NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION OF SANMINA-SCI

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

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

Management Estimates and Uncertainties -- The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing the consolidated financial statements include depreciation and amortization periods, the allowance for doubtful accounts, and reserves for inventory and environmental matters. Actual results could materially differ from these estimates.

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

                                                              AS OF SEPTEMBER 29, 2001
                                                  -------------------------------------------------
                                                  AMORTIZED    AGGREGATE    UNREALIZED   UNREALIZED
                                                     COST      FAIR VALUE      GAIN         LOSS
                                                  ----------   ----------   ----------   ----------
                                                                   (IN THOUSANDS)
U.S. government and agency securities...........  $  322,135   $  324,667     $2,598        $(66)
State and municipal securities..................      36,298       36,651        353          --
U.S. corporate and bank debt....................     919,487      924,771      5,290          (6)
                                                  ----------   ----------     ------        ----
                                                  $1,277,920   $1,286,089     $8,241        $(72)
                                                  ==========   ==========     ======        ====

                                                              AS OF SEPTEMBER 30, 2000
                                                  -------------------------------------------------
                                                  AMORTIZED    AGGREGATE    UNREALIZED   UNREALIZED
                                                     COST      FAIR VALUE      GAIN         LOSS
                                                  ----------   ----------   ----------   ----------
                                                                   (IN THOUSANDS)
U.S. government and agency securities...........  $   59,798   $   59,867      $ 83        $ (14)
State and municipal securities..................      95,309       95,304        63          (68)
U.S. corporate and bank debt....................     972,046      972,251       292          (87)
                                                  ----------   ----------      ----        -----
                                                  $1,127,153   $1,127,422      $438        $(169)
                                                  ==========   ==========      ====        =====

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

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

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Raw materials..............................................    $356,939        $371,384
Work-in-process............................................    $ 57,886         148,404
Finished goods.............................................    $ 88,997          88,646
                                                               --------        --------
                                                               $503,822        $608,434
                                                               ========        ========

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

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Machinery and equipment....................................   $1,094,895      $1,042,693
Furniture and fixtures.....................................       21,802          25,483
Leasehold improvements.....................................       82,900         191,416
Land and buildings.........................................      239,152         104,819
                                                              ----------      ----------
                                                               1,438,749       1,364,411
Less: Accumulated depreciation and amortization............     (895,546)       (786,694)
                                                              ----------      ----------
                                                                 543,203         577,717
Construction in progress...................................       89,387         123,001
                                                              ----------      ----------
Net Property, Plant and Equipment..........................   $  632,590      $  700,718
                                                              ==========      ==========

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

Goodwill and intangibles are as follows:

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Goodwill...................................................    $297,837        $305,548
Intangibles................................................      85,167         103,398
                                                               --------        --------
                                                                383,004         408,946
Less: Accumulated amortization.............................     (88,607)        (61,928)
                                                               --------        --------
Net Goodwill and Intangibles...............................    $294,397        $347,018
                                                               ========        ========

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

NOTE 3. EARNINGS PER SHARE

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

                                                                           YEAR ENDED
                                                           ------------------------------------------
                                                           SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                               2001            2000           1999
                                                           -------------   -------------   ----------
                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net income...............................................     $40,446        $210,094       $104,716
Interest expense, net of tax, related to convertible
  subordinated debt......................................          --          10,145             --
                                                              -------        --------       --------
Net income...............................................     $40,446        $220,239       $104,716
                                                              =======        ========       ========
Weighted average number of shares outstanding during the
  period.................................................     319,360         304,824        284,958
Weighted average number of shares for stock options
  outstanding for the period.............................      10,869          16,435         15,370
Weighted average number of shares for subordinated debt
  for the period.........................................          --          16,091             --
                                                              -------        --------       --------
Weighted average number of shares........................     330,229         337,350        300,328
                                                              =======        ========       ========
Diluted earnings per share...............................     $  0.12        $   0.65       $   0.35
                                                              =======        ========       ========

                                                                          AS OF
                                                              -----------------------------
                                                              SEPTEMBER 29,   SEPTEMBER 30,
                                                                  2001            2000
                                                              -------------   -------------
                                                                     (IN THOUSANDS)
Convertible Subordinated Notes due 2004.....................   $  350,000      $  350,000
9 1/2% Senior Subordinated Notes due 2008...................       12,121          12,118
Convertible Subordinated Notes due 2012.....................        2,135           2,886
Zero Coupon Convertible Subordinated Notes due 2020.........      783,821         753,385
Convertible Debt, due 2003, converted in March 2001.........           --           2,702
Revolving Credit Agreements (Note 6)........................        6,150           8,565
Obligations under capital leases with interest rates ranging
  from 7.0% to 7.75%........................................       10,182          17,598
Bank loans due through August 2010, at rates ranging from
  4.63% to 6.10%............................................       69,999          70,451
                                                               ----------      ----------
Total.......................................................    1,234,408       1,217,705
Less: current portion.......................................      (15,800)        (16,941)
                                                               ----------      ----------
Total Long-term debt........................................   $1,218,608      $1,200,764
                                                               ==========      ==========

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

FISCAL YEARS ENDING
-------------------                                           (IN THOUSANDS)
2002........................................................    $   15,800
2003........................................................        10,368
2004........................................................       360,689
2005........................................................         1,786
2006........................................................           461
Thereafter..................................................       845,304
                                                                ----------
  Total.....................................................    $1,234,408
                                                                ==========

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Merger and restructuring reserves (Note 10)................     $47,697        $ 16,922
Other......................................................      50,435         113,140
                                                                -------        --------
Total accrued liabilities..................................     $98,132        $130,062
                                                                =======        ========
Other non-current liabilities consist of the following:

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Environmental reserves (Note 7)............................     $27,408         $13,342
Other......................................................          --          10,550
                                                                -------         -------
Total other non-current liabilities........................     $27,408         $23,892
                                                                =======         =======

NOTE 6. REVOLVING CREDIT AGREEMENTS

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

                    FISCAL YEARS ENDING
                    -------------------                       (IN THOUSANDS)
2002........................................................  $       30,839
2003........................................................          27,594
2004........................................................          20,934
2005........................................................          14,261
2006........................................................          10,931
Thereafter..................................................          19,944
                                                              --------------
Future minimum lease payments...............................  $      124,503
                                                              ==============

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

NOTE 8. RETIREMENT PLANS

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

NOTE 9. ACQUISITIONS

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

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

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

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

                                                                 YEAR ENDED
                                                               OCTOBER 2, 1999
                                                               ---------------
                                                               (IN THOUSANDS,
                                                                 EXCEPT PER
                                                               SHARE AMOUNTS)
Revenue.....................................................     $2,754,764
Net income..................................................        104,747
Diluted net income per share................................     $     0.35
Shares used in calculating per share amounts................        300,328

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

                                                                      YEAR ENDED
                                                              --------------------------
                                                              SEPTEMBER 30,   OCTOBER 2,
                                                                  2000           1999
                                                              -------------   ----------
                                                                    (IN THOUSANDS)
Net Sales:
  Sanmina-SCI...............................................   $3,911,559     $1,214,744
  Altron....................................................           --             --
  Manu-Tronics..............................................           --             --
  Hadco.....................................................           --      1,005,970
  Essex.....................................................           --        176,409
  Segerstrom................................................      332,627        230,544
  Eliminations..............................................       (5,084)        (7,044)
                                                               ----------     ----------
  Combined..................................................   $4,239,102     $2,620,623
                                                               ==========     ==========

                                                                      YEAR ENDED
                                                              --------------------------
                                                              SEPTEMBER 30,   OCTOBER 2,
                                                                  2000           1999
                                                              -------------   ----------
                                                                    (IN THOUSANDS)
Net Income:
  Sanmina-SCI...............................................    $192,334       $ 93,697
  Altron....................................................          --             --
  Manu-Tronics..............................................          --             --
  Hadco.....................................................          --         21,964
  Essex.....................................................          --          2,606
  Segerstrom................................................      17,760        (13,551)
                                                                --------       --------
     Combined...............................................    $210,094       $104,716
                                                                ========       ========

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

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

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

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

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

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

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

                                                                   YEAR ENDED
                                                   ------------------------------------------
                                                   SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                       2001            2000           1999
                                                   -------------   -------------   ----------
Merger costs.....................................    $ 12,523         $19,863       $ 5,479
Restructuring costs..............................     159,132          27,338        29,965
                                                     --------         -------       -------
Total............................................    $171,655         $47,201       $35,444
                                                     ========         =======       =======

2001

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

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

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

                                                                                                      TOTAL
                                                                                                    COSTS FOR
                                                                                                   YEAR ENDED
                                                        SANMINA-SCI   SANMINA-SCI                 SEPTEMBER 29,
                       NATURE OF CHARGES   SEGERSTROM    JUNE 2001     JULY 2001    HADCO/ESSEX       2001
                       -----------------   ----------   -----------   -----------   -----------   -------------
Severance related to
  involuntary
  employee
  terminations and
  related costs......  Cash                 $ 7,220       $ 1,705      $ 18,152      $(14,449)      $ 12,628
Lease cancellation
  and facility exit
  costs..............  Cash                   2,354            --        40,133            --         42,487
Write off of
  obsolete/redundant
  fixed assets.......  Non-Cash               2,851        11,970        85,132            --         99,953
Miscellaneous other
  expenses...........  Cash/Non-Cash             --         3,733           331            --          4,064
                                            -------       -------      --------      --------       --------
                                            $12,425       $17,408      $143,748      $(14,449)      $159,132
                                            =======       =======      ========      ========       ========

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

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

2000

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

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

                                                                                          TOTAL
                                                                                        COSTS FOR
                                                                                       YEAR ENDED
                                                        NATURE OF                     SEPTEMBER 30,
                                                         CHARGES     HADCO    ESSEX       2000
                                                        ---------   -------   -----   -------------
Severance related to involuntary employee terminations
  and related costs...................................  Cash        $25,856   $650       $26,506
Miscellaneous other expenses..........................  Cash            832     --           832
                                                                    -------   ----       -------
                                                                    $26,688   $650       $27,338
                                                                    =======   ====       =======

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

1999

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

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

                                                                                     TOTAL COSTS FOR
                                                                                       YEAR ENDED
                                              NATURE OF                                OCTOBER 2,
                                               CHARGES    SANMINA-SCI   SEGERSTROM        1999
                                              ---------   -----------   ----------   ---------------
Severance related to involuntary employee
  terminations and related costs............  Cash          $ 3,190      $ 5,950         $ 9,140
Lease cancellation and facility exit
  costs.....................................  Cash            3,457        6,426           9,883
Write off of obsolete/redundant fixed
  assets....................................  Non-Cash       10,228          714          10,942
                                                            -------      -------         -------
                                                            $16,875      $13,090         $29,965
                                                            =======      =======         =======

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

Below is a summary of the activity related to merger and restructuring costs for the year ended September 29,2001 and September 30, 2000:

                                                   BALANCE AT     PROVISION                 BALANCE AT
                                                  SEPTEMBER 30,   CHARGED TO    CHARGES    SEPTEMBER 29,
                              NATURE OF CHARGES       2000        OPERATIONS   UTILIZED        2001
                              -----------------   -------------   ----------   ---------   -------------
CASH AND NON-CASH
  PROVISIONS:
Employee severance and
  related expenses..........  Cash                   $14,742       $ 12,628    $ (19,639)     $ 7,731
Restructuring and other
  expenses..................  Cash/Non-Cash              832          4,064       (4,057)         839
Merger fees.................  Cash                     1,348         12,523      (11,289)       2,582
Shut down and consolidation
  costs of duplicate
  facilities................  Cash                        --         42,487       (5,942)      36,545
Write-off of impaired or
  redundant fixed assets....  Non-Cash                    --         99,953      (99,953)          --
                                                     -------       --------    ---------      -------
  Total provision...........                         $16,922       $171,655    $(140,880)     $47,697
                                                     =======       ========    =========      =======

                                                   BALANCE AT     PROVISION                 BALANCE AT
                                                   OCTOBER 2,     CHARGED TO    CHARGES    SEPTEMBER 30,
                              NATURE OF CHARGES       1999        OPERATIONS    UTILIZED       2000
                              -----------------   -------------   ----------    --------   -------------
CASH AND NON-CASH
  PROVISIONS:
Employee severance and
  related expenses..........  Cash                   $ 2,458       $26,506      $(14,222)     $14,742
Restructuring and other
  expenses..................  Cash/Non-Cash               --           832            --          832
Merger fees.................  Cash                     2,191        19,863       (20,706)       1,348
Shut down and consolidation
  costs of duplicate
  facilities................  Cash                     6,926            --        (6,926)          --
Write-off of impaired or
  redundant fixed assets....  Non-Cash                   714            --          (714)          --
                                                     -------       -------      --------      -------
  Total provision...........                         $12,289       $47,201      $(42,568)     $16,922
                                                     =======       =======      ========      =======

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. STOCKHOLDERS' EQUITY

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

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

Sanmina-SCI Stock Option Plans

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

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

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

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

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

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

                                                                        WEIGHTED AVERAGE
                                                             SHARES      EXERCISE PRICE
                                                           ----------   ----------------
Balance at September 30, 1998............................  21,951,496        $ 5.10
                                                           ----------
  Altron Plan............................................   3,865,784          6.32
  Granted................................................   7,920,244         11.63
  Exercised..............................................  (4,988,496)         4.92
  Cancelled..............................................  (2,466,928)         8.92
                                                           ----------
Balance at October 2, 1999...............................  26,282,100          6.90
                                                           ----------
  Hadco Plan.............................................   3,096,982         14.59
  Granted................................................   9,478,400         27.35
  Exercised..............................................  (5,455,934)         7.23
  Cancelled..............................................  (2,177,894)        13.87
                                                           ----------
Balance at September 30, 2000............................  31,223,654         13.31
                                                           ----------
  2000 Plan..............................................     610,000         28.29
  Granted................................................   6,173,326         25.51
  Exercised..............................................  (4,052,338)         9.76
  Cancelled..............................................  (2,352,286)        27.27
                                                           ----------
Balance at September 29, 2001............................  31,602,356        $15.71
                                                           ==========

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

                                                 OPTIONS OUTSTANDING
                                   -----------------------------------------------
                                                     WEIGHTED                         OPTIONS VESTED AND EXERCISABLE
                                                     AVERAGE           WEIGHTED      --------------------------------
                                     NUMBER         REMAINING          AVERAGE        NUMBER VESTED    NUMBER VESTED
RANGE OF WEIGHTED EXERCISE PRICES  OUTSTANDING   CONTRACTUAL LIFE   EXERCISE PRICE   AND EXERCISABLE   EXERCISE PRICE
---------------------------------  -----------   ----------------   --------------   ---------------   --------------
$0.63-$5.02..................      6,714,969..         3.92             $ 2.97          6,665,783          $ 2.96
$5.04-$8.60..................       6,451,076          6.18             $ 7.04          4,633,531          $ 7.04
$8.70-$18.56.................       7,740,857          7.68             $15.10          3,526,058          $13.66
$18.57-$30.97................       7,339,409          8.52             $24.52          2,108,575          $23.06
$31.06-$57.82................       3,356,045          8.80             $39.97            704,833          $39.74
                                   ----------                                          ----------
$0.63-$57.82.................      31,602,356          6.89             $15.71         17,638,780          $10.04
                                   ==========                                          ==========

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

Sanmina-SCI Employee Stock Purchase Plan. Sanmina-SCI's employee stock purchase plan (the "Purchase Plan") provides for the issuance of up to 10,200,000 shares of common stock. Under the Purchase Plan, employees may purchase, on a periodic basis, a limited number of shares of common stock through payroll deductions over a six-month period. The per share purchase price is 85% of the fair market value of the stock at the beginning or end of the offering period, whichever is lower. As of September 29, 2001,

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

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

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

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

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

                                                                   YEAR ENDED
                                                   ------------------------------------------
                                                   SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                       2001            2000           1999
                                                   -------------   -------------   ----------
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
Net income (loss):
  As reported....................................    $ 40,446        $210,094       $104,716
  Pro forma......................................    $(18,778)       $162,794         87,265
Basic EPS/(loss) per share:
  As reported....................................    $   0.13        $   0.69       $   0.37
  Pro forma......................................       (0.06)           0.53           0.31
Diluted EPS/(loss) per share:
  As reported....................................    $   0.12        $   0.65       $   0.35
  Pro forma......................................       (0.06)           0.48           0.29

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

                                                               YEAR ENDED
                                               -------------------------------------------
                                               SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                   2001            2000           1999
                                               -------------   -------------   -----------
Volatility...................................      99%             67%           53%-64%
Risk-free interest rate......................     5.0%            5.75%        5.20%-6.00%
Dividend yield...............................      0%              0%              0%
Expected lives (management and directors)
  beyond vesting.............................   1.2 years       1.1 years       0.8 years
Expected lives (employees) beyond vesting....   0.6 years       0.5 years       0.3 years

                                                                   YEAR ENDED
                                                   ------------------------------------------
                                                   SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                       2001            2000           1999
                                                   -------------   -------------   ----------
                                                                 (IN THOUSANDS)
Income (loss) from continuing operations before
  income taxes:
  Domestic.......................................     $55,416        $310,149       $187,610
  International..................................      27,376          47,820        (18,243)
                                                      -------        --------       --------
                                                      $82,792        $357,969       $169,367
                                                      =======        ========       ========

                                                   SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                       2001            2000           1999
                                                   -------------   -------------   ----------
                                                                 (IN THOUSANDS)
Federal
  Current........................................    $ 98,721        $145,377       $62,634
  Deferred.......................................     (60,049)        (44,314)       (8,774)
                                                     --------        --------       -------
                                                       38,672         101,063        53,860
                                                     --------        --------       -------
State
  Current........................................      12,673          27,829        16,094
  Deferred.......................................      (7,783)         (4,023)       (1,281)
                                                     --------        --------       -------
                                                        4,890          23,806        14,813
                                                     --------        --------       -------
Foreign taxes
  Current........................................      (7,109)         18,047        (4,022)
  Deferred.......................................       5,893               0             0
                                                     --------        --------       -------
                                                       (1,216)         18,047        (4,022)
                                                     --------        --------       -------
Total provision for income taxes before
  extraordinary items............................      42,346         142,916        64,651
Less tax benefit of extraordinary items..........          --          (3,039)           --
                                                     --------        --------       -------
Total provision for income taxes.................    $ 42,346        $139,877       $64,651
                                                     ========        ========       =======

                                                                         AS OF
                                                             -----------------------------
                                                             SEPTEMBER 29,   SEPTEMBER 30,
                                                                 2001            2000
                                                             -------------   -------------
                                                                    (IN THOUSANDS)
Deferred tax assets:
  Current reserves not currently deductible................    $ 86,133        $ 55,481
  State income taxes.......................................       5,563           5,954
  Accruals.................................................      66,893          17,190
  Depreciation.............................................          --           2,722
  Net operating loss carryforwards.........................       4,495           1,851
  Deferred compensation....................................       1,114           2,229
  Other....................................................        (225)          1,760
                                                               --------        --------
  Total deferred income tax asset..........................     163,973          87,187
Valuation allowance........................................      (4,074)             --
                                                               --------        --------
Net deferred income tax asset..............................    $159,899        $ 87,187
                                                               ========        ========
Deferred Tax Liabilities:
  Acquisition related intangibles..........................    $(36,572)       $(42,755)
  Depreciation differences.................................     (23,334)        (18,979)
  Other....................................................      (1,092)           (277)
                                                               --------        --------
     Total gross deferred tax liability....................    $(60,998)       $(62,011)
                                                               ========        ========

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

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

                                                                   YEAR ENDED
                                                              ---------------------
                                                              2001    2000    1999
                                                              -----   -----   -----
Federal tax at statutory rate...............................  35.00%  35.00%  35.00%
State income taxes, net of federal benefit..................   4.16    4.66    5.81
Foreign subsidiary income/(loss)............................  (2.95)   0.27    0.21
Effect of non-deductible goodwill amortization..............  16.76    0.89    0.70
Tax exempt interest income..................................     --   (0.17)  (0.49)
Foreign sales corporation benefit...........................  (4.11)  (0.69)  (0.98)
Tax credits.................................................  (0.83)  (0.43)  (0.21)
Change in valuation allowance...............................   3.86   (0.62)  (1.62)
Merger and acquisition costs................................   1.16    1.63      --
Other.......................................................  (1.90)  (0.58)  (0.25)
                                                              -----   -----   -----
Provision for income taxes..................................  51.15%  39.96%  38.17%
                                                              =====   =====   =====

SANMINA-SCI CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 13. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

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

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

The following summarizes financial information by geographic segment:

                                                                 YEAR ENDED
                                                 ------------------------------------------
                                                 SEPTEMBER 29,   SEPTEMBER 30,   OCTOBER 2,
                                                     2001            2000           1999
                                                 -------------   -------------   ----------
                                                               (IN THOUSANDS)
Net Sales:
  Domestic.....................................   $3,067,208      $3,181,949     $2,136,525
  International................................      986,840       1,057,153        484,098
                                                  ----------      ----------     ----------
          Total................................   $4,054,048      $4,239,102     $2,620,623
                                                  ==========      ==========     ==========
Operating Income (loss):
  Domestic.....................................   $  108,638      $  301,389     $  208,140
  International................................      (45,165)         60,067        (11,106)
                                                  ----------      ----------     ----------
          Total................................   $   63,473      $  361,456     $  197,034
                                                  ==========      ==========     ==========

                                                                   AS OF
                                                       ------------------------------
                                                         2001       2000       1999
                                                       --------   --------   --------
                                                               (IN THOUSANDS)
Long Lived Assets (excludes goodwill and intangibles)
  Domestic...........................................  $604,474   $631,139   $547,308
  International......................................   158,167    153,686    116,290
                                                       --------   --------   --------
          Total......................................  $762,641   $784,825   $663,598
                                                       ========   ========   ========
Depreciation and amortization
  Domestic...........................................  $149,055   $144,418   $111,582
  International......................................    31,738     20,802     18,685
                                                       --------   --------   --------
          Total......................................  $180,793   $165,220   $130,267
                                                       ========   ========   ========
Capital expenditures
  Domestic...........................................  $156,269   $150,927   $126,181
  International......................................    31,262     54,669     13,584
                                                       --------   --------   --------
          Total......................................  $187,531   $205,596   $139,765
                                                       ========   ========   ========

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

NOTE 14. SUBSEQUENT EVENTS

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

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

FINANCIAL STATEMENT SCHEDULE

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