JABIL CIRCUIT INC - 10-K Annual Report

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UNITED STATES
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 AUGUST 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 0-21308
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JABIL CIRCUIT, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 38-1886260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

10560 NINTH STREET NORTH, 33716
ST. PETERSBURG, FLORIDA (Zip Code)
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(727) 577-9749

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE

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 periods 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 Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. [ ]

The aggregate market value of the voting common stock held by
non-affiliates of the Registrant based on the closing sale price of the Common
Stock as reported on the New York Stock Exchange on November 16, 2001 was
approximately $4.1 billion. For purposes of this determination, shares of Common
Stock held by each officer and director and by each person who owns 5% or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes. The number of
outstanding shares of the Registrant's Common Stock as of the close of business
on November 16, 2001, was 197,144,750. The Registrant does not have any
non-voting stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders to be held on January 24, 2002 is incorporated by reference in Part
III of this Annual Report on Form 10-K to the extent stated herein.
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PART I

ITEM 1. BUSINESS

References in this report to "the Company", "Jabil", "we", or "us" mean
Jabil Circuit, Inc. together with its subsidiaries, except where the context
otherwise requires. This Annual Report on Form 10-K contains certain statements
that are, or may be deemed to be, forward-looking statements within the meaning
of section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934, and are made in reliance upon the protections provided by
such acts for forward-looking statements. These forward-looking statements (such
as when we describe what we "believe," "expect" or "anticipate" will occur, and
other similar statements) include, but are not limited to, statements regarding
future sales and operating results, future prospects, anticipated benefits of
proposed (or future) acquisitions and new facilities, growth, the capabilities
and capacities of business operations, any financial or other guidance and all
statements that are not based on historical fact, but rather reflect our current
expectations concerning future results and events. The ultimate correctness of
these forward-looking statements is dependent upon a number of known and unknown
risks and events, and is subject to various uncertainties and other factors that
may cause our actual results, performance or achievements to be different from
any future results, performance or achievements expressed or implied by these
statements. The following important factors, among others, could affect future
results and events, causing those results and events to differ materially from
those expressed or implied in our forward-looking statements: business
conditions and growth in our customer's industries, the contract manufacturing
industry and the general economy, variability of operating results, our
dependence on a limited number of major customers, the potential consolidation
of our customer base, limited availability of components, dependence on certain
industries, variability of customer requirements, our ability to successfully
consummate acquisitions, including the remaining portions of the Marconi
operation acquisition, and to integrate operations following consummation of
acquisitions, other economic, business and competitive factors affecting our
customers, our industry and business generally and other factors that we may not
have currently identified or quantified. For a further list and description of
various risks, relevant factors and uncertainties that could cause future
results or events to differ materially from those expressed or implied in our
forward-looking statements, see the "Factors Affecting Future Results" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections and elsewhere in this document.

All forward-looking statements included in this Report on Form 10-K are
made only as of the date of this Report on Form 10-K, and we do not undertake
any obligation to publicly update or correct any forward-looking statements to
reflect events or circumstances that subsequently occur or which we hereafter
become aware of. You should read this document and the documents that we
incorporate by reference into this Annual Report on Form 10-K completely and
with the understanding that our actual future results may be materially
different from what we expect. We may not update these forward-looking
statements, even if our situation changes in the future. All forward-looking
statements attributable to us are expressly qualified by these cautionary
statements.

THE COMPANY

We are one of the leading worldwide independent providers of electronic
manufacturing services ("EMS"). We design and manufacture electronic circuit
board assemblies and systems for major original equipment manufacturers ("OEMs")
in the communications, computer, peripherals, automotive and consumer products
industries. We serve our OEM customers with dedicated work cell business units
that combine high volume, highly automated continuous flow manufacturing with
advanced electronic design and design for manufacturability technologies. Our
customers currently include industry leaders such as Cisco Systems, Inc., Dell
Computer Corporation, Hewlett-Packard Company, Johnson Controls, Inc., Lucent
Technologies and Marconi plc. For the fiscal year ended August 31, 2001, we
achieved net revenues of approximately $4.3 billion and net income of $118.5
million.

The EMS industry has experienced rapid growth over the past several years
as an increasing number of OEMs have outsourced their manufacturing
requirements. OEMs are turning to outsourcing in order to

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reduce product cost, achieve accelerated time-to-market and time-to-volume
production, access advanced design and manufacturing technologies, improve
inventory management and purchasing power, reduce their capital investment in
manufacturing facilities, and achieve parallel manufacturing of the same product
throughout the world. We believe further growth opportunities exist for EMS
providers to penetrate the worldwide electronics markets.

We offer our customers significant turnkey EMS solutions that are
responsive to their outsourcing needs. Our work cell business units are capable
of providing:

- integrated design and engineering services

- component selection, sourcing and procurement

- automated assembly

- design and implementation of product testing

- parallel global production

- systems assembly and direct order fulfillment services

- repair and warranty services

We currently conduct our operations in facilities that are located in the
United States, Belgium, Brazil, China, England, Hungary, Hong Kong, Ireland,
Italy, Malaysia, Mexico, and Scotland. Our parallel global production strategy
provides our customers with the benefits of improved supply-chain management,
reduced inventory obsolescence, lowered transportation costs and reduced product
fulfillment time.

Our principal executive offices are located at 10560 Ninth Street North,
St. Petersburg, Florida 33716, and our telephone number is (727) 577-9749. Our
website is located at www.jabil.com. Information contained in our website is not
a part of this document or the documents incorporated by reference in this
document.

EMS INDUSTRY BACKGROUND

The EMS industry is composed of companies that provide a range of
manufacturing services for OEMs in the electronics industry. The EMS industry
has experienced rapid growth over the past several years as an increasing number
of OEMs have chosen an external manufacturing strategy. This growth has been
impacted by OEMs divesting of internal manufacturing capacity. Factors driving
OEMs to favor outsourcing to EMS providers include:

- Reduced Product Cost. EMS providers are able to manufacture products at
a reduced total cost to OEMs. These cost advantages result from higher
utilization of capacity because of diversified product demand and,
typically, a higher sensitivity to elements of cost.

- Accelerated Product Time-to-Market and Time-to-Volume. EMS providers are
able to deliver accelerated production start-ups and achieve high
efficiencies in transferring new products into production. EMS providers
are also able to rapidly scale production for changing markets and to
position themselves in global locations that serve the leading world
markets. With increasingly shorter product life cycles, these key
services allow new products to be sold in the marketplace in an
accelerated time frame.

- Access to Advanced Technologies. Customers of EMS providers gain access
to advanced technologies in manufacturing processes, as well as product
and production design. Product and production design services may offer
customers significant improvements in the performance, cost,
time-to-market and manufacturability of their products.

- Improved Inventory Management and Purchasing Power. EMS providers are
able to manage both procurement and inventory, and have demonstrated
proficiency in purchasing components at

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improved pricing due to the scale of the operations and continuous
interaction with the materials marketplace.

- Reduced Capital Investment in Manufacturing. OEMs are increasingly
seeking to lower their investment in inventory, facilities and equipment
used in manufacturing in order to allocate capital to other activities
such as sales and marketing, and research and development. This shift in
capital deployment has placed a greater emphasis on outsourcing to
external manufacturing specialists.

OUR STRATEGY

We are focused on expanding our position as one of the leading global
providers of electronic manufacturing services to major OEMs. To achieve this
objective, we will continue implementing the following strategies:

- Establish and Maintain Long-Term Customer Relationships. Our core
strategy is to establish and maintain long-term relationships with
leading electronics companies in expanding industries with the size and
growth characteristics that can benefit from highly automated, continuous
flow and global manufacturing. Historically, we have derived a majority
of our growth from existing customers. We focus on maintaining long-term
relationships with our customers and seek to expand such relationships to
include additional product lines and services. In addition, we have a
focused effort to identify and develop relationships with new customers
who meet our profile.

- Utilize Work Cell Business Units. Each of our work cell business units
is dedicated to one customer and operates with a high level of autonomy,
utilizing dedicated production equipment, production workers,
supervisors, buyers, planners and engineers. We believe our work cell
business units promote increased responsiveness to our customers' needs,
particularly as a customer relationship grows to multiple production
locations.

- Expand Parallel Global Production. Our ability to produce the same
product on a global scale is a significant requirement of our customers.
We believe that parallel global production is a key strategy to reduce
obsolescence risk and secure the lowest landed costs while simultaneously
supplying products of equivalent or comparable quality throughout the
world. Consistent with this strategy, we have acquired facilities in the
United Kingdom and Italy.

- Offer Systems Assembly and Direct Order Fulfillment. Our systems
assembly and direct order fulfillment services allow our customers to
reduce product cost and risk of product obsolescence by reducing total
work-in-process and finished goods inventory. We offer these services at
all of our manufacturing locations.

- Pursue Selective Acquisition Opportunities. An increasing number of OEMs
are divesting internal manufacturing operations to EMS providers. In many
of these situations, the OEM enters into a customer relationship with the
EMS provider that acquires the operations. Our acquisition strategy is
focused on obtaining OEM manufacturing operations with consistent growth,
experienced management teams, and opportunities for long-term outsourcing
relationships. See "Factors Affecting Future Results -- We may not
achieve expected profitability from our acquisitions."

OUR APPROACH TO MANUFACTURING

In order to achieve high levels of manufacturing performance, we have
adopted the following approach:

- Work Cell Business Units. Each of our work cell business units is
dedicated to one customer and is empowered to formulate strategies
tailored to its customer's needs. Each work cell business unit has
dedicated production lines consisting of equipment, production workers,
supervisors and engineers. Work cell business units have direct
responsibility for manufacturing results and time-to-volume production,
promoting a sense of individual commitment and ownership. The work cell

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business unit approach is modular and enables us to grow incrementally
without disrupting the operations of other work cell business units.

- Business Unit Management. Our Business Unit Managers coordinate all
financial, manufacturing and engineering commitments for each of our
customers at a particular manufacturing facility. Our Business Unit
Directors oversee local Business Unit Managers and coordinate on a
worldwide basis all financial, manufacturing and engineering commitments
for each of our customers that have both domestic and global production
requirements. Jabil's Business Unit Management has the authority to
develop customer relationships, make design strategy decisions and
production commitments, establish pricing and implement production and
electronic design changes. Business Unit Managers and Directors are also
responsible for assisting customers with strategic planning for future
products, including developing cost and technology goals. These Managers
and Directors operate autonomously, with responsibility for the
development of customer relationships and direct profit and loss
accountability for work cell business unit performance.

- Continuous Flow. We use a highly automated, "continuous flow" approach
where different pieces of equipment are joined directly or by conveyor to
create an in-line assembly process. This process is in contrast to a
"batch" approach, where individual pieces of assembly equipment are
operated as freestanding work-centers. The elimination of waiting time
prior to sequential operations results in faster manufacturing, which
improves production efficiencies and quality control, and reduces
inventory work-in-process. Continuous flow manufacturing provides
significant cost reduction and quality improvement when applied to volume
manufacturing.

- Computer Integration. We support all aspects of our manufacturing
activities with advanced computerized control and monitoring systems.
Component inspection and vendor qualities are monitored electronically in
real-time. Materials planning, purchasing, stockroom and shop floor
control systems are supported through a computerized Manufacturing
Resource Planning system, providing customers with a continuous ability
to monitor material availability and track work-in-process on a real-time
basis. Manufacturing processes are supported by a real-time, computerized
statistical process control system, whereby customers can remotely access
our computer systems to monitor real-time yields, inventory positions,
work-in-process status and vendor quality data. See "Technology" and
"Factors Affecting Future Results -- Any delay in integrating our new
information systems could disrupt our operations and cause unanticipated
increases in our cost."

- Supply Chain Management. We utilize an electronic commerce
system/electronic data interchange ("EDI") and web-based tools with our
customers and suppliers to implement a variety of supply chain management
programs. Our customers utilize these tools to share demand and product
forecasts and deliver purchase orders. We use these tools with our
suppliers for just-in-time delivery, supplier-managed inventory and
consigned supplier-managed inventory.

OUR DESIGN SERVICES

We offer a wide spectrum of value-added design services for products that
we manufacture for our customers. We provide these services to enhance our
relationships with current customers and to help develop relationships with new
customers. During fiscal year 2001, over one-half of our customers shipped
product incorporating Jabil design. We offer the following design services:

Electronic Design. Our electronic design team provides electronic
circuit design services including application specific integrated circuit
design and firmware development. These services have been used to develop a
variety of circuit designs for cellular telephone accessories, notebook and
personal computers, servers, radio frequency products, video set-top boxes,
optical communications, personal digital assistants, communication
broadband products and automotive and consumer appliance controls.

Industrial Design Services. Our industrial team assists in designing
the "look and feel" of the plastic and metal enclosures that house printed
circuit board assemblies and systems.

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Mechanical Design. Our mechanical engineering team specializes in
three-dimensional design and analysis of electronic and optical assemblies
using state of the art modeling and analytical tools. The mechanical team
has extended Jabil's product offering capabilities to include all aspects
of industrial design, advance mechanism development and tooling management.
They are staffed to support Jabil customers for all development projects
including turnkey system design and design for manufacturing ("DFM")
activities.

CAD Design. Our CAD ("Computer Assisted Design") design team provides
printed circuit board ("PCB") design and other related services. These
services include PCB design services using advanced CAD/CAE ("Computer
Assisted Engineering") tools, PCB design testing and verification services,
and other consulting services, which includes the generation of a bill of
materials, approved vendor list and assembly equipment configuration for a
particular PCB design. We believe that our CAD design services result in
PCB designs that are optimized for manufacturability and cost and
accelerate the time-to-market and time-to-volume production.

Applied R&D. The goal of Jabil's applied R&D group is to make Jabil
more profitable by pairing with our OEM partners and establishing new
product roadmaps. Applied R&D is a launching pad for new ideas and products
in specific growth areas. This team provides system-based solutions to
engineering problems and challenges.

OUR SYSTEMS ASSEMBLY, TEST AND DIRECT ORDER FULFILLMENT SERVICES

We offer systems assembly, test and direct order fulfillment services to
our customers. Our systems assembly services extend our range of assembly
activities to include assembly of higher-level sub-systems and systems
incorporating multiple printed circuit boards. We maintain significant systems
assembly capacity to meet the increasing demands of our customers. In addition,
we provide testing services, based on quality assurance programs developed with
our customers, of the printed circuit boards, sub-systems and systems products
that we manufacture. Our quality assurance programs include circuit testing
under various environmental conditions to try to ensure that our products meet
or exceed required customer specifications. We also offer direct order
fulfillment services for delivery of final products we assemble for our
customers.

OUR REPAIR AND WARRANTY SERVICES

As an extension of our manufacturing model and an enhancement to our total
global solution, we offer repair and warranty services to our customers from
strategic logistics hub locations. We have the ability to service our OEM
partner's product following completion of the traditional manufacturing and
fulfillment process.

TECHNOLOGY

We believe that our manufacturing and testing technologies are among the
most advanced in the industry. Through our research and development efforts, we
intend to continue to offer our customers among the most advanced high volume,
continuous flow manufacturing process technologies. These technologies include
surface mount technology, tape automated bonding, ball grid array, chip scale
packages, flip chip/direct chip attach, thin substrate processes, reflow solder
of mixed technology circuit boards and other testing and emerging interconnect
technologies. In addition to our research and development activities, we are
continuously making refinements to our existing manufacturing processes in
connection with providing manufacturing services to our customers. See "Factors
Affecting Future Results -- Failure to maintain our technological and
manufacturing process expertise could harm our results of operations."

RESEARCH AND DEVELOPMENT

To meet our customers' increasingly sophisticated needs, we continually
engage in research and development activities. The development and refinement of
new manufacturing processes are performed

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primarily at our advanced engineering facility in San Jose, California and
supplemented with additional resources in St. Petersburg, Florida. These efforts
consist of design of the circuit board assembly, mechanical design and the
related production design necessary to manufacture the circuit board assembly in
the most cost-effective and reliable manner. Additional research and development
efforts have focused on new optical, test engineering, RF ("radio frequency")
and wireless failure analysis technologies. The Company is also engaged in the
research and development of new products including optical products, network
infrastructure systems, next-generation portable communication devices, wireless
and broadband access products. See "Factors Affecting Future Results -- Failure
to maintain our technological and manufacturing process expertise could harm our
results of operations."

For fiscal years 2001, 2000 and 1999, we expended $6.4 million, $4.8
million and $5.9 million, respectively, on research and development activities.
To date, substantially all of our research and development expenditures have
related to internal research and development activities.

CUSTOMERS AND MARKETING

Our core strategy is to establish and maintain long-term relationships with
leading electronics companies in expanding industries with the size and growth
characteristics that benefit from highly automated continuous flow and global
manufacturing. A small number of customers and significant industries have
historically comprised a major portion of our net revenue. The table below sets
forth the respective portion of net revenue for the applicable period
attributable to our customers who individually accounted for approximately 10%
or more of our net revenue in any respective period:

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* less than 10% of net revenues

Jabil's revenue was distributed over the following significant industries
for the periods indicated:

In fiscal year 2001, 30 customers accounted for more than 95% of our net
revenue. We expect to continue to depend upon a relatively small number of
customers for a significant percentage of our net revenue. As illustrated in the
two tables above, the historic percentages of net revenue we have received from
specific customers or significant industries have varied substantially from year
to year. Accordingly, these historic percentages are not necessarily indicative
of the percentage of net revenue that we may receive from any customer or
industry in the future. In the past, some of our customers have terminated their
manufacturing arrangements with us or have significantly reduced or delayed the
volume of manufacturing services ordered from us. We cannot assure you that
present or future customers will not terminate their manufacturing arrangements
with us or significantly change, reduce or delay the amount of manufacturing
services ordered from us. If they do, it could have a material adverse effect on
our results of operations. See "Factors Affecting Future Results -- Because we
depend on a limited number of

6

customers, a reduction in sales to any one of our customers could cause a
significant decline in our revenue" and Note 7 to the Consolidated Financial
Statements.

Our principal source of new business is the expansion of existing customer
relationships to include additional product lines and services, referrals and
direct sales through our Business Unit Managers and Directors and executive
staff. Our Business Unit Managers and Directors, supported by the executive
staff, identify and attempt to develop relationships with new customers who meet
our profile. This profile includes financial stability, need for
technology-driven turnkey manufacturing, anticipated unit volume and long-term
relationship stability. Unlike traditional sales managers, our Business Unit
Managers and Directors are responsible for ongoing management of production for
their customers.

INTERNATIONAL OPERATIONS

A key element in our strategy is to provide localized production of global
products produced for OEMs in the major consuming regions of the United States
and Latin America, Europe and Asia. Consistent with this strategy, we have
established or acquired manufacturing and/or repair facilities in Belgium,
Brazil, China, Hungary, Ireland, Italy, Malaysia, Mexico, Scotland and England.
In addition, a sales office has been established in Japan.

Our European facilities located in Belgium, Italy, Hungary, Ireland,
Scotland and England, target existing European customers, North American
customers having significant sales in Europe and potential European customers
who meet our customer profile.

Our Asian facilities, located in China and Malaysia, enable us to provide
local manufacturing services to the Asian market in order to reduce costs,
freight and duties, to provide a more competitive cost structure for these
markets and to serve as a low cost manufacturing source for new and existing
customers.

See "Factors Affecting Future Results -- We derive a substantial portion of
our revenues from our international operations, which are subject to greater
volatility and often require more management time and expense to achieve
profitability than our domestic operations" and "Management's Discussion and
Analysis of Financial Analysis of Financial Condition and Results of
Operations."

FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS

We have identified our global presence as a key to assessing our business
performance. While the services provided, the manufacturing process, class of
customers and the order fulfillment process is similar across manufacturing
locations, we evaluate our business performance on an increasingly regional
basis. Accordingly, our operating segments consist of the United States, Latin
America, Europe and Asia regions. See note 7 to the Consolidated Financial
Statements.

COMPETITION

The EMS industry is highly competitive. We compete against numerous
domestic and foreign manufacturers, including Celestica, Inc., Flextronics
International, Sanmina Corporation, SCI Systems, Inc. and Solectron Corporation.
In addition, we may in the future encounter competition from other large
electronic manufacturers that are selling, or may begin to sell, electronic
manufacturing services. Most of our competitors have international operations
and some have substantially greater manufacturing, financial, research and
development and marketing resources than Jabil. We also face potential
competition from the manufacturing operations of our current and potential
customers, who are continually evaluating the merits of manufacturing products
internally versus the advantages of outsourcing to us.

We believe that the primary basis of competition in our targeted markets
are capability, price, manufacturing quality, advanced manufacturing technology,
design expertise, time-to-volume production, reliable delivery and regionally
dispersed manufacturing. Management believes we currently compete favorably with
respect to these factors. See "Factors Affecting Future Results -- We compete
with

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numerous providers of electronic manufacturing services, including our current
or potential customers who may decide to manufacture all of their products
internally."

BACKLOG

Our order backlog at August 31, 2001 was approximately $799.4 million,
compared to backlog of $1.2 billion at August 31, 2000. Although our backlog
consists of firm purchase orders, the level of backlog at any particular time is
not necessarily indicative of future sales. Given the nature of our
relationships with our customers, we frequently allow our customers to cancel or
reschedule deliveries, and therefore, backlog is not a meaningful indicator of
future financial results. Although we may seek to negotiate fees to cover the
costs of such cancellations or rescheduling, we may not be successful in doing
so. See "Factors Affecting Future Results -- Most of our customers do not commit
to long-term production schedules, which makes it difficult for us to schedule
production and achieve maximum efficiency of our manufacturing capacity."

COMPONENTS PROCUREMENT

We procure components from a broad group of suppliers, determined on an
assembly-by-assembly basis. Almost all of the products we manufacture require
one or more components that are ordered from only one source, and most
assemblies require components that are available from only a single source. Some
of these components are allocated in response to supply shortages. We attempt to
ensure continuity of supply of these components. In cases where unanticipated
customer demand or supply shortages occur, we attempt to arrange for alternative
sources of supply, where available, or defer planned production to meet the
anticipated availability of the critical component. In some cases, supply
shortages will substantially curtail production of all assemblies using a
particular component. In addition, at various times there have been industry
wide shortages of electronic components, particularly of memory and logic
devices. We cannot assure you that such shortfalls will not have a material
adverse effect on our results of operations in the future. See "Factors
Affecting Future Results -- We depend on a limited number of suppliers for
components that are critical to our manufacturing process. A shortage of these
components or an increase in their price could interrupt our operations and
reduce our profits."

PROPRIETARY RIGHTS

We regard our manufacturing processes and electronic designs as proprietary
trade secrets and confidential information. To protect our proprietary rights,
we rely largely upon a combination of trade secret laws; non-disclosure
agreements with our customers, employees, and suppliers; our internal security
systems; confidentiality procedures and employee confidentiality agreements.
Although we take steps to protect our trade secrets, misappropriation may still
occur.

We currently have various patents. However, we believe that the rapid pace
of technological change makes patent protection less significant than such
factors as the knowledge and experience of management and personnel and our
ability to develop, enhance and market manufacturing services.

We license some technology from third parties that we use in providing
manufacturing services to our customers. We believe that such licenses are
generally available on commercial terms from a number of licensors. Generally,
the agreements governing such technology grant us non-exclusive, worldwide
licenses with respect to the subject technology and terminate upon a material
breach by us.

We believe that our electronic designs and manufacturing processes do not
infringe on the proprietary rights of third parties. However, if third parties
assert valid infringement claims against us with respect to past, current or
future designs or processes, we could be required to enter into an expensive
royalty arrangement, develop non-infringing designs or processes, or engage in
costly litigation.

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EMPLOYEES

As of August 31, 2001, we had 17,097 full-time employees, compared to
19,115 full-time employees at August 31, 2000. We believe our employee relations
are good.

GEOGRAPHIC INFORMATION

The information regarding revenue, operating profit and identifiable assets
set forth in Note 7 to the Consolidated Financial Statements, is hereby
incorporated by reference into this Part I, Item 1.

ENVIRONMENTAL

We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. Although we
believe that we are currently in substantial compliance with all material
environmental regulations, any failure to comply with present and future
regulations could subject us to future liabilities or the suspension of
production. In addition, such regulations could restrict our ability to expand
our facilities or could require us to acquire costly equipment or to incur other
significant expense to comply with environmental regulations. See "Factors
Affecting Future Results -- Compliance or the failure to comply with current and
future environmental regulations could cause us significant expense."

ITEM 2. PROPERTIES

We have manufacturing and support facilities located in the United States,
Belgium, Brazil, China, England, Hungary, Hong Kong, Ireland, Italy, Japan,
Malaysia, Mexico and Scotland. A summary of building locations is as follows:

Our manufacturing facilities in Auburn Hills, Livingston, Coventry,
Liverpool, Marcianise, Tiszaujvaros, and Saint Petersburg are ISO-9001
certified. Our manufacturing facilities in Bergamo, Belo Horizonte, Billerica,
Boise, Chihuahua, Panyu, Dublin, Guadalajara, Livingston, Louisville, Memphis,
Penang, Tampa and San Jose are ISO-9002 certified. Our manufacturing facilities
in Auburn Hills, Chihuahua and Livingston are QS-9000 certified. Also,
manufacturing facilities in Auburn Hills, Bergamo, Billerica, Boise, Panyu,
Guadalajara, Livingston, Penang, St. Petersburg and Tiszaujvaros are ISO-14000
certified.

We are currently constructing a high volume manufacturing facility in
Guangzhou, China.

ITEM 3. LEGAL PROCEEDINGS

We are party to certain lawsuits in the ordinary course of business. We do
not believe that these proceedings, individually or in the aggregate, will have
a material adverse effect on our financial position, results of operations and
cash flows.

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

No matters were submitted to a vote of our stockholders during the fourth
quarter covered by this report.

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PART II

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

Our common stock trades on the New York Stock Exchange under the symbol
"JBL." The following table sets forth the high and low closing sales prices per
share for our common stock as reported on the New York Stock Exchange for the
fiscal periods indicated. The table has been adjusted to reflect a two-for-one
stock split in the form of a 100% stock dividend to stockholders that was paid
on March 30, 2000.

On November 16, 2001, the closing sales price for our common stock as
reported on the New York Stock Exchange was $26.96. As of November 16, 2001,
there were approximately 3,752 holders of record of our common stock.

We have never paid cash dividends on our capital stock and do not
anticipate paying cash dividends in the foreseeable future.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The information set forth below is not necessarily indicative of the
results of future operations and should be read in conjunction with the
consolidated financial statements and notes thereto incorporated into Item 8 of
this report. The historical information set forth below has been restated to
reflect the September 1999 merger with GET Manufacturing, Inc. ("GET"), which
was accounted for as a pooling of interests.

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

(1) During 2001, we recorded charges of $6.6 million ($4.1 million after-tax)
related to the acquisition of certain manufacturing facilities of Marconi
Communications. We also recorded charges of $27.4 million ($21.6 million
after-tax) related to restructuring of our business and other non-recurring
charges during our fiscal year. Operating income excluding these charges was
$197.7 million. Net income excluding these charges was $144.3 million and
diluted earnings per share was $0.71.

(2) During 2000, we recorded additional merger-related charges of $5.2 million
($4.7 million after-tax) in connection with the merger with GET ("GET
Merger"). Operating income excluding this charge was $218.1 million. Net
income excluding this charge was $150.3 million and diluted earnings per
share was $0.80.

(3) During 1999, we recorded a merger-related charge of $7.0 million ($6.5
million after-tax) in connection with the GET Merger. During March 1999, we
also recorded the write-off of impaired goodwill of a GET subsidiary of $3.6
million ($3.3 million after-tax). As a result of the overlapping period
created when GET's fiscal year was conformed to an August 31 year-end, the
write-off falls into the results of operations for both years ended August
31, 1999 and 1998. Stockholders' equity was adjusted so that the duplicate
amount is reflected only once in retained earnings. Operating income
excluding these charges was $146.5 million for the year ended August 31,
1999. Net income excluding these charges was $94.6 million and diluted
earnings per share was $0.54.

(4) In connection with the acquisition of certain assets of the LaserJet
Formatter Manufacturing Organization of the Hewlett-Packard Company, (the
"HP Acquisition"), we recorded an acquisition-related charge of $20.8
million ($12.9 million after-tax). During March 1999, we also recorded the
write-off of impaired goodwill of a GET subsidiary of $3.6 million ($3.3
million after-tax). As a result of the overlapping period created when GET's
fiscal year was conformed to an August 31 year end, this charge is included
in the operating results of the year ended August 31, 1998. Operating income
excluding these charges was $111.1 million. Net income excluding this charge
was $73.7 million and diluted earnings per share was $0.45.

(5) Gives effect to two-for-one stock splits in the form of 100% stock dividends
to stockholders of record on March 23, 2000 and on February 5, 1999.

13

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

OVERVIEW

This Annual Report on Form 10-K contains certain statements that are, or
may be deemed to be, forward-looking statements within the meaning of section
27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act
of 1934, and are made in reliance upon the protections provided by such acts for
forward-looking statements. These forward-looking statements (such as when we
describe what we "believe," "expect" or "anticipate" will occur, and other
similar statements) include, but are not limited to, statements regarding future
sales and operating results, future prospects, anticipated benefits of proposed
(or future) acquisitions and new facilities, growth, the capabilities and
capacities of business operations, any financial or other guidance and all
statements that are not based on historical fact, but rather reflect our current
expectations concerning future results and events. The ultimate correctness of
these forward-looking statements is dependent upon a number of known and unknown
risks and events, and is subject to various uncertainties and other factors that
may cause our actual results, performance or achievements to be different from
any future results, performance or achievements expressed or implied by these
statements. The following important factors, among others, could affect future
results and events, causing those results and events to differ materially from
those expressed or implied in our forward-looking statements: business
conditions and growth in our customer's industries, the contract manufacturing
industry and the general economy, variability of operating results, our
dependence on a limited number of major customers, the potential consolidation
of our customer base, limited availability of components, dependence on certain
industries, variability of customer requirements, our ability to successfully
consummate acquisitions, including the remaining portions of the Marconi
operation acquisition, and to integrate operations following consummation of
acquisitions, other economic, business and competitive factors affecting our
customers, our industry and business generally and other factors that we may not
have currently identified or quantified. For a further list and description of
various risks, relevant factors and uncertainties that could cause future
results or events to differ materially from those expressed or implied in our
forward-looking statements, see the "Factors Affecting Future Results" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" sections and elsewhere in this document.

All forward-looking statements included in this Report on Form 10-K are
made only as of the date of this Report on Form 10-K, and we do not undertake
any obligation to publicly update or correct any forward-looking statements to
reflect events or circumstances that subsequently occur or which we hereafter
become aware of. You should read this document and the documents that we
incorporate by reference into this Annual Report on Form 10-K completely and
with the understanding that our actual future results may be materially
different from what we expect. We may not update these forward-looking
statements, even if our situation changes in the future. All forward-looking
statements attributable to us are expressly qualified by these cautionary
statements.

Jabil is one of the leading worldwide independent providers of turnkey
manufacturing services to electronics OEMs in the communications, computer,
peripherals, automotive and consumer products industries. While operating income
and net income decreased in fiscal year 2001, Jabil has historically experienced
substantial growth in net revenue, operating income and net income. This growth,
as well as the growth of the overall EMS industry, has been driven by the
increasing number of electronics OEMs who are outsourcing their manufacturing
requirements. We anticipate that this industry trend will continue during the
next several years.

We derive most of our net revenue under purchase orders from OEM customers.
We recognize revenue, net of product return and warranty costs, typically at the
time of product shipment. The volume and timing of orders placed by our
customers vary due to several factors, including: variation in demand for our
customers' products; our customers' inventory management; new product
introductions and manufacturing strategy changes; and consolidations among our
customers. Demand for our customers' products depends on, among other things,
product life cycles, competitive conditions and general economic conditions.

14

Our cost of revenue includes the cost of electronic components and other
materials that comprise the products we manufacture, the cost of labor and
manufacturing overhead, and provisions for excess and obsolete inventory
adjustments. As a provider of turnkey manufacturing services, we are responsible
for procuring components and other materials. This requires us to commit
significant working capital to our operations and to manage the purchasing,
receiving, inspection and stocking of materials. Although we bear the risk of
fluctuations in the cost of materials and excess scrap, we periodically
negotiate cost of materials adjustments with our customers.

Net revenue from each product that we manufacture consists of a component
based on the costs of materials in that product and a component based on the
labor and manufacturing overhead allocation to that product. We refer to the
portion of the sales price of a product that is based on labor and manufacturing
overhead costs as "manufacturing-based revenue," and to the portion of the sales
price of a product that is based on materials costs as "material-based revenue."
Our gross margin for any product depends on the mix between the cost of
materials in the product and the cost of labor and manufacturing overhead
allocated to the product. We typically realize higher gross margins on
manufacturing-based revenue than we do on materials-based revenue. As we gain
experience in manufacturing a product, we usually achieve increased
efficiencies, which result in lower labor costs and manufacturing overhead for
that product.

Our operating results are impacted by the level of capacity utilization of
manufacturing facilities, indirect labor and selling, general and administrative
expenses. Gross margins and operating income margins have generally improved
during periods of high volume and high capacity utilization. During periods of
low volume production, we generally have idle capacity and reduced operating
margins. As our capacity has grown during recent years, through the construction
of new greenfield facilities, the expansion of existing facilities and our
acquisition of additional facilities, our selling, general and administrative
expenses have increased to support this growth.

We have consistently utilized advanced circuit design, production design
and manufacturing technologies to meet the needs of our customers. To support
this effort, our engineering staff focuses on developing and refining design and
manufacturing technologies to meet specific needs of specific customers. Most of
the expenses associated with these customer-specific efforts are reflected in
our cost of revenue. In addition, our engineers engage in research and
development of new technologies that apply generally to our operations. The
expense of these research and development activities are reflected in the
"Research and Development" line item in our Consolidated Financial Statements.

An important element of our strategy is the expansion of our global
production facilities. Substantially all of our revenue and materials costs
worldwide are denominated in U.S. dollars, while our labor and utility costs in
plants outside the United Sates are denominated in local currencies. We
occasionally hedge these local currency costs, based on our evaluation of the
potential exposure as compared to the cost of the hedge, through the purchase of
foreign exchange contracts, the amount and cost of which have not been material.
Changes in the fair market value of such hedging instruments are included in
other comprehensive income: See Note 1(p) to the Consolidated Financial
Statements.

We continue to depend upon a relatively small number of customers for a
significant percentage of our net revenue. Significant reductions in sales to
any of our large customers would have a material adverse effect on our results
of operations. In the past, some of our customers have terminated their
manufacturing arrangements with us, and other customers have significantly
reduced or delayed the volume of manufacturing services ordered from us. There
can be no assurance that present or future customers will not terminate their
manufacturing arrangements with us or significantly change, reduce or delay the
amount of manufacturing services ordered from us. Any such termination of a
manufacturing relationship or change, reduction or delay in orders could have an
adverse effect on our results of operations or financial condition. See Note 7
to the Consolidated Financial Statements.

15

ACQUISITIONS AND EXPANSION

On September 1, 1999 we acquired, through our Jabil Global Services
subsidiary, the net assets of EFTC Services, Inc., an electronic product service
and repair business. Jabil Global Services, Inc. continues to offer repair and
warranty services for existing and future customers from its hub-based
operations in Memphis, Tennessee; Louisville, Kentucky; and Tampa, Florida. The
purchase price of approximately $28 million was paid in cash. The acquisition
was accounted for as a purchase and resulted in approximately $19 million of
goodwill, which is being amortized, on a straight-line basis over a period of 15
years. The consolidated financial statements include the operating results of
the acquired business from the date of acquisition.

On September 13, 1999 we issued approximately 10.2 million shares of our
common stock for all the outstanding common stock of GET Manufacturing, Inc., a
China-based electronics manufacturing services provider. The business
combination was accounted for as a pooling-of-interests and, accordingly, our
historical consolidated financial statements presented herein have been restated
to include the accounts and results of operations of GET Manufacturing, Inc. In
connection with the merger, we recorded acquisition-related charges of $7.0
million ($6.5 million after-tax) and $5.2 million ($4.7 million after-tax) in
the fourth quarter of fiscal year 1999 and the first quarter of fiscal year
2000, respectively, consisting of key employee severance and legal and
professional fees associated with the merger.

On February 1, 2000, we acquired the net assets of Bull Information
Technology, an electronic manufacturing service provider. The business operates
in the city of Contagem, State of Minas Gerais, in the Belo Horizonte region
Brazil. The purchase price of approximately $6 million was paid in cash. The
acquisition was accounted for as a purchase and resulted in approximately $5
million of goodwill, which is being amortized, on a straight-line basis over a
period of 10 years. The consolidated financial statements include the operating
results of the acquired business from the date of the acquisition.

On July 20, 2000 we acquired the share capital of Telenor Technology
Services Limited, a repair and logistics services division of Telenor Mobile
Communications AS, a Norwegian provider of telecommunication, data and media
communication services. The purchase price of approximately $4 million was paid
in cash. The acquisition was accounted for as a purchase and resulted in
approximately $2 million of goodwill, which is being amortized, on a
straight-line basis over a period of 15 years. The acquired operations allow
Jabil Global Services to offer circuit board repair and warranty services for
European customers from Dublin, Ireland. The consolidated financial statements
include the operating results of the acquired business from the date of
acquisition.

During the second quarter of fiscal 2001, we entered into a business sale
agreement with Marconi plc ("Marconi") to acquire certain operations of its
Communications division located in the United States, England, Italy and
Germany. On June 13, 2001, we consummated the English and Italian portions of
the acquisition and modified certain terms of the transaction. The acquisition
price of the English and Italian portions was approximately $172 million and is
being accounted for under the purchase accounting method. The acquisition is
anticipated to result in intangible assets, including goodwill, of approximately
$117 million, based on management's preliminary valuation. The allocation of the
acquisition price will be based on appraisals and final analysis of management.
The acquired assets were used by Marconi to manufacture printed circuit board
assemblies for their Communications division. Simultaneous with the closings, we
entered into a product supply agreement to continue to produce both existing and
new products for Marconi in new product introduction, printed circuit board
assembly, as well as repair of access, optical transmission and broadband
switching products. On September 4, 2001, the Company completed the portion of
the transaction related to the United States and we anticipate completing the
German portion of the acquisition during fiscal 2002. The consolidated financial
statements include the operating results of the acquired business from the date
of acquisition. See "Factors Affecting Future Results -- We may not achieve
expected profitability from our acquisitions."

In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business

16

combinations completed after June 30, 2001. Statement 141 also specifies
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill, noting that any
purchase price allocable to an assembled workforce may not be accounted for
separately. Statement 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with estimable useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with FAS
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of.

The Company plans to early adopt Statements 141 and 142 beginning in the
first quarter of its fiscal year ending August 31, 2002. See Note 1 and 12 to
the Consolidated Financial Statements.

Statement 141 will require upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.

In connection with Statement 142's transitional goodwill impairment
evaluation, the Statement will require the Company to perform an assessment of
whether there is an indication that goodwill is impaired as of the date of
adoption. To accomplish this, the Company must identify its reporting units and
determine the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to six
months from the date of adoption to determine the fair value of each reporting
unit and compare it to the reporting unit's carrying amount. To the extent a
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. In the second step, the
Company must compare the implied fair value of the reporting unit's goodwill,
determined by allocating the reporting unit's fair value to all of it assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with Statement 141, to its carrying amount, both
of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. Any transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of earnings.

As of the date of adoption, the Company expects to have unamortized
intangibles of approximately $149 million, all of which will be subject to the
transition provisions of Statements 141 and 142. Because of the extensive effort
needed to comply with adopting Statements 141 and 142, the Company has not
completed its analysis of the impact of adopting these Statements on the
Company's financial statements at the date of this report, including whether it
will be required to recognize any transitional impairment losses as the
cumulative effect of a change in accounting principle.

During this fiscal year, we completed greenfield expansions in Brussels,
Belgium, Tiszaujvaros, Hungary and Chihuahua, Mexico. The Hungarian facility is
approximately 250,000 square feet and began production in the fall of 2000. In
Chihuahua, two 500,000 square-foot facilities were constructed to add capacity
in Mexico. We also completed expansions of existing manufacturing sites in North
America and opened an additional Jabil Global Services facility in Brussels,
Belgium.

The EMS industry has experienced rapid growth over the past several years
as an increasing number of OEMs have outsourced their manufacturing
requirements. OEMs are turning to outsourcing in order to

17

reduce product cost, achieve accelerated time-to-market and time-to-volume
production, access advanced design and manufacturing technologies, improve
inventory management and purchasing power, reduce their capital investment in
manufacturing facilities, and achieve parallel manufacturing of the same product
throughout the world. We believe that further growth opportunities exist for EMS
providers to penetrate the worldwide electronics markets.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
operating data as a percentage of net revenue:

FISCAL YEAR ENDED AUGUST 31, 2001 COMPARED TO FISCAL YEAR ENDED AUGUST 31,
2000

Net Revenue. Our net revenue increased 21.7% to $4.3 billion for fiscal
year 2001, up from $3.6 billion in fiscal year 2000. The increase was primarily
due to a 41.0% increase in production of communications products, a 59.9%
increase in production of consumer products and a 10.4% increase in production
of peripheral products. These increases were offset by a 9.5% decrease in
production of computer products due to softening demand in that sector.

Foreign source revenue represented 50.3% of our net revenue for fiscal year
2001 and 43.5% of revenue for fiscal 2000. The increase in foreign source
revenue was attributable to increased production in our international locations,
primarily in our Mexican, Malaysian and Hungarian facilities, and from
incremental revenue resulting from the Marconi acquisitions in England and Italy
during the fourth quarter of fiscal 2001.

Gross Profit. Gross margin decreased to 9.1% in fiscal year 2001 from
10.1% in fiscal year 2000 reflecting a higher content of material-based revenue
as well as relatively lower levels of capacity utilization than in fiscal 2000.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $184.1 million (4.3% of net revenue) in fiscal year 2001
from $132.7 million (3.7% of net revenue) in fiscal year 2000. This increase was
primarily due to increases in staffing and related departmental expenses at all
of our locations along with increases in information systems staff to support
the expansion of our business.

18

Research and Development. Research and development expenses in fiscal year
2001 increased to $6.4 million (0.2% of net revenue) from $4.8 million (0.1% of
net revenue) in fiscal year 2000 as a result of the establishment of a new
Design Center located in our Michigan facility as well as expanded services in
other locations.

Amortization of Intangibles. We recorded $5.8 million of amortization of
intangibles in fiscal year 2001 as compared to $2.7 million in fiscal year 2000.
This increase is attributable to the amortization of the goodwill arising from
the Marconi acquisition during fiscal 2001. Recent accounting pronouncements
will change the way we account for amortization of goodwill in future periods by
requiring us to no longer amortize goodwill. We will also be required to test
goodwill for impairment on an annual basis. We are currently reviewing this
statement to determine the impact its adoption will have on our financial
position, results of operations and cash flow. See Notes 1 and 12 to the
Consolidated Financial Statements.

Acquisition and Merger-Related Charge. During fiscal year 2001, we
incurred $6.6 million in acquisition-related charges consisting of increased
staffing and support costs and legal and professional fees associated with the
Marconi acquisition. See Note 10 to the Consolidated Financial Statements.

Restructuring and Other Non-Recurring Charges. During fiscal 2001, we
incurred $27.4 million in restructuring and other non-recurring charges related
to reductions in our cost structure. These charges include reductions in
workforce, re-sizing of facilities and the transition of certain facilities into
new customer development sites. Approximately $11.5 million related to asset
write-off costs, $5.6 million to lease exit costs, $8.9 million to employee
severance and benefit costs and $1.4 million in other restructuring costs. As of
August 31, 2001, liabilities relating to these restructuring activities,
totaling $5.5 million, are expected to be paid out within the next twelve
months.

Interest Income. Interest income increased to $8.2 million in fiscal year
2001 from $7.4 million in fiscal year 2000 reflecting increased income on
greater cash balances resulting from the issuance of convertible notes completed
in the third quarter of fiscal 2001. See Note 4 to the Consolidated Financial
Statements for fiscal year 2001.

Interest Expense. Interest expense decreased to $5.9 million in fiscal
year 2001, from $7.6 million in fiscal year 2000, primarily as a result of
decreased short-term borrowings under our revolving line of credit throughout
the year, offset by additional expense accrued on the convertible notes issued
in the third quarter of fiscal 2001.

Income Taxes. In fiscal year 2001, our effective tax rate decreased to
28.7% from 31.5% in fiscal year 2000. The effective tax rate is predominantly a
function of the mix of domestic versus international income from operations. Our
international operations have been taxed at a lower rate than in the United
States, primarily due to tax holidays granted to our sites in Malaysia, China
and Hungary. Such tax holidays are subject to conditions with which we expect to
comply. See Note 5 to the Consolidated Financial Statements for fiscal 2001.

FISCAL YEAR ENDED AUGUST 31, 2000 COMPARED TO FISCAL YEAR ENDED AUGUST 31,
1999

Net Revenue. Our net revenue increased 59.0% to $3.6 billion for fiscal
year 2000, up from $2.2 billion in fiscal year 1999. The increase was primarily
due to increased production of communications products. Foreign source revenue
represented 43.5% of our net revenue for fiscal year 2000 and 40.5% of net
revenue for fiscal year 1999. The increase in foreign source revenue was
attributable to increased production in our international locations.

Gross Profit. Gross margin decreased to 10.1% in fiscal year 2000 from
11.0% in fiscal year 1999, reflecting a higher content of material-based revenue
and under-utilization of assets in certain international factories.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $132.7 million (3.7% of net revenue) in fiscal year 2000
from $92.0 million (4.1% of net revenue) in fiscal year 1999. This increase was
primarily due to continued increases in staffing and related departmental

19

expenses at all of our locations along with increases in information systems
staff to support the expansion of our business.

Research and Development. Research and development expenses in fiscal year
2000 decreased to $4.8 million (0.1% of net revenue) from $5.9 million (0.3% of
net revenue) in fiscal year 1999 as a result of an increase in the rate of
recovery of these costs from our customers.

Amortization of Intangibles. We recorded $2.7 million of amortization of
intangibles in fiscal year 2000 as compared to $1.2 million in fiscal year 1999.
This increase is attributable to the amortization of the goodwill arising from
the EFTC Services, Inc. and Bull Technology, Inc. acquisitions.

Acquisition and Merger-Related Charge. During the first quarter of fiscal
year 2000, we incurred $5.2 million in merger-related charges consisting of key
employee severance and legal and professional fees associated with the GET
merger. See Note 10 to the Consolidated Financial Statements.

Interest Income. Interest income increased to $7.4 million in fiscal year
2000 from $4.5 million in fiscal year 1999 reflecting increased income on
greater cash balances resulting from an equity offering completed in the fourth
quarter.

Interest Expense. Interest expense increased to $7.6 million in fiscal
year 2000, from $7.1 million in fiscal year 1999, primarily reflecting slightly
increased short-term borrowings to support plant expansions and working capital
needs.

Income Taxes. In fiscal year 2000, our effective tax rate decreased to
31.5% from 36.4% in fiscal year 1999. The effective tax rate is predominantly a
function of the mix of domestic versus international income from operations. See
Note 5 to the Consolidated Financial Statements.

20

QUARTERLY RESULTS

The following table sets forth certain unaudited quarterly financial
information for the 2001 and 2000 fiscal years. In the opinion of management,
this information has been presented on the same basis as the audited
consolidated financial statements appearing elsewhere, and all necessary
adjustments (consisting of normal recurring adjustments and acquisition and
merger-related charges which are discussed in Note 10 to the Consolidated
Financial Statements) have been included in the amounts stated below to present
fairly the unaudited quarterly results when read in conjunction with the audited
consolidated financial statements and related notes thereto. The operating
results for any quarter are not necessarily indicative of results for any future
period.

21

The following table sets forth, for the periods indicated, certain
financial information stated as a percentage of net revenue:

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

(1) In connection with the acquisition of certain manufacturing facilities of
Marconi, we recorded acquisition charges of $1.9 million ($1.2 million
after-tax), $3.8 million ($2.3 million after-tax), and $0.8 million ($0.6
million after-tax) during the quarters ended August 31, 2001, May 31, 2001
and February 28, 2001, respectively. We also recorded charges of $11.8
million ($11.0 million after-tax) and $15.6 million ($10.6 million
after-tax) related to the restructuring of our business and other non-
recurring charges during the quarters ended August 31, 2001 and May 31,
2001, respectively. Operating income excluding these charges was $31.6
million (3.4 % of net revenue), $41.7 million (4.0% of net revenue) and
$59.2 million (4.9% of net revenue) for the quarters ended August 31, 2001,
May 31, 2001 and February 28, 2001, respectively. Net income excluding these
charges was $23.5 million (2.5% of net revenue), $31.7 million (3.0% of net
revenue) and $41.3 million (3.4% of net revenue) and diluted earnings per
share was $0.12, $0.16 and $0.21 for the quarters ended August 31, 2001, May
31, 2001 and February 28, 2001, respectively.

(2) In connection with the GET Merger, we recorded merger-related charges of
$5.2 million ($4.7 million after-tax) in the quarter ended November 30,
1999. Operating income excluding these charges was $44.6 million (6.5% of
net revenue). Net income excluding this charge was $31.1 million (4.5% of
net revenue), and diluted earnings per share was $0.17.

(3) Gives effect to a two-for-one stock split in the form of a 100% stock
dividend to stockholders of record on March 23, 2000 and on February 5,
1999.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations from the proceeds of public debt and equity
offerings, private placement debt, borrowings on a revolving credit facility and
cash generated from operations. In May 2001, we issued a total of $345 million,
20-year, 1.75% convertible subordinated notes at par, resulting in net proceeds
of approximately $338 million. The notes mature on May 15, 2021 and pay interest

22

semiannually on May 15 and November 15. Each note is convertible at any time
after the date of original issuance and prior to the close of business on the
business day immediately preceding the maturity date by the holder at a
conversion rate of 24.368 shares per $1,000 principal amount of notes. Holders
may require us to purchase all or a portion of their notes on May 15 in the
years 2004, 2006, 2009 and 2014 at par plus accrued interest. We may choose to
pay the purchase price in cash or common stock valued at 95% of its market
price. We may redeem all or a portion of the notes for cash at any time on or
after May 18, 2004 at 100% of principal plus accrued interest. The net proceeds
from the offering are anticipated to be used for general corporate purposes and
to fund acquisitions. A portion of the proceeds were used to fund the initial
Marconi acquisition closing. In June 2000, we sold 13.0 million shares of our
common stock, which generated net proceeds to us of approximately $525.4
million.

At August 31, 2001 our principal sources of liquidity consisted of cash and
short-term investments, available borrowings under our revolving credit
facilities, an accounts receivable securitization program and proceeds from the
convertible notes issuance. We have committed line of credit facilities in place
with a syndicate of banks that provide up to $750 million of working capital
borrowing capacity, $500 million of which is provided for under a three-year
facility. The remaining $250 million is provided for under a separate 364-day
agreement. There were no borrowings outstanding under this line of credit as of
August 31, 2001.

Net cash provided by operating activities for the year ended August 31,
2001 was $182.8 million. This consisted primarily of $118.5 million of net
income, $155.4 million of depreciation and amortization and $97.7 million of
decreases in inventory, offset by $171.4 million of decreases in accounts
payable and accrued expenses and $21.9 million of decreases in taxes payable.
The decreases in inventory and accounts payable were due to reduced levels of
business during the second half of fiscal 2001. During the third and fourth
quarters of fiscal 2001, we experienced levels of reduced demand from many of
our customers in response to the general economic downturn. Inventory levels and
purchases were decreased in line with new levels of expected demand.

Net cash used in investing activities of $441.5 million for the year ended
August 31, 2001 consisted of our capital expenditures of $309.2 million for
construction and equipment worldwide and cash paid of $139.2 million in the
acquisition of certain assets of Marconi plc, net of $6.9 million of proceeds
from the sale of property and equipment. In the early part of fiscal 2001,
capital expenditures were made to complete the construction of our greenfield
facilities in Tiszaujvaros, Hungary and Chihuahua, Mexico as well as to expand
our existing facilities in North America. Purchases of manufacturing and
computer equipment were made to support our ongoing business throughout the
year. Despite the economic downturn experienced in the last half of fiscal 2001,
we continue to invest in capital assets necessary to support both our existing
business levels and our expected future capacity needs.

Net cash provided by financing activities of $351.8 million for the year
ended August 31, 2001 resulted primarily from $337.5 million in net proceeds
from our issuance of convertible notes, $16.6 million in proceeds from the
issuance of common stock for the exercise of employee stock options and the
employee stock purchase plan and $5.9 million of proceeds from grants received
from the Scottish government, offset in part by the repayment of an installment
of principal on our private placement debt. See Notes 4 and 6 to the
Consolidated Financial Statements

Over the past several years, we have experienced significant growth. As a
result, we have used cash to finance our working capital needs. In the event
that we experience similar growth in the future, we may need to finance such
growth and any corresponding working capital needs with additional borrowings
under our revolving credit facility, as well as additional public and private
offerings of our debt and equity. During the quarter ended November 30, 1999, we
filed a "shelf" registration statement registering the potential sale of debt
and equity securities in the future from time-to-time to augment our liquidity
and capital resources. In August 2000, we effectively increased the amount of
unissued securities under our shelf registration statement to $1.5 billion. The
May 2001 offering of $345 million in convertible notes and the June 2000
offering of 13 million shares of our common stock was made pursuant to that
registration statement. In August 2000, we established a $225 million account
receivables securitization program with

23

a syndicate of banks with an expiration date in August 2001, which was later
extended to November 2001. We renewed the facility with a new funding capacity
of $100 million in November 2001. There were no borrowings outstanding under the
facility at August 31, 2001. Interest is payable based on designated commercial
paper rates plus agreed upon margins. In May 2001, the Company also established
a 364-day, $250 million revolving credit facility with a syndicate of banks.
There were no borrowings outstanding under the facility at August 31, 2001.

We believe that during fiscal year 2002, our capital expenditures will
exceed $100 million, principally for machinery, equipment, facilities and
related expenses. We believe that our level of resources, which include cash on
hand, available borrowings, and funds provided by operations, will be more than
adequate to fund these capital expenditure and working capital requirements for
fiscal 2002. Consummating any significant amount of additional acquisition
opportunities, which we regularly explore, would increase our capital needs and,
possibly, result in our need to increase our borrowings and access to public and
private debt and equities markets. See "Factors Affecting Future Results -- We
may not achieve expected profitability from our acquisitions, -- We derive a
substantial portion of our revenues from our international operations, which are
subject to greater volatility and often require more management time and expense
to achieve profitability than our domestic operations."

24

FACTORS AFFECTING FUTURE RESULTS

OUR OPERATING RESULTS MAY FLUCTUATE DUE TO A NUMBER OF FACTORS, MANY OF WHICH
ARE BEYOND OUR CONTROL.

Our annual and quarterly operating results are affected by a number of
factors, including:

- the level and timing of customer orders

- the composition of the costs of sales between materials and labor and
manufacturing overhead

- price competition

- our level of experience in manufacturing a particular product

- the degree of automation used in our assembly process

- the efficiencies achieved by us in managing inventories and fixed assets

- fluctuations in materials costs and availability of materials

- the timing of expenditures in anticipation of increased sales, customer
product delivery requirements and shortages of components or labor.

The volume and timing of orders placed by our customers vary due to
variation in demand for our customers' products, our customers' inventory
management, new product introductions and manufacturing strategy changes, and
consolidations among our customers. In the past, changes in customer orders have
had a significant effect on our results of operations due to corresponding
changes in the level of overhead absorption. Any one or a combination of these
factors could adversely affect our annual and quarterly results of operations in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Quarterly Results."

BECAUSE WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS, A REDUCTION IN SALES TO ANY
ONE OF OUR CUSTOMERS COULD CAUSE A SIGNIFICANT DECLINE IN OUR REVENUE.

For the fiscal year ended August 31, 2001, our four largest customers
accounted for approximately 53% of our net revenue and 30 customers accounted
for over 95% of our net revenue. For the fiscal year ended August 31, 2001,
Cisco Systems, Inc. and Dell Computer Corporation, accounted for approximately
23% and 14% of our net revenue, respectively. We are dependent upon the
continued growth, viability and financial stability of our customers whose
industries have experienced rapid technological change, short product life
cycles, consolidation, and pricing and margin pressures. We expect to continue
to depend upon a relatively small number of customers for a significant
percentage of our net revenue. Consolidation among our customers may further
reduce the number of customers that generate a significant percentage of our
revenues and exposes us to increased risks relating to dependence on a small
number of customers. A significant reduction in sales to any of our customers or
a customer exerting significant pricing and margin pressures on us, would have a
material adverse effect on our results of operations. In the past, some of our
customers have terminated their manufacturing arrangements with us or have
significantly reduced or delayed the volume of manufacturing services ordered
from us. We cannot assure you that present or future customers will not
terminate their manufacturing arrangements with us or significantly change,
reduce or delay the amount of manufacturing services ordered from us. If they
do, it could have a material adverse effect on our results of operations. In
addition, we generate significant account receivables in connection with
providing manufacturing services to our customers. If one or more of our
customers were to become insolvent or otherwise were unable to pay for the
manufacturing services provided by us, our operating results and financial
condition would be adversely affected. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Customers and
Marketing."

25

MOST OF OUR CUSTOMERS DO NOT COMMIT TO LONG-TERM PRODUCTION SCHEDULES, WHICH
MAKES IT DIFFICULT FOR US TO SCHEDULE PRODUCTION AND ACHIEVE MAXIMUM EFFICIENCY
OF OUR MANUFACTURING CAPACITY.

The volume and timing of sales to our customers may vary due to:

- variation in demand for our customers' products

- our customers' attempts to manage their inventory

- electronic design changes

- changes in our customers' manufacturing strategy

- acquisitions of or consolidations among customers

- recessionary conditions in customers' industries

Due in part to these factors, most of our customers do not commit to firm
production schedules for more than one quarter in advance. Our inability to
forecast the level of customer orders with certainty makes it difficult to
schedule production and maximize utilization of manufacturing capacity. In the
past, we have been required to increase staffing and other expenses in order to
meet the anticipated demand of our customers. Anticipated orders from many of
our customers have, in the past, failed to materialize or delivery schedules
have been deferred as a result of changes in our customers' business needs,
thereby adversely affecting our results of operations. On other occasions, our
customers have required rapid increases in production, which have placed an
excessive burden on our resources. Such customer order fluctuations and
deferrals have had a material adverse effect on us in the past, and we may
experience such effects in the future. In addition, the current business
environment resulting from uncertainties relating to terrorist activities and
economic recession has made planning even more complex. A business downturn
resulting from any of these external factors could have a material adverse
effect on our operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Backlog."

WE COMPETE WITH NUMEROUS PROVIDERS OF ELECTRONIC MANUFACTURING SERVICES,
INCLUDING OUR CURRENT OR POTENTIAL CUSTOMERS WHO MAY DECIDE TO MANUFACTURE ALL
OF THEIR PRODUCTS INTERNALLY.

The electronic manufacturing services business is highly competitive. We
compete against numerous domestic and foreign manufacturers, including
Celestica, Inc., Flextronics International, Sanmina Corporation, SCI Systems,
Inc. and Solectron Corporation. In addition, we may in the future encounter
competition from other large electronic manufacturers that are selling, or may
begin to sell, electronic manufacturing services. Most of our competitors have
international operations and some have substantially greater manufacturing,
financial, research and development, and marketing resources than us. We also
face potential competition from the manufacturing operations of our current and
potential customers, who are continually evaluating the merits of manufacturing
products internally versus the advantages of outsourcing. See
"Business -- Competition."

IF WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, OUR PROFITABILITY COULD DECLINE.

We have grown rapidly. Our ability to manage growth effectively will
require us to continue to implement and improve our operational, financial and
management information systems; continue to develop the management skills of our
managers and supervisors; and continue to train, motivate and manage our
employees. Our failure to effectively manage growth could have a material
adverse effect on our results of operations. See "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

26

ANY DELAY IN INTEGRATING OUR NEW INFORMATION SYSTEMS COULD DISRUPT OUR
OPERATIONS AND CAUSE UNANTICIPATED INCREASES IN OUR COSTS.

We have completed the installation of an Enterprise Resource Planning
system in eleven of our manufacturing sites and in our corporate location. We
are in the process of installing this system in our remaining plants which will
replace the current Manufacturing Resource Planning system and financial
information systems. Any delay in the implementation of these new information
systems could result in material adverse consequences, including disruption of
operations, loss of information and unanticipated increases in cost.

WE MAY NOT ACHIEVE EXPECTED PROFITABILITY FROM OUR ACQUISITIONS.

We cannot assure you that we will be able to successfully integrate the
operations and management of our recent acquisitions. Similarly, we cannot
assure you that we will be able to consummate or, if consummated, successfully
integrate the operations and management of future acquisitions. Acquisitions
involve significant risks, which could have a material adverse effect on us,
including:

- Financial risks, such as (1) potential liabilities of the acquired
businesses; (2) the dilutive effect of the issuance of additional equity
securities; (3) the incurrence of additional debt; (4) the financial
impact of valuing goodwill and other intangible assets involved in any
acquisitions that are accounted for using the purchase method of
accounting; and (5) possible adverse tax and accounting effects.

- Operating risks, such as (1) the diversion of management's attention to
the assimilation of the businesses to be acquired; (2) the risk that the
acquired businesses will fail to maintain the quality of services that we
have historically provided; (3) the need to implement financial and other
systems and add management resources; (4) the risk that key employees of
the acquired businesses will leave after the acquisition; and (5)
unforeseen difficulties in the acquired operations.

We have acquired and will continue to pursue the acquisition of
manufacturing and supply chain management operations from OEM's. In these
acquisitions, the divesting OEM will typically enter a supply arrangement with
the acquiror. Therefore, the competition for these acquisitions is intense. In
addition, certain OEM's may not choose to consummate these acquisitions with us
because of our current supply arrangements with other OEM's. If we are unable to
attract and consummate some of these acquisition opportunities, our growth could
be adversely impacted.

Our ability to achieve the expected benefits of the outsourcing
opportunities associated with these acquisitions is subject to risks, including
our ability to meet volume, product quality, timeliness and pricing
requirements, and our ability to achieve the OEM's expected cost reduction. In
addition, when acquiring manufacturing operations, we may receive limited
commitments to firm production schedules. Accordingly, in these circumstances,
we may spend substantial amounts purchasing these manufacturing facilities and
assume significant contractual and other obligations with no guaranteed levels
of revenues. We may also not achieve expected profitability from these
arrangements. As a result of these and other risks, these outsourcing
opportunities may not be profitable.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR COMPONENTS THAT ARE CRITICAL TO
OUR MANUFACTURING PROCESSES. A SHORTAGE OF THESE COMPONENTS OR AN INCREASE IN
THEIR PRICE COULD INTERRUPT OUR OPERATIONS AND REDUCE OUR PROFITS.

Substantially all of our net revenue is derived from turnkey manufacturing
in which we provide materials procurement. While most of our significant
long-term customer contracts permit quarterly or other periodic adjustments to
pricing based on decreases and increases in component prices and other factors,
we typically bear the risk of component price increases that occur between any
such re-pricings or, if such re-pricing is not permitted, during the balance of
the term of the particular customer contract. Accordingly, certain component
price increases could adversely affect our gross profit margins. Almost all of
the products we manufacture require one or more components that are available
from only a single

27

source. Some of these components are allocated from time to time in response to
supply shortages. In some cases, supply shortages will substantially curtail
production of all assemblies using a particular component. In addition, at
various times industry wide shortages of electronic components have occurred,
particularly of memory and logic devices. Such circumstances have produced
significant levels of short-term interruption of our operations, and may have a
material adverse effect on our results of operations in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Components Procurement."

WE DERIVE A SUBSTANTIAL PORTION OF OUR REVENUES FROM OUR INTERNATIONAL
OPERATIONS, WHICH ARE SUBJECT TO GREATER VOLATILITY AND OFTEN REQUIRE MORE
MANAGEMENT TIME AND EXPENSE TO ACHIEVE PROFITABILITY THAN OUR DOMESTIC
OPERATIONS.

We derived over 50% of our revenues from international operations in fiscal
year 2001. We currently operate outside the United States in Brussels, Belgium;
Contagem, Brazil; Dan Shui, Panyu, and Shenzhen, China; Coventry and Liverpool,
England; Sheung Shui, Hong Kong; Tiszaujvaros, Hungary; Dublin, Ireland; Bergamo
and Marcianise, Italy; Penang, Malaysia; Tokyo, Japan; Chihuahua and
Guadalajara, Mexico; and Livingston, Scotland. We continually consider
additional opportunities to make foreign acquisitions and construct new foreign
facilities. Our international operations may be subject to a number of risks,
including:

- difficulties in staffing and managing foreign operations

- political and economic instability

- unexpected changes in regulatory requirements and laws

- longer customer payment cycles and difficulty collecting accounts
receivable export duties, import controls and trade barriers (including
quotas)

- governmental restrictions on the transfer of funds to us from our
operations outside the United States

- burdens of complying with a wide variety of foreign laws and labor
practices

- fluctuations in currency exchange rates, which could affect local
payroll, utility and other expenses

- inability to utilize net operating losses incurred by our foreign
operations to reduce our U.S. income taxes

In addition, several of the countries where we operate have emerging or
developing economies, which may be subject to greater currency volatility,
negative growth, high inflation, limited availability of foreign exchange and
other risks. These factors may harm our results of operations and any measures
that we may implement to reduce the effect of volatile currencies and other
risks of our international operations may not be effective. In our experience,
entry into new international markets requires considerable management time as
well as start-up expenses for market development, hiring and establishing office
facilities before any significant revenues are generated. As a result, initial
operations in a new market may operate at low margins or may be unprofitable.
See "Management's Discussion and Analysis of Financial Condition and Result of
Operations -- Liquidity and Capital Resources."

WE DO NOT HAVE EMPLOYMENT AGREEMENTS WITH ANY OF OUR KEY PERSONNEL, THE LOSS OF
WHICH COULD HURT OUR OPERATIONS.

Our continued success depends largely on the efforts and skills of our key
managerial and technical employees. The loss of the services of certain of these
key employees or an inability to attract or retain qualified employees could
have a material adverse effect on us. We do not have employment agreements or
non-competition agreements with our key employees.

28

FAILURE TO MAINTAIN OUR TECHNOLOGICAL AND MANUFACTURING PROCESS EXPERTISE COULD
HARM OUR RESULTS OF OPERATIONS.

The market for our manufacturing services is characterized by rapidly
changing technology and continuing process development. We are continually
evaluating the advantages and feasibility of new manufacturing processes. We
believe that our future success will depend upon our ability to develop and
provide manufacturing services which meet our customers' changing needs,
maintain technological leadership, and successfully anticipate or respond to
technological changes in manufacturing processes on a cost-effective and timely
basis. We cannot assure you that our process development efforts will be
successful. See "Business -- Technology" and "-- Research and Development."

COMPLIANCE OR THE FAILURE TO COMPLY WITH CURRENT AND FUTURE ENVIRONMENTAL
REGULATIONS COULD CAUSE US SIGNIFICANT EXPENSE.

We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. If we fail to
comply with any present and future regulations, we could be subject to future
liabilities or the suspension of production. In addition, such regulations could
restrict our ability to expand our facilities or could require us to acquire
costly equipment, or to incur other significant expenses to comply with
environmental regulations.

CERTAIN OF OUR EXISTING STOCKHOLDERS HAVE SIGNIFICANT CONTROL.

Our executive officers, directors and principal stockholders and their
affiliates collectively beneficially own 22.7% of our outstanding common stock,
of which William D. Morean beneficially owns 17.3%. As a result, our executive
officers, directors, principal stockholders and their affiliates have
significant influence over (1) the election of our Board of Directors, (2) the
approval or disapproval of any other matters requiring stockholder approval, and
(3) the affairs and policies of Jabil.

OUR STOCK PRICE MAY BE VOLATILE DUE TO FACTORS BEYOND OUR CONTROL.

Our common stock is traded on the New York Stock Exchange. The market price
of our common stock has fluctuated substantially in the past and could fluctuate
substantially in the future, based on a variety of factors, including future
announcements covering us or our key customers or competitors, government
regulations, litigation, changes in earnings estimates by analysts, fluctuations
in quarterly operating results, or general conditions in the contract
manufacturing, communications, computer peripherals, personal computer,
automotive or consumer products industries. Furthermore, stock prices for many
companies, and high technology companies in particular, fluctuate widely for
reasons that may be unrelated to their operating results. Those fluctuations and
general economic, political and market conditions, such as recessions or
international currency fluctuations and demand for our services, may adversely
affect the market price of our common stock.

PROVISIONS IN OUR CERTIFICATE OF INCORPORATION, BYLAWS, STOCKHOLDER RIGHTS PLAN
AND DELAWARE LAW MAY DISCOURAGE CERTAIN TAKEOVER TRANSACTIONS.

The Corporation Law of the State of Delaware and our certificate of
incorporation and bylaws each contain certain provisions that may, in effect,
discourage, delay or prevent a change of control of Jabil or unsolicited
acquisition proposals from taking place. We recently adopted a stockholder
rights agreement, which could make it considerably more difficult or costly for
a person or group to acquire Jabil in a transaction that our board of directors
opposes. These provisions, alone or in combination with each other, may
discourage transactions involving actual or potential changes of control,
including transactions that otherwise could involve payment of a premium over
prevailing market prices to holders of common stock, or could limit the ability
of stockholders to approve transactions that they may deem to be in their best
interests.

29

AN ADVERSE CHANGE IN THE INTEREST RATES FOR OUR BORROWINGS COULD ADVERSELY
AFFECT OUR FINANCIAL CONDITION.

We pay interest on outstanding borrowings under our $750 million revolving
credit facilities at interest rates that fluctuate based upon changes in various
base interest rates. As of August 31, 2001, we did not have outstanding
borrowings under our revolving credit facilities. We also have funding costs
associated with the asset-backed securitization. Costs are in part based on
commercial paper rates. As of August 31, 2001, we did not have any outstanding
borrowings under the asset-backed securitization. An adverse change in the base
rates upon which our interest rate is determined could have a material adverse
effect on our financial position, results of operations and cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's market risk sensitive financial instruments are entered into
for purposes other than trading. Financial instruments include cash equivalents,
which are available for immediate withdrawal. Long-term debt instruments are
subject to a fixed interest rate and maturity schedule. Short-term interest rate
changes can impact interest expense on our variable rate credit facility and
asset-backed securitization, however, no amounts were outstanding on either of
the facilities as of August 31, 2001.

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Factors Affecting Future Results -- We depend on a
limited number of suppliers for components that are critical to our
manufacturing processes. A shortage of these components or an increase in their
price could interrupt our operations and reduce our profits, -- We derive a
substantial portion of our revenues from our international operations, which are
subject to greater volatility and often require more management time and expense
to achieve profitability than our domestic operations, and -- An adverse change
in the interest rates for our borrowings could adversely affect our financial
condition." See Notes 1, 4 and 8 to the Consolidated Financial Statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Certain information required by this item is included in Item 7 of Part II
of this Report under the heading "Quarterly Results" and is incorporated into
this item by reference. All other information required by this item is included
in Item 14 of Part IV of this Report and is incorporated into this item by
reference.

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

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding our directors is incorporated by reference to the
information set forth under the caption "Proposal No. 1: Election of Directors"
in our Proxy Statement for the Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission (the "Commission") within 120 days after
the end of our fiscal year ended August 31, 2001.

Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, is hereby incorporated herein by reference
from the section entitled "Other Information -- Section 16(a) Beneficial
Ownership Reporting Compliance" in the Proxy Statement for the Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
our fiscal year ended August 31, 2001.

30

OUR EXECUTIVE OFFICERS

Officers are appointed by the Board of Directors and serve at the
discretion of the Board. Each executive officer is a full-time employee of
Jabil. There are no family relationships among our officers and directors.

Timothy L. Main (age 44) has served as Chief Executive Officer of Jabil
since September 2000, as President since January 1999 and as a director since
October 1999. He joined Jabil in April 1987 as a Production Control Manager, was
promoted to Operations Manager in September 1987, to Project Manager in July
1989, to Vice President Business Development in May 1991, and to Senior Vice
President, Business Development in August 1996. Prior to joining Jabil, Main was
a commercial lending officer, international division for the National Bank of
Detroit. Main has earned a B.S. from Michigan State University and an MIM from
the American Graduate School of International Management (Thunderbird).

Ronald J. Rapp (age 48) was named Chief Operating Officer in November 2000.
He served as Senior Vice President, Operational Development from January 1999 to
November 2000 and as a director from September 1988 to October 1999. Rapp joined
Jabil in 1983 as Controller, was promoted to Treasurer in 1984, to CFO in 1988
and to Executive Vice President, Operations in 1996. Prior to joining Jabil,
Rapp was the corporate Controller for Van Pelt Corporation and a C.P.A. with the
accounting firm of Ernst & Ernst. Rapp holds a B.A. in accounting from Ferris
State University.

Chris Lewis (age 41) joined Jabil as Treasurer in June 1995 and was
promoted to Chief Financial Officer in August 1996. From July 1989 to May 1995,
Lewis was U.S. Controller of Peek PLC, a high technology manufacturing group.
Prior to July 1989, Lewis was a CPA with the accounting firm of KPMG Peat
Marwick. Lewis holds a B.A. in Business Administration from Wittenberg
University in Springfield, Ohio.

Robert L. Paver (age 45) joined Jabil Circuit as General Counsel and
Corporate Secretary in 1997. Prior to working for Jabil, Paver was a practicing
attorney with the law firm of Holland & Knight in St. Petersburg, Fla. He has
served as an adjunct professor of law at Stetson University College of Law since
1985. Paver holds a B.A. from the University of Florida and a J.D. from Stetson
University College of Law.

Mark Mondello (age 37) was promoted to Senior Vice President, Business
Development in January 1999. He joined Jabil Circuit in 1992 as Production Line
Supervisor, was promoted to Project Manager in 1993 and to Vice President,
Business Development in 1997. Prior to Jabil, Mondello served as project manager
on commercial and defense-related aerospace programs for Moog, Inc. Mondello
holds a B.S. in Mechanical Engineering from the University of South Florida.

Wesley "Butch" Edwards (age 49) was named Senior Vice President,
Operational Development in November 2000. He was promoted to Senior Vice
President, Operations in August 1996 after serving as Vice President, Operations
since May 1994. Edwards joined Jabil as Manufacturing Manager of its Michigan
facility in July 1988 and was promoted to Operations Manager of the Florida
facility in July 1989. He holds an M.B.A. from the University of Florida.

Beth A. Walters (age 41) was named Vice President, Communications in
November 1998. She joined Jabil in 1992 as Marketing Communications Manager and
was promoted to Director of Communications in 1994. Prior to joining Jabil,
Walters owned a marketing communications firm and served in a variety of public
relations positions with advertising and public relations agencies in Florida
and Hawaii. She holds a B.S. in Political Science from American University in
Washington, DC and an M.A. in Political Science from the University of Hawaii.

Scott D. Brown (age 39) was named Senior Vice President Strategic Planning
in November 2000. He joined Jabil as a Project Manager in November 1988 and was
promoted to Vice President, Corporate Development in September 1997. Prior to
joining Jabil, Brown was a financial consultant with Merrill

31

Lynch & Co., Inc. in Bloomfield Hills, Michigan. Brown holds a B.S. in Economics
from the University of Michigan.

Jeffrey J. Lumetta (age 38) was named Vice President of Jabil Technology
Services in November 2000. He served as Vice President, Design Services from
November 1996 to November 2000. Lumetta joined Jabil in 1986 as a Design
Engineer, and was promoted to Manager, Design Engineering at the Florida
facility in 1994. Lumetta holds a B.S. in Electrical Engineering from Michigan
Technological University.

John P. Lovato (age 41) was promoted from General Manager of the company's
California facility to Vice President, Global Business Units in 1999. Lovato
began his career at Jabil in 1990 as a Business Unit Manager in the Michigan
facility. In 1994, he was promoted Business Unit Director and became General
Manager of the California facility in 1998. Before joining Jabil, Lovato held
several positions at Texas Instruments. He holds a B.S. in Electronics
Engineering from McMaster University in Ontario, Canada.

Michael F. Ward (age 50) joined Jabil Circuit in 1993 as plant operations
manager and helped establish Jabil's first international greenfield site in
Livingston, Scotland. Ward was named Vice President, Supply Chain and
Information Technology in October 2000 after serving as Vice President,
Information Technology since May 1998. Prior to Jabil, Ward held various
positions at Seagate Technology, Honeywell and Burroughs Machines. Ward earned
degrees in Electronic and Electrical Engineering and Mechanical Engineering from
Bell College of Technology Hamilton, Scotland.

William E. Peters (age 38) was named Senior Vice President, Operations in
November 2000. He served as Vice President, Operations from January 1999 to
November 2000. Peters was hired by Jabil in 1990 as a buyer and was promoted to
Purchasing Manager soon after. In 1993, he was promoted to Operations Manager
for the Michigan facility. Prior to joining Jabil, Peters was a financial
analyst for Electronic Data Systems. Peters earned a B.A. in Economics from
Michigan State University.

Frank Krajcirovic (age 53) has been Vice President, Quality Control since
June 1988. Krajcirovic joined us in 1982 as a Quality Engineer. He was promoted
to Manager of Quality in 1983 and to Director of Quality in September 1987.
Prior to joining Jabil, Krajcirovic held various reliability engineering
positions with Massey Ferguson, Inc. and Fundimensions, Inc. He holds a B.S. in
Electrical Engineering from the City of Brno College, Czechoslovakia.

Roddy A. MacPhee (age 41) was named Vice President/European Business
Development in October 2000. MacPhee joined Jabil in February 1993 as Quality
Engineering Manager and has held various positions in business development, most
recently Senior Director of Business Development for Europe. Prior to joining
Jabil, MacPhee held a variety of technical, commercial and senior managerial
positions in Compaq Computer Inc., Polaroid Inc., Pilikington Defence
Electronics and JB Gas Turbines. MacPhee holds Higher National Certificates in
both Mechanical and Production Engineering and has an MBA from the University of
Strathclyde.

Joseph McGee (age 39) was named Vice President, Global Business Units in
October 2000. He joined Jabil in 1993 as a Business Unit Manager at Jabil
Scotland and has held several positions during his tenure, including Director of
Business Development, Jabil Malaysia. Most recently, McGee was General Manager,
Jabil California. Prior to joining Jabil, he held positions with Sun
Microsystems and Philips. McGee earned a PhD in Thermodynamics and Fluid
Mechanics and a B.S. in Mechanical Engineering from the University of
Strathclyde and holds an MBA from the University of Glasgow.

Brian Althaver (age 45) was named Vice President, Jabil Automotive Group in
October 2000. Althaver joined Jabil in September 1999 as Director of Corporate
Development with 15 years of international management experience in both
automotive and electronics manufacturing. He holds a B.S. in Labor and
Industrial Relations from Michigan State University and a Master's Degree in
International Management from the American Graduate School of International
Management.

David S. Emerson (age 44) was named Vice President, Sales and Marketing for
the Americas in October 2000. Emerson has run various Business Units for Jabil
and most recently lead sales efforts

32

throughout the United States. Prior to joining Jabil, Emerson held positions
with SCI Systems, General Signal and Schlumberger. He holds a B.A. in Business
from Pacific University.

Forbes I.J. Alexander (age 41) was named Treasurer in November 1996.
Alexander joined us in 1993 as Controller of our Scottish operation and was
promoted to Assistant Treasurer in April 1996. Prior to joining Jabil, Alexander
was Financial Controller of Tandy Electronics European Manufacturing Operations
in Scotland and has held various financial positions with Hewlett Packard and
Apollo Computer. Alexander is a Chartered Management Accountant. He holds a B.A.
in Accounting from Dundee College, Scotland.

J. Patrick Redmond (age 41) was promoted to Controller of Jabil in July
1999. Redmond joined Jabil in May 1995 as Plant Controller for the Florida
operation and later became Plant Controller for the Scotland facility. Prior to
joining Jabil, Redmond was Plant Controller for Loral Data Systems and has held
a variety of financial and business management positions at Loral and
previously, at Schlumberger. Redmond earned a B.A. in Accounting from the
University of South Florida.

Rick Evans (age 34) was named Vice President, Business Development -- Asia
Pacific in April 2001. Evans previously served as Senior Director Asia Pacific
Business Development overseeing business activity in China and Malaysia and
started Jabil's operations in Japan. Evans joined Jabil in 1989 and served as a
Business Unit Director overseeing a global account and held other manufacturing
related positions. He holds a B.S. in Business Administration from Tampa
College.

Bill Muir (age 33) was promoted to Vice President, Operations -- Americas
in February, 2001. Muir joined Jabil in 1992 as a Quality Engineer and was
promoted to Senior Director of Operations for Florida, Michigan, Guadalajara and
Chihuahua. In 1992, he concurrently earned a Bachelor's degree in Industrial
Engineering and an MBA, both from the University of Florida.

Teck Ping Yuen (age 46) was named Vice President, Operations -- Asia in
August, 2001. He joined Jabil in 1995, serving as the first Operations Manager
at the Penang, Malaysia facility. Yuen was promoted to Senior Director of
Operations -- Asia, where he held operational responsibilities for the Malaysia
and China facilities. Yuen earned degrees in Industrial Engineering and
Production Engineering from the University of Oklahoma and Singapore
Polytechnic, respectively.

Courtney Ryan (age 32) was named Vice President, Operations -- Europe in
February 2001. Ryan joined Jabil in 1993 as a Quality Engineer and held several
positions in Florida and Michigan, including Workcell Manager, Business Unit
Manager and Operations Manager. He holds a B.S. in Economics and an MBA, both
from the University of Florida.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated by reference
to the information set forth under the captions "Proposal No. 1: Election of
Directors -- Compensation of Directors" and "Executive Officer Compensation" in
our Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with
the Commission within 120 days after the end of our fiscal year ended August 31,
2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the information set forth under the
caption "Other Information -- Share Ownership by Principal Stockholders and
Management" in our Proxy Statement for the 2001 Annual Meeting of Stockholders
to be filed with the Commission within 120 days after the end of our fiscal year
ended August 31, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions is
incorporated by reference to the information set forth under the caption
"Certain Transactions" in our Proxy Statement for the 2001

33

Annual Meeting of Stockholders to be filed with the Commission within 120 days
after the end of our fiscal year ended August 31, 2001.

PART IV

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

(a) The following documents are filed as part of this Report:

1. Financial Statements. Our consolidated financial statements, and
related notes thereto, with independent auditors' reports thereon are
included in Part IV of this report on the pages indicated by the Index to
Consolidated Financial Statements and Schedule as presented on page 35 of
this report.

2. Financial Statement Schedule. Our financial statement schedule is
included in Part IV of this report on the page indicated by the Index to
Consolidated Financial Statements and Schedule as presented on page 35 of
this report. This financial statement schedule should be read in
conjunction with our consolidated financial statements, and related notes
thereto.

Schedules not listed in the Index to Consolidated Financial Statements
and Schedule have been omitted because they are not applicable, not
required, or the information required to be set forth therein is included
in the consolidated financial statements or notes thereto.

3. Exhibits. See Item 14(c) below.

(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the last quarter of the year ended August 31, 2001.

(c) Exhibits. The exhibits listed on the Exhibits Index are filed as part
of, or incorporated by reference into, this Report.

(d) Financial Statement Schedules. See Item 14(a) above.

34

JABIL CIRCUIT, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Independent Auditors' Report................................ 36
Consolidated Financial Statements:
Consolidated Balance Sheets -- August 31, 2001 and 2000... 38
Consolidated Statements of Earnings -- Years ended August
31, 2001, 2000, and 1999............................... 39
Consolidated Statements of Comprehensive Income -- Years
ended August 31, 2001
2000, and 1999......................................... 40
Consolidated Statements of Stockholders' Equity -- Years
ended August 31, 2001, 2000, and 1999.................. 41
Consolidated Statements of Cash Flows -- Years ended
August 31, 2001, 2000, and 1999........................ 42
Notes to Consolidated Financial Statements................ 43
Financial Statement Schedule:
Schedule II -- Valuation and Qualifying Accounts.......... 67

35

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Jabil Circuit, Inc:

We have audited the accompanying consolidated financial statements of Jabil
Circuit, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the accompanying financial statement schedule as listed in the
accompanying index. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits. We did not
audit the consolidated statements of income, shareholders' equity, and cash
flows of GET Manufacturing, Inc. for the year ended August 31, 1999, which
reflects total revenues constituting 10.6 percent for the year ended August 31,
1999, of the related consolidated total. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for GET Manufacturing, Inc., is based solely on
the report of the other auditors.

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

In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Jabil Circuit, Inc. and
subsidiaries as of August 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the years in the three-year period ended August
31, 2001, in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, which is based on our audits and
the report of other auditors, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

/s/ KPMG LLP

St. Petersburg, Florida
September 20, 2001

36

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors of
GET Manufacturing, Inc:

We have audited the consolidated balance sheet of GET Manufacturing, Inc.
and subsidiaries as of August 31, 1999 (not presented separately herein), and
the related consolidated statements of income, shareholders' equity, and cash
flows for the twelve months ended August 31, 1999 (not presented separately
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
GET Manufacturing, Inc. and subsidiaries at August 31, 1999, and the
consolidated results of their operations and their cash flows for the twelve
months ended August 31, 1999 in conformity with accounting principles generally
accepted in the United States of America.

/s/ Ernst & Young

Hong Kong
November 3, 1999

37

JABIL CIRCUIT, INC. AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
38

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

See accompanying notes to consolidated financial statements.
39

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

See accompanying notes to consolidated financial statements.
40

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

See accompanying notes to consolidated financial statements.
41

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

See accompanying notes to consolidated financial statements.
42

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Jabil Circuit, Inc. (together with its subsidiaries, herein referred to as
the "Company") is an independent supplier of custom manufacturing services for
circuit board assemblies, subsystems and systems to major original equipment
manufacturers ("OEMs") in the communications, personal computer, peripherals,
consumer and automotive industries. The Company's manufacturing services combine
a high volume, highly automated manufacturing approach with advanced design and
manufacturing technologies. The Company is headquartered in St. Petersburg,
Florida and has manufacturing operations in Asia, Europe, the United States and
Latin America.

On September 13, 1999 the Company issued approximately 10.2 million shares
of its common stock for all the outstanding common stock of GET Manufacturing,
Inc. ("GET"), a China-based electronics manufacturing services provider to
original equipment manufacturers serving the consumer electronics,
telecommunications, medical and computer peripheral industries. The transaction
was accounted for as a pooling of interests and, accordingly, the Company's
historical consolidated financial statements for all periods presented have been
restated to reflect the merger with GET. Because Jabil and GET had differing
fiscal periods prior to the merger, GET's financial statements for the fiscal
year ended March 31, 1999 and March 31, 1998 were combined with Jabil's
financial statements for the years ended August 31, 1998 and August 31, 1997,
respectively. GET's 1999 financial statements were conformed to the twelve
months ending August 31 for purposes of consolidating with Jabil's financial
statements for its year ended August 31, 1999. As a result of the overlapping
period created when GET's fiscal year was conformed to an August 31 fiscal year,
$1,116 of net loss (for the period September 1998 through March 1999) was
included in consolidated net income for both fiscal years ended August 31, 1998
and 1999. Stockholders' equity was adjusted so that the duplicate amount is
eliminated from retained earnings. There were no material transactions between
Jabil and GET prior to the merger. The effects of conforming GET's accounting
policies to those of Jabil were not material.

Significant accounting policies followed by the Company are as follows:

A. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts and operations
of Jabil Circuit, Inc. and its subsidiaries, all of which are wholly-owned. All
significant inter-company balances and transactions have been eliminated in
preparing the consolidated financial statements.

As discussed above and in Note 10, in September, 1999 the Company completed
a merger with GET Manufacturing, Inc. which was accounted for as a pooling of
interests in fiscal 2000. The accompanying historical consolidated financial
statements were previously restated to reflect the impact of this transaction.

B. USE OF ACCOUNTING ESTIMATES

Management is required to make estimates and assumptions during the
preparation of the consolidated financial statements and accompanying notes in
conformity with generally accepted accounting principles. These estimates and
assumptions affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the dates of the consolidated
financial statements. They also affect the reported amounts of net income.
Actual results could differ materially from these estimates and assumptions.

C. CASH, CASH EQUIVALENTS AND OTHER FINANCIAL INSTRUMENTS

The Company considers all highly liquid instruments with original
maturities of 90 days or less to be cash equivalents for consolidated financial
statement purposes. Cash equivalents consist of investments in

43

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

money market funds and commercial paper with original maturities of 90 days or
less. At August 31, 2001 and 2000 cash equivalents totaled approximately $110.4
million and $178.2 million, respectively. Management considers the carrying
value of cash and cash equivalents to be a reasonable approximation of market
value given the short-term nature of these financial instruments. Short term
investments include corporate and governmental debt securities which are
classified as available-for-sale and are reported at fair market value in
accordance with Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities. As of August 31, 2001,
the Company held no short-term investments.

D. INVENTORIES

Inventories are stated at the lower of cost (first in, first out (FIFO)
method) or market.

E. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is capitalized at cost and depreciated using
the straight-line depreciation method over the estimated useful lives of the
respective assets, primarily thirty-five years for buildings and three to five
years for other assets.

Maintenance and repairs are expensed as incurred. The cost and related
accumulated depreciation of assets sold or retired are removed from the accounts
and any resulting gain or loss is reflected in the statement of earnings.

F. INTANGIBLE ASSETS

Intangible assets arose in connection with business combinations. They are
stated at amortized cost and include goodwill and other intellectual property.
The table below sets forth the components of intangible assets.

Amortization expense was $5.8 million and $2.7 million in the years ended
August 31, 2001 and 2000, respectively. Historically, intangibles have been
amortized on a straight-line basis over 10 to 15 years. Recent accounting
pronouncements will affect both the valuation of and the amortization of
intangible assets in future years. See note 12 to the Consolidated Financial
Statements.

G. IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews property and equipment for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of property and equipment is measured by
comparison of its carrying amount, including the unamortized portion of goodwill
allocated to the property and equipment, to future net cash flows the property
and equipment are expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the property and equipment, including the allocated goodwill,
if any, exceeds its fair market value. The Company assesses the

44

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recoverability of goodwill by determining whether the unamortized goodwill
balance can be recovered through undiscounted future cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future cash flows using a discount rate reflecting the
Company's average cost of funds. During 1999, the Company determined that the
portion of goodwill related to GET's 1997 acquisition of Able Electronics
Corporation ("Able") was impaired. As a result of the overlapping period created
when GET's fiscal year was conformed to an August 31 fiscal year, the write off
of the unamortized goodwill of $3,578,000 is included in the results of
operations for both fiscal years ended August 31, 1998 and 1999. Stockholders'
equity was adjusted to eliminate the duplicate effect on retained earnings. See
Note 12 to the Consolidated Financial Statements relating to recently issued
accounting standards regarding the impairment of long-lived assets.

H. REVENUE RECOGNITION

The Company's net revenue is principally derived from the product sales of
electronic equipment built to customer specifications. The Company also derives
revenue to a lesser extent from repair services, design services and excess
inventory sales. Revenue from product sales and excess inventory sales is
recognized when goods are shipped, or title passes. Service related revenues are
recognized upon completion of the services. The Company assumes no significant
obligations after product shipment. Revenue is recorded net of estimated product
return and warranty costs.

In connection with the August 1998 acquisition of the net assets of
Hewlett-Packard Company ("HP") laser printer operations, the Company entered
into an agreement with HP to produce laser printer component products. During
the first year of the agreement, the Company received compensation for available
capacity, as well as compensation for the raw material content of actual units
produced. The available capacity compensation was recorded on a units produced
basis. The agreement for compensation for available capacity expired in August
1999 and has been replaced with a unit pricing agreement similar to the
Company's other contracts.

I. GRANT REVENUE

The Company has been awarded grants related to the development of its
Scottish operations. Grant funds are earned as certain milestones are met, and
are being amortized over two to five-year periods based on the dates of the
grant.

J. INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized in income in
the period that includes the enactment date of the rate change.

45

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

K. NET INCOME PER SHARE

The following table sets forth the calculation of basic and diluted Earning
Per Share (in thousands, except per share data).

For the years ended August 31, 2001, 2000 and 1999, options to purchase
580,313, 138,732, and 6,218 shares of common stock were outstanding during the
period but were not included in the computation of diluted earnings per share
because the options' exercise prices were greater than the average market price
of the common shares, and therefore, the effect would be anti-dilutive.

L. FOREIGN CURRENCY TRANSACTIONS

For the Company's foreign subsidiaries which use the local currency as
their functional currency, assets and liabilities are translated at exchange
rates in effect at the balance sheet date, and revenues and expenses are
translated at the weighted average exchange rate for the period. The effects of
these translation adjustments are reported in comprehensive income. Gains and
losses arising from foreign currency 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 income. To date, the effect of such amounts on net
income has not been material.

M. PROFIT SHARING AND 401(K) PLAN

The Company contributes to a profit sharing plan for all employees who have
completed a 12-month period of service in which the employee has worked at least
1,000 hours. In addition, the Company provides retirement benefits to its
domestic employees who have completed a 90 day period of service, through a
401(k) plan that provides a Company matching contribution. The Company also has
defined contribution benefit plans for certain of its international employees
primarily dictated by the custom of the region in which it operates. Company
contributions are at the discretion of the Company's Board of Directors. The
Company contributed approximately $21.9 million, $14.9 million and $11.2 million
for the years ended August 31, 2001, 2000 and 1999, respectively.

46

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

N. STOCK BASED COMPENSATION

Prior to September 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related interpretations.
As such, compensation expense would be recorded on the date of granting of stock
options only if the current market price of the underlying stock exceeded the
exercise price. Effective September 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based Compensation
(Statement 123), which permits entities to recognize as expense over the vesting
period the fair value of all stock based awards on the date of the grant.
Alternatively, Statement 123 allows entities to continue to apply the provisions
of APB Opinion No. 25 and provide pro forma net income and pro forma net income
per share disclosures for employee stock options granted in fiscal 1996 and
subsequent years as if the fair value based method defined in Statement 123 had
been applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure required by Statement 123.

O. STOCK SPLIT

On March 16, 2000 and January 28, 1999, the Company's Board of Directors
approved a two-for-one stock split of the Company's common stock. Per share
information in the accompanying consolidated financial statements and notes has
been adjusted to reflect the impact of the common stock splits for all periods
presented.

P. COMPREHENSIVE INCOME

The Company has adopted Statement of Financial Accounting Standards No.
130, Reporting Comprehensive Income. Statement 130 establishes standards for
reporting comprehensive income. The Statement defines comprehensive income as
the changes in equity of an enterprise except those resulting from stockholder
transactions. The Company's balance of accumulated other comprehensive income is
composed of accumulated foreign currency translation losses of $(0.5) million,
net of tax, and $0.2 million, net of tax, resulting from the change in fair
market value of derivative instruments.

2. INVENTORIES

Inventories consist of the following (in thousands):

47

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

Depreciation expense of approximately $149.6 million, $96.6 million and
$62.0 million was recorded for the years ended August 31, 2001, 2000 and 1999,
respectively.

During the year ended August 31, 2001, the Company began construction of a
manufacturing facility in Guangzhou, China and completed construction of
facilities in Tiszaujvaros, Hungary and Chihuahua, Mexico. During the years
ended August 31, 2001, 2000, and 1999, the Company capitalized approximately
$3.0 million, $1.0 million and $0, respectively, in interest related to the
constructed facilities.

Maintenance and repairs expense was approximately $22.1 million, $13.4
million and $10.6 million for the years ended August 31, 2001, 2000 and 1999,
respectively.

4. NOTES PAYABLE AND LONG-TERM DEBT

Notes Payable and Long-term debt consists of the following (in thousands):

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

(a) In May 1996, the Company completed a private placement of $50,000,000 Senior
Notes due 2004. The Notes have a fixed interest rate of 6.89%, with interest
payable on a semi-annual basis. Principal is payable in six equal annual
installments which began May 30, 1999.

(b) At May 31, 2001, the Company negotiated a 364-day, $250 million unsecured
line of credit facility with a syndicate of banks. The terms of the loan
agreement mirror the terms of the $500 million

48

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

revolving credit facility described below. As of August 31, 2001, there were
no borrowings under the 364-day facility.

(c) On April 7, 2000, the Company renegotiated its unsecured line of credit
facility and established a $500 million unsecured revolving credit facility
with a syndicate of banks ("Revolver"). Under the terms of the Revolver,
borrowings can be made under either floating rate loans or Eurodollar rate
loans. The Company pays interest on outstanding floating rate loans at the
banks' prime rate. The Company pays interest on outstanding Eurodollar loans
at the London Interbank Offered Rate (LIBOR) in effect at the loan inception
plus a factor of 1.125% to 1.875% depending on the Company's funded debt to
total capitalization ratios. The Company pays a commitment fee on the unused
portion of the Revolver at 0.25% to 0.375% depending on the Company's funded
debt to total capitalization ratios. The renegotiated Revolver expires on
April 6, 2003 and outstanding borrowings are then due and payable. As of
August 31, 2001, there were no borrowings outstanding under the Revolver and
$500 million of the facility was available.

(d) In May 2001, we issued a total of $345 million, 20-year, 1.75% convertible
subordinated notes at par, resulting in net proceeds of approximately $338
million. The notes mature on May 15, 2021 and pay interest semiannually on
May 15 and November 15. Each note is convertible at any time after the date
of original issuance and prior to the close of business on the business day
immediately preceding the maturity date by the holder at a conversion rate
of 24.368 shares per $1,000 principal amount of notes. Holders may require
us to purchase all or a portion of their notes on May 15 in the years 2004,
2006, 2009 and 2014 at par plus accrued interest. We may choose to pay the
purchase price in cash or common stock valued at 95% of its market price. We
may redeem all or a portion of the notes for cash at any time on or after
May 18, 2004 at 100% of principal plus accrued interest.

Long term debt maturities as of August 31, 2001 for the next five years are
as follows:

2002........................................................ $ 8,333
2003........................................................ 8,333
2004........................................................ 8,334
2005........................................................ --
Thereafter.................................................. 345,000
--------
$370,000
========

The credit facilities require compliance with a financial covenant based on
the ratio of total debt to total capitalization, calculated on a consolidated
basis. The credit facilities require compliance with operating covenants which
limit, among other things, the incurrence of additional indebtedness by the
Company and the covered subsidiaries. The Company was in compliance with the
respective covenants as of August 31, 2001.

In August, 2000 Jabil Circuit entered into an asset backed securitization
program with Bank One, which provides for the sale of up to $225 million of
eligible accounts receivables of certain U.S. plants with an expiration date in
August 2001, which was later extended to November 2001. We renewed the facility
with a new funding capacity of $100 million in November 2001. We account for the
sale of receivables under this securitization program in accordance with
Statement of Financial Accounting Standards No. 125, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, as
replaced by Statement of Financial Accounting Standards No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
Receivables sold under this program will be excluded from accounts receivable in
the Consolidated Balance Sheets. The asset backed securitization will be used as
a financing tool to fund working capital.

49

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

Income tax expense amounted to $47.6 million, $67.0 million and $48.5
million for the years ended August 31, 2001, 2000 and 1999, respectively (an
effective rate of 28.7%, 31.5% and 36.4%, respectively). The actual expense
differs from the "expected" tax expense (computed by applying the U.S. federal
corporate tax rate of 35% to earnings before income taxes) as follows (in
thousands):

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

The components of income taxes for the fiscal years ended August 31, 2001,
2000 and 1999, were as follows (in thousands):

Jabil has been granted tax incentives, including tax holidays, for its
Hungarian, Chinese and Malaysian subsidiaries. These tax incentives, including
tax holidays, expire between 2003 and 2010, and are subject to certain
conditions with which the Company expects to comply. The subsidiaries generated
income during the years ended August 31, 2001, 2000 and 1999, resulting in a tax
benefit of approximately $15.2 million ($.08 per share), $12.6 million ($0.07
per share) and $4.7 million ($0.03 per share),
50

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respectively. The Company has been granted a 10-year Malaysian income tax
holiday that began November 1, 2000.

The Company intends to indefinitely re-invest income from all of its
foreign subsidiaries. The aggregate undistributed earnings of the Company's
foreign subsidiaries for which no deferred tax liability has been recorded is
approximately $208.1 million as of August 31, 2001. Determination of the amount
of unrecognized deferred tax liability on these undistributed earnings is not
practicable.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows
(in thousands):

Net current deferred tax assets were $17.8 million and $15.8 million at
August 31, 2001 and August 31, 2000, respectively, and net noncurrent deferred
tax liabilities were $37.0 million and $25.8 million at August 31, 2001 and
August 31, 2000, respectively.

Based on the Company's historical operating income, management believes
that it is more likely than not that the Company will realize the benefit of its
net deferred tax assets.

6. STOCKHOLDERS' EQUITY

A. PUBLIC OFFERING

On June 6, 2000, the Company completed an equity offering of 13 million
shares of its Common Stock. The shares were offered at a price of $41.75 per
share for total gross proceeds of $542.8 million. Net proceeds to the Company
were approximately $525.8 million after underwriter's discount and fees and
expenses.
51

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. STOCK OPTION PLANS

As of August 31, 2001, no options were outstanding under the 1983 and 1989
stock option plans. The Board of Directors terminated these plans in November
1992, and no additional options may be issued thereunder. The exercise price of
the outstanding options under these plans was equal to fair market value, as
determined by the Company, on the date of grant.

The Company's 1992 Stock Option Plan (the "1992 Plan") provides for the
granting to employees of incentive stock options within the meaning of Section
422 of the Internal Revenue Code and for the granting of non-statutory stock
options to employees and consultants of the Company. The 1992 Plan was adopted
by the Board of Directors in November 1992 and approved by the stockholders in
December 1992. A total of 23,440,000 shares of common stock have been reserved
for issuance under the 1992 Plan. As of August 31, 2001, options to purchase
9,816,109 shares are outstanding under the 1992 Plan.

The exercise price of all incentive stock options granted under the 1992
Plan is to be at least equal to the fair market value of shares of common stock
on the date of grant. With respect to any participant who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company, the exercise price of any stock option granted is to equal at least
110% of the fair market value on the grant date and the maximum term of the
option may not exceed five years. The term of all other options under the 1992
Plan may not exceed ten years.

In connection with the merger with GET, the Company has assumed all options
outstanding under the GET Stock Option Plan (the "GET Plan"). Options under the
GET Plan have been converted into the Company's options and adjusted to effect
the appropriate conversion ratio as specified by the applicable merger
agreement. The options generally vest over three to four years and expire ten
years after the date of grant. Due to the merger between the Company and GET,
the GET Plan was terminated. As a result, no further options may be granted
under the GET Plan.

The following table summarizes option activity from September 1, 1998
through August 31, 2001:

52

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At August 31, 2001, options for 4,537,574 shares were exercisable. In
February 2001, the Company adopted a new Stock Award Plan. The purpose of the
Stock Award Plan is to provide incentives to attract and retain key employees to
the Company and motivate such persons to stay with the Company and to increase
their efforts to make the business of the Company more successful. As of August
31, 2001, 4,200 shares were issued to employees under the Stock Award Plan.

The range of exercise prices, shares, weighted average remaining
contractual life and exercise price for the options outstanding as of August 31,
2001 are presented below:

The range of exercise prices, shares and weighted average exercise price of
the options exercisable at August 31, 2001 are presented below:

The per-share weighted-average fair value of stock options granted during
2001, 2000 and 1999 was $18.02, $16.61, and $12.57, respectively, on the date of
the grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: 2001 -- expected dividend yield of 0%, risk-free
interest rate of 5.0%, expected volatility of 94%, and an expected life of 4
years; 2000 -- expected dividend yield of 0%, risk-free interest rate of 5.75%,
expected volatility of 91%, and an expected life of 4 years; 1999 -- expected
dividend yield of 0%, risk-free interest rate of 6.0%, expected volatility of
96%, and an expected life of 5 years.

C. STOCK PURCHASE PLAN

The Company's 1992 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in November 1992 and approved by the
stockholders in December 1992. A total of 5,820,000 shares of common stock have
been reserved for issuance under the Purchase Plan. The Purchase Plan is
intended to qualify under Section 423 of the Internal Revenue Code.

Employees are eligible to participate after 90 days of employment with the
Company. The Purchase Plan permits eligible employees to purchase common stock
through payroll deductions, which may not exceed 10% of an employee's
compensation, as defined, at a price equal to 85% of the fair market value of
the common stock at the beginning or end of the offering period, whichever is
lower. Unless terminated

53

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

sooner, the Purchase Plan will terminate ten years from its effective date. As
of August 31, 2001, a total of 4,678,595 shares had been issued under the
Purchase Plan.

The per-share weighted-average fair value of stock issued to employees in
2001, 2000 and 1999, respectively, under the Company's 1992 Employee Stock
Purchase Plan was $17.18, $38.18 and $16.32, respectively, using the
Black-Scholes option-pricing model with the identical assumptions as those
listed for stock options granted during those years.

D. PRO FORMA RESULTS

The Company applies APB Opinion No. 25 in accounting for its stock options
and, accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Additionally, no compensation costs
are reflected for the discount related to shares granted to employees under the
1992 Employee Stock Purchase Plan. Had the Company determined compensation cost
based on Statement 123, the Company's net income would have been as follows:

As discussed in Note 1(n) the disclosure presented above represents only
the estimated fair value of stock options granted in fiscal 1996 and subsequent
years. Such disclosure is not necessarily indicative of the fair value of stock
options that could be granted by the Company in future fiscal years or of all
options currently outstanding.

7. CONCENTRATION OF RISK AND SEGMENT DATA

A. CONCENTRATION OF RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral. The Company maintains reserves for potential credit
losses.

Sales of the Company's products are concentrated among specific customers.
Sales to the following customers, expressed as a percentage of consolidated net
revenue, and the percentage of accounts receivable for each customer, were as
follows:

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

* Amount was less than 10% of total

54

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. SEGMENT DATA

The Company adopted the Financial Accounting Standards Board Statement No.
131, Disclosures about Segments of an Enterprise and Related Information in
fiscal year 1999. Statement No. 131 establishes standards for reporting
information about segments in financial statements. Operating segments are
defined as components of an enterprise about which separate financial
information is available and that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.

The Company derives its revenues from providing manufacturing services to
major electronic OEM's on a contract basis in various countries throughout the
world. Operating segments consist four geographical regions -- the United
States, Latin America, Europe and Asia. Revenues are attributed to the location
in which the product is manufactured. The services provided, the manufacturing
processes, class of customers and the order fulfillment process is similar and
generally interchangeable across operating segments. An operating segment's
performance is evaluated based upon its pre-tax operating contribution. Pre-tax
operating contribution is defined as revenue less cost of revenue and selling,
general and administrative expenses and does not include research and
development, intangible amortization, acquisition and merger-related charges,
write-off of goodwill, interest income, interest expense or income taxes.

The following table sets forth segment information (in thousands):

55

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As noted in Note 11, the Company implemented a restructuring program during
fiscal year 2001. Total restructuring costs of $27.4 million were charged
against earnings during fiscal year 2001. Approximately $14.1 million, $9.6
million and $3.7 million of restructuring charges were incurred in the United
States, Latin America and Asia, respectively.

56

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company operates in the following geographic areas: the United States,
China, England, Mexico, Malaysia, Scotland and Other. Sales to unaffiliated
customers are based on the Company's manufacturing location providing services.
The following table sets forth information concerning these geographic areas (in
thousands):

Total foreign source revenue was approximately $2.2 billion, $1.6 billion
and $0.9 billion for the years ended August 31, 2001, 2000 and 1999,
respectively. Total long-lived assets related to our foreign operations was
approximately $402 million, $278 million and $171 million for the years ended
August 31, 2001, 2000 and 1999, respectively.

8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June 1998 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Certain Hedging Activities. In June 2000 the FASB
issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activity, an Amendment of SFAS 133. SFAS No. 133 and SFAS No. 138
require that all derivative instruments be recorded on the balance sheet at
their respective fair values. The Company adopted SFAS No. 133 and SFAS No. 138
on September 1, 2000. There were no transition amounts recorded upon adoption of
SFAS 133.

We utilize certain derivative instruments to enhance our ability to manage
risk relating to cash flow exposure. Derivative instruments are entered into for
periods consistent with related underlying cash flow exposures and are not
entered into for speculative purposes. On the date into which the derivative
contract is entered into, the derivative is designated as a cash flow hedge.

To limit exposure to differences in the U.S. dollar, British pound
sterling, Italian lira and Mexican peso exchange rate fluctuations, we enter
into and designate forward contracts to hedge certain of the

57

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

forecasted cash outflows. We document all relationships between hedging
instruments and hedged items, as well as our risk-management objectives and
strategies for undertaking various hedge transactions. Changes in the derivative
fair values that are designated, effective and qualify as cash flow hedges are
deferred and recorded as a component of "Accumulated other comprehensive income
(loss)" until the underlying transaction is recorded in earnings. In the period
in which the hedged item affects earnings, gains or losses on the derivative
instrument are reclassified from "Accumulated other comprehensive income (loss)"
to the Consolidated Statement of Earnings in the same financial statement
category as the underlying transaction. We assess, both at the inception of the
hedge and on an on-going basis, whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in cash flows of hedged
items.

During the year ended August 31, 2001, we recorded the change in value
related to cash flow hedges amounting to a gain of $0.2 million in "Accumulated
other comprehensive income (loss)". There were no amounts related to the
ineffectiveness of our hedging instruments.

At August 31, 2001, we had a $5.1 million sterling contract with an
expiration date of September 20, 2001. Jabil purchased Sterling at a rate of
1.4053 U.S. dollars to pounds sterling, which had a fair market value and
carrying value of $0.2 million at August 31, 2001.

9. COMMITMENTS AND CONTINGENCIES

A. LEASE AGREEMENTS

The Company leases certain facilities and computer services under
non-cancelable operating leases. The future minimum lease payments under
non-cancelable operating leases outstanding August 31, 2001 are as follows (in
thousands):

Total rent expense for operating leases was approximately $29.5 million,
$24.6 million and $14.7 million for the years ended August 31, 2001, 2000 and
1999 respectively.

B. LITIGATION

The Company is party to certain lawsuits in the ordinary course of
business. Management does not believe that these proceedings individually or in
the aggregate, will have a material adverse effect on the Company's financial
position, results of operations or cash flows.

10. ACQUISITIONS

On September 1, 1999 the Company acquired, through our Jabil Global
Services subsidiary, the net assets of EFTC Services, Inc., an electronic
product service and repair business. Jabil Global Services continues to offer
repair and warranty services for existing and future customers from its
hub-based operations in Memphis, Tennessee; Louisville, Kentucky; and Tampa,
Florida. The purchase price of approximately $27 million was paid in cash. The
acquisition was accounted for as a purchase and resulted

58

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in approximately $18 million of goodwill, which is being amortized on a
straight-line basis over a period of 15 years. The consolidated financial
statements include the operating results of the acquired business from the date
of acquisition.

On September 13, 1999 the Company issued approximately 10.2 million shares
of our common stock for all of the outstanding common stock of GET
Manufacturing, Inc., a China-based electronics manufacturing services provider.
The business combination was accounted for as a pooling-of-interests and,
accordingly, our historical consolidated financial statements presented herein
have been restated to include the accounts and results of operations of GET
Manufacturing, Inc.

In connection with the merger, the Company recorded a merger-related charge
of $7.0 million consisting of professional fees and other expenses in the fourth
quarter of fiscal year 1999. In the first quarter of fiscal year 2000, we
incurred a merger-related charge of $5.2 million ($4.7 million after-tax)
consisting of key employee severance and legal and professional fees.

On February 1, 2000, the Company acquired the net assets of Bull
Information Technology, an electronic manufacturing service provider. The
business operates in the city of Contagem, State of Minas Gerais, in the Belo
Horizonte region Brazil. The purchase price of approximately $6 million was paid
in cash. The acquisition was accounted for as a purchase and resulted in
approximately $5 million of goodwill, which is being amortized, on a
straight-line basis over a period of 10 years. The consolidated financial
statements include the operating results of the acquired business from the date
of the acquisition. Pro forma results of operations have not been presented
because the effect of the acquisition was not material.

On July 20, 2000 the Company acquired the share capital of Telenor
Technology Services Limited, a repair and logistics services division of Telenor
Mobile Communications AS, a Norwegian provider of telecommunication, data and
media communication services. The purchase price of approximately $4 million was
paid in cash. The acquisition was accounted for as a purchase and resulted in
approximately $2 million of goodwill, which is being amortized on a
straight-line basis over a period of 15 years. The acquired operations allow
Jabil Global Services to offer circuit board repair and warranty services for
European customers from Dublin, Ireland. The consolidated financial statements
include the operating results of the acquired business from the date of
acquisition. Pro forma results of operations have not been presented because the
effect of the acquisition was not material.

During the second quarter of fiscal 2001, we entered into a business sale
agreement with Marconi plc ("Marconi") to purchase certain operations of its
communications division located in the United States, England, Italy and
Germany. On June 13, 2001, we consummated the English and Italian portions of
the acquisition and modified certain of the terms of the transaction. The
acquisition price of the English and Italian portions was approximately $172
million and is being accounted for under the purchase accounting method. The
acquisition is anticipated to result in intangible assets, including goodwill,
of approximately $117 million, based on management's preliminary valuation. The
allocation of the acquisition price will be based on appraisals and final
analysis of management. On September 4, 2001 the Company completed the portion
of the transaction related to the United States. The assets purchased consist
primarily of inventory and property, plant and equipment. Total consideration
paid was approximately $34 million. The transaction will be accounted for under
the purchase method of accounting and is anticipated to result in approximately
$22 million of intangible assets, including goodwill, based on management's
preliminary valuation. The allocation of the acquisition price will be based on
an appraisal and final analysis of management. We anticipate completing the
German portion of the acquisition during fiscal 2002. Certain payments
associated with the purchase will be made in three installments with the initial
payment due upon completion of the German portion of the acquisition. The
remaining two payments will be made 24 and 36 months after the final close.
These payments have been recorded based on the net present value of the total
premiums discounted at 7%. Imputed interest is amortized over the term of the
payments and is

59

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recorded as interest expense. Pro forma results of operations have not been
presented because the effect of the acquisition was not material.

In connection with this acquisition, integration costs of $6.6 million
($4.1 million after-tax), consisting of professional fees and other expenses
were recorded during fiscal 2001.

Recent accounting pronouncements will affect both the valuation of and the
amortization of intangible assets in future years. See note 12 to the
Consolidated Financial Statements.

11. RESTRUCTURING

During the third quarter of fiscal 2001, Jabil implemented a restructuring
program to reduce its cost structure due to the current economic downturn. This
restructuring program includes reductions in workforce, re-sizing of facilities
and the transition of certain facilities into new customer development sites.

During fiscal year 2001, the Company charged $27.4 million of restructuring
costs against earnings. These restructuring charges included employee severance
and benefit costs of approximately $8.9 million, costs related to lease
commitments of approximately $5.6 million, fixed asset write-offs of
approximately $11.5 million and other restructuring costs, primarily related to
professional fees incurred in connection with the restructuring activities.

The employee severance and benefit costs related to the elimination of
approximately 3,700 regular employees, the majority of which were engaged in
direct manufacturing activities in various manufacturing facilities around the
world. Lease commitments consist primarily of future lease payments subsequent
to abandonment related to re-sizing of facilities and the transition of certain
facilities into new customer development sites. Fixed asset write-offs consist
primarily of the leasehold improvements in the facilities that are subject to
restructuring.

The table below sets forth the significant components and activity in the
restructuring program since the inception of the program in FY 2001:

12. NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill, noting that any
purchase price allocable to an assembled workforce may not be accounted for
separately. Statement 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with estimable useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for

60

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

impairment in accordance with FAS Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

The Company plans to early adopt Statements 141 and 142 beginning in the
first quarter of its fiscal year ending August 31, 2002. See Note 1 to the
Consolidated Financial Statements.

Statement 141 will require upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired,
and make any necessary amortization period adjustments by the end of the first
interim period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.

In connection with Statement 142's transitional goodwill impairment
evaluation, the Statement will require the Company to perform an assessment of
whether there is an indication that goodwill is impaired as of the date of
adoption. To accomplish this, the Company must identify its reporting units and
determine the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to six
months from the date of adoption to determine the fair value of each reporting
unit and compare it to the reporting unit's carrying amount. To the extent a
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. In the second step, the
Company must compare the implied fair value of the reporting unit's goodwill,
determined by allocating the reporting unit's fair value to all of it assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with Statement 141, to its carrying amount, both
of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. Any transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of earnings.

As of the date of adoption, the Company expects to have unamortized
intangibles of approximately $149 million, all of which will be subject to the
transition provisions of Statements 141 and 142. Because of the extensive effort
needed to comply with adopting Statements 141 and 142, it is not practicable to
reasonably estimate the impact of adopting these Statements on the Company's
financial statements at the date of this report, including whether it will be
required to recognize any transitional impairment losses as the cumulative
effect of a change in accounting principle.

Statement of Financial Accounting Standards No. 143 -- Accounting for Asset
Retirement Obligations. Statement 143 relates to the accounting for the
obligations associated with the retirement of long-lived assets. The Company is
currently reviewing this statement and the impact of its adoption on its
financial position, results of operations and cash flow. The Company will
implement Statement 143 beginning in the first quarter of its fiscal year ending
August 31, 2003.

Statement of Financial Accounting Standards No. 144 -- Accounting for
Impairment or Disposal of Long-lived Assets. Statement 144 establishes methods
of accounting and reporting for the impairment of long-lived assets other than
goodwill and intangible assets not being amortized. The Company is currently
reviewing this statement and the impact of its adoption on its financial
position, results of operations and

61

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

cash flows. The Company will implement Statement 144 beginning in the first
quarter of its fiscal year ending August 31, 2003.

13. SUBSEQUENT EVENTS (UNAUDITED)

On October 19, 2001, the Company announced its Board of Directors approval
of the adoption of a Stockholder Rights Plan. Under the plan, the Company will
issue a dividend of one preferred stock purchase right for each share of common
stock of the Company held by stockholders of record at the close of business
October 29, 2001. Each right will initially entitle stockholders to purchase a
fractional share of Jabil's "Series A" preferred stock for $162.00. The rights
will not become exercisable, however, until the occurrence of certain events,
including the commencement of a tender offer or acquisition of 15 percent or
more of Jabil's common stock. The rights are redeemable at $.001 per right of
the option of Jabil. The rights plan will expire ten years from the record date.

On October 25, 2001 the Company closed on an asset purchase agreement with
Intel ("Intel"). The assets purchased consist primarily of inventory and
property, plant and equipment located in Penang, Malaysia. Total consideration
paid was approximately $37 million. The transaction will be accounted for under
the purchase method of accounting and is anticipated to result in approximately
$9 million of intangible assets, including goodwill, based on management's
preliminary valuation. The allocation of the acquisition price will be based on
an appraisal and final analysis of management. Funding for this acquisition was
provided by current working capital. Simultaneous with the closings, we entered
into a three-year product supply agreement to manufacture certain peripheral
products for Intel. Under the terms of the transaction, approximately 900
employees will transfer to Jabil Circuit. No involuntary job losses are expected
and existing employment rights will be protected.

On November 16, 2001, the Company renewed its asset backed securitization
program with Bank One to provide for the sale of up to $100 million of eligible
accounts receivables of certain U.S. plants. The agreement expires in 6 months.

62

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 27th day of
November 2000.

JABIL CIRCUIT, INC.

By: /s/ TIMOTHY L. MAIN
------------------------------------
Timothy L. Main

Date: November 28, 2001

POWER OF ATTORNEY

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Timothy L. Main and Chris A. Lewis and
each of them, jointly and severally, his attorneys-in-fact, each with full power
of substitution, for him in any and all capacities, to sign any and all
amendments to this Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorneys-in-fact or his substitute or substitutes, may do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report on Form 10-K has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

64

EXHIBIT INDEX

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

(1) Incorporated by reference to the Registration Statement on Form S-1 filed
by the Registrant on March 3, 1993 (File No. 33-58974).

(2) Incorporated by reference to exhibit Amendment No. 1 to the Registration
Statement on Form S-1 filed by the Registrant on March 17, 1993 (File No.
33-58974).

(3) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994.

65

(4) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1997.

(5) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1998.

(6) Incorporated by reference to exhibit to the Registrant's Current Report on
Form 8-K filed by the Registrant on September 28, 1999.

(7) Indicates management compensatory plan, contract or arrangement.

(8) Incorporated by reference to exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 2000.

(9) Incorporated by reference to exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended February 29, 2000.

(10) Incorporated by reference to the Registration Statement on Form S-8 filed
by the Registrant on August 31, 1999.

(11) Incorporated by reference to the Registration Statement on Form S-8 filed
by the Registrant on October 10, 1997.

(12) Incorporated by reference to the Registrant's Current Report on Form 8-K
filed by the Registrant on May 3, 2001.

(13) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 31, 2000.

66

SCHEDULE II

JABIL CIRCUIT, INC. AND SUBSIDIARIES

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

See accompanying independent auditors' report.
67