SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                 FORM 10-Q


X QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED May 26, 2000.

__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT  OF 1934   FOR   THE   TRANSITION   PERIOD   FROM   _________________   TO
_________________.

COMMISSION FILE NUMBER 1-11098

                           SOLECTRON CORPORATION
           (Exact Name of Registrant as specified in its Charter)


                 Delaware                        94-2447045
      (State or other jurisdiction             (IRS Employer
    of Incorporation or Organization)       Identification Number)


             777 Gibraltar Drive, Milpitas, California 95035
           (Address of principal executive offices and Zip Code)

Registrant's telephone number, including area code:   (408) 957-8500



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes   X        No


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

At June 30,  2000,  601,513,793  shares of Common Stock of the  Registrant  were
outstanding.


<PAGE>


SOLECTRON CORPORATION

INDEX TO FORM 10-Q


PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets at
         May 31, 2000 and August 31, 1999                          3

         Condensed Consolidated Statements of Income
         for the three months and nine months ended
         May 31, 2000 and 1999                                   4 - 5

         Condensed Consolidated Statements of Comprehensive
         Income for the three months and nine months ended
         May 31, 2000 and 1999                                     6

         Condensed Consolidated Statements of Cash Flows
         for the nine months ended May 31, 2000 and 1999         7 - 8

         Notes to Condensed Consolidated Financial
         Statements                                              9 - 15

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                    16 - 34

Item 3.  Quantitative and Qualitative Disclosures About
         Market Risk                                               34


PART II. OTHER INFORMATION


Item 1.  Legal Proceedings                                         35

Item 2.  Changes in Securities                                     35

Item 3.  Defaults Upon Senior Securities                           35

Item 4.  Submission of Matters to a Vote of Security Holders       36

Item 5.  Other Information                                         36

Item 6.  Exhibits and Reports on Form 8-K                          36

Signature                                                          37


                                       2
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                     SOLECTRON CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In millions)
                                   (Unaudited)

                                                May 31,      August 31,
                                                 2000           1999
ASSETS                                       -----------    -----------
Current assets:
  Cash, cash equivalents and
    short-term investments                    $  3,419.9     $  1,881.6
  Accounts receivable, net                       1,839.6        1,237.9
  Inventories                                    2,522.5        1,170.1
  Prepaid expenses and other
    current assets                                 233.6          120.9
                                              ----------     ----------
    Total current assets                         8,015.6        4,410.5
Net property and equipment                         833.1          705.6
Other assets                                       305.9          203.2
                                              ----------     ----------
Total assets                                  $  9,154.6     $  5,319.3
                                              ==========     ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt                             $     39.5     $     21.4
  Accounts payable                               1,826.1        1,013.7
  Accrued employee compensation                    117.5           97.5
  Accrued expenses                                 119.7           44.0
  Other current liabilities                        172.0           70.4
                                              ----------     ----------
    Total current liabilities                    2,274.8        1,247.0
Long-term debt                                   3,295.8          922.6
Other long-term liabilities                         15.2            9.2
                                              ----------     ----------
    Total liabilities                            5,585.8        2,178.8
                                              ----------     ----------
Commitments

Stockholders' equity:
  Common stock                                       0.6            0.3
  Additional paid-in capital                     2,195.6        2,057.6
  Retained earnings                              1,493.3        1,171.1
  Accumulated other comprehensive losses          (120.7)         (88.5)
                                              ----------     ----------
     Total stockholders' equity                  3,568.8        3,140.5
                                              ----------     ----------
Total liabilities and
  stockholders' equity                        $  9,154.6     $  5,319.3
                                              ==========     ==========


See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>


                     SOLECTRON CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In millions, except per share data)
                                 (Unaudited)

                            Three Months Ended      Nine Months Ended
                            ------------------     ------------------
                             May 31,   May 31,      May 31,   May 31,
                              2000      1999          2000      1999
                            --------  --------     --------  --------
Net sales                   $3,592.3  $2,366.0     $9,227.6  $6,729.5
Cost of sales                3,290.2   2,130.9      8,377.5   6,077.9
                            --------  --------     --------  --------
Gross profit                   302.1     235.1        850.1     651.6
Operating expenses:
  Selling, general and
    administrative             107.2      90.5        308.5     257.1
  Research and
    development                 15.7      11.8         44.7      32.5
  Acquisition and
    restructuring costs          7.0        -          32.0        -
                            --------  --------     --------  --------
      Operating income         172.2     132.8        464.9     362.0

Interest income                 24.0      10.6         67.4      23.4
Interest expense               (15.5)    (11.0)       (37.7)    (26.0)
                             --------  --------    --------  --------
Income before income taxes
  and cumulative effect
  of change in accounting
  principle                    180.7     132.4        494.6     359.4

Income tax expense              57.8      42.4        158.3     115.0
                            --------  --------     --------  --------
Income before cumulative
  effect of change in
  accounting principle         122.9      90.0        336.3     244.4

Cumulative effect of change
  in accounting principle
  for start-up costs, net of
  $1.6 income tax benefit         -         -          (3.5)       -
                            --------  --------     --------  --------
     Net income             $  122.9  $   90.0     $  332.8  $  244.4
                            ========  ========     ========  ========


                                  (continued on next page)


                                       4
<PAGE>


                           SOLECTRON CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME (continued)
                            (In millions, except per share data)
                                       (Unaudited)


                            Three Months Ended      Nine Months Ended
                            ------------------     ------------------
                             May 31,   May 31,      May 31,   May 31,
                              2000      1999         2000      1999
                            --------  --------     --------  --------
Basic net income per share:
 Income before cumulative
  effect of change in
  accounting principle      $   0.21  $   0.16     $   0.57  $   0.46

 Cumulative effect of change
  in accounting principle         -         -         (0.01)       -
                            --------  --------     --------  --------
                            $   0.21  $   0.16     $   0.56  $   0.46
                            ========  ========     ========  ========
 Diluted net income per share:
  Income before cumulative
   effect of change in
   accounting principle     $   0.20  $   0.16     $   0.55  $   0.44

  Cumulative effect of change
   in accounting principle        -         -         (0.01)       -
                            --------  --------     --------  --------
                            $   0.20  $   0.16     $   0.54  $   0.44
                            ========  ========     ========  ========


Shares used to compute
 net income per share:

     Basic                     597.8     550.3        594.1     530.7
                            ========  ========     ========  ========

     Diluted                   620.1     574.0        618.9     570.0
                            ========  ========     ========  ========


See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>



                    SOLECTRON CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                               (In millions)
                                (Unaudited)



                              Three Months Ended       Nine Months Ended
                              ------------------      ------------------
                               May 31,   May 31,       May 31,   May 31,
                                2000      1999          2000      1999
                              --------  --------      --------  --------

Net income                    $  122.9  $   90.0      $  332.8  $  244.4

Other comprehensive
 income (loss):

Foreign currency translation
 adjustments, net of income
 tax benefit of $0.4 for
 three months and $1.0 for
 nine months in fiscal 2000      (19.7)     12.8         (30.6)    (57.9)

Unrealized loss on
 investments, net of income
 tax benefit of $0.5 for three
 months and $1.0 for nine
 months in fiscal 2000            (0.8)       -           (1.6)       -
                              --------  --------      --------  --------
Comprehensive income          $  102.4  $  102.8      $  300.6  $  186.5
                              ========  ========      ========  ========



---------------
Accumulated  foreign currency  translation losses were $118.1 million at May 31,
2000 and $87.5 million at August 31, 1999. For the  nine-month  period of fiscal
year 1999, the foreign  currency  translation  loss primarily  resulted from the
devaluation  of the Brazilian  real.  The  translation  loss for the  nine-month
period of fiscal year 2000 was  principally due to the weakened French franc and
British sterling.  Most of Solectron's foreign currency  translation  adjustment
amounts relate to investments  which are permanent in nature. To the extent that
such amounts relate to investments  which are permanent in nature, no adjustment
for income taxes is made. Accumulated unrealized losses on investments were $2.6
million at May 31, 2000 and $1.0 million at August 31, 1999.


See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>


                     SOLECTRON CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In millions)
                                (Unaudited)


                                                   Nine Months Ended
                                                -----------------------
                                                   May 31,     May 31,
                                                    2000        1999
                                                ----------   ----------
Cash flows from operating activities:
  Net income                                    $    332.8    $   244.4
  Adjustments to reconcile net income
   to net cash (used in) provided by operating
   activities:
     Depreciation and amortization                   169.1        136.7
     Non-cash interest expense                        27.4         10.6
     Tax benefit associated with the
      exercise of stock options                       52.6         21.5
     Cumulative effect of change in accounting
      principle for start-up costs                     3.5           -
     Other                                            (4.4)       (15.1)
     Changes in operating assets and
     liabilities:
       Accounts receivable                          (633.5)      (247.4)
       Inventories                                (1,185.8)      (164.1)
       Prepaid expenses and other
        current assets                               (93.6)        (8.4)
       Accounts payable                              870.5         43.7
       Accrued expenses and other
        current liabilities                          188.4         10.3
                                                ----------    ---------
     Net cash (used in) provided by
       operating activities                         (273.0)        32.2
                                                ----------    ---------
Cash flows from investing activities:
  Sales and maturities of short-term
   investments                                       699.8        286.7
  Purchases of short-term investments             (1,079.0)      (494.6)
  Acquisition of manufacturing assets
   and locations                                    (297.7)      (108.4)
  Capital expenditures                              (318.6)      (320.1)
  Proceeds from sale of property and equipment        71.7         16.8
  Other                                              (13.1)       (13.3)
                                                ----------    ---------
     Net cash used in investing
      activities                                    (936.9)      (632.9)
                                                ----------    ---------


                               (continued on next page)


                                       7
<PAGE>


                       SOLECTRON CORPORATION AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                                (In millions)
                                 (Unaudited)


                                                  Nine Months Ended
                                                -----------------------
                                                  May 31,      May 31,
                                                   2000        1999
                                                ----------   ----------

Cash flows from financing activities:
  Net proceeds from bank lines of credit              5.0          16.6
  Net proceeds from long-term debt                2,296.8         731.4
  Net proceeds from stock issued under
   option and employee purchase plans                97.1          55.1
  Repurchases of common stock                          -           (7.2)
  Other                                               8.1          15.8
                                               ----------    ----------
    Net cash provided by financing
    activities                                    2,407.0         811.7
                                               ----------    ----------
Effect of exchange rate changes on
 cash and cash equivalents                          (15.2)         (0.1)
                                                ----------    ---------
Net increase in cash and
 cash equivalents                                 1,181.9         210.9

Cash and cash equivalents at
 beginning of period                              1,416.8         300.7
                                               ----------    ----------
Cash and cash equivalents at
 end of period                                 $  2,598.7    $    511.6
                                               ==========    ==========


SUPPLEMENTAL DISCLOSURES

Cash paid during the period:
   Income taxes                                $    102.2    $     85.4
   Interest                                    $     12.8    $     26.0

Non-cash investing and financing activities:
   Issuance of common stock upon
     conversion of long-term debt              $       -     $    230.0
   Issuance of common stock for business
     combination, net of cash acquired                1.0            -


See accompanying notes to condensed consolidated financial statements.


                                       8

<PAGE>


SOLECTRON CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

NOTE 1 - Basis of Presentation

The accompanying  unaudited condensed  consolidated balance sheets as of May 31,
2000 and August 31,  1999,  and the  related  unaudited  condensed  consolidated
statements  of income for the three- and  nine-month  periods ended May 31, 2000
and 1999, and the unaudited condensed  consolidated  statements of comprehensive
income for the three- and  nine-month  periods ended May 31, 2000 and 1999,  and
the  unaudited  condensed  consolidated  statements  of cash  flows for the nine
months ended May 31, 2000 and 1999 have been prepared on substantially  the same
basis as the annual consolidated  financial statements.  Management believes the
financial  statements  reflect  all  adjustments,   consisting  only  of  normal
recurring  adjustments,  necessary  for a fair  presentation  of  the  Company's
financial position,  operating results and cash flows for the periods presented.
The results of operations  for the three- and  nine-month  periods ended May 31,
2000 are not  necessarily  indicative  of results to be expected  for the entire
year.  These  condensed  consolidated  financial  statements  should  be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended August 31, 1999 included in the Company's  Current Report on Form 8-K
filed on April 11, 2000.

For clarity of presentation, the Company has indicated its third fiscal quarters
as ending on May 31, 2000 and 1999,  and its fiscal year as ending on August 31,
1999. In fact, the Company's third quarter of fiscal 2000 ended on May 26, 2000,
its third  quarter of fiscal 1999 ended on May 28, 1999 and its 1999 fiscal year
ended on August 27, 1999.

NOTE 2 - Inventories

Inventories consisted of (in millions):

                                   May 31,           August 31,
                                    2000                1999
                                 -----------        -----------
          Raw materials          $   1,984.1        $     841.2
          Work-in-process              375.9              232.6
          Finished goods               162.5               96.3
                                 -----------        -----------
          Total                  $   2,522.5        $   1,170.1
                                 ===========        ===========

                                       9
<PAGE>


NOTE 3 - Net Income Per Share

The following  table sets forth the  computation of basic and diluted net income
per share for the three- and nine-month periods ended May 31, 2000 and 1999.

                                  Three Months Ended          Nine Months Ended
                                  ------------------         ------------------
                                   May 31,   May 31,          May 31,   May 31,
                                    2000      1999             2000      1999
                                  --------  --------         --------  --------
                                       (in millions, except per share data)
Income before cumulative
  effect of change in
  accounting principle            $ 122.9   $   90.0         $  336.3  $  244.4

Cumulative effect of change
  in accounting principle,
  net of income tax benefit            -          -              (3.5)       -

Interest expense from
  convertible subordinated
  notes, net of income taxes           -          -               -         5.0
                                  --------  --------         --------  --------
Net income - diluted              $  122.9  $   90.0         $  332.8  $  249.4
                                  ========  ========         ========  ========

Weighted average shares - basic      597.8     550.3            594.1     530.7

Common shares issuable upon
  exercise of stock options           22.3      22.8             24.8      20.9

Common shares issuable
  upon assumed conversion of
  convertible subordinated notes        -        0.9               -       18.4
                                  --------  --------         --------  --------
Weighted average shares - diluted    620.1     574.0            618.9     570.0
                                  ========  ========         ========  ========

Basic net income per share:
 Income before cumulative
   effect of change in
   accounting principle           $   0.21  $   0.16         $   0.57  $   0.46

 Cumulative effect of change
   in accounting principle              -         -             (0.01)       -
                                  --------  --------         --------  --------
    Net income per share          $   0.21  $   0.16         $   0.56  $   0.46
                                  ========  ========         ========  ========

Diluted net income per share:
 Income before cumulative
   effect of change in
   accounting principle           $   0.20 $    0.16         $   0.55  $   0.44

 Cumulative effect of change
   in accounting principle              -         -             (0.01)       -
                                  --------  --------         --------  --------

     Net income per share         $   0.20  $   0.16         $   0.54  $   0.44
                                  ========  ========         ========  ========

                                       10
<PAGE>

For the three- and  nine-month  periods ended May 31, 2000,  options to purchase
1.9 million  shares of the Company's  common stock with exercise  prices greater
than the average  fair  market  values of its common  stock for such  periods at
$38.66 and $39.43,  respectively,  were not included in the calculation  because
the effect would have been antidilutive.

Prior to  fiscal  2000,  the  fiscal  years of  Solectron  and  SMART  differed.
Solectron's  condensed  consolidated  statements  of income  for the  three- and
nine-month  periods  ended May 31, 1999 were  combined  with  SMART's  condensed
consolidated  statements of income for the three- and  nine-month  periods ended
July 31,  1999.  For  Solectron,  options to  purchase  620,000  and 3.4 million
shares,  respectively,  of Solectron's common stock with exercise prices greater
than the average  fair market  values of its common  stock at $25.04 and $19.69,
respectively,  for the three- and nine-month periods ended May 31, 1999 were not
included in the calculation because the effect would have been antidilutive. For
SMART,  options to purchase  1.5  million  shares of SMART's  common  stock with
exercise  prices greater than the average fair market values of its common stock
at $17.44 and $18.31, respectively,  for the three- and nine-month periods ended
July 31, 1999 were not included in the calculation because the effect would have
been antidilutive.

In  addition,  the  calculation  above did not include the 24.7 million and 49.6
million  common  shares  issuable  upon  conversion  of the  zero-coupon  senior
convertible  notes  due 2019 and 2020,  respectively,  as they  would  have been
antidilutive.

NOTE 4 - Commitments

Solectron  leases various  facilities  under  operating  lease  agreements.  The
facility  leases  expire at various  dates  through  2014.  Most of such  leases
require Solectron to pay property taxes, insurance and normal maintenance costs.
Payments of some leases are periodically  adjusted based on LIBOR rates. Certain
leases for Solectron's  facilities,  including  Milpitas,  Fremont and San Jose,
California; Everett, Washington; Suwanee, Georgia; and Columbia, South Carolina,
provide  Solectron  with an  option  at the  end of the  lease  term  of  either
acquiring  the property at its original cost or arranging for the property to be
acquired. For these leases,  Solectron is contingently liable under a first loss
clause for a decline in market value of such leased  facilities up to 85% of the
original  costs, or  approximately  $170 million in total as of May 31, 2000, in
the  event  Solectron  does  not  purchase  the  properties  at  the  end of the
respective lease terms.  Under such  agreements,  the Company must also maintain
compliance  with  financial  covenants  similar  to its $100  million  unsecured
multicurrency revolving credit facility.

Additionally,   Solectron  periodically  enters  into  lease  arrangements  with
third-party  leasing companies under which it sells fixed assets and leases them
back from the leasing  companies.  Solectron is  accounting  for these leases as
operating leases.

NOTE 5 - Segment Information

The Company has transitioned its operations into three strategic  business units
- manufacturing and operations,  technology solutions, and global services. Each
business unit has its own president and support  staff.  Solectron's  management
uses an internal management reporting system, which provides important financial
data, to evaluate  performance  and allocate  resources for these three business
units.  Intersegment  adjustments were related  primarily to intersegment  sales
that  were  generally   recorded  at  prices  that  approximated   arm's  length
transactions.  Certain  corporate  expenses  were  allocated to these  operating
segments  and  were  included  for  performance  evaluation.  Some  amortization
expenses  were also  allocated  to these  operating  segments,  but the  related
intangible assets were not allocated.  The accounting  policies for the segments
were the same as for Solectron taken as a whole.

Segment  information  by business  units for the three- and  nine-month  periods
ended May 31, 2000 and 1999, was as follows:

                                       11
<PAGE>





                                  Three Months Ended        Nine Months Ended
                                 --------------------    ----------------------
                                  May 31,    May 31,       May 31,      May 31,
                                   2000        1999         2000         1999
                                 --------    --------    ---------    ---------
                                                  (in millions)
Net sales:
 Manufacturing and operations    $3,217.1    $2,123.5     $8,157.3     $5,935.9
 Technology solutions               368.3       261.8      1,044.5        851.8
 Global services                     55.9         -          110.3          -
 Intersegment adjustments           (49.0)      (19.3)       (84.5)       (58.2)
                                 --------    --------     --------     --------
                                 $3,592.3    $2,366.0     $9,227.6     $6,729.5
                                 ========    ========     ========     ========

Depreciation and amortization:
 Manufacturing and operations    $   56.2    $   42.8     $  126.0     $  116.6
 Technology solutions                 6.3         4.6         19.3         15.3
 Global services                      1.3          -           9.5           -
 Corporate                            3.5         3.1         14.3          4.8
                                 --------    --------     --------     --------
                                 $   67.3    $   50.5     $  169.1     $  136.7
                                 ========    ========     ========     ========

Interest income:
 Manufacturing and operations    $    1.9    $    2.0     $    5.8     $    5.8
 Technology solutions                 1.9         1.6          5.1          5.2
 Global services                      0.1          -           0.1            -
 Corporate                           33.7        11.6         82.2         23.8
 Intersegment adjustments           (13.6)       (4.6)       (25.8)       (11.4)
                                 --------    --------     --------     --------
                                 $   24.0    $   10.6     $   67.4      $  23.4
                                 ========    ========     ========     ========

Interest expense:
 Manufacturing and operations    $   14.8    $    5.1     $   28.0     $   13.0
 Technology solutions                 0.2         0.4          0.8          0.9
 Global services                      0.2          -           0.2            -
 Corporate                           14.3        10.1         34.9         23.5
 Intersegment adjustments           (14.0)       (4.6)       (26.2)       (11.4)
                                 --------    --------     --------     --------
                                 $   15.5    $   11.0     $   37.7     $   26.0
                                 ========    ========     ========     ========

Pre-tax income:
 Manufacturing and operations    $  163.0    $  125.7     $  456.1     $  338.3
 Technology solutions                21.5        23.0         44.9         59.9
 Global services                     (4.3)         -          (0.7)          -
 Corporate                            0.5       (16.3)       (10.8)       (38.8)
                                 --------    --------     --------     --------
                                 $  180.7 a  $  132.4     $  489.5 b,c $  359.4
                                 ========    ========     ========     ========


                                       12
<PAGE>


                                  Three Months Ended        Nine Months Ended
                                 --------------------    ----------------------
                                  May 31,     May 31,      May 31,      May 31,
                                    2000        1999         2000         1999
                                 --------    --------    ---------    ---------
                                                (in millions)
Capital expenditures:
 Manufacturing and operations    $  109.7    $   83.9     $  267.8     $  282.5
 Technology solutions                 7.9         7.8         21.6         15.9
 Global services                      2.6          -           9.6           -
 Corporate                            6.9         1.2         19.6         21.7
                                 --------    --------     --------     --------
                                 $  127.1    $   92.9     $  318.6     $  320.1
                                 ========    ========     ========     ========


                                                 May 31,     August 31,
                                                  2000          1999
                                              ------------   ----------
                                                    (in millions)

Total assets:
 Manufacturing and operations                 $    5,183.8   $  3,265.9
 Technology solutions                                602.8        556.7
 Global services                                     109.4         42.4
 Corporate                                         5,611.0      2,717.0
 Intersegment adjustments                         (2,352.4)    (1,262.7)
                                              ------------   ----------
                                              $    9,154.6   $  5,319.3
                                              ============   ==========
----------------------------
a.Reflects  acquisition  costs of $5.2 million  recorded in global  services and
   $1.8 million recorded as restructuring costs in manufacturing and operations.

b.Reflects  acquisition  costs of $16.5 million,  $5.2 million and $3.8 million,
   respectively,   recorded  in  technology   solutions,   global  services  and
   corporate;  and  restructuring  costs of $2.8 million,  $1.9 million and $1.8
   million, respectively,  recorded in technology solutions, global services and
   manufacturing and operations.

c.Includes $5.1 million for cumulative effect of change in accounting  principle
  for start-up costs.

NOTE 5 - Zero-Coupon Convertible Senior Notes

In May 2000, Solectron issued 4,025,000 zero-coupon  convertible senior notes at
an issue price of $579.12 per note which resulted in gross proceeds to Solectron
of approximately  $2.3 billion under an effective  registration  statement filed
with the  Securities  and Exchange  Commission.  These notes are  unsecured  and
unsubordinated  indebtedness  of  Solectron  with a maturity  value  aggregating
$4.025  billion.  There  will be no  interest  payment  by  Solectron  prior  to
maturity.  Each note has a yield of 2.75% with a maturity value of $1,000 on May
8, 2020. Solectron is amortizing the issue discount using the effective interest
method over the term of the notes.  Each note is  convertible at any time by the
holder at a  conversion  rate of 12.3309  shares per note.  Holders  may require
Solectron  to purchase all or a portion of their notes on May 8, 2003 and May 8,
2010,  at a price of $628.57  and  $761.00 per note,  respectively.  Also,  each
holder may require  Solectron to  repurchase  all or a portion of such  holder's
notes  upon a change in  control of the  Company  occurring  on or before May 8,
2003. Solectron,  at its option, may redeem all or a portion of the notes at any
time on or after May 8, 2003.


                                       13
<PAGE>


NOTE 6 - Pooling of Interests

On April 28, 2000,  Solectron  completed the  acquisition  of AMERICOM  Wireless
Services  (AMERICOM)  in  its  entirety,  a  privately  held  corporation  which
specializes  in  wireless  handset  repair  and   refurbishment  and  outsourced
technical customer support services.  Solectron issued approximately 1.8 million
shares  of its  common  stock  to  exchange  for all  outstanding  stock  and to
extinguish  obligations  under the stock  appreciation  rights plan of AMERICOM.
This transaction was accounted for as a pooling of interests.  As the results of
operations of AMERICOM prior to this acquisition were not considered material to
the Company's  consolidated  results of  operations,  the  Company's  historical
financial  statements  have not been restated to reflect the financial  position
and results of operations of AMERICOM,  and pro-forma financial  information has
not been disclosed.  However,  the Company has signed a definitive agreement for
the  acquisition  of Bluegum  Group in its  entirety and expects to complete the
acquisition in July 2000. The combined  effect of Bluegum Group and AMERICOM may
be deemed to be material to the Company's  consolidated  results of  operations.
Upon  the  completion  of  the  acquisition  of  Bluegum  Group,  the  Company's
historical  financial  statements  will be  restated  to reflect  the  financial
position and results of operations of Bluegum Group and AMERICOM.  Bluegum Group
is a leading electronics contract manufacturer in Australia, and the acquisition
is subject to various conditions of closing.

Acquisition  costs  of  $5.2  million  were  recorded  in  connection  with  the
acquisition of AMERICOM.  These costs included direct  transaction fees, as well
as legal fees, accounting fees, registration fees and other incidentals.

NOTE 7 - Acquisitions of Manufacturing Assets and Business

On March 1, 2000,  Solectron  completed the  acquisition of the complex  systems
manufacturing assets of Ericsson Telecom AB's telecommunications  infrastructure
equipment  operations in Longuenesse,  France, and Ostersund,  Sweden. The total
purchase  price  for  the   manufacturing   assets  and  intangible  assets  was
approximately  $162.2  million,  subject  to  adjustment.  The  transaction  was
accounted for as a purchase of assets,  and the purchase  price was allocated to
the assets  acquired based on the relative fair values of the assets at the date
of  acquisition.  As part of the  agreement,  Solectron  will provide a complete
range of integrated supply-chain solutions to Ericsson Telecom AB. This includes
supply-base  management,  early  prototyping,  New  Product  Introduction  (NPI)
management, complex printed circuit board (PCB) assembly, configure-to-order and
build-to-order complex systems assembly, and global services.

On  March  31,  2000,   Solectron   completed  the   acquisition   of  Alcatel's
manufacturing  business  in  Aguadilla,  Puerto  Rico.  The  purchase  price was
approximately  $48.2  million,  subject  to  adjustments.  The  acquisition  was
accounted for as a purchase of a business resulting in goodwill of approximately
$13.3  million,  subject to  adjustment.  The condensed  consolidated  financial
statements  include the  operating  results of this  operation  from the date of
acquisition.  Pro forma  results of  operations  are not  presented  because the
effect of this  acquisition  is not  significant.  Alcatel is a world  leader in
building  next-generation  networks and end-to-end data voice solutions. As part
of the acquisition of Alcatel's  manufacturing business in Aguadilla,  Solectron
will assume full manufacturing responsibility for Alcatel's PCB products focused
on the networking and telecommunication industries. Additionally, Solectron will
provide a full range of  manufacturing  services  to Alcatel  for the next three
years including prototyping and high-volume PCB assembly.

On April 6, 2000,  Solectron  announced  the  completion of  acquisition  of the
manufacturing assets of Premisys Communications, Inc., a wholly owned subsidiary
of  Zhone  Technologies,   Inc.  (Zhone).  The  total  purchase  price  for  the
manufacturing  assets and  intangible  assets was  approximately  $15.5 million,
subject to  adjustment.  The  transaction  was  accounted  for as a purchase  of
assets, and the purchase price was allocated to the assets acquired based on the
relative  fair  values  of the  assets




                                       14
<PAGE>

at   the   date   of   acquisition.   Zhone   is  a   communications   equipment
providerintegrating expertise in voice, video and data communications. Under the
agreement,  Solectron becomes Zhone's virtual  supply-chain partner and signed a
five-year  commitment  with  Zhone to  provide  product  life  cycle  management
services, including NPI through repair and end-of-life services.

NOTE 8 - Subsequent Events

On June 5, 2000,  Solectron  acquired  the  manufacturing  assets of four Nortel
manufacturing  facilities  including  Calgary,  Canada;  Research Triangle Park,
North Carolina;  Monterrey,  Mexico; and Cwmcarn,  Wales. Solectron will provide
prototyping,  PCB assembly,  small sub-assembly and repair services to Nortel in
these  locations.  On June 30,  2000,  the  Company  completed  the  purchase of
manufacturing assets at two Nortel Networks  manufacturing and repair facilities
located in Pont de Buis and Douarnenez,  France, and Monkstown, Northern Ireland
for which Solectron will offer prototyping, PCB assembly, small sub-assembly and
repair services to Nortel Networks.  Solectron expects to complete an additional
asset  acquisition  at Nortel  Networks  manufacturing  and repair  operation in
Turkey by the end of August  2000  which is subject  to  various  conditions  of
closing. Under the terms of the agreements and the proposed agreements, assuming
certain  conditions are met,  Solectron will pay  approximately  $900 million to
assume the assets  contemplated in these agreements.  The companies also entered
into a multi-year  supply  agreement,  valued in excess of $10 billion in sales,
with the option to renew.

NOTE 9 - Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133, "Accounting for Derivative  Instruments and Hedging Activities." As amended
by SFAS No. 137 and 138,  SFAS No. 133  establishes  methods of  accounting  for
derivative  financial  instruments  and  hedging  activities  related  to  those
instruments as well as other hedging activities.  Solectron anticipates that the
adoption  of SFAS  No.  133 will not have a  material  impact  on its  financial
position,  results of operations or cash flows.  The Company will adopt SFAS No.
133 in its first fiscal quarter of 2001.

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
Statements,"  which provides  guidance related to revenue  recognition  based on
interpretations  and  practices  followed by the SEC and was effective the first
fiscal  quarter of fiscal years  beginning  after December 15, 1999 and requires
companies to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board opinion 20, "Accounting Changes." Subsequently, SAB No.101A and
101B  were  issued  to  delay  the  implementation  of SAB No.  101.  It will be
effective  for  Solectron in the Company's  fourth  quarter of fiscal 2001.  The
Company is currently evaluating the impact, if any, SAB No. 101 will have on its
financial position or results of operations.



                                       15
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Certain  statements  contained  in the  following  Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations,  including,  without
limitation,   statements   containing  the  words   "believes,"   "anticipates,"
"estimates," "expects," and words of similar import, constitute  forward-looking
statements  which involve risks and  uncertainties.  Solectron's  actual results
could  differ  materially  from  those  anticipated  in  these   forward-looking
statements  as a result of certain  factors,  including  those factors set forth
under "Trends and Uncertainties" below.

General

Solectron  provides  electronics  manufacturing  services to original  equipment
manufacturers  (OEMs) who design and sell  networking  equipment,  workstations,
personal  and  notebook  computers,  computer  peripherals,   telecommunications
equipment or other electronic equipment.  These OEMs include Cisco Systems, Inc.
(Cisco),  Compaq Computer Corporation (Compaq),  Ericsson Telecom AB (Ericsson),
Hewlett-Packard  Company, Inc. (HP), International Business Machines Corporation
(IBM) and Nortel  Networks  Limited  (Nortel).  These  companies  contract  with
Solectron to build their products or to obtain other related services.

Solectron  furnishes  integrated  supply-chain  solutions  that span the  entire
product life cycle - from technology solutions, to manufacturing and operations,
to global services. These services include the following range of services:

-   Advanced building block design solutions;
-   Product design and manufacturing;
-   New product introduction management;
-   Materials purchasing and management;
-   Prototyping;
-   Printed circuit board assembly (the process of placing components on an
    electrical printed circuit board that controls the processing functions of
    a personal computer or other electronic equipment);
-   Systems  assembly (for  example,  building  complete  systems such as mobile
    telephones and testing them to ensure functionality);
-   Distribution;
-   Product repair; and
-   Warranty services.

Solectron's  performance  of these  services  allows  its  customers  to  remain
competitive  by focusing on their core  competencies  of sales,  marketing,  and
research and  development.  We have  manufacturing  facilities  in the Americas,
Europe  and  Asia.  This  geographic  presence  gives  our  customers  access to
manufacturing  services  in the  locations  where they need to be close to their
expanding markets for faster product delivery.

During 1997, Solectron established a strategic, global manufacturing partnership
with Ericsson Telecom AB's Business Area Infocom  Systems.  We established a New
Product  Introduction  (NPI) center in Sweden and  transferred  production  from
certain  Ericsson Telecom AB (Ericsson)  plants  worldwide to our  manufacturing
sites around the world. In October 1997, we acquired  certain assets,  primarily
equipment and  inventory,  of Ericsson's  printed  circuit board (PCB)  assembly
operation located in Sao Paulo, Brazil.

In April 1998,  Solectron acquired NCR Corporation's (NCR) manufacturing  assets
in Columbia,  South Carolina;  Duluth,  Georgia; and Dublin,  Ireland. Under the
terms of the agreement,  NCR outsourced the  manufacturing  of certain  computer
components to Solectron for at least five years.


                                       16
<PAGE>

In June 1998, Solectron acquired  International  Business Machines Corporation's
(IBM)  Electronic  Card  Assembly  and  Test  (ECAT)   manufacturing  assets  in
Charlotte,  North Carolina, and non-exclusive rights to certain IBM intellectual
property.  Under  the  terms of the  agreement,  we will  provide  PCB  assembly
services to IBM in North  America for three  years.  In  addition,  IBM has made
available to Solectron  intellectual property rights covering a wide spectrum of
technologies and  capabilities.  IBM also provided to Solectron failure analysis
and characterization tools for process development and manufacturing,  including
fault detection and isolation.

In October 1998, Solectron acquired the wireless telephone  manufacturing assets
of  Mitsubishi  Consumer  Electronics  America,  Inc.'s (MCEA)  Cellular  Mobile
Telephone  (CMT)  division  in  Braselton,  Georgia.  MCEA was a  subsidiary  of
Mitsubishi Electric Corporation (Mitsubishi).  Under the terms of the agreement,
we will provide  MCEA-CMT with a full range of  manufacturing  services for five
years,  including  NPI  management,  PCB assembly and full systems  assembly for
MCEA's branded and  private-label  cellular  products sold in North America.  In
October  1999,  we combined the  operations of Braselton and Duluth into a newly
constructed manufacturing facility in Suwanee, Georgia.

In February 1999,  Solectron  acquired IBM's  Electronic  Card Assembly and Test
(ECAT)  manufacturing  assets in  Austin,  Texas,  and  non-exclusive  rights to
certain IBM  intellectual  property.  Under the terms of the agreement,  we will
provide PCB assembly for  motherboards  used in IBM's mobile  computer  products
manufactured  worldwide for three years.  This includes  physical design,  early
prototyping,  new product  launch,  PCB  assembly and test,  volume  production,
end-of-life  support,  field return services and life cycle management.  We will
also  provide  IBM's  worldwide  design  teams a full  range of  integrated  NPI
services  which involve  pre-manufacturing  support,  such as design and layout,
component and concurrent engineering, test development,  prototype,  procurement
and assembly.

In July 1999,  Solectron issued common stock to acquire Sequel,  Inc.  (Sequel).
Sequel was a privately held  corporation  specializing in notebook  computer and
liquid   crystal   display   repair   service  and  support.   We  have  assumed
responsibility  for  Sequel's  business  operations  in  San  Jose,  California;
Memphis,  Tennessee;  and Reading, United Kingdom. We have also assumed Sequel's
ownership in  joint-venture  operations in Japan and Taiwan.  The acquisition is
expected  to enable us to expand our global  support  services  capabilities  by
adding  quick-turn  service  operations,  customer service centers and help-desk
support for the end-users of Solectron-built products.

In  August  1999,   Solectron  acquired  the  manufacturing  assets  of  Trimble
Navigation  Limited  (Trimble)  in  Sunnyvale,   California,  and  assumed  full
manufacturing  responsibility of Trimble's Global  Positioning  System (GPS) and
related radio frequency (RF) technology  products for three years.  Trimble is a
leader in RF  products  enabled  by GPS  technology.  We also  acquired  certain
intellectual  property  rights related to RF technology.  Under the terms of the
agreement,  we will provide  Trimble a full range of integrated  services across
the entire product life cycle including design  consultation,  prototyping,  NPI
management, and volume PCB and systems assembly.

In September 1999,  Solectron announced the acquisition of manufacturing  assets
in several phases of IBM's Netfinity server operations in Greenock, Scotland. In
addition,  we acquired certain IBM intellectual  property rights included in the
design  and  manufacture  of PC  server  motherboards.  Under  the  terms of the
agreement,  we  assumed  NPI  and  manufacturing   responsibility  for  the  PCB
assemblies used in IBM's Netfinity server lines which were formerly manufactured
at IBM's Greenock  operations.  We will provide IBM  full-service NPI management
which includes a full range of premanufacturing services, specifically component
and  concurrent  engineering,  test  development,   prototype,  procurement  and
assembly. We will also provide IBM for three years fully integrated PCB assembly
services  including early


                                       17
<PAGE>

prototyping,   new  product  launch,   assembly  and  test,  volume  production,
end-of-life support and life cycle management.  The volume PCB assembly services
will  be  transferred  from  IBM's  Greenock  facility  to our  existing  global
manufacturing  operations.  In addition, we have established a new, full-service
NPI center in Port Glasgow, Scotland, to support the IBM design teams.

In October 1999, Solectron signed a definitive agreement with Acer, Inc. (Acer),
a core unit of the Acer Group, the world's  third-largest  PC  manufacturer,  to
form a strategic  alliance to provide global design,  manufacturing  and service
solutions for OEM-branded  personal  computers,  servers and workstations.  As a
result of the alliance, it is expected that customers will be able to access the
extensive technology,  motherboard and system-level design services,  and global
supply-base,   manufacturing,   distribution,   logistics  and  global  services
operations of both  companies to further  streamline  their global supply chain.
Solectron  and  Acer  plan  to  leverage  their  combined  resources,  including
facilities,  systems  and  personnel,  to provide  the  industry's  first  fully
integrated,  global and optimized end-to-end design,  manufacturing and services
solution.  The  companies  will manage this  alliance  under a joint  management
matrix.

In November 1999, Solectron acquired NULOGIX Technical Services, Inc. (NULOGIX),
a wholly owned subsidiary of IBM Canada, in its entirety.  NULOGIX is located in
Vaughan,  Canada, and specializes in repair,  remanufacturing and refurbishment.
With this  acquisition,  we expect to be able to provide the  Canadian  market a
full range of value-added  global  service  solutions.  These  services  include
product repair,  upgrades,  remanufacturing  and maintenance through factory and
fast-hub  service  centers located around the world;  help-desk  support through
customer call centers for  end-users;  logistics and parts  management;  returns
processing;   warehousing;   engineering  change  management;   and  end-of-life
manufacturing.

In  November  1999,   Solectron  completed  its  acquisition  of  SMART  Modular
Technologies,  Inc.  (SMART)  which was accounted for as a pooling of interests.
SMART is a  designer  and  manufacturer  of memory  modules  and  memory  cards,
embedded  computers,  and I/O products.  Through the acquisition,  Solectron has
gained  a  manufacturing   presence  in  Aguada,  Puerto  Rico,  and  additional
manufacturing  capacity  through  SMART's  facilities  in  Fremont,  California;
Penang, Malaysia; and East Kilbride, Scotland. In addition, Solectron has gained
design centers in Fremont, California;  Bangalore, India; Boston, Massachusetts;
and Ayr,  Scotland.  The  acquisition  enables  Solectron  to expand its service
capabilities  and  infrastructure  by  integrating  SMART  into  the  technology
business unit with Force  Computers,  Inc.  (Force).  In addition,  Solectron is
benefiting   from  the  business   purchase   transaction  of  Compaq   Computer
Corporation's embedded and real-time product business in Fremont, California and
Scotland by SMART in August 1999.

In March 2000,  Solectron  completed  the  acquisition  of the  complex  systems
manufacturing assets of Ericsson's  telecommunications  infrastructure equipment
operations  in  Longuenesse,  France,  and  Ostersund,  Sweden.  As  part of the
agreement,  Solectron will provide a complete  range of integrated  supply-chain
solutions to Ericsson. This includes supply-base management,  early prototyping,
NPI  management,  complex PCB assembly,  configure-to-order  and  build-to-order
complex systems assembly, and global services.

In March 2000,  Solectron  completed the acquisition of Alcatel's  manufacturing
business  in  Aguadilla,  Puerto  Rico.  Alcatel is a world  leader in  building
next-generation  networks and end-to-end  data voice  solutions.  As part of the
acquisition,   Solectron  will  assume  full  manufacturing  responsibility  for
Alcatel's  PCB  products   focused  on  the  networking  and   telecommunication
industries.  Additionally,  Solectron will provide a full range of manufacturing
services  to  Alcatel  for  the  next  three  years  including  prototyping  and
high-volume PCB assembly.

In  April  2000,  Solectron  announced  the  completion  of  acquisition  of the
manufacturing assets of Premisys Communications, Inc., a wholly owned subsidiary
of


                                       18
<PAGE>

Zhone  Technologies,  Inc.  (Zhone).  Zhone  is a  communications  equipment
provider integrating  expertise in voice, video and data  communications.  Under
the agreement, Solectron becomes Zhone's virtual supply-chain partner and signed
a  five-year  commitment  with Zhone to provide  product  life cycle  management
services, including NPI through repair and end-of-life services.

In April 2000, Solectron Completed the acquisition of AMERICOM Wireless Services
(AMERICOM) in its entirety,  a privately held corporation  which  specializes in
wireless  handset repair and  refurbishment  and outsourced  technical  customer
support  services.  As part of the transaction,  Solectron will gain specialized
repair and testing equipment and assume  responsibility for AMERICOM's  business
operations  in  Los  Angeles,  California;   Louisville,   Kentucky;  Baltimore,
Maryland; and Dallas, Texas; as well as AMERICOM's field technicians and support
operations throughout the United States.

In May 2000,  Solectron announced the signing of a definitive  agreement for the
acquisition  of  Bluegum  Group,   Australia's  leading   electronics   contract
manufacturer,  in its  entirety.  It is expected that  Solectron  will gain NPI,
manufacturing, systems assembly, and services capability in Liverpool, New South
Wales; Wangaratta, and Melbourne, Victoria; and program offices in Sydney, North
Melbourne and Singapore.  The acquisition is expected to be completed by the end
of July 2000, subject to various conditions of closing.

On June 5, 2000,  Solectron  acquired  the  manufacturing  assets of four Nortel
manufacturing  facilities  including  Calgary,  Canada;  Research Triangle Park,
North Carolina;  Monterrey,  Mexico; and Cwmcarn,  Wales. Solectron will provide
prototyping,  PCB assembly,  small sub-assembly and repair services to Nortel in
these  locations.  On June 30,  2000,  the  Company  completed  the  purchase of
manufacturing assets at two Nortel Networks  manufacturing and repair facilities
located in Pont de Buis and Douarnenez,  France, and Monkstown, Northern Ireland
for which Solectron will offer prototyping, PCB assembly, small sub-assembly and
repair services to Nortel Networks.  Solectron expects to complete an additional
asset  acquisition  at Nortel  Networks  manufacturing  and repair  operation in
Turkey by the end of August  2000,  subject to various  conditions  of  closing.
Following the  transaction  in Northern  Ireland,  Solectron  purchased a 50,000
square-foot  (4,645  square-meter)  facility in  Carrickfergus,  just outside of
Belfast.  During  renovations,  Solectron  will  operate  from Nortel  Networks'
facility in Monkstown and will transfer work to the new site,  which is expected
to be fully  operational  in September  2000.  The new site will be a NPI center
that will serve Nortel Networks telecommunications needs and manufacture optical
networking  products.  Under  the  terms  of the  agreements  and  the  proposed
agreements,   assuming   certain   conditions   are  met,   Solectron  will  pay
approximately   $900  million  to  assume  the  assets   contemplated  in  these
agreements.  The  companies  also entered into a  multi-year  supply  agreement,
valued in excess of $10 billion in sales, with the option to renew.

On June 30, 2000,  Solectron  completed  the  acquisition  of IBM  Corporation's
manufacturing operations in Hortolandia, Sao Paulo state, Brazil. Solectron will
assume  responsibility  for the  systems  configuration  and  assembly  of IBM's
Personal Systems Group,  Retail Systems Solutions Group, and Enterprise  Systems
Group products sold into the Brazilian,  Mercosul and Andean markets. As part of
the multi-year agreement,  Solectron will provide IBM with an extensive range of
integrated  services  including NPI support,  PCB and systems assembly,  product
configuration services, repair and end-of-life product support.

Results of Operations

The  electronics  industry  is subject to rapid  technological  change,  product
obsolescence  and  price  competition.  These and other  factors  affecting  the
electronics industry, or any of Solectron's major customers in particular, could
materially   harm   Solectron's   results  of   operations.   See   "Trends  and
Uncertainties"


                                       19
<PAGE>

for factors  relating  to  possible  fluctuation  of  operating  results and our
competitors.

The following table sets forth, for the periods indicated,  certain items in the
Consolidated  Statements of Income as a percentage  of net sales.  The financial
information  and the  discussion  below should be read in  conjunction  with the
Condensed Consolidated Financial Statements and Notes thereto.

                            Three Months Ended      Nine Months Ended
                            ------------------     ------------------
                             May 31,   May 31,      May 31,   May 31,
                              2000      1999         2000      1999
                            --------  --------     --------  --------
Net sales                      100.0%    100.0%       100.0%    100.0%
Cost of sales                   91.6      90.1         90.8      90.3
                            --------  --------     --------  --------
Gross profit                     8.4       9.9          9.2       9.7
Operating expenses:
  Selling, general and
    administrative               3.0       3.8          3.3       3.8
  Research and
    Development                  0.4       0.5          0.5       0.5
  Acquisition and
    restructuring costs          0.2        -           0.4        -
                            --------  --------     --------  --------
      Operating income           4.8       5.6          5.0       5.4

Interest income                  0.6       0.5          0.7       0.3
Interest expense                (0.4)     (0.5)        (0.4)     (0.4)
                            --------  --------     --------  --------
Income before income taxes
  and cumulative effect
  of change in accounting
  principle                      5.0       5.6          5.3       5.3

Income tax expense               1.6       1.8          1.7       1.7
                            --------  --------     --------  --------
Income before cumulative
  effect of change in
  accounting principle           3.4       3.8          3.6       3.6

Cumulative effect of change
  in accounting principal
  for start-up costs              -         -            -         -
                            --------  --------     --------  --------
     Net income                  3.4%      3.8%         3.6%      3.6%
                            ========  ========     ========  ========

Net Sales

Net sales for the three- and nine-month periods of fiscal 2000 were $3.6 billion
and $9.2 billion,  respectively,  and increased  51.8% and 37.1%,  respectively,
over the same  periods  in  fiscal  1999.  The  growth  in sales  was  primarily
attributable  to major new program  ramp-ups,  strong  demand from our customers
worldwide and acquisitions made during fiscal 1999 and through the third quarter
of fiscal  2000.  However,  the sales  increase  was  constrained  by  component
shortages.

Solectron has three  business  units  including  manufacturing  and  operations,
technology   solutions,   and  global   services.   Our  core  business   group,
manufacturing  and  operations,  provided 89% of net sales for both  three-month
periods  in  fiscal  2000 and 1999,  and 88% of net  sales  for both  nine-month
periods in fiscal  2000 and


                                       20
<PAGE>

1999. Our newly established  technology  solutions group consisting of SMART and
Force  contributed  10% and 11%,  respectively,  of net sales for the three- and
nine-month periods in fiscal 2000 compared to 11% and 12%, respectively, for the
same  periods  in  fiscal  1999.  The  new  global  services  unit   contributed
approximately  1% of net sales for the three- and  nine-month  periods in fiscal
2000.

Manufacturing and Operations

Net sales from our worldwide manufacturing operations group grew to $3.2 billion
and $8.2 billion,  respectively, for the three- and nine-month periods in fiscal
2000 compared to the same periods in fiscal 1999. These increases were 51.5% and
37.4% over the comparable  periods of fiscal 1999. The increase in net sales was
principally  due to strong demand  growth from our  customers  and  acquisitions
including  manufacturing  assets of  Mitsubishi  in  October  1998;  IBM ECAT in
Austin,  Texas in February  1999;  Trimble,  California  in August  1999;  IBM's
Netfinity server operations in Greenock,  Scotland in September 1999; Ericsson's
telecommunications  infrastructure  equipment operations in Longuenesse,  France
and  Ostersund,  Sweden in March 2000;  and Zhone,  California in April 2000; as
well as the acquisition of Alcatel's manufacturing business in Aguadilla, Puerto
Rico in March 2000.

Within the Americas, the Milpitas site in California, Guadalajara site in Mexico
and Charlotte site in North Carolina were the largest contributors primarily due
to new programs from our customers.  However, sales in the Americas were impeded
by the  shortage of  components.  Sales growth in the  Milpitas  site  continued
despite the planned  transfer of personal  computer  PCB  programs  and computer
peripherals  systems  assembly  programs  to Mexico and  networking  business to
Penang.

In Europe, the net sales increase in the three- and nine-month periods of fiscal
2000 over the same periods of fiscal 1999 primarily resulted from greater demand
from our  mobile  phone  and  telecommunications  customers.  Additionally,  the
acquisitions of  manufacturing  assets of IBM's Netfinity  server  operations in
Greenock,   Scotland  in  September  1999  and   Ericsson's   telecommunications
infrastructure equipment operations in Longuenesse, France and Ostersund, Sweden
in March 2000  contributed  incremental  net sales for the three- and nine-month
periods in fiscal 2000.

In Asia,  the net sales  growth  was  primarily  due to demand  growth in mobile
phones,  networking and personal computer projects for the three- and nine-month
periods  in  fiscal  2000   compared  to  the  same   periods  of  fiscal  1999.
Additionally,  the China site  started  expanding in  production  to meet demand
growth.  Our Penang site in Malaysia  continues  to benefit from the transfer of
networking business from Milpitas, California.

Technology Solutions

Net sales from our new  technology  solutions  group,  which  includes SMART and
Force, grew 40.7% to $368.3 million and 22.6% to $1.0 billion for the three- and
nine-month  periods,  respectively,  over the same periods of fiscal  1999.  The
increase in net sales primarily resulted from an overall increase in the average
memory  densities  incorporated  into the standard memory products and growth in
sales of communication card products and embedded computer modules. In addition,
the embedded and real-time  product line acquired during August 1999 from Compaq
further  contributed  to the  increase.  The increase in net sales was partially
offset by declines in average selling prices.

Global Services

This newly  established  group  reported  net sales of $55.9  million and $110.3
million, respectively, for the three- and nine-month periods of fiscal 2000. Net
sales benefited from the business  acquisitions of Sequel in July 1999,  NULOGIX
in November 1999 and AMERICOM in April 2000.


                                       21
<PAGE>



Concentration of Sales - The operations in Milpitas,  California,  contributed a
substantial  portion of Solectron's net sales and operating income during fiscal
1999,  1998 and 1997.  In recent years,  management  has  undertaken  deliberate
actions to achieve  improved  global  load  balancing  by  transferring  certain
projects  from  the  Milpitas  site  to  other  sites  worldwide.  However,  the
performance  of  the  Milpitas  operation  is  expected  to  continue  to  be  a
significant  factor in the  overall  financial  performance  of  Solectron.  Any
adverse material change to the customer base,  product mix,  efficiency or other
attributes of this site could materially harm Solectron's  consolidated  results
of operations.

International  Sales - In the first nine  months of fiscal  2000,  international
locations  contributed  42.3% of consolidated net sales compared to 36.4% in the
same period of fiscal 1999. As a result of Solectron's  international  sales and
facilities,  Solectron's  operations  are subject to the risks of doing business
abroad.  While these dynamics have not materially harmed Solectron's  results of
operations,  we  cannot  assure  that  there  will not be such an  impact in the
future.   See  "Trends  and   Uncertainties"   for  factors  pertaining  to  our
international  sales and  fluctuations in the exchange rates of foreign currency
for  further  discussion  of  potential  adverse  effects in  operating  results
associated with the risks of doing business abroad.

Net Sales to Major  Customers - Several of our  customers  accounted  for 10% or
more of our net sales in the three- and  nine-month  periods of fiscal  2000 and
1999.  The following  table details  these  customers and the  percentage of net
sales attributed to them.

                                    Three Months Ended       Nine Months Ended
                                    ------------------      ------------------
                                     May 31,  May 31,        May 31,   May 31,
                                      2000      1999          2000      1999
                                    --------  --------      --------  --------

Ericsson Telecom AB (Ericsson)         15%        *            12%         *
Cisco Systems, Inc. (Cisco)            13%       12%           12%        11%
Compaq Computer Corporation (Compaq)    *        11%            *         13%
Hewlett-Packard Company (HP)            *         *             *         10%

----------------
* Less than 10%.

No other  customer  accounted  for more than 10% of net sales  during any of the
periods presented.

Solectron's  top  ten  customers   accounted  for  approximately  72%  and  75%,
respectively,  of consolidated net sales in the first nine months of fiscal 2000
and 1999. We are dependent upon continued revenues from Ericsson, Cisco, Compaq,
and HP, as well as our other top ten customers.  We cannot  guarantee that these
or any  other  customers  will not  increase  or  decrease  as a  percentage  of
consolidated  net sales either  individually  or as a group.  Consequently,  any
material  decrease in sales to these or other  customers  could  materially harm
Solectron's results of operations.

Solectron  believes  that its ability to continue  achieving  growth will depend
upon growth in sales to existing  customers for their current and future product
generations,  successful  marketing  to new  customers,  and  future  geographic
expansion.  Customer  contracts can be canceled and volume levels can be changed
or delayed.  The timely replacement of delayed,  canceled or reduced orders with
new  business  cannot be  assured.  In  addition,  we cannot  assure that any of
Solectron's  current  customers will continue to utilize  Solectron's  services.
Because of these factors,  we cannot assure that Solectron's  historical revenue
growth rate will continue.  See "Trends and  Uncertainties"  for a discussion of
certain factors affecting the management of

                                       22
<PAGE>

growth, geographic expansion, and potential fluctuations in sales and results of
operations.

Gross Profit

The gross margin percentage  decreased to 8.4% and 9.2%,  respectively,  for the
three-  and  nine-month  periods  of fiscal  2000  compared  with 9.9% and 9.7%,
respectively,  for the same periods of fiscal 1999.  The reduction was primarily
attributable to manufacturing  inefficiencies  due to non-linearity of materials
receipts,  a  high  level  of  business  development  activities  and  new  site
integration support expenditures,  as well as capacity ramp-up for future demand
growth.

For  our  worldwide  manufacturing  operations,  we  anticipate  that  a  larger
percentage  of our  sales  may be  derived  from  systems-build  projects  which
generally  yield lower profit  margins  than PCB  assembly.  For our  technology
solutions  business,  we expect  that a majority  of our sales  from  technology
solutions may continue to be derived from turnkey projects which typically yield
lower  profit  margins  than the  consignment  projects.  In  addition,  factors
affecting technology  solutions' profit margins include the mix between sales of
specialty memory modules,  standard memory modules,  communication card products
and embedded  computer  modules,  as well as changes in average memory densities
used in memory  products.  Currently,  a  significant  majority of net sales are
derived from the sales of standard  memory  modules which  typically  have lower
profit margins than its specialty memory modules.

In the  foreseeable  future,  Solectron's  overall  gross  margin is expected to
depend  primarily  on  product  mix,  production  efficiencies,  utilization  of
manufacturing  capacity,  start-up  and  integration  costs of new and  acquired
businesses, percentage of sales derived from systems-build and turnkey projects,
pricing within the electronics industry, component costs and delivery linearity,
and the cost  structure at  individual  sites.  Over time,  gross margins at the
individual  sites  and for  Solectron  as a whole  may  continue  to  fluctuate.
Increases in the systems-build  business or turnkey  projects,  additional costs
associated with new projects,  and price erosion within the electronics industry
could harm our gross margin.

In  addition,  we have  experienced  component  shortages.  While the  component
availability  fluctuates from time to time and is still subject to lead time and
other constraints,  this could possibly limit our profit margin growth and might
have a negative  impact on our sales  projections  for the  foreseeable  future.
Because of these factors and others  discussed under "Trends and  Uncertainties"
below,  we cannot  assure that  Solectron's  gross margin will not  fluctuate or
decrease in future periods.

Selling, General and Administrative Expenses

In  absolute  dollars,  selling,  general  and  administrative  (SG&A)  expenses
increased 18.5% and 20.0%,  respectively,  for the three- and nine-month periods
of fiscal 2000 over the same  periods of fiscal  1999.  As a  percentage  of net
sales,  SG&A  expenses  were 3.0% and 3.3%,  respectively,  for the  three-  and
nine-month  periods in the fiscal 2000, and 3.8% for the  comparable  periods in
fiscal  1999.  The  increase  in absolute  dollars  for the fiscal 2000  periods
primarily resulted from increased human resources and information  systems costs
to support sales growth and increased costs of acquisition  related  activities.
The decline as a percentage  of net sales for the fiscal 2000  periods  reflects
our on-going effort to manage  operating  expenses  relative to sales growth and
gross margin  levels.  We  anticipate  SG&A  expenses  will increase in terms of
absolute  dollars in the future,  and may possibly  increase as a percentage  of
revenue,  as we  continue  to invest in our  infrastructure  such as  marketing,
sales,  supply-base  management as well as continuing  investment in information
systems to support the increased size and complexity of our business.


                                       23
<PAGE>

Research and Development Expenses

With the exception of our technology solutions operations,  Solectron's research
and development  (R&D) activities have been focused primarily on the development
of prototype and engineering  design  capabilities,  fine pitch  interconnecting
technologies (which include ball-grid array,  tape-automated bonding,  multichip
modules,   chip-on-flex,   chip-on-board   and  flip   chip),   high-reliability
environmental  stress test technology and the  implementation of environmentally
friendly assembly processes such as VOC-free and no-clean. Technology solutions'
R&D efforts are  concentrated  on new product  development  and  improvement  of
product  designs  through   improvements  in   functionality   and  the  use  of
microprocessors in embedded applications.

As a percentage of net sales, R&D expenses were 0.4% and 0.5%, respectively, for
the  three- and nine month  periods in fiscal  2000 and 0.5% for the  comparable
periods of fiscal 1999. In absolute dollars, R&D expenses were $15.7 million and
$44.7  million,  respectively,  in the third  quarter  and first nine  months of
fiscal 2000  compared to $11.8  million and $32.5 million in the same periods of
fiscal 1999.  The increase in R&D expenses in the fiscal 2000 periods  compared
to fiscal 1999 periods was  primarily  due to increased R&D effort at technology
solutions and new R&D projects  initiated at various  sites.  We expect that R&D
expenses will  increase in absolute  dollars in the future and may increase as a
percentage  of net  sales as SMART  and  Force  continue  to invest in their R&D
efforts and additional R&D projects are undertaken at certain sites.

Acquisition and Restructuring Costs

For the  three-month  period of fiscal 2000,  acquisition  costs of $5.2 million
were  recorded in  connection  with the  acquisition  of  AMERICOM.  These costs
included  direct  transaction  fees,  as well as legal  fees,  accounting  fees,
registration  fees and other  incidentals.  Restructuring  costs of $1.8 million
related  to   re-alignment   of  the  operations  in  Atlanta,   Georgia.   Such
restructuring  costs consisted of severance costs,  long-term assets written off
and other incidental costs.

For the  nine-month  period of fiscal 2000,  acquisition  costs of $25.5 million
included  $20.3  million  recorded  in the second  quarter of fiscal  1999 which
related to the merger of SMART consisting of investment banker fees, legal fees,
accounting fees,  registration fees and other incidentals.  Total  restructuring
costs of $6.5 million comprised of $4.7 million which was recorded in the second
quarter of fiscal 2000 associated with the  consolidation of certain  facilities
as a result of the  mergers  with SMART and  Sequel,  Inc.  These  restructuring
transaction  costs of $4.7 million  included  lease exit costs of  approximately
$2.4 million, fixed asset write-offs and other incidental costs of approximately
$1.4 million, as well as severance costs of approximately $0.9 million.

As of May 31, 2000,  liabilities related to restructuring  activities,  totaling
approximately  $3.6  million,  are  expected  to be  paid  out by the end of the
calendar year 2000.

Net Interest Income (Expense)

Net  interest  income was $8.5  million  for the third  quarter  of fiscal  2000
compared to net  interest  expense of $0.4  million in the same period of fiscal
1999.  For the first nine months of fiscal 2000,  net interest  income was $29.7
million  compared to $2.6  million of net  interest  expense for the  comparable
period of fiscal  1999.  The net  interest  income in the  fiscal  2000  periods
primarily   resulted  from  interest   income  earned  on  undeployed  cash  and
investments from the proceeds of the 2.75% zero-coupon  convertible senior notes
which were issued in May 2000,  offset in part by interest expense on the 4% and
2.75 yield zero-coupon  convertible senior notes as well as on the 7 3/8% senior
notes.  In  the  first   nine-month   period  of  fiscal  2000,  we  capitalized
approximately  $0.9 million of interest expense related to the costs


                                       24
<PAGE>

of computer  software  developed  for internal use. We expect to utilize more of
the  undeployed  cash  during  fiscal 2000 in order to fund  anticipated  future
growth. See "Trends and Uncertainties" for factors relating to management growth
and potential fluctuations in operating results.

Income Taxes

For the  nine-month  period of fiscal  2000,  income  taxes  increased to $158.3
million  from  $115.0  million in the  fiscal  1999  period.  The  increase  was
primarily due to increased income before income taxes. In general, the effective
income  tax rate is  largely a  function  of the  balance  between  income  from
domestic and international  operations.  Solectron's  international  operations,
taken as a whole,  have  been  taxed at a lower  rate than  those in the  United
States,  primarily  due to the tax  holiday  granted  to  Solectron's  sites  in
Malaysia.  The  Malaysian  tax holiday is  effective  through  January 31, 2002,
subject to some conditions, including certain levels of research and development
expenditures.  Solectron  has also been  granted  various tax holidays in China,
which are effective for various terms and are subject to some conditions.

Cumulative Effect of Change in Accounting Principle

Statement  of  Position  (SOP)  98-5,   "Reporting  on  the  Costs  of  Start-up
Activities."  This SOP  requires  companies  to expense  all costs  incurred  in
connection with start-up activities. The Company recorded a cumulative effect of
change in accounting  principle of $3.5 million, net of $1.6 million tax benefit
in the first quarter of fiscal 2000.

Liquidity and Capital Resources

Net working capital was $5.7 billion at May 31, 2000 compared to $3.2 billion at
the end of fiscal 1999.  During the first nine months of fiscal 2000, cash, cash
equivalents  and  short-term  investments  increased  to $3.4  billion from $1.9
billion that reflects the undeployed cash and  investments  from the proceeds of
2.75% yield zero-coupon convertible senior debt issued in May 2000.

Additionally,   we  used  $297.7   million  for   acquisitions   of   additional
manufacturing  assets  from  Trimble  in  California,   acquisition  funding  of
manufacturing assets at IBM's Netfinity server operations in Greenock, Scotland;
Erisson in France and Sweden;  and Zhone,  California;  as well as the  business
acquisitions  of NULOGIX in Canada and Compaq's  embedded and real-time  product
lines in Fremont,  California  and Scotland,  and Alcatel Puerto Rico during the
first nine months of fiscal 2000.

As we continue to grow, it is expected that we will require  greater  amounts of
working capital to support our operations.  We believe that our current level of
working capital,  together with cash generated from operations and our available
credit facilities,  will provide adequate working capital for our operations for
the  foreseeable  future.  However,  we may  need to raise  additional  funds to
finance our rapid expansion,  including  establishing new locations or financing
additional  acquisitions.  We cannot assure that such funds, if needed,  will be
available on terms acceptable to us or at all.

Inventory   levels   fluctuate   directly   with  the   volume  of   Solectron's
manufacturing. Changes or significant fluctuations in product market demands can
cause  fluctuations in inventory  levels that may result in changes of inventory
turns and  liquidity.  The  increase  in  inventory  levels at May 31, 2000 from
fiscal year end 1999 was primarily due to ramp-up  programs,  incomplete kits on
hand  awaiting  short   components,   and  purchased   inventory  through  asset
acquistions.

In the first nine months of fiscal 2000,  Solectron  invested  $318.6 million in
capital  expenditures.  A large  portion  of these  expenditures  related to the
purchase of new equipment,  primarily surface mount assembly and test equipment,
to meet

                                       25
<PAGE>

current and expected  production  levels, as well as to replace or upgrade older
equipment  which  was  retired  or sold.  Expenditures  were  also  made for the
construction of buildings for the sites in Mexico,  Romania,  North Carolina and
Massachusetts.  We  expect  total  capital  expenditures  in  fiscal  2000 to be
approximately $450 million.

In  addition  to cash  and  cash  equivalents  of $2.6  billion  and  short-term
investments  of $0.8 billion as of May 31, 2000,  Solectron has available a $100
million unsecured  multicurrency revolving credit facility that expires in April
2002. This credit facility is subject to certain  financial  covenants.  We also
have approximately $101 million in unused foreign credit facilities of which $24
million is committed credit line.

                            TRENDS AND UNCERTAINTIES

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

A majority of our annual net sales comes from a small  number of our  customers.
Our ten largest  customers  accounted for  approximately 72% of net sales in the
first nine  months of fiscal 2000 and  approximately  75%,  68%,  and 63% of net
sales in fiscal 1999, 1998 and 1997,  respectively.  Since we are dependent upon
continued  net  sales  from  our ten  largest  customers,  any  material  delay,
cancellation  or reduction of orders from these or other major  customers  could
cause  our  net  sales  to  decline  significantly.   Some  of  these  customers
individually  account  for more than ten  percent of our  annual  net sales.  We
cannot guarantee that we will be able to retain any of our ten largest customers
or any other  accounts.  In addition,  our customers may  materially  reduce the
level of services  ordered from us at any time.  This could cause a  significant
decline  in our net  sales  and we may not be able to  reduce  the  accompanying
expenses at the same time.  Moreover,  our  business,  financial  condition  and
results of operations will continue to depend in significant part on our ability
to obtain orders from new customers,  as well as on the financial  condition and
success of our customers.  Therefore,  any adverse factors  affecting any of our
customers  or their  customers  could  have a  material  adverse  effect  on our
business, financial condition and results of operations.

OUR LONG-TERM CONTRACTS DO NOT INCLUDE MINIMUM PURCHASE REQUIREMENTS.

Although  we have  long-term  contracts  with a few of our  top  ten  customers,
including  Ericsson and IBM under which these  customers are obligated to obtain
services  from us,  they are not  obligated  to purchase  any minimum  amount of
services.  As a result,  we cannot  guarantee that we will receive any net sales
from these contracts.  In addition,  these customers with whom we have long-term
contracts may materially  reduce the level of services ordered at any time. This
could cause a  significant  decline in our net sales,  and we may not be able to
reduce our accompanying expenses at the same time.

POSSIBLE  FLUCTUATION OF OPERATING  RESULTS FROM QUARTER TO QUARTER COULD AFFECT
THE MARKET PRICE OF OUR COMMON STOCK.

Our  quarterly  earnings may  fluctuate in the future due to a number of factors
including the following:

     - Differences in the  profitability of the types of manufacturing  services
       we provide. For example, high velocity and low complexity PCB and systems
       assembly  services have lower gross margins than low  volume/complex  PCB
       and systems assembly services;

     - Our ability to maximize the hours of use of our equipment and  facilities
       is dependent on the duration of the  production run time for each job and
       customer;

                                       26
<PAGE>

     - The amount of automation that we can use in the manufacturing process for
       cost reduction varies, depending upon the complexity of the product being
       made;

     - Our ability to optimize the ordering of inventory as to timing and amount
       to avoid holding inventory in excess of immediate production needs;

     - Fluctuations in demand for our services or the products being
       manufactured;

     - Timing of expenditures in anticipation of increased sales;

     - Cyclicality in our target markets; and

     - Expenses associated with acquisitions.

Therefore,  our operating  results in the future could be below the expectations
of securities  analysts and investors.  If this occurs,  the market price of our
common stock could be harmed.

WE ARE  DEPENDENT  UPON THE  ELECTRONICS  INDUSTRY  WHICH  CONTINUALLY  PRODUCES
TECHNOLOGICALLY  ADVANCED  PRODUCTS  WITH SHORT LIFE  CYCLES;  OUR  INABILITY TO
CONTINUALLY  MANUFACTURE  SUCH PRODUCTS ON A COST EFFECTIVE BASIS WOULD HARM OUR
BUSINESS.

A majority of our net sales is to companies in the electronics  industry,  which
is  subject  to rapid  technological  change and  product  obsolescence.  If our
customers  are  unable to  create  products  that  keep  pace with the  changing
technological environment, our customers' products could become obsolete and the
demand for our services could decline  significantly.  If we are unable to offer
technologically advanced, cost effective,  quick response manufacturing services
to  customers,  demand  for our  services  will also  decline.  In  addition,  a
substantial  portion  of our net  sales is  derived  from our  ability  to offer
complete  service  solutions  for  our  customers.  For  example,  if we fail to
maintain  high-quality  design and  engineering  services,  our net sales  would
significantly decline.

For our  technology  solutions  business,  we have  experienced,  and may in the
future experience,  delays from time to time in the development and introduction
of new  products.  Moreover,  we cannot  assure  that we will be  successful  in
selecting, developing, manufacturing and marketing new products or enhancements.
We cannot assure that defects or errors will not be found in our products  after
commencement of commercial shipments,  which could result in the delay in market
acceptance  of such  products.  The  inability  to  introduce  new  products  or
enhancements  could  harm our  business,  financial  condition  and  results  of
operations.

WE ARE DEPENDENT ON LIMITED OR SOLE SOURCE OF SUPPLIERS FOR CRITICAL COMPONENTS.
THE INABILITY TO OBTAIN SUFFICIENT COMPONENTS AS REQUIRED WOULD CAUSE SALES
REDUCTIONS.

We are  dependent  on  certain  suppliers,  including  limited  and sole  source
suppliers,  to provide key components used in our products.  We have experienced
and may continue to experience delays in component  deliveries which could cause
delays in product shipments and require the redesign of certain  products.  Also
for our technology solutions business,  we are dependent upon certain limited or
sole  source  suppliers  for  critical  components  used for our memory  module,
communications card and embedded computer products. The electronics industry has
experienced  in the  past,  and  may  experience  in the  future,  shortages  in
semiconductor devices,  including DRAM, SRAM, Flash memory,  tantalum capacitors
and other  commodities  that may be caused by such  conditions as overall market
demand surges or supplier  production capacity  constraints.  Except for certain
commodity parts, we generally have no written

                                       27
<PAGE>

agreements  with our suppliers.  We cannot assure that we will receive  adequate
component supplies on a timely basis in the future. The inability to continue to
obtain sufficient  components as required,  or to develop alternative sources if
required, could cause delays,  disruptions or reductions in product shipments or
require  product  redesigns  which could  damage  relationships  with current or
prospective customers, thereby causing sales reductions.

WE  POTENTIALLY  BEAR THE  RISK OF PRICE  INCREASES  ASSOCIATED  WITH  POTENTIAL
SHORTAGES IN THE AVAILABILITY OF ELECTRONICS COMPONENTS.

At various  times,  there have been  shortages of components in the  electronics
industry.  One of the services that we perform for many  customers is purchasing
electronics  components used in the manufacturing of the customers' products. As
a result of this service,  we potentially  bear the risk of price  increases for
these  components  because we are unable to purchase  components  at the pricing
level  anticipated  to support the margins  assumed in our  agreements  with our
customers.

OUR NET SALES COULD DECLINE IF OUR COMPETITORS PROVIDE COMPARABLE  MANUFACTURING
SERVICES AND IMPROVED PRODUCTS AT A LOWER COST.

We compete  with  different  contract  manufacturers,  depending  on the type of
service  we  provide  or the  geographic  locale of our  operations.  The memory
module,  communications card and embedded computer subsystem industries are also
intensely  competitive.   These  competitors  may  have  greater  manufacturing,
financial,  R&D and/or marketing resources than we have. In addition, we may not
be  able  to  offer  prices  as low as some  of our  competitors  because  those
competitors  may have  lower  cost  structures  as a result of their  geographic
location or the services  they provide.  Our inability to provide  comparable or
better  manufacturing  services at a lower cost than our competitors could cause
our net sales to decline.  We also expect our competitors to continue to improve
the performance of their current  products or services,  to reduce their current
products or service  sales prices and to introduce new products or services that
may offer greater  performance and improved pricing.  Any of these could cause a
decline in sales,  loss of market  acceptance  of our products or  services,  or
profit margin compression.

WE ARE DEPENDENT ON THE MEMORY MODULE PRODUCT MARKET.

A  substantial  majority  of our  technology  solutions  business'  net sales is
derived  from  memory  modular  products.  The  market  for  these  products  is
characterized by frequent  transitions in which products rapidly incorporate new
features and performance  standards. A failure to develop products with required
feature  sets or  performance  standards  or a delay as short as a few months in
bringing a new  product to market  could  reduce our net sales  which may have a
material  adverse  effect on our  business,  financial  condition and results of
operations.  In addition,  the market for semiconductor  memory devices has been
cyclical. The industry has experienced significant economic downturns at various
times,  characterized  by  diminished  product  demand,  accelerated  erosion of
average  selling  prices  and  excess  production.   In  the  past,  there  were
significant  declines in the prices for DRAM, SRAM and Flash.  Such  occurrences
will reduce our profit.

WE ARE DEPENDENT ON THE CONTINUING TREND OF OUTSOURCING BY OEM'S.

A substantial  factor in our revenue growth is  attributable  to the transfer of
manufacturing  and supply base  management  activities  from our OEM  customers.
Future growth is partially  dependent on new outsourcing  opportunities.  To the
extent that these  opportunities  are not available,  our future growth would be
unfavorably impacted.  These outsourcing  opportunities may include the transfer
of assets such as facilities, equipment and inventory.

                                       28
<PAGE>

IF WE ARE UNABLE TO MANAGE OUR RAPID GROWTH AND  ASSIMILATE  NEW OPERATIONS IN A
COST EFFECTIVE MANNER, OUR PROFITABILITY COULD DECLINE.

We have experienced  rapid growth over many years. Our historical growth may not
continue.  In recent years, we have  established  operations in different places
throughout the world. For example,  in fiscal 1998, we opened offices in Taipei,
Taiwan;  Tel Aviv,  Israel;  Norrkoping  and  Stockholm,  Sweden;  and commenced
manufacturing  operations in Guadalajara,  Mexico; Suzhou, China; and Timisoara,
Romania.  Also in fiscal  1998,  we acquired  foreign  facilities  in Sao Paulo,
Brazil and Dublin, Ireland. Furthermore, through acquisitions in fiscal 1998 and
1999, we acquired facilities in Columbia,  South Carolina;  Memphis,  Tennessee;
and San Jose,  California  and enhanced our  capabilities  in  Charlotte,  North
Carolina; Austin, Texas; and Milpitas, California.

During October and November of 1999, we entered into an agreement to acquire the
assets of IBM's Netfinity server operations in Greenock,  Scotland, and acquired
IBM Canada's NULOGIX Technical Services, Inc. subsidiary in Vaughan,  Canada, in
its entirety.  Also in October 1999, we signed a definitive agreement with Acer,
Inc.  (Acer),  a core unit of the Acer  Group,  the  world's  third  largest  PC
manufacturer,   to  form  a  strategic   alliance  to  provide   global  design,
manufacturing and service solutions for OEM branded personal computers,  servers
and  workstations.  On November 30, 1999, we completed the  acquisition of SMART
Modular Technologies, Inc. which was accounted for as a pooling of interests. In
addition,  we are benefiting  from the business  purchase  transaction of Compaq
Computer  Corporation's  embedded  and real time  product  business  in Fremont,
California and Scotland by SMART in August 1999.

On March 1, 2000,  we  acquired  the  complex  systems  manufacturing  assets of
Ericsson's    telecommunications    infrastructure   equipment   operations   in
Longuenesse,  France, and Ostersund, Sweden. On March 31, 2000, we completed the
acquisition of Alcatel's  manufacturing  business in Aguadilla,  Puerto Rico. On
April  6,  2000,  we  announced  the  completion  of  the   acquisition  of  the
manufacturing assets of Premisys Communications, Inc., a wholly owned subsidiary
of Zhone Technologies, Inc.

On April 28, 2000 we acquired Americom Wireless Services, Inc., a privately held
corporation  which  specializes in wireless handset repair and refurbishment and
outsourced technical customer support services, in its entirety. On May 31, 2000
we signed a  definitive  agreement  to  acquire  Blue Gum Group,  an  Electronic
Manufacturing Services provider in Australia and New Zealand.

On June 5, 2000, we acquired the assets at four Nortel manufacturing facilities,
located in Calgary,  Canada;  North  Carolina;  Monterey,  Mexico;  and Cwmcarn,
Wales.  On June 30, 2000,  the Company  completed the purchase of  manufacturing
assets at two Nortel Networks  manufacturing  and repair  facilities  located in
Pont de Buis and Douarnenez,  France, and Monkstown, Northern Ireland. Solectron
expects  to  complete  an  additional  asset   acquisition  at  Nortel  Networks
manufacturing  and repair operation in Turkey by the end of August 2000 which is
subject to various conditions of closing.  Under the terms of the agreements and
the proposed agreements, assuming certain conditions are met, Solectron will pay
approximately   $900  million  to  assume  the  assets   contemplated  in  these
agreements.  The  companies  also entered into a  multi-year  supply  agreement,
valued in excess of $10 billion in sales, with the option to renew.

Also on June 30, 2000, we acquired IBM manufacturing  operations in Hortolandia,
Sao Paulo state, Brazil.

Since we have been  significantly  expanding  our  operations,  our  growth  has
resulted in a significant  increase in  responsibility  for existing  management
which has placed, and may continue to place, a heavy strain on our personnel and
management,  manufacturing  and other  resources.  Our  ability  to  manage  the
expansion to date,  as well as any future  expansion,  will require  progressive
increases in  manufacturing

                                       29
<PAGE>

capacity,  as well as  enhancements or upgrades of accounting and other internal
management  systems  and the  implementation  of a  variety  of  procedures  and
controls.  We cannot  assure that  significant  problems in these areas will not
occur.  Any  failure to enhance  or expand  these  systems  and  implement  such
procedures and controls in an efficient manner and at a pace consistent with our
business   activities  could  harm  our  financial   condition  and  results  of
operations.  Also, in order to achieve  anticipated  revenue and other financial
performance  targets,  we will  continue to be required to manage our assets and
operations   efficiently.   In   addition,   should   we   continue   to  expand
geographically,  we may experience certain inefficiencies from the management of
geographically dispersed facilities.

As we manage and  continue to expand new  operations,  we may incur  substantial
infrastructure and working capital costs. If we do not achieve sufficient growth
to offset increased expenses associated with rapid expansion,  our profitability
will decline.

WE NEED TO MANAGE INTEGRATION OF OUR ACQUISITIONS TO MAINTAIN PROFITABILITY.

In fiscal 1998 and 1999, we completed  acquisitions of manufacturing  assets and
facilities from Ericsson,  NCR, IBM,  Mitsubishi and Trimble  Navigation Limited
and  acquired  all of the capital  stock of Sequel,  Inc.  During the first nine
months of fiscal 2000, we completed  the asset  acquisition  of IBM's  Netfinity
server operations in Greenock, Scotland, acquired IBM Canada's NULOGIX Technical
Services, Inc. subsidiary in Vaughan, Canada, in its entirety, and completed the
acquisition  of SMART Modular  Technologies,  Inc.  which was accounted for as a
pooling  of  interests.  On March 1,  2000,  we  acquired  the  complex  systems
manufacturing assets of Ericsson's  telecommunications  infrastructure equipment
operations in Longuenesse,  France, and Ostersund, Sweden. On March 31, 2000, we
completed  the  acquisition  of Alcatel's  manufacturing  business in Aguadilla,
Puerto Rico. On April 6, 2000, we announced the  completion of  acquisition  for
the  manufacturing  assets of  Premisys  Communications,  Inc.,  a wholly  owned
subsidiary of Zhone  Technologies,  Inc. On April 28, 2000 we acquired  Americom
Wireless  Services,  Inc., a privately  held  corporation  which  specializes in
wireless  handset repair and  refurbishment  and outsourced  technical  customer
support  services,  in its  entirety.  On May 31,  2000 we  signed a  definitive
agreement  to  acquire  Blue Gum Group,  an  Electronic  Manufacturing  Services
provider in Australia  and New Zealand.  On June 5, 2000, we acquired the assets
at four  Nortel  manufacturing  facilities,  located in Calgary,  Canada;  North
Carolina;  Monterey,  Mexico; and Cwmcarn, Wales. On June 30, 2000, we completed
the purchase of manufacturing  assets at two Nortel Networks  manufacturing  and
repair facilities located in Pont de Buis and Douarnenez, France, and Monkstown,
Northern  Ireland.  Also  on  June  30,  2000,  we  acquired  IBM  manufacturing
operations in Hortolandia, Sao Paulo state, Brazil.

We also continue to evaluate acquisition opportunities and may pursue additional
acquisitions over time. These acquisitions involve risks, including:

     - Integration and management of the operations;

     - Retention of key personnel;

     - Integration of purchasing operations and information systems;

     - Management of an increasingly larger and more geographically disparate
       business; and

     - Diversion of management's attention from other ongoing business concerns.

Our  profitability  will suffer if we are unable to  successfully  integrate and
manage  recent  acquisitions  and  pending  acquisitions,  as well as any future
acquisitions that we might pursue, or if we do not achieve sufficient revenue to
offset the increased expenses associated with these acquisitions.

                                       30
<PAGE>

OUR NON-U.S. LOCATIONS ARE A SIGNIFICANT AND GROWING PORTION OF OUR NET SALES;
WE ARE INCREASINGLY EXPOSED TO RISKS ASSOCIATED WITH OPERATING INTERNATIONALLY.

In the first nine  months of fiscal  2000,  approximately  42% of net sales came
from sites outside the United States,  while approximately 36% of net sales came
from sites  outside the United States in fiscal 1999. As a result of our foreign
sales and facilities,  our operations are subject to a variety of risks that are
unique to international operations, including the following:

     - Adverse movement of foreign currencies against the U.S. dollar in which
       our results are reported;

     - Import and export duties, and value added taxes;

     - Import and export regulation  changes that could erode our profit margins
       or restrict exports;

     - Potential restrictions on the transfer of funds;

     - Inflexible employee contracts in the event of business downturns; and

     - The burden and cost of compliance with foreign laws.

In addition,  we have operations in several  locations in emerging or developing
economies that have a potential for higher risk. The risks associated with these
economies include but are not limited to currency volatility, and other economic
or  political  risks.  In the  future,  these  factors  may harm our  results of
operations.  Solectron  locations in emerging or  developing  economies  include
Mexico,  Brazil,  China,  Malaysia and Romania.  As of May 31, 2000, we recorded
$118.1 million in cumulative foreign exchange  translation losses on our balance
sheet which was primarily due to the devaluation of the Brazilian  real.  While,
to date, these factors have not had a significant  adverse impact on our results
of  operations,  we  cannot  assure  that  there  will  not be such  an  impact.
Furthermore,  while we may  adopt  measures  to  reduce  the  impact  of  losses
resulting from volatile  currencies and other risks of doing business abroad, we
cannot assure that such measures will be adequate.

The Malaysian government adopted currency exchange controls,  including controls
on its currency,  the ringgit,  held outside  Malaysia,  and established a fixed
exchange rate for the ringgit against the U.S.  dollar.  The fixed exchange rate
provides a stable rate environment when applied to local expenses denominated in
ringgit. The long-term impact of such controls is not predictable due to dynamic
economic conditions that also affect or are affected by other regional or global
economies.

We have been granted a tax holiday which is effective  through January 31, 2002,
subject to some  conditions,  for our Malaysian sites. We have also been granted
various tax  holidays in China.  These tax holidays  are  effective  for various
terms and are subject to some  conditions.  It is possible  that the current tax
holidays  will be terminated or modified or that future tax holidays that we may
seek  will not be  granted.  If the  current  tax  holidays  are  terminated  or
modified,  or if  additional  tax  holidays  are not granted in the future,  our
effective income tax rate would likely increase.

WE ARE EXPOSED TO FLUCTUATIONS IN THE EXCHANGE RATES OF FOREIGN CURRENCY.

We do not use derivative  financial  instruments for speculative  purposes.  Our
policy is to hedge our foreign  currency  denominated  transactions  in a manner
that  substantially  offsets the effects of changes in foreign currency exchange
rates.  Presently,  we use foreign  currency  borrowings  and  foreign  currency
forward contracts to hedge only those currency exposures associated with certain
assets and


                                       31
<PAGE>

liabilities  denominated in non functional  currencies.  Corresponding gains and
losses on the underlying  transaction  generally  offset the gains and losses on
these foreign currency hedges.

As of May 31, 2000, all of the foreign currency hedging contracts were scheduled
to mature in less than three months and there were no material deferred gains or
losses.  In addition,  our  international  operations in some instances act as a
natural  hedge  because  both  operating  expenses  and a  portion  of sales are
denominated  in  local  currency.  In these  instances,  including  our  current
experience  involving  the  devaluation  of  the  Brazilian  real,  although  an
unfavorable  change in the exchange rate of a foreign  currency against the U.S.
dollar will result in lower sales when  translated  to U.S.  dollars,  operating
expenses will also be lower in these circumstances.

We have currency exposures arising from both sales and purchases  denominated in
currencies other than the functional currency of our sites.  Fluctuations in the
rate of  exchange  between  the  currency  of the  exposure  and the  functional
currency of our site could  seriously harm our business,  operating  results and
financial condition. For example, if there is an increase in the rate at which a
foreign  currency is  exchanged  for U.S.  dollars,  it will require more of the
foreign  currency to equal a specified  amount of U.S.  dollars  than before the
rate increase.  In such cases,  and if we price our products and services in the
foreign  currency,  we will receive less in U.S.  dollars than we did before the
rate  increase  went into effect.  If we price our products and services in U.S.
dollars and competitors  price their products in local currency,  an increase in
the  relative  strength  of the U.S.  dollar  could  result in our prices  being
uncompetitive in markets where business is transacted in the local currency.

WE ARE EXPOSED TO FLUCTUATIONS IN INTEREST RATES.

The primary  objective of our  investment  activities is to preserve  principal,
while at the same time, maximize yields without  significantly  increasing risk.
To achieve this  objective,  we maintain our portfolio of cash  equivalents  and
short-term investments in a variety of securities, including both government and
corporate obligations, certificates of deposit and money market funds. As of May
31, 2000,  approximately  85% of our total  portfolio was scheduled to mature in
less than six months.  In  addition,  our  investments  are  diversified  and of
relatively  short maturity.  A hypothetical 10% increase in interest rates would
not have a material effect on our investment portfolios.

We have  entered  into an interest  rate swap  transaction  under which we pay a
fixed rate of interest  hedging  against the variable  interest rates charged by
the lessor for the facility  lease at Milpitas,  California.  The interest  rate
swap expires in the year 2002,  which  coincides  with the maturity  date of the
lease term. As we intend to hold the interest rate swap until the maturity date,
we are not subject to market risk.  In fact,  such  interest rate swap has fixed
the interest rate for the facility lease, thus reducing interest rate risk.

Our long-term debt instruments are subject to fixed interest rates. In addition,
the amount of principal  to be repaid at maturity is also fixed.  In the case of
the  convertible  notes,  such notes are based on fixed  conversion  ratios into
common stock.  Therefore,  we are not exposed to variable interest rates related
to our long-term debt instruments.

WE MAY NOT BE ABLE TO ADEQUATELY  PROTECT OR ENFORCE OUR  INTELLECTUAL  PROPERTY
RIGHTS; AND WE COULD BECOME INVOLVED IN INTELLECTUAL PROPERTY DISPUTES.

Our ability to effectively compete may be affected by our ability to protect our
proprietary  information.  We hold a number of patents and other license rights.
These patent and license  rights may not provide  meaningful  protection for our
manufacturing  processes  and equipment  innovations.  On June 23, 1999, we were
served,

                                       32
<PAGE>

along with 87 other  companies  including  SMART,  as a  defendant  in a lawsuit
brought by the Lemelson Medical,  Education & Research  Foundation.  The lawsuit
alleges that we have infringed  certain of the plaintiff's  patents  relating to
machine vision and bar code technology.  We believe we have meritorious defenses
to these  allegations  and do not expect that this  litigation  will result in a
material  impact on our  financial  condition or results of  operations.  In the
semiconductor, computer, telecommunications and networking industries, companies
receive notices from time to time alleging infringement of patents,  copyrights,
or other intellectual  property rights or others. We are currently being sued by
a  party  who  alleges  that  certain  of  our  technology  solutions  business'
communications  card products  have  infringed and continue to infringe upon the
party's intellectual property rights.  Similarly,  in January of this year SMART
filed a lawsuit seeking to have declared  invalid,  and/or not infringed,  three
patents purportedly  applicable to industry standard memory products,  including
those  manufactured  by SMART  and the  other  manufacturers  of these  industry
standard memory products.  The owner of these patents brought a  cross-complaint
alleging patent  infringement  against SMART,  and has also brought suit against
several other memory product  manufacturers  alleging  infringement of the three
patents.  We believe  that  SMART's  memory  products do not  infringe any valid
claims of any of the three patents at issue. Moreover, we have been and may from
time to  time  continue  to be  notified  of  claims  that we may be  infringing
patents,  copyrights or other intellectual  property rights owned by other third
parties.  The  current  litigation  or any  other  litigation  could  result  in
substantial  costs and diversion of resources and could have a material  adverse
effect on our business,  financial  condition and results of operations.  In the
future,  third  parties  may  assert  infringement  claims  against  us  or  our
customers.  In the event of an infringement claim, we may be required to spend a
significant amount of money to develop a non-infringing alternative or to obtain
licenses.  We may  not be  successful  in  developing  such  an  alternative  or
obtaining  a license on  reasonable  terms,  if at all.  In  addition,  any such
litigation could be lengthy and costly and could harm our financial condition.

FAILURE TO COMPLY WITH ENVIRONMENTAL REGULATIONS COULD HARM OUR BUSINESS.

As a company in the electronics  manufacturing services industry, we are subject
to a  variety  of  environmental  regulations  relating  to  the  use,  storage,
discharge  and disposal of  hazardous  chemicals  used during our  manufacturing
process.  Although we have never sustained any  significant  loss as a result of
non  compliance  with  such  regulations,  any  failure  by  us to  comply  with
environmental laws and regulations could result in liabilities or the suspension
of  production.  In  addition,  these laws and  regulations  could  restrict our
ability to expand our  facilities or require us to acquire  costly  equipment or
incur other significant costs to comply with regulations.

OUR STOCK PRICE MAY BE VOLATILE DUE TO FACTORS OUTSIDE OF OUR CONTROL.

     Our stock price could fluctuate due to the following factors, among others:

     - Announcements of operating results and business conditions by our
       customers;

     - Announcements by our competitors relating to new customers or
       technological innovation or new services;

     - Economic developments in the electronics industry as a whole;

     - Political and economic developments in countries in which we have
       operations; and

     - General market conditions.

                                       33
<PAGE>

FAILURE TO RETAIN KEY PERSONNEL AND SKILLED ASSOCIATES COULD HURT OUR
OPERATIONS.

Our continued  success  depends to a large extent upon the efforts and abilities
of key managerial and technical associates. Losing the services of key personnel
could harm us. Our business also depends upon our ability to continue to attract
and retain senior managers and skilled  associates.  Failure to do so could harm
our operations.

OUR  ANTI-TAKEOVER  DEFENSE  PROVISIONS  MAY DETER  POTENTIAL  ACQUIRORS AND MAY
DEPRESS OUR STOCK PRICE.

Our certificate of incorporation  and bylaws contain  provisions that could have
the  effect of making it more  difficult  for a third  party to  acquire,  or of
discouraging  a third party from  attempting  to acquire,  control of Solectron.
These  provisions  allow us to issue preferred stock with rights senior to those
of our common stock and impose various  procedural and other  requirements  that
could make it more difficult for our  stockholders  to effect certain  corporate
actions.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Management's  Discussion and Analysis of Financial  Condition and Results of
Operations for factors  related to fluctuations in the exchange rates of foreign
currency and fluctuations in interest rates under "Trend and Uncertainties."







                                       34
<PAGE>


SOLECTRON CORPORATION AND SUBSIDIARIES


Part II. OTHER INFORMATION

Item 1:  Legal Proceedings

     SMART Modular  Technologies,  Inc.  (SMART),  a wholly owned  subsidiary of
     Solectron Corporation,  and certain of SMART's ex-officers and ex-directors
     have been named as defendants in six securities class action lawsuits filed
     in  the  United  States  District  Court  for  the  Northern   District  of
     California,  Boren v. SMART  Modular  Technologies,  Inc., et al., No. C 98
     20692  JW  (PVT)   (filed  July  1,  1998),   Woszczak  v.  SMART   Modular
     Technologies,  Inc., et al., No. C 98 2617 JL (filed July 2, 1998),  Bisson
     v. SMART Modular Technologies,  Inc., et al., No. C 98 20714 JF (filed July
     8, 1998),  D'Amato v. SMART  Modular  Technologies,  Inc., et al., No. C 98
     2804 PJH (filed July 16, 1998), Cha v. SMART Modular Technologies, Inc., et
     al.,  No. C 98 2833 BZ (filed  July 17,  1998) and Chang v.  SMART  Modular
     Technologies,  Inc.,  et al.,  No. C 98 3151 SI  (filed  August  13,  1998)
     (collectively,  the  "Federal  Actions").  The  plaintiffs  in the  Federal
     Actions  allege  that  defendants  made  material   misrepresentations  and
     omissions  during  the period  from July 1, 1997  through  May 21,  1998 in
     violation of Section 10(b) of the Securities  Exchange Act of 1934 and Rule
     10b-5  promulgated  thereunder.  The Federal  Actions were  consolidated on
     October 9, 1998,  and a  consolidated  complaint  was filed on November 30,
     1998 (the "Federal  Complaint").  On November 2, 1999,  defendants  filed a
     motion to dismiss the Federal Complaint. This motion is pending.

     On October 22, 1998, a putative securities class action lawsuit,  captioned
     Reagan v. SMART Modular Technologies, Inc., et al., Case No. H204162-5 (the
     "State Complaint"),  was filed against SMART and certain of ex-officers and
     ex-directors  in the Superior Court of the State of  California,  County of
     Alameda. The State Complaint alleges violations of Sections 25400 and 25500
     of the California Corporations Code and seeks unspecified damages on behalf
     of a purported  class of purchasers of SMART common stock during the period
     from July 1, 1997  through May 21,  1998.  The factual  allegations  of the
     State Complaint are nearly identical to the factual  allegations  contained
     within the Federal  Complaint.  On February  22, 1999,  the Superior  Court
     granted  SMART's motion to stay the state action pending  resolution of the
     federal action.

     On June 23,  1999,  Solectron  was  served,  along with 87 other  companies
     including  SMART,  as a  defendant  in a lawsuit  brought  by the  Lemelson
     Medical,   Education  &  Research  Foundation.  The  lawsuit  alleges  that
     Solectron  and SMART  have  infringed  certain of the  plaintiff's  patents
     relating to machine vision and bar-code technology.

     The  Company  believes  that all claims  related  to the state and  federal
     securities  actions  are  without  merit and  intends to defend  vigorously
     against  these  actions.  The  Company  also  believes  it has  meritorious
     defenses  to the patent  infringement  allegations.  The  Company  does not
     expect that all these  allegations  will result in a material impact on its
     financial position or results of operations.

Item 2:  Changes in Securities

         None

Item 3:  Defaults upon Senior Securities

         None

                                       35
<PAGE>

Item 4:  Submission of Matters to a Vote of Security Holders

         None

Item 5:  Other Information

         None

Item 6:  Exhibits and Reports on Form 8-K

         (a) Exhibits

             27.1  Financial Data Schedule - Nine Months Ended May 26, 2000.

         (b) Reports on Form 8-K

            On April 4, 2000,  Solectron  filed a Current  Report on Form 8-K in
            regard to signing a definitive agreement to acquire Nortel Networks'
            New Product  Introduction  (NPI),  printed  circuit  board (PCB) and
            telephone set ("telset")  assembly  assets in North America and Asia
            (the "Assets").

            On April 11, 2000,  Solectron  filed a Current Report on Form 8-K to
            include the audited  consolidated  financial statements of Solectron
            and  subsidiaries as of August 31, 1999 and 1998 and for each of the
            years  in  the  three-year  period  ended  August  31,  1999  giving
            retroactive  effect to the  acquisition of SMART which was accounted
            for as a pooling of interests.

            On May 16,  2000,  Solectron  filed a  Current  Report  on Form  8-K
            regarding to the completion of its sale of $3,500,000,000  aggregate
            principal  amount at maturity of Liquid Yield Option(TM) Notes (Zero
            Coupon-Senior)  due 2020 under an effective  registration  statement
            filed with the Securities and Exchange Commission.



                                       36


<PAGE>



SOLECTRON CORPORATION



SIGNATURE



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




                                     SOLECTRON CORPORATION
                                     (Registrant)





Date: July 10, 2000                 By: /s/ Susan Wang
                                     ----------------------
                                     Susan S. Wang
                                     Senior Vice President, Chief
                                     Financial Officer and Secretary
                                     (Principal Financial and
                                     Accounting Officer)



                                       37
<PAGE>



EXHIBIT INDEX

Exhibit Number    Document
--------------    --------
27.1              Financial Data Schedule - Nine Months Ended May 26, 2000