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

---

FORM 10-Q

---

(MARK ONE)

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

For the quarterly period ended March 1, 2002

[  ]       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



|Delaware                                                       | 94-2447045                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

777 Gibraltar DriveMilpitas, California     95035

(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 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 March 29, 2002, 822,912,257 shares of Common Stock of the Registrant were
outstanding.







SOLECTRON CORPORATION
                           Index to Form 10-Q



|PART I.   Financial Information                                                                                                                           | Page No.
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                                                          |         
|Item 1.   Financial Statements                                                                                                                            |         
|                                                                                                                                                          |         
|Condensed Consolidated Balance Sheets at
          
         February 28, 2002 and August 31, 2001                                                        | 3       
|                                                                                                                                                          |         
|Condensed Consolidated Statements of Operations for the
          
         three months and six months ended February 28, 2002 and 2001                  | 4       
|                                                                                                                                                          |         
|Condensed Consolidated Statements of Comprehensive Income (Loss)
          
         for the three months and six months ended February 28, 2002 and 2001 | 5       
|                                                                                                                                                          |         
|Condensed Consolidated Statements of Cash Flows
          
         for the six months ended February 28, 2002 and 2001                                   | 6       
|                                                                                                                                                          |         
|Notes to Condensed Consolidated Financial
         Statements                                                                                             | 7       
|                                                                                                                                                          |         
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                     | 18      
|                                                                                                                                                          |         
|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                                                                                              | 35      
|                                                                                                                                                          |         
|Item 5.  Other Information                                                                                                                                | 36      
|                                                                                                                                                          |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                                                                | 36      
|                                                                                                                                                          |         
|Signature                                                                                                                                                 | 39      

---

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

---

SOLECTRON CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                  (In millions)
                                  (Unaudited)

`February 28,   August 31,
                                                                   2002          2001
                                                               ------------  ------------

ASSETS
Current assets:
  Cash, cash equivalents and short-term investments.......... $    2,614.3  $    2,790.1
  Restricted cash, cash equivalents & short-term investments.        638.9          --
  Accounts receivable, net...................................      2,223.4       2,443.6
  Inventories................................................      2,339.4       3,209.9
  Prepaid expenses and other current assets..................        401.8         260.5
                                                               ------------  ------------
    Total current assets.....................................      8,217.8       8,704.1
Net property and equipment...................................      1,392.8       1,304.7
Other assets.................................................        852.9         934.4
Goodwill.....................................................      4,437.1       1,987.2
                                                               ------------  ------------
Total assets................................................. $   14,900.6  $   12,930.4
                                                               ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term debt............................................ $      219.8  $      306.2
  Accounts payable...........................................      1,581.3       1,786.1
  Accrued employee compensation..............................        267.3         166.5
  Accrued expenses...........................................        550.5         363.7
  Other current liabilities..................................         --            66.8
                                                               ------------  ------------
    Total current liabilities................................      2,618.9       2,689.3
Long-term debt...............................................      4,581.4       5,027.5
Other long-term liabilities..................................        109.6          62.9
                                                               ------------  ------------
    Total liabilities........................................      7,309.9       7,779.7
                                                               ------------  ------------
Commitments

Stockholders' equity:
  Common stock...............................................          0.8           0.7
  Additional paid-in capital.................................      6,617.0       3,877.6
  Retained earnings..........................................      1,353.1       1,531.6
  Accumulated other comprehensive losses.....................       (380.2)       (259.2)
                                                               ------------  ------------
     Total stockholders' equity..............................      7,590.7       5,150.7
                                                               ------------  ------------
Total liabilities and stockholders' equity................... $   14,900.6  $   12,930.4
                                                               ============  ============`

See accompanying notes to condensed consolidated financial statements.

---

SOLECTRON CORPORATION AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In millions, except per share data)

                                   (Unaudited)

`Three Months Ended           Six Months Ended
                                           --------------------------  --------------------------
                                            February 28,  February 28,  February 28,  February 28,
                                              2002          2001          2002          2001
                                           ------------  ------------  ------------  ------------
Net sales................................ $    2,974.6  $    5,418.5  $    6,126.8  $   11,114.0
Cost of sales............................      2,773.9       4,930.3       5,725.0      10,141.1
                                           ------------  ------------  ------------  ------------
Gross profit.............................        200.7         488.2         401.8         972.9
Operating expenses:
  Selling, general and
    administrative.......................        213.5         189.1         377.7         377.7
  Research and development...............         21.2          18.3          33.7          36.3
  Goodwill amortization expense..........           --          33.8            --          35.5
  Acquisition costs......................           --          29.2            --          29.2
  Restructuring & impairment costs.......        174.7          25.3         247.6          25.3
                                           ------------  ------------  ------------  ------------
      Operating income (loss)............       (208.7)        192.5        (257.2)        468.9
Interest income..........................         21.4          36.6          41.3          73.2
Interest expense.........................        (62.5)        (47.1)       (105.2)        (79.8)
                                           ------------  ------------  ------------  ------------
Income (loss) before income taxes
  and extraordinary gain.................       (249.8)        182.0        (321.1)        462.3
Income tax (benefit).....................        (92.7)         60.1        (113.5)        149.8
                                           ------------  ------------  ------------  ------------
Income (loss) before extraordinary gain..       (157.1)        121.9        (207.6)        312.5

Extraordinary gain, net of tax...........         31.1            --          29.1            --
                                           ------------  ------------  ------------  ------------
     Net income (loss)................... $     (126.0) $      121.9  $     (178.5) $      312.5
                                           ============  ============  ============  ============
Basic net income (loss) per share:
 Income (loss) before extraordinary
    gain................................. $      (0.19) $       0.19  $      (0.28) $       0.50

Extraordinary gain, net of income tax....         0.04            --          0.04            --
                                           ------------  ------------  ------------  ------------
                                          $      (0.15) $       0.19  $      (0.24) $       0.50
                                           ============  ============  ============  ============
 Diluted net income per share:
 Income (loss) before extraordinary
    gain................................. $      (0.19) $       0.18  $      (0.28) $       0.48

Extraordinary gain, net of income tax....         0.04            --          0.04            --
                                           ------------  ------------  ------------  ------------
                                          $      (0.15) $       0.18  $      (0.24) $       0.48
                                           ============  ============  ============  ============
Shares used to compute
 net income (loss) per share:
     Basic...............................        818.0         648.4         740.9         628.6
                                           ============  ============  ============  ============

     Diluted.............................        818.0         664.3         740.9         722.0
                                           ============  ============  ============  ============`

See accompanying notes to condensed consolidated financial statements.

---

SOLECTRON CORPORATION AND SUBSIDIARIES

                         CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                              (In millions)

                                               (Unaudited)

`Three Months Ended            Six Months Ended
                                             --------------------------   ---------------------------
                                              February 28,  February 28,   February 28,   February 28,
                                                  2002          2001           2002           2001
                                             ------------  ------------   ------------   ------------
Net income (loss).......................... $     (126.0) $      121.9  $      (178.5) $       312.5
Other comprehensive income (loss):
 Foreign currency translation adjustments..        (42.0)         15.1         (118.6)         (29.1)
 Unrealized gain (loss) on investments and
  derivatives..............................         (1.7)          0.9           (2.4)          (4.7)
                                             ------------  ------------   ------------   ------------
Comprehensive income (loss)................ $     (169.7) $      137.9  $      (299.5) $       278.7
                                             ============  ============   ============   ============`

_______

Accumulated foreign currency translation losses were ($378.0) million at February 28, 2002 and
($259.4) million at August 31, 2001. Accumulated unrealized gain (loss) on investments and
derivatives was ($2.2) million at February 28, 2002, and $0.2 million at August 31, 2001.

See accompanying notes to condensed consolidated financial statements.

---

SOLECTRON CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (In millions)

                                   (Unaudited)

`Six Months Ended
                                                               --------------------------
                                                                February 28,   February 28,
                                                                   2002           2001
                                                               -----------    -----------
Cash flows from operating activities:
  Net income (loss) ......................................... $    (178.5)   $     312.5
  Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
     Depreciation and amortization...........................       208.9          231.2
     Amortization of debt issuance costs and accretion
      of discount on notes payable...........................        69.9           71.4
     Tax benefit associated with the
      exercise of stock options..............................         2.9           36.5
     Extraordinary (gain), net of tax........................       (29.1)           --
     Loss (gain) on disposal of property and equipment.......        (1.5)           5.5
     Impairment of fixed assets and other long-term assets ..        93.3            --
     Other...................................................         --            13.1
     Changes in operating assets and liabilities:
       Accounts receivable...................................       567.9         (694.3)
       Inventories...........................................     1,245.4         (672.5)
       Prepaid expenses and other current assets.............        46.0          (12.1)
       Accounts payable......................................      (317.5)        (374.7)
       Accrued expenses and other
        current liabilities..................................        (4.9)         406.7
                                                               -----------    -----------
     Net cash provided by (used in)
       operating activities..................................     1,702.8         (676.7)
                                                               -----------    -----------
Cash flows from investing activities:
  Restricted cash............................................      (638.9)           --
  Sales and maturities of short-term investments.............       407.6          921.6
  Purchases of short-term investments........................      (490.2)        (376.6)
  Acquisition of business, net of cash acquired .............      (215.1)      (2,389.5)
  Acquisition of manufacturing assets and locations..........         --           (83.5)
  Capital expenditures.......................................      (117.5)        (414.6)
  Proceeds from sale of property and equipment...............        64.0           74.5
  Other......................................................       (17.8)        (157.3)
                                                               -----------    -----------
     Net cash used in investing
      activities.............................................    (1,007.9)      (2,425.4)
                                                               -----------    -----------
Cash flows from financing activities:
  Net proceeds from bank lines of credit.....................       357.6           99.1
  Repayment of borrowings under bank lines of credit.........      (448.1)         (66.8)
  Proceeds from issuance of ACES & Senior notes .............     1,553.8            --
  Net proceeds from long-term debt...........................       145.7        1,535.5
  Repurchase of LYONS .......................................    (1,839.2)           --
  Principal payments on long-term debt.......................      (578.5)          (5.3)
  Common stock repurchase....................................        (4.5)           --
  Net proceeds from stock issued under
   option and employee purchase plans........................        25.8           44.6
  Net proceeds from issuance of common stock.................         --         1,429.0
  Other......................................................       (29.4)          12.6
                                                               -----------    -----------
    Net cash provided by (used in) financing
    activities...............................................      (816.8)       3,048.7
                                                               -----------    -----------
Effect of exchange rate changes on
 cash and cash equivalents...................................      (140.0)         (16.5)
                                                               -----------    -----------
Net decrease in cash and cash equivalents....................      (261.9)         (69.9)
Cash and cash equivalents at beginning of period.............     2,482.3        1,475.5
                                                               -----------    -----------
Cash and cash equivalents at
 end of period............................................... $   2,220.4    $   1,405.6
                                                               ===========    ===========
SUPPLEMENTAL DISCLOSURES
Cash paid (received) during the period:
   Income taxes.............................................. $     (33.5)   $     130.4
   Interest.................................................. $      22.1    $      11.0
Non-cash investing and financing activities:
   Issuance of common stock for business
     combination, net of cash acquired....................... $   2,513.3    $       --`

See accompanying notes to condensed consolidated financial statements.

---

SOLECTRON CORPORATION AND SUBSIDIARIES

                Notes to Condensed Consolidated Financial Statements



NOTE 1 - Basis of Presentation

The accompanying unaudited condensed consolidated balance
sheet as of February 28, 2002, and the related unaudited condensed consolidated
statements of operations and comprehensive income (loss) for the three and six-months
ended February 28, 2002 and 2001, and cash flows for the six-months ended
February 28, 2002 and 2001, 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 condensed consolidated balance sheet as of August 31, 2001 was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended August 31, 2001, included in the
Company's Annual Report to Stockholders.

The Company's second quarter of fiscal 2002 ended March 1, 2002, its second
quarter of fiscal 2001 ended March 2, 2001. For clarity of presentation, the
Company has indicated its second fiscal quarters as having ended on February 28.

NOTE 2 - Inventories

Inventories consisted of (in millions):

`February 28,    August 31,
                                                    2002            2001
                                                -------------  --------------
          Raw materials........................$     1,622.6  $      2,503.5
          Work-in-process......................        358.2           331.0
          Finished goods.......................        358.6           375.4
                                                -------------  --------------
          Total................................$     2,339.4  $      3,209.9
                                                =============  ==============`

NOTE 3 - Net Income (Loss) Per Share

The following table sets forth the computation of basic
and diluted net income (loss) per share for the three- and six-month periods
ended February 28, 2002 and 2001.

`Three Months Ended          Six Months Ended
                                           --------------------------  --------------------------
                                           February 28,  February 28,  February 28,  February 28,
                                               2002          2001          2002          2001
                                           ------------  ------------  ------------ -------------
                                                    (in millions, except per share data)

Income (loss) before
  extraordinary gain..................... $     (157.1) $      121.9  $     (207.6) $      312.5
Extraordinary gain, net of tax...........         31.1           --           29.1           --
Interest expense from dilutive
  convertible LYON notes (net of taxes)..          --            --            --           31.5
                                           ------------  ------------  ------------  ------------
Net income (loss) - diluted.............. $     (126.0) $      121.9  $     (178.5) $      344.0
                                           ============  ============  ============  ============

Weighted average shares - basic..........        818.0         648.4         740.9         628.6
Common shares issuable upon
  exercise of stock options..............          --           15.9           --           19.0
Common shares issuable upon conversion
  of LYONs...............................          --            --            --           74.4
                                           ------------  ------------  ------------  ------------
Weighted average shares
  diluted................................        818.0         664.3         740.9         722.0
                                           ============  ============  ============  ============


Basic net income per share:
Income (loss) before
  extraordinary gain..................... $      (0.19) $       0.19  $      (0.28) $       0.50
   Extraordinary gain per share..........         0.04           --           0.04           --
                                           ------------  ------------  ------------  ------------
    Net income (loss) per share.......... $      (0.15) $       0.19  $      (0.24) $       0.50
                                           ============  ============  ============  ============
Diluted net income per share:

Income (loss) before
  extraordinary gain..................... $      (0.19) $       0.18  $      (0.28) $       0.48
   Extraordinary gain per share..........         0.04           --           0.04           --
                                           ------------  ------------  ------------  ------------
    Net income (loss) per share.......... $      (0.15) $       0.18  $      (0.24) $       0.48
                                           ============  ============  ============  ============`

The calculation for the three- and six-month periods ended
February 28, 2002 did not include the 61.7 million common shares issuable upon
conversion of the Company's Liquid Yield Option Notes (LYONs) or 66.9 million
options to purchase common stock outstanding at February 28, 2002, as the effect
would have been antidilutive.

For the three- and six-month periods ended February 28, 2001,
the exercise prices for 14.7 million and 8.4 million options, respectively, were
greater than the average market prices of Solectron's common stock for these
periods. Consequently, these options were not included in the calculation
because the effect would have been antidilutive. In addition, the calculation
for the three and six-month periods ended February 28, 2001, did not include the
108.6 million and 18.4 million, respectively, common shares issuable upon
conversion of the LYONs as the effect would have been antidilutive.

NOTE 4 - Commitments

Synthetic Leases

The Company has six lease agreements relating to 10
manufacturing sites.  The Company has accounted for these arrangements as
operating leases in accordance with Statement of Financial Accounting
Standards No. 13, Accounting for Leases, as amended. The leases have
expiration dates in 2002 to 2005. At the end of the lease term, the Company
has an option, subject to certain conditions to purchase the facility for the
"Termination Value", which approximates original cost, or to cause a third
party to purchase the property. In addition, with respect to sites B), C) and
D) below, the company has the option at the end of the lease term, subject to
certain conditions, to lease the facilities subject thereto for an additional
lease term.  If the Company chooses or cause a third party to purchase the property,
as applicable, or a third party purchases the facility for less than the "termination value," it will be contingently liable under a first loss clause for declines in
market value of such leased facilities up  to 85% of the original cost of the
leased facility, which percentage of original cost is approximately $257 million in the aggregate as of February 28, 2002.
 The Company also is entitled to any proceeds from a sale of the property in excess of the Termination Value. The approximate maximum
Termination Values for each of the leases are provided below.

A) $52 million - Milpitas, CA
    B) $13 million - San Jose, CA
    C) $24 million - Everett, WA
    D) $35 million - Atlanta, GA
    E) $115 million for a site in Milpitas, CA; Columbia, SC and three sites
in Fremont, CA
    F) $63 million - Nakaniida, Japan

If the Company determines that it is probable that the expected
fair value of the property at the end of the lease term will be less than the
Termination Value, the Company will accrue the  expected loss on a straight
line basis over the remaining lease term.

Each lease agreement contains various affirmative,
negative and, except for site E), financial covenants.  A default under the
lease, including violation of these covenants, may require the Company to
purchase the facility (or facilities) for the "Termination Value". Monthly
lease payments are generally based on the 30-day LIBOR index  (1.87% as of
February 28, 2002) plus an interest rate margin applied against the unpaid
portion of the lessor's investment. As of  February 28, 2002, the Company was
not in breach of any covenants since it obtained waivers from each of the
financial institutions, (other than for site E), for which no waiver was
necessary), which  waivers have expiration dates of May 1, 2002, except that
the waiver for site F) has an expiration date of March 8, 2002.  On March 8,
2002, the Company purchased site F). These  waivers were sought and obtained
in relation to the Company's capital raising activities from December 2001 to
February 2002. As of February 28, 2002, the Company provided $187 million of
cash as collateral in order to obtain these waivers under these lease
agreements.  The Company previously provided cash collateral of $115 million
for site E) in November 2001. The total cash collateral of $302 million is included in restricted cash, cash equivalent and short-
term investments in the accompanying consolidated balance sheets as of February 28, 2002.
The Company believes it will be able to
refinance these leases with other institutions.  If the Company is not able to
refinance these leases, the Company will be required to purchase the sites for an aggregate purchase price of $122 million
on May 1, 2002. The Company has not determined the loss, if any, which will be incurred on such purchase.
In connection with the refinancing of these
leases, the Company intends to purchase certain of the facilities for their
"Termination Values" for a total of approximately $117 million. The Company
has accrued $33.3 million for the  probable loss on these purchases. See Note
12- Subsequent Events, regarding the purchase of site F).

Sale Lease-back Transactions

In addition, 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. Any gains from sale lease-back
transactions are deferred and amortized over the lease-back period.

Derivative Instruments

Solectron enters into foreign
exchange forward contracts intended to reduce the short-term impact of foreign
currency fluctuations on foreign currency receivables, investments and payables.
The gains and losses on the foreign exchange forward contracts offset the
transaction gains and losses on the foreign currency receivables, investment,
and payables recognized in earnings. The Company does not enter into foreign
exchange forward contracts for speculative purposes. Solectron's foreign
exchange forward contracts related to current assets and liabilities are
generally three months or less in original maturity.

Solectron periodically hedges foreign currency forecasted
transactions related to certain operating expenses with foreign exchange forward
contracts. These transactions are treated as cash flow hedges in accordance with
Statement of Financial Accounting Standards No. 133. These foreign exchange
forward contracts have original maturities of up to 18 months.

Solectron also uses interest rate swaps to hedge its mix of
short-term and long-term interest rate exposures resulting from Solectron's
long-term debt obligations. As of February 28, 2002, Solectron had one interest
rate swap outstanding, under which Solectron pays a fixed rate of interest
hedging against the variable interest rates implicit in the rent charged by the
lessor for the facility lease at Milpitas, California. The interest rate swap
expires June 3, 2002, which coincides with the maturity date of the lease term.
The swap is designated as cash flow hedge under Statement of Financial
Accounting Standards No. 133.

As of February 28, 2002, Solectron had outstanding foreign
exchange forward contracts with a total notional amount of approximately $420
million. The interest rate swap had a total notional amount of $52 million. The
fair values of these derivatives were not significant.

For all derivative transactions, Solectron is exposed to
counterparty credit risk to the extent that the counter parties may not be able
to meet their obligations towards Solectron. To manage the counterparty risk,
Solectron limits its derivative transactions to those with major financial
institutions. Solectron does not expect any material risks as a result of
default by Solectron's counterparties.

Related Party Guarantees

Solectron guarantees $60 million of debt and $88 million
of vendor contracts for its minority owned affiliate, Pacific City International
Holdings, (PCI). The guarantee will expire during December 2002.

NOTE 5 - Segment Information

As a result of Solectron's acquisition of C-MAC on
December 3, 2001, Solectron has made organizational changes and has created the
Microsystems Business Unit. Solectron now has the following four business units:
Global Operations, Microsystems, 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 the four business units.
Certain corporate expenses have been allocated to Solectron's business units and
were included for performance evaluation. The accounting policies for the
segments were the same as for Solectron taken as a whole.

`Three Months Ended            Six Months Ended
                                            --------------------------    --------------------------
                                             February 28,  February 28,    February 28,  February 28,
                                                2002          2001            2002          2001
                                            ------------  ------------    ------------  ------------
                                                                   (in millions)
Net sales:
 Global operations........................ $    2,462.9  $    5,044.7    $    5,318.8  $   10,187.6
 Technology solutions.....................        187.4         298.8           341.9         788.5
 Global services..........................        223.1          75.0           364.9         137.9
 Microsystems.............................        101.2           --            101.2           --
                                            ------------  ------------    ------------  ------------
                                           $    2,974.6  $    5,418.5    $    6,126.8  $   11,114.0
                                            ============  ============    ============  ============
Depreciation and amortization:
 Global operations........................ $       81.1  $      135.0    $      171.5  $      210.5
 Technology solutions.....................          7.5           7.7            14.6          14.6
 Global services..........................          9.1           3.3            14.2           6.1
 Microsystems.............................          8.6           --              8.6           --
                                            ------------  ------------    ------------  ------------
                                           $      106.3  $      146.0    $      208.9  $      231.2
                                            ============  ============    ============  ============
Interest income:
 Global operations........................ $        9.8  $        5.1    $       16.4  $        7.7
 Technology solutions.....................          0.5           0.6             0.8           1.1
 Global services..........................          0.1           --              0.3           0.1
 Microsystems.............................          0.3           --              0.3           --
 Corporate................................         10.7          30.9            23.5          64.3
                                            ------------  ------------    ------------  ------------
                                           $       21.4  $       36.6    $       41.3  $       73.2
                                            ============  ============    ============  ============
Interest expense:
 Global operations........................ $        5.9  $        6.5    $        8.9  $        9.1
 Technology solutions.....................          0.2           0.2             0.4           0.4
 Global services..........................          0.7           --              1.2           --
 Microsystems.............................          0.5           --              0.5           --
 Corporate................................         55.2          40.4            94.2          70.3
                                            ------------  ------------    ------------  ------------
                                           $       62.5  $       47.1    $      105.2  $       79.8
                                            ============  ============    ============  ============
Income (loss) before extraordinary gain
   and income tax
 Global operations........................ $     (332.5) $      192.9    $     (383.7) $      435.7
 Technology solutions.....................        (14.5)         16.0           (18.5)         42.7
 Global services..........................         21.1           8.6            24.8          16.9
 Microsystems.............................         (1.6)          --             (1.6)          --
 Corporate................................         77.7         (35.5)           57.9         (33.0)
                                            ------------  ------------    ------------  ------------
                                           $     (249.8) $      182.0    $     (321.1) $      462.3
                                            ============  ============    ============  ============
Capital expenditures:
 Global operations........................ $       29.1  $      145.1    $       65.9  $      360.3
 Technology solutions.....................          2.0           5.8             7.1          17.0
 Global services..........................         14.8           5.2            26.7           7.6
 Microsystems.............................          3.4           --              3.4           --
 Corporate................................          5.6           9.6            14.4          29.7
                                            ------------  ------------    ------------  ------------
                                           $       54.9  $      165.7    $      117.5  $      414.6
                                            ============  ============    ============  ============
Geographic net sales:
 United States............................ $    1,225.5  $    2,719.4    $    2,404.3  $    5,471.0
 Other North America and latin America....        337.4         814.6           663.8       1,610.3
 Europe...................................        477.0         905.0         1,028.0       2,033.8
 Malaysia.................................        315.9         604.2           728.6       1,366.8
 Asia Pacific.............................        618.8         375.3         1,302.1         632.1
                                            ------------  ------------    ------------  ------------
                                           $    2,974.6  $    5,418.5    $    6,126.8  $   11,114.0
                                            ============  ============    ============  ============

                                             February 28,   August 31,
                                                2002          2001
                                            ------------  ------------
                                                   (in millions)
Total assets:
 Global operations........................ $    9,809.6  $    9,752.4
 Technology solutions.....................        682.8         587.5
 Global services..........................        839.1         184.9
 Microsystems.............................        878.0           --
 Corporate................................      2,691.1       2,405.6
                                            ------------  ------------
                                           $   14,900.6  $   12,930.4
                                            ============  ============

                                             February 28,   August 31,
                                                2002          2001
                                            ------------  ------------
                                                  (in millions)
Total assets:
 United States............................ $    6,635.8  $    5,704.7
 Other North America and Latin America....      2,819.5       1,543.7
 Europe...................................      1,623.5       1,904.0
 Asia Pacific.............................      3,821.8       3,778.0
                                            ------------  ------------
                                           $   14,900.6  $   12,930.4
                                            ============  ============`

NOTE 6 - Long-Term Debt

Zero-Coupon Convertible Senior Notes

During the second quarter of the fiscal year 2002,
Solectron repurchased a portion of its 4.0% zero coupon senior Liquid Yield
Option Notes (LYONs) due 2019 with a carrying amount of approximately $607
million for approximately $618 million, a portion of its 2.75% LYONs due 2020
with a carrying amount of approximately $995 million for approximately $940
million, and a portion of its 3.25% LYONs due 2020 with a carrying amount of
approximately $65 million for approximately $60 million. The total cash payments
for the LYONs repurchased during the second quarter of fiscal 2002 was
approximately $1.6 billion. These transactions resulted in an extraordinary gain
of approximately $31 million, net of tax.

During the first quarter of the fiscal year 2002, Solectron
repurchased a portion of its 4.0% LYONs due 2019 with a carrying amount of
approximately $218 million for approximately $222 million resulting in an
extraordinary loss of $2 million, net of tax.

Adjustable Conversion-Rate Equity Security units
(ACES)

During the second quarter of fiscal year 2002,
Solectron closed its public offering of $1.1 billion or 44 million units of
7.25% Adjustable Conversion-Rate Equity Security units (ACES).  Each ACES unit
has a stated amount of $25 and consists of (a) a contract to purchase, for
$25, a number of shares of Solectron common stock to be determined on November
15, 2004, based on the average trading price of Solectron's  common stock at
that time and certain specified settlement rates ranging from 2.1597 shares of
Solectron's common stock per purchase contract to 2.5484 shares of
Solectron's common stock  per purchase contract (subject to certain
anti-dilution adjustments), and (b) $25 principal amount of 7.25% subordinated
debentures due 2006. Solectron received net proceeds of approximately $1.067
billion from the transaction.  Solectron allocated $48.4 million to the fair
value of the stock purchase contracts. The debentures initially will be held and
pledged for Solectron's benefit to secure the holders' obligation to purchase
Solectron's common stock on November 15, 2004. On or about August 15, 2004,
the ACES debentures will be remarketed and if the remarketing is successful,
the interest rate will be reset at then current rates as described in the
indentures and the proceeds from the remarketing will be used to satisfy the
holders' obligation to repurchase Solectron's common stock in November 2004.
If the debentures are not successfully remarketed, the interest rate will not
be reset and Solectron may use the pledged debentures to satisfy the holders'
obligation to purchase the Company's common stock in November 2004.  Solectron
used  approximately $150.6 million in cash to purchase treasury securities
sufficient to collateralize the Company's obligations under the debentures in
an amount equal to the first eight quarterly interest payments on the
debentures. These securities have been included in the Company's restricted cash, cash equivalents and short-term
investments as of Febraury 28, 2002.

9.625% Senior Notes

On February 8, 2002, Solectron issued 9.625% Senior notes
due 2009 for an aggregate principal amount of $500 million. Solectron received
net proceeds of approximately $486.8 million. Solectron will pay interest on the
notes on February 15 and August 15 of each year. The first such payment will be
made on August 15, 2002. At any time prior to February 15, 2005, Solectron will
have the option to redeem up to 35% of the notes at the premiums set forth in
the indenture with the proceeds of certain equity offerings. In addition, prior
to February 15, 2006, Solectron will have the option to redeem the notes, in
whole or in part at the premium set forth in the indenture. On or after February
15, 2006, Solectron will have the option to redeem all or a portion of the notes
at the premiums set forth in the indenture.

NOTE 7 - Stockholders' Equity

On September 17, 2001, Solectron's board of directors
authorized a $200 million stock repurchase program. During the first fiscal
quarter of 2002, Solectron repurchased 442,200 shares of its common stock at an
average price of $10.10 for approximately $4.5 million.

NOTE 8 - Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires that the purchase method of accounting be used for all business
combinations initiated or completed after June 30, 2001. SFAS No. 141 also
specifies the criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill. SFAS
No. 142 requires that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated lives to their estimated residual values, and be
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.

In accordance with SFAS No. 141, the Company is accounting
for all business combinations initiated or completed after June 30, 2001 using
the purchase method of accounting. The Company adopted the remaining provisions
of SFAS No. 141 and SFAS No. 142 effective September 1, 2001.

SFAS No. 141 requires, upon adoption of SFAS No. 142, that
Solectron evaluate its existing intangibles assets and goodwill that were
acquired in prior purchase business combinations, and to make any necessary
reclassifications in order to conform with the new criteria in SFAS No. 141 for
recognition apart from goodwill. Upon adoption of SFAS No. 142, Solectron
reassessed the useful lives and residual values of all intangible assets
acquired in purchase business combinations, and no significant changes were
deemed necessary. Solectron was also required to test the intangible assets for
impairment in accordance with the provisions of SFAS No. 142 within the first
interim period. No impairment loss was deemed necessary related to intangible
assets during the first interim period.

In connection with the transitional goodwill impairment
evaluation, SFAS No. 142 requires Solectron to perform an assessment of whether
there is an indication that goodwill is impaired as of the date of adoption. To
accomplish this, Solectron identified its reporting units to be consistent with
its business units as defined in Note 5, using the aggregation criteria included
in the standard. Solectron then determined the carrying value of its global
operations business unit which includes all but insignificant amounts of
goodwill by allocating the assets and liabilities, including the goodwill and
intangible assets, to the unit as of the date of adoption. Solectron then
determined the fair value of the reporting unit using a discounted cash flow
model and compared it to the unit's carrying value. Based on this test, the fair
value of the unit according to the model exceeded the carrying amount and the
second step of the impairment test required by the standard was not required and
no impairment loss was recognized.

The following table presents the impact of adopting SFAS 142
on net income (loss) and net income (loss) per share had the standard been in
effect for the three and six months ended February 28, 2001.

`Three Months Ended           Six Months Ended
                                                   -------------------------    --------------------------
                                                   February 28,  February 28,   February 28,   February 28,
                                                      2002          2001           2002           2001
                                                   -----------   -----------    -----------  -------------
                                                              (in millions, except per share data)

Net income (loss) as reported................... $     (126.0)  $     121.9   $     (178.5)  $      312.5

Adjustments:
   Amortization of goodwill, net of tax.........          --           30.8            --            30.8
                                                   -----------   -----------    -----------    -----------
   Adjusted net income (loss)................... $     (126.0)  $     152.7   $     (178.5)  $      343.3
                                                   ===========   ===========    ===========    ===========

Basic net income (loss) per share as reported... $      (0.15)  $      0.19   $      (0.24)  $       0.50

Basic net income (loss) per share adjusted...... $      (0.15)  $      0.24   $      (0.24)  $       0.55

Diluted net income (loss) per share as reported. $      (0.15)  $      0.18   $      (0.24)  $       0.48

Diluted net income (loss) per share adjusted.... $      (0.15)  $      0.23   $      (0.24)  $       0.52

Shares used to compute
 net income (loss) per share:
     Basic......................................        818.0         648.4          740.9          628.6
                                                   ===========   ===========    ===========    ===========
     Diluted....................................        818.0         664.3          740.9          722.0
                                                   ===========   ===========    ===========    ===========`

Solectron has intangible assets (net of accumulated
amortization) of $569.2 million as of February 28, 2002. The Company's
intangible assets are categorized into three main classes; supply agreements,
intellectual property and other intangible assets. The supply agreements
resulted from the Company's acquisition of several Nortel manufacturing
facilities during the third quarter of fiscal 2000. The second class consists of
intellectual property resulting from Solectron's acquisition of various IBM
facilities in fiscal 1999 and 2000. The third class, other, consists of
miscellaneous acquisition related costs from the Company's various asset
purchases. The following table summarizes the gross amounts and accumulated
amortization for each major class (in millions):

`Supply      Intellectual
                            Agreement       Property     Other       Total
                           ------------   ------------  ---------  ---------
Gross amount............. $      382.5   $      106.4  $   211.2  $   700.1
Accumulated amortization.        (47.7)         (29.1)     (54.1)    (130.9)
                           ------------   ------------  ---------  ---------
Carrying value........... $      334.8   $       77.3  $   157.1  $   569.2
                           ============   ============  =========  =========`

Amortization expense for the second quarter of fiscal 2002
was $21.3 million. The Company expects that its annual amortization expense for
each of the next five fiscal years will be approximately $85 million.

The FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, in August 2001, and SFAS No.144, Accounting for the Impairment or
Disposal of Long-lived Assets, in October 2001. SFAS No. 143 requires that the
fair value of an asset retirement obligation be recorded as a liability in the
period in which it incurs the obligation. SFAS No. 144 serves to clarify and
further define the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. SFAS No. 144 does
not apply to goodwill and other intangible assets that are not amortized. SFAS
No. 143 is effective for fiscal years beginning after June 15, 2002 and SFAS No.
144 is effective for fiscal years beginning after December 15, 2001. Solectron
expects to adopt both effective September 1, 2002. The adoption of these
statements is not expected to have a material effect on the Company's
consolidated financial position or results of operations.

NOTE 9 - Acquisitions

On December 3, 2001, the Company completed its
acquisition of 100% of the outstanding common stock of C-MAC Industries Inc. (C-MAC).
C-MAC provides a comprehensive portfolio of electronic manufacturing
services and solutions to customers worldwide. The Company believes that the
acquisition will enable Solectron to create a diversified provider of integrated
electronic manufacturing solutions that can benefit from complementary high-end
technology capabilities, selected vertical integration and improved access to
growth opportunities and meet the growing demand by customers for complete
supply chain management solutions.

The Company issued approximately 98.8 million shares of its
common stock, 52.5 million exchangeable shares of Solectron Global Services
Canada Inc., which are exchangeable on a one-to-one basis for Solectron's common
stock, and 5.2 million options in the transaction. The purchase price was
$2,565.3 million, consisting of stock valued at $2,487.2 million, stock options
valued at $63.1 million and direct acquisition costs of $15 million. The value
of the common stock issued was determined based on the average market price of
Solectron's common stock over the four day period before and after the terms of
the acquisition were agreed to and announced.

On December 6, 2001, the Company completed its acquisition of
Artesyn Solutions, Inc. for approximately $36.4 million in cash. The transaction
was accounted for under the purchase method of accounting. The following table
summarizes purchase price allocations.

`C-MAC      Artesyn     Total
                               -----------  ---------  ----------
                                          (in millions)
 Assets acquired............. $   1,212.1  $     7.6  $  1,219.7
 Goodwill....................     2,030.4       32.9     2,063.3
 Liabilities assumed.........      (683.3)      (4.1)     (687.4)
 Deferred compensation.......         6.1        --          6.1
                               -----------  ---------  ----------
 Total purchase price........ $   2,565.3  $    36.4  $  2,601.7
                               ===========  =========  ==========`

The allocations above are based on management's preliminary
estimate of assets acquired and liabilities assumed. In connection with the C-MAC
acquisition, Solectron intends to close certain locations and terminate
employees at those sites. Solectron estimated the impact of these activities and
has recorded the affected assets at net realizable value and estimated employee
severance liabilities to be incurred. The Company is presently awaiting a final
appraisal of the C-MAC assets acquired and certain of the recorded amounts may
change based on the results of the appraisals.

The Company's statements of operations include C-MAC's
results from the acquisition date. The following unaudited pro forma financial
information presents the combined results of operations of Solectron and C-MAC
as if the acquisition had occurred as of the beginning of the six-month periods
in fiscal 2002 and 2001. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred if
Solectron and C-MAC constituted a single entity during such periods. This information is not presented for the three-month period
ended Febraury 28, 2002 as the acuisition occurred at the beginning of the quarter.

`2002         2001
                                                    ----------   ----------
                                             (in millions, except per share data)

Revenue........................................... $  6,369.3   $ 12,150.5
Net income (loss) before extraordinary gain ...... $   (231.1)  $    363.0
Net income (loss)................................. $   (202.0)  $    363.0
Basic income (loss) per share
   before extraordinary gain...................... $    (0.28)  $     0.47
Basic income (loss) per share..................... $    (0.25)  $     0.47
Diluted income (loss) per share
   before extraordinary gain...................... $    (0.28)  $     0.45
Diluted income (loss) per share................... $    (0.25)  $     0.45`

NOTE 10 - Restructuring and Impairment

Fiscal Year 2002

During the first quarter of fiscal 2002, Solectron
continued its restructuring activities and total restructuring and impairment
costs of $72.9 million were charged against earnings. These restructuring and
impairment charges included employee severance and benefit costs of
approximately $28.3 million, costs related to leased facilities that will be
abandoned and subleased of approximately $1.1
million, costs related to leased equipment
that will be abandoned of approximately $1.3 million, impairment of equipment
and other assets of approximately $34.2 million, impairment of facilities of
approximately $4.0 million and other exit costs of approximately $4.0
million.

The employee severance and benefit costs included in these
restructuring charges related to the elimination of approximately 2,000
positions worldwide, as of November 30, 2001, and all of such positions have
been eliminated under this plan. Approximately 76% of the positions eliminated
were in the Americas region and 24% were in Europe. The employment reductions
primarily affected employees in manufacturing and back office support functions.
Facilities and equipment subject to restructuring were also primarily located in
the Americas and Europe. For leased facilities that will be abandoned and
subleased, the lease costs represent future lease payments subsequent to
abandonment less estimated sublease income. For facilities and equipment held
for disposal, the impairment loss recognized was based on the fair value less
costs to sell with fair value based on estimates of existing market prices for
similar assets.

During the second quarter of fiscal 2002, Solectron continued
its restructuring activities and total restructuring and impairment costs of
$174.7 million were charged against earnings. These restructuring and impairment
charges included employee severance and benefit costs of approximately $40.4
million, costs related to leased facilities that will be abandoned and subleased
of approximately $55.0
million, costs related to leased equipment that will be abandoned of
approximately $16.5 million, impairment of equipment and other assets of
approximately $45.2 million, impairment of facilities of approximately $9.9
million and other exit costs of approximately $7.7 million.

The employee severance and benefit costs included in these
restructuring charges relate to the elimination of approximately 5,500 positions
worldwide, as of February 28, 2002, and all of such positions have been
eliminated under this plan. Approximately 78% of the positions eliminated were
in the Americas region, 16% were in Europe, and 6% in Asia. The employment
reductions primarily affected employees in manufacturing and back office support
functions. Facilities and equipment subject to restructuring were primarily
located in the Americas and Europe. For leased facilities that will be abandoned
and subleased, the lease costs represent future lease payments subsequent to
abandonment less estimated sublease income. For facilities and equipment held
for disposal, the impairment loss recognized was based on the fair value less
costs to sell with fair value based on estimates of existing market prices for
similar assets.

The following table summarizes quarterly restructuring
activities in fiscal 2002 (in millions):

`First      Second     Six Months
                                   Quarter     Quarter      2002      Nature of
                                   Charges     Charges     Charges     Charges
                                  ---------  -----------  ----------  ---------
Impairment of equipment......... $    34.2  $      45.2  $     79.4   non-cash
Impairment of facilities........       4.0          9.9        13.9   non-cash
                                  ---------  -----------  ----------
Total fixed assets impairment... $    38.2  $      55.1  $     93.3

Severance.......................      28.3         40.4        68.7   cash
Loss on leased equipment........       1.3         16.5        17.8   cash
Loss on leased facilities.......       1.1         55.0        56.1   cash
Other exit costs................       4.0          7.7        11.7   cash/non-cash
                                  ---------  -----------  ----------
Total                            $    72.9  $     174.7  $    247.6
                                  =========  ===========  ==========`

Fiscal Year 2001

Beginning in the second quarter of fiscal 2001, Solectron
initiated a restructuring of its operations in light of the current economic
downturn. The measures, which included reducing the workforce, consolidating
some facilities and changing the strategic focus of a number of sites, was
largely intended to align Solectron's capacity and infrastructure to anticipated
customer demand as well as to rationalize its footprint worldwide.

During fiscal 2001, the Company recorded total restructuring
and impairment costs of $517.3 million against earnings. These restructuring and
impairment charges included employee severance and benefit costs of
approximately $70.0 million, costs related to leased facilities that will be
abandoned and subleased of approximately $56.4 million, costs related to
equipment that will be abandoned of approximately $117.5, impairment of
equipment of approximately $188.2 million, impairment of facilities of
approximately $37.7 million, impairment of goodwill, intangible and other assets
related to closed facilities of approximately $42.2 million and other exit costs
of approximately $5.3 million.

The employee severance and benefit costs included in these
restructuring charges relate to the elimination of 11,800 positions worldwide
and all such positions have been eliminated under this plan. Approximately 67%
of the positions eliminated were in the Americas region, 23% were in Europe and
10% were in Asia/Pacific. The employment reductions primarily affected employees
in manufacturing and back office support functions. Facilities and equipment
subject to restructuring were primarily located in the Americas and Europe. For
leased facilities that will be abandoned and subleased, the lease costs
represent future lease payments subsequent to abandonment less estimated
sublease income.

The following table summarizes quarterly restructuring
activities in fiscal 2001(in millions):

`Total
                                   Second       Third       Fourth     Fiscal
                                   Quarter     Quarter     Quarter      2001       Nature of
                                   Charges     Charges     Charges     Charges       Charges
                                  ---------  -----------  ---------- ----------    -----------
Impairment of equipment......... $    19.7  $      99.9  $     68.6  $   188.2     non-cash
Impairment of facilities........        --         11.3        26.4       37.7     non-cash
                                  ---------  -----------  ----------  ---------
Total fixed assets impairment... $    19.7  $     111.2  $     95.0  $   225.9

Severance.......................       3.2         41.8        25.0       70.0     cash
Loss on leased equipment........        --         56.2        61.3      117.5     cash
Loss on leased facilities.......        --         44.7        11.7       56.4     cash
Goodwill impairment.............        --         28.2        14.0       42.2     non-cash
Other exit costs................       2.4          2.9          --        5.3     cash/non-cash
                                  ---------  -----------  ----------  ---------
Total .......................... $    25.3  $     285.0  $    207.0  $   517.3
                                  =========  ===========  ==========  =========`

The following table summarizes cash restructuring activities
in fiscal 2001 and fiscal 2002 (in millions):

`Severance     Lease       Lease
                                     and     Payments on  Payments on
                                  Benefits   Facilities   Equipment     Other         Total
                                  ---------  -----------  ----------  ---------    -----------
Balance at December 1, 2000..... $      --  $        --  $       --  $      --   $         --
Q2-FY01 provision...............       3.2           --          --        2.4            5.6
Cash payments...................        --           --          --         --             --
                                  ---------  -----------  ---------- ----------    -----------
Balance at February 28, 2001.... $     3.2  $        --  $       --  $     2.4   $        5.6

Q3-FY01 provision...............      41.8         44.7        56.2        2.9          145.6
Cash payments...................     (31.2)          --          --       (0.1)         (31.3)
                                  ---------  -----------  ---------- ----------    -----------
Balance at May 31, 2001......... $    13.8  $      44.7  $     56.2  $     5.2   $      119.9

Q4-FY01 provision...............      25.0         11.7        61.3         --           98.0
Cash payments...................     (38.8)        (5.5)       (5.0)      (0.8)         (50.1)
                                  ---------  -----------  ---------- ----------    -----------
Balance at August 31, 2001...... $      --  $      50.9  $    112.5  $     4.4   $      167.8

Q1-FY02 provision...............      28.3          1.1         1.3        4.0           34.7
Cash payments...................     (28.3)        (8.8)       (7.6)      (0.7)         (45.4)
                                  ---------  -----------  ---------- ----------    -----------
Balance at November 30, 2001.... $      --  $      43.2  $    106.2  $     7.7   $      157.1

Current quarter provision.......      40.4         55.0        16.5        7.7          119.6
Cash payments...................     (38.5)        (6.0)      (54.5)      (7.8)        (106.8)
                                  ---------  -----------  ---------- ----------    -----------
Balance at February 28, 2002.... $     1.9  $      92.2  $     68.2  $     7.6   $      169.9
                                  =========  ===========  ==========  =========    ===========`

NOTE 11 - Related Party Transactions

Solectron guarantees $60 million of debt and $88 million
of vendor contracts for its minority owned affiliate, Pacific City International
Holdings, (PCI). The guarantees will expire during December 2002.

NOTE 12 - Subsequent Events

On March 8, 2002, Solectron purchased its Nakaniida site
building, previously under lease, for $62.8 million. In connection with this
transaction, the Company incurred a loss of approximately $15 million.

On December 18, 200, Moody's Investor's Service and Standard
& Poor's downgraded Solectron's corporate debt rating to "Ba1" and "BB+"
respectively with a negative outlook. On March 22, 2002, Standard and Poor's
downgraded Solectron's senior unsecured debt rating to "BB" with a negative
outlook. These rating downgrades may increase Solectron's cost of capital should
the Company borrow under its revolving line of credit, and may make it more
difficult for the Company to raise additional capital in the future on terms
that are acceptable.

On March 28, 2002, Solectron announced that it has entered into a three-year
supply agreement to produce optical networking equipment for Lucent
Technologies. As part of the three year supply agreement, Solectron intends to
purchase equipment and inventory related to Lucent's optical product lines for
approximately $125 million.

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

Cautionary Statement Regarding Forward-Looking Statements

With the exception of historical facts, the statements
contained in this discussion are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and are subject to the
Safe Harbor provisions created by that statute. 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 that involve risks and
uncertainties. Such statements are based on current expectations and are subject
to risk, uncertainties and changes in condition, significance, value and effect,
including those discussed under the heading Risk Factors within the section of
this report entitled "Item 2," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and reports filed by Solectron
with the Securities and Exchange Commission, specifically, forms 8-K, 10-Q, 10-K,
S-3, S-4 and S-8. Such risks, uncertainties and changes in condition,
significance, value and effect could cause our actual results to differ
materially from our anticipated outcomes. Although we believe that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate, including, but not limited to, statements
about our future operating results and business plans. We disclaim any intention
or obligation to update or revise any forward-looking statements as a result of
new information, future events or otherwise.

Critical Accounting Policies

Our management is required to make judgments, assumptions
and estimates that affect the amounts reported when we prepare financial
statements and related disclosures in conformity with accounting principles
generally accepted in the United States. Note 1 to the Consolidated Financial
Statements in our Annual Report on Form 10-K for the fiscal year ended August
31, 2001 describes the significant accounting policies and methods used in the
preparation of our consolidated financial statements. Estimates are used for,
but not limited to, our accounting for contingencies, inventory allowances,
goodwill impairments, and restructuring costs. Actual results could differ from
these estimates. The foregoing critical accounting policies are impacted
significantly by judgments, assumptions and estimates used in the preparation of
our consolidated financial statements.

We are subject to the possibility of various loss
contingencies arising in the ordinary course of business. We consider the
likelihood of the loss or impairment of an asset or the incurrence of a
liability as well as our ability to reasonably estimate the amount of loss in
determining loss contingencies. Estimated loss contingencies are accrued when it
is probable that a liability has been incurred or an asset has been impaired and
the amount of loss can be reasonably estimated. We regularly evaluate current
information available to us to determine whether such accruals should be
adjusted.

Inventory purchases and commitments are based upon future
customer demand forecasts. Exposure related to raw materials that are purchased
pursuant to such demand forecasts and/or result from changes in accordance with
our supply agreements' contractual terms are the responsibility of our
customers. We are responsible for remaining inventory exposures such as those
resulting from inventory purchases in excess of customer demand forecasts and
other similar situations generally not covered by our supply agreements with our
customers. If our customers do not comply with their contractual obligations,
the inventory allowances included in our financial statements may not be
adequate to cover our exposure.

We perform goodwill impairment tests annually and more
frequently if an event or circumstance indicates that is more likely than not
that an impairment loss has been incurred. We perform the impairment tests at
the reporting unit level which we have determined to be consistent with our
business units. The tests are performed by determining the fair value of our
reporting units using a discounted future cash flow model and comparing those
fair values to the carrying values of the reporting units, including goodwill.
Adverse changes in the electronics industry, customer demand and other market
conditions could result in future impairments of goodwill.

From time to time, we have recorded restructuring and
impairment costs in light of customer demand declines and economic downturns.
These restructuring and impairment charges included employee severance and
benefit costs, costs related to leased facilities that will be abandoned and
subleased, costs related to leased equipment that will be abandoned and
impairment of equipment and facilities. Severance and benefit costs are recorded
when incurred. For leased facilities that will be abandoned and subleased, the
estimated lease loss is accrued for future lease payments subsequent to
abandonment less estimated subleased income. For owned facilities and equipment
held for disposal, the impairment losses recognized are based on the fair value
estimated using existing market prices for similar assets less costs to sell.
See footnote 10 -Restructuring and Impairment for further discussion of our
restructuring activities.

Certain customers contract for us to provide fulfillment
services such as warehousing, distribution, or billing to third parties. In
order for us to recognize revenues, the following conditions are met: upon
shipment of product to the warehousing location and invoicing the customer for
the manufacturing service, we have completed the manufacturing process, with no
further performance obligations other than storage of the product. Completed
products for which revenue has been recognized are segregated from work in
process and not used to fill other orders. Title and risk of ownership have
passed to the customer. The customer has a business reason for storing the
inventory at Solectron's or the third party's warehouse and requests this
arrangement. Delivery schedules are fixed by the customer and no special payment
terms are given to the customer.

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 "Risk Factors" for additional factors relating to possible
fluctuations of our operating results.

The following table sets forth, for the periods indicated, certain items in
the consolidated statements of operations 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           Six Months Ended
                                           --------------------------  --------------------------
                                            February 28,  February 28,  February 28,  February 28,
                                               2002          2001          2002          2001
                                           ------------  ------------  ------------  ------------
Net sales................................        100.0 %       100.0 %       100.0 %       100.0 %
Cost of sales............................         93.3          91.0          93.4          91.2
                                           ------------  ------------  ------------  ------------
Gross profit.............................          6.7           9.0           6.6           8.8
Operating expenses:
  Selling, general and
    administrative.......................          7.2           3.5           6.2           3.4
  Research and development...............          0.7           0.3           0.6           0.3
  Goodwill amortization expense..........          --            0.6           --            0.3
  Acquisition costs......................          --            0.5           --            0.3
  Restructuring & impairment costs.......          5.8           0.5           4.0           0.2
                                           ------------  ------------  ------------  ------------
      Operating income (loss)............         (7.0)          3.6          (4.2)          4.3
Interest income..........................          0.7           0.7           0.7           0.7
Interest expense.........................         (2.1)         (0.9)         (1.7)         (0.8)
                                           ------------  ------------  ------------  ------------
Income (loss) before income taxes
  and extraordinary gain.................         (8.4)          3.4          (5.2)          4.2
Income tax (benefit).....................         (3.1)          1.1          (1.9)          1.4
                                           ------------  ------------  ------------  ------------

Income (loss) before
  extraordinary gain ....................         (5.3)          2.3          (3.3)          2.8

Extraordinary gain, net of income tax....         (1.0)          --           (0.5)          --
                                           ------------  ------------  ------------  ------------
     Net income (loss)...................         (4.3)%         2.3 %        (2.8)%         2.8 %
                                           ============  ============  ============  ============`

Net Sales

We are organized in four business units including global
operations, technology solutions, global services and newly established
microsystems created from our acquisition of C-MAC in December 2001. Our core
business unit, global operations, provided 82.8% and 86.8% of net sales,
respectively, for the three- and six-month periods of fiscal 2002 compared to
93.1% and 91.7% of net sales for the same periods in fiscal 2001. Our technology
solutions unit contributed 6.3% and 5.6%, respectively, for the three- and six-month
periods of fiscal 2002 compared to 5.5% and 7.1%, respectively, for the
same periods in fiscal 2001. The global services unit contributed 7.5% and 6.0%
of net sales, respectively, for the three- and six-month periods of fiscal 2002
compared to 1.4% and 1.2% respectively, for the same period in fiscal 2001. Our
microsystems business unit contributed 3.4% and 1.6% of net sales for the three
and six-month periods of February 28, 2002.

Net sales for the three- and six-month periods of fiscal 2002
were $3.0 billion and $6.1 billion, respectively, compared to $5.4 billion and
$11.1 billion, respectively, for the same periods in fiscal 2001. This
represents a 45.1% and 44.9% decrease for the three and six-month periods,
respectively. The decreases in sales are primarily attributable to continued
weakness in our customer demand resulting from the worldwide economic slowdown.
This decrease was partially offset by revenues of our recent acquisitions
including approximately $350 million from C-MAC.



Global Operations Business Unit

Net sales from our global operations business unit
decreased to $2.5 billion and $5.3 billion, respectively, for the three- and
six-month periods in fiscal 2002 compared to $5.0 billion and $10.2 billion for
the corresponding periods in fiscal 2001. This represented decreases of 51.2%
and 47.8%, respectively, for the three- and six-month periods in fiscal 2002
from the comparable periods of fiscal 2001. The decrease in net sales was
principally due to continued weakeness in customer demand, particularly in our
telecommunications segment. The biggest contributors to the sales decline were
our sites in Milpitas, California, Guadalajara, Mexico and France. This was
partially offset by revenue increases resulting from our acquisition of
CMAC.

Technology Solutions Business Unit

Net sales from our technology solutions business unit
decreased to $187.4 million and $341.9 million, respectively, for the three- and
six-month periods in fiscal 2002, compared to $298.8 million and $788.5 million
for the corresponding periods of fiscal 2001. This represents decreases of 37.3%
for the three-month period and 56.6% for the six-month period. The decrease in
net sales primarily resulted from lower customer demand and decreasing average
selling prices of memory components.

Global Services Business Unit

Net sales from our global services business unit
increased to $223.1 million and $364.9 million, respectively, for the three- and
six-month periods in fiscal 2002, compared to $75.0 million and $137.9 million
for the corresponding periods in fiscal 2001. This represents increases of
197.5% and 164.6%, respectively, for the three- and six-month periods of fiscal
2002 over the corresponding periods of fiscal 2001. Our recent acquisitions of
Stream International and Artesyn Solutions, Inc. were main contributors to the
increase as well as higher demand for after-sale support service provided by
this business unit.

MicroSystems Business Unit

This new business unit was formed as a result of our
recent acquisitions of C-MAC. MicroSystems business unit is a provider of
sensors, controllers, actuators and other sophisticated componentry for key
sectors of the economy such as automotive and aviation. Net sales for the second
quarter of fiscal 2002 were $101.2 million. This represented 3.4% and 1.6% of
our net sales for three- and six-month periods of fiscal 2002.

International Sales

In the three- and six-month periods of fiscal 2002, our
international locations contributed 58.8% and 61.8%, respectively, of
consolidated net sales compared to 46.6% and 45.8% for the same periods of
fiscal 2001. The increase was primarily due to project transfers from sites in
the United States to Asian sites. These transfers are occurring due to weaker
demand for our services in the United States as compared to internationally. Our
international operations are subject to various risks of doing business abroad.
See "Risk Factors" for additional factors relating to possible fluctuations of
our international operating results. While these dynamics have not materially
harmed our results of operations, we cannot ensure that there will not be such
an impact in the future.

Major Customers

Several of our customers accounted for 10% or more of our
net sales in the three- and six-month periods of fiscal 2002 and 2001. The
following table details these customers and the percentage of net sales
attributed to them.

`Three Months Ended          Six Months Ended
                                 --------------------------  ---------------------------
                                 February 28,  February 28,  February 28,   February 28,
                                      2002          2001          2002           2001
                                 ------------  ------------  -------------  ------------
Cisco..........................         10.9%         15.2%          11.0%         13.9%
Ericsson ......................            *          13.2%             *          14.0%
Nortel ........................         15.9%         12.0%          14.7%         12.1%

* less than 10%`

Our top ten customers accounted for approximately 64% and 67%, respectively,
of consolidated net sales in the three- and six-month periods of fiscal 2002
compared to 71% and 74% respectively, for the corresponding periods in fiscal
2001. We are dependent upon continued revenues from Cisco and Nortel as well as
our other large 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 our results of operations.

We believe that our ability to grow depends on increasing
sales to existing customers for their current and future product generations and
on successfully attracting new customers. 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 ensured. In addition, we
cannot assume that any of our current customers will continue to utilize our
services. Consequently, our results of operations may be materially adversely
affected.

Gross Profit

Our gross margin percentage decreased to 6.7% and 6.6%
respectively, for the three- and six-month periods of fiscal 2002 compared to
9.0% and 8.8% for the corresponding periods of fiscal 2001. Our gross margin was
affected by inefficiencies associated with reduced workload and restructuring
activities. We continue to shift capacity to low-cost locations at an
accelerated pace. Those transfer costs are accounted for as operational costs
versus restructuring costs and, consequently, they affected our margins. We have
begun to see the benefits of our restructuring activities and improved product
mix on our margin. Gross margins have improved for two consecutive quarters.
Gross margins were 5.8%, 6.4% and 6.7% during the fourth quarter of fiscal 2001,
and the first and second quarters of fiscal 2002, respectively.

For our global operations unit, we anticipate that a larger
percentage of our sales may be derived from systems-build projects that
generally yield lower profit margins than PCB assembly. We expect most of our
technology solutions sales may continue to be derived from turn-key projects,
which typically yield lower profit margins than consignment projects. In
addition, factors affecting technology solutions profit margins include the
sales mix 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.

In the foreseeable future, our overall gross margin will
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 turn-key
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 turn-key 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
component availability fluctuates from time to time and is still subject to
lead-time and other constraints, this could possibly limit our gross profit
growth and might have a negative impact on our sales and gross margins for the
foreseeable future. Therefore, we cannot ensure that our 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 12.9% for the three-month period ended February
28, 2002 over the corresponding period of fiscal 2001. For the six months ended
February 28, 2002, SG&A expenses remained consistent compared to the same
period of fiscal 2001. As a percentage of net sales, SG&A expenses were 7.2%
for the three-month period ended February 28, 2002, compared to 3.5% for the
corresponding period in fiscal 2001, and 6.2% for the six-month period in fiscal
2002 compared to 3.4% for the corresponding period in fiscal 2001. The increase
in absolute dollars for the three-month period ended February 28, 2002 was
primarily due to our recent acquisitions including C-MAC and Stream
International. The increase as a percentage of net sales for the three- and six-month
periods resulted from a decrease in net sales as a major portion of these
expense are fixed.

Research and Development Expenses

With the exception of our technology solutions business
unit, our research and development (R&D) activities have been primarily
developing prototype and engineering design capabilities, developing common
tools for electrical, mechanical design, standardizing a single functional test
platform, developing methods for handling, processing and re-flow of high I/O
ball grid array, high reliability environmental stress technology and the
implementation of environmentally friendly assembly processes such as lead 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.

In absolute dollars, R&D expenses increased 15.8% for the
three-month period ended February 28, 2002 from the corresponding period in
fiscal 2001. For the six-month period ended February 28, 2002, R&D expenses
decreased 7.2% from the corresponding period in fiscal 2001. As a percentage of
net sales, R&D expenses increased to 0.7% and 0.6% for the three- and six-month
periods in fiscal 2002 compared to 0.3% for each of the corresponding
periods in fiscal 2001. The increase in absolute dollars for the second quarter
of fiscal 2002 compared to the same period in fiscal 2001 was primarily due the
acquisition of C-MAC. In spite of the C-MAC acquisition, there was a decrease in
absolute dollars for the six-month period ended February 28, 2002. This was
mainly due to continued efforts to keep costs under control and the closure of
our Force-Westborough site during the first quarter of fiscal 2002.

Net Interest Income (Expense)

Net interest expense was $41.1 million for the three-month
period ended February 28, 2002 compared to net interest expense of $10.5
million for the corresponding period of fiscal 2001. For the six months ended
February 28, 2002, net interest expense was $63.9 million compared to net
interest expense of $6.6 million for the corresponding period of fiscal 2001.
The increase in net interest expense in the second quarter of fiscal 2002
primarily resulted from our issuance of the Adjustable Conversion-Rate Equity
Security units (ACES) and the 9.625% Senior Notes due 2009 during the quarter.
Additionally, our interest income decreased due to lower average interest rates
as compared to the same period in fiscal 2001. The increase in net interest
expense during the six-month period of fiscal 2002 is further due to the fact
that the 3.25% zero-coupon convertible senior notes were only outstanding for
approximately three months during the six-month period of fiscal 2001. We expect
interest expense to increase in absolute dollars in future periods since the
ACES and the 9.625% Senior Notes due 2009 were issued later in the quarter and
interest expense related to these securities was not accumulated for the entire
quarter.



Income Taxes

For the six-month period ended February 28, 2002, we
recorded an income tax benefit of $113.5 million on pretax net loss of $321.1
million. We incurred income tax expense of $149.8 million in the corresponding
period of fiscal 2001. The difference was primarily due to our loss before
income taxes during the first six months of fiscal 2002. In general, the
effective income tax rate is largely a function of the balance between income
from domestic and international operations. Our international operations, taken
as a whole, have been taxed at a lower rate than those in the United States,
primarily due to a tax holiday granted to several of our overseas sites in
Malaysia, Singapore, and China. The Malaysian tax holiday is effective through
July 2011, subject to some conditions, including maintaining certain levels of
research and development expenditures. The tax holidays in China are effective
for various terms and are subject to some conditions.



Liquidity and Capital Resources



Cash, cash equivalents and short-term investments, including
restricted balances of $638.9 million, increased to $3.3 billion at February 28,
2002 from $2.8 billion at August 31, 2001. The increase was primarily a result
of cash provided by operating activities of approximately $1.7 billion and
financing activities in the second quarter of fiscal 2002. This increase was
partially offset by cash used in investing activities of $369 million (primarily
for acquisition of businesses and capital expenditures). Through our recent
offering of ACES due 2006, and the 9.625% Senior Notes due 2009, we raised net
proceeds of $1.067 billion and $486.8 million, respectively. We applied $1.8
billion of our available cash towards repurchase of our LYONs debt during the
six months ended February 28, 2002. We also repaid other debt including C-MAC's
outstanding debt assumed upon acquisition of approximately $341 million.
Approximately $638.9 million of our cash, cash equivalents and short-term
investments are restricted primarily related to leasing transactions (see
further discussion in footnote 4) and collateral for our obligations under the
ACES securities in an amount equal to the first eight quarterly interest
payments on the debentures constituting part of the ACES.

Accounts receivable decreased $220.2 million during the first
six months of fiscal 2002 over the fiscal year-end of 2001. The decrease in
accounts receivable is primarily due to our revenue decrease during the first
six months of fiscal 2002. Inventories decreased $870.5 million during the first
six months of fiscal 2002 over the fiscal year-end of 2001. The inventory decrease was
primarily due to the sale of excess raw materials inventory back to customers.

As of February 28, 2002, we had available a $250 million
secured, revolving line of credit that expires on February 12, 2003, and a $250
million secured, revolving line of credit that expires on February 14, 2005.
Borrowings under the credit facilities bear interest at the London interbank
offering rate (LIBOR) plus a margin. As of February 28, 2002, there were no
borrowings outstanding under these lines of credit.

On December 18, 2001,  Moody's Investor's Service and
Standard & Poor's downgraded our senior unsecured debt rating to "Ba1" and
"BB+" respectively with a negative outlook.  On March 22, 2002, Standard and
Poor's downgraded our senior unsecured debt rating to "BB" with a negative
outlook. These  rating downgrades will increase our cost of capital should we
borrow under our revolving lines of credit, and may make it more expensive for
us to raise additional capital in the future and such capital raising
activities may be on terms that are not be acceptable to us.

In addition, we had approximately $24.9 million and $541.6
million, respectively, in committed and uncommitted foreign lines of credit and
other bank facilities as of February 28, 2002.
The interest rates range from the bank's prime lending rate to the
bank's prime rate plus 2.0%. As of February 28, 2002, borrowings and guaranteed
amounts were $4.1 million and $267.2 million under committed and uncommitted
foreign lines of credit, respectively. Borrowings were payable on demand. The weighted-average interest rate was
7.65% for committed and 2.24% for uncommitted foreign lines of credit.

We have purchased in the past and may continue to purchase in
the future our Liquid Yield Option Notes ("LYONs") on an opportunistic basis. In
addition, our cash and liquidity could be adversely affected if we require
substantial amounts of cash in connection with our obligations to purchase our
LYONs as they become due. Instead of repurchasing the LYONs with cash, we may
elect to offer holders our common stock or a combination of our cash and common
stock. At the time of such election, it may be in the best interests of our
shareholders to satisfy such obligation in cash, however, we may not have
sufficient cash available and we may not be able to finance the required amount
on acceptable terms if at all. As a result we may be required to satisfy such
obligations with our common stock, which would be extremely dilutive at our
current stock prices. See "Risk factors-Our Low Stock Price May Reduce Our
Earnings Per Share." Based on the aggregate amount outstanding on February 28,
2002, on May 8, 2003, holders of our 2.75% LYONS due 2020 have the option to
require us to repurchase their notes in an amount of $628.57 per $1,000
principal amount for a total of approximately $1.5 billion. Based on the
aggregate amount outstanding on Febraury 28, 2002, on May 20, 2004 holders of
our 3.25% LYONS due 2020 have the option to require us to repurchase their
notes in an amount of $587.46 per $1,000 principal amount for a  total of
approximately $1.6 billion. On January 27, 2009 holders of our 4% LYONS due
2019 have the option to require us to repurchase their notes in an amount of
$672.97 per $1,000 principal amount for a total of approximately $1.1 million.
Our 7.25% subordinated ACES debentures are due November 15, 2006. On or about
August 15, 2004, the ACES debentures will be remarketed and if the remarketing
is  successful, the interest rate will be reset at then current rates as
described in the indentures and the proceeds from the remarketing will be used
to satisfy the holders' obligation to purchase our common stock in November
2004.  If the debentures are not successfully remarketed, the interest rate
will not be reset and Solectron may use the pledged debentures to satisfy the
holder's obligation to purchase our common stock in November 2004. In
addition, our 9.625% Senior Notes are due February 15, 2009.

We have six lease agreements relating to 10 manufacturing
sites.  We have accounted for these arrangements as operating leases in
accordance with Statement of Financial Accounting Standards No. 13, Accounting
for Leases, as amended. The leases have expiration dates in 2002 to 2005. At
the end of the lease term, we have an option, subject to certain conditions,
to purchase the facility for the "Termination  Value", which approximates
original cost, or to cause a third party to purchase the property. In
addition, with respect to sites B), C), and D) below, we have the option at
the end of the lease term, subject to certain conditions, to lease the
facilities subject thereto for an additional lease term. If we choose to or cause a third
party to purchase the property, as applicable, or a third party purchases the
facility for less than the "termination value," we will be  contingently liable
under a first loss clause for declines in market value of such leased
facilities up to 85% of the original costs of the leased facility, which
percentage of original cost is approximately $257  million in the aggregate as February 28, 2002.
We are also entitled
to any  proceeds from a sale of the property in excess of the Termination
Value.  The approximate maximum Termination Values for each of the leases are
provided below.

A) $52 million - Milpitas, CA
    B) $13 million - San Jose, CA
    C) $24 million - Everett, WA
    D) $35 million - Atlanta, GA
    E) $115 million for a site in Milpitas, CA; Columbia, SC and three sites
in Fremont, CA
    F) $63 million - Nakaniida, Japan

If we determine that it is probable that the expected
fair value of the property at the end of the lease term will be less than the
Termination Value, we will accrue the expected loss on a straight line basis
over the remaining lease term.

Each lease agreement contains various affirmative,
negative and, except for site E), financial covenants.  A default under the
lease, including violation of these covenants, may require us to purchase the
facility (or facilities) for the "Termination Value". Monthly lease payments
are generally based on the 30-day LIBOR  index  (1.87% as of February 28,
2002) plus an interest rate margin applied against the unpaid portion of the
lessor's investment. As of February 28, 2002, we were not in breach of any
covenants since we had obtained waivers from each of the financial
institutions, (other than for sites E), for which no waiver was necessary),
which  waivers have expiration dates of May 1, 2002, except that the waiver
for site F) has an  expiration date of March 8, 2002. On March 8, 2002, we
purchased site F). These waivers were sought and obtained in relation to our
capital raising activities from December 2001 to February 2002. As of February
28, 2002, we provided $187 million of cash as collateral in order to obtain
these waivers under these lease agreements.  We provided cash collateral of
$115 million for site E) in November 2001. The total cash collateral of $302 million is included in restricted cash, cash equivalent, and short-term
investments in the accompanying consolidated balance sheet as of February 28, 2002.
We believe we  will be able
refinance these leases with other institutions. If we are not able to refinance these
 leases, we will be required to purchase the sites for an aggregate price of $122 million on May 1, 2002. We have not determined the loss,
if any, which will be incurred on such purchase.
In connection with the refinancing of these leases, we
intend to purchase certain of the facilities for their Termination Values, for
total of approximately $117 million. We have accrued $33.3 million for the
probable loss on these purchases. See Note 12- Subsequent Events, regarding
the purchase of site F).

We believe that our current cash and cash equivalents, short-term
investments, lines of credit and cash generated from operations will
satisfy our expected working capital, capital expenditure, debt service and
investment requirements through at least the next 12 months.

The following is a summary of certain obligations and commitments (excluding lease commitments) of the
Company as of February 28, 2002:

`Payment Due by Period ( in millions)
                                         -----------------------------------------------------
                                                    Less than     1-3        4-5      After 5
                                          Total      1 year      years      years      years
                                         ---------  ---------  ---------  ---------  ---------
Long term debt......................... $ 4,581.4  $     --   $ 2,948.0  $ 1,203.9  $   429.5
Borrowing against lines of credit (1)..     212.6      212.6        --         --         --
Standby letters of credit..............      17.7       17.2        0.5        --         --`

(1) Solectron guarantees lines of credit, provided by various financial
institutions, for its operating subsidiaries worldwide. Lines of credit which
Solectron guarantees total $566.6 million. In addition, Solectron guarantees
other financial transactions totaling $523.7 million. These transactions
include, among others, certain real estate and equipment operating
leases.

RECENT ACQUISITIONS

On December 3, 2001, we completed our acquisition of C-MAC
Industries, Inc. We issued approximately 98.8 million shares of our common
stock, 52.5 million exchangeable shares of Solectron Global Services Canada
Inc., which are exchangeable on a one-to one basis for our common stock, and 5.2
million options in the transaction. The purchase price was $2,565.3 million,
consisting of stock valued at $2,487.2 million, stock options valued at $63.1
million and direct acquisition costs of $15 million.

On December 6, 2001, we completed our acquisition of Artesyn
Solutions, Inc. for approximately $36.4 million in cash. The transaction was
accounted for under the purchase method of accounting

On March 28, 2002, we announced that we have entered into a three-year supply
agreement to produce optical networking equipment for Lucent Technologies. As
part of the three year supply agreement, we intend to purchase equipment and
inventory related to Lucent's optical product lines for approximately $125
million.

RECENT DEVELOPMENT

Synthetic Lease Purchase

On March 8, 2002, we purchased the properties at our
Nakaniida, Japan site, previously under a lease, for $62.8 million. In
connection with this transaction, the Company incurred a loss of approximately
$15 million.



RISK FACTORS

WE ARE EXPOSED TO GENERAL ECONOMIC CONDITIONS, WHICH COULD
HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION.

As a result of unfavorable general economic conditions in the
U.S. and internationally, and reduced capital spending, our sales have continued
to decline in recent fiscal quarters. In particular, we started to see sales
decline in the telecommunications, workstation and server equipment
manufacturing industry worldwide during the second half of fiscal 2001. If the
economic conditions in the United States and the other markets we serve worsen,
we may experience a material adverse impact on our business, operating results
and financial condition.

WE HAVE SIGNIFICANT DEBT LEVERAGE AND DEBT SERVICE
OBLIGATIONS; IF WE ARE UNABLE TO SERVICE THESE DEBT OBLIGATIONS, OUR BUSINESS,
OPERATING RESULTS AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY
IMPACTED.

For the six months ended February 28, 2002 our fixed charges
exceeded our earnings by $320.8 million as compared to our ratio of earnings to
fixed charges for the six months ended February 28, 2001 of 5.97x, and our ratio
of earnings to fixed charges of 0.23x for fiscal year 2001. This decline in the
ratio is primarily due to interest expense growing at a greater rate than income
during the second half of fiscal 2001 and fiscal 2002. We have computed the
ratio of earnings to fixed charges by dividing earnings available for fixed
charges by fixed charges. The computations include us and our consolidated
subsidiaries. For these ratios, "earnings" represents (1) income (loss) before
taxes and before adjustment for minority interests, plus (2) fixed charges
(excluding capitalized interest), plus (3) amortization of capitalized interest.
Fixed charges consist of (1) interest on all indebtedness and amortization of
debt discount and expense, plus (2) capitalized interest, plus (3) an interest
factor attributable to rentals.

As of February 28, 2002, we had approximately
$220 million of short-term indebtedness and $4.6 billion of long-term
indebtedness. In addition on December 3, 2001 we assumed approximately $341
million of indebtedness in connection of our combination of C-MAC which we
repaid in the second quarter of fiscal 2002. The degree to which we may be
leveraged could materially and adversely affect our ability to obtain financing
for working capital, acquisitions or other purposes, could make us more
vulnerable to industry downturns and competitive pressures, or could limit our
flexibility in planning for, or reacting to, changes and opportunities in, the
electronics manufacturing industry, which may place us at a competitive
disadvantage compared to our competitors. Our ability to meet our debt service
obligations will be dependent upon our future performance, which will be subject
to financial, business and other factors affecting our operations, many of which
are beyond our control.

We will require substantial amounts of cash to fund scheduled
payments of principal and interest on our outstanding indebtedness, as well as
future capital expenditures and any increased working capital requirements. In
addition, we may require substantial amounts of cash in connection with our
obligations to purchase our LYONs. On January 28, 2002, holders of our 4%
LYONs due 2019 exercised their option to require us to repurchase their notes in
an amount of $510.03 per $1,000 principal amount, of which we
purchased $482.8 million. As of February 28, 2002, following our repurchase of
these LYONs for cash, approximately $1 million of accreted value of these
LYONs remained outstanding. Based on the aggregate amount outstanding on
February 28, 2002, on May 8, 2003, holders of our 2.75% LYONs due 2020 will
have the option to require us to repurchase their notes in an amount of $628.57
per $1,000 principal amount for a total of up to approximately $1.5 billion.
Based on the aggregate amount outstanding on February 28, 2002, on May 20,
2004, holders of our 3.25% LYONs due 2020 will have the option to require us to
repurchase their notes in an amount of $587.46 per $1,000 principal amount for a
total of approximately $1.6 billion. Instead of repurchasing the LYONs with
cash, we may elect to offer holders our common stock or a combination of our
cash and common stock. At the time of such election, it may be in the best
interests of our shareholders to satisfy such obligation in cash, however, we
may not have sufficient cash available and we may not be able to finance the
required amount on acceptable terms if at all. As a result we may be required to
satisfy such obligations with our common stock, which would be extremely
dilutive at our current stock prices. See "Risk factors-Our Low Stock Price May
Reduce Our Earnings Per Share."

If we are unable to meet our cash requirements from
operations we would be required to fund these cash requirements by alternative
financings. There can be no assurance that we will be able to obtain alternative
financing, that any such financing would be on favorable terms, or that we will
be permitted to do so under the terms of our existing financing arrangements, or
our financing arrangements in effect in the future. In the absence of such
financing, our ability to respond to changing business and economic conditions,
make future acquisitions, experience adverse operating results or fund required
capital expenditures or increased working capital requirements may be adversely
affected.

We had a net loss of $126.0 million for the second quarter of
fiscal 2002 as compared to net income of $121.9 million for the second quarter
of fiscal 2001.





THE AGREEMENTS GOVERNING OUR EXISTING AND FUTURE DEBT
CONTAIN AND WILL CONTAIN VARIOUS COVENANTS THAT LIMIT OUR DISCRETION IN THE
OPERATION OF OUR BUSINESS.

The agreements and instruments governing our existing and
future debt and our secured credit facilities contain and may in the future
contain various restrictive covenants that, among other things, require us to
comply with or maintain certain financial tests and ratios and restrict our
ability to:

- incur debt;
- incur or maintain liens;
- redeem and/or prepay subordinated debt;
- make acquisitions of businesses or entities;
- make investments, including loans and advances;
- make capital expenditures;
- engage in mergers, consolidations or certain sales of assets;
- engage in transactions with affiliates;
- pay dividends or engage in stock redemptions; and
- enter into certain restrictive agreements.

Our secured credit facilities are secured by a pledge of all
of the capital stock of our material domestic subsidiaries, 65% of the capital
stock of our first-tier material foreign subsidiaries and certain of our
intercompany loans.

Our ability to comply with covenants contained in our
existing debt and our secured credit facilities and other indebtedness to which
we are or may become a party may be affected by events beyond our control,
including prevailing economic, financial and industry conditions. Our failure to
comply with our debt-related obligations could result in an event of default
which, if not cured or waived, could result in an acceleration of our
indebtedness and cross-defaults under our other indebtedness, which would have a
material adverse effect on our financial condition. Even if we are able to
comply with all applicable covenants, the restrictions on our ability to operate
our business could harm our business by, among other things, limiting our
ability to take advantage of financings, mergers, acquisitions and other
corporate opportunities.

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

Most of our annual net sales come from a small number of our
customers. Our ten largest customers accounted for approximately 64% and 67% of
net sales in the three- and six-month periods ended February 28, 2002 and
approximately 71% and 74% of net sales in the corresponding periods of fiscal
2001. Since we depend on continued net sales from our 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 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, market share,
financial condition and results of operations will continue to depend
significantly 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.
In addition to the above, some industry sources have projected that our market
share by revenues may decline in the near term.

WE MAY ENCOUNTER SIGNIFICANT DELAYS OR DEFAULTS IN
PAYMENTS OWED TO US BY CUSTOMERS FOR PRODUCTS WE HAVE MANUFACTURED OR COMPONENTS
THAT ARE UNIQUE TO PARTICULAR CUSTOMERS.

We structure our agreements with customers to minimize our
risks related to obsolete or unsold inventory. However, enforcement of these
contracts may result in material expense and delay in payment for inventory. If
any of our significant customers become unable or unwilling to purchase such
inventory, our business may be materially harmed.

OUR CONTRACTS GENERALLY DO NOT INCLUDE MINIMUM PURCHASE
REQUIREMENTS AND OUR PROJECTIONS OF FUTURE REVENUES FROM CUSTOMER BID WINS MAY
BE LOWER THAN EXPECTED.

Although we have long-term contracts with a few of our top
ten customers, including Ericsson and Nortel, under which these customers are
obligated to obtain services from us, only Nortel is obligated to purchase any
minimum amount of services. As a result, we cannot guarantee that we will
receive any net sales from these contracts or any of our other contracts with
customers. In addition, the customers with whom we have contracts may materially
reduce the level of services ordered at any time, which they have done in the
past. 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.

IF WE ARE UNABLE TO MANAGE OUR GROWTH AND COST-EFFECTIVELY
ASSIMILATE NEW OPERATIONS, OUR PROFITABILITY COULD DECLINE FURTHER.

We have experienced rapid growth over many years. In recent
years, we have established operations in different locations throughout the
world. For example, in fiscal 1998, we opened offices, acquired facilities or
commenced manufacturing operations in nine foreign locations. Furthermore,
through acquisitions in fiscal 1998 and 1999, we acquired or expanded our
capabilities in six domestic facilities.

In fiscal 2000, we completed acquisitions of AMERICOM, SMART
and Bluegum. Through additional acquisitions, we also acquired facilities in
fourteen foreign locations. During fiscal 2001, we completed acquisitions of
NEL, Shinei, Centennial, MCC-Sequel, and Sony's manufacturing facilities in
Japan and Taiwan as well as IBM's repair center in the Netherlands. Thus far in
fiscal 2002, we have completed acquisitions of Stream International, Iphotonics,
Inc., Artesyn Solutions, Inc., C-MAC Industries Inc. We intend to continue to
make acquisitions of companies and strategic assets under our acquisition
strategy. These acquisitions may be for cash, capital stock or any combination
of cash and capital stock, and may include the incurrence or assumption of
indebtedness and a reduction of our available cash.

In order to achieve anticipated revenue and other financial
performance targets, we must manage our assets and operations efficiently. Our
expansion and growth 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 infrastructure, 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 you 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. In addition, should we continue to expand geographically,
we may experience 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 ability to return to profitability will be harmed.

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

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 printed circuit boards
and systems assembly services have lower gross margins than low volume/complex
printed circuit boards 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;
- 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 customers' ability to take delivery of our products and to make timely
payments for delivered products;
- 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;
- fluctuations in the availability and pricing of components;
- 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 DEPEND UPON ECONOMIC DEVELOPMENTS IN THE ELECTRONICS
INDUSTRY AS A WHOLE, WHICH CONTINUALLY PRODUCES TECHNOLOGICALLY ADVANCED
PRODUCTS WITH SHORT LIFE CYCLES; OUR INABILITY TO CONTINUALLY MANUFACTURE SUCH
PRODUCTS IN A COST EFFECTIVE MANNER WOULD HARM OUR BUSINESS, FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

Most of our net sales are 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 ensure that we will be
successful in selecting, developing, manufacturing and marketing new products or
enhancements. We cannot ensure 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 DEPEND ON LIMITED OR SOLE SOURCE SUPPLIERS FOR CRITICAL
COMPONENTS. THE INABILITY TO OBTAIN SUFFICIENT COMPONENTS AS REQUIRED WOULD
CAUSE HARM TO OUR BUSINESS.

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 agreements with
our suppliers. We cannot give any assurance 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 as
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 harm to our business.

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 DEPEND ON THE MEMORY MODULE PRODUCT MARKET.

Most of our technology solutions net sales are 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 materially harm 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 including at the present time,
characterized by diminished product demand, accelerated erosion of average
selling prices and excess production. In the past, there have been significant
declines in the prices for DRAM, SRAM and flash memory. Similar occurrences will
reduce our profit.

WE DEPEND ON THE CONTINUING TREND OF OEMS TO
OUTSOURCE.

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.

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

In the three- and six-month periods ended February 28 2002,
approximately 59% and 62%, respectively, of net sales came from sites outside
the United States, while approximately 47% and 46% of net sales came from sites
outside the United States in the same period of fiscal 2001. 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. Our locations in emerging or
developing economies include Mexico, Brazil, China, Malaysia, Hungary and
Romania. While, to date, these factors have not had a significant adverse impact
on our results of operations, we cannot give any assurance 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 tax holidays, which are effective
through 2011, subject to some conditions, for our Malaysian and Singapore 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 FOREIGN CURRENCY
EXCHANGE RATES.

We enter into foreign exchange forward contracts intended
to reduce the short-term impact of foreign currency fluctuations on foreign
currency receivables, investments and payables. The gains and losses on the
foreign exchange forward contracts offset the transaction gains and losses on
the foreign currency receivables, investments, and payables recognized in
earnings. We do not enter into foreign exchange forward contracts for
speculative purposes. Our foreign exchange forward contracts related to current
assets and liabilities are generally three months or less in original
maturity.

We periodically hedge foreign currency forecasted
transactions related to certain operating expenses with foreign exchange forward
contracts. These transactions are treated as cash flow hedges. These foreign
exchange forward contracts generally have original maturities of 18 months.

As of February 28, 2002, the majority of the foreign currency
hedging contracts were scheduled to mature in approximately 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, 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.
Although approximately 21% of our net sales in the second quarter of fiscal 2002
were denominated in currencies other than U.S. dollar, we do not believe our
total exposure to be significant because of natural hedges.

We have currency exposure 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 INTEREST RATE FLUCTUATIONS.

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 February 28, 2002, approximately 82% 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.



The following table presents the amounts of our cash
equivalents and short-term investments that are subject to interest rate risk by
fiscal year of expected maturity and weighted average interest rates as of
February 28, 2002:

`2002     2003     2004    Total    Fair Value
                                  -------  -------  -------  -------  ---------
Cash equivalents and short-term
  investments (in millions)..... $ 516.7  $  91.6  $  22.1  $ 630.4  $   630.4

Average interst rate............    2.12%    3.09%    2.65%`

We have entered into
an interest rate swap transaction under which we pay a fixed rate of interest
hedging against the variable interest rates implicit in the rent charged by the
lessor for the facility lease at Milpitas, California. The interest rate swap
expires June 3, 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 substance, 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, but we may become
exposed if there were to be material borrowings under the facility.

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. In the
past, third parties have asserted infringement claims against us or our
customers and are likely to do so in the future. In the event of a successful
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. The addition of
numerous production and manufacturing service facilities as a result of our
recent combination with C-MAC could generate additional risks that we have been
unable to fully evaluate as of this time.

The investigations of the C-MAC facilities to date indicate
that there are some contaminated sites for which C-MAC has been indemnified by
third parties with respect to any required remediation, sites for which there is
a risk of the presence of contamination, and sites with some levels of
contamination for which C-MAC may be liable and which may or may not ultimately
require any remediation. We have obtained environmental insurance to mitigate
certain environmental liabilities posed by C-MAC's operations and facilities. We
believe, based on our current knowledge, that the cost of any groundwater or
soil clean-up that may be required at C-MAC facilities would not materially harm
our business, financial condition and results of operations. Nevertheless, the
process of remediating contamination in soil and groundwater at the facilities
is costly, and there can be no assurance that the costs of such activities would
not harm our business, financial condition and results of operations in the
future.



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;
- ratings downgrades may have a negative impact on our stock price;
- political and economic developments in countries in which
we have operations; and
- general market conditions.

OUR RATING DOWNGRADES MAKES IT MORE EXPENSIVE FOR US TO BORROW MONEY

On December 18, 2001 Moody's Investor's Service and Standard
& Poor's downgraded our senior unsecured debt rating to "Ba1" and "BB+"
respectively with a negative outlook. On March 22, 2002, Standard and Poor's
downgraded our senior unsecured debt rating to "BB" with a negative outlook.
These rating downgrades will increase our cost of capital should we borrow under
our revolving lines of credit, and may make it more expensive for us to raise
additional capital in the future on terms that are acceptable to us or at all.
In addition, ratings downgrades may negatively impact the price of our common
stock and many have other negative implications on our business, many of which
are beyond our control.

OUR LOW STOCK PRICE MAY REDUCE OUR EARNINGS PER SHARE.

On May 8, 2003, we may become obligated to purchase, at
the option of the holders, all or a portion of the outstanding 2.75% LYONs at a
price of $628.57 per note and on May 20, 2004 we may become obligated to
purchase, at the option of the holders, all or a portion of the outstanding
3.25% LYONs at a price of $587.46 per note. We have the option to pay the
purchase price of LYONs in cash or common stock or any combination thereof. At
the time of such election, it may be in the best interests of our shareholders
to satisfy such obligation in cash, however, we may not have sufficient cash
available and we may not be able to finance the required amounts on acceptable
terms if at all. As a result we may be required to satisfy such obligations with
our common stock. If we elect to pay the purchase price, in whole or part, in
shares of our common stock, the number of shares of common stock to be delivered
shall equal the purchase price divided by the average of the sale prices of the
common stock for the five trading day period ending on the third business day
prior to May 8, 2003 or May 20, 2004, as the case may be. On each respective
repurchase date the 2.75% LYONs or the 3.25% LYONs are convertible into common
stock at a price of $50.98 per share or 12.3309 shares per LYON in the case of
the 2.75% LYONs or at a price of $49.84 per share or 11.7862 shares per LYON, in
the case of the 3.25% LYONs. In the event that our stock price remains below
$50.98 per share at May 8, 2003 or below $49.84 per share at May 20, 2004, as
the case may be, we may have to issue a significant amount of additional shares
to such holders. Accordingly, our earnings per share may be significantly
reduced.

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, bylaws and stockholder
rights plan 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
"Risk Factors."

SOLECTRON CORPORATION AND
SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1: Legal Proceedings

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. Solectron has been and may from time to time continue to be
notified of claims that it may be infringing patents, copyrights or other
intellectual property rights owned by other third parties. Any litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on Solectron's business, financial condition and results of
operations. In the future, third parties may assert infringement claims against
Solectron or its customers. In the event of an infringement claim, Solectron may
be required to spend a significant amount of money to develop a non-infringing
alternative or to obtain licenses. Solectron 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
Solectron's financial condition.

Item 2: Changes in Securities

> None



Item 3: Defaults upon Senior Securities

> None



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

Annual Meeting of Stockholders Held January 23,
2002

Final Report of The Inspector Of Election

1)	At the Meeting, the votes on the election of
eleven (11) directors to serve for the ensuing year and until their successor
are duly elected and qualified, was as follows:



|                                                                                                                                                                                               | In Favor                                                                                                                            | Withheld                                                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
|Dr. Koichi Nishimura
Richard A. D'Amore
Charles A. Dickinson
Heinz Fridrich
William A. Hasler
Dr. Kenneth E. Haughton
Dr. Paul R. Low
C. Wesley M. Scott
Ajay B. Shah
Dennis Wood
Osamu Yamada | 529,996,557
528,912,521
523,039,736
529,333,055
525,086,737
528,947,413
529,084,215
528,903,503
530,037,841
529,557,856
529,195,491 | 13,530,383
14,614,419
20,487,204
14,193,885
18,440,203
14,579,527
14,442,725
14,623,437
13,489,099
13,969,084
14,331,449

2)	At the Meeting, the vote to approve the
Company's 2002 Stock Option Plan, was as follows:



|For         | Against    | Abstain  
|----------- | ---------- | ---------
|370,458,413 | 61,670,227 | 3,236,357

3)



|For         | Against   | Abstain  
|----------- | --------- | ---------
|531,538,295 | 9,797,046 | 2,191,598

IN WITNESS WHEREOF, I have made this Final
Report and have hereunto set my hand this 28th day of January 2002.

Respectfully submitted,

Solectron Corporation

/s/_______________
                   Susan Wang
                   Secretary



Item 5: Other Information

> None



Item 6: Exhibits and Reports on Form 8-K

> (a) Exhibits:



|Exhibit
No. | Exhibit Description                                                                                                                                                                                                                                             
|----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1***      | Senior Debt Securities Indenture, dated as of
February 6, 2002, between the Registrant and State Street Bank and Trust Company
of California, N.A., as Trustee.                                                                                                 
|4.2*        | Subordinated Debt Securities Indenture dated as
of December 27, 2001 between the Registrant and State Street Bank and Trust
Company of California, N.A. as Trustee                                                                                              
|4.3***      | First Supplemental Indenture, dated as of
February 6, 2002, between the Registrant and State Street Bank and Trust Company
of California, N.A., as Trustee.                                                                                                     
|4.4*        | First Supplemental Indenture dated as of
December 27, 2001 between the Registrant and State Street Bank and Trust Company
of California, N.A. as Trustee                                                                                                        
|4.5*        | Purchase Contract Agreement dated as of December
27, 2001 between the Registrant and State Street Bank and Trust Company of
California, N.A., as purchase contract agent.                                                                                       
|4.6*        | Pledge Agreement dated as of December 27, 2001
among the Registrant, U.S. Bank Trust, N.A., as collateral agent, custodial
agent, and securities intermediary, and State Street Bank and Trust Company of
California, N.A., as purchase contract agent.         
|4.7*        | Pledge Agreement dated as of December 27, 2001
between the Registrant and State Street Bank and Trust Company of California,
N.A., as the Trustee for the holders of the Debentures.                                                                            
|4.8**       | Amendment No. 1 made and entered into as of
January 8, 2002 to Pledge Agreement dated as of December 27, 2001 between the
Registrant and State Street Bank and Trust Company of California, N.A., as the
Trustee for the holders of the Debentures.             
|4.9*        | Control Agreement dated as of December 27, 2001
between the Registrant and State Street Bank and Trust Company of California,
N.A., as Trustee and as securities intermediary and depository bank.                                                              
|4.10**      | Amendment No. 1 made and entered into as of
January 8, 2002 to Control Agreement dated as of December 27, 2001 between the
Registrant and State Street Bank and Trust Company of California, N.A., as
Trustee and as securities intermediary and depository bank
|10.1        | Three-Year facility Credit Agreement dated as of
February 14, 2002, among the Registrant and Goldman, Sachs Credit Partners,
L.P., Bank of America, N.A., JP Morgan Chase Bank and The Bank of Nova
Scotia.                                                     
|10.2        | 364-Day Facility Credit Agreement dated as of
February 14, 2002, among the Registrant and Goldman, Sachs Credit Partners,
L.P., Bank of America, N.A., JP Morgan Chase Bank and The bank of Nova
Soctia.                                                        

> 

*	Exhibit previously filed in Registrant's Form 8-K filed with
the Securities and Exchange Commission on January 7, 2002

**	Exhibit previously filed in Registrant's Amendment No. 1 to
Form 8-K dated January 7, 2002 filed with the Securities and Exchange Commission
on January 10, 2002

***	Exhibit previously filed in Registrant's Form 8-K filed with
the Securities and Exchange Commission on February 8, 2002

(b) Reports on Form 8-K

On December 14, 2001, Solectron filed a Current Report on
Form 8-K regarding its completion of acquisition of C-MAC Industries ("C-MAC").
As of December 3, 2001, the Registrant issued 1.755 shares of Solectron common
stock in exchange for each C-MAC common share outstanding. Upon timely
elections, C-MAC Canadian shareholders received common shares in a Solectron
Canadian subsidiary, exchangeable into Solectron common shares.

On December 18, 2001, Solectron filed Amendment No.1 to Form
8-K filed on December 14, 2001, pursuant to which Solectron filed certain
financial information under Item 7 of Form 8-K related to the acquisition of C-
MAC.

On December 18, 2001, Solectron filed a Current Report on
Form 8-K to include the Registrant's fiscal first quarter results and outlook
for its fiscal second quarter. Solectron also issued a press release announcing
that it intends to use cash to meet any obligations next month to repurchase its
zero-coupon senior convertible notes due in 2019.

On January 7, 2002, Solectron filed a Current Report on Form
8-K related to the offering of $1,000,000,000 of the Registrant's 7.25%
Adjustable Conversion-Rate Equity Security Units (the "Units").

On January 10, 2002, Solectron filed an Amendment No. 1 to
Form 8-K filed on January 7, 2002 related to the offering of $1,100,000 of the
Registrant's 7.25% Adjustable Conversion-Rate Equity Security Units (the
"Units").

On February 1, 2002, Solectron filed a Current Report on Form 8-K to announce
its negotiations with Lucent Technologies.

On February 6, 2002, Solectron filed a Current Report on Form 8-K regarding
long-time senior executive and corporate officer Susan Wang's intention to
retire after 18 years with the company.

On February 8, 2002, Solectron filed a Current Report on Form 8-K related to
the offering of $500,000,000 aggregate principal amount of the Registrant's
9.625% Senior Notes due 2009.

On April 2, 2002, Solectron filed a Current Report on Form 8-K related to the
announcement of the purchase of equipment and inventory, and Three Year Supply
Agreement with Lucent Technologies.

---

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: April 12, 2002

| | By:                                                                                            | /s/ Kiran Patel
| | ---------------------------------------------------------------------------------------------- | ---------------
| |                                                                                               
| | Kiran Patel                                                                                   
| | Executive Vice President, Chief Financial Officer (Principal
Financial and Accounting Officer)

---