6-K 1 oct3001_cmac6k.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 October 30, 2001 C-MAC INDUSTRIES INC. (Translation of Registrant's Name Into English) 1010 Sherbrook Street West, Suite 1610 Montreal, Quebec, Canada H3A 2R7 (514) 282-7629 (Address of Principal Executive Offices) (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.) Form 20-F Form 40-F X --- --- (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.) Yes No X --- --- (If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______.) ================================================================================ C-MAC INDUSTRIES INC. TABLE OF CONTENTS Item ---- 1. Certificate Of Mailing For Shareholders Of C-MAC Industries Inc. 2. Certificate Of Mailing For Optionholders Of C-MAC Industries Inc. Item 1. ------- CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL C-MAC INDUSTRIES INC. The special meeting of the holders of common shares and options of CMAC Industries Inc., will be held at the Marriott Chateau Champlain, 1050 de la Gauthetiere Street West, Montreal, Quebec, on November 28, 2001 at 11:00 a.m. (Montreal time). CERTIFICATE OF MAILING I the undersigned, Sylvie St-Pierre, by the present certify that : 1. I am an authorized officer of General Trust of Canada, a trust company duly incorporated, having its head office at 1100 University, Montreal. 2. General Trust of Canada is the Transfer Agent and Registrar for the common shares of the Capital Stock of C-MAC INDUSTRIES INC. 3. On October 24, 2001, the following documents were mailed to the address of all registered shareholders of the issuing company of record October 19, 2001, to some intermediaries, to the Directors and the Auditor of the Company and the Director of Industry Canada: A) Notice of special meeting of securityholders of C-MAC Industries Inc. and management information circular of C-MAC Industries Inc.; B) Letter of transmittal and election form for registered holders of CMAC Industries Inc. common shares; C) Form of proxy for holders of common shares; D) Notice of Guaranteed Delivery for Deposit of Common Shares; E) Return Envelope pre-paid for the proxy form; F) Return Envelope not pre-paid for the certificate of the holders; G) Substitute Form W-9 (to all registered American holders only). Montreal, this twenty-fourth (24th) day of the month of October, two thousand one (2001). GENERAL TRUST OF CANADA By: /s/ Sylvie St-Pierre -------------------------- Authorized Officer Item 2. ------- CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL C-MAC INDUSTRIES INC. The special meeting of the holders of common shares and options of C-MAC Industries Inc., will be held at the Marriott Chateau Champlain, 1050 de la Gauthetiere Street West, Montreal, Quebec, on November 28, 2001 at 11:00 a.m. (Montreal time). CERTIFICATE OF MAILING I the undersigned, Sylvie St-Pierre, by the present certify that: 1. I am an authorized officer of General Trust of Canada, a trust company duly incorporated, having its head office at 1100 University, Montreal. 2. On October 25, 2001, the following documents were mailed to the address of all registered Optionholders of the issuing company of record October 19, 2001: A) Notice of special meeting of securityholders of C-MAC Industries Inc. and management information circular of C-MAC Industries Inc.; B) Letter of transmittal and election form applicable to C-MAC Industries Inc. Optionholders; C) Form of proxy for holders of options to purchase common shares; D) Return Envelope pre-paid for the proxy form; E) Return Envelope not pre-paid; F) Substitute Form W-9 (to all American Optionholders only). Montreal, this twenty-fifth (25th) day of the month of October, two thousand one (2001). GENERAL TRUST OF CANADA By: /s/ Sylvie St-Pierre -------------------------- Authorized Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. C-MAC INDUSTRIES INC. Date: October 30, 2001 By: /s/ Michel Megelas ---------------------------- Name: Michel Megelas Title: Legal Counsel

PAGE ----- Questions and Answers About the Transaction................. 1 Summary..................................................... 8 Comparative Historical and Pro Forma Per Share Data......... 20 Comparative Market Price and Trading Volume Information..... 22 Cautionary Statements Regarding Forward-Looking Statements in this Document.......................................... 25 Risk Factors................................................ 26 General Risks Relating to the Proposed Transaction........ 26 Risks Relating to Solectron............................... 31 Risks Relating to C-MAC................................... 39 The Special Meeting of Solectron Stockholders............... 44 General................................................... 44 Date, Time and Place...................................... 44 Purpose of the Special Meeting............................ 44 Record Date for the Special Meeting....................... 44 Vote Required............................................. 44 Quorum, Abstentions and Broker Non-Votes.................. 45 Solicitation of Proxies and Expenses...................... 45 Voting of Proxies at the Special Meeting and Revocation of Proxies................................................ 46 Dissenters' Appraisal Rights.............................. 46 Other Matters............................................. 46 Recommendation of Solectron Board of Directors............ 47 The Special Meeting of C-MAC Securityholders................ 48 General................................................... 48 Date, Time and Place...................................... 48 Purpose of the Special Meeting............................ 48 Record Date of Special Meeting............................ 48 Vote Required............................................. 48 Quorum.................................................... 49 Non-Registered Shareholders............................... 49 Solicitation of Proxies and Expenses...................... 49 Voting of Proxies at Special Meeting and Revocation of Proxies................................................ 49 Dissenting Shareholder Rights............................. 50 Other Matters............................................. 50 Recommendation of the C-MAC Board of Directors............ 51 The Transaction............................................. 52 General................................................... 52 Background of the Transaction............................. 53 Joint Reasons for the Transaction......................... 58 Recommendation of Solectron's Board of Directors.......... 59 Opinion of Solectron's Financial Advisor.................. 60 Recommendation of C-MAC's Board of Directors.............. 67 Conclusion of the Ad Hoc Committee of C-MAC's Board of Directors.............................................. 69

PAGE ----- Opinion of C-MAC's Financial Advisor...................... 70 Interests of Certain Persons in the Transaction........... 78 Court Approval of the Arrangement and Completion of the Transaction............................................ 79 Accounting Treatment...................................... 79 Stock Exchange Listings................................... 80 Eligibility for Investment in Canada...................... 80 Regulatory Matters........................................ 81 Resale of Exchangeable Shares and Shares of Solectron Common Stock........................................... 82 Delisting and Deregistration of C-MAC Common Shares After the Transaction........................................ 84 Ongoing Canadian Reporting Obligations.................... 84 Treatment of Stock Options................................ 84 Future Issuances of Shares................................ 85 Expenses.................................................. 85 Reporting Currencies and Accounting Principles.............. 86 Exchange Rates.............................................. 87 Selected Consolidated Financial Data........................ 88 Solectron Selected Consolidated Financial Data............ 88 Solectron Supplementary Financial Data.................... 89 C-MAC Selected Consolidated Financial Data................ 90 Pro Forma Capitalization of Solectron....................... 92 The Combination Agreement................................... 93 Structure of the Arrangement.............................. 93 Completion and Effectiveness of the Arrangement........... 93 Exchange of Shares in the Arrangement..................... 93 Fractional Shares......................................... 94 C-MAC's Representations and Warranties.................... 94 Representations and Warranties of Solectron and Exchangeco............................................. 95 C-MAC's Conduct of Business Before Completion of the Arrangement............................................ 96 Solectron's Conduct of Business Before Completion of the Arrangement............................................ 97 Material Covenants........................................ 97 Employee Matters.......................................... 99 Other Covenants........................................... 100 Termination of C-MAC 401(k) Plans......................... 101 Conditions to Completion of the Arrangement............... 102 Termination of the Combination Agreement.................. 103 Payment of Termination Fee................................ 105 Extension, Waiver and Amendment of the Combination Agreement.............................................. 105 Definition of Material Adverse Effect..................... 105 Expenses.................................................. 106 Transaction Mechanics....................................... 107 The Arrangement........................................... 107 The Holding Company Alternative........................... 108

PAGE ----- Share Certificates........................................ 110 Fractional Shares......................................... 111 Description of Exchangeable Shares.......................... 112 General................................................... 112 Voting, Dividend and Liquidation Rights................... 112 Optional Redemption by Holders............................ 114 Mandatory Redemption by Exchangeco and Solectron Call Right.................................................. 115 Ranking................................................... 117 Certain Restrictions...................................... 117 Amendment and Approval.................................... 117 Exchangeable Share Rights................................. 117 Solectron Support Obligation.............................. 118 Withholding............................................... 119 Disclosure of Interest in Exchangeable Shares............. 120 Transfer Agent............................................ 120 Listing................................................... 120 Solectron Capital Stock..................................... 121 Preferred Stock........................................... 121 Series A Participating Preferred Stock and Rights Agreement.............................................. 122 Solectron Series B Preferred Stock -- Special Voting Share.................................................. 124 Solectron Common Stock.................................... 125 Delaware General Corporation Law Section 203.............. 125 Exchangeco Share Capital.................................... 126 Common Shares............................................. 126 Exchangeable Shares....................................... 126 Class A Non-Voting Shares................................. 126 C-MAC Share Capital......................................... 127 The Companies After the Transaction......................... 129 General................................................... 129 Exchangeco............................................. 129 Nova Scotia Company.................................... 129 Callco................................................. 129 Plans and Proposals....................................... 129 Directors and Officers.................................... 130 Dividend Policy........................................... 135 Independent Auditors...................................... 135 Transfer Agent and Registrar.............................. 135 Business of Solectron....................................... 136 Overview.................................................. 136 Industry Overview......................................... 136 Strategy.................................................. 137 International Manufacturing Capability.................... 139 New Product Introduction Centers.......................... 141 Global Services........................................... 142

PAGE ----- Electronics Assembly and Other Services................... 142 Sales and Marketing....................................... 143 Backlog................................................... 143 Competition............................................... 143 Associates................................................ 144 Patents and Trademarks.................................... 144 Legal Proceedings......................................... 144 Directors and Executive Officers of Solectron............. 145 Security Ownership of Certain Beneficial Owners and Management............................................. 146 Options to Purchase Securities............................ 147 Executive Officer Compensation............................ 148 Compensation of Directors................................. 149 Recent Developments....................................... 150 Solectron Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 152 Business of C-MAC........................................... 166 Overview.................................................. 166 Industry Overview......................................... 166 C-MAC's Competitive Advantage -- Selective Vertical Integration............................................ 167 C-MAC's Products and Services............................. 168 Customers................................................. 171 Sales, Marketing & Customer Services...................... 171 Technology Research & Development......................... 171 Competition............................................... 172 Employees................................................. 172 Facilities................................................ 173 Environmental Matters..................................... 173 Security Ownership of Certain Beneficial Owners and Management............................................. 174 Management of C-MAC....................................... 175 Audit Committee........................................... 177 Human Resources and Corporate Governance Committee........ 177 Directors' Remuneration................................... 178 Report on Executive Compensation.......................... 178 Aggregate Compensation.................................... 179 Executive Compensation.................................... 180 Stock Option Plan......................................... 180 Employment Agreements..................................... 182 Performance Graph......................................... 182 C-MAC Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 183 Tax Considerations for C-MAC Securityholders................ 192 Comparison of Shareholder Rights............................ 209 Required Vote for Certain Transactions.................... 209 Cumulative Voting......................................... 210

PAGE ----- Calling a Stockholder Meeting............................. 210 Amendment of Certificate of Incorporation or Articles of Incorporation.......................................... 210 Amendment of Bylaws....................................... 210 Dissenters' or Appraisal Rights........................... 211 Oppression Remedy......................................... 212 Shareholder Derivative Action............................. 212 Director Qualifications................................... 213 Number of Directors....................................... 213 Removal of Directors...................................... 214 Filling Vacancies on the Board of Directors............... 214 Advance Notice Provisions for Stockholder Nominations and Proposals.............................................. 214 Stockholder Action by Written Consent..................... 215 Indemnification of Officers and Directors................. 215 Director Liability........................................ 216 Anti-Take-Over Provisions and Interested Stockholders..... 216 Dissenting Shareholder Rights............................... 218 Legal Matters............................................... 221 Experts..................................................... 221 Enforceability of Civil Liabilities......................... 221 Stockholder Proposals....................................... 221 Where You Can Find Additional Information................... 222 ANNEXES: Combination Agreement....................................... A-1-1 Amendment No. 1 to Combination Agreement.................... A-2-1 Interim Order and Notice of Application..................... B-1 Form of Plan of Arrangement................................. C-1 Form of Exchangeable Share Support Agreement................ D-1 Form of Voting and Exchange Trust Agreement................. E-1 C-MAC Arrangement Resolution................................ F-1 Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................................. G-1 Opinion of Banc of America Securities LLC................... H-1 Section 190 of the Canada Business Corporations Act......... I-1 Solectron Consolidated Financial Statements................. J-1 Condensed Consolidated Balance Sheets..................... J-2 Condensed Consolidated Statements of Operations........... J-3 Condensed Consolidated Statements of Comprehensive Income................................................. J-4 Condensed Consolidated Statements of Cash Flows........... J-5 Notes to Condensed Consolidated Financial Statements...... J-6 Consolidated Balance Sheets............................... J-18 Consolidated Statements of Income......................... J-19 Consolidated Statements of Stockholders' Equity........... J-20 Consolidated Statements of Comprehensive Income........... J-21 Consolidated Statements of Cash Flows..................... J-22 Notes to Consolidated Financial Statements................ J-23

PAGE ----- Schedule II -- Valuation and Qualifying Accounts.......... J-48 Independent Auditors' Report.............................. J-49 NatSteel Consolidated Financial Statements.................. J-50 Independent Auditors' Report.............................. J-50 Consolidated Balance Sheet................................ J-51 Consolidated Profit and Loss Account...................... J-52 Consolidated Statement of Changes in Shareholders' Equity................................................. J-53 Consolidated Statement of Cash Flows...................... J-54 Notes to the Consolidated Financial Statements............ J-55 C-MAC Industries Inc. Audited Consolidated Financial Statements................................................ K-1 Auditors' Report.......................................... K-2 Consolidated Balance Sheets............................... K-3 Consolidated Statements of Earnings and Retained Earnings............................................... K-4 Consolidated Statements of Cash Flows..................... K-5 Notes to Consolidated Financial Statements................ K-6 C-MAC Pro Forma Condensed Consolidated Statement of Earnings Compilation Report........................................ K-27 Condensed Consolidated Statement of Earnings.............. K-28 Notes to Pro Forma Condensed Consolidated Statement of Earnings............................................... K-29 Kavlico Consolidated Financial Statements Report of Independent Accountants......................... K-32 Consolidated Balance Sheets............................... K-33 Consolidated Statements of Income and Retained Earnings... K-34 Consolidated Statements of Cash Flows..................... K-35 Notes to the Consolidated Financial Statements............ K-36 DY 4 Consolidated Financial Statements Auditors' Report.......................................... K-41 Consolidated Balance Sheets............................... K-42 Consolidated Statements of Earnings and Retained Earnings............................................... K-43 Consolidated Statements of Cash Flows..................... K-44 Notes to Consolidated Financial Statements................ K-45 A-Plus Financial Statements Independent Auditors' Report.............................. K-53 Balance Sheets............................................ K-54 Statements of Income...................................... K-55 Statements of Shareholders' Equity........................ K-56 Statements of Cash Flows.................................. K-57 Notes to Financial Statements............................. K-58 Solectron Unaudited Pro Forma Combined Condensed Financial Statements................................................ L-1

C-MAC SOLECTRON TWELVE MONTHS YEAR ENDED ENDED AUGUST 31, 2000 SEPTEMBER 30, 2000 --------------- ------------------ (IN U.S. DOLLARS -- UNAUDITED)(1) NET INCOME PER SHARE (BASIC): Canadian GAAP:............................................ n/a $ 0.94 U.S. GAAP:................................................ $0.83 $ 0.94 NET INCOME PER SHARE (DILUTED): Canadian GAAP:............................................ n/a $ 0.92 U.S. GAAP:................................................ $0.80 $ 0.91 BOOK VALUE PER SHARE(2): Canadian GAAP:............................................ n/a $14.93 U.S. GAAP:................................................ $6.28 $14.90

NINE MONTHS ENDED NINE MONTHS ENDED MAY 31, 2001 JUNE 30, 2001 ----------------- ----------------- (IN U.S. DOLLARS -- UNAUDITED)(1) NET INCOME PER SHARE (BASIC): Canadian GAAP:............................................ n/a $ 0.82 U.S. GAAP................................................. $0.20 $ 0.84 NET INCOME PER SHARE (DILUTED): Canadian GAAP:............................................ n/a $ 0.80 U.S. GAAP................................................. $0.19 $ 0.83 BOOK VALUE PER SHARE(2): Canadian GAAP:............................................ n/a $16.86 U.S. GAAP................................................. $8.24 $16.86

AS OF AND FOR THE YEAR ENDED AUGUST 31, 2000(3) ------------------------------------------------ SOLECTRON C-MAC EQUIVALENT PRO FORMA COMBINED PRO FORMA COMBINED(5) -------------------- ----------------------- (IN U.S. DOLLARS -- UNAUDITED)(1) NET INCOME PER SHARE (BASIC): Canadian GAAP:.................................... n/a n/a U.S. GAAP:........................................ $0.60 $1.05 NET INCOME PER SHARE (DILUTED): Canadian GAAP:.................................... n/a n/a U.S. GAAP:........................................ $0.58 $1.02

AS OF AND FOR THE NINE MONTHS ENDED MAY 31, 2001(3) -------------------------------------------- SOLECTRON C-MAC EQUIVALENT PRO FORMA COMBINED PRO FORMA COMBINED(5) ------------------ --------------------- (IN U.S. DOLLARS -- UNAUDITED)(1) NET INCOME PER SHARE (BASIC): Canadian GAAP:.................................... n/a n/a U.S. GAAP:........................................ $0.12 $ 0.21 NET INCOME PER SHARE (DILUTED): Canadian GAAP:.................................... n/a n/a U.S. GAAP:........................................ $0.11 $ 0.19 BOOK VALUE PER SHARE(4): Canadian GAAP:.................................... n/a n/a U.S. GAAP:........................................ $9.85 $17.29

SOLECTRON SOLECTRON COMMON STOCK COMMON STOCK PER SHARE SALES PRICES AVERAGE ---------------------- TRADING FISCAL QUARTERS HIGH $ LOW $ VOLUME --------------- ------- ------- ------------ 1999: First Quarter....................................... 17.344 9.703 2,708,600 Second Quarter...................................... 23.563 16.250 4,862,885 Third Quarter....................................... 28.938 20.251 2,744,203 Fourth Quarter...................................... 39.469 26.125 2,618,022 2000: First Quarter....................................... 45.000 33.063 2,764,381 Second Quarter...................................... 49.000 31.250 4,907,971 Third Quarter....................................... 49.500 28.250 5,240,325 Fourth Quarter...................................... 48.375 30.938 3,279,624 September........................................... 49.813 43.750 3,295,165 October............................................. 52.625 39.250 4,383,682 November............................................ 46.000 28.000 7,317,586 December............................................ 34.930 24.540 6,067,175 2001: January............................................. 41.950 30.060 5,367,443 February............................................ 40.930 26.500 6,742,179 March............................................... 30.690 18.050 7,730,795 April............................................... 26.450 16.060 5,600,270 May................................................. 28.120 20.650 4,331,327 June................................................ 23.350 16.330 4,943,467 July................................................ 18.400 14.710 4,259,976 August.............................................. 19.000 13.440 6,525,126 September........................................... 13.600 9.910 8,279,120 October(1).......................................... 15.390 11.130 6,785,771

THE TORONTO STOCK EXCHANGE NEW YORK STOCK EXCHANGE(1) ----------------------------------- ----------------------------------- AVERAGE AVERAGE HIGH CDN.$ LOW CDN.$ VOLUME HIGH U.S.$ LOW U.S.$ VOLUME ---------- --------- ---------- ---------- --------- ---------- 1999: First Quarter................ 14.250 11.150 195,959 n/a n/a n/a Second Quarter............... 16.375 12.575 109,106 n/a n/a n/a Third Quarter................ 19.750 15.425 182,022 n/a n/a n/a Fourth Quarter............... 44.250 18.500 322,835 n/a n/a n/a 2000: First Quarter................ 80.250 32.875 451,222 n/a n/a n/a Second Quarter............... 77.500 48.000 356,619 n/a n/a n/a Third Quarter................ 112.800 69.900 457,035 76.750 56.688 297,003 Fourth Quarter............... 113.500 60.550 564,920 74.813 39.375 229,632 2001 January...................... 84.750 56.100 643,706 55.938 37.625 190,405 February..................... 83.000 39.600 952,558 55.510 25.730 181,679 March........................ 40.190 27.450 1,171,088 26.050 17.700 142,582 April........................ 52.500 27.500 986,484 33.900 17.400 244,630 May.......................... 59.750 44.750 824,192 38.890 29.120 177,991 June......................... 50.200 29.800 613,414 32.750 19.500 119,581 July......................... 43.650 32.650 579,721 28.200 21.000 109,910 August....................... 40.900 34.500 1,501,046 26.740 22.550 623,709 September.................... 36.000 22.750 1,270,256 23.550 14.750 1,303,847 October(2)................... 41.080 29.190 601,316 26.290 18.880 772,057

C-MAC C-MAC SOLECTRON EQUIVALENT PRICE COMMON SHARES COMMON SHARES COMMON STOCK PER SHARE ---------------- ----------------- ------------ ---------------- (CDN.$ ON TSE) (U.S.$ ON NYSE) (U.S.$) (U.S.$)(1) August 8, 2001................. $34.80 $22.67 $17.20 $30.19 October 18, 2001............... $38.29 $24.18 $14.00 $24.57

Q1 2002 Q4 2002 TOTAL FAIR VALUE -------- ------- -------- ---------- (IN THOUSANDS) Cash equivalents and short-term investments........ $1,122.8 $46.5 $1,169.3 $1,169.3 Average interest rate.............................. 4.70% 6.30%

MEAN IMPLIED OFFER PRICE PREMIUM IN COMPARABLE TRANSACTIONS PREMIUM ---------------------------- PERIOD REPRESENTED SELECTED AVERAGE BY THE TECHNOLOGY PERIOD PRIOR TO THE TRANSACTION C-MAC IMPLIED SELECTED EMS TRANSACTIONS ANNOUNCEMENT DATE SHARE PRICE OFFER PRICE TRANSACTIONS $2-5 BN ------------------------------- ----------- ----------- ------------ ------------ 1 Day...................................... $22.67 33.2% 44.4% 40.9% 1 Month Average............................ $23.59 28.0% 54.0% 55.0% 3 Month Average............................ $27.03 11.7% 63.7% 61.3%

MEAN TRANSACTION EXCHANGE RATIO PREMIUM IN COMPARABLE PREMIUM TRANSACTIONS PERIOD REPRESENTED ---------------------------- AVERAGE BY THE SELECTED C-MAC TRANSACTION TECHNOLOGY PERIOD PRIOR TO THE TRANSACTION EXCHANGE EXCHANGE SELECTED EMS TRANSACTIONS ANNOUNCEMENT DATE RATIO RATIO TRANSACTIONS $2-5 BN ------------------------------- -------- ----------- ------------ ------------ 1 Day....................................... 1.3180x 33.2% 40.2% 39.8% 1 Month Average............................. 1.4254x 23.1% 44.7% 52.5% 3 Month Average............................. 1.3768x 27.5% 50.3% 58.6%

PERIOD LOW ($) HIGH ($) ------ ------- -------- 12 Months................................................... $18.01 $74.69 6 Months.................................................... 18.01 46.88 3 Months.................................................... 20.17 38.62 1 Month..................................................... 21.00 26.77 10 Trading Days............................................. 22.67 24.68

TIER I TIER II ------ ------- Celestica Inc. Benchmark Electronics Inc. Flextronics International Ltd. Elcoteq Network Corporation Jabil Circuit, Inc. Manufacturers' Services Ltd. Sanmina Corporation Plexus Corporation SCI Systems, Inc. Viasystems Group, Inc. Solectron Corporation

TIER I TIER II ------------ ------------ 2001 2002 2001 2002 ---- ---- ---- ---- Maximum Multiple........................................ 42.8x 30.7x 36.9x 28.4x Minimum Multiple........................................ 29.6x 24.0x 11.7x 6.6x

ACQUIROR TARGET -------- ------ Sanmina Corporation SCI Systems, Inc. Celestica Inc. Omni Industries Ltd. Sanmina Corporation AB Segerstrom & Svenson Solectron Corporation NatSteel Electronics Flextronics International Ltd. JIT Holdings Flextronics International Ltd. Chatham Technologies Sanmina Corporation Hadco Corporation Flextronics International Ltd. DII Group, Inc. Solectron Corporation Smart Modular Technologies, Inc.

MEAN MEDIAN ---- ------ Transaction Offer Value/LTM EBITDA.......................... 17.9x 18.7x Implied Offer Price/LTM EPS................................. 35.3x 37.2x

LOW ($) HIGH ($) ------- -------- Implied Equity Value Per Common Share of C-MAC........... 24.18 41.19

PERIOD LOW ($) HIGH ($) ------ ------- -------- 12 months................................................ 14.79 52.00 6 Months................................................. 14.79 34.20 3 Months................................................. 14.79 27.13 1 Month.................................................. 14.79 18.62 10 Trading Days.......................................... 17.11 18.62

2001 2002 ---- ---- Maximum Multiple............................................ 42.8x 30.7x Minimum Multiple............................................ 25.9x 20.0x

LOW ($) HIGH ($) ------- -------- Implied Equity Value Per Share of Solectron Common Stock.................................................. 12.84 25.25

PERIOD LOW HIGH ------ ------ ------ 12 Months.................................................. 0.7810x 1.8058x 6 Months................................................... 0.7810x 1.7260x 3 Months................................................... 1.1938x 1.7260x 1 Month.................................................... 1.2507x 1.7260x

LOW HIGH ------ ------ Relative Public Comparables Exchange Ratio................. 1.0279x 2.4800x

LOW HIGH ------ ------ Relative Discounted Cash Flow Analysis Exchange Ratio...... 0.9576x 3.2079x

RANGE OF MULTIPLES MEDIAN MEAN ------------------ ------ ---- ENTERPRISE VALUE TO: CY2002 net sales........................... 0.72x to 1.95x 0.91x 1.11x EQUITY VALUE TO: CY2002 cash net income..................... 22.1x to 29.7x 26.0x 26.3x

RANGE OF MULTIPLES MEDIAN MEAN ------------------ ------ ---- ENTERPRISE VALUE TO: Latest twelve months net sales............. 0.27x to 2.54x 1.09x 1.24x EQUITY VALUE TO: Latest twelve months cash net income....... 8.4x to 45.6x 21.7x 26.0x

PREMIUM ONE DAY PREMIUM ONE BEFORE MONTH BEFORE ANNOUNCEMENT ANNOUNCEMENT ---------------- -------------- MEDIAN MEAN MEDIAN MEAN ------- ----- ------ ---- STOCK-FOR-STOCK TRANSACTIONS: Since January 1, 1995...................................... 24.7% 32.1% 34.7% 44.2% Since January 1, 2000...................................... 25.2% 33.4% 42.7% 47.0% Since July 1, 2000......................................... 22.4% 29.9% 36.1% 39.5% SELECTED TECHNOLOGY TRANSACTIONS: Since January 1, 2000...................................... 35.7% 39.7% 53.0% 59.0% Since July 1, 2000......................................... 34.9% 39.4% 53.0% 57.0%

PREMIUM TO HISTORICAL EXCHANGE RATIO -------------------------------------- PERIOD PRIOR TO ANNOUNCEMENT LOW HIGH MEDIAN MEAN ---------------------------- ------ ------ -------- ------ One Day...................................... 6.3% 72.7% 27.3% 34.6% One Month Average............................ 12.9% 86.7% 43.0% 48.6% Three Month Average.......................... 13.6% 84.0% 54.5% 49.1%

MEAN PERIOD PRIOR TO AUGUST 9, 2001 EXCHANGE RATIO ------------------------------ -------------- One Day..................................................... 1.318x 1 Month Average............................................. 1.425x 3 Month Average............................................. 1.377x 6 Month Average............................................. 1.238x Average Since August 9, 2000................................ 1.323x

ON AN ESTIMATED ON AN ESTIMATED CALENDAR YEAR CALENDAR YEAR C-MAC'S CONTRIBUTION TO: 2001 BASIS 2002 BASIS ------------------------ --------------- --------------- Net Sales..................................... 10.4% 10.8% Gross Profit.................................. 19.6% 19.9% EBITA......................................... 21.7% 21.0% EBIT.......................................... 27.5% 25.5% Cash Net Income (before adjusting for LYONs add-back)................................... 18.2% 19.2% Cash Net Income (after adjusting for LYONs add-back)................................... 15.2% 16.4%

AVERAGE CLOSING PRICE PER PERIOD PRIOR TO AUGUST 9, 2001 C-MAC COMMON SHARE ------------------------------ ------------------------- 1 week.................................................. $23.12 1 month................................................. $23.59 3 months................................................ $26.89 6 months................................................ $26.94

SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------- 2001 2000 1999 1998 1997 1996 ----------- ------ ------ ------ ------- ------ High...................................... 0.6695 0.6973 0.6929 0.7105 0.7489 0.7515 Low....................................... 0.6334 0.6413 0.6537 0.6343 0.6948 0.7215 Average................................... 0.6517 0.6733 0.6731 0.6741 0.7223 0.7334 Period End................................ 0.6589 0.6666 0.6929 0.6534 0.6997 0.7301

NINE MONTHS ENDED YEAR ENDED AUGUST 31, MAY 31, ------------------------------------------ 2001 2000 1999 1998 1997 1996 ----------- ------ ------ ------ ------ ------ High....................................... 1.5789 1.5081 1.5578 1.5765 1.3995 1.3860 Low........................................ 1.4735 1.4341 1.4505 1.3714 1.3306 1.3282 Average.................................... 1.5275 1.4715 1.5066 1.4388 1.3686 1.3635 Period End................................. 1.5457 1.4722 1.4958 1.5722 1.3885 1.3684

NINE MONTHS ENDED MAY 31, FISCAL YEAR ENDED AUGUST 31, -------------------- ----------------------------------------------------- 2001 2000 2000 1999 1998 1997 1996 --------- -------- --------- -------- -------- -------- -------- Net Sales...................... $15,097.4 $9,401.3 $14,137.5 $9,669.2 $6,102.2 $4,408.5 $3,231.8 Operating Income............... 214.4 461.2 704.2 516.1 368.6 303.2 213.6 Income before income taxes and cumulative effect of change in accounting principle...... 182.3 488.0 739.5 514.5 375.5 307.5 213.2 Net income..................... 126.8 326.2 497.2 350.3 251.3 203.7 139.6 Basic net income per share(1)..................... 0.20 0.54 0.83 0.65 0.49 0.42 0.31 Diluted net income per share(1)..................... 0.19 0.52 0.80 0.61 0.47 0.40 0.30

AS OF MAY 31, AS OF AUGUST 31, -------------------- ----------------------------------------------------- 2001 2000 2000 1999 1998 1997 1996 --------- -------- --------- -------- -------- -------- -------- Working capital................ $ 6,233.6 $5,738.2 $ 5,411.4 $3,162.7 $1,278.1 $1,137.5 $ 860.9 Total assets................... 13,292.5 9,221.4 10,375.6 5,420.5 2,843.7 2,209.9 1,627.9 Long-term debt................. 4,977.2 3,295.8 3,319.5 922.7 386.8 386.2 388.3 Stockholders' equity........... 5,410.0 3,584.6 3,802.1 3,166.9 1,475.4 1,150.2 787.8

FIRST SECOND THIRD 2001 QUARTER QUARTER QUARTER ---- -------- -------- -------- Net sales....................................... $5,695.5 $5,418.5 $3,983.4 Gross profit.................................... $ 484.7 $ 488.2 $ 305.7 Gross margin.................................... 8.5% 9.0% 7.7% Operating income................................ $ 276.4 $ 192.5 $ (254.5) Operating margin................................ 4.9% 3.6% (6.4%) Net income...................................... $ 190.6 $ 121.9 $ (185.7) Basic net income per share...................... $ 0.31 $ 0.19 $ (0.28) Diluted net income per share.................... $ 0.29 $ 0.18 $ (0.28)

FIRST SECOND THIRD FOURTH 2000 QUARTER QUARTER QUARTER QUARTER ---- -------- -------- -------- -------- Net sales....................................... $2,834.6 $2,912.7 $3,645.0 $4,736.2 Gross profit.................................... $ 277.0 $ 279.9 $ 305.5 $ 412.9 Gross margin.................................... 9.8% 9.6% 8.4% 8.7% Operating income................................ $ 155.3 $ 135.7 $ 170.2 $ 243.0 Operating margin................................ 5.5% 4.6% 4.7% 5.1% Income before cumulative effect of change in accounting principle.......................... $ 113.3 $ 96.7 $ 119.7 $ 171.0 Cumulative effect of change in accounting principle, net of income tax benefit.......... $ (3.5) $ -- $ -- $ -- Net income...................................... $ 109.8 $ 96.7 $ 119.7 $ 171.0 Basic net income per share:(1) Income before cumulative effect of change in accounting principle....................... $ 0.19 $ 0.16 $ 0.20 $ 0.28 Cumulative effect of change in accounting principle.................................. $ (0.01) $ -- $ -- $ -- Net income.................................... $ 0.18 $ 0.16 $ 0.20 $ 0.28 Diluted net income per share:(1) Income before cumulative effect of change in accounting principle....................... $ 0.18 $ 0.16 $ 0.19 $ 0.27 Cumulative effect of change in accounting principle.................................. $ (0.01) $ -- $ -- $ -- Net income.................................... $ 0.17 $ 0.16 $ 0.19 $ 0.27

FIRST SECOND THIRD FOURTH 1999 QUARTER QUARTER QUARTER QUARTER ---- -------- -------- -------- -------- Net sales....................................... $2,272.0 $2,249.3 $2,440.4 $2,707.5 Gross profit.................................... $ 211.7 $ 216.9 $ 240.8 $ 266.9 Gross margin.................................... 9.3% 9.6% 9.9% 9.9% Operating income................................ $ 115.1 $ 117.0 $ 134.0 $ 150.0 Operating margin................................ 5.1% 5.2% 5.5% 5.5% Net income...................................... $ 77.5 $ 78.4 $ 90.9 $ 103.5 Basic net income per share(1)................... $ 0.15 $ 0.15 $ 0.16 $ 0.18 Diluted net income per share(1)................. $ 0.14 $ 0.14 $ 0.16 $ 0.17

TWENTY-SIX WEEK PERIODS ENDED ---------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ---------------------------------------------------------- 2001 2000 2000 1999 1998 1997 1996 ---------- --------- ----------- ---------- --------- -------- -------- (UNAUDITED) (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) CONSOLIDATED STATEMENT OF EARNINGS DATA: CANADIAN GAAP: Revenue................................. $1,491,678 $ 993,953 $ 2,552,839 $1,169,097 $ 642,983 $413,055 $316,219 Operating expenses: Cost of goods sold.................... 1,228,970 831,641 2,115,505 970,701 525,504 334,553 258,666 Selling and administrative............ 74,096 46,419 113,969 67,482 44,620 27,820 19,948 Research and development.............. 36,246 13,420 41,463 17,196 12,852 7,669 4,660 Amortization of capital and other assets.............................. 36,751 17,076 44,070 22,844 11,841 8,671 8,258 ---------- --------- ----------- ---------- --------- -------- -------- Earnings from operations................ 115,615 85,397 237,832 90,874 48,166 34,342 24,687 Financial expenses...................... 6,195 12,094 9,187 13,589 6,099 1,237 683 Income taxes............................ 37,931 27,020 79,779 27,399 15,307 12,739 9,266 Non-controlling interest................ 120 190 386 854 -- -- -- ---------- --------- ----------- ---------- --------- -------- -------- Net earnings before goodwill amortization.......................... 71,369 46,093 148,480 49,032 26,760 20,366 14,738 Goodwill amortization, net of income taxes................................. 18,841 5,169 15,722 3,860 1,342 114 44 ---------- --------- ----------- ---------- --------- -------- -------- Net earnings............................ $ 52,528 $ 40,924 $ 132,758 $ 45,172 $ 25,418 $ 20,252 $ 14,694 ========== ========= =========== ========== ========= ======== ======== Earnings before goodwill amortization per share Basic................................. $ 0.83 $ 0.68 $ 1.99 $ 0.82 $ 0.51 $ 0.39 $ 0.29 Diluted............................... $ 0.81 $ 0.66 $ 1.94 $ 0.80 $ 0.50 $ 0.38 $ 0.29 Earnings per share Basic................................. $ 0.61 $ 0.60 $ 1.78 $ 0.76 $ 0.49 $ 0.39 $ 0.29 Diluted............................... $ 0.60 $ 0.58 $ 1.73 $ 0.74 $ 0.47 $ 0.38 $ 0.28 Weighted average number of outstanding common shares Basic................................. 86,282 68,133 74,558 59,830 52,082 51,594 51,524 Diluted............................... 87,813 70,238 76,524 61,424 53,519 53,081 51,558 U.S. GAAP Net earnings............................ $ 55,023 $ 39,610 $ 131,839 $ 49,675 $ 19,522 $ 20,588 $ 14,199 Earnings per share Basic................................. $ 0.64 $ 0.58 $ 1.77 $ 0.83 $ 0.37 $ 0.40 $ 0.28 Diluted............................... $ 0.63 $ 0.56 $ 1.72 $ 0.81 $ 0.36 $ 0.39 $ 0.28 CONSOLIDATED CASH FLOW DATA: CANADIAN GAAP: Cash flows from (used in) operating activities............................ $ 140,715 $ (84,486) $ (184,238) $ 13,148 $ 37,073 $ 30,323 $ 24,767 Cash flows from (used by) financing activities............................ 16,715 278,084 1,260,803 180,363 196,794 14,993 (21,875) Cash flows used by investing activities............................ (79,156) (246,436) (1,056,081) (172,550) (138,994) (31,153) (14,097)

DECEMBER 31, JUNE 30, ------------------------ 2001 2000 1999 ----------- ---------- ---------- (UNAUDITED) (IN THOUSANDS OF CANADIAN DOLLARS) CONSOLIDATED BALANCE SHEET DATA: CANADIAN GAAP: Cash and cash equivalents.............................. $ 271,900 $ 203,242 $ 160,773 Working capital........................................ 970,627 941,235 324,907 Capital assets......................................... 417,601 395,477 188,030 Total assets........................................... 2,884,179 3,029,968 1,061,503 Long-term debt, including current portion.............. 320,631 306,014 213,361 Shareholders' equity................................... 2,202,637 2,152,478 527,251 U.S. GAAP: Cash and cash equivalents.............................. $ 271,900 $ 203,242 $ 160,773 Working capital........................................ 970,627 940,831 324,839 Capital assets......................................... 417,601 395,477 188,030 Total assets........................................... 2,884,202 3,027,496 1,059,951 Long-term debt, including current portion.............. 320,631 306,014 213,361 Shareholders' equity................................... 2,202,660 2,150,006 525,699

AS ADJUSTED SOLECTRON SOLECTRON AS OF AS OF MAY 31, 2001 MAY 31, 2001(1) ------------ --------------- (IN MILLIONS) Stockholders' Equity Preferred Stock, $.001 par value, 1.2 million authorized shares; no shares issued............................... $ -- $ -- Common Stock, $.001 par value, 1,600 million shares authorized; 656.2 million shares issued and outstanding as of May 31, 2001; and 807.7 million shares as adjusted as of May 31, 2001............................ 0.7 0.8 Additional Paid-In Capital................................ 3,847.9 6,398.3 Retained Earnings......................................... 1,781.9 1,781.9 Accumulated other comprehensive income.................... (220.5) (220.5) Deferred compensation..................................... -- (1.9) -------- -------- TOTAL STOCKHOLDERS' EQUITY.................................. $5,410.0 $7,958.6 ======== ======== TOTAL CAPITALIZATION........................................ $5,410.0 $7,958.6 ======== ========

APPROXIMATE NAME AMOUNT OWNED(1) PERCENTAGE OWNED(24) ---- --------------- -------------------- Dennis Wood.............................................. 15,066,239(2) 1.86% Ajay B. Shah............................................. 7,089,144(3) * Lin Chien................................................ 2,701,110(4) * Dr. Koichi Nishimura..................................... 1,365,602(5) * Dr. Winston H. Chen...................................... 1,267,124(6) * Susan S. Wang............................................ 1,031,810(7) * Charles A. Dickinson..................................... 372,712(8) * Dr. Saeed Zohouri........................................ 235,240(9) * Dr. Paul R. Low.......................................... 213,124(10) * Daniel Perez............................................. 157,089(11) * Dr. Kenneth E. Haughton.................................. 134,124(12) * Richard A. D'Amore....................................... 117,124(13) * Kevin R. Burns........................................... 115,121(14) * Heinz Fridrich........................................... 83,124(15) * David Kynaston........................................... 78,786(16) * Osamu Yamada............................................. 51,124(17) * William A. Hasler........................................ 45,124(18) * C. Wesley M. Scott....................................... 1,755 * Kiran Patel.............................................. 5,000(19) * Massued Behrouzi......................................... 417,493(20) * Alejandro Gomez-Montoy................................... 38,311(21) * William Mitchell......................................... 36,064(22) * George Moore............................................. 15,755(23) * All directors and executive officers as a group (23 persons)............................................... 30,632,163 3.78%

NAME AGE POSITION ---- --- -------- Dr. Koichi Nishimura................. 63 President, Chief Executive Officer and Chairman of the Board Dr. Winston H. Chen.................. 60 Chairman, Paramitas Foundation Richard A. D'Amore................... 48 General Partner, North Bridge Venture Partners Charles A. Dickinson................. 77 Independent Consultant Heinz Fridrich....................... 68 Faculty, University of Florida William A. Hasler.................... 59 Co-Chief Executive Officer, Aphton Corporation Dr. Kenneth E. Haughton.............. 73 Independent Management Consultant Dr. Paul R. Low...................... 68 President, PRL Associates Osamu Yamada......................... 72 International Business Consultant Kevin R. Burns....................... 37 Executive Vice President and Chief Materials Officer Lin Chien............................ 60 Executive Vice President and President of Solectron Asia David Kynaston....................... 60 Executive Vice President and President of Solectron Europe Daniel Perez......................... 50 Executive Vice President of Worldwide Account Management and Marketing Ajay B. Shah......................... 42 Executive Vice President and President, Chief Executive Officer of Solectron Technology Solutions Susan S. Wang........................ 50 Executive Vice President, Corporate Development and Corporate Secretary Dr. Saeed Zohouri.................... 50 Executive Vice President and Chief Operating Officer Kiran Patel.......................... 53 Executive Vice President and Chief Financial Officer Massued Behrouzi..................... 46 Senior Vice President and President Solectron North America Alejandro Gomez-Montoy............... 50 Senior Vice President and President Solectron Latin America William Mitchell..................... 57 Executive Vice President and President Solectron Global Services George Moore......................... 45 Executive Vice President and President Solectron Systems Solutions

AMOUNT APPROXIMATE NAME OWNED(1) PERCENTAGE OWNED(16) ---- -------------- -------------------- AXA Financial Inc....................................... 67,771,722(2) 10.29% 1290 Avenue of the Americas New York, NY 10104 Ajay B. Shah............................................ 7,089,144(3) 1.15% Dr. Koichi Nishimura.................................... 1,365,602(4) * Dr. Winston H. Chen..................................... 1,267,124(5) * Charles A. Dickinson.................................... 372,712(6) * Dr. Saeed Zohouri....................................... 235,240(7) * Dr. Paul R. Low......................................... 213,124(8) * Dr. Kenneth E. Haughton................................. 134,124(9) * Richard A. D'Amore...................................... 117,124(10) * Kevin R. Burns.......................................... 115,121(11) * Heinz Fridrich.......................................... 83,124(12) * David Kynaston.......................................... 78,786(13) * Osamu Yamada............................................ 51,124(14) * William A. Hasler....................................... 45,124(15) * All directors and executive officers as a group (21 persons).............................................. 15,564,169 2.36%

MARKET VALUE CURRENT NUMBER OF PURCHASE PRICE EXPIRATION OF SECURITIES MARKET VALUE NUMBER OF SECURITIES OF SECURITIES DATE OF UNDER OPTION OF SECURITIES HOLDER OF OPTION OPTIONEES UNDER OPTION UNDER OPTION OPTION ON DATE OF GRANT UNDER OPTION(1) ---------------- --------- ------------ -------------- ----------- ---------------- --------------- (U.S.$) (IN U.S.$ (IN U.S.$ THOUSANDS) THOUSANDS) Directors and Executive Officers of Solectron....... 21 6,076,333 3.33 - 46.94 2001 - 2011 118,688 76,766 Other Employees...... 6,967 58,127,055 0.33 - 433.66 2001 - 2011 1,123,306 705,662,447

LONG-TERM ANNUAL COMPENSATION(1) COMPENSATION(2) ALL OTHER ----------------------------- OPTIONS/SARS COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#)(2) ($)(3) --------------------------- ---- --------- -------- --------------- ------------ Dr. Koichi Nishimura.............. 2000 643,097 -- 132,182 9,594 President, Chief Executive Officer 1999 660,000 940,010 200,000 8,805 and Chairman of the Board 1998 485,552 727,887 180,000 7,650 of Directors David Kynaston.................... 2000 300,008 408,665 12,000 23,335 Senior Vice President and 1999 300,041 290,599 30,000 13,393 President, Solectron Europe 1998 195,313 211,814 32,000 12,500 Kevin R. Burns.................... 2000 296,167 365,371 5,764 12,654 Senior Vice President and 1999 234,242 65,492 120,000 88,095(4) Chief Materials Officer 1998 -- -- -- -- Dr. Saeed Zohouri................. 2000 503,162 -- 86,755 13,367 Senior Vice President and 1999 425,022 882,060 111,600 10,388 Chief Operating Officer 1998 352,926 510,596 60,000 4,485 Ajay B. Shah...................... 2000 252,692 225,676 -- 3,904 President and Chief Executive 1999 -- -- -- -- Officer of Technology Solutions 1998 -- -- -- --

INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE -------------------------------------------------- AT PERCENT OF ASSUMED ANNUAL RATES OF TOTAL OPTIONS STOCK PRICE APPRECIATION OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(2) GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------------- NAME (#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($) ---- ------- ------------- ----------- ---------- ------------ ------------ Dr. Koichi Nishimura....... 120,000 1.09% 35.0313 09/28/06 1,711,351 3,988,175 12,182 .11 43.7500 08/23/07 216,969 505,631 David Kynaston............. 12,000 .11 35.0313 09/28/06 171,135 398,818 Kevin R. Burns............. 5,764 .05 31.0000 05/10/07 72,742 169,521 Dr. Saeed Zohouri.......... 65,000 .59 35.0313 09/28/06 926,982 2,160,262 16,145 .15 31.0000 05/10/07 203,752 474,828 5,610 .05 43.7500 08/23/07 99,918 232,851 Ajay B. Shah............... -- -- -- -- -- --

TOTAL NUMBER OF VALUE OF UNEXERCISED, UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS HELD AT SHARES HELD AT FISCAL YEAR END(#) FISCAL YEAR END($)(2) ACQUIRED ON VALUE --------------------------- ----------------------------- NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- -------------- ----------- ------------- ------------ -------------- Dr. Koichi Nishimura.......... -- -- 846,247 265,935 30,962,513 6,035,791 David Kynaston....... 100,000 3,843,818 40,208 33,792 1,257,477 870,363 Kevin R. Burns....... -- -- 52,860 72,904 1,474,883 1,963,292 Dr. Saeed Zohouri.... 40,224 1,547,720 293,752 151,587 10,363,018 3,256,874 Ajay B. Shah......... -- -- 26,086 35,572 556,242 758,515

NINE MONTHS ENDED MAY 31, -------------- 2001 2000 ----- ----- Net sales................................................... 100.0% 100.0% Cost of sales............................................... 91.5 90.8 ----- ----- Gross profit................................................ 8.5 9.2 Operating expenses: Selling, general and administrative....................... 3.8 3.4 Research and development.................................. 0.4 0.5 Goodwill amortization expense............................. 0.6 -- Acquisition costs......................................... 0.2 0.3 Restructuring and impairment costs........................ 2.1 0.1 ----- ----- Operating (loss) income................................... 1.4 4.9 Net interest (expense) income............................... (.2) .3 ----- ----- (Loss) income before income taxes and cumulative effect of change in accounting principle............................ 1.2 5.2 Income taxes................................................ 0.4 1.7 ----- ----- (Loss) income before cumulative effect of change in accounting principle...................................... 0.8 3.5 Cumulative effect of change in accounting principle for start-up costs............................................ -- -- ----- ----- Net (loss) income......................................... 0.8% 3.5% ===== =====

NINE MONTHS ENDED MAY 31, -------------- 2001 2000 ---- ---- Cisco....................................................... 12.0% 12.0% Ericsson.................................................... 14.0% 11.0% Nortel...................................................... 12.0% --

YEARS ENDED AUGUST 31, ----------------------- 2000 1999 1998 ----- ----- ----- Net sales................................................... 100.0% 100.0% 100.0% Cost of sales............................................... 91.0 90.3 89.1 ----- ----- ----- Gross profit................................................ 9.0 9.7 10.9 Operating expenses: Selling, general and administrative....................... 3.3 3.9 4.4 Research and development.................................. 0.4 0.4 0.5 Acquisition costs......................................... 0.3 -- -- ----- ----- ----- Operating income....................................... 5.0 5.4 6.0 Net interest income......................................... 0.2 -- 0.1 ----- ----- ----- Income before income taxes.................................. 5.2 5.4 6.1 Income taxes................................................ 1.7 1.7 2.0 ----- ----- ----- Net income........................................ 3.5% 3.7% 4.1% ===== ===== =====

YEARS ENDED AUGUST 31, ----------------------- 2000 1999 1998 ----- ----- ----- Ericsson.................................................... 13% * * Compaq...................................................... * 12% * Cisco....................................................... 12% 11% 10% HP.......................................................... * * 11%

Q1 Q4 2002 2002 TOTAL FAIR VALUE -------- ----- -------- ---------- (AMOUNTS IN MILLIONS) Cash equivalents and short-term investments......... $1,122.8 $46.5 $1,169.3 $1,169.3 Average interest rate............................... 4.70% 6.30%

SUPPLY CHAIN PROPRIETARY PRODUCTS DESIGN SERVICES MANUFACTURING SERVICES MANAGEMENT SERVICES AND TECHNOLOGIES --------------------- ---------------------- --------------------- --------------------- - Concept design - Printed circuit - Materials - Microtechnology - Product design boards procurement products - Cost reduction - Printed circuit - Inventory - Hybrid - Product board management microcircuits documentation assembly - Logistics - Sensors and data management - Backplanes - Packaging - Computer modules - Prototype services - Backplanes assembly - Distribution - Frequency control - Product - Metal fabrication - After-market products qualification - Plastic injection support - DC/DC converters - Design for molding - Refurbishment - Low Temperature Manufacturability - Electro-mechanical Co-Fired Ceramic - Design for test sub-assembly (LTCC) - Regulatory Testing - Opto-electronic - Multichip modules - Software Design assembly - Databus modules - New product - Product assembly - Compact PCI and VME introduction - Electro-plating bus systems - System assembly - Fiber optic modules - Product test - High-density - Quality assurance connectors - Failure analysis - Activators - Body Control Electronics - Telematics - Point of use power supplies - Resistor networks - Video Filters - Data bus modules

NUMBER OF OWNED OR LEASED AGGREGATE AREA COUNTRY FACILITIES (SQ. FT.) ------- ---------- -------------- United States............................................... 19 1,567,906 Canada...................................................... 22 1,360,672 United Kingdom.............................................. 26 669,966 France...................................................... 2 108,725 Mexico...................................................... 2 92,584 Germany..................................................... 2 55,315 India....................................................... 2 50,000 Brazil...................................................... 1 48,733 China....................................................... 2 31,452 Australia................................................... 1 1,500

NUMBER OF C-MAC COMMON PERCENTAGE OF C-MAC NAME OF SHAREHOLDER SHARES COMMON SHARES(1) ------------------- --------- ------------------- Dennis Wood(2)(3)..................................... 7,740,552 8.97% The Hon. Edward C. Lumley(6).......................... 6,532 * Brenda T. Norris...................................... 5,288 * Jean Pierre Ouellet(6)................................ 2,500 * Ronald T. Riley(4).................................... 12,888 * Richard Royer(5)...................................... 43,988 * C. Wesley M. Scott(6)................................. 1,000 * Christopher Wood(2)................................... 4,688 * Brian Hamilton Antell................................. -- -- Anthony Byk........................................... 90,000 * Suzanne M. Gunther.................................... 4,000 * Peter Kielstra........................................ -- -- Denis Marchand........................................ 104,644 * Claude Michaud........................................ 4,000 * John Naismith......................................... 21,850 * Donna Pasteris........................................ -- -- Frederick Rollinson, III.............................. -- -- Directors and Executive Officers as a group (18 persons)............................................ 8,041,930 9.32

NAME AGE POSITIONS WITH C-MAC ---- --- -------------------- Dennis Wood(1)............................ 62 Chairman of the Board of Directors, President and Chief Magog, Quebec Executive Officer The Hon. Edward C. Lumley(1).............. 61 Director South Lancaster, Ontario Brenda T. Norris(3)....................... 69 Director Westmount, Quebec Jean Pierre Ouellet(1)(2)(3).............. 53 Vice-Chairman of the Board of Directors Montreal, Quebec Ronald T. Riley(1)(2)..................... 66 Director Westmount, Quebec Richard Royer(3).......................... 64 Director Sherbrooke, Quebec C. Wesley M. Scott(2)..................... 55 Director Toronto, Ontario Christopher Wood(1)....................... 37 Director King Township, Ontario Brian Hamilton Antell..................... 62 Chief Operating Officer and President, Microtechnology Norfolk, England Anthony Byk............................... 51 Vice President of C-MAC and President, Electronic Palm Beach Gardens, Florida Components Suzanne M. Gunther........................ 39 Vice President, Strategic Development Wellington, Florida Peter Kielstra............................ 44 Vice President, Engineering Kanata, Ontario Denis Marchand............................ 46 Vice President of C-MAC and General Manager Sherbrooke, Quebec Automotive Business Unit Claude Michaud............................ 43 Vice President and Chief Financial Officer Town of Mount Royal, Quebec John Naismith............................. 54 Executive Vice President, Global Supply Chain Montreal, Quebec Management Donna Pasteris............................ 55 Vice President, Corporate Services Town of Mount Royal, Quebec Frederick Rollinson, III.................. 45 Vice President of C-MAC and President, Electronic Raleigh, North Carolina Manufacturing Services

ANNUAL COMPENSATION(1) --------------------------------------------- OTHER ANNUAL NUMBER OF ALL OTHER COMPENSATION SECURITIES UNDER COMPENSATION NAME YEAR SALARY(CDN. $) BONUS(CDN. $) (CDN. $) OPTIONS(3) (CDN. $)(1)(2) ---- ---- -------------- ------------- ------------ ---------------- -------------- Dennis Wood................ 2000 579,464 367,500 -- 75,000 -- Chairman of the Board 1999 525,000 332,500 -- 120,000 -- of Directors, President 1998 475,000 197,500 -- 150,000 -- and Chief Executive Officer Brian Hamilton Antell...... 2000 198,985 92,582 31,379 10,000 89,126(4) Chief Operating 1999 206,166 95,923 23,780 20,000 92,342(4) Officer and 1998 206,383 103,191 18,368 12,000 18,575(4) President, Microtechnology Frederick Rollinson, III... 2000 208,084 118,840 -- 10,000 -- Vice President and 1999 185,411 7,217 -- 25,000 -- President, Electronic 1998 44,231(5) -- -- -- -- Manufacturing Services Anthony Byk................ 2000 248,097 133,695 -- 10,000 -- Vice President and 1999 208,733 131,340 -- 20,000 -- President, Electronic 1998 199,329 119,597 -- 20,000 -- Components Suzanne M. Gunther......... 2000 179,374 95,815 15,000 -- Vice President, 1999 152,050 57,732 20,000 -- Strategic Development 1998 144,492 -- 3,000 2,760

MARKET VALUE OF PERCENTAGE OF SECURITIES NUMBER OF TOTAL OPTIONS UNDERLYING SECURITIES GRANTED TO EXERCISE OR OPTIONS ON THE UNDER OPTIONS EMPLOYEES IN BASE PRICE DATE OF GRANT NAME GRANTED(#) FINANCIAL YEAR (CDN.$/SHARE) (CDN.$/SHARE) EXPIRATION DATE ---- ------------- -------------- ------------- --------------- --------------- Dennis Wood............. 75,000 9.56% 57.00 57.00 04-18-2010 Brian Hamilton Antell... 10,000 1.27 57.00 57.00 04-18-2010 Frederick Rollinson, III................... 10,000 1.27 57.00 57.00 04-18-2010 Anthony Byk............. 10,000 1.27 57.00 57.00 04-18-2010 Suzanne M. Gunther...... 5,000 0.64 71.65 71.65 07-05-2010 10,000 1.27 57.00 57.00 04-10-2010

VALUE OF UNEXERCISED AGGREGATE NUMBER OF SECURITIES IN-THE-MONEY OPTIONS SHARES VALUE UNDERLYING UNEXERCISED AT 2000 YEAR-END ACQUIRED ON REALIZED OPTIONS AT 2000 YEAR-END EXERCISABLE/UNEXERCISABLE NAME EXERCISE(#) (CDN.$) EXERCISABLE/UNEXERCISABLE (CDN.$)(1) ---- ----------- ---------- ------------------------- ------------------------- Dennis Wood..................... 300,000 18,840,000(2) 740,000/205,000 45,662,500/7,813,750 Brian Hamilton Antell........... 17,000 1,768,000(3) 38,666/ 27,334 2,281,030/1,050,470 Frederick Rollinson, III........ -- -- 8,332/ 26,668 411,098/ 922,402 Anthony Byk..................... 40,000 2,300,000(4) 44,000/ 30,000 2,575,867/1,197,833 50,000 3,630,000(5) Suzanne M. Gunther.............. -- -- 29,200/ 18,800 1,522,350/ 451,960

-------------------------------------------------------------------------------------------- 29-Dec-95 31-Dec-96 31-Dec-97 31-Dec-98 31-Dec-99 29-Dec-00 -------------------------------------------------------------------------------------------- C-MAC $100.00 $233.7 $436.1 $608.4 $1,988.0 $3,228.9 TSE 300 $100.00 $125.7 $142.1 $137.6 $ 178.5 $ 189.5 --------------------------------------------------------------------------------------------

TWENTY-SIX WEEK PERIODS ENDED ------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, -------------------------- 2001 2000 2000 1999 1998 -------- ------- ------ ------ ------ Revenue........................................... 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses: Cost of goods sold.............................. 82.4 83.7 82.9 83.0 81.8 Selling and administrative...................... 5.0 4.7 4.5 5.8 6.9 Research and development........................ 2.4 1.4 1.6 1.5 2.0 Amortization of capital and other assets........ 2.5 1.7 1.7 2.0 1.8 ----- ----- ----- ----- ----- Earnings from operations.......................... 7.7 8.5 9.3 7.7 7.5 Financial expenses................................ 0.4 1.2 0.4 1.2 0.9 ----- ----- ----- ----- ----- Earnings before income taxes, non-controlling interest and goodwill amortization.............. 7.3 7.3 8.9 6.5 6.6 Income taxes...................................... 2.5 2.7 3.1 2.3 2.4 Net earnings before goodwill amortization......... 4.8 4.6 5.8 4.2 4.2 Goodwill amortization, net of income taxes........ 1.3 0.5 0.6 0.3 0.2 ----- ----- ----- ----- ----- Net earnings...................................... 3.5% 4.1% 5.2% 3.9% 4.0% ===== ===== ===== ===== =====

THIRTEEN-WEEK PERIODS ENDED ------------------------------------------------------------------------- JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JULY 1, APRIL 1, 2001 2001 2000 2000 2000 2000 -------- --------- ------------ ------------- -------- -------- (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) CONSOLIDATED STATEMENT OF EARNINGS Revenue.................. $764,118 $727,560 $856,278 $702,608 $578,730 $415,223 Operating expenses: Cost of goods sold..... 629,101 599,869 699,762 584,102 483,558 348,083 Selling and administrative....... 36,104 37,992 36,832 30,718 26,069 20,350 Research and development.......... 17,885 18,361 18,168 9,875 7,682 5,738 Amortization of capital and other assets..... 18,382 18,369 15,685 11,309 9,702 7,374 -------- -------- -------- -------- -------- -------- Earnings from operations............. 62,646 52,969 85,831 66,604 51,719 33,678 Financial expenses (earnings)............. 2,995 3,200 (2,320) (587) 7,449 4,645 Income taxes............. 20,424 17,507 27,410 25,349 16,582 10,438 Non-controlling interest............... 73 47 (35) 231 (29) 219 -------- -------- -------- -------- -------- -------- Net earnings before goodwill amortization........... 39,154 32,215 60,776 41,611 27,717 18,376 Goodwill amortization, net of income taxes.... 9,518 9,323 6,402 4,151 3,504 1,665 -------- -------- -------- -------- -------- -------- Net earnings............. 29,636 22,892 54,374 37,460 24,213 16,711 Earnings before goodwill amortization per share: Basic.................. $ 0.45 $ 0.37 $ 0.72 $ 0.54 $ 0.40 $ 0.27 Diluted................ $ 0.45 $ 0.37 $ 0.71 $ 0.52 $ 0.39 $ 0.26 Earnings per share: Basic.................. $ 0.34 $ 0.27 $ 0.64 $ 0.48 $ 0.35 $ 0.25 Diluted................ $ 0.34 $ 0.26 $ 0.63 $ 0.47 $ 0.34 $ 0.24 Weighted average number of outstanding common shares: Basic.................. 86,295 86,268 84,356 77,477 68,511 67,759 Diluted................ 87,846 87,783 86,165 79,413 70,459 69,567 THIRTEEN-WEEK PERIODS ENDED --------------------------------------------------- DECEMBER 31, OCTOBER 2, JULY 3, APRIL 3, 1999 1999 1999 1999 ------------- ------------ --------- -------- (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) CONSOLIDATED STATEMENT OF EARNINGS Revenue.................. $391,721 $279,220 $256,239 $241,917 Operating expenses: Cost of goods sold..... 322,477 231,682 213,861 202,681 Selling and administrative....... 19,930 15,049 16,059 16,444 Research and development.......... 6,801 3,693 3,194 3,508 Amortization of capital and other assets..... 6,853 5,489 5,245 5,257 -------- -------- -------- -------- Earnings from operations............. 35,660 23,307 17,880 14,027 Financial expenses (earnings)............. 5,676 3,118 2,787 2,008 Income taxes............. 10,311 7,475 5,494 4,119 Non-controlling interest............... 298 268 50 238 -------- -------- -------- -------- Net earnings before goodwill amortization........... 19,375 12,446 9,549 7,662 Goodwill amortization, net of income taxes.... 1,630 828 607 795 -------- -------- -------- -------- Net earnings............. 17,745 11,618 8,942 6,867 Earnings before goodwill amortization per share: Basic.................. $ 0.32 $ 0.21 $ 0.16 $ 0.13 Diluted................ $ 0.31 $ 0.21 $ 0.16 $ 0.13 Earnings per share: Basic.................. $ 0.30 $ 0.20 $ 0.15 $ 0.12 Diluted................ $ 0.29 $ 0.19 $ 0.15 $ 0.11 Weighted average number of outstanding common shares: Basic.................. 59,831 58,630 58,453 58,413 Diluted................ 61,821 60,201 59,925 59,759

THIRTEEN-WEEK PERIODS ENDED --------------------------------------------------------------------------------------- JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JULY 1, APRIL 1, DECEMBER 31, 2001 2001 2000 2000 2000 2000 1999 -------- --------- ------------ ------------- ------- -------- ------------ (IN PERCENTAGE OF REVENUE) CONSOLIDATED STATEMENT OF EARNINGS Revenue...................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Operating expenses: Cost of goods sold......... 82.3% 82.4% 81.7% 83.1% 83.6% 83.8% 82.3% Selling and administrative........... 4.7% 5.2% 4.3% 4.4% 4.5% 4.9% 5.1% Research and development... 2.3% 2.5% 2.1% 1.4% 1.3% 1.4% 1.7% Amortization of capital and other assets............. 2.4% 2.5% 1.8% 1.6% 1.7% 1.8% 1.7% ----- ----- ----- ----- ----- ----- ----- Earnings from operations..... 8.2% 7.3% 10.0% 9.5% 8.9% 8.1% 9.1% Financial expenses........... 0.4% 0.4% -0.3% -0.1% 1.3% 1.1% 1.4% Income taxes................. 2.7% 2.4% 3.2% 3.6% 2.9% 2.5% 2.6% Non-controlling interest..... 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% ----- ----- ----- ----- ----- ----- ----- Net earnings before goodwill amortization............... 5.1% 4.4% 7.1% 5.9% 4.8% 4.4% 4.9% Goodwill amortization, net of income taxes............... 1.2% 1.3% 0.7% 0.6% 0.6% 0.4% 0.4% ----- ----- ----- ----- ----- ----- ----- Net earnings................. 3.9% 3.1% 6.4% 5.3% 4.2% 4.0% 4.5% ===== ===== ===== ===== ===== ===== ===== THIRTEEN-WEEK PERIODS ENDED ------------------------------- OCTOBER 2, JULY 3, APRIL 3, 1999 1999 1999 ---------- ------- -------- (IN PERCENTAGE OF REVENUE) CONSOLIDATED STATEMENT OF EARNINGS Revenue...................... 100.0% 100.0% 100.0% Operating expenses: Cost of goods sold......... 83.0% 83.5% 83.8% Selling and administrative........... 5.4% 6.3% 6.8% Research and development... 1.3% 1.2% 1.5% Amortization of capital and other assets............. 2.0% 2.0% 2.2% ----- ----- ----- Earnings from operations..... 8.3% 7.0% 5.8% Financial expenses........... 1.1% 1.1% 0.8% Income taxes................. 2.7% 2.1% 1.7% Non-controlling interest..... 0.1% 0.0% 0.1% ----- ----- ----- Net earnings before goodwill amortization............... 4.5% 3.7% 3.2% Goodwill amortization, net of income taxes............... 0.3% 0.2% 0.3% ----- ----- ----- Net earnings................. 4.2% 3.5% 2.8% ===== ===== =====

PAGE ---- ARTICLE I DEFINITIONS................................................. 1 1.1 Certain Definitions......................................... 1 1.2 Interpretation.............................................. 6 ARTICLE II THE ARRANGEMENT............................................ 6 2.1 Implementation Steps by Company............................. 6 2.2 Implementation Steps by the Parent Parties.................. 6 2.3 Interim Order............................................... 7 2.4 Articles of Arrangement..................................... 7 2.5 Company Circular............................................ 7 2.6 Parent Circular............................................. 7 2.7 Securities Compliance....................................... 8 2.8 Preparation of Filings, etc................................. 8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY................. 10 3.1 Organization and Qualification; Subsidiaries................ 10 3.2 Articles of Incorporation and Bylaws........................ 10 3.3 Capitalization.............................................. 10 3.4 Authority Relative to this Agreement........................ 11 3.5 No Conflict; Required Filings and Consents.................. 12 3.6 Compliance; Permits......................................... 13 3.7 Reports; Financial Statements............................... 13 3.8 No Undisclosed Liabilities.................................. 14 3.9 Absence of Certain Changes or Events........................ 14 3.10 Absence of Litigation....................................... 14 3.11 Employee Benefit Plans...................................... 14 3.12 Labor Matters............................................... 16 3.13 Restrictions on Business Activities......................... 17 3.14 Title to Property........................................... 17 3.15 Taxes....................................................... 17 3.16 Environmental Matters....................................... 18 3.17 Brokers..................................................... 19 3.18 Intellectual Property....................................... 20 3.19 Agreements, Contracts and Commitments....................... 20 3.20 Insurance................................................... 21 3.21 Opinion of Financial Advisor................................ 21 3.22 Board Approval.............................................. 22 3.23 Vote Required............................................... 22

PAGE ---- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES....... 22 4.1 Organization and Qualification; Subsidiaries................ 22 4.2 Certificate of Incorporation and Bylaws..................... 22 4.3 Capitalization.............................................. 22 4.4 Authority Relative to this Agreement........................ 23 4.5 No Conflict; Required Filings and Consents.................. 23 4.6 Compliance; Permits......................................... 24 4.7 SEC Filings; Financial Statements........................... 24 4.8 No Undisclosed Liabilities.................................. 25 4.9 Absence of Certain Changes or Events........................ 25 4.10 Absence of Litigation....................................... 25 4.11 Intellectual Property....................................... 25 4.12 Taxes....................................................... 25 4.13 Brokers..................................................... 25 4.14 Opinion of Financial Advisor................................ 26 4.15 Board Approval.............................................. 26 4.16 Vote Required............................................... 26 4.17 Class B Non-Voting Preference Shares........................ 26 4.18 Exchangeable Shares......................................... 26 4.19 Parent Common Shares........................................ 26 ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME......................... 26 5.1 Conduct of Business by Company.............................. 26 5.2 Conduct of Business by Parent............................... 28 ARTICLE VI ADDITIONAL AGREEMENTS...................................... 29 6.1 Confidentiality; Access to Information...................... 29 6.2 No Solicitation............................................. 30 6.3 Public Disclosure........................................... 32 6.4 Reasonable Best Efforts; Notification....................... 32 6.5 Indemnification............................................. 34 6.6 Company Affiliate Agreement................................. 34 6.7 Regulatory Filings; Reasonable Best Efforts................. 34 6.8 Employee Plans.............................................. 34 6.9 Termination of Company 401(k) Plans......................... 35 6.10 Revised Benefits Schedule................................... 35 6.11 Parent Board Designees...................................... 36 6.12 Change of Control........................................... 36 6.13 Quebec Employees............................................ 36 6.14 Rights Plan................................................. 36

PAGE ---- ARTICLE VII CONDITIONS TO THE MERGER.................................. 36 Conditions to Obligations of Each Party to Effect the 7.1 Arrangement................................................. 36 7.2 Additional Conditions to Obligations of Company............. 37 Additional Conditions to the Obligations of Parent 7.3 Parties..................................................... 37 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER........................ 38 8.1 Termination................................................. 38 8.2 Notice of Termination; Effect of Termination................ 40 8.3 Fees and Expenses........................................... 40 8.4 Amendment................................................... 41 8.5 Extension; Waiver........................................... 41 ARTICLE IX GENERAL PROVISIONS......................................... 41 9.1 Non-Survival of Representations and Warranties.............. 41 9.2 Notices..................................................... 41 9.3 Counterparts................................................ 43 9.4 Entire Agreement; Third Party Beneficiaries................. 43 9.5 Severability................................................ 43 9.6 Other Remedies; Specific Performance........................ 43 9.7 Governing Law............................................... 43 9.8 English/French Language..................................... 44 9.9 No Personal Liability....................................... 44 9.10 Assignment.................................................. 44 9.11 WAIVER OF JURY TRIAL........................................ 44 9.12 Currency.................................................... 45

MAY 31, AUGUST 31, 2001 2000 ----------- ---------- (UNAUDITED) ASSETS Current assets: Cash, cash equivalents and short-term investments......... $ 2,175.9 $ 2,434.1 Accounts receivable, net.................................. 2,391.4 2,146.3 Inventories............................................... 4,201.7 3,787.3 Prepaid expenses and other current assets................. 312.7 260.5 --------- --------- Total current assets................................... 9,081.7 8,628.2 Net property and equipment.................................. 1,381.1 1,080.4 Other assets................................................ 844.5 627.4 Goodwill.................................................... 1,985.2 39.6 --------- --------- Total assets........................................... $13,292.5 $10,375.6 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt........................................... $ 337.6 $ 69.2 Accounts payable.......................................... 2,040.5 2,694.1 Accrued employee compensation............................. 203.0 179.8 Accrued expenses.......................................... 120.7 262.5 Other current liabilities................................. 146.3 11.2 --------- --------- Total current liabilities.............................. 2,848.1 3,216.8 Long-term debt.............................................. 4,977.2 3,319.5 Other long-term liabilities................................. 57.2 37.2 --------- --------- Total liabilities...................................... 7,882.5 6,573.5 --------- --------- Commitments Stockholders' equity: Common stock.............................................. 0.7 0.6 Additional paid-in capital................................ 3,847.9 2,259.1 Retained earnings......................................... 1,781.9 1,656.8 Accumulated other comprehensive losses.................... (220.5) (114.4) --------- --------- Total stockholders' equity............................. 5,410.0 3,802.1 --------- --------- Total liabilities and stockholders' equity.................. $13,292.5 $10,375.6 ========= =========

NINE MONTHS END MAY 31, --------------------- 2001 2000 --------- -------- Net sales................................................... $15,097.4 $9,401.3 Cost of sales............................................... 13,818.8 8,538.9 --------- -------- Gross profit................................................ 1,278.6 862.4 Operating expenses: Selling, general and administrative....................... 580.8 319.4 Research and development.................................. 55.8 44.7 Goodwill amortization expense............................. 87.8 3.9 Acquisition costs......................................... 29.5 25.5 Restructuring and impairment costs........................ 310.3 7.7 --------- -------- Operating (loss) income................................ 214.4 461.2 Interest income............................................. 95.9 67.4 Interest expense............................................ (128.0) (40.6) --------- -------- (Loss) income before income taxes and cumulative effect of change in accounting principle............................ 182.3 488.0 Income taxes................................................ 55.5 158.3 --------- -------- (Loss) income before cumulative effect of change in accounting principle...................................... 126.8 329.7 Cumulative effect of change in accounting principle for start-up costs, net of $1.6 income tax benefit............ -- (3.5) --------- -------- Net (loss) income...................................... $ 126.8 $ 326.2 ========= ======== Basic net (loss) income per share: (Loss) income before cumulative effect of change in accounting principle................................... $ 0.20 0.55 Cumulative effect of change in accounting principle....... -- (0.01) --------- -------- $ 0.20 0.54 ========= ======== Diluted net (loss) income per share: (Loss) income before cumulative effect of change in accounting principle................................... $ 0.19 0.53 Cumulative effect of change in accounting principle....... -- (0.01) --------- -------- $ 0.19 0.52 ========= ======== Shares used to compute net (loss) income per share: Basic..................................................... 636.9 597.8 ========= ======== Diluted................................................... 653.1 622.7 ========= ========

NINE MONTHS END MAY 31, ----------------- 2001 2000 ------- ------ Net (loss) income......................................... $ 126.8 $326.2 Other comprehensive income (loss): Foreign currency translation adjustments, net of income tax benefit of $0.6 and $0.4 for the three- and nine-month periods in fiscal 2001.................... (101.1) (33.7) Unrealized loss on investments and derivatives, net of income tax benefit of $0.2 and $3.0 for the three- and nine-month periods in fiscal 2001................ (4.9) (1.6) ------- ------ Comprehensive (loss) income............................... $ 20.8 $290.9 ======= ======

NINE MONTHS END MAY 31, ---------------------- 2001 2000 --------- --------- Cash flows from operating activities: Net income................................................ $ 126.8 $ 326.2 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization.......................... 389.8 173.1 Impairment of fixed assets and other long-term assets................................................ 139.4 -- Amortization of debt issuance costs and accretion of discount on notes payable............................. 108.8 27.4 Tax benefit associated with the exercise of stock options............................................... 40.1 52.6 Cumulative effect of change in accounting principle for start-up costs........................................ -- 3.5 Loss on disposal of property and equipment............. 3.2 -- Other.................................................. 18.6 (4.7) Changes in operating assets and liabilities: Accounts receivable.................................. 84.9 (637.7) Inventories.......................................... (21.9) (1,192.4) Prepaid expenses and other current assets............ (27.0) (98.6) Accounts payable..................................... (989.9) 874.3 Accrued expenses and other current liabilities....... (103.1) 198.7 --------- --------- Net cash used in operating activities.................. (230.3) (277.6) --------- --------- Cash flows from investing activities: Sales and maturities of short-term investments............ 1,169.1 699.8 Purchases of short-term investments....................... (540.5) (1,079.1) Purchase of NatSteel Electronics Ltd, net of cash acquired............................................... (2,399.5) -- Cash acquired in business combination..................... 8.1 -- Acquisition of manufacturing assets and locations......... (84.0) (297.7) Capital expenditures...................................... (454.9) (323.5) Proceeds from sale of property and equipment.............. 83.6 71.7 Other..................................................... (148.5) (13.5) --------- --------- Net cash used in investing activities.................. (2,366.6) (942.3) --------- --------- Cash flows from financing activities: Net proceeds from bank lines of credit.................... 121.0 4.5 Repayment of borrowings under bank lines of credit........ (113.8) -- Net proceeds from long-term debt.......................... 1,544.2 2,297.3 Principal payments on long-term debt...................... (15.3) (0.5) Net proceeds from stock issued under option and employee purchase plans......................................... 54.8 97.1 Net proceeds from issuance of common stock................ 1,429.0 11.1 Other..................................................... 17.0 6.9 --------- --------- Net cash provided by financing activities.............. 3,036.9 2,416.4 --------- --------- Effect of exchange rate changes on cash and cash equivalents............................................... (69.5) (15.2) --------- --------- Net increase in cash and cash equivalents................... 370.5 1,181.3 Cash and cash equivalents at beginning of period............ 1,475.5 1,417.4 --------- --------- Cash and cash equivalents at end of period.................. $ 1,846.0 $ 2,598.7 ========= ========= SUPPLEMENTAL DISCLOSURES Cash paid during the period: Income taxes.............................................. $ 11.0 $ 103.3 Interest.................................................. $ 144.5 $ 15.8 Non-cash investing activities: Issuance of common stock for business combination, net of cash acquired.......................................... $ 56.1 $ 1.0

MAY 31, AUGUST 31, 2001 2000 -------- ---------- Raw materials............................................... $3,328.8 $3,043.0 Work-in-process............................................. 436.7 558.9 Finished goods.............................................. 436.2 185.4 -------- -------- Total............................................. $4,201.7 $3,787.3 ======== ========

NINE MONTHS ENDED MAY 31, -------------------- 2001 2000 -------- -------- (IN MILLIONS, EXCEPT PER SHARE DATA) Income (loss) before cumulative effect of change in accounting principle...................................... $126.8 $329.7 Cumulative effect of change in accounting principle, net of tax....................................................... -- (3.5) ------ ------ Net (loss) income -- diluted................................ $126.8 $326.2 ====== ====== Weighted average shares -- basic............................ 636.9 597.8 Common shares issuable upon exercise of stock options....... 16.3 24.9 ------ ------ Weighted average shares diluted............................. 653.2 622.7 ====== ====== Basic net (loss) income per share: Income (loss) before cumulative effect of change in accounting principle................................... $ 0.20 $ 0.55 Cumulative effect of change in accounting principle....... -- (0.01) ------ ------ Net (loss) income per share............................ $ 0.20 $ 0.54 ====== ====== Diluted net income (loss) per share: Income (loss) before cumulative effect of change in accounting principle................................... $ 0.19 $ 0.53 Cumulative effect of change in accounting principle....... -- (0.01) ------ ------ Net (loss) income per share............................ $ 0.19 $ 0.52 ====== ======

NINE MONTHS ENDED MAY 31, --------------------- 2001 2000 --------- -------- (IN MILLIONS) Net sales: Manufacturing and operations.............................. $13,793.6 $8,208.4 Technology solutions...................................... 1,082.0 1,035.1 Global services........................................... 221.8 157.8 --------- -------- $15,097.4 $9,401.3 ========= ======== Depreciation and amortization: Manufacturing and operations.............................. $ 359.5 $ 140.9 Technology solutions...................................... 21.3 21.0 Global services........................................... 9.0 11.2 --------- -------- $ 389.8 $ 173.1 ========= ======== Interest income: Manufacturing and operations.............................. $ 11.9 $ 5.7 Technology solutions...................................... 1.6 5.0 Global services........................................... 0.1 0.1 Corporate................................................. 82.3 56.6 --------- -------- $ 95.9 $ 67.4 ========= ======== Interest expense: Manufacturing and operations.............................. $ 13.9 $ 4.2 Technology solutions...................................... 1.0 0.8 Global services........................................... -- 0.9 Corporate................................................. 113.1 34.7 --------- -------- $ 128.0 $ 40.6 ========= ========

NINE MONTHS ENDED MAY 31, --------------------- 2001 2000 --------- -------- (IN MILLIONS) Pre-tax (loss) income: Manufacturing and operations.............................. $ 212.6 $ 444.5 Technology solutions...................................... 8.9 44.4 Global services........................................... 28.1 (0.5) Corporate................................................. (67.3) (0.4) --------- -------- $ 182.3 $ 488.0(a) ========= ======== Capital expenditures: Manufacturing and operations.............................. $ 395.3 $ 270.9 Technology solutions...................................... 18.7 21.6 Global services........................................... 8.4 11.5 Corporate................................................. 32.5 19.5 --------- -------- $ 454.9 $ 323.5 ========= ======== Geographic net sales: North America............................................. $ 7,355.6 $5,727.7 Europe.................................................... 2,832.7 1,183.8 Asia Pacific & Other...................................... 4,909.1 2,489.8 --------- -------- $15,097.4 $9,401.3 ========= ========

MAY 31, AUGUST 31, 2001 2000 --------- ---------- (IN MILLIONS) Total assets: Manufacturing and operations.............................. $ 6,875.1 $ 5,303.4 Technology solutions...................................... 531.8 500.2 Global services........................................... 216.1 222.2 Corporate................................................. 5,669.5 4,349.8 --------- --------- $13,292.5 $10,375.6 ========= ========= North America............................................. $ 8,548.8 $ 6,060.8 Europe.................................................... 1,303.7 1,864.8 Asia Pacific & Other...................................... 3,440.0 2,450.0 --------- --------- $13,292.5 $10,375.6 ========= =========

SEVERANCE LEASE PAYMENTS LEASE PAYMENTS AND BENEFITS ON FACILITIES ON EQUIPMENT OTHER TOTAL ------------ -------------- -------------- ----- ----- (IN MILLIONS) Balance at February 28, 2001....... 3.2 -- -- 2.4 5.6 Third Quarter 2001 Provision....... 41.8 44.7 56.2 2.9 145.6 Cash payments...................... (31.2) -- -- (0.1) (31.3) ----- ---- ---- ---- ----- Balance at May 31, 2001............ 13.8 44.7 56.2 5.2 119.9 ===== ==== ==== ==== =====

IMPAIRMENT ON IMPAIRMENT ON IMPAIRMENT ON FACILITIES HELD EQUIPMENT HELD GOODWILL AND FOR DISPOSAL FOR DISPOSAL INTANGIBLE ASSETS TOTAL --------------- -------------- ----------------- ----- Third Quarter 2001 Impairments........ 11.3 99.9 28.2 139.4 ---- ---- ---- ----- Balance at May 31, 2001............... 11.3 99.9 28.2 139.4 ==== ==== ==== =====

MAY 31, 2001 MAY 31, 2000 ------------ ------------ (IN MILLIONS, EXCEPT PER SHARE DATA) Net income adjustments: Net income under U.S. GAAP................................ $ 126.8 $ 326.2 Increases (decreases): Income statement impact of purchase accounting(a): Force................................................ (19.2) (19.2) SMART................................................ (146.2) (111.7) Americom............................................. (5.5) 2.8 Bluegum.............................................. (6.9) 6.8 Start-up costs(b)...................................... -- 5.1 Convertible debentures(c).............................. 2.2 1.1 Unrealized gains/losses on short-term investments(d)... 4.3 (2.6) Income taxes(e)........................................ (2.5) 3.3 --------- ------- Net income (loss) under Canadian GAAP..................... $ (47.0) $ 211.8 ========= ======= Net income (loss) per common share(f)..................... $ (0.07) $ 0.37 ========= ======= Net diluted income (loss) per common share(f)............. $ (0.07) $ 0.35 ========= ======= Shareholders' equity adjustments: Shareholders' equity under U.S. GAAP...................... $ 5,410.0 Increases (decreases): Conversion from Pooling of Interests to Purchase Accounting(a): Conversion to purchase accounting upon acquisition... 2,361.5 Income statement impact of purchase accounting: Force............................................. (114.1) SMART............................................. (288.7) Americom.......................................... (4.4) Bluegum........................................... (7.7) Start-up costs(b)...................................... -- Convertible debentures(c).............................. 0.1 Equity portion of convertible debentures(c)............ 2,836.6 Unrealized gains/losses on short-term investments(d)... (0.5) Income taxes(e)........................................ (1.9) --------- Shareholders' equity under Canadian GAAP.................... $10,190.9 =========

(IN MILLIONS) ------------- Assets acquired: Cash, cash equivalents and short-term investments......... $167 Accounts receivable....................................... 139 Inventories............................................... 123 Deferred income taxes..................................... 6 Other current assets...................................... 10 Property and equipment.................................... 51 Other..................................................... 16 ---- Total assets acquired.................................. $512 ==== Liabilities assumed: Accounts payable.......................................... $134 Accrued employee compensation............................. 5 Accrued bonuses........................................... 3 Accrued expenses.......................................... 7 Income taxes.............................................. 10 Other long-term liabilities............................... 3 ---- Total liabilities assumed.............................. $162 ====

AS OF AUGUST 31, --------------------- 2000 1999 --------- -------- ASSETS Current assets: Cash and cash equivalents................................. $ 1,475.5 $1,428.1 Short-term investments.................................... 958.6 453.6 Accounts receivable, less allowances of $8.6 and $6.4, respectively........................................... 2,146.3 1,282.5 Inventories............................................... 3,787.3 1,197.0 Prepaid expenses and other current assets................. 260.5 121.2 --------- -------- Total current assets................................... 8,628.2 4,482.4 Net property and equipment.................................. 1,080.4 723.8 Other assets................................................ 667.0 214.3 --------- -------- Total assets........................................... $10,375.6 $5,420.5 ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt........................................... $ 69.2 $ 46.9 Accounts payable.......................................... 2,694.1 1,050.4 Accrued employee compensation............................. 179.8 103.7 Accrued expenses.......................................... 262.5 46.6 Other current liabilities................................. 11.2 72.1 --------- -------- Total current liabilities.............................. 3,216.8 1,319.7 Long-term debt.............................................. 3,319.5 922.7 Other long-term liabilities................................. 37.2 11.2 --------- -------- Total liabilities...................................... 6,573.5 2,253.6 --------- -------- Stockholders' equity: Preferred stock, $.001 par value; 1.2 shares authorized; no shares issued....................................... -- -- Common stock, $.001 par value; 800.0 shares authorized; 605.0 and 594.1 shares issued and outstanding, respectively, adjusted for stock split................. 0.6 0.6 Additional paid-in capital................................ 2,259.1 2,081.4 Retained earnings......................................... 1,656.8 1,172.8 Accumulated other comprehensive losses.................... (114.4) (87.9) --------- -------- Total stockholders' equity............................. 3,802.1 3,166.9 --------- -------- Total liabilities and stockholders' equity............. $10,375.6 $5,420.5 ========= ========

YEARS ENDED AUGUST 31, --------------------------------- 2000 1999 1998 --------- -------- -------- Net sales................................................... $14,137.5 $9,669.2 $6,102.2 Cost of sales............................................... 12,862.2 8,732.9 5,435.6 --------- -------- -------- Gross profit................................................ 1,275.3 936.3 666.6 Operating expenses: Selling, general and administrative....................... 472.4 379.7 268.1 Research and development.................................. 60.8 40.5 29.9 Acquisition and restructuring costs....................... 37.9 -- -- --------- -------- -------- Operating income............................................ 704.2 516.1 368.6 Interest income............................................. 106.9 36.7 32.3 Interest expense............................................ (71.6) (38.3) (25.4) --------- -------- -------- Income before income taxes and cumulative effect of change in accounting principle................................... 739.5 514.5 375.5 Income taxes................................................ 238.8 164.2 124.2 --------- -------- -------- Income before cumulative effect of change in accounting principle................................................. 500.7 350.3 251.3 Cumulative effect of change in accounting principle......... (3.5) -- -- --------- -------- -------- Net income.................................................. $ 497.2 $ 350.3 $ 251.3 ========= ======== ======== Basic net income per share: Income before cumulative effect of change in accounting principle.............................................. $ 0.84 $ 0.65 $ 0.49 Cumulative effect of change in accounting principle....... (0.01) -- -- --------- -------- -------- Net income per share................................... $ 0.83 $ 0.65 $ 0.49 ========= ======== ======== Diluted net income per share: Income before cumulative effect of change in accounting principle.............................................. $ 0.80 $ 0.61 $ 0.47 Cumulative effect of change in accounting principle....... -- -- -- --------- -------- -------- Net income per share................................... $ 0.80 $ 0.61 $ 0.47 ========= ======== ======== Weighted average number of shares: Basic..................................................... 599.4 542.6 510.1 Diluted................................................... 623.5 579.0 556.6

ACCUMULATED COMMON STOCK ADDITIONAL OTHER TOTAL --------------- PAID-IN RETAINED COMPREHENSIVE STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSSES) EQUITY ------ ------ ---------- -------- --------------- ------------- Balances as of August 31, 1997..... 503.1 $0.5 $ 586.3 $ 574.0 $ (10.6) $1,150.2 Net income......................... 251.3 251.3 Foreign currency translation....... 2.4 2.4 Stock issued under stock option and employee purchase plans.......... 15.4 0.1 54.2 54.3 Issuance of common stock, net...... 1.9 15.7 15.7 Repayment of shareholder note receivable....................... 0.1 0.1 0.1 Cash dividends..................... (0.9) (0.9) Repurchase of common stock......... (0.6) (9.2) (9.2) Tax benefit associated with exercise of stock options........ 11.5 11.5 ----- ---- -------- -------- ------- -------- Balances as of August 31, 1998..... 519.9 0.6 658.6 824.4 (8.2) 1,475.4 Net income......................... 350.3 350.3 Foreign currency translation....... (78.6) (78.6) Unrealized loss on investments..... (1.1) (1.1) Stock issued under stock option and employee purchase plans.......... 12.7 81.5 81.5 Conversion of long-term debt, net.............................. 27.2 225.3 225.3 Issuance of common stock, net of issuance costs of $32.5.......... 34.2 1,069.9 1,069.9 Stock issued in business combinations..................... 0.5 17.8 17.8 Cash dividends..................... (1.9) (1.9) Repurchase of common stock......... (0.4) (7.1) (7.1) Tax benefit associated with exercise of stock options........ 35.4 35.4 ----- ---- -------- -------- ------- -------- Balances as of August 31, 1999..... 594.1 0.6 2,081.4 1,172.8 (87.9) 3,166.9 Net income......................... 497.2 497.2 Adjustment to conform fiscal year ends of pooled acquisitions...... (11.8) (11.8) Foreign currency translation....... (32.8) (32.8) Unrealized gain on investments..... 6.3 6.3 Stock issued under stock option and employee purchase plans.......... 10.3 109.0 109.0 Stock issued in business combinations..................... 0.2 6.4 6.4 Cancellation of shares............. (9.0) (9.0) Issuance of common stock........... .4 11.2 11.2 Cash dividends..................... (1.4) (1.4) Tax benefit associated with exercise of stock options........ 60.1 60.1 ----- ---- -------- -------- ------- -------- Balances as of August 31, 2000..... 605.0 $0.6 $2,259.1 $1,656.8 $(114.4) $3,802.1 ===== ==== ======== ======== ======= ========

YEARS ENDED AUGUST 31, -------------------------- 2000 1999 1998 ------ ------ ------ Net income.................................................. $497.2 $350.3 $251.3 Other comprehensive income (loss): Foreign currency translation adjustments, net of income tax benefit of $15.9 in 2000 and $0.4 in 1999................. (32.8) (78.6) 2.4 Unrealized gain (loss) on investments, net of income tax expense of $3.8 in 2000 and income tax benefit of $0.6 in 1999...................................................... 6.3 (1.1) -- ------ ------ ------ Comprehensive income........................................ $470.7 $270.6 $253.7 ====== ====== ======

YEARS ENDED AUGUST 31, -------------------------------- 2000 1999 1998 --------- -------- ------- Cash flows from operating activities: Net income................................................ $ 497.2 $ 350.3 $ 251.3 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization........................... 251.4 200.4 134.6 Non-cash interest expense............................... 52.5 18.5 -- Tax benefit associated with the exercise of stock options............................................... 60.1 35.4 11.5 Adjustment to conform fiscal year ends of pooled acquisitions.......................................... (11.8) -- -- Cumulative effect of change in accounting principle for start-up costs........................................ 3.5 -- -- Gain on disposal of fixed assets........................ (8.7) (4.6) (2.3) Other................................................... 20.9 5.5 (0.6) Changes in operating assets and liabilities: Accounts receivable................................... (934.1) (505.2) (271.2) Inventories........................................... (2,096.0) (329.7) (165.2) Prepaid expenses and other current assets............. (102.9) 16.2 (38.7) Accounts payable...................................... 1,710.7 294.8 248.8 Accrued expenses and other current liabilities........ 214.5 15.0 44.1 --------- -------- ------- Net cash (used in) provided by operating activities......... (342.7) 96.6 212.3 --------- -------- ------- Cash flows from investing activities: Purchases and sales of short-term investments............. 982.0 (598.0) (244.9) Purchases and sales and maturities of short-term investments............................................. (1,498.6) 327.8 358.1 Acquisition of manufacturing locations and assets......... (1,097.9) (164.2) (204.0) Capital expenditures...................................... (506.0) (449.4) (279.1) Proceeds from sales of fixed assets....................... 88.9 41.7 60.4 Other..................................................... (35.1) (32.0) (15.6) --------- -------- ------- Net cash used in investing activities....................... (2,066.7) (874.1) (325.1) --------- -------- ------- Cash flows from financing activities: Net proceeds from bank lines of credit.................... 16.9 22.1 22.8 Proceeds from issuance of long-term debt.................. 2,296.3 729.4 (0.9) Repayment of long-term debt............................... (0.8) -- -- Repurchase of common stock................................ -- (7.1) (9.2) Proceeds from exercise of stock options................... 121.9 81.5 54.3 Net proceeds from issuance of common stock................ 11.2 1,069.9 15.7 Dividends paid............................................ (1.4) (1.4) (0.4) Other..................................................... 29.9 (0.4) (2.2) --------- -------- ------- Net cash provided by financing activities................... 2,474.0 1,894.0 80.1 --------- -------- ------- Effect of exchange rate changes on cash and cash equivalents............................................... (6.5) 5.2 1.7 --------- -------- ------- Net increase (decrease) in cash and cash equivalents........ 58.1 1,121.7 (31.0) Cash and cash equivalents at beginning of year(1)........... 1,417.4 306.4 337.4 --------- -------- ------- Cash and cash equivalents at end of year.................... $ 1,475.5 $1,428.1 $ 306.4 ========= ======== ======= Cash paid: Interest.................................................. $ 17.6 $ 27.7 $ 25.7 Income taxes.............................................. $ 135.7 $ 114.5 $ 93.7 Non cash investing and financing activities: Issuance of common stock upon conversion of long-term debt, net............................................... $ -- $ 225.4 $ -- Issuance of common stock for business combination, net of cash acquired........................................... $ 6.4 $ 14.7 $ --

YEARS ENDED AUGUST 31, ------------------------------- 2000 1999 1998 --------- -------- -------- (IN MILLIONS) Net sales Solectron............................................. $13,786.5 $8,391.4 $5,288.3 SMART*................................................ 280.4 995.9 714.6 AMERICOM*............................................. 53.5 63.7 36.7 Bluegum*.............................................. 156.1 247.2 87.2 Eliminations.......................................... (139.0) (29.0) (24.6) --------- -------- -------- $14,137.5 $9,669.2 $6,102.2 ========= ======== ======== Net income Solectron............................................. $ 497.0 $ 294.0 $ 198.8 SMART*................................................ 12.2 53.5 51.5 AMERICOM*............................................. (2.8) 2.8 1.8 Bluegum*.............................................. (8.4) -- (0.5) Eliminations.......................................... (0.8) -- (0.3) --------- -------- -------- $ 497.2 $ 350.3 $ 251.3 ========= ======== ========

CASH AND SHORT-TERM CASH EQUIVALENTS INVESTMENTS ---------------- ----------- (IN MILLIONS) 2000 Cash...................................................... $ 439.6 $ -- Money market funds........................................ 428.0 -- Certificates of deposit................................... 19.7 60.4 Market auction securities................................. -- 15.5 U.S. government securities................................ 26.3 158.7 Corporate obligations..................................... 485.0 697.9 Other..................................................... 76.9 26.1 -------- ------ Total................................................ $1,475.5 $958.6 ======== ====== 1999 Cash...................................................... $ 229.6 $ -- Money market funds........................................ 119.7 0.7 Certificates of deposit................................... 55.1 38.8 Market auction securities................................. 33.5 39.1 U.S. government securities................................ 603.9 274.4 Corporate obligations..................................... 313.9 100.6 Other..................................................... 72.4 -- -------- ------ Total................................................ $1,428.1 $453.6 ======== ======

2000 1999 -------- -------- (IN MILLIONS) Raw materials............................................... $3,043.0 $ 862.9 Work-in-process............................................. 558.9 237.6 Finished goods.............................................. 185.4 96.5 -------- -------- Total.................................................. $3,787.3 $1,197.0 ======== ========

2000 1999 -------- -------- (IN MILLIONS) Land........................................................ $ 40.3 $ 24.8 Buildings and improvements.................................. 243.0 142.8 Leasehold improvements...................................... 102.2 61.8 Factory equipment........................................... 1,033.4 749.9 Computer equipment and software............................. 195.5 168.9 Furniture, fixtures and other............................... 109.6 48.9 Construction-in-process..................................... 125.8 94.0 -------- -------- 1,849.8 1,291.1 Less accumulated depreciation and amortization.............. 769.4 567.3 -------- -------- Net property and equipment.................................. $1,080.4 $ 723.8 ======== ========

2000 1999 -------- ------ (IN MILLIONS) Zero coupon convertible senior notes due 2020, face value $4,025.0, fair value of $2,648.9 in 2000.................. $2,350.5 $ -- Zero coupon convertible senior notes due 2019, face value $1,656.0, fair value of $1,195.8 in 2000 and $1,029.9 in 1999...................................................... 798.5 767.6 7 3/8% senior notes due 2006, face value $150.0, fair value of $146.9 in 2000 and $143.8 in 1999...................... 149.8 149.8 Other, fair value of $20.7 in 2000 and $5.3 in 1999......... 20.7 5.3 -------- ------ Total long-term debt........................................ $3,319.5 $922.7 ======== ======

2000 1999 1998 ------ ------ ------ IN MILLIONS Current: Federal................................................ $ 96.0 $ 81.6 $ 90.1 State.................................................. 23.4 15.2 16.4 Foreign................................................ 48.6 29.7 19.9 ------ ------ ------ 168.0 126.5 126.4 ------ ------ ------ Deferred: Federal................................................ (10.6) (3.1) (7.9) State.................................................. (0.7) 1.4 (1.8) Foreign................................................ 22.0 4.0 (4.0) ------ ------ ------ 10.7 2.3 (13.7) ------ ------ ------ Charge in lieu of taxes attributable to employee stock plans.................................................. 60.1 35.4 11.5 ------ ------ ------ Total.......................................... $238.8 $164.2 $124.2 ====== ====== ======

2000 1999 1998 ---- ---- ---- Federal tax rate............................................ 35.0% 35.0% 35.0% State income tax, net of federal tax benefit................ 2.7 2.9 3.2 Income of international subsidiaries taxed at different rates..................................................... 0.1 0.1 (1.0) Tax holiday................................................. (7.4) (5.9) (5.6) Tax credits................................................. (0.5) (0.1) (0.1) Tax exempt interest income.................................. (0.1) (0.3) (0.4) FSC benefit................................................. (0.1) (0.1) (0.1) Other....................................................... 2.6 0.3 2.1 ---- ---- ---- Effective income tax rate................................... 32.3% 31.9% 33.1% ==== ==== ====

2000 1999 ------ ------ (IN MILLIONS) Deferred tax assets: Accruals, allowances and reserves......................... $ 19.3 $ 19.3 State income tax.......................................... 9.2 5.4 Acquired intangible assets................................ 5.9 3.3 Net undistributed profits of subsidiaries................. 3.8 2.8 Plant and equipment....................................... -- 4.0 Net operating loss carryover.............................. 83.6 8.0 Other..................................................... -- 5.2 ------ ------ Total deferred tax assets................................... 121.8 48.0 ------ ------ Deferred tax liabilities: Foreign inventories expensed for tax...................... (55.6) -- Depreciation.............................................. (4.0) (3.3) Other..................................................... (21.8) (2.7) ------ ------ Total deferred tax liabilities.............................. (81.4) (6.0) ------ ------ Net deferred tax assets..................................... $ 40.4 $ 42.0 ====== ======

2000 1999 1998 ------ ------ ------ (IN MILLIONS) U.S. .................................................. $392.1 $349.7 $279.2 Non-U.S. .............................................. 347.4 164.8 96.3 ------ ------ ------ Total............................................. $739.5 $514.5 $375.5 ====== ====== ======

2000 1999 1998 -------- -------- -------- (IN MILLIONS, EXCEPT PER SHARE DATA) Net income: As reported...................... $497.2 $350.3 $251.3 Pro forma........................ $444.0 $314.3 $222.0 Net income per share: Basic As reported...................... $ 0.83 $ 0.65 $ 0.49 Pro forma........................ $ 0.74 $ 0.58 $ 0.43 Diluted As reported...................... $ 0.80 $ 0.61 $ 0.47 Pro forma........................ $ 0.71 $ 0.55 $ 0.42

2000 1999 1998 ----------- ----------- ----------- Expected life of Options............................. 3.5 years 3.5 years 4 years Expected life of purchase rights..................... 3 months 3 months 3 months Volatility........................................... 52% 44% 40% Risk-free interest Rate.............................. 4.8% to 6.8% 4.5% to 5.8% 5.1% to 5.9% Dividend yield....................................... zero zero zero

2000 1999 1998 ----------------- ----------------- ----------------- WEIGHTED WEIGHTED WEIGHTED NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE OF EXERCISE OF EXERCISE OF EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------ -------- ------ -------- ------ -------- Outstanding, beginning of year.............. 45.9 $11.29 45.5 $ 7.37 47.1 $ 4.71 Granted..................................... 13.4 $34.21 15.6 $18.04 15.5 $11.82 Exercised................................... (10.8) $ 8.18 (11.5) $ 5.69 (14.2) $ 3.19 Canceled.................................... (4.4) $21.94 (3.7) $ 8.39 (2.9) $ 8.50 ----- ----- ----- Outstanding, end of year.................... 44.1 $17.72 45.9 $11.29 45.5 $ 7.37 ===== ===== ===== Exercisable at year-end..................... 23.6 $11.23 22.0 $ 7.61 12.3 $ 9.62 ===== ===== ===== Weighted-average fair value of options granted during the year................... $15.92 $ 7.07 $ 4.40

OUTSTANDING ---------------------------------- EXERCISABLE WEIGHTED -------------------- AVERAGE WEIGHTED WEIGHTED RANGE OF REMAINING AVERAGE AVERAGE EXERCISE NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE PRICES SHARES LIFE PRICE SHARES PRICE --------------- --------- ----------- -------- --------- -------- $ 0.33 - $ 4.75.. 4.7 1.85 years $ 4.20 5.0 $ 3.95 $ 5.09 - $ 5.98.. 4.8 2.64 years $ 5.84 4.6 $ 5.84 $ 6.13 - $10.34.. 4.3 3.75 years $ 8.01 3.4 $ 7.86 $10.95 - $11.69.. 4.9 4.25 years $11.15 3.2 $11.10 $12.26 - $16.06.. 2.3 6.69 years $12.94 0.9 $12.94 $13.30 - $16.43.. 5.7 5.39 years $13.61 2.4 $13.57 $16.56 - $31.00.. 8.9 6.71 years $23.72 2.6 $21.54 $35.03 - $41.55.. 4.9 6.21 years $34.98 0.9 $34.91 $36.09 - $43.88.. 3.1 6.45 years $42.16 0.5 $40.70 $46.00 - $46.00.. 0.5 6.38 years $46.00 0.1 $46.00 ---- ---- $ 0.33 - $46.00.. 44.1 4.94 years $17.72 23.6 $11.23 ==== ====

2000 1999 1998 --------- -------- -------- (IN MILLIONS) Net sales: Manufacturing and operations.............................. $12,418.5 $8,460.3 $5,211.3 Technology solutions...................................... 1,486.5 1,130.4 825.9 Global services........................................... 232.5 78.5 65.0 --------- -------- -------- $14,137.5 $9,669.2 $6,102.2 ========= ======== ======== Depreciation and amortization: Manufacturing and operations.............................. $ 194.1 $ 167.8 $ 110.2 Technology solutions...................................... 26.1 21.5 16.7 Global services........................................... 12.8 2.2 1.5 Corporate................................................. 18.4 8.9 6.2 --------- -------- -------- $ 251.4 $ 200.4 $ 134.6 ========= ======== ======== Interest income: Manufacturing and operations.............................. $ 8.6 $ 8.0 $ 6.9 Technology solutions...................................... 5.7 7.2 8.1 Global services........................................... 0.2 -- -- Corporate................................................. 92.4 21.5 17.3 --------- -------- -------- $ 106.9 $ 36.7 $ 32.3 ========= ======== ======== Interest expense: Manufacturing and operations.............................. $ 6.9 $ 3.4 $ 1.8 Technology solutions...................................... 1.1 0.7 0.5 Global services........................................... 0.9 -- -- Corporate................................................. 62.7 34.2 23.1 --------- -------- -------- $ 71.6 $ 38.3 $ 25.4 ========= ======== ======== Income before income taxes and cumulative effect of change in accounting principle: Manufacturing and operations.............................. $ 668.7 $ 484.0 $ 302.8 Technology solutions...................................... 78.4 82.6 81.4 Global services........................................... 2.6 9.6 5.5 Corporate................................................. (10.2) (61.7) (14.2) --------- -------- -------- $ 739.5 $ 514.5 $ 375.5 ========= ======== ========

2000 1999 1998 --------- -------- -------- (IN MILLIONS) Capital expenditures: Manufacturing and operations.............................. $ 432.3 $ 392.0 $ 225.7 Technology solutions...................................... 29.0 24.1 40.1 Global services........................................... 15.7 3.8 2.7 Corporate................................................. 29.0 29.5 10.6 --------- -------- -------- $ 506.0 $ 449.4 $ 279.1 ========= ======== ======== Total Assets: Manufacturing and operations.............................. $ 5,303.4 $2,712.7 $1,771.1 Technology solutions...................................... 500.2 451.5 331.4 Global services........................................... 222.2 52.6 14.9 Corporate................................................. 4,349.8 2,203.7 726.3 --------- -------- -------- $10,375.6 $5,420.5 $2,843.7 ========= ======== ========

2000 1999 1998 --------- -------- -------- (IN MILLIONS) Net sales derived from: PCB assembly.............................................. $ 9,940.5 $6,502.0 $4,167.9 Systems build............................................. 2,516.1 2,058.6 1,128.6 Technology solutions products............................. 1,501.1 1,108.6 805.7 Global services........................................... 179.8 -- -- --------- -------- -------- $14,137.5 $9,669.2 $6,102.2 ========= ======== ======== Geographic net sales: United States............................................. $ 8,328.9 $6,491.2 $4,366.1 Europe.................................................... 3,440.9 1,952.4 1,267.8 Asia/Pacific and other.................................... 2,367.7 1,225.6 468.3 --------- -------- -------- $14,137.5 $9,669.2 $6,102.2 ========= ======== ======== Long-lived assets (physical location): United States............................................. $ 837.8 $ 523.2 $ 304.0 Europe.................................................... 607.2 100.1 95.7 Asia/Pacific and other.................................... 302.4 314.8 188.5 --------- -------- -------- $ 1,747.4 $ 938.1 $ 588.2 ========= ======== ========

YEARS ENDED AUGUST 31, -------------------------- 2000 1999 1998 ------ ------ ------ (IN MILLIONS, EXCEPT PER SHARE DATA) Net income before cumulative effect of change in accounting principle................................................. $500.7 $350.3 $251.3 Cumulative effect of change in accounting principle, net of taxes..................................................... (3.5) -- -- ------ ------ ------ Net income -- basic......................................... $497.2 $350.3 $251.3 Interest expense from convertible subordinated notes, net of taxes..................................................... -- 5.0 9.6 ------ ------ ------ Net income -- diluted....................................... $497.2 $355.3 $260.9 ====== ====== ====== Weighted average shares -- basic............................ 599.4 542.6 510.1 Common shares issuable upon exercise of stock options....... 24.1 22.6 19.3 Common shares issuable upon conversion of convertible subordinated notes........................................ -- 13.8 27.2 ------ ------ ------ Weighted average shares -- diluted.......................... 623.5 579.0 556.6 ====== ====== ====== Basic net income per share: Income before cumulative effect of change in accounting principle.............................................. $ 0.84 $ 0.65 $ 0.49 Cumulative effect of change in accounting principle....... (0.01) -- -- ------ ------ ------ Net income per share................................. $ 0.83 $ 0.65 $ 0.49 ====== ====== ====== Diluted net income per share: Income before cumulative effect of change in accounting principle.............................................. $ 0.80 $ 0.61 $ 0.47 Cumulative effect of change in accounting principle....... -- -- -- ------ ------ ------ Net income per share................................. $ 0.80 $ 0.61 $ 0.47 ====== ====== ======

2000 1999 1998 ---------- ---------- ---------- (IN MILLIONS, EXCEPT PER SHARE DATA) Net income adjustments: Net income under U.S. GAAP................................ $ 497.2 $ 350.3 $ 251.3 Increases (decreases): Income statement impact of purchase accounting(a): Force................................................ (25.6) (25.6) (25.6) SMART................................................ (160.4) (78.7) (75.3) Americom............................................. 0.9 (2.8) (1.7) Bluegum.............................................. 6.4 (0.7) 0.5 Start-up costs(b)...................................... 5.1 (1.0) (4.1) Convertible debentures(c).............................. 2.0 (0.1) (1.7) Unrealized gains/losses on short-term investments(d)... (2.6) (1.7) -- Income taxes(e)........................................ (5.8) 26.6 25.5 -------- -------- -------- Net income under Canadian GAAP............................ $ 317.2 $ 266.3 $ 168.9 ======== ======== ======== Net income per common share(f)............................ $ 0.54 $ 0.54 $ 0.36 ======== ======== ======== Net diluted income per common share(f).................... $ 0.52 $ 0.51 $ 0.35 ======== ======== ======== Shareholders' equity adjustments: Shareholders' equity under U.S. GAAP...................... $3,802.1 $3,166.9 $1,475.4 Increases (decreases): Conversion from Pooling of Interests to Purchase Accounting(a): Conversion to purchase accounting upon acquisition..... 2,361.5 (119.5) (39.8) Income statement impact of purchase accounting: Force................................................ (94.9) (69.3) (43.7) SMART................................................ (142.5) -- -- Americom............................................. 1.1 -- -- Bluegum.............................................. (0.8) -- -- Start-up costs(b)......................................... -- (5.1) (4.1) Convertible debentures(c)................................. (2.3) (4.3) (4.2) Equity portion of convertible debentures(c)............... 1,842.0 322.0 22.1 Unrealized gains/losses on short-term investments(d)...... (12.7) -- -- Income taxes(e)........................................... 3.6 2.4 2.3 -------- -------- -------- Shareholders' equity under Canadian GAAP.................. $7,757.1 $3,293.1 $1,408.0 ======== ======== ========

(IN MILLIONS) Assets acquired: Cash, cash equivalents and short-term investments......... $167 Accounts receivable....................................... 139 Inventories............................................... 123 Deferred income taxes..................................... 6 Other current assets...................................... 10 Property and equipment.................................... 51 Other..................................................... 16 ---- Total assets acquired.................................. $512 ==== Liabilities assumed: Accounts payable.......................................... $134 Accrued employee compensation............................. 5 Accrued bonuses........................................... 3 Accrued expenses.......................................... 7 Income taxes.............................................. 10 Other long-term liabilities............................... 3 ---- Total liabilities assumed.............................. $162 ====

BALANCE AT AMOUNTS BEGINNING CHARGED TO BALANCE AT DESCRIPTION OF PERIOD OPERATIONS (DEDUCTIONS) END OF PERIOD ----------- ---------- ---------- ------------ ------------- Year ended August 31, 2000: Allowance for doubtful accounts receivable................................ $6.4 $5.1 $(2.9) $8.6 Year ended August 31, 1999: Allowance for doubtful accounts receivable................................ $4.7 $2.5 $(0.8) $6.4 Year ended August 31, 1998: Allowance for doubtful accounts receivable................................ $4.7 $3.0 $(3.0) $4.7

NOTE ---- ASSETS CURRENT ASSETS Cash and cash equivalents................................... 95,977 Trade accounts receivable................................... 4 619,536 Inventories................................................. 5 687,808 Other current assets........................................ 6 71,870 --------- Total Current Assets........................................ 1,475,191 LONG-TERM ASSETS Long-term investments....................................... 7 63,938 Intangible assets........................................... 8 228,906 Property, plant and equipment, net.......................... 9 479,609 --------- Total Assets................................................ 2,247,644 ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debts (unsecured)................................ 435,570 Trade accounts payable...................................... 551,914 Current instalments of obligations under capital leases..... 10 565 Accrued operating expenses.................................. 108,303 Income taxes payable........................................ 14,582 Other current liabilities................................... 11 69,196 --------- Total Current Liabilities................................... 1,180,130 LONG-TERM LIABILITIES Obligations under capital leases, excluding current instalments............................................... 10 1,036 Long-term debts............................................. 12 196,349 Deferred tax liabilities.................................... 13 7,799 --------- Total Liabilities........................................... 1,385,314 Minority interests.......................................... 22,105 SHAREHOLDERS' EQUITY Share capital............................................... 14 50,948 Reserves.................................................... 15 789,277 --------- Total Shareholders' Equity.................................. 840,225 --------- Total Liabilities and Shareholders' Equity.................. 2,247,644 =========

NOTE ---- Net revenue................................................. 16 4,512,974 Cost of revenue............................................. (4,325,417) ---------- Gross profit................................................ 187,557 Operating expenses: Research and development.................................. (2,338) Sales and marketing....................................... (6,803) General and administrative................................ (252,195) Amortisation of goodwill.................................. (27,373) ---------- Loss from operations........................................ (101,152) Share of losses in associated companies..................... (2,846) Interest income............................................. 4,029 Interest expense............................................ 17 (31,748) Foreign exchange gains...................................... 11,149 Other income/(expenses)..................................... (8,992) ---------- Loss before income tax...................................... 18 (129,560) Income taxes................................................ 19 (16,445) ---------- Loss before minority interests.............................. (146,005) Minority interests.......................................... (1,337) ---------- Loss for the year........................................... (147,342) ==========

CURRENCY SHARE SHARE REVENUE TRANSLATION CAPITAL PREMIUM RESERVE RESERVE TOTAL ------- ------- -------- ----------- -------- At January 1, 2000............................. 43,010 243,494 187,259 16,092 489,855 Issue of ordinary shares....................... 7,938 464,883 -- -- 472,821 Loss for the year.............................. -- -- (147,342) -- (147,342) Exchange differences on translation of foreign currency balances............................ -- -- -- 24,903 24,903 Payment of 1999 dividends...................... -- -- (12) -- (12) ------ ------- -------- ------ -------- At December 31, 2000........................... 50,948 708,377 39,905 40,995 840,225 ====== ======= ======== ====== ========

GROUP'S COUNTRY OF EFFECTIVE INCORPORATION/ EQUITY INTEREST NAME OF SUBSIDIARY PRINCIPAL ACTIVITIES BUSINESS % ------------------ ---------------------------- ---------------------------- --------------- NatSteel Electronics Hungary Manufacturing Limited Liability Company................... Contract manufacturing Hungary 100 NatSteel Electronics (M) Sdn. Bhd.............. Contract manufacturing Malaysia 100 NatSteel Electronics S.A de C.V................ Contract manufacturing Mexico 100 Natsteel Electronics (Shanghai) Co., Ltd....... Contract manufacturing The People's Republic of 100 China NatSteel Electronics (Shenzhen) Company Limited................... Contract manufacturing The People's Republic of 100 China NEL (US) Holdings Inc. and its subsidiaries:-.... Investment holding United States of America 100 - NatSteel Electronics (USA) Manufacturing, Inc..................... Contract manufacturing United States of America 100 - NatSteel Electronics Inc. ................... Provision of technical United States of America 100 services - NEL Americas Inc. ...... Contract manufacturing United States of America 100 - U.S. Robotics Corporation (mu)........ Provider of internet access United States of America 65.6 equipment P.T. NatSteel Electronics Indonesia (mu)............ Contract manufacturing Batam, Republic of Indonesia 100 Thai Integrated Electronics Company Limited........... Dormant Thailand 99.4 ECS Holdings Limited and its subsidiary:-.............. Investment holding Singapore (OMEGA) - ECS (Computers) Asia Pte Ltd..................... Trading of computer software Singapore (OMEGA) and peripheral equipment NatSteel Electronics International Ltd (phi)... Provision of marketing and British Virgin Islands 100 technical services NatSteel Electronics (HK) Holding Ltd.......... Dormant Hong Kong 100 NatSteel Electronics (HK) Ltd (phi)................. Provision of marketing and British Virgin Islands 100 technical services NP Online Pte Ltd........... Trading of IT components and Singapore 75 accessories

S$'000 ------- Trade accounts receivable................................... 635,010 Less: Provision for doubtful debts -- Balance as at January 1, 2000............................. 2,867 De-consolidation of a subsidiary.......................... (630) Provision made during the year............................ 14,372 Bad debts written off against provision................... (1,261) Translation adjustment.................................... 126 ------- Balance as at December 31, 2000........................... 15,474 ------- 619,536 =======

S$'000 ------- At cost - Raw materials............................................... 501,171 Indirect materials.......................................... 1,145 Work-in-progress............................................ 74,060 Finished goods.............................................. 189,690 ------- 766,066 Less: Provision for inventory obsolescence - Balance as at January 1, 2000............................. 4,030 De-consolidation of a subsidiary.......................... (1,786) Provision made during the year............................ 84,378 Inventory written off against provision................... (8,661) Translation adjustment.................................... 297 ------- Balance as at December 31, 2000........................... 78,258 ------- 687,808 =======

S$'000 ------ Amounts due from associated companies....................... 12,433 Recoverables................................................ 26,699 Other receivables........................................... 21,607 Deposits.................................................... 4,846 Prepayments................................................. 6,285 ------ 71,870 ======

S$'000 ------- Unquoted equity shares in associated companies, at cost..... 49,181 Goodwill on acquisition..................................... (9,048) Translation adjustment...................................... 671 ------- 40,804 ------- Share of post-acquisition reserves - Capital reserve........................................... 357 - Revenue reserve........................................... 3,472 - Currency translation reserve.............................. (127) ------- 3,702 ------- Long term loans receivable.................................. 6,936 ------- Quoted equity shares, at cost (market value: $3,634,000).... 21,772 Provision for diminution in value of quoted equity shares... (18,138) ------- 3,634 Unquoted investments, at cost............................... 8,680 Club memberships............................................ 182 ------- 63,938 =======

S$'000 ------ Balance as at January 1, 2000............................... -- Provision made during the year.............................. 18,089 Translation adjustment...................................... 49 ------ Balance as at December 31, 2000............................. 18,138 ======

PLACE OF GROUP NAME OF INCORPORATION/ EFFECTIVE INTEREST ASSOCIATED COMPANY PRINCIPAL ACTIVITIES BUSINESS % ------------------ -------------------- -------------- ------------------ ECS Holdings Limited*........... Investment holding Singapore 35.00 Lite-On Enclosure, Inc.......... Provision of metal, plastic Taiwan 25.00 enclosure products and contract system assembly work Multiwave Innovation Pte Ltd.... Research, development and Singapore 33.67 marketing computer hardware and software systems PCI-NEL Technology Limited...... Provision of distribution and Hong Kong 50.10 logistic services for original equipment manufacturing Unimag (Thailand) Limited....... Contract manufacturing for Thailand 49.00 original equipment manufacturers in the computer telecommunications and related electronics industries

S$'000 ------- Bond issue expenses......................................... 11,131 Translation adjustment...................................... 441 Accumulated amortisation.................................... (7,839) ------- 3,733 ------- Licence fees................................................ 13,567 Accumulated amortisation.................................... (867) ------- 12,700 ------- Purchased goodwill.......................................... 228,610 Goodwill on acquisition of associated companies............. 9,048 Translation adjustment...................................... 1,980 ------- 239,638 Accumulated amortisation.................................... (27,165) ------- 212,473 ------- 228,906 =======

S$'000 ------ Bond issue expense -- Balance as at January 1, 2000............................. 980 Amortisation/write-off for the year....................... 6,805 Translation adjustment.................................... 54 ------ Balance as at December 31, 2000........................... 7,839 ------ Licence fees -- Balance as at January 1, 2000............................. -- Amortisation for the year................................. 867 ------ Balance as at December 31, 2000........................... 867 ====== Purchased goodwill/goodwill on amortisation -- Balance as at January 1, 2000............................. 86 Amortisation/write-off for the year....................... 27,373 Disposal of an associated company......................... (370) Translation adjustment.................................... 76 ------ Balance as at December 31, 2000........................... 27,165 ======

AS AT DISPOSALS/ DECONSOLIDATION TRANSLATION AS AT 1/1/00 ADDITIONS WRITE-OFFS OF SUBSIDIARY ADJUSTMENT 31/12/00 COST S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 ---- ------- --------- ---------- --------------- ----------- -------- Freehold properties.................... 31,396 20,995 (2,683) -- 1,313 51,021 Leasehold properties................... 54,631 13,402 -- -- 2,232 70,265 Leasehold improvements................. 30,324 55,431 (18,223) (2,150) 1,306 66,688 ------- ------- ------- ------ ------ ------- Sub-total land and buildings........... 116,351 89,828 (20,906) (2,150) 4,851 187,974 ------- ------- ------- ------ ------ ------- Plant and equipment.................... 335,410 98,516 (31,781) -- 13,663 415,808 Office equipment....................... 1,986 4,695 (148) (4,018) 70 2,585 Furniture and fittings................. 2,202 5,123 (219) (793) 95 6,408 Computers.............................. 9,310 38,376 (18,688) (1,486) 388 27,900 Motor vehicles......................... 5,869 1,492 (1,244) (715) 208 5,610 ------- ------- ------- ------ ------ ------- Sub-total other fixed assets........... 354,777 148,202 (52,080) (7,012) 14,424 458,311 ------- ------- ------- ------ ------ ------- Total property, plant and equipment.... 471,128 238,030 (72,986) (9,162) 19,275 646,285 ------- ------- ------- ------ ------ ------- ACCUMULATED DEPRECIATION Freehold properties.................... 1,754 1,622 -- -- 74 3,450 Leasehold properties................... 3,825 1,216 -- -- 156 5,197 Leasehold improvements................. 6,392 4,206 (2,632) (336) 260 7,890 ------- ------- ------- ------ ------ ------- Sub-total land and buildings........... 11,971 7,044 (2,632) (336) 490 16,537 ------- ------- ------- ------ ------ ------- Plant and equipment.................... 102,308 47,742 (18,973) -- 4,193 135,270 Office equipment....................... 1,091 2,982 (130) (2,633) 41 1,351 Furniture and fittings................. 1,277 1,070 (95) (533) 50 1,769 Computers.............................. 3,582 6,212 (293) (417) 151 9,235 Motor vehicles......................... 1,772 1,403 (536) (195) 70 2,514 ------- ------- ------- ------ ------ ------- Sub-total other fixed assets........... 110,030 59,409 (20,027) (3,778) 4,505 150,139 ------- ------- ------- ------ ------ ------- Total property, plant and equipment.... 122,001 66,453 (22,659) (4,114) 4,995 166,676 ======= ======= ======= ====== ====== =======

NET BOOK VALUE 31/12/00 S$'000 -------------- Freehold properties......................................... 47,571 Leasehold properties........................................ 65,068 Leasehold improvements...................................... 58,798 ------- Sub-total land and buildings................................ 171,437 ------- Plant and equipment......................................... 280,538 Office equipment............................................ 1,234 Furniture and fittings...................................... 4,639 Computers................................................... 18,665 Motor vehicles.............................................. 3,096 ------- Sub-total other fixed assets................................ 308,172 ------- Total property, plant and equipment......................... 479,609 =======

PAYMENTS INTEREST PRINCIPAL S$'000 S$'000 S$'000 -------- -------- --------- Within 1 year........................................... 650 (85) 565 After 1 year but before 5 years......................... 1,205 (169) 1,036 ----- ---- ----- 1,855 (254) 1,601 ===== ==== =====

S$'000 ------ Accrued bond interest....................................... 17,228 Provision for warranties.................................... 23,716 Sundry payables............................................. 28,252 ------ 69,196 ------

S$'000 -------- 2004 Bonds -- Bonds issued in 1999...................................... 416,750 Conversion into equity in 2000............................ (232,186) Translation adjustment.................................... 11,785 -------- 196,349 2005 Bonds -- Bonds issued in 2000...................................... 150,000 Conversion into equity in 2000............................ (150,000) -------- 196,349 --------

S$'000 ------ Balance as at January 1, 2000............................... 7,589 De-consolidation of a subsidiary............................ (32) Provision made during the year.............................. 13 Translation adjustment...................................... 229 ----- Balance as at December 31, 2000............................. 7,799 =====

NO. OF SHARES S$'000 ------------- ------ AUTHORISED: Ordinary "A" shares of S$0.10 each........................ 800,000,000 80,000 =========== ====== ISSUED AND FULLY PAID: Ordinary "A" shares of S$0.10 each As at January 1, 2000..................................... 430,100,000 43,010 Issue of shares during the year -- Additional working capital............................. 10,461,000 1,046 -- Conversion of bonds.................................... 60,845,973 6,084 -- Exercise of share options.............................. 8,076,000 808 ----------- ------ As at December 31, 2000..................................... 509,482,973 50,948 =========== ======

S$'000 ------- Share premium............................................... 708,377 Revenue reserve............................................. 39,905 Currency translation reserve................................ 40,995 ------- 789,277 =======

S$'000 --------- Net revenue from -- Third parties............................................ 4,508,159 -- Associated companies..................................... 4,815 --------- 4,512,974 ========= Comprises: -- Contract manufacturing................................... 4,131,682 -- Trading (including after-sales support).................. 381,292 --------- 4,512,974 =========

S$'000 ------ Interest paid and payable: -- convertible bonds........................................ 8,790 -- bank loans and overdrafts................................ 22,862 -- finance leases........................................... 96 ------ 31,748 ======

NOTE S$'000 ---- ------- LOSS FROM OPERATIONS IS ARRIVED AT AFTER CHARGING: Amortisation of intangible assets -- Bond issue expenses...................................... 8 6,805 -- License fees............................................. 8 867 -- Goodwill on acquisition/purchase goodwill................ 8 27,373 Bad debts written off....................................... 80 Depreciation of property, plant and equipment............... 9 66,453 Loss on -- Dilution of a subsidiary................................. 4,432 -- Disposal of an associated company........................ 3,913 Loss on disposal/write-offs of property, plant and equipment................................................. 25,578 Operating lease expense..................................... 4,608 Provision for -- Diminution in value of quoted equity shares.............. 7 18,089 -- Doubtful debts (trade)................................... 4 14,372 -- Stock obsolescence....................................... 5 84,378 -- Warranties............................................... 11 23,716 Staff costs*................................................ 247,412 =======

S$'000 ------ Based on results for the year -- Current taxation......................................... 15,961 -- Deferred taxation........................................ 13 -- Share of associated companies' tax....................... 471 ------ 16,445 ======

S$'000 ------- Unabsorbed tax losses....................................... 90,719 Unutilised wear and tear allowances......................... 20,662 Unutilised reinvestment allowances.......................... 82,408 ------- 193,789 =======

S$'000 ------ Associated companies -- Sale of trading stocks................................... 4,815 =====

S$'000 ------ Capital expenditure -- Approved and contracted for.............................. 1,082 -- Approved but not contracted for.......................... 11,534 ------ 12,616 ======

S$'000 ------ Payable:- Within 1 year............................................... 10,329 Between 2 to 5 years........................................ 8,795 After 5 years............................................... 21,425 ------ 40,549 ======

ASIA SINGAPORE AMERICA EUROPE PACIFIC TOTAL S$'000 S$'000 S$'000 S$'000 S$'000 --------- --------- ------- ------- --------- Total revenue from external customers.......................... 1,908,684 1,237,032 797,515 564,928 4,508,159 ========= ========= ======= ======= ========= Segment assets....................... 621,830 960,832 134,886 530,096 2,247,644 ========= ========= ======= ======= ========= Segment liabilities.................. 639,768 629,546 57,005 58,995 1,385,314 ========= ========= ======= ======= ========= Capital expenditure.................. 31,304 359,869 25,315 72,767 489,255 ========= ========= ======= ======= ========= Significant non-cash items -- Depreciation of property, plant and equipment..................... 11,254 22,933 1,563 30,703 66,453 -- Amortisation of intangible assets............................ 6,805 18,271 -- 9,969 35,045 ========= ========= ======= ======= =========

S$'000 -------- Net loss as reported under Singapore GAAP................... (147,342) US GAAP adjustments -- Capitalisation of borrowing and other costs(c)............ 3,678 Compensation charge for employee stock options(d)......... (1,598) Accrued interest upon conversion of convertible bonds(e)............................................... (16,255) Recognition of deferred tax assets(f)..................... 10,817 Goodwill on acquisition of interests in subsidiaries(g)... (1,586) Gain on sale of a subsidiary's shares(g).................. 6,238 Reversal of Solectron's acquisition costs(h).............. 20,660 Miscellaneous US GAAP adjustments(i)...................... 369 -------- 22,323 -------- Net loss under US GAAP.................................... (125,019) Currency translation adjustments.......................... 24,903 -------- Comprehensive loss under US GAAP.......................... (100,116) ========

S$'000 ------- Shareholders' equity as reported under Singapore GAAP....... 840,225 US GAAP adjustments -- Capitalisation of borrowing and other costs(c).............. 6,555 Recognition of deferred tax assets(f)....................... 12,002 Goodwill on acquisition of interests in subsidiaries(g)..... 4,652 Reversal of Solectron's acquisition costs(h)................ 20,660 Miscellaneous US GAAP adjustments(i)........................ 682 ------- 44,551 ------- Shareholders' equity under US GAAP.......................... 884,776 =======

DECEMBER 31, JUNE 30, ------------------------ 2001 2000 1999 ----------- ---------- ---------- (UNAUDITED) Current assets: Cash and cash equivalents................................. $ 271,900 $ 203,242 $ 160,773 Short-term investments.................................... 5,844 10,287 -- Trade receivables, net of an allowance for doubtful accounts of $7,554, $7,908 and $2,045, respectively..... 533,027 635,296 249,728 Income taxes receivable................................... 4,961 9,959 2,303 Inventories (note 4)...................................... 440,970 571,549 190,853 Future income taxes (note 11)............................. 22,956 33,515 14,623 Prepaid expenses.......................................... 21,470 14,838 6,582 ---------- ---------- ---------- 1,301,128 1,478,686 624,862 Capital assets (note 5)..................................... 417,601 395,477 188,030 Goodwill, net of accumulated amortization of $50,286, $25,954 and $6,927, respectively.......................... 1,088,667 1,098,365 230,540 Other assets................................................ 28,098 24,100 10,526 Future income taxes (note 11)............................... 48,685 33,340 7,545 ---------- ---------- ---------- $2,884,179 $3,029,968 $1,061,503 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 180,433 $ 287,130 $ 214,014 Accrued payroll........................................... 33,204 52,790 13,429 Other accrued liabilities................................. 78,937 122,956 45,971 Income taxes payable...................................... 32,396 67,228 22,336 Current portion of long-term debt......................... 5,531 7,347 4,205 ---------- ---------- ---------- 330,501 537,451 299,955 Long-term debt (note 6)..................................... 315,100 298,667 209,156 Other liabilities........................................... 9,048 17,657 13,194 Future income taxes (note 11)............................... 24,099 21,049 9,652 Non-controlling interest.................................... 2,794 2,666 2,295 Shareholders' equity: Share capital (note 7).................................... 1,880,802 1,880,702 391,696 Retained earnings......................................... 320,165 267,637 134,879 Cumulative translation adjustment......................... 1,670 4,139 676 ---------- ---------- ---------- 2,202,637 2,152,478 527,251 Commitments and contingencies (note 8) Canadian and United States accounting differences (note 15) Subsequent event (note 17) ---------- ---------- ---------- $2,884,179 $3,029,968 $1,061,503 ========== ========== ==========

TWENTY-SIX WEEK PERIODS ENDED ---------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ------------------------------------ 2001 2000 2000 1999 1998 ---------- -------- ---------- ---------- -------- (UNAUDITED) Revenue......................... $1,491,678 $993,953 $2,552,839 $1,169,097 $642,983 Operating expenses: Cost of goods sold............ 1,228,970 831,641 2,115,505 970,701 525,504 Selling and administrative.... 74,096 46,419 113,969 67,482 44,620 Research and development...... 36,246 13,420 41,463 17,196 12,852 Amortization of capital and other assets............... 36,751 17,076 44,070 22,844 11,841 ---------- -------- ---------- ---------- -------- Earnings from operations........ 115,615 85,397 237,832 90,874 48,166 Financial expenses, net (note 10)........................... 6,195 12,094 9,187 13,589 6,099 Earnings before income taxes, non-controlling interest and goodwill amortization......... 109,420 73,303 228,645 77,285 42,067 Income taxes (note 11): Current....................... 28,105 25,512 80,362 28,523 6,733 Future........................ 9,826 1,508 (583) (1,124) 8,574 ---------- -------- ---------- ---------- -------- 37,931 27,020 79,779 27,399 15,307 Non-controlling interest........ 120 190 386 854 -- Net earnings before goodwill amortization.................. 71,369 46,093 148,480 49,032 26,760 Goodwill amortization, net of income taxes of $5,491, $899, $3,305, $1,015 and $350 respectively.................. 18,841 5,169 15,722 3,860 1,342 ---------- -------- ---------- ---------- -------- Net earnings.................... 52,528 40,924 132,758 45,172 25,418 Retained earnings, beginning of period........................ 267,637 134,879 134,879 89,707 64,958 Premium on redemption of common shares........................ -- -- -- -- (669) ---------- -------- ---------- ---------- -------- Retained earnings, end of period........................ $ 320,165 $175,803 $ 267,637 $ 134,879 $ 89,707 ========== ======== ========== ========== ======== Earnings before goodwill amortization per share: Basic......................... $ 0.83 $ 0.68 $ 1.99 $ 0.82 $ 0.51 Diluted....................... $ 0.81 $ 0.66 $ 1.94 $ 0.80 $ 0.50 Earnings per share: Basic......................... $ 0.61 $ 0.60 $ 1.78 $ 0.76 $ 0.49 Diluted....................... $ 0.60 $ 0.58 $ 1.73 $ 0.74 $ 0.47 Weighted average number of outstanding common shares (in thousands) Basic......................... 86,282 68,133 74,558 59,830 52,082 Diluted....................... 87,813 70,238 76,524 61,424 53,519

TWENTY-SIX WEEK PERIODS ENDED --------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ------------------------------------- 2001 2000 2000 1999 1998 -------- --------- ----------- --------- --------- (UNAUDITED) Cash flows from operating activities: Net earnings..................... $ 52,528 $ 40,924 $ 132,758 $ 45,172 $ 25,418 Adjustments to reconcile net earnings to cash flows from operating activities: Capital asset amortization.... 34,670 16,303 40,948 21,258 11,650 Goodwill amortization......... 24,332 6,068 19,027 4,875 1,692 Other assets amortization..... 2,081 773 3,122 1,586 191 Deferred financing costs amortization (note 10)...... 629 502 1,089 1,202 248 Future income taxes........... 9,826 1,508 (583) (1,124) 8,574 Non-controlling interest...... 120 190 386 854 -- Other......................... (243) 16 12 (44) (696) -------- --------- ----------- --------- --------- Cash flows from earnings......... 123,943 66,284 196,759 73,779 47,077 Net change in operating assets and liabilities, net of acquisitions (note 14)........ 16,772 (150,770) (380,997) (60,631) (10,004) -------- --------- ----------- --------- --------- Cash flows from (used in) operating activities.......... 140,715 (84,486) (184,238) 13,148 37,073 Cash flows from financing activities: Increase (decrease) in bank indebtedness.................. -- (20,379) (19,439) (50,027) 12,755 Repayment of long-term debt...... (10,235) (41,345) (99,529) (142,020) (13,820) Increase in long-term debt....... 26,850 156,032 167,639 196,667 124,359 Redemption of common shares...... -- -- -- -- (781) Issuance of common shares........ 550 191,231 1,270,934 183,849 77,395 Share issue expenses............. (450) (7,455) (58,802) (8,106) (3,114) -------- --------- ----------- --------- --------- Cash flows from financing activities.................... 16,715 278,084 1,260,803 180,363 196,794 Cash flows from investing activities: Additions to capital assets...... (55,554) (60,208) (148,863) (40,028) (18,453) Business acquisitions, net of cash and cash equivalents (note 3)...................... -- (169,469) (892,097) (131,386) (115,595) Increase in other assets......... (4,337) (5,970) (14,721) (235) (4,991) Other............................ (19,265) (10,789) (400) (901) 45 -------- --------- ----------- --------- --------- Cash flows used in investing activities....................... (79,156) (246,436) (1,056,081) (172,550) (138,994) Impact of changes in exchange rates on cash balances................. (9,616) 3,893 21,985 (7,853) 5,940 -------- --------- ----------- --------- --------- Net change in cash and cash equivalents...................... 68,658 (48,945) 42,469 13,108 100,813 Cash and cash equivalents, beginning of period.............. 203,242 160,773 160,773 147,665 46,852 -------- --------- ----------- --------- --------- Cash and cash equivalents, end of period........................... $271,900 $ 111,828 $ 203,242 $ 160,773 $ 147,665 ======== ========= =========== ========= ========= Supplemental cash flow information: Cash paid during the period: Interest...................... $ 14,693 $ 18,839 $ 21,647 $ 19,222 $ 8,180 Income taxes.................. 42,065 20,528 66,764 6,901 4,637 Cash received during the period: Interest...................... 7,406 6,669 21,688 7,472 2,239

DECEMBER 31, 1999 ------------ Reduction of capital assets............................. $2,812 Increase to goodwill.................................... 2,416 Increase to share capital............................... 3,422 Increase to future income tax asset, formerly the deferred income tax assets............................ 3,824

YEARS ENDED DECEMBER 31, ---------------------------------- 2000 1999 1998 ---------- -------- -------- Assets acquired: Current assets(i)............................... $ 336,140 $ 96,408 $ 45,215 Capital assets.................................. 103,330 42,910 44,181 Goodwill........................................ 899,211 174,928 59,101 Other assets.................................... 3,089 456 304 Future income taxes............................. 3,135 8,254 9,003 ---------- -------- -------- 1,344,905 322,956 157,804 Liabilities assumed: Bank indebtedness............................... 16,980 19,473 893 Other current liabilities....................... 132,646 77,942 34,439 Long-term debt.................................. 21,426 31,804 629 Other liabilities............................... 10,102 6,736 1,084 Future income taxes............................. 3,379 -- -- ---------- -------- -------- 184,533 135,955 37,045 ---------- -------- -------- Net assets acquired at fair value................. $1,160,372 $187,001 $120,759 ========== ======== ======== Consideration: Cash............................................ $ 910,113 $130,062 $115,595 Common shares................................... 250,259 56,939 -- Notes payable(ii)............................... -- -- 5,164 ---------- -------- -------- $1,160,372 $187,001 $120,759 ========== ======== ========

DECEMBER 31, JUNE 30, -------------------- 2001 2000 1999 -------- -------- -------- Raw materials...................................... $277,566 $398,003 $117,863 Goods in process................................... 86,297 108,114 52,669 Finished goods..................................... 77,107 65,432 20,321 -------- -------- -------- $440,970 $571,549 $190,853 ======== ======== ========

JUNE 30, 2001 ------------------------------------ ACCUMULATED NET BOOK COST AMORTIZATION VALUE -------- ------------ -------- Land.............................................. $ 15,994 $ -- $ 15,994 Buildings......................................... 71,269 11,089 60,180 Leasehold improvements............................ 22,549 3,583 18,966 Machinery and equipment........................... 324,129 92,115 232,014 Furniture and fixtures............................ 85,857 21,842 64,015 Projects in progress.............................. 26,432 -- 26,432 -------- -------- -------- $546,230 $128,629 $417,601 ======== ======== ========

DECEMBER 31, 2000 ------------------------------------ ACCUMULATED NET BOOK COST AMORTIZATION VALUE -------- ------------ -------- Land.............................................. $ 17,331 $ -- $ 17,331 Buildings......................................... 67,663 10,365 57,298 Leasehold improvements............................ 19,553 2,481 17,072 Machinery and equipment........................... 295,562 76,570 218,992 Furniture and fixtures............................ 53,340 16,771 36,569 Projects in progress.............................. 48,215 -- 48,215 -------- -------- -------- $501,664 $106,187 $395,477 ======== ======== ========

DECEMBER 31, 1999 ------------------------------------ ACCUMULATED NET BOOK COST AMORTIZATION VALUE -------- ------------ -------- Land.............................................. $ 13,472 $ -- $ 13,472 Buildings......................................... 48,426 7,164 41,262 Leasehold improvements............................ 10,417 1,708 8,709 Machinery and equipment........................... 146,685 41,280 105,405 Furniture and fixtures............................ 22,028 11,872 10,156 Projects in progress.............................. 9,026 -- 9,026 -------- -------- -------- $250,054 $ 62,024 $188,030 ======== ======== ========

INTEREST RATE INTEREST RATE AS AT AS AT DECEMBER, 31 JUNE 30, DECEMBER 31, JUNE 30, ------------------- 2001 2000 MATURITY 2001 2000 1999 --------------- --------------- -------- -------- -------- -------- Revolving bank credit(a)........... 5.296% 7.07% 2004 $139,742 $115,065 $ 45,246 Debentures(b)......... 6.65% and 7.95% 6.65% and 7.95% 2008 166,540 164,945 158,763 Other debts........... Various Various Various 14,349 26,004 9,352 --------------- --------------- ------- -------- -------- -------- 320,631 306,014 213,361 Current portion of long-term debt...... 5,531 7,347 4,205 -------- -------- -------- $315,100 $298,667 $209,156 ======== ======== ========

JUNE 30, DECEMBER 31, 2001 2000 -------- ------------ 2001................................................... $5,486 $7,347 2002................................................... 3,082 4,416 2003................................................... 1,897 3,522 2004................................................... 455 3,033 2005................................................... 396 1,428 2006................................................... 192 --

DECEMBER 31, JUNE 30, ---------------------- 2001 2000 1999 ---------- ---------- -------- Issued and fully paid: 86,306,744 common shares (2000 -- 86,249,229; 1999 -- 67,583,930)........................ $1,880,802 $1,880,702 $391,696

NUMBER OF OPTIONS OUTSTANDING ----------------------------------- DECEMBER 31, SUBSCRIPTION PRICE JUNE 30, ---------------------- YEAR OF GRANT (IN DOLLARS) 2001 2000 1999 ------------- ------------------- --------- --------- --------- 1995......................... $ 1.750 -- -- 414,620 1996......................... $ 2.625 to $ 3.025 442,086 446,086 683,090 1997......................... $ 5.575 325,032 347,200 429,338 1998......................... $ 9.000 to $ 12.500 366,337 376,640 416,468 1999......................... $12.300 to $ 29.850 678,594 703,638 792,500 2000......................... $37.750 to $ 57.000 355,000 360,100 -- 2000......................... $70.750 to $109.750 383,020 410,060 -- 2001......................... $29.950 to $ 78.100 554,950 -- -- --------- --------- --------- 3,105,019 2,643,724 2,736,016 ========= ========= =========

DECEMBER 31, TWENTY-SIX WEEK PERIOD ---------------------- ENDED JUNE 30, 2001 2000 1999 ---------------------- --------- --------- Balance at beginning of year............. 2,643,724 2,736,016 2,251,708 Granted.................................. 559,700 786,960 811,500 Exercised................................ (57,515) (835,823) (259,186) Cancelled................................ (40,890) (43,429) (68,006) --------- --------- --------- Balance at end of year................... 3,105,019 2,643,724 2,736,016 ========= ========= =========

OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------- ---------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE EXERCISE PRICES OUTSTANDING LIFE (IN YEARS) PRICE EXERCISABLE PRICE --------------- ----------- --------------- -------- ----------- -------- $ 2.625 to $ 3.025 442,086 4.205 $ 2.760 442,086 $ 2.760 $ 5.575 325,032 5.300 5.575 325,032 5.575 $ 9.000 to $ 12.500 336,337 6.291 11.466 366,337 11.466 $12.300 to $ 29.850 678,594 7.404 15.257 395,281 14.721 $37.750 to $ 57.000 355,000 8.368 56.837 71,000 56.837 $70.750 to $109.750 383,020 8.750 83.299 76,604 83.299 $29.450 to $ 78.100 554,950 9.175 43.570 -- -- --------- --------- 3,105,019 1,676,340 ========= =========

OPTIONS OUTSTANDING ---------------------------------------- OPTIONS EXERCISABLE WEIGHTED ---------------------- AVERAGE WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE EXERCISE PRICES OUTSTANDING LIFE (IN YEARS) PRICE EXERCISABLE PRICE --------------- ----------- --------------- -------- ----------- -------- $ 2.625 to $ 3.025 446,086 5.206 $ 2.760 446,086 $ 2.760 $ 5.575 347,200 6.300 5.575 347,200 5.575 $ 9.000 to $ 12.500 376,640 7.290 11.477 250,842 11.477 $12.300 to $ 29.850 703,638 8.405 15.282 204,172 14.733 $37.750 to $ 57.000 360,100 9.298 56.840 -- -- $70.750 to $109.750 410,060 9.753 83.097 -- -- --------- --------- 2,643,724 1,248,300 ========= =========

JUNE 30, DECEMBER 31, 2001 2000 -------- ------------ 2001................................................ $ 7,321 $12,961 2002................................................ 12,755 11,335 2003................................................ 9,463 8,849 2004................................................ 8,568 7,572 2005................................................ 8,059 7,502 Thereafter.......................................... 23,339 21,153 ======= =======

CURRENCY NOTIONAL AMOUNT IN AVERAGE (SOLD/BOUGHT) FOREIGN CURRENCY RATE MATURITY ------------- ------------------ ------- ------------------ Forward exchange contracts: June 30, 2001 USD/CAD.......................... 175.8 million 1.5536 December 20, 2002 GBP/CAD.......................... 0.3 million 2.3630 September 28, 2001 December 31, 2000 USD/CAD.......................... 93.5 million 1.5172 March 28, 2002 GBP/CAD.......................... 0.4 million 2.3670 September 28, 2001

DECEMBER 31, JUNE 30, ---------------------------------------- 2001 2000 1999 ------------------- ------------------- ------------------ CARRYING FAIR CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE VALUE VALUE -------- -------- -------- -------- -------- ------- Foreign exchange contracts and currency swap agreement.................. $ -- $ 5,890 $ -- $ 1,186 $ -- $ 929 Debentures................... 166,540 147,810 164,945 158,819 53,660 45,289

TWENTY-SIX WEEK PERIODS ENDED ------------------ YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, -------------------------- 2001 2000 2000 1999 1998 -------- ------- ------- ------- ------ Interest on long-term debt................ $14,082 $12,456 $25,005 $11,242 $6,439 Deferred financing costs amortization..... 629 502 1,089 1,202 248 Interest on bank indebtedness and others.................................. 6,679 5,525 5,762 6,650 1,932 ------- ------- ------- ------- ------ 21,390 18,483 31,856 19,094 8,619 Interest income........................... 15,195 6,389 22,669 5,505 2,520 ------- ------- ------- ------- ------ $ 6,195 $12,094 $ 9,187 $13,589 $6,099 ======= ======= ======= ======= ======

TWENTY-SIX WEEK PERIODS ENDED ------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, -------------------------- 2001 2000 2000 1999 1998 -------- ------- ------ ------ ------ Basic income tax rate........................ 38.0% 38.0% 38.0% 38.0% 38.0% Increase (decrease) of the income tax rate arising from the following items: Manufacturing and processing profits deduction............................... (1.8) (2.9) (2.9) (2.8) (2.8) Foreign income taxed at different rate..... (0.3) 0.6 1.3 0.5 0.6 Others..................................... (1.2) 1.2 (1.5) (0.2) 0.6 ---- ---- ---- ---- ---- Effective income tax rate.................... 34.7% 36.9% 34.9% 35.5% 36.4% ==== ==== ==== ==== ====

DECEMBER 31 JUNE 30, -------------------- 2001 2000 1999 -------- -------- -------- Future tax assets: Trade receivables..................... $ 4,603 $ 4,910 $ 4,312 Inventories........................... 5,020 5,361 4,955 Capital assets........................ 6,266 502 2,079 Accrued and other liabilities......... 22,201 25,757 10,888 Share capital......................... 27,885 30,036 3,423 Non-capital losses and other tax deductions carryforwards............ 27,423 20,844 16,156 -------- -------- -------- Total gross future tax assets............ 93,398 87,410 41,813 Less valuation allowance................. (21,757) (20,555) (19,645) -------- -------- -------- Future tax assets, including a current portion of $22,956, $33,515 and $14,623, respectively............................. 71,641 66,855 22,168 Future tax liabilities: Capital assets........................... 17,550 17,960 8,628 Other assets............................. 6,504 2,989 945 Other.................................... 45 100 79 -------- -------- -------- Total future tax liabilities............. 24,099 21,049 9,652 -------- -------- -------- Net future tax assets...................... $ 47,542 $ 45,806 $ 12,516 ======== ======== ========

DECEMBER 31 JUNE 30, ------------------ 2001 2000 1999 -------- ------- ------- Income tax benefit that would be reported in the consolidated statement of earnings...... $ 5,176 $ 3,974 $ 1,774 Goodwill and other non-current intangible assets...................................... 16,581 16,581 17,871 ------- ------- ------- $21,757 $20,555 $19,645 ======= ======= =======

CANADA UNITED STATES OTHER COUNTRIES ------ ------------- --------------- 2003.................................... $ -- $ -- $ 1,354 2004.................................... -- -- 3,734 2005.................................... 30 1,616 2,204 2006.................................... 369 397 931 2007.................................... 4,143 -- -- 2010.................................... -- 471 -- 2018.................................... -- 2,143 -- 2019.................................... -- 892 -- 2020.................................... -- 4,302 -- Without expiration...................... 248 -- 34,353 ------ ------ ------- $4,790 $9,821 $42,576 ====== ====== =======

TWENTY-SIX WEEK PERIODS ENDED ----------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ---------------------------------- 2001 2000 2000 1999 1998 ---------- ---------- ---------- ---------- -------- GEOGRAPHICAL ACTIVITIES Revenue: Canada Domestic......................... $ 198,717 $ 318,584 $ 874,859 $ 207,383 $ 84,464 Export........................... 275,664 48,153 167,842 98,277 41,419 Intersegment transfers........... 141,153 142,315 350,680 44,995 12,336 ---------- ---------- ---------- ---------- -------- 615,534 509,052 1,393,381 350,655 138,219 United States of America......... 783,453 419,314 1,050,434 604,423 337,434 Europe........................... 234,851 207,005 443,715 248,159 178,458 Asia............................. 8,529 3,557 15,989 10,855 1,208 Intersegment transfers........... 127,961 126,320 291,211 142,963 33,493 ---------- ---------- ---------- ---------- -------- 1,154,794 756,196 1,801,349 1,006,400 550,593 ---------- ---------- ---------- ---------- -------- 1,770,328 1,265,248 3,194,730 1,357,055 688,812 Elimination of intersegment transfers...................... (278,650) (271,295) (641,891) (187,958) (45,829) ---------- ---------- ---------- ---------- -------- Total revenue......................... $1,491,678 $ 993,953 $2,552,839 $1,169,097 $642,983 ========== ========== ========== ========== ========

TWENTY-SIX WEEK PERIODS ENDED ------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ----------------------------- 2001 2000 2000 1999 1998 -------- -------- -------- -------- ------- Earnings from operations: Canada............................. $ 49,152 $ 47,457 $158,203 $ 44,563 $14,386 United States of America........... 32,052 34,504 84,143 42,989 31,514 Europe............................. 12,735 16,149 36,958 11,276 1,072 Asia............................... 818 (188) 1,290 1,493 (73) -------- -------- -------- -------- ------- 94,757 97,922 280,594 100,321 46,899 Elimination of intersegment transfers....................... 20,858 (12,525) (42,762) (9,447) 1,267 -------- -------- -------- -------- ------- Total earnings from operations............... $115,615 $ 85,397 $237,832 $ 90,874 $48,166 ======== ======== ======== ======== =======

DECEMBER 31 JUNE 30, ---------------------- 2001 2000 1999 ---------- ---------- -------- Capital assets: Canada........................................ $ 155,411 $ 157,854 $ 52,374 United States of America...................... 187,387 169,300 83,209 Europe........................................ 63,427 55,962 45,017 Asia.......................................... 11,376 12,361 7,430 ---------- ---------- -------- Total capital assets............................ $ 417,601 $ 395,477 $188,030 ========== ========== ======== Goodwill: Canada........................................ $ 373,674 $ 377,900 $104,922 United States of America...................... 647,268 648,300 52,331 Europe........................................ 65,935 70,336 71,378 Asia.......................................... 1,790 1,829 1,909 ---------- ---------- -------- Total goodwill.................................. $1,088,667 $1,098,365 $230,540 ========== ========== ========

TWENTY-SIX WEEK PERIODS ENDED --------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ---------------------------------- 2001 2000 2000 1999 1998 ---------- -------- ---------- ---------- -------- Customer revenues by destination: Canada........................ $ 274,645 $350,067 $ 936,886 $ 317,700 $103,500 United States................. 913,126 421,726 1,130,144 585,800 354,900 Europe........................ 249,173 189,553 405,533 221,300 151,500 Asia.......................... 54,734 32,607 80,276 44,297 33,083 ---------- -------- ---------- ---------- -------- Total........................... $1,491,678 $993,953 $2,552,839 $1,169,097 $642,983 ========== ======== ========== ========== ========

TWENTY-SIX WEEK PERIODS ENDED --------------------- YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ------------------------------- 2001 2000 2000 1999 1998 --------- --------- --------- -------- -------- Short-term investments................... $ 4,443 $ -- $ 2,971 $ -- $ -- Trade receivables........................ 102,269 (100,115) (248,214) (81,019) (50,725) Income taxes receivable.................. 4,998 (1,130) (7,656) 2,351 (1,344) Inventories.............................. 130,579 (138,878) (225,753) (51,533) (9,294) Prepaid expenses......................... (6,632) (444) (5,744) 357 4,765 Accounts payable......................... (106,697) 56,451 (8,078) 43,213 57,938 Accrued payroll and other accrued liabilities............................ (65,848) 31,040 69,871 10,271 (7,571) Income taxes payable..................... (46,340) 2,306 41,606 15,729 (3,773) --------- --------- --------- -------- -------- $ 16,772 $(150,770) $(380,997) $(60,631) $(10,004) ========= ========= ========= ======== ========

TWENTY-SIX WEEK PERIODS ENDED ------------------ YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ----------------------------- 2001 2000 2000 1999 1998 -------- ------- -------- -------- ------- Net earnings for the period in accordance with Canadian GAAP................................ $52,528 $40,924 $132,758 $ 45,172 $25,418 Financial instruments(a)....................... 4,703 (616) 694 3,940 (3,715) Start-up costs capitalized(b).................. (238) (165) 913 617 (4,584) Deferred foreign exchange gain (loss) on long-term monetary items(c).................. (645) (1,298) (3,019) 2,457 (972) ------- ------- -------- -------- ------- Future income taxes(d)......................... (1,325) 765 493 (2,511) 3,375 Net earnings for the period in accordance with United States GAAP........................... 55,023 39,610 131,839 49,675 19,522 Other comprehensive income: Foreign currency cumulative translation adjustment................................... (2,469) 3,494 3,463 (14,342) 8,163 ------- ------- -------- -------- ------- Comprehensive income for the period in accordance with United States GAAP........... $52,554 $43,104 $135,302 $ 35,333 $27,685 ======= ======= ======== ======== ======= Earnings per share: Basic........................................ $ 0.64 $ 0.58 $ 1.77 $ 0.83 $ 0.37 Diluted...................................... 0.63 0.56 1.72 0.81 0.36

DECEMBER 31, JUNE 30, --------------------------------------------- 2001 2000 1999 ----------------------- ----------------------- ------------------- CANADA US CANADA US CANADA US ---------- ---------- ---------- ---------- -------- -------- Assets Future income taxes -- current(d)..... $ 22,956 $ 22,956 $ 33,515 $ 33,111 $ 14,623 $ 14,555 Other assets(a)(b)(c)...... 28,098 28,257 24,100 20,440 10,526 8,010 Future income taxes -- long-term(d)... 48,685 48,723 33,340 35,107 7,545 8,577 Goodwill(a)................ 1,088,667 1,088,493 1,098,365 1,098,191 230,540 230,540 Shareholders' Equity Retained earnings.......... 320,165 320,189 267,637 265,166 134,879 133,327

TWENTY-SIX WEEK PERIODS ENDED ------------------ YEARS ENDED DECEMBER 31, JUNE 30, JULY 1, ---------------------------- 2001 2000 2000 1999 1998 -------- ------- -------- ------- ------- Net earnings -- basic and diluted............... $52,528 $40,924 $132,758 $45,172 $25,418 ======= ======= ======== ======= ======= Weighted average number of outstanding common shares (in thousands): Basic......................................... 86,282 68,133 74,558 59,830 52,082 Common shares issuable upon exercise of stock options....................................... 1,531 2,105 1,966 1,594 1,437 ------- ------- -------- ------- ------- Weighted average share -- diluted............... 87,813 70,238 76,524 61,424 53,519 ======= ======= ======== ======= ======= Earnings per share: Basic......................................... $ 0.61 $ 0.60 $ 1.78 $ 0.76 $ 0.49 Diluted....................................... 0.60 0.58 1.73 0.74 0.47

PRO FORMA C-MAC A-PLUS KAVLICO DY 4 ADJUSTMENTS NOTES CONSOLIDATED ---------- ---------- ---------- ------- ----------- ----- ------------ (3 MONTHS) (325 DAYS) Revenue.................. $2,552,839 $50,165 $220,299 $86,437 $(12,158) 1 $2,897,582 Cost of goods sold, selling and administrative expenses............... 2,229,474 43,429 182,373 61,318 (6,647) 1 2,509,947 Research and development............ 41,463 -- 2,535 9,953 (884) 1 53,067 Amortization of capital and other assets....... 44,070 1,608 7,205 1,993 (154) 1 54,722 ---------- ------- -------- ------- -------- ---------- Earnings from operations............. 237,832 5,128 28,186 13,173 (4,473) 279,846 Financial expenses (revenues), net........ 9,187 229 1,042 (1,396) 32 1 9,094 ---------- ------- -------- ------- -------- ---------- Earnings before income taxes, non-controlling interest and goodwill amortization........... 228,645 4,899 27,144 14,569 (4,505) 270,752 Income taxes............. 79,779 1,960 184 4,074 11,129 2(b) 95,865 (1,261) 1 Non-controlling interest............... 386 -- -- -- -- 386 ---------- ------- -------- ------- -------- ---------- Net earnings before goodwill amortization........... 148,480 2,939 26,960 10,495 (14,373) 174,501 Goodwill amortization, net of income taxes.... 15,722 -- -- 20 16,745 2(c) 32,487 ---------- ------- -------- ------- -------- ---------- Net earnings............. $ 132,758 $ 2,939 $ 26,960 $10,475 $(31,118) $ 142,014 ========== ======= ======== ======= ======== ========== Earnings before goodwill amortization per share: Basic.................. $ 1.99 $ 2.18 Diluted................ 1.94 2.13 Earnings per share: Basic.................. $ 1.78 $ 1.77 Diluted................ 1.73 1.73 Weighted average number of outstanding common shares (in thousands): Basic.................. 74,558 5,584 2(d) 80,142 Diluted (note 3)....... 76,524 5,584 2(d) 82,108

(IN THOUSANDS) Weighted average number of outstanding common shares: Basic................................................ 74,558 Diluted.............................................. 76,524 Plus: Additional shares to give effect to the DY 4 acquisition as at January 1, 2000................. 2,721 Additional shares to give effect to the public offerings in June and August 2000 as at January 1, 2000, only to the extent those proceeds are being used to pay for the acquisitions of A-Plus and Kavlico........................................... 2,863 ------ 5,584 ====== Pro forma weighted average number of outstanding shares: Basic................................................ 80,142 Diluted.............................................. 82,108

NOVEMBER 20, DECEMBER 31, DECEMBER 31, 2000 1999 1998 ------------ ------------ ------------ Current assets: Cash.............................................. $ 81,000 $ 271,000 $ 544,000 Accounts receivable, less allowance for doubtful accounts of $268,000, $176,000 and $92,000, respectively................................... 21,654,000 19,196,000 22,875,000 Inventories (note 3).............................. 32,162,000 24,795,000 19,427,000 Other current assets.............................. 1,349,000 585,000 711,000 ----------- ----------- ----------- 55,246,000 44,847,000 43,557,000 Property, plant and equipment, net (note 4)......... 17,527,000 16,655,000 13,479,000 ----------- ----------- ----------- $72,773,000 $61,502,000 $57,036,000 =========== =========== =========== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Accounts payable.................................. $ 6,405,000 $ 8,065,000 $ 8,993,000 Employment agreements and incentive awards payable -- current portion (note 5)............ 2,783,000 2,932,000 1,431,000 Accrued liabilities............................... 4,508,000 3,729,000 3,662,000 ----------- ----------- ----------- 13,696,000 14,726,000 14,086,000 Employment agreements and incentive awards payable (note 5).......................................... 5,422,000 4,312,000 3,117,000 Commitments and contingencies (note 7) Shareholder's equity: Share capital: Common stock, $100 par value, 2,000 shares authorized, 100 shares issued and outstanding.................................. 10,000 10,000 10,000 Capital in excess of par value.................... 1,763,000 1,763,000 1,763,000 Retained earnings................................. 51,882,000 40,691,000 38,060,000 ----------- ----------- ----------- 53,655,000 42,464,000 39,833,000 ----------- ----------- ----------- $72,773,000 $61,502,000 $57,036,000 =========== =========== ===========

PERIOD FROM JANUARY 1, 2000 YEARS ENDED THROUGH DECEMBER 31, NOVEMBER 20, ---------------------------- 2000 1999 1998 --------------- ------------ ------------ Net sales........................................ $148,866,000 $169,131,000 $167,826,000 Cost of sales.................................... 114,669,000 128,451,000 127,086,000 ------------ ------------ ------------ Gross profit..................................... 34,197,000 40,680,000 40,740,000 Operating expenses: Selling........................................ 4,943,000 5,525,000 5,058,000 General and administrative..................... 8,494,000 10,627,000 8,621,000 Research and development....................... 1,713,000 1,665,000 1,944,000 ------------ ------------ ------------ 15,150,000 17,817,000 15,623,000 ------------ ------------ ------------ Income from operations........................... 19,047,000 22,863,000 25,117,000 Other income and expense: Interest and other income...................... 380,000 1,284,000 315,000 Interest and other expense..................... 1,084,000 1,064,000 1,122,000 ------------ ------------ ------------ 704,000 (220,000) 807,000 ------------ ------------ ------------ Income before income taxes....................... 18,343,000 23,083,000 24,310,000 Provision for taxes on income.................... 124,000 177,000 228,000 ------------ ------------ ------------ Net income....................................... 18,219,000 22,906,000 24,082,000 Retained earnings, beginning of period........... 40,691,000 38,060,000 34,783,000 Contribution of GmbH to Kavlico.................. 72,000 -- -- Dividends........................................ 7,100,000 20,275,000 20,805,000 ------------ ------------ ------------ Retained earnings, end of period................. $ 51,882,000 $ 40,691,000 $ 38,060,000 ============ ============ ============

PERIOD FROM JANUARY 1, 2000 YEARS ENDED THROUGH DECEMBER 31, NOVEMBER 20, ---------------------------- 2000 1999 1998 --------------- ------------ ------------ Cash flows from operating activities: Net income..................................... $18,219,000 $ 22,906,000 $ 24,082,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation................................ 4,869,000 4,261,000 2,844,000 Changes in assets and liabilities, net of effects from acquisition of GmbH: Accounts receivable....................... (2,338,000) 3,679,000 (2,986,000) Inventories............................... (7,340,000) (5,368,000) (751,000) Other current assets...................... (754,000) 126,000 451,000 Accounts payable.......................... (1,711,000) (928,000) 954,000 Employment agreements and incentive awards payable -- current..................... (149,000) 1,501,000 676,000 Accrued liabilities....................... 739,000 67,000 1,250,000 Employment agreements and incentive awards payable -- long-term................... 1,110,000 1,195,000 1,695,000 ----------- ------------ ------------ 12,645,000 27,439,000 28,215,000 Cash flows from investing activities: Purchases of property and equipment............ (5,645,000) (7,437,000) (7,292,000) Investment in GmbH subsidiary, net of cash acquired.................................... (90,000) -- -- ----------- ------------ ------------ (5,735,000) (7,437,000) (7,292,000) Cash flows from financing activities: Dividends paid................................. (7,100,000) (20,275,000) (20,805,000) ----------- ------------ ------------ Net (decrease) increase in cash.................. (190,000) (273,000) 118,000 Cash, beginning of period........................ 271,000 544,000 426,000 ----------- ------------ ------------ Cash, end of period.............................. $ 81,000 $ 271,000 $ 544,000 =========== ============ ============ Supplemental cash flow information: Cash paid during the period for: Interest.................................... $ 96,000 $ 69,000 $ 69,000 Income taxes................................ 195,000 152,000 294,000

DECEMBER 31, NOVEMBER 20, -------------------------- 2000 1999 1998 ------------ ----------- ----------- Raw materials and purchased parts........... $11,400,000 $ 8,495,000 $ 7,852,000 Work in process............................. 10,500,000 9,664,000 7,098,000 Finished goods.............................. 10,262,000 6,636,000 4,477,000 ----------- ----------- ----------- $32,162,000 $24,795,000 $19,427,000 =========== =========== ===========

DECEMBER 31, NOVEMBER 20, -------------------------- 2000 1999 1998 ------------ ----------- ----------- Land and building................................... $ -- $ -- $ 225,000 Machinery and equipment............................. 36,711,000 32,239,000 24,465,000 Leasehold improvements.............................. 5,214,000 5,205,000 4,945,000 Office furniture and equipment...................... 5,651,000 5,438,000 4,869,000 Autos and trucks.................................... 706,000 912,000 776,000 Construction in progress............................ 834,000 187,000 1,618,000 ----------- ----------- ----------- 49,116,000 43,981,000 36,898,000 Less: accumulated depreciation and amortization..... 31,589,000 27,326,000 23,419,000 ----------- ----------- ----------- Property, plant and equipment, net.................. $17,527,000 $16,655,000 $13,479,000 =========== =========== ===========

2000 1999 ------- ------- Current Assets Cash and cash equivalents................................. $16,686 $21,374 Negotiable securities..................................... 12,463 6,727 Accounts receivable (Note 3).............................. 24,326 18,856 Unbilled accounts receivable.............................. 3,195 2,068 Inventories (Note 4)...................................... 19,512 14,839 Prepaid expenses.......................................... 558 540 Deferred income taxes..................................... 836 865 ------- ------- 77,576 65,269 Capital Assets (Note 5)..................................... 13,910 8,017 Goodwill.................................................... 130 150 ------- ------- $91,616 $73,436 ======= ======= Current Liabilities Accounts payable and accrued liabilities.................. $14,909 $ 9,881 Income taxes payable...................................... 1,995 1,299 Progress billings......................................... 1,595 295 Current portion of lease.................................. 229 278 ------- ------- 18,728 11,753 Long-Term Lease (Note 6).................................... 132 360 Deferred Income Taxes....................................... 1,219 1,390 ------- ------- 20,079 13,503 ------- ------- Shareholders' Equity Share capital (Note 7).................................... 28,636 27,507 Retained earnings......................................... 42,901 32,426 ------- ------- 71,537 59,933 ------- ------- $91,616 $73,436 ======= =======

2000 1999 ------- ------- Sales....................................................... $86,437 $75,030 Cost of sales............................................... 43,899 37,497 ------- ------- Gross profit................................................ 42,538 37,533 Expenses Selling, general, and administrative...................... 19,432 17,052 Research and development, net (Note 8).................... 9,953 9,126 ------- ------- Earnings from operations.................................... 13,153 11,355 Interest expense............................................ (68) (80) Interest income............................................. 1,464 1,083 ------- ------- Earnings before income taxes................................ 14,549 12,358 Income taxes (Note 9)....................................... 4,074 3,726 ------- ------- Net earnings................................................ 10,475 8,632 Retained earnings beginning of year......................... 32,426 23,794 ------- ------- Retained earnings end of year............................... $42,901 $32,426 ======= ======= Earnings per share (Note 10) Basic..................................................... $ 0.82 $ 0.68 Fully diluted............................................. $ 0.78 $ 0.65 Weighted average number of shares (thousands) Basic..................................................... 12,795 12,689 Fully diluted............................................. 14,038 13,886

2000 1999 -------- ------- Operating Net earnings.............................................. $ 10,475 $ 8,632 Non-cash items: increase/(decrease) Depreciation and amortization.......................... 2,013 1,833 Loss on disposal of capital asset...................... -- 133 Deferred income taxes (Note 9)......................... (142) (187) Net change in non-cash working capital (Note 11)....... (4,264) (2,452) -------- ------- 8,082 7,959 -------- ------- Financing Issuance of common shares (Note 7)........................ 1,129 1,241 Long-term lease financing (Note 6)........................ (277) (265) -------- ------- 852 976 -------- ------- Investing Maturity of negotiable securities......................... 11,971 4,878 Purchase of negotiable securities......................... (17,707) (8,066) Acquisition of capital assets............................. (7,886) (2,471) -------- ------- (13,622) (5,659) -------- ------- Increase in cash and cash equivalents....................... (4,688) 3,276 Cash and cash equivalents, beginning of year................ 21,374 18,098 -------- ------- Cash and cash equivalents, end of year (Note 11)............ $ 16,686 $21,374 ======== =======

2000 1999 ------- ------- Trade....................................................... $23,288 $17,310 Earned interest............................................. 469 329 Other....................................................... 569 1,217 ------- ------- $24,326 $18,856 ======= =======

2000 1999 ------- ------- Raw materials............................................... $13,762 $ 9,916 Work-in-process............................................. 4,780 3,362 Finished goods.............................................. 970 1,561 ------- ------- $19,512 $14,839 ======= =======

ACCUMULATED 2000 NET 1999 NET COST AMORTIZATION BOOK VALUE BOOK VALUE ------- ------------ ---------- ---------- Furniture and equipment............... $25,108 $12,508 $12,600 $6,940 Software.............................. 2,426 1,586 840 833 Leasehold improvements................ 387 197 190 244 Land.................................. 280 -- 280 -- ------- ------- ------- ------ $28,201 $14,291 $13,910 $8,017 ======= ======= ======= ======

2000 1999 ---- ---- Total remaining lease liability............................. $361 $638 Less: current portion....................................... 229 278 ---- ---- Long-term lease liability................................... $132 $360 ==== ====

2000 1999 --------------------- --------------------- NUMBER DOLLAR NUMBER DOLLAR OF SHARES AMOUNTS OF SHARES AMOUNTS ---------- ------- ---------- ------- Balance, beginning of year............. 12,758,498 $27,507 12,616,188 $26,266 Employee and directors' stock options exercised during the year............ 127,000 1,129 142,310 1,241 ---------- ------- ---------- ------- Balance, end of year................... 12,885,498 $28,636 12,758,498 $27,507 ========== ======= ========== =======

2000 1999 --------------------------- --------------------------- WEIGHTED WEIGHTED NUMBER OF AVERAGE NUMBER OF AVERAGE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE --------- -------------- --------- -------------- Outstanding at beginning of the year............................ 1,201,290 $ 9.36 1,245,900 $9.22 Granted........................... 455,700 10.66 208,600 9.62 Exercised......................... 127,000 8.88 142,310 8.72 Forfeited......................... 236,190 12.35 110,900 9.11 --------- ------ --------- ----- Outstanding at end of year........ 1,293,800 $ 9.81 1,201,290 $9.36 ========= ====== ========= ===== Options exercisable at year end... 487,100 546,690 ========= =========

OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------------------------------------- ------------------------- WEIGHTED AVERAGE WEIGHTED WEIGHTED REMAINING AVERAGE AVERAGE RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE --------------------- ----------- ------------ -------- ----------- -------- $3.60 75,000 2.17 $ 3.60 75,000 $ 3.60 $7.85 -- $8.95 93,400 2.68 8.50 51,300 8.28 $9.00 -- $9.88 519,600 5.87 9.50 255,800 9.42 $10.05 -- $10.95 288,200 4.24 10.67 -- -- $11.10 -- $11.63 317,600 4.50 11.39 105,000 11.31 ----------------------------------------------------------------------------------------------------- $3.60 -- $11.63 1,293,800 4.73 $ 9.81 487,100 $ 8.81 -----------------------------------------------------------------------------------------------------

2000 1999 ------- ------ Gross expenditures.......................................... $10,123 $9,261 Net government repayments................................... 262 570 Investment tax credits...................................... (432) (705) ------- ------ Net current expenditures.................................... $ 9,953 $9,126 ======= ======

2000 1999 ------ ------ Current..................................................... $4,216 $3,539 Deferred.................................................... (142) 187 ------ ------ $4,074 $3,726 ====== ======

2000 1999 ------- ------- Earnings from operations before income taxes................ $14,549 $12,358 ======= ======= Combined basic Canadian Federal and Provincial income tax at 43.08% (1999 -- 44.6%).................................... $ 6,268 $ 5,512 Increase (decrease) resulting from: Manufacturing credit...................................... (209) (168) Ontario super allowance................................... (73) (136) Foreign tax differential.................................. (2,565) (1,179) Other..................................................... 653 (303) ------- ------- Income taxes................................................ $ 4,074 $ 3,726 ======= =======

2000 1999 ------- ------- Cash and cash equivalents are comprised of: Cash...................................................... $ 3,890 $ 1,132 Cash equivalents.......................................... 12,796 20,242 ------- ------- Total cash and cash equivalents........................... $16,686 $21,374 ======= ======= Net change in non-cash working capital is comprised of: Accounts receivable....................................... $(5,470) $(3,629) Unbilled accounts receivables............................. (1,127) 713 Inventories............................................... (4,673) 342 Prepaid expenses.......................................... (18) 14 Accounts payable and accrued liabilities.................. 5,028 485 Income taxes payable...................................... 696 235 Progress billings......................................... 1,300 (612) ------- ------- Net change in non-cash working capital.................... $(4,264) $(2,452) ======= ======= Other: Interest received, net.................................... $ 1,264 $ 1,292 ======= ======= Income taxes paid......................................... $ 3,163 $ 1,029 ======= =======

2000 1999 -------------------------- -------------------------- CAPITAL ASSETS CAPITAL ASSETS GEOGRAPHIC INFORMATION REVENUES AND GOODWILL REVENUES AND GOODWILL ---------------------- -------- -------------- -------- -------------- Canada............................... $ 1,307 $12,522 $ 3,031 $6,656 United States........................ 69,592 1,119 58,361 1,067 United Kingdom....................... 8,842 391 5,290 431 Singapore............................ 2,323 -- 200 -- Japan................................ 640 -- 2,631 -- Other................................ 3,733 8 5,517 13 ------- ------- ------- ------ Total................................ $86,437 $14,040 $75,030 $8,167 ======= ======= ======= ======

MINIMUM CAPITAL LEASE OPERATING PAYMENTS LEASES ------------- --------- 2001........................................................ $268 $1,328 2002........................................................ 110 1,353 2003........................................................ -- 1,168 2004........................................................ -- 1,064 2005 and thereafter......................................... -- 2,068 ---- ------ 378 $6,981 ====== Less imputed interest at 7%................................. (17) ---- $361 ====

AMOUNT AVERAGE EXCHANGE RATE DUE DATE --------- --------------------- ------------------------------ USD 9,000 1.4565 October 2000 -- September 2001 GBP 1,000 2.357 December 2000 -- September 2001

MARCH 27, DECEMBER 31, 2000 1999 ----------- ------------ (UNAUDITED) Current assets: Cash and cash equivalents................................. $ -- $ 2,640,360 Short-term investments.................................... 680 675 Accounts receivable, less allowance for doubtful accounts of $307,636 and $307,636, respectively................. 16,965,458 17,364,686 Inventories............................................... 27,787,780 17,503,979 Prepaid expenses and other current assets................. 546,943 466,960 Deferred income taxes -- current.......................... 1,248,170 1,248,170 ----------- ----------- Total current assets...................................... 46,549,031 39,224,830 Property and equipment, net................................. 14,001,607 9,575,322 Other assets................................................ 282,139 170,927 ----------- ----------- $60,832,777 $48,971,079 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank indebtedness......................................... $ 1,978,277 $ -- Current portion of long-term subordinated notes........... 1,500,000 1,500,000 Current portion of capital lease obligations.............. 1,422,707 1,422,707 Current portion of long-term bank loans................... 1,297,564 799,619 Accounts payable.......................................... 16,927,795 14,630,715 Accrued liabilities....................................... 2,737,516 2,486,742 Accrued bonus............................................. 1,923,945 2,011,065 Income taxes payable...................................... 1,049,892 1,450,857 Line of credit............................................ 9,500,000 6,000,000 ----------- ----------- Total current liabilities................................. 38,337,696 30,301,705 Long-term subordinated notes, net of current portion........ 1,500,000 1,500,000 Capital lease obligations, net of current portion........... 1,140,681 1,540,553 Long-term bank loans, net of current portion................ 3,912,868 1,665,841 Deferred income tax liability............................... 510,959 510,959 ----------- ----------- Total liabilities........................................... 45,402,204 35,519,058 Shareholders' equity: Common stock, no par value: 20,000,000 shares authorized: 11,236,378 shares issued and 8,989,102 shares outstanding............................................ 2,297,640 2,297,640 Retained earnings......................................... 19,132,933 17,154,381 Treasury stock, 2,247,276 shares, at cost................. (6,000,000) (6,000,000) ----------- ----------- 15,430,573 13,452,021 ----------- ----------- $60,832,777 $48,971,079 =========== ===========

TWELVE-WEEK PERIODS ENDED MARCH 27, YEAR ENDED -------------------------- DECEMBER 31, 2000 1999 1999 ----------- ----------- ------------ (UNAUDITED) Net sales.......................................... $33,762,967 $21,581,690 $102,153,714 Cost of sales...................................... 28,674,213 18,224,280 85,193,291 ----------- ----------- ------------ Gross profit....................................... 5,088,754 3,357,410 16,960,423 Selling, general and administrative expenses....... 1,636,732 1,133,039 5,367,635 ----------- ----------- ------------ Income from operations............................. 3,452,022 2,224,371 11,592,788 Other income (expense): Interest income.................................. -- 23,459 84,583 Interest expense................................. (294,782) (220,926) (1,003,142) Other............................................ 140,346 186,512 250,935 ----------- ----------- ------------ 154,436 (10,955) (667,624) ----------- ----------- ------------ Income before income taxes......................... 3,297,586 2,213,416 10,925,164 Income taxes....................................... 1,319,034 958,409 3,988,501 ----------- ----------- ------------ Net income......................................... $ 1,978,552 $ 1,255,007 $ 6,936,663 =========== =========== ============

COMMON STOCK TOTAL ---------------------- RETAINED TREASURY SHAREHOLDERS' SHARES AMOUNT EARNINGS STOCK EQUITY --------- ---------- ----------- ----------- ------------- Balance as of December 31, 1998.... 8,989,102 $2,297,640 $10,217,718 $(6,000,000) $ 6,515,358 Net income for the year ended December 31, 1999................ -- -- 6,936,663 -- 6,936,663 --------- ---------- ----------- ----------- ----------- Balance as of December 31, 1999.... 8,989,102 2,297,640 17,154,381 (6,000,000) 13,452,021 Net income for the twelve-week period ended March 27, 2000 (unaudited)...................... -- -- 1,978,552 -- 1,978,552 --------- ---------- ----------- ----------- ----------- Balance as of March 27, 2000 (unaudited)...................... 8,989,102 $2,297,640 $19,132,933 $(6,000,000) $15,430,573 ========= ========== =========== =========== ===========

TWELVE-WEEK PERIODS ENDED MARCH 27, YEAR ENDED --------------------------- DECEMBER 31, 2000 1999 1999 ------------ ----------- ------------ (UNAUDITED) Cash flows from operating activities: Net income...................................... $ 1,978,552 $ 1,255,007 $ 6,936,663 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................ 1,081,936 889,259 3,646,410 Deferred income taxes........................ -- 333,885 (757,359) Changes in operating assets and liabilities: Accounts receivable.......................... 399,228 (247,503) (6,700,585) Inventories.................................. (10,283,801) (3,274,794) (12,422,154) Prepaid expenses and other current assets.... (79,983) (651,863) (356,487) Other assets................................. (111,212) (194,543) (82,625) Accounts payable and accrued liabilities..... 2,460,735 2,085,673 8,824,190 Income taxes payable......................... (400,965) (198,409) 1,034,040 ------------ ----------- ------------ Net cash used by operating activities........... (4,955,510) 393,530 122,093 Cash flows from investing activities: Purchases of property and equipment............. (5,508,221) 56,387 (3,108,131) Sale of investments............................. -- -- 230,147 ------------ ----------- ------------ Net cash used in investing activities........... (5,508,221) 56,387 (2,877,984) Cash flows from financing activities: Borrowings on line of credit.................... 3,500,000 1,000,000 6,000,000 Bank indebtedness............................... 1,978,277 -- -- Principal payments on notes payable............. -- -- (1,500,000) Principal payments under capital lease obligations.................................. (400,552) (485,589) (1,905,048) Principal payments/borrowings on bank loans..... 2,744,971 (54,787) (636,982) Borrowings under bank loans..................... -- -- 1,363,255 ------------ ----------- ------------ Net cash provided by financing activities....... 7,822,696 459,624 3,321,225 ------------ ----------- ------------ Net (decrease) increase in cash and cash equivalents..................................... (2,641,035) 909,541 565,334 Cash and cash equivalents, beginning of period.... 2,641,035 2,305,848 2,075,026 ------------ ----------- ------------ Cash and cash equivalents, end of period.......... $ -- $ 3,215,389 $ 2,640,360 ============ =========== ============ Supplemental disclosures of cash flow information: Cash paid during the period: Income taxes................................. $ 1,720,000 $ 760,000 $ 3,987,039 Interest..................................... 286,696 140,675 1,019,978

ASSETS PERIOD ------ ------ Leased equipment................................... 5 years Machinery and equipment............................ 5 years Furniture and equipment............................ 7 years Office equipment and computers..................... 3 - 5 years Vehicles........................................... 5 years Leasehold improvements............................. Shorter of useful life or lease term

CASH AND CASH SHORT-TERM EQUIVALENTS INVESTMENTS ------------- ----------- December 31, 1999: Cash.............................................. $2,627,884 $ -- Money market funds................................ 12,476 -- Available for sale -- mutual funds................ -- 675 ---------- ---- $2,640,360 $675 ========== ====

YEAR ENDED MARCH 27, DECEMBER 31, 2000 1999 ----------- ------------ Raw materials..................................... $18,648,055 $11,136,965 Work in progress.................................. 7,289,358 5,290,586 Finished goods.................................... 1,850,367 1,076,428 ----------- ----------- $27,787,780 $17,503,979 =========== ===========

YEAR ENDED MARCH 27, DECEMBER 31, 2000 1999 ----------- ------------ Leased equipment (note 9)......................... $11,075,896 $11,107,999 Machinery and equipment........................... 15,323,373 10,677,264 Furniture and equipment........................... 227,872 227,877 Office equipment and computers.................... 802,180 497,755 Vehicles.......................................... 213,592 213,591 Leasehold improvements............................ 1,347,498 757,709 ----------- ----------- 28,990,411 23,482,195 Less accumulated depreciation and amortization.... 14,988,804 13,906,873 ----------- ----------- Property and equipment, net....................... $14,001,607 $ 9,575,322 =========== ===========

YEAR ENDED MARCH 27, DECEMBER 31, 2000 1999 ---------- ------------ 7% subordinated notes payable in four annual installments of $1,500,000, including interest, payable annually through June 9, 2001............ $3,000,000 $3,000,000 Less current portion............................... 1,500,000 1,500,000 ---------- ---------- $1,500,000 $1,500,000 ========== ==========

MARCH 27, DECEMBER 31, 2000 1999 ----------- ------------ 2000.............................................. $ 1,291,071 $ 973,020 2001.............................................. 1,537,420 844,401 2002.............................................. 1,284,082 533,988 2003.............................................. 1,148,013 401,654 2004.............................................. 916,960 194,685 2005.............................................. 69,561 -- ----------- ---------- Total payments.......................... 6,247,107 2,947,748 Less amount representing interest (at rates ranging from 7.1% to 9.0%)...................... (1,036,675) (482,288) ----------- ---------- Principal of bank loans........................... 5,210,432 2,465,460 Less current portion of bank loan................. 1,297,564 799,619 ----------- ---------- $ 3,912,868 $1,665,841 =========== ==========

MARCH 27, DECEMBER 31, 2000 1999 ----------- ------------ Machinery and equipment........................... $11,075,896 $11,107,999 Less accumulated amortization..................... 8,133,533 7,624,282 ----------- ----------- $ 2,942,363 $ 3,483,717 =========== ===========

DECEMBER 31, 1999 ------------------------- CAPITAL OPERATING LEASES LEASES ---------- ----------- 2000............................................... $1,601,556 $ 1,366,333 2001............................................... 1,027,109 1,280,178 2002............................................... 513,183 1,145,731 2003............................................... 134,637 942,480 2004 and thereafter................................ -- 6,719,760 ---------- ----------- Total minimum lease payments............. 3,276,485 $11,454,482 =========== Less amount representing interest (at rates ranging from 8.5% to 11.5%).............................. 313,225 ---------- Present value of net minimum capital lease payments......................................... 2,963,260 ---------- Less current instalments of obligations under capital leases................................... 1,422,707 ---------- Obligation under capital leases, excluding current instalments...................................... $1,540,553 ==========

CURRENT DEFERRED TOTAL ---------- --------- ---------- December 31, 1999: Federal...................................... $3,960,022 $(357,286) $3,602,736 State........................................ 785,838 (400,073) 385,765 ---------- --------- ---------- $4,745,860 $(757,359) $3,988,501 ========== ========= ==========

PRO FORMA ADJUSTMENTS SOLECTRON C-MAC ----------- HISTORICAL HISTORICAL AS OF AS OF MAY 31, 2001 JUNE 30, 2001 COMBINED ------------ ------------- --------- ASSETS Current assets: Cash and cash equivalents and short-term investments.......................... $ 2,175.9 $ 183.4 $ $ 2,359.3 Accounts receivable, net................ 2,391.4 352.0 (8.1)(a) 2,735.3 Inventories............................. 4,201.7 291.3 6.4(b) 4,499.4 Prepaid expenses and other current assets............................... 312.7 36.5 349.2 --------- -------- --------- Total current assets............ 9,081.7 863.2 9,943.2 Net property plant and equipment........ 1,381.1 275.8 1,656.9 Goodwill, net........................... 1,985.2 719.1 1,111.0(c) 3,815.3 Other assets............................ 844.5 47.0 891.5 --------- -------- --------- Total assets............................ $13,292.5 $1,905.1 $16,306.9 ========= ======== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt......................... $ 337.6 $ -- $ $ 337.6 Accounts payable and accrued liabilities.......................... 2,364.2 193.2 (8.1)(a) 2,573.3 16.0(c) 8.0(d) Other current liabilities............... 146.3 26.3 172.6 --------- -------- --------- Total current liabilities............ 2,848.1 219.5 3,083.5 Long-term debt.......................... 4,977.2 208.1 5,185.3 Other long-term liabilities............. 57.2 22.3 79.5 --------- -------- --------- Total liabilities............... 7,882.5 449.9 8,348.3 Commitments Stockholders' equity: Common stock............................ 0.7 1,242.3 (1,242.3)(e) 0.8 0.1(e) Additional paid-in capital.............. 3,847.9 -- 2,550.4(e) 6,398.3 Retained earnings....................... 1,781.9 211.8 (211.8)(e) 1,781.9 Accumulated other comprehensive income............................... (220.5) 1.1 (1.1)(e) (220.5) Deferred compensation................... -- -- (1.9)(f) (1.9) --------- -------- --------- Total stockholders' equity...... 5,410.0 1,455.2 7,958.6 --------- -------- --------- Total liabilities and stockholders' equity.................................. $13,292.5 $1,905.1 $16,306.9 ========= ======== =========

PRO FORMA ADJUSTMENTS --------------------------------- C-MAC NEL SOLECTRON C-MAC NEL ------ ------ HISTORICAL PRO FORMA HISTORICAL NINE MONTHS NINE MONTHS FOUR MONTHS ENDED ENDED ENDED MAY 31, 2001 JUNE 30, 2001 DEC. 31, 2000 COMBINED ------------ ------------- ------------- --------- Net sales............................... $15,097.4 $1,558.5 $1,042.4 $(17.4)(a) $ $17,680.9 Cost of Sales........................... 13,818.8 1,307.3 1,006.4 (17.4)(a) 16,115.1 --------- -------- -------- --------- Gross Profit............................ 1,278.6 251.2 36.0 1,565.8 Operating expenses: Selling, general and administrative... 580.8 84.1 94.0 0.5(f) 0.1(l) 757. 5 (1.6)(i) (0.4)(j) Research and development.............. 55.8 36.5 0.3 92.6 Goodwill amortization expense......... 87.8 23.4 11.5 (23.4)(c) 49.8(h) 149.1 Acquisition costs..................... 29.5 -- -- 29.5 Restructuring and impairment.......... 310.3 -- -- 310.3 --------- -------- -------- --------- Operating income (loss)........... 214.4 107.2 (69.8) 226.8 Equity in income of equity affiliates... -- -- (1.0) (1.0) Interest income......................... 95.9 16.0 1.2 113.1 Interest expense........................ (128.0) (14.9) (12.3) (11.4)(l) (160.7) 5.9(j) Other income............................ -- -- (3.5) (3.5) --------- -------- -------- --------- Income (loss) before income taxes....... 182.3 108.3 (85.4) 174.7 Income tax expense...................... 55.5 39.1 1.2 2.8(g) (16.8)(m) 81.8 --------- -------- -------- --------- Income (loss) before minority interests............................. 126.8 69.2 (86.6) 92.9 Minority interests...................... -- (0.1) -- (0.1) --------- -------- -------- --------- Net income (loss)....................... $ 126.8 $ 69.1 $ (86.6) $ 92.8 ========= ======== ======== ========= Basic net income per share.............. $ 0.20 $ 0.12 ========= ========= Diluted net income per share............ $ 0.19 $ 0.11 ========= ========= Shares used to compute net income per share: Basic................................. 636.9 151.5 8.9(k) 797.3 ========= ====== ====== ========= Diluted............................... 653.1 152.7 8.9(k) 814.7 ========= ====== ====== =========

SOLECTRON C-MAC NEL HISTORICAL PRO FORMA HISTORICAL YEAR TWELVE MONTHS TWELVE MONTHS PRO FORMA ADJUSTMENTS ENDED ENDED ENDED ------------------------------------- AUG. 31, 2000 SEPTEMBER 30, 2000 JUNE 30, 2000 C-MAC NEL COMBINED ------------- ------------------ ------------- ------ ------ --------- Net sales......................... $14,137.5 $1,708.0 $2,121.3 $(7.6)(a) $ $17,959.2 Cost of Sales..................... 12,862.2 1,408.4 1,998.3 (7.6)(a) 16,261.3 --------- -------- -------- --------- Gross Profit...................... 1,275.3 299.6 123.0 1,697.9 Operating expenses: Selling, general and administrative................ 472.4 102.8 48.5 0.6(f) 0.7(l) 618.9 (4.8)(i) (1.3)(j) Research and development........ 60.8 29.1 12.1 102.0 Goodwill amortization........... 27.1 2.3 (27.1)(c) 197.4(h) 199.7 Acquisition and restructuring costs......................... 37.9 -- -- 37.9 --------- -------- -------- --------- Operating income.......... 704.2 140.6 60.1 739.4 Equity in income of equity affiliates...................... -- 1.0 1.0 Interest income................... 106.9 9.9 4.0 120.8 Interest expense.................. (71.6) (22.7) (21.0) (49.9)(l) (152.1) 13.1(j) Other income (expense)............ -- -- 0.1 0.1 --------- -------- -------- --------- Income before income taxes........ 739.5 127.8 44.2 709.2 Income tax expense................ 238.8 50.6 3.5 3.3(g) (61.4)(m) 234.8 --------- -------- -------- --------- Income before minority interests and cumulative effect of change in accounting principle......... 500.7 77.2 40.7 474.4 Minority interests................ -- (0.5) (1.8) (2.3) --------- -------- -------- --------- Net income before cumulative effect of change in accounting principle....................... 500.7 76.7 38.9 472.1 Cumulative effect of change in accounting principle............ (3.5) -- (3.5) --------- -------- -------- --------- Net income........................ $ 497.2 $ 76.7 $ 38.9 $ 468.6 ========= ======== ======== ========= Basic net income per share: Income before cumulative effect........................ $ 0.84 $ 0.60 Cumulative effect............... (0.01) -- --------- --------- Net income...................... $ 0.83 $ 0.60 ========= ========= Diluted net income per share: Income before cumulative effect........................ $ 0.80 $ 0.58 Cumulative effect............... -- -- --------- --------- Net income...................... $ 0.80 $ 0.58 ========= ========= Shares used to compute net income per share: Basic........................... 599.4 151.5 35.0(k) 785.9 ========= ====== ====== ========= Diluted......................... 623.5 152.7 35.0(k) 811.2 ========= ====== ====== =========

C-MAC C-MAC HISTORICAL KAVLICO DY 4 PROFORMA NINE MONTHS 51 DAYS 55 DAYS NINE MONTHS ENDED ENDED ENDED ENDED JUNE 30, NOVEMBER 20, NOVEMBER 24, JUNE 30, 2001 2000 2000 ADJUSTMENTS 2001 ----------- ------------ ------------ ----------- ----------- Net sales................................. $1,532.7 $22.6 $ 3.2 $ -- $1,558.5 Cost of sales............................. 1,286.4 18.4 2.5 -- 1,307.3 -------- ----- ----- ----- -------- Gross Profit.............................. 246.3 4.2 0.7 -- 251.2 Operating expenses: Selling, general and administrative..... 79.2 2.3 2.7 -- 84.2 Research and development................ 35.5 0.2 0.8 -- 36.5 Goodwill amortization expense........... 21.2 -- -- 2.2 23.4 -------- ----- ----- ----- -------- Operating income.......................... 110.4 1.7 (2.8) (2.2) 107.1 Interest income......................... 15.7 0.1 0.2 -- 16.0 Interest expense........................ (14.7) (0.1) (0.1) -- (14.9) -------- ----- ----- ----- -------- Income before income taxes................ 111.4 1.7 (2.7) (2.2) 108.2 Income taxes.............................. 39.1 -- -- -- 39.1 -------- ----- ----- ----- -------- Net income................................ $ 72.3 $ 1.7 $(2.7) $(2.2) $ 69.1 ======== ===== ===== ===== ========

C-MAC C-MAC HISTORICAL KAVLICO DY 4 A-PLUS PROFORMA TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS SIX MONTHS TWELVE MONTHS ENDED ENDED ENDED ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 29, MARCH 27, SEPTEMBER 30, 2000 2000 2000 2000 ADJUSTMENTS 2000 ------------- ------------- ------------- ---------- ----------- ------------- Net sales................. $1,418.5 $162.8 $58.7 $68.0 $ -- $1,708.0 Cost of sales............. 1,199.8 124.6 29.8 54.2 -- 1,408.4 -------- ------ ----- ----- ------ -------- Gross Profit.............. 218.7 38.2 28.9 13.8 -- 299.6 Operating expenses: Selling, general and administrative........ 70.7 14.6 13.2 4.8 -- 103.3 Research and development........... 20.4 1.9 6.8 -- -- 29.1 Goodwill amortization expense............... 8.7 -- -- -- 18.4 27.1 -------- ------ ----- ----- ------ -------- Operating income.......... 118.9 21.7 8.9 9.0 (18.4) 140.1 Interest income........... 8.6 0.3 1.0 -- -- 9.9 Interest expense.......... (21.0) (1.2) (0.1) (0.4) -- (22.7) -------- ------ ----- ----- ------ -------- Income before income taxes................... 106.5 20.8 9.8 8.6 (18.4) 127.3 Income taxes.............. 41.3 -- 2.7 2.9 3.7 50.6 -------- ------ ----- ----- ------ -------- Net income................ $ 65.2 $ 20.8 $ 7.1 $ 5.7 $(22.1) $ 76.7 ======== ====== ===== ===== ====== ========

NINE MONTHS ENDED YEAR ENDED MAY 31, 2001 AUGUST 31, 2000 ----------------- --------------- Net income adjustments: Pro forma net income under U.S. GAAP...................... $ 92.8 $ 468.6 Increases (decreases): Income statement impact of purchase accounting(a): Force................................................ (19.2) (25.6) SMART................................................ (146.2) (160.4) Americom............................................. (5.5) 0.9 Bluegum.............................................. (6.9) 6.4 Start-up costs(b)...................................... -- 5.1 Convertible debentures(c).............................. 2.2 2.0 Unrealized gains/losses on short-term investments(d)... 4.3 (2.6) Derivative financial instruments(e).................... (4.1) 0.2 Foreign currency exchange(f)........................... 0.7 0.6 Income taxes(h)........................................ (1.4) (5.9) --------- ---------- (176.1) (179.3) ========= ========== Pro forma net income (loss) under Canadian GAAP........... $ (83.3) $ 289.3 ========= ========== Pro forma basic net income (loss) per share(i)............ $ (0.10) $ 0.37 ========= ========== Pro forma diluted net income (loss) per share(i).......... $ (0.10) $ 0.36 ========= ==========

NINE MONTHS ENDED MAY 31, 2001 ----------------- Shareholders' equity adjustments: Shareholders' equity under U.S. GAAP.................................................... $ 7,958.6 Increases (decreases): Conversion from Pooling of Interests to Purchase Accounting(a): Conversion to purchase accounting upon acquisition................................. 2,361.5 Income statement impact of purchase accounting: Force........................................................................... (114.1) SMART........................................................................... (288.7) Americom........................................................................ (4.4) Bluegum......................................................................... (7.7) Start-up costs(b).................................................................... -- Convertible debentures(c)............................................................ 0.1 Equity portion of convertible debentures(c).......................................... 2,836.6 Unrealized gains/losses on short-term investments(d)................................. (0.5) Derivative financial instruments(e).................................................. (3.9) Foreign currency exchange(f)......................................................... 1.4 C-MAC purchase accounting(g)......................................................... (714.8) Income taxes(h)...................................................................... (2.0) 4,063.5 --------- Shareholders' equity under Canadian GAAP................................................ $12,022.1 =========

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