SANMINA CORP/DE - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
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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 SEPTEMBER 29, 2001

OR

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 0-21272

SANMINA-SCI CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 77-0228183
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

2700 NORTH FIRST STREET, SAN JOSE, CA 95134
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 964-3500
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)

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.

The aggregate value of voting stock held by non-affiliates of the
Registrant was approximately $4,256,825,124 as of September 29, 2001, based upon
the average of the high and low prices of the Registrant's Common Stock reported
for such date on the Nasdaq National Market. Shares of Common Stock held by each
executive officer and director and by each person who owns 10% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. The determination of affiliate status is not necessarily a
conclusive determination for other purposes. As of September 29, 2001, the
Registrant had outstanding 318,819,000 shares of Common Stock.
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DOCUMENTS INCORPORATED BY REFERENCE

Certain information is incorporated into Part III of this report by
reference to the Proxy Statement for the Registrant's 2002 annual meeting of
stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered
by this Form 10-K.
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SANMINA-SCI CORPORATION

INDEX

1

PART I

ITEM 1. BUSINESS

Sanmina-SCI Corporation ("Sanmina-SCI") is a leading independent provider
of customized integrated electronic manufacturing services, known as EMS,
including turnkey electronic assembly and manufacturing management services, to
original equipment manufacturers, or OEMs, in the electronics industry. Our
electronics manufacturing services consist primarily of the design and
manufacture of complex printed circuit board assemblies using surface mount and
pin-through-hole interconnection technologies, the manufacture of custom
designed backplane assemblies, fabrication of complex multi-layered printed
circuit boards, the manufacture of custom cables and wire harness assemblies,
the manufacture of optoelectronic assemblies and custom fiber optic cables, the
manufacture of electronic enclosure systems that house large electronic systems
and subsystems, testing and assembly of completed systems, and global order
fulfillment. In addition to the services above, turnkey manufacturing management
also involves procurement and materials management, as well as engineering
consultation on printed circuit board design, signal integrity analysis,
reliability testing, product homologation services, and manufacturing processes.
As a result of these services, Sanmina-SCI can offer an end to end total EMS
solution to its customers.

Surface mount and pin-through-hole printed circuit board assemblies are
printed circuit boards on which various electronic components, such as
integrated circuits, capacitors, microprocessors and resistors, are mounted.
These assemblies are key functional elements of many types of electronic
products. Backplane assemblies are large printed circuit boards on which
connectors are mounted to interconnect other printed circuit boards, integrated
circuits and other electronic components. Optoelectronic assemblies are
typically printed circuit assemblies employing fiber optic module integration,
including fusion splicing of functional optical signal processing modules.
Interconnect products manufactured by Sanmina-SCI generally require greater
manufacturing expertise and have shorter delivery cycles than mass produced
interconnect products, and therefore, typically have higher profit margins.

Our customers include leading OEMs in the communications, high-speed
computer systems, medical and industrial instrumentation, multimedia
entertainment and personal computers. Our principal customers on a combined
basis include Alcatel, Cisco Systems, Compaq, Dell Computer, Ericsson, Hewlett
Packard, Houston Tracker, Nokia, Nortel Networks, Phillips and Tellabs.

We locate our manufacturing facilities near our customers and,
increasingly, our customers' end users. On a combined basis, Sanmina-SCI
manufactures its products in 107 decentralized plants, consisting of 71
electronics assembly facilities, 9 printed circuit board fabrication facilities,
3 cable assembly facilities, 23 enclosure assembly facilities and 1 other
manufacturing facility. Sanmina-SCI has electronics assembly, printed circuit
fabrication, enclosure manufacturing, cable manufacturing and global technology
solution centers domestically in Alabama, Arizona, California, Colorado,
Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York,
North Carolina, South Dakota, Texas, Utah, Virginia and Wisconsin, and
internationally in Australia, Belgium, Brazil, Canada, China, Finland, France,
Hungary, Israel, Ireland, Malaysia, Mexico, The Netherlands, Singapore, Spain,
Sweden, Thailand and the United Kingdom. In addition to these facilities,
Sanmina-SCI has a 49.9% ownership interest in INBOARD, the remainder of which is
owned by Siemens AG. INBOARD is a manufacturer of complex printed circuit boards
and is located in Germany.

We have pursued and intend to continue to pursue business acquisition
opportunities, particularly when these opportunities have the potential to
enable us to increase our net sales while maintaining operating margins, to
access new customers, technologies or geographic markets, to implement our end
to end total manufacturing solution strategy or to increase capacity and obtain
facilities and equipment. In particular, we expect that we will continue to
pursue opportunities to acquire assembly operations being divested by
electronics industry OEMs, particularly those in the communications sector and
other principal technology sectors served by Sanmina-SCI.

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RECENT DEVELOPMENTS

In December 2001, SCI Systems, Inc. merged with a wholly-owned subsidiary
of Sanmina Corporation and following the transaction, SCI is a wholly owned
subsidiary of Sanmina-SCI. Under the terms of the merger, SCI stockholders
received 1.36 shares of Sanmina common stock for each share of SCI. In
connection with the merger, Sanmina changed its corporate name to Sanmina-SCI
Corporation and three former members of SCI's board of directors joined the
board of directors of Sanmina-SCI.

In October 2001, Sanmina-SCI purchased certain assets of Electro Mechanical
Solutions ("E-M-Solutions"). This transaction includes the purchase of certain
manufacturing operations in the United States, as well as the stock of
E-M-Solutions' subsidiaries incorporated in Mexico and Northern Ireland. The
cash purchase price for this transaction was $110.65 million, $20 million of
which is subject to reduction based on a post-closing audit of E-M-Solutions'
balance sheet.

In September 2001, pursuant to an asset purchase agreement and related
agreements with International Business Machines Corporation, or IBM, and IBM
Japan Limited, or IBM Japan, SCI acquired IBM's design and product testing and
engineering and EMS operations based in Yasu, Japan. The cash purchase price for
this transaction was $90 million.

In connection with the acquisition, an SCI subsidiary, AET Holdings,
Limited, or AET, and IBM entered into two five year supply agreements under
which AET will provide to IBM card design and product testing and engineering
services, fulfillment and manufacturing coordination, and EMS services for
products developed by IBM's Storage Technology and Personal Computer Divisions,
including mobile computing products. The products to be supplied by AET include
certain electronic cards for IBM's notebook personal computers and storage
devices. AET will design and coordinate the manufacture of electronic cards for
IBM as an IBM preferred supplier, but is required to remain competitive under
terms described in the supply agreements, which relate primarily to market terms
for price, delivery and quality of product.

As part of the acquisition, another subsidiary of SCI, SCI Japan
Technologies, Ltd., or SCI Japan, also agreed to use certain employees of IBM
Japan under employment arrangements which may last two or three years. During
that period, SCI Japan may retain certain employees of IBM Japan. The companies
also entered into other transition service arrangements. SCI is actively
pursuing similar transactions, and may enter into similar arrangements as other
manufacturers outsource component manufacturing..

In August 2001, SCI entered into an asset purchase agreement with Nortel
Networks, Ltd. and Nortel Networks, U.K., Ltd. for the purchase of certain of
their assets located in St. Laurent, Quebec and Monkstown, Northern Ireland. The
St. Laurent transaction closed in September 2001 and the Monkstown transaction
closed in November 2001. The cash purchase price for these transactions was
approximately $124 million.

In August 2001, SCI and Nokia UK Ltd entered into an asset purchase
agreement providing for SCI's acquisition of Nokia UK Ltd's Camberley, U.K. test
and repair center. At closing, SCI and Nokia entered into a multi-year repair
service agreement and other related agreements. Under the repair service
agreement, SCI will provide wireless diagnostics; testing and repair services to
Nokia for its mobile communication base station products located in Europe, the
Middle East and Africa. The cash purchase price for this transaction was
approximately $97 million.

In June 2001, SCI and Nortel Networks, Inc. entered into an asset purchase
agreement providing for SCI's purchase of manufacturing equipment and inventory
located at Nortel Network's Boston, Massachusetts systems house. This
transaction closed on August 3, 2001, at which time SCI and Nortel Networks
entered into a multi-year supply agreement under which SCI will manufacture
products for Nortel Networks. The final cash purchase price is contingent on
achieving certain revenue levels but will not exceed $4 million.

INDUSTRY OVERVIEW

We are benefiting from increased market acceptance of the use of
manufacturing specialists in the electronics industry. Many electronics OEMs
have adopted, and are becoming increasingly reliant upon,

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manufacturing outsourcing strategies, and we believe the trend towards
outsourcing manufacturing will continue. Electronics industry OEMs use EMS
specialists for many reasons including the following:

- Reduce Time to Market. Due to intense competitive pressures in the
electronics industry, OEMs are faced with increasingly shorter product
life cycles and, therefore, have a growing need to reduce the time
required to bring a product to market. OEMs can reduce their time to
market by using a manufacturing specialist's established manufacturing
expertise, global presence and infrastructure.

- Reduce Capital Investment. As electronic products have become more
technologically advanced, the manufacturing process has become
increasingly automated, requiring a greater level of investment in
capital equipment. Manufacturing specialists enable OEMs to gain access
to advanced manufacturing facilities, thereby reducing the OEMs' overall
capital equipment requirements.

- Focus Resources. Because the electronics industry is experiencing
greater levels of competition and more rapid technological change, many
OEMs are increasingly seeking to focus their resources on activities and
technologies in which they add the greatest value. By offering
comprehensive electronic assembly and turnkey manufacturing services,
manufacturing specialists allow OEMs to focus on core technologies and
activities such as product development, marketing and distribution.
Comprehensive design services from semiconductor design through New
Product Introduction (NPI) of complete functional product prototypes is
becoming a routine customer need and EMS companies have added significant
internal resources during 2001 to serve this new demand.

- Access Leading Manufacturing Technology. Electronic products and
electronics manufacturing technology have become increasingly
sophisticated and complex, making it difficult for OEMs to maintain the
necessary technological expertise in process development and control.
OEMs are motivated to work with a manufacturing specialist in order to
gain access to the specialist's process expertise and manufacturing
knowledge.

- Improve Inventory Management and Purchasing Power. Electronics industry
OEMs are faced with increasing difficulties in planning, procuring and
managing their inventories efficiently due to frequent design changes,
short product lifecycles, large investments in electronic components,
component price fluctuations and the need to achieve economies of scale
in materials procurement. By using a manufacturing specialist's volume
procurement capabilities and expertise in inventory management, OEMs can
reduce production and inventory costs.

- Access Worldwide Manufacturing Capabilities. OEMs are increasing their
international activities in an effort to lower costs and access foreign
markets. Manufacturing specialists with worldwide capabilities are able
to offer such OEMs a variety of options on manufacturing locations to
better address their objectives regarding cost, shipment location,
frequency of interaction with manufacturing specialists and local content
requirements of end-market countries.

SANMINA-SCI BUSINESS STRATEGY

Our objective is to provide OEMs with a total EMS solution. Our strategy
encompasses several key elements:

- Concentrate on high value added products and services for leading
OEMs. We focus on leading manufacturers of advanced electronic products
that generally require custom designed, more complex interconnect
products and short lead-time manufacturing services. By focusing on
complex interconnect products and manufacturing services for leading
OEMs, we are able to realize higher margins than many other participants
in the interconnect and EMS industries.

- Leverage vertical integration. Building on our integrated manufacturing
capabilities, we can provide our customers with a broad range of high
value added manufacturing services from design to fabrication of bare
printed circuit boards, to final system assembly and test. The cable
assembly capabilities of Sanmina-SCI provide us with further
opportunities to leverage our vertical integration. By manufacturing
printed circuit boards, electronic enclosure systems, and custom cable
assemblies

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used in our EMS assemblies, we, through our vertical integration, are
able to add greater value and realize additional manufacturing margin. In
addition, our vertical integration provides greater control over quality,
delivery and cost, and enables us to offer our customers a complete EMS
solution.

- Focus on high growth customer sectors. We have focused our marketing
efforts on key, fast growing industry sectors. Our customers include
leading OEM companies in communications, industrial and medical
instrumentation and computer sectors. Sales efforts will focus on
increasing penetration of our existing customer base as well as
attracting new customers, thus diversifying our revenue across a wider
base.

- Geographic expansion of manufacturing facilities. Since 1993, we have
significantly expanded and upgraded our operations through the opening of
and acquisition of new facilities and operations in various locations
throughout the United States, including Northern California, Southern
California, the Dallas-Fort Worth area, the greater Boston area, the
greater Chicago area and other locations. Internationally, we have
established operations in Canada, China, France, Germany, Ireland,
Mexico, Sweden and Finland. With the acquisition of Segerstrom, we have
added facilities in Brazil, Hungary, Scotland and additional facilities
in Sweden, Finland and the Atlanta, Georgia area. As a result of our
merger with SCI, Sanmina-SCI will have a manufacturing presence in over
20 countries. These facilities provide us with operations in key
geographic markets for the electronics industry. We will continue to
aggressively and opportunistically pursue future expansion opportunities
in other markets.

- Aggressive pursuit of acquisition opportunities. Our strategy involves
the pursuit of business acquisition opportunities, particularly when
these opportunities have the potential to enable us to increase our net
sales while maintaining operating margin, access new customers,
technologies and geographic markets, implement our vertical integration
strategy and obtain facilities and equipment on terms more favorable than
those generally available in the market. These acquisitions have involved
both acquisitions of entire companies as well as acquisitions of selected
assets, principally equipment, inventory and customer contracts and, in
certain cases, facilities or facility leases. We intend to continue to
evaluate and pursue acquisition opportunities on an ongoing basis.

- Develop long-term customer relationships. We seek to establish
"partnerships" with our customers by focusing on early stage involvement
in product design, state-of-the-art technology, quick-turnaround
manufacturing and comprehensive management support for materials and
inventory. We also work closely with our customers to help them manage
their manufacturing cycle and reduce their time to market. While we will
continue to emphasize growth with our current customers, we have been
successful in attracting new customers. To further these efforts, we
intend to continue to expand our direct sales and support staff. We
believe our direct sales force and support staff are two of our key
competitive advantages.

- Extend technology leadership. Today we can provide a total EMS solution
with services ranging from design services to fabrication of circuit
boards and complete system assemblies. In providing these services, we
use a variety of processes and technologies. We strive for continuous
improvement of our processes and have adopted a number of quality
improvement and measurement techniques to monitor our performance. We
have also recently made significant capital expenditures to upgrade plant
and equipment at our facilities. We intend to stay on the leading edge of
technology development and will evaluate new interconnect and packaging
technologies as they emerge.

CUSTOMERS, MARKETING AND SALES

Our customers include a diversified base of OEMs in the communications,
high-speed computer systems, medical and industrial instrumentation, multimedia
entertainment and personal computers segments of the electronics industry. Our
principal customers on a combined basis include Alcatel, Cisco Systems, Compaq,
Dell Computer, Ericsson, Hewlett Packard, Houston Tracker, Nokia, Nortel
Networks, Phillips and Tellabs.

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The following table shows the approximate percentage, on a combined basis, for
Sanmina-SCI, for our fiscal 2001 sales in each of these industry sectors.

Communications.............................................. 45%
Personal computers.......................................... 22%
High-Speed Computer Systems................................. 17%
Medical and Industrial Instrumentation...................... 9%
Multimedia entertainment.................................... 7%

We develop relationships with our customers and market our manufacturing
services through a direct sales force augmented by a network of manufacturers'
representative firms and a staff of in-house customer support specialists. Our
sales resources are directed at multiple management and staff levels within
target accounts. Our direct sales personnel work closely with the customers'
engineering and technical personnel to better understand their requirements. Our
manufacturers' representatives are managed by our direct sales personnel, rather
than from corporate headquarters, in order to provide for greater accountability
and responsiveness. We also conduct advertising and public relations activities,
as well as receiving referrals from current customers.

Historically, we have had substantial recurring sales from existing
customers. We have also expanded our customer base through acquisitions and
organic growth. In particular, the acquisition of the Alabama operations of
Comptronix Corporation and certain assets of the former custom manufacturing
services division of Lucent Technologies provided us with several new key
customer accounts with significant growth potential. In addition, the November
1997 acquisition of Elexsys International Inc., the November 1998 acquisition of
Altron Incorporated, the December 1998 acquisition of Telo Electronics, Inc.,
and the March 1999 acquisition of Manu-Tronics, Inc. provided us with several
major new customer accounts. Our October and November 1999 acquisitions of
certain Nortel Networks assembly operations have expanded our customer
relationship with Nortel Networks. This relationship was enhanced by our
acquisition of a Nortel Networks design engineering group in August 2000. Our
recent transactions with Alcatel, Harris and Lucent will provide us with the
opportunity to significantly expand our relationship with these customers. Our
acquisitions of Hadco Corporation and Essex AB and our acquisition of EMS
operations in China enabled us to broaden our customer base as well our
geographic base. Our acquisition of Segerstrom has further expanded our global
footprint as well as our enclosure systems and full system build capabilities,
further strengthening our industry leading position in providing our customers
with a total manufacturing solution. Our merger with SCI has resulted in the
creation of a leading global EMS company serving major electronics industry
markets with a full range of manufacturing and related services in key domestic
and international technology centers.

Although we seek to diversify our customer base, a small number of
customers are responsible for a significant portion of our net sales. Prior to
the merger and during fiscal 2001, 2000, and 1999, sales to Sanmina-SCI's ten
largest customers accounted for 51.1%, 54.8% and 48.1%, respectively, of
Sanmina-SCI's net sales. On a combined basis, for fiscal year 2001, the ten
largest customers would have accounted for 55.3%, of Sanmina-SCI's net sales.
Prior to the merger and for fiscal 2001, no single customer individually
exceeded 10.0% of Sanmina-SCI's net sales. For fiscal 2000, sales to one
customer, Nortel Networks, represented more than 10.0% of Sanmina-SCI's net
sales. For fiscal year 1999, no single customer individually exceeded 10.0% of
Sanmina-SCI's net sales.

Although we cannot assure you that our principal customers will continue to
purchase products and services from us at current levels, if at all, we expect
to continue to depend upon our principal customers for a significant portion of
our net sales. Our customer concentration could increase or decrease, depending
on future customer requirements, which will be dependent in large part on market
conditions in the electronics industry segments in which our customers
participate. The loss of one or more major customers, or declines in sales to
major customers, could harm our business and operating results.

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MANUFACTURING SERVICES

We specialize in manufacturing complex printed circuit board assemblies,
backplane assemblies and printed circuit boards that are used in the manufacture
of sophisticated electronic equipment. We began manufacturing backplane
assemblies in 1981 and began providing electronic assembly and turnkey
manufacturing management services, including the assembly and testing of
sophisticated electronic systems, in October 1993.

We seek to establish "partnerships" with our customers by providing a
responsive, flexible total manufacturing services solution. These services
include computer integrated manufacturing, known as CIM, and design and
engineering services, quick-turnaround NPI manufacturing of prototype and
preproduction assemblies, and materials procurement and management. CIM services
provided by us consist of developing manufacturing processes, tooling and test
sequences for new products from customer designs. We also evaluate customer
designs for manufacturability and test, and, when appropriate, recommend design
changes to reduce manufacturing cost or lead times or to increase manufacturing
yields and the quality of the finished product. Once engineering is completed,
we manufacture prototype or preproduction versions of that product on a
quick-turnaround basis. We expect that the demand for engineering and
quick-turnaround prototype and preproduction manufacturing services will
increase as OEMs' products become more complex and as product life cycles
shorten. Materials procurement and handling services provided by us include
planning, purchasing, warehousing and financing of electronic components and
enclosures used in the assemblies and systems.

MANUFACTURING AND ENGINEERING

Manufacturing Processes. We produce complex, technologically advanced
surface mount and pin-through-hole assemblies, backplane assemblies and
multi-layer printed circuit boards, custom cable assemblies, enclosures and full
systems that meet increasingly tight tolerances and specifications demanded by
OEMs. Multi-layering, which involves placing multiple layers of electrical
circuitry on a single printed circuit board or backplane, expands the number of
circuits and components that can be contained on the interconnect product and
increases the operating speed of the system by reducing the distance that
electrical signals must travel. Increasing the density of the circuitry in each
layer is accomplished by reducing the width of the circuit tracks and placing
them closer together on the printed circuit board or backplane. Today, we are
capable of efficiently producing commercial quantities of printed circuit boards
with up to 60 layers and circuit track widths as narrow as three mils.
Additionally, 2 mil line patterning is done on a growing percentage of new
customer designs. The manufacture of complex multilayer interconnect products
often requires the use of sophisticated circuit interconnections between certain
layers (called "blind or buried vias") and adherence to strict electrical
characteristics to maintain consistent circuit transmission speeds (referred to
as "controlled impedance"). Customer requirements for higher signal speed PCBs
increasingly requires the application of recently developed polymer laminate
materials; close development relationships with key laminate materials suppliers
are essential for successful factory and EMS product qualification. These
technologies require very tight lamination and etching tolerances and are
especially critical for printed circuit boards with ten or more layers.

The manufacture of printed circuit boards involves several steps: etching
the circuit image on copper-clad epoxy laminate, pressing the laminates together
to form a panel, drilling holes and depositing copper or other conductive
material to form the inter-layer electrical connections and, lastly, cutting the
panels to shape. Certain advanced interconnect products require additional
critical steps, including dry film imaging, photoimageable soldermask
processing, computer controlled drilling and routing, automated plating and
process controls and achievement of controlled impedance. Manufacture of printed
circuit boards used in backplane assemblies requires specialized expertise and
equipment because of the larger size of the backplane relative to other printed
circuit boards and the increased number of holes for component mounting.

In addition to volume fabrication of printed circuit boards, Sanmina-SCI
has facilities that specialize in prototype and pre-production manufacturing.
Prototypes typically require lead times of three to seven days, and often as
short as 24 hours. Prototype development at these facilities has included
multi-layer printed circuit boards of up to 60 layers, embedded discrete
components, heavy copper substrates, sequential

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lamination, cavity substrates, thermal management products, single chip
carriers, planar magnetics, advanced surface finishes and various high
performance substrates for the high frequency microwave market. These facilities
also support advanced attachment technologies such as Direct Chip Attach (DCA)
and High Density Interconnect (HDI). In combining the design of a printed
circuit with the manufacture of the prototype, Sanmina-SCI can reduce the length
of the design/manufacture cycle. By working closely with customers at the design
and prototype stage, Sanmina-SCI believes it strengthens long-term relationships
with its customers and gains an advantage in securing a preferred vendor status
when customers begin volume production. Pre-production is the manufacture of
limited quantities of electronic interconnects during the transition period from
prototype to volume production. Pre-production generally requires quick-turn
delivery to accommodate time-to-volume pressures or as a temporary solution for
unforeseen customer demands. Pre-production is done both in the quick-turn
prototype and volume production facilities.

The manufacture of surface mount and pin-through-hole assemblies involves
the attachment of various electronic components, such as integrated circuits,
capacitors, microprocessors and resistors to printed circuit boards. The
manufacture of backplane assemblies involves attachment of electronic
components, including printed circuit boards, integrated circuits and other
components, to the backplane, which is a large printed circuit board that we
also manufacture. We use surface mount, pin-through-hole and press-fit
technologies in backplane assembly.

The integration of all these processes allows us to offer an end-to-end
total EMS solution.

Substantially all of our manufacturing facilities are certified under ISO
9002, a set of standards published by the International Organization of
Standardization and used to document, implement and demonstrate quality
management and assurance systems in design and manufacturing. As part of the ISO
9002 certification process, we have developed a quality systems manual and an
internal system of quality controls and audits. Although ISO 9002 certification
is of particular importance to the companies doing business in the European
Community, we believe that United States electronics manufacturers are
increasing their use of ISO 9002 registration as a criteria for suppliers.

In addition to ISO 9000, many of our facilities have been TL 9000
certified. TL 9000 is relatively new telecommunications standard. The TL 9000
Quality System Requirements and Quality System Metrics are designed specifically
for the telecommunications industry to promote consistency, efficiency, and
improved customer satisfaction. Included in the TL 9000 system are
performance-based metrics that measure the reliability and quality performance
of the product.

The majority of our facilities are also Telcordia (formerly Bellcore),
British Approval Board for Telecommunications (BABT), and Underwriters
Laboratories (UL), compliant. These standards define requirements for quality,
manufacturing process control and manufacturing documentation and are required
by many OEMs in the electronics industry, including suppliers to AT&T and the
Regional Bell Operating Companies.

Facilities. On a combined basis, Sanmina-SCI manufactures products in 107
decentralized plants, consisting of 71 electronics assembly facilities, 9
printed circuit board fabrication facilities, 3 cable assembly facilities, 23
enclosure assembly facilities and 1 other manufacturing facility. Generally,
each of our decentralized plants has its own production, purchasing, and
materials management and quality capabilities located on site. The production
expertise of some plants overlaps, which enables us to allocate production based
on product type and available capacity at one or more plants. With assembly
facilities located in major electronics industry centers throughout the country,
including, including Silicon Valley, Southern California, the Dallas-Forth Worth
area, the Research Triangle Park area, New England, the greater Chicago area and
Northern Alabama, as well as international locations including Australia,
Belgium, Brazil, Canada, China, Finland, France, Hungary, Israel, Ireland,
Malaysia, Mexico, The Netherlands, Singapore, Spain, Sweden, Thailand, and The
United Kingdom, we are also able to allocate production based on geographic
proximity to the customer, process capabilities and available capacity.
Decentralized plants can focus on particular product types and respond quickly
to customers' specific requirements. We believe that decentralized facilities
also allow us to achieve improved accountability, quality control and cost
control.

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In November 1998, we entered into a lease with an option to purchase a
330,000 square foot campus facility located in San Jose, California. The
facility consists of four buildings on a single site. We consolidated our
corporate headquarters and some of our San Jose area assembly operations at this
facility. We believe that our existing facilities, together with facilities
expansion and upgrades that are in process or that we are currently evaluating,
are adequate to meet our reasonably foreseeable requirements for at least the
next two years. We continually evaluate our expected future facilities
requirements.

TECHNOLOGY DEVELOPMENT

Our close involvement with our customers at the early stages of their
product development positions us at the leading edge of technical innovation in
the manufacturing of SMT and PTH assemblies, backplane assemblies, and printed
circuit boards. We selectively seek orders that require the use of
state-of-the-art materials or manufacturing techniques in order to further
develop our manufacturing expertise. Current areas of manufacturing process
development include reducing circuit widths and hole sizes, establishing new
standards for particle contamination and developing new manufacturing processes
for the use with new materials and new surface mount connector and component
designs.

Recent developments in the electronics industry have necessitated
improvements in the types of laminate used in the manufacture of interconnect
products. New laminate materials may contain new chemical formulations to
achieve better control of flow, resin systems with high glass transition
temperatures, reduced surface imperfections and greatly improved dimensional
stability. Future generations of interconnect products will require lower
dielectric loss polymers for better total signal transmission integrity, ultra
fine lines, multilayers of much greater complexity and thickness, and extremely
small holes in the 3 to 10 mil range. The materials designed to meet these
requirements, such as BT epoxy, cyanate esters, polyamide quartz, thermoplastic
composites, and Kevlar epoxy, are beginning to appear in the marketplace.
Widespread commercial use of these materials will depend upon statistical
process control and improved manufacturing procedures to achieve the required
yields and quality. In addition, Hadco has developed a material technology known
as Buried Capacitance as well as various other microvia processes which are
designed to provide improved electrical performance, decreased EMI emissions,
and greater interconnect densities on printed circuit boards.

We have developed expertise and techniques, which we use in the manufacture
of circuit boards, backpanels and subsystems. Generally, we rely on common law
trade secret protection and on confidentiality agreements with our employees to
protect our expertise and techniques.

SUPPLIER RELATIONSHIPS

We order materials and components based on purchase orders received and
accepted and seek to minimize our inventory of materials or components that are
not identified for use in filling specific orders.

Historically, the majority of raw materials used in Sanmina-SCI's
manufacture of printed circuit boards and components used in backplane and
system assemblies have been readily available. However, in the recent past there
have been shortages of electronic components that have affected the ability of
Sanmina-SCI and other manufacturers to complete and ship assemblies on a timely
basis. Component shortages can force Sanmina-SCI to delay shipments to
customers, which could harm Sanmina-SCI's results of operations for a particular
fiscal period and could also expose Sanmina-SCI to contractual penalties for
failure to complete deliveries as scheduled. Accordingly, component shortages
could harm Sanmina-SCI's business, financial condition and results of
operations.

INTELLECTUAL PROPERTY

Sanmina-SCI holds various United States and foreign patents directed to
printed circuit boards and methods of manufacturing printed circuit boards.
Although Sanmina-SCI seeks to protect certain proprietary technology and other
intangible assets through patents and trademark filings, it has relatively few
patents and relies primarily on trade secret protection. There can be no
assurance that Sanmina-SCI will be able to protect its trade secrets or that
others will not independently develop substantially equivalent proprietary
information
9

and techniques or otherwise gain access to Sanmina-SCI's trade secrets. The
future success of Sanmina-SCI will depend on the continued development of
processes and capabilities. Sanmina-SCI believes that its accumulated experience
with respect to materials and process technology is also important to its
operations.

ENVIRONMENTAL CONTROLS

We are subject to a variety of local, state, federal environmental laws and
regulations in the United States and elsewhere relating to the treatment,
storage, use, discharge, emission and disposal of chemicals, solid waste and
other hazardous materials used during their manufacturing processes, as well as
occupational safety and health laws, and product take back, product labeling and
product content requirements. The failure to comply with present and future laws
and regulations could restrict our ability to expand facilities or could require
us to acquire costly equipment or to incur other significant expenses to comply
with environmental regulations including the payment of fines and penalties.
Proper waste disposal is a major consideration for printed circuit board
manufacturers because metals and chemicals are used in the manufacturing
process. Water used in the printed circuit board manufacturing process must be
treated to remove metal particles and other contaminants before it can be
discharged into municipal sanitary sewer systems. In addition, although the
electronics assembly process generates significantly less wastewater than
printed circuit board fabrication, maintenance of environmental controls is also
important in the electronics assembly process. Each of our printed circuit board
and electronics assembly plants has personnel responsible for monitoring
environmental compliance.

Each plant, to the extent required by law, operates under environmental
permits issued by the appropriate governmental authority. These permits must be
renewed periodically and are subject to revocation in the event of violations of
environmental laws. There can be no assurance that violations will not occur in
the future as a result of human error, equipment failure or other causes. In the
event of a future violation of environmental laws, we could be held liable for
damages, fines, costs of remedial actions, and we could be subject to revocation
of permits. Any such revocation could require us to cease or limit production at
one or more of our facilities, thereby having an adverse impact on our results
of operations.

We have through our acquisitions, and in some cases with respect to our own
sites, discovered contamination in the soil, groundwater and in the interior of
certain sites. For example, contamination has been discovered in soil and
groundwater of current and former operating sites including the Mountain View
and Irvine, California sites associated with our November 1997 acquisition of
Elexsys International, Inc., the Wilmington, Massachusetts site associated with
our November 1998 acquisition of Altron Corporation, the Derry, New Hampshire,
Owego, New York and Ft. Lauderdale, Florida sites associated with our June 2000
acquisition of Hadco Corporation and SCI's Brockville, Ontario site. Lead dust
contamination associated with printed circuit board assembly has been discovered
in SCI's Arab, Alabama, Colorado Springs, Colorado and San Jose, California
facilities. In addition, there are certain sites where the potential for
contamination exists, but has not been confirmed

We believe, based on the limited information currently available, that the
cost of any groundwater or soil clean-up that may be required at these
facilities would not materially harm our business, financial condition and
results of operations. Nevertheless, the process of remediating contamination in
soil, groundwater and inside the facilities is costly, and there can be no
assurance that the costs of such activities would not harm our business,
financial condition and results of operations. Sanmina-SCI has, with its
consultants, performed environmental review of acquired sites and has
established a reserve to address these liabilities. The issues associated with
these and other contaminated sites and the reserves for liabilities associated
with the contamination are described in detail under "Factors Affecting
Operating Results." We also have been named as a potentially responsible party
at contaminated disposal sites such as the Casmalia Resources Site, the
Allworth, Inc. site and several other sites as a result of the past disposal of
hazardous waste by Sanmina-SCI, companies we acquired or their corporate
predecessors. While liabilities for such historic disposal activities have not
been material to our financial condition to date, there can be no guarantee that
past disposal activities will not result in material liability to us in the
future. These disposal site liabilities and the reserves associated with them
are further described under "Factors Affecting Operating Results."

10

BACKLOG

Sanmina-SCI's backlog prior to the merger was approximately $0.7 billion at
September 29, 2001. Sanmina-SCI's backlog, on a combined basis, would have been
approximately $3.4 billion at September 29, 2001. Backlog consists of purchase
orders received, including, in certain instances, forecast requirements released
for production under customer contracts. Cancellation and postponement charges
generally vary depending upon the time of cancellation or postponement, and a
certain portion of our backlog may be subject to cancellation or postponement
without significant penalty. Typically, a substantial portion of our backlog is
scheduled for delivery within the next six months.

COMPETITION

Significant competitive factors in the market for advanced backplane
assemblies and printed circuit boards include product quality, responsiveness to
customers, manufacturing and engineering skills, and price. We believe that
competition in the market sectors we serve is based more on product quality and
responsive customer service and support than on price, in part because the cost
of interconnect products we manufacture is usually low relative to the total
cost of the equipment for which they are components, and in part because of the
greater importance of product reliability and prompt delivery to our customers.
We believe that our primary competitive strengths are our ability to provide
leading edge technology and to provide an end to end total EMS solution which
includes responsive, flexible, short lead-time manufacturing services, our
engineering and manufacturing expertise and our customer service support.

We face intense competition from a number of established competitors in our
various product markets. Certain of our competitors have greater financial and
manufacturing resources than we do, including significantly greater surface
mount assembly capacity. During periods of recession in the electronic industry,
our competitive advantages in the areas of quick-turnaround manufacturing and
responsive customer service may be of reduced importance to electronics OEMs,
who may become more price sensitive. In addition, captive interconnect product
manufacturers may seek orders in the open market to fill excess capacity,
thereby increasing price competition. Although we generally do not pursue
high-volume, highly price sensitive interconnect product business, we may be at
a competitive disadvantage with respect to price when compared to manufacturers
with lower cost structures, particularly those manufacturers with more extensive
offshore facilities where labor and other costs are lower.

EMPLOYEES

As of September 2001, Sanmina-SCI, on a combined basis, would have had
48,774 full-time employees, including 47,156 in manufacturing and engineering,
575 in marketing and sales and 1,043 in general administration and finance. None
of our U.S. employees are represented by a labor union and we have never
experienced a work stoppage or strike. We believe our relationship with our
employees is good.

ITEM 2. PROPERTIES

Our facilities consist of assembly, fabrication, enclosure, cable and
other, and global technology solution centers, located domestically and
internationally. These facilities, on a combined basis, comprise an aggregate of
approximately 14.9 million square feet, including square footage that is
currently unoccupied due to restructuring and consolidation activities, of which
5.4 million square feet are leased. Leases for these facilities

11

expire between 2001 and 2010. The leases generally may be extended at our
option. Our principal facilities are located as follows:

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

(1) Includes facilities located nearby in Santa Clara, Fremont, Milpitas and
Mountain View.

We believe that our existing facilities, together with facilities
expansions and upgrades that are in process or that we are currently evaluating,
are adequate to meet our reasonably foreseeable requirements for at least the
next two years. We continually evaluate our expected future facilities
requirements.

ITEM 3. LEGAL PROCEEDINGS

Sanmina-SCI and certain of its subsidiaries, namely Hadco and SCI, are
involved in various administrative proceedings related to environmental matters.
These matters are described in greater detail under "Factors Affecting Operating
Results." Although Sanmina-SCI could incur significant costs relating to these
matters, Sanmina-SCI believes, on the limited information currently available,
that the cost of any remediation that may be required at these facilities would
not materially harm our business, financial condition or results of operations.

Sanmina-SCI is a party to certain other legal proceedings that have arisen
in the ordinary course of its business. The amounts in controversy in these
matters are not material to Sanmina-SCI, and Sanmina-SCI believes that the
resolution of these proceedings will not have a material adverse effect on
Sanmina-SCI's business, financial condition and results of operations.

On June 13, 2001, Sanmina-SCI filed a complaint against Metricom, Inc. in
the California state court. The complaint arose out of a July 2, 1999 Agreement
for Electronic Manufacturing Services and seeks compensation for cancellation
charges arising under this agreement. Sanmina-SCI's damages consist of the cost
of certain materials and work-in-process. Metricom has filed for Chapter 11
bankruptcy, and as a result, Sanmina-SCI's claim has been stayed. Accordingly,
Sanmina-SCI has filed a claim for its damages in the bankruptcy proceedings.
Sanmina-SCI currently estimates it has no additional exposure on this matter
(after exhausting allocated reserves).

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

Not applicable.

EXECUTIVE OFFICERS OF THE COMPANY

Pursuant to General Instruction G(3), the information regarding the
Company's executive officers required by Item 401(b) of Regulation S-K is hereby
included in Part I of this report.

The following table sets forth the name of each executive officer of the
Company, the office held by such officer and the age, as of December, 2001, of
such officer.

13

Mr. Sola co-founded Sanmina-SCI in 1980 and initially held the position of
Vice President of Sales and Marketing and was responsible for the development
and growth of Sanmina-SCI's sales organization. He became Vice President and
General Manager in October 1987 with responsibility for all manufacturing
operations as well as sales and marketing. Mr. Sola was elected President in
October 1989 and has served as Chairman of the Board and Chief Executive Officer
since April 1991. Mr. Sola relinquished the title of President when Mr. Furr was
appointed to such position in March 1996. As of the consummation of the merger,
Mr. Sola serves as Co-Chairman of the Sanmina-SCI Board of Directors and
continues as Chief Executive Officer of Sanmina-SCI.

Mr. Sapp joined SCI in 1962, and after holding several positions, was
promoted to President and Chief Operating Officer in 1981. In July 1999, Mr.
Sapp was appointed Chief Executive Officer of SCI Systems, Inc. and had served
as Chairman of the Board and Chief Executive Officer since July 2000. As of the
consummation of the merger, Mr. Sapp serves as Co-Chairman of the Sanmina-SCI
Board of Directors.

Mr. Furr joined Sanmina-SCI as Vice President and Chief Financial Officer
in August 1992. In March 1996, Mr. Furr was appointed President and Chief
Operating Officer. In December 1999, Mr. Furr was appointed to Sanmina-SCI's
Board of Directors. Mr. Furr is a Certified Public Accountant. As of the
consummation of the merger, Mr. Furr continues as President, Chief Operating
Officer and a Director of Sanmina-SCI.

Mr. Ackel became Chief Financial Officer and Executive Vice President at
Sanmina-SCI in June 2000. Mr. Ackel joined Sanmina-SCI after 25 years of
experience with Arthur Andersen LLP. As a partner for Arthur Andersen LLP, Mr.
Ackel worked with a number of high technology and manufacturing clients. He has
a Bachelor of Science Degree from California State University at Hayward, is a
Certified Public Accountant and a member of the California State Society of
CPA's and the AICPA. As of the consummation of the merger, Mr. Ackel continues
as Executive Vice President and Chief Financial Officer of Sanmina-SCI.

PART II

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

Sanmina-SCI's common stock is traded on the Nasdaq National Market under
the symbol SANM. The following table lists the high and low closing prices for
Sanmina-SCI's common stock as reported on Nasdaq.

As of December 10, 2001, we had approximately 2,828 common stockholders of
record. On December 10, 2001, the last reported sales price of Sanmina-SCI's
common stock on the Nasdaq National Market was $23.50 per share.

We have never declared or paid any cash dividends on our common stock. We
currently expect to retain future earnings for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.

14

ITEM 6. SELECTED FINANCIAL DATA

FIVE YEAR SELECTED FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

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

This report contains forward-looking statements within the meaning of
Section 72A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual events and/or future results of operations may
differ materially from those contemplated by such forward-looking statements, as
a result of the factors described herein, and in the documents incorporated
herein by reference, including, in particular, those factors described under
"Factors Affecting Operating Results."

OVERVIEW

Sanmina-SCI Corporation ("Sanmina-SCI") was incorporated in Delaware in May
1989 to acquire its predecessor company which had been in the printed circuit
board and backplane business since 1980. Sanmina-SCI is a leading independent
provider of customized integrated electronic manufacturing services ("EMS"),
including turnkey electronic assembly and manufacturing management services, to
original

15

equipment manufacturers ("OEMs") in the electronics industry. Our principal
customers on a combined basis include Alcatel, Cisco Systems, Compaq, Dell
Computer, Ericsson, Hewlett Packard, Houston Tracker, Nokia, Nortel Networks,
Phillips and Tellabs. Sanmina-SCI's electronics manufacturing services consist
primarily of the design and manufacture of complex printed circuit board
assemblies using surface mount ("SMT") and pin-through hole ("PTH")
interconnection technologies, the manufacture of custom designed backplane
assemblies, fabrication of complex multi-layered printed circuit boards, metal
stamping and plating, electronic enclosure systems, subsystem assembly, testing,
and assembly of completed systems and direct order fulfillment. In addition to
assembly, turnkey manufacturing management also involves procurement and
materials management, as well as consultation on printed circuit board design
and manufacturing. Sanmina-SCI also manufactures custom cable and wire harness
assemblies.

Sanmina-SCI, prior to its merger with SCI, manufactured its products in 53
decentralized plants, consisting of 28 electronics assembly facilities, 9
printed circuit board fabrication facilities, 3 cable assembly facilities, 12
enclosure assembly facilities and 1 other manufacturing facility. Sanmina-SCI,
prior to its merger with SCI, had electronics assembly, printed circuit board
fabrication, enclosure manufacturing, cable manufacturing and global technology
solution centers domestically in Alabama, Arizona, California, Massachusetts,
New Hampshire, New York, North Carolina, Texas, Utah and Wisconsin and
internationally in Brazil, Canada, China, Finland, France, Hungary, Ireland,
Malaysia, Mexico, Scotland and Sweden. In addition to the above facilities,
Sanmina-SCI had a 49.9% ownership interest in INBOARD, the remainder of which is
owned by Siemens AG. INBOARD is a manufacturer of complex printed circuit boards
located in Germany.

In December 2001, SCI Systems, Inc. merged into a wholly-owned subsidiary
of Sanmina-SCI Corporation. Under the terms of the merger, SCI stockholders
received 1.36 shares of Sanmina-SCI common stock for each share of SCI. In
connection with the merger, Sanmina Corporation changed its corporate name to
Sanmina-SCI Corporation and three former members of SCI's board of directors
joined the board of directors of Sanmina-SCI.

In October 2001, Sanmina-SCI purchased certain assets of Electro Mechanical
Solutions, Inc., a privately-held manufacturer of electronic enclosures. This
transaction includes the purchase of certain manufacturing operations in the
United States, in Mexico and Northern Ireland. The cash purchase price for this
transaction was $110.65 million, $20 million of which is subject to reduction
based on a post-closing audit of E-M-Solutions' balance sheet.

In March 2001, Sanmina-SCI acquired AB Segerstrom & Svensson
("Segerstrom"), a global supplier of integrated enclosure systems to the
communications sector. The transaction was structured as a stock for stock
exchange and was accounted for as a pooling of interests. Under the terms of the
agreement, each Segerstrom common share and convertible debenture was converted
into approximately 0.4519 shares of Sanmina-SCI common stock. Sanmina-SCI
acquired approximately 94% of the outstanding shares of Segerstrom pursuant to
its offer to acquire Segerstrom. Sanmina-SCI has commenced a compulsory
acquisition process for the remaining shares in accordance with Swedish law and
business practice. Sanmina-SCI has issued approximately 11.6 million shares of
common stock in connection with the acquisition of Segerstrom. This number
represents 94% of outstanding shares and convertible debentures of Segerstrom,
and the remaining 6% will be acquired under the compulsory acquisition process,
which is expected to be completed within the next 12 months. Segerstrom has
manufacturing facilities in Brazil, Finland, Scotland and Sweden.

Prior to being acquired by Sanmina-SCI, Segerstrom operated under a
calendar year end, and accordingly, Segerstrom's statements of operations,
shareholders' equity and cash flows for the year ended December 31, 2000 have
been combined with the corresponding Sanmina-SCI consolidated statements for the
year ended September 30, 2000. During Sanmina-SCI's fiscal 2001, Segerstrom's
year-end was changed from December 31 to a 52 or 53 week year ending on the
Saturday nearest September 30 to conform to Sanmina-SCI's fiscal year end.
Accordingly, an adjustment was made to retained earnings in the first quarter of
fiscal 2001 to eliminate the duplication of $5.3 million of net income for
Segerstrom, for the three months of Segerstrom operations ended December 31,
2000. Segerstrom's revenues for the three months ended December 31, 2000 were
$96 million. For the three months ended December 31, 2000, Segerstrom cash
provided by operating activities of $5.9 million, cash used for investing
activities of $4.8 million and cash

16

provided by financing activities of $0.4 million have been excluded from
Sanmina-SCI's consolidated statement of cash flows for year ended September 29,
2001.

Sanmina-SCI's results of operations have varied and may continue to
fluctuate significantly from period to period, including on a quarterly basis.
Sanmina-SCI's operating results are affected by a number of factors. These
factors include timing of orders from major customers, mix of product ordered by
and shipped to major customers, the volume of orders as related to Sanmina-SCI's
capacity, the ability of Sanmina-SCI to effectively manage inventory and fixed
assets, pricing and competitive pressures, component shortages, which could
cause Sanmina-SCI to be unable to meet customer delivery schedules, and the
ability of Sanmina-SCI to time expenditures in anticipation of future sales.
Sanmina-SCI's results are also affected by the mix of products between backplane
assemblies and printed circuit boards as well as general economic conditions in
the electronics industry. Sanmina-SCI's results can also be significantly
influenced by development and introduction of new products by Sanmina-SCI's
customers. From time to time, Sanmina-SCI experiences changes in the volume of
sales to each of its principal customers, and operating results may be affected
on a period-to-period basis by these changes. Sanmina-SCI's customers generally
require short delivery cycles, and a substantial portion of Sanmina-SCI's
backlog is typically scheduled for delivery within six months. Quarterly sales
and operating results therefore depend in large part on the volume and timing of
bookings received during the quarter, which are difficult to forecast,
especially with the uncertainty and slowdown of Sanmina-SCI's customers'
end-markets.

Sanmina-SCI's backlog also affects its ability to plan production and
inventory levels, which could lead to fluctuations in operating results. In
addition, a significant portion of Sanmina-SCI's operating expenses are
relatively fixed in nature and planned expenditures are based in part on
anticipated orders. Any inability to adjust spending quickly enough to
compensate for any revenue shortfall may magnify the adverse impact of such
revenue shortfall on Sanmina-SCI's results of operations. Results of operations
in any period should not be considered indicative of the results to be expected
for any future period. In addition, fluctuations in operating results may also
result in fluctuations in the price of Sanmina-SCI's convertible subordinated
notes and common stock.

Sanmina-SCI's customers include a diversified base of OEMs in the
communications (telecommunications and networking), high-speed computer systems,
industrial and medical instrumentation, multimedia entertainment and personal
computers sectors of the electronics industry. These industry sectors, and the
electronics industry as a whole, are subject to rapid technological change and
product obsolescence. Discontinuance or modification of products being
manufactured by Sanmina-SCI could adversely affect Sanmina-SCI's results of
operations. The electronics industry is also subject to economic cycles and has
in the past experienced, and is likely in the future to experience, recessionary
periods. In particular, many sectors of the electronics industry, including
particularly the telecommunications sector, are currently experiencing a
significant downturn in economic conditions. This downturn is leading to reduced
demand for the services provided by EMS companies, including Sanmina-SCI. These
changes in demand and in economic conditions have resulted and may continue to
result in customer rescheduling of orders and shipments, which could affect
Sanmina-SCI's results of operations. In addition, a protracted general recession
in the electronics industry could have a material adverse effect on
Sanmina-SCI's business, financial condition and results of operations.
Sanmina-SCI has no firm long-term volume commitments from its customers and over
the last few years has experienced reduced lead-time in customer orders. In
addition, customer orders can be canceled and volume levels can be changed or
delayed. The timely replacement of cancelled, delayed or reduced orders with new
business cannot be assured. There can be no assurance that any of Sanmina-SCI's
current customers will continue to use Sanmina-SCI's manufacturing services. The
loss of one or more of Sanmina-SCI's principal customers, or reductions in sales
to any of such customers, could have a material adverse effect on Sanmina-SCI's
business, financial condition and results of operations.

Sanmina-SCI has pursued, and intends to continue to pursue, business
acquisition opportunities, particularly when these opportunities have the
potential to enable Sanmina-SCI to increase its net sales while maintaining
operating margins, to access new geographic markets, to implement Sanmina-SCI's
vertical integration strategy and/or to obtain access to new customers,
geographic regions, facilities and equipment on

17

terms more favorable than those generally available in the market. Acquisitions
of companies and businesses and expansion of operations involves certain risks,
including

- the potential inability to successfully integrate acquired operations and
businesses or to realize anticipated synergies, economies of scale or
other value,

- diversion of management's attention,

- difficulties in scaling up productions at new sites and coordinating
management of operations at new sites and

- loss of key employees of acquired operations.

No assurance can be given that Sanmina-SCI will not incur problems with
integrating acquired operations, including the integration of SCI, which is
currently underway. In addition, there can be no assurance that Sanmina-SCI's
recent acquisitions, including the Sanmina-SCI merger, or any future acquisition
will result in a positive contribution to Sanmina-SCI's results of operations.
Furthermore, there can be no assurance that Sanmina-SCI will realize value from
any such acquisition that equals or exceeds the consideration paid. In addition,
there can be no assurance that Sanmina-SCI will realize anticipated strategic
and other benefits from expansion of existing operations to new sites. Any such
problems could have a material adverse effect on Sanmina-SCI's business,
financial condition and results of operations. In addition, future acquisitions
may result in dilutive issuances of equity securities, the incurrence of
additional debt, large one-time write-offs and the creation of other intangible
assets that could result in amortization expense and goodwill.

In addition, Sanmina-SCI expects to pursue opportunities to acquire
assembly operations being divested by electronics industry OEMs. Sanmina-SCI
expects that competition for these opportunities among electronics manufacturing
services firms will be intense because these transactions typically enable the
acquirer to enter into long-term supply arrangements with the divesting OEM.
Accordingly, Sanmina-SCI's future results of operations could be adversely
affected if Sanmina-SCI is not successful in attracting a significant portion of
the OEM divestiture transactions it pursues. In addition, due to the large scale
and long-term nature of supply arrangements typically entered into in OEM
divestiture transactions and because cost reductions are generally a major
reason why the OEM is divesting operations, pricing of manufacturing services
may be less favorable to the manufacturer than in standard contractual
relationships. Accordingly, as Sanmina-SCI enters into new OEM divestiture
transactions, Sanmina-SCI may experience erosion in gross margins.

18

RESULTS OF OPERATIONS

Fiscal Years Ended September 29, 2001, September 30, 2000 and October 2, 1999

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

Net Sales. Net sales in fiscal 2001 decreased 4.4% to $4,054.0 million
from $4,239.1 million in fiscal 2000. Net sales in fiscal 2000 increased 61.8%
to $4,239.1 million in fiscal 2000 from $2,620.6 million in fiscal 1999. The
decrease in net sales for fiscal 2001 was primary due to a downturn in economic
conditions worldwide and in the electronics industry in general, and the
communications sector in particular. This downturn has had a significant impact
on our customers and the markets in which they sell their products and services
during the last nine months of fiscal year 2001. These economic conditions have
resulted in a reduced demand for services provided by Sanmina-SCI and other EMS
companies. The increase in net sales for fiscal 2000 as compared to fiscal 1999
was due primarily to a more positive economic environment, resulting in
increased shipments of printed circuit boards and EMS assemblies to both
existing and new customers obtained both through acquisitions and internal
growth. Sanmina-SCI's printed circuit board fabrication operations focused
increasingly on manufacturing printed circuit boards used in EMS assemblies and
subassemblies manufactured by Sanmina-SCI. Growth in EMS assembly revenues
between fiscal 1999 and 2000 was influenced by the electronics industry trend
towards outsourcing, expansion of Sanmina-SCI's operations, both through
acquisitions and Sanmina-SCI originated expansions, and a generally positive
economic environment in the communications, medical and industrial
instrumentation, and high speed computer systems sectors of the electronics
industry. These industry sectors continued to experience overall growth during
fiscal 1999 and fiscal 2000.

19

The following summarizes financial information by geographic segment (in
thousands):

Domestic sales for fiscal 2001 decreased by 3.6% to $3.1 billion from $3.2
billion and international sales decreased by 6.7% to $986.8 million from $1.1
billion in the corresponding period of the prior year. The decrease in sales in
both geographic segments is primarily due to the downturn in economic conditions
worldwide. Domestic sales for fiscal 2000 increased by 48.9% to $3.2 billion
from $2.1 billion and international sales increased 118.4% to $1.1 billion from
$484.1 million in the corresponding period of the prior year.

As a result of the acquisition of Segerstrom and the prior pooling of
interests accounting for Hadco and Essex, Sanmina-SCI has restated its
historical results of operations to include the results of operations of these
entities. The financial information presented gives effect to this restatement.
A reconciliation of the financial statements for the year ended September 30,
2000, to previously reported information is as follows (in thousands):

In the last two fiscal years, Sanmina-SCI has made substantial strategic
acquisitions of communication product manufacturing operations and electronics
industry related enclosure manufacturers. These acquisitions contributed to end
market diversification and represented 6.7% and 39.8% of net revenue in fiscal
2001 and 2000.

Gross Margin. Gross margins were 13.4%, 16.0%, and 16.6% in fiscal 2001,
2000, and 1999, respectively. The decrease in margins between 2001 and 2000 was
primarily attributable to applying fixed costs to a lower base of revenues,
changes in product and customer mix and additions to inventory reserves to
account for changing customer demand, as compared to the prior year. Sanmina-SCI
expects gross margins to continue to be influenced by product and customer mix.
The 2001, 2000 and 1999 gross margin reflects charges related to the write down
of obsolete inventory and other manufacturing related assets. In 2001, 2000 and
1999,

20

$152.6 million, $29.4 million and $4.9 million of raw materials inventory was
written down, respectively. These writedowns were related to:

- inventory written down to lower of cost or market (first-in, first-out
method),

- raw materials held specific to customers who were no longer in business,

- litigation and

- changes in customer demand for inventory that resulted in excess
quantities on hand.

Inventory is procured by Sanmina-SCI based on specific customer orders.
Correspondingly, customer modifications in orders for inventory previously
procured by (e.g. cancellations as well as inventory that is highly customized
and therefore not available for use by other customers) resulted in excess and
obsolete inventory for the related customers that could not be recovered through
put back to vendors or the specific customer concerned. The 2000 and 1999 gross
margin also reflects an offsetting increase to the gross margin resulting from
improved mix and capacity utilization from printed circuit boards and assembly
operations from acquired companies. The decrease in margins between 2000 and
1999 was primarily attributable to pricing terms negotiated as part of OEM
divestiture transactions, principally the Nortel Networks transaction that was
completed in the first quarter of fiscal 2000 and transactions with Harris
Corporation and Alcatel, which were completed during 2000. This decrease was
partially offset by the realization of synergies associated with the completion
of the acquisition of Hadco Corporation during the fourth quarter of the fiscal
year. Due to increased competition, product and customer mix, and pricing
structures negotiated in OEM divestiture transactions, including the recent
transactions and possible future transactions, Sanmina-SCI may continue to
experience decreases in gross margins.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 2001, 2000, and 1999 were $239.7 million,
$235.7 million, and $174.1 million, respectively. The percentages based upon
sales were 5.9%, 5.6%, and 6.7%, respectively. The percentage increase in
selling, general and administrative expenses for fiscal 2001 was primarily due
to a lower base of revenues. The percentage decreases in selling, general and
administrative expenses for fiscal 2000 and 1999 were due to Sanmina-SCI's
ability to grow sales while maintaining or reducing operating expenses as a
percentage of net sales, including synergies gained from acquisitions. The
absolute dollar increases in selling, general and administrative expenses for
fiscal 2000 and 1999 were primarily the result of increased expenditures to
support higher sales volume. In particular, the balance in the reserve for
doubtful accounts increased from $10.9 million in fiscal 1999 to $27.8 million
in fiscal 2000 as a result of doubtful accounts arising from a larger accounts
receivable base. The gross accounts receivable balance for fiscal 1999 was
$388.3 million as compared to fiscal 2000, which was $742.3 million or a 91%
increase year over year. Correspondingly, the net sales for 1999 was $2.6
billion as compared to 2000 which was $4.2 billion or a 61.8% increase year over
year. For fiscal 2001, the balance in the reserve for doubtful accounts
increased to $48.6 million from $27.8 million in fiscal 2000. Gross accounts
receivable for fiscal 2001 was $458.5 million as compared to fiscal 2000, which
was $742.3 million or a 38.2% decrease year over year. The increase in the
reserve for doubtful accounts in fiscal 2001 was related to deterioration in the
economic environment affecting certain customers ability to pay primarily in the
communications sector. Selling, general and administrative expenses as a
percentage of sales are anticipated to remain relatively constant or decrease
slightly, depending on sales volume and our ability to scale back on operations
to be in line with anticipated customer demand. In addition, we expect to
continue to achieve operating synergies as a result of integration of acquired
businesses and Sanmina-SCI's focus on controlling operating expenses.

Amortization of Goodwill and Intangibles. Sanmina-SCI incurred $26.4
million, $23.5 million, and $16.5 million in amortization expense for fiscal
years 2001, 2000, and 1999, respectively. These amortization expenses reflect
the amortization of intangibles and goodwill related to those acquisitions which
were accounted for as purchase transactions.

Merger and restructuring costs. In fiscal year ended 1999, Sanmina-SCI
closed certain manufacturing plants in Fremont, California and Woburn,
Massachusetts and merged the operations from these facilities into existing
manufacturing facilities within the same regions. These closures were made to
eliminate duplicate
21

facilities and other costs resulting from the merger with Altron in fiscal 1999.
Concurrent with the plant closures, Sanmina-SCI reduced its workforce in the
same regions by approximately 50 people. Sanmina-SCI also incurred restructuring
costs related to lease payments (less any applicable sublease income) for
properties abandoned and Sanmina-SCI's planned relocation to its new campus
facility in fiscal 2000. Asset related write-offs consisted of excess equipment
and leasehold improvements to facilities that were abandoned and whose estimated
fair market value were zero. Sanmina-SCI's move to the new campus facility
commenced in fiscal 1999 and was completed in the second quarter of fiscal 2000.
Noncancelable lease payments on vacated facilities were paid in full as of the
end of fiscal 2000. Sanmina-SCI also discontinued the use of enterprise-wide
software and hardware used internally by the acquired companies, as these were
no longer required post acquisition. The closing of the plants discussed above,
and the costs related to the integration of information systems and hardware,
were all incurred in fiscal 1999.

In fiscal 1999, and prior to its acquisition by Sanmina-SCI, Segerstrom
closed a factory in Stockholm, Sweden and merged the operations into existing
facilities in Sweden and Finland. These costs included severance payments to
involuntarily terminate employees, lease termination and facility exit costs and
asset write-offs related to excess equipment and leasehold improvements for
facilities that were abandoned and whose estimated fair value was zero.

At the end of fiscal 1999 and in accordance with EITF 94-3, an accrual of
approximately $10.1 million remained. The balance of the accrued amounts were
fully paid in fiscal 2000. Below is a summary detailing the specific components
of restructuring costs for fiscal 1999:

Merger costs of $5.5 million were also recorded in 1999, of which $3.2
million was paid during fiscal year ended 1999 and the balance of $2.3 million
paid in fiscal year ended 2000. These costs consisted of fees for investment
bankers, attorneys, accountants and other direct merger related expenses and
relate to those acquisitions that were accounted for using the pooling of
interests method.

In June 2000, Sanmina-SCI acquired Hadco Corporation ("Hadco") in a pooling
of interests business combination. Sanmina-SCI recorded, in accordance with EITF
94-3, involuntary termination costs representing expected severance costs of 885
employee positions due to attrition and expected synergies arising from the
closure of duplicate facilities. At the end of fiscal 2000, approximately $11.8
million had been paid representing primarily severance payments to 13 members of
Hadco senior management pursuant to employee agreements. At the time of the
original EITF 94-3 plan, Sanmina-SCI expected to downsize duplicate Hadco
facilities in the six months immediately following the merger. Severance
agreements with affected employees specified that if the employees were
terminated within six months of the merger date, they would receive specified
severance amounts, which was the amount originally accrued. However, the volume
of activity in that six month period picked up significantly, and personnel at
these particular facilities were needed. Subsequent to the six months following
the merger, Sanmina-SCI experienced an economic slowdown and terminated the
remaining 834 identified positions. As the ultimate termination of the remaining
positions was after the expiration of the original six month severance period,
Sanmina-SCI determined it would not extend the severance agreement time periods.
This determination, and the completion of the termination of the affected
employees was reached in the quarter ending June 30, 2001 and accordingly,
Sanmina-SCI reversed the balance of the accrual of approximately $14 million
through the line item "Restructuring Costs" in the statement of operations for
the three months ended June 30, 2001. All restructuring activities related to
the Hadco acquisition were completed as of June 30, 2001. In June 2000,
Sanmina-SCI acquired Essex AB

22

("Essex") in a pooling of interests business combination. Sanmina-SCI recorded,
in accordance with EITF 94-3, involuntary termination costs representing
expected severance costs of 38 employee positions. As of the end of fiscal 2000,
no amounts had been paid. As of Sanmina-SCI's fiscal quarter ended June 30,
2001, Sanmina-SCI had completed the termination of the identified positions, but
at a significantly reduced cost than originally anticipated. Sanmina-SCI
reversed the balance of the accrual at June 30, 2001 of approximately $449,000
through the line item "Restructuring Costs" in the statement of operations for
the three months ended June 30, 2001. Restructuring activities related to the
Essex acquisition were completed as of June 30, 2001.

Below is a summary detailing the specific components of restructuring costs
for fiscal 2000:

Merger costs of $19.9 million were recorded in 2000, and consisted of fees
for investment bankers, attorneys, accountants and other direct merger related
expenses related to those acquisitions accounted for using the pooling of
interests method. Merger costs of approximately $18.5 million were paid during
fiscal year ended 2000 with the remainder paid in fiscal 2001.

In March 2001, Sanmina-SCI acquired Segerstrom in a pooling of interests
business combination. Sanmina-SCI recorded in accordance with EITF 94-3,
expected involuntary employee termination costs of approximately $7.2 million
for 470 employee positions. As of the end of Sanmina-SCI's fiscal year 2001, 302
employees have been terminated for an approximate cost of $3.5 million.
Sanmina-SCI also incurred restructuring costs of $5.2 million related to
consolidation of duplicate facilities primarily in Europe. The balance of the
terminations, at the originally estimated and accrued amount for involuntary
employee termination costs, and the consolidation of duplicate facilities are
expected to be completed by March 2002.

In June 2001, Sanmina-SCI consolidated certain manufacturing plants in
Calgary, Alberta, Canada and Salem, Massachusetts and merged the operations from
these facilities into existing manufacturing facilities in other regions. These
consolidations were made to eliminate duplicate facilities and reduce capacity
in line with the reduced customer demand experienced at that time. As part of
the consolidation, Sanmina-SCI reduced its workforce in the same regions by
approximately 665 people. In addition, Sanmina-SCI incurred restructuring and
other costs, primarily related to discontinued use of enterprise-wide software
systems used internally by acquired companies (no longer required
post-acquisition); integration of new information systems at acquired companies;
costs related to consolidation of duplicate facilities and write-offs of
redundant fixed assets. These activities are expected to be completed by June
2002.

In July 2001, due to the slowdown in the EMS industry and the economy
worldwide, Sanmina-SCI closed certain manufacturing facilities throughout North
America and Europe, and merged operations from these facilities into existing
manufacturing facilities. These plant closures were made to eliminate duplicate
facilities and better align capacity to reduced levels of customer demand.
Concurrent with the plant closures, Sanmina-SCI reduced its workforce in the
same regions by approximately 2,967 people. Sanmina-SCI also incurred
restructuring costs related to lease payments (less any applicable sublease
income) for properties abandoned. Asset related write-offs consisted of excess
equipment and leasehold improvements to facilities that were abandoned and whose
estimated fair market value were zero. The closing of the plants discussed above
are expected to be completed by the fourth quarter of fiscal 2002.

23

Below is a summary detailing the specific components of restructuring costs
for fiscal 2001:

24

Sanmina-SCI continues to rationalize manufacturing facilities and headcount
to better scale capacity to current market and operating conditions. In
connection therewith, Sanmina-SCI will incur additional restructuring charges in
fiscal year 2002.

Write Down of Long-Lived Assets. Sanmina-SCI reviews long-lived and
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable in
accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." An asset is considered impaired if
its carrying amount (including the unamortized portion of goodwill allocated to
the asset) exceeds the future net cash flow the asset is expected to generate.
If such asset is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset, including the
allocated goodwill, if any, exceeds its fair value. Sanmina-SCI assesses the
recoverability of its long-lived and intangible assets by determining whether
the unamortized balances can be recovered through undiscounted future net cash
flows of the acquired operation. The amount of goodwill impairment, if any, is
measured based on projected discounted future net cash flows using a discount
rate reflecting Sanmina-SCI's average cost of funds.

During the fourth quarter of 2001, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets and unamortized
goodwill originally acquired as part of the June 2000 Hadco merger were less
than their carrying value. Accordingly, Sanmina-SCI recorded an adjustment to
write down $40.3 million of intangible assets and unamortized goodwill. The fair
value of the intangible assets and unamortized goodwill at the time of the
original acquisition by Sanmina-SCI was based on expected future cash flows to
be generated from the assets based on the facts and circumstances that existed
at the date the acquisition was complete. The existing customer relationships,
in-place workforce, tradename and trademarks and unamortized goodwill, valued at
the time of the original acquisition, became impaired in the quarter ended
September 29, 2001 due to closure or consolidation of the related manufacturing
facilities. As a result, based on future expected discounted cash flows from the
customer base, from experienced and expected work force attrition and from
future utilization of tradename and trademarks, Sanmina-SCI recorded an
adjustment to the carrying value of these intangible assets and allocated
goodwill in the amounts of $10.6 million, $3.7 million, $3.6 million and $22.4
million, respectively, in the fourth quarter of fiscal 2001.

During the third quarter of 2000, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets acquired as part of
the Hadco merger were less than their carrying value. Accordingly, Sanmina-SCI
recorded an adjustment to write down $8.8 million of intangible assets. The fair
value of the intangible assets at the time of the original acquisition by Hadco
was based on expected future cash flows to be generated from the assets based on
the facts and circumstances that existed at the date the acquisitions were
complete. The existing customer relationships, and in-place workforce, valued at
the time of the original acquisition, became impaired at the time of the merger
in June 2000, due to the closure or consolidation of the related manufacturing
facilities. As a result, based on future expected cash flows from the related
customer base, and from experienced and expected work force attrition,
Sanmina-SCI has recorded an adjustment to the carrying value of these intangible
assets in the amounts of $7.5 million and $1.3 million, respectively, in the
third quarter of fiscal 2000.

During fiscal year ended October 2, 1999, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets related to the
Pragmatech, Inc. ("Pragmatech") acquisition were less than their carrying value.
Accordingly, Sanmina-SCI recorded an adjustment to write down the remaining
$11.4 million of unamortized goodwill arising from the acquisition. The fair
value of Pragmatech at the acquisition date was based on the estimated future
cash flows to be generated from the assets based the facts and circumstances
that existed at the date the acquisition was complete. Financial projections
prepared at the time of the acquisition of Pragmatech reflected Sanmina-SCI's
belief that Sanmina-SCI would continue to provide electronics manufacturing
services to existing Pragmatech customers and would grow the Pragmatech business
at Pragmatech's existing facilities. However, the existing Pragmatech customer
relationships could not be restructured to conform to Sanmina-SCI's pricing and
revenue models, and as a result, the relationships with the former Pragmatech
customers have terminated. In addition, Sanmina-SCI closed several of the former
Pragmatech facilities in fiscal 1998. As a result of these operational factors,
Sanmina-SCI's analysis of projected revenues, results of operations, and cash
flows attributable to the few remaining
25

Pragmatech customers did not support the carrying value of Pragmatech assets,
including the unamortized goodwill.

Excluding merger and restructuring charges and writedown of long-lived
assets, for fiscal 2001, operating expenses as a percentage of sales were 6.6%,
as compared to 6.1% for fiscal 2000 and 7.3% for fiscal 1999.

Other Income and Expense, net. In fiscal 2001, net other income was $19.3
million as compared to net other expense of $3.5 million, and $27.7 million for
2000 and 1999, respectively. The components of other income and expense are
primarily interest expense on borrowings, convertible subordinated notes and
interest income on cash balances and short-term investments. For fiscal 2001 and
2000, the increase in net other income and the decrease in net other expense,
respectively, was largely due to interest received from additional cash flows
from operations, cash received from equity offerings, the issuance of
convertible debt and the retirement of subordinated notes.

Provision for Income Taxes. For fiscal 2001, 2000, and 1999, Sanmina-SCI's
effective tax rate was 51.2%, 40.0%, and 38.2%, respectively. The effective tax
rate for 2001 is higher than previous years due largely to the effects of
significant non-deductible charges related to the acquisition of Segerstrom and
the write-off of nondeductible goodwill.

Extraordinary Charge. In fiscal 2000, Sanmina-SCI recorded an
extraordinary charge, net of tax effect, of approximately $5.0 million.
Sanmina-SCI was required to offer to redeem $198.9 million of the Hadco 9 1/2%
Senior Subordinated Notes due 2008, or the 9 1/2% Notes, according to the terms
in the change of control provision when Sanmina-SCI acquired Hadco. The
redemption was at 101% of the principal amount of the 9 1/2% Notes. On August
24, 2000, Sanmina-SCI redeemed $187.9 million of the outstanding 9 1/2% Notes.
The redemption premium and deferred debt costs related to the 9 1/2% Notes were
expensed by Sanmina-SCI in the fourth quarter of fiscal 2000 as an early
extinguishment of debt, and was reflected as an extraordinary charge. These
costs were approximately $8.0 million. All 9 1/2% Notes not redeemed as part of
the offer will remain outstanding. Sanmina-SCI may elect to purchase the
remaining outstanding notes through the open market or negotiated transactions,
additional tenders, or exchange offers. There were no extraordinary charges in
fiscal 2001 or fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

Sanmina-SCI generated cash from operating activities of $401.5 million,
$89.2 million, and $267.6 million, in fiscal years 2001, 2000, and 1999,
respectively. The increase in cash provided by operating activities in 2001 from
2000 is primarily due to changes in balance sheet activity, including decreases
in accounts receivable and inventory, offset by decreases in accounts payable
and other accrued liabilities and income tax accounts. The decrease in cash
provided by operating activities in 2000 from 1999 is related to the impact from
the growth in revenues and related balance sheet activity, including increases
in accounts receivable and inventories, offset by increases in accounts payable
and other accrued liabilities, and increases in net income.

Cash used for investing activities during fiscal 2001, 2000, and 1999 of
$845.4 million, $358.0 million, and $491.8 million, respectively. For fiscal
2001, Sanmina-SCI paid approximately $2.3 billion for short-term and long-term
investments and capital equipment. Additionally, Sanmina-SCI paid $71.7 million
in cash for acquired businesses. These payments were offset by $1.5 billion of
proceeds received from maturities of short-term investments and $4.0 million of
proceeds received from the sale of fixed assets.

For fiscal 2000, Sanmina-SCI paid approximately $522.0 million for
short-term and long-term investments as well as capital equipment. Additionally,
Sanmina-SCI paid approximately $202.7 million in cash for acquired businesses.
These payments were offset by maturities of $366.7 million in short-term
investments.

Investing activities during 1999 included payments of approximately $611.2
million for short-term and long-term investments and capital equipment.
Additionally, Sanmina-SCI paid approximately $75.1 million in cash for acquired
businesses. These payments were partially offset by $194.2 million in maturities
of short-term investments as well as proceeds of $0.3 million from the sale of
assets.

26

Net cash provided by financing activities for fiscal 2001 was $22.3 million
and consisted primarily of $57.2 million in proceeds received from issuance of
common stock from the employee stock purchase plan and upon the exercise of
stock options and $8.5 million of proceeds from other debt financing. These were
offset by payments of long-term debt and liabilities of $18.5 million and
repurchase of shares of Sanmina-SCI common stock of $24.9 million.

Net cash provided by financing activities for fiscal 2000 was $1.1 billion
and consisted primarily of $734.9 million in proceeds received from the issuance
of convertible subordinated notes, $623.8 million from proceeds from the sale of
common stock, including the February 2000 offering of 19.1 million shares of
common stock and $68.7 million from the proceeds of other debt financing. This
was offset by $305.0 million of retirements related to the Hadco line of credit,
the 9 1/2% Notes and other debt relating to leases and other maturities.

For 1999, the $274.8 million generated consisted primarily of $340.7
million in net proceeds from the issuance of convertible subordinated notes and
proceeds from the sale of common stock of $39.5 million. These proceeds were
partly offset by $26.6 million in payments for long-term liabilities and $77.8
million in payments for usage of line of credits by the Sanmina-SCI's
subsidiaries. Additionally, Segerstrom paid dividends of approximately $1.0
million.

In fiscal 1999, Sanmina-SCI entered into an operating lease agreement for
new facilities in San Jose, California, where it has established its corporate
headquarters and certain of its assembly operations. In connection with these
transactions, Sanmina-SCI pledged $52.9 million of its cash and investments as
collateral for certain obligations of the lease.

In August 2000, Sanmina-SCI redeemed $187.9 million of the outstanding
9 1/2% Notes. The redemption premium and deferred debt costs related to the
9 1/2% Notes was expensed by Sanmina-SCI in the fourth quarter of fiscal 2000 as
an early extinguishment of debt and was reflected as an extraordinary charge.

In December 2001, Sanmina-SCI entered into a $750 million in revolving
credit facilities consisting of a $250 million 364-day credit facility and a
$500 million three-year credit facility with a syndicate of banks. Approximately
$600 million from the proceeds of loans under these facilities together with
approximately $385 million of cash was used to repay certain indebtedness of
SCI, a majority of which this indebtedness became due and payable pursuant to
change of control provisions in connection with Sanmina's acquisition of SCI.

Sanmina-SCI's future needs for financial resources include increases in
working capital to support anticipated sales growth and investment in
manufacturing facilities and equipment. Cash, cash equivalents and short-term
investments were $1.4 billion and working capital was $2.1 billion at September
29, 2001. Sanmina-SCI has evaluated and will continue to evaluate possible
business acquisitions. In this regard, Sanmina-SCI anticipates incurring
additional expenditures during fiscal 2002 in connection with the integrations
of its recently acquired businesses and expenditures associated with the
anticipated growth.

Sanmina-SCI believes that its capital resources, together with cash
generated from operations, will be sufficient to meet its working capital and
capital expenditure requirements through at least the next twelve months.
Sanmina-SCI may seek to raise additional capital through the issuance of either
debt or equity securities. Debt financing may require Sanmina-SCI to pledge
assets as collateral and comply with financial ratios and covenants. Equity
financing may result in dilution to stockholders.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements. In June 1999, the Financial Accounting
Standards Board issued SFAS No. 138, "Accounting for Derivative Instruments and
Hedging Activities Deferral of the Effective Date of FASB Statement No. 133,"
which amends SFAS No. 133 to be effective for all fiscal years beginning after
June 15, 2000. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Sanmina-SCI enters
into short-term foreign currency forward contracts to hedge only those currency
exposures associated with certain assets and liabilities denominated in
27

foreign currencies. These contracts' fair value is recorded in short-term
investments on the balance sheet with corresponding gains or losses in other
expense on the statement of operations. Impact of these foreign exchange
contracts were immaterial to the results of operations for fiscal 2001.
Sanmina-SCI adopted SFAS No. 133 in the first quarter of fiscal 2001.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" to be effective for all business combinations initiated
after June 30, 2001. Under the provisions of the statement, the use of
pooling-of-interests method of accounting for those transactions is prohibited
and all business combinations should be accounted for using the purchase method
of accounting. Sanmina-SCI adopted SFAS 141 on July 1, 2001.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets" to be effective for all fiscal years
beginning after December 15, 2001. As part of the adoption of SFAS No. 142,
Sanmina-SCI will no longer amortize goodwill or intangible assets with
indefinite lives related to existing goodwill and intangible assets or related
to acquisitions subsequent to July 1, 2001. Sanmina-SCI will test for impairment
of goodwill at least annually and will use a two-step approach to assess any
impairment to goodwill at the established reporting unit level. Sanmina-SCI will
reassess the value and useful lives of goodwill and intangible assets previously
recorded in connection with prior acquisitions. Certain identifiable intangible
assets with finite lives will continue to amortize over their respective useful
lives. Sanmina-SCI is currently analyzing the impact of early adoption of SFAS
142, expects to complete their analysis by the end of their fiscal quarter ended
March 30, 2002 and would retroactively reflect the impact of the cumulative
effect of the change in accounting principle in their first fiscal quarter ended
December 29, 2001. As of September 29, 2001, Sanmina had existing net goodwill
and identifiable intangible assets of $294.4 million. Sanmina-SCI expects that
upon adoption of SFAS 142, Sanmina-SCI would no longer record annual fiscal year
amortization associated with existing goodwill of approximately $22 million.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations" to be effective for all
fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS
143 establishes accounting standards for the recognition and measurement of an
asset retirement obligation and its associated asset retirement cost. It also
provides accounting guidance for legal obligations associated with the
retirement of tangible long-lived assets. Sanmina-SCI is currently assessing the
impact of SFAS 143 on its financial position, results of operations and cash
flows as well as the timing of its adoption.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which
establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS 144 supersedes SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of" and APB Opinion No. 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions for
the Disposal of a Segment of a Business." The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted and, in general, are to be applied prospectively. Sanmina-SCI is
currently assessing the impact of SFAS 144 on its financial position, results of
operations and cash flows as well as the timing of its adoption.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

Sanmina-SCI's exposure to market risk for changes in interest rates relates
primarily to Sanmina-SCI's investment portfolio. Currently, Sanmina-SCI does not
use derivative financial instruments in its investment portfolio. Sanmina-SCI
invests in high credit quality issuers and, by policy, limits the amount of
principal exposure to any one issuer. As stated in Sanmina-SCI's policy,
Sanmina-SCI seeks to ensure the safety and preservation of its invested
principal funds by limiting default and market risk.

28

Sanmina-SCI seeks to mitigate default risk by investing in high-credit
quality securities and by positioning its investment portfolio to respond to a
significant reduction in a credit rating of any investment issuer, guarantor or
depository. Sanmina-SCI seeks to mitigate market risk by limiting the principal
and investment term of funds held with any one issuer and by investing funds in
marketable securities with active secondary or resale markets.

The table below presents carrying amounts and related average interest
rates by year of maturity for Sanmina-SCI's investment portfolio as of September
29, 2001.

FOREIGN CURRENCY EXCHANGE RISK

Sanmina-SCI transacts business in foreign countries. Sanmina-SCI's primary
foreign currency cash flows are in certain European countries, Brazil, Canada
and Asia. Sanmina-SCI enters into foreign exchange contracts to hedge certain of
its assets and liabilities denominated in foreign currencies. At September 29,
2001, Sanmina-SCI had forward contracts to exchange various foreign currencies
for U.S. dollars in the gross amount of $17.6 million. Market value gains and
losses on forward exchange contracts are recognized in the consolidated
statement of operations as offsets to the exchange gains and losses on the
hedged transactions.

QUARTERLY RESULTS (UNAUDITED)

The following table contains selected unaudited quarterly financial data
for the eight fiscal quarters in the period ended September 29, 2001. In
management's opinion, the unaudited data has been prepared on the same basis as
the audited information and includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the data for the
periods presented. Sanmina-SCI's results of operations have varied and may
continue to fluctuate significantly from quarter to quarter. Results of
operations in any period should not be considered indicative of the results to
be expected from any future period. In June 1998, March 2000 and January 2001,
Sanmina-SCI affected a two-for-one stock split in the form of a stock dividend.
Accordingly, all share and per share data has been adjusted to retroactively
reflect the stock splits. Common stock prices reflect high and low reported
sales prices, as reported by the Nasdaq National Market. The acquisitions of
Elexsys, Altron, Manu-Tronics Inc., Hadco, Essex and Segerstrom were accounted
for as a pooling of interests, and therefore, all prior periods presented were
restated to combine the results of those companies.

FACTORS AFFECTING OPERATING RESULTS

This report contains forward-looking statements, which involve risks and
uncertainties. Our actual results could differ materially from those anticipated
by such forward looking statements as a result of certain factors, including
those set forth below. You should carefully consider the risks described below
in connection with any evaluation of our business and prospects. Additional
risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business operations. A holder of securities
issued by Sanmina-SCI should be aware of these and other various risks,
including those just described and those described below. The risks set forth in
this report on Form 10-K are not the only risks we face. If any of the risks set
forth above or if any of the following risks occur, our business, financial
condition and results of operations could be materially adversely affected. In
that case, the trading price of our common stock and our convertible
subordinated notes could decline.

Keep these risk factors in mind when you read "forward-looking" statements
elsewhere in this report and in other reports and documents filed by Sanmina-SCI
with the Securities and Exchange Commission. These are statements that relate to
our expectations for future events and time periods. Generally, the words
"anticipate," "expect," "intend" and similar expressions identify
forward-looking statements. Forward-looking statements involve risks and
uncertainties, and future events and circumstances could differ significantly
from those anticipated in the forward-looking statements.

SANMINA-SCI FACES UNCERTAINTIES RELATING TO THE INTEGRATION OF SCI'S OPERATIONS,
SYSTEMS AND PERSONNEL.

In December 2001, Sanmina Corporation and SCI Systems, Inc. completed a
merger to create Sanmina-SCI. Integrating the operations, systems and personnel
of SCI will be a complex process, and as such, the integration may not be
completed in a timely manner or achieve the anticipated benefits of the merger.
The challenges involved in this integration include:

- retaining existing customers, suppliers and other business partners of
each company;

- retaining and integrating management and other key employees of both
Sanmina-SCI and SCI;

- combining product and service offerings effectively, quickly and without
disruption to Sanmina-SCI's or SCI's ongoing businesses;

30

- transitioning all systems to a common information technology system;

- persuading employees that the business cultures of Sanmina-SCI and SCI
are compatible; and

- developing, maintaining and combining uniform standards, controls,
procedures and policies.

Sanmina-SCI may not succeed in addressing these risks or any other problems
encountered in connection with the merger. The diversion of the attention of
Sanmina-SCI's management and any difficulties encountered in the process of
combining the companies could cause the disruption of, or a loss of momentum in,
the activities of Sanmina-SCI's business. In addition, there may be
unanticipated expenses related to integration of the two companies. Further,
Sanmina-SCI cannot assure you that the growth rate of the combined company will
equal the historical growth rates experienced by either Sanmina or SCI prior to
the merger.

CUSTOMER AND EMPLOYEE UNCERTAINTY ABOUT THE MERGER COULD HARM THE COMBINED
COMPANY.

Sanmina-SCI's customers may, in response to the consummation of the merger,
seek alternative sources of product supply or service, or change orders for
products due to uncertainty over the integration of the two companies or the
strategic position of Sanmina-SCI. As a result, Sanmina-SCI may experience
customer attrition due to the merger, which could harm Sanmina-SCI's results of
operations. In addition, employees of Sanmina-SCI may experience uncertainty
about their future roles with the combined company until or after Sanmina-SCI
announces and executes its integration plan with regard to employees. This may
adversely affect Sanmina-SCI's ability to attract and retain key management,
marketing and technical personnel.

IF SANMINA-SCI DOES NOT SUCCESSFULLY INTEGRATE SANMINA AND SCI OR THE MERGER'S
BENEFITS DO NOT MEET THE EXPECTATIONS OF INVESTORS OR FINANCIAL OR INDUSTRY
ANALYSTS, THE MARKET PRICE OF SANMINA-SCI COMMON STOCK MAY DECLINE.

The market price of Sanmina-SCI common stock may decline as a result of the
merger for many reasons including:

- if the integration of Sanmina-SCI and SCI is not completed in a timely
and efficient manner;

- if the perceived benefits of the merger are not achieved as rapidly or to
the extent anticipated by financial or industry analysts;

- if the effect of the merger on the combined company's financial results
is not consistent with the expectations of financial or industry
analysts; or

- if significant stockholders of Sanmina-SCI decide to dispose of their
shares after the merger because the results of the merger are not
consistent with their expectations.

THE MERGER WILL RESULT IN SIGNIFICANT COSTS TO SANMINA-SCI.

Costs associated with combining the operations of the two companies are
difficult to estimate. Direct transaction costs to Sanmina-SCI, which will be
included as part of the total purchase price for accounting purposes, are
estimated at approximately $20.0 million. Direct transaction costs of SCI, which
will be expensed in the quarter that the merger closes, are estimated at
approximately $26.8 million. These costs are expected to consist primarily of
fees for investment bankers, attorneys, accountants, filing fees and financial
printing. The aggregate amount of these costs may be greater than currently
anticipated. Sanmina-SCI believes the combined company may incur charges to
operations, which are not currently reasonably estimable, in the quarter in
which the merger is completed or the following quarters, to reflect costs
associated with integrating the businesses and operations of Sanmina-SCI and
SCI. There can be no assurance that Sanmina-SCI will not incur additional
material charges in subsequent quarters to reflect additional costs associated
with the merger.

31

PURCHASE BUSINESS COMBINATION ACCOUNTING TREATMENT AND THE IMPACT OF
AMORTIZATION OF IDENTIFIABLE INTANGIBLES COULD ADVERSELY AFFECT SANMINA-SCI'S
OPERATING RESULTS.

Under United States generally accepted accounting principles that apply to
Sanmina-SCI, Sanmina-SCI will account for the merger as a purchase business
combination. Sanmina-SCI will record the following as the cost of acquiring SCI:

- the market value of Sanmina-SCI common stock issued in connection with
the merger;

- the fair value of the options to purchase SCI common stock that will be
converted into options to purchase Sanmina-SCI common stock in connection
with the merger; and

- the amount of direct transaction costs incurred by Sanmina-SCI.

Sanmina-SCI will allocate the cost of the items described above to the
individual assets acquired and liabilities assumed, including deferred
compensation and identifiable intangible assets such as technology-based
intangible assets, based on their respective fair values. Identifiable
intangible assets with finite lives will be amortized over those lives.
Intangible assets, including goodwill, with indefinite lives will not be
amortized. The amount of purchase cost allocated to goodwill and identifiable
intangibles will be estimated using the estimated purchase price of $4.4
billion, which is based on the average closing price of Sanmina-SCI's common
stock during the five trading day period ended July 17, 2001, or $20.87 per
share, and the fair value of the tangible assets acquired and liabilities
assumed. Deferred compensation will be amortized over the remaining vesting
period of SCI's outstanding stock options of up to three years. The amount of
Purchase cost allocated to deferred compensation is estimated at $6.6 million.
If deferred compensation were amortized in equal quarterly amounts over the
average remaining vesting period of the related stock options, the accounting
charge attributable to these items would be approximately $0.6 million per
quarter and $2.2 million per fiscal year in the year following the closing date
of the merger. As a result, business combination accounting treatment of the
merger will decrease the net income of Sanmina-SCI in the foreseeable future
based on the amortization of any identifiable intangible assets and deferred
compensation, which could have a material adverse effect on the market value of
Sanmina-SCI common stock. These amounts are only estimates, however, and actual
amounts may differ from these estimates.

SANMINA-SCI IS HEAVILY DEPENDENT ON THE ELECTRONICS INDUSTRY IN GENERAL AND THE
COMMUNICATIONS SECTOR IN PARTICULAR, AND CHANGES IN THE INDUSTRY COULD HARM
SANMINA-SCI'S BUSINESS AND OPERATING RESULTS.

Sanmina-SCI's business is heavily dependent on the health of the
electronics industry. Sanmina-SCI's customers are manufacturers in the
communications, high-speed computer systems, medical and industrial
instrumentation, multimedia entertainment and personal computers sectors. These
industry sectors, and the electronics industry as a whole, are subject to rapid
technological change and product obsolescence. Sanmina-SCI's customers can
discontinue or modify products containing components manufactured by them. Any
discontinuance or modification of orders or commitments could harm Sanmina-SCI's
operating results.

A substantial portion of Sanmina-SCI's revenue was derived from the
communications sector. During 2001, the communications sector has undergone a
significant downturn and many major communications companies have reported
declining sales and operating results. The downturn in this sector has resulted
in rescheduling of customer orders and shipments and has adversely affected
Sanmina-SCI's operating results. In the event this downturn continues,
Sanmina-SCI's operating results will continue to be harmed.

The electronics industry is also subject to economic cycles and has in the
past experienced, and is likely in the future to experience, recessionary
periods. In particular, many sectors of the electronics industry are currently
experiencing the effects of a downturn in economic conditions. This downturn is
leading to reduced demand for the services provided by EMS companies. These
changes in demand and in economic conditions have resulted and may continue to
result in customer rescheduling of orders and shipments, which could affect
Sanmina-SCI's results of operations. In addition, a protracted general recession
in the electronics industry could have a material adverse effect on
Sanmina-SCI's business, financial condition and results of operations.

32

In addition, Sanmina-SCI has experienced and may continue to experience,
the risk that customers will be unable or unwilling to pay for products and
services already provided to them. On June 13, 2001, Sanmina-SCI filed a
complaint against Metricom, Inc. in the California state court. The complaint
arose out of a July 2, 1999 agreement for electronic manufacturing services and
seeks compensation for cancellation charges arising under the agreement.
Sanmina-SCI's damages consist of the cost of certain materials and
work-in-process currently held by Sanmina-SCI. Metricom has filed for Chapter 11
bankruptcy and, as a result, Sanmina-SCI's claim has been stayed. Accordingly,
Sanmina-SCI has filed a claim for its damages in the bankruptcy proceedings.
Sanmina-SCI currently estimates it has no additional exposure on this matter
(after exhausting allocated reserves).

SANMINA-SCI TYPICALLY DOES NOT OBTAIN LONG-TERM VOLUME PURCHASE COMMITMENTS FROM
CUSTOMERS, AND CANCELLATIONS AND RESCHEDULING OF PURCHASE ORDERS COULD HARM
SANMINA-SCI'S OPERATING RESULTS AND CAUSE ITS STOCK PRICE TO DECLINE.

Sanmina-SCI typically does not obtain long-term volume purchase commitments
from its customers. Customer orders may be canceled and volume levels may be
changed or delayed. For example, Sanmina-SCI has recently experienced certain
cancellation and rescheduling of shipment dates of customer orders. Results of
operations in future fiscal periods may continue to be affected by customer
cancellations and reschedulings as well as by changes in shipment volumes.
Sanmina-SCI cannot assure you that it will be able to replace canceled, delayed
or reduced contracts or purchase orders with new business. As a result, future
cancellations or rescheduling of orders or commitments could cause Sanmina-SCI's
operating results to be below expectations, which would likely cause
Sanmina-SCI's stock price to decline.

SANMINA-SCI'S OPERATING RESULTS MAY FLUCTUATE SUBSTANTIALLY, WHICH MAY CAUSE ITS
STOCK PRICE TO FALL.

Sanmina-SCI's quarterly and annual results of operations have varied in the
past, and Sanmina-SCI's operating results may vary significantly in the future
due to a number of factors including, but not limited to, the following:

- timing of orders from major customers;

- mix of products ordered by and shipped to major customers;

- the volume of orders as related to Sanmina-SCI's capacity;

- pricing and other competitive pressures;

- component shortages, which could cause Sanmina-SCI to be unable to meet
customer delivery schedules;

- fluctuations in component prices;

- economic conditions in the electronics industry;

- Sanmina-SCI's ability to effectively manage inventory and fixed assets;
and

- Sanmina-SCI's ability to time expenditures in anticipation of future
sales.

Sanmina-SCI's results can also be significantly influenced by the
development and introduction of new products by its customers. From time to
time, Sanmina-SCI experiences changes change in the volume of sales to each of
its principal customers, and operating results may be affected on a
period-to-period basis by these changes. Sanmina-SCI's customers generally
require short delivery cycles, and a substantial portion of each of their
backlogs are typically scheduled for delivery within six months. Quarterly sales
and operating results therefore depend in large part on the volume and timing of
bookings received during the quarter, which are difficult to forecast.

Sanmina-SCI's backlog also affects its ability to plan production and
inventory levels, which could lead to fluctuations in operating results. In
addition, a significant portion of Sanmina-SCI's operating expenses are
relatively fixed in nature and planned expenditures are based in part on
anticipated orders. Any inability to

33

adjust spending quickly enough to compensate for any revenue shortfall may
magnify the adverse impact of such revenue shortfall on Sanmina-SCI's results of
operations. Results of operations in any period should not be considered
indicative of the results to be expected for any future period. In addition,
fluctuations in operating results may also result in fluctuations in the price
of Sanmina-SCI common stock.

SANMINA-SCI RELIES ON A LIMITED NUMBER OF CUSTOMERS FOR A SUBSTANTIAL PART OF
ITS REVENUES, AND DECLINES IN SALES TO MAJOR CUSTOMERS COULD HARM SANMINA-SCI'S
OPERATING RESULTS.

Sales to a limited number of customers have accounted for a significant
portion of each of Sanmina-SCI's and SCI's revenues in each fiscal period.
Sanmina-SCI expects that sales to a limited number of customers will continue to
account for a substantial portion of Sanmina-SCI's total revenues in future
periods. Sanmina-SCI and SCI each has experienced periods in which sales to some
of their respective major customers, as a percentage of total revenues, have
fluctuated due to delays or failures to place expected orders.

During fiscal 2001, 2000 and 1999, and prior to the merger, sales to
Sanmina-SCI's ten largest customers accounted for approximately 51.1%, 54.8% and
48.1%, respectively, of Sanmina-SCI's net sales. For fiscal 2000, only sales to
one customer, Nortel Networks Corporation, represented more than 10% of
Sanmina-SCI's net sales. For fiscal 1999 and 1998, no single customer accounted
for more than 10% of net sales. This customer information gives effect to the
restatement of Sanmina-SCI's results of operations to reflect its recent
acquisition of AB Segerstrom and Svensson.

During fiscal years ending June 30, 2001, 2000 and 1999, SCI's ten largest
customers contributed more than 70% of SCI's revenues. For fiscal 2001, sales to
Hewlett-Packard Company, Dell Computer Corporation and Nortel Networks
Corporation each represented more than 10% of SCI's revenues. For fiscal 2000,
sales to Hewlett-Packard Company and Nortel Networks Corporation each
represented more than 10% of SCI's revenues and for fiscal 1999, sales to
Hewlett-Packard, Dell and Compaq each represented more than 10% of SCI's
revenues.

Although Sanmina-SCI cannot assure you that it's combined principal
customers will continue to purchase products and services from Sanmina-SCI at
current levels, if at all, and Sanmina-SCI expects to continue to depend upon
its principal customers for a significant portion of Sanmina-SCI's net sales.
Sanmina-SCI's customer concentration could increase or decrease, depending on
future customer requirements, which will depend in large part, on market
conditions in the electronics industry segments in which Sanmina-SCI's customers
participate. The loss of one or more major customers or declines in sales to
major customers could significantly harm Sanmina-SCI's business and operating
results and lead to declines in the price of Sanmina-SCI common stock.

SANMINA-SCI IS SUBJECT TO RISKS ASSOCIATED WITH ACQUISITIONS, AND THESE RISKS
COULD HARM SANMINA-SCI'S OPERATING RESULTS AND CAUSE ITS STOCK PRICE TO DECLINE.

Sanmina-SCI and SCI each have, for the past several fiscal years, pursued a
strategy of growth through acquisitions. In Sanmina-SCI's case these
acquisitions have primarily involved acquisitions of entire companies. In
addition, Sanmina-SCI and SCI have acquired selected assets from electronics
industry OEMs, principally equipment, inventory and, in certain cases,
facilities or facility leases. These transactions also typically involve new
supply agreements with OEMs. Acquisitions of companies and businesses and
expansion of operations involve certain risks, including the following:

- the potential inability to successfully integrate acquired operations and
businesses or to realize anticipated synergies, economies of scale or
other value;

- diversion of management's attention;

- difficulties in scaling up production at new sites and coordinating
management of operations at new sites;

- difficulties associated with managing and integrating operations in
distant geographic locations, such as Europe, the Middle East, Asia and
Latin America;

34

- the possible need to restructure, modify or terminate customer
relationships of the acquired company; and

- loss of key employees of acquired operations.

Accordingly, Sanmina-SCI may experience problems in integrating the
operations recently acquired or operations associated with any future
acquisition. Sanmina-SCI therefore cannot assure you that any recent or future
acquisition will result in a positive contribution to Sanmina-SCI's results of
operations. Furthermore, Sanmina-SCI cannot assure you that it will realize
value from any acquisition which equals or exceeds the consideration paid. In
particular, the successful combination of Sanmina-SCI and any businesses
Sanmina-SCI acquires in the future will require substantial effort from each
company, including the integration and coordination of sales and marketing
efforts. The diversion of the attention of management and any difficulties
encountered in the transition process, including, the interruption of, or a loss
of momentum in, the activities of any future acquisition, problems associated
with integration of management information and reporting systems, and delays in
implementation of consolidation plans, could harm Sanmina-SCI's ability to
realize the anticipated benefits of any future acquisition. Any failure of
Sanmina-SCI to realize the anticipated benefits of its acquisitions could harm
Sanmina-SCI's business and operating results, and could cause the price of
Sanmina-SCI common stock to decline. In addition, future acquisitions may result
in dilutive issuances of equity securities, the incurrence of additional debt,
large one-time write-offs and the creation of goodwill and other intangible
assets that could result in amortization expense or impairment charges. These
factors could harm Sanmina-SCI's business and operating results and cause the
price of Sanmina-SCI's common stock to decline.

OEM ASSET DIVESTITURE TRANSACTIONS INVOLVE SIGNIFICANT RISKS THAT COULD HARM
SANMINA-SCI.

Sanmina and SCI have pursued and Sanmina-SCI expects to continue to pursue
opportunities to acquire assembly operations being divested by electronics
industry OEMs. Sanmina-SCI expects that competition for these opportunities
among electronics manufacturing services firms will be intense as these
transactions typically enable the acquiror to enter into long-term supply
arrangements with the divesting OEM. Accordingly, Sanmina-SCI's future results
of operations could be harmed if it is not successful in consummating a
significant portion of the OEM divestiture transactions it pursues. In addition,
due to the large scale and long-term nature of supply arrangements typically
entered into in OEM divestiture transactions and because cost reductions are
generally a major reason why the OEM is divesting operations, pricing of
manufacturing services may be less favorable to the manufacturer than in
standard contractual relationships. For example, Sanmina-SCI experienced
declines in gross margins during fiscal 2000 due to Sanmina-SCI's increase in
sales to Nortel Networks under Sanmina-SCI's supply agreement relating to the
operations it acquired. In addition, premiums paid to the divesting OEM may be
in excess of the value that can be realized from the transaction. Furthermore,
because these transactions involve customers, they can present difficult
managerial and organizational challenges, particularly with respect to excess
inventory, excess capacity and similar problems. If Sanmina-SCI enters into new
OEM divestiture transactions, Sanmina-SCI may experience further erosion in
gross margins as a result of the pricing structure in such transactions as well
as problems arising from excess inventory and capacity.

SANMINA-SCI MAY EXPERIENCE COMPONENT SHORTAGES, WHICH WOULD CAUSE IT TO DELAY
SHIPMENTS TO CUSTOMERS, RESULTING IN POTENTIAL DECLINES IN REVENUES AND
OPERATING RESULTS.

In the recent past, a number of components purchased by either Sanmina-SCI
or SCI and incorporated into assemblies and subassemblies they each produced
were subject to shortages. These components include application-specific
integrated circuits, capacitors and connectors. Unanticipated component
shortages caused Sanmina-SCI to be unable to make certain scheduled shipments to
customers during fiscal 2000 and 2001 and may do so in the future. SCI also
experienced shipment delays due to component shortages. The inability to make
scheduled shipments in the future could cause Sanmina-SCI to experience a
shortfall in revenues and cost absorption. Sanmina-SCI could also experience
negative customer goodwill due to the delay in shipment. Component shortages may
also increase Sanmina-SCI's cost of goods due to premium charges it must pay to
purchase components in short supply and due to changes in the mix of assemblies
shipped to customers. For
35

example, shortages in certain components negatively affected Sanmina-SCI's and
SCI's operating results and contributed to an increase in inventory levels
during fiscal 2001. Accordingly, component shortages could harm the combined
company's operating results for a particular fiscal period due to the resulting
revenue shortfall, cost absorption, or cost increases and could also damage
customer relationships over a longer-term period.

SANMINA-SCI IS SUBJECT TO COMPETITION AND TECHNOLOGICAL CHANGE, AND ITS BUSINESS
MAY BE HARMED BY COMPETITIVE PRESSURES AND FAILURE TO ADAPT TO TECHNOLOGICAL
CHANGES.

The electronics manufacturing services industry is highly competitive.
Sanmina-SCI competes on a worldwide basis to provide electronics manufacturing
services to OEM's. Sanmina-SCI must continually develop improved manufacturing
processes to accommodate customers' needs for increasingly complex products.
Sanmina-SCI's competitors include large independent manufacturers such as
Celestica, Inc., Flextronics International Ltd., Jabil Circuit, Inc and
Solectron Corporation. Some of these companies have greater manufacturing and
financial resources than Sanmina-SCI. In addition, Sanmina-SCI faces competition
from OEMs that manufacture their own products.

The communications equipment industry is highly fragmented and
characterized by intense competition. Sanmina-SCI offers products and services
in the communications equipment product space, which is highly competitive but
is less fragmented than the electronics manufacturing services as a whole.
Sanmina-SCI's competitors also manufacture communications equipment and some of
these competitors have greater manufacturing and financial resources than
Sanmina-SCI, as well as greater surface mount assembly capacity. Consequently,
as a participant in the communications equipment product space, Sanmina-SCI must
continually develop improved manufacturing processes to accommodate its
customers' needs for increasingly complex products.

During periods of recession in the electronics industry, Sanmina-SCI's
competitive advantages in the areas of quick turnaround manufacturing and
responsive customer service may be of reduced importance to electronics OEMs,
who may become more price sensitive. Sanmina-SCI may also be at a competitive
disadvantage with respect to price when compared to manufacturers with lower
cost structures, particularly those with offshore facilities where labor and
other costs are lower.

Sanmina-SCI will experience intense competition which is expected to
intensify further as more companies enter markets in which Sanmina-SCI operates,
as existing competitors expand capacity and as the industry consolidates. To
remain competitive, Sanmina-SCI must develop and provide technologically
advanced engineering services, information systems and manufacturing processes.
In addition, Sanmina-SCI must maintain high quality products and services, offer
flexible delivery schedules and deliver products on a timely basis. Failure to
satisfy these or other requirements could adversely affect the company.

SANMINA-SCI MAY BE AFFECTED BY CONSOLIDATION IN THE ELECTRONICS INDUSTRY.

As a result of the current economic climate, consolidation in the
electronics industry may increase. For example, Hewlett-Packard and Compaq, two
major electronics companies, have recently announced an agreement to merge.
Consolidation in the electronics industry could result in an increase in excess
manufacturing capacity as companies seek to close plants or take other steps to
increase efficiencies and realize synergies of mergers. The availability of
excess manufacturing capacity could create increased pricing and competitive
pressures for the electronics manufacturing services industry as a whole and the
combined company in particular. In addition, consolidation could also result in
an increasing number of very large electronics companies offering products in
multiple sectors of the electronics industry. The growth of these large
companies, with significant purchasing power and market power, could also result
in increased pricing and competitive pressures for the company. Accordingly,
industry consolidation could harm Sanmina-SCI's business.

36

SANMINA-SCI'S OPERATING RESULTS MAY BE AFFECTED BY SEASONALITY.

Seasonal demands for products produced by SCI, prior to the merger, for its
customers and sold to consumers may impact Sanmina-SCI's quarterly revenues. The
effect of seasonality has increased in recent quarters, as the proportion of
SCI's customers' products ultimately sold at retail, has increased. SCI's
operating margins have undergone seasonal fluctuations in the past, particularly
in the first fiscal quarter due to the slowing effects of the summer season.
Sanmina-SCI believes these seasonality effects may continue at the combined
company.

ENVIRONMENTAL MATTERS ARE A KEY CONSIDERATION IN SANMINA-SCI'S AND SCI'S
BUSINESS AND FAILURE TO COMPLY WITH THE REQUIREMENTS OF ENVIRONMENTAL LAWS COULD
HARM ITS BUSINESS.

Sanmina-SCI is subject to a variety of local, state and federal
environmental laws and regulations in the United States and elsewhere relating
to the treatment, storage, use, discharge and disposal of chemicals, solid waste
and other hazardous materials used during their manufacturing processes, as well
as air quality regulations, restrictions on water use, labeling requirements,
occupational safety and health laws, and product take back and product content
requirements. Proper waste disposal is a major consideration for printed circuit
board manufacturers such as Sanmina-SCI because metals and chemicals are used in
the manufacturing process. Maintenance of environmental controls is also
important in the electronics assembly process. When violations of environmental
laws occur, Sanmina-SCI can be held liable for damages and the costs of remedial
actions and can also be subject to revocation of their permits necessary to
conduct its businesses. There can be no assurance that violations of
environmental laws will not occur in the future as a result of the inability to
obtain permits, human error, equipment failure or other causes. Any permit
revocations could require the combined company to cease or limit production at
one or more facilities, which could seriously harm the combined company's
business, financial condition and results of operations. Moreover, the failure
to comply with present and future regulations could restrict the combined
company's ability to expand facilities or could require the combined company to
acquire costly equipment or to incur other significant expenses to comply with
environmental regulations.

Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with violations.
Sanmina-SCI will operate in several environmentally sensitive locations and will
be subject to potentially conflicting and changing regulatory agendas of
political, business and environmental groups. Changes or restrictions on
discharge limits, emissions levels, permitting requirements and material storage
or handling might require a higher than anticipated level of capital investment
or, depending on the severity of the impact of the foregoing factors, plant
relocation. Compliance with new or existing regulations could seriously harm
Sanmina-SCI's business, financial condition and results of operations.

Sanmina-SCI has liabilities associated with environmental contamination at
its current and former facilities (and those of the companies it has acquired)
which are described in detail in the following sections as well as liabilities
associated with disposal of hazardous waste at other locations. Sanmina-SCI has
also been named as a potentially responsible party at several contaminated
disposal sites as a result of the past disposal of hazardous waste by companies
acquired by Sanmina-SCI or their corporate predecessors. While liabilities for
such historic disposal activities have not materially affected Sanmina-SCI's
financial condition to date, there can be no guarantee that past disposal
activities will not result in liability which will materially affect Sanmina-SCI
in the future. Sanmina-SCI currently anticipates that its liabilities associated
with its disposal sites will range from $1,150,000 to $2,150,000. Sanmina-SCI,
in consultation with its consultants, has determined that the appropriate
reserve for these matters is $1,450,000.

SANMINA-SCI IS SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES OPERATED BY
ACQUIRED COMPANIES AND COULD INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL
REMEDIATION AND RELATED ACTIVITIES AT THESE SITES.

Sanmina-SCI has liabilities associated with disposal of hazardous waste.
Sanmina-SCI has been named as a potentially responsible party at several
contaminated disposal sites as a result of the past disposal of hazardous waste
by companies acquired by Sanmina-SCI or their corporate predecessors.
Sanmina-SCI

37

currently anticipates that its liabilities associated with its disposal sites
will range from $1,150,000 to $2,150,000. Sanmina-SCI, in consultation with its
consultants, has determined that the best estimate within this range for these
matters is $1,450,000.

Elexsys International, Inc. -- In November 1997, Sanmina-SCI acquired
Elexsys International Inc. ("Elexsys"), which became a wholly-owned subsidiary
of Sanmina-SCI and has since been merged into Sanmina-SCI. Several facilities
owned or occupied by Elexsys at the time of the acquisition, or formerly owned
or occupied by Elexsys or companies acquired by Elexsys, had either soil or
groundwater contamination or contamination of groundwater underneath or near the
facility. For example, the Von Karman Avenue. Irvine, California facility, a
printed circuit board manufacturing plant, has solvent contamination in soil and
groundwater and is currently under investigation by the California Regional
Water Quality Control Board ("RWQCB"). Sanmina-SCI has been pumping and treating
groundwater for a number of years. By letter dated June 8, 2001, the RWQCB
threatened to issue a Clean-up and Abatement Order to address concerns about
additional investigation and remediation. No such order has been issued and
Sanmina-SCI is working with the RWQCB to address their concerns. To date, the
cost of the various investigations and of operating the remediation system at
the Irvine facility have not materially affected Sanmina-SCI's financial
condition. In the event Sanmina-SCI is required to undertake additional
groundwater or soil cleanup, the cost of such cleanup is likely to be
substantial. However, Sanmina-SCI believes, based on the information currently
available, that the potential cost of any groundwater or soil cleanup would not
materially affect Sanmina-SCI's financial condition. Currently, Sanmina-SCI is
unable to anticipate whether any third party claims will be brought against them
for the existence of contamination at the Irvine facility.

At two facilities formerly owned or occupied by a predecessor company to
Elexsys in Mountain View, California, Sanmina-SCI has been required by the
California Department of Toxic Substances Control ("DTSC") to undertake
investigation of soil and groundwater. DTSC has advised Sanmina-SCI that no
further investigation will be required at one of the two facilities. At the
other facility, test results have not been sufficient to enable Sanmina-SCI to
determine whether or not cleanup activities will be required; however,
Sanmina-SCI does not believe any such activities will be required. Sanmina-SCI
has not been ordered to undertake any soil or groundwater cleanup activities at
either of the two former Mountain View facilities. Nevertheless, the process of
remediating contaminated soil and groundwater is costly, and if Sanmina-SCI is
required to undertake substantial remediation activities at one or more of the
former Elexsys facilities, the costs of such activities may materially affect
Sanmina-SCI's financial condition.

Sanmina-SCI, through evaluations performed by a consultant, has determined
that the mean expected cost for the remaining environmental liabilities
associated with site contamination at former Elexsys facilities is $3,245,000
with a maximum of $9,765,000. After discussions with Sanmina-SCI's environmental
consultants, the company has determined that the best estimate within this range
for these matters is $4,100,000.

Altron, Inc. -- In November 1998, Sanmina-SCI acquired Altron, which became
a wholly owned subsidiary of Sanmina-SCI and has since been merged into the
company. Altron was advised in 1993 by Olin Corporation ("Olin") that
contamination resulting from activities of prior owners of property owned by
Olin and located close to the Altron manufacturing plant in Wilmington,
Massachusetts, had migrated under the Altron plant. Olin has assumed full
responsibility for any remediation activities that may be required and has
agreed to indemnify and hold Altron harmless from any and all costs,
liabilities, fines, penalties, charges and expenses arising from and relating to
any action or requirement, whether imposed by statute, ordinance, rule,
regulation, order, decree or by general principles of law to remediate, clean up
or abate contamination emanating from the Olin site. Although Sanmina-SCI
believes that Olin's assumption of responsibility will result in no remediation
cost to Sanmina-SCI from the contamination, there can be no assurance that
Sanmina-SCI will not be subject to some costs regarding this matter, but
Sanmina-SCI does not anticipate that costs related to this matter, if any, will
materially affect its financial condition.

Hadco Corporation -- Hadco, acquired by Sanmina-SCI in June 2000, is aware
of certain chemicals that exist in the ground at certain of its facilities.
Hadco has notified various governmental agencies and continues to work with them
to monitor and resolve these matters. During March 1995, Hadco received a Record
Of Decision (ROD) from the New York State Department of Environmental
Conservation (NYSDEC),

38

regarding soil and groundwater contamination at its Owego, New York facility.
Based on a Remedial Investigation and Feasibility Study (RIFS) for apparent
on-site contamination at that facility and a Focused Feasibility Study (FFS),
each prepared by environmental consultants of Hadco, the NYSDEC has approved a
remediation program of groundwater withdrawal and treatment and iterative soil
flushing. Hadco has executed a Modification of the Order on Consent to implement
the approved ROD. Capital equipment for this remediation has already been
acquired by Hadco, and future operation and maintenance costs, which will be
incurred and expended over the estimated life of the program of the next 28
years, are estimated at between $40,000 and $100,000 per year. In the summer of
1998, NYSDEC took additional samples from a wetland area near Hadco's Owego
facility. Analytical reports of earlier sediment samples indicated the presence
of certain inorganics. The new samples showed elevated levels of certain metals,
but NYSDEC has not made a determination as to the potential source of such
metals, the remedial action to be taken, or the persons to undertake and/or pay
for any remediation. There can be no assurance that Hadco and/or other third
parties will not be required to conduct additional investigations and
remediation at that location, the costs of which are currently indeterminable.

Hadco has commenced the operation of a groundwater extraction system at its
Derry, New Hampshire facility to address certain groundwater contamination and
migration control issues. It is not possible to make a reliable estimate of the
length of time remedial activity will have to be performed. However, it is
anticipated that the groundwater extraction system will be operated for at least
30 years. There can be no assurance that Hadco will not be required to conduct
additional investigations and remediation relating to the Derry facility. The
total costs of such groundwater extraction system and of conducting any
additional investigations and remediation relating to the Derry facility are not
fully determinable.

From 1974 to 1980, Hadco operated a printed circuit manufacturing facility
in Florida as a lessee. In June 1999, Hadco, Gould Electronics, Inc. ("Gould")
and the Florida Department of Environmental Protection ("FDEP") entered into a
Settlement Agreement which provides that Hadco and Gould will undertake remedial
action based on a Supplemental Contamination Assessment Report and a later
Feasibility Study, which has been prepared by a consultant to Hadco and Gould
and approved by the FDEP. The remedial capital costs are estimated to be $1.4
million. In addition, ongoing monitoring and operation and maintenance costs are
estimated to be $1.4 million, which includes operation of the remediation system
for 8 years and monitoring for 30 years. Actual remedial activities have not yet
commenced.

In March 1993, the EPA notified Hadco Santa Clara of its potential
liability for maintenance and remediation costs in connection with a hazardous
waste disposal facility operated by Casmalia Resources, a California Limited
Partnership, in Santa Barbara County, California. In June 1997, the United
States District Court in Los Angeles, California approved and entered a Consent
Decree among the EPA and 49 entities (including Hadco Santa Clara) acting
through the Casmalia Steering Committee (CSC). The Consent Decree sets forth the
terms and conditions under which the CSC will carry out work aimed at final
closure of the site. Certain closure activities will be performed by the CSC.
Under the Consent Decree, the settling parties will work with the EPA to pursue
the non-settling parties to ensure they participate in contributing to the
closure and long-term operation and maintenance of the facility.

In May 2000, Sanmina-SCI has been through evaluations performed by its
consultant has determined that the mean expected cost for the remaining
environmental liabilities associated with site contamination at former Hadco
facilities is $8,805,000 with a maximum of $32,630,000. After discussions with
consultants, the company has determined that the best estimate within this range
for these matters is $11,242,500.

Segerstrom -- In March 2001, Sanmina-SCI acquired approximately 94% of the
outstanding shares and convertible debentures of Segerstrom. It is possible that
previous operations have contaminated soil and/or groundwater at Segerstrom
facilities. Sanmina-SCI believes, based on the limited information currently
available, that the cost of any groundwater or soil clean-up that may be
required would not harm Sanmina-SCI's business, financial condition and results
of operations. Nevertheless, the process of remediating contaminated soil and
groundwater is costly, and if Sanmina-SCI is required to undertake substantial
remediation activities at one or more of the former Segerstrom facilities, there
can be no assurance that the costs of such activities would not harm
Sanmina-SCI's business, financial condition and results of operations.

39

Sanmina-SCI through evaluations performed by its consultant has determined that
the mean expected cost for the remaining environmental liabilities associated
with site contamination at Segerstrom facilities is $8,239,657 with a maximum of
$18,023,138. After discussions with Sanmina-SCI's current consultants, the
company has determined that the best estimate within this range for these
matters is $10,615,553.

Electro Mechanical Solutions -- In October 2001, Sanmina-SCI acquired
assets of Electro-Mechanical Solutions, Inc. ("EM Solutions") and related
entities, in part through bankruptcy proceedings. Sanmina-SCI's environmental
consultants reviewed the environmental conditions on the sites operated by EM
Solutions, some of which will be occupied for a period of time by Sanmina-SCI,
as lessee. The consultants have determined that contamination does or may exist
at some of these locations which may have primarily been caused by occupants on
the properties prior to EM Solutions. As determined by the consultants, the
environmental liabilities associated with the properties range from $1,482,000
and $4,556,000 in the aggregate. As the contamination on these sites was not
caused by Sanmina-SCI, and the liability for such contamination was not assumed
contractually by Sanmina-SCI, Sanmina-SCI does not believe it has material
liability for these environmental matters. Sanmina-SCI is currently evaluating
the appropriate reserves, if any, to set aside for these matters.

SCI IS SUBJECT TO ENVIRONMENTAL CONTINGENCIES AT SITES OPERATED BY SCI AND COULD
INCUR SUBSTANTIAL COSTS FOR ENVIRONMENTAL REMEDIATION AND RELATED ACTIVITIES AT
THESE SITES.

SCI's Plant 34 in Brockville, Ontario, Canada has groundwater contamination
that Nortel Networks is remediating to comply with applicable standards. Nortel
Networks has agreed to indemnify SCI for any loss it incurs as a result of
claims by third parties relating to the groundwater contamination or the work
associated with the cleanup of the contamination. The treatment system has been
in operation since 1992 at a cost of $100,000 a year to Nortel Networks and SCI
therefore does not believe that the contamination has migrated off-site.
However, there may also be soil and/or groundwater contamination at other
current or former SCI manufacturing facilities which has yet to be discovered
and could give rise to material remediation obligations and/or other
liabilities. In the course of preparing its plants located in Arab, Alabama, and
Colorado Springs, Colorado, for sale, SCI conducted a Phase I Environmental Site
Assessment and Limited Compliance Review at both facilities. Both assessments
indicated the presence of lead in wipe samples obtained from surfaces in the
interior of these plants. While there are no standards for lead on surfaces in
commercial buildings, these concentrations are above residential standards not
applicable to these facilities. Remediation activities to reduce the lead
concentrations are currently underway at both plants. Lead dust has also been
identified at SCI's San Jose, California, facility. The estimated clean up costs
for identified remediation activities at these plants is approximately $900,000.
In addition, lead contamination is suspected at Plant 11 in Rapid City, South
Dakota because of the age of the facility and the nature of the manufacturing
activities at the facility. Based on remediation costs at the facilities
discussed above, the clean-up costs for remediation activities at Plant 11 are
expected to be approximately $300,000.

As the manufacturing equipment that generated the lead dust is used at most
SCI manufacturing facilities, it is possible that lead dust could be present in
the interior of some or all of its current and former manufacturing facilities.
While SCI regularly monitors for airborne concentrations of lead in its
buildings and is not aware of any significant lead concentrations in excess of
the applicable OSHA standards, the presence of lead dust in these facilities
could give rise to affirmative remediation obligations and/or other liabilities
if the levels are found to be sufficiently high. Possible lead contamination at
other SCI facilities in being addressed through increased maintenance
activities.

Asbestos containing materials (ACM) are present at several SCI
manufacturing facilities. While this ACM is being managed in place pursuant to
ACM operations and maintenance plans, the presence of ACM could give rise to
affirmative remediation obligations and other liabilities. No third-party claims
relating to ACM have been brought at this time.

Sanmina-SCI hired a consultant, URS Corporation, to perform a review of
expected environmental liabilities relating to contamination of SCI's
facilities. This includes, for example, remediation of lead dust, asbestos
containing materials, leaking underground storage tank liabilities and other
known or potential

40

contamination events. The consultant's findings are that the mean expected cost
for such liabilities at a 50% or "optimistic level" (i.e. the amount that has a
50% chance of being exceeded) is $4,201,423 with a maximum liability (in the
consultant's report the "pessimistic level" or the amount that has a 5% chance
of being exceeded) is $22,519,632. For the purposes of planning and providing
for environmental reserves, Sanmina-SCI-SCI will use the consultant's "planning
level" number of $9,442,423, which is an amount that the consultant estimates
has only a 25% chance of being exceeded.

SOME EXECUTIVE OFFICERS AND KEY PERSONNEL ARE CRITICAL TO THE BUSINESS OF
SANMINA-SCI AND THESE OFFICERS AND KEY PERSONNEL MAY NOT REMAIN WITH SANMINA-SCI
IN THE FUTURE.

The success of Sanmina-SCI depends upon the continued service of some
executive officers and other key personnel. Generally, Sanmina-SCI's employees
are not bound by employment or non-competition agreements, and there can be no
assurance that Sanmina-SCI will retain its officers and key employees,
particularly its highly skilled design, process and test engineers involved in
the manufacture of existing products and development of new products and
processes. The competition for these employees is intense, and the loss of key
employees could negatively affect Sanmina-SCI. If Sanmina-SCI loses the services
of Jure Sola, co-chairman and chief executive officer, Randy Furr, president and
chief operating officer, Robert C. Bradshaw, president of EMS operations, one or
more of Sanmina-SCI other executive officers or key employees, or if one or more
of these individuals decides to join a competitor or otherwise compete directly
or indirectly with Sanmina-SCI, the company's business, operating results and
financial condition could be seriously harmed.

SANMINA-SCI HAS SUBSTANTIAL INDEBTEDNESS, SOME OF WHICH IS VARIABLE INTEREST
DEBT THAT IS AFFECTED BY INTEREST RATE FLUCTUATIONS.

In May 1999, Sanmina-SCI raised approximately $350 million through an
offering of four and one-quarter percent convertible subordinated notes due 2004
to qualified institutional investors. In September 2000, Sanmina-SCI raised
approximately $750 million through an offering of zero coupon convertible
subordinated debentures due 2020 to qualified institutional investors. For a
description of Sanmina-SCI's outstanding indebtedness, refer to Sanmina-SCI's
audited financial statements and footnotes elsewhere in this document.
Sanmina-SCI's other indebtedness is principally comprised of operating and
capital leases.

In July 1996, SCI borrowed $100 million under adjustable rate senior notes
due 2006 issued to a group of institutional investors. In March 2001, SCI
borrowed $600 million of $564 million at 7.67% and $36 million at variable
interest rates, senior notes due 2006 issued to a second group of institutional
investors. The interest rates under these issues of senior notes adjust on the
basis of certain changes in financial covenants applicable to SCI. SCI also has
in place two credit facilities with a group of domestic and international banks
under which SCI may borrow principal amounts up to $325 million under a 364-day
revolving credit line and up to $200 million under a five-year credit line. SCI
further has a $210 million asset securitization program expiring November 2001
under which certain accounts receivable may be sold by a special purpose
subsidiary of SCI, with limited recourse. In March 2000, SCI issued $575 million
of its 3% convertible subordinated notes due March 2007. The notes are
convertible into Sanmina-SCI common stock following the merger. For a complete
description of SCI's outstanding indebtedness, refer to SCI's audited financial
statements and footnotes on Form 10-K. SCI's other debt-related liabilities
include lease or guarantee obligations under industrial revenue bonds.

Included in the debt described above is approximately $205 million of
variable interest debt, at June 30, 2001, incurred by SCI. Short term interest
rate changes can impact SCI's interest expense on this debt, as well as the
discount (reflected in interest expense) on its accounts receivable sold under
SCI's asset securitization agreement. The fluctuations in interest rates may
have an effect on operating results of the combined company.

SCI's $600 million adjustable and fixed rate Senior Notes due 2006, 364 day
revolving credit facility and 5 year credit facility, all amounts outstanding at
the time of the acquisition by Sanmina-SCI under such credit facilities and
instruments were repaid. In addition, certain other debts of SCI were repaid in
connection with

41

the acquisition. Sanmina-SCI utilized approximately $385 million of cash and
$600 million drawn under its revolving credit facilities consisting of a $250
million 364-day credit facility and a $500 million three-year credit facility to
make the payments on such notes and the SCI credit facilities.

The level of the combined company's indebtedness, among other things,
could:

- make it difficult for Sanmina-SCI to make payments on the notes and
leases;

- make it difficult for Sanmina-SCI to obtain any necessary future
financing for working capital, capital expenditures, debt service
requirements or other purposes;

- require Sanmina-SCI to dedicate a substantial portion of its expected
cash flow from operations to service its indebtedness, which would reduce
the amount of its expected cash flow available for other purposes,
including working capital and capital expenditures;

- limit its flexibility in planning for, or reacting to, changes in
Sanmina-SCI's business; and

- make Sanmina-SCI more vulnerable in the event of a downturn in its
business.

Sanmina-SCI may incur substantial additional indebtedness in the future.

FAILURE TO MANAGE SANMINA-SCI'S GROWTH MAY SERIOUSLY HARM ITS BUSINESS.

Sanmina-SCI's businesses have grown in recent years through both internal
expansion and acquisitions, and continued growth may cause a significant strain
on Sanmina-SCI's infrastructure and internal systems. To manage its growth
effectively, Sanmina-SCI must continue to improve and expand its management
information systems. Sanmina-SCI will face additional growth management
challenges, particularly as a result of its recent acquisitions in Europe, Asia,
North America and Brazil. Future acquisitions, both in the United States and
internationally, could place additional strains on Sanmina-SCI's management
infrastructure. If Sanmina-SCI is unable to manage growth effectively, its
results of operations could be harmed.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS MAY HARM THE OPERATIONS OF
SANMINA-SCI.

Sanmina-SCI's existing international operations and plans to expand
international operations involve additional risks, and failure to effectively
expand internationally could harm Sanmina-SCI's operating results. Sanmina-SCI
opened its first overseas facility, located in Dublin, Ireland, in June 1997.
During June 2000 and July 2000, Sanmina-SCI acquired operations in Ireland,
Sweden, Finland, Malaysia and China. In October 2000, Sanmina-SCI acquired a
49.9% ownership interest in INBOARD, a wholly owned subsidiary of Siemens AG,
located in Germany. In the Segerstrom acquisition, Sanmina-SCI acquired
operations in Sweden, Finland, Brazil, Hungary, and Scotland. Prior to the
merger, SCI generated more than half of its revenue from its non-U.S. operations
and much of SCI's manufacturing material was provided by international
suppliers.

Sanmina-SCI's international sales and operations may be limited or
disrupted by the imposition of government controls, export license requirements,
political and economic instability, trade restrictions, changes in tariffs,
labor unrest and difficulties in staffing, coordinating communications among and
managing international operations. Sanmina-SCI's business and operating results
may be harmed by fluctuations in international currency exchange rates as well
as increases in duty rates, earnings expatriation restrictions, difficulties in
obtaining export licenses, misappropriation of intellectual property,
constraints on Sanmina-SCI's ability to maintain or increase prices, and
competition. Sanmina-SCI cannot assure you that the company will realize the
anticipated strategic benefits of its international expansion or that
international operations will contribute positively to the company's business
and operating results.

To respond to competitive pressures and customer requirements, Sanmina-SCI
may further expand internationally in lower cost locations, particularly
additional locations in Asia, Central Europe and Latin America. As a result of
this possible expansion, Sanmina-SCI could encounter difficulties in scaling up

42

production at overseas facilities and in coordinating Sanmina-SCI's United
States and international operations. In addition, Sanmina-SCI may not realize
anticipated revenue growth at new international operations. Sanmina-SCI may
elect to establish start-up operations rather than acquiring existing
businesses, which would require Sanmina-SCI to recruit management and other
personnel and build a customer base at a completely new operation. Accordingly,
unanticipated problems Sanmina-SCI encounters in establishing new international
operations could harm its business and operating results and cause its stock
price to decline.

SANMINA-SCI'S OPERATING RESULTS MAY BE AFFECTED BY FLUCTUATIONS IN INTERNATIONAL
CURRENCIES.

Sanmina-SCI currently primarily conducts its international sales and
purchase transactions in U.S. dollars, except that Segerstrom's transactions are
denominated primarily in Euros, Swedish krona or other European currencies, or
under customer contract provisions that protect against most major currency
risks. Sanmina-SCI's largest currency risk is that associated with its Brazilian
operation. Unlike Sanmina-SCI's other international operations, its Brazilian
plant is directly exposed to the effects of currency devaluation on certain
customers' contracts until forward pricing is adjusted accordingly (normally
quarterly). Other currency exchange risks associated with Sanmina-SCI's
international operations primarily relate to current assets and liabilities
denominated in currencies other than the U.S. dollar. Although Sanmina-SCI
endeavors to balance such items against each other where possible at individual
operations, no assurance can be given that it will be successful in mitigating
the effects of changes in currency exchange rates upon such international dollar
transactions. Changes in some international currency exchange rates impact the
geographic areas where Sanmina-SCI's revenue is derived. When international
currencies are devalued, manufacturing costs of plants in those countries may
become more competitive with other established plants. Accordingly, Sanmina-SCI
will be subject to risks associated with currency fluctuations and devaluations.

SANMINA-SCI IS SUBJECT TO RISKS RELATED TO INTELLECTUAL PROPERTY RIGHTS HELD BY
THIRD PARTIES.

Sanmina-SCI is subject to risks related to intellectual property rights
held by third parties. In certain cases, Sanmina-SCI may find it necessary or
desirable to license or otherwise acquire rights to intellectual property held
by others. Disputes, which could involve the combined company in litigation or
in administrative proceedings before the United States Patent and Trademark
Office or patent authorities in other countries, could arise in the future.
These proceedings could be costly to conduct and could also result in the
diversion of management time and attention. In addition, adverse determinations
in any proceedings of this nature could require Sanmina-SCI to pay monetary
damages and could also result in the loss of intellectual property rights. In
the event Sanmina-SCI was able to settle disputes through licensing or similar
arrangements, the costs of these licenses could be substantial. Accordingly,
future disputes regarding intellectual property rights could harm the combined
company's business, financial condition and results of operations.

On February 14, 2001, Gemstar-TV Guide International, Inc. and StarSight
Telecast, Inc. filed a complaint against SCI and four other respondents with the
United States International Trade Commission. With respect to SCI, the complaint
alleged certain unfair acts, including patent infringement, in the importation
of set top boxes manufactured by SCI for EchoStar Communications Corporation,
another respondent in the case. The Commission instituted an investigation
following publication of its notice in the Federal Register on March 21, 2001.
The trial concluded on December 20, 2001. The International Trade Commission is
scheduled to release a ruling on this matter in the spring of 2002. If it is
determined that SCI infringes certain patents of Gemstar-TV Guide International,
Inc. and StarSight Telecast Inc., the International Trade Commission may
prohibit the importation of infringing products into the United States. To the
extent that SCI's customer, EchoStar Communications Corp., cannot "design
around" the allegedly infringing design or build the product in the United
States avoiding importation of potentially infringing products, revenue from
this customer, and potentially other like customers utilizing the allegedly
infringing technology, could be at risk. Any "design around" would by necessity
originate with EchoStar. Labor costs in United States may make production of
allegedly infringing products in United States uncompetitive. Sanmina-SCI does
not believe that the outcome of this matter will have a material adverse effect
upon its business.

43

SANMINA-SCI'S BUSINESS MAY BE HARMED BY THE CALIFORNIA ELECTRICAL POWER CRISIS.

A significant portion of Sanmina-SCI's customer base and operations are
located in the State of California, which has been in the midst of an energy
crisis that could disrupt Sanmina-SCI's operations and increase Sanmina-SCI's
expenses. In the event of an acute power shortage, that is, when power reserves
for the State of California fall below 1.5%, California has on some occasions
implemented, and may in the future continue to implement, rolling blackouts
throughout California. If blackouts interrupt Sanmina-SCI's power supply,
Sanmina-SCI could be temporarily unable to continue operations at certain of its
California facilities. In addition, concerns exist that the California energy
crisis could lead to worsening of economic conditions in California that could
affect Sanmina-SCI's customers in California. Power shortages in California have
also caused the wholesale price of electricity to increase, which will likely
cause Sanmina-SCI's operating expenses for California facilities to increase.
Accordingly, the California energy situation could adversely affect
Sanmina-SCI's business and results of operations.

SANMINA-SCI MAY BE SUBJECT TO A SECURITIES CLASS ACTION SUIT IF ITS STOCK PRICE
FALLS.

Following periods of volatility in the market price of a company's stock,
some stockholders may file a securities class action litigation. Any future
securities class action litigation could be expensive and divert management's
attention and harm Sanmina-SCI's business, regardless of its merits.

THE TRADING PRICE OF SANMINA-SCI'S SECURITIES, INCLUDING COMMON STOCK AND
CONVERTIBLE SUBORDINATED DEBENTURES, MAY BE VOLATILE, AND THE VALUE OF YOUR
INVESTMENT COULD DECLINE.

The trading price of Sanmina-SCI's common stock has been and could in the
future be subject to significant fluctuations in response to variations in
quarterly operating results, developments in the electronics industry, changes
in general economic conditions and economic conditions in the electronics
industry and the communications sector in particular, changes in securities
analysts' recommendations regarding Sanmina-SCI's and SCI's securities and other
factors. In addition, the stock market in recent years has experienced
significant price and volume fluctuations which have affected the market prices
of technology companies and which have been unrelated to or disproportionately
impacted by the operating performance of those companies. For example,
Sanmina-SCI's common stock price has fluctuated from a high of approximately
$60.50 to a low of approximately $11.64 during the 52 weeks ended September 29,
2001. These broad market fluctuations may cause the market price of our common
stock to decline, which could diminish the value of your investment.

In addition, Sanmina-SCI and SCI each have outstanding several classes of
convertible subordinated notes. The Sanmina-SCI notes are not traded on a
national securities exchange or market. However inter-institutional trading
markets do exist for these securities. The SCI 3% convertible subordinated notes
are listed on the New York Stock Exchange The market price of these securities
is likely to be affected by the same factors that will affect the market price
for Sanmina-SCI's common stock.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is included in Part IV Item 14(a)(1)
and (2).

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

None.

PART III

Information called for by PART III (Items 10, 11, 12 and 13) is
incorporated by reference from the Company's definitive Proxy Statement to be
filed in connection with its 2002 Annual Meeting of Stockholders pursuant to
Regulation 14A, except that the information regarding the Company's executive
officers called for by Item 401(b) of Regulation S-K has been included in PART I
of this report.

44

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 10-K

(a) 1. FINANCIAL STATEMENTS

The following financial statements are filed as part of this report:

(a) 2. FINANCIAL STATEMENT SCHEDULE

The following financial statement schedule of Sanmina-SCI Corporation is
filed as part of this report on Form 10-K and should be read in conjunction with
the Financial Statements of Sanmina-SCI Corporation incorporated by reference
herein:

Schedule II -- Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or the notes thereto.

(a) 3. EXHIBITS

(a) Refer to (c) below.

(b) Reports on Form 8-K

On July 17, 2001, Sanmina-SCI Corporation filed a report on Form 8-K
relating to merger with SCI Systems, Inc.

(c) Exhibits

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

(1) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Registration Statement on Form S-1, No. 33-70700 filed
with the Securities and Exchange Commission ("SEC") on February 19, 1993.

(2) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Registration Statement on Form S-1 No. 33-70700 filed
with the SEC on October 22, 1993.

(3) Incorporated by reference to exhibit no. 2 previously filed with
Registrant's Report on Form 8-K filed with the SEC on October 28, 1994.

(4) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 29,
1994.

(5) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31, 1995.

(6) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1995.

(7) Incorporated by reference to exhibit 2 previously filed with the
Registrant's Report on Form 8-K filed with the SEC on November 15, 1996.

(8) Incorporated by reference to the like numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1996, filed with the SEC on December 24, 1996.

(9) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on November 21, 1997.

(10) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on September 4, 1998.

(11) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1998.

(12) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on April 29, 1999.

(13) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 18,
2000.

(14) Incorporated by reference to the like-numbered exhibit previously filed
with the Registrant's Report on Form S-8 filed with the SEC on May 25,
1999.

(15) Incorporated by reference to Exhibit 4.1 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

47

(16) Incorporated by reference to Exhibit 4.2 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

(17) Incorporated by reference to Exhibit 4.3 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

(18) Incorporated by reference to Exhibit 3.1(a) to Sanmina-SCI's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2001, filed on
May 11, 2001.

(19) Incorporated by reference to the like numbered exhibit previously filed
with Registrant's Registration Statement on Form 8-A No. 000-21272, filed
with the SEC on May 25, 2001

(20) Incorporated by reference to Exhibit 10.4 previously filed with
Registrant's Registration Statement on Form S-8 filed with the SEC on March
19, 1997.

(21) Incorporated by reference to Exhibit 10.1 previously filed with
Registrant's Registration Statement on Form S-8 filed with the SEC on March
19, 1997.

(22) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-37526, filed with the SEC on
May 22, 2000.

(23) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-3, No. 333-39316, filed with the SEC on
June 14, 2000.

(24) Incorporated by reference to Exhibit 25.1 previously filed with
Registrant's Registration Statement on Form S-3, No. 333-84221, filed with
the SEC on July 30, 1999.

(25) Incorporated by reference to Exhibit 4.1 previously filed with Registrant's
Registration Statement on Form S-3, No 333-50282, filed with the SEC on
November 20, 2000.

(26) Incorporated by reference to the like-numbered exhibits previously filed
with the Registrant's Registration Statement on Form S-1, No. 33-70700,
filed with the SEC on February 19, 1993.

(27) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.

(28) Incorporated by reference to Exhibit 4.1 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(29) Incorporated by reference to Exhibit 4.2 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(30) Incorporated by reference to Exhibit 4.3 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(31) Incorporated by reference to Exhibit 3.1.2 previously filed with
Registrant's Registration Statement on Form S-4, No. 333-67326, filed with
the SEC on August 10, 2001.

(32) Incorporated by reference to Exhibit 2.5 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.

(33) Incorporated by reference to Exhibit 2.6 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.

48

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

We have audited the accompanying consolidated balance sheets of Sanmina-SCI
Corporation (a Delaware Corporation) and subsidiaries as of September 29, 2001
and September 30, 2000 and the related consolidated statements of operations,
comprehensive income, stockholders' equity and cash flows for each of the three
years in the period ended September 29, 2001. 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. 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 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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sanmina-SCI
Corporation and subsidiaries as of September 29, 2001 and September 30, 2000,
and the results of their operations and their cash flows for each of the three
years in the period ended September 29, 2001 in conformity with accounting
principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

San Jose, California
October 22, 2001
(except with respect to the matters
discussed in Note 14, as to which the
date is December 6, 2001)

49

SANMINA-SCI CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

See accompanying notes.
50

SANMINA-SCI CORPORATION

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

See accompanying notes.
51

SANMINA-SCI CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)

See accompanying notes.
52

SANMINA-SCI CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

See accompanying notes.
53

SANMINA-SCI CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

See accompanying notes.
54

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION OF SANMINA-SCI

Sanmina-SCI Corporation ("Sanmina-SCI") was incorporated in Delaware in
1989 to acquire its predecessor company which had been in the printed circuit
board and backplane business since 1980. Sanmina-SCI is a leading independent
provider of customized integrated electronics manufacturing services ("EMS"),
including turnkey electronic assembly and manufacturing management services to
original equipment manufacturers in the electronics industry. Sanmina-SCI's
services consist primarily of the manufacture of complex printed circuit board
assemblies using surface mount and pin-through hole interconnection
technologies, the manufacture of custom-designed backplane assemblies,
fabrication of complex multi-layered printed circuit boards, metal stamping and
plating, electronic enclosure systems, subsystem assembly, testing and assembly
of completed systems and direct order fulfillment. In addition to assembly,
turnkey manufacturing management also involves procurement and materials
management, as well as consultation on printed circuit board design and
manufacturing. Sanmina-SCI also manufactures custom cable and wire harness
assemblies. Sanmina-SCI, as of September 2001 and prior to its merger with SCI,
had 53 manufacturing and assembly facilities and 15 global technology solution
centers, located both domestically and internationally. Sanmina-SCI, subsequent
to the merger with SCI, plans to consolidate certain duplicate and redundant
facilities. Therefore, the number of previously discussed facilities will
change. Sanmina-SCI on a combined basis has electronics assembly, printed
circuit fabrication, enclosure manufacturing, cable manufacturing and global
technology solution centers domestically in Alabama, Arizona, California,
Colorado, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Hampshire,
New York, North Carolina, South Dakota, Texas, Utah, Virginia and Wisconsin, and
internationally in Australia, Belgium, Brazil, Canada, China, Finland, France,
Hungary, Israel, Ireland, Malaysia, Mexico, The Netherlands, Singapore, Spain,
Sweden, Thailand and the United Kingdom. In addition to the above facilities,
Sanmina-SCI has a 49.9% ownership interest in INBOARD, the remainder of which is
owned by Siemens AG. INBOARD is a manufacturer of complex printed circuit boards
and is located in Germany.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year -- Effective October 1, 1998, Sanmina-SCI changed its fiscal
year end from September 30 to a 52 or 53-week year ending on the Saturday
nearest September 30. Accordingly, the 1999 fiscal year, which was a 53 week
year, ended on October 2, whereas the 2000 fiscal year ended on September 30 and
the 2001 fiscal year ended on September 29. All general references to years
relate to fiscal years unless otherwise noted.

Principles of Consolidation -- The consolidated financial statements
include the accounts of Sanmina-SCI and its wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated.

Foreign Currency Translation -- For foreign subsidiaries using the local
currency as their functional currency, assets and liabilities are translated at
exchange rates in effect at the balance sheet date and income and expenses are
translated at average exchange rates. The effects of these translation
adjustments are reported in accumulated other comprehensive income (loss).
Exchange gains and losses arising from transactions denominated in a currency
other than the functional currency of the entity involved and remeasurement
adjustments for foreign operations where the U.S. dollar is the functional
currency are included in other income (expense), >net in the accompanying
consolidated statements of operations.

Management Estimates and Uncertainties -- The preparation of consolidated
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 disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.
Significant estimates made in preparing the consolidated financial statements
include depreciation and amortization periods, the allowance for doubtful
accounts, and reserves for inventory and environmental matters. Actual results
could materially differ from these estimates.

55

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Financial Instruments and Concentration of Credit Risk -- Financial
instruments consist of cash equivalents, short-term investments, accounts
receivable, accounts payable and long-term debt obligations. The fair value of
these financial instruments approximates their carrying amount except for the
9 1/2% Senior Subordinated Notes due 2008 ("the 9 1/2% Notes"), at September 29,
2001. The fair value of the 9 1/2% Notes was $13.0 million with a carrying
amount of $12.1 million at September 29, 2001. (Note 4)

As of September 29, 2001, Sanmina-SCI had no significant off balance sheet
concentrations of credit risk such as foreign currency exchange contracts or
other hedging arrangements. Financial instruments that subject Sanmina-SCI to
credit risk consist of cash and cash equivalents, short-term investments and
trade accounts receivable. Sanmina-SCI maintains the majority of its cash, cash
equivalents and short-term investment balances with financial institutions.
Sanmina-SCI has not experienced any significant losses on these investments to
date. The most significant credit risk is the ultimate realization of its
accounts receivable. This risk is mitigated by (i) sales to well established
companies, (ii) ongoing credit evaluation of its customers, and (iii) frequent
contact with its customers, especially its most significant customers, thus
enabling Sanmina-SCI to monitor current changes in business operations and to
respond accordingly. Sanmina-SCI considers these concentrations of credit risks
in establishing its allowance for doubtful accounts and management believes
these allowances are adequate. Sanmina-SCI has no customer representing greater
than 10.0% of gross accounts receivable.

Cash Equivalents -- Sanmina-SCI considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.

Short Term Investments -- Sanmina-SCI's investments are classified as
available for sale and are recorded at their fair value, as determined by quoted
market prices, with any unrealized holding gains or losses classified as a
separate component of stockholders' equity. Upon sale of the investments, any
previously unrealized holding gains or losses are recognized in results of
operations. The specific identification method is used to determine the cost of
securities sold. Realized gains and losses have not been material to date. As of
September 29, 2001, the difference between the aggregate fair value and cost
basis was a net unrealized gain of $ 8,169,000. Sanmina-SCI has the intent and
ability to liquidate the investments prior to the maturity period and, as such,
has classified its investments as short-term investments. The value of
Sanmina-SCI's investments by major security type is as follows:

56

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As of September 29, 2001, approximately $465.3 million of the total cash
and cash equivalents balance of $567.6 million consist of investments in debt
securities. As of September 29, 2000, $862.1 million of the total cash and cash
equivalents balance of $998.2 million consist of investments in debt securities.
The remaining balance of the total investments in debt securities is classified
as short-term investments. As of September 29, 2001, securities with a fair
value of $1,072 million mature within one year and $214 million mature beyond
one year but as management's intent is to hold these securities for less than
one year, all these securities are being classified as short-term.

Long-Term Investments -- In fiscal year 1999, Sanmina entered into a lease
facility to finance the acquisition of certain San Jose, California facilities,
where it has established its corporate headquarters and certain of its assembly
operations. The lease facility is for $52.9 million and under the arrangement
with a bank, the bank is the owner of the buildings for accounting purposes. In
connection with this transaction, Sanmina pledged $52.9 million of its cash and
investments to the bank as collateral for certain obligations of the lease,
which is included in long-term investments on the accompanying consolidated
balance sheets. Management has determined that the lease facility originally
met, and continues to meet, the criteria for non-consolidation and therefore
accounts for the lease facility as an operating lease. The obligations under
this operating lease are disclosed in aggregate with other operating leases in
Note 7.

Sanmina-SCI has a 49.9% ownership interest in INBOARD, the remainder of
which is owned by Siemens AG. INBOARD is a manufacturer of complex printed
circuit boards and is located in Germany. This investment is accounted for using
the equity method of accounting. Sanmina-SCI records its equity in the income or
losses of INBOARD generally one month in arrears. Sanmina-SCI records this
investment on the consolidated balance sheets in "Long-term Investments" and its
share of INBOARD's earnings or losses as "Other income (expense)" on the
consolidated statements of operations. The impact of the INBOARD investment has
been immaterial to the results of operations for fiscal 2001.

Sanmina-SCI also has various minority equity investments in nonpublic
companies that are carried at cost. Sanmina-SCI monitors these investments for
impairment and records appropriate reductions in carrying values when necessary.
No impairments have been incurred to date.

Inventories -- Inventories are stated at the lower of cost (first-in,
first-out method) or market. Cost includes labor, material and manufacturing
overhead. Provisions when required are made to reduce excess inventories to
their estimated net realizable values. It is possible that estimates of net
realizable values can change in the near term. The components of inventories,
net of provisions, are as follows:

Property, Plant and Equipment, net -- Property, plant, and equipment are
stated at cost or, in the case of property and equipment acquired through
business combinations accounted for as a purchase, at fair value based upon the
allocated purchase price at the acquisition date. Depreciation and amortization
are provided on a straight-line basis over ten to forty years for buildings,
five years for machinery and equipment and five years

57

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for furniture and fixtures or in the case of leasehold improvements, over the
remaining term of the related lease, if shorter. Property, plant and equipment
consists of the following:

Impairment of Long-Lived Assets -- Sanmina-SCI reviews long-lived and
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable in
accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." An asset is considered impaired if
its carrying amount (including the unamortized portion of goodwill allocated to
the asset) exceeds the future net cash flow the asset is expected to generate.
If such asset is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset, including the
allocated goodwill, if any, exceeds its fair market value. Sanmina-SCI assesses
the recoverability of its long-lived and intangible assets by determining
whether the unamortized balances can be recovered through undiscounted future
net cash flows of the acquired operation. The amount of goodwill impairment, if
any, is measured based on projected discounted future net cash flows using a
discount rate reflecting the Company's average cost of funds.

During fiscal year end September 29, 2001, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets and unamortized
goodwill originally acquired as part of the June 2000 Hadco merger were less
than their carrying value. Accordingly, Sanmina-SCI recorded an adjustment to
write down $40.3 million of intangible assets and unamortized goodwill. The fair
value of the intangible assets and unamortized goodwill at the time of the
original acquisition by Sanmina-SCI was based on expected future cash flows to
be generated from the assets based on the facts and circumstances that existed
at the date the acquisition was complete. The existing customer relationships,
in-place workforce, tradename and trademarks and unamortized goodwill, valued at
the time of the original acquisition became impaired in the quarter ended
September 29, 2001 due to closure or consolidation of the related manufacturing
facilities. As a result, based on future expected cash flows from the remaining
customer base, from experienced and expected work force attrition and from
future utilization of tradename and trademarks, Sanmina-SCI has recorded an
adjustment to the carrying value of these intangible assets and allocated
goodwill in the amounts of $10.6 million, $3.7 million, $3.6 million and $22.4
million, respectively, in the fourth quarter of fiscal 2001.

During fiscal year end September 30, 2000, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets acquired as part of
the Hadco merger were less than their carrying value. Accordingly, Sanmina-SCI
recorded an adjustment to write down $8.8 million of intangible assets. The fair
value of the intangible assets at the time of the original acquisition by Hadco
was based on expected future cash flows to be generated from the assets based on
the facts and circumstances that existed at the date the acquisitions were
complete.. The existing customer relationships, and in-place workforce, valued
at the time of

58

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the original acquisition were impaired at the time of the merger in June 2000,
due to closure or consolidation of the related manufacturing facilities. As a
result, based on future expected cash flows from the related customer base, and
from experienced and expected work force attrition, Sanmina-SCI recorded an
adjustment to the carrying value of these intangible assets in the amounts of
$7.5 million and $1.3 million, respectively, in the third quarter of fiscal
2000.

During fiscal year ended October 2, 1999, an evaluation under SFAS No. 121
indicated that the fair value of certain intangible assets related to the
Pragmatech, Inc. ("Pragmatech") acquisition were less than their carrying value.
Accordingly, Sanmina-SCI recorded an adjustment to write down the remaining
$11.4 million of unamortized goodwill arising from the acquisition. The fair
value of Pragmatech at the acquisition date was based on the estimated future
cash flows to be generated from the assets based on the facts and circumstances
that existed at the date the acquisition was complete. Financial projections
prepared at the time of the acquisition of Pragmatech reflected Sanmina-SCI's
belief that Sanmina-SCI would continue to provide electronics manufacturing
services to existing Pragmatech customers and would grow the Pragmatech business
at Pragmatech's existing facilities. However, the existing Pragmatech customer
relationships could not be restructured to conform to Sanmina-SCI's pricing and
revenue models, and as a result, the relationships with the former Pragmatech
customers have terminated. In addition, Sanmina-SCI closed several of the former
Pragmatech facilities in fiscal 1998. As a result of these operational factors,
Sanmina-SCI's analysis of projected revenues, results of operations, and cash
flows attributable to the few remaining Pragmatech customers did not support the
carrying value of Pragmatech assets, including the unamortized goodwill.

Goodwill and Intangibles -- Costs in excess of tangible assets acquired and
liabilities assumed are recorded as goodwill and intangibles. Goodwill is
amortized on a straight-line basis over the estimated useful lives of five to
thirty years. Intangibles relate to customer lists, developed technology,
workforce, trademarks and other intangibles arising from Sanmina-SCI's
acquisitions accounted for as a purchase with useful lives of ten to thirty
years. Sanmina-SCI is currently analyzing the impact of early adoption of SFAS
142, expects to complete their analysis by the end of their fiscal quarter ended
March 30, 2002 and would retroactively reflect the impact of the cumulative
effect of the change in accounting principle in their first fiscal quarter ended
December 29, 2001. As part of the adoption of SFAS No. 142, Sanmina-SCI would no
longer amortize goodwill or intangible assets with indefinite lives related to
existing goodwill and intangible assets or related to acquisitions subsequent to
July 1, 2001. Sanmina-SCI expects that upon adoption of SFAS 142, Sanmina-SCI
would no longer record annual fiscal year amortization associated with existing
goodwill of approximately $22 million

Goodwill and intangibles are as follows:

Revenue Recognition -- Sanmina-SCI generally recognizes revenue at the
point of shipment to its customers, under the contractual terms which are FOB
shipping point or when services have been performed. Title transfers upon
shipment and risks and rewards of ownership of the product are assumed by the
customer. In some cases, Sanmina-SCI will recognize revenue upon delivery of
shipment to the customer or its

59

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

designated location. Except in specific circumstances, there are no formal
customer acceptance requirements or further Sanmina-SCI obligations subsequent
to shipment. In specific circumstances in which there are such requirements or
further Sanmina-SCI obligations, revenue is recognized at the point of said
formal acceptance and upon completion of said obligations. Where appropriate,
provisions are made for estimated warranty and return costs.

Comprehensive Income (loss) -- Comprehensive income for Sanmina-SCI
consists of net income plus the effect of unrealized holding gains or losses on
investments classified as available-for-sale and foreign currency translation
adjustments, net of tax effects of $1.6 million, $2.3 million and $1.5 million
for 2001, 2000 and 1999, respectively. As of September 29, 2001, the cumulative
unrealized holding gain on investments and cumulative foreign currency
translation adjustments were $8.1 million and $(21.8) million, respectively. As
of September 30, 2000, the cumulative unrealized holding gain on investments and
cumulative foreign currency translation adjustments was $269,000 and $(9.8)
million, respectively.

Stock-Based Compensation -- Sanmina-SCI has adopted the disclosure
provisions of SFAS 123, "Accounting for Stock Based Compensation." In accordance
with the provisions of SFAS 123, Sanmina-SCI applies Accounting Principles Board
("APB") Opinion 25 and related interpretations in accounting for its employee
stock option plans. See Note 11 for a summary of the pro forma effects on
reported net income and earnings per share for fiscal years 2001, 2000, and 1999
based on the fair value of options and shares granted as prescribed by SFAS 123.

Recent Accounting Pronouncements -- In June 1999, the Financial Accounting
Standards Board issued SFAS No. 138, "Accounting for Derivative Instruments and
Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133,"
which amends SFAS No. 133 to be effective for all fiscal years beginning after
June 15, 2000. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement also
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Sanmina-SCI enters
into short-term foreign currency forward contracts to hedge only those currency
exposures associated with certain assets and liabilities denominated in foreign
currencies. These contracts' fair value is recorded in short-term investments on
the balance sheet with corresponding gains or losses in other expense on the
statement of operations. Impact of these foreign exchange contracts were
immaterial to the results of operations for fiscal 2001. Sanmina-SCI adopted
SFAS No. 133 in the first quarter of fiscal 2001.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" to be effective for all business combinations initiated
after June 30, 2001. Under the provisions of the statement, the use of
pooling-of-interests method of accounting for those transactions is prohibited
and all business combinations should be accounted for using the purchase method
of accounting. Sanmina-SCI adopted SFAS 141 on July 1, 2001.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets" to be effective for all fiscal years
beginning after December 15, 2001. As part of the adoption of SFAS No. 142,
Sanmina-SCI will no longer amortize goodwill or intangible assets with
indefinite lives related to existing goodwill and intangible assets or related
to acquisitions subsequent to July 1,2001. Sanmina-SCI will test for impairment
of goodwill at least annually and will use a two-step approach to assess any
impairment to goodwill at the established reporting unit level. Sanmina-SCI will
reassess the value and useful lives of goodwill and intangible assets previously
recorded in connection with prior acquisitions. Certain identifiable intangible
assets with finite lives will continue to amortize over their respective useful
lives. Sanmina-SCI is currently analyzing the impact of early adoption of SFAS
142, expects to complete their analysis by the end of their fiscal quarter ended
March 30, 2002 and would retroactively reflect the impact of the cumulative
effect of the change in accounting principle in their first fiscal quarter ended
December 29, 2001. As of September 29, 2001, Sanmina had existing net goodwill
and identifiable intangible assets of
60

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$294.4 million. Sanmina-SCI expects that upon adoption of SFAS 142, Sanmina-SCI
would no longer record annual fiscal year amortization associated with existing
goodwill of approximately $22 million.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
143, "Accounting for Asset Retirement Obligations" to be effective for all
fiscal years beginning after June 15, 2002, with early adoption permitted. SFAS
143 establishes accounting standards for the recognition and measurement of an
asset retirement obligation and its associated asset retirement cost. It also
provides accounting guidance for legal obligations associated with the
retirement of tangible long-lived assets. Sanmina-SCI is currently assessing the
impact of SFAS 143 on its financial position, results of operations and cash
flows as well as timing of its adoption.

In October 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which
establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS 144 supersedes SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of" and APB Opinion No. 30, "Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions for
the Disposal of a Segment of a Business." The provisions of SFAS 144 are
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted and, in general, are to be applied prospectively. Sanmina-SCI is
currently assessing the impact of SFAS 144 on its financial position, results of
operations and cash flows as well as timing of its adoption.

Reclassification -- Sanmina-SCI has reclassified certain prior year
information to conform to the current year's presentation.

NOTE 3. EARNINGS PER SHARE

Basic earnings per share was computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share includes dilutive common stock equivalents, using the
treasury stock method, and assumes that the convertible debt instruments were
converted into common stock upon issuance, if dilutive. For the years ended
September 29, 2001, September 30, 2000 and October 2, 1999, 26,706,108, 561,707
and 6,829,918 potentially dilutive shares from the conversion of the convertible
subordinated debt and after-tax interest expense of $23.5 million, $980,000 and
$4.5 million, respectively, were not included in the computation of diluted
earnings per share because to

61

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

do so would be anti-dilutive. A reconciliation of the net income and weighted
average number of shares used for the diluted earnings per share computations
follows:

NOTE 4. LONG-TERM DEBT

Long-term debt consists of the following:

Convertible Subordinated Notes due 2004 -- On May 1, 1999, Sanmina-SCI
issued $350.0 million of 4 1/4% convertible subordinated notes (the "4 1/4%
Notes") due on May 1, 2004. The 4 1/4% Notes are convertible into common stock,
at the option of the note holder, at a conversion price of approximately $22.17
per share, subject to adjustments in certain events. The 4 1/4% Notes are
subordinated in right of payment to all existing and future senior indebtedness,
as defined, of Sanmina-SCI. The 4 1/4% Notes are redeemable at the option of
Sanmina-SCI on or after May 6, 2002. Interest is payable semi-annually on May 1
and November 1.

62

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9 1/2% Senior Subordinated Notes due 2008 -- On May 18, 1998, Hadco issued
$200.9 million aggregate principal amount of its 9 1/2% Senior Subordinated
Notes due 2008 (the "9 1/2% Notes"). Interest on the 9 1/2% Notes is payable
semi-annually on each June 15 and December 15 and commenced December 15, 1998.
The 9 1/2% Notes are redeemable at the option of Hadco, in whole or in part, at
any time on or after June 15, 2003, at 104.75% of their principal amount, plus
accrued interest, with such percentages declining ratably to 100% of their
principal amount, plus accrued interest. At any time on or prior to June 15,
2001 and subject to certain conditions, up to 35% of the aggregate principal
amount of the 9 1/2% Notes may be redeemed, at the option of Hadco. In addition,
at any time prior to June 15, 2003, Hadco may redeem the 9 1/2% Notes, at its
option, in whole or in part, at a price equal to the principal amount thereof,
together with accrued interest, plus the applicable premium (as defined in the
Indenture governing the 9 1/2% Notes). The 9 1/2% Notes are guaranteed, on a
senior subordinated basis, by each of certain Hadco subsidiaries. The net
proceeds of $193.8 million received by Hadco from the issuance of the 9 1/2%
Notes, was used to repay outstanding indebtedness incurred to, among other
things, finance acquisitions.

In July 2000, Sanmina-SCI initiated an offer to purchase the 9 1/2% Notes.
The offer to redeem was required by the terms of the Indenture under which the
9 1/2% Notes were issued as a result of a change in control provision when
Sanmina-SCI acquired Hadco. The redemption was at 101% of the principal amount
of the 9 1/2% Notes. On August 24, 2000, Sanmina-SCI redeemed $187.9 million of
the outstanding 9 1/2% Notes. The redemption premium and deferred debt costs
related to the 9 1/2% Notes were expensed by Sanmina-SCI in the fourth quarter
of fiscal 2000. Costs of approximately $5.0 million, net of tax, are reflected
as an extraordinary charge relating to the early extinguishment of this debt.
All 9 1/2% Notes not redeemed as part of the offer are outstanding. Sanmina-SCI
may elect to purchase the remaining outstanding 9 1/2% Notes through the open
market or negotiated transactions, additional tenders, or exchange offers.

Convertible Subordinated Notes due 2012 -- In 1987, Elexsys International,
Inc. ("Elexsys") issued $32.0 million of 5 1/2% convertible subordinated
debentures (the "Debentures") due on March 1, 2012. The Debentures are currently
convertible into shares of common stock at $14.97, subject to adjustment under
certain conditions. The Debentures are redeemable by Sanmina-SCI at declining
premiums prior to March 1, 1997 and thereafter at 100 percent of the principal
amount. The Debentures are also redeemable through the operation of a sinking
fund at 100 percent of the principal amount. Interest is payable semi-annually
on September 1 and March 1 of each year. Mandatory annual sinking fund payments,
sufficient to retire 5 percent of the aggregate principal amount of the
Debentures issued, were to be made on each March 1 commencing in 1997. As a
result of two exchanges of common stock for $16.0 million and $4.0 million of
the Debentures in fiscal 1994 and fiscal 1995, respectively, Sanmina-SCI now has
sinking fund credits available to offset these obligations for twelve and
one-half years, thus no sinking fund payments will be required until 2009. The
Debentures are subordinated to all senior indebtedness of Sanmina-SCI.

Zero Coupon Convertible Subordinated Notes due 2020 -- On September 12,
2000, Sanmina-SCI issued $1.66 billion of zero-coupon 4% convertible notes (the
"Zero Coupon 4% Notes"), due on September 12, 2020, to qualified institutional
investors in a private placement at an issue price of $452.89 per note,
resulting in gross proceeds of $751.8 million. The Zero Coupon 4% Notes are
subordinated to the prior payment of all senior indebtedness, as defined. There
will be no cash interest payments prior to maturity. The issue discount is
amortized using the effective interest method over the term of the notes. The
Zero Coupon 4% notes are convertible into common stock, at the option of the
note holder, at the conversion ratio of approximately 3.24:1. The Zero Coupon 4%
Notes are redeemable at the option of Sanmina-SCI on or after September 12,
2005. The Zero Coupon 4% Notes may also be subject to repurchase, at the option
of the holder, on September 12, 2005, September 12, 2010, and September 12, 2015
at $552.08, $672.98, and $820.35, respectively per note. Sanmina-SCI has filed
with the Securities Exchange Commission a registration statement for resale of
the notes and the common stock issuable upon conversion.

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Convertible Debt, due 2003 -- In June 2000, Segerstrom issued convertible
debentures denominated in Swedish krona (SEK) of SEK 24 million (approximately
$2.7 million) due on July 30, 2003. The debentures were convertible into
Segerstrom common stock, at the option of the debenture holder, at a conversion
price of approximately SEK 90.10. Interest accrued at the STIBOR (Stockholm
InterBank Offered Rate) less 0.75% and was due on June 30, 2001, June 30, 2002,
March 30, 2003 and June 30, 2003. In connection with the acquisition of
Segerstrom, Sanmina-SCI acquired the convertible debentures in March 2001; under
the terms of the acquisition agreement, each convertible debenture converted to
0.4519 shares of Sanmina-SCI common stock.

Maturities of long-term debt, including capital lease obligations, assuming
no redemption requests by noteholders, are as follows as of September 29, 2001.

NOTE 5. OTHER ACCRUED AND OTHER NON-CURRENT LIABILITIES

Other accrued current liabilities consist of the following:

NOTE 6. REVOLVING CREDIT AGREEMENTS

Sanmina-SCI's revolving line of credit with various banks is related to an
Amended and Restated Revolving Credit Agreement, (the "Credit Facility"). The
Credit Facility provided, among other things, for direct borrowings for up to
the lesser of $198.8 million or the Borrowing Base, as defined in the Credit
Facility, and was to expire January 8, 2002. Interest on loans outstanding under
the Credit Facility was payable at Sanmina-SCI's option at either (i) the Base
Rate (as defined in the Credit Facility) or (ii) the Eurodollar

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Rate, plus the Applicable Eurodollar Rate Margin (both as defined in the Credit
Facility). At September 30, 2000, there were no borrowings outstanding under the
Credit Facility. The weighted average interest rates for the year September 30,
2000 was 6.18%. The Credit Facility was closed as of September 30, 2000.

Sanmina-SCI also has lines of credit arrangements with a Malaysian bank
denominated in Malaysian ringgits and U.S. dollars for aggregate borrowings of
approximately $3.6 million for the purpose of acquiring land, facilities and
equipment for the Malaysian subsidiary. The arrangement is renewable annually.
At September 29, 2001 and September 30, 2000 there were no amounts outstanding
under this arrangement.

Essex AB ("Essex"), a subsidiary of Sanmina-SCI, has a line of credit
arrangement with a Swedish bank denominated in SEK for aggregate borrowings of
up to SEK 300 million (approximately $28.0 million). Borrowings outstanding on
this line of credit arrangement are secured by all of the assets of Essex,
accrue interest at the STIBOR of 3.88% and 4.63% as of September 29, 2001 and
September 30, 2000, respectively, and contains covenants which require that
Essex maintain certain financial ratios over a period of five years and is
renewable annually. Essex was in compliance with these financial ratios as of
fiscal years ended 2001 and 2000, respectively. As of September 29, 2001 and
September 30, 2000, $1.3 million and $4.9 million, respectively, was outstanding
under this line of credit.

Segerstrom has a line of credit arrangement with a Swedish bank denominated
in SEK for aggregate borrowings of up to SEK 85 million (approximately $7.9
million). Borrowings outstanding on this line of credit arrangement are secured
by all of the assets of Segerstrom, accrue interest at 3.75% and 4.45% as of
September 29, 2001 and September 30, 2000, respectively, and contain certain
covenants which require that Segerstrom maintain certain financial ratios and is
renewable annually. Segerstrom was in compliance or received a waiver related to
these financial ratios as of fiscal years ended 2001 and 2000, respectively. As
of September 29, 2001 and September 30, 2000, $4.9 million and $3.7 million,
respectively, was outstanding under this line of credit.

NOTE 7. COMMITMENTS AND CONTINGENCIES

Operating Leases -- Sanmina-SCI leases its facilities under operating
leases expiring at various dates through 2009. Sanmina-SCI is responsible for
utilities, maintenance, insurance and property taxes under the leases. Future
minimum lease payments under operating leases are as follows:

Rent expense under operating leases was approximately $27.6 million, $26.9
million and $24.3 million for the years ended September 29, 2001, September 30,
2000 and October 2, 1999, respectively.

In November 1998, Sanmina-SCI entered into an operating lease agreement for
a new corporate headquarters and new facilities for its principal Northern
California assembly operations. This campus facility, which comprises
approximately 330,000 square feet, is located in San Jose, California. A
condition of this operating lease is that Sanmina-SCI pledges $52.9 million to
the administrative agent until the end of the lease's initial term, which is
included in long-term investments in the accompanying consolidated balance
sheets.

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Environmental Matters -- Sanmina-SCI has liabilities associated with
disposal of hazardous waste. Sanmina-SCI has been named as a potentially
responsible party at several contaminated disposal sites as a result of the past
disposal of hazardous waste by companies acquired by Sanmina-SCI or their
corporate predecessors. Sanmina-SCI currently anticipates that its liabilities
associated with its disposal sites will range from $1,150,000 to $2,150,000.
Sanmina-SCI, in consultation with its consultants, has determined that the best
estimate within this range for these matters is $1,450,000.

Sanmina-SCI also has liabilities associated with environmental
contamination at its current and former facilities (and those of the companies
it has acquired). These are described in more detail below.

Elexsys International, Inc. -- In November 1997, Sanmina acquired Elexsys
International Inc., which became a wholly-owned subsidiary of Sanmina. Several
facilities owned or occupied by Elexsys at the time of the acquisition, or
formerly owned or occupied by Elexsys or companies acquired by Elexsys, had
either soil or groundwater contamination underneath or near the facility. For
example, the Von Karman Avenue, Irvine, California facility, a printed circuit
board manufacturing plant, has solvent contamination in soil and groundwater and
is currently under investigation by the California Regional Water Quality
Control Board (RWQCB). Sanmina has been pumping and treating groundwater for a
number of years. By letter dated June 8, 2001, the RWQCB threatened to issue a
Clean-up and Abatement Order to address concerns about additional investigation
and remediation. No such order has been issued, and Sanmina is working with the
RWQCB to address their concerns. To date, the cost of the various investigations
and of operating the remediation system at the Irvine facility have not
materially affected Sanmina-SCI's financial condition. In the event Sanmina-SCI
is required to undertake additional groundwater or soil cleanup, the cost of
such cleanup is likely to be substantial. However, Sanmina-SCI believes, based
on the information currently available to it, that the potential cost of any
groundwater or soil clean-up would not materially affect Sanmina-SCI's financial
condition. Currently, Sanmina-SCI is unable to anticipate whether any third
party claims will be brought against it for the existence of the contamination
at the Irvine facility.

At two facilities formerly owned or occupied by a predecessor company to
Elexsys in Mountain View, California, Sanmina-SCI has been required by the
California Department of Toxic Substances Control (DTSC) to undertake
investigation of soil and groundwater. DTSC has advised Sanmina-SCI that no
further investigation will be required at one of the two facilities. At the
other facility, test results have not been sufficient to enable Sanmina-SCI to
determine whether or not cleanup activities will be required; however,
Sanmina-SCI does not believe any such activities will be required. Sanmina has
not been ordered to undertake any soil or groundwater cleanup activities at
either of the two former Mountain View facilities. Nevertheless, the process of
remediating contaminated soil and groundwater is costly, and if Sanmina is
required to undertake substantial remediation activities at one or more of the
former Elexsys facilities, the costs of such activities may materially affect
Sanmina-SCI's financial condition.

Sanmina-SCI, through evaluations performed by a consultant, has determined
that the mean expected cost for the remaining environmental liabilities
associated with site contamination at former Elexsys facilities is $3,245,000
with a maximum of $9,765,000. After discussions with Sanmina-SCI's environmental
consultants, the company has determined that the best estimate within this range
for these matters is $4,100,000. The methodology used by the consultants hired
by Sanmina-SCI for the purpose of determining environmental liabilities and
estimating appropriate reserves involves a two pronged approach. In cases where
contamination is known to be present, the consultant evaluates the extent of
contamination, the likelihood remediation will be required and the likely cost
of such remediation. At sites that have a potential for contamination, but where
such contamination has not been confirmed, the consultant reviews the history of
each site, the use of hazardous materials at that site, the likelihood that
contamination may have resulted from such activities, and the amount it would
cost to remediate the contamination were it found to be present. From this
evaluation, the consultant provides an estimate of potential liabilities from
which the cost estimates are derived.

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Altron, Inc. -- In November 1998, Sanmina acquired Altron Incorporated,
which became a wholly-owned subsidiary of Sanmina and has since been merged into
the company. Altron was advised in 1993 by Olin Corporation that contamination
resulting from activities of prior owners of property owned by Olin and located
close to the Altron manufacturing plant in Wilmington, Massachusetts, had
migrated under the Altron plant. Olin has assumed full responsibility for any
remediation activities that may be required and has agreed to indemnify and hold
Altron harmless from any and all costs, liabilities, fines, penalties, charges
and expenses arising from and relating to any action or requirement, whether
imposed by statute, ordinance, rule, regulation, order, decree or by general
principles of law to remediate, clean up or abate contamination emanating from
the Olin site. Although Sanmina-SCI believes that Olin's assumption of
responsibility will result in no remediation cost to Sanmina-SCI from the
contamination, there can be no assurance that Sanmina-SCI will not be subject to
some costs regarding this matter. Sanmina-SCI does not anticipate costs relating
to this matter, if any, will materially affect its financial condition.

Hadco Corporation -- Hadco, acquired by us in June 2000, is aware of
certain chemicals that exist in the ground at certain of its facilities. Hadco
has notified various governmental agencies and continues to work with them to
monitor and resolve these matters. During March 1995, Hadco received a Record Of
Decision (ROD) from the New York State Department of Environmental Conservation
(NYSDEC), regarding soil and groundwater contamination at its Owego, New York
facility. Based on a Remedial Investigation and Feasibility Study (RIFS) for
apparent on-site contamination at that facility and a Focused Feasibility Study
(FFS), each prepared by environmental consultants of Hadco, the NYSDEC has
approved a remediation program of groundwater withdrawal and treatment and
iterative soil flushing. Hadco has executed a Modification of the Order on
Consent to implement the approved ROD. Capital equipment for this remediation
has already been acquired by Hadco, and future operation and maintenance costs,
which will be incurred and expended over the estimated life of the program of
the next 28 years, are estimated at between $40,000 and $100,000 per year. In
the summer of 1998, NYSDEC took additional samples from a wetland area near
Hadco's Owego facility. Analytical reports of earlier sediment samples indicated
the presence of certain inorganics. The new samples showed elevated levels of
certain metals, but NYSDEC has not made a determination as to the potential
source of such metals, the remedial action to be taken, or the persons to
undertake and/or pay for any remediation. There can be no assurance that Hadco
and/or other third parties will not be required to conduct additional
investigations and remediation at that location, the costs of which are
currently indeterminable. Hadco has commenced the operation of a groundwater
extraction system at its Derry, New Hampshire, facility to address certain
groundwater contamination and migration control issues. It is not possible to
make a reliable estimate of the length of time remedial activity will have to be
performed. However, it is anticipated that the groundwater extraction system
will be operated for at least 30 years. There can be no assurance that Hadco
will not be required to conduct additional investigations and remediation
relating to the Derry facility. The total costs of such groundwater extraction
system and of conducting any additional investigations and remediation relating
to the Derry facility are not fully determinable.

From 1974 to 1980, Hadco operated a printed circuit manufacturing facility
in Florida as a lessee. In June 1999, Hadco, Gould Electronics, Inc. and the
Florida Department of Environmental Protection (FDEP) entered into a Settlement
Agreement which provides that Hadco and Gould will undertake remedial action
based on a Supplemental Contamination Assessment Report and a later Feasibility
Study, which has been prepared by a consultant to Hadco and Gould and approved
by the FDEP. The remedial capital costs are estimated to be $1.4 million. In
addition, ongoing monitoring and operation and maintenance costs are estimated
to be $1.4 million, which includes operation of the remediation system for 8
years and monitoring for 30 years. Actual remedial activities have not yet
commenced.

In March 1993, the EPA notified Hadco Santa Clara of its potential
liability for maintenance and remediation costs in connection with a hazardous
waste disposal facility operated by Casmalia Resources, a California Limited
Partnership, in Santa Barbara County, California. In June 1997, the United
States District Court in Los Angeles, California, approved and entered a Consent
Decree among the EPA and 49 entities
67

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(including Hadco Santa Clara) acting through the Casmalia Steering Committee
(CSC). The Consent Decree sets forth the terms and conditions under which the
CSC will carry out work aimed at final closure of the site. Certain closure
activities will be performed by the CSC. Under the Consent Decree, the settling
parties will work with the EPA to pursue the non-settling parties to ensure they
participate in contributing to the closure and long-term operation and
maintenance of the facility. Sanmina, through evaluations performed by its
consultant, has determined that the mean expected cost for the remaining
environmental liabilities associated with site contamination at former Hadco
facilities is $8,805,000 with a maximum of $32,630,000. After discussions with
its consultant, the Company has determined that the best estimate within this
range for these matters is $11,242,500.

Segerstrom -- In March 2001, Sanmina acquired approximately 94% of the
outstanding shares and convertible debentures of Segerstrom. It is possible that
previous operations have contaminated soil and/or groundwater at Segerstrom
facilities. Sanmina-SCI believes, based on the limited information currently
available, that the cost of any groundwater or soil clean-up that may be
required would not harm Sanmina-SCI's business, financial condition and results
of operations. Nevertheless, the process of remediating contaminated soil and
groundwater is costly, and if Sanmina is required to undertake substantial
remediation activities at one or more of the former Segerstrom facilities, there
can be no assurance that the costs of such activities would not harm
Sanmina-SCI's business, financial condition and results of operations.
Sanmina-SCI through evaluations performed by its consultant, has determined that
the mean expected cost for the remaining environmental liabilities associated
with site contamination at Segerstrom facilities is $8,239,657 with a maximum of
$18,023,138. After discussions with Sanmina-SCI's current consultants, the
company has determined that the best estimate within this range for these
matters is $10,615,553.

The cost estimates relating to future environmental clean-up are subject to
numerous variables, the effects of which can be difficult to measure, including
the stage of the environmental investigations, the nature of potential remedies,
possible joint and several liability, the magnitude of possible contamination,
the difficulty of determining future liability, the time over which remediation
might occur, and the possible effects of changing laws and regulations. The
total reserve for environmental matters currently identified by Sanmina-SCI
amounted to $27.4 million at September 29, 2001 and $17.9 million at September
30, 2000, of which $27.4 million and $13.3 million, respectively, are recorded
as long term liabilities (Note 5). Management's estimates of reserves for
environmental matters are based on assessments made by environmental
consultants. Management believes the ultimate disposition of the above known
environmental matters will not have a material adverse effect on the liquidity,
capital resources, business or consolidated financial position of Sanmina-SCI.
However, one or more of such environmental matters could have a significant
negative impact on the consolidated financial results for a particular reporting
period.

The future costs in connection with the lawsuits described in the above
paragraphs are currently indeterminable due to such factors as the unknown
timing and extent of any future remedial actions which may be required, the
extent of any liability of Sanmina-SCI and its acquired entities and of other
potentially responsible parties, and the financial resources of the other
potentially responsible parties. Management currently believes, based on the
facts currently known to it, that it is probable that the ultimate dispositions
of the above lawsuits will not have a material adverse effect on Sanmina-SCI's
business and financial condition; however, there can be no assurance that this
will be the case.

From time to time, Sanmina-SCI is a party to litigation which arises in the
ordinary course of business. Sanmina-SCI believes that the resolution of this
litigation will not materially harm Sanmina-SCI's business, financial condition
or results of operations.

Litigation -- On June 13, 2001, Sanmina-SCI filed a complaint against
Metricom, Inc. in California state court. The complaint arose out of a July 2,
1999 Agreement for Electronic Manufacturing Services and seeks compensation for
cancellation charges arising under this agreement. Sanmina-SCI's damages consist
of the cost of certain materials and work-in-process. Metricom has filed for
Chapter 11 bankruptcy, and as a
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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

result, Sanmina-SCI's claim has been stayed. Accordingly, Sanmina-SCI has filed
a claim for its damages in the bankruptcy proceedings. Sanmina-SCI currently
estimates it has no additional exposure on this matter (after exhausting
allocated reserves).

NOTE 8. RETIREMENT PLANS

Sanmina-SCI has various retirement plans that cover the majority of its
employees. Sanmina-SCI's retirement plans permit participants to elect to have
contributions made to the retirement plans in the form of reductions in salary
under Section 401(k) of the Internal Revenue Code. Under the Sanmina-SCI
retirement plans, Sanmina-SCI matches a portion of employee contributions. The
amounts contributed by Sanmina-SCI and its acquired businesses accounted for as
poolings as 401(k) matches against employee contributions were approximately
$9.1 million, $7.6 million and $6.4 million during the fiscal years ended
September 29, 2001, September 30, 2000 and October 2, 1999, respectively.

NOTE 9. ACQUISITIONS

In November 1998, Sanmina-SCI acquired Altron. Under the terms of the
acquisition agreement, each share of Altron common stock was converted into
1.818 shares of Sanmina-SCI common stock. Approximately 28.8 million shares of
common stock were issued to acquire Altron. The acquisition was accounted for as
a pooling-of-interests, and therefore, all prior periods presented were restated
to combine the results of the companies. Altron's year end was December 31. For
purposes of the restatement, Altron's restated year ended September 30, 1998 was
combined with Sanmina-SCI's year ended September 30, 1998 and Altron's years
ended December 31, 1997 and December 31, 1996 were combined with Sanmina-SCI's
year ended September 30, 1997 and September 30, 1996 respectively. As a result,
the net sales and net income of Altron for the quarter ended December 31, 1997,
have been included in both fiscal 1998 and 1997. An adjustment of $3.2 million
to account for the duplication of net income has been made to retained earnings
in fiscal 1998.

On December 28, 1998, Sanmina-SCI acquired Telo Electronics, Incorporated,
a California corporation ("Telo"). Sanmina-SCI issued approximately 3.8 million
shares of Sanmina-SCI common stock in exchange for 100% of the outstanding
common stock of Telo. The acquisition was accounted for as a pooling of
interests. Due to the immateriality of this acquisition to Sanmina-SCI's
consolidated financial position and results of operations, Telo has been
included in Sanmina-SCI's consolidated results of operations as of the beginning
of fiscal 1999 (October 1, 1998), and therefore, amounts presented for periods
prior to fiscal 1999 have not been restated to include Telo's historical results
of operations.

In March 1999, Sanmina-SCI acquired Manu-Tronics, Incorporated, a Wisconsin
corporation ("Manu-Tronics"). Sanmina-SCI issued approximately 3.4 million
shares of Sanmina-SCI common stock in exchange for 100% of the outstanding
common stock of Manu-Tronics. The acquisition was accounted for as a pooling-
of-interests, and therefore, all prior periods presented were restated to
combine the results of the two companies.

On August 4, 1999, Sanmina-SCI announced the agreement to acquire certain
operations of Nortel Networks' Wireless Electro-Mechanical Subsystem Assembly
("EMSS"). As part of the agreement, Sanmina-SCI would acquire certain assets of
Nortel Networks' EMSS operations in Calgary, Alberta, Canada, and Chateaudun,
France. On October 1, 1999, Sanmina-SCI completed the acquisition of certain
Calgary EMSS assets and liabilities for a cash purchase price of approximately
$47.2 million, which was accounted for as a purchase. The purchase price was
allocated to the net assets acquired, which consisted of inventories, equipment,
and accrued payroll related expenses, on a fair value basis. The results of
operations for the year ended October 2, 1999, include the results of operations
of this business from the date of acquisition. The acquisition resulted in
goodwill of $29.6 million, which prior to adoption of SFAS 142, is amortized
over a fifteen-year period.

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The unaudited pro forma financial information for the year ended October 2,
1999 is presented below as if the Calgary EMSS operations had been acquired on
October 1, 1998:

On June 1, 2000, Sanmina-SCI acquired Essex, an EMS supplier in
Scandinavia. The transaction was structured as a stock-for-stock exchange and
was accounted for as a pooling of interests. Approximately 4.0 million shares of
Sanmina-SCI common stock were issued to acquire Essex. On June 23, 2000,
Sanmina-SCI completed its acquisition of Hadco, a manufacturer of advanced
electronic interconnect products. The acquisition was accounted for as a pooling
of interests. Approximately 39.2 million shares of Sanmina-SCI common stock were
issued to acquire Hadco. As a result of the acquisitions of Essex and Hadco,
Sanmina-SCI's historical financial statements have been restated retroactively
to include the financial results of Essex and Hadco. Essex's results of
operations for the year ended December 31, 1999 and Hadco's results of
operations for the year ended October 30, 1999 have been combined with
Sanmina-SCI's results of operations for the years ended October 2, 1999 The
fiscal years for Essex and Hadco were changed to coincide with Sanmina-SCI's
year end beginning in fiscal 2000. Accordingly, an adjustment was made to
retained earnings to eliminate the duplication of $6.3 million of net income for
both Hadco and Essex, for the one month of Hadco operations and three months of
Essex operations ended October 31, 1999 and December 31, 1999, respectively. The
revenues for one month of Hadco operations and three months of Essex operations
ended October 31, 1999 and December 31, 1999, respectively, totaled
approximately $163.0 million. The restated financial information includes
certain adjustments to eliminate the net sales between the combining companies
and certain reclassifications to conform to Sanmina-SCI's financial statement
presentation. No adjustments were necessary to conform the accounting policies
of the combining companies.

On August 31, 2000, Segerstrom acquired all of the outstanding shares of
Lewis C. Grant Ltd ("LCG"), a British supplier of enclosure systems to the
telecommunications industry. The cash purchase price was approximately $30.5
million and was allocated to the net assets acquired, based on the respective
fair values. The acquisition resulted in goodwill of SEK 247 million
(approximately $27 million), which prior to adoption of SFAS 142, is amortized
over 20 years. The acquisition was accounted for as a purchase and accordingly,
LCG's operating results since the respective date of acquisition is included in
the accompanying consolidated financial statements. Pro forma statements of
operations reflecting this acquisition are not shown, as the results would not
materially differ from reported results.

On March 1, 2001, Sanmina-SCI acquired Segerstrom, a global supplier of
integrated enclosure systems headquartered in Sweden. As a result of this
acquisition, Sanmina-SCI added 10 manufacturing facilities in Sweden, Finland,
Brazil, Hungary, Scotland, and the United States. The transaction was structured
as a stock for stock exchange and was accounted for as a pooling of interests.
Under the terms of the agreement, each Segerstrom common share and convertible
debenture was converted into approximately 0.4519 shares of Sanmina-SCI common
stock. Sanmina-SCI acquired approximately 94% of the outstanding shares of
Segerstrom pursuant to its offer to acquire Segerstrom. Sanmina-SCI has
commenced a compulsory acquisition process for the remaining shares in
accordance with Swedish law and business practice. As of September 29, 2001,
Sanmina-SCI has issued approximately 11.6 million shares of common stock in
connection with the acquisition of Segerstrom. This number represents 94% of
outstanding shares and convertible debentures of Segerstrom and the remaining 6%
will be acquired under the compulsory acquisition

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

process, which is expected to be completed in within the next 12 months.
Segerstrom has manufacturing facilities in Sweden, Finland, Hungary, Scotland
and Brazil.

As mentioned above, the merger was accounted for as a pooling of interests
and the consolidated financial statements have been restated to reflect the
combined operations of all entities for the periods presented. Prior to being
acquired by Sanmina-SCI, Segerstrom operated under a calendar year end, and
accordingly, Segerstrom's statements of operations, shareholders' equity and
cash flows for the year ended December 31, 2000 have been combined with the
corresponding Sanmina-SCI consolidated statements for the year ended September
30, 2000. During Sanmina-SCI's fiscal 2001, Segerstrom's year-end was changed
from December 31 to a 52 or 53 week year ending on the Saturday nearest
September 30 to conform to Sanmina-SCI's fiscal year end. Accordingly, an
adjustment was made to retained earnings in the first quarter of fiscal 2001 to
eliminate the duplication of $5.3 million of net income for Segerstrom, for the
three months of Segerstrom operations ended December 31, 2000. Segerstrom's
revenues for the three months ended December 31, 2000 were $96 million. For the
three months ended December 31, 2000, Segerstrom cash provided by operating
activities of $5.9 million, cash used for investing activities of $4.8 million
and cash provided by financing activities of $0.4 million have been excluded
from Sanmina-SCI's consolidated statement of cash flows for the year ended
September 29, 2001.

As a result of the recent pooling of interests accounting for Segerstrom,
and the prior pooling of interests accounting for Altron, Manu-Tronics, Essex
and Hadco, Sanmina-SCI has retroactively restated its historical results of
operations to include the results of operations of all entities. The financial
information presented gives effect to such restatement. A reconciliation of the
net sales and net income for the years ended September 30, 2000 and October 2,
1999 to previously reported information, is as follows:

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SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Sanmina-SCI has also completed several other smaller acquisitions. These
transactions (see below) involved the purchase of either stock or assets in
exchange for cash and were accounted for as purchase transactions. Pro forma
statements of operations reflecting these acquisitions are not shown, as, in
aggregate, they would not differ materially from reported results.

On March 6, 2000, Sanmina-SCI acquired Alcatel's North Carolina electronic
enclosure systems facility for a cash purchase price of approximately $23.8
million. This transaction was accounted for as a purchase. The purchase price
was allocated to the net assets acquired, which consisted of inventories,
equipment, and accrued payroll related expenses, based on fair market value,
resulting in goodwill of approximately $8 million, which prior to adoption of
SFAS 142, is amortized over a period of 10 years. The transaction also includes
a three-year manufacturing service contract between Sanmina-SCI and Alcatel.

On June 27, 2000, Sanmina-SCI acquired Interworks Computer Products, Inc.
("Interworks") for a cash purchase price of approximately $45.0 million.
Interworks is a designer and manufacturer of standard and custom modular
subsystems, focused on meeting the growing needs of the networking equipment and
communications sectors. This transaction was accounted for as a purchase. The
fair value of the tangible net assets acquired, comprising primarily fixed
assets and inventory, was approximately $4.7 million. The acquisition resulted
in goodwill of approximately $40.3 million, which prior to adoption of SFAS 142,
is amortized over a period of 15 years. Interworks designs, manufactures, tests
and distributes a complete line of Digital Signal Processor modular solutions
and advanced memory products to leading electronics original equipment
manufacturers serving the networking and telecommunications markets.

On July 10, 2000, Sanmina-SCI acquired a PCB assembly and system assembly
facility located in Shenzhen, Guangdong province in China. The acquisition was
accounted for as a purchase and also includes administrative offices in Hong
Kong and a branch procurement office in Taiwan. The purchase price was
approximately $65.0 million in cash. The fair value of the tangible assets
acquired, comprising primarily fixed assets, inventories and accounts
receivables was approximately $20.0 million. The acquisition resulted in
goodwill of approximately $45.0 million, which prior to adoption of SFAS 142, is
amortized over a period of 15 years. The facilities in China include a
manufacturing facility with administrative and dormitory buildings.

On September 30, 2000, Sanmina-SCI acquired the San Jose system integration
and fulfillment operation of Lucent Technologies. The acquisition included the
purchase of a manufacturing facility and related equipment and the transfer of
employees to Sanmina-SCI.

In October 2000, Sanmina-SCI acquired a 49.9% ownership interest in
INBOARD, the remainder of which is owned by Siemens AG. INBOARD is a
manufacturer of complex printed circuit boards, located in Germany.

72

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On August 24, 2001, Sanmina-SCI acquired Alcatel's manufacturing
operations, located in Richardson, Texas, for a cash purchase price of $66.4
million. The acquisition was accounted for as a purchase and includes a
multiyear supply contract, the purchase of a manufacturing facility and related
equipment and the transfer of employees to Sanmina-SCI. The fair value of the
tangible assets acquired, comprising primarily of fixed assets, inventories and
accounts receivable was approximately $46.4 million. The acquisition resulted in
goodwill of approximately $20 million. For the year ended September 29, 2001,
the supply contract purchased did not have a material impact on Sanmina's gross
margin.

NOTE 10. MERGER AND RESTRUCTURING COSTS

Merger and restructuring costs consist of the following:

2001

In March 2001, Sanmina-SCI acquired Segerstrom in a pooling of interests
business combination. Sanmina-SCI recorded in accordance with EITF 94-3,
expected involuntary employee termination costs of approximately $7.2 million
for 470 employee positions. As of the end of Sanmina-SCI's fiscal year 2001, 302
employees have been terminated for an approximate cost of $3.5 million.
Sanmina-SCI also incurred restructuring costs of $5.2 million related to
consolidation of duplicate facilities primarily in Europe. The balance of the
terminations, at the originally estimated and accrued amounts for involuntary
employee termination costs, and the consolidation of duplicate facilities are
expected to be completed by March 2002.

In June 2001, Sanmina-SCI consolidated certain manufacturing plants in
Calgary, Alberta, Canada and Salem, Massachusetts and merged the operations from
these facilities into existing manufacturing facilities within the same regions.
These consolidations were made to eliminate duplicate facilities and reduce
capacity inline with the reduced customer demand experienced at that time. As
part of the consolidation, Sanmina-SCI reduced its workforce in the same regions
by approximately 665 people. In addition, Sanmina-SCI incurred restructuring and
other costs, primarily related to discontinued use of enterprise-wide software
costs used internally by acquired companies (no longer required
post-acquisition); integration of new information systems at acquired companies;
costs related to consolidation of duplicate facilities and write-offs of
redundant fixed assets. These activities are expected to be completed by June
2002.

In July 2001, due to the slowdown in the EMS industry and the economy
worldwide, Sanmina-SCI closed certain manufacturing facilities throughout North
America and Europe, and merged operations from these facilities into existing
manufacturing facilities within the same regions. These plant closures were made
to eliminate duplicate facilities to better align capacity to reduced levels of
customer demand. Concurrent with the plant closures, Sanmina-SCI reduced its
workforce in the same regions by approximately 2,967 people. Sanmina-SCI also
incurred restructuring costs related to lease payments (less any applicable
sublease income) for properties abandoned. Asset related write-offs consisted of
excess equipment and leasehold improvements to facilities that were abandoned
and whose estimated fair market value were zero. The closing of the plants
discussed above are expected to be completed by the fourth quarter of fiscal
2002.

73

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Below is a summary detailing the specific components of restructuring costs
for fiscal 2001:

Merger costs of $12.5 million were recorded in 2001 and consisted of fees
for investment banking, accounting, legal and related fees and expenses for the
Segerstrom acquisition, which was accounted for using the pooling of interests
method. Merger costs of approximately $9.7 million were paid during fiscal year
2001. The remaining amounts will be paid in fiscal 2002.

Sanmina-SCI continues to rationalize manufacturing facilities and headcount
to better scale capacity to current market and operating conditions. In
connection therewith, Sanmina-SCI will incur additional restructuring charges in
fiscal year 2002.

2000

In June 2000, Sanmina-SCI acquired Hadco in a pooling of interests business
combination. Sanmina-SCI recorded, in accordance with EITF 94-3, involuntary
termination costs representing expected severance costs of 847 employee
positions due to attrition and expected synergies arising from the closure of
duplicate facilities. At the end of fiscal 2000, approximately 11.8 million had
been paid representing primarily severance payments to 13 members of Hadco
senior management pursuant to employee agreements. At the time of the original
EITF 94-3 plan, Sanmina expected to downsize duplicate Hadco facilities in the
six months after the merger. Severance agreements with affected employees
specified that if the employees were terminated within six months of the merger
date, they would receive specified severance amounts, which was the amount
originally accrued. However, the volume of activity in that six month period
picked up significantly, and personnel at these particular facilities were
needed. Subsequent to the six months following the merger, Sanmina-SCI
experienced an economic slowdown and terminated the remaining 834 identified
positions. As the ultimate termination of the remaining positions was after the
expiration of the original , and the completion of the termination of the
affected employees, six month severance period, Sanmina-SCI determined it would
not extend the severance agreement time periods. This determination was reached
in the quarter ending June 30, 2001 and accordingly Sanmina-SCI reversed the
balance of the accrual of approximately $14 million through the line item
"Restructuring Costs" in the statement of operations for the three months ended
June 30, 2001. All restructuring activities related to the Hadco acquisition
were completed as of June 30, 2001.

In June 2000, Sanmina-SCI acquired Essex in a pooling of interests business
combination. Sanmina-SCI recorded, in accordance with EITF 94-3, involuntary
termination costs representing expected severance costs

74

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of 38 employee positions. As of the end of fiscal 2000, no amounts had been
paid. As of Sanmina-SCI's fiscal quarter ended June 30, 2001, Sanmina-SCI had
completed the termination of the identified positions, but at a significantly
reduced cost than originally anticipated. Sanmina-SCI reversed the balance of
the accrual at June 30, 2001 through the line item "Restructuring Costs" in the
statement of operations. Below is a summary detailing the specific components of
restructuring costs for fiscal 2000:

Merger costs of $19.9 million were recorded in 2000, and consisted of fees
for investment bankers, attorneys, accountants and other direct merger related
expenses and relate to those acquisitions that were accounted for using the
pooling of interests method. Merger costs of approximately $18.5 million were
paid during fiscal year ended 2000 with the remainder paid in fiscal 2001.

1999

In fiscal year ended 1999, Sanmina-SCI closed certain manufacturing plants
in Fremont, California and Woburn, Massachusetts and merged the operations from
these facilities into existing manufacturing facilities within the same regions.
These closures were made to eliminate duplicate facilities and other costs
resulting from the merger with Altron in fiscal 1999. Concurrent with the plant
closures, Sanmina-SCI reduced its workforce in the same regions by approximately
50 people. Sanmina-SCI also incurred restructuring costs related to lease
payments (less any applicable sublease income) for properties abandoned and
Sanmina-SCI's planned relocation to its new campus facility in fiscal 2000.
Asset related write-offs consisted of excess equipment and leasehold
improvements to facilities that were abandoned and whose estimated fair market
value were zero. Sanmina-SCI's move to the new campus facility commenced in
fiscal 1999 and was completed in the second quarter of fiscal 2000.
Noncancelable lease payments on vacated facilities were paid in full as of the
end of fiscal 2000. Sanmina-SCI also discontinued the use of enterprise-wide
software and hardware used internally by the acquired companies, as these were
no longer required post acquisition. The closing of the plants discussed above,
and the costs related to the integration of information systems and hardware,
were all incurred in fiscal 1999.

In fiscal 1999 and prior to its acquisition by Sanmina-SCI, Segerstrom
closed a factory in Stockholm, Sweden and merged the operations into existing
facilities in Sweden and Finland. These costs included severance payments to
involuntarily terminate 280 employees, lease termination and facility exit costs
and asset write-offs related excess equipment and leasehold improvements for
facilities that were abandoned and whose estimated fair value was zero.

75

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At the end of fiscal 1999 and in accordance with EITF 94-3, an accrual of
approximately $10.1 million remained. The balance of the accrued amounts were
fully paid in fiscal 2000. Below is a summary detailing the specific components
of restructuring costs for fiscal 1999:

76

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. STOCKHOLDERS' EQUITY

Common Stock -- In March 2000 and January 2001, Sanmina-SCI effected a
two-for-one stock split payable in the form of a dividend. Accordingly, all
share and per share data has been adjusted to retroactively reflect the stock
splits. On February 8, 2000, Sanmina-SCI completed a public offering of
19,100,000 shares of common stock at $29.50 per share for the aggregate gross
proceeds of $563.5 million.

Treasury Stock -- In September 2001, Sanmina-SCI's Board of Directors
authorized Sanmina-SCI to repurchase up to 5% of the outstanding common stock at
market price. The timing of the stock purchases are made at the discretion of
management. At September 29, 2001, Sanmina-SCI had purchased approximately 3.5
million shares for a total of approximately $45.9 million.

Sanmina-SCI Stock Option Plans

Stock Option Plans -- The 1990 Incentive Stock Plan (the "Plan") provides
for the grant of incentive stock options, non-statutory stock options, and stock
purchase rights to employees and other qualified individuals to purchase shares
of Sanmina-SCI's Common Stock at amounts not less than 100% of the fair market
value of the shares on the date of the grant.

On January 29, 1999, shareholders approved an amendment to adopt
Sanmina-SCI's 1999 Stock Plan (the "1999 Plan"). The 1999 Plan provides for the
grant of incentive stock options, non-statutory stock options, and stock
purchase rights to employees and other qualified individuals to purchase shares
of Sanmina-SCI's Common Stock generally at amounts not less than 100% of the
fair market value of the shares on the date of the grant. In the event a grant
is priced at a level below the, then current market value on the date of grant,
Sanmina-SCI records the corresponding deferred compensation.

The 1995 Director Option Plan (the "Director Plan") provides for the
automatic grant of stock options to outside directors of Sanmina-SCI or any
subsidiary of Sanmina-SCI at amounts not less than 100% of the fair market value
of the shares on the date of grant.

The 1996 Supplemental Stock Option Plan (the "Supplemental Plan") permits
only the grant of non-statutory options and provides that options must have an
exercise price at least equal to the fair market value of Sanmina-SCI's Common
Stock on the date of the grant. Options under the Supplemental Plan may be
granted to employees and consultants, but executive officers and directors may
not be granted options under the Supplemental Plan.

The Sanmina-SCI Corporation Inc., Stock Option Plan 2000 (the "2000 Plan")
provides for the grant of non-statutory stock options to employees of our
subsidiaries in Sweden and Finland. The exercise price of options granted under
the 2000 Plan can be less than the market value of a share, but shall not be
less than the market value of a share on the day before the date on which
invitations to apply for Options were issued.

The French Addendum to the 1999 Stock Plan (the "French Addendum") provides
for the grant of non-statutory options to employees of the subsidiaries of
Sanmina-SCI in France. For French tax purposes, the French Addendum is a
qualifying plan which will avoid social security charges to the employee
provided the shares acquired are not sold within five years of the date on which
the option is granted. The option price of the newly issued shares cannot be
lower than 80% of the average stock exchange price during the 20 days preceding
the grant.

77

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Options vest as determined by the Board of Directors and in no event may an
option have a term exceeding ten years from the date of the grant. Option
activity under the Sanmina-SCI option plans is as follows:

The following table summarizes information regarding stock options
outstanding under the Sanmina-SCI option plans at September 29, 2001:

The number of exercisable options and the weighted average exercise price
as of September 30, 2000 and October 2, 1999 were 15,866,128 at $13.31 per share
and 11,457,740 at $4.23 per share, respectively.

Sanmina-SCI Employee Stock Purchase Plan. Sanmina-SCI's employee stock
purchase plan (the "Purchase Plan") provides for the issuance of up to
10,200,000 shares of common stock. 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. 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 September 29, 2001,

78

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9,315,824 shares had been issued under the Purchase Plan. Subsequent to
September 29, 2001, the Company increased the number of shares authorized under
the Purchase Plan from 10,200,000 to 13,200,000.

Hadco Employee Stock Purchase Plan. Hadco's Employee Stock Purchase Plan
("ESP Plan") was approved by the stockholders in March 1998 to allow eligible
employees, as defined in the ESP Plan, to purchase shares of common stock during
one or more six-month periods through payroll deductions. Shares were purchased
at 85% of fair value, as defined. A total of 1,400,000 shares of common stock
were reserved for purchase under the ESP Plan. During fiscal 2000 and 1999,
Hadco issued 296,992 and 379,764 shares, respectively, under the ESP Plan. As of
September 30, 2000, Sanmina-SCI had closed the plan. Shares that were available
for purchase under the ESP Plan have expired.

As of September 29, 2001, Sanmina-SCI has reserved the following shares of
authorized but unissued common stock:

Convertible subordinated debt............................... 26,706,108
Stock option plans.......................................... 25,384,754
Employee stock purchase plan................................ 884,176
----------
52,975,038
==========

Stock-based Compensation. Sanmina-SCI accounts for its stock option plans
and employee stock purchase plan under APB Opinion No. 25 and related
interpretations. Had compensation cost for all plans been determined consistent
with SFAS No. 123, Sanmina-SCI's net income and net income per share would have
been reduced to the following pro forma amounts:

The weighted average fair values of options granted by Sanmina-SCI during
fiscal 2001, 2000, and 1999 was $22.46, $19.51 and $8.45 per share,
respectively. The weighted average fair values of options granted by Hadco
during fiscal 1999 was $6.78 per share. The fair value of each stock option
granted or stock issued under the employee stock purchase plans is estimated on
the date of grant using the Black-Scholes option

79

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

pricing model with the following weighted-average assumptions used for grants or
issuances in fiscal 2001, 2000, and 1999, respectively.

NOTE 12. INCOME TAXES

The provision (benefit) for income taxes attributable to continuing
operations is based upon income (loss) before income taxes from continuing
operations as follows (dollars in thousands)

80

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes consists of the following:

81

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the deferred income tax assets and liabilities are as
follows:

In accordance with SFAS No. 109 "Accounting for Income Taxes", Sanmina-SCI
believes it is more likely than not that Sanmina-SCI will not realize a portion
of the benefits of certain deferred tax assets, and accordingly, has provided a
valuation allowance for them.

The tax rate used in the computation of the provision for federal and state
income taxes differs from the statutory federal and state rates due to the
following:

82

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

Sanmina-SCI adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," during fiscal 1999. SFAS No. 131
established standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports issued to stockholders. It also
established standards for related disclosures about product and services,
geographic areas and major customers. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision makers, or
decision making group, in deciding how to allocate resources and in assessing
performance.

Sanmina-SCI's chief operating decision maker is the Chief Operating
Officer. Based on the evaluation of financial information, including the
financial information related to Segerstrom, by the Chief Operating Officer,
management currently believes that Sanmina-SCI operates in two geographic
segments, domestic (U.S.A.) and international operations. Revenues are
attributable to the country in which the product is manufactured. During fiscal
2001, 2000, and 1999, there were no assets or revenues from any individual
foreign country greater than 10% of the total assets or revenues, respectively.
Each segment manufactures, tests and services a full spectrum of complex printed
circuit boards, custom backplane interconnect devices, and electronic assembly
services. The chief operating decision maker evaluates performance based upon
each segment's operating income. Operating income is defined as income before
interest income or interest expense and taxes.

The following summarizes financial information by geographic segment:

83

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Although Sanmina-SCI seeks to diversify its customer base, a small number
of customers are responsible for a significant portion of Sanmina-SCI's net
sales. During fiscal 2001, 2000, and 1999, sales to Sanmina-SCI's ten largest
customers accounted for 51.1%, 54.8%, and 48.1%, respectively, of Sanmina-SCI's
net sales. In 2001, no single customer individually accounted for more than
10.0% of net sales. In 2000, sales to Sanmina-SCI's largest customer
individually represented 11.4% of net sales. In 1999, no single customer
individually accounted for more than 10.0% of net sales.

NOTE 14. SUBSEQUENT EVENTS

On December 6, 2001, SCI Systems, Inc. merged into a wholly-owned
subsidiary of Sanmina Corporation. Under the terms of the merger, SCI
stockholders received 1.36 shares of Sanmina common stock for each share of SCI.
In connection with the merger, Sanmina changed its corporate name to Sanmina-SCI
Corporation and three former members of SCI's board of directors joined the
board of directors of Sanmina-SCI.

In October 2001, Sanmina-SCI purchased certain assets of Electro Mechanical
Solutions, Inc., ("E-M-Solutions") a privately-held manufacturer of electronic
enclosures. This transaction includes the purchase of certain manufacturing
operations in the United States, as well as the stock of E-M-Solutions'
subsidiaries incorporated in Mexico and Northern Ireland. The cash purchase
price for this transaction was $110.65 million, $20 million of which is subject
to reduction based on a post-closing audit of E-M-Solutions' balance sheet.

84

FINANCIAL STATEMENT SCHEDULE

The financial statement Schedule II -- VALUATION AND QUALIFYING ACCOUNTS is
filed as part of this Form 10-K.

SANMINA-SCI CORPORATION

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

85

SIGNATURES

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

Date: December 20, 2001 SANMINA-SCI CORPORATION
(Registrant)

By /s/ RANDY W. FURR
--------------------------------------
Randy W. Furr
President and Chief Operating Officer

By /s/ RICK R. ACKEL
--------------------------------------
Rick R. Ackel
Executive Vice President and
Chief Financial Officer

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 date indicated.

87

EXHIBIT INDEX

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

(1) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Registration Statement on Form S-1, No. 33-70700 filed
with the Securities and Exchange Commission ("SEC") on February 19, 1993.

(2) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Registration Statement on Form S-1 No. 33-70700 filed
with the SEC on October 22, 1993.

(3) Incorporated by reference to exhibit no. 2 previously filed with
Registrant's Report on Form 8-K filed with the SEC on October 28, 1994.

(4) Incorporated by reference to the like-numbered exhibits previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 29,
1994.

(5) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-Q filed with the SEC on July 31, 1995.

(6) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1995.

(7) Incorporated by reference to exhibit 2 previously filed with the
Registrant's Report on Form 8-K filed with the SEC on November 15, 1996.

(8) Incorporated by reference to the like numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1996, filed with the SEC on December 24, 1996.

(9) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on November 21, 1997.

(10) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on September 4, 1998.

(11) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K for the fiscal year ended September
30, 1998.

(12) Incorporated by reference to exhibit 2.1 previously filed with Registrant's
Report on Form 8-K filed with the SEC on April 29, 1999.

(13) Incorporated by reference to the like-numbered exhibit previously filed
with Registrant's Report on Form 10-K filed with the SEC on December 18,
2000.

(14) Incorporated by reference to the like-numbered exhibit previously filed
with the Registrant's Report on Form S-8 filed with the SEC on May 25,
1999.

(15) Incorporated by reference to Exhibit 4.1 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

(16) Incorporated by reference to Exhibit 4.2 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

(17) Incorporated by reference to Exhibit 4.3 previously filed with the
Registrant's Registration Statement on Form S-8, filed with the SEC on June
23, 2000.

(18) Incorporated by reference to Exhibit 3.1(a) to Sanmina-SCI's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2001, filed on
May 11, 2001.

(19) Incorporated by reference to the like numbered exhibit previously filed
with Registrant's Registration Statement on Form 8-A No. 000-21272, filed
with the SEC on May 25, 2001

(20) Incorporated by reference to Exhibit 10.4 previously filed with
Registrant's Registration Statement on Form S-8 filed with the SEC on March
19, 1997.

(21) Incorporated by reference to Exhibit 10.1 previously filed with
Registrant's Registration Statement on Form S-8 filed with the SEC on March
19, 1997.

(22) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-37526, filed with the SEC on
May 22, 2000.

(23) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-3, No. 333-39316, filed with the SEC on
June 14, 2000.

(24) Incorporated by reference to Exhibit 25.1 previously filed with
Registrant's Registration Statement on Form S-3, No. 333-84221, filed with
the SEC on July 30, 1999.

(25) Incorporated by reference to Exhibit 4.1 previously filed with Registrant's
Registration Statement on Form S-3, No 333-50282, filed with the SEC on
November 20, 2000.

(26) Incorporated by reference to the like-numbered exhibits previously filed
with the Registrant's Registration Statement on Form S-1, No. 33-70700,
filed with the SEC on February 19, 1993.

(27) Incorporated by reference to Exhibit 2.1 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.

(28) Incorporated by reference to Exhibit 4.1 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(29) Incorporated by reference to Exhibit 4.2 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(30) Incorporated by reference to Exhibit 4.3 previously filed with Registrant's
Registration Statement on Form S-8 filed with the SEC on December 20, 2001.

(31) Incorporated by reference to Exhibit 3.1.2 previously filed with
Registrant's Registration Statement on Form S-4, No. 333-67326, filed with
the SEC on August 10, 2001.

(32) Incorporated by reference to Exhibit 2.5 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.

(33) Incorporated by reference to Exhibit 2.6 previously filed with Registrant's
Registration Statement on Form S-4, No. 333-67326, filed with the SEC on
August 10, 2001.