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

                                ----------------
                                    FORM 10-K
                                ----------------

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

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2001

                                       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 000-23354

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

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

                            11 UBI ROAD 1, #07-01/02
                           MEIBAN INDUSTRIAL BUILDING
                                SINGAPORE 408723
                                  (65) 844-3366
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

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

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

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

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                                   TABLE OF CONTENTS



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                                                    PART I
                                                                                                  
Item 1.   Business...................................................................................     3
Item 2.   Properties.................................................................................    15
Item 3.   Legal Proceedings..........................................................................    16
Item 4.   Submission of Matters to a Vote of Security Holders........................................    16

                                                    PART II

Item 5.   Market for the Registrant's Common Equity and Related Stockholder Matters..................    16
Item 6.   Selected Financial Data....................................................................    19
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations......    20
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.................................    28
Item 8.   Financial Statements and Supplementary Data................................................    30
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.......    56

                                                   PART III

Item 10.  Directors and Executive Officers of the Registrant.........................................    56
Item 11.  Executive Compensation.....................................................................    58
Item 12.  Security Ownership of Certain Beneficial Owners and Management.............................    61
Item 13.  Certain Relationships and Related Transactions.............................................    63

                                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K...........................    65



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                                     PART I

ITEM 1. BUSINESS

     Except for historical information contained herein, the matters discussed
in this annual report on Form 10-K are forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. The words "will," "may," "designed to," "outlook,"
"believes," "should," "anticipates," "plans," "expects," "intends," "estimates"
and similar expressions identify forward-looking statements, which speak only as
of the date of this annual report. These forward-looking statements are
contained principally under Item 1, "Business," and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Because these forward-looking statements are subject to certain risks and
uncertainties, actual results could differ materially from the expectations
expressed in the forward-looking statements. Important factors that could cause
actual results to differ materially from the expectations reflected in the
forward-looking statements include those described in this section under "Risk
Factors," including,

         -    our ability to integrate acquired companies and manage change in
              our operations;

         -    fluctuations in our customers' requirements and demand for their
              products;

         -    increased competition;

         -    tax matters; and

         -    currency fluctuations.

We undertake no obligation to update or revise these forward-looking statements
to reflect subsequent events or circumstances.

OVERVIEW

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

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

     Through a combination of internal growth and acquisitions, we have become
one of the world's largest electronics manufacturing services ("EMS") providers,
with revenues of $12.1 billion and EBITDA (earnings before interest, tax,
depreciation and amortization, excluding unusual charges) of $838.0 million in
fiscal 2001. In addition, we have increased our manufacturing square footage
from 1.5 million square feet on April 1, 1998 to over 16.0 million square feet
on March 31, 2001. We offer a complete and flexible manufacturing solution that
provides accelerated time-to-market and time-to-volume production, reduced
production costs and advanced engineering and design capabilities. By working
closely with and being highly responsive to customers throughout the design,
manufacturing and distribution process, we believe that we can be an integral
part of their operations. We believe that our size, global presence, broad
service offerings and expertise enable us to win large programs from leading
multinational OEMs for the manufacture of electronic products.


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

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

INDUSTRY OVERVIEW

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

         -    reducing production costs;

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

         -    accessing advanced manufacturing, design and engineering
              capabilities;

         -    reducing capital investment requirements and fixed overhead costs;

         -    improving inventory management and purchasing power; and

         -    accessing worldwide manufacturing capabilities.

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

STRATEGY

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

Enhance Our Customers' Product Development and Manufacturing Strategy. We
believe we can become an integral part of our customers' operations by working
closely with them throughout the design, manufacturing and distribution process,
and by offering flexible, highly responsive services. We believe our customer
relationships


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are strengthened through a management approach which fosters rapid
decision-making and a customer service orientation that responds quickly to
frequently changing customer design specifications and production requirements.
Our approach allows our customers to focus on their core competencies and thus
enables them to accelerate their time-to-market and time-to-volume production.

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

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

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

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

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

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

EXPANSION

     We have actively pursued mergers and other business acquisitions to expand
our global reach, manufacturing capacity and service offerings, in addition to
diversifying and strengthening customer relationships. These acquisitions have
enabled us to provide more integrated outsourcing technology solutions with
time-to-market and lower cost advantages. Acquisitions have also played an
important part in expanding our presence in the global electronics marketplace.
We have completed several significant business combinations since the end of
fiscal 2000. In fiscal 2001, we acquired all the outstanding shares of The DII
Group, Inc. ("DII"), Palo Alto Products International Pte. Ltd. ("Palo Alto
Products International"), Chatham Technologies, Inc. ("Chatham"), Lightning
Metal Specialties and related entities ("Lightning") and JIT Holdings Ltd.
("JIT"). Each of these acquisitions were accounted for as pooling of interests.
Additionally, we have completed other immaterial pooling of interests
transactions in fiscal 2001. We have also made a number of business acquisitions
which were accounted for using the purchase method. In addition, we have
purchased a number of manufacturing facilities and related assets from customers
and simultaneously entered into manufacturing agreements to provide electronics
design, assembly and test services to these customers. In fiscal 2001, we
purchased a facility in Italy from Siemens Mobile, a facility in


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Switzerland from Ascom, a facility in Denmark from Bosch Telecom GmbH and a
facility in Sweden from Ericsson Radio AB. In the first quarter of fiscal 2002,
we commenced management of the operations of Ericsson's mobile telephone
operations using facilities owned by Ericsson in Brazil, Great Britain, Malaysia
and Sweden, as well as our own facilities. In connection with this relationship,
we purchased certain equipment, inventory and other assets, and assumed certain
accrued expenses, from Ericsson at their net book value of approximately $450.0
million. Additionally, in the first quarter of fiscal 2002, we announced our
intentions to purchase a manufacturing facility and related assets from Alcatel
located in Laval, France.

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

CUSTOMERS

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

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



CUSTOMER                                                     END PRODUCTS
--------                                                     ------------
                        
Alcatel                    Cellular phones, accessories and telecommunications infrastructure
Cabletron Systems          Data communications products
Cisco Systems, Inc.        Data communications products
Ericsson Telecom AB        Cellular phones, business telecommunications systems and GSM infrastructure
Hewlett-Packard Company    Inkjet printers and storage devices
Motorola, Inc.             Cellular phones, set-top boxes and telecommunications infrastructure
Nokia Corporation          Cellular phone accessories, cellular phones, office phones and
                           telecommunications infrastructure
Palm, Inc.                 Pilot electronic organizers
Philips Electronics        Consumer electronics products
Siemens AG                 Cellular phones and telecommunications infrastructure


     On May 30, 2000, we entered into a strategic alliance for product
manufacturing with Motorola. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that provided it with
incentives to purchase products and services from us by entitling it to acquire
22,000,000 of our ordinary shares at any time through December 31, 2005 upon
meeting targeted purchase levels of up to $32.0 billion or making additional
payments to us. In June 2001, we entered into an agreement with Motorola under
which we repurchased this equity instrument for $112.0 million. No current or
planned manufacturing programs are affected by this repurchase and we anticipate
that Motorola will continue to be a customer following the repurchase, although
our future revenue from Motorola may be less than it would have been had this
instrument remained in effect.


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     In April 2001, we entered into a definitive agreement with Ericsson with
respect to our management of the operations of Ericsson's mobile telephone
operations. Operations under this arrangement commenced in the first quarter of
fiscal 2002. Under this agreement, we are to provide a substantial portion of
Ericsson's mobile phone requirements. We 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. We expect to also provide PCBs and
plastics, primarily from our Asian operations.

SALES AND MARKETING

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

SERVICES

     We offer a broad range of integrated services, providing customers with a
total design and manufacturing solution that takes a product from its initial
design through volume production, test, distribution and into post-sales service
and support. We operate and are managed internally by four geographic business
segments, including Asia, the Americas, Western Europe and Central Europe. For
additional information on these geographic business segments, please see Note
12, "Segment Reporting," of the Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."

     Our integrated services include the following:

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

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

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

     The manufacture of complex multilayer interconnect products often requires
the use of sophisticated circuit interconnections between layers, referred to as
vias, and adherence to strict electrical characteristics to maintain


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consistent circuit transmission speeds. Our production of microvias, by laser
ablation and our surface laminar circuit technology, a photo generated microvia
capability, provides our customers with proven high volume production capacity
in both of the major high density interconnect process solutions.

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

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

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

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

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

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

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

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

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

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


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

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

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

BACKLOG

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

COMPETITION

         The EMS industry is extremely competitive and includes hundreds of
companies, several of whom have achieved substantial market share. We compete
with different companies, depending on the type of service or geographic area.
We compete against numerous domestic and foreign EMS providers, and current and
prospective customers also evaluate our capabilities against the merits of
internal production. In addition, in recent years the EMS industry has attracted
a significant number of new entrants, including large OEMs with excess
manufacturing capacity, and many existing participants, including us, have
significantly increased their manufacturing capacity by expanding their
facilities and adding new facilities. In the event of a decrease in overall
demand for electronics manufacturing services, this increased capacity could
result in substantial pricing pressures which could harm our operating results.
Some of our competitors, may have greater manufacturing, financial or other
resources than us. As competitors increase the scale of their operations, they
may increase their ability to realize economies of scale, to reduce their prices
and to more effectively meet the needs of large OEMs. We believe that the
principal competitive factors in the segments of the EMS industry in which we
operate are cost, technological capabilities, responsiveness and flexibility,
delivery cycles, location of facilities, product quality and range of services
available. Failure to satisfy any of the foregoing requirements could seriously
harm our business.

ENVIRONMENTAL REGULATION

         Our operations are subject to certain federal, state and local
regulatory requirements relating to the use, storage, discharge and disposal of
hazardous chemicals used during their manufacturing processes. We believe that
our operations are currently in compliance with applicable regulations and do
not believe that costs of compliance with these laws and regulations will have a
material effect upon our capital expenditures, operating results or


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competitive position. Currently we have no commitments with environmental
authorities regarding any compliance related matters.

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

EMPLOYEES

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

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

RISK FACTORS

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

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

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

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

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

         -    we may incur cost overruns;

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

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

         In addition, we expect to incur new fixed operating expenses associated
with our expansion efforts that will increase our cost of sales, including
substantial increases in depreciation expense and rental expense. If our
revenues do not increase sufficiently to offset these expenses, our operating
results would be seriously harmed. Our expansion, both through internal growth
and acquisitions, has contributed to our incurring significant unusual charges.
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


                                       10
   11
million, net of tax, and in connection with the issuance of an equity instrument
to Motorola relating to our strategic alliance, we recorded a one-time non-cash
charge of approximately $286.5 million.

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

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

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

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

         -    recessionary periods in our customers' markets.

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

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

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

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

OUR OPERATING RESULTS VARY SIGNIFICANTLY.

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

         -    the timing of customer orders;


                                       11
   12
         -    the volume of these orders relative to our capacity;

         -    market acceptance of customers' new products;

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

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

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

         -    our effectiveness in managing manufacturing processes and costs;

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

         -    changes in our product mix;

         -    changes in economic conditions;

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

         -    seasonality in customers' product requirements.

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

         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, some of our customers are currently experiencing increased
volatility in demand, and in some cases reduced demand, for their products. This
increases the difficulty of anticipating the levels and timing of future
revenues from these customers, and could lead them to defer delivery schedules
for products, which could lead to a reduction or delay in such revenues. Any of
these factors or a combination of these factors could seriously harm our
business and result in fluctuations in our results of operations.

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

    In the past 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
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


                                       12
   13
     -    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 of manufacturing
and supply base management activities from our OEM customers. Future growth
partially depends on new outsourcing opportunities. To the extent that these
opportunities are not available, our future growth would be unfavorably
impacted. These outsourcing opportunities may include the transfer of assets
such as facilities, equipment and inventory.

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

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

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

OUR INDUSTRY IS EXTREMELY COMPETITIVE.

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


                                       13
   14
         In recent years, many participants in the industry, including us, have
substantially expanded their manufacturing capacity. If overall demand for
electronics manufacturing services should decrease, this increased capacity
could result in substantial pricing pressures, which could seriously harm our
operating results.

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

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

OUR CUSTOMERS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL CHANGE.

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

WE ARE SUBJECT TO THE RISK OF INCREASED INCOME TAXES.

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

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

         -    income tax rates are low.

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

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


                                       14
   15
         -    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.

         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 have a significant
effect on the market price of our ordinary shares.

ITEM 2. PROPERTIES

         Our facilities consist of a global network of industrial parks,
regional manufacturing and technology centers, and design/engineering and
product introduction centers, providing over 16.0 million square feet of
capacity


                                       15
   16
as of March 31, 2001. We own facilities with approximately 1.1 million square
feet in the Americas, 2.5 million square feet in Asia and 4.8 million square
feet of capacity in Europe. We lease facilities with approximately 2.9 million
square feet in the Americas, 1.5 million square feet in Asia and 3.5 million
square feet of capacity in Europe.

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

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

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

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

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

         Our facilities are generally well maintained and suitable for the
operations conducted and, in substantially all cases where owned, free and clear
of any encumbrances. The productive capacity of our plants is generally adequate
for current needs. All of our manufacturing facilities are registered to the
quality requirements of the International Organization for Standardization (ISO
9002) or are in the process of final certification.

ITEM 3. LEGAL PROCEEDINGS

    None.

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

    None.

                                        PART II

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

PRICE RANGE OF ORDINARY SHARES


                                       16
   17

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



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


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

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

DIVIDENDS

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

TAXATION

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

INCOME TAXATION UNDER SINGAPORE LAW

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

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


                                       17
   18
    There is no stamp duty payable in respect of the holding and disposition of
shares. No duty is payable on the acquisition of new shares. Where existing
shares are acquired in Singapore, stamp duty is payable on the instrument of
transfer of the shares at the rate of S$2 for every S$1,000 of the market value
of the shares. The stamp duty is borne by the purchaser unless there is an
agreement to the contrary. Where the instrument of transfer is executed outside
of Singapore, stamp duty must be paid if the instrument of transfer is received
in Singapore. Under Article 22 (iii) of our Articles of Association, our
directors are authorized to refuse to register a transfer unless the instrument
of transfer has been duly stamped.

INCOME TAXATION UNDER UNITED STATES LAW

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

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

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

ESTATE TAXATION

    In the case of an individual who is not domiciled in Singapore, a Singapore
estate tax is imposed on the value of all movable and immovable properties
situated in Singapore. Our shares are considered to be situated in Singapore.
Thus, an individual shareholder who is not domiciled in Singapore at the time of
his or her death will be subject to Singapore estate tax on the value of any
such shares held by the individual upon the individual's death. Such a
shareholder will be required to pay Singapore estate tax to the extent that the
value of the shares (or in aggregate with any other assets subject to Singapore
estate tax) exceeds S$600,000. Any such excess will be taxed at a rate equal to
5% on the first S$12,000,000 of the individual's Singapore chargeable assets and
thereafter at a rate equal to 10%. An individual shareholder who is a U.S.
citizen or resident (for U.S. estate tax purposes) also will have the value of
the shares included in the individual's gross estate for U.S. estate tax
purposes. An individual shareholder generally will be entitled to a tax credit
against the shareholder's U.S. estate tax to the extent the individual
shareholder actually pays Singapore estate tax on the value of the shares;
however, such tax credit is generally limited to the percentage of the U.S.
estate tax attributable to the inclusion of the value of the shares included in
the shareholder's gross estate for U.S. estate tax purposes, adjusted further by
a pro rata apportionment of available exemptions. Individuals who are domiciled
in Singapore should consult their own tax advisors regarding the Singapore
estate tax consequences of their investment.


                                       18
   19
ITEM 6. SELECTED FINANCIAL DATA

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

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



                                                                        FISCAL YEAR ENDED MARCH 31,
                                                    ----------------------------------------------------------------------
                                                       1997          1998           1999           2000            2001
                                                    ----------    ----------    -----------     ----------    ------------
                                                                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                               
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Net sales ......................................    $1,498,332    $2,577,926    $ 3,952,786     $6,959,122    $ 12,109,699
Cost of sales ..................................     1,289,567     2,246,135      3,512,229      6,335,242      11,127,896
Unusual charges(1) .............................        16,443         8,869         77,286          7,519         510,495
                                                    ----------    ----------    -----------     ----------    ------------
   Gross profit ................................       192,322       322,922        363,271        616,361         471,308
Selling, general and administrative ............       113,308       169,586        240,512        319,952         430,109
Goodwill and intangibles amortization ..........         5,979        10,487         29,156         41,326          63,541
Unusual charges(1) .............................         4,649        12,499          2,000          3,523         462,847
Interest and other expense, net ................         8,398        21,480         52,234         69,912          67,115
                                                    ----------    ----------    -----------     ----------    ------------
   Income(loss) before income taxes ............        59,988       108,870         39,369        181,648        (552,304)
Provision for (benefit from) income taxes ......        16,415        22,378        (11,634)        23,080        (106,285)
                                                    ----------    ----------    -----------     ----------    ------------
   Net income (loss) ...........................    $   43,573    $   86,492    $    51,003     $  158,568    $   (446,019)
                                                    ==========    ==========    ===========     ==========    ============
Diluted earnings (loss) per share(2) ...........    $     0.18    $     0.30    $      0.17     $     0.42    $      (1.01)
                                                    ==========    ==========    ===========     ==========    ============
Shares used in computing diluted per
  share amounts(2) .............................       238,770       297,307        329,352        383,119         441,991




                                                                            AS OF MARCH 31,
                                                    ----------------------------------------------------------------
                                                      1997          1998          1999          2000          2001
                                                    --------    ----------    ----------    ----------    ----------
                                                                                           
                                                                             (IN THOUSANDS)
CONSOLIDATED BALANCE SHEETS DATA:
Working capital ................................    $ 87,855    $  372,870    $  384,084    $1,161,535    $1,914,741
Total assets ...................................     937,865     1,862,088     2,783,707     5,134,943     7,571,655
Total long-term debt, excluding current
  portion ......................................     139,383       580,441       789,471       645,267       917,313
Shareholders' equity ...........................     331,622       641,667       915,305     2,376,628     4,030,361


----------

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

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

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

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

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

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


                                       19
   20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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

ACQUISITIONS

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



DATE                ACQUIRED COMPANY             NATURE OF BUSINESS                CONSIDERATION
----                ----------------             ------------------                -------------
                                                                          
November 2000       JIT Holdings Ltd.            Provides electronics              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
                    and related entities         stamping and integration
                                                 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 consolidated financial statements have been restated to reflect the combined
operations of the merged companies for all periods presented. Additionally, we
have completed other immaterial pooling of interests transactions in fiscal
2001. Prior period statements have not been restated for these transactions. We
have also made a number of business acquisitions of other companies. These
transactions were accounted for using the purchase method and, accordingly our
consolidated financial statements include the operating results of each business
from the date of acquisition. Pro forma results of operations have not been
presented because the effects of these acquisitions were not material on either
an individual or an aggregate basis.

OTHER STRATEGIC TRANSACTIONS

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


                                       20
   21
     In April 2001, we entered into a definitive agreement with Ericsson with
respect to our management of the operations of Ericsson's mobile telephone
operations. Operations under this arrangement commenced in the first quarter of
fiscal 2002. Under this agreement, we are to provide a substantial portion of
Ericsson's mobile phone requirements. We will assume responsibility for product
assembly, new product prototyping, supply chain management and logistics
management, in which we will process customer orders from Ericsson and configure
and ship products to Ericsson's customers. We expect to provide PCBs and
plastics, primarily from our Asian operations. In connection with this
relationship, we purchased certain equipment, inventory and other assets, and
assumed certain accrued expenses, from Ericsson at their net book value of
approximately $450.0 million. See Item 1, "Business--Risk Factors--Our strategic
relationship with Ericsson creates risks."

RESULTS OF OPERATIONS

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



                                                                FISCAL YEAR ENDED
                                                                    MARCH 31,
                                                       ---------------------------------
                                                        1999          2000         2001
                                                       ------        ------       ------
                                                                         
Net sales .......................................       100.0%        100.0%       100.0%
Cost of sales ...................................        88.9          91.0         91.9
Unusual charges .................................         1.9           0.1          4.2
                                                       ------        ------       ------
     Gross margin ...............................         9.2           8.9          3.9
Selling, general and administrative .............         6.1           4.6          3.6
Goodwill and intangibles amortization ...........         0.7           0.6          0.5
Unusual charges .................................         0.1           0.1          3.8
Interest and other expense, net .................         1.3           1.0          0.6
                                                       ------        ------       ------
     Income (loss) before income taxes ..........         1.0           2.6         (4.6)
Provision for (benefit from) income taxes .......        (0.3)          0.3         (0.9)
                                                       ------        ------       ------
     Net income (loss) ..........................         1.3%          2.3%        (3.7)%
                                                       ======        ======       ======


Net Sales

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

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

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

Gross Profit


                                       21
   22
     Gross profit varies from period to period and is affected by a number of
factors, including product mix, component costs, product life cycles, unit
volumes, startup, expansion and consolidation of manufacturing facilities,
pricing, competition and new product introductions. See Item 1, "Business--Risk
Factors."

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

     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 OEM divestitures. These arrangements, which are relatively
larger in scale, could adversely affect our gross margins. We believe that
these and other factors may adversely affect our gross margins, but we do not
expect that this will have a material effect on our income from operations.

Unusual Charges

FISCAL 2001

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

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

     In connection with the aforementioned mergers and facility closures, we
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 are as follows (in thousands):


                                       22
   23



                                               FIRST     SECOND      THIRD      FOURTH
                                              QUARTER    QUARTER    QUARTER     QUARTER       TOTAL     NATURE OF
                                              CHARGES    CHARGES    CHARGES     CHARGES      CHARGES     CHARGES
                                             ---------  ---------  ----------  ----------  ---------  -------------
                                                                                    
Facility closure costs:
  Severance.....................             $  62,487   $  5,677   $   3,606   $  60,703  $ 132,473  cash
  Long-lived asset impairment...                46,646     14,373      16,469     155,046    232,534  non-cash
  Exit costs....................                24,201      5,650      19,703     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 facility closures, we developed formal plans to exit
certain activities and involuntarily terminate employees. Management's plan to
exit an activity included the identification of duplicate manufacturing and
administrative facilities for closure and the identification of manufacturing
and administrative facilities for consolidation into other facilities.
Management currently anticipates that the facility closures and activities to
which all of these charges relate will be substantially completed within one
year of the commitment dates of the respective exit plans, except for certain
long-term contractual obligations. The following table summarizes the components
of the facility closure costs and related activities in fiscal 2001:



                                                            LONG-LIVED
                                                              ASSET           EXIT
                                            SEVERANCE       IMPAIRMENT        COSTS           TOTAL
                                            ---------       ----------      ---------       ---------
                                                                                
Balance at March 31, 2000 .............      $     --       $      --       $      --       $      --
Activities during the year:
  First quarter provision .............        62,487          46,646          24,201         133,334
  Cash charges ........................       (35,800)             --          (1,627)        (37,427)
  Non-cash charges ....................            --         (46,646)         (7,441)        (54,087)
                                             --------       ---------       ---------       ---------
Balance at June 30, 2000 ..............        26,687              --          15,133          41,820
Activities during the year:
  Second quarter provision ............         5,677          14,373           5,650          25,700
  Cash charges ........................        (4,002)             --          (4,231)         (8,233)
  Non-cash charges ....................            --         (14,373)         (8,074)        (22,447)
                                             --------       ---------       ---------       ---------
Balance at September 30, 2000 .........        28,362              --           8,478          36,840
Activities during the year:
  Third quarter provision .............         3,606          16,469          19,703          39,778
  Cash charges ........................        (7,332)             --          (2,572)         (9,904)
  Non-cash charges ....................            --         (16,469)        (14,070)        (30,539)
                                             --------       ---------       ---------       ---------
Balance at December 31, 2000 ..........        24,636              --          11,539          36,175
Activities during the year:
  Fourth quarter provision ............        60,703         155,046         169,818         385,567
  Cash charges ........................       (13,605)             --         (14,686)        (28,291)
  Non-cash charges ....................            --        (155,046)        (71,328)       (226,374)
                                             --------       ---------       ---------       ---------
Balance at March 31, 2001 .............      $ 71,734       $      --       $  95,343       $ 167,077
                                             ========       =========       =========       =========


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

     The unusual pre-tax charges include $232.5 million for the write-down of
long-lived assets to fair value. This amount has been classified as a component
of Cost of Sales. Included in the long-lived asset impairment are charges of
$229.1 million, which relate to property, plant and equipment associated with
the various manufacturing and administrative facility closures which were
written down to their 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


                                       23
   24
asset impairment also includes the write-off of the remaining goodwill and other
intangibles related to certain closed facilities of $3.4 million.

     The unusual pre-tax charges also include approximately $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 $23.1 million of other exit costs
during fiscal 2001. Additionally, approximately $101.0 million of other exit
costs were non-cash charges utilized during fiscal 2001. The remaining $95.3
million is classified in accrued liabilities as of March 31, 2001 and 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 include approximately $64.3 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the merger transactions. Other direct
transaction costs which totaled approximately $38.1 million were mainly
comprised of accelerated debt prepayment expense, accelerated executive stock
compensation and benefit-related expenses. We paid approximately $70.9 million
of the direct transaction costs during fiscal 2001. Additionally, approximately
$28.2 million of the direct transaction costs were non-cash charges utilized
during fiscal 2001. The remaining $3.3 million is classified in accrued
liabilities as of March 31, 2001 and is expected to be substantially paid out in
the first quarter of fiscal 2002.

FISCAL 2000

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

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

FISCAL 1999

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

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



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


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


                                       24
   25
     The unusual pre-tax charges include approximately $54.8 million for the
write-down of long-lived assets to fair value. Included in the long-lived asset
impairment are charges of $50.7 million related to the Fab which was written
down to its net realizable value based on its sales price. The impaired
long-lived assets consisted primarily of machinery and equipment of $43.4
million and building and improvements of $7.3 million. The long-lived asset
impairment also includes the write-off of the remaining goodwill of $0.6
million. The remaining $3.5 million of asset impairment relates to the
write-down to net realizable value of a facility we exited during fiscal 1999.

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

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

     Based on an independent valuation of certain of the assets of Advanced
Component Labs ("ACL") and other factors, we determined that the purchase price
of ACL included in-process research and development costs totaling $2.0 million
which had not reached technological feasibility and had no probable alternative
future use. Accordingly, we wrote-off $2.0 million of in-process research and
development in fiscal 1999.

Selling, General and Administrative Expenses

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

Goodwill and Intangible Assets Amortization

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

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

Interest and Other Expense, Net

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



                                                          1999         2000         2001
                                                        --------     --------     ---------
                                                                         
Interest expense ...................................    $ 61,430     $ 84,198     $ 135,243
Interest income ....................................     (11,374)     (22,681)      (32,219)
Foreign exchange (gain) loss .......................       3,543        2,128        (4,028)
Other (income) expense, net ........................      (1,365)       6,267       (31,881)
                                                        --------     --------     ---------
          Total interest and other expense, net ....    $ 52,234     $ 69,912     $  67,115
                                                        ========     ========     =========



                                       25
   26
     Net interest expense increased to $103.0 million in fiscal 2001 from $61.5
million in fiscal 2000. The increase was primarily attributable to the interest
expense associated with the approximately $645.0 million of senior subordinated
notes, consisting of $500.0 million of 9.875% notes and euros 150.0 million of
9.75% notes we issued in June 2000.

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

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

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

Provision for Income Taxes

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

     Inventories increased to $1.8 billion at March 31, 2001 from $1.1 billion
at March 31, 2000. The increase in inventories was primarily the result of
increased purchases of materials to support our growing sales, combined with


                                       26
   27
the inventory acquired in connection with the manufacturing facility purchased
during the fourth quarter of fiscal 2001. Additionally, many of our customers
have experienced a slowdown in demand for their products since late 2000 which
in some cases has resulted in the deferral of purchases, thereby adversely
affecting our inventory levels at the end of our fiscal year.

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

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

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

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

     -    $158.9 million for acquisitions of businesses.

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

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

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

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

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

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

     -    $85.7 million for acquisitions of businesses.

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

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

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

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

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


                                       27
   28
     Additionally, our financing activities used $1.5 billion for the repayment
of bank borrowings and long-term debt and $31.8 million for the repayment of
capital lease obligations. The repayments of our bank borrowings and long-term
debt primarily resulted from the use of the proceeds from our issuance of the
senior notes in June 2000. See Note 4, "Bank Borrowings and Long-Term Debt," of
the Notes to Consolidated Financial Statements in Item 8, "Financial Statements
and Supplementary Data" for a description of our bank credit facilities and
long-term debt.

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

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

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

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

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

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

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

     A portion of our exposure to market risk for changes in interest rates
relates to our investment portfolio. We do not use derivative financial
instruments in our investment portfolio. We invest in high-credit quality
issuers and, by policy, limit the amount of credit exposure to any one issuer.
As stated in our policy, we protect our invested principal funds by limiting
default risk, market risk and reinvestment risk. We mitigate default risk by
investing in safe and high-credit quality securities and by constantly
positioning the portfolio to respond appropriately to a significant reduction in
a credit rating of any investment issuer, guarantor or depository. The portfolio
includes only


                                       28
   29
marketable securities with active secondary or resale markets to ensure
portfolio liquidity. Maturities of short-term investments are timed, whenever
possible, to correspond with debt payments and capital investments. As of March
31, 2001, the outstanding amount in the investment portfolio was $349.8 million,
comprised mainly of money market funds with an average return of 5.26%.

     We also have exposure to interest rate risk with certain variable rate
lines of credit. These credit lines are located throughout the world and are
based on a spread over that country's inter-bank offering rate. We primarily
enter into debt obligations to support general corporate purposes including
capital expenditures, acquisitions and working capital needs. As of March 31,
2001, the outstanding short-term debt, including capitalized leases was $325.7
million. The following table presents principal cash flows and related interest
rates by fiscal year of maturity for debt obligations. The variable interest
rate for future years assumes the same rate as March 31, 2001.



                                                            EXPECTED FISCAL YEAR OF MATURITY
                                          ----------------------------------------------------------------------
DEBT                                       2002       2003      2004      2005     2006    THEREAFTER     TOTAL
----                                      -------   --------  --------   ------   ------   ----------   --------
                                                                     (IN THOUSANDS)
                                                                                    
Sr. Subordinated Notes .................       --         --        --       --       --      779.59     779,596
  Weighted Average Interest Rate .......     9.64%       9.6%      9.6%    9.64%    9.64%        9.7%        9.7%
Fixed Rate .............................  118,170    110,126   107,773   86,899   77,077     142,609     642,654
  Weighted Average Interest Rate .......     6.66%      6.48%     6.02%    6.24%    5.48%       6.20%       6.22%
Variable Rate ..........................     5.60%      5.80%     5.80%    5.20%    5.20%       5.20%       5.20%


FOREIGN CURRENCY EXCHANGE RISK

     We transact business in various foreign countries. We manage our foreign
currency exposure by borrowing in various foreign currencies and by entering
into foreign exchange forward contracts only with respect to transaction
exposure. We try to maintain a fully hedged position for all certain, known
transaction exposures. These exposures are primarily, but not limited to,
revenues, vendor payments, accrued expenses and inter-company balances in
currencies other than the functional currency unit of the operating entity. We
will first evaluate and, to the extent possible, use non-financial techniques,
such as currency of invoice, leading and lagging payments, receivable management
or local borrowing to reduce transaction exposure before taking steps to
minimize remaining exposure with financial instruments. As of March 31, 2001,
the total cumulative outstanding notional amounts of our forward contracts in
Euro, French Franc, German Deutsche Mark, Japanese Yen, Swedish Kronor and
United States Dollar was approximately $200.4 million.


                                       29
   30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Flextronics International Ltd.

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

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

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

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

                                      ARTHUR ANDERSEN LLP

San Jose, California
April 20, 2001


                                       30
   31


INDEPENDENT AUDITORS' REPORT


Board of Directors
The DII Group, Inc.

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

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

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





DELOITTE & TOUCHE LLP

Denver, Colorado
March 28, 2000

   32
                         FLEXTRONICS INTERNATIONAL LTD.

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



                                             ASSETS

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

                              LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank borrowings and current portion of long-term debt .......................    $   487,773     $   298,052
  Current portion of capital lease obligations ................................         24,037          27,602
  Accounts payable ............................................................      1,227,142       1,480,468
  Other current liabilities ...................................................        317,879         730,246
  Deferred revenue ............................................................          4,378           4,938
                                                                                   -----------     -----------
          Total current liabilities ...........................................      2,061,209       2,541,306
                                                                                   -----------     -----------
Long-term debt, net of current portion ........................................        593,830         879,525
Capital lease obligations, net of current portion .............................         51,437          37,788
Other liabilities .............................................................         51,839          82,675

Commitments and contingencies

SHAREHOLDERS' EQUITY:
  Ordinary shares, S$.01 par value; authorized -- 1,500,000,000 shares;
     issued and outstanding -- 411,596,229 and 481,531,339 as of March 31,
     2000 and 2001, respectively ..............................................          2,467           2,871
  Additional paid-in capital ..................................................      1,997,016       4,266,908
  Retained earnings (deficit) .................................................        373,735        (132,892)
  Accumulated other comprehensive income (loss) ...............................          8,494        (106,526)
  Deferred compensation .......................................................         (5,084)             --
                                                                                   -----------     -----------
          Total shareholders' equity ..........................................      2,376,628       4,030,361
                                                                                   -----------     -----------
          Total liabilities and shareholders' equity ..........................    $ 5,134,943     $ 7,571,655
                                                                                   ===========     ===========


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


                                       31
   33
                             FLEXTRONICS INTERNATIONAL LTD.

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



                                                                YEARS ENDED MARCH 31,
                                                     ------------------------------------------
                                                         1999           2000            2001
                                                     -----------     ----------    ------------
                                                                          
Net sales .......................................    $ 3,952,786     $6,959,122    $ 12,109,699
Cost of sales ...................................      3,512,229      6,335,242      11,127,896
Unusual charges .................................         77,286          7,519         510,495
                                                     -----------     ----------    ------------
          Gross profit ..........................        363,271        616,361         471,308
Selling, general and administrative .............        240,512        319,952         430,109
Goodwill and intangibles amortization ...........         29,156         41,326          63,541
Unusual charges .................................          2,000          3,523         462,847
Interest and other expense, net .................         52,234         69,912          67,115
                                                     -----------     ----------    ------------
          Income (loss) before income taxes .....         39,369        181,648        (552,304)
Provision for (benefit from) income taxes .......        (11,634)        23,080        (106,285)
                                                     -----------     ----------    ------------
          Net income (loss) .....................    $    51,003     $  158,568    $   (446,019)
                                                     ===========     ==========    ============
Earnings (loss) per share:
  Basic .........................................    $      0.17     $     0.44    $      (1.01)
                                                     ===========     ==========    ============
  Diluted .......................................    $      0.17     $     0.42    $      (1.01)
                                                     ===========     ==========    ============
Shares used in computing per share amounts:
  Basic .........................................        299,984        356,338         441,991
                                                     ===========     ==========    ============
  Diluted .......................................        329,352        383,119         441,991
                                                     ===========     ==========    ============


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


                                       32
   34
                         FLEXTRONICS INTERNATIONAL LTD.

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



                                                                            YEARS ENDED MARCH 31,
                                                                      ------------------------------------
                                                                        1999          2000          2001
                                                                      --------     ---------     ---------
                                                                                        
Net income (loss) ................................................    $ 51,003     $ 158,568     $(446,019)
Other comprehensive income (loss):
  Foreign currency translation adjustment, net of tax ............     (12,793)      (16,783)      (49,844)
  Unrealized gain (loss) on available-for-sale securities,
    net of tax ...................................................          --        59,704       (55,851)
                                                                      --------     ---------     ---------
Comprehensive income (loss) ......................................    $ 38,210     $ 201,489     $(551,714)
                                                                      ========     =========     =========


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


                                       33
   35
                             FLEXTRONICS INTERNATIONAL LTD.

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



                                                                                         ACCUMULATED
                                            ORDINARY SHARES    ADDITIONAL   RETAINED        OTHER                        TOTAL
                                           ------------------    PAID-IN    EARNINGS    COMPREHENSIVE     DEFERRED    SHAREHOLDERS'
                                            SHARES    AMOUNT     CAPITAL    (DEFICIT)    INCOME (LOSS)  COMPENSATION     EQUITY
                                           --------   -------  -----------  ---------   --------------  ------------  -------------
                                                                                                 
BALANCE AT MARCH 31, 1998.................  288,370   $ 1,753  $   467,584  $ 202,843     $ (17,600)      $(12,913)   $   641,667
  Issuance of ordinary shares for
    acquisitions..........................      511         3        4,798         --            --             --          4,801
  Issuance of common stock................    4,144        24       49,056         --            --             --         49,080
  Exercise of stock options...............    5,482        32       11,370         --            --             --         11,402
  Ordinary shares issued under Employee
    Stock Purchase Plan...................    2,957        17        7,304         --            --             --          7,321
  Tax benefit on employee stock plans.....       --        --        1,635         --            --             --          1,635
  Sale of ordinary shares in public
    offering, net of offering costs.......   21,600       126      193,874         --            --             --        194,000
  Ordinary share repurchase...............   (4,684)      (27)     (24,308)        --            --             --        (24,335)
  Conversion of convertible notes.........        2        --           15         --            --             --             15
  Dividends paid to former shareholders...       --        --           --     (9,227)           --             --         (9,227)
  Deferred stock compensation.............       --        --         (938)        --            --          1,172            234
  Amortization of deferred stock
    compensation..........................       --        --           --         --            --          2,247          2,247
  Net income..............................       --        --           --     51,003            --             --         51,003
 Foreign currency translation.............       --        --           --         --       (14,538)            --        (14,538)
                                           --------   -------  -----------  ---------     ---------       --------    -----------
BALANCE AT MARCH 31, 1999.................  318,382     1,928      710,390    244,619       (32,138)        (9,494)       915,305
  Adjustment to conform fiscal year of
    pooled entity.........................       --        --           --       (818)           --             --           (818)
  Impact of immaterial pooling of
    interests acquisitions................    1,847         6        1,607     (2,062)           --             --           (449)
  Issuance of common stock................    2,448        14        9,975         --            --             --          9,989
  Exercise of stock options...............    4,991        29       18,068         --            --             --         18,097
  Ordinary shares issued under Employee
    Stock Purchase Plan...................    2,118        13        8,822         --            --             --          8,835
  Tax benefit on employee stock plans ....       --        --        4,785         --            --             --          4,785
  Sale of ordinary shares in public
    offering, net of offering costs.......   67,018       391    1,158,382         --            --             --      1,158,773
  Conversion of convertible notes.........   14,792        86       84,988         --            --             --         85,074
  Dividends paid to former shareholders...       --        --           --    (26,572)           --             --        (26,572)
  Deferred stock compensation.............       --        --           (1)        --            --            361            360
  Amortization of deferred stock
    compensation..........................       --        --           --         --            --          4,049          4,049
  Net income..............................       --        --           --    158,568            --             --        158,568
  Change in unrealized gain (loss) on
     available for sale securities........       --        --           --         --        59,704             --         59,704
  Foreign currency translation............       --        --           --         --       (19,072)            --        (19,072)
                                           --------   -------  -----------  ---------     ---------       --------    -----------
BALANCE AT MARCH 31, 2000.................  411,596     2,467    1,997,016    373,735         8,494         (5,084)     2,376,628
  Adjustment to conform fiscal year of
    pooled entities.......................    6,882        40        4,056    (58,306)       (3,787)            --        (57,997)
  Impact of immaterial pooling of
    interests acquisitions................      728         4        2,482     (2,112)           --             --            374
  Issuance of ordinary shares for
    acquisitions..........................   10,825        63      365,422         --            --             --        365,485
  Exercise of stock options...............   11,405        66       69,504         --            --             --         69,570
  Ordinary shares issued under Employee
    Stock Purchase Plan...................      445         3        8,911         --            --             --          8,914
  Tax benefit on employee stock plans.....       --        --       11,537         --            --             --         11,537
  Sale of ordinary shares in public
    offering, net of offering costs.......   39,650       228    1,421,443         --            --             --      1,421,671
   Dividends paid to former shareholders..       --        --           --       (190)           --             --           (190)
  Amortization of deferred stock
    compensation..........................       --        --           --         --            --          5,084          5,084
  Issuance of equity instrument (Note 9)..       --        --      386,537         --            --             --        386,537
  Net loss................................       --        --           --   (446,019)           --             --       (446,019)
  Change in unrealized gain (loss) on
     available for sale securities........       --        --           --         --       (55,851)            --        (55,851)
  Foreign currency translation............       --        --           --         --       (55,382)            --        (55,382)
                                           --------   -------  -----------  ---------     ---------       --------    -----------
BALANCE AT MARCH 31, 2001.................  481,531   $ 2,871  $ 4,266,908  $(132,892)    $(106,526)      $     --    $ 4,030,361
                                           ========   =======  ===========  =========     =========       ========    ===========


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


                                       34
   36
                             FLEXTRONICS INTERNATIONAL LTD.

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (IN THOUSANDS)



                                                                                         YEARS ENDED MARCH 31,
                                                                                 -----------------------------------------
                                                                                   1999           2000            2001
                                                                                 ---------     -----------     -----------
                                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ...........................................................    $  51,003     $   158,568     $  (446,019)
Adjustments to reconcile net income (loss) to net cash provided
 by (used in) operating activities:
  Depreciation, amortization and impairment charges .........................      180,153         187,597         518,985
  Loss (gain) on sales of equipment .........................................         (427)          2,818          (1,382)
  Provision for doubtful accounts ...........................................        1,149          12,534           9,429
  Provision for inventories .................................................        7,624          32,345          33,634
  Equity in earnings of associated companies ................................       (2,529)         (1,591)            (79)
  In-process research and development .......................................        2,000              --              --
  Gain on sales of subsidiaries and long-term investments ...................          (67)           (365)             --
  Amortization of deferred stock compensation ...............................        2,247           4,049           5,084
  Non-cash charge from issuance of equity instrument ........................           --              --         286,537
  Minority interest expense and other non-cash unusual charges ..............       11,553          (2,414)        139,067
  Changes in operating assets and liabilities, net of acquisitions:
    Accounts receivable .....................................................     (180,873)       (444,306)       (581,225)
    Inventories .............................................................     (112,381)       (597,698)       (559,842)
    Other current assets ....................................................      (30,848)        (89,464)       (159,902)
    Other current liabilities, including accounts payable ...................      253,645         721,965         464,009
    Deferred revenue ........................................................          314          (2,292)          1,723
    Deferred income taxes ...................................................      (21,681)        (16,107)       (179,744)
                                                                                 ---------     -----------     -----------
         Net cash provided by (used in) operating activities ................      160,882         (34,361)       (469,725)
                                                                                 ---------     -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net of proceeds
     from sale of equipment .................................................     (322,185)       (462,398)       (711,227)
Purchases of OEM facilities and related assets ..............................     (104,900)       (249,755)       (239,042)
Proceeds from sales of subsidiaries and investments .........................           --          35,871          46,910
Other investments and notes receivable ......................................      (15,250)       (117,391)        (54,398)
Acquisitions of businesses, net of cash acquired ............................     (130,441)        (85,743)       (158,882)
Other .......................................................................          572              --              --
                                                                                 ---------     -----------     -----------
         Net cash used in investing activities ..............................     (572,204)       (879,416)     (1,116,639)
                                                                                 ---------     -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank borrowings and proceeds from long-term debt ............................      497,188         342,691       1,420,594
Repayments of bank borrowings and long-term debt ............................     (178,872)       (120,231)     (1,451,114)
Repayments of capital lease obligations .....................................      (19,337)        (40,930)        (31,788)
Dividends paid to former shareholders .......................................       (9,227)        (26,572)           (190)
Proceeds from exercise of stock options and Employee Stock
  Purchase Plan .............................................................       18,723          26,932          78,484
Net proceeds from issuance of common stock ..................................       23,621           9,804              --
Net proceeds from sale of ordinary shares in public offering ................      194,000       1,158,773       1,421,671
Proceeds from issuance of equity instrument .................................           --              --         100,000
Payments to acquire treasury stock ..........................................      (24,335)             --              --
Other .......................................................................           --           1,162              --
                                                                                 ---------     -----------     -----------
         Net cash provided by financing activities ..........................      501,761       1,351,629       1,537,657
                                                                                 ---------     -----------     -----------
Effect on cash from:
   Exchange rate changes ....................................................       (5,872)         (8,150)        (34,048)
   Adjustment to conform fiscal year of pooled entities .....................           --            (818)        (32,706)
                                                                                 ---------     -----------     -----------
Net increase (decrease) in cash and cash equivalents ........................       84,567         428,884        (115,461)
Cash and cash equivalents, beginning of year ................................      233,598         318,165         747,049
                                                                                 ---------     -----------     -----------
Cash and cash equivalents, end of year ......................................    $ 318,165     $   747,049     $   631,588
                                                                                 =========     ===========     ===========


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


                                       35
   37
                         FLEXTRONICS INTERNATIONAL LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

1. ORGANIZATION OF THE COMPANY

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

2. SUMMARY OF ACCOUNTING POLICIES

Principles of consolidation and basis of presentation

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

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

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

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

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


                                       36
   38



                                                         YEARS ENDED MARCH 31,
                                                      ---------------------------
                                                         1999            2000
                                                      -----------     -----------
                                                                
Net sales:
  Flextronics ....................................    $ 2,233,208     $ 4,307,193
  DII ............................................        925,543       1,339,943
  Lightning ......................................        124,795         269,258
  Chatham ........................................        206,736         376,997
  Palo Alto Products International ...............         95,519          95,458
  JIT ............................................        368,229         573,132
  Intercompany elimination .......................         (1,244)         (2,859)
                                                      -----------     -----------
  As restated ....................................    $ 3,952,786     $ 6,959,122
                                                      ===========     ===========
Net income (loss):
  Flextronics ....................................    $    60,883     $   120,915
  DII ............................................        (17,032)         58,382
  Lightning ......................................          5,051           3,461
  Chatham ........................................        (15,321)        (41,711)
  Palo Alto Products International ...............          4,949           2,148
  JIT ............................................         12,473          15,373
                                                      -----------     -----------
  As restated ....................................    $    51,003     $   158,568
                                                      ===========     ===========


Reclassifications

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

Translation of Foreign Currencies

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

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

Cash, Cash Equivalents and Investments

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

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


                                       37
   39
     Cash equivalents and short-term investments consist of the following (in
thousands):



                                                             MARCH 31, 2001
                                            --------------------------------------------------
                                                           GROSS         GROSS       ESTIMATED
                                            AMORTIZED    UNREALIZED   UNREALIZED       FAIR
                                               COST        GAINS        LOSSES         VALUE
                                            ---------    ----------   ----------     ---------
                                                                         
Money market funds ....................      $344,499      $   --        $ --        $344,499
Certificates of deposits ..............           272          --          --             272
Corporate debt securities .............         5,264          --          --           5,264
Corporate equity securities ...........         1,622       3,853          --           5,475
                                             --------      ------        ----        --------
                                             $351,657      $3,853        $ --        $355,510
                                             ========      ======        ====        ========
Included in cash and cash equivalents .      $350,035      $   --        $ --        $350,035
Included in other current assets ......         1,622       3,853          --           5,475
                                             --------      ------        ----        --------
                                             $351,657      $3,853        $ --        $355,510
                                             ========      ======        ====        ========




                                                          MARCH 31, 2000
                                          ----------------------------------------------
                                                         GROSS       GROSS     ESTIMATED
                                          AMORTIZED    UNREALIZED  UNREALIZED    FAIR
                                             COST        GAINS       LOSSES      VALUE
                                          ---------    ----------  ----------  ---------
                                                                   
Money market funds ....................    $236,342      $    --      $ --      $236,342
Certificates of deposits ..............      36,775           --        --        36,775
Corporate debt securities .............     282,781           --        --       282,781
Corporate equity securities ...........      19,660       59,704        --        79,364
                                           --------      -------      ----      --------
                                           $575,558      $59,704      $ --      $635,262
                                           ========      =======      ====      ========
Included in cash and cash equivalents .     555,898           --        --       555,898
Included in other current assets ......      19,660       59,704        --        79,364
                                           --------      -------      ----      --------
                                           $575,558      $59,704      $ --      $635,262
                                           ========      =======      ====      ========


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

Property, plant and equipment

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



                                                       2000            2001
                                                    -----------     -----------
                                                              
Machinery and equipment ........................    $   927,294     $ 1,209,422
Buildings ......................................        418,332         596,070
Leasehold improvements .........................         55,834         168,764
Computer equipment and software ................         74,412         167,115
Furniture, fixtures and vehicles ...............         79,397         216,818
Other, including land ..........................        119,677          88,901
                                                    -----------     -----------
                                                      1,674,946       2,447,090
Accumulated depreciation and amortization ......       (351,214)       (618,649)
                                                    -----------     -----------
Property, plant and equipment, net .............    $ 1,323,732     $ 1,828,441
                                                    ===========     ===========


Concentration of credit risk

     Financial instruments, which potentially subject the Company to
concentrations of credit risk, are primarily accounts receivable, cash
equivalents and investments. The Company performs ongoing credit evaluations of
its customers' financial condition and maintains an allowance for doubtful
accounts based on the outcome of its credit evaluations. The Company maintains
cash and cash equivalents with various financial institutions that management


                                       38
   40
believes to be of high credit quality. These financial institutions are located
in many different locations throughout the world.

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

Goodwill and other intangibles

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

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

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



                                                      2000          2001
                                                    --------     -----------
                                                           
Goodwill .......................................    $420,494     $ 1,060,712
Other intangibles ..............................      55,397          79,730
                                                    --------     -----------
                                                     475,891       1,140,442
Accumulated amortization .......................     (85,540)       (157,058)
                                                    --------     -----------
Goodwill and other intangibles, net ............    $390,351     $   983,384
                                                    ========     ===========


Long-lived assets

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

Use of estimates

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

Inventories

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


                                       39
   41



                                                        2000             2001
                                                     ----------       ----------
                                                                
Raw materials ................................       $  820,070       $1,346,427
Work-in-process ..............................          207,474          301,875
Finished goods ...............................          115,050          138,753
                                                     ----------       ----------
                                                     $1,142,594       $1,787,055
                                                     ==========       ==========


Other current liabilities

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



                                                              2000        2001
                                                            --------    --------
                                                                  
Income taxes payable ...................................    $ 26,108    $ 33,777
Accrued payroll ........................................     112,035     182,217
Sales taxes and other taxes payable ....................      19,600      20,797
Accrued expenses for unusual charges (see Note 9) ......         931     170,384
Other accrued liabilities ..............................     159,205     323,071
                                                            --------    --------
                                                            $317,879    $730,246
                                                            ========    ========


Revenue recognition

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

     The Company's net sales are comprised of product sales and service revenue
earned from engineering and design services. Revenue from product sales is
recognized upon shipment of the goods. Service revenue is recognized either at
the completion of the service or as the services are performed, depending on the
nature of the arrangement.

Interest and other expense, net

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



                                                             1999         2000          2001
                                                           --------     --------     ---------
                                                                            
Interest expense ......................................    $ 61,430     $ 84,198     $ 135,243
Interest income .......................................     (11,374)     (22,681)      (32,219)
Foreign exchange (gain) loss ..........................       3,543        2,128        (4,028)
Other (income) expense, net ...........................      (1,365)       6,267       (31,881)
                                                           --------     --------     ---------
          Total interest and other expense, net .......    $ 52,234     $ 69,912     $  67,115
                                                           ========     ========     =========


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.


                                       40
   42
     Earnings per share data were computed as follows for the years ended March
31 (in thousands, except per share amounts):



                                                                         1999        2000         2001
                                                                       --------    --------    ---------
                                                                                      
BASIC EARNINGS (LOSS) PER SHARE:
Net income (loss) .................................................    $ 51,003    $158,568    $(446,019)
                                                                       --------    --------    ---------
Shares used in computation:
   Weighted-average ordinary shares outstanding ...................     299,984     356,338      441,991
                                                                       ========    ========    =========
Basic earnings (loss) per share ...................................    $   0.17    $   0.44    $   (1.01)
                                                                       ========    ========    =========

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


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

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

New Accounting Pronouncements

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

3. SUPPLEMENTAL CASH FLOW DISCLOSURES

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



                                                                                1999       2000        2001
                                                                               -------    -------    --------
                                                                                            
Cash paid for:
  Interest ................................................................    $42,513    $78,293    $ 68,363
  Income taxes ............................................................     16,846     12,927      15,312
Non-cash investing and financing activities:
  Equipment acquired under capital lease obligations ......................     50,843     50,897      10,318
  Conversion of convertible notes to common stock .........................         --     85,074          --




                                       41
   43


                                                                                            
  Issuances of ordinary shares for purchases of OEM assets ................         --         --      26,902
  Issuances of ordinary shares for acquisitions of businesses .............      4,801         --     338,583


4. BANK BORROWINGS AND LONG-TERM DEBT

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

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

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

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

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

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

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

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


                                                      2000             2001
                                                   -----------      -----------
                                                              
Senior subordinated notes ....................     $   300,000      $   779,596
Credit facilities ............................         433,849               --
Outstanding under lines of credit ............         116,624          219,579



                                       42
   44

                                                              
Mortgages ....................................          23,550           43,340
Term loans and other debt ....................         207,580          135,062
                                                   -----------      -----------
                                                     1,081,603        1,177,577
          Current portion ....................        (487,773)        (298,052)
                                                   -----------      -----------
          Non-current portion ................     $   593,830      $   879,525
                                                   ===========      ===========


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


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


5. FINANCIAL INSTRUMENTS

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

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

6. COMMITMENTS AND CONTINGENCIES

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



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



                                       43
   45
    Total rent expense was $28.7 million, $50.7 million and $78.7 million for
the years ended March 31, 1999, 2000 and 2001, respectively.

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

7. INCOME TAXES

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



                                         1999        2000         2001
                                        -------    --------    ---------
                                                      
       Singapore ...................    $ 4,912    $ 32,377    $(269,771)
       Foreign .....................     34,457     149,271     (282,533)
                                        -------    --------    ---------
       Total .......................    $39,369    $181,648    $(552,304)
                                        =======    ========    =========


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



                                       1999          2000          2001
                                     --------     ---------     ---------
                                                       
      Current:
        Singapore ...............    $  2,828     $     839     $   6,607
        Foreign .................       7,755        35,406        27,170
                                     --------     ---------     ---------
                                       10,583        36,245        33,777
                                     --------     ---------     ---------
      Deferred:
        Singapore ...............         363         2,870        (2,206)
        Foreign .................     (22,580)      (16,035)     (137,856)
                                     --------     ---------     ---------
                                      (22,217)      (13,165)     (140,062)
                                     --------     ---------     ---------
                                     $(11,634)    $  23,080     $(106,285)
                                     ========     =========     =========


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



                                                                 1999         2000          2001
                                                               --------     --------     ---------
                                                                                
Income taxes based on Singapore statutory rates ...........    $ 10,236     $ 47,133     $(135,315)
Effect of tax rate differential ...........................     (19,220)     (41,984)     (138,105)
Tax exempt income .........................................        (549)        (866)       (8,790)
Amortization of goodwill and other intangibles ............       3,350        4,334        15,568
Motorola unusual charge ...................................          --           --        70,201
Merger expenses ...........................................          --           --        16,059
Facility closure costs ....................................          --           --        46,094
Change in valuation allowance .............................      (2,827)      15,993        26,848
Tax credits and carryforwards .............................      (1,166)      (4,800)           --
Other .....................................................      (1,458)       3,270         1,155
                                                               --------     --------     ---------
          Provision for (benefit from) income taxes .......    $(11,634)    $ 23,080     $(106,285)
                                                               ========     ========     =========


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



                                                                          2000          2001
                                                                       ---------     ---------
                                                                               
Deferred tax liabilities:
  Unremitted earnings of foreign subsidiaries .....................    $  (2,766)    $      --
  Intangible assets ...............................................      (10,604)       (6,665)
  Fixed assets ....................................................      (34,922)           --
  Others ..........................................................       (5,398)         (803)
                                                                       ---------     ---------
          Total deferred tax liabilities ..........................    $ (53,690)    $  (7,468)
                                                                       ---------     ---------


Deferred tax assets:


                                       44
   46


                                                                               
  Fixed assets ....................................................    $      --     $  15,855
  Deferred compensation ...........................................        6,057        43,147
  Compensated absences ............................................        1,164         3,210
  Provision for inventory obsolescence ............................       10,867        35,760
  Provision for doubtful accounts .................................        5,625         8,782
  Net operating loss carryforwards ................................       67,689       133,860
  Federal and state credits .......................................       11,857        11,414
  Uniform capitalization of inventory .............................        4,493         2,523
  Unusual charges .................................................           --            --
  Others ..........................................................       13,069        37,982
                                                                       ---------     ---------
          Total deferred tax assets ...............................      120,821       292,533
  Valuation allowances ............................................      (50,342)     (102,792)
                                                                       ---------     ---------
          Total deferred tax assets ...............................    $  70,479     $ 189,741
                                                                       ---------     ---------
   Net deferred tax asset .........................................    $  16,789     $ 182,273
                                                                       =========     =========
The net deferred tax asset is classified as follows:
  Current asset (classified as Other Current Assets) ..............    $  18,338     $  42,595
  Long-term asset (classified as Other Assets/Liabilities) ........       (1,549)      139,678
                                                                       ---------     ---------
                                                                       $  16,789     $ 182,273
                                                                       =========     =========


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

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

8. SHAREHOLDERS' EQUITY

Secondary offerings

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

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

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

Stock splits

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

Strategic Alliance


                                       45
   47
     On May 30, 2000, the Company entered into a strategic alliance for product
manufacturing with Motorola. This alliance provides incentives for Motorola to
purchase over $32.0 billion of products and services from us through December
31, 2005. The relationship is not exclusive and does not require that Motorola
purchase any specific volumes of products or services from the Company. The
Company's ability to achieve any of the anticipated benefits of this
relationship is subject to a number of risks, including its ability to provide
services on a competitive basis and to expand manufacturing resources, as well
as demand for Motorola's products. In connection with this strategic alliance,
Motorola paid $100.0 million for an equity instrument that entitles it to
acquire 22,000,000 Flextronics ordinary shares at any time through December 31,
2005 upon meeting targeted purchase levels or making additional payments to the
Company. The issuance of this equity instrument resulted in a one-time non-cash
charge equal to the excess of the fair value of the equity instrument issued
over the $100.0 million proceeds received. As a result, the one-time non-cash
charge amounted to approximately $286.5 million offset by a corresponding credit
to additional paid-in capital in the first quarter of fiscal 2001. During the
term of the strategic alliance, if Motorola meets targeted purchase levels, no
additional payments may be required by Motorola to acquire 22,000,000
Flextronics ordinary shares. However, there may be additional non-cash charges
of up to $300.0 million over the term of the strategic alliance. (See Note 14,
"Subsequent Events" for additional information on this equity instrument.)

Stock-based compensation

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

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

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

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



                                                        1999                   2000                   2001
                                                --------------------   --------------------  --------------------
                                                  OPTIONS      PRICE     OPTIONS      PRICE    OPTIONS      PRICE
                                                -----------   ------   -----------   ------  -----------   ------
                                                                                         
Outstanding, beginning of year ...........       28,281,584   $ 3.07    39,283,808   $ 4.25   44,853,772   $ 7.46
Granted ..................................       19,223,312     5.28    11,668,916    13.49   14,655,646    23.23
Exercised ................................       (5,481,928)    2.15    (4,990,596)    3.57  (11,404,613)    5.54
Forfeited ................................       (2,739,160)    4.11    (1,108,356)    6.30     (869,374)   23.98
                                                 ----------             ----------           -----------
Outstanding, end of year .................       39,283,808   $ 4.25    44,853,772   $ 7.46   47,235,431   $13.35
                                                 ==========             ==========           ===========
Exercisable, end of year .................       11,314,768             13,583,702            21,065,008
                                                 ==========             ==========           ===========
Weighted average fair value per option
  granted ................................      $      3.30            $      7.44           $     12.60
                                                 ==========             ==========           ===========


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


                                       46
   48



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


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

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

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


                                       47
   49



                                                         YEARS ENDED MARCH 31,
                                                   ---------------------------------
                                                     1999        2000         2001
                                                   --------    --------    ---------
                                                                  
Net income (loss):
  As reported .................................    $ 51,003    $158,568    $(446,019)
  Proforma ....................................      35,943     133,319     (596,494)
Basic earnings (loss) per share:
  As reported .................................    $   0.17    $   0.44    $   (1.01)
  Proforma ....................................        0.12        0.37        (1.35)
Diluted earnings (loss) per share:
  As reported .................................    $   0.17    $   0.42    $   (1.01)
  Proforma ....................................        0.12        0.35        (1.35)


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



                                                 YEARS ENDED MARCH 31,
                                            --------------------------------
                                            1999          2000          2001
                                            ----          ----          ----
                                                              
Volatility ..............................     58%           58%           62%
Risk-free interest rate range ...........    5.2%          6.2%          6.3%
Dividend yield ..........................      0%            0%            0%
Expected lives ..........................    3.5 yrs       3.5 yrs       3.6 yrs


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

Deferred Stock Compensation

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

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

9. UNUSUAL CHARGES

FISCAL 2001

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


                                       48
   50
    On May 30, 2000, the Company entered into a strategic alliance for product
manufacturing with Motorola. See Note 8, "Shareholders' Equity," for further
information concerning the strategic alliance. In connection with this strategic
alliance, Motorola paid $100.0 million for an equity instrument that entitles it
to acquire 22.0 million Flextronics ordinary shares at any time through December
31, 2005, upon meeting targeted purchase levels or making additional payments to
the Company. The issuance of this equity instrument resulted in a one-time
non-cash charge equal to the excess of the fair value of the equity instrument
issued over the $100.0 million proceeds received. As a result, the one-time
non-cash charge amounted to approximately $286.5 million offset by a
corresponding credit to additional paid-in capital in the first quarter of
fiscal 2001.

    In connection with the aforementioned mergers and facility closures, 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 are as follows (in thousands):



                                           FIRST      SECOND     THIRD     FOURTH
                                          QUARTER     QUARTER   QUARTER    QUARTER     TOTAL     NATURE OF
                                          CHARGES     CHARGES   CHARGES    CHARGES    CHARGES     CHARGES
                                          --------    -------  --------   ---------  ---------  -------------
                                                                              
Facility closure costs:
  Severance............................   $ 62,487    $ 5,677   $ 3,606   $  60,703  $ 132,473  cash
  Long-lived asset impairment..........     46,646     14,373    16,469     155,046    232,534  non-cash
  Exit costs...........................     24,201      5,650    19,703     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 facility closures, the Company developed formal plans
to exit certain activities and involuntarily terminate employees. Management's
plan to exit an activity included the identification of duplicate manufacturing
and administrative facilities for closure and the identification of
manufacturing and administrative facilities for consolidation into other
facilities. Management currently anticipates that the facility closures and
activities to which all of these charges relate will be substantially completed
within one year of the commitment dates of the respective exit plans, except for
certain long-term contractual obligations. The following table summarizes the
components of the facility closure costs and related activities in fiscal 2001:



                                                           LONG-LIVED
                                                              ASSET            EXIT
                                            SEVERANCE      IMPAIRMENT          COSTS            TOTAL
                                            ---------      -----------       ---------        ---------
                                                                                  
Balance at March 31, 2000 ...........       $     --        $      --        $      --        $      --
Activities during the year:
  First quarter provision ...........         62,487           46,646           24,201          133,334
  Cash charges ......................        (35,800)              --           (1,627)         (37,427)
  Non-cash charges ..................             --          (46,646)          (7,441)         (54,087)
                                            --------        ---------        ---------        ---------
Balance at June 30, 2000 ............         26,687               --           15,133           41,820
Activities during the year:
  Second quarter provision ..........          5,677           14,373            5,650           25,700
  Cash charges ......................         (4,002)              --           (4,231)          (8,233)
  Non-cash charges ..................             --          (14,373)          (8,074)         (22,447)
                                            --------        ---------        ---------        ---------
Balance at September 30, 2000 .......         28,362               --            8,478           36,840
Activities during the year:
  Third quarter provision ...........          3,606           16,469           19,703           39,778
  Cash charges ......................         (7,332)              --           (2,572)          (9,904)
  Non-cash charges ..................             --          (16,469)         (14,070)         (30,539)
                                            --------        ---------        ---------        ---------
Balance at December 31, 2000 ........         24,636               --           11,539           36,175
Activities during the year:



                                       49
   51


                                                                                  
  Fourth quarter provision ..........         60,703          155,046          169,818          385,567
  Cash charges ......................        (13,605)              --          (14,686)         (28,291)
  Non-cash charges ..................             --         (155,046)         (71,328)        (226,374)
                                            --------        ---------        ---------        ---------
Balance at March 31, 2001 ...........       $ 71,734        $      --        $  95,343        $ 167,077
                                            ========        =========        =========        =========


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

     The unusual pre-tax charges include $232.5 million for the write-down of
long-lived assets to fair value. This amount has been classified as a component
of Cost of Sales. Included in the long-lived asset impairment are charges of
$229.1 million, which relate to property, plant and equipment associated with
the various manufacturing and administrative facility closures which were
written down to their 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 includes the write-off of the remaining goodwill and other
intangibles related to certain closed facilities of $3.4 million.

     The unusual pre-tax charges also include approximately $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 $23.1 million of other exit
costs during fiscal 2001. Additionally, approximately $101.0 million of other
exit costs were non-cash charges utilized during fiscal 2001. The remaining
$95.3 million is classified in accrued liabilities as of March 31, 2001 and 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 include approximately $64.3 million of costs
primarily related to investment banking and financial advisory fees as well as
legal and accounting costs associated with the merger transactions. Other direct
transaction costs which totaled approximately $38.1 million were mainly
comprised of accelerated debt prepayment expense, accelerated executive stock
compensation and benefit-related expenses. The Company paid approximately $70.9
million of the direct transaction costs during fiscal 2001. Additionally,
approximately $28.2 million of the direct transaction costs were non-cash
charges utilized during fiscal 2001. The remaining $3.3 million is classified in
accrued liabilities as of March 31, 2001 and is expected to be substantially
paid out in the first quarter of fiscal 2002.

FISCAL 2000

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

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

FISCAL 1999

     During fiscal 1999, the Company recognized unusual pre-tax charges of $79.3
million, substantially all of which related to the operations of the Company's
wholly owned subsidiary, Orbit Semiconductor, Inc. ("Orbit").


                                       50
   52
     The Company decided to sell Orbit's 6-inch, 0.6 micron wafer fabrication
facility ("Fab") and adopt a fabless manufacturing strategy to complement
Orbit's design and engineering services. The charges were primarily due to the
impaired recoverability of inventories, intangible assets and fixed assets, and
other costs associated with the exit of semiconductor manufacturing. The Fab was
ultimately sold in January 2000.

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



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


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

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

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

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

     Additionally, based on an independent valuation of certain of the assets of
Advanced Component Labs ("ACL") and other factors, the Company determined that
the purchase price of ACL included in-process research and development costs
totaling $2.0 million which had not reached technological feasibility and had no
probable alternative future use. Accordingly, the Company wrote-off $2.0 million
of in-process research and development in fiscal 1999.

10. RELATED PARTY TRANSACTIONS

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


                                       51
   53
11. BUSINESS COMBINATIONS

FISCAL 2001

     Pooling of Interests Mergers

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

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

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

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

     DII and Lightning operated under a calendar year end prior to merging with
Flextronics and, accordingly, their respective balance sheets, statements of
operations, shareholders' equity and cash flows as of December 31, 1999 and for
each of the two years ended December 31, 1999 have been combined with the
Company's consolidated financial statements as of March 31, 2000 and for each of
the two fiscal years ended March 31, 2000. Chatham operated under a fiscal year
which ended on the Saturday closest to September 30 prior to merging with
Flextronics and, accordingly, Chatham's balance sheets, statements of
operations, shareholders' equity and cash flows as of September 24, 1999 and for
each of the two years ended September 24, 1999 have been combined with the
Company's consolidated financial statements as of March 31, 2000 and for each of
the two fiscal years ended March 31, 2000.

     Starting in fiscal 2001, DII, Lightning and Chatham changed their
respective year ends to conform to the Company's March 31 year end. Accordingly,
DII's and Lightning's operations for the three months ended March 31, 2000, and
Chatham's operations for the six months ended March 31, 2000, have been excluded
from the consolidated results of operations for fiscal 2001 and reported as an
adjustment to retained earnings. Total net sales related to the omitted periods
amounted to approximately $898.3 million.

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

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

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

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


                                       52
   54
Business Acquisitions

     In fiscal 2001, the Company completed several immaterial business
acquisitions. These transactions have been accounted for under the purchase
method of accounting and accordingly, the results of the acquired businesses
were included in the Company's consolidated statements of operations from the
acquisition dates forward. Comparative proforma information has not been
presented, as the results of the acquired operations were not material to the
Company's consolidated financial statements. In connection with these business
acquisitions, the Company paid total cash consideration of approximately $146.4
million, net of cash acquired, and issued approximately 9.8 million ordinary
shares, which equated to approximately $338.6 million of purchase price.

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

FISCAL 2000

Pooling of Interests Merger

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

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

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

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


                                       53
   55
Business Acquisitions

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

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

FISCAL 1999

Business Acquisitions

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

     The aggregate purchase price paid for these business acquisitions was
allocated to the net assets acquired based on their estimated fair values at the
dates of acquisitions. The fair value of the net assets acquired, amounted to
approximately $50.4 million, including estimated acquisition costs. The costs of
acquisitions have been allocated on the basis of estimated fair values of assets
acquired and liabilities assumed. Goodwill and intangibles resulting from these
acquisitions amounted to approximately $84.8 million. The respective goodwill
associated with these acquisitions is amortized over fifteen years.

12. SEGMENT REPORTING

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



                                                                          1999            2000             2001
                                                                      -----------     ------------     ------------
                                                                                              
Net Sales:
  Asia ...........................................................    $   898,304     $  1,588,665     $  2,467,629
  Americas .......................................................      1,875,677        2,936,441        5,466,547
  Western Europe .................................................        666,763        1,391,965        2,356,281
  Central Europe .................................................        572,289        1,132,242        2,147,788
  Intercompany eliminations ......................................        (60,247)         (90,191)        (328,546)
                                                                      -----------     ------------     ------------
                                                                      $ 3,952,786     $  6,959,122     $ 12,109,699
                                                                      ===========     ============     ============
Income (Loss) before Income Taxes:
  Asia ...........................................................    $    61,845     $    102,541     $     13,611
  Americas .......................................................        (52,774)          (4,149)        (319,420)
  Western Europe .................................................         12,803           23,833            7,740
  Central Europe .................................................         31,839           44,107           33,333
  Intercompany eliminations, corporate allocations and
     Motorola one-time non-cash charge (see Note 9) ..............        (14,344)          15,316         (287,568)
                                                                      -----------     ------------     ------------
                                                                      $    39,369     $    181,648     $   (552,304)
                                                                      ===========     ============     ============
Long-Lived Assets:



                                       54
   56


                                                                                              
  Asia ...........................................................    $   286,797     $    449,824     $    503,094
  Americas .......................................................        511,036          712,215          636,399
  Western Europe .................................................        240,759          275,935          371,064
  Central Europe .................................................        114,734          171,165          317,884
                                                                      -----------     ------------     ------------
                                                                      $ 1,153,326     $  1,609,139     $  1,828,441
                                                                      ===========     ============     ============
Depreciation and Amortization:*
  Asia ...........................................................    $    25,492     $     39,889     $     54,038
  Americas .......................................................         69,079           86,967          126,012
  Western Europe .................................................         18,933           42,534           56,667
  Central Europe .................................................         11,854           18,207           49,734
                                                                      -----------     ------------     ------------
                                                                      $   125,358     $    187,597     $    286,451
                                                                      ===========     ============     ============
Capital Expenditures:
  Asia ...........................................................    $    83,382     $    155,243     $    178,557
  Americas .......................................................        141,082          214,224          284,340
  Western Europe .................................................        127,471           52,396          125,072
  Central Europe .................................................         57,720           83,570          193,252
                                                                      -----------     ------------     ------------
                                                                      $   409,655     $    505,433     $    781,221
                                                                      ===========     ============     ============


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

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

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

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

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

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


13. QUARTERLY FINANCIAL DATA (UNAUDITED)

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



                                                  FISCAL YEAR ENDED                               FISCAL YEAR ENDED
                                                   MARCH 31, 2000                                   MARCH 31, 2001
                                  ----------------------------------------------  -------------------------------------------------
                                    FIRST       SECOND      THIRD       FOURTH       FIRST        SECOND      THIRD       FOURTH
                                  ----------  ----------  ----------  ----------  -----------   ----------  ----------  -----------
                                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                                                
Net sales ......................  $1,237,320  $1,525,366  $1,967,740  $2,228,696  $ 2,676,974   $3,078,998  $3,239,293  $ 3,114,434
Cost of sales ..................   1,112,493   1,383,783   1,797,643   2,041,323    2,470,408    2,829,406   2,964,034    2,864,048
Unusual charges ................          --          --          --       7,519       83,721       24,268      38,550      363,956
                                  ----------  ----------  ----------  ----------  -----------   ----------  ----------  -----------
   Gross profit (loss) .........     124,827     141,583     170,097     179,854      122,845      225,324     236,709     (113,570)
Selling, general and
  administrative ...............      67,996      73,733      86,534      91,689       94,918      107,931     113,736      113,524
Goodwill and intangibles
  amortization .................       9,754       8,787      10,735      12,050        9,370       12,505      15,141       26,525
Unusual charges ................          --       3,523          --          --      409,383       24,127       7,726       21,611
Interest and other expense
  (income), net ................      14,420      19,236      23,367      12,889       (4,199)      22,359      22,092       26,863
                                  ----------  ----------  ----------  ----------  -----------   ----------  ----------  -----------
   Income (loss) before
     income taxes ..............      32,657      36,304      49,461      63,226     (386,627)      58,402      78,014     (302,093)
Provision for (benefit from)
  income taxes .................       5,870       5,349       1,662      10,199      (16,065)       8,475      10,232     (108,927)
                                  ----------  ----------  ----------  ----------  -----------   ----------  ----------  -----------
   Net income (loss) ...........  $   26,787  $   30,955  $   47,799  $   53,027  $  (370,562)  $   49,927  $   67,782  $  (193,166)
                                  ==========  ==========  ==========  ==========  ===========   ==========  ==========  ===========



                                       55
   57

                                                                                                
Diluted earnings (loss)
  per share ....................  $     0.08  $     0.09  $     0.12  $     0.12  $     (0.88)  $     0.10  $     0.14  $     (0.41)
                                  ==========  ==========  ==========  ==========  ===========   ==========  ==========  ===========
Shares used in computing
  diluted per share amounts ....     359,213     360,465     384,017     427,521      418,857      480,801     478,657      468,069
                                  ==========  ==========  ==========  ==========  ===========   ==========  ==========  ===========


14. SUBSEQUENT EVENTS (UNAUDITED)

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

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

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

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

     None.

                                        PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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



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



                                       56
   58

                            
    Chuen Fah Alain Ahkong   52   Director
    Goh Thiam Poh Tommie     50   Director


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

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

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

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

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

    HUMPHREY PORTER - Mr. Porter has served as our President of Central and
Eastern European Operations since October 1997. From July 1994 to October 1997,
he served as President and Chief Executive Officer of Neutronics Electronics
Industries Holding AG, which we acquired in October 1997. Prior to joining
Neutronics, Mr. Porter served in various positions at Philips, including
Industrial Director for Philips Audio Austria from 1989 to 1994 and Managing
Director of the Philips Audio factory in Penang, Malaysia from 1984 to 1989. He
received his B.Sc. in Production Engineering from Trent University.

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

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

    RONALD R. SNYDER - Mr. Snyder has served as our President of Flextronics
Semiconductor since April 2000 following our acquisition of DII. From May 1998
to April 2000, he served as Senior Vice President of DII and


                                       57
   59
President of DII Semiconductor. From March 1994 to May 1998, Mr. Snyder served
as Senior Vice President of Sales and Marketing of DII. Prior to DII, he served
as President of Dovatron Manufacturing Colorado, a division of Dovatron
International, Inc. from March 1993 to March 1994.

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

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

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

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

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

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

    GOH THIAM POH TOMMIE -- Mr. Goh has been a member of our Board of Directors
since December 2000. He founded JIT Electronics Pte Ltd in 1988 and grew the
company to one of the top 20 largest electronics manufacturing services
providers in the world before the merger with Flextronics in November 2000. Mr
Goh was named "Entrepreneur of the Year" in 1997 and "Businessman of the Year"
in 1999 in Singapore. He was conferred the Doctor of Philosophy in Business
Administration by Wisconsin International University in 2000.

ITEM 11. EXECUTIVE COMPENSATION

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


                                       58
   60
                                 SUMMARY COMPENSATION TABLE



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


(1)    Represents a vehicle allowance.

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

(3)    Represents payment for a company vehicle.

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

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

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

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

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

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

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

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

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

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

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

OPTION GRANTS IN FISCAL 2001

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

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

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

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


                                       59
   61
         -    assuming that the aggregate option exercise price derived from the
              calculation compounds at the annual 5% or 10% rates should in the
              table for the entire five or ten year term of the option, as the
              case may be; and

         -    subtracting from that result the aggregate option exercise price.

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



                                              INDIVIDUAL GRANTS
                              -----------------------------------------------------   POTENTIAL REALIZE VALUE AT
                              NUMBER OF     PERCENT OF                                  ASSUMED ANNUAL RATES OF
                              SECURITIES   TOTAL OPTIONS                                STOCK PRICE APPRECIATED
                              UNDERLYING    GRANTED TO       EXERCISE                       FOR OPTION TERM
                                OPTIONS    EMPLOYEES IN      PRICE PER   EXPIRATION   ---------------------------
NAME                            GRANTED     FISCAL 2001        SHARE        DATE           5%              10%
----                          ----------   -------------     ---------   ----------   ------------    -----------
                                                                                   
Michael E. Marks...........       36,456        0.25%        $32.4375    04/07/2005    $   326,714    $   721,953
                               1,000,000        6.82          23.1875    12/20/2010     14,582,494     36,954,903
Michael McNamara...........      600,000        4.09          23.1875    12/20/2010      8,749,496     22,172,942
Robert R.B. Dykes..........      400,000        2.73          23.1875    12/20/2010      5,832,998     14,781,961
Humphrey Porter............      200,000        1.36          23.1875    12/20/2010      2,916,499      7,390,981
Ronny Nilsson..............      200,000        1.36          23.1875    12/20/2010      2,916,499      7,390,981


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

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

         In addition, the table includes the number of shares covered by both
exercisable and unexercisable stock options as of March 31, 2001. Also reported
are values of "in-the-money" options that represent the positive spread between
the respective exercise prices of outstanding stock options and $15.00 per
share, which was the closing price per ordinary share as reported on the Nasdaq
National Market on March 30, 2001, the last day of trading for fiscal 2001.
These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized.



                                                                 NUMBER OF SECURITIES
                                                                 UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED
                                 NUMBER OF                            OPTIONS AT            IN-THE-MONEY OPTIONS AT
                                  SHARES                            MARCH 31, 2001               MARCH 31, 2001
                                 ACQUIRED          VALUE        -----------------------    --------------------------
NAME                            ON EXERCISE       REALIZED       VESTED       UNVESTED       VESTED         UNVESTED
----                            -----------     -----------     ---------     ---------    -----------    -----------
                                                                                        
Michael E. Marks ..........        935,274      $25,047,854     2,866,039     2,804,167    $42,990,585    $27,062,505
Michael McNamara ..........        109,298        2,925,023     1,767,448     1,666,982     26,511,720     16,004,730
Robert R.B. Dykes .........        377,166       10,721,962     1,131,002       775,832     16,965,030      5,637,480
Humphrey Porter ...........        231,997        8,934,592       183,670       678,333      2,755,050      7,174,995
Ronny Nilsson .............             --               --       900,000            --     10,500,000             --


EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

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

         Pursuant to the Employment Agreement, Mr. Nilsson:

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


                                       60
   62
      -    is entitled to receive an annual salary of $250,000; and

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

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

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

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

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

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

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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

DIRECTOR COMPENSATION

      Each individual who first becomes a non-employee Board member is granted a
stock option to subscribe for 15,000 ordinary shares. After this initial grant,
on the date of each Annual General Meeting, each individual who is at that time
serving as a non-employee director receives a stock option to subscribe for
3,000 ordinary shares, all pursuant to the automatic option grant provisions of
our 1993 Share Option Plan. Pursuant to this program, Messrs. Ahkong, Moritz,
Sharp, Foley and Tsui each received option grants for 3,000 ordinary shares in
fiscal 2001.

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

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

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

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

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


                                       61

   63
         -    each director;

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

         -    all directors and executive officers as a group.

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

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

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



                                                                 SHARES BENEFICIALLY OWNED
                                                                 -------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER                             NUMBER OF SHARES  PERCENT
------------------------------------                             ----------------  -------
                                                                             
5% SHAREHOLDERS:
Entities associated with AXA Financial, Inc.(1)...............       45,279,073      9.4%
   1290 Avenue of the Americas
   New York, NY 10104
T. Rowe Price Associates, Inc.(2).............................       26,521,115      5.5
   100 E. Pratt Street
   Baltimore, MD 21202
Entitles associated with FMR Corporation(3)...................       24,634,204      5.1
   82 Devonshire Street
   Boston, MA 02109
EXECUTIVE OFFICERS AND DIRECTORS:
Richard L. Sharp(4)...........................................        6,062,202      1.3
Goh Thiam Poh Tommie..........................................        5,573,114      1.2
Michael E. Marks(5)...........................................        5,285,777      1.1
Michael McNamara(6)...........................................        2,641,700      *
Robert R.B. Dykes(7)..........................................        1,606,407      *
Michael J. Moritz(8)..........................................          455,682      *
Ronny Nilsson(9)..............................................          390,000      *
Tsui Sung Lam(10).............................................          313,946      *
Humphrey Porter(11)...........................................          272,003      *
Patrick Foley(12).............................................          208,250      *
Chuen Fah Alain Ahkong(13)....................................           28,250      *
                                                                     ----------     ----
All 16 directors and executive officers as a group(14)........       25,986,948      5.3%
                                                                     ==========     ====


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

*    Less than 1%.

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

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


                                       62
   64
(3)  Based on information supplied by FMR Corporation in an amended Schedule 13G
     filed with the Securities and Exchange Commission on February 13, 2001.

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

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

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

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

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

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

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

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

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

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

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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

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

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

LOANS TO EXECUTIVE OFFICERS

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


                                       63
   65
         Mr. McNamara. On October 22, 1996, Flextronics USA loaned $135,900 to
Mr. Michael McNamara. Mr. McNamara executed a promissory note in favor of
Flextronics USA that bears interest at a rate of 7.00% and matures on October
22, 2001. The remaining outstanding balance of the loan as of March 31, 2001 was
$179,464 (representing $135,900 in principal and $43,564 in accrued interest).

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

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

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

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

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

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

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

OTHER LOANS TO EXECUTIVE OFFICERS

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

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

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

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


                                       64
   66

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

                                     PART IV

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

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

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

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

          Schedule II -- Valuation and qualifying accounts

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



                                                                               INCORPORATED BY REFERENCE
                                                                     ---------------------------------------------------
 EXHIBIT                                                                                            FILING       EXHIBIT    FILED
   NO.                             EXHIBIT                           FORM         FILE NO.           DATE          NO.    HEREWITH
 -------                           -------                           ----         --------          ------       -------  --------
                                                                                                        
   2.01     Exchange Agreement dated as of June 11, 1999 among       10-K         000-23354        06-29-99        2.3
            the Registrant, Flextronics Holding Finland Oyj,
            Kyrel EMS Oyj, and Seppo Parhankangas

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

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

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

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

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

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

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



                                       65
   67



                                                                               INCORPORATED BY REFERENCE
                                                                     ---------------------------------------------------
 EXHIBIT                                                                                            FILING       EXHIBIT    FILED
   NO.                             EXHIBIT                           FORM         FILE NO.           DATE          NO.    HEREWITH
 -------                           -------                           ----         --------          ------       -------  --------
                                                                                                        
   4.02     U.S. Dollar Indenture dated June 29, 2000 between the    10-Q         000-23354        08-14-00        4.1
            Registrant and Chase Manhattan Bank and Trust
            Company, N.A., as trustee.

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

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

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

   4.06     Amendment, dated as of June 15, 2001, to the             10-Q         000-23354        11-14-01       10.01
            Flextronics USA Credit Agreement.*

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

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

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

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

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

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

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

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

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

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

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

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

  21.01     Subsidiaries of Registrant                                                                                        X

  23.01     Consent of Arthur Andersen LLP                                                                                    X

  23.02     Consent of Deloitte & Touche LLP                                                                                  X



                                       66
   68

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


+    Management contract, compensatory plan or arrangement.

(b)  Reports on Form 8-K:

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

     On February 1, 2001 we filed a current report on Form 8-K relating to (i)
     our underwritten public offering of 27,000,000 of our ordinary shares, all
     of which were sold by us, at a public offering price of $37.9375 per share
     and (ii) our announcement that we had entered into a non-binding memorandum
     of understanding with Ericsson in which we were selected to manage the
     operations of Ericsson's mobile phone business. This Form 8-K was amended
     on February 8, 2001 to file the underwriting agreement relating to our
     underwritten public offering.




                                       67
   69
                                   SIGNATURES

      Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereto duly authorized.

Date: June 29, 2001                           FLEXTRONICS INTERNATIONAL LTD.



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

                                POWER OF ATTORNEY

      KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Michael E. Marks
and Robert R.B. Dykes and each one of them, his attorneys-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any and all
amendments to this Report (including any and all amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitutes, may do or cause to be done
by virtue hereof.

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



                       SIGNATURE                                         TITLE                              DATE
                       ---------                                         -----                              ----
                                                                                                  
               /s/ MICHAEL E. MARKS                      Chief Executive Officer                        June 29, 2001
-----------------------------------------------------    and Chairman of the Board
                   Michael E. Marks                      (Principal Executive Officer)

               /s/ ROBERT R.B. DYKES                     President, Systems Group                       June 29, 2001
-----------------------------------------------------    and Chief Financial Officer
                   Robert R.B. Dykes                     (Principal Financial Officer)

                /s/ THOMAS J. SMACH                      Vice President, Finance                        June 29, 2001
-----------------------------------------------------    (Principal Accounting Officer)
                    Thomas J. Smach

                 /s/ TSUI SUNG LAM                       Director                                       June 29, 2001
-----------------------------------------------------
                     Tsui Sung Lam

               /s/ MICHAEL J. MORITZ                     Director                                       June 29, 2001
-----------------------------------------------------
                   Michael J. Moritz

               /s/ RICHARD L. SHARP                      Director                                       June 29, 2001
-----------------------------------------------------
                   Richard L. Sharp

                 /s/ PATRICK FOLEY                       Director                                       June 29, 2001
-----------------------------------------------------
                     Patrick Foley

            /s/ CHUEN FAH ALAIN AHKONG                   Director                                       June 29, 2001
-----------------------------------------------------
                Chuen Fah Alain Ahkong

             /s/ GOH THIAM POH TOMMIE                    Director                                       June 29, 2001
-----------------------------------------------------
                 Goh Thiam Poh Tommie



                                       68
   70

                        Valuation and Qualifying Accounts
                                   Schedule II


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




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




   71

                                  EXHIBIT INDEX



                                                                               INCORPORATED BY REFERENCE
                                                                     ---------------------------------------------------
 EXHIBIT                                                                                            FILING       EXHIBIT    FILED
   NO.                             EXHIBIT                           FORM         FILE NO.           DATE          NO.    HEREWITH
 -------                           -------                           ----         --------          ------       -------  --------
                                                                                                        
   2.01     Exchange Agreement dated as of June 11, 1999 among       10-K         000-23354        06-29-99        2.3
            the Registrant, Flextronics Holding Finland Oyj,
            Kyrel EMS Oyj, and Seppo Parhankangas

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

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

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

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

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

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

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



   72



                                                                               INCORPORATED BY REFERENCE
                                                                     ---------------------------------------------------
 EXHIBIT                                                                                            FILING       EXHIBIT    FILED
   NO.                             EXHIBIT                           FORM         FILE NO.           DATE          NO.    HEREWITH
 -------                           -------                           ----         --------          ------       -------  --------
                                                                                                        
   4.02     U.S. Dollar Indenture dated June 29, 2000 between the    10-Q         000-23354        08-14-00        4.1
            Registrant and Chase Manhattan Bank and Trust
            Company, N.A., as trustee.

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

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

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

   4.06     Amendment, dated as of June 15, 2001, to the             10-Q         000-23354        11-14-01       10.01
            Flextronics USA Credit Agreement.*

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

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

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

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

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

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

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

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

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

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

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

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

  21.01     Subsidiaries of Registrant                                                                                        X

  23.01     Consent of Arthur Andersen LLP                                                                                    X

  23.02     Consent of Deloitte & Touche LLP                                                                                  X



   73

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


+    Management contract, compensatory plan or arrangement.