FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549
(Mark One)

  [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934

          For the quarter period ended December 3, 1998

                               OR

  [ ]  Transition Report Pursuant to Section 13 or 15(d) of the
                 Securities Exchange Act of 1934
         For the transition period from        to

              Commission File No.     333-50981

                           MCMS, INC.
       (Exact name of registrant as specified in its charter)

          Idaho                                 82-0480109
(State or other jurisdiction      (I.R.S. Employer identification No.)
    of incorporation or
       organization)

               16399 Franklin Road, Nampa, Idaho 83687
          (Address of principal executive offices, Zip Code)

                          (208)898-2600
         (Registrant's telephone number, including area code)
                                
 (Former name, former address and former fiscal year, if changed
                       since last report)

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

                      Yes         No      X

        APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
          PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by  check  mark whether the registrant  has  filed  all
documents and reports required to be filed by Sections 12, 13  or
15(d)  of the Securities Exchange Act of 1934 subsequent  to  the
distribution of securities under a plan confirmed by a court.

                      Yes         No

              APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Shares of Class A Common Stock outstanding at December 3, 1998:  3,261,177
Shares of Class B Common Stock outstanding at December 3, 1998:    863,823
Shares of Class C Common Stock outstanding at December 3, 1998:    874,999

<PAGE>


MCMS, INC.

INDEX
   
Part I.                                                                   Page
                                                                          ----

Item 1  Financial Information

        Unaudited Consolidated Balance Sheets -
             September 3, 1998 and December 3, 1998                          3

        Unaudited Consolidated Statements of Operations -    
             Three Months Ended November 27, 1997 and
             December 3, 1998                                                4
                                                                 
        Unaudited Consolidated Statements of Cash Flows -
             Three Months Ended November 27, 1997 and
             December 3, 1998                                                5

        Notes to Unaudited Consolidated Financial Statements                 6

Item 2  Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                  9

        Certain Factors                                                     13
         
Item 3  Quantitative and Qualitative Disclosures about
        Market Risk                                                         18

Part II.

Other Information

Item 6  Exhibits                                                            19

Signatures                                                                  20

                                 2     
<PAGE>


PART I  FINANCIAL INFORMATION
-----------------------------

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
                                  MCMS, INC.
                   CONSOLIDATED BALANCE SHEETS (UNAUDITED)
             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>

                                                  September 3,          December 3,
As of                                                 1998                  1998
-----------------------------------------------------------------------------------

ASSETS
Current Assets:                                                  
<S>                                               <C>                  <C>
Cash and cash equivalents                         $      7,542         $          -
Trade account receivable, net of allowances                   
  for doubtful accounts of $97 and $278                 34,231               39,323
Receivable from affiliates                               2,096                1,350
Inventories                                             29,816               48,929
Deferred income taxes                                    1,255                1,452
Other current assets                                       356                  529
                                                  ------------         ------------
     Total current assets                               75,296               91,583
Property, plant and equipment, net                      62,106               62,668
Deferred income taxes                                        -                  314
Other assets                                             7,650                7,433
                                                  ------------         ------------
     Total assets                                 $    145,052         $    161,998
                                                  ============         ============                  

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:                                             
Current portion of long-term debt                 $        420         $        195
Accounts payable and accrued expenses                   44,433               59,159
Payable to affiliates                                      775                  848
Interest payable                                           197                4,528
                                                  ------------         ------------
     Total current liabilities                          45,825               64,730
Notes payable, net of current portion                  184,737              186,180
Deferred income taxes                                    1,286                    -
Other liabilities                                          580                  597
                                                  ------------         ------------
     Total liabilities                                 232,428              251,507
                                                                             
Redeemable preferred stock, no par value,                                    
  750,000 shares authorized; issued and                                      
  outstanding 266,313 and 274,632 shares,                                    
  respectively; mandatory redemption value of                                
  $26.6 million and $27.5 million, respectively         25,675               26,528
                                                                             
Commitments and contingencies                                -                    -
                                                                             
Series A convertible preferred stock, par value                              
  $0.001 per share, 6,000,000 shares authorized;                             
  issued and outstanding 3,261,177; aggregate                                
  liquidation preference of $36,949,135                      3                    3
                                                                             
Series B convertible preferred stock, par value                              
  $0.001 per share, 6,000,000 shares authorized;                             
  issued and outstanding 863,823 shares;                                     
  aggregate liquidation preference of $9,787,115             1                    1
                                                                             
Series C convertible preferred stock, par value                              
  $0.001 per share, 1,000,000 shares authorized;                             
  issued and outstanding 874,999 shares;                                     
  aggregate liquidation preference of $9,913,739             1                    1
                                                                             
Class A common stock, par value $0.001 per                                   
  share, 30,000,000 shares authorized; issued and                            
  outstanding 3,261,177                                      3                    3
                                                                             
Class B common stock, par value $0.001 per                                   
  share, 12,000,000  shares authorized; issued                               
  and outstanding 863,823 shares                             1                    1
                                                                             
Class C common stock, par value $0.001 per                                   
  share, 2,000,000 shares authorized; issued and                             
  outstanding 874,999 shares                                 1                    1
                                                                              
Additional paid-in capital                              63,318               62,471
Accumulated other comprehensive income                  (2,270)              (2,337)
Retained earnings                                     (174,109)            (176,131)
Less treasury stock at cost:                                                 
Series A convertible preferred stock, 3,676                                  
  shares outstanding                                         -                  (42)
Class A common stock, 3,676 shares outstanding               -                   (8)
                                                  ------------         ------------
     Total shareholders' equity (deficit)             (113,051)            (116,037)
                                                  ------------         ------------
     Total liabilities and shareholders'                                
       equity (deficit)                           $    145,052         $    161,998
                                                  ============         ============
</TABLE>
                                3
<PAGE>


                                  MCMS, INC.
             CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
             (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                       
                                                          Three months ended
                                                  ---------------------------------
                                                  November 27,          December 3,
                                                      1997                  1998
                                                  ------------         ------------
                                                                  
<S>                                                     <C>                  <C>
Net sales                                         $     71,001         $     91,243
Cost of goods sold                                      60,909               86,056
                                                  ------------         ------------
Gross profit                                            10,092                5,187
                                                                              
Selling, general and administrative expenses             3,122                4,219
                                                  ------------         ------------
Income from operations                                   6,970                  968
                                                                                    
Other expense (income):                                                             
Interest expense (income), net                            (135)               4,721
Other                                                        -                   45
                                                  ------------         ------------
Income (loss) before taxes                               7,105               (3,798)
                                                                              
Income tax provision (benefit)                           2,629               (1,775)
                                                  ------------         ------------
Net income (loss)                                        4,476               (2,023)
                                                                              
Redeemable preferred stock dividends and                                      
  accretion of preferred stock discount                      -                 (882)
                                                  ------------         ------------
Net income (loss) to common stockholders          $      4,476         $     (2,905)
                                                  ============         ============
Net income (loss) per share  - basic and                                      
  diluted                                         $      4,476         $      (0.58)
                                                  ============         ============
Weighted average common shares outstanding -                                  
  basic and diluted                                      1,000            5,000,000
                                                  ============         ============
</TABLE>
                                4
<PAGE>


                                  MCMS, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                          Three months ended
                                                  ---------------------------------
                                                  November 27,          December 3,
                                                      1997                  1998
                                                  ------------         ------------
                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>                   <C>
Net income (loss)                                 $      4,476         $     (2,023)
Adjustments to reconcile net income (loss) to                                 
  net cash provided by operating activities:
Depreciation and amortization                            2,629                3,661
Loss on sale of property, plant and equipment                2                   25
Changes in operating assets and liabilities:                                  
  Receivables                                            6,269               (4,292)
  Inventories                                           (3,409)             (19,103)
  Other assets                                            (154)                (418)
  Accounts payable and accrued expenses                    757               13,616
  Interest payable                                           -                4,331
  Deferred income taxes                                    178               (1,797)
  Other liabilities                                          -                  100
                                                  ------------         ------------
Net cash provided by (used for) operating                                    
  activities                                            10,748               (5,900)
                                                  ------------         ------------
                                                                              
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment          (7,677)              (2,921)
Proceeds from sales of property, plant and                                    
  equipment                                                 31                    -
                                                  ------------         ------------
Net cash used for investing activities                  (7,646)              (2,921)
                                                  ------------         ------------
                                                                              
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayments of) borrowings on                               
  line of credit                                             -                1,500
Repayments of debt                                        (254)                 (70)
Purchase of treasury stock                                   -                  (50)
                                                  ------------         ------------
Net cash provided by (used for) financing                                     
  activities                                              (254)               1,380
                                                  ------------         ------------
                                                                              
Effect of exchange rate changes on cash and                                   
  cash equivalents                                           -                 (101)
                                                  ------------         ------------
                                                                              
Net increase (decrease) in cash and cash                                      
  equivalents                                            2,848               (7,542)
                                                  ------------         ------------
                                                                              
Cash and cash equivalents at beginning of                                     
  period                                                13,636                7,542
                                                  ------------         ------------
                                                                              
Cash and cash equivalents at end of period        $     16,484         $          -
                                                  ============         ============
</TABLE>
                                5
<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(TABULAR DOLLAR AMOUNTS IN THOUSANDS)



1.  General

     The  information included in the  accompanying  consolidated
interim  financial statements is unaudited and should be read  in
conjunction  with  the  annual audited financial  statements  and
notes thereto contained in the Company's Report on Form 10-K  for
the  fiscal  year  ended September 3, 1998.  In  the  opinion  of
management,  all  adjustments,  consisting  of  normal  recurring
accruals,  necessary for a fair presentation of  the  results  of
operations for the interim periods presented have been  reflected
herein.   The  results  of  operations for  the  interim  periods
presented  are  not necessarily indicative of the results  to  be
expected for the entire fiscal year.

2.  Effect of Recently Issued Accounting Standards

     During the first quarter of fiscal 1999, the Company adopted
Statement  of  Financial Accounting Standards ("SFAS")  No.  130,
Reporting   Comprehensive  Income.   SFAS  No.  130   establishes
standards for the presentation of comprehensive income or loss in
financial  statements.   Comprehensive income  or  loss  includes
income  and loss components which are otherwise recorded directly
to  shareholders'  equity  under  generally  accepted  accounting
principles.   The  Company's comprehensive  loss  for  the  three
months  ended  December  3, 1998 was $2,090,000.   The  Company's
comprehensive income for the three months ended November 27, 1997
was  $3,179,000.  The  accumulated balance  of  foreign  currency
translation  adjustments, excluded from net income  or  loss,  is
presented in the consolidated balance sheet as "Accumulated other
comprehensive income."

     In  June  1997,  the Financial  Accounting  Standards  Board
issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and  Related  Information."  Under SFAS No.  131,  publicly  held
companies  are required to report financial and other information
about key revenue-producing segments of the entity for which such
information  is available and is utilized by the chief  operating
decision-maker.    Specific  information  to  be   reported   for
individual segments includes profit or loss, certain revenue  and
expense  items  and  total assets.  A reconciliation  of  segment
financial  information  to  amounts  reported  in  the  financial
statements must also be provided.  SFAS No. 131 is effective  for
the  Company  in fiscal 1999 but the form of the presentation  in
the Company's financial statements has not yet been determined.

     In  March  1998,  the  AICPA issued  Statement  of  Position
("SOP")  98-1,  "Accounting for the Costs  of  Computer  Software
Developed  or  Obtained  for  Internal  Use."  Under  SOP   98-1,
companies  are required to capitalize certain costs  of  computer
software  developed or obtained for internal use,  provided  that
those  costs  are not research and development.  The  Company  is
currently  evaluating the  effect of SOP  98-1 on  the  Company's
results  of  operations and financial position.  The  Company  is
required to implement SOP 98-1 in fiscal 2000.
<TABLE>

3.  Inventories
<CAPTION>
                                                  September 3,          December 3,
                                                      1998                  1998
                                                  ------------         ------------
                                                                         
    <S>                                                <C>                  <C>
    Raw materials and supplies                    $     18,126         $     26,587
    Work in process                                     11,020               21,866
    Finished goods                                         670                  476
                                                  ------------         ------------
                                                  $     29,816         $     48,929
                                                  ============         ============                

4.  Accounts payable and accrued expenses
                                                  September 3,          December 3,
                                                      1998                  1998
                                                  ------------         ------------                         
                                                  
    Trade accounts payable                        $     39,152         $     53,047
    Short-term equipment contracts                         543                1,152
    Salaries, wages, and benefits                        3,619                3,600
    Other                                                1,119                1,360
                                                  ------------         ------------
                                                  $     44,433         $     59,159
                                                  ============         ============
</TABLE>
                                6
<PAGE>
<TABLE>

5.  Long-term Debt
<CAPTION>
                                                  September 3,          December 3,
                                                      1998                  1998
                                                  ------------         ------------
                                                                
<S>                                                    <C>                  <C>
Revolving loan, principal payments at the                                  
Company's option  to February 26, 2003,                                    
interest due quarterly,  interest rates                                    
ranging from 8.38% to 10.75% and 8.0% to                                   
9.75%, respectively (8.38% and 8.11% at                                    
September 3, 1998 and December 3, 1998,                                    
respectively)                                     $      9,500         $     11,000
                                                                           
Note payable, matures on October 8, 1998,                                  
interest due at maturity, weighted average                                 
interest rate equal to interest earned on the                              
Company's cash investments (5.24% at September                             
3, 1998)                                                   212                    -
                                                                           
Senior subordinated notes (the "Fixed Rate                                 
Notes"), unsecured, interest at 9.75% due                                  
semiannually, mature on March 1, 2008                  145,000              145,000
                                                                           
Floating interest rate subordinated term                                   
securities, (the "Floating Rate Notes"),                                   
unsecured, interest due semiannually, mature                               
on March 1, 2008, variable interest rate equal                             
to LIBOR plus 4.63%  (10.22% and 10.22% at                                 
September 3, 1998 and December 3, 1998,                                    
respectively)                                           30,000               30,000
                                                                           
Note payable, quarterly installments through                               
October 1, 2000, interest rate of 3.51%                    445                  375
                                                  ------------         ------------                         
Total debt                                             185,157              186,375
Less current portion                                      (420)                (195)
                                                  ------------         ------------
                                                                           
                                                  $    184,737         $    186,180
                                                  ============         ============
</TABLE>

     On  February 26, 1998, the Company also issued $25.0 million
in 12-1/2% Redeemable Preferred Stock due on March 1, 2010 with a
liquidation preference of $100 per share.  Dividends are  payable
in  cash  or in-kind quarterly beginning June 1, 1998 at  a  rate
equal  to  12-1/2% per annum. To-date, the Company has  paid  all
dividends in-kind.
     
6.  Net Income (Loss) Per Share

     Basic earnings per share is computed using net income (loss)
reduced  (increased)  by  dividends on the  Redeemable  Preferred
Stock  divided  by the weighted average number of  common  shares
outstanding.   Diluted earnings per share is computed  using  the
weighted  average  number of common and common  stock  equivalent
shares  outstanding.   Common equivalent  shares  include  shares
issuable  upon  the  exercise of outstanding  stock  options  and
shares  issuable  upon the conversion of outstanding  convertible
securities, and affect earnings per share only when they  have  a
dilutive  effect.  For the first quarter ended December 3,  1998,
the  inclusion of 3.3 million, 0.9 million and 0.9 million common
shares  issuable  upon  conversion of the  Company's  outstanding
Series  A,  Series  B and Series C Convertible  Preferred  Stock,
respectively,  are  not  included in the calculation  of  diluted
earnings per share because the effect would be antidilutive.
     
7.  Income Taxes

     The  effective rate of the tax benefit for the first quarter
of fiscal 1999 was 46.7%. The effective rate for the provision of
income  taxes  was  37.0% for the corresponding period of  fiscal
1998.  The  effective tax rate primarily reflects  the  statutory
corporate  income tax rate, the net effect of state taxation  and
the  effect of  a tax holiday granted to the Company's  Malaysian
operation.    The  increase  in the effective  rate  of  the  tax
benefit   in   the  first  quarter  of  1999  relative   to   the
corresponding  period  of fiscal 1998 was  primarily  due  to  an
increase in the proportion of lower taxed income generated by the
Company's  Malaysian operations.  Because the  Company  does  not
provide   for   U.S.  tax  on  the  earnings  of    its   foreign
subsidiaries,  the  effective rate may  vary  significantly  from
period to period.

                                7
<PAGE>
     

8.  Recapitalization

     On   February   26,   1998    the    Company   completed   a
Recapitalization.  Prior to the closing of the  Recapitalization,
the Company was a wholly owned subsidiary of MEI California, Inc.
("MEIC"),  a wholly owned subsidiary of Micron Electronics,  Inc.
("MEI").   Under   the   terms  of  the  amended   and   restated
Recapitalization  Agreement between the Company,  MEIC,  MEI  and
certain other parties, pursuant to which the Company effected the
Recapitalization,  certain unrelated investors (the  "Investors")
acquired  an equity interest in the Company. In order to complete
the   Recapitalization,  the  Company  arranged  for   additional
financing  in  the form of notes and redeemable  preferred  stock
totaling  $200.0 million. The Company used the proceeds from  the
Investors'  equity  investment and  the  issuance  of  notes  and
redeemable  preferred  stock  to  redeem  a  portion  of   MEIC's
outstanding equity interest for approximately $249.2 million.  As
of the date of this report and at all times since the date of the
Recapitalization,  MEIC  holds  a  10%  equity  interest  in  the
Company.

                                8
<PAGE>


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

     Statements  contained in this Form 10-Q that are not  purely
historical are forward-looking statements and are being  provided
in  reliance  upon the "safe harbor" provisions  of  the  Private
Securities  Litigation  Reform Act of 1995.  All  forward-looking
statements  are  made  as of the date hereof  and  are  based  on
current management expectations and information available to  the
Company  as  of  such date. The Company assumes no obligation  to
update  any  forward-looking statement. It is important  to  note
that  actual  results  could  differ materially  from  historical
results  or those contemplated in the forward-looking statements.
Forward-looking  statements  involve  a  number  of   risks   and
uncertainties, and include trend information. Factors that  could
cause  actual results to differ materially include, but  are  not
limited  to, those identified herein under "Certain Factors"  and
in  other  Company  filings  with  the  Securities  and  Exchange
Commission. All quarterly references are to the Company's  fiscal
periods ended December 3, 1998, September 3, 1998 or November 27,
1997, unless otherwise indicated.

     MCMS,   Inc.   ("MCMS"  or  the  "Company")  is  a   leading
electronics   manufacturing  service  ("EMS")  provider   serving
original  equipment  manufacturers ("OEMs")  in  the  networking,
telecommunications,  computer systems and other  sectors  of  the
electronics  industry.   The Company  offers  a  broad  range  of
capabilities  and  manufacturing management  services,  including
product design and prototype manufacturing; materials procurement
and  inventory management; manufacturing and testing  of  printed
circuit  board  assemblies  ("PCBAs")  and  memory  modules   and
systems; quality assurance; and end-order fulfillment.

     MCMS  provides  services on both  a turnkey and  consignment
basis.   Under  a consignment arrangement, the OEM  procures  the
components  and the Company assembles and tests them in  exchange
for  a  process  fee.  Under a turnkey arrangement,  the  Company
assumes responsibility for both the procurement of components and
their  assembly and test.  Turnkey manufacturing generates higher
net sales than consignment manufacturing due to the generation of
revenue  from  materials  as  well  as  labor  and  manufacturing
overhead, but also typically results in lower gross margins  than
consignment manufacturing because the Company generally  realizes
lower   gross   margins  on  material-based   revenue   than   on
manufacturing-based revenue.  The Company also provides  services
on  a partial consignment basis, whereby the OEM procures certain
materials  and  the  Company procures  the  remaining  materials.
Consignment  revenues,  excluding partial  consignment  revenues,
accounted  for  4.6%  of the Company's net sales  for  the  three
months ended December 3, 1998.

<TABLE>

Results of Operations
<CAPTION>
                                          Three months ended
                                       ----------------------------
                                       November 27,    December 3,
                                           1997            1998
                                       ------------    ------------
                                                      
<S>                                       <C>             <C>
Net sales                                 100.0%          100.0%
Costs of sales                             85.8            94.3
                                       ------------    ------------
Gross margin                               14.2             5.7
Selling, general and                                  
administrative expenses                     4.4             4.6
                                       ------------    ------------
Income from operations                      9.8             1.1
Interest expense (income), net             (0.2)            5.2
Other                                         -             0.1
                                       ------------    ------------
Income (loss) before taxes                 10.0            (4.2)
Income tax provision (benefit)              3.7            (2.0)
Net income (loss)                           6.3%           (2.2%)
                                       ============    ============
                                                            
Depreciation and amortization (1)           3.7%            3.8%
---------------------------------      ============    ============

(1) For the three  months ended December 3, 1998 depreciation and
amortization amount excludes $233,000 of deferred loan
amortization that was expensed as interest.
</TABLE>

Three  Months  Ended December 3, 1998 Compared  to  Three  Months
Ended November 27, 1997

     Net Sales.  Net sales for the three months ended December 3,
1998  increased by $20.2 million, or 28.5%, to $91.2 million from
$71.0 million for the three months ended November 27, 1997.   The
increase in net sales is primarily the result of a higher  volume
of   PCBA   shipments   to  customers  in  the   networking   and

                               9
<PAGE>

telecommunications  industries. These  increases  were  partially
offset  by lower PCBA prices and by decreases in both the  volume
and price of custom turnkey and consigned memory modules.

     Net  sales attributable to foreign subsidiaries totaled $7.1
million for the three months ended December 3, 1998, compared  to
$5.4  million  for the corresponding period of fiscal  1998.  The
growth in foreign subsidiary net sales is primarily the result of
additional sales at the Company's Belgian operation, which  began
operations in November of 1997.

     Gross  Profit.   Gross  profit for the  three  months  ended
December  3,  1998 decreased by $4.9 million, or 48.6%,  to  $5.2
million  from  $10.1 million for the three months ended  November
27,  1997.   Gross margin for the three months ended December  3,
1998 decreased to 5.7% of net sales from 14.2% for the comparable
period  ended  November 27, 1997.  The decrease in  gross  profit
resulted  from a lower volume of units shipped and lower  pricing
on  consigned  modules,  lower volumes of turnkey  custom  memory
modules  and  reduced capacity utilization at the  Durham,  North
Carolina operation. To a lesser degree, the Belgian operation had
a  negative impact on gross margin during this period and  it  is
anticipated  that it will continue to have a negative  impact  on
margins for the remainder of fiscal 1999.

     Selling,  General  and  Administrative  Expenses.   Selling,
general and administrative expenses ("SG&A") for the three months
ended  December 3, 1998 increased by $1.1 million, or  35.1%,  to
$4.2  million  from  $3.1  million for  the  three  months  ended
November  27,  1997.   This increase for the three  months  ended
December 3, 1998 was the result of additional headcount in senior
management, finance and administration, sales and marketing,  and
information  technology  which  collectively  amounted  to   $0.6
million, as well as additional SG&A associated with the Company's
foreign subsidiaries in the amount of $0.4 million.

     Interest  Expense.  Interest expense  for the  three  months
ended  December  3,  1998 increased to $4.7 million  due  to  the
addition of $175 million in long-term debt issued or incurred  in
conjunction with the Recapitalizaton.

     Provision  for  Income Taxes.   Income taxes for  the  three
months  ended  December 3, 1998 decreased by $4.4 million,  to  a
benefit  of $1.8 million from an expense of $2.6 million for  the
three  months ended November 27, 1997. The effective rate of  the
tax  benefit for the first quarter of fiscal 1999 was  46.7%,  as
compared  to  a  provision for income  taxes  of  37.0%  for  the
corresponding  period  of  fiscal  1998.  The  increase  in   the
effective rate of the tax benefit in the first quarter of  fiscal
1999  was primarily due to an increase in the proportion of lower
taxed income generated by the Company's Malaysian operation.

     Net  Income.  For  the reasons stated above, net income  for
the three months ended December 3, 1998 decreased by $6.5 million
to  a  loss of $2.0 million from income of $4.5 million  for  the
three  months  ended November 27, 1997.  As a percentage  of  net
sales,  net loss for the three months ended December 3, 1998  was
2.2%  compared to net income of 6.3% for the three  months  ended
November 27, 1997.

Liquidity and Capital Resources

     During the first  quarter of fiscal 1999, the Company's cash
and  cash  equivalents  decreased  by  $7.5  million.   Net  cash
consumed by operating activities was $5.9 million.  Net cash used
by investing activities was $2.9 million and net cash provided by
financing  activities  was $1.4 million.  Exchange  rate  changes
reduced  net  cash by $0.1 million.  Net cash used  by  investing
activities  during  the  first quarter of fiscal  1999  primarily
consisted of to capital expenditures for additional manufacturing
capacity  in  the  U.S and implementation of the Baan  Enterprise
Resource  Planning   ("ERP")  system.  Net  cash  generated  from
financing  activities principally resulted  from  net  borrowings
under the Company's existing credit facilities.

     The  cash  consumed  by  operations   of  $5.9  million  was
primarily due to an increase in inventory of $19.1 million during
the  first  quarter  of 1999.  The growth in  inventory  included
increases in raw materials of $6.9 million and work in process of
$3.8  million  resulting from the growth and  volatility  of  new
programs at the Nampa, Idaho operation and increases in  work  in
process of  $6.4 million due to stronger customer demand late  in
the  first quarter at the Durham, North Carolina operation.   The
average collection period for accounts receivable and the average
inventory  turns  were 38.5 days and 8.7 turns during  the  first
quarter  of  fiscal  1999 compared to 44.3 days  and  12.6  turns
during  the  corresponding period in fiscal  1998.   The  average
collection  period and average inventory turn  level  vary  as  a
function of sales volume, sales volatility, product mix,  payment
terms  with customers and suppliers and the mix of consigned  and
turnkey business.

                                10
<PAGE>

     Capital  expenditures  during the  first quarter  of  fiscal
1999  were  $2.9  million, including $1.6 million for  additional
manufacturing  capacity in the U.S. and $1.3 million  toward  the
implementation  of the Baan ERP system.  The Company  anticipates
spending  an  additional $2.9 million in fiscal 1999 to  complete
the  ERP  system implementation.  See "Year 2000 Compliance"  and
"Certain Factors -- Baan Implementation."     
     
     In  conjunction   with  the  Recapitalization,  the  Company
entered  into  a  revolving  credit facility  ("Revolving  Credit
Facility")  with Bankers Trust Company, as agent, which  provides
for  borrowings  of  up  to $40.0 million  for  working  capital,
capital   expenditures  and  other  general  corporate  purposes.
Subsequent to the end of the fiscal quarter and as of January 11,
1999, the Company had drawn $22.5 million on the Revolving Credit
Facility and had a cash balance of $10.9 million.  As of December
3, 1998, the Company was in compliance with  the covenants  under
the  Revolving  Credit Facility, as amended  May  20,  1998,  for
periods through August 31, 1999.

     The  Company's principal  sources of  future  liquidity  are
cash flows from operating activities and  borrowings  under   the
Revolving  Credit Facility. The Company is highly  leveraged  and
believes  that these sources should provide sufficient  liquidity
and  capital  resources to meet its current and  future  interest
payments,  working capital and capital expenditures  obligations.
No  assurance can be given, however, that this will be the  case.
Depending  upon rate of growth and profitability and the  ability
of  the  Company  to  manage  its  working  capital  effectively,
including  its inventory turns and accounts receivable collection
period,  the  Company  may  require  additional  equity  or  debt
financing  to  meet  its interest payments  and  working  capital
requirements  or  capital  equipment  needs.  There  can  be   no
assurance  that  additional  financing  will  be  available  when
required or, if available, will be on terms satisfactory  to  the
Company.  The Company's future operating performance and  ability
to  service  or  refinance  the notes and  to  repay,  extend  or
refinance the Revolving Credit Facility will be subject to future
economic conditions and to financial, business and other factors,
many  of  which  are beyond the Company's control.  See  "Certain
Factors--High   Level  of  Indebtedness;   Ability   to   Service
Indebtedness and  Satisfy Preferred Stock Dividend Requirements."

Year 2000 Compliance

     State of Readiness

     The  Year 2000 presents many  issues for the Company because
many computer hardware and software systems use only the last two
digits  to refer to a calendar year. Consequently, these  systems
may  fail  to  process dates correctly after December  31,  1999,
which  may  cause system failures.  In October 1997, the  Company
established  a cross functional team chartered with the  specific
task  of evaluating all of the Company's software, equipment  and
processes for Year 2000 compliance.  This team determined that  a
substantial  portion  of  the Company's  systems,  including  its
company-wide  enterprise resource planning ("ERP")  system,  were
not Year 2000 compliant and therefore developed a plan to resolve
this  issue which includes, among other things, implementing  the
Baan ERP system.  The Baan ERP system is being implemented across
all of the Company's sites with targeted completion scheduled  in
1999.   In addition, the Company retained the services of outside
consulting  firms  to review and assess the Company's  evaluation
and  implementation plan.  The Company believes that the Baan ERP
system  will  make  all  "mission critical"  company  information
systems Year 2000 compliant.

     As  part  of  the Company's Year 2000 compliance evaluation,
the   Company  recently  began  to  contact  key  suppliers   and
significant  customers  to determine  the  extent  to  which  the
Company  is  exposed to third party failure to remedy their  Year
2000 compliance issues.  The Company will continue to contact key
suppliers  and  significant customers as part of  its  Year  2000
compliance  evaluation.   In addition,  the  Company  intends  to
conduct audits and/or testing of certain suppliers for Year  2000
compliance.  There can be no assurance the Company will  be  able
to successfully complete such evaluations on a timely basis which
could  have a material adverse effect on the Company's  business,
financial condition and results of operations.
     
     Costs

     The total costs, whether capitalized or expensed, associated
with  implementation and system modification relating to the Year
2000  problem  is  anticipated to be approximately  $10  million,
excluding  internal  programming time on  existing  systems.  The
total  amount spent in the first quarter of fiscal 1999  relating
to  the  Year  2000  problem  was $1.3 million  with  anticipated
expenditures  of approximately $2.9 million during the  remainder
of  fiscal 1999.  This amount includes the costs associated  with
new  systems  that will be Year 2000 compliant even  though  such
compliance was not the primary reason for installation.

                               11    
<PAGE>
     
     Contingency Plan

     Although the Company has no formal contingency plan  related
to   the   Baan   implementation  at  the   present   time,   the
implementation  is on schedule with completion  slated  for  late
fiscal  1999.  If the Baan implementation is delayed, the Company
will endeavor to develop a contingency plan.  The Company will be
attempting  to  develop a contingency plan  designed  to  address
problems  which  might arise from the failure  of  the  Company's
suppliers  and  customers to timely and adequately  address  Year
2000 issues.     

     Risks Associated with the Company's  Year 2000 Issues
     
     The  Company  presently believes that by modifying  existing
software  and  converting to new software, such as the  Baan  ERP
system,   the   Year  2000  problem  will  not  pose  significant
operational  problems  for  the  Company's  information  systems.
However, if such modifications and conversions are not timely  or
properly  implemented,  the Year 2000 problem  could  affect  the
ability  of  the  Company,  among other  things,  to  manufacture
product,  procure and manage materials, and administer  functions
and  processes, which could have a material adverse effect on the
Company's   business,   financial  condition   and   results   of
operations.   Additionally, failure of third party suppliers   to
become Year 2000 compliant on a timely basis could create a  need
for  the  Company  to change suppliers and otherwise  impair  the
sourcing of components, raw materials or services to the Company,
or  the functionality of such components or raw materials, any of
which  could  have  a material adverse effect  on  the  Company's
business, financial condition and results of operations.

     In addition, the Company's Year 2000 compliance efforts have
caused significant strain on the Company's information technology
resources  and,  as  a  result,  could  cause  the  deferral   or
cancellation of other important Company projects.  There  can  be
no assurance that the delay or cancellation of such projects will
not  have  a  material adverse affect on the Company's  business,
financial condition and results of operations.

                                12
<PAGE>
                         

                         CERTAIN FACTORS

     In addition to factors discussed elsewhere in this Form 10-Q
and  in  other  Company filings with the Securities and  Exchange
Commission, the following are important factors which could cause
actual results or events to differ materially from the historical
results  of the Company's operations or those results  or  events
contemplated  in any forward-looking statements  made  by  or  on
behalf of the Company.

High  Level of Indebtedness; Ability to Service Indebtedness  and
Satisfy Preferred Stock Dividend Requirements

     The  Company is highly leveraged.  At December 3, 1998,  the
Company  had  approximately $186.2 million of total  indebtedness
outstanding (exclusive of unused commitments of $29 million under
the  Revolving  Credit  Facility), and Series  B  12-1/2%  Senior
Preferred  Stock  (the "Redeemable Preferred Stock")  outstanding
with  an  aggregate liquidation preference of $27.5 million.   In
addition,  as of January 11, 1999, the  Company had  drawn  $22.5
million  on the Revolving Credit Facility.  The Company may incur
additional indebtedness from time to time to provide for  working
capital or capital expenditures or for other purposes, subject to
certain  restrictions  in the (i) the Revolving  Credit  Facility
(ii)  the  Indenture  (the "Indenture") governing  the  Company's
Series B 9-3/4% Senior Subordinated Notes due 2008 and the Series 
B Floating Interest Rate Subordinated Term  Securities  due  2008
(collectively, the "Notes"), (iii) the Certificate of Designation
relating  to the Redeemable Preferred Stock (the "Certificate  of
Designation")  and (iv) the Indenture (the "Exchange  Indenture")
governing  the  12-1/2% Subordinated  Exchange  Debentures   (the
"Exchange  Debentures") due 2010 issuable  in  exchange  for  the
Redeemable Preferred Stock.

     The level of the Company's indebtedness could have important
consequences  to  the Company and the holders  of  the  Company's
securities, including, but not limited to, the following:  (i)  a
substantial  portion of the Company's cash flow  from  operations
must  be dedicated to debt service and will not be available  for
other  purposes; (ii) the Company's ability to obtain  additional
financing  in  the future, as needed, may be limited;  (iii)  the
Company's  leveraged  position and  covenants  contained  in  the
Indenture, the Certificate of Designation, the Exchange Indenture
and  the Revolving Credit Facility may limit its ability to  grow
and   make  capital  improvements  and  acquisitions;  (iv)   the
Company's  level of indebtedness may make it more  vulnerable  to
economic  downturns; and (v) the Company may be at a  competitive
disadvantage because some of the Company's competitors  are  less
financially  leveraged,  resulting  in  greater  operational  and
financial flexibility for such competitors.

     The ability  of the Company to pay cash dividends on, and to
satisfy  the redemption obligations in respect of, the Redeemable
Preferred  Stock  and to satisfy its debt obligations,  including
the  Notes, will be primarily dependent upon the future financial
and  operating  performance of the Company. Such  performance  is
dependent  upon  financial, business and other  general  economic
factors, many of which are beyond the control of the Company.  If
the  Company is unable to generate sufficient cash flow  to  meet
its  debt  service  obligations  or  provide  adequate  long-term
liquidity, it will have to pursue one or more alternatives,  such
as  reducing or delaying capital expenditures, refinancing  debt,
selling  assets  or  raising equity  capital.  There  can  be  no
assurance  that  such  alternatives  could  be  accomplished   on
satisfactory terms, if at all, or in a timely manner.

Restrictions Imposed by Terms of Indebtedness and Redeemable
Preferred Stock

     The  Indenture, the Certificate of Designation, the Exchange
Indenture  and  the  Revolving Credit  Facility  contain  certain
covenants that restrict, among other things, the ability  of  the
Company  and  its subsidiaries to incur additional  indebtedness,
consummate  certain assets sales and purchases,  issue  preferred
stock,   incur  liens,  pay  dividends  or  make  certain   other
restricted   payments,  enter  into  certain  transactions   with
affiliates, merge or consolidate with any other person  or  sell,
assign,  transfer, lease, convey or otherwise dispose of  all  or
substantially  all  of  the  assets  of  the  Company   and   its
subsidiaries,  none  of which impaired the Company's  ability  to
conduct business in the first quarter of fiscal 1999. A breach of
any  of  these  covenants could result in  a  default  under  the
Revolving  Credit  Facility,  the  Indenture  and  the   Exchange
Indenture and would violate certain provisions of the Certificate
of  Designation.  The Revolving Credit Facility also requires the
Company  to  maintain specified financial ratios and  to  satisfy
certain financial condition tests. The ability of the Company  to
meet those financial ratios and financial condition tests can  be
affected  by  events  beyond its control, and  there  can  be  no
assurance that the Company will meet those ratios and tests.

                               13
<PAGE>
                          
     In  the  event  the Company  does not meet such  tests,  the
availability of capital from bank borrowings, including  but  not
limited  to the ability to access the Revolving Credit  Facility,
could  be  adversely affected. The inability to borrow under  the
Revolving Credit Facility could have a material adverse effect on
the  Company's  business,  financial  condition  and  results  of
operations.

     Upon  an  event  of  default   under  the  Revolving  Credit
Facility,  the Indenture or the Exchange Indenture,  the  lenders
thereunder   could  elect  to  declare  all  amounts  outstanding
thereunder, together with accrued interest, to be immediately due
and payable. In the case of the Revolving Credit Facility, if the
Company   were  unable  to  repay  those  amounts,  the   lenders
thereunder could proceed against the collateral granted  to  them
to  secure  that indebtedness.  Such collateral is  comprised  of
substantially  all of the tangible and intangible assets  of  the
Company, including the capital stock of its subsidiaries (limited
to  no  more  than  65%  of  the capital  stock  of  its  foreign
subsidiaries).

     On  May  20,  1998,  the Company and its lenders  under  the
Revolving  Credit  Facility amended certain  financial  covenants
under the Revolving Credit Facility through August 31, 1999.   As
of  December  3,  1998, the Company was in compliance  with  such
financial covenants, as amended.

Customer Concentration; Dependence on Certain Industries

     At  any   given  time,  certain customers  may  account  for
significant  portions of the Company's net sales. For  the  first
quarter  of  fiscal  1999, approximately 80% of  net  sales  were
derived  from  networking and telecommunications  customers.   In
addition, for the first quarter of fiscal 1999, the Company's ten
largest customers accounted for approximately 89.1% of net sales.
The Company's top two customers accounted for approximately 46.5%
and 18.1% of net sales in the first quarter of 1999. In addition,
the  Company  has  another major customer that operates  under  a
consignment  manufacturing model and, while sales are  less  than
10%   of   total   revenue,  the  customer  makes  an   important
contribution  to  the  Company's overall  financial  performance.
Moreover, the Company has significant customer concentration at a
site  level.  Volatility in demand from these customers may  lead
to  reduced site capacity utilization and have a negative  effect
on  the  Company gross margin. Decreases in sales to  or  margins
with  these  or  any other key customers could  have  a  material
adverse effect on the Company's business, financial condition and
results  of operations. See "Management's Discussion and Analysis
of  Financial  Condition  and Results of  Operations--Results  of
Operations."

     The Company expects to continue  to depend upon a relatively
small number of customers for a significant percentage of its net
sales.  There  can  be no assurance that the Company's  principal
customers  will continue to purchase services at current  levels,
if  at  all. The percentage of the Company's sales to such  major
customers   may  fluctuate  from  period-to-period.   Significant
reductions  in sales to any of the Company's major  customers  as
well  as  period-to-period fluctuations in sales and  changes  in
product  mix  ordered  by such customers could  have  a  material
adverse effect on the Company's business, financial condition and
results of operations.

     In  addition,  the Company is  dependent upon the  continued
growth,  viability and financial stability of its OEM  customers,
which  are in turn substantially dependent on the growth  of  the
networking,  telecommunications,  computer  systems   and   other
industries.  These industries are subject to rapid  technological
change,  product obsolescence and price competition. In addition,
many  of the Company's customers in these industries are affected
by  general economic conditions. Recent currency devaluations and
economic slowdowns in various Asian economies may have an adverse
effect  on  the results of operations of certain of the Company's
OEM customers, and in turn, their orders from the Company.  These
and   other   competitive  factors  affecting   the   networking,
telecommunications and computer system industries in general, and
the  Company's OEM customers in particular, could have a material
adverse effect on the Company's business, financial condition and
results  of operations. Moreover, any further volatility  in  the
market  for  DRAM components caused by, among other  things,  the
turmoil  in  the  Asian economies, could have a material  adverse
effect  on  MTI, which has historically been one of the Company's
major   customers,  and  consequently  the  Company's   business,
financial  condition and results of operations. See "Management's
Discussion  and  Analysis of Financial Condition and  Results  of
Operations--Results of Operations."

Variability of Results of Operations

     The  Company's  operations may be affected by  a  number  of
factors  including  economic conditions, price  competition,  the
level  of volume and the timing of customer orders, product  mix,
management of manufacturing processes, materials procurement  and
inventory  management, fixed asset utilization, foreign  currency

                               14
<PAGE>

fluctuations,   the  level  of  experience  in  manufacturing   a
particular   product,  customer  product  delivery  requirements,
availability   and   pricing  of  components,   availability   of
experienced  labor and failure to introduce, or  lack  of  market
acceptance,  new processes, services, technologies and  products.
In  addition,  the level of net sales and gross margin  can  vary
significantly based on whether certain projects are contracted on
a turnkey basis, where the Company purchases materials, versus on
a consignment basis, where materials are provided by the customer
(turnkey  manufacturing tends to result in higher net  sales  and
lower  gross margins than consignment manufacturing).  An adverse
change  in  one  or more of these factors could have  a  material
adverse effect on the Company's business, financial condition and
results of operations.
    
     In  addition,  customer  orders can be canceled  and  volume
levels can be changed or delayed. From time to time, some of  the
Company's   customers   have   terminated   their   manufacturing
arrangements  with the Company, and other customers have  reduced
or  delayed  the  volume  of  design and  manufacturing  services
performed by the Company.  Resolving customer obligations due  to
program  or  relationship  termination  and  the  replacement  of
canceled,  delayed or reduced contracts with new business  cannot
be  assured.  Termination  of  a  manufacturing  relationship  or
changes,  reductions or delays in orders could  have  a  material
adverse effect on the Company's business, financial condition and
results of operations.

Management of Growth

     Expansion  has caused, and is expected to cause,  strain  on
the   Company's   infrastructure,   including   its   managerial,
technical, financial, information systems and other resources. To
manage  further  growth,  the Company must  continue  to  enhance
financial  and  operational controls, develop or hire  additional
executive  officers  and  other  qualified  personnel.  Continued
growth   will   also   require  increased  investments   to   add
manufacturing  capacity  and  to enhance  management  information
systems. See "Certain Factors--Baan Implementation." There can be
no  assurance that the Company will be able to scale its internal
infrastructure and other resources to effectively  manage  growth
and the failure to do so could have a material adverse effect  on
the  Company's  business,  financial  condition  and  results  of
operations.

     The markets served by the Company are characterized by short
product  life cycles and rapid technology changes.  The Company's
ability  to  successfully  support new product  introductions  is
critical  to  the Company's customers.  New product introductions
have  caused,  and  are expected to continue  to  cause,  certain
inefficiencies and strain on the Company's resources.   Any  such
inefficiencies  could  have  a material  adverse  effect  on  the
Company's   business,   financial  condition   and   results   of
operations.

     New  operations, whether  foreign or domestic,  can  require
significant start-up costs and capital expenditures. In the event
that   the   Company  continues  to  expand   its   domestic   or
international  operations, there can be  no  assurance  that  the
Company  will  be  successful in generating  revenue  to  recover
start-up  and operating costs.  See "Management's Discussion  and
Analysis  of  Financial  Condition and  Results  of  Operations--
Results of Operations."

Baan Implementation

     In fiscal 1997, the Company finalized selection of a company-
wide  ERP  software solution to, among other things,  accommodate
the future growth and requirements of the Company and, in October
1997,  the Company began implementation of ERP software  provided
by Baan U.S.A., Inc.  The Company based its selection criteria on
a  number  of items it deemed critical, and included among  other
things,  multi-site and foreign currency capabilities, 7x24  hour
system  availability, enhanced customer communications, end-order
fulfillment  and  other mix mode manufacturing support  and  year
2000 compliance. The Company began to implement this software  in
late  1998  with completion scheduled in 1999. There  can  be  no
assurance that the Company will be successful and timely  in  its
implementation efforts and any delay of such implementation could
have  a  material  adverse  affect  on  the  Company's  business,
financial condition and results of operations.

Competition

     The electronics manufacturing services industry is intensely
competitive  and  subject to rapid change, and includes  numerous
regional, national and international companies, a number of which
have achieved substantial market share. The Company believes that
the  primary  competitive  factors in its  targeted  markets  are
manufacturing  technology,  product quality,  responsiveness  and
flexibility,  consistency  of  performance,  range  of   services
provided,   the  location  of  facilities  and   price.   To   be
competitive,  the  Company must provide technologically  advanced
manufacturing   services,   high   quality   products,   flexible
production  schedules and reliable delivery of finished  products

                               15
<PAGE>
on  a timely and price competitive basis. Failure to satisfy  any
of  the  foregoing  requirements could materially  and  adversely
affect  the Company's competitive position. The Company  competes
directly   with  a  number  of  EMS  firms,  including  Celestica
International  Holdings  Inc., Flextronics  International,  Ltd.,
Jabil Circuits, Inc., SCI Systems, Inc., Sanmina Corporation  and
Solectron   Corporation.   The  Company   also   faces   indirect
competition  from  the captive manufacturing  operations  of  its
current and prospective customers, which continually evaluate the
merits of manufacturing products internally rather than using the
services of EMS providers. Many of the Company's competitors have
more   geographically   diversified   manufacturing   facilities,
international procurement capabilities, research and  development
and  capital  and  marketing  resources  than  the  Company.   In
addition,  the  Company  may  be at  a  competitive  disadvantage
because  some  of the Company's competitors are less  financially
leveraged,  resulting in, among other things, greater operational
and  financial  flexibility for such competitors.   See  "Certain
Factors--High   Level  of  Indebtedness;   Ability   to   Service
Indebtedness  and Satisfy Preferred Stock Dividend Requirements."
In  recent  years, the EMS industry has attracted  new  entrants,
including large OEMs with excess manufacturing capacity, and many
existing   participants   have   substantially   expanded   their
manufacturing capacity by expanding their facilities through both
internal  expansion and acquisitions. In the event of a  decrease
in overall demand for EMS services, this increased capacity could
result  in  substantial pricing pressures,  which  could  have  a
material  adverse  effect  on the Company's  business,  financial
condition and results of operations.

Capital Requirements

     The Company believes that, in order to achieve its long-term
expansion  objectives  and maintain and enhance  its  competitive
position, it will need significant financial resources  over  the
next   several   years   for   capital  expenditures,   including
investments   in   manufacturing  capabilities  and    management
information  systems,  working  capital  and  debt  service.  The
Company   has   added  significant  manufacturing  capacity   and
increased  capital  expenditures since 1995. In  April  1995,  it
opened  its Durham, North Carolina facility. In October 1996,  it
opened  its first international facility in Penang, Malaysia  and
moved from its former Boise, Idaho facility to a new facility  in
Nampa,  Idaho. In November 1997, it purchased its first  European
facility  in  Colfontaine,  Belgium  from  Alcatel.  The  Company
anticipates  that  its  capital  expenditures  will  continue  to
increase  as  the  Company expands its  facilities  in  Asia  and
Europe,  invests in necessary equipment to continue  new  product
production,  and  continues to invest  in  new  technologies  and
equipment to increase the performance and the cost efficiency  of
its  manufacturing operations. The precise amount and  timing  of
the  Company's future funding needs cannot be determined at  this
time  and  will  depend upon a number of factors,  including  the
demand for the Company's services and the Company's management of
its  working  capital.  The Company may not  be  able  to  obtain
additional  financing  on acceptable terms  or  at  all.  If  the
Company  is  unable  to obtain sufficient capital,  it  could  be
required  to  reduce  or  delay  its  capital  expenditures   and
facilities expansion, which could materially adversely affect the
Company's   business,   financial  condition   and   results   of
operations.   See  "Management's  Discussion  and   Analysis   of
Financial  Condition  and  Results of  Operations--Liquidity  and
Capital Resources."

International Operations

     The  Company  currently  offers EMS  capabilities  in  North
America,  Asia and Europe. In the first quarter of  fiscal  1999,
net sales attributable to foreign operations totaled $7.1 million
or  7.8%  of  total net sales.  The Company may  be  affected  by
economic  and  political conditions in each of the  countries  in
which  it  operates  and certain other risks  of  doing  business
abroad, including fluctuations in the value of currencies, import
duties,  changes  to  import  and export  regulations  (including
quotas), possible restrictions on the transfer of funds, employee
turnover,  labor  or civil unrest, long payment  cycles,  greater
difficulty  in collecting accounts receivable, the burdens,  cost
and  risk of compliance with a variety of foreign laws,  and,  in
certain  parts of the world, political and economic  instability.
In  addition, the attractiveness of the Company's services to its
United  States  customers  is affected  by  United  States  trade
policies,  such  as  "most  favored  nation"  status  and   trade
preferences, which are reviewed periodically by the United States
government. Changes in policies by the United States  or  foreign
governments  could  result  in, for  example,  increased  duties,
higher   taxation,  currency  conversion  limitations,  hostility
toward United States-owned operations, limitations on imports  or
exports,  or  the  expropriation of private enterprises,  any  of
which  could  have  a material adverse effect  on  the  Company's
business,  financial  condition or  results  of  operations.  The
Company's   Belgian  operations  are  subject  to   labor   union
agreements   covering  managerial,  supervisory  and   production
employees,  which  set  standards for, among  other  things,  the
maximum  number of working hours and minimum compensation levels.
In  addition,  economic considerations may make it difficult  for
the  Company to compete effectively compared to other lower  cost
European  locations.   The  Company's  Malaysian  operations  and
assets are subject to significant political, economic, legal  and
other uncertainties customary for businesses located in Southeast
Asia.
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<PAGE>
                                       
     The Company's international  operations are based in Belgium
and   Malaysia.  The  functional  currencies  of  the   Company's
international operations are the Belgian Franc and the  Malaysian
Ringgit.  The  Company's financial performance may  be  adversely
impacted  by  changes in exchange rates between these  currencies
and  the  U.S. dollar. Fixed assets for the Belgian and Malaysian
operations  are denominated in each entity's functional  currency
and  translation gains or losses will occur as the exchange  rate
between  the  local  functional  currency  and  the  U.S.  dollar
fluctuates  on  each balance sheet reporting date. The  Company's
investments  in  fixed assets as of December 3,  1998  were  $6.8
million  (10.8% of total fixed assets) and $2.4 million (3.8%  of
total  fixed  assets) in Belgium and Malaysia, respectively.  The
Company's cumulative translation losses as of December  3,  1998,
were  $0.1 million and $2.2 million for the Belgian and Malaysian
operations,  respectively.  The Company's  equity  investment  in
Belgium and Malaysia are long-term in nature and, therefore,  the
translations  adjustments are shown as a  separate  component  of
shareholders' equity and do not effect the Company's net  income.
An  additional risk is that certain working capital accounts such
as  accounts  receivable and accounts payable are denominated  in
currencies other than the functional currency and may  give  rise
to  exchange gains or losses upon settlement or at the end of any
financial reporting period.  Sales in currencies other  than  the
functional   currency  were  approximately  2.6%  and   4.3%   of
consolidated  sales for the quarter ended December  3,  1998  for
Belgium  and  Malaysia,  respectively. The Company's  transaction
gains  for  the fiscal quarter ended December 3, 1998  were  $0.5
million   and   $0.0  million  for  the  Belgian  and   Malaysian
operations,   respectively.  The  exchange  rate    between   the
Malaysian  Ringgit  and U.S. dollar has been  extremely  volatile
over  the last year.  In September 1998, the Malaysian government
imposed  currency  control measures which,  among  other  things,
fixed the exchange rate between the United States dollar and  the
Malaysian  Ringgit and make it more difficult to  repatriate  the
Company's  investments.  The Company  attempts  to  minimize  the
impact  of exchange rate volatility by entering into U.S.  dollar
denominated transactions whenever possible for purchases  of  raw
materials  and  capital  equipment and by  keeping  minimal  cash
balances  of  foreign  currencies.  Direct  labor,  manufacturing
overhead,  and selling, general and administrative costs  of  the
international  operations  are  also  denominated  in  the  local
currencies. Transaction losses are reflected in the Company's net
income. As exchange rates fluctuate, the Company will continue to
experience translation and transaction adjustments related to its
investments in Belgium and Malaysia which could have  a  material
and adverse effect on the Company's business, financial condition
and results of operations.

Dependence on Key Personnel

     The  Company's continued  success depends to a large  extent
upon  the  efforts and abilities of key managerial and  technical
employees.  The  Company's business will  also  depend  upon  its
ability  to  continue to attract and retain qualified  employees.
Although  the  Company  has  been successful  in  attracting  and
retaining  key managerial and technical employees  to  date,  the
loss  of services of certain key employees, in particular any  of
its  executive officers, or the Company's failure to continue  to
attract  and retain other key managerial and technical  employees
could  have a material adverse effect on the Company's  business,
financial condition and results of operations.

Environmental Regulations

     The  Company is  subject to a variety of environmental  laws
and  regulations  governing, among other things,  air  emissions,
waste water discharge, waste storage, treatment and disposal, and
remediation of releases of hazardous materials. While the Company
believes  that  it is currently in material compliance  with  all
such  environmental  requirements, any  failure  to  comply  with
present  and  future requirements could have a  material  adverse
effect  on  the  Company's  business,  financial  conditions  and
results  of  operations.  Such  requirements  could  require  the
Company to acquire costly equipment or to incur other significant
expenses to comply with environmental regulations. The imposition
of  additional or more stringent environmental requirements,  the
results  of  future  testing at the Company's  facilities,  or  a
determination  that  the Company is potentially  responsible  for
remediation  at  other  sites where problems  are  not  presently
known,   could  result  in  expenditures  in  excess  of  amounts
currently estimated to be required for such matters.

Concentration of Ownership

     Cornerstone  Equity Investors  and certain  other  investors
beneficially  own, in the aggregate, approximately 90.0%  of  the
outstanding  capital  stock (other than the Redeemable  Preferred
Stock)  of the Company. As a result, although no single  investor
has  more  than  49.0%  of  the voting  power  of  the  Company's
outstanding  securities or the ability to appoint a  majority  of
the  directors,  the  aggregate votes of  these  investors  could

                                17
<PAGE>

determine the composition of a majority of the board of directors
and,  therefore,  influence the management and  policies  of  the
Company.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

     The Company uses the U.S. dollar as its functional currency,
except  for its operations in Belgium and Malaysia.  The  Company
has  evaluated  the  potential  costs  and  benefits  of  hedging
potential  adverse  changes in the exchange  rates  between  U.S.
dollar,  Belgian  Franc  and Malaysian Ringgit.   Currently,  the
Company  does  not  enter into derivative  financial  instruments
because  a  substantial portion of the Company's sales  in  these
foreign   operations  are  in  U.S  dollars.    The  assets   and
liabilities of the these two operations are translated into  U.S.
dollars  at an exchange rates in effect at the period  end  date.
Income  and  expense  items are translated  at  the  year-to-date
average rate.  Aggregate transaction gains included in net income
for  the  first quarter ended December 3, 1998 were $462,000  and
$20,000 for the Belgian and Malaysian operations, respectively.

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<PAGE>


PART II  OTHER INFORMATION
--------------------------

ITEM 6.  EXHIBITS

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


Exhibit     Description
            
10.9 (a)    Employment Agreement, dated as of October 12, 1998,
            by and between MCMS, Inc. and David Garcia.
            
10.9 (b)    Employment Agreement, dated as of December 2, 1998,
            by and between MCMS, Inc. and Richard Downing.
            
10.20 (a)   Form of Stock Option Agreement for officers of the
            Company.
            
10.25       Executive Bonus Plan.
            
10.26       Employee Profit Sharing Plan.
            
11          MCMS, Inc. Basic and Diluted Earnings Per Share.
            
27          Financial Data Schedules.

                                19
<PAGE>

                                  
SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed on behalf of the registrant
by the following duly authorized person.

                            MCMS, Inc.
                           (Registrant)

                                       
Date:  January 14, 1999     By:  /s/ Chris J. Anton
                            Vice President, Finance and Chief
                            Financial Officer (Principal
                            Financial Officer and Accounting
                            Officer)

                                20