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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****WASHINGTON, D.C. 20549**

**FORM 10-Q**

**(MARKONE)**
| ý                                           | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.**  |
|--------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                             |                                                                                           |
| **For  the quarterly period ended July 1, 2001** |
|                                             |
| **OR**                                           |
|                                             |
| o                                                | **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: 001-15883**

**MANUFACTURERS' SERVICES LIMITED**(EXACT NAME OF REGISTRANT AS SPECIFIED INITS CHARTER)

 

| **DELAWARE**                                                                                | **04-3258036**                        |
|---------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                             |                                       |
| (STATE OR OTHER  JURISDICTION OFINCORPORATION OR ORGANIZATION)                              | (I.R.S. EMPLOYER  IDENTIFICATION NO.) |
|                                                                                        |                                  |
| **300  BAKER AVENUE, SUITE 106,  CONCORD, MASSACHUSETTS**                                   | **01742**                             |
|                                                                                             |                                       |
| (ADDRESS OF PRINCIPAL  EXECUTIVE OFFICES)                                                   | (ZIP CODE)                            |
|                                                                                        |                                  |
| **(978)  287-5630**                                                                         |
| ****                                                                                        |
| (TELEPHONE NUMBER,  INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE  OFFICES) |
| **NOT  APPLICABLE**                                                                         |
| (Former  Name, Former Address and Former Fiscal Year, if Changed Since Last Report)    |
|                                                                                             |

Indicate by check mark whether theRegistrant: (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that theRegistrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days. Yes ýNo o

At August 13, 2001, there were 33,575,208shares of Common Stock, $0.001 par value, outstanding.

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MANUFACTURERS'SERVICES LIMITEDINDEX

| PART I.   FINANCIAL INFORMATION |
|--------------------------------------|
|                                 |
| Item 1.                              | Financial  Statements |
|                                 |   |
|                                 | Condensed  Consolidated Balance Sheets – July 1, 2001 (Unaudited) and December 31, 2000 |
|                                 |   |
|                                 | Condensed  Consolidated Statements of Operations (Unaudited) -Three and Six Months Ended  July 1, 2001 and July 2, 2000 |
|                                 |   |
|                                 | Condensed  Consolidated Statements of Cash Flows (Unaudited) -Three and Six Months Ended  July 1, 2001 and July 2, 2000. |
|                                 |   |
|                                 | Notes  to Condensed Consolidated Financial Statements |
|                                 |   |
| Item 2.                              | Management's  Discussion and Analysis of Financial Condition and Results of Operations |
|                                 |   |
| Item 3.                              | Quantitative  and Qualitative Disclosure about Market Risk |
|                                 |   |
| PART II.   OTHER  INFORMATION   |
|                                 |
| Item 4                               | Submission  of Matters to a Vote of Security Holders |
|                                 |   |
| Item 6.                              | Exhibits and Reports  on Form 8-K |
|                                 |   |
|                                 | Signatures |

 

PARTI.FINANCIALINFORMATION

Item1.FinancialStatements

MANUFACTURERS' SERVICES LIMITEDCONDENSED CONSOLIDATED BALANCESHEETS(IN THOUSANDS, EXCEPT SHARE DATA)

|                                    | July  1,                                                                                                                                                                     |    | December  31,  |    |
|-----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|----------------|---------|
|                                    |                                                                                                                                                                              |    |                |    |
|                                    | 2001                                                                                                                                                                         |    | 2000           |    |
|                                    | (UNAUDITED)                                                                                                                                                                  |    |           |    |
| ASSETS                                  |                                                                                                                                                                         |    |           |    |
| Current assets:                         |                                                                                                                                                                         |    |           |    |
|                                    | Cash and cash  equivalents                                                                                                                                                   | $       | 17,471         |    | $ | 10,388 |   |
|                                    | Accounts receivable,  less allowance for doubtful accounts of $2,027 and $2,239 at  July 1, 2001 and December 31, 2000, respectively                                         | 256,429 |           | 359,978 |   |
|                                    | Inventories                                                                                                                                                                  | 213,373 |           | 363,485 |   |
|                                    | Prepaid expenses and  other current assets                                                                                                                                   | 53,279  |           | 36,060  |   |
|                                    |                                                                                                                                                                         |         |           |         |   |
|                                    | Total current assets                                                                                                                                                         | 540,552 |           | 769,911 |   |
|                                    |                                                                                                                                                                         |    |           |    |   |
|                                    |                                                                                                                                                                         |    |           |    |
| Property and  equipment, net            | 83,553                                                                                                                                                                       |    | 93,649         |    |
| Goodwill and other  intangibles         | 40,836                                                                                                                                                                       |    | 44,535         |    |
| Other assets                            | 21,434                                                                                                                                                                       |    | 25,422         |    |
|                                    |                                                                                                                                                                              |    |                |    |
|                                    |                                                                                                                                                                         |    |           |    |
|                                    | Total assets                                                                                                                                                                 | $       |   686,375 |    | $ |  933,517 |   |
|                                    |                                                                                                                                                                         |         |           |         |   |
|                                    |                                                                                                                                                                         |    |           |    |
|                                    |                                                                                                                                                                         |    |           |    |
| LIABILITIES  AND STOCKHOLDERS' EQUITY   |                                                                                                                                                                         |    |           |    |
| Current liabilities                     |                                                                                                                                                                         |    |           |    |
|                                    | Current portion of  long-term debt and capital lease obligations                                                                                                             | $       |   6,398   |    | $ |   7,737 |   |
|                                    | Accounts payable                                                                                                                                                             | 224,723 |           | 474,579 |   |
|                                    | Accrued expenses and  other current liabilities                                                                                                                              | 44,938  |           | 53,170  |   |
|                                    |                                                                                                                                                                         |         |           |         |   |
|                                    | Total current  liabilities                                                                                                                                                   | 276,059 |           | 535,486 |   |
|                                    |                                                                                                                                                                         |    |           |    |   |
|                                    | Long-term debt and  capital lease obligations                                                                                                                                | 203,532 |           | 181,344 |   |
|                                    | Other liabilities                                                                                                                                                            | 848     |           | 1,239   |   |
|                                    |                                                                                                                                                                              |    |                |    |
|                                    | Total liabilities                                                                                                                                                            | 480,439 |           | 718,069 |   |
|                                    |                                                                                                                                                                              |    |                |    |
| Commitments and  contingencies (Note 3) |                                                                                                                                                                         |    |           |    |
|                                    |                                                                                                                                                                         |    |           |    |
| Stockholders' equity                    |                                                                                                                                                                         |    |           |    |
|                                    | Preferred stock,  $0.001 par value, 3,000,000 shares authorized; no shares issued and  outstanding                                                                           |    |           |    |   |
|                                    |                                                                                                                                                                         |    |           |    |   |
|                                    | Common stock, $0.001  par value; 150,000,000 shares authorized; 33,554,838 and 33,346,735 shares  issued and outstanding at July 1, 2001 and December 31, 2000, respectively | 34      |           | 33      |   |
|                                    | Additional paid in  capital                                                                                                                                                  | 263,225 |           | 262,024 |   |
|                                    | Accumulated deficit                                                                                                                                                          | (40,942 | )              | (34,396 | ) |
|                                    | Accumulated other  comprehensive loss                                                                                                                                        | (16,381 | )              | (12,213 | ) |
|                                    |                                                                                                                                                                              |    |                |    |
|                                    | Total stockholders'  equity                                                                                                                                                  | 205,936 |           | 215,448 |   |
|                                    |                                                                                                                                                                         |         |           |         |   |
|                                    | Total liabilities and  stockholders' equity                                                                                                                                  | $       |   686,375 |    | $ |   933,517 |   |
|                                    |                                                                                                                                                                         |         |           |         |   |
|                                         |                                                                                                                                                                              |         |                |         |  |  |  |  |  |  |  |

 

See accompanying notes to the interimcondensed consolidated financial statements.

 

MANUFACTURERS' SERVICES LIMITEDCONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS — UNAUDITED(IN THOUSANDS, EXCEPT PER SHARE DATA)

|                                             | Three  months ended                       |       | Six  months ended |       |
|--------------------------------------------------|-------------------------------------------|------------|-------------------|------------|
|                                             | July  1, 2001                             |       | July  2, 2000     |       | July  1, 2001 |   | July  2, 2000 |   |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Net sales                                        | $                                         | 403,505    |              | $          | 362,422 |   | $ | 932,213 |   | $ | 695,242 |   |
| Cost of goods sold                               | 371,288                                   |       | 341,266           |       | 865,860 |   | 657,771 |   |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Gross profit                                     | 32,217                                    |       | 21,156            |       | 66,353 |   | 37,471 |   |
|                                             |                                           |       |                   |       |  |   |  |   |
| Operating expenses:                              |                                      |       |              |       |   |   |   |   |
|                                             | Selling, general and  administrative      | 23,634     |              | 14,191     |   | 47,563 |   | 30,893 |   |
|                                             | Restructuring and  other asset writedowns | 10,151     |              | -          |   | 12,942 |   | - |   |
|                                             | Legal settlement                          | -          |              | -          |   | - |   | 6,000 |   |
|                                             |                                      |            |              |            |   |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Operating income  (loss)                         | (1,568                                    | )          | 6,965             |       | 5,848 |   | 578 |   |
| Interest expense, net                            | (5,826                                    | )          | (4,085            | )          | (11,550 | ) | (7,561 | ) |
| Foreign exchange gain  (loss)                    | 229                                       |       | (293              | )          | 192 |   | (966 | ) |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Income (loss) before  provision for income taxes | (7,165                                    | )          | 2,587             |       | (5,510 | ) | (7,949 | ) |
| Provision for income  taxes                      | 463                                       |       | 739               |       | 1,036 |   | 1,026 |   |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Income (loss) before  extraordinary loss         | $                                         | (7,628     | )                 | $          | 1,848 |   | $ | (6,546 | ) | $ | (8,975 | ) |
| Extraordinary loss                               | -                                         |       | (627              | )          | - |   | (627 | ) |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Net income (loss)                                | $                                         | (7,628     | )                 | $          | 1,221 |   | $ | (6,546 | ) | $ | (9,602 | ) |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Net income (loss)  applicable to common stock    | $                                         | (7,628     | )                 | $          | (18,572 | ) | $ | (6,546 | ) | $ | (31,526 | ) |
|                                             |                                           |       |                   |       |  |   |  |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Basic income (loss)  per share:                  |                                      |       |              |       |   |   |   |   |
|                                             | Net income (loss)                         | $          | (0.23             | )          | $ | (0.85 | ) | $ | (0.20 | ) | $ | (1.52 | ) |
|                                             | Weighted average  shares outstanding      | 33,546,705 |              | 21,123,082 |   | 33,494,370 |   | 20,394,120 |   |
|                                             |                                      |       |              |       |   |   |   |   |
| Diluted income (loss)  per share:                |                                      |       |              |       |   |   |   |   |
|                                             | Net income (loss)                         | $          | (0.23             | )          | $ | (0.85 | ) | $ | (0.20 | ) | $ | (1.52 | ) |
|                                             | Weighted average  shares outstanding      | 33,546,705 |              | 21,123,082 |   | 33,494,370 |   | 20,394,120 |   |

Seeaccompanying notes to the interim condensed consolidated financial statements.

 

MANUFACTURERS' SERVICES LIMITEDCONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS — UNAUDITED(IN THOUSANDS)

|                                              | SIX  MONTHS ENDED                                                            |     |
|---------------------------------------------------|------------------------------------------------------------------------------|----------|
|                                              |                                                                              |     |
|                                              | July  1,                                                                     |     | July  2, |   |
|                                              | 2001                                                                         |     | 2000 |   |
|                                              |                                                                         |     |   |   |
| CASH FLOWS RELATING TO OPERATING ACTIVITIES:      |                                                                         |     |   |   |
|                                              | Net loss                                                                     | $        | (6,546 | ) | $ | (9,602 | ) |
|                                              | Adjustments to  reconcile net loss to net cash used in operating activities: |     |   |   |   |
|                                              | Depreciation and  amortization                                               | 18,138   |   | 12,673 |   |
|                                              | Amortization of  capitalized finance fees                                    | 1,313    |   | 600 |   |
|                                              | Extraordinary loss                                                           | -        |   | 627 |   |
|                                              | Additions to allowance  for doubtful accounts                                | 2,302    |   | 755 |   |
|                                              | Non cash charge for  equity awards                                           | 519      |   | 4,219 |   |
|                                              | Foreign exchange loss                                                        | 1,227    |   | 1,026 |   |
|                                              | Deferred taxes                                                               | (1,185   | ) | 60 |   |
|                                              | Loss on disposal and  abandonment of fixed assets                            | 5,020    |   | - |   |
|                                              | Litigation settled by  shareholder                                           | -        |   | 1,000 |   |
|                                              | Changes in operating  assets and liabilities:                                |     |   |   |   |
|                                              | Accounts receivable                                                          | 97,347   |   | (51,977 | ) |
|                                              | Inventories                                                                  | 143,989  |   | (39,617 | ) |
|                                              | Prepaid expenses and  other assets                                           | (15,345  | ) | 6,065 |   |
|                                              | Accounts payable                                                             | (240,215 | ) | 40,043 |   |
|                                              | Accrued expenses and  other liabilities                                      | (7,125   | ) | 13,385 |   |
|                                              |                                                                         |          |   |  |   |
| Net cash used in  operating activities            | (561                                                                         | )        | (20,743 | ) |
|                                              |                                                                              |     |  |   |
|                                              |                                                                         |     |   |   |
| CASH FLOWS RELATING TO  INVESTING ACTIVITIES:     |                                                                         |     |   |   |
|                                              | Acquisition of  business, net of cash acquired                               | -        |   | (2,767 | ) |
|                                              | Purchase of intangible  assets                                               | (1,393   | ) | - |   |
|                                              | Proceeds from sale of  fixed assets                                          | 226      |   | 3,568 |   |
|                                              | Purchases of property  and equipment                                         | (11,322  | ) | (14,877 | ) |
|                                              | Cost of internal use  software                                               | (808     | ) | (4,901 | ) |
|                                              |                                                                         |          |   |  |   |
| Net cash used in  investing activities            | (13,297                                                                      | )        | (18,977 | ) |
|                                              |                                                                              |     |  |   |
|                                              |                                                                         |     |   |   |
| CASH FLOWS RELATING TO  FINANCING ACTIVITIES:     |                                                                         |     |   |   |
|                                              | Proceeds from  long-term debt                                                | -        |   | 25,000 |   |
|                                              | Net proceeds from  (payments on) revolving line-of-credit                    | 25,651   |   | (14,900 | ) |
|                                              | Repayments of  long-term debt and capital lease obligations                  | (4,056   | ) | (55,514 | ) |
|                                              | Debt issuance and  amendment costs                                           | (358     | ) | (540 | ) |
|                                              | Proceeds from exercise  of stock options                                     | 139      |   | 723 |   |
|                                              | Proceeds from employee  stock purchase plan                                  | 1,063    |   | - |   |
|                                              | Proceeds from the  issuance of common stock, net of issuance costs           | -        |   | 161,427 |   |
|                                              | Retirement of  preferred stock                                               | -        |   | (57,000 | ) |
|                                              | Dividend payments on  preferred stock                                        | -        |   | (4,135 | ) |
|                                              |                                                                         |          |   |  |   |
| Net cash provided by  financing activities        | 22,439                                                                       |     | 55,061 |   |
|                                              |                                                                              |     |  |   |
| Effect of foreign  exchange rates on cash         | (1,498                                                                       | )        | (191 | ) |
|                                              |                                                                              |     |  |   |
| Net increase in cash                              | 7,083                                                                        |     | 15,150 |   |
| Cash and cash  equivalents at beginning of period | $                                                                            | 10,388   |   | $ | 24,182 |   |
|                                              |                                                                              |     |  |   |
| Cash and cash  equivalents at end of period       | $                                                                            | 17,471   |   | $ | 39,332 |   |
|                                              |                                                                              |     |  |   |
|                                                   |                                                                              |          |  |  |  |  |  |  |

See accompanying notes to the interimcondensed consolidated financial statements.

MANUFACTURERS' SERVICES LIMITEDNOTES TO INTERIM CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED(IN THOUSANDS, EXCEPT SHARE DATA)

1.          BASISOF PRESENTATION

             Theaccompanying consolidated financial statements of Manufacturers' ServicesLimited (the "Company") are unaudited, and certain information andfootnote disclosure related thereto normally included in financial statementsprepared in accordance with generally accepted accounting principles has beenomitted in accordance with Rule 10-01 of Regulation S-X. Accordingly, thesestatements should be read in conjunction with the audited financial statementsand notes thereto for the year ended December 31, 2000 included in theCompany's Annual Report on Form 10-K. In the opinion of management, theaccompanying unaudited consolidated financial statements were preparedfollowing the same policies and procedures used in the preparation of theaudited financial statements and reflect all adjustments (consisting of normalrecurring adjustments) considered necessary to present fairly the financialposition and results of operations of the Company. The results of operationsfor the interim periods are not necessarily indicative of the results for theentire fiscal year.

2.          INVENTORY

             Inventoriesare comprised of the following:

|                                  |   | July  1, |    | December  31, |
|---------------------------------------|--------|----------|---------|---------------|
|                                  |   | 2001     |    | 2000          |
|                                  |   |          |    |               |
| Raw materials and purchased inventory |   | $        | 167,350 |          | $ | 310,175 |
| Work-in-process.                      |   | 40,865   |    | 48,162        |
| Finished goods                        |   | 5,158    |    | 5,148         |
|                                  |   |          |    |               |
|                                  |   | $        | 213,373 |          | $ | 363,485 |
|                                  |   |          |    |               |

3.          CONTINGENCIES

             OnJuly 22, 1999, the Company received written notice from legal counsel for theLemelson Medical, Education & Research Foundation, Limited Partnership (the“Lemelson Partnership”) alleging that the Company was infringing specifiedpatents held by the Lemelson Partnership and offering to license such patentsto the Company.  In August 2001, theCompany purchased a license from the Lemelson Partnership for the full terms ofthose patents and subsequent related patents for $529.  The Company also received a release from allpotential claims related to those patents.

DEFERRED REVENUE

             InJune 2000, the Company received a payment of $14,592 in connection with asupply agreement with a customer. The agreement includes a provision wherebythe Company will either retain or repay a portion of this amount each quarter,through the fourth quarter of 2001, dependent upon sales levels achieved ineach quarter.  This $14,592 was recordedas deferred revenue, and is being amortized as the Company either recognizesthe revenue or repays amounts to the customer. At July 1, 2001, the remaining deferred revenue balance of approximately$3,500 was included in accruedexpenses.  During the quarter ended July1, 2001, approximately $3,800 wasrecognized as revenue based on the sales levels achieved.

4.          ACQUISITIONS

ASSET ACQUISITIONS

             InSeptember 2000, the Company acquired certain assets from 3Com Corporation usedin the production of cable and DSL modems, carrier systems products and digitalcameras for total consideration of $79,127. In the first quarter of 2001, theCompany finalized the purchase price allocation, resulting in a decrease of$1,053 to the long-term assets acquired in the transaction.

             InJanuary 2001, the Company acquired certain assets from Oce-Industries used inthe production of complex printer systems for $5,883 in cash and assumedliabilities.  These assets consisted ofa manufacturing facility, other fixed assets and an intangible asset.  The transaction was accounted for as a purchaseof assets, and the purchase price was allocated to the assets acquired based onthe relative fair values of the tangible and intangible assets at the date ofacquisition.  In connection with theasset acquisition, the Company entered into a three-year supply agreement tomanufacture complex printer systems for Oce-Industries.5. BUSINESS SEGMENT INFORMATION
             TheCompany's operations comprise a single line of business, providing electronicsdesign and manufacturing services. Information about the Company's operationsin different geographic regions is presented in the table below:
 Three  Months Ended Six  Months Ended     July  1, 2001 July  2, 2000 July  1, 2001 July  2 2000      Net sales         United States— Corporate$— $— $— $—   — Operations306,445 249,490 697,205 483,041  Europe84,517 79,709 193,322 143,468  Asia12,543 33,223 41,686 68,733       $403,505 $362,422 $932,213 $695,242      Operating income  (loss)         United States — Corporate$(6,390)$(5,495)$(14,423)$(21,293)  — Operations14,718 6,659 31,482 13,074  Europe 801 4,093 4,222 6,277  Asia(10,697)1,708 (15,433)2,520       $(1,568)$6,965 $5,848 $578      
 
 July  1, December  31,  2001 2000    Identifiable Assets    United States — Corporate$13,631 $13,395   — Operations488,188 662,559 Europe133,398 173,426 Asia51,158 84,137     $686,375 $933,517    
6. EARNINGS PER SHARE

             Thefollowing table illustrates the reconciliation of the numerator and denominatorof basic and diluted income (loss) per share before extraordinary loss asrequired by SFAS 128:
 Three  Months Ended Six  Months Ended     July  1,  2001 July  2,  2000 July  1,  2001 July  2,  2000      Numerator—basic and  diluted earnings  per share:         Income (loss)$(7,628)$1,848 $(6,546)$(8,975) Dividends on senior  redeemable preferred stock— (1,681)— (3,464) Accretion of senior  redeemable preferred stock and call premium— (18,112)— (18,460)       Income (loss)  available to common stockholders$(7,628)$(17,945)$(6,546)$(30,899)      Denominator:         Basic income (loss)  per share — weighted average shares outstanding33,546,705 21,123,082 33,494,370 20,394,120  Effect of dilutive  securities — stock options and warrants— — — —        Diluted income (loss)  per share — Weighted average shares outstanding33,546,705 21,123,082 33,494,370 20,394,120       Basic income (loss)  per share$(0.23)$(0.85)$(0.20)$(1.52)Diluted income (loss)  per share$(0.23)$(0.85)$(0.20)$(1.52)
             Forthe three and six months ended July 1, 2001, 5,228,908 anti-dilutive optionsand warrants have been excluded from the calculation of EPS and for the threeand six months ended July 2, 2000, 4,083,005 anti-dilutive options and warrantshave been excluded from the calculation of EPS, as the Company had a net lossavailable to common stockholders for the periods.7. COMPREHENSIVE INCOME (LOSS)
The following table illustrates thecomponents of comprehensive income (loss) as required by SFAS 130:
 Three  Months Ended Six  Months Ended     July  1,  2001 July  2,  2000 July  1,  2001 July  2,  2000      Net income (loss)$(7,628)$1,221 $(6,546)$(9,602)Other comprehensive  income (loss)         Foreign currency  translation adjustments(1,221)42 (4,168)(2,198) Unrealized gain (loss)  on securities held for sale—  (114)— (46)      Comprehensive income  (loss)$(8,849)$1,149 $(10,714)$(11,846)     
8.          RESTRUCTURINGAND OTHER ASSET WRITEDOWNS

             Inthe second quarter of 2001, management approved a plan to restructure certainoperations in the United States, Spain, Ireland and Asia.  The total charge recorded for this plan was$10,151, which was comprised of the write-off of capitalized assets which wereabandoned totaling $4,765, lease termination costs of $1,783 and severance of$3,603 related to personnel reductions of approximately 653 managerial andmanufacturing employees.  Acorresponding liability for the cash portion of this charge was recorded inaccrued expenses and other current liabilities, of which approximately $2,163was paid during the quarter ended July 1, 2001.  The restructuring plan is expected to be substantially completeby the end of the third quarter of 2001.

             Inthe first quarter of 2001, management approved a plan to restructure certain ofthe Company’s Asian operations.  Thetotal charge recorded for this plan was $2,791, which was comprised of leasetermination costs of $1,788 and severance of $1,003 related to personnelreductions of approximately 333 managerial and manufacturing employees.  A corresponding liability was recorded inaccrued expenses and other current liabilities, of which $837 was paid duringthe six months ended July 1, 2001.  Therestructuring plan was completed during the second quarter of 2001.

             Thefollowing table sets forth the activity in the restructuring reserves throughJuly 1, 2001:
Balance at December  31, 2000$- Restructuring  provision2,791 Cash payments464   Balance at April 1,  20012,327 Restructuring  provision10,151 Asset writedowns4,765 Cash payments2,536   Balance at July 1,  2001$5,177   
             Reservesremaining at July 1, 2001 represent liabilities for severance and leasetermination payments.

9.          RECENTLYISSUED ACCOUNTING PRONOUNCEMENTS

             InJuly 2001, the Financial Accounting Standards Board issued SFAS No. 141,"Business Combinations" and SFAS No. 142, "Goodwill andOther Intangible Assets." SFAS No. 141 requires that all businesscombinations be accounted for under the purchase method only and that certainacquired intangible assets in a business combination be recognized as assetsapart from goodwill.  SFAS No. 142requires that ratable amortization of goodwill be replaced with periodic testsof the goodwill's impairment and that intangible assets other than goodwill beamortized over their useful lives. SFAS No. 141 is effective for allbusiness combinations initiated after June 30, 2001 and for all businesscombinations accounted for by the purchase method for which the date ofacquisition is after June 30, 2001. The provisions of SFAS No. 142will be effective for fiscal years beginning after December 15, 2001, andwill thus be adopted by the Company, as required, in fiscal year 2003. Theimpact of SFAS No. 141 and SFAS No. 142 on the Company's financialstatements has not yet been determined.ITEM 2.MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW

             Weare a leading global provider of advanced electronics manufacturing services tooriginal equipment manufacturers (OEMs). We have established a global networkof manufacturing facilities in the world's major electronics markets—NorthAmerica, Europe and Asia. We have developed relationships with leading OEMs inrapidly growing industries such as wired and wireless communications,networking and storage equipment, computer systems and peripherals, industrialequipment, medical products and commercial avionics. We offer our customers anoutsourcing solution that represents a lower total cost of ownership than thatprovided by their internal operations through efficient management of ourbusiness and aggressive management of our asset base. We seek to differentiate ourselvesby providing exceptional customer service and by broadly and deeply integratingour services into our customers' OEM operations.  We provide integrated supply chain solutions that address allstages of the product life cycle, including engineering and design, new productintroduction, materials procurement and management, printed circuit boardassembly, product assembly and system integration, testing, logistics anddistribution, and after-market support. We believe that this comprehensiverange of services promotes our growth by attracting new customers and capturingadditional outsourcing opportunities within our existing customer base.

             Sinceour founding in 1994, we have experienced substantial growth driven primarilyby acquisitions of existing OEM manufacturing facilities and by the increasingnumber of OEMs who are outsourcing their manufacturing requirements. Over thenext several years, we intend to continue to actively pursue strategicacquisitions and to benefit from this increasing trend by OEMs to outsourcetheir manufacturing requirements.

             Wework closely with our customers to anticipate and forecast their future volumeof orders and delivery dates. We derive most of our net sales under purchaseorders from our customers. We recognize sales, net of product return andwarranty costs, typically at the time of product shipment or as services arerendered. Our cost of goods sold includes the cost of electronic components andmaterials, labor costs and manufacturing overhead. The procurement of rawmaterials and components requires us to commit significant working capital toour operations and to manage the purchasing, receiving, inspection and stockingof these items. Our typical customer contract contains provisions which specifythat we may recover from the customer inventory costs and material acquisitioncosts for raw material which becomes excess or obsolete due to customerreschedules, cancellations or product changes.

             Ouroperating results are affected by the level of capacity utilization in ourmanufacturing facilities, indirect labor costs and selling, general andadministrative expenses. Gross margins and operating income generally improveduring periods of high-volume and high-capacity utilization in ourmanufacturing facilities and decline during periods of low-volume andlow-capacity utilization. However, certain of our customer contracts containguaranteed minimum commitments, requiring the customer to either purchasecertain contractual minimum quantities or pay for amounts in deficit of theminimum purchase commitment.  Suchcontracts, including our contract with 3Com related to manufacturing servicesprovided in Mt. Prospect, Illinois, help offset the negative impact oflow-capacity utilization on gross margins and operating income.

             Duringthe first half of fiscal 2001, the 3Com supply contract related to our Mt.Prospect facility provided a significant positive contribution to our operatingresults due to 3Com’s contractual payment commitments, that were notaccompanied by the corresponding variable expenses associated with themanufacture of products, coupled with 3Com not achieving its contractualminimum requirements.  At 3Com’srequest, we anticipate engaging in discussions with 3Com regarding themodification of the Mt. Prospect agreement on mutually beneficial terms toconform to 3Com’s current demand requirements. While we are mindful of the current economic benefits being realizedfrom the Mt. Prospect contract, we may agree to modify the terms of thecontract if we believe it is beneficial to our long-term relationship with 3Comand MSL’s overall financial condition. Although we do not at this time know whether this contract will bemodified, or the terms of such a modification, it is possible that such amodification may have a negative impact on our future quarterly operatingresults.  Moreover, regardless of theoutcome of these discussions with 3Com, we do not believe we will be able torenew the contract on its current favorable terms following the expiration ofthe contract term on September 30, 2002.

             Asa result of the current economic uncertainty and slowdown in the economygenerally, several of our customers and competitors have announced layoffs andhave indicated that revenues and earnings in future periods may be less thanpreviously expected. Such a slowdown in economic growth could have a negativeimpact on our future financial performance.

             Ourbusiness strategy includes the continued expansion of our global manufacturingnetwork. Currently, approximately 85% of our net sales worldwide aredenominated in US dollars, while our labor and utility costs in facilitiesoutside of the United States are denominated in local currencies. Foreigncurrency gains and losses are the result of transacting business in a currencythat is different from the functional currency of our operating entity and themovements in those currencies between the time a transaction is recorded forfinancial reporting purposes and the time payment is made or received. Wecurrently use forward foreign exchange contracts on a limited basis to minimizeour foreign currency risk but not for trading purposes. We expect to continueto utilize forward foreign exchange contracts only to the extent that thesecontracts minimize exposure and reduce risk from exchange rate fluctuations onspecific underlying transactions that create foreign currency exchange raterisk for us. Any increase or decrease in our use of derivative financialinstruments will likely be as a result of these contracts.RECENT ACQUISITIONS
             Asignificant portion of our growth has come from recent acquisitions, which havestrengthened existing customer relationships, added new customers and increasedour range of service offerings.

             InJanuary 2001, we acquired selected fixed assets and intangible assets fromOce-Industries, an existing customer and a leading Netherlands-based OEM, for$5.9 million in cash and assumed liabilities. As part of the transaction, we acquired a 130,000 square foot manufacturingfacility in Guerande, France.  Inconnection with this acquisition, we entered into a three-year supply agreementto manufacture complex printer systems for Oce-Industries.  We also retained the facility employees.  The acquisition of the Guerande facilityexpanded our relationship with Oce-Industries and provided us with ouroperations in France.

             InSeptember 2000, we acquired selected inventory, fixed assets and intangibleassets from 3Com, an existing customer, for $78.1 million. The purchase priceconsisted of $59.1 million in cash, financed with a term loan under our bankcredit facility, and 1,551,220 shares of our Common Stock. As part of thistransaction, we leased a 404,000 square foot manufacturing facility located inMt. Prospect, Illinois, near Chicago. In connection with this acquisition, weentered into a two-year supply agreement with 3Com to produce digitalsubscriber line (DSL) and cable modems, carrier systems products and digitalcameras. We also retained the facility employees. In addition to expanding ourrelationship with 3Com, this acquisition enhanced our new product introduction,product assembly and systems integration and testing capabilities.

RESTUCTURING AND OTHER ASSET WRITEDOWNS

             Generally,we enter into business acquisitions or asset acquisitions and related supplyagreements with the intention of improving the existing manufacturingoperations, reducing costs and improving operating margins.  To accomplish this, we typically assess themanufacturing processes and employee base and restructure the operations.

             Duringthe quarter ended July 1, 2001, we approved a plan to restructure certainoperations in the United States, Spain, Ireland and Asia. The totalrestructuring charge recorded for this plan was $10.2 million, which wascomprised of the write-off of capitalized assets which were abandoned of $4.8million, lease termination costs of $1.8 million and severance of $3.6 millionrelated to personnel reductions of approximately 653 managerial andmanufacturing employees.  As of July 1,2001, we had paid approximately $2.2 million of the cash portion of thecharge.  We expect the restructuringplan to be substantially complete by the end of the third quarter of 2001, andthe savings from the implementation of this plan to be approximately $18.5million annually.  We expect to beginrealizing the majority of these expense savings in the second half of the yearending December 31, 2001, and most of these savings will be reflected in costof goods sold in our reported results of operations.

             Duringthe quarter ended April 1, 2001, we approved a plan to restructure certainoperations in Asia, including moving some of our Asian operations to China. Thetotal restructuring charge recorded for this plan was $2.8 million, which wascomprised of lease termination costs of $1.8 million and severance of $1.0million related to personnel reductions of approximately 333 managerial andmanufacturing employees.  As of July 1,2001, we had paid $0.8 million of the cash portion of the charge.  The restructuring plan was substantiallycomplete at the end of the second quarter of 2001, and the expected savingsfrom the implementation of this plan are estimated to be approximately $4.3million annually.  We expect to beginrealizing the majority of these expense savings in the second half of the yearending December 31, 2001, and these savings will be reflected in cost of goodssold in our reported results of operations.

             The following table sets forth theactivity in the restructuring reserves through July 1, 2001 (dollars in thousands):
Balance at December  31, 2000$- Restructuring  provision2,791 Cash payments464   Balance at April 1,  20012,327 Restructuring  provision10,151 Asset writedowns4,765 Cash payments2,536   Balance at July 1,  2001$5,177   
             Reservesremaining at July 1, 2001 primarily represent liabilities for severance andlease termination payments.

             Wehave not implemented any further plans to date to restructure operations.  However, in light of current economicconditions, we may implement further restructuring plans during fiscal2001.  Such plans may include furtherheadcount reductions, lease terminations, and disposal of underutilizedmanufacturing assets, as well as shut-downs of manufacturing facilities.  If we were to implement such plans, it mayresult in significant further restructuring costs related to severance paymentsand lease termination costs, as well as writedowns of certain long-livedassets, including intangible assets.  Inparticular, we have supply contracts with 3Com that expire on November 27, 2001(associated with the asset purchase related to our Salt Lake City, Utahfacility) and September 30, 2002 (associated with the asset purchase related toour Mt. Prospect, Illinois facility). 3Com has informed us that it does not wish to renew these contracts ontheir current terms.  We intend to bidon further business with 3Com following the expiration of these contracts.  If we fail to maintain the same levels ofbusiness with 3Com under the Salt Lake City or Mt. Prospect contracts followingtheir expiration, it may result in the impairment of significant intangibleassets related to our relationship with 3Com or a reduction of the amortizationperiod of the intangible assets to the contract term.  However, based on current information, there is no impairmentrelated to intangible assets associated with 3Com, and the current amortizationperiods assigned to the intangibles are considered appropriate.  We do not believe the cash charges from anyrestructuring actions undertaken during the balance of fiscal 2001 would exceed$12.0 million.  Potential chargesrelated to asset writedowns are not currently estimable.
RESULTS OF OPERATIONS

             Thefollowing table sets forth specified operating data, in dollars and as a percentageof net sales, for the periods indicated:
 Three  Months Ending Six  Months Ending     July  1, 2001 July  2, 2000 July  1, 2001 July  2, 2000       (Dollars  in thousands) Net sales$403,505 100.0%$362,422 100.0%$932,213 100.0%$695,242 100.0%Cost of goods sold371,288 92.0 341,266 94.2 865,860 92.9 657,771 94.6          Gross profit32,217 8.0 21,156 5.8 66,353 7.1 37,471 5.4 Selling, general and  administrative (a)23,634 5.9 14,191 3.9 47,563 5.1 30,893 4.4 Restructuring and  other asset writedowns10,151 2.5 — — 12,942 1.4 — — Litigation settlement  (b)— — — — — — 6,000 0.9          Operating income  (loss)(1,568)(0.4)6,965 1.9 5,848 0.6 578 0.1 Interest expense, net(5,826)(1.4)(4,085)(1.1)(11,550)(1.2)(7,561)(1.1)Foreign exchange gain  (loss)229 0.1 (293)(0.1)192 (0.0)(966)(0.1)         Income (loss) before  provision for income taxes and extraordinary loss(7,165)(1.8)2,587 0.7 (5,510)(0.6)(7,949)(1.1)Provision for income  taxes463 0.1 739 0.2 1,036 0.1 1,026 0.1          Income (loss) before  extraordinary loss(7,628)(1.9)1,848 0.5 (6,546)(0.7)(8,975)(1.3)Extraordinary loss— — (627) — — — (627)(0.1)         Net income (loss)$(7,628)(1.9)%$1,221 0.5%$(6,546)(0.7)%$(9,602)(1.4)%         (a)Includes  $334, $232, $519 and $4,219 of non-cash charges related to stock-based  compensation in the three months ended  July 1, 2001 and July 2, 2000, and the six months ended July 1, 2001 and July  2, 2000, respectively.  (b)Represents  the settlement of a legal claim arising from a potential acquisition that was  not consummated.
 

FISCAL QUARTER ENDED JULY 1, 2001COMPARED TO FISCAL QUARTER ENDED JULY 2, 2000

NET SALES

             Netsales for the quarter ended July 1, 2001 increased $41.1 million, or 11.3%, to$403.5 million from $362.4 million for the quarter ended July 2, 2000. Netsales for the quarter ended July 1, 2001 included $87.0 million attributable toour Mt. Prospect and Guerande facilities, which were acquired in September 2000and January 2001, respectively. Additional increases include $21.3 million fromthree existing customers and $20.4 million from three new customers.  These additional sales were partially offsetby volume reductions in two customers' programs of $20.8 million due tocancellation of these customers’ programs. Other volume reductions are primarily related to the economic downturnexperienced during the first half of 2001.

GROSS PROFIT

             Grossprofit increased to 8.0% of net sales for the quarter ended July 1, 2001 from5.8% of net sales for the quarter ended July 2, 2000. This increase resultedprimarily from the positive effects of our Mt. Prospect and Guerandefacilities, which operate under customer contracts with guaranteed minimumpurchase commitments.  Our contract with3Com related to our Mt. Prospect facility provided the majority of thiscontribution.  Gross profit was alsopositively impacted by the mix of customer programs in the quarter ended July1, 2001. These increases were partially offset by the decrease in utilizationof our manufacturing capacity related to the economic downturn experiencedduring the first half of 2001.

SELLING, GENERAL AND ADMINISTRATIVE

             Selling,general and administrative expense for the quarter ended July 1, 2001 increasedto $23.6 million, or 5.9% of net sales, from $14.2 million, or 3.9% of netsales, for the quarter ended July 2, 2000. This increase related to the assetand business acquisitions that occurred since the second quarter of 2000,including amortization of intangible assets ($0.4 million) and expenses relatedto human resources, accounting and information systems necessary to support thenew facilities ($2.5 million). Additional increases include consulting andprofessional fees ($2.9 million), primarily associated with integratinginformation systems, amortization of internal use software ($0.7 million),administrative costs associated with four start-up operations and growth of ourcorporate organization to support new facilities acquired or opened since July2, 2000.

INTEREST EXPENSE, NET

             Netinterest expense increased to $5.8 million for the quarter ended July 1, 2001from $4.1 million for the quarter ended July 2, 2000, reflecting higher averageborrowings, partially offset by the impact of decreasing interest rates.

FOREIGN EXCHANGE GAINS/LOSSES

             Foreignexchange gains for the three months ended July 1, 2001 were $0.2 million.  Foreign exchange losses for the three monthsended July 2, 2000 were $0.3 million. The foreign exchange gains and losses realized in both periods areprimarily related to the changes in the value of the US dollar in relation tothe Spanish peseta on materials purchased in Valencia which must be settled inUS dollars.
PROVISION FOR INCOME TAXES

             Provisionfor income taxes was $0.5 million for the quarter ended July 1, 2001 and $0.7million for the quarter ended July 2, 2000. Our tax provisions in both quartersresulted from the mix of profits and losses experienced by us across thejurisdictions within which we operate. For the quarter ended July 1, 2001,losses in Asia provided us with no income tax benefit while profits in Spainand France required us to record tax provisions.  There is no tax provision on profits in the United States due tothe benefit of net operating loss carryforwards, against which a full valuationallowance had previously been provided.

SIX MONTHS ENDED JULY 1, 2001 COMPARED TOSIX MONTHS ENDED JULY 2, 2000

NET SALES

             Netsales for the six months ended July 1, 2001 increased $237.0 million, or 34.0%,to $932.2 million from $695.2 million for the six months ended July 2, 2000.Net sales for the six months ended July 1, 2001 included $206.3 millionattributable to our Mt. Prospect and Guerande facilities, which were acquiredin September 2000 and January 2001, respectively. Additional increases include$68.3 million from five existing customers and $50.4 million from three newcustomers.  These additional sales werepartially offset by volume reductions related to the economic downturn as wellas $29.0 million related to the cancellation of two customers' programs.

GROSS PROFIT

             Grossprofit increased to 7.1% of net sales for the six months ended July 1, 2001from 5.4% of net sales for the six months ended July 2, 2000. This increaseresulted primarily from the positive effects of our Mt. Prospect and Guerandefacilities, which operate under customer contracts with guaranteed minimumpurchase commitments. Our contract with 3Com related to our Mt. Prospectfacility provided the most significant contribution.  Gross profit was also positively impacted by the mix of customerprograms in the six months ended July 1, 2001. These increases were partially offset by the decrease in utilization ofour manufacturing capacity related to the economic downturn experienced duringthe first half of 2001.

SELLING, GENERAL AND ADMINISTRATIVE

             Selling,general and administrative expense for the six months ended July 1, 2001increased to $47.6 million, or 5.1% of net sales, from $30.9 million, or 4.4%of net sales, for the six months ended July 2, 2000. This increase related tothe asset and business acquisitions that occurred since the second quarter of2000, including amortization of intangible assets ($1.0 million) and expensesrelated to human resources, accounting and information systems necessary tosupport the new facilities ($5.6 million). Additional increases includeconsulting and professional fees, primarily associated with integratinginformation systems ($4.5 million), amortization of internal use software ($1.3million), additions to the allowance for doubtful accounts ($1.2 million),administrative costs associated with four start-up operations and growth of ourcorporate organization to support new facilities acquired or opened since July2, 2000.  These increases were partiallyoffset by a reduction in stock-based compensation due to a $3.8 million chargerecognized in the quarter ended April 2, 2000 related to stock granted tosenior management.

LEGAL SETTLEMENT

             InApril 2000, we agreed to settle a claim for damages brought against us arisingfrom a potential acquisition that was not consummated.  As a result, we recorded a $6.0 millioncharge in the three months ended April 2, 2000.

INTEREST EXPENSE, NET

             Netinterest expense increased to $11.6 million for the six months ended July 1,2001 from $7.6 million for the six months ended July 2, 2000, reflecting higheraverage borrowings, partially offset by the impact of decreasing interestrates.

FOREIGN EXCHANGE GAINS/LOSSES

             Foreignexchange gains for the six months ended July 1, 2001 were $0.2 million comparedto foreign exchange losses of $1.0 million for the six months ended July 2,2000.  Approximately $0.4 million of theloss for the six months ended July 2, 2000 related to the strengthening of theUS dollar in relation to the Spanish peseta on materials purchased in Valenciawhich must be settled in US dollars. The remaining $0.6 million of the loss was attributable to thestrengthening of the US dollar in relation to the Spanish peseta in connectionwith a US dollar denominated loan in Valencia. The change in foreign exchange gains and losses was attributable to theincreased use, and effectiveness, of forward foreign exchange contracts tohedge currency losses.

PROVISION FOR INCOME TAXES

             Provisionfor income taxes was $1.0 million for both the six months ended July 1, 2001and the six months ended July 2, 2000. Our tax provisions in both periods resulted from the mix of profits andlosses experienced by us across the jurisdictions within which we operate. Forthe six months ended July 1, 2001, losses in Asia provided us with no incometax benefit while profits in Spain and France required us to record taxprovisions.  There is no tax provisionon profits in the United States due to the benefit of net operating losscarryforwards, against which a full valuation allowance had previously beenprovided.

LIQUIDITY AND CAPITAL RESOURCES

             AtJuly 1, 2001, we had cash and cash equivalents of $17.5 million, total bank andother debt of $209.9 million and $58.5 million of unused borrowing capacityunder our revolving bank credit facility. During the quarter ended July 1, 2001, our operations were fundedprimarily with borrowings under our bank credit facility and cash generatedfrom operations.
             Netcash used in operating activities of $0.6 million for the six months ended July1, 2001 resulted primarily from a net loss of $6.5 million and a decrease inoperating liabilities of $247.3 million, offset by items such as depreciationand amortization of $18.1 million, a decrease in operating assets of $226.0million and non-cash charges related to loss on disposal and abandonment offixed assets and additions to allowance for doubtful accounts totaling $7.3million.  The decrease in operatingassets included  a $97.0 millionreduction in inventory attributable to the sale of excess inventory under theprovisions of our customer contracts. Of the $97.0 million of excess inventory sales recorded during theperiod, $21.0 million remaining to be collected were recorded in prepaidexpenses and other current assets at July 1, 2001.  Net cash used in operating activities of $20.7 million for thesix months ended July 2, 2000 resulted primarily from a net loss of $9.6million and an increase in operating assets of $85.5 million offset by anincrease of operating liabilities of $53.4 million, depreciation andamortization of $12.7 million and other non-cash items aggregating $8.3million.  Other non-cash items includenon-cash charges for equity awards of $4.0 million and other non-cash chargesof $1.0 million associated with the obligations of Donaldson, Lufkin &Jenrette Securities Corporation under a litigation settlement agreement withLockheed Martin Corporation.  Theincrease in depreciation and amortization for the six months ended July 1, 2001compared to the six months ended July 2, 2000 reflects the impact of asset andbusiness acquisitions since July 2, 2000 as well as an overall increase in thedepreciable asset base due to investments in manufacturing equipment and internaluse software.

             Netcash used in investing activities for the six months ended July 1, 2001 was$13.3 million, consisting primarily of $11.1 million of net capitalexpenditures, $0.8 million of internal use software, and $1.4 million for theacquisition of intangible assets related to our Guerande facility.  Capital expenditures include $3.9 millionrelated to the purchase of our Guerande facility. Net cash used in investingactivities for the six months ended July 2, 2000 was $19.0 million, consisting of$11.3 million of capital expenditures, $4.9 million of internal use software,and, using proceeds from the initial public offering, $2.8 million for theacquisition of Qualitronics, Inc. Capital expenditures consisted of production equipment for our ArdenHills, Asia and Salt Lake City facilities and computer hardware and software inSalt Lake City.

             Netcash provided by financing activities for the six months ended July 1, 2001 was$22.4 million, consisting of net borrowings under our bank credit facility of$21.6 million and proceeds from the issuance of stock under our employee stockpurchase plan of $1.1 million.  Net cashprovided by financing activities for the six months ended July 2, 2000 was$55.1 million, including net proceeds of $161.4 million from the issuance ofcommon stock in the initial public offering which closed in June 2000.  These proceeds were used to pay off aportion of borrowings under our bank credit facility ($99.5 million) and retireall of our outstanding senior preferred stock ($58.9 million, includingremaining dividends owed).  Otherfinancing activities for the six months ended July 2, 2000 included netborrowings under our bank credit facility of $54.1 million, excluding amountspaid off with proceeds from the initial public offering, and $1.9 million ofdividends paid on our senior preferred stock prior to the retirement.

             Webelieve our current level of working capital, cash expected to be generatedfrom operations, leasing capabilities and amounts available under our existingrevolving credit facility will be adequate to meet our anticipated futureoperating expenses, capital expenditures and debt obligations for at least thenext twelve months.  Our liquidity needsbeyond the next twelve months will not be materially different from currentneeds except for the financing requirements of future acquisitions, if any, andfor future internal growth.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

             InJuly 2001, the Financial Accounting Standards Board issued SFAS No. 141,"Business Combinations" and SFAS No. 142, "Goodwill andOther Intangible Assets." SFAS No. 141 requires that all businesscombinations be accounted for under the purchase method only and that certainacquired intangible assets in a business combination be recognized as assetsapart from goodwill.  SFAS No. 142requires that ratable amortization of goodwill be replaced with periodic testsof the goodwill's impairment and that intangible assets other than goodwill beamortized over their useful lives. SFAS No. 141 is effective for allbusiness combinations initiated after June 30, 2001 and for all businesscombinations accounted for by the purchase method for which the date ofacquisition is after June 30, 2001. The provisions of SFAS No. 142will be effective for fiscal years beginning after December 15, 2001, andwe will adopt the provisions, as required, in fiscal year 2002. The impact ofSFAS No. 141 and SFAS No. 142 on our financial statements has not yetbeen determined.

FORWARD LOOKING STATEMENTS

             ThisForm 10-Q includes forward-looking statements. Some of the forward-lookingstatements can be identified by the use of forward-looking words such as"believes," "expects," "may," "will,""should," "seeks," "approximately,""intends," "plans," "estimates" or "anticipates"or the negative of those words or other comparable terminology. Forward-lookingstatements involve risks and uncertainties. A number of important factors couldcause actual results to differ materially from those in the forward-lookingstatements. These factors include systems failures, technological changes,volatility of securities markets, government regulations and economicconditions and competition in the areas in which we conduct our operations. Fora discussion of factors that could cause actual results to differ, please seethe discussion under "Risk Factors" included below in this Form 10-Q.The forward-looking statements made in this Form 10-Q represent our views onlyas of the date of this Report, and we disclaim any duty to update these statements,even if subsequent events cause our views to change.
RISKFACTORS

             YOUSHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN INVESTMENTDECISION. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEMIMMATERIAL MAY ALSO IMPAIR OUR BUSINESS. ANY OF THESE RISKS COULD HAVE AMATERIAL AND NEGATIVE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OFOPERATIONS.

BECAUSE A SIGNIFICANT PORTION OF OURSALES CURRENTLY COMES FROM A SMALL NUMBER OF CUSTOMERS, ANY DECREASE IN SALESFROM THESE CUSTOMERS COULD HARM OUR OPERATING RESULTS.

             Wedepend on a small number of customers for a large portion of our business. Ourten largest customers accounted for approximately 87% of net sales in the sixmonths ended July 1, 2001 and approximately 88% of net sales for fiscal2000.  Changes in our customers' ordershave, in the past, had a significant impact on our operating results. If amajor customer significantly reduces the amount of business it does with us,there would be an adverse impact on our operating results.

             Weexpect to continue to depend on sales to our major customers. Because it is notalways possible to replace lost business on a timely basis, it is likely thatour operating results would be adversely affected if one or more of our majorcustomers were to cancel, delay or reduce a large amount of business with us inthe future. Our customer agreements typically permit the customer to terminatethe agreement on three to six month's notice. Were a customer to terminate itsagreement with us, it is likely that our operating results would be adverselyaffected.  Moreover, our operatingresults have been positively affected by several customer contracts containingguaranteed minimum commitments, including our contract with 3Com at our Mt.Prospect, Illinois facility.  Whilethose contracts generally have fixed terms and may not be terminated (absent abreach) prior to their stated expiration, our operating results would beadversely affected if we fail to renew those contracts on similarly favorableterms.

             Inaddition, we generate significant accounts receivable in connection withproviding services to our major customers. If one or more of our customers wereto become insolvent or otherwise be unable to pay for our services, ouroperating results and financial condition could be adversely affected.

WE HAVE MADE SEVERAL RECENT STRATEGICACQUISITIONS OF MANUFACTURING FACILITIES AND BUSINESSES AND MAY MAKE MOREACQUISITIONS IN THE FUTURE, AND THE FAILURE TO SUCCESSFULLY INTEGRATE ACQUIREDFACILITIES AND BUSINESSES MAY ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.

             Wehave made several significant acquisitions since the beginning of fiscal 1999,and selectively pursuing strategic acquisitions remains an important part ofour overall business strategy. However, any acquisitions we make could resultin:
-difficulty  integrating our operations, technologies, financial controls and information  systems, products and services with those of the acquired facility;  -difficulty  in managing and operating geographically dispersed businesses, including some  located in foreign countries;  -diversion  of our capital and our management's attention away from other business  issues;  -an  increase in our expenses and our working capital requirements;  -potential  loss of key employees and customers of facilities or businesses we acquire;  and  -financial  risks, such as:  -potential  liabilities of the facilities and businesses we acquire;  -our  need to incur additional indebtedness; and  -dilution  if we issue additional equity securities.
             Wemay not successfully integrate any operations, technologies, systems, productsor services that we acquire, and we cannot assure you that any of our recent orfuture acquisitions will be successful. If any of our recent or futureacquisitions are not successful, it is likely that our financial performancewill be adversely affected.

OUR GROWTH MAY BE LIMITED AND OURCOMPETITIVE POSITION MAY BE HARMED IF WE ARE UNABLE TO IDENTIFY, FINANCE ANDCOMPLETE FUTURE ACQUISITIONS.

             Weexpect to selectively pursue strategic acquisitions as part of our overallbusiness strategy. Competition for acquiring attractive facilities andbusinesses in our industry is substantial. In executing this part of our businessstrategy, we may experience difficulty in identifying suitable acquisitioncandidates or in completing selected transactions. In addition, our existingbank credit facilities limit our ability to acquire the assets or businesses ofother companies. If we are able to identify acquisition candidates, suchacquisitions may be financed with substantial debt or with potentially dilutiveissuances of equity securities. Our ability to successfully completeacquisitions in the future will depend upon several factors, including thecontinued availability of financing. We cannot assure you that financing foracquisitions will be available on terms acceptable to us, if at all.
THE INCURRENCE OF INDEBTEDNESS COULD HARMOUR OPERATING RESULTS AND FINANCIAL CONDITION.

             Ourgrowth and acquisition strategy could require us to incur substantial amountsof indebtedness. As of July 1, 2001, our total debt was $209.9 million and ourinterest expense for the six months ended July 1, 2001 was $5.8 million. Inaddition, we may incur additional indebtedness in the future.  Our future level of indebtedness could haveadverse consequences for our business, including:
-vulnerability  to the effects of poor economic and industry conditions affecting our  business;  -dedication  of a substantial portion of our cash flow from operations to repayment of  debt, limiting the availability of cash for working capital, capital  expenditures or acquisitions which may be attractive to us;  -reduced  flexibility in planning for, or reacting to, changes in our business and  industry, due to the debt repayment obligations and restrictive covenants  contained in our debt instruments; and  -failure  to comply with the financial covenants under the agreements governing our  indebtedness relating to matters such as interest coverage, leverage,  consolidated EBITDA and net worth resulting in an event of default, which if  not cured or waived, could cause substantially all of our indebtedness to  become immediately due and payable.
             Wehave financial instruments that are subject to interest rate risk, principallydebt obligations under our bank credit facility. An increase in the base ratesupon which our interest rates are determined could have an adverse effect onour operating results and financial condition.

COMPETITION FROM EXISTING OR NEWCOMPANIES IN THE EMS INDUSTRY COULD CAUSE US TO EXPERIENCE DOWNWARD PRESSURE ONPRICES, FEWER CUSTOMER ORDERS, REDUCED MARGINS, THE INABILITY TO TAKE ADVANTAGEOF NEW BUSINESS OPPORTUNITIES AND THE LOSS OF MARKET SHARE.

             Weoperate in a highly competitive industry. We compete against many domestic andforeign companies, some of which have substantially greater manufacturing,financial, research and development and marketing resources than we do. Some ofour competitors have broader geographic breadth and range of services than wedo. In addition, some of our competitors may have more developed relationshipswith our existing customers than we do. We also face competition from themanufacturing operations of our current and potential customers, whocontinually evaluate the benefits of internal manufacturing versus outsourcing.As more OEMs dispose of their manufacturing assets and increase the outsourcingof their products, we will face increasing competitive pressures to grow ourbusiness in order to maintain our competitive position.
LONG-TERM CONTRACTS ARE NOT TYPICAL INOUR INDUSTRY, AND REDUCTIONS, CANCELLATIONS OR DELAYS IN CUSTOMER ORDERS WOULDADVERSELY AFFECT OUR OPERATING RESULTS.

             Asis typical in the EMS industry, we do not usually obtain long-term purchaseorders or commitments from our customers. Instead, we work closely with ourcustomers to develop non-binding forecasts of the future volume of orders.  Customers may cancel their orders, changeproduction quantities from forecasted volumes or delay production for a numberof reasons beyond our control. Significant or numerous cancellations, reductions or delays in orders byour customers would reduce our net sales. In addition, because many of our costsare fixed, a reduction in net sales could have a disproportionate adverseeffect on our operating results. From time to time we make capital investmentsin anticipation of future business opportunities. There can be no assurancethat we will receive the anticipated business. If we are unable to obtain theanticipated business, our operating results and financial condition may beharmed.

WE DEPEND ON OUR SUPPLIERS, SOME OF WHICHARE THE SOLE SOURCE FOR OUR COMPONENTS, AND OUR PRODUCTION WOULD BE SUBSTANTIALLYCURTAILED IF THESE SUPPLIERS ARE NOT ABLE TO MEET OUR DEMANDS AND ALTERNATIVESOURCES ARE NOT AVAILABLE.

             Weorder raw materials and components to complete our customers' orders, and someof these raw materials and components are ordered from sole-source suppliers.Although we work with our customers and suppliers to minimize the impact ofshortages in raw materials and components, we sometimes experience short-termadverse effects due to price fluctuations and delayed shipments. In the past,there have been industry-wide shortages of electronic components, particularlymemory and logic devices. If a significant shortage of raw materials orcomponents were to occur, we may have to delay shipments, and our operatingresults would be adversely affected. In some cases, supply shortages ofparticular components will substantially curtail production of products usingthese components. While most of our significant customer contracts permitquarterly or other periodic reviews of pricing based on decreases and increasesin the prices of raw materials and components, we are not always able to passon price increases to our customers. Accordingly, some raw material andcomponent price increases could adversely affect our operating results. We alsodepend on a small number of suppliers for many of the other raw materials andcomponents that we use in our business. If we were unable to continue topurchase these raw materials and components from our suppliers, our operatingresults would be adversely affected. Because many of our costs are fixed, ourmargins depend on our volume of output at our facilities and a reduction involume will adversely affect our margins

IF WE ARE LEFT WITH EXCESS INVENTORY, OUROPERATING RESULTS WILL BE ADVERSELYAFFECTED.

             Wetypically purchase components and manufacture products in anticipation ofcustomer orders based on customer forecasts. For a variety of reasons, such asdecreased end-user demand for the products we are manufacturing, our customersmay not purchase all of the products we have manufactured or for which we havepurchased components. In such event, we would attempt to recoup our materialsand manufacturing costs by means such as returning components to our vendors,disposing of excess inventory through other channels or requiring our OEMcustomers to purchase or otherwise compensate us for such excess inventory.Some of our significant customer agreements do not give use the ability torequire our OEM customers to do so. To the extent we are unsuccessful inrecouping our material and manufacturing costs, not only would our net sales beadversely affected, but our operating results would be disproportionatelyadversely affected. Moreover, carrying excess inventory would reduce theworking capital we have available to continue to operate and grow our business.
UNCERTAINTIES AND ADVERSE TRENDSAFFECTING THE ELECTRONICS INDUSTRY OR ANY OFOUR MAJOR CUSTOMERS MAY ADVERSELY AFFECT OUR OPERATING RESULTS.

             Ourbusiness depends on the electronics industry, which is subject to rapid technologicalchange, short product life cycles and pricing and margin pressure.  In addition, the electronics industry hashistorically been cyclical and subject to significant downturns characterizedby diminished product demand, rapid declines in average selling prices andproduction over-capacity. When these factors adversely affect our customers, wemay suffer similar effects. Our customers' markets are also subject to economiccycles and are likely to experience recessionary periods in the future. The economicconditions affecting the electronics industry, in general, or any of our majorcustomers, in particular, may adversely affect our operating results.

BECAUSE WE HAVE SIGNIFICANT OPERATIONSOVERSEAS, OUR OPERATING RESULTS COULD BEHARMED BY ECONOMIC, POLITICAL, REGULATORY AND OTHER FACTORS EXISTING IN FOREIGNCOUNTRIES IN WHICH WE OPERATE.

             Wehave substantial manufacturing operations in Europe and Asia. Our internationaloperations are subject to inherent risks, which may adversely affect us, including:
-political  and economic instability in countries where we have manufacturing facilities,  particularly in Asia where we conduct a significant portion of our business;  -fluctuations  in the value of foreign currencies;  -high  levels of inflation, historically the case in a number of countries in Asia  where we do business;  -changes  in labor conditions and difficulties in staffing and managing our foreign  operations;  -greater  difficulty in collecting our accounts receivable and longer payment cycles;  -burdens  and costs of our compliance with a variety of foreign laws;  -increases  in the duties and taxes we pay;  -imposition  of restrictions on currency conversion or the transfer of funds; and  -  expropriation  of private enterprises.
OUR QUARTERLY OPERATING RESULTS ARESUBJECT TO FLUCTUATIONS AND SEASONALITY AND IF WE FAIL TO MEET THE EXPECTATIONSOF SECURITIES ANALYSTS OR INVESTORS THE PRICE OF OUR SECURITIES MAY DECREASE.

             Ourannual and quarterly results may vary significantly depending on variousfactors, many of which are beyond our control, and may not meet theexpectations of securities analysts or investors. If this occurs, the price ofour common stock would likely decline. These factors include:
-variations  in the timing and volume of customer orders relative to our manufacturing  capacity;  -introduction  and market acceptance of our customers' new products;  -changes  in demand for our customers' existing products;  -the  timing of our expenditures in anticipation of future orders;  -effectiveness  in managing our manufacturing processes;  -changes  in competitive and economic conditions generally or in our customers' markets  -the  timing of, and the price we pay for, acquisitions and related integration  costs;  -changes  in the cost or availability of components or skilled labor; and  -foreign  currency exposure.
             Asis the case with many technology companies, we typically ship a significantportion of our products in the last few weeks of a quarter. As a result, anydelay in anticipated sales is likely to result in the deferral of theassociated revenue beyond the end of a particular quarter, which would have asignificant effect on our operating results for that quarter. In addition, mostof our operating expenses do not vary directly with net sales and are difficultto adjust in the short term. As a result, if net sales for a particular quarterwere below our expectations, we could not proportionately reduce operatingexpenses for that quarter, and, therefore, that revenue shortfall would have adisproportionate adverse effect on our operating results for that quarter.
LOSS OF ANY OF OUR KEY PERSONNEL COULDHURT OUR BUSINESS BECAUSE OF THEIR EXPERIENCE IN THE EMS INDUSTRY AND THEIRTECHNOLOGICAL EXPERTISE.

             Weoperate in the highly competitive EMS industry and depend on the services ofour key senior executives and our technological experts. The loss of theservices of one or several of our key employees or an inability to attract,train and retain qualified and skilled employees, specifically engineering,operations and sales personnel, could result in the loss of customers orotherwise inhibit our ability to operate and grow our business successfully. Inaddition, our ability to successfully integrate acquired facilities orbusinesses depends, in part, on our ability to retain and motivate keymanagement and employees hired by us in connection with the acquisition.

IF WE ARE UNABLE TO MAINTAIN OURTECHNOLOGICAL EXPERTISE IN DESIGN AND MANUFACTURING PROCESSES WE WILL NOT BEABLE TO SUCCESSFULLY COMPETE.

             Webelieve that our future success will depend upon our ability to develop andprovide design and manufacturing services that meet the changing needs of ourcustomers. This requires that we successfully anticipate and respond totechnological changes in design and manufacturing processes in a cost-effectiveand timely manner. As a result, we continually evaluate the advantages andfeasibility of new product design and manufacturing processes. We cannot,however, assure you that our process development efforts will be successful.

WE ARE SUBJECT TO A VARIETY OFENVIRONMENTAL LAWS THAT EXPOSE US TO POTENTIAL FINANCIAL LIABILITY.

             Ouroperations are regulated under a number of federal, state and foreignenvironmental and safety laws and regulations that govern, among other things,the discharge of hazardous materials into the air and water as well as thehandling, storage and disposal of these materials. These laws and regulationsinclude the Clean Air Act, the Clean Water Act, the Resource, Conservation andRecovery Act, and the Comprehensive Environmental Response, Compensation andLiability Act, as well as analogous state and foreign laws. Compliance withthese environmental laws is a major consideration for us because we usehazardous materials in our manufacturing process. In addition, because we are agenerator of hazardous wastes, we, along with any other person who arranges forthe disposal of our wastes, may be subject to financial exposure for costsassociated with an investigation and any remediation of sites at which we havearranged for the disposal of hazardous wastes if these sites becomecontaminated, even if we fully comply with applicable environmental laws. Inthe event of a violation of environmental laws, we could be held liable fordamages. And for the costs of remedial actions and could also be subject torevocation of our effluent discharge permits. Any revocation could require usto cease or limit production at one or more of our facilities, therebynegatively impacting our revenues and results of operations. Environmental lawscould also become more stringent over time, imposing greater compliance costsand increasing risks and penalties associated with any violation, which alsocould negatively impact our operating results.

OUR CONTROLLING STOCKHOLDERS AND SOME OFOUR DIRECTORS MAY HAVE INTERESTS THAT DIFFER FROM YOURS.

             CreditSuisse First Boston, through certain of its affiliates, owns approximately 49%of our outstanding common stock and, as a result, has significant control overour business, policies and affairs, including, effectively, the power toappoint new management, prevent or cause a change of control and approve anyaction requiring the approval of the holders of our common stock, such asadopting amendments to our certificate of incorporation and approving mergersor sales of all or substantially all of our assets. In addition, under theterms of a stockholders agreement between us, certain other parties and those affiliatesof Credit Suisse First Boston, those affiliates have the right to elect amajority of our directors if they own 50% or more of our outstanding commonstock. Circumstances may occur in which the interests of these stockholderscould be in conflict with your interests.

PROVISIONS IN OUR CHARTER DOCUMENTS ANDDELAWARE LAW MAY DELAY, DETER OR PREVENT SOMEONE FROM ACQUIRING US, WHICH COULDDECREASE THE VALUE OF OUR COMMON STOCK.

             Provisions in our charter andbylaws may have the effect of delaying, deterring or preventing a change ofcontrol or changes in our management that investors might consider favorableunless approved by our stockholders and directors affiliated with Credit SuisseFirst Boston. Those provisions serve to limit the circumstances in which apremium may be paid for our common stock in proposed transactions or where aproxy contest for control of our board may be initiated. If a change of controlor change in management is delayed, deterred or prevented, the market price ofour common stock could suffer.

ITEM3.QUANTITATIVE AND QUALITATIVEDISCLOSURE ABOUT MARKET RISKS

             Therehave been no material changes in our market risk during the quarter ended July1, 2001.  Market risk information iscontained under the caption “Quantitative and Qualitative Disclosure Relatingto Market Risks” in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2000.

PARTII.OTHER INFORMATION

ITEM4.SUBMISSION OF MATTERS TO A VOTEOF SECURITY HOLDERS

At the Company’s Annual Meeting of Stockholdersheld on May 22, 2001, the following proposals were adopted by the marginsindicated:

To elect two Class I directors to serveon the Board of Directors until the 2004 Annual Meeting of Stockholders oruntil their successors are duly elected and qualified
 Number  of Shares     Voted  ForWithheldWilliam  J. Weyand25,364,019369,369Karl  R. Wyss25,364,019369,369
To approve an amendment to the 2000Equity Incentive Plan, as amended, (“Plan”) to increase the number of sharesavailable under the Plan from 2,668,750 to 5,668,750
Number  of Shares       Voted  ForVoted  AgainstAbstainBroker  Non-Votes14,211,5553,113,49820,7008,387,635
To ratify the appointment ofPricewaterhouseCoopers as the independent auditors of the Company for the year endingDecember 31, 2001.
Number  of Shares       Voted  ForVoted  AgainstAbstainBroker  Non-Votes25,709,22710,92613,2350
ITEM6.EXHIBITSAND REPORTS ON FORM 8-K

(a)         Exhibits

 EXHIBITINDEX
EXHIBIT  NUMBERDESCRIPTION 2.1(1)Securities  Purchase Agreement dated as of January 20, 1995 by and among MSL and the  parties listed therein.2.2(1)Warrant  Agreement dated as of August 31, 1995 by and among MSL, Bank of America  National Trust and Savings Association and the parties listed therein.2.3(1)Preferred  Stock and Warrant Subscription Agreement dated as of November 26, 1999 by and  among MSL and the parties listed therein.2.4(1)Escrow  Agreement dated as of November 26, 1999 by and among MSL and the parties  listed therein.2.5(1)Asset  Purchase Agreement dated as of November 19, 1999 among 3Com Corporation,  Manufacturers' Services Limited and Manufacturers' Services Salt Lake City  Operations, Inc.2.6(2)Asset  Purchase Agreement dated as of September 26, 2000 among 3Com Corporation,  Manufacturers' Services Limited and Manufacturers' Services Salt Lake City  Operations, Inc.3.1(1)Restated  Certificate of Incorporation of MSL.3.2(1)Amended  and Restated By-Laws of MSL.3.4(5)Amended  and Restated Articles of Incorporation of MSL3.3(1)Form  of certificate representing shares of common stock, $.001 par value per  share.4.1(1)Stockholders  Agreement dated as of January 20, 1995 by and among MSL and the stockholders  named therein.4.2(1)Stockholders  Agreement Amendment dated November 26, 1999 by and among MSL and the  stockholders named therein.4.3(1)Credit  Agreement dated August 21, 1998 among MSL, MSL Overseas Finance B.V and the  lenders named therein.4.4(1)First  Amendment to Credit Agreement and Limited Waiver dated as of February 26,  1999 by and among MSL, MSL Overseas Finance B.V. and the lenders named in the  Credit Agreement.4.5(1)Second  Amendment to Credit Agreement and Consent dated as of November 23, 1999 by  and among MSL, MSL Overseas Finance B.V. and the lenders named in the Credit  Agreement.4.6(4)First  Amended and Restated Credit Agreement dated as of September 29, 2000 by and  between Manufacturers' Services Limited and the lenders named in the Credit  Agreement.4.7(4)First  Amendment Agreement and Consent dated as of  September 29, 2000 by and between Manufacturers' Services  Limited and the lenders named therein.4.8(3)First  Amendment to First Amended and Restated Credit Agreement dated as of October  25, 2000 by and between Manufacturers' Services Limited and the lenders named  therein4.9(5)Second  Amendment to First Amended and Restated Credit Agreement dated as of March 2,  2001 by and between Manufacturers’ Services Limited and the lenders named  therein10.1(1)Employment  Agreement dated as of January 20, 1995 by and between MSL and Kevin C. Melia.10.2(1)Employment  Letter dated as of June 20, 1997 by and between MSL and Robert E. Donahue.10.3(1)Employment  Letter dated as of September 27, 1995 by and between MSL and Rodolfo  Archbold.10.4(1)Employment  Letter dated as of January 4, 1996 by and between MSL and Dale R. Johnson.10.5(1)Severance  Letter dated June 25, 1996 by and between MSL and Dale R. Johnson.10.6(1)Employment  Letter dated as of January 23, 1998 by and between MSL and James N. Poor.10.7(1)Second  Amended and Restated Non-Qualified Option Plan.10.8(1)Form  of 2000 Equity Incentive Plan.10.9(1)Form  of 2000 Employee Stock Purchase Plan.10.10(1)Form  of Indemnification Agreement.10.11(1)Office/Warehouse  Lease dated as of April 14, 1997 by and between Amberjack, Ltd. and  Manufacturers' Services Limited - Roseville, Inc.10.12(1)Lease  dated as of May 5, 1998 by and between International Business Machines  Corporation and Manufacturers' Services Western U.S. Operations, Inc.10.13(1)Supply  Agreement dated as of November 27, 1999 buy and between MSL and 3Com  Corporation.10.14(1)Outsourcing  Agreement dated as of June 1, 1998 by and between International Business  Machines Corporation and Manufacturers' Services Western US Operations, Inc.10.15(1)Manufacturing,  Integration and Fulfillment Contract dated as of June 26, 1998 by and between  International Business Machines S.A. and Global Manufacturers' Services -  Valencia10.16(1)Global  Requirements Agreement No. MSL 183G dated as of July 30, 1997 by and between  MSL and Iomega Corporation.10.17(1)Supply  Agreement dated as of November 27, 1999 by and between MSL and Palm  Computing, Inc.10.18(1).Manufacturing  Services Agreement dated as of June 1, 1999 by and between Hewlett-Packard  Singapore Pte Ltd. and Manufacturers' Services Singapore Pte Ltd10.19(1)2000  Cash Incentive Compensation Plan.10.20(4)Supply  Agreement dated as of September 26, 2000 between Manufacturers' Services Salt  Lake City Operations, Inc. and 3Com Corporation.10.21(4)Lease  dated as of September 26, 2000 by and between 3Com Corporation and  Manufacturers' Services Salt Lake City Operations, Inc.10.22(4)2000  Non-employee Director Stock Option Plan, as amended10.23(4)2000  Non-qualified Stock Option Plan10.24(4)Second  Amended and Restated Non-qualified Stock Option Plan, as amended10.25(4)2000  Equity Incentive Plan, as amended10.26(5)Form  of Change in Control Agreement for Kevin Melia, Robert Donahue, Albert  Notini, Rodolfo Archbold, James Poor, Alan Cormier, Richard Gaynor, Francis  Binder, Richard Buckingham and Sam Landol10.27(5)First  Amendment to Supply Agreement between Manufacturers’ Services Salt Lake City  Operations, Inc. and Palm, Inc., effective as of December 1, 2000.10.28(5)Amendment  to Employment Letter dated as of September 27, 1995 between MSL and Rodolfo  Archbold10.29(5)First  Amendment to Supply Agreement between Manufacturers Services Salt Lake City  Operations, Inc. and 3Com Corporation, effective as of January 15, 200110.302000  Equity Incentive Plan, as amended10.312000  Employee Stock Purchase Plan, as amended10.322000  Non-Qualified Stock Option Plan, as amended
 
+Confidential  treatment requested as to certain portions which portions have been filed  separately with the Securities and Exchange Commission.  (1)Filed  as an Exhibit to the Registrant's Registration Statement on Form S-1, as  amended (File No. 333-96227), filed on February 4, 2000(2)Filed  as an Exhibit to the Registrant's Current Report on Form 8-K filed on October  11, 2000(3)Filed  as an Exhibit to the Registrant’s Current Report on Form 8-K filed on  December 5, 2000(4)Filed  as an Exhibit to the Registrant’s Quarterly Report on Form 10-Q filed on  November 14, 2000(5)Filed  as an Exhibit to the Registrant’s Annual Report on Form 10-K filed on April  2, 2001
(b)        Reports on Form 8-K

             On May 18, 2001, the Company fileda report on Form 8-K furnishing information under Item 9, Regulation FDDisclosure.

SIGNATURES

             Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized:
 MANUFACTURERS'  SERVICES LIMITED (Registrant)   Date:  August 14, 2001   By:  /s/ Albert A. Notini   Albert A. Notini Executive Vice  President and Chief Financial  Officer (Principal Financial  Officer)   By:  /s/ Richard J. Gaynor   Richard J. Gaynor Vice President and Corporate Controller (Principal Accounting  Officer)