FLEXTRONICS INTERNATIONAL LTD, DEF 14A, 1997-09-15

FLEXTRONICS INTERNATIONAL LTD
DEF 14A, 1997-09-15
PRINTED CIRCUIT BOARDS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
FLEXTRONICS INTERNATIONAL LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

LOGO

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 14, 1997

To our Shareholders:

You are cordially invited to attend and NOTICE IS HEREBY GIVEN of the
Annual General Meeting of FLEXTRONICS INTERNATIONAL LTD. (the "Company") which
will be held at the Sheraton San Jose Hotel, 1810 Barber Lane, Milpitas,
California, United States of America, at 9:00 a.m., California time on October
14, 1997 for the following purposes:

As Ordinary Business

1. To re-elect Tsui Sung Lam who will retire pursuant to Article 95 of the
Articles of Association of the Company, to the Board of Directors:

2. To receive and adopt the Audited Accounts of the Company for the fiscal
year ended March 31, 1997 together with the Reports of the Directors and
Auditors thereon.

3. To consider and vote upon a proposal to appoint Arthur Anderson as
independent auditors for the Company for the fiscal year ending March 31, 1998
in place of the retiring auditors, Ernst & Young, and to authorize the Directors
to fix their remuneration.

As Special Business

4. To pass the following resolution as an Ordinary Resolution:

RESOLVED THAT approval be and is hereby given for the Company's 1993 Share
Option Plan (the "1993 Plan") to be amended to increase the maximum number of
Ordinary Shares authorized for issuance under the 1993 Plan from 2,000,000
Ordinary Shares to 2,600,000 Ordinary Shares and that an additional 600,000
Ordinary Shares be reserved for issuance under the 1993 Plan, and that such
Ordinary Shares, when issued and paid for in accordance with the terms of the
1993 Plan, shall be validly issued, fully paid and nonassessable Ordinary Shares
in the capital of the Company.

5. To pass the following resolution as an Ordinary Resolution:

RESOLVED THAT approval be and is hereby given for adoption of the Company's
1997 Employee Share Purchase Plan (the "Share Purchase Plan"), a summary of
which is set out in the Proxy Statement dated August 18, 1997, and that the
aggregate maximum number of Ordinary Shares authorized for issuance under the
Share Purchase Plan be 75,000 Ordinary Shares and that such Ordinary Shares,
when issued and paid for in accordance with the terms of the Share Purchase
Plan, shall be validly issued, fully paid and nonassessable Ordinary Shares in
the capital of the Company, and that the Board of Directors be and are hereby
authorized to:

(a) establish and administer the Share Purchase Plan;

(b) modify and/or amend the Share Purchase Plan from time to time provided
that such modification and/or amendment is effected in accordance with
the provisions of the Share Purchase Plan and to do all such acts and
to enter into all such transactions, arrangements and agreements as may
be necessary or expedient in order to give full effect to the Share
Purchase Plan; and
<PAGE> 3

(c) offer and grant options in accordance with the provisions of the Share
Purchase Plan and to allot and issue from time to time such number of
Ordinary Shares in the capital of the Company as may be required to be
issued pursuant to the exercise of the options under the Share Purchase
Plan.

6. To pass the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 161 of the Companies
Act, Cap. 50, and notwithstanding the provisions of Article 46 of the Articles
of Association of the Company but subject otherwise to the provisions of that
Act and the Articles of Association of the Company, the Board of Directors be
and are hereby authorized to allot and issue, or grant options in respect of,
Ordinary Shares in the capital of the Company or to allot and issue such shares
in the capital of the Company pursuant to the exercise of any option granted in
respect thereof to such persons on such terms and conditions and with such
rights or restrictions as they may think fit to impose and as are set forth in
the Articles of Association of the Company aforesaid and that such authority
shall continue in force until the conclusion of the next Annual General Meeting
or the expiration of the period within which the next Annual General Meeting of
the Company is required by law to be held, whichever is the earlier.

As Ordinary Business

7. To transact any other business as may properly be transacted at any
Annual General Meeting.

The Board of Directors has fixed the close of business on August 18, 1997
as the record date for determining those shareholders who will be entitled to
receive copies of this Notice and accompanying Proxy Statement. However, holders
of record on October 14, 1997 will be entitled to vote at the Annual General
Meeting.

A shareholder (member) entitled to attend and vote at the Annual General
Meeting is entitled to appoint a proxy to attend and vote on his or her behalf.
A proxy need not also be a shareholder (member). Representation of at least 33
1/3% of all outstanding Ordinary Shares of Flextronics International Ltd. is
required to constitute a quorum. Accordingly, it is important that your shares
be represented at the meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. An instrument appointing a proxy must be left at the
registered office of the Company located at 36, Robinson Road, #18-01, City
House, Singapore 068877 or at Boston EquiServe, P.O. Box 8040, Boston, MA 02266-
8040, United States of America not less than forty-eight (48) hours before the
time appointed for holding the meeting. Your proxy may be revoked at any time
prior to the time it is voted.

By Order of the Board of Directors,

Yap Lune Teng
Joint Secretary

Singapore
September 12, 1997
<PAGE> 4

SHAREHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT CAREFULLY PRIOR TO RETURNING
THEIR PROXIES

PROXY STATEMENT
FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF
FLEXTRONICS INTERNATIONAL LTD.

TO BE HELD ON OCTOBER 14, 1997

This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Flextronics International Ltd. (the "Company") of
proxies to be voted at the Annual General Meeting which will be held at 9:00
a.m., California time on October 14, 1997 at the Sheraton San Jose Hotel, 1810
Barber Lane, Milpitas, California in the United States of America, or at any
adjournments or postponements thereof, for the purposes set forth in the
accompanying Notice of Annual General Meeting. This Proxy Statement and the
proxy card were first mailed on or about September 12, 1997 to shareholders of
record on August 18, 1997. The entire cost of soliciting proxies will be borne
by the Company.

VOTING RIGHTS AND SOLICITATION OF PROXIES

The close of business on August 18, 1997 was the record date for
shareholders entitled to notice of the Annual General Meeting. As of that date,
the Company had 13,771,447 Ordinary Shares, S$0.01 par value per share (the
"Ordinary Shares"), issued and outstanding. All of the Ordinary Shares issued
and outstanding on October 14, 1997 are entitled to vote at the Annual General
Meeting, and shareholders of record on October 14, 1997 entitled to vote at the
meeting will on a poll have one (1) vote for each Ordinary Share so held on the
matters to be voted upon.

Ordinary Shares represented by proxies in the accompanying form which are
properly executed and returned to the Company will be voted at the Annual
General Meeting in accordance with the shareholders' instructions contained
therein. The affirmative vote of the holders of a majority of the issued shares
present and voting in person or by proxy at the Annual General Meeting is
required to re-elect the director nominated pursuant to Proposal No. 1, to
approve Proposal Nos. 2 and 3, and to approve the ordinary resolutions in
Proposal Nos. 4, 5 and 6. Abstentions and broker non-votes are each included in
the determination of the number of shares present for quorum purposes. Neither
abstentions nor broker non-votes are counted in tabulations of the votes cast on
proposals presented to shareholders.

In the absence of contrary instructions, shares represented by proxies will
be voted FOR Proposal Nos. 1, 2, 3, 4, 5 and 6. Management does not know of any
matters to be presented at this Annual General Meeting other than those set
forth in this Proxy Statement and in the Notice accompanying this Proxy
Statement. If other matters should properly come before the meeting, the proxy
holders will vote on such matters in accordance with their best judgment. Any
shareholder of record has the right to revoke his or her proxy at any time prior
to voting at the Annual General Meeting by submitting a subsequently dated proxy
or by attending the meeting and voting in person. To be effective, a proxy must
be deposited at the registered office of the Company located at 36 Robinson Road
#18-01, City House, Singapore 068877 or at Boston EquiServe, P.O. Box 8040,
Boston, MA 02266-8040, United States of America, at least forty-eight (48) hours
before the time set for the Annual General Meeting.

The Company has prepared, in accordance with Singapore law, Singapore
dollar financial statements to be distributed as part of this Proxy Statement.
Except as otherwise stated herein, all monetary amounts in this Proxy Statement
have been presented in U.S. dollars.
<PAGE> 5

PROPOSAL 1:

RE-ELECTION OF DIRECTOR

At each Annual General Meeting at least one-third (1/3) of the Directors
(or, if their number is not a multiple of three (3), the number nearest to but
not less than one-third (1/3)) are required to retire from office. The Directors
required to retire in each year are those who have been in office longest since
their last re-election or appointment. As between persons who became or were
last re-elected Directors on the same day, those required to retire are (unless
they otherwise agree among themselves) determined by lot. At the 1997 Annual
General Meeting, Messrs. Tsui Sung Lam and Bernard J. Lacroute will retire from
office. Retiring Directors are eligible for re-election, however Mr. Bernard J.
Lacroute has declined to stand for re-election at the 1997 Annual General
Meeting. The Board of Directors also wishes to inform the shareholders that Mr.
Robert R. B. Dykes, who resigned as a Director of the Company with effect from
August 19, 1997, became the Senior Vice President of Finance and Administration
in February 1997 and will continue in that capacity in lieu of being a Director
of the Company. As set forth below, Mr. Tsui Sung Lam is eligible for
re-election and has been nominated to stand for re-election at the 1997 Annual
General Meeting. In addition, the Company anticipates that additional
non-employee directors will be appointed following the 1997 Annual General
Meeting. The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominee for Director listed below. In the event any
nominee is unable or declines to serve as a Director at the time of the Annual
General Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors, in accordance with Article 100 of
the Articles of Association of the Company, to fill the vacancy. In the event
that additional persons are nominated for election as Directors, in accordance
with Article 100 of the Articles of Association of the Company, the proxy
holders intend to vote all proxies received by them for the nominee listed
below. Except as provided above, as of the date of this Proxy Statement, the
Board of Directors is not aware of any nominee who is unable or will decline to
serve as a Director.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the issued shares
present and voting in person or by proxy at the Annual General Meeting is
required to re-elect Mr. Tsui. Abstentions and broker non-votes are each
included in the determination of the number of shares present for quorum
purposes. Neither abstentions or broker non-votes are counted in the tabulation
of the votes cast on the re-election of Mr. Tsui.

THE BOARD RECOMMENDS A VOTE FOR THE RE-ELECTION OF MR. TSUI TO THE BOARD OF
DIRECTORS.

NOMINEE TO BOARD OF DIRECTORS

Tsui Sung Lam (age 47) -- Mr. Tsui has been the Company's President,
Asia-Pacific Operations since April 1997, and a Director since 1991. From
January 1994 to April 1997, he served as the Company's President and Chief
Operating Officer. From June 1990 to December 1993, he was the Company's
Managing Director and Chief Executive Officer. From 1982 to June 1990, Mr. Tsui
served in various positions for Flextronics, Inc., the Company's predecessor,
including Vice President of Asian Operations. Mr. Tsui received Diplomas in
Production Engineering and Management Studies from Hong Kong Polytechnic, and a
Certificate in Industrial Engineering from Hong Kong University.

DIRECTORS NOT STANDING FOR RE-ELECTION

Michael E. Marks (age 46) -- Mr. Marks has been the Company's Chief
Executive Officer since January 1994 and its Chairman of the Board since July
1993. He has been a Director of the Company since December 1991. From November
1990 to December 1993, Mr. Marks was President and Chief Executive Officer of
Metcal, Inc., a precision heating instrument company ("Metcal"). Mr. Marks
received a B.A. and M.A. from Oberlin College and an M.B.A. from the Harvard
Business School.

Stephen J. L. Rees (age 36) -- Mr. Rees has served as a Director of the
Company since April 1996, as Senior Vice President, Worldwide Sales and
Marketing since March 1997, and as Chairman and Chief

2
<PAGE> 6

Executive Officer of Astron Group Limited ("Astron") since the acquisition of
Astron by the Company in February 1996. Mr. Rees has been Chairman and Chief
Executive Officer of Astron since November 1991. Mr. Rees holds a B.A. in
Finance from the City of London Business School and graduated in Production
Technology and Mechanical Engineering from the HTL St. Polten Technical
Institute in Austria.

Richard L. Sharp (age 50) -- Mr. Sharp has served as a Director of the
Company since July 1993. He has been the Chairman, President, Chief Executive
Officer and a director of Circuit City Stores, Inc., a consumer electronics and
appliances retailer, since June 1986. Mr. Sharp also serves as a director of S&K
Famous Brands, Inc. and the James River Corporation.

Bernard J. Lacroute (age 53) -- Mr. Lacroute has served as a Director of
the Company since July 1993. Mr. Lacroute has been a partner of Kleiner Perkins
Caufield & Byers, a Northern California venture capital firm, since 1989. Mr.
Lacroute also serves as a director of several privately-held companies.

Michael J. Moritz (age 42) -- Mr. Moritz has served as a Director of the
Company since July 1993. Mr. Moritz has been a General Partner of Sequoia
Capital, a venture capital firm, since 1988. Mr. Moritz also serves as a
director of Yahoo, Inc., Neomagic and several privately-held companies.

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company held a total of sixty-four (64)
meetings during fiscal 1997. Forty-four (44) of these meetings were held solely
for the purpose of approving the allotment of Ordinary Shares of the Company in
connection with employee stock option exercises, as required under Singapore
law, and were not attended by the full Board of Directors. During the period for
which each current Director was a Director or a committee member, all Directors
except Messrs. Moritz, Dykes, Lacroute, Sharp and Rees attended at least 75% of
the aggregate of (i) the total number of meetings of the Board and (ii) the
total number of meetings held by all committees of the Board on which he served.
Of the twenty (20) meetings held primarily for purposes other than the approval
of allotments of Ordinary Shares of the Company in connection with employee
stock option exercises, all Directors, except for Messrs. Moritz, Dykes,
Lacroute, Sharp and Rees, attended at least 75% of the aggregate of the total
number of meetings of the Board and the total number of meetings held by all
committees of the Board on which he served.

The Board of Directors has created an Audit Committee and a Compensation
Committee of the Board. During fiscal 1997, Mr. Dykes served on both the Audit
Committee and the Compensation Committee. Mr. Dykes resigned from both
committees upon becoming Senior Vice President of Finance and Administration of
the Company in February 1997. Mr. Lacroute replaced Mr. Dykes as a member of the
Audit Committee and Mr. Moritz replaced Mr. Dykes as a member of the
Compensation Committee. The Audit Committee is currently composed of Mr.
Lacroute and Mr. Moritz and is charged with reviewing the Company's annual audit
and meeting with the Company's independent accountants to review the Company's
internal controls and financial management practices. The Compensation
Committee, which is currently composed of Mr. Sharp and Mr. Moritz, recommends
to the Board of Directors compensation for the Company's key employees and
administers the employee share option plans. The Audit Committee held one (1)
meeting in fiscal 1997 and the Compensation Committee held eight (8) meetings in
fiscal 1997. There is no nominating committee or a committee performing the
functions of a nominating committee.

DIRECTOR REMUNERATION

On the date of each Annual General Meeting, each individual who is at that
time serving as a non-employee Director and who does not reside in Singapore
receives stock options pursuant to the automatic option grant provisions of the
Company's 1993 Share Option Plan. Pursuant to this program, Messrs. Sharp,
Dykes, Lacroute and Moritz each received option grants for 3,000 Ordinary Shares
in fiscal 1997. In addition, all Directors receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with meetings of the Board of
Directors. No non-employee Director receives any cash compensation for services
rendered as a Director. No Director who is an employee of the Company receives
compensation for services rendered as a Director.

3
<PAGE> 7

EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth information concerning the compensation paid
or accrued by the Company for services rendered during fiscal 1997, 1996 and
1995 by the Chief Executive Officer and each of the four most highly compensated
executive officers as of March 31, 1997 whose total salary and bonus for fiscal
1997 exceeded $100,000 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------------ ------ -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks........ 1997 $300,000 $ 80,400 $234,052(1) 250,000 $ 8,351(2)
Chairman of the Board 1996 $275,000 $132,500 -- 150,000 $ 10,209(3)
and Chief Executive 1995 $250,000 $ 45,750 -- 25,000 $ 9,170(4)
Officer
Tsui Sung Lam........... 1997 $256,791 $ 87,180 -- 20,000 $ 28,757(5)
President, 1996 $249,176 $143,313 -- 40,000 $ 39,988(6)
Asia-Pacific
Operations 1995 $216,028 $ 67,533 -- -- $ 18,288(7)
Michael McNamara........ 1997 $199,999 $ 30,642 $ 5,337(8) 21,000 $ 3,958(9)
Vice President, 1996 $173,250 $ 53,626 -- 15,000 --
President
of U.S. Operations 1995 $165,000 $ 15,468 -- -- --
Dennis Stradford(10).... 1997 $191,100 $ 33,634 -- -- $ 8,290(11)
Senior Vice President, 1996 $191,100 $ 65,066 -- 13,000 $ 9,419(12)
Sales and Marketing 1995 $182,000 $ 45,018 -- -- $ 8,800(13)
Goh Chan Peng(14)....... 1997 $174,283 $ 44,870 -- 16,000 $ 24,449(15)
Senior Vice President of 1996 $163,718 $ 65,976 -- 15,000 $ 24,217(16)
Finance and 1995 $134,193 $ 49,544 -- -- $ 14,122(17)
Operations,
Asia-Pacific
</TABLE>

- ---------------

(1) Includes an auto allowance of $7,712, forgiveness of a promissory note due
to a subsidiary of the Company of $200,000 and forgiveness of interest
payment of $26,340 on the promissory note payable to a subsidiary of the
Company.

(2) Includes Company contributions to the Company's 401(k) plan of $4,750 and
life and disability insurance premium payments of $3,601.

(3) Includes Company contributions to the Company's 401(k) plan of $4,370 and
life and disability insurance premium payments of $5,839.

(4) Includes Company contributions to the Company's 401(k) plan of $4,520 and
life insurance premium payments of $4,650.

(5) Includes life insurance payments of $736 and Company contributions to the
Central Provident Fund of $28,021. The Central Provident Fund is a
Singapore statutory savings plan to which contributions may be made to
provide for employees' retirement.

(6) Includes life insurance payments of $736 and Company contributions to the
Central Provident Fund of $39,252.

(7) Includes life insurance premium payments of $671 and Company contributions
to the Central Provident Fund of $17,617.

(8) Represents forgiveness of interest payment due on a promissory note payable
to a subsidiary of the Company.

(9) Represents Company contributions to the Company's 401(k) plan.

(10) Mr. Stradford was the Company's Vice President, Sales and Marketing through
April 1997. Mr. Stradford is now responsible for sales in Europe and is no
longer deemed an executive officer of the Company.

4
<PAGE> 8

(11) Includes Company contributions to the Company's 401(k) plan of $4,750 and
life insurance premium payments of $3,540.

(12) Includes Company contributions to the Company's 401(k) plan of $3,832 and
life insurance premium payments of $5,587.

(13) Includes Company contributions to the Company's 401(k) plan of $5,460 and
life insurance premium payments of $3,340.

(14) Mr. Goh was the Company's Chief Financial Officer for fiscal 1997. Mr. Goh
is no longer deemed an executive officer of the Company.

(15) Includes life insurance payments of $736 and Company contributions to the
Central Provident Fund of $23,713.

(16) Includes life insurance premium payments of $736 and Company contributions
to the Central Provident Fund of $23,481.

(17) Includes life insurance premium payments of $671 and Company contributions
to the Central Provident Fund of $13,451.

OPTION GRANT TABLE

The following table sets forth information regarding option grants during
fiscal 1997 to each of the Named Executive Officers. All options were granted
pursuant to the Company's 1993 Share Option Plan. In accordance with the rules
of the Securities and Exchange Commission, the table sets forth the hypothetical
gains or "option spreads" that would exist for the options at the end of their
respective five-year terms. These gains are based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the option was
granted to the end of the option term.

OPTION GRANTS IN FISCAL 1997

<TABLE>
<CAPTION>
PERCENTAGE POTENTIAL REALIZABLE
NUMBER OF OF TOTAL VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE
OPTIONS EMPLOYEES PRICE PER EXPIRATION APPRECIATION FOR
NAME GRANTED(1) IN 1997 SHARE(2) DATE OPTION TERM(3)
- ------------------------------- ----------- ----------- --------- ---------- -----------------------
5% 10%
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks............... 250,000 34.7% $ 23.125 11/08/01 $1,597,244 $3,529,511
Tsui Sung Lam.................. 20,000 2.8% $ 23.125 11/08/01 127,780 282,361
Michael McNamara............... 1,000 0.1% $ 19.75 08/27/01 5,457 12,058
20,000 2.1% $ 23.125 11/08/01 127,780 282,361
Dennis P. Stradford............ -- -- -- -- -- --
Goh Chan Peng.................. 1,000 0.1% $ 19.75 08/27/01 5,457 12,058
15,000 2.1% $ 23.125 11/08/01 95,835 211,771
</TABLE>

- ---------------

(1) The options shown in the table were granted at fair market value, are
incentive stock options and will expire five years from the date of grant,
subject to earlier termination upon termination of the optionee's
employment. The options become exercisable over a four-year period, with 25%
of the shares vesting on the first anniversary of the date of grant and
1/36th of the shares vesting for each full calendar month that an optionee
renders services to the Company thereafter. All of the options shown in the
table will become immediately exercisable for all of the option shares in
the event the Company is acquired by merger or sale of substantially all of
the Company's assets or outstanding Ordinary Shares, unless the options are
assumed or otherwise replaced by the acquiring entity. The Compensation
Committee has authority to provide for the acceleration of each option in
connection with certain hostile tender offers or proxy contests for Board
membership. Each option includes a limited stock appreciation right pursuant
to which the option will automatically be canceled upon the occurrence of
certain hostile tender offers, in return for a cash distribution from the
Company based on the tender offer price per share. In the case of Messrs.
Tsui and Goh, all of the options shown in the table will become immediately
exercisable in the event of termination of employment for any reason.

(2) The exercise price of the option may be paid in cash or through a cashless
exercise procedure involving a same-day sale of the purchased shares.

(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% rates of share price appreciation are mandated by rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of future Ordinary Share prices.

5
<PAGE> 9

YEAR-END OPTION TABLE

The following table sets forth certain information concerning the exercise
of options by each of the Named Executive Officers during fiscal 1997, including
the aggregate amount of gains on the date of exercise. In addition, the table
includes the number of shares covered by both exercisable and unexercisable
stock options as of March 31, 1997. Also reported are values of "in-the-money"
options that represent the positive spread between the respective exercise
prices of outstanding stock options and $19.875 per share, which was the closing
price of the Company's Ordinary Shares as reported on the Nasdaq National Market
on March 31, 1997, the last day of trading for fiscal 1997.

AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND YEAR-END VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END(2) FISCAL YEAR-END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(1) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Marks............ 10,000 286,700 132,002 349,998 1,196,977 692,213
Tsui Sung Lam............... 10,000 310,800 63,355 43,645 830,253 150,482
Michael McNamara............ -- -- 30,418 35,582 403,468 114,257
Dennis P. Stradford......... 16,000 416,648 6,105 6,895 44,970 52,915
Goh Chan Peng............... -- -- 35,230 27,770 502,256 70,529
</TABLE>

- ---------------

(1) "Value Realized" represents the fair market value of the Company's Ordinary
Shares underlying the option on the date of exercise less the aggregate
exercise price of the option.

(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized and are based on the
positive spread between the respective exercise prices of outstanding
options and the closing price of the Company's Ordinary Shares on March 31,
1997, the last day of trading for fiscal 1997.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee during fiscal 1997 were Mr. Dykes
and Mr. Sharp. Mr. Dykes resigned his position on the Compensation Committee
upon becoming an officer of the Company in February 1997. The current members of
the Compensation Committee are Mr. Sharp and Mr. Moritz. No officers of the
Company serve on the Compensation Committee.

EMPLOYMENT AND CONSULTING AGREEMENTS

In July 1993, the Company entered into employment agreements with Messrs.
Tsui and Goh. Under these agreements, Messrs. Tsui and Goh were entitled to
receive an annual salary (in Singapore dollars) of S$344,539 and S$207,103,
respectively. In April 1997, the Compensation Committee increased the base
salaries (in Singapore dollars) of Messrs. Tsui and Goh to S$429,000 and
S$304,499, respectively. In addition, the Company entered into revised
employment agreements with Messrs. Tsui and Goh as President, Asia Pacific
Operations and Senior Vice President of Finance and Operations, Asia Pacific,
respectively, effective April 1, 1997. Pursuant to the new employment
agreements, the employment of Messrs. Tsui and Goh will continue until either
the Company or the employee gives the other 12 months' notice of termination (or
pays the other 12 months' base salary in lieu of notice). The Company is
required to pay one month's salary for each year of employment by Messrs. Tsui
and Goh upon termination of their respective employment by the Company. The
Company also agreed that upon termination of employment of Messrs. Tsui or Goh
by the Company for any reason, any options to purchase Ordinary Shares then held
by them would immediately vest and become exercisable for all of the shares
subject to such option.

In connection with the Company's acquisition of Astron, Astron Technologies
Limited, a subsidiary of the Company ("ATL"), entered into a Services Agreement
(the "Services Agreement") with Croton Technology Ltd., a company under the
management and control of Mr. Rees ("Croton"), and Astron entered into a
Supplemental Services Agreement (the "Supplemental Services Agreement") with Mr.
Rees. Under

6
<PAGE> 10

the terms of the Services Agreement, Mr. Rees acted as President of ATL, and
Croton was responsible for developing the business of ATL through June 1998. The
Services Agreement provided that Croton will receive (i) a payment of $15
million on June 30, 1998, $5 million of which was to be payable in cash and $10
million of which was to be payable in cash or the Ordinary Shares of the Company
at the option of the Company and (ii) an annual fee in the amount of $90,000.
Payment of the $15 million lump sum payment was conditioned upon, among other
things, Mr. Rees' continuing as Chairman of Astron through June 1998. The
Services Agreement was to terminate on June 30, 1998 but may be terminated for
cause under the terms described therein. Pursuant to the terms of the
Supplemental Services Agreement, Mr. Rees acted as Chairman of Astron and was
responsible for maintaining and developing the business of Astron, and, in
exchange, received an annual salary of $140,000. The Supplemental Services
Agreement was to terminate on June 30, 1998.

Effective March 27, 1997, the Company revised the Services Agreement and
the Supplemental Services Agreement, and appointed Mr. Rees as the Company's
Senior Vice President - Worldwide Sales and Marketing. In connection with this
revision, the amount of the payment due on June 30, 1998 was reduced from $15
million to $14 million and the remaining conditions to the Company's payment of
the fee were removed. Of the $14 million, $5 million remains payable in cash,
and $9 million remains payable in cash or, at the option of the Company, in
Ordinary Shares. This reduction was negotiated in view of (i) a negotiated
settlement in March 1997 of the amount of the earnout payable by the Company to
the former shareholders of Astron in which the Company agreed to certain
matters, previously in dispute affecting the amount of the earnout payment, and
(ii) the elimination of the conditions to payment and of Mr. Rees' ongoing
obligations under the Services Agreement and the Supplemental Services
Agreement.

In connection with the acquisition of two manufacturing facilities from
Ericsson Business Networks AB located in Karlskrona, Sweden, the Company and Mr.
Ronny Nilsson entered into an Employment and Noncompetition Agreement
("Employment Agreement") and a Services Agreement (the "Nilsson Services
Agreement"), both dated as of April 30, 1997. Pursuant to the Employment
Agreement, Mr. Nilsson (a) was appointed as the Company's Senior Vice President,
Europe for a four-year period, (b) receives an annual salary of $250,000, and
(c) is entitled to a bonus of up to 45% of his annual salary upon the successful
completion of certain performance criteria. Pursuant to the Nilsson Services
Agreement, Mr. Nilsson is to perform management consultation and guidance
services to the Company in consideration of (a) an aggregate of $775,000 to be
paid between March 31, 1997 and April 15, 1998, and (b) the issuance by the
Company to Mr. Nilsson of an interest-free loan in the amount of $415,000 to be
repaid by Mr. Nilsson in two installments of $210,000 and $205,000 on September
15, 1997 and April 15, 1998, respectively.

7
<PAGE> 11

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 which might incorporate future filings made by the Company under those
statutes, the following Compensation Committee Report on Executive Compensation
and the Performance Graph will not be incorporated by reference into any of
those prior filings; nor will such report or graph be incorporated by reference
into any future filings made by the Company under those statutes.

The Compensation Committee (the "Committee") of the Board of Directors sets
the base salary of the Company's executive officers and approves individual
bonus programs for executive officers. Option grants to executive officers are
also made by the Committee, and the Committee has complete discretion in
establishing the terms of each such grant. The following is a summary of
policies of the Company that affect the compensation paid to executive officers,
as reflected in the tables and text set forth elsewhere in this Proxy Statement.

GENERAL COMPENSATION POLICY

The Company's overall policy is to offer its executive officers cash-based
and equity-based compensation opportunities based upon their personal
performance, the financial performance of the Company and their contribution to
that performance. One of the Company's primary objectives is to have a
significant portion of each officer's compensation contingent upon the Company's
performance as well as upon his or her own level of performance. The principal
factors taken into account in establishing each executive officer's compensation
package are summarized below. Additional factors may be taken into account to a
lesser degree, and the relative weight given to each factor varies with each
individual in the discretion of the Committee. The Committee may in its
discretion apply entirely different factors, such as different measures of
financial performance, for future fiscal years.

Cash Based Compensation. The Company sets base salary for executive
officers on the basis of personal performance and internal comparability
considerations. Bonuses are paid at the discretion of the Committee. In
determining the amount of the bonus to be paid to each executive officer,
including the Chief Executive Officer, the Company first establishes a
percentage of the officers' base salary as a target bonus. The amount of the
actual bonus paid to the officer can be greater or less than this percentage,
and depends on the Company's net income, the performance of the operations of
the Company that are under the officer's supervision and other performance
factors, each as compared to budgeted performance for the period. The Company
also has a 401(k) retirement savings plan for U.S. employees to which it can
contribute a portion of profits and such contribution is allocated to eligible
participants in proportion to their total compensation for the year relative to
the total aggregate compensation for all eligible participants. The Company
believes that all employees share the responsibility of achieving profits.

Long-Term Equity-Based Compensation. The Committee intends to make stock
option grants from time to time. Each grant is designed to align the interests
of the executive officer with those of the shareholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire the Company's Ordinary Shares at a fixed
price per share (the market price on the grant date) over a specified period of
time (up to five (5) years), thus providing a return to the officer only if he
or she remains in the employ of the Company and the market price of the shares
appreciates over the option term. The size of the option grant to each executive
officer generally is set at a level that is intended to create a meaningful
opportunity for share ownership based upon the individual's current position
with the Company, but there is also taken into account the individual's
potential for future responsibility and promotion over the option term, the
individual's personal performance in recent periods and the number of options
held by the individual at the time of grant. The relative weight given to these
factors varies with each individual in the sole discretion of the Committee.

8
<PAGE> 12

CEO Compensation. Mr. Marks' base salary is based on the Company's
expectation of his personal performance and comparisons to the base salaries of
other executive officers of the Company. With respect to Mr. Marks' base salary,
it is the Company's intent to provide him with a level of stability and
certainty each year and not have this particular component of compensation
affected to any significant degree by Company performance factors. In fiscal
1997, the Committee granted Mr. Marks options for 250,000 Ordinary Shares at an
exercise price of $23.125 per share. The Committee based its decision regarding
the size of the option grant to Mr. Marks, in part on a survey of the number of
options held by chief executive officers of comparable companies. The Committee
determined that Mr. Marks had substantially fewer options than the chief
executive officers of comparable companies. The Committee decided that given Mr.
Mark's position as chief executive officer of the Company it was important to
set the size of the option grant at a level that is competitive with comparable
companies to create a meaningful opportunity for share ownership in the Company.

Deduction Limit for Executive Compensation. Section 162(m) of the Internal
Revenue Code ("Section 162(m)") limits federal income tax deductions for
compensation paid to the chief executive officer and the four other most highly
compensated officers of a public company to $1 million per year, but contains an
exception for performance-based compensation that satisfies certain conditions.

The Company believes that stock options granted to its executives qualify
for the performance-based exception to the deduction limit and because it is
unlikely that other compensation payable to any Company executive would exceed
the deduction limit in the near future the Committee has not yet qualified
compensation other than options for the performance-based exception. In
approving the amount and form of compensation for Company executives, the
Committee will continue to consider all elements of cost to the Company of
providing that compensation.

Submitted by the Compensation Committee of the Company's Board of
Directors:

Richard L. Sharp

Robert R.B. Dykes (Member until
February 1997)

Michael J. Moritz (Member from
February 1997)

9
<PAGE> 13

PERFORMANCE GRAPH

The following performance graph shows the percentage change in cumulative
total return to a holder of the Company's Ordinary Shares, assuming $100
invested, compared with the cumulative total return, assuming dividend
reinvestment, of the Standard & Poor's 500 Stock Index and the peer group
indicated below, during the period from March 18, 1994 (the date of the
Company's initial public offering) through March 31, 1997.

The comparisons in the graph below are based on historical data and are not
indicative of, or intended to forecast, the possible future performances of the
Company's Ordinary Shares.

COMPARISON OF 36 MONTH CUMULATIVE TOTAL RETURN*
AMONG FLEXTRONICS INTERNATIONAL LTD., THE S&P 500 INDEX AND A PEER GROUP

<TABLE>
<CAPTION>
Flextronics
Measurement Period International,
(Fiscal Year Covered) Inc. Peer Group S & P 500
<S> <C> <C> <C>
3/18/94 100 100 100
3/94 89 88 95
3/95 98 85 109
3/96 218 137 144
3/97 142 185 173
</TABLE>

* $100 invested on 03/18/94 in Ordinary Shares, Peer Group or
Index -- including reinvestment of dividends. Fiscal year ending March 31.

10
<PAGE> 14

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Ordinary Shares and other equity securities of the
Company. Additionally, officers, Directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.

Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the year ended March 31, 1997
with all Section 16(a) filing requirements applicable to the Company's officers,
Directors and greater than ten-percent (10%) beneficial owners.

NEW PLAN BENEFITS

The amount of future option grants under the Discretionary Option Grant
Program of the 1993 Share Option Plan (the "1993 Plan") to (i) the Company's
Chief Executive Officer; (ii) the Company's Named Executive Officers; (iii) all
current executive officers as a group; and (iv) all employees, including all
officers who are not executive officers, as a group, are not determinable
because, under the terms of the Discretionary Option Grant Program of the 1993
Plan (as more fully described under "Proposal 4"), such grants are made in the
discretion of the Plan Administrator or its designees. Future option exercise
prices under the 1993 Plan are not determinable because they are based upon the
fair market value of the Company's Ordinary Shares on the date of grant. Future
purchases under the 1997 Employee Share Purchase Plan (as more fully described
under "Proposal 5") are not determinable because they are based on participant
contributions.

The following table shows in the aggregate the options that will be granted
to non-employee Directors under the Automatic Option Grant Program of the 1993
Plan in fiscal 1998 if the shareholders approve the amendments to the 1993 Plan.
Since all current non-employee Directors are incumbent Directors, no non-
employee Director who is elected at the 1997 Annual General Meeting will receive
the automatic grant of 30,000 ordinary shares.

<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF
NAME AND POSITION (PER SHARE) OPTIONS
- ------------------------------------------------- ----------------------------------- ---------
<S> <C> <C>
All current Directors who are not executive
officers as a group (2 persons, excluding Mr.
Lacroute who is not standing for
re-election)................................... Fair market value on date of grant 6,000
</TABLE>

11
<PAGE> 15

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information as of July 31, 1997 regarding
the beneficial ownership of the Company's Ordinary Shares, by (i) each Director,
(ii) each executive officer named in the Summary Compensation Table and (iii)
all Directors and executive officers as a group. Unless otherwise indicated
below, the persons and entities named in the table have sole voting and sole
investment power with respect to all the shares beneficially owned, subject to
community property laws where applicable.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) PERCENT(2)
- ----------------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Richard L. Sharp (3)............................................. 948,144 6.89%
c/o Circuit City Stores, Inc.
9950 Mayland Drive
Richmond, Virginia 23233
Michael E. Marks (4)............................................. 389,759 2.80%
Tsui Sung Lam (5)................................................ 57,305 *
Michael McNamara (6)............................................. 36,315 *
Goh Chan Peng (7)................................................ 22,251 *
Robert R. B. Dykes (8)........................................... 38,024 *
Dennis P. Stradford (9).......................................... 62,730 *
Bernard J. Lacroute (10)......................................... 62,855 *
Michael J. Moritz (11)........................................... 953,568 6.92%
Stephen J. L. Rees (12).......................................... 62,505 *
All directors and executive officers as a group (10 persons) 2,633,456 18.57%
(13)...........................................................
</TABLE>

- ---------------

* Less than 1.0%.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially
owned by any person who has voting or investment power with respect to such
shares. Ordinary Shares subject to options that are currently exercisable
or exercisable within 60 days of July 31, 1997 are deemed to be outstanding
and to be beneficially owned by the person holding such options for the
purpose of computing the percentage ownership of such person but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.

(2) Percentage ownership is based upon 13,754,469 outstanding Ordinary Shares
as of July 31, 1997.

(3) Includes 225,000 shares beneficially owned by Bethany Limited Partnership.
Mr. Sharp, the general partner of Bethany Limited Partnership, may be
deemed to share voting and investment power with respect to such shares.
Mr. Sharp disclaims beneficial ownership of all such shares except to the
extent of his proportionate interest therein. Also includes 37,625 shares
subject to options exercisable within 60 days after July 31, 1997 held by
Mr. Sharp.

(4) Includes 163,252 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. Marks.

(5) Includes 38,230 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. Tsui.

(6) Includes 36,315 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. McNamara.

(7) Includes 22,251 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. Goh. Mr. Goh was the Company's Chief Financial
Officer for fiscal 1997. Mr. Goh is no longer deemed an executive officer
of the Company.

(8) Includes 37,625 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. Dykes.

(9) Includes 1,842 shares held in an IRA rollover account. Also includes 8,480
shares subject to options exercisable within 60 days after July 31, 1997
held by Mr. Stradford. Mr. Stradford was the Company's Vice President,
Sales and Marketing through April 1997. Mr. Stradford is now responsible
for sales in Europe and is no longer deemed an executive officer of the
Company.

(10) Includes 14,503 shares held by KPCB Zaibatsu Fund I. KPCB IV Associates,
L.P., of which Mr. Lacroute is a limited partner, is the general partner of
KPCB Zaibatsu Fund I. Mr. Lacroute disclaims beneficial ownership of such
shares. Also includes 10,727 shares held by the Bernard and Ronny Lacroute
Trust and 37,625 shares subject to options exercisable within 60 days after
July 31, 1997 held by Mr. Lacroute.

12
<PAGE> 16

(11) Includes 788,985 shares held by Sequoia Capital Growth Fund, a limited
partnership, 50,291 shares held by Sequoia Technology Partners III, a
limited partnership, 80,167 shares held by Sequoia Capital VII, a limited
partnership, 3,900 shares held by Sequoia Technology Partners VII, a
limited partnership and 2,600 shares held by Sequoia 1995, a limited
corporation. Sequoia Partners (CF) is the general partner of Sequoia
Capital Growth Fund and has sole voting and investment power over such
shares. The general partners of Sequoia Partners (CF) are Donald T.
Valentine, Pierre R. Lamond, Thomas F. Stephenson, Michael J. Moritz and
Gordon Russell. The general partners of Sequoia Technology Partners III are
Donald T. Valentine, Pierre R. Lamond, Thomas F. Stephenson and Gordon
Russell. The general partner of Sequoia Capital VII and Sequoia Technology
Partners VII is Sequoia Capital VII-A Management, LLC. The general partners
of Sequoia Capital VII-A Management, LLC are Mr. Moritz, Douglas Leone,
Mark Stevens, Thomas Stephenson and J. Thomas McMurray. Also includes
27,625 shares subject to options exercisable within 60 days after July 31,
1997 held by Mr. Moritz.

(12) Also includes 3,754 shares held by Mrs. Janine Margaret Rees. Includes
21,458 shares subject to options exercisable within 60 days after July 31,
1997 held by Mr. Rees.

(13) Includes 430,486 shares subject to options exercisable within 60 days after
July 31, 1997.

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the only persons
who beneficially owned (to the Company's knowledge) more than 5% of the
Company's Ordinary Shares as of July 31, 1997. Unless otherwise indicated below,
the persons and entities named in the table have sole voting and sole investment
power with respect to all the shares beneficially owned, subject to community
property laws where applicable.

- ---------------

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that deem shares to be beneficially owned
by any person who has voting or investment power with respect to such
shares. Ordinary Shares subject to options that are currently exercisable or
exercisable within 60 days of July 31, 1997 are deemed to be outstanding and
to be beneficially owned by the person holding such options for the purpose
of computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person.

(2) Percentage ownership is based upon 13,754,469 outstanding Ordinary Shares as
of July 31, 1997.

(3) Based on information supplied by Mr. Baron in a Schedule 13D filed with the
Securities and Exchange Commission on January 26, 1997. Includes 205,000
shares held by Baron Capital Partners, L.P. and Baron Investment Partners,
L.P., of which Mr. Baron is a general partner. Mr. Baron may be deemed to
have sole power to vote and direct the disposition of such shares. Also
includes 1,465,000 shares held by Baron Asset Fund and Baron Growth & Income
Fund, which are advised by BAMCO, Inc., and 261,600 shares held by
investment advisory clients of Baron Capital Management, Inc. BAMCO, Inc.
and Baron Capital Management, Inc. are controlled by Mr. Baron, and Mr.
Baron may be deemed to share power to vote and dispose of such shares.

(4) Includes 788,985 shares held by Sequoia Capital Growth Fund, a limited
partnership, 50,291 shares held by Sequoia Technology Partners III, a
limited partnership, 80,167 shares held by Sequoia Capital VII, a limited
partnership, 3,900 shares held by Sequoia Technology Partners VII, a limited
partnership and 2,600 shares held by Sequoia 1995, a limited corporation.
Sequoia Partners (CF) is the general partner of Sequoia Capital Growth Fund
and has sole

13
<PAGE> 17

voting and investment power over such shares. The general partners of
Sequoia Partners (CF) are Donald T. Valentine, Pierre R. Lamond, Thomas F.
Stephenson, Michael J. Moritz and Gordon Russell. The general partners of
Sequoia Technology Partners III are Donald T. Valentine, Pierre R. Lamond,
Thomas F. Stephenson and Gordon Russell. The general partner of Sequoia
Capital VII and Sequoia Technology Partners VII is Sequoia Capital VII-A
Management, LLC. The general partners of Sequoia Capital VII-A Management,
LLC are Mr. Moritz, Douglas Leone, Mark Stevens, Thomas Stephenson and J.
Thomas McMurray. Also includes 27,625 shares subject to options exercisable
within 60 days after July 31, 1997 held by Mr. Moritz.

(5) Includes 781,500 shares beneficially owned by Capital Research and
Management Company.

(6) Includes 225,000 shares beneficially owned by Bethany Limited Partnership.
Mr. Sharp, the general partner of Bethany Limited Partnership, may be deemed
to share voting and investment power with respect to such shares. Mr. Sharp
disclaims beneficial ownership of all such shares except to the extent of
his proportionate interest therein. Also includes 37,625 shares subject to
options exercisable within 60 days after July 31, 1997 held by Mr. Sharp.

CERTAIN TRANSACTIONS

In fiscal 1997, the Company had net sales of approximately $1.55 million to
Metcal, a precision heating instrument company. Prior to becoming the Company's
Chief Executive Officer in January 1994, Mr. Marks was the President and Chief
Executive Officer of Metcal. The Company believes that sales made to Metcal were
made on terms no less favorable to the Company than those that could have been
obtained from third parties.

In fiscal 1997, the Company had net sales of approximately $38.1 million to
Global Village Communication, Inc. ("Global Village"). Mr. Moritz, a Director of
the Company, is affiliated with Sequoia Capital, which through its affiliates
owns more than 10% of the outstanding shares of Global Village. Mr. Moritz was a
director of Global Village through June 1996. The Company believes that sales
made to Global Village were made on terms no less favorable to the Company than
those that could have been obtained from third parties.

PROPOSAL 2:

TO RECEIVE AND ADOPT THE AUDITED ACCOUNTS OF THE COMPANY,
INCLUDING THE REPORTS OF THE DIRECTORS AND AUDITORS

The Company's Annual Report for the fiscal year ended March 31, 1997 (the
"Annual Report") accompanies this Proxy Statement. The Annual Report includes
the Company's United States dollar financial statements prepared in conformity
with United States generally accepted accounting principles. The Company's
Singapore dollar financial statements prepared in conformity with Singapore
generally accepted accounting principles also accompany this Proxy Statement.
The United States dollar financial statements and the Singapore dollar financial
statements are referred to herein collectively as the "Financial Statements."
The Financial Statements are accompanied by auditor's reports of Ernst & Young.
The Company publishes its consolidated financial statements in U.S. dollars,
which is the principal currency in which it conducts its business. The Company's
Singapore dollar financial statements have been prepared and circulated to
shareholders as a part of this Proxy Statement as required by Singapore law.

THE BOARD RECOMMENDS A VOTE FOR THE RECEIPT AND ADOPTION OF THE COMPANY'S
FINANCIAL STATEMENTS, INCLUDING THE DIRECTORS' REPORT AND AUDITOR'S REPORTS
INCLUDED THEREIN.

14
<PAGE> 18

PROPOSAL 3:

APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS AND
AUTHORIZATION OF BOARD TO FIX THEIR REMUNERATION

The firm of Ernst & Young served as independent public accountants for the
Company for the fiscal year ended March 31, 1997. In connection with the
Company's shift of certain financial reporting functions and the Company's audit
relationship to San Jose, California, it is proposed that Arthur Andersen be
appointed as independent public accountants to audit the accounts and records of
the Company for the fiscal year ending March 31, 1998, and to perform other
appropriate services. Ernst & Young will not seek reappointment at the 1997
Annual General Meeting. The Company expects that a representative from Arthur
Andersen will be present at the 1997 Annual General Meeting. The Company does
not expect that a representative from Ernst & Young will be present at the 1997
Annual General Meeting. A notice of nomination of the proposed new auditors,
Arthur Andersen, given by a shareholder of the Company is enclosed with this
Proxy Statement, as required by Singapore law.

THE BOARD RECOMMENDS A VOTE FOR THE APPOINTMENT OF ARTHUR ANDERSEN AS
INDEPENDENT AUDITORS FOR FISCAL YEAR 1998 IN PLACE OF THE RETIRING AUDITORS,
ERNST & YOUNG, AND AUTHORIZATION FOR THE BOARD OF DIRECTORS TO FIX THEIR
REMUNERATION.

PROPOSAL 4:

ORDINARY RESOLUTION TO APPROVE THE INCREASE OF THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE UNDER THE 1993 SHARE OPTION PLAN

The Company's shareholders are being asked to approve an amendment to the
1993 Share Option Plan (which was adopted by the Board of Directors and approved
by the shareholders in 1993) (the "1993 Plan") to increase the number of the
Company's Ordinary Shares authorized for issuance under the 1993 Plan by 600,000
shares, from 2,000,000 shares to 2,600,000 shares. As of August 31, 1997 there
were 13,141 Ordinary Shares available for issuance under the 1993 Plan and after
this amendment 613,141 Ordinary Shares will be available for issuance under the
1993 Plan. The Board believes the share increase is necessary for the Company to
continue to have a sufficient reserve of Ordinary Shares available under the
1993 Plan to attract and retain the services of key individuals essential to the
Company's long-term success.

In connection with the increase of the number of shares authorized for
issuance under the 1993 Plan, the Board of Directors has terminated the
Executives Share Option Scheme ("SOS"), the Executives Incentive Share Scheme
("ISS") and the nCHIP Stock Option Plan. While there were 205,431 Ordinary
Shares available for issuance under the SOS, 4,182 Ordinary Shares available for
issuance under the ISS and 76,716 Ordinary Shares available for issuance under
the nCHIP Stock Option Plan, upon termination of such plans, none of such
286,329 Ordinary Shares are or will be available for grant or reserved for
issuance under such option plans. Each option outstanding at the time of such
termination will remain in force in accordance with the provisions of the
agreements evidencing such grant.

1997 INTERIM OPTION PLAN

The Company's 1997 Interim Option Plan (the "Interim Plan") was adopted by
the Board on June 5, 1997 to supplement the number of shares available for
issuance under the 1993 Plan. The Board reserved an aggregate of 130,000 shares
for issuance under the Interim Plan. Shares subject to an option granted
pursuant to the Interim Plan that expires or terminates for any reason without
being exercised will again become available for grant and issuance pursuant to
awards under the Interim Plan. The Interim Plan provides a mechanism for the
Company to grant non-qualified stock options to certain persons who are not
officers or Directors of the Company without incurring the compensation charge
that would otherwise result if the Company issued shares under the 1993 Plan
subject to future shareholder approval. As the Interim Plan does not provide for
the issuance of incentive stock options or for the issuance of options to
officers or directors, shareholder approval of the Interim Plan is not required.
It is anticipated that no further options will be

15
<PAGE> 19

granted pursuant to the Interim Plan after the approval of the increase in the
number of shares reserved for issuance under the 1993 Plan.

From inception of the Interim Plan in July 1997 to August 1997, options to
purchase an aggregate of 106,400 of the Company's Ordinary Shares were granted
under the Interim Plan.

1993 PLAN

The following is a summary of the principal features of the 1993 Plan, as
most recently amended. The summary, however, does not purport to be a complete
description of all the provisions of the 1993 Plan. Any shareholder of the
Company who wishes to obtain a copy of the actual plan document may do so upon
written request to the Company at the Company's offices located at 2090 Fortune
Drive, San Jose, California 95131.

EQUITY INCENTIVE PROGRAMS

The 1993 Plan contains two (2) separate equity incentive programs: (i) a
Discretionary Option Grant Program and (ii) an Automatic Option Grant Program.
The Discretionary Option Grant Program will be administered, with respect to
officers and directors, by the Primary Committee (consisting of the Compensation
Committee of the Board), and with respect to all other employees, by the
Secondary Committee (currently consisting of the Chairman of the Board, Mr.
Marks). These committees (the "Plan Administrator") will have complete
discretion (subject to the provisions of the 1993 Plan) to authorize option
grants under the 1993 Plan. However, all grants under the Automatic Option Grant
Program will be made in strict compliance with the provisions of that program,
and no administrative discretion will be exercised by the Plan Administrator
with respect to the grants made thereunder.

SHARE RESERVE

A total of 2,000,000 Ordinary Shares have been reserved for issuance over
the ten year term of the 1993 Plan. In no event may any one participant in the
1993 Plan be granted options or separately exercisable stock appreciation rights
for more than 500,000 Ordinary Shares in the aggregate over the term of the 1993
Plan after July 1, 1995.

In the event any change is made to the outstanding Ordinary Shares by
reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to the securities issuable (in the aggregate and to each participant) under
the 1993 Plan and to each outstanding option.

As of August 31, 1997, 1,746,081 Ordinary Shares were subject to
outstanding options and 13,141 shares were available for option grants under the
1993 Plan.

ELIGIBILITY

Officers and other key employees of the Company and its parent or
subsidiaries (whether now existing or subsequently established) and consultants
and independent contractors of the Company and its parent and subsidiaries are
eligible to participate in the Discretionary Option Grant Program. Non-employee
members of the Board are only eligible to participate in the Automatic Option
Grant Program. Consultants, independent contractors and non-employee members of
the Board who are residents of Singapore are not eligible to participate in the
1993 Plan.

As of August 31, 1997 nine (9) executive officers and approximately 300
other employees were eligible to participate in the 1993 Plan, and three (3)
non-employee Board members were eligible to participate in the Automatic Option
Grant Program.

Over the term of the 1993 Plan through August 31, 1997, the following
Directors and executive officers have been granted the following options to
purchase shares under the 1993 Plan: Mr. Sharp, 39,000; Mr. Marks, 500,000
shares; Mr. Tsui, 214,418; Mr. Goh, 106,000; Mr. Dykes, 175,000; Mr. Lacroute,
39,000; Mr. Moritz, 39,000; Mr. Rees, 92,741. During this period, the Company's
executive officers as a group have

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<PAGE> 20

been granted options to purchase an aggregate of 1,089,659 shares, and all
employees as a group (excluding Directors and executive officers) have been
granted options to purchase an aggregate of 792,366 shares under the 1993 Plan.
During this period, the Company's current Directors (excluding current executive
officers) have been granted options to purchase 117,000 shares under the 1993
Plan.

VALUATION

The fair market value per Ordinary Share on any relevant date under the
1993 Plan is the closing selling price per share on that date on the Nasdaq
National Market. On September 10, 1997, the closing selling price per share was
$39.75.

DISCRETIONARY OPTION GRANT PROGRAM

Options may be granted under the Discretionary Option Grant Program at an
exercise price per share not less than eighty five percent (85%) of the fair
market value per Ordinary Share on the option grant date. The Company does not
currently intend to issue options with an exercise price below fair market
value. No granted option will have a term in excess of five (5) years.

Upon cessation of service, the optionee will have a limited period of time
in which to exercise any outstanding option to the extent such option is
exercisable for vested shares. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.

The Plan Administrator is authorized to issue two (2) types of stock
appreciation rights in connection with option grants made under the
Discretionary Option Grant Program:

Tandem stock appreciation rights provide the holders with the right to
surrender their options for an appreciation distribution from the Company equal
in amount to the excess of (a) the fair market value of the vested Ordinary
Shares subject to the surrendered option over (b) the aggregate exercise price
payable for such shares. Such appreciation distribution may, at the discretion
of the Plan Administrator, be made in cash or in Ordinary Shares.

Limited stock appreciation rights may be granted to officers of the Company
as part of their option grants. Any option with such a limited stock
appreciation right in effect for at least six (6) months may be surrendered to
the Company upon the successful completion of a hostile take-over of the
Company. In return for the surrendered option, the officer will be entitled to a
cash distribution from the Company in an amount per surrendered option share
equal to the excess of (a) the take-over price per share over (b) the exercise
price payable for such share.

The Plan Administrator will have the authority to effect the cancellation
of outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of Ordinary Shares
and to issue replacement options with an exercise price based on the market
price of Ordinary Shares at the time of the new grant.

AUTOMATIC OPTION GRANT PROGRAM

Under the Automatic Option Grant Program, each individual who was serving
as a non-employee Board member on January 24, 1994 was automatically granted at
that time an option grant for 30,000 Ordinary Shares. Each individual who first
became a non-employee Board member after such date and before September 10, 1997
automatically was granted, upon becoming a Board member, an option grant for
30,000 Ordinary Shares, and each individual who first becomes a non-employee
Board member on or after September 10, 1997 will automatically be granted, upon
becoming a Board member, an option grant for 15,000 Ordinary Shares. In
addition, on the date of each Annual General Meeting, beginning with the 1994
Annual General Meeting, each individual who is at that time serving as a
non-employee Board member,

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<PAGE> 21

whether or not such individual is standing for reelection, will automatically be
granted an option to purchase 3,000 Ordinary Shares, provided such individual
has served as a non-employee Board member for at least six (6) months. There
will be no limit on the number of such 3,000-share options which any one
non-employee Board member may receive over the period of Board service.

Each option will have an exercise price per share equal to 100% of the fair
market value per Ordinary Share on the option grant date and a maximum term of
five (5) years measured from the option grant date.

Each option will become exercisable for the option shares in twenty-four
(24) equal monthly installments over the optionee's period of Board service,
with the first such installment to become exercisable upon the completion of one
(1) month of Board service measured from the option grant date.

Each automatic option grant will automatically accelerate upon the
optionee's death or permanent disability or upon an acquisition of the Company
by merger or asset sale or a hostile change in control of the Company. In
addition, upon the successful completion of a hostile take-over, each automatic
option grant which has been outstanding for at least six (6) months may be
surrendered to the Company for a cash distribution per surrendered option share
in an amount equal to the excess of (a) the take-over price per share over (b)
the exercise price payable for such share.

GENERAL PROVISIONS

ACCELERATION

In the event that the Company is acquired by merger or asset sale, each
outstanding option under the Discretionary Option Grant Program which is not to
be assumed by the successor corporation or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation will
automatically accelerate in full. The Plan Administrator has the discretionary
authority to accelerate any options assumed or replaced in connection with such
acquisition upon the subsequent termination of the optionee's service within a
designated period following the acquisition. In connection with a hostile change
in control of the Company (whether by successful tender offer for more than 50%
of the outstanding voting stock or by proxy contest for the election of Board
members), the Plan Administrator will have the discretionary authority to
provide for automatic acceleration of outstanding options under the
Discretionary Option Grant Program either at the time of such change in control
or upon the subsequent termination of the optionee's service.

The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.

FINANCIAL ASSISTANCE

The Plan Administrator may permit one or more optionees to pay the exercise
of outstanding options under the 1993 Plan by delivering a promissory note
payable in installments. The Plan Administrator will determine the terms of any
such promissory note. However, the maximum amount of financing provided any
optionee may not exceed the cash consideration payable for the purchased shares
plus all applicable taxes incurred in connection with the acquisition of the
shares. Any such promissory note may be subject to forgiveness in whole or in
part, at the discretion of the Plan Administrator, over the optionee's period of
service.

AMENDMENT AND TERMINATION

The Board may amend or modify the 1993 Plan in any or all respects
whatsoever subject to any required shareholder approval. The Board may terminate
the 1993 Plan at any time, and the 1993 Plan will in all events terminate on
November 30, 2003.

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<PAGE> 22

FEDERAL INCOME TAX CONSEQUENCES

THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT
OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND EMPLOYEES
PARTICIPATING IN THE 1993 PLAN. FEDERAL TAX LAWS MAY CHANGE AND THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPATING EMPLOYEE WILL DEPEND UPON
HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPATING EMPLOYEE HAS BEEN AND IS
ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISER REGARDING THE TAX
CONSEQUENCES OF PARTICIPATION IN THE 1993 PLAN.

OPTION GRANTS

Options granted under the 1993 Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:

Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised (unless the optionee is subject to the
alternative minimum tax ("AMT")). The optionee will, however, recognize taxable
income in the year in which the shares acquired upon exercise of an incentive
stock option (the"ISO Shares") are sold or otherwise disposed of. For Federal
tax purposes, dispositions are divided into two categories: (i) qualifying and
(ii) disqualifying.

A qualifying disposition occurs if the sale or other disposition is made
after the optionee has held the ISO Shares for more than two years after the
option grant date and more than one year after the exercise date. The optionee
will generally realize mid-term capital gain or loss (rather than ordinary
income or loss) upon a qualifying disposition of ISO Shares held for more than
12 months from the date of exercise. Mid-term capital gain will be taxed at a
maximum of 28%. If the ISO Shares are held for more than 18 months from the date
of exercise, the optionee will generally realize long-term capital gain or loss
upon a qualifying disposition of such ISO Shares. Long-term capital gain will be
taxed at a maximum of 20%. Any capital gain or loss will be equal to the
difference between the amount realized upon such disposition and the amount paid
for the ISO Shares.

If the optionee disposes of ISO Shares prior to the expiration of the one
year and two year holding periods set forth in the preceding paragraph, the gain
realized on such disqualifying disposition, up to the difference between the
fair market value of the ISO Shares on the date of exercise (or, if less, the
amount realized on a sale of such ISO Shares) and the option exercise price will
be treated as ordinary income. Any additional gain will be capital gain. If the
optionee makes a disqualifying disposition of the ISO Shares, then the Company
will be entitled to an income tax deduction for the taxable year in which such
disposition occurs equal to the excess of (i) the fair market value of such ISO
Shares on the option exercise date over (ii) the exercise price paid for the ISO
Shares. In no other instance will the Company be allowed a deduction with
respect to the optionee's disposition of the ISO Shares.

Alternative Minimum Tax. The difference between the fair market value of
the ISO Shares on the date of exercise and the exercise price is an adjustment
to income for purposes of AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is 26% of an individual taxpayer's alternative minimum
taxable income (28% in the case of alternative minimum taxable income in excess
of $175,000). Where an individual has capital gain, a separate calculation
applies to the net capital gain portion of alternative minimum taxable income
and the maximum rate is 20%. Alternative minimum taxable income is determined by
adjusting regular taxable income for certain items, increasing that income by
certain tax preference items (including the difference between the fair market
value of the ISO Shares on the date of exercise and the exercise price), and
reducing this amount by the applicable exemption amount ($45,000 in case of a
joint return, subject to reduction under certain circumstances). If a
disqualifying disposition of the ISO Shares occurs in the same calendar year as
the exercise of the ISO Shares, there is no AMT adjustment with respect to those
ISO Shares. Also, upon a sale of ISO Shares that is not a disqualifying
disposition, alternative minimum taxable income is reduced in the year of sale
by the excess of the fair market value of the ISO Shares at exercise price over
the amount paid for the ISO Shares.

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<PAGE> 23

Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income. Upon
resale of the purchased shares, any subsequent application or depreciation will
be treated as capital gain or loss.

If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.

The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.

STOCK APPRECIATION RIGHTS

An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
the appreciation distribution for the taxable year in which such ordinary income
is recognized by the optionee.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the issued shares of
the Company present in person or by proxy at the Annual General Meeting is
required for approval of the amendment to the 1993 Plan. Abstentions and broker
non-votes are each included in the determination of the number of shares present
for quorum purposes. Neither abstentions or broker non-votes are counted in the
tabulation of votes cast on the proposal to amend the Company's 1993 Plan.

THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL TO THE AMENDMENT OF THE
COMPANY'S 1993 PLAN.

PROPOSAL 5:

ADOPTION OF 1997 EMPLOYEE SHARE PURCHASE PLAN

Shareholders are being asked to approve the adoption of the Company's 1997
Employee Share Purchase Plan (the "Share Purchase Plan"). The Board of Directors
believes that the adoption of the Share Purchase Plan is in the best interests
of the Company because of the need to provide equity participation to attract
and retain quality employees and remain competitive in the industry. The Share
Purchase Plan plays an important role in the Company's efforts to attract and
retain employees of outstanding ability.

The Board of Directors approved the Share Purchase Plan in September 1997
subject to shareholder approval. Below is a summary of the principal provisions
of the Share Purchase Plan, assuming shareholder approval. The summary is not
necessarily complete, and reference should be made to the full text of the Share
Purchase Plan.

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<PAGE> 24

SHARE PURCHASE PLAN HISTORY

The Board of Directors adopted the Share Purchase Plan in September 1997.
The purpose of the Share Purchase Plan is to provide employees of the Company
and its subsidiaries and parent corporations designated by the Board of
Directors as eligible to participate in the Share Purchase Plan ("Participating
Subsidiaries") with a convenient means to acquire an equity interest in the
Company through payroll deductions and to provide an incentive for continued
employment. The Company intends that the Share Purchase Plan will qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code").

SHARES SUBJECT TO THE SHARE PURCHASE PLAN

The shares subject to issuance under the Share Purchase Plan consist of the
Company's authorized but unissued Ordinary Shares. An aggregate of 75,000
Ordinary Shares have been reserved by the Board of Directors for issuance under
the Share Purchase Plan. This number of shares is subject to proportional
adjustment to reflect stock splits, stock dividends and other similar events.

ADMINISTRATION

The Share Purchase Plan will be administered by the Board or a committee of
at least two members of the Board (the "Committee"). The interpretation or
construction by the Committee of any provisions of the Share Purchase Plan will
be final and binding on all employees.

ELIGIBILITY

All employees of the Company and any Participating Subsidiaries are
eligible to participate in an Offering Period (as defined below) under the Share
Purchase Plan, except the following:

(a) employees who are not employed by the Company one month before the
beginning of such Offering Period;

(b) employees who are customarily employed for 20 hours or less per
week;

(d) employees who own shares or hold options to purchase shares or
who, as a result of participation in the Share Purchase Plan, would own
shares or hold options to purchase shares, possessing 5% or more of the
total combined voting power or value of all classes of shares of the
Company; and

(e) individuals who provide services to the Company or Participating
Subsidiaries as independent contractors who are reclassified as common law
employees for any purpose other than federal income and employment tax
purposes.

As of August 31, 1997, approximately 800 persons were eligible to
participate in the Share Purchase Plan and no shares had been issued pursuant to
the Share Purchase Plan. As of August 31, 1997, the closing price of the
Company's Ordinary Shares on the Nasdaq National Market was $39.75 per share.

Employees participate in the Share Purchase Plan through payroll
deductions. An employee sets the rate of such payroll deductions, which may not
be less than 2% nor more than 10% of the employee's compensation, including base
salary, commissions, bonuses and shift premiums before any deductions from the
employee's salary pursuant to Sections 125 or 401(k) of the Code. No employee is
permitted to purchase shares under the Share Purchase Plan at a rate which, when
aggregated with such employee's rights to purchase shares under all similar
purchase plans of the Company, exceeds $25,000 in fair market value determined
as of the Offering Date (as defined below) for each calendar year.

OFFERING PERIODS

Each offering of Ordinary Shares under the Share Purchase Plan is for a
period of six months (the "Offering Period"). Offering Periods are planned to
commence on December 1 and June 1 of each year and

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<PAGE> 25

end on November 31 and May 30 of each year, respectively. The initial Offering
Period shall begin on December 1, 1997. Each Offering Period shall consist of
one six-month purchase period (a "Purchase Period") during which payroll
deductions of the employees are accumulated under the Share Purchase Plan. The
Board of Directors has the power to set the beginning of any Offering Period and
to change dates or the duration of Offering Periods or Purchase Periods without
shareholder approval (including adopting 24-month Offering Periods consisting of
four six-month Purchase Periods) if such change is announced at least 15 days
before the scheduled beginning of the first Offering Period or Purchase Period
to be affected. The first business day of each Offering Period is the "Offering
Date" for such Offering Period and the last business day of each Purchase Period
is the "Purchase Date" for such Purchase Period.

Employees will participate in the Share Purchase Plan during each Offering
Period through regular payroll deductions as described above. Employees may
elect to participate in any Offering Period by enrolling as provided under the
terms of the Share Purchase Plan. Once enrolled, an employee will automatically
participate in each succeeding Offering Period unless the employee withdraws
from the Offering Period or the Share Purchase Plan is terminated. After the
rate of payroll deductions for an Offering Period has been set by an employee,
that rate will continue to be effective for the remainder of the Offering Period
(and for all subsequent Offering Periods in which the employee is automatically
enrolled) unless otherwise changed by the employee. The employee may increase or
lower the rate of payroll deductions for any subsequent Offering Period, but may
only lower the rate of payroll deductions for an ongoing Offering Period. No
more than one change may be made during a single Offering Period.

PURCHASE PRICE

The purchase price of shares that may be acquired in any Purchase Period
under the Share Purchase Plan is 85% of the lesser of: (i) the fair market value
of the shares on the Offering Date; or (ii) the fair market value of the shares
on the Purchase Date. In no event may the purchase price be less than the par
value of the Ordinary Shares. The fair market value of the Company's Ordinary
Shares is deemed to be the closing price of the Company's Ordinary Shares on the
Nasdaq National Market on the date of determination as reported in The Wall
Street Journal.

PURCHASE OF SHARES UNDER THE SHARE PURCHASE PLAN

The number of whole shares an employee will be able to purchase in any
Purchase Period will be determined by dividing the total payroll amount withheld
from the employee during the Purchase Period pursuant to the Share Purchase Plan
by the purchase price for each share determined as described above, rounded down
to the nearest whole number. The purchase will take place automatically on the
Purchase Date of such Purchase Period.

WITHDRAWAL

An employee may withdraw from any Offering Period. Upon withdrawal, the
accumulated payroll deductions will be returned to the withdrawn employee,
without interest, provided that the withdrawal occurs at least 15 days before
the related Purchase Date. If the withdrawal occurs less than 15 days before
such Purchase Date, payroll deductions will continue for the remainder of that
Purchase Period. No further payroll deductions for the purchase of shares will
be made for the succeeding Offering Period unless the employee enrolls in the
new Offering Period at least 15 days before the Offering Date.

AMENDMENT OF THE SHARE PURCHASE PLAN

The Board of Directors may at any time amend, terminate or extend the term
of the Share Purchase Plan, except that any such termination cannot affect
options previously granted under the Share Purchase Plan, nor may any amendment
make any change in an option previously granted which would adversely affect the
right of any participant, nor may any amendment be made without shareholder
approval if such amendment would: (a) increase the number of shares that may be
issued under the Share Purchase Plan or

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<PAGE> 26

(b) change the designation of the employees (or class of employees) eligible for
participation in the Share Purchase Plan.

TERM OF THE SHARE PURCHASE PLAN

The Share Purchase Plan will continue until the earlier to occur of: (i)
termination of the Share Purchase Plan by the Board of Directors; (ii) the
issuance of all the Ordinary Shares reserved for issuance under the Share
Purchase Plan; or (iii) September 2007, ten years after the date the Share
Purchase Plan was adopted by the Board of Directors.

FEDERAL INCOME TAX INFORMATION

THE FOLLOWING IS A GENERAL SUMMARY AS OF THE DATE OF THIS PROXY STATEMENT
OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND EMPLOYEES
PARTICIPATING IN THE SHARE PURCHASE PLAN. FEDERAL TAX LAWS MAY CHANGE AND THE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPATING EMPLOYEE WILL
DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPATING EMPLOYEE HAS
BEEN AND IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISER REGARDING
THE TAX CONSEQUENCES OF PARTICIPATION IN THE SHARE PURCHASE PLAN.

The Share Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code.

Tax Treatment of Employees. Employees will not recognize income for federal
income tax purposes either upon enrollment in the Share Purchase Plan or upon
the purchase of shares. All tax consequences are deferred until an employee
sells the shares, disposes of the shares by gift or dies.

If shares are held for more than one year after the date of purchase and
more than two years from the beginning of the applicable Offering Period, or if
the employee dies while owning the shares, the employee realizes ordinary income
on a sale (or a disposition by way of gift or upon death) to the extent of the
lesser of: (i) 15% of the fair market value of shares at the beginning of the
Offering Period; or (ii) the actual gain (the amount by which the market value
of the shares on the date of sale, gift or death exceeds the purchase price).
All additional gain upon the sale of shares is treated as capital gain. If the
shares are sold and the sale price is less than the purchase price, there is no
ordinary income and the employee has a capital loss for the difference between
the sale price and the purchase price.

If the shares are sold or are otherwise disposed of including by way of
gift (but not death, bequest or inheritance) (in any case, a "disqualifying
disposition") within either the one-year or the two-year holding periods
described above, the employee realizes ordinary income at the time of sale or
other disposition, taxable to the extent that the fair market value of the
shares at the date of purchase is greater than the purchase price. This excess
will constitute ordinary income (not currently subject to withholding) in the
year of the sale or other disposition even if no gain is realized on the sale or
if a gratuitous transfer is made. The difference, if any, between the proceeds
of sale and the aggregate fair market value of the shares at the date of
purchase is a capital gain or loss. If the shares were held for more than one
year but less than 18 months after the date of purchase, any additional gain
will be treated as mid-term gain and taxed at a maximum of 28%. If the shares
were held for at least 18 months after the date of purchase, any additional gain
will be treated as long-term capital gain and taxed at a maximum of 20%. Capital
gains may be offset by capital losses, and up to $3,000 of capital losses may be
used annually against ordinary income.

Tax Treatment of the Company. The Company will be entitled to a deduction
in connection with the disposition of shares acquired under the Share Purchase
Plan only to the extent that the employee recognizes ordinary income on a
disqualifying disposition of the shares. The Company will treat any transfer of
record ownership of shares as a disposition, unless it is notified to the
contrary. In order to enable the Company to learn of disqualifying dispositions
and ascertain the amount of the deductions to which it is entitled, employees
will be required to notify the Company in writing of the date and terms of any
disposition of shares purchased under the Share Purchase Plan.

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<PAGE> 27

ERISA. The Share Purchase Plan is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA") nor is it
qualified under Section 401(a) of the Code.

VOTE REQUIRED

The affirmative vote of a majority of the issued shares of the Company
present in person or by proxy at the Annual General Meeting is required for the
adoption of the Share Purchase Plan. Abstentions and broker non-votes are each
included in the determination of the number of shares present for quorum
purposes. Neither abstentions or broker non-votes are counted in the tabulation
of votes on the proposal to adopt the Share Purchase Plan.

THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE SHARE PURCHASE PLAN.

PROPOSAL 6:

ORDINARY RESOLUTION TO APPROVE VARIOUS MATTERS RELATING TO ORDINARY SHARE
ISSUANCES

The Company is incorporated in the Republic of Singapore. Under Singapore
law, new Ordinary Shares may only be issued with the prior approval of the
shareholders of the Company at a general meeting. Such approval, if granted, is
effective from the date of the meeting at which it was given to the conclusion
of the next Annual General Meeting of shareholders of the Company or the
expiration of the period within which the next Annual General Meeting is
required by law to be held, whichever is the earlier. The Board believes that it
is advisable and in the best interest of the Company for the shareholders to
authorize the Directors to issue new shares for financing future transactions,
acquisitions and other proper corporate opportunities and purposes. Having
additional shares available and authorized for issuance in the future gives the
Company greater flexibility to pursue corporate opportunities and enables the
Directors to issue new shares without the expense and delay of an extraordinary
general meeting of shareholders.

The Company is seeking shareholder approval to issue new Ordinary Shares
during the period from the 1997 Annual General Meeting Date to the 1998 Annual
General Meeting Date. If obtained, shareholder approval of this proposal will
lapse on the 1998 Annual General Meeting Date or the expiration of the period
within which the 1998 Annual General Meeting is required by law to be held,
whichever is the earlier.

THE BOARD RECOMMENDS A VOTE FOR THE RESOLUTION RELATING TO ORDINARY SHARE
ISSUANCES.

SHAREHOLDER PROPOSALS

Shareholder proposals intended to be considered at the next Annual General
Meeting of shareholders must be received by the Company no later than April 14,
1998. Any proposals must be mailed to the Company's San Jose, California
offices, 2090 Fortune Drive, San Jose, California 95131, Attention: Chief
Executive Officer. Such proposals may be included in next year's proxy statement
if they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission.

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OTHER MATTERS

Management does not know of any matters to be presented at this Annual
General Meeting other than those set forth herein and in the Notice accompanying
this Proxy Statement.

It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. YOU ARE, THEREFORE, URGED TO EXECUTE
PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Shareholders who are present at the meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.

By Order of the Board of Directors,

Yap Lune Teng
Joint Secretary

September 12, 1997
Singapore

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Directors' Report and
Audited Financial Statements

Flextronics International Ltd.
and Subsidiary Companies

31 March 1997
<PAGE> 30

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

DIRECTORS' REPORT AND AUDITED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
DIRECTORS
Michael E. Marks
Tsui Sung Lam
Robert Roscoe Bernard Dykes
Richard L. Sharp
Michael J. Moritz
Bernard J. Lacroute
Stephen J.L. Rees (Appointed on 15 April 1996)
Andrew W. Russell (Resigned on 10 September 1996)
SECRETARIES
Patricia Seet Geok Neo
Yap Lune Teng
REGISTERED OFFICE
36 Robinson Road #18-01
City House
Singapore 068877
AUDITORS
Ernst & Young
</TABLE>

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

INDEX

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of the directors............................................................. 1 - 6
Statement by directors.............................................................. 7
Report of the auditors.............................................................. 8
Profit and loss accounts............................................................ 9
Balance sheets...................................................................... 10
Consolidated statement of cash flows................................................ 11-12
Notes to the accounts............................................................... 13-31
</TABLE>
<PAGE> 31

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS

The directors have pleasure in presenting their report together with the
audited accounts of the company and of the group for the financial year ended 31
March 1997.

PRINCIPAL ACTIVITIES

The company is principally engaged in investment holding. The activities of
the subsidiary companies are in the design, assembly and manufacture of computer
industrial grade printed circuit boards sub-assemblies, products that require
advanced electronic packaging, fabrication and assembly of high density,
miniaturized PCBs, and the manufacture of multi-chip modules; systems assembly
and testing; and trading of components.

RESULTS FOR THE FINANCIAL YEAR

<TABLE>
<CAPTION>
GROUP COMPANY
------- -------
$'000 $'000
<S> <C> <C>
Profit for the year transferred to accumulated losses.................... 10,174 10,921
======= =======
</TABLE>

In the opinion of the directors of the company, the results of the
operations of the company and of the group during the financial year have not
been substantially affected by any item, transaction or event of a material and
unusual nature except as disclosed in the accounts.

TRANSFERS TO/FROM RESERVES AND PROVISIONS

<TABLE>
<CAPTION>
GROUP COMPANY
------- -------
$'000 $'000
<S> <C> <C>
The following amounts have been credited/(debited) to:
ACCUMULATED LOSSES
Exchange difference arising on translation............................. 1,797 --
SHARE PREMIUM ACCOUNT
Premium on issue of ordinary shares.................................... 2,496 1,964
Expenses on issuance of shares......................................... (56) (56)
======= =======
</TABLE>

DIVIDENDS

No dividend has been declared or paid since the end of the previous
financial year of the company. The directors of the company do not recommend
that a final dividend be paid for the current financial year.

SHARE CAPITAL

The company issued the following shares of $0.01 each during the financial
year:

(a) 223,321 Ordinary Shares as consideration for the purchase of 100% of
the outstanding shares in Fine Line Printed Circuit Design Inc.

(b) 239,633 Ordinary Shares for cash at a premium of $1,964,000 by virtue
of the exercise of share options previously granted.

There were no debentures issued by the company or any corporation in the
group during the financial year.

1
<PAGE> 32

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS (CONTINUED)

ACQUISITION AND DISPOSAL OF SUBSIDIARIES

The following subsidiaries were acquired during the year:

<TABLE>
<CAPTION>
NET TANGIBLE ASSETS BY EXCHANGE
INTEREST ON DATE OF OF SHARES
NAME OF COMPANY ACQUIRED ACQUISITION AT $0.01 EACH
- ---------------------------------------------------- -------- ------------------- -------------
US$
<S> <C> <C> <C>
Fine Line Printed Circuit Design Inc. 100% 1,215,000 223,321
</TABLE>

The following subsidiaries were incorporated by the company during the
year:

<TABLE>
<CAPTION>
INTEREST
NAME OF COMPANY ACQUIRED DETAILS OF ISSUE CONSIDERATION
- ----------------------------------- -------- ------------------------------------ -------------
US$
<S> <C> <C> <C>
Flextronics de Mexico S.A. de C.V. 100 % 50,000 ordinary shares of 1 Mexican 6,500
Peso each
Flextronics Holdings UK Limited 100 % 1,000 ordinary shares of L1 each 1,600
</TABLE>

The following company was incorporated by the Company's subsidiary during
the year:

<TABLE>
<CAPTION>
INTEREST
NAME OF COMPANY ACQUIRED DETAILS OF ISSUE CONSIDERATION
- ----------------------------------- -------- ------------------------------------ -------------
US$
<S> <C> <C> <C>
Flextronics Holding AB (formerly 100 % 1,000 ordinary shares of SEK 100 13,038
known as Insatsen 2334 each
Aktiebolag)
Flextronics International Sweden AB 100 % 100,000 ordinary shares of SEK 100 1,303,781
(formerly known as Insatsen 2333 each
AB)
</TABLE>

<TABLE>
<CAPTION>
INTEREST
NAME OF COMPANY ACQUIRED PRINCIPAL ACTIVITY
- ----------------------------------- -------- -------------------------------------------------
<S> <C> <C>
Zhuhai Dao Men Chao Yi Technology 100% Design, assembly and manufacture of computer
Co. Ltd. industrial grade printed circuit board
sub-assemblied, systems assembly, miniature, gold
finished printed circuit board.
</TABLE>

There was no disposal of any subsidiary during the financial year.

DIRECTORS OF THE COMPANY

The directors of the company in office at the date of this report are :

Michael E. Marks
Tsui Sung Lam
Richard L. Sharp
Michael J. Moritz
Bernard J. Lacroute
Robert Roscoe Bernard Dykes
Stephen J.L. Rees (Appointed on 15 April 1996)

2
<PAGE> 33

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS (CONTINUED)

The following directors who held office at the end of the financial year
had, according to the register required to be kept under Section 164 of the
Companies Act, Cap. 50, an interest in shares of the company or the company's
subsidiaries, as stated below:

<TABLE>
<CAPTION>
AT BEGINNING OF AT END OF
NAME OF DIRECTOR AND COMPANY IN WHICH INTERESTS ARE HELD FINANCIAL YEAR FINANCIAL YEAR
- ------------------------------------------------------------------ --------------- --------------
<S> <C> <C>
Interest in the company's Ordinary Shares of $0.01 each
Mr. Michael E. Marks.............................................. 10,000 216,507
Mr. Tsui Sung Lam................................................. 1,632 1,978
Mr. Richard L. Sharp.............................................. 471,778 685,519
Mr. Michael J. Moritz............................................. 10,000 10,000
Mr. Bernard J. Lacroute........................................... 1,854 1,854
Mr. Robert R. B. Dykes............................................ 200 539
Interest in options to acquire Ordinary Shares of $0.01 each
Mr. Michael E. Marks.............................................. 242,000 482,000
Mr. Tsui Sung Lam................................................. 97,000 107,000
Mr. Richard L. Sharp.............................................. 36,000 39,000
Mr. Michael J. Moritz............................................. 26,000 29,000
Mr. Bernard J. Lacroute........................................... 36,000 39,000
Mr. Robert R. B. Dykes............................................ 36,000 39,000
Mr. Stephen J.L. Rees............................................. -- 60,000
</TABLE>

Since the end of the previous financial year, except as disclosed above and
in the accompanying accounts, no director of the company has received or become
entitled to receive a benefit by reason of a contract made by the company or a
related corporation with the director or with a firm of which he is a member, or
with a company in which he has a substantial financial interest.

Neither at the end of the financial year, nor at anytime during that year,
did there subsist any arrangements, to which the company is a party, whereby
directors might acquire benefits by means of the acquisition of shares in, or
debentures of, the company or any other body corporate except for those
disclosed under the options mentioned above.

SHARE OPTION PLANS

Executives' Share Option Scheme ("SOS")

No options were granted under the SOS during the financial year ended 31
March 1997.

29,111 Ordinary Shares in the company were issued during the financial year
by virtue of the exercise of options granted under the SOS.

As at 31 March 1997, the number and class of unissued shares under option
granted under the SOS was 52,817 Ordinary Shares, net of cancellation of options
for 213 Ordinary Shares. The outstanding options may be exercised at a
subscription price of US$2.92, and expire on 8 July 1998 unless any such option
lapses by reason of cessation of the optionee's employment with the company or
the optionee's death. The persons to whom options have been granted under the
SOS do not have any rights to participate by virtue of such options in any share
issue of any other company.

Executives' Incentive Share Scheme ("ISS")

The ISS has lapsed and accordingly, no options were granted under the ISS
during the financial year ended 31 March 1997, no Ordinary Shares in the company
were issued during the financial year by virtue of

3
<PAGE> 34

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS (CONTINUED)

the exercise of options granted under the ISS, and no unissued shares of the
company remain under option under the ISS as at 31 March 1997.

1993 Share Option Plan (the "Plan")

During the financial year ended 31 March 1997, options over a total of
720,503 Ordinary Shares in the company were issued, details of which are as
follows:

<TABLE>
<CAPTION>
NUMBER OF
GRANT DATE EXPIRY DATE SHARE OPTIONS EXERCISE PRICE
- ----------- ----------- ------------- --------------
US$
<S> <C> <C> <C>
03.06.1996 02.06.2001 20,000 31.375
08.08.1996 07.08.2001 23,130 20.50
15.08.1996 14.08.2001 15,000 17.25
27.08.1996 26.08.2001 25,623 19.75
08.11.1996 07.11.2001 426,750 23.125
18.11.1996 17.11.2001 110,000 27.75
25.11.1996 24.11.2001 100,000 33.00
720,503
</TABLE>

The basis upon which the above options may be exercised have been disclosed
in the Directors' Report to the Audited Accounts for the financial year ended 31
March 1996.

107,806 Ordinary Shares in the company were issued during the financial
year by virtue of the exercise of options granted under the Plan.

As at 31 March 1997, the number and class of unissued shares under option
granted under the Plan was 1,582,500 Ordinary Shares, net of cancellation of
options for 76,607 Ordinary Shares.

The exercise price of incentive stock options (granted under the Plan's
discretionary option grant program to employees and which qualify for favourable
tax treatment under U.S. federal tax laws) and of options granted under the
Plan's automatic grant program may not be less than 100% of the fair market
value of the Ordinary Shares on the date of grant. The exercise price of
non-statutory options (granted under the Plan's discretionary option grant
program to certain consultants of the company or its parent, or subsidiary
corporations and which do not qualify for favourable tax treatment under U.S.
federal tax laws) must be at least 85% of the fair market value of the Ordinary
Shares on the date of grant.

No options may have a term in excess of 5 years and each option will be
subject to earlier termination in the event of the optionee's cessation of
service with the company. Outstanding options will not be transferable other
than in connection with the optionee's death.

The persons to whom options have been granted under the Plan do not have
any rights to participate by virtue of such options in any share issue of any
other company.

nCHIP Stock Option Plan (the "nCHIP Plan")

The nCHIP Plan was assumed by the company consequent upon the company's
acquisition of a 100% interest in nCHIP, Inc. in January 1995.

No options were granted under the nCHIP Plan during the financial year
ended 31 March 1997.

102,716 Ordinary Shares in the company were issued during the financial
year by virtue of the exercise of options granted under the nCHIP Plan.

4
<PAGE> 35

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS (CONTINUED)

As at 31 March 1997, the number and class of unissued shares under option
granted under the nCHIP Plan was 45,665 Ordinary Shares, net of cancellation of
options for 20,855 Ordinary Shares.

The exercise price of incentive stock options (which qualify for favourable
tax treatment under U.S. federal tax laws) may not be less than 100% of the fair
market value of the Common Stock of nCHIP, Inc. on the original grant date. The
exercise price of non-statutory options (which do not qualify for favourable tax
treatment under U.S. federal tax laws) must not be less than 85% of such fair
market value. In no event, however, will any option assumed by the company under
the nCHIP Plan have an exercise price per share less than the par value per
Ordinary Share of the company subject to that assumed option. The options will
expire on 26 January 2000.

The persons to whom options have been granted under the nCHIP Plan do not
have any rights to participate by virtue of such options in any share issue of
any other company.

ASSET VALUES

Before the profit and loss account and balance sheet of the company were
made out, the directors of the company took reasonable steps to ascertain that:

(a) action had been taken in relation to the writing off of bad debts and
the making of provision for doubtful debts and satisfied themselves
that all known bad debts had been written off and that adequate
provision had been made for doubtful debts; and

(b) any current assets which were unlikely to realise their book value in
the ordinary course of business had been written down to their
estimated realisable values or adequate provision had been made for the
difference between those values.

At the date of this report, the directors of the company are not aware of
any circumstances which would render:

(a) any amount written off for bad debts or the amount of the provision for
doubtful debts in the group inadequate to any substantial extent; and

(b) the values attributed to current assets in the consolidated accounts
misleading.

CHARGES AND CONTINGENT LIABILITIES

At the date of this report:

(i) no charge on the assets of the company or any corporation in the group
has arisen since the end of the financial year which secures the
liabilities of any other person; and

(ii) no contingent liability of the company or any corporation in the group
has arisen since the end of the financial year.

No contingent or other liability of the company or any corporation in the
group has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the
opinion of the directors of the company, will or may affect substantially the
ability of the company and of the group to meet its obligations as and when they
fall due.

OTHER CIRCUMSTANCES AFFECTING THE ACCOUNTS

At the date of this report the directors of the company are not aware of
any circumstances not otherwise dealt with in this report or consolidated
accounts which would render any amount stated in the accounts of the company and
the consolidated accounts misleading.

5
<PAGE> 36

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE DIRECTORS (CONTINUED)

UNUSUAL ITEMS AFTER THE FINANCIAL YEAR

In the opinion of the directors of the company, no item, transaction or
event of a material and unusual nature has arisen in the interval between the
end of the financial year and the date of this report which is likely to affect
substantially the results of the operations of the company or of the group for
the financial year in which this report is made.

AUDITORS

The auditors, Ernst & Young, Certified Public Accountants, have indicated
that they will not be seeking re-appointment.

On behalf of the Board of Directors,

Michael E. Marks
Director

Tsui Sung Lam
Director

31 July 1997
Singapore

6
<PAGE> 37

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

STATEMENT BY DIRECTORS PURSUANT TO SECTION 201(15)

We, Michael E. Marks and Tsui Sung Lam, being two of the directors of
Flextronics International Ltd., do hereby state that, in the opinion of the
directors:

(i) the balance sheets, profit and loss accounts and consolidated
statement of cash flows together with the notes thereto, set out on
pages 9-31 are drawn up so as to give a true and fair view of the
state of affairs of the company and of the group as at 31 March 1997,
the results of the company and of the group and cash flows of the
group for the year ended on that date; and

(ii) at the date of this statement there are reasonable grounds to believe
that the company will be able to pay its debts as and when they fall
due.

On behalf of the Board of Directors,

Michael E. Marks
Director

Tsui Sung Lam
Director

31 July 1997
Singapore

7
<PAGE> 38

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

REPORT OF THE AUDITORS TO THE MEMBERS OF FLEXTRONICS INTERNATIONAL LTD.

We have audited the accounts set out on pages 10 to 37 in accordance with
the Statements of Auditing Guideline and Statements of Auditing Practice and,
accordingly, included such tests of the accounting records and such other
auditing procedures as we considered appropriate in the circumstances.

In our opinion:

(a) the accounts are properly drawn up in accordance with the provisions of
the Companies Act, Cap. 50 and Statements of Accounting Standard and so
as to give a true and fair view of:

(i) the state of affairs of the group and of the company as at 31
March 1997, the results of the group and of the company and the
cash flows of the group for the year ended on that date; and

(ii) the other matters required by Section 201 of the Act to be dealt
with in the accounts and consolidated accounts;

(b) the accounting and other records and the registers required by the Act
to be kept by the company and by the subsidiary incorporated in
Singapore, of which we are the auditors, have been properly kept in
accordance with the provisions of the Act.

We have considered the accounts and auditors' reports of all the
subsidiaries for which we have not acted as auditors and the accounts of
subsidiaries of which an audit is not required by law in their countries of
incorporation being accounts that have been included in the consolidated
accounts. The subsidiary companies audited by our associated firms and those
audited by other firms are indicated in Note 3 to the accounts.

We are satisfied that the accounts of the subsidiaries that are
consolidated with the accounts of the holding company are in form and content
appropriate and proper for the purposes of the preparation of the consolidated
accounts, and we have received satisfactory information and explanations as
required by us for those purposes.

The auditors' reports on the accounts of the subsidiaries were not subject
to any qualification, and in respect of the subsidiary incorporated in
Singapore, did not include any comment made under sub-section (3) of Section 207
of the Act.

As disclosed in Note 8 to the accounts, the 1996 financial statements have
been restated to correct the Company's accounting for the acquisition of the
Astron Group Limited.

ERNST & YOUNG
Certified Public Accountants

31 July 1997
Singapore

8
<PAGE> 39

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

PROFIT AND LOSS ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 1997

<TABLE>
<CAPTION>
NOTE
----
GROUP COMPANY
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C>
SALES AND OTHER OPERATING REVENUE....... 4 686,818 627,685 -- 7,324
======= ======= ======= =======
OPERATING PROFIT/(LOSS)................. 5 26,780 (9,122) (2,736) (62,880)
----------- ----------- ----------- -----------
Interest on hire purchase contracts..... (2,209) (1,936) -- --
Interest income......................... 745 562 41 38
Term loan interest...................... (1,986) (1,255) (1,493) --
Subordinated loan interest.............. (44) (32) -- --
Interest on bank overdraft.............. (171) (33) -- --
Other interest expenses................. (1,482) (769) -- (280)
Redundancy costs........................ -- (409) -- --
Share of profits of associated
company............................... 338 -- -- --
----------- ----------- ----------- -----------
(4,809) (3,872) (1,452) (242)
------- ------- ------- -------
PROFIT/(LOSS) BEFORE TAXATION........... 21,971 (12,994) (4,188) (63,122)
Taxation................................ 6 (3,582) (5,307) (11) (14)
------- ------- ------- -------
PROFIT/(LOSS) AFTER TAXATION............ 18,389 (18,301) (4,199) (63,136)
Extraordinary item...................... 7 (8,215) (3,436) 15,120 --
------- ------- ------- -------
PROFIT/(LOSS) FOR THE YEAR TRANSFERRED
TO ACCUMULATED LOSSES................. 10,174 (21,737) 10,921 (63,136)
======= ======= ======= =======
STATEMENT OF ACCUMULATED LOSSES
BALANCE AT BEGINNING OF FINANCIAL YEAR
As previously stated.................. (42,878) (15,926) (70,537) (3,115)
Prior year adjustments................ 8 3,266 -- 3,587 --
------- ------- ------- -------
As restated........................... (39,612) (15,926) (66,950) (3,115)
Exchange difference arising on
translation........................... 1,797 (1,949) -- (699)
Retained profit/(loss) for the year..... 10,174 (21,737) 10,921 (63,136)
------- ------- ------- -------
BALANCE AT END OF FINANCIAL YEAR........ (27,641) (39,612) (56,029) (66,950)
======= ======= ======= =======
EARNINGS/(LOSS) PER SHARE
basic (in cents)...................... 9 128.6 (144.3)
fully diluted (in cents).............. 123.6 --
</TABLE>

The accompanying notes to the accounts form an integral part of the accounts.

9
<PAGE> 40

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

BALANCE SHEETS AS AT 31 MARCH 1997

<TABLE>
<CAPTION>
NOTE
----
GROUP COMPANY
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C> <C>
FIXED ASSETS............................ 10 155,351 85,878 -- --
INTEREST IN SUBSIDIARY COMPANIES........ 11 -- -- 146,686 118,788
INVESTMENT IN ASSOCIATE................. 12 2,373 -- 7,280 --
GOODWILL ARISING ON CONSOLIDATION....... 13 27,342 16,941 -- --
INTANGIBLE ASSETS....................... 14 14,658 17,167 -- --
DEFERRED EXPENDITURE.................... 15 2,425 489 -- --
OTHER RECEIVABLE........................ 16 3,575 2,919 -- --
CURRENT ASSETS:
----------- ----------- ----------- -----------
Cash and bank balances.................. 33,103 9,164 964 508
Trade accounts receivable............... 17 97,063 109,360 -- --
Other accounts receivable............... 18 14,617 5,680 5,485 --
Inventories............................. 19 149,217 73,691 -- --
Amounts due from subsidiary companies... 20 -- -- 199,629 39,664
----------- ----------- ----------- -----------
294,000 197,895 206,078 40,172
----------- ----------- ----------- -----------
CURRENT LIABILITIES:
----------- ----------- ----------- -----------
Amounts due to bankers.................. 21 155,506 20,131 155,400 --
Term loan -- current portion............ 21 1,061 1,503 -- --
Trade accounts payable and accruals..... 103,082 90,475 -- --
Other accounts payable.................. 22 47,206 15,392 15,038 1,070
Hire purchase creditors................. 23 9,065 9,431 -- --
Amounts due to subsidiary companies..... 20 -- -- 23,944 --
Taxation................................ 5,840 3,886 10 11
Notes payable........................... 25 7,000 14,000 7,000 14,000
----------- ----------- ----------- -----------
328,760 154,818 201,392 15,081
----------- ----------- ----------- -----------
NET CURRENT (LIABILITIES)/ASSETS........ (34,760) 43,077 4,686 25,091
TERM LOAN............................... 21 3,032 3,576 -- --
HIRE PURCHASE CREDITORS................. 23 14,191 14,168 -- --
DEFERRED TAXATION....................... 30 771 1,394 -- --
NOTES PAYABLE TO FORMER SHAREHOLDERS.... 24 312 960 -- --
NOTES AND OTHER PAYABLE................. 25 33,600 42,000 33,600 42,000
------- ------- ------- -------
119,058 104,373 125,052 101,879
======= ======= ======= =======
CAPITAL AND RESERVES
Share capital........................... 26 136 132 136 132
Share premium........................... 27 145,629 142,919 120,007 117,033
Capital reserve......................... 28 255 255 255 255
Revaluation reserve..................... 29 -- -- 60,683 51,409
Accumulated losses...................... (27,641) (39,612) (56,029) (66,950)
------- ------- ------- -------
118,379 103,694 125,052 101,879
Minority interest....................... 679 679 -- --
------- ------- ------- -------
119,058 104,373 125,052 101,879
======= ======= ======= =======
</TABLE>

The accompanying notes to the accounts form an integral part of the accounts.

10
<PAGE> 41

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 1997

<TABLE>
<CAPTION>
GROUP
--------------------
1997 1996
-------- ------
$'000 $'000
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Operating income/(loss) before taxation................................. 21,971 (12,994)
Adjustments for:
Depreciation of fixed assets.......................................... 18,786 13,372
Gain on sale of fixed assets.......................................... (4,049) (1,951)
Loss on sale of investment............................................ -- 374
Share of profit from associated company............................... (338) --
Allowance for stock obsolescence...................................... 5,918 796
Amortisation of goodwill arising on consolidation..................... 1,429 1,247
Amortisation of intangible assets..................................... 2,351 863
Amortisation of organisation expenses................................. 175 186
In process research & development written off......................... -- 40,601
Currency re-alignment................................................. 1,118 1,188
Interest expense...................................................... 5,892 4,025
Interest income....................................................... (745) (562)
Issuance of non-employee stock options................................ 532 --
--------- --------
OPERATING INCOME BEFORE REINVESTMENT IN WORKING CAPITAL................. 53,040 47,145
CHANGES IN OPERATING ASSETS AND LIABILITIES (NET OF EFFECTS OF
ACQUISITION)
Decrease/(increase) in accounts receivable.............................. 12,297 (37,105)
(Increase)/decrease in other accounts receivable........................ (8,652) 3,450
Increase in inventories................................................. (4,006) (26,009)
Increase in accounts payable............................................ 12,607 18,761
Increase in other accounts payable...................................... 16,642 4,821
Increase in amount due to associated company............................ 765 --
--------- --------
CASH GENERATED FROM OPERATIONS.......................................... 82,693 11,063
Interest received....................................................... 745 562
Interest paid........................................................... (5,892) (4,025)
--------- --------
Income taxes paid....................................................... (2,251) (3,668)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES............................... 75,295 3,932
========= ========
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of business, net of cash acquired.............................. (115,295) (21,213)
Purchase of fixed assets................................................ (44,757) (39,504)
Investment in associated company........................................ (4,200) --
Proceeds from sale of fixed assets...................................... 2,166 2,120
Deferred expenditure due to subsidiary incorporated..................... (2,084) (61)
Plant closure expenses.................................................. (784) --
(Repayment of)/proceeds from loan to related party...................... (656) 2,037
Repayment of note payable............................................... (14,648) (435)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES................................... (180,258) (57,056)
========= ========
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of share capital................................. 2,182 32,174
Proceeds from bank borrowings........................................... 135,375 14,396
(Repayment of)/proceeds from term loan.................................. (986) 144
Finance lease (repaid)/obtained......................................... (7,669) 8,963
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES............................... 128,902 55,677
========= ========
NET INCREASE IN CASH AND CASH EQUIVALENTS............................... 23,939 2,553
Effect of exchange rate changes......................................... -- (135)
Cash and cash equivalents at beginning of financial year................ 9,164 6,746
--------- --------
Cash and cash equivalents at end of financial year...................... 33,103 9,164
========= ========
</TABLE>

The accompanying notes to the accounts form an integral part of the accounts.

11
<PAGE> 42

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 1997

The acquisition of the Karlskrona Facilities from Ericsson have been shown
in the statement as a single item. The effect on the individual assets and
liabilities is set out below:

<TABLE>
<CAPTION>
ERICSSON
--------
$'000
<S> <C>
Fixed assets....................................................................... 44,898
Inventories........................................................................ 77,438
Debtors............................................................................ 285
Current liabilities................................................................ (7,326)
-------
NET ASSETS ACQUIRED................................................................ 115,295
-------
CASH FLOW ON ACQUISITION NET OF CASH ACQUIRED...................................... 115,295
=======
</TABLE>

The accompanying notes to the accounts form an integral part of the accounts.

12
<PAGE> 43

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

(a) BASIS OF ACCOUNTING

The accounts of the company and the group which are maintained in United
States dollars, are prepared under the historical cost convention except in
respect of investment in subsidiaries which is stated at valuation based on the
respective subsidiaries' net assets at the balance sheet date (see paragraph (k)
below). The financial statements have been prepared by translating the United
States dollars accounts to Singapore dollars at the exchange rate ruling at the
financial year end except for share capital and non-monetary items which have
been translated at historical rates. Exchange differences on currency
translation are taken to reserves.

The accounts are prepared in accordance with applicable accounting
standards.

(b) BASIS OF CONSOLIDATION

The consolidated accounts incorporate the accounts of the company and all
its subsidiary companies. The accounting year of the company and all its
subsidiary companies ends on 31 March.

The acquisition of Fine Line Printed Circuit Design Inc. ("Fine Line") in
1997 financial year was accounted for as a pooling of interest (see note 37).
However if the aggregate impact of the business is individually insignificant,
prior period financial statements are not required to be restated.

On acquisition of a subsidiary accounted for using purchase method, any
excess of the purchase consideration over the fair value of the assets acquired
at the date of acquisition is included in goodwill on consolidation and
amortised on a straight line basis (see paragraph (g) below). Assets,
liabilities and results of overseas subsidiaries are translated into Singapore
dollars on the basis outlined in paragraph (d) below.

Depreciation is calculated on the straight line method to write off the
cost of fixed assets over their estimated useful lives as follows:

<TABLE>
<S> <C>
Building............................................ 20 to 50 years
Leasehold improvements.............................. 10 years
Plant and equipment................................. 2 to 10 years
</TABLE>

(d) FOREIGN CURRENCIES

Foreign currency assets and liabilities are converted to United States
dollars at rates approximately those ruling at balance sheet date. Foreign
currency transactions are converted to United States dollars at the rates ruling
at the date of the transactions. All exchange differences on conversion of
foreign currencies are dealt with in the profit and loss account.

For inclusion in the consolidated accounts, the financial statements of the
company and the subsidiaries are translated into Singapore dollars at year end
exchange rates.

(e) DEFERRED EXPENDITURE

Deferred expenditure comprises preliminary expenses and is written off to
profit and loss account on a straight line basis over a five-year period
commencing from the date of commercial operations.

(f) REVENUE RECOGNITION

Revenues from the sale of manufactured products and services rendered are
recognised upon passage of title to the customer which generally coincides with
their delivery and passage.

13
<PAGE> 44

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

Revenues from contract manufacturing are recognised on the percentage of
completion method. Any losses are provided for as they become known.

(g) GOODWILL ARISING ON CONSOLIDATION

Goodwill represents the excess of the purchase price of acquired companies
over the fair value of the net assets acquired. Goodwill is amortised on a
straight line basis over the estimated life of the benefits received which
ranges from ten to twenty-five years. On an annual basis, the company evaluates
recorded goodwill for potential impairment against the current and estimated
undiscounted future operating income before goodwill amortisation of the
businesses to which the goodwill relates.

(h) INTANGIBLE ASSETS

Intangible assets comprise technical agreements, patents, trademarks,
developed technologies and identifiable intangible assets in a subsidiary's
assembled work force, its favourable lease and its customer list.

Technical agreements are being amortised on a straight line basis over the
periods not exceeding five years. Patents and trademarks are being amortised on
a straight line basis over periods not exceeding twenty-five years. Purchased
technologies are being amortised on a straight line basis over periods not
exceeding seven years. The identifiable intangible assets in the subsidiary's
assembled work force, its favourable lease and its customer list are amortised
on a straight line basis over the estimated life of the benefits received of
three to twenty years.

(i) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials on a first-in-first-out basis and in the case of
finished products, includes direct labour and attributable production overheads
based on normal levels of activity. Net realisable value represents the
estimated selling price less anticipated cost of disposal and after making
allowance for damaged, obsolete and slow-moving items.

(j) LEASED ASSETS

Where assets are financed by lease agreements that give rights
approximating to ownership (finance leases), the assets are capitalised under
fixed assets as if they had been purchased during the periods of the leases and
the corresponding lease commitments are included under liabilities. Lease
payments are treated as consisting of capital and interest elements and the
interest is charged to profit and loss account. Depreciation on the relevant
assets is charged to profit and loss account on the basis outlined in note (c)
above.

(k) SUBSIDIARY COMPANIES

The investments in subsidiary companies are revalued by the directors at
balance sheet date at amounts equal to the attributable net assets of the
subsidiaries concerned based on their audited accounts.

An increase in carrying amount arising from the revaluation is credited to
Revaluation Reserve. To the extent that a decrease in carrying amount offsets a
previous increase that has been credited to Revaluation Reserve and not
subsequently reversed or utilised, it is charged against that Revaluation
Reserve. In all other cases, a decrease in carrying amount is charged to income.
An increase on revaluation directly related to a previous decrease in carrying
amount that was charged to income is credited to income to the extent that it
offsets the previously recorded decrease.

Where a subsidiary is acquired at the end of a financial year, there will
be no revaluation of the subsidiary in that year of acquisition.

14
<PAGE> 45

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

(l) ASSOCIATED COMPANIES

An associated company is defined as a company, not being a subsidiary, in
which the Group has a longterm interest of not less than 20% of the equity and
in whose financial and operating policy decisions the Group exercises
significant influence.

The Group's share of the results of associated companies is included in the
consolidated profit and loss account. The Group's share of the post-acquisition
reserves of associated companies is included in the investments in the
consolidated balance sheet. Where the audited accounts are not co-terminous with
those of the Group, the share of profits is arrived at from the last audited
accounts available and unaudited management accounts to the end of the
accounting period.

Shares in associated companies are stated in the Company's balance sheet at
cost and provision is made for permanent impairment in values.

(m) FIXED ASSETS

Fixed assets are stated at cost less accumulated depreciation. The cost of
an asset comprises its purchase price and any directly attributable costs of
bringing the asset to working condition for its intended use. Expenditure for
additions, improvements and renewals are capitalised and expenditure for
maintenance and repairs are charged to the profit and loss account. When assets
are sold or retired, any gain or loss resulting from their disposal is included
in the profit and loss account.

(n) DEFERRED TAXATION

Deferred taxation is accounted for under the liability method whereby the
tax charge for the financial year is based on the disclosed book profit after
adjusting for all permanent differences. The amount of taxation deferred on
account of all timing differences is reflected in the deferred taxation account.
Deferred tax benefits are not recognised unless there is reasonable expectation
of their realisation.

(o) CASH AND CASH EQUIVALENT

Cash and cash equivalents consist of cash at bank and in hand less bank
overdrafts, but exclude secured bank overdrafts which are used for financing
activities.

(p) PRIOR YEAR ADJUSTMENTS

All income and expenditure arising in the course of the Company's and
Group's normal business are taken into account in arriving at the results for
the period. Any prior year adjustments are shown separately and are not included
in the results for the period.

2. GENERAL

The principal activity of the company, which is incorporated in Singapore,
is investment holding. The principal activities of the subsidiary companies are
as stated in Note 3.

There have been no significant changes in the nature of these activities
during the financial year.

15
<PAGE> 46

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

3. GROUP COMPANIES

The subsidiary companies at 31 March 1997 are as follows:

<TABLE>
<CAPTION>
PERCENTAGE OF ORIGINAL
COUNTRY OF EQUITY HELD COST OF
INCORPORATION BY THE GROUP INVESTMENT
NAME OF PRINCIPAL AND PLACE --------------- -----------------
COMPANY ACTIVITIES OF BUSINESS 1997 1996 1997 1996
- ---------------- -------------------------------- ------------- ------ ------ ------- -------
% % US$'000 US$'000
SUBSIDIARY COMPANIES
<S> <C> <C> <C> <C> <C> <C>
Flextronics Design, assembly and manufacture Singapore 100 100 3,977 3,977
Singapore of computer industrial grade
Pte Ltd printed circuit board
sub-assemblies, systems assembly
and testing
* Flextronics Designs, assembly and United States 100 100 12,017 4,017
International manufacture of computer of America
(USA), Inc. industrial grade printer circuit
(Formerly board sub-assemblies, and
known as products requiring advance
nCHIP, Inc) electronics packaging; marketing
and procurement representative
* Flextronics Manufacture of components for Hong Kong 100 100 -- --
Manufacturing computer equipment
(HK) Limited
Astron Sales and marketing business Mauritius 100 100 50 --
Technologies
Ltd
* Hiromichi Dormant British 100 100 2,107 2,107
Limited Virgin
Islands
* Flextronics Contract manufacturer of United 100 100 4,057 4,057
International electronics and Kingdome
(UK) Limited telecommunication equipment
(Formerly providing turnkey manufacturing
known as services to its customers
Assembly and
Automation
(Electronics
Limited)
Flextronics Investment holding United 100 -- 2 --
Holdings UK Kingdom
Limited
Flextronics de Design, assembly and manufacture Mexico 100 -- 7 --
Mexico S.A. de of computer industrial grade
C.V. printed circuit board
sub-assemblies, products that
require advanced electronic
packaging and the manufacture of
multi-chip modules, systems
assembly and testing and trading
of components
</TABLE>

On the date of acquisition, Fine Line Printed Circuit Design Inc. was
merged into Flextronics International (USA), Inc.

16
<PAGE> 47

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

Held by Flextronics
Holdings UK Limited

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Flextronics Investment holding Sweden 100 -- 13 --
Holdings AB
(formerly
known as
Insatsen 2334
AB)
</TABLE>

Held by Flextronics
Holdings AB

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Flextronics Design, assembly and manufacture Sweden 100 -- 1,304 --
International of computer industrial grade
Sweden AB printed circuit board
(formerly known sub-assemblies, systems assembly
as and testing
Insatsen 2333
AB)
</TABLE>

Held by Flextronics
Manufacturing (HK)
Ltd

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
* Astron Group Manufacturer of miniature, gold- Hong Kong 100 100 # #
Limited finished printed circuit boards
</TABLE>

17
<PAGE> 48

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

* Astron Group Manufacturer of miniature, gold- China 100 100 # #
(China) finished printed circuit boards
Limited
Zhuhai Dao Men Design, assembly and manufacture China 100 100 # #
Chao Yi of computer industrial grade
Technology Co. printed circuit board
Ltd. sub-assemblied, systems
assembly, miniature, gold
finished printed circuit board
</TABLE>

Held by Flextronics
International (USA)
Inc.

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
**Flex Asia (UK) Sales and marketing of computer United 100 100 # #
Ltd (Formerly industrial graded PCB assemblies Kingdom
known as and systems assembly
Flextronics
International
(UK) Ltd)
</TABLE>

- ---------------

* Audited by associated firms of Ernst & Young

** Audited by other firms

# The shareholdings of these companies are held by subsidiaries of Flextronics
International Ltd.

The associated company at 31 March 1997 is as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FICO Invest- Sales and manufacture of plastic Hong Kong 40 -- 5,200 --
ment Holding material products and its
Ltd by-products
</TABLE>

4. SALES AND OTHER OPERATING REVENUE

Sales and other operating revenue of the group represent invoiced trading
sales and services to customers. Sales is stated net of sales discounts given to
customers relating to options granted as a result of meeting the sales target.
Transactions within the group have been excluded.

Sales of the company represent dividend income from subsidiaries.

18
<PAGE> 49

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

5. OPERATING PROFIT/(LOSS)

Operating profit/(loss) is stated after charging/(crediting) the following:

<TABLE>
<CAPTION>
GROUP COMPANY
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Directors' remuneration
-- directors of the company....... 1,777 1,182 -- --
-- other directors of
subsidiaries................... 615 718 -- --
Auditors' remuneration --
-- auditors of the company........ 109 109 -- 84
-- other auditors of
subsidiaries................... 510 264 -- --
Depreciation of fixed assets........ 18,786 13,372 -- --
(Gain) on sale of fixed assets...... (4,049) (1,951) -- --
Loss on sale of investment.......... -- 374 -- --
Amortisation of deferred
expenditure....................... 175 186 -- --
Amortisation of goodwill on
consolidation..................... 1,429 1,247 -- --
Amortisation of intangible assets... 2,351 863 -- --
Provision for stock obsolescence.... 5,918 796 -- --
Write off of In process research and
development....................... -- 40,601 -- --
Exchange (gain)..................... (1,635) (1,213) -- --
======= ======= ======= =======
</TABLE>

6. TAXATION

<TABLE>
<S> <C> <C> <C> <C>
Profit for taxation in respect of
profit for the financial year:
Current taxation -- Singapore..... 2,250 1,831 10 14
-- Foreign...... 1,954 3,172 -- --
Deferred taxation (note 30)....... (623) 118 -- --
Underprovision in respect of
previous financial years....... 1 186 1 --
------- ------- ------- -------
3,582 5,307 11 14
======= ======= ======= =======
</TABLE>

The taxation charge for the Group differs from the amount determined by
applying the Singapore income tax rate of 26% to the pre-tax profits because of
non-deductible expenses, difference in tax rates applicable to overseas
subsidiaries and utilisation of investment allowance.

7. EXTRAORDINARY ITEM

<TABLE>
<CAPTION>
GROUP COMPANY
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Provision for plant closure......... (8,215) (3,436) -- --
Waiver of notes payable............. -- -- 15,120 --
======= ======= ======= =======
</TABLE>

The provision for plant closure of $8,215,000 relates to the costs incurred
in the closure of the Texas facility, the write off of obsolete equipment at the
nChip semiconductor fabrication facility and downsizing the Singapore
manufacturing operations. The provision includes $2,800,000 provision for
severance and $700,000

19
<PAGE> 50

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

provision for the write off of fixed assets in the Singapore manufacturing
facilities. An amount of $3,931,000 associated with certain obsolete equipment
at the Company's facilities in nChip and Texas have been written off. The
provision also includes severance payments amounting to $784,000 for the
employees of Texas and nChip facilities.

The extraordinary gain of $15,210,000 arises from the waiver by a
subsidiary of the rights and interest of two promissory notes sold by the
Company.

8. PRIOR YEAR ADJUSTMENTS

The Astron Group Limited was acquired by the Company in February 1996.
During the current financial year, the Company reconsidered its accounting for
this acquisition and a new independent valuation was performed as of the date of
the acquisition to correct certain errors noted in the original valuation and
the cost of acquiring Astron has also been changed. Consequently, the
comparative figures for the Group and the Company have been restated to give
effect to the change in purchase consideration and the new allocation of the
revised purchase price to various classes of assets and liabilities.

The effect on the various classes of assets and liabilities based on the
new valuation report are as follows:

<TABLE>
<CAPTION>
1996
-------------------
GROUP COMPANY
------- -------
$'000 $'000
<S> <C> <C>
Increase in fixed assets................................. 335 --
Increase in goodwill arising from consolidation.......... 3,523 --
Increase in intangible assets............................ 16,033 --
Increase in investment in subsidiaries................... -- 20,212
Decrease in other accounts payable....................... 4,375 4,375
Increase in Notes and Other Payable...................... 21,000 21,000
</TABLE>

Accordingly, prior year adjustments have also been made against opening
reserves to give effect to the following:

<TABLE>
<CAPTION>
GROUP COMPANY
------- -------
$'000 $'000
<S> <C> <C>
Increase in amortisation of goodwill arising on
consolidation.......................................... (30) --
Increase in amortisation of intangible assets............ (291) --
Decrease in In process research and development written
back................................................... 3,587 3,587
------- -------
3,266 3,587
======= =======
</TABLE>

9. EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share are calculated by dividing the net
profit/(loss) after tax of $18,389,000 (1996: ($18,301,000)) with the weighted
average of 14,299,000 Ordinary Shares (1996: 12,684,000 Ordinary Shares) in
issue during the financial year.

The fully diluted earnings per share is calculated after adjusting for
those shares not yet exercised under the share options to purchase Ordinary
Shares.

20
<PAGE> 51

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

10. FIXED ASSETS

<TABLE>
<CAPTION>
FREEHOLD LEASEHOLD PLANT AND
GROUP BUILDING IMPROVEMENTS EQUIPMENT TOTAL
--------------------------------- -------- ------------ --------- -------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Cost
At beginning of financial
year........................ 18,979 11,074 108,879 138,932
Currency realignment........... 216 -- 1,019 1,235
Due to acquisition of
subsidiaries................ 21,165 -- 23,733 44,898
Additions...................... 13,029 9,591 22,137 44,757
Disposals/write off............ (466) (411) (14,554) (15,431)
------ ------ ------- -------
At end of financial year....... 52,923 20,254 141,214 214,391
====== ====== ======= =======
Accumulated depreciation
At beginning of financial
year........................ 563 2,246 50,245 53,054
Currency realignment........... 25 (40) 598 583
Due to acquisition of
subsidiaries................ -- -- -- --
Charge for the financial
year........................ 843 1,004 16,939 18,786
Disposals/write off............ (51) (352) (12,980) (13,383)
------ ------ ------- -------
At end of financial year....... 1,380 2,858 54,802 59,040
====== ====== ======= =======
Charge for 1996................ 145 928 12,299 13,372
====== ====== ======= =======
Net book value
At 31 March 1997............... 51,543 17,396 86,412 155,351
At 31 March 1996............... 18,416 8,828 58,634 85,878
====== ====== ======= =======
</TABLE>

Plant and equipment includes items costing $41,876,609 (1996: $39,742,226)
were purchased under hire purchase contracts (note 23).

11. INTEREST IN SUBSIDIARY COMPANIES

<TABLE>
<CAPTION>
COMPANY
-------------------
1997 1996
-------- -------
$'000 $'000
<S> <C> <C>
Unquoted shares, at directors' valuation:
At beginning of financial year............................ 118,788 50,894
Currency realignment...................................... -- (717)
Acquisition of subsidiary................................. 18,624 97,123
Disposal of subsidiary.................................... -- (68,281)
Revaluation............................................... 9,274 39,769
------- -------
At end of financial year.................................. 146,686 118,788
======= =======
</TABLE>

The company's investment in subsidiary companies is stated at the
attributable share of their combined net asset value. The revaluation surplus
for the year is $9,274,000 (1996: $39,769,000).

The subsidiaries acquired during the financial year have been stated at the
cost of investment less any provision for diminution in net asset value. It is
the directors' opinion that any revaluation of these subsidiaries is not
necessary in the current year.

The company's subsidiaries operating in the People's Republic of China are
required to obtain approval from the relevant authorities when making foreign
currency payments.

21
<PAGE> 52

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

12. ASSOCIATED COMPANY

<TABLE>
<CAPTION>
GROUP COMPANY
-------------- --------------
1996 1997 1996
------ ------ ------
1997 $'000 $'000 $'000
------
$'000
<S> <C> <C> <C> <C>
Unquoted shares -- at cost............................... 2,800 -- 7,280 --
Share of net post-acquisition reserve.................... 338 -- -- --
Amounts payable on current account....................... (765) -- -- --
----- -----
At end of financial year................................. 2,373 -- 7,280 --
===== =====
</TABLE>

Amounts owing to associated companies are unsecured, interest-free and have
no fixed term of payment.

Associated company is stated in note 3.

13. GOODWILL ARISING ON CONSOLIDATION

<TABLE>
<CAPTION>
GROUP
-----------------
1997 1996
------ ------
$'000 $'000
<S> <C> <C>
Cost
At beginning of financial year........................... 21,803 12,058
Additions................................................ 11,830 9,745
------ ------
At end of financial year................................. 33,633 21,803
------ ------
Amortisation
At beginning of financial year........................... 4,862 3,615
------ ------
Amortisation for the financial year...................... 1,429 1,247
------ ------
At end of financial year................................. 6,291 4,862
------ ------
Net book value at end of financial year.................... 27,342 16,941
====== ======
</TABLE>

14. INTANGIBLE ASSETS

<TABLE>
<CAPTION>
GROUP
-----------------
1997 1996
------ ------
$'000 $'000
<S> <C> <C>
Cost
At beginning of financial year........................... 18,515 1,458
Currency realignment..................................... -- (4)
(Write-off)/additions.................................... (158) 17,061
------ ------
At end of financial year................................. 18,357 18,515
------ ------
Amortisation
At beginning of financial year........................... 1,348 486
Currency realignment..................................... -- (1)
Amortisation for the financial year...................... 2,351 863
------ ------
At end of financial year................................. 3,699 1,348
------ ------
Net book value at end of financial year.................. 14,658 17,167
====== ======
</TABLE>

22
<PAGE> 53

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

15. DEFERRED EXPENDITURE

<TABLE>
<CAPTION>
GROUP
---------------
1997 1996
----- -----
$'000 $'000
<S> <C> <C>
Cost
At beginning of financial year............................. 935 595
Currency realignment....................................... -- (8)
Additions.................................................. 2,111 359
Disposals.................................................. -- (11)
----- -----
At end of financial year................................... 3,046 935
----- -----
Amortisation
At beginning of financial year............................. 446 275
Currency realignment....................................... -- (4)
Charge for the year........................................ 175 186
Disposals.................................................. -- (11)
----- -----
At end of financial year................................... 621 446
----- -----
Net book value at end of financial year...................... 2,425 489
===== =====
</TABLE>

16. OTHER RECEIVABLE

<TABLE>
<CAPTION>
GROUP
---------------
1997 1996
----- -----
$'000 $'000
<S> <C> <C>
Loan to related party (Note 35).............................. 3,575 2,919
===== =====
</TABLE>

The loan is unsecured by a corporate guarantee, bears interest at 7.15% per
annum and is wholly repayable by 4 February 1999.

17. TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable of the group are stated after provision for
doubtful debts of $7,920,000 (1996: $5,006,000).

<TABLE>
<CAPTION>
GROUP
----------------
1997 1996
------ -----
$'000 $'000
<S> <C> <C>
Provision for doubtful debts is analysed as:
Balance at beginning of the financial year................ 5,006 2,499
Currency realignment...................................... 35 (35)
Provision during the financial year....................... 5,905 2,772
Due to acquisition of subsidiaries........................ -- 197
Amounts written off/back.................................. (3,026) (427)
------ -----
Balance at end of the financial year...................... 7,920 5,006
====== =====
</TABLE>

23
<PAGE> 54

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

18. OTHER ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
GROUP COMPANY
----------------- ----------------
1997 1996 1997 1996
------- ------ ------ ------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Prepayments................................. 9,572 2,245 5,478 --
Deposits.................................... 3,134 2,100 -- --
Sundry debtors.............................. 1,911 1,335 7 --
------ ----- ----- -----
14,617 5,680 5,485 --
====== ===== ===== =====
</TABLE>

19. INVENTORIES

<TABLE>
<CAPTION>
GROUP
-------------------
1997 1996
-------- -------
$'000 $'000
<S> <C> <C>
Raw materials.............................................. 98,538 59,083
Work in progress........................................... 23,185 19,668
Finished goods............................................. 36,133 1,346
------- ------
157,856 80,097
Deduct: Provision for obsolescence......................... (8,639) 6,406)
------- ------
149,217 73,691
======= ======
</TABLE>

20. AMOUNTS DUE FROM/TO SUBSIDIARY COMPANIES

The amounts due from/to subsidiary companies are unsecured and have no
fixed terms of repayment.

21. BANK BORROWINGS

<TABLE>
<CAPTION>
GROUP
-------------------
1997 1996
-------- -------
$'000 $'000
<C> <S> <C> <C>
(a) Term loan (secured)
Total outstanding................................ 4,093 5,079
Deduct: current portion.......................... (1,061) (1,503)
------
Long term portion................................ 3,032 3,576
======
(b) Amounts due to bankers (secured)
Short-term advances.............................. 155,506 20,131
======
</TABLE>

The group's banking facilities are secured by:

(a) corporate guarantees from holding company and several of its subsidiary
companies;

(b) a first fixed charge over the securities and a pledge of the Company's
shares in certain of its subsidiaries;

(d) a lien on all accounts receivable and inventory of the Company and its
subsidiaries.

The weighted average interest rate on short-term advances as at year-end is
8.50% (1996 : 6.41%) per annum.

24
<PAGE> 55

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

22. OTHER ACCOUNTS PAYABLE

<TABLE>
<CAPTION>
GROUP COMPANY
------------------- ------------------
1997 1996 1997 1996
------- ------- ------- ------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Miscellaneous creditors.............. 23,504 6,475 2,554 --
Accruals............................. 14,952 8,917 3,734 1,070
Purchase obligation earnout.......... 8,750 -- 8,750 --
------- ------- ------- -------
47,206 15,392 15,038 1,070
======= ======= ======= =======
</TABLE>

The purchase obligation earnout, payable to former shareholders of a
subsidiary was agreed by management in March 1997.

23. HIRE PURCHASE CREDITORS

At balance sheet date, future minimum instalment payments under hire
purchase contracts are as follows:

<TABLE>
<CAPTION>
GROUP
-------------------
1997 1996
------- -------
$'000 $'000
<S> <C> <C>
1997................................................... -- 11,144
1998................................................... 10,849 8,382
1999................................................... 7,719 4,775
2000................................................... 4,594 2,061
2001................................................... 3,030 705
2002................................................... 786 --
------- -------
Total instalment payments................................ 26,978 27,067
Amount representing interest............................. (3,722) 3,468)
------- -------
Present value of net instalment payments................. 23,256 23,599
Deduct: Current portion.................................. (9,065) (9,431)
------- -------
Long-term portion of hire purchase contracts............. 14,191 14,168
======= =======
</TABLE>

24. NOTES PAYABLE TO FORMER SHAREHOLDERS

This relates to note payable to former shareholders of nCHIP, Inc. The
notes are interest bearing at 5.7% per annum and are secured upon some licence
agreements. Repayments is schedule as follows:

<TABLE>
<CAPTION>
GROUP
-------------------
1997 1996
------- ------
$'000 $'000
<S> <C> <C>
1997................................................... -- 685
1998................................................... 156 142
1999................................................... 156 142
------- -------
Total.................................................... 312 969
Currency realignment..................................... -- (9)
------- -------
312 960
======= =======
</TABLE>

25
<PAGE> 56

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

25. NOTES AND OTHER PAYABLE

GROUP COMPANY
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Notes
Promissory notes bearing interest at
8% per annum...................... 7,000 21,000 7,000 21,000
Deduct: Current portion............. (7,000) (14,000) (7,000) (14,000)
------- ------- ------- -------
Long term portion................. -- 7,000 -- 7,000
Other payable
Issuance of Ordinary shares......... 28,000 28,000 28,000 28,000
In cash............................. 5,600 7,000 5,600 7,000
------- ------- ------- -------
33,600 42,000 33,600 42,000
======= ======= ======= =======
</TABLE>

26. SHARE CAPITAL

GROUP COMPANY
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Authorised: --
100,000,000 Ordinary Shares of $0.01
each............................... 1,000 1,000 1,000 1,000
======= ======= ======= =======
Issued and fully paid
Balance as previously stated.......... 132 116 132 116
Retroactive adjustment on merger of
companies (note 1b)................ -- -- -- --
------- ------- ------- -------
Balance brought forward............... 132 116 132 116
Issued: --
1,000,000 Ordinary Shares for cash in
respect of secondary listing.......... -- 10 -- 10
66,908 shares as part consideration for
the purchase of Assembly & Automation
(Electronics) Ltd..................... -- 1 -- 1
238,684 shares as part consideration for
the purchase of Astron Group
Limited............................... -- 2 -- 2
239,633 (1996: 304,201) shares for cash
at a premium of $1,964,000
(1996:$1,410,000) by virtue of the
exercise of share options............. 2 3 2 3
223,321 shares for the purchase of Fine
Line Printed Circuit Design Inc....... 2 -- 2 --
------- ------- ------- -------
136 132 136 132
======= ======= ======= =======
</TABLE>

During the year, 20,000 stock options were issued to a customer for
subscription of ordinary shares.

26
<PAGE> 57

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

27. SHARE PREMIUM

<TABLE>
<CAPTION>
GROUP COMPANY
--------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Balance brought forward......... 142,919 100,338 117,033 74,452
Premium on issue of ordinary
shares........................ 2,496 44,230 1,964 44,230
-------- -------- -------- --------
Expenses on issuance of
shares........................ (56) (1,649) (56) (1,649)
Issuance of shares for purchase
of Fine Line Printed Circuit
Design Inc.................... 270 -- -- --
Cost related to exercise of
share options by employees.... -- -- 1,066 --
-------- -------- -------- --------
At end of financial year........ 145,629 142,919 120,007 117,033
======== ======== ======== ========
</TABLE>

28. CAPITAL RESERVE

The company, which is listed on NASDAQ in the United States of America,
also prepares accounts which comply with United States generally accepted
accounting principles. These accounts, which are in United States dollars, are
filed with the Securities and Exchange Commission ("SEC") in the United States.
During the year ended 31 March 1994, an amount of $254,885 representing the
difference between the fair market value at the date of grant of certain share
options to selected management employees and the exercise price of the options
was charged to the profit and loss account in compliance with United States
generally accepted accounting principles. No such charge was made in the
preparation of the Singapore statutory accounts as there is no equivalent
accounting standard in Singapore. In order to reduce the revenue reserve to that
reported in the accounts prepared in compliance with United States generally
accepted accounting principles, an amount of $254,885 was transferred from
revenue reserve to capital reserve. Details of the share options granted are
detailed in note 31.

29. REVALUATION RESERVE

<TABLE>
<CAPTION>
COMPANY
-----------------
1997 1996
------ ------
$'000 $'000
<S> <C> <C>
At beginning of financial year............................. 51,409 11,640
Revaluation of investment in subsidiary companies (note
11)...................................................... 9,274 39,769
------ ------
At end of financial year................................... 60,683 51,409
====== ======
</TABLE>

30. DEFERRED TAXATION

<TABLE>
<CAPTION>
GROUP
---------------
1997 1996
----- -----
$'000 $'000
<S> <C> <C>
At beginning of financial year............................... 1,394 980
Currency realignment......................................... -- (15)
(Reversed)/provided during the year (note 6)................. (623) 118
Changes in group structure................................... -- 311
----- -----
At end of financial year..................................... 771 1,394
===== =====
</TABLE>

The deferred taxation arises mainly due to excess of net book value over
tax written down value of fixed assets.

27
<PAGE> 58

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

The potential deferred tax asset arises substantially from tax losses
available for carry-forward. These tax losses can only be set off against future
income of the operations in respect of which the tax losses arose.

As a result, management is uncertain as to when or whether these operations
will generate sufficient profit to realise the deferred tax asset benefit.

31. SHARE OPTION PLANS

The following table represents the activity for options:

<TABLE>
<CAPTION>
OPTIONS OPTIONS OUTSTANDING
AVAILABLE FOR -----------------------------------
GRANT SHARES PRICE PER SHARE
------------- --------- ---------------------
<S> <C> <C> <C>
BALANCE AT MARCH 31, 1995....... 520,178 1,060,564 US$2.92 - US$16.75
Increase in options available
for grant..................... 600,000 -- US$0.01 - US$35.75
Options granted................. (641,783) 641,783 US$14.75 - US$35.75
Options exercised............... -- (304,201) US$0.77 - US$14.50
Options cancelled............... 71,146 (71,146) US$0.77 - US$24.00
-------- ---------
BALANCE AT MARCH 31, 1996....... 549,541 1,327,000
Increase in options available
for grant..................... 500,000 -- US$0.01 - US$35.75
Options granted................. (720,503) 720,503 US$17.75 - US$31.375
Options exercised............... -- (239,633) US$0.77 - US$24.00
Options cancelled............... 97,462 (97,462) US$0.77 - US$35.75
-------- ---------
BALANCE AT MARCH 31, 1997....... 426,500 1,710,408
======== =========
</TABLE>

In January 1995, the Company acquired nCHIP and thereby assumed the
existing nCHIP employee stock options. The outstanding nCHIP employee stock
options were converted into options to purchase approximately 345,389 of the
Company's ordinary shares. As at 31 March 1997, options to subscribe 230,397
Ordinary Shares have been exercised.

The above options will expire between July 1998 and November 2001.

32. OPERATING LEASE COMMITMENTS

At the balance sheet date, commitments for minimum rental payments under
non-cancellable operating leases with a term of more than one year are as
follows:-

<TABLE>
<CAPTION>
GROUP
-----------------
1996
------
1997 $'000
------
$'000
<S> <C> <C>
1997....................................................... -- 3,047
1998....................................................... 4,622 2,494
1999....................................................... 4,310 2,143
2000....................................................... 3,365 1,606
2001....................................................... 2,376 1,111
2002....................................................... 1,969 2,646
Thereafter................................................. 7,725 --
------ ------
24,367 13,047
====== ======
</TABLE>

28
<PAGE> 59

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

33. CONTINGENT LIABILITIES

During the financial year under review, the company and one of its
subsidiary companies entered into revolving credit facility and term loan
agreements with a consortium of bankers for facilities amounting to
USD175,000,000. The facilities are secured by guarantees, debentures and charges
given by the company and its subsidiary companies in favour of the bankers.

In addition, the company and its subsidiaries have also entered into
guarantees to secure hire purchases and lease agreements and also the due
performance of one of its subsidiaries of the latter's obligations under an
Asset Transfer Agreement in relation to the purchase of Ericsson.

34. FUTURE CAPITAL EXPENDITURE

<TABLE>
<CAPTION>
GROUP
---------------
1997 1996
---- ----
$'000 $'000
<S> <C> <C>
Capital expenditure not provided for in the accounts:-
Commitments in respect of contracts placed................ 14,165 641
------ ---
Other amounts approved by directors but not committed..... 54,091 --
====== ===
</TABLE>

35. RELATED PARTY TRANSACTIONS

(a) The following are the significant transactions entered into by the
group with a company in which a director of a company acquired during
the financial year has a beneficial interest:

<TABLE>
<CAPTION>
GROUP COMPANY
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
$'000 $'000 $'000 $'000
<S> <C> <C> <C> <C>
Loan made (Note 16)..................... 3,575 2,919 -- --
Interest received on loan made.......... (169) (38) -- --
Rent paid............................... 291 49 -- --
Management fees paid.................... 165 -- -- --
====== ====== ====== ======
</TABLE>

(b) Sales during the financial year amounting to $2,166,515 (1996 :
$2,986,161) were made to a company in which a director of the company
was the former President and Chief Executive Officer and remained as a
director during the financial year.

(c) In March 1997, the company revised the agreement to pay in June 1998, a
$21 million consulting fee to an entity affiliated with Stephen J.L.
Rees, Senior Vice President, Worldwide Sales and Marketing. The Company
and Mr. Rees agreed to remove the remaining conditions to payment of
the fee and to reduce this amount of the fees which remains payable in
June 1998 to $19.6 million.

29
<PAGE> 60

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

36. SEGMENT REPORTING

A summary of the group's operations by geographical area is as follows:

<TABLE>
<CAPTION>
1997 1996
-------- --------
$'000 $'000
<S> <C> <C>
NET SALES:
Singapore:
Unaffiliated customers
Domestic.......................................... 1,962 914
Export............................................ 1,192 12,988
Intercompany......................................... 123,275 109,059
-------- --------
126,429 122,961
-------- --------
USA and UK:
Unaffiliated customers
Domestic.......................................... 291,515 291,145
Export............................................ 3,403 19,274
Intercompany...................................... 12 38
-------- --------
294,930 310,457
-------- --------
Hong Kong and China:
Unaffiliated customers
Domestic.......................................... 15,957 16,573
Export............................................ 29,684 4,173
Intercompany......................................... 180,826 85,091
-------- --------
226,467 105,837
-------- --------
Malaysia:
Unaffiliated customers
Domestic.......................................... 343,105 282,618
Export............................................ -- --
Intercompany......................................... -- --
-------- --------
343,105 282,618
-------- --------
Eliminations......................................... (304,113) (194,188)
-------- --------
686,818 627,685
======== ========
OPERATING PROFIT/(LOSS):
Singapore............................................ 2,211 (35,454)
Hong Kong, China & Mauritius......................... 8,752 (7,703)
USA and Mexico....................................... (3,085) 6,384
Europe............................................... (2,130) (1,922)
Malaysia............................................. 21,032 29,573
-------- --------
26,780 (9,122)
======== ========
IDENTIFIABLE ASSETS:
Singapore............................................ 66,961 65,422
Hong Kong, China & Mauritius......................... 96,174 70,397
USA & Mexico......................................... 104,837 103,215
Europe............................................... 163,686 15,484
Malaysia............................................. 68,066 66,771
-------- --------
499,724 321,289
======== ========
</TABLE>

30
<PAGE> 61

FLEXTRONICS INTERNATIONAL LTD. AND SUBSIDIARY COMPANIES

NOTES TO THE ACCOUNTS -- (CONTINUED)

37. BUSINESS COMBINATION

In November 1996, the Company acquired Fine Line for the issue of an
aggregate of 223,321 Ordinary Shares of $0.01 each, in exchange for all of the
outstanding capital of Fine Line. The transaction was accounted for as a pooling
of interests, however due to the insignificant aggregate impact on the Company,
restatement of prior year financial statements is not required and Fine Line was
merged into the books of Flextronics International (U.S.A.) Inc.

On March 27, 1997, the Company purchased the manufacturing facilities of
Ericsson Business Networks AB's two manufacturing plants in Karlskrona, Sweden
for a cash consideration of $115,295,000.

38. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with the
current year's presentation.

31
<PAGE> 62

Robert R. B. Dykes
1225 Larnel Place
Los Altos, CA 94024
United States of America

September 9, 1997

Flextronics International Ltd.
36 Robinson Road #18-01
City House
Singapore 068877

Attention: Ms. Yap Lune Teng
Joint Secretary

Re: Nomination of Auditors

Dear Sirs:

I, the undersigned, being a member of your Company, hereby nominate
(pursuant to Section 205(11) of the Companies Act, Cap. 50 of Singapore) M/s
Arthur Andersen for appointment as Auditors of the Company at the forthcoming
Annual General Meeting of the Company in place of the retiring Auditors, M/s
Ernst & Young.

Accordingly, I intend to propose the following resolution at the
forthcoming Annual General Meeting:-

"That M/s Arthur Andersen be and are hereby appointed as Auditors of the
Company, in place of the retiring Auditors, M/s Ernst & Young, to hold office
until the conclusion of the next Annual General Meeting at a fee to be
determined by the Directors."

Yours faithfully,

/s/ ROBERT R. B. DYKES
Robert R. B. Dykes

32
<PAGE> 63
FLEXTRONICS INTERNATIONAL LTD. 1997 EMPLOYEE SHARE PURCHASE PLAN

As Adopted September 10, 1997

1. ESTABLISHMENT OF PLAN. Flextronics International Ltd. (the
"COMPANY") proposes to grant options for purchase of the Company's Ordinary
Shares to eligible employees of the Company and its Participating Subsidiaries
(as hereinafter defined) pursuant to this Employee Share Purchase Plan (this
"PLAN"). For purposes of this Plan, "PARENT CORPORATION" and "SUBSIDIARY"
(collectively, "PARTICIPATING SUBSIDIARIES") shall have the same meanings as
"parent corporation" and "subsidiary corporation" in Sections 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended (the "CODE").
"PARTICIPATING SUBSIDIARIES" are Parent Corporations or Subsidiaries that the
Board of Directors of the Company (the "BOARD") designates from time to time as
corporations that shall participate in this Plan. The Company intends this Plan
to qualify as an "employee stock purchase plan" under Section 423 of the Code
(including any amendments to or replacements of such Section), and this Plan
shall be so construed. Any term not expressly defined in this Plan but defined
for purposes of Section 423 of the Code shall have the same definition herein. A
total of 75,000 Ordinary Shares of the Company are reserved for issuance under
this Plan. Such number shall be subject to adjustments effected in accordance
with Section 14 of this Plan.

2. PURPOSE. The purpose of this Plan is to provide eligible employees
of the Company and Participating Subsidiaries with a convenient means of
acquiring an equity interest in the Company through payroll deductions, to
enhance such employees' sense of participation in the affairs of the Company and
Participating Subsidiaries, and to provide an incentive for continued
employment.

3. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "COMMITTEE"). As used in this Plan, references to the "Committee"
shall mean either such committee or the Board if no committee has been
established. Subject to the provisions of this Plan and the limitations of
Section 423 of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Committee
and its decisions shall be final and binding upon all participants. Members of
the Committee shall receive no compensation for their services in connection
with the administration of this Plan, other than standard fees as established
from time to time by the Board for services rendered by Board members serving on
Board committees. All expenses incurred in connection with the administration of
this Plan shall be paid by the Company.

4. ELIGIBILITY. Any employee of the Company or the Participating
Subsidiaries is eligible to participate in an Offering Period (as hereinafter
defined) under this Plan except the following:

(a) employees who are not employed by the Company or Participating
Subsidiaries one month before the beginning of such Offering Period;

(b) employees who are customarily employed for twenty (20) hours or
less per week;

(d) employees who, together with any other person whose shares
would be attributed to such employee pursuant to Section 424(d) of the Code, own
shares or hold options to purchase shares possessing five percent (5%) or more
of the total combined voting power or value of all classes of shares of the
Company or any of its Participating Subsidiaries or who, as a result of being
granted an option under this Plan with respect to such Offering Period, would
own shares or hold options to purchase shares possessing five percent (5%) or
more of the total combined voting power or value of all classes of shares of the
Company or any of its Participating Subsidiaries; and

(e) individuals who provide services to the Company or any of its
Participating Subsidiaries as independent contractors who are reclassified as
common law employees for any purpose other than federal income and employment
tax purposes.

<PAGE> 64

5. OFFERING DATES. The offering periods of this Plan (each, an
"OFFERING PERIOD") shall be of six (6) months duration commencing on December 1
and June 1 of each year and ending on May 31 and November 30 of each year. Each
Offering Period shall consist of one (1) six-month purchase period (a "PURCHASE
PERIOD") during which payroll deductions of the participants are accumulated
under this Plan. The first Offering Period shall begin on December 1, 1997. The
first business day of each Offering Period is referred to as the "OFFERING
DATE". The last business day of each Purchase Period is referred to as the
"PURCHASE DATE". The Board shall have the power to change the duration of
Offering Periods or Purchase Periods with respect to offerings (and specifically
shall have the power to change the duration of Offering Periods from six (6)
months to twenty-four (24) months) without shareholder approval if such change
is announced at least fifteen (15) days prior to the scheduled beginning of the
first Offering Period or Purchase Period to be affected.

6. PARTICIPATION IN THIS PLAN. Eligible employees may become
participants in an Offering Period under this Plan on the first Offering Date
after satisfying the eligibility requirements by delivering a subscription
agreement to the Company's treasury department (the "TREASURY DEPARTMENT") not
later than fifteen (15) days before such Offering Date unless a later time for
filing the subscription agreement authorizing payroll deductions is set by the
Committee for all eligible employees with respect to a given Offering Period. An
eligible employee who does not deliver a subscription agreement to the Treasury
Department by such date after becoming eligible to participate in such Offering
Period shall not participate in that Offering Period or any subsequent Offering
Period unless such employee enrolls in this Plan by filing a subscription
agreement with the Treasury Department not later than fifteen (15) days
preceding a subsequent Offering Date. Once an employee becomes a participant in
an Offering Period, such employee will automatically participate in the Offering
Period commencing immediately following the last day of the prior Offering
Period unless the employee withdraws or is deemed to withdraw from this Plan or
terminates further participation in the Offering Period as set forth in Section
11 below. Such participant is not required to file any additional subscription
agreement in order to continue participation in this Plan.

7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of whole Ordinary Shares of the Company
determined by dividing (a) the amount accumulated in such employee's payroll
deduction account during such Purchase Period by (b) the lower of (i)
eighty-five percent (85%) of the fair market value of an Ordinary Share of the
Company on the Offering Date (but in no event less than the par value of the
Company's Ordinary Shares), or (ii) eighty-five percent (85%) of the fair market
value of an Ordinary Share of the Company on the Purchase Date (but in no event
less than the par value of the Company's Ordinary Shares) and rounding down to
the nearest whole number, provided, however, that the number of Ordinary Shares
of the Company subject to any option granted pursuant to this Plan shall not
exceed the lesser of (a) the maximum number of shares set by the Committee
pursuant to Section 10(c) below with respect to the applicable Purchase Date, or
(b) the maximum number of shares which may be purchased pursuant to Section
10(b) below with respect to the applicable Purchase Date. The fair market value
of the Company's Ordinary Shares shall be determined as provided in Section 8
hereof.

8. PURCHASE PRICE. The purchase price per share at which an Ordinary
Share of the Company will be sold in any Offering Period shall be eighty-five
percent (85%) of the lesser of:

(a) The fair market value on the Offering Date; or

(b) The fair market value on the Purchase Date.

Notwithstanding the foregoing, in no event may the purchase price
of an Ordinary Share of the Company be less than the par value. For purposes of
this Plan, the term "FAIR MARKET VALUE" means, as of any date, the value of an
Ordinary Share of the Company determined as follows:

(a) if such Ordinary Shares are then quoted on the Nasdaq
National Market, the closing price on the Nasdaq
National Market on the date of determination as
reported in The Wall Street Journal;

(b) if such Ordinary Shares are publicly traded and are
then listed on a national securities exchange, the
closing price on the date of determination on the
principal national securities

2
<PAGE> 65
exchange on which the Ordinary Shares are listed or
admitted to trading as reported in The Wall Street
Journal;

(c) if such Ordinary Shares are publicly traded but are not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on the
date of determination as reported in The Wall Street
Journal;

(d) if none of the foregoing is applicable, by the Board in
good faith.

9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE
OF SHARES.

(a) The purchase price of the shares is accumulated by regular
payroll deductions made during each Offering Period. The deductions are made as
a percentage of the participant's compensation in one percent (1%) increments
not less than two percent (2%), nor greater than ten percent (10%) or such lower
limit set by the Committee. Compensation shall mean base salary, commissions,
bonuses, and shift premiums not to exceed $250,000 per year, provided however,
that for purposes of determining a participant's base salary, any election by
such participant to reduce his or her regular cash remuneration under Sections
125 or 401(k) of the Code shall be treated as if the participant did not make
such election. Payroll deductions shall commence on the first payday following
the Offering Date and shall continue to the end of the Offering Period unless
sooner altered or terminated as provided in this Plan.

(b) A participant may lower (but not increase) the rate of payroll
deductions during an Offering Period by filing with the Treasury Department a
new authorization for payroll deductions, in which case the new rate shall
become effective for the next payroll period commencing more than fifteen (15)
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one (1) change may be made
effective during any Offering Period. A participant may increase or decrease the
rate of payroll deductions for any subsequent Offering Period by filing with the
Treasury Department a new authorization for payroll deductions not later than
fifteen (15) days before the beginning of such Offering Period.

(c) All payroll deductions made for a participant are credited to
his or her account under this Plan and are deposited with the general funds of
the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

(d) On each Purchase Date, so long as this Plan remains in effect
and provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole Ordinary
Shares of the Company reserved under the option granted to such participant with
respect to the Offering Period to the extent that such option is exercisable on
the Purchase Date. The purchase price per share shall be as specified in Section
8 of this Plan. Any cash remaining in a participant's account after such
purchase of shares shall be refunded to such participant in cash, without
interest; provided, however that any amount remaining in such participant's
account on a Purchase Date which is less than the amount necessary to purchase a
full Ordinary Share of the Company shall be carried forward, without interest,
into the next Purchase Period or Offering Period, as the case may be. In the
event that this Plan has been oversubscribed, all funds not used to purchase
shares on the Purchase Date shall be returned to the participant, without
interest. No Ordinary Shares shall be purchased on a Purchase Date on behalf of
any employee whose participation in this Plan has terminated prior to such
Purchase Date.

(e) As promptly as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.

(f) During a participant's lifetime, such participant's option to
purchase shares hereunder is exercisable only by him or her. The participant
will have no interest or voting right in shares covered by his or her option
until such option has been exercised.

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<PAGE> 66
10. LIMITATIONS ON SHARES TO BE PURCHASED.

(a) No participant shall be entitled to purchase shares under this
Plan at a rate which, when aggregated with his or her rights to purchase shares
under all other employee share purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan.

(b) No more than two hundred percent (200%) of the number of
shares determined by using eighty-five percent (85%) of the fair market value of
an Ordinary Share of the Company on the Offering Date as the denominator may be
purchased by a participant on any single Purchase Date.

(c) No participant shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any single Purchase Date. Not less
than thirty (30) days prior to the commencement of any Offering Period, the
Committee may, in its sole discretion, set a maximum number of shares which may
be purchased by any employee at any single Purchase Date (hereinafter the
"MAXIMUM SHARE AMOUNT"). Until otherwise determined by the Committee, there
shall be no Maximum Share Amount. In no event shall the Maximum Share Amount, if
any, exceed the amounts permitted under Section 10(b) above. If a new Maximum
Share Amount is set, then all participants must be notified of such Maximum
Share Amount prior to the commencement of the next Offering Period. Once the
Maximum Share Amount is set, it shall continue to apply with respect to all
succeeding Purchase Dates and Offering Periods unless revised by the Committee
as set forth above.

(d) If the number of shares to be purchased on a Purchase Date by
all employees participating in this Plan exceeds the number of shares then
available for issuance under this Plan, then the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected
thereby.

(e) Any payroll deductions accumulated in a participant's account
which are not used to purchase shares due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.

11. WITHDRAWAL.

(a) Each participant may withdraw from an Offering Period under
this Plan by signing and delivering to the Treasury Department a written notice
to that effect on a form provided for such purpose. Such withdrawal may be
elected at any time at least fifteen (15) days prior to the end of an Offering
Period.

(b) Upon withdrawal from this Plan, the accumulated payroll
deductions shall be returned to the withdrawn participant, without interest, and
his or her interest in this Plan shall terminate. In the event a participant
voluntarily elects to withdraw from this Plan, he or she may not resume his or
her participation in this Plan during the same Offering Period, but he or she
may participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
this Plan.

(c) If the purchase price on the first day of any current Offering
Period in which a participant is enrolled is higher than the purchase price on
the first day of any subsequent Offering Period, the Company will automatically
enroll such participant in the subsequent Offering Period. Any funds accumulated
in a participant's account prior to the first day of such subsequent Offering
Period will be applied to the purchase of shares on the Purchase Date
immediately prior to the first day of such subsequent Offering Period. A
participant does not need to file any forms with the Company to automatically be
enrolled in the subsequent Offering Period

12. TERMINATION OF EMPLOYMENT. Termination of a participant's
employment for any reason, including retirement, death or the failure of a
participant to remain an eligible employee of the Company or of a Participating
Subsidiary, immediately terminates his or her participation in this Plan. In
such event, the payroll deductions credited to the participant's account will be
returned to him or her or, in the case of his or her death, to his or her legal

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<PAGE> 67
representative, without interest. For purposes of this Section 12, an employee
will not be deemed to have terminated employment or failed to remain in the
continuous employ of the Company or of a Participating Subsidiary in the case of
sick leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.

13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest
in this Plan is terminated by withdrawal, termination of employment or
otherwise, or in the event this Plan is terminated by the Board, the Company
shall promptly deliver to the participant all payroll deductions credited to
such participant's account. No interest shall accrue on the payroll deductions
of a participant in this Plan.

14. CAPITAL CHANGES. Subject to any required action by the shareholders
of the Company, the number of Ordinary Shares covered by each option under this
Plan which has not yet been exercised and the number of Ordinary Shares which
have been authorized for issuance under this Plan but have not yet been placed
under option (collectively, the "RESERVES"), as well as the price of each
Ordinary Share covered by each option under this Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the
number of issued and outstanding Ordinary Shares of the Company resulting from a
stock split or the payment of a stock dividend (but only on the Ordinary Shares)
or any other increase or decrease in the number of issued and outstanding
Ordinary Shares effected without receipt of any consideration by the Company;
provided, however, that (a) conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration" and (b) no such adjustment shall be made if as a result, the
purchase price for each Ordinary Share shall fall below the par value thereof
and if such adjustment would but for this paragraph (b) result in the purchase
price being less than the par value of an Ordinary Share, the purchase price
payable shall be the par value of an Ordinary Share. Such adjustment shall be
made by the Committee, whose determination shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
shares of any class, or securities convertible into shares of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Ordinary Shares subject to an option.

In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee. The Committee may,
in the exercise of its sole discretion in such instances, declare that the
options under this Plan shall terminate as of a date fixed by the Committee and
give each participant the right to exercise his or her option as to all of the
optioned shares, including shares which would not otherwise be exercisable. In
the event of (i) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative share holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
will be binding on all participants), (ii) a merger in which the Company is the
surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (iii)
the sale of substantially all of the assets of the Company, or (iv) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, each option under this Plan may
be assumed or an equivalent option may be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. In the
event such surviving corporation refuses to assume or substitute options under
this Plan, (i) this Plan will terminate upon the consummation of such
transaction, unless otherwise provided by the Committee, and (ii) the Committee
may declare that the options under this Plan shall terminate as of a date fixed
by the Committee, and give each Participant the right to exercise such
participant's option as to all of the optioned shares. If the Committee makes an
option fully exercisable in the event of a merger, consolidation or sale of
assets, the Committee shall notify the participant that the option shall be
fully exercisable for a certain period, and the option and this Plan will
terminate upon the expiration of such period.

The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Ordinary Shares covered by each outstanding option, in the event
that the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of its outstanding Ordinary Shares,
or in the event of the Company being consolidated with or merged into any other
corporation, provided however, that no such adjustment shall be made if as a
result, the purchase price for each

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<PAGE> 68

Ordinary Share would fall below the par value thereof and if such adjustment
would result in the purchase price being less than the par value of an Ordinary
Share, the purchase price payable shall be the par value of an Ordinary Share.

15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will or the laws of descent and
distribution) by the participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be void and without effect.

16. REPORTS. Individual accounts will be maintained for each
participant in this Plan. Each participant shall receive promptly after the end
of each Purchase Period a report of his or her account setting forth the total
payroll deductions accumulated, the number of shares purchased, the per share
price thereof and the remaining cash balance, if any, carried forward to the
next Purchase Period or Offering Period, as the case may be.

17. NOTICE OF DISPOSITION. Each participant shall notify the Company if
the participant disposes of any of the shares purchased in any Offering Period
pursuant to this Plan if such disposition occurs within two (2) years from the
Offering Date or within one (1) year from the Purchase Date on which such shares
were purchased (the "NOTICE PERIOD"). Unless such participant is disposing of
any of such shares during the Notice Period, such participant shall keep the
certificates representing such shares in his or her name (and not in the name of
a nominee) during the Notice Period. The Company may, at any time during the
Notice Period, place a legend or legends on any certificate representing shares
acquired pursuant to this Plan requesting the Company's transfer agent to notify
the Company of any transfer of the shares. The obligation of the participant to
provide such notice shall continue notwithstanding the placement of any such
legend on the certificates.

18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant
of any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Participating Subsidiary, or restrict the right of
the Company or any Participating Subsidiary to terminate such employee's
employment.

19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have
equal rights and privileges with respect to this Plan so that this Plan
qualifies as an "employee stock purchase plan" within the meaning of Section 423
or any successor provision of the Code and the related regulations. Any
provision of this Plan which is inconsistent with Section 423 or any successor
provision of the Code shall, without further act or amendment by the Company,
the Committee or the Board, be reformed to comply with the requirements of
Section 423. This Section 19 shall take precedence over all other provisions in
this Plan.

20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with this Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

21. TERM; SHAREHOLDER APPROVAL. This Plan will become effective on the
date that it is adopted by the Board. This Plan shall be approved by the
shareholders of the Company, in any manner permitted by applicable corporate
law, within twelve (12) months before or after the date this Plan is adopted by
the Board. No purchase of shares pursuant to this Plan shall occur prior to such
shareholder approval. This Plan shall continue until the earlier to occur of (a)
termination of this Plan by the Board (which termination may be effected by the
Board at any time), (b) issuance of all of the Ordinary Shares reserved for
issuance under this Plan, or (c) ten (10) years from the adoption of this Plan
by the Board.

22. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

23. APPLICABLE LAW. The Plan shall be governed by the substantive laws
of Singapore.

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<PAGE> 69

24. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time
amend, terminate or extend the term of this Plan, except that any such
termination cannot affect options previously granted under this Plan, nor may
any amendment make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the shareholders of the Company obtained in accordance with
Section 21 hereof within twelve (12) months of the adoption of such amendment
(or earlier if required by Section 21) if such amendment would:

(a) increase the number of shares that may be issued under this
Plan; or

(b) change the designation of the employees (or class of
employees) eligible for participation in this Plan.

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FLEXTRONICS INTERNATIONAL LTD.

1993 SHARE OPTION PLAN

(AS AMENDED AND RESTATED THROUGH SEPTEMBER 10, 1997)

ARTICLE ONE
GENERAL

I. PURPOSE OF THE PLAN

A. This 1993 Share Option Plan (the "Plan") is intended to
promote the interests of Flextronics International Ltd., a Singapore
corporation (the "Corporation"), by providing (i) key employees (including
officers) of the Corporation (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation
(or its parent or subsidiary corporations), (ii) certain non-employee members
of the Corporation's Board of Directors (the "Board") and (iii) certain
consultants and other independent contractors who provide valuable services to
the Corporation (or its parent or subsidiary corporations) with the opportunity
to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation (or its parent or subsidiary corporations).

B. The Plan shall become effective on December 1, 1993 upon
adoption by the Board, and such date shall accordingly constitute the Effective
Date of the Plan.

II. DEFINITIONS

A. For purposes of the Plan, the following definitions shall be
in effect:

BOARD: the Corporation's Board of Directors.

CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:

a. the direct or indirect acquisition by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept; or

b. a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy
<PAGE> 71
contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since
the beginning of such period or (ii) have been elected or nominated
for election as Board members during such period by at least a
majority of the Board members described in clause (i) who were still
in office at the time such election or nomination was approved by the
Board.

CODE: the U.S. Internal Revenue Code of 1986, as amended.

CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:

a. a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Corporation is
incorporated,

b. the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or

c. any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such merger.

EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more parent or subsidiary corporations, subject to
the control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.

EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.

FAIR MARKET VALUE: the Fair Market Value per Ordinary Share
determined in accordance with the following provisions:

a. If the Ordinary Shares are not at the time listed or
admitted to trading on any U.S. national stock exchange but are traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per Ordinary Share on the date in question, as
such price is reported by the National Association of Securities
Dealers through the Nasdaq National Market or any successor system.
If there is no reported closing selling price for the Ordinary Shares
on the date in question, then the closing selling price per Ordinary
Share on the last preceding date for which such quotation exists shall
be determinative of Fair Market Value.

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<PAGE> 72
b. If the Ordinary Shares are at the time listed or
admitted to trading on any U.S. national stock exchange, then the Fair
Market Value shall be the closing selling price per Ordinary Share on
the date in question on the U.S. exchange determined by the Plan
Administrator to be the primary market for the Ordinary Shares, as
such price is officially quoted in the composite tape of transactions
on such exchange. If there is no reported sale of the Ordinary Shares
on such exchange on the date in question, then the Fair Market Value
shall be the closing selling price per Ordinary Share on the exchange
on the last preceding date for which such quotation exists.

c. If the Ordinary Shares are on the date in question
neither listed nor admitted to trading on any U.S. national stock
exchange nor traded on the Nasdaq National Market, then the Fair
Market Value per Ordinary Share on such date shall be determined by
the Plan Administrator after taking into account such factors as the
Plan Administrator shall deem appropriate.

HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:

b. the acceptance of more than fifty percent (50%) of
the securities so acquired in such tender or exchange offer from
holders other than Section 16 Insiders.

INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.

INITIAL AUTOMATIC GRANT DATE: January 24, 1994.

1934 ACT: the U.S. Securities and Exchange Act of 1934, as amended
from time to time.

NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.

OPTIONEE: any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in effect under
the Plan.

ORDINARY SHARES: ordinary shares of the Corporation with a par value
of S $0.01 per share.

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<PAGE> 73
PARENT: any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.

PLAN ADMINISTRATOR: the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant Program with respect to one or more
classes of eligible persons, to the extent such entity is carrying out its
administrative functions under that program with respect to the persons under
its jurisdiction.

PRIMARY COMMITTEE: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Discretionary Option
Grant Program with respect to Section 16 Insiders.

SECONDARY COMMITTEE: the committee of one (1) or more Board members
appointed by the Board to administer the Discretionary Option Grant Program
with respect to eligible persons other than Section 16 Insiders.

SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the Board or an independent consultant or
advisor, except to the extent otherwise specifically provided in the applicable
stock option agreement.

SECTION 12(g) REGISTRATION DATE: the date on which the initial
registration of the Ordinary Shares under Section 12(g) of the 1934 Act becomes
effective.

SECTION 16 INSIDER: an officer or director of the Corporation subject
to the short-swing profit restrictions of Section 16 of the 1934 Act.

SUBSIDIARY: any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at
the time of the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

TAKE-OVER PRICE: the greater of (a) the Fair Market Value per
Ordinary Share on the date the particular option to purchase Ordinary Shares is
surrendered to the Corporation in connection with a Hostile Take-Over or (b)
the highest reported price per Ordinary Share paid by

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<PAGE> 74
the tender offeror in effecting such Hostile Take-Over. However, if the
surrendered option is an Incentive Option, the Take-Over Price shall not exceed
the clause (a) price per share.

UNDERWRITING EXECUTION DATE: the date on which the Underwriting
Agreement for the initial public offering of the Ordinary Shares in the U.S. is
executed and priced.

B. The following provisions shall be applicable in determining
the parent and subsidiary corporations of the Corporation:

Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered
to be a PARENT of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.

Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation in the unbroken chain (other than the last corporation)
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

III. STRUCTURE OF THE PLAN

A. Stock Programs. The Plan shall be divided into two (2)
components: the Discretionary Option Grant Program specified in Article Two and
the Automatic Option Grant Program specified in Article Three. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase Ordinary Shares in
accordance with the provisions of Article Two. Under the Automatic Option
Grant Program, non-employee members of the Board will receive special option
grants at periodic intervals to purchase Ordinary Shares in accordance with the
provisions of Article Three.

B. General Provisions. Unless the context clearly indicates
otherwise, the provisions of Articles One and Four shall apply to the
Discretionary Option Grant and the Automatic Option Grant Programs and shall
accordingly govern the interests of all individuals under the Plan.

IV. ADMINISTRATION OF THE PLAN

A. The Primary Committee shall have sole and exclusive authority
to administer the Discretionary Option Grant Program with respect to Section 16
Insiders. No non-employee Board member shall be eligible to serve on the
Primary Committee if such individual has, during the twelve (12)-month period
immediately preceding the date of his or her appointment to the Committee or
(if shorter) the period commencing with the Section 12(g) Registration Date and
ending with the date of his or her appointment to the Primary Committee,
received an option

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<PAGE> 75
grant under the Plan or any other stock option, stock appreciation, stock bonus
or other stock plan of the Corporation (or any parent or subsidiary
corporation), other than pursuant to the Automatic Option Grant Program.

B. Administration of the Discretionary Option Grant Program with
respect to all other persons eligible to participate in that program may, at
the Board's discretion, be vested in the Primary Committee or a Secondary
Committee, or the Board may retain the power to administer that program with
respect to all such persons. The members of the Secondary Committee may be
Board members who are Employees eligible to receive discretionary option grants
under the Plan or any other stock option, stock appreciation, stock bonus or
other stock plan of the Corporation (or any Parent or Subsidiary).

C. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.

D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it
may deem appropriate for proper administration of the Discretionary Option
Grant Program and to make such determinations under, and issue such
interpretations of the provisions of such program and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions
under the Plan shall be final and binding on all parties who have an interest
in the Discretionary Option Grant Program under its jurisdiction or any option
grant thereunder.

E. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the Primary
Committee or the Secondary Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option grants under the
Plan.

F. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms and conditions of that program, and
no Plan Administrator shall exercise any discretionary functions with respect
to any option grants made under that program.

V. OPTION GRANTS

A. The persons eligible to participate in the Discretionary
Option Grant Program under Article Two shall be limited to the following:

1. officers and other key employees of the Corporation
(or its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the
Corporation (or its parent or subsidiary corporations); and

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<PAGE> 76
2. those consultants or other independent contractors
who provide valuable services to the Corporation (or its parent or
subsidiary corporations) but who are not residents of Singapore.

B. Non-employee Board members shall not be eligible to
participate in the Discretionary Option Grant Program. Such individuals shall,
however, be eligible to receive automatic option grants pursuant to the
provisions of Article Three, provided such individuals are not residents of
Singapore.

C. The Plan Administrator shall have full authority to determine
which eligible individuals are to receive option grants under the Discretionary
Option Grant Program, the number of Ordinary Shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.

VI. STOCK SUBJECT TO THE PLAN

A. The maximum number of Ordinary Shares which may be issued over
the term of the Plan shall not exceed 2,600,000 Ordinary Shares, subject to
adjustment from time to time in accordance with the provisions of this Section
VI. The Ordinary Shares reserved for issuance under the Plan shall be drawn
from the Corporation's authorized but unissued Ordinary Shares.

B. In no event may the aggregate number of Ordinary Shares for
which any one individual participating in the Plan may be granted stock options
exceed 500,000 Ordinary Shares over the term of this Plan.

C. Should one or more outstanding options under this Plan expire
or terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the Ordinary Shares subject to the portion of
each option not so exercised shall be available for subsequent issuance under
the Plan. Ordinary Shares subject to any option or portion thereof surrendered
in accordance with Section V of Article Two or Section III of Article Three and
all Ordinary Shares issued under the Plan shall reduce on a share-for-share
basis the number of Ordinary Shares available for subsequent issuance the Plan.

D. Should any change be made to the Ordinary Shares issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Ordinary Shares as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in
the Plan may be granted stock options over the term of the Plan, (iii) the
number and/or class of securities for which automatic option grants are to be
subsequently made per newly-elected or continuing non-employee Board member
under the Automatic Option Grant Program and (iv) the number and/or class of
securities and price per share in effect under each option outstanding under
the

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<PAGE> 77
Discretionary Option Grant or Automatic Option Grant Program. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude
the enlargement or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. TERMS AND CONDITIONS OF OPTIONS

Options granted pursuant to the Discretionary Option Grant Program
shall be authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or Non-Statutory
Options. Individuals who are not Employees of the Corporation or its parent or
subsidiary corporations may only be granted Non-Statutory Options. Each
granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.

A. Exercise Price.

1. The exercise price per Ordinary Share shall be fixed
by the Plan Administrator in accordance with the following provisions:

a. The exercise price per Ordinary Share subject
to an Incentive Option shall in no event be less than one hundred
percent (100%) of the Fair Market Value per Ordinary Share on the
grant date.

b. The exercise price per Ordinary Share subject
to a Non-Statutory Option shall in no event be less than eighty-five
percent (85%) of the Fair Market Value per Ordinary Share on the grant
date.

c. In no event may the exercise price per
Ordinary Share subject to any Incentive or Non-Statutory Option be
less than the par value of such Ordinary Share.

2. The exercise price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of Article
Four and the instrument evidencing the grant, shall be payable in one of the
following alternative forms specified below:

a. full payment in cash or check made payable to
the Corporation's order; or

b. full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee shall provide
concurrent irrevocable written instructions (i) to a
Corporation-designated brokerage firm to effect the

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immediate sale of the purchased Ordinary Shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate exercise price payable for the purchased Ordinary Shares
plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation in connection with such purchase and
(ii) to the Corporation to deliver the certificates for the purchased Ordinary
Shares directly to such brokerage firm in order to complete the sale
transaction.

B. Term and Exercise of Options. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of five (5) years measured from the grant date. During
the lifetime of the Optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the Optionee and
shall not be assignable or transferable by the Optionee except for a transfer
of the option effected by will or by the laws of descent and distribution
following the Optionee's death.

C. Termination of Service.

1. The following provisions shall govern the exercise
period applicable to any outstanding options held by the Optionee at the time
of cessation of Service or death.

a. Should an Optionee cease Service for any
reason (including death or Permanent Disability) while holding one or
more outstanding options under this Article Two, then none of those
options shall (except to the extent otherwise provided pursuant to
subparagraph 3 below) remain exercisable for more than a twenty-four
(24)-month period (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant)
measured from the date of such cessation of Service.

b. Any option held by the Optionee under this
Article Two and exercisable in whole or in part on the date of his or
her death may be subsequently exercised by the personal representative
of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution. However, the right to
exercise such option shall lapse upon the earlier of (i) the second
anniversary of the date of the Optionee's death (or such shorter
period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) or (ii) the specified expiration date
of the option term. Accordingly, upon the occurrence of the earlier
event, the option shall terminate and cease to remain outstanding.

c. Under no circumstances shall any such option
be exercisable after the specified expiration date of the option term.

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d. During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of Ordinary Shares (if any) for which that option is
exercisable at the time of the Optionee's cessation of Service. Upon
the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each
such option shall terminate and cease to be outstanding with respect
to any vested Ordinary Shares for which the option has not otherwise
been exercised. However, each outstanding option shall immediately
terminate and cease to be outstanding, at the time of the Optionee's
cessation of Service, with respect to any Ordinary Shares for which
the option is not otherwise at that time exercisable or in which
Optionee is not otherwise vested.

e. Should (i) the Optionee's Service be
terminated for misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or (ii) the
Optionee make any unauthorized use or disclosure of confidential
information or trade secrets of the Corporation or its parent or
subsidiary corporations, then in any such event all outstanding
options held by the Optionee under this Article Two shall terminate
immediately and cease to remain outstanding.

2. The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to permit one or more options held by the
Optionee under this Article Two to be exercised, during the limited
post-Service exercise period applicable under this paragraph C., not only with
respect to the number of vested Ordinary Shares for which each such option is
exercisable at the time of the Optionee's cessation of Service but also with
respect to one or more subsequent installments of vested Ordinary Shares for
which the option would otherwise have become exercisable had such cessation of
Service not occurred.

3. The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which
the option is to remain exercisable following the Optionee's cessation of
Service or death from the limited period in effect under subparagraph 1. above
to such greater period of time as the Plan Administrator shall deem
appropriate. In no event, however, shall such option be exercisable after the
specified expiration date of the option term.

D. Stockholder Rights. An optionee shall have no stockholder
rights with respect to the Ordinary Shares subject to the option until such
individual shall have exercised the option and paid the exercise price for the
purchased Ordinary Shares.

II. INCENTIVE OPTIONS

The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only
be granted to individuals who are Employees of the Corporation. Options which
are specifically designated as Non-Statutory

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Options when issued under the Plan shall not be subject to such terms and
conditions. Except as so modified by this Section II, the provisions of
Articles One, Two and Four of the Plan shall apply to all Incentive Options
granted hereunder.

A. Dollar Limitation. The aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Ordinary Shares
for which one or more options granted to any Employee under this Plan (or any
other option plan of the Corporation or its parent or subsidiary corporations)
may for the first time become exercisable as incentive stock options under the
Code during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more
such options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such options as
incentive stock options under the Code shall be applied on the basis of the
order in which such options are granted. Should the number of Ordinary Shares
for which any Incentive Option first becomes exercisable in any calendar year
exceed the applicable One Hundred Thousand Dollar ($100,000) limitation, then
that option may nevertheless be exercised in such calendar year for the excess
number of shares as a non-statutory option under the Code.

B. 10% Stockholder. If any individual to whom an Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Code) possessing ten percent (10%) or more of the total combined voting
power of all classes of stock of the Corporation or any one of its parent or
subsidiary corporations, then the exercise price per Ordinary Share shall not
be less than the greater of (i) one hundred and ten percent (110%) of the Fair
Market Value per Ordinary Share on the grant date or (ii) the par value of such
Ordinary Share.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

A. In the event of any Corporate Transaction, each option which
is at the time outstanding under this Article Two shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to the total number of Ordinary Shares at the time subject to such
option and may be exercised for all or any portion of such Ordinary Shares.
However, an outstanding option under this Article Two shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent
thereof or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof, (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the option spread existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such option or (iii) the acceleration of such
option is subject to other limitations imposed by the Plan Administrator at the
time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.

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B. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to remain outstanding, except to the extent assumed by the successor
corporation or its parent company.

C. Each outstanding option under this Article Two which is
assumed in connection with the Corporate Transaction or is otherwise to
continue in effect shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be
made to the exercise price payable per share, provided the aggregate exercise
price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan following
the consummation of the Corporate Transaction shall be appropriately adjusted.

D. The Plan Administrator shall have the discretion, exercisable
either in advance of any actually-anticipated Corporate Transaction or at the
time of an actual Corporate Transaction, to provide (upon such terms as it may
deem appropriate) for the automatic acceleration of one or more outstanding
options granted under the Plan which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, in the event the
Optionee's Service should subsequently terminate within a designated period
following such Corporate Transaction.

E. The Plan Administrator shall have the discretionary authority,
exercisable either in advance of any actually-anticipated Change in Control or
at the time of an actual Change in Control, to provide for the automatic
acceleration of one or more outstanding options under this Article Two upon the
occurrence of the Change in Control. The Plan Administrator shall also have
full power and authority to condition any such option acceleration upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.

F. Any options accelerated in connection with the Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.

G. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

H. The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Code only to
the extent the dollar limitation of Section II of this Article Two is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a non-statutory option under the
Code.

IV. CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding

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options under this Article Two and to grant in substitution new options under
the Plan covering the same or different numbers of Ordinary Shares but with an
exercise price per Ordinary Share not less than (i) eighty-five percent (85%)
of the Fair Market Value per Ordinary Share on the new grant date or (ii) one
hundred percent (100%) of such Fair Market Value in the case of an Incentive
Option, but in no event shall the exercise price per Ordinary Share be less
than the par value of such Ordinary Share.

V. STOCK APPRECIATION RIGHTS

A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or
part of an unexercised option under this Article Two in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
Fair Market Value (on the option surrender date) of the number of vested
Ordinary Shares for which the surrendered option (or surrendered portion
thereof) is at the time exercisable over (ii) the aggregate exercise price
payable for such vested Ordinary Shares.

B. No surrender of an option shall be effective hereunder unless
it is approved by the Plan Administrator. If the surrender is so approved,
then the distribution to which the Optionee shall accordingly become entitled
under this Section V may be made in Ordinary Shares valued at Fair Market Value
on the option surrender date, in cash, or partly in Ordinary Shares and partly
in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.

C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt of the rejection notice or (ii)
the last day on which the option is otherwise exercisable in accordance with
the terms of the instrument evidencing such option, but in no event may such
rights be exercised more than five (5) years after the date of the option
grant.

D. One or more Section 16 Insiders may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights
in tandem with their outstanding options under this Article Two. Upon the
occurrence of a Hostile Take-Over, the Section 16 Insider shall have a thirty
(30)-day period in which he or she may surrender any outstanding options with
such a limited stock appreciation right in effect for at least six (6) months
to the Corporation, to the extent such option is at the time exercisable for
vested Ordinary Shares. The Section 16 Insiders shall in return be entitled to
a cash distribution from the Corporation in an amount equal to the excess of
(i) the Take-Over Price of the vested Ordinary Shares for which each
surrendered option (or surrendered portion thereof) is at the time exercisable
over (ii) the aggregate exercise price payable for such Ordinary Shares. The
cash distribution payable upon such option surrender shall be made within five
(5) days following the date the option is surrendered to the Corporation.
Neither the approval of the Plan Administrator nor the consent of the Board
shall be required in connection with such option surrender and cash
distribution. Any unsurrendered

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<PAGE> 83
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.

E. The Ordinary Shares subject to any option surrendered for an
appreciation distribution pursuant to this Section V shall NOT be available for
subsequent issuance under the Plan.

ARTICLE THREE

AUTOMATIC OPTION GRANT PROGRAM

I. ELIGIBILITY

A. Eligible Directors. The individuals eligible to receive
automatic option grants pursuant to the provisions of this Article Three shall
be limited to (i) those individuals who are serving as non-employee Board
members on the Initial Automatic Grant Date, (ii) those individuals who are
first elected or appointed as non-employee Board members after the Initial
Automatic Grant Date, whether through appointment by the Board or election by
the Corporation's stockholders, and (iii) those individuals who continue to
serve as non-employee Board members at one or more Annual Stockholders Meetings
held after the Underwriting Execution Date. In no event, however, may any
non-employee Board member who is a Singapore resident participate in this
Automatic Option Grant Program. Any non-employee Board member eligible to
participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of the Plan.

B. Limitation. Except for the option grants to be made pursuant
to the provisions of this Automatic Option Grant Program, a non-employee Board
member shall not be entitled to receive any additional option grants or stock
issuances under this Plan or any other stock plan of the Corporation (or its
parent or subsidiaries) during his or her period of Board service.

II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

A. Grant Dates. Option grants shall be made under this Article
Three on the dates specified below:

1. Initial Grant.

Each individual serving as an Eligible Director on the Initial
Automatic Grant Date shall automatically be granted on such date a
Non-Statutory Option to purchase 30,000 Ordinary Shares upon the terms and
conditions of this Article Three.

Each individual who first becomes an Eligible Director after
the Initial Automatic Grant Date, whether through election by the stockholders
or appointment by the Board, shall automatically be granted, at the time of
such initial election or appointment, a Non-Statutory Option to purchase 30,000
Ordinary Shares upon the terms and conditions of this Article Three.

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2. Annual Grant. On the date of each Annual
Stockholders Meeting held after the Underwriting Execution Date, each
individual who is at that time serving as an Eligible Director, whether or not
such individual is standing for reelection as a Board member at that Annual
Meeting, shall automatically be granted a Non-Statutory Option to purchase an
additional 3,000 Ordinary Shares upon the terms and conditions of this Article
Three, provided such individual has served as a Board member for at least six
(6) months.

B. There shall be no limit on the number of such 3,000 Ordinary
Share option grants any one Eligible Director may receive over his or her
period of Board service. The number of Ordinary Shares for which the automatic
option grants are to be made to each newly elected or continuing Eligible
Director shall be subject to periodic adjustment pursuant to the applicable
provisions of Section VI.C. of Article One.

C. Exercise Price. The exercise price per Ordinary Share subject
to each automatic option grant made under this Article Three shall be
determined as follows:

- For each automatic option grant made on the Initial Automatic
Grant Date, the exercise price per Ordinary Share shall be equal to the Fair
Market Value per Ordinary Share on such date as shall be determined by the Plan
Administrator after taking into account such factors as the Plan Administrator
deems relevant.

- For all other automatic option grants, the exercise price per
Ordinary Share shall be equal to one hundred percent (100%) of the Fair Market
Value per Ordinary Share on the automatic grant date, but in no event less than
the par value of such Ordinary Share.

D. Payment. The exercise price shall be payable in one of the
alternative forms specified below:

1. full payment in cash or check made payable to the
Corporation's order; or

2. to the extent the option is exercised for vested
Ordinary Shares, full payment through a sale and remittance procedure pursuant
to which the non-employee Board member shall provide concurrent irrevocable
written instructions (i) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased Ordinary Shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased Ordinary Shares and (ii) to the Corporation to deliver the
certificates for the purchased Ordinary Shares directly to such brokerage firm
in order to complete the sale transaction.

E. Option Term. Each automatic grant under this Article Three
shall have a maximum term of five (5) years measured from the automatic grant
date.

F. Exercisability. Each automatic grant shall become exercisable
for the Ordinary Shares subject to that grant in a series of successive equal
monthly installments upon the Optionee's completion of each month of Board
service over the twenty-four (24) month period measured from the automatic
grant date. The exercisability of each such grant shall be subject to

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acceleration as provided in Section II.G and Section III of this Article Three.
In no event, however, shall any automatic option grant become exercisable for
any additional Ordinary Shares after the Optionee's cessation of Board service.

G. Non-Transferability. During the lifetime of the Optionee,
each automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than a transfer of the
option effected by will or by the laws of descent and distribution following
Optionee's death.

H. Termination of Board Service.

1. Should the Optionee cease to serve as a Board member
for any reason (other than death or Permanent Disability) while holding one or
more automatic option grants under this Article Three, then such individual
shall have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option for any or all of the option
shares for which the option is exercisable at the time of such cessation of
Board service. Each such option shall immediately terminate and cease to
remain outstanding, at the time of the Optionee's cessation of Board service,
with respect to any option shares for which the option is not otherwise at that
time exercisable.

2. Should the Optionee die within six (6) months after
cessation of Board service, then any automatic option grant held by the
Optionee at the time of death may subsequently be exercised, for any or all of
the option shares for which the option is exercisable at the time of the
Optionee's cessation of Board service (less any option shares subsequently
purchased by the Optionee prior to death), by the personal representative of
the Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. The right to exercise each such option shall lapse
upon the expiration of the twelve (12)-month period measured from the date of
the Optionee's death.

3. Should the Optionee die or become Permanently
Disabled while serving as a Board member, then each automatic option grant held
by such Optionee under this Article Three shall immediately become exercisable
for all the Ordinary Shares subject to that option, and the Optionee (or the
representative of the Optionee's estate or the person or persons to whom the
option is transferred upon the Optionee's death) shall have a twelve (12)-month
period following the date of the Optionee's cessation of Board service in which
to exercise such option for any or all of those Ordinary Shares as fully-vested
shares.

4. In no event shall any automatic grant under this
Article Three remain exercisable after the expiration date of the five (5)-year
option term. Upon the expiration of the applicable post-service exercise
period under subparagraphs 1. through 3. above or (if earlier) upon the
expiration of the five (5)-year option term, the automatic grant shall
terminate and cease to be outstanding for any option shares for which the
option was exercisable at the time of the Optionee's cessation of Board service
but for which such option was not otherwise exercised.

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I. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to the Ordinary Shares subject to such option until such individual
shall have exercised the option and paid the exercise price for the purchased
Ordinary Shares.

J. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE

TAKE-OVER

A. In the event of any Corporate Transaction, each option at the
time outstanding under this Article Three but not otherwise fully exercisable
shall, immediately prior to the specified effective date for the Corporate
Transaction, automatically accelerate and become fully exercisable for all of
the Ordinary Shares at the time subject to that option and may be exercised for
all or any portion of those shares as fully vested Ordinary Shares.
Immediately following the consummation of the Corporate Transaction, all
automatic option grants under this Article Three shall terminate and cease to
remain outstanding.

B. In connection with any Change in Control of the Corporation,
each option at the time outstanding under this Article Three but not otherwise
fully exercisable shall, immediately prior to the specified effective date for
the Change in Control, automatically accelerate and become fully exercisable
for all of the Ordinary Shares at the time subject to that option and may be
exercised for all or any portion of those shares as fully vested Ordinary
Shares. Each such option shall remain so exercisable for the option shares
until the expiration or sooner termination of the option term.

C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
option held by him or her under this Article Three for a period of at least six
(6) months. The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over
Price of the Ordinary Shares at the time subject to the surrendered option
(whether or not the option is otherwise at the time exercisable for those
Ordinary Shares) over (ii) the aggregate exercise price payable for such
Ordinary Shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. Neither the approval
of the Plan Administrator nor the consent of the Board shall be required in
connection with such option surrender and cash distribution. The Ordinary
Shares subject to each option surrendered in connection with the Hostile
Take-Over shall NOT be available for subsequent issuance under the Plan.

D. The automatic option grants outstanding under this Article
Three shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

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IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS

A. Limited Amendments. The provisions of this Automatic Option
Grant Program, together with the automatic option grants outstanding under this
Article Three, may not be amended at intervals more frequently than once every
six (6) months, other than to the extent necessary to comply with applicable
U.S. income tax laws and regulations.

ARTICLE FOUR

MISCELLANEOUS

I. LOANS OR INSTALLMENT PAYMENTS

A. The Plan Administrator may, in its discretion but subject to
any prohibition imposed by any applicable laws, assist any Optionee, to the
extent such Optionee is an Employee (including an Optionee or Participant who
is an officer of the Corporation), in the exercise of one or more stock options
granted to such Optionee under the Discretionary Option Grant Program,
including the satisfaction of any Federal, state and local income and
employment tax obligations arising therefrom, by (i) authorizing the extension
of a loan from the Corporation to such Optionee or (ii) permitting the Optionee
to pay the exercise price for the purchased shares in installments over a
period of years. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be upon such terms
as the Plan Administrator specifies in the applicable option agreement or
otherwise deems appropriate under the circumstances. Loans or installment
payments may be authorized with or without security or collateral. However,
the maximum credit available to the Optionee may not exceed the exercise price
of the acquired Ordinary Shares (less the par value of such shares) plus any
Federal, state and local income and employment tax liability incurred by the
Optionee in connection with the acquisition of the Ordinary Shares.

B. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under this financial assistance
program shall be subject to forgiveness by the Corporation in whole or in part
upon such terms and conditions as the Plan Administrator may deem appropriate.

C. All financial assistance provided under this Section I of
Article Four shall be effected in compliance with the applicable provisions of
Section 76(9)(b) of the Companies Act, Chapter 50 of Singapore (or any
successor statutory provision).

II. AMENDMENT OF THE PLAN AND AWARDS

A. The Board has complete and exclusive power and authority to
amend or modify the Plan (or any component thereof) in any or all respects
whatsoever. However, (i) no such amendment or modification shall adversely
affect rights and obligations with respect to options at the time outstanding
under the Plan, unless the Optionee consents to such amendment, and (ii) any
amendment made to the Automatic Option Grant Program (or any options
outstanding thereunder) shall be in compliance with the limitation of Section
IV of Article Three. In

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<PAGE> 88
addition, the Board may not, without the approval of the Corporation's
stockholders, amend the Plan to (i) materially increase the maximum number of
Ordinary Shares issuable under the Plan or the number of Ordinary Shares for
which options may be granted per newly-elected or continuing Eligible Director
under Article Three of the Plan or the maximum number of Ordinary Shares for
which any one individual participating in the Plan may be granted stock options
over the term of the Plan, except for permissible adjustments under Section
VI.C. of Article One, (ii) materially modify the eligibility requirements for
plan participation or (iii) materially increase the benefits accruing to plan
participants.

B. Options to purchase Ordinary Shares may be granted under the
Discretionary Option Grant Program which are in excess of the number of
Ordinary Shares then available for issuance under the Plan. However, no such
option shall become exercisable in whole or in part for the excess Ordinary
Shares subject to that option until stockholder approval is obtained for a
sufficient increase in the number of Ordinary Shares available for issuance
under the Plan. If such stockholder approval is not obtained within twelve
(12) months after the date the first such excess option grants are made, then
such options shall terminate and cease to be exercisable with respect to the
excess number of Ordinary Shares, and no further option grants shall be made
under the Plan.

III. TAX WITHHOLDING

The Corporation's obligation to deliver Ordinary Shares upon the
exercise of stock options for such shares under the Plan shall be subject to
the satisfaction of all applicable income and employment tax withholding
requirements.

IV. EFFECTIVE DATE AND TERM OF PLAN

A. This Plan became effective when adopted by the Board and
approved by the stockholders in 1993. On June 8, 1995, the Board approved an
amendment to the Plan to (i) increase the aggregate number of Ordinary Shares
issuable over the term thereof from 900,000 shares to 1,500,000 shares and (ii)
increase the number of Ordinary Shares for which options may be granted to any
one individual from 300,000 shares to 500,000 shares. The stockholders
approved those amendments at the 1995 Annual Meeting.

B. In June 1996, the Board amended the Plan to (i) increase the
aggregate number of Ordinary Shares issuable over the term of the Plan from
1,500,000 Ordinary Shares to 2,000,000 Ordinary Shares. The stockholders
approved such amendment at the 1996 Annual Meeting.

C. On August 15, 1996, the Board amended and restated the Plan to
authorize, among other things, the separate but concurrent jurisdiction of the
Discretionary Option Grant Program by the Primary Committee and one or more
Secondary Committees of the Board, with the Primary Committee to have the sole
authority to administer such program with respect to Section 16 Insiders.

D. In September 1996, the Board approved an amendment to the Plan
to (i) increase the aggregate number of Ordinary Shares issuable over the term
of the Plan from 2,000,000

19
<PAGE> 89
Ordinary Shares to 2,600,000 Ordinary Shares. Such share increase is subject
to stockholder approval at the 1997 Annual Meeting. Should stockholder
approval not be obtained, then the 600,000-share increase to the Ordinary Share
reserve shall not be implemented, and any stock options granted on the basis of
that 600,000-share increase shall immediately terminate without becoming
exercisable for the Ordinary Shares subject to those options, and no additional
options will be granted on the basis of such share increase.

E. The Plan shall terminate upon the earlier of (i) November 30,
2003 or (ii) the date on which all Ordinary Shares available for issuance under
the Plan shall have been issued or cancelled pursuant to the exercise,
surrender or cash-out of the options granted under the Plan. If the date of
termination is determined under clause (i) above, then all option grants
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such grants.

V. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of
Ordinary Shares pursuant to option grants under the Plan shall be used for
general corporate purposes.

VI. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any stock
option or stock appreciation right under the Plan, the issuance of any Ordinary
Shares upon the exercise or surrender of the stock options or stock
appreciation rights granted hereunder shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the stock options and stock appreciation
rights granted under it and the Ordinary Shares issued pursuant to it.

B. No Ordinary Shares or other assets or securities shall be
issued or delivered under this Plan unless and until there shall have been
compliance with (i) all applicable requirements of U.S. and state securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the Ordinary Shares issuable under the Plan, (ii) all applicable
listing requirements of any securities exchange on which the Ordinary Shares
are then listed for trading and (iii) all applicable requirements of Singapore
law.

VII. NO EMPLOYMENT/SERVICE RIGHTS

Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in
the Service of the Corporation (or any parent or subsidiary corporation) for
any period of specific duration, and the Corporation (or any parent or
subsidiary corporation retaining the services of such individual) may terminate
such individual's Service at any time and for any reason, with or without
cause.

VIII. MISCELLANEOUS PROVISIONS

20
<PAGE> 90
A. Except to the extent otherwise expressly provided in the Plan,
the right to acquire Ordinary Shares or other assets or securities under the
Plan may not be assigned, encumbered or otherwise transferred by any Optionee.

B. The provisions of the Plan shall inure to the benefit of, and
be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.

21
<PAGE> 91
FLEXTRONICS INTERNATIONAL LTD.

2090 Fortune Drive
San Jose, California 95131

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned being a member of Flextronics International Ltd. hereby
appoints Michael E. Marks or failing whom Tsui Sung Lam, as Proxy of the
undersigned and hereby authorizes the Proxy to represent and to vote, as
designated on the reverse side, all of the Ordinary Shares of Flextronics
International Ltd., held of record by the undersigned on August 18, 1997, at the
Annual General Meeting of Flextronics International Ltd. to be held September
26, 1997, or at any adjournment thereof.

This Proxy, when properly executed and returned in a timely manner, will
be voted at the Annual Meeting and any adjournments thereof in the manner
described herein. If no contrary indication is made, the proxy will be voted FOR
the Board of Director nominees, FOR Proposals 1 2, 3, 4, 5, and 6 and in
accordance with the judgment of the persons named as proxies herein on any other
matters that may properly come before the Annual Meeting.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE

---------------
SEE REVERSE
SIDE
---------------
- --------------------------------------------------------------------------------
Please mark
[X] votes as in
this example.

The Board of Directors unanimously recommends that a vote FOR Proposals 1, 2, 3,
4, 5 and 6. This Proxy, when properly executed, will be voted as specified
below. This Proxy will be voted FOR Proposal Nos. 1, 2, 3, 4, 5, and 6 if no
specification is made.

<TABLE>
<S> <C> <C> <C> <C>
1. To re-elect Tsui Sung Lam to the Board of FOR AGAINST ABSTAIN
Directors. [ ] [ ] [ ]

2. To receive and adopt the Directors' Report, FOR AGAINST ABSTAIN
Auditors' Report and Audited Accounts for the [ ] [ ] [ ]
fiscal year ended March 31, 1997.

3. To appoint Arthur Andersen LLP as independent FOR AGAINST ABSTAIN
auditors of the Company for the fiscal year [ ] [ ] [ ]
ended March 31, 1998 in place of retiring
auditors, Ernst & Young, and to authorize the
Directors to fix their remuneration.

4. To approve an Ordinary Resolution to increase FOR AGAINST ABSTAIN
the number of shares authorized under the 1993 [ ] [ ] [ ]
Share Option Plan to 2,600,000 Ordinary Shares.

5. To approve an Ordinary Resolution to adopt the FOR AGAINST ABSTAIN
Company's 1997 Employee Share Purchase Plan. [ ] [ ] [ ]

6. To approve an Ordinary Resolution relating to FOR AGAINST ABSTAIN
Ordinary Share issuances. [ ] [ ] [ ]
</TABLE>

In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.

This Proxy must be signed exactly as your name appears hereon. If more than one
name appears, all persons so designated should sign. Attorneys, executors,
administrators, trustees and guardians should indicate their capacities. If the
signer is a corporation, please print full corporate name and indicate capacity
of duly authorized officer executing on behalf of the corporation. If the signer
is a partnership, please print full partnership name and indicate capacity of
duly authorized person executing on behalf of the partnership.

Signature: Date: , 1997
------------------------------------ ------------------

(Reverse Side)

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THIS PROXY CARD AND RETURN IT PRIOR TO THE MEETING IN THE ENCLOSED ENVELOPE.