JABIL CIRCUIT INC, 10-K405, 1999-11-12

JABIL CIRCUIT INC
10-K405, 1999-11-12
PRINTED CIRCUIT BOARDS

Previous: US TRUST CO OF CALIFORNIA NA, SC 13G/A, 1999-11-12

Next: JABIL CIRCUIT INC, S-3, 1999-11-12

<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

FOR THE FISCAL YEAR ENDED AUGUST 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________TO____________
COMMISSION FILE NUMBER: 0-21308

JABIL CIRCUIT, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 38-1886260
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

10560 NINTH STREET NORTH, ST. PETERSBURG, FLORIDA 33716
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (727) 577-9749

Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
<S> <C>
Title of each class Name of each exchange on which registered
Common Stock, $0.001 par value per share New York Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K. / X /

The aggregate market value of the voting common stock held by
non-affiliates of the Registrant (based on the closing sale price of the Common
Stock as reported on the New York Stock Exchange on October 15, 1999) was
approximately $ 2.8 million. For purposes of this determination, shares of
Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes. The number of
outstanding shares of the Registrant's Common Stock as of the close of business
on October 15, 1999, was 82,284,585. The Company does not have any non-voting
stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive Proxy Statement for the 1999 Annual
Meeting of Stockholders to be held on January 13, 2000 is incorporated by
reference in Part III of this Annual Report on Form 10-K to the extent stated
herein.

<PAGE> 2

PART I

ITEM 1. BUSINESS

We make "forward-looking statements" within the "safe harbor"
provision of the Private Securities Litigation Reform Act of 1995 throughout
this document and in the documents we incorporate by reference into this Annual
Report on Form 10-K. You can identify these statements by forward-looking words
such as "may," "will," "expect," "anticipate," "believe," "estimate," "plan"
and "continue" or similar words. We have based these statements on our current
expectations about future events. Although we believe that our expectations
reflected in or suggested by our forward-looking statements are reasonable, we
cannot assure you that these expectations will be achieved. Our actual results
may differ materially from what we currently expect. Important factors which
could cause our actual results to differ materially from the forward-looking
statements in this document are set forth in the "Factors Affecting Future
Results" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections and elsewhere in this document.

You should read this Annual Report on Form 10-K completely and with
the understanding that our actual future results may be materially different
from what we expect. We may not update these forward-looking statements, even
in the event that our situation changes in the future. All forward-looking
statements attributable to us are expressly qualified by these cautionary
statements.

THE COMPANY

We are one of the leading worldwide independent providers of
electronic manufacturing services ("EMS"). We design and manufacture electronic
circuit board assemblies and systems for major original equipment manufacturers
("OEMs") in the communications, computer peripherals, personal computer,
automotive and consumer products industries. We serve our OEM customers with
dedicated work cell business units that combine high volume, highly automated
continuous flow manufacturing with advanced electronic design and design for
manufacturability technologies. Our customers currently include industry
leaders such as Cisco Systems, Inc., Gateway 2000, Inc., Hewlett-Packard
Company, Johnson Controls, Inc. and Quantum Corporation. For the fiscal year
ended August 31, 1999, we achieved net revenues of approximately $2.0 billion
and net income of $91.5 million.

Subsequent to August 31, 1999, we completed two business combinations.
On September 1, 1999, we purchased EFTC Services, Inc. (the "EFTC
Acquisition"), an electronic product service and repair business. Operating as
Jabil Global Services, Inc., we will continue to offer repair and warranty
services for existing and future customers from our hub-based operations in
Memphis, Tennessee; Louisville, Kentucky; and Tampa, Florida. The acquisition
will be recorded as a purchase.

On September 13, 1999, we completed a merger with GET Manufacturing,
Inc., (the "GET Merger") a China-based electronics manufacturing services
provider. We believe that the acquisition establishes Jabil as a leading EMS
provider in China. The operations currently service customers in the computer
peripherals, medical instruments, telephony, set-top box and consumer market
industries. The transaction will be accounted for as a pooling of interests
and, accordingly, our historical consolidated financial statements presented in
future reports will be restated to include the accounts and results of
operations of GET Manufacturing, Inc.

The EMS industry has experienced rapid growth over the past several
years as an increasing number of OEMs have outsourced their manufacturing
requirements. OEMs are turning to outsourcing in order to reduce product cost,
achieve accelerated time-to-market and time-to-volume production, access
advanced design and manufacturing technologies, improve inventory management
and purchasing power, reduce their

<PAGE> 3

capital investment in manufacturing facilities, and achieve parallel
manufacturing of the same product throughout the world. We believe further
growth opportunities exist for EMS providers to penetrate the worldwide
electronics markets.

We offer our customers complete turnkey EMS solutions that are
responsive to their outsourcing needs. Our work cell business units are capable
of providing:

o integrated design and engineering services

o component selection, sourcing and procurement

o automated assembly

o design and implementation of product testing

o parallel global production

o systems assembly and direct order fulfillment services

o repair and warranty services

We currently conduct our operations in facilities that are located in
the United States, China, Italy, Malaysia, Mexico and Scotland. Our parallel
global production strategy provides our customers with the benefits of improved
supply-chain management, reduced inventory obsolescence, lowered transportation
costs and reduced product fulfillment time.

Our principal executive offices are located at 10560 Ninth Street
North, St. Petersburg, Florida 33716, and our telephone number is (727)
577-9749. Our website is located at www.jabil.com. Information contained in our
website is not a part of this document.

EMS INDUSTRY BACKGROUND

The EMS industry is comprised of companies that provide a range of
manufacturing services for OEMs in the electronics industry. The EMS industry
has experienced rapid growth over the past several years as an increasing
number of OEMs have chosen an external manufacturing strategy. Industry sources
estimate that the EMS industry has grown at an average annual rate of 25.0%
from 1996 to 1999, while the leading EMS providers have grown at a faster rate
over this same period. This growth has been impacted by OEMs divesting of
internal manufacturing capacity. Factors driving OEMs to favor outsourcing to
EMS providers include:

o REDUCED PRODUCT COST. EMS providers are able to manufacture
products at a reduced total cost to OEMs. These cost advantages result
from higher utilization of capacity because of diversified product
demand and, typically, a higher sensitivity to elements of cost.

o ACCELERATED PRODUCT TIME-TO-MARKET AND TIME-TO-VOLUME. EMS
providers are able to deliver accelerated production start-ups and
achieve high efficiencies in transferring new products into
production. EMS providers are also able to rapidly scale production
for changing markets and to position themselves in global locations
that serve the leading world markets. With increasingly shorter
product life cycles, these key services allow new products to be sold
in the marketplace in an accelerated time frame.

<PAGE> 4

o ACCESS TO ADVANCED TECHNOLOGIES. Customers of EMS providers
gain access to advanced technologies in manufacturing processes, as
well as product and production design. Product and production design
services may offer customers significant improvements in the
performance, cost, time-to-market and manufacturability of their
products.

o IMPROVED INVENTORY MANAGEMENT AND PURCHASING POWER. EMS
providers are able to manage both procurement and inventory, and have
demonstrated proficiency in purchasing components at improved pricing
due to the scale of the operations and continuous interaction with the
materials marketplace.

o REDUCED CAPITAL INVESTMENT IN MANUFACTURING. OEMs are
increasingly seeking to lower their investment in inventory,
facilities and equipment used in manufacturing in order to allocate
capital to other activities such as sales and marketing, and research
and development. This shift in capital deployment has placed a greater
emphasis on outsourcing to external manufacturing specialists.

OUR STRATEGY

We are focused on expanding our position as one of the leading global
providers of electronic manufacturing services to major OEMs. To achieve this
objective, we will continue implementing the following strategies:

o ESTABLISH AND MAINTAIN LONG-TERM CUSTOMER RELATIONSHIPS. Our core
strategy is to establish and maintain long-term relationships with
leading electronics companies in expanding industries with the size
and growth characteristics that can benefit from highly automated,
continuous flow and global manufacturing. Historically, we have
derived a majority of our growth from existing customers. We focus on
maintaining long-term relationships with our customers and seek to
expand such relationships to include additional product lines and
services. In addition, we have a focused effort to identify and
develop relationships with new customers who meet our profile.

o UTILIZE WORK CELL BUSINESS UNITS. Each of our work cell business
units is dedicated to one customer and operates with a high level of
autonomy, utilizing dedicated production equipment, production
workers, supervisors, buyers, planners and engineers. We believe our
work cell business units promote increased responsiveness to our
customers' needs, particularly as a customer relationship grows to
multiple production locations.

o EXPAND PARALLEL GLOBAL PRODUCTION. Our ability to produce the same
product on a global scale is a significant requirement of our
customers. We believe that parallel global production is a key
strategy to reduce obsolescence risk and secure the lowest landed
costs while simultaneously supplying products of equivalent or
comparable quality throughout the world. Consistent with this
strategy, we have expanded our existing Mexican facility, and as part
of the GET Merger, acquired manufacturing operations in China and
Mexico.

o OFFER SYSTEMS ASSEMBLY AND DIRECT ORDER FULFILLMENT. Our systems
assembly and direct order fulfillment services allow our customers to
reduce product cost and risk of product obsolescence by reducing total
work-in-process and finished goods inventory. We offer these services
at all of our manufacturing locations.

o PURSUE SELECTIVE ACQUISITION OPPORTUNITIES. An increasing number of
OEMs are divesting internal manufacturing operations to EMS providers.
In many of these situations, the OEM enters

<PAGE> 5

into a customer relationship with the EMS provider. Our acquisition
strategy is focused on obtaining from OEMs manufacturing operations
with consistent growth and experienced management teams, and
opportunities for long-term outsourcing relationships.

OUR APPROACH TO MANUFACTURING

In order to achieve high levels of manufacturing performance, we have
adopted the following approach:

o WORK CELL BUSINESS UNITS. Each of our work cell business units is
dedicated to one customer and is empowered to formulate strategies
tailored to its customer's needs. Each work cell business unit has
dedicated production lines consisting of equipment, production
workers, supervisors and engineers. Work cell business units have
direct responsibility for manufacturing results and time-to-volume
production, promoting a sense of individual commitment and ownership.
The work cell business unit approach enables us to grow incrementally
without disrupting the operations of other work cell business units.

o BUSINESS UNIT MANAGEMENT. Our Business Unit Managers coordinate all
financial, manufacturing and engineering commitments for each of our
customers at a particular manufacturing facility. Our Business Unit
Directors oversee local Business Unit Managers and coordinate on a
worldwide basis all financial, manufacturing and engineering
commitments for each of our customers that have both domestic and
global production requirements. Jabil's Business Unit Management has
the authority to develop customer relationships, make design strategy
decisions and production commitments, establish pricing and implement
production and electronic design changes. Business Unit Managers and
Directors are also responsible for assisting customers with strategic
planning for future products, including developing cost and technology
goals. These Managers and Directors operate autonomously, with
responsibility for the development of customer relationships and
direct profit and loss accountability for work cell business unit
performance.

o CONTINUOUS FLOW. We use a highly automated, "continuous flow"
approach where different pieces of equipment are joined directly or by
conveyor to create an in-line assembly process. This process is in
contrast to a "batch" approach, where individual pieces of assembly
equipment are operated as freestanding work-centers. The elimination
of waiting time prior to sequential operations results in faster
manufacturing which improves production efficiencies and quality
control, and reduces inventory work-in-process. Continuous flow
manufacturing provides significant cost reduction and quality
improvement when applied to volume manufacturing.

o COMPUTER INTEGRATION. We support all aspects of our manufacturing
activities with advanced computerized control and monitoring systems.
Component inspection and vendor qualities are monitored electronically
in real-time. Materials planning, purchasing, stockroom and shop floor
control systems are supported through a computerized Manufacturing
Resource Planning system, providing customers with a continuous
ability to monitor material availability and track work-in-process on
a real-time basis. We believe our current legacy computer systems are
Year 2000 compliant, and we are in the process of replacing them with
a new Enterprise Resource Planning system, which we believe is also
Year 2000 compliant. Manufacturing processes are supported by a
real-time, computerized statistical process control system, whereby
customers can remotely access our computer systems to monitor
real-time yields, inventory positions, work-in-process status and
vendor quality data. See "--Technology."

o SUPPLY CHAIN MANAGEMENT. We utilize an electronic commerce
system/electronic data interchange ("EDI") with our customers and
suppliers to implement a variety of supply chain

<PAGE> 6

management programs. Our customers utilize EDI supply chain management
to share demand and product forecasts and deliver purchase orders. We
use the EDI system with our suppliers for just-in-time delivery,
supplier-managed inventory and consigned supplier-managed inventory.

OUR DESIGN SERVICES

We offer a full spectrum of value-added design services for products
that we manufacture for our customers. We provide these services to enhance our
relationships with current customers and to help develop relationships with new
customers. During fiscal year 1999, approximately one-half of the products we
shipped to our customers included Jabil designs. We offer the following design
services:

ELECTRONIC DESIGN. Our electronic design team provides electronic
circuit design services including application specific integrated circuit
design and firmware development. These services have been used to develop a
variety of circuit designs for cellular telephone accessories, notebook and
personal computers, radio frequency products, video set-top boxes, and
automotive and consumer appliance controls.

PRODUCTION DESIGN. Our production design team provides printed circuit
board ("PCB") design and other related services. These services include PCB
design services using advanced CAD/CAE tools, PCB design testing and
verification services, and other consulting services, which include generation
of a bill of materials, approved vendor list and assembly equipment
configuration for a particular PCB design. We believe that our production
design services result in PCB designs that are optimized for manufacturability
and cost and accelerate product time-to-market and time-to-volume production.

INDUSTRIAL/MECHANICAL AND OTHER DESIGN SERVICES. Our industrial and
mechanical design team often work with our customers to assist in designing the
"look and feel" of the plastic and metal enclosures that house printed circuit
board assemblies. In addition, from time to time we will procure additional
design services from third parties to meet our customers' needs.

OUR SYSTEMS ASSEMBLY, TEST AND DIRECT ORDER FULFILLMENT SERVICES

We offer systems assembly, test and direct order fulfillment services
to our customers. Our systems assembly services extend our range of assembly
activities to include assembly of higher level sub-systems and systems
incorporating multiple printed circuit boards. We maintain significant systems
assembly capacity to meet the increasing demands of our customers. In addition,
we provide testing services, based on quality assurance programs developed with
our customers, of the printed circuit boards, sub-systems and systems products
that we manufacture. Our quality assurance programs include circuit testing
under various environmental conditions to ensure that our products meet or
exceed required customer specifications. We also offer direct order fulfillment
services for delivery of final products we assemble for our customers.

OUR REPAIR AND WARRANTY SERVICES

As an extension of our manufacturing model and an enhancement to our
total global solution, we offer repair and warranty services to our customers
from strategic logistics hub locations. We have the ability to service our OEM
partners product following completion of the traditional manufacturing and
fulfillment process.

TECHNOLOGY

We believe that our manufacturing and testing technologies are among
the most advanced in the industry. Through our research and development
efforts, we intend to continue to offer our customers among the most advanced
high volume, continuous flow manufacturing process technologies. These
technologies include surface mount technology, tape automated bonding, ball
grid array, chip scale packages, flip

<PAGE> 7

chip/direct chip attach, thin substrate processes, reflow solder of mixed
technology circuit boards and other testing and emerging interconnect
technologies. In addition to our research and development activities, we are
continuously making refinements to our existing manufacturing processes in
connection with providing manufacturing services to our customers.

RESEARCH AND DEVELOPMENT

To meet our customers' increasingly sophisticated needs, we
continually engage in research and development activities. The development and
refinement of new manufacturing processes are performed primarily at our
advanced engineering facility in San Jose, California. From time to time, we
perform research and development related to new products on a
project-by-project basis. Our research and development consists of design of
the circuit board assembly, mechanical design and the related production design
necessary to manufacture the circuit board assembly in the most cost-effective
and reliable manner.

For fiscal years 1997, 1998 and 1999, we expended $3.1 million, $3.8
million, and $4.1 million, respectively, on research and development
activities. To date, substantially all of our research and development
expenditures have related to internal research and development activities.

In conjunction with the acquisition of the operations of the LaserJet
Formatter Manufacturing Organization from Hewlett-Packard Company in August
1998, (the "HP Acquisition"), we recorded a charge of $6.5 million related to
the write-off of in-process research and development. See Note 10 of Notes to
Consolidated Financial Statements.

CUSTOMERS AND MARKETING

Our core strategy is to establish and maintain long-term relationships
with leading electronics companies in expanding industries with the size and
growth characteristics that benefit from highly automated, continuous flow and
global manufacturing. A small number of customers and industries have
historically comprised a major portion of our net revenue. The table below sets
forth the respective portion of net revenue for the applicable period
attributable to our customers who accounted for more than 10% of our net
revenue in any respective period:

YEAR ENDED AUGUST 31
---------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Hewlett-Packard Company....................................... 15% 10% 25%
Cisco Systems Inc............................................ 20% 20% 20%
3Com.......................................................... 21% 18% *
Quantum Corporation........................................... 10% * *
</TABLE>
* less than 10% of net revenues

Jabil's revenue was distributed over the following significant
industries for the periods indicated:

YEAR ENDED AUGUST 31
--------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Communications................................................ 51% 52% 44%
Computer Peripherals.......................................... 16% 19% 35%
Personal Computers............................................ 21% 16% 11%
Automotive and other.......................................... 12% 13% 10%
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>

<PAGE> 8

In fiscal years 1997, 1998 and 1999 fewer than 20 customers accounted
for all of our net revenue. We expect to continue to depend upon a relatively
small number of customers for a significant percentage of our net revenue. As
illustrated in the two tables above, the historic percentages of net revenue we
have received from specific customers or industries have varied substantially
from year to year. Accordingly, these historic percentages are not necessarily
indicative of the percentage of net revenue that we may receive from any
customer or industry in the future. In the past, some of our customers have
terminated their manufacturing arrangements with us or have significantly
reduced or delayed the volume of manufacturing services ordered from us. We
cannot assure you that present or future customers will not terminate their
manufacturing arrangements with us or significantly change, reduce or delay the
amount of manufacturing services ordered from us. If they do, it could have a
material adverse effect on our results of operations. See "Factors Affecting
Future Results--We Depend on a Limited Number of Customers" and Note 7 of Notes
to Consolidated Financial Statements.

Our principal source of new business is the expansion of existing
customer relationships to include additional product lines and services,
referrals and direct sales through our Business Unit Managers and Directors and
executive staff. Our Business Unit Managers and Directors, supported by the
executive staff, identify and attempt to develop relationships with new
customers who meet our profile. This profile includes financial stability, need
for technology-driven turnkey manufacturing, anticipated unit volume and
long-term relationship stability. Unlike traditional sales managers, our
Business Unit Managers and Directors are responsible for ongoing management of
production for their customers.

INTERNATIONAL OPERATIONS

A key element in our strategy is to provide localized production of
global products produced for OEMs in the major consuming regions of North
America, Europe and Asia. Consistent with this strategy, we have established or
acquired manufacturing facilities in China, Italy, Malaysia, Mexico and
Scotland.

Our European facilities target existing European customers, North
American customers having significant sales in Europe and potential European
customers who meet our customer profile.

Our Asian facilities, located in China and Malaysia, enable us to
provide local manufacturing services to the Asian market in order to reduce
costs, freight and duties, to provide a more competitive cost structure for
these markets and to serve as a low cost manufacturing source for new and
existing customers.

See "Factors Affecting Future Results--Our International Operations
May Be Subject to Certain Risks" and "Management's Discussion and Analysis of
Financial Analysis of Financial Condition and Results of Operations."

COMPETITION

The EMS industry is highly competitive. We compete against numerous
domestic and foreign manufacturers, including SCI Systems, Inc., Solectron
Corporation, Celestica, Inc., and Flextronics International. In addition, we
may in the future encounter competition from other large electronic
manufacturers that are selling, or may begin to sell, electronic manufacturing
services. Most of our competitors have international operations and some have
substantially greater manufacturing, financial, research and development and
marketing resources than Jabil. We also face potential competition from the
manufacturing operations of our current and potential customers, who are
continually evaluating the merits of manufacturing products internally versus
the advantages of outsourcing to us.

We believe that the primary basis of competition in our targeted
markets are capability, price, manufacturing quality, advanced manufacturing
technology, design expertise, time-to-volume production, reliable delivery and
regionally dispersed manufacturing. Management believes we currently compete

<PAGE> 9

favorably with respect to these factors. See "Factors Affecting Future
Results--We are in a Highly Competitive Industry."

BACKLOG

Our order backlog at August 31, 1999 was approximately $622 million,
compared to backlog of $456 million at August 31, 1998. Although our backlog
consists of firm purchase orders, the level of backlog at any particular time
is not necessarily indicative of future sales. Given the nature of our
relationships with our customers, we frequently allow our customers to cancel
or reschedule deliveries, and therefore, backlog is not a meaningful indicator
of future financial results. Although we may seek to negotiate fees to cover
the costs of such cancellations or rescheduling, we may not be successful in
doing so. See "Factors Affecting Future Results--The Volume and Timing of
Customer Sales May Vary."

COMPONENTS PROCUREMENT

We procure components from a broad group of suppliers, determined on
an assembly-by-assembly basis. Almost all of the products we manufacture
require one or more components that are ordered from only one source, and most
assemblies require components that are available from only a single source.
Some of these components are allocated in response to supply shortages. We
attempt to ensure continuity of supply of these components. In cases where
unanticipated customer demand or supply shortages occur, we attempt to arrange
for alternative sources of supply, where available, or defer planned production
to meet the anticipated availability of the critical component. In some cases,
supply shortages will substantially curtail production of all assemblies using
a particular component. In addition, at various times there have been industry
wide shortages of electronic components, particularly of memory and logic
devices. We cannot assure you that such shortfalls will not have a material
adverse effect on our results of operations in the future. See "Factors
Affecting Future Results--The Availability of the Manufacturing Components We
Need May be Limited."

PROPRIETARY RIGHTS

We regard our manufacturing processes and electronic designs as
proprietary trade secrets and confidential information. To protect our
proprietary rights, we rely largely upon a combination of trade secret laws;
non-disclosure agreements with our customers, employees, and suppliers; our
internal security systems; confidentiality procedures and employee
confidentiality agreements. Although we take steps to protect our trade
secrets, misappropriation may still occur.

We currently have five patents. However, we believe that the rapid
pace of technological change makes patent protection less significant than such
factors as the knowledge and experience of management and personnel and our
ability to develop, enhance and market manufacturing services.

We license some technology from third parties that we use in providing
manufacturing services to our customers. We believe that such licenses are
generally available on commercial terms from a number of licensors. Generally,
the agreements governing such technology grant us non-exclusive, worldwide
licenses with respect to the subject technology and terminate upon a material
breach by us.

We believe that our electronic designs and manufacturing processes do
not infringe on the proprietary rights of third parties. However, if third
parties assert valid infringement claims against us with respect to past,
current or future designs or processes, we could be required to enter into an
expensive royalty arrangement, develop non-infringing designs or processes, or
engage in costly litigation.

<PAGE> 10

of infringement, an unspecified amount of damages to compensate Lemelson for
alleged past infringement, together with interest and costs, such damages to be
trebled due to alleged willful infringement, reasonable attorney's fees, and
such other relief that the court may award. We, along with several other
defendants, jointly hired legal counsel to represent us in the litigation and
filed an answer to the complaint denying the substantive allegations in the
complaint and raising various affirmative defenses. Lemelson has offered to
license the patents alleged to be infringed. Based on our understanding of the
terms that Lemelson has made available to certain licensees, we believe that
obtaining a license from Lemelson under the same or similar terms would not
have a material adverse effect on our results of operations or financial
condition. We have not yet determined, however, whether to seek such a license,
and we cannot assure you that, if sought, we would be offered the same or
similar terms or that the ultimate resolution of this matter will not have a
material adverse effect on us.

EMPLOYEES

As of August 31, 1999, we had 6,554 full-time employees, compared to
5,311 full-time employees at August 31, 1998. In addition, approximately 6,000
employees have joined the company as a result of the EFTC Acquisition and the
GET Merger. We believe our employee relations are good.

GEOGRAPHIC INFORMATION

The information regarding revenue, operating profit, identifiable
assets and export sales set forth in Note 7 of Notes to Consolidated Financial
Statements, set forth elsewhere herein, is hereby incorporated by reference
into this Part I, Item 1.

ENVIRONMENTAL

We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. Although we
believe that we are currently in substantial compliance with all material
environmental regulations, any failure to comply with present and future
regulations could subject us to future liabilities or the suspension of
production. In addition, such regulations could restrict our ability to expand
our facilities or could require us to acquire costly equipment or to incur
other significant expense to comply with environmental regulations.

<PAGE> 11

ITEM 2. PROPERTIES

We have manufacturing facilities located in the United States, China,
Italy, Malaysia, Mexico and Scotland. A summary of building locations is as
follows:

CURRENT FACILITIES

Year Approximate
Location Commenced Owned/Leased Square Footage Description (1)
-------- --------- ------------ -------------- ---------------
<S> <C> <C> <C> <C>
St. Petersburg, Florida 1988 Owned 110,000 High volume mfg.
St. Petersburg, Florida 1997 Owned 125,000 High volume mfg.
St. Petersburg, Florida 1997 Leased 91,000 Systems assembly
St. Petersburg, Florida 1997 Leased 27,000 Operations
St. Petersburg, Florida 1998 Leased 27,000 Office
St. Petersburg, Florida 1999 Owned 64,000 Corporate office
Auburn Hills, Michigan 1997 Leased 54,000 High volume mfg.
Auburn Hills, Michigan 1993 Owned 125,000 High volume mfg.
Auburn Hills, Michigan 1993 Leased 30,000 Warehouse
San Jose, California 1998 Leased 181,000 Volume & prototype
mfg., design
Boise, Idaho (2) 1998 Leased 129,000 High volume mfg.
Tewksbury, Massachusetts 1999 Leased 217,000 High volume mfg.
Penang, Malaysia 1997 Owned 150,000 High volume mfg.
Guadalajara, Mexico 1997 Owned 254,000 High volume mfg.
Livingston, Scotland 1997 Owned 130,000 High volume mfg.
Bergamo, Italy 1998 Leased 102,000 High volume mfg.
Panyu, China 1999 Owned 210,000 High volume mfg.
Shenzhen, China (3) 1999 Leased 435,000 High volume mfg.
Dan Shui, China (3) 1999 Leased 129,000 High volume mfg.
Tijuana, Mexico 1999 Leased 63,000 High volume mfg.
Sheung Shui, Hong Kong 1999 Owned 95,000 Office, Warehouse
Oldsmar, Florida 1999 Leased 45,000 Repair Services
Louisville, Kentucky 1999 Leased 40,000 Repair Services
Memphis, Tennessee 1999 Leased 80,000 Repair Services
Memphis, Tennessee 1999 Leased 75,000 Repair Services
</TABLE>

(1) Our manufacturing facilities in China, Florida, Idaho, Italy, Malaysia,
Mexico and Scotland are ISO-9002 certified, and our manufacturing
facilities in Michigan are QS-9000 and ISO-9001 certified.

(2) We are currently constructing a high volume manufacturing facility,
consisting of approximately 175,000 square feet, in Boise, Idaho to replace
the facility we are currently leasing.

(3) Our manufacturing facilities in China are leased from joint venture
partners.

ITEM 3. LEGAL PROCEEDINGS

We are party to certain lawsuits in the ordinary course of business.
We do not believe that these proceedings individually or in the aggregate, will
have a material adverse effect on our financial position, results of operations
and cash flows. Jabil has been named as a defendant in a patent infringement
lawsuit. See "Business-Proprietary Rights."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our stockholders during the
fourth quarter covered by this report.

<PAGE> 12

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Prior to May 5, 1998, our common stock traded on the Nasdaq National
Stock Market. Since that date, our common stock has traded on the New York
Stock Exchange under the symbol "JBL." The following table sets forth the high
and low closing sales prices per share for our common stock as reported on the
New York Stock Exchange and the Nasdaq National Stock Market for the fiscal
periods indicated. The table has been adjusted to reflect a two-for-one stock
split in the form of a 100% stock dividend to stockholders that was paid on
February 18, 1999.

HIGH LOW
------ ------
<S> <C> <C>
YEAR ENDED AUGUST 31, 1998
First Quarter (September 1, 1997--November 30, 1997) $36.00 $18.13
Second Quarter (December 1, 1997--February 28, 1998) $28.38 $14.75
Third Quarter (March 1, 1998--May 31, 1998) $26.63 $14.94
Fourth Quarter (June 1, 1998--August 31, 1998) $19.13 $11.50
YEAR ENDED AUGUST 31, 1999
First Quarter (September 1, 1998--November 30, 1998) $29.25 $12.59
Second Quarter (December 1, 1998--February 28, 1999) $38.69 $29.75
Third Quarter (March 1, 1999--May 31, 1999) $48.25 $31.94
Fourth Quarter (June 1, 1999--August 31, 1999) $53.56 $36.63
</TABLE>

As of October 15, 1999, there were approximately 1,757 holders of
record of our common stock.

We have never paid cash dividends on our capital stock and do not
anticipate paying cash dividends in the foreseeable future.

<PAGE> 13

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The information set forth below is not necessarily indicative of the
results of future operations and should be read in conjunction with the
consolidated financial statements and notes thereto incorporated into Item 8 of
this report. The information set forth below has not been restated to reflect
the September 13, 1999 GET Merger which will be accounted for as a pooling of
interests. Our historical consolidated financial statements presented in future
reports will be restated to include the accounts and results of operations of
GET Manufacturing, Inc.

YEARS ENDED AUGUST 31,
-----------------------------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- ---------- ----------
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF EARNINGS DATA:
Net revenue.................................... $559,474 $863,285 $978,102 $1,277,374 $2,000,346
Cost of revenue.............................. 523,338 790,311 857,245 1,115,647 1,772,735
-------- -------- -------- ---------- ----------
Gross profit................................... 36,136 72,974 120,857 161,727 227,611
Selling, general and administrative.......... 17,898 25,456 35,886 52,014 81,043
Research and development..................... 1,819 2,112 3,117 3,784 4,114
Amortization of intangibles.................. -- -- -- -- 1,225
Acquisition related charge................... -- -- -- 20,825 --
-------- -------- -------- ---------- ----------
Operating income............................... 16,419 45,406 81,854 85,104 (1) 141,229
Interest expense, net........................ 6,347 7,333 1,612 3,124 1,692
-------- -------- -------- ---------- ----------
Income before income taxes..................... 10,072 38,073 80,242 81,980 139,537
Income taxes................................. 2,792 13,724 27,745 25,047 48,063
-------- -------- -------- ---------- ----------

Net income..................................... $ 7,280 $24,349 $52,497 $56,933 (1) $91,474
======= ======= ======= ======= =======
Earnings per share:
Basic........................................ $ 0.12 $ 0.35 $ 0.72 $ 0.77 $ 1.17
Diluted...................................... $ 0.12 $ 0.34 $ 0.68 $ 0.74 (1) $ 1.12
Common shares used in the calculations of earnings
per share:
Basic........................................ 58,356 68,916 72,599 74,249 78,253
Diluted...................................... 62,200 72,668 76,680 77,151 81,828
</TABLE>

AUGUST 31,
-------------------------------------------------------------------
1995 1996 1997 1998 1999
-------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.................................. $33,333 $ 115,758 $97,349 $ 100,284 $ 257,103
Total assets..................................... 280,961 299,940 405,903 523,327 920,651
Current installments of long-term obligations.... 81,130 2,451 2,475 8,333 8,333
Notes payable and long-term obligations, excluding
current installments........................... 27,932 58,371 50,000 81,667 33,333
Net stockholders' equity......................... $59,595 $ 124,234 $ 181,485 $ 248,366 $ 545,832
</TABLE>
- ---------------------

(1) In connection with the HP Acquisition, we recorded an acquisition-related
charge of $20.8 million ($12.9 million after-tax). Operating income excluding
this charge was $105.9 million. Net income excluding this charge was $69.8
million, and diluted earnings per share was $0.91.

<PAGE> 14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We make "forward-looking statements" within the "safe harbor"
provision of the Private Securities Litigation Reform Act of 1995 throughout
this Annual Report on Form 10-K and in the documents we incorporate by
reference herein. You can identify these statements by forward-looking words
such as "may," "will," "expect," "anticipate," "believe," "estimate," "plan"
and "continue" or similar words. We have based these statements on our current
expectations about future events. Although we believe that our expectations
reflected in or suggested by our forward-looking statements are reasonable, we
cannot assure you that these expectations will be achieved. Our actual results
may differ materially from what we currently expect. Important factors which
could cause our actual results to differ materially from the forward-looking
statements in this document are set forth in the following "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Factors Affecting Future Results" sections and elsewhere in this document.

You should read this document and the documents that we incorporate by
reference into this Annual Report on Form 10-K completely and with the
understanding that our actual future results may be materially different from
what we expect. We may not update these forward-looking statements, even though
our situation will change in the future. All forward-looking statements
attributable to us are expressly qualified by these cautionary statements.

Jabil is one of the leading worldwide independent providers of turnkey
manufacturing services to electronics OEMs in the communications, computer
peripherals, personal computer, automotive and consumer products industries.
During the past several years, Jabil has experienced substantial growth in net
revenue, operating income and net income. This growth, as well as the growth of
the overall EMS industry, has been driven by the increasing number of
electronics OEMs who are outsourcing their manufacturing requirements. We
anticipate that this industry trend will continue during the next several
years.

We derive most of our net revenue under purchase orders from OEM
customers. We recognize revenue, net of product return and warranty costs,
typically at the time of product shipment. The volume and timing of orders
placed by our customers vary due to several factors, including: variation in
demand for our customers' products; our customers' inventory management; new
product introductions and manufacturing strategy changes; and consolidations
among our customers. Demand for our customers' products depends on, among other
things, product life cycles, competitive conditions and general economic
conditions.

Our cost of revenue includes the cost of electronic components and
other materials that comprise the products we manufacture, the cost of labor
and manufacturing overhead, and provisions for excess and obsolete inventory
adjustments. As a provider of turnkey manufacturing services, we are
responsible for procuring components and other materials. This requires us to
commit significant working capital to our operations and to manage the
purchasing, receiving, inspection and stocking of materials. Although we bear
the risk of fluctuations in the cost of materials, excess scrap and inventory
obsolescence, we periodically negotiate cost of materials adjustments with our
customers.

Net revenue from each product that we manufacture consists of a
component based on the costs of materials in that product and a component based
on the labor and manufacturing overhead allocation to that product. We refer to
the portion of the sales price of a product that is based on labor and
manufacturing overhead costs as "manufacturing-based revenue," and to the
portion of the sales price of a product that is based on materials costs as
"material-based revenue." Our gross margin for any product depends on the mix
between the cost of materials in the product and the cost of labor and
manufacturing overhead allocated to the product. We typically realize higher
gross margins on manufacturing-based revenue than we do on materials-based
revenue. As we gain experience in manufacturing a product, we usually achieve
increased efficiencies, which result in lower labor costs and manufacturing
overhead for that product.

<PAGE> 15

Our operating results are impacted by the level of capacity
utilization of manufacturing facilities, indirect labor and selling, general
and administrative expenses. Gross margins and operating income margins have
generally improved during periods of high volume and high capacity utilization.
During periods of low volume production, we generally have idle capacity and
reduced operating margins. As our capacity has grown during recent years, both
through the construction of new "greenfield" facilities and the expansion of
existing facilities, our selling, general and administrative expenses have
increased to support this growth.

We have consistently utilized advanced circuit design, production
design and manufacturing technologies to meet the needs of our customers. To
support this effort, our engineering staff focuses on developing and refining
design and manufacturing technologies to meet specific needs of specific
customers. Most of the expenses associated with these customer-specific efforts
are reflected in our cost of revenue. In addition, our engineers engage in
research and development of new technologies that apply generally to our
operations. The expense of these research and development activities are
reflected in the "Research and Development" line item in our Consolidated
Financial Statements.

An important element of our strategy is the expansion of our global
production facilities. Substantially all of our revenue and materials costs
worldwide are denominated in U.S. dollars, while our labor and utility costs in
plants outside the United Sates are denominated in local currencies. We
typically hedge these local currency costs through the purchase of foreign
exchange contracts, the amount and cost of which have not been material.

We continue to depend upon a relatively small number of customers for
a significant percentage of our net revenue. Significant reductions in sales to
any of our large customers would have a material adverse effect on our results
of operations. In the past, some of our customers have terminated their
manufacturing arrangements with us, and other customers have significantly
reduced or delayed the volume of manufacturing services ordered from us. There
can be no assurance that present or future customers will not terminate their
manufacturing arrangements with us or significantly change, reduce or delay the
amount of manufacturing services ordered from us. Any such termination of a
manufacturing relationship or change, reduction or delay in orders could have
an adverse effect on our results of operations or financial condition. See Note
7 of Notes to Consolidated Financial Statements.

ACQUISITIONS

On August 3, 1998, we acquired certain assets (primarily raw material
inventory and property, plant and equipment) relating to the LaserJet Formatter
Manufacturing Organization of Hewlett-Packard Company located in Bergamo, Italy
and Boise, Idaho. The HP Acquisition price was approximately $80.0 million and
was accounted for under the purchase method of accounting. The acquisition
resulted in goodwill and other intangible assets of approximately $11.2
million, which are being amortized on a straight-line basis over ten years. The
acquired assets were used by the Hewlett-Packard Company to manufacture printed
circuit-board assemblies for the LaserJet printer division of Hewlett-Packard
Company. Simultaneously with the HP Acquisition, we entered into a
manufacturing agreement to continue to produce the printed circuit board
assemblies being produced by the Hewlett-Packard Company operations in Bergamo
and Boise.

On September 1, 1999 we acquired the net assets of EFTC Services,
Inc., an electronic product service and repair business. Jabil Global Services,
Inc. will continue to offer repair and warranty services for existing and
future customers from its hub-based operations in Memphis, Tennessee;
Louisville, Kentucky; and Tampa, Florida. The purchase price of approximately
$28 million was paid in cash. The acquisition will be accounted for as a
purchase.

<PAGE> 16

On September 13, 1999 we issued approximately 5.6 million shares of
our common stock for all the outstanding common stock of GET Manufacturing,
Inc., a China-based electronics manufacturing services provider. The
transaction will be accounted for as a pooling-of-interests and, accordingly,
our historical consolidated financial statements presented in future reports
will be restated to include the accounts and results of operations of GET
Manufacturing, Inc.

During the past several years, an increasing number of OEMs have
divested manufacturing operations to EMS providers. Acquisitions of such
manufacturing assets have permitted EMS companies to increase their capacity
and solidify relationships with OEMs. We believe attractive acquisition
opportunities exist that will support the expansion of our global manufacturing
capabilities as well as the establishment and maintenance of long-term customer
relationships. We plan to continue a strategy of selectively acquiring the
assets of OEMs with size and growth characteristics consistent with our
customer profile.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
operating data as a percentage of net revenue:

YEARS ENDED AUGUST 31,
--------------------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Net revenue................................................... 100.0% 100.0% 100.0%
Cost of revenue............................................... 87.6 87.3 88.6
----- ----- -----
Gross margin.................................................. 12.4 12.7 11.4
Selling, general and administrative........................... 3.7 4.1 4.1
Research and development...................................... 0.3 0.3 0.2
Amortization of intangibles................................... -- -- --
Acquisition related charge.................................... -- 1.6 --
----- ----- -----
Operating income.............................................. 8.4 6.7 7.1
Interest (income) expense, net................................ 0.2 0.2 0.1
----- ----- -----
Income before income taxes.................................... 8.2 6.5 7.0
Income taxes.................................................. 2.8 2.0 2.4
----- ----- -----
Net income.................................................... 5.4% 4.5% 4.6%
===== ===== =====
</TABLE>

FISCAL YEAR ENDED AUGUST 31, 1999 COMPARED TO FISCAL YEAR ENDED AUGUST 31, 1998

NET REVENUE. Our net revenue increased 56.6% to $2.0 billion for
fiscal year 1999, up from $1.3 billion in fiscal year 1998. The increase was
primarily due to incremental revenue due to the HP Acquisition as well as
increased production of communications products. Foreign source revenue
represented 31% of our net revenue for fiscal year 1998 and 33% of net revenue
for fiscal year 1999.

GROSS PROFIT. Gross margin decreased to 11.4% in fiscal year 1999
from 12.7% in fiscal year 1998, reflecting a higher content of material-based
revenue from the HP Acquisition and underutilization of assets in certain
international factories.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased to $81.0 million (4.1% of net revenue) in
fiscal year 1999 from $52.0 million (4.1% of net revenue) in fiscal year 1998.
This increase was primarily due to continued increases in staffing and related
departmental expenses at all the Jabil locations, including the acquired
Hewlett-Packard Company sites, along with increases in information systems
staff to support the expansion of our business.

RESEARCH AND DEVELOPMENT. Research and development expenses in
fiscal year 1999 increased to $4.1 million (0.2% of net revenue) from $3.8
million (0.3% of net revenue) in fiscal year 1998 due to the expansion of
electronic design activities.

<PAGE> 17

INTEREST EXPENSE, NET. Net Interest expense decreased to $1.7
million in fiscal year 1999, from $3.1 million in fiscal year 1998, primarily
reflecting significantly reduced short-term borrowings and increased income on
cash balances.

INCOME TAXES. In fiscal year 1999, the effective tax rate increased
to 34.4% from 30.6% in fiscal year 1998. The effective tax rate is
predominantly a function of the mix of domestic versus international income
from operations. See Note 5 of Notes to Consolidated Financial Statements.

FISCAL YEAR ENDED AUGUST 31, 1998 COMPARED TO FISCAL YEAR ENDED AUGUST 31, 1997

NET REVENUE. Our net revenue increased 30.6% to $1.3 billion for
fiscal year 1998, up from $978.1 million in fiscal year 1997. The increase was
primarily a result of manufacturing services growth provided to existing and
new customers. Foreign source revenue represented 31.0% of our net revenue for
fiscal year 1998 and 30.0% of net revenue for fiscal year 1997.

GROSS PROFIT. Gross margin increased to 12.7% in fiscal year 1998
from 12.4% in fiscal year 1997, reflecting an increase in manufacturing-based
revenues and overall capacity utilization.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased to $52.0 million (4.1% of net revenue) in
fiscal year 1998 from $35.9 million (3.7% of net revenue) in fiscal year 1997.
This increase was primarily due to continued increases in staffing and related
departmental expenses at our existing operations, new operations in Mexico, and
acquired Hewlett-Packard Company sites, along with increases in information
systems staff to support the expansion of our business in existing and new
locations.

RESEARCH AND DEVELOPMENT. Research and development expenses in
fiscal year 1998 increased to $3.8 million (0.3% of net revenue) from $3.1
million (0.3% of net revenue) in fiscal year 1997 reflecting an increase in
design-based activity.

ACQUISITION RELATED CHARGE. During the fourth quarter of fiscal year
1998, we completed the HP Acquisition and recorded a one-time
acquisition-related charge of $20.8 million ($12.9 million after-tax)
consisting of an in-process technology write-off of $6.5 million, work force
related expenses of $10.0 million, and $4.3 million of other expenses.

INTEREST EXPENSE, NET. Interest expense increased to $3.1 million in
fiscal year 1998, from $1.6 million in fiscal year 1997, primarily reflecting
interest expense on our Private Placement Debt, offset in part by interest
income on cash balances.

INCOME TAXES. In fiscal year 1998, the effective tax rate decreased
to 30.6% from 34.6% in fiscal year 1997. The effective tax rate is
predominantly a function of the mix of domestic versus international income
from operations. Our international operations are being taxed at a lower rate
than in the United States, primarily due to the tax holiday granted to our
Malaysian subsidiary. The Malaysian tax holiday is currently scheduled to
expire on October 30, 2000.

QUARTERLY RESULTS

The following table sets forth certain unaudited quarterly financial
information for the 1998 and 1999 fiscal years. In the opinion of management,
this information has been presented on the same basis as the audited
consolidated financial statements appearing elsewhere, and all necessary
adjustments (consisting of normal recurring adjustments and an acquisition
related charge which is discussed in Note 10 in the Notes to Consolidated
Financial Statements) have been included in the amounts stated below to present
fairly the unaudited quarterly results when read in conjunction with the
audited consolidated financial statements and related notes thereto. The
operating results for any quarter are not necessarily indicative of results for
any future period.

<PAGE> 18

FISCAL 1998 FISCAL 1999
-------------------------------------------- ---------------------------------------------
NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31,
1997 1998 1998 1998 1998 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue..................... $319,512 $330,688 $309,599 $317,575 $447,941 $493,363 $522,497 $536,545
Cost of revenue............... 278,167 286,628 269,826 281,026 397,009 437,556 462,779 475,391
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit.................... 41,345 44,060 39,773 36,549 50,932 55,807 59,718 61,154
Selling, general and
administrative.............. 11,077 12,858 12,941 15,138 18,318 19,588 21,237 21,900
Research and development...... 912 879 1,065 928 1,066 989 952 1,107
Amortization of intangibles..... -- -- -- -- 357 294 287 287
Acquisition related charge (1).. -- -- -- 20,825 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------

Operating income (loss)......... 29,356 30,323 25,767 (342)(1) 31,191 34,936 37,242 37,860
Interest (income) expense, net 713 1,134 722 555 1,520 1,670 (301) (1,197)
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes......................... 28,643 29,189 25,045 (897) 29,671 33,266 37,543 39,057
Income tax expense (benefit). 9,572 9,050 7,764 (1,339) 10,385 11,650 13,139 12,889
-------- -------- -------- -------- -------- -------- -------- --------
Net income...................... $ 19,071 $ 20,139 $ 17,281 $ 442 (1) $ 19,286 $ 21,616 $ 24,404 $ 26,168
======== ======== ======== ======== ======== ======== ======== ========
Earnings per share:
Basic .......................... $ 0.26 $ 0.27 $ 0.23 $ 0.01 $ 0.26 $ 0.29 $ 0.30 $ 0.32
======== ======== ======== ======== ======== ======== ======== ========
Diluted......................... $ 0.25 $ 0.26 $ 0.22 $ 0.01 (1) $ 0.25 $ 0.28 $ 0.29 $ 0.30
======== ======== ======== ======== ======== ======== ======== ========
Common shares used in the
calculations of earnings per
share:
Basic .......................... 74,038 74,161 74,333 74,466 74,565 74,848 81,441 82,157
======== ======== ======== ======== ======== ======== ======== ========
Diluted......................... 77,350 77,128 77,231 76,893 77,654 78,379 85,325 85,954
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>

The following table sets forth, for the periods indicated, certain
financial information stated as a percentage of net revenue:

FISCAL 1998 FISCAL 1999
------------------------------------------------ -----------------------------------------------
NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31,
1997 1998 1998 1998 1998 1999 1999 1999
-------- ------- ------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue............... 87.1 86.7 87.2 88.5 88.6 88.7 88.6 88.6
----- ----- ----- ----- ----- ----- ----- -----
Gross profit.................... 12.9 13.3 12.8 11.5 11.4 11.3 11.4 11.4
Selling, general and
Administrative.............. 3.4 3.9 4.2 4.7 4.1 3.9 4.0 4.0
Research and development........ 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2
Amortization of intangibles..... -- -- -- -- 0.1 0.1 0.1 0.1
Acquisition related charge...... -- -- -- 6.6 -- -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Operating income (loss)......... 9.2 9.1 8.3 (0.1)(1) 7.0 7.1 7.1 7.1
Interest (income) expense, net.. 0.2 0.3 0.2 0.2 0.4 0.3 (0.1) (0.2)
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before income
Taxes......................... 9.0 8.8 8.1 (0.3) 6.6 6.8 7.2 7.3
Income tax expense (benefit).... 3.0 2.7 2.5 (0.4) 2.3 2.4 2.5 2.4
----- ----- ----- ----- ----- ----- ----- -----
Net income ..................... 6.0% 6.1% 5.6% 0.1%(1) 4.3% 4.4% 4.7% 4.9%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
- --------------------------
(1) In connection with the HP Acquisition in the fourth quarter of fiscal year
1998, we recorded an acquisition-related charge of $20.8 million ($12.9 million
after-tax). Operating income excluding this charge was $20.5 million (6.5% of
net revenue). Net income excluding this charge was $13.4 million (4.2% of net
revenue), and dilutive earnings per share was $0.17.

<PAGE> 19

LIQUIDITY AND CAPITAL RESOURCES

We have funded our operations from the proceeds of public equity
offerings, private placement debt, borrowings on a revolving credit facility
and cash generated from operations. In March 1999, we sold 6.9 million shares
of our common stock which generated net proceeds of approximately $199 million.

At August 31, 1999 our principal source of liquidity consisted of
cash and short-term investments of $140.7 million and available borrowings
under our credit facilities.

Net cash provided by operating activities for the year ended August
31, 1999 was $107.3 million. This consisted primarily of $91.5 million of net
income, $55.9 million of depreciation and amortization, $131.2 million of
increases in accounts payable and accrued expenses, offset by $102.4 million of
increases in accounts receivable and $68.4 million increases in inventories.

Net cash used in investing activities of $174.3 million for the year
ended August 31, 1999 was primarily a result of our capital expenditures for
equipment and facilities in North America to support increased manufacturing
activities in addition to purchases of short-term investments.

Net cash provided by financing activities of $157.4 million for the
year ended August 31, 1999 resulted primarily from $199 million in proceeds from
our common stock offering, offset in part by the repayment of borrowings on our
revolving credit facility and an installment of principal on our private
placement debt. See Notes 4 and 6 of Notes to Consolidated Financial Statements.

Over the past several years, we have experienced significant growth.
As a result, we have used cash to finance increases in our inventory and
accounts receivable. In the event that we experience similar growth in the
future, we may need to finance such growth and any corresponding working
capital needs with additional borrowings under our revolving credit facility,
as well as additional public and private offerings of our debt and equity.

We believe that during fiscal year 2000, our capital expenditures
will exceed $150 million, principally for machinery, equipment, facilities and
related expenses. We believe that our level of resources, which include cash on
hand, available borrowings, and funds provided by operations, will be more than
adequate to fund these capital expenditure and working capital requirements for
fiscal 2000.

"YEAR 2000" READINESS

We are continuing to actively take steps to ensure that our global
information technology infrastructure and business system applications,
manufacturing equipment and systems will be Year 2000 compliant. A global team,
overseen by a corporate officer has implemented a proactive multi-phase
approach, which includes assessing the scope of work, prioritizing, certifying
compliance, and testing compliance.

As of the end of fiscal 1999, approximately 99% of our equipment
and systems were certified as Year 2000 compliant. We expect to complete Year
2000 compliance testing and verification by the fourth quarter of calendar year
1999.

To offset potential impacts from unforeseen Year 2000 issues, every
one of our plants has modified its previously established Business Contingency
Plan to specifically address the Year 2000 rollover. Teams have been identified
from all disciplines and will be available to support all plants. In preparation
for the rollover, all plants will cease production prior to the holiday period,
sequentially power down both IT and manufacturing machinery and equipment to a
standby mode for the rollover. After the start of the New Year, we will
sequentially power up all equipment, execute testing and verification in
preparation for production continuation after the holiday period. This plan is
designed to allow systems to be verified

<PAGE> 20

ready for operation. While it is impossible to say that all potential issues
have been identified and planned for, this plan will permit sufficient time to
resolve smaller issues if and when they arise.

We are also seeking adequate assessments of Year 2000 compliance from
our suppliers, customers, and other third parties with whom we conduct business.
We have validated such third parties' Year 2000 representations where deemed
appropriate, and have developed sourcing contingency plans in areas where we
determined that these third parties' readiness is insufficient.

We estimate that we will spend an additional $200,000 prior to
December 31, 1999 to complete our Year 2000 compliance certification, testing
and verification programs. We are unable to fully determine the effect of a
failure of our own systems or those of third parties with whom we do business,
but any significant failures could have a material adverse effect on our
financial position, results of operations and cash flows. See "Factors Affecting
Future Results - We May Experience Year 2000 Risks" below.

FACTORS AFFECTING FUTURE RESULTS

OUR OPERATING RESULTS MAY FLUCTUATE

Our annual and quarterly operating results are affected by a number
of factors, including:

o the level and timing of customer orders

o the composition of the costs of sales between materials and labor
and manufacturing overhead

o price competition

o our level of experience in manufacturing a particular product

o the degree of automation used in our assembly process

o the efficiencies achieved by us in managing inventories and fixed
assets

o fluctuations in materials costs and availability of materials

o the timing of expenditures in anticipation of increased sales,
customer product delivery requirements and shortages of
components or labor

The volume and timing of orders placed by our customers vary due to variation
in demand for our customers' products, our customers' inventory management, new
product introductions and manufacturing strategy changes, and consolidations
among our customers. In the past, changes in customer orders have had a
significant effect on our results of operations due to corresponding changes in
the level of overhead absorption. Any one or a combination of these factors
could adversely affect our annual and quarterly results of operations in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Results."

<PAGE> 21

WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS

For the fiscal year ended August 31, 1999, our three largest
customers accounted for approximately 52.0% of our net revenue and fewer than
20 customers accounted for all of our net revenue. For the fiscal year ended
August 31, 1999, Hewlett-Packard Company and Cisco Systems, Inc. accounted for
approximately 25% and 20% of our net revenue, respectively. We are dependent
upon the continued growth, viability and financial stability of our customers
whose industries have experienced rapid technological change, short product
life cycles, consolidation, and pricing and margin pressures. We expect to
continue to depend upon a relatively small number of customers for a
significant percentage of our net revenue. A significant reduction in sales to
any of our customers, or a customer exerting significant pricing and margin
pressures on us, would have a material adverse effect on our results of
operations. In the past, some of our customers have terminated their
manufacturing arrangements with us or have significantly reduced or delayed the
volume of manufacturing services ordered from us. We cannot assure you that
present or future customers will not terminate their manufacturing arrangements
with us or significantly change, reduce or delay the amount of manufacturing
services ordered from us. If they do, it could have a material adverse effect
on our results of operations. In addition, we generate significant accounts
receivables in connection with providing manufacturing services to our
customers. If one or more of our customers were to become insolvent or
otherwise were unable to pay for the manufacturing services provided by us, our
operating results and financial condition would be adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Customers and Marketing."

THE VOLUME AND TIMING OF CUSTOMER SALES MAY VARY

The volume and timing of sales to our customers may vary due to:

o variation in demand for our customers' products

o our customers' attempts to manage their inventory

o electronic design changes

o changes in our customers' manufacturing strategy

o acquisitions of or consolidations among customers

Due in part to these factors, most of our customers do not commit to firm
production schedules for more than one quarter in advance. Our inability to
forecast the level of customer orders with certainty makes it difficult to
schedule production and maximize utilization of manufacturing capacity. In the
past, we have been required to increase staffing and other expenses in order to
meet the anticipated demand of our customers. Anticipated orders from many of
our customers have, in the past, failed to materialize or delivery schedules
have been deferred as a result of changes in our customers' business needs,
thereby adversely affecting our results of operations. On other occasions, our
customers have required rapid increases in production, which have placed an
excessive burden on our resources. Such customer order fluctuations and
deferrals have had a material adverse effect on us in the past, and we may
experience such effects in the future. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Business--Backlog."

WE ARE IN A HIGHLY COMPETITIVE INDUSTRY

The electronic manufacturing services business is highly
competitive. We compete against numerous domestic and foreign manufacturers,
including SCI Systems, Inc., Solectron Corporation, Celestica, Inc. and

<PAGE> 22

Flextronics International. In addition, we may in the future encounter
competition from other large electronic manufacturers that are selling, or may
begin to sell, electronic manufacturing services. Most of our competitors have
international operations and some have substantially greater manufacturing,
financial, research and development, and marketing resources than us. We also
face potential competition from the manufacturing operations of our current and
potential customers, who are continually evaluating the merits of manufacturing
products internally versus the advantages of outsourcing. See
"Business--Competition."

OUR RAPID GROWTH MAY BE DIFFICULT TO MANAGE

We have grown rapidly. Our ability to manage growth effectively will
require us to continue to implement and improve our operational, financial and
management information systems; continue to develop the management skills of
our managers and supervisors; and continue to train, motivate and manage our
employees. Our failure to effectively manage growth could have a material
adverse effect on our results of operations. See "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

WE MAY EXPERIENCE RISKS RELATING TO OUR COMPUTER INTEGRATION

We are in the process of installing a new Enterprise Resource
Planning system that will replace the current Manufacturing Resource Planning
system and financial information systems. Any delay in the implementation of
these new information systems could result in material adverse consequences,
including disruption of operations, loss of information and unanticipated
increases in cost. See "--We May Experience Year 2000 Risks."

WE MAY ENCOUNTER DIFFICULTIES WITH ACQUISITIONS

We cannot assure you that we will be able to successfully integrate
the operations and management of our recent acquisitions. Similarly, we cannot
assure you that we will be able to consummate or, if consummated, successfully
integrate the operations and management of future acquisitions. Acquisitions
involve significant risks which could have a material adverse effect on us,
including:

o Financial risks, such as (1) potential liabilities of the
acquired businesses; (2) the dilutive effect of the issuance of
additional equity securities; (3) the incurrence of additional
debt; (4) the financial impact of amortizing goodwill and other
intangible assets involved in any acquisitions that are accounted
for using the purchase method of accounting; and (5) possible
adverse tax and accounting effects.

o Operating risks, such as (1) the diversion of management's
attention to the assimilation of the businesses to be acquired;
(2) the risk that the acquired businesses will fail to maintain
the quality of services that we have historically provided; (3)
the need to implement financial and other systems and add
management resources; (4) the risk that key employees of the
acquired businesses will leave after the acquisition; and (5)
unforeseen difficulties in the acquired operations.

<PAGE> 23

THE AVAILABILITY OF THE MANUFACTURING COMPONENTS WE NEED MAY BE LIMITED

Substantially all of our net revenue is derived from turnkey
manufacturing in which we provide materials procurement. While most of our
significant long-term customer contracts permit quarterly or other periodic
adjustments to pricing based on decreases and increases in component prices and
other factors, we typically bear the risk of component price increases that
occur between any such repricings or, if such repricing is not permitted,
during the balance of the term of the particular customer contract.
Accordingly, certain component price increases could adversely affect our gross
profit margins. Almost all of the products we manufacture require one or more
components that are available from only a single source. Some of these
components are allocated from time to time in response to supply shortages. In
some cases, supply shortages will substantially curtail production of all
assemblies using a particular component. In addition, at various times industry
wide shortages of electronic components have occurred, particularly of memory
and logic devices. Such circumstances have produced significant levels of
short-term interruption of our operations, and may have a material adverse
effect on our results of operations in the future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Business--Components Procurement."

OUR INTERNATIONAL OPERATIONS MAY BE SUBJECT TO CERTAIN RISKS

We derived 33% of our revenues from international operations in
fiscal year 1999. We currently operate outside the United States in Dan Shui,
Panyu, and Shenzhen, China; Bergamo, Italy; Penang, Malaysia; Guadalajara and
Tijuana, Mexico; and Livingston, Scotland. Our international operations may be
subject to a number of risks, including:

o difficulties in staffing and managing foreign operations

o political and economic instability

o unexpected changes in regulatory requirements and laws

o longer customer payment cycles and difficulty collecting accounts
receivable export duties, import controls and trade barriers
(including quotas)

o governmental restrictions on the transfer of funds to us from our
operations outside the United States

o burdens of complying with a wide variety of foreign laws and
labor practices

o fluctuations in currency exchange rates, which could affect local
payroll, utility and other expenses

o inability to utilize net-operating losses incurred by our foreign
operations to reduce our U.S. income taxes

In our experience, entry into new international markets requires
considerable management time as well as start-up expenses for market
development, hiring and establishing office facilities before any significant
revenues are generated. As a result, initial operations in a new market may
operate at low margins or may be unprofitable. See "Management's Discussion and
Analysis of Financial Condition and Result of Operations--Liquidity and Capital
Resources."

<PAGE> 24

WE DEPEND ON KEY PERSONNEL

Our continued success depends largely on the efforts and skills of
our key managerial and technical employees. The loss of the services of certain
of these key employees or an inability to attract or retain qualified employees
could have a material adverse effect on us. We do not have employment
agreements or noncompetition agreements with our key employees.

WE MAY EXPERIENCE YEAR 2000 RISKS

Many existing computer programs use only two digits to identify a
year in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. We are actively taking steps to ensure that our global information
technology infrastructure and business system applications, manufacturing
equipment and systems will be Year 2000 compliant. We are also seeking adequate
assurances of Year 2000 compliance from our suppliers, customers, and other
third parties with whom we conduct business. We have spent approximately $1.5
million to date, and intend to spend an additional $200,000 by December 31,
1999, to address any Year 2000 issues. However, we cannot assure you that our
efforts are appropriate, adequate or complete. Based on our assessment of Year
2000 issues, we may face the following concerns:

o We believe our current legacy computer systems are Year 2000
compliant, and we are in the process of replacing them with a new
Enterprise Resource Planning system, which we believe is also
Year 2000 compliant. As a result of our acquisition efforts, we
now foresee a continuing effort to integrate and consolidate
acquired systems into our Enterprise Resource Planning System.
This process will continue throughout calendar year 2000. Any
significant failure of these systems could have a material
adverse effect on our financial position, results of operations
and cash flows.

o We have made recent acquisitions and plan to continue to pursue
additional acquisitions. In this regard, we may acquire a
business with a significant risk from Year 2000 issues.

o Our business operations utilize an electronic commerce
system/electronic data interchange with suppliers and customers
to implement a variety of supply chain management programs. While
we are actively seeking assurances of Year 2000 compliance from
our suppliers and customers, the failure by any one of these
third parties to address Year 2000 issues could result in our
temporary inability to process these supply chain management
programs with such third parties.

As a result of these Year 2000 issues, we may suffer the following
consequences:

o We may experience a significant number of operational
inconveniences and inefficiencies that may divert our time,
attention and financial and human resources from our ordinary
business activities.

o We may suffer serious system failures that may require
significant efforts by us or our suppliers, customers, and other
third parties, to prevent or alleviate material business
disruptions.

o We may experience a significant loss of revenues or incur a
significant amount of unanticipated expenses.

<PAGE> 25

WE MUST MAINTAIN OUR TECHNOLOGICAL AND MANUFACTURING PROCESS EXPERTISE

The market for our manufacturing services is characterized by
rapidly changing technology and continuing process development. We are
continually evaluating the advantages and feasibility of new manufacturing
processes. We believe that our future success will depend upon our ability to
develop and provide manufacturing services which meet our customers' changing
needs, maintain technological leadership, and successfully anticipate or
respond to technological changes in manufacturing processes on a cost-effective
and timely basis. We cannot assure you that our process development efforts
will be successful. See "Business--Technology" and "--Research and
Development."

WE ARE SUBJECT TO A VARIETY OF ENVIRONMENTAL LAW COMPLIANCE RESPONSIBILITIES

We are subject to a variety of federal, state, local and foreign
environmental regulations relating to the use, storage, discharge and disposal
of hazardous chemicals used during our manufacturing process. If we fail to
comply with any present and future regulations, we could be subject to future
liabilities or the suspension of production. In addition, such regulations
could restrict our ability to expand our facilities or could require us to
acquire costly equipment, or to incur other significant expenses to comply with
environmental regulations.

CERTAIN EXISTING STOCKHOLDERS HAVE SIGNIFICANT CONTROL

Our executive officers, directors and principal stockholders and
their affiliates collectively beneficially own 30.7% of our outstanding common
stock, of which William D. Morean beneficially owns 25.4%. As a result, our
executive officers, directors, principal stockholders and their affiliates have
significant influence over (1) the election of our Board of Directors, (2) the
approval or disapproval of any other matters requiring stockholder approval,
and (3) the affairs and policies of Jabil.

OUR STOCK PRICE MAY BE VOLATILE

Our common stock is traded on the New York Stock Exchange. The
market price of our common stock has fluctuated substantially in the past and
could fluctuate substantially in the future, based on a variety of factors,
including future announcements covering us or our key customers or competitors,
government regulations, litigation, changes in earnings estimates by analysts,
fluctuations in quarterly operating results, or general conditions in the
contract manufacturing, communications, computer peripherals, personal
computer, automotive or consumer products industries. Furthermore, stock prices
for many companies, and high technology companies in particular, fluctuate
widely for reasons that may be unrelated to their operating results. Those
fluctuations and general economic, political and market conditions, such as
recessions or international currency fluctuations and demand for our services,
may adversely affect the market price of our common stock.

OUR CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW MAY HAVE CERTAIN ANTI-
TAKEOVER EFFECTS

The Corporation Law of the State of Delaware and our certificate of
incorporation and bylaws each contain certain provisions which may, in effect,
discourage, delay or prevent a change of control of Jabil or unsolicited
acquisition proposals from taking place.

WE ARE SENSITIVE TO CHANGES IN INTEREST RATES

We pay interest on outstanding borrowings under our $225.0 million
revolving credit facility at interest rates that fluctuate based upon changes
in various base interest rates. As of August 31, 1999, we did not have
outstanding borrowings under our revolving credit facility. An adverse change
in the base rates upon which our interest rate is determined could have a
material adverse effect on our financial position, results of operations and
cash flows.

<PAGE> 26

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations: Factors Affecting Future Results - The Availability of
the Manufacturing Components We Need May be Limited," "-Our International
Operations May be Subject to Certain Risks", and "-We Are Sensitive to Changes
in Interest Rates."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Certain information required by this item is included in Item 7 of
Part II of this Report under the heading "Quarterly Results" and is
incorporated into this item by reference. All other information required by
this item is included in Item 14 of Part IV of this Report and is incorporated
into this item by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

25
<PAGE> 27

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding our directors is incorporated by reference to
the information set forth under the caption "Proposal No. 1: Election of
Directors" in our Proxy Statement for the Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission (the "Commission") within 120
days after the end of our fiscal year ended August 31, 1999.

Information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended, is hereby incorporated herein by
reference from the section entitled "Other Information-- Section 16(a)
Beneficial Ownership Reporting Compliance" in the Proxy Statement for the
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission (the "Commission") within 120 days after the end of our fiscal year
ended August 31, 1999.

EXECUTIVE OFFICERS OF THE COMPANY

Officers are appointed by the Board of Directors and serve at the
discretion of the Board. Each excutive officer is a full-time employee of the
Company. There are no family relationships among the officers and directors of
the Company.

WILLIAM D. MOREAN (age 43) has served as Chief Executive Officer
and Chairman of the Board since 1988 and as a director since
1978. Morean joined the Company in 1977 and assumed management of
day-to-day operations the following year. Prior to serving as
Chief Executive Officer and Chairman of the Board, Morean served
as President and Vice President and held various operating
positions. Morean attended Western Michigan University, where he
studied aviation.

THOMAS A. SANSONE (age 50) was elected Vice Chairman in January
1999. He has served as a director since 1983. Sansone joined the
Company in 1983 as Vice President was promoted to President in
1988. Prior to joining Jabil, Sansone was a practicing attorney.
He holds a B.A. in Business Administration from Hillsdale
College, a J.D. from Detroit College of Law and an LL.M in
taxation from New York University.

TIMOTHY L. MAIN (age 41) was named President of the Company in
January 1999 and a director of the Company in October 1999. He
previously served as Senior Vice President, Business Development.
Main joined the Company in April 1987 as a Production Control
Manager, was promoted to Operations Manager in September 1987, to
Project Manager in July 1989 and to Vice President Business
Development in May 1991. Prior to joining the Company, Main was a
commercial lending officer, international division for the
National Bank of Detroit. Main has earned a B.S. from Michigan
State University and an MIM from the American Graduate School of
International Management (Thunderbird).

RONALD J. RAPP (age 46) was named Senior Vice President,
Operational Development in January 1999. He served as a director
from September 1988 to October 1999. Rapp joined the Company in
1983 as Controller, was promoted in 1984 to Treasurer, to CFO in
1988 and to Executive Vice President, Operations in 1996. Prior
to joining Jabil, Rapp was the Corporate Controller for Van Pelt
Corporation, a wholesale distributor of steel tubing products.
Before joining Van Pelt, Rapp was a certified public accountant
with the accounting firm of Ernst & Ernst. Rapp holds a B.A. in
accounting from Ferris State University.

CHRIS LEWIS (age 39) joined Jabil as Treasurer in June 1995 and
was promoted to Chief Financial Officer in August 1996. From July
1989 to May 1995, Lewis was U.S. Controller of

<PAGE> 28

Peek PLC, a high technology manufacturing group. Prior to July
1989, Lewis was a CPA with the accounting firm of KPMG Peat
Marwick. Lewis holds a B.A. in Business Administration from
Wittenberg University in Springfield, Ohio.

ROBERT L. PAVER (age 43) joined Jabil Circuit as General Counsel
in 1997. Prior to working for Jabil, Paver was a practicing
attorney with the law firm of Holland & Knight in St. Petersburg,
Fla. He has served as an adjunct professor of law at Stetson
University College of Law since 1985. Paver holds a B.A. from the
University of Florida and a J.D. from Stetson University College
of Law.

MARK MONDELLO (age 35) was promoted to Senior Vice President,
Business Development in January 1999. He joined Jabil Circuit in
1992 as Production Line Supervisor, was promoted to Project
Manager in 1993 and to Vice President, Business Development in
1997. Prior to Jabil, Mondello served as project manager on
commercial and defense-related aerospace programs for Moog, Inc.
Mondello holds a B.S. in Mechanical Engineering from the
University of South Florida.

WESLEY "BUTCH" EDWARDS (age 46) was named Senior Vice President,
Operations in August 1996 after serving as Vice President,
Operations since May 1994. Edwards joined the Company as
Manufacturing Manager of its Michigan facility in July 1988 and
was promoted to Operations Manager of the Florida facility in
July 1989. He holds an M.B.A. from the University of Florida.

PAUL BITTNER (age 54) has been Vice President, Advanced
Engineering since January 1992. Bittner joined the Company in
1986 as Manufacturing Engineering Manager, was promoted to
Director of Manufacturing Engineering in April 1987, and was
promoted to Vice President, Manufacturing Engineering, in June
1988. Prior to joining Jabil, Bittner held various positions with
United Technologies Automotive Electronics Group.

RANDON HAIGHT (age 49) has served as Vice President, Business
Development Europe since May 1992. Haight joined the Company as a
Project Manager in July 1989. Prior to joining Jabil, Haight was
the President of Cardinal Automotive, an automobile customizer
from 1987 to July 1989. Before joining Cardinal Automotive,
Haight was a group Manager at Terry Barr Sales, Inc., a
manufacturers' representative to the automotive industry. He
holds a B.A. in Liberal Arts from Hillsdale College and an M.A.
from Eastern Michigan University.

BETH A. WALTERS (age 39) was named Vice President, Communications
in November 1998. She joined Jabil in 1992 as Marketing
Communications Manager and was promoted to Director of
Communications in 1994. Prior to joining Jabil, Walters owned a
marketing communications firm and served in a variety of public
relations positions with advertising and public relations
agencies. She holds a B.S. in Political Science from American
University in Washington, DC and an M.A. in Political Science
from the University of Hawaii.

SCOTT D. BROWN (age 37) was named Vice President, Corporate
Development in September 1997. He joined Jabil Circuit as a
Project Manager in November 1988 and served in that capacity
through August 1997. Prior to joining Jabil, Brown was a
financial consultant with Merrill Lynch & Co., Inc. in Bloomfield
Hills, Michigan. Brown holds a B.S. in Economics from the
University of Michigan.

JEFFREY J. LUMETTA (age 36) was named Vice President, Design
Services in November 1996. Lumetta joined the Company in 1986 as
a Design Engineer, and was promoted to Manager, Design
Engineering at the Florida facility in 1994. Lumetta holds a B.S.
in Electrical Engineering from Michigan Technological University.

<PAGE> 29

MICHAEL F. WARD (age 48) joined Jabil Circuit in 1993 as plant
operations manager and helped establish Jabil's first
international greenfield site in Livingston, Scotland. He was
promoted to his current position of VP, Information Technology in
May 1998. Prior to Jabil, Ward held various positions at Seagate
Technology, Honeywell and Burroughs Machines. Ward earned degrees
in Electronic and Electrical Engineering and Mechanical
Engineering from Bell College of Technology Hamilton, Scotland.

WILLIAM E. PETERS (age 36) was named Vice President, Operations
in January, 1999. Peters was hired by Jabil in 1990 as a buyer
and was promoted to Purchasing Manager soon after. In 1993, he
was promoted to Operations Manager for the Michigan facility.
Prior to joining Jabil, Peters was a Financial Analyst for
Electronic Data Systems. Peters earned a B.A. in Economics from
Michigan State University.

FRANK KRAJCIROVIC (age 51) has been Vice President, Quality
Control since June 1988. Krajcirovic joined the Company in 1982
as a Quality Engineer. He was promoted to Manager of Quality in
1983 and to Director of Quality in September 1987. Prior to
joining Jabil, Krajcirovic held various reliability engineering
positions with Massey Ferguson, Inc., a farm equipment
manufacturer and Fundimensions, Inc., Lionel Division, a toy
manufacturer. He holds a B.S. in Electrical Engineering from the
City of Brno College, Czechoslovakia.

ROLAND J. BURKE (age 56) joined Jabil in 1995 as the Operations
Manager, overseeing the Florida manufacturing facilities. He
remained in this position until April 1998, when he was promoted
to his current position, Vice President, Supply Chain Management.
Previously, Burke held executive positions at Conner Peripherals,
Cipher Data, Archive Corp. and Irwin Magnetics. He holds a
Bachelor's degree from Oakland University in Rochester, Michigan.

FORBES I.J. ALEXANDER (age 39) was named Treasurer in November
1996. Alexander joined the company in 1993 as Controller of the
company's Scottish operation and was promoted to Assistant
Treasurer in April 1996. Prior to joining Jabil, Alexander was
Financial Controller of Tandy Electronics European Manufacturing
Operations in Scotland and has held various financial positions
with Hewlett Packard and Apollo Computer. Alexander is a
Chartered Management Accountant. He holds a B.A. in Accounting
from Dundee College, Scotland.

J. PATRICK REDMOND (age 39) was promoted to Controller of Jabil
in July 1999. Redmond joined the Company in May 1995 as Plant
Controller for the Florida campus and later became Plant
Controller for the Scotland facility. Prior to joining Jabil,
Redmond was Plant Controller for Loral Data Systems and has held
a variety of financial and business management positions at Loral
and previously, at Schlumberger. Redmond obtained a B.A. in
accounting from the University of South Florida.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated by
reference to the information set forth under the captions "Proposal No. 1:
Election of Directors - "Compensation of Directors" and "Executive Officer
Compensation" in our Proxy Statement for the 1999 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
our fiscal year ended August 31, 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial
owners and management is incorporated by reference to the information set forth
under the caption "Other Information -- Share Ownership by Principal
Stockholders and Management" in our Proxy Statement for the 1999 Annual Meeting

<PAGE> 30

of Stockholders to be filed with the Commission within 120 days after the end
of our fiscal year ended August 31, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions
is incorporated by reference to the information set forth under the caption
"Certain Transactions" in our Proxy Statement for the 1999 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
our fiscal year ended August 31, 1999.

<PAGE> 31

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

1. Financial Statements. The consolidated financial statements, and
related notes thereto, of the Company with independent auditors'
report thereon are included in Part IV of this report on the pages
indicated by the Index to Consolidated Financial Statements and
Schedule as presented on page 31 of this report.

2. Financial Statement Schedule. The financial statement schedule of
the Company is included in Part IV of this report on the page
indicated by the Index to Consolidated Financial Statements and
Schedule as presented on page 31 of this report. This financial
statement schedule should be read in conjunction with the
consolidated financial statements, and related notes thereto, of
the Company.

Schedules not listed in the Index to Consolidated Financial
Statements and Schedule have been omitted because they are not
applicable, not required, or the information required to be set
forth therein is included in the consolidated financial statements
or notes thereto.

3. Exhibits. See Item 14(c) below.

(b) Reports on Form 8-K. We filed no Current Reports on Form 8-K during the
last quarter of the fiscal year ended August 31, 1999. Subsequent to year end,
we filed a Current Report on Form 8-K on September 28, 1999 reporting the
completion of the acquisition of 100 percent of the voting common stock of GET
Manufacturing, Inc. See Note 10 of Notes to Consolidated Financial Statements.

(c) Exhibits. The exhibits listed on the Exhibits Index are filed as part of,
or incorporated by reference into, this Report.

(d) Financial Statement Schedules. See Item 14(a) above.

<PAGE> 32
JABIL CIRCUIT, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report............................................................................... 32

Consolidated Financial Statements:

Consolidated Balance Sheets--August 31, 1998 and 1999................................................. 33

Consolidated Statements of Earnings--Years ended August 31, 1997,
1998, and 1999..................................................................................... 34

Consolidated Statements of Stockholders' Equity--Years ended
August 31, 1997, 1998, and 1999.................................................................... 35

Consolidated Statements of Cash Flows--Years ended August 31, 1997,
1998, and 1999..................................................................................... 36

Notes to Consolidated Financial Statements............................................................ 37

Financial Statement Schedule:

Schedule II - Valuation and Qualifying Accounts....................................................... S-5
</TABLE>

<PAGE> 33

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Jabil Circuit, Inc:

We have audited the consolidated financial statements of Jabil
Circuit, Inc. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Jabil
Circuit, Inc. and subsidiaries as of August 31, 1998 and 1999, and the results
of their operations and their cash flows for each of the years in the
three-year period ended August 31, 1999, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

/s/ KPMG LLP
------------

St. Petersburg, Florida
September 15, 1999

<PAGE> 34

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

AUGUST 31,
---------------------
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................................. $ 23,139 $113,556
Short term investments (note 1) ........................................ -- 27,176
Accounts receivable, less allowance for doubtful accounts of $3,079
in 1998 and $3,780 in 1999 (note 7) ................................. 126,276 228,631
Inventories (note 2) ................................................... 123,097 191,482
Prepaid expenses and other current assets .............................. 1,772 14,401
Deferred income taxes (note 5) ......................................... 12,719 12,654
-------- --------
Total current assets ................................................ 287,003 587,900
Property, plant and equipment, net (note 3) .............................. 224,680 314,282
Other assets ............................................................. 11,644 18,469
-------- --------
$523,327 $920,651
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 4) ........................ $ 8,333 $ 8,333
Accounts payable ....................................................... 132,601 263,314
Accrued compensation and employee benefits ............................. 19,716 24,246
Other accrued expenses ................................................. 20,744 16,027
Income taxes payable ................................................... 5,325 18,877
-------- --------
Total current liabilities ........................................... 186,719 330,797
Note payable and long-term debt, less current installments (note 4) ...... 81,667 33,333
Deferred income taxes (note 5) ........................................... 4,348 8,891
Deferred grant revenue ................................................... 2,227 1,798
-------- --------
Total liabilities ................................................... 274,961 374,819
-------- --------
Stockholders' equity (notes 1 and 6):
Preferred stock, $.001 par value, authorized 1,000,000 shares; no shares
issued and outstanding .............................................. -- --
Common stock, $.001 par value, authorized 120,000,000 shares;
issued and outstanding, 74,536,850 shares in 1998, and
82,227,444 in 1999 ................................................ 75 82
Additional paid-in capital ............................................. 71,542 277,527
Retained earnings ...................................................... 176,749 268,223
-------- --------
Total stockholders' equity .......................................... 248,366 545,832
-------- --------
Commitments and contingencies (note 9) ................................... $523,327 $920,651
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE> 35

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

YEARS ENDED AUGUST 31,
----------------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Net revenue (note 7) ........................................ $ 978,102 $1,277,374 $2,000,346
Cost of revenue ............................................. 857,245 1,115,647 1,772,735
---------- ---------- ----------
Gross profit ................................................ 120,857 161,727 227,611
Operating expenses:
Selling, general and administrative.. ....................... 35,886 52,014 81,043
Research and development .................................... 3,117 3,784 4,114
Amortization of intangibles ................................. -- -- 1,225
Acquisition-related charge (note 10) ........................ -- 20,825 --
---------- ---------- ----------
Operating income ............................................ 81,854 85,104 141,229
Interest expense, net ....................................... 1,612 3,124 1,692
---------- ---------- ----------
Income before income taxes .................................. 80,242 81,980 139,537
Income taxes (note 5) ....................................... 27,745 25,047 48,063
---------- ---------- ----------
Net income .................................................. $ 52,497 $ 56,933 $ 91,474
========== ========== ==========
Earnings per share:
Basic ..................................................... $ 0.72 $ 0.77 $ 1.17
========== ========== ==========
Diluted ................................................... $ 0.68 $ 0.74 $ 1.12
========== ========== ==========
Common shares used in the calculations of earnings per share:
Basic ..................................................... 72,599 74,249 78,253
========== ========== ==========
Diluted ................................................... 76,680 77,151 81,828
========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE> 36

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

COMMON STOCK UNEARNED
-------------------------- ADDITIONAL COMPENSATION NET
SHARES PAID-IN RETAINED FROM GRANT OF STOCKHOLDERS'
OUTSTANDING PAR VALUE CAPITAL EARNINGS STOCK OPTION EQUITY
----------- --------- ---------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at August 31, 1996....... 71,192,892 $71 $ 56,871 $ 67,319 $ (27) $124,234

Exercise of stock options........ 2,530,020 3 2,384 -- -- 2,387

Amortization of unearned
compensation................... -- -- -- -- 27 27

Shares issued under Employee
Stock Purchase Plan ........... 277,272 -- 1,237 -- -- 1,237

Tax benefit of options exercised. -- -- 1,103 -- -- 1,103

Net income....................... -- -- -- 52,497 -- 52,497
---------- --- -------- -------- ----- --------
Balance at August 31, 1997....... 74,000,184 $74 $ 61,595 $119,816 $ -- $181,485

Exercise of stock options........ 384,780 1 513 -- -- 514

Shares issued under Employee
Stock Purchase Plan ........... 151,886 -- 2,320 -- -- 2,320

Tax benefit of options exercised -- -- 7,114 -- -- 7,114

Net income....................... -- -- -- 56,933 -- 56,933
---------- --- -------- -------- ----- --------
Balance at August 31, 1998....... 74,536,850 $75 $ 71,542 $176,749 $ -- $248,366

Exercise of stock options........ 553,340 -- 2,117 -- -- 2,117

Shares issued under Employee
Stock Purchase Plan ........... 237,254 -- 4,611 -- -- 4,611

Tax benefit of options exercised -- -- 657 -- -- 657

Secondary Public Offering, net
of expenses.................... 6,900,000 7 198,600 -- -- 198,607

Net income....................... -- -- -- 91,474 -- 91,474
---------- --- -------- -------- ----- --------
Balance at August 31, 1999....... 82,227,444 $82 $277,527 $268,223 $ -- $545,832
========== === ======== ======== ===== ========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE> 37

JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEARS ENDED AUGUST 31,
---------------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .................................................................. $ 52,497 $ 56,933 $ 91,474
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ............................................... 24,924 35,702 55,978
Recognition of grant revenue ................................................ (1,705) (827) (825)
Deferred income taxes ....................................................... (1,840) (5,443) 4,608
Loss (gain) on sale of property ............................................. (275) 160 2,755
Acquisition related in-process research and development charge .............. -- 6,500 --
Change in operating assets and liabilities, exclusive of net assets acquired:
Accounts receivable ...................................................... (32,148) (9,289) (102,355)
Inventories .............................................................. (31,318) 10,566 (68,385)
Prepaid expenses and other current assets ................................ (436) 2,776 (12,629)
Other assets ............................................................. 1,513 (2,828) (8,050)
Accounts payable and accrued expenses .................................... 56,838 5,059 131,183
Income taxes payable ..................................................... 1,310 (861) 13,552
--------- --------- ---------
Net cash provided by operating activities ............................... 69,360 98,448 107,306
--------- --------- ---------
Cash flows from investing activities:
Net cash paid for net assets acquired ....................................... -- (64,990) --
Purchases of investments .................................................... -- -- (27,176)
Acquisition of property, plant and equipment ................................ (93,805) (99,782) (150,120)
Proceeds from sale of property and equipment ................................ 368 2,698 3,011
--------- --------- ---------
Net cash used in investing activities .................................... (93,437) (162,074) (174,285)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from (payments of) long-term debt and capital lease obligations .... (8,347) 37,525 (48,334)
Net proceeds from issuance of common stock .................................. 3,624 2,834 205,335
Proceeds from grants ........................................................ 938 949 395
--------- --------- ---------
Net cash provided by (used in) financing activities ...................... (3,785) 41,308 157,396
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents ........................ (27,862) (22,318) 90,417
Cash and cash equivalents at beginning of period .............................. 73,319 45,457 23,139
--------- --------- ---------
Cash and cash equivalents at end of period .................................... $ 45,457 $ 23,139 $ 113,556
========= ========= =========
Supplemental disclosure information:
Interest paid ............................................................... $ 4,707 $ 5,135 $ 5,493
========= ========= =========
Income taxes paid, net of refunds received .................................. $ 29,378 $ 31,351 $ 29,903
========= ========= =========
Tax benefit of options exercised ............................................ $ 1,103 $ 7,114 $ 657
========= ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE> 38

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Jabil Circuit, Inc. (together with its subsidiaries, herein referred
to as the "Company") is an independent supplier of custom manufacturing
services for circuit board assemblies, subsystems and systems to major original
equipment manufacturers ("OEMs") in the communications, personal computer,
peripherals, consumer and automotive industries. The Company's manufacturing
services combine a high volume, highly automated manufacturing approach with
advanced design and manufacturing technologies. The Company is headquartered in
St. Petersburg, Florida and has manufacturing operations in North America,
Europe and Asia.

Significant accounting policies followed by the Company are as
follows:

a. CONSOLIDATION

The consolidated financial statements include the accounts and
operations of Jabil Circuit, Inc. and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions have been
eliminated in preparing the consolidated financial statements.

As discussed in Note 10, subsequent to August 31, 1999 the Company
completed a merger which will be accounted for as a pooling of interests in
fiscal 2000. The accompanying consolidated financial statements do not reflect
the impact of this transaction.

b. REVENUE RECOGNITION

The Company typically recognizes revenue at the time of product
shipment. Such revenue is recorded net of estimated product return and warranty
costs. At August 31, 1998 and 1999, such estimated amounts for returns and
warranties are not considered material.

In connection with the August 3, 1998 acquisition of the net assets
of Hewlett-Packard Company ("HP") laser printer operations, the Company entered
into an agreement with HP to produce laser printer component products. During
the first year of the agreement, the Company received compensation for
available capacity, as well as compensation for the raw material content of
actual units produced. The available capacity compensation was recorded on a
units produced basis. The agreement for compensation for available capacity
expired in August 1999 and has been replaced with a unit pricing agreement
similar to the Company's other contracts.

c. ACCOUNTING ESTIMATES

Management is required to make estimates and assumptions during the
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles. These estimates and assumptions
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the dates of the consolidated financial
statements. They also affect the reported amounts of net income. Actual results
could differ materially from these estimates and assumptions.

d. INVENTORIES

Inventories are stated at the lower of cost (first in, first out
(FIFO) method) or market.

<PAGE> 39

e. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost and depreciated and
amortized on the straight-line method over the estimated useful lives of the
respective assets, primarily thirty-five years for buildings and three to five
years for other assets. Maintenance and repairs are charged to expense as
incurred.

f. CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

The Company considers all highly liquid instruments with original
maturities of 90 days or less to be cash equivalents for consolidated financial
statement purposes. Cash equivalents consist of investments in money market
funds and commercial paper with original maturities of 90 days or less. At
August 31, 1998 and 1999 cash equivalents totaled approximately $0 and $67.2
million, respectively. Short term investments include corporate and
governmental debt securities which are classified as available-for-sale and are
reported at fair market value in accordance with Statement of Financial
Accounting Standards 115, Accounting for Certain Investments in Debt and Equity
Securities. As of August 31, 1999, the fair value of the Company's investments
in corporate and governmental debt securities approximated amortized cost and
as a result, unrealized holding gains and losses were insignificant.

g. GRANT REVENUE

The Company has been awarded grants related to the development of
its Scottish operations. Grant funds are earned as certain milestones are met,
and are being amortized over two to five-year periods.

h. INCOME TAXES

Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in the tax rate is recognized in income in
the period that includes the enactment date of the rate change.

i. PROFIT SHARING AND 401(K) PLAN

The Company contributes to a profit sharing plan for all employees
who have completed a 12-month period of service in which the employee has
worked at least 1,000 hours. In addition, the Company provides retirement
benefits to its domestic employees through a 401(k) plan that provides a
Company matching contribution. The Company also has defined contribution
benefit plans for certain of its international employees primarily dictated by
the custom of the region in which it operates. Company contributions are at the
discretion of the Company's Board of Directors. The Company contributed
approximately $4.5 million, $6.3 million, and $11.2 million for the years ended
August 31, 1997, 1998, and 1999, respectively.

j. FOREIGN CURRENCY TRANSACTIONS

Gains or losses on foreign currency transactions are included in the
determination of net income as the Company considers the United States dollar
to be the functional currency of its foreign operations.

The Company enters into foreign currency contracts in order to
mitigate the impact of certain foreign currency fluctuations. Gains and losses
related to the hedges of firmly committed and anticipated transactions are
deferred and included in the basis of the transaction when it occurs.

<PAGE> 40

k. NET INCOME PER SHARE

The Company adopted Statement of Financial Accounting Standards No.
128 (Statement 128), Earnings per Share, in the fiscal year ended August 31,
1998. Under Statement 128, the Company presents two earnings per share (EPS)
amounts. Basic EPS is calculated based on net earnings available to common
shareholders and the weighted-average number of shares outstanding during the
reported period. Diluted EPS includes additional dilution from potential common
stock, such as stock issuable pursuant to the exercise of stock options
outstanding. Previously reported earnings per share amounts have been restated
to conform to the Statement 128 requirements.

Fiscal Year Ended
------------------------------------------
August 31, August 31, August 31,
1997 1998 1999
---------- ---------- ----------
(In thousands except per share data)
<S> <C> <C> <C>
Numerator:
Net income $52,497 $56,933 $91,474
======= ======= =======
Denominator:
Weighted average shares outstanding - Basic 72,599 74,249 78,253
Employee stock options and other 4,081 2,902 3,575
------- ------- -------
Weighted average shares outstanding - Diluted 76,680 77,151 81,828
======= ======= =======
Earnings per common share:
Basic $ 0.72 $ 0.77 $ 1.17
======= ======= =======
Diluted $ 0.68 $ 0.74 $ 1.12
======= ======= =======
</TABLE>

For the years ended August 31, 1997, 1998 and 1999, options to
purchase 212,000, 80,000, and 3,109 shares of common stock were outstanding
during the period but were not included in the computation of diluted earnings
per share because the options' exercise prices were greater than the average
market price of the common shares, and therefore, the effect would be
anti-dilutive.

l. COMPREHENSIVE INCOME

Effective September 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income.
Statement 130 establishes standards for reporting comprehensive income. The
Statement defines comprehensive income as the changes in equity of an
enterprise except those resulting from shareholder transactions. During the
years ended August 31, 1997, 1998 and 1999 comprehensive income as defined by
Statement 130 was equal to net income as shown in the accompanying Consolidated
Statement of Earnings.

m. STOCK BASED COMPENSATION

Prior to September 1, 1996, the Company accounted for its stock
option plan in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
granting of stock options only if the current market price of the underlying
stock exceeded the exercise price. Effective September 1, 1996, the Company
adopted Statement of Financial Accounting Standards No. 123, Accounting for
Stock Based Compensation (Statement 123), which permits entities to recognize
as expense over the vesting period the fair value of all stock based awards on
the date of the grant. Alternatively, Statement 123 allows entities to continue
to apply the provisions of APB Opinion No. 25 and provide pro forma net income

<PAGE> 41

and pro forma net income per share disclosures for employee stock options
granted in fiscal 1996 and subsequent years as if the fair value based method
defined in Statement 123 had been applied. The Company has elected to continue
to apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosure required by Statement 123.

n. STOCK SPLIT

On June 17, 1997 and on January 29, 1999, the Company's Board of
Directors approved a two-for-one stock split of the Company's common stock. Per
share information in the accompanying consolidated financial statements and
notes has been adjusted to reflect the impact of the common stock splits for all
periods presented.

o. INTANGIBLE ASSETS

Intangible assets are comprised of goodwill and other intellectual
property. Intangible assets, aggregating approximately $10.0 million, net of
$1.2 million of amortization, as of August 31, 1999, are classified as a
component of other assets in the accompanying consolidated balance sheets. Such
amounts are amortized over a ten-year period.

p. IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews property and equipment for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of property and equipment is
measured by comparison of its carrying amount, including the unamortized
portion of goodwill allocated to the property and equipment, to future net cash
flows the property and equipment are expected to generate. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the property and equipment, including
the allocated goodwill, if any, exceeds its fair market value. The Company
assesses the recoverability of enterprise level goodwill by determining whether
the unamortized goodwill balance can be recovered through undiscounted future
cash flows of the acquired operation. The amount of enterprise level goodwill
impairment, if any, is measured based on projected discounted future cash flows
using a discount rate reflecting the Company's average cost of funds. To date,
no adjustments to the carrying value of the Company's long-lived assets have
been required.

2. INVENTORIES

Inventories consist of the following (in thousands):

AUGUST 31,
-------------------------
1998 1999
-------- --------
<S> <C> <C>
Raw materials ............................... $101,319 $133,616
Work in process ............................. 15,955 21,625
Finished goods .............................. 5,823 36,241
-------- --------
$123,097 $191,482
======== ========
</TABLE>

<PAGE> 42

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in
thousands):

AUGUST 31,
----------------------
1998 1999
-------- --------
<S> <C> <C>
Land and improvements ............................. $ 13,679 $ 19,459
Buildings ......................................... 58,382 74,550
Leasehold improvements ............................ 4,988 4,691
Machinery and equipment ........................... 186,747 265,861
Furniture, fixtures and office equipment .......... 9,990 13,418
Computer equipment ................................ 23,039 55,400
Transportation equipment .......................... 3,884 4,044
Construction in progress .......................... 23,627 18,688
-------- --------
324,336 456,111
Less accumulated depreciation and amortization .... 99,656 141,829
-------- --------
$224,680 $314,282
======== ========
</TABLE>

During the year ended August 31, 1999, the Company completed an
expansion of its manufacturing facility in Guadalajara, Mexico. During the
years ended August 31, 1997, 1998 and 1999, the Company capitalized
approximately $120,000, $83,000 and $0, respectively, in interest related to
the constructed facilities.

Maintenance and repairs expense was approximately $5.2 million $9.3
million, and $9.7 million for the years ended August 31, 1997, 1998, and 1999,
respectively.

<PAGE> 43

4. NOTES PAYABLE AND LONG-TERM DEBT

Notes Payable and Long-term debt consists of the following (in
thousands):

AUGUST 31,
--------------------
1998 1999
------- -------
<S> <C> <C>
Term loans (a) ................................................. $50,000 $41,666
Borrowings under revolving credit facility (b) ................. 40,000 --
Total notes payable and long-term debt ......................... 90,000 41,666
Less current installments of long-term debt .................... 8,333 8,333
------- -------
Notes payable and long-term debt, less current installments .... $81,667 $33,333
======= =======
</TABLE>

(a) In May 1996, the Company completed a private placement of $50,000,000
Senior Notes due 2004. The Notes have a fixed interest rate of 6.89%, with
interest payable on a semi-annual basis. Principal is payable in six equal
annual installments which began May 30, 1999.

(b) In August 1998, the Company renegotiated its unsecured line of credit
facility and established a $225 million unsecured revolving credit facility
with a syndicate of banks ("Revolver"). Under the terms of the Revolver,
borrowings can be made under either floating rate loans or Eurodollar rate
loans. The Company pays interest on outstanding floating rate loans at the
banks' prime rate. The Company pays interest on outstanding Eurodollar
loans at the London Interbank Offered Rate (LIBOR) in effect at the loan
inception plus a factor of .625% to 1.00% depending on the Company's funded
debt to total capitalization ratios. The Company pays a commitment fee on
the unused portion of the Revolver at .20% to .25% depending on the
Company's funded debt to total capitalization ratios. The renegotiated
Revolver expires on August 3, 2001 and outstanding borrowings are then due
and payable. As of August 31, 1999, there were no borrowings outstanding
under the Revolver and $225 million of the facility was available. As of
August 31, 1998, there were $40 million in borrowings outstanding under the
Revolver and $185 million of the facility was available.

The agreements related to the obligations described above contain a number of
restrictive financial and/or other covenants. In all cases, the Company was in
compliance with the respective covenants as of August 31, 1999.

Aggregate annual maturities for notes payable and long-term debt are $8,333,000
per year until 2004.

42
<PAGE> 44

5. INCOME TAXES

Income tax expense amounted to $27.8 million, $25.0 million and
$48.1 million for the years ended August 31, 1997, 1998 and 1999, respectively
(an effective rate of 35.0%, 30.6% and 34.4%, respectively). The actual expense
differs from the "expected" tax expense (computed by applying the U.S. federal
corporate tax rate of 35% to earnings before income taxes) as follows (in
thousands):

YEARS ENDED AUGUST 31,
--------------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax expense ............. $ 28,085 $ 28,693 $ 48,839

State taxes, net of Federal benefit ......... 1,352 895 3,512

Income of Malaysian subsidiary .............. (2,706) (5,957) (4,683)

Other, net................................... 1,014 1,416 395
-------- -------- --------
$ 27,745 $ 25,047 $ 48,063
======== ======== ========
</TABLE>

The Company's Malaysian subsidiary has been granted "pioneer" tax
status for the five-year period commencing November 1, 1995. This status allows
tax-free treatment by the Malaysian government for the subsidiary's income
through October 30, 2000. Malaysia's statutory income tax rate is 30%. The
Malaysian subsidiary generated income during the years ended August 31, 1997,
1998 and 1999, resulting in a tax holiday of approximately $2.7 million ($0.04
per share), $5.9 million ($0.08 per share) and $4.7 million ($0.06 per share),
respectively. The Company intends to indefinitely re-invest income from all of
its foreign subsidiaries. The aggregate undistributed earnings of the Company's
foreign subsidiaries for which no deferred income taxes have been recorded was
approximately $39.5 million as of August 31, 1999.

The components of income tax expense are (in thousands):

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1997:
Federal............................................................................ $24,155 $(1,800) $22,355
State.............................................................................. 2,236 (156) 2,080
Foreign............................................................................ 3,194 116 3,310
------- ------- -------
$29,585 $(1,840) $27,745
======= ======= =======
1998:
Federal............................................................................ $26,682 $(4,001) $22,681
State.............................................................................. 1,770 (449) 1,321
Foreign............................................................................ 2,038 (993) 1,045
------- ------- -------
$30,490 $(5,443) $25,047
======= ======= =======
1999:
Federal............................................................................ $30,311 $ 5,705 $36,016
State.............................................................................. 5,397 495 5,892
Foreign............................................................................ 7,747 (1,592) 6,155
------- ------- -------
$43,455 $ 4,608 $48,063
======= ======= =======
</TABLE>

<PAGE> 45

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
are as follows (in thousands):

AUGUST 31,
-----------------
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts ........... $ 1,171 $ 1,319
Grant receivable................................................................... 1,397 146
Inventories, principally due to reserves and additional costs
inventoried for tax purposes pursuant to the Tax Reform Act of 1986............. 5,365 4,608
Compensated absences, principally due to accrual for financial reporting purposes... 839 1,672
Accrued expenses, principally due to deferrals for financial reporting purposes..... 3,023 1,071
Other.............................................................................. 1,168 4,082
------- -------
Total gross deferred tax assets................................................. 12,963 12,898
Less valuation allowance........................................................ (244) (244)
------- -------
Net deferred tax assets......................................................... $12,719 $12,654
======= =======
Deferred tax liabilities:
Intangible assets................................................................... (3,376) 3,534
Property, plant and equipment, principally due to differences in
depreciation and amortization................................................... 7,724 5,357
------- -------
Deferred tax liabilities........................................................ $ 4,348 $ 8,891
======= =======
</TABLE>

Based on the Company's historical operating income, management
believes that it is more likely than not that the Company will realize the
benefit of its net deferred tax assets.

<PAGE> 46

6. STOCKHOLDERS' EQUITY

a. PUBLIC OFFERING

On March 10, 1999, the Company completed an equity offering of
12,075,000 shares of its Common Stock (including 1,575,000 shares that were
issued to cover the underwriters' over-allotments). The Company sold 6,900,000
shares and certain Company stockholders sold 5,175,000 shares at $30 per share.
Net proceeds to the Company were approximately $199 million.

b. STOCK OPTION PLANS

As of August 31, 1999, options to purchase a total of 2,730,800
shares were outstanding under the 1983 and 1989 stock option plans. The Board
of Directors terminated these plans in November 1992, and no additional options
may be issued thereunder. The exercise price of the outstanding options under
these plans is equal to fair market value, as determined by the Company, on the
date of grant.

The Company's 1992 Stock Option Plan (the "1992 Plan") provides for
the granting to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code and for the granting of non-statutory
stock options to employees and consultants of the Company. The 1992 Plan was
adopted by the Board of Directors in November 1992 and approved by the
stockholders in December 1992. A total of 8,220,000 shares of common stock have
been reserved for issuance under the 1992 Plan. As of August 31, 1999, options
to purchase 3,004,090 shares are outstanding under the 1992 Plan.

The exercise price of all incentive stock options granted under the
1992 Plan is to be at least equal to the fair market value of shares of common
stock on the date of grant. With respect to any participant who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company, the exercise price of any stock option granted is to equal at least
110% of the fair market value on the grant date and the maximum term of the
option may not exceed five years. The term of all other options under the 1992
Plan may not exceed ten years.

The following table summarizes option activity from September 1,
1996 through August 31, 1999:

OPTIONS OUTSTANDING
-------------------------------------------------
SHARES WEIGHTED
AVAILABLE AVERAGE
FOR GRANT SHARES OPTION PRICE
----------- ---------- ------------
<S> <C> <C> <C>
Balance at August 31, 1996 638,080 6,912,000 $ 0.88

Options granted (296,000) 296,000 12.61
Options cancelled 9,280 (9,280) 1.29
Options exercised -- (2,530,020) 0.94
----------- ---------- ------
Balance at August 31, 1997 351,360 4,668,700 $ 1.60

Options authorized 1,600,000 -- --
Options granted (357,000) 357,000 18.61
Options exercised -- (384,780) 1.34
----------- ---------- ------
Balance at August 31, 1998 1,594,360 4,640,920 $ 2.93

Options authorized 3,000,000 -- --
Options granted (1,694,600) 1,694,600 15.95
Options cancelled 47,290 (47,290) 5.72
Options exercised -- (553,340) 3.69
----------- ---------- ------
Balance at August 31, 1999 2,947,050 5,734,890 $ 6.68
=========== ========== ======
</TABLE>

<PAGE> 47

At August 31, 1999, options for 3,921,780 shares were excercisable.

The range of exercise prices, shares, weighted average contractual
life and exercise price for the options outstanding as of August 31, 1999 are
presented below:

Range of Exercise Weighted-Average Weighted-Average
Prices Shares Contractual Life Exercise Price
----------------- --------- ---------------- ----------------
<S> <C> <C> <C>
$ 0.44 2,730,800 2.00 $ 0.44
1.25 - 3.72 848,580 5.67 1.78
11.00 - 30.25 2,034,510 8.85 15.56
31.50 - 49.50 121,000 9.47 32.72
============== --------- ==== ======

$ 0.44 - 49.50 5,734,890 5.13 $ 6.68
============== ========= ==== ======
</TABLE>

The range of exercise prices, shares and weighted average exercise
price of the options exercisable at August 31, 1999 are presented below:

Range of Exercise Shares Weighted-Average
Prices Exercisable Exercise Price
----------------- ----------- ----------------
<S> <C> <C>
$ 0.44 2,730,800 $ 0.44
1.25 - 3.72 712,660 1.68
11.00 - 30.25 464,870 15.90
31.50 - 49.50 13,450 31.65
============== --------- ======

$ 0.44 - 49.50 3,921,780 $ 2.60
============== ========= ======
</TABLE>

The per-share weighted-average fair value of stock options granted
during 1997, 1998 and 1999 was $14.82, $11.23 and $12.57, respectively, on the
date of the grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions: 1997 - expected dividend yield of 0%,
risk-free interest rate of 6.2%, expected volatility of 76%, and an expected
life of 5 years; 1998 - expected dividend yield of 0%, risk-free interest rate
of 5.6%, expected volatility of 78%, and an expected life of 5 years; 1999 -
Expected dividend yield of 0%, risk-free interest rate of 6.0%, expected
volatility of 96% and an expected life of 5 years.

46
<PAGE> 48

c. STOCK PURCHASE PLAN

The Company's 1992 Employee Stock Purchase Plan (the "Purchase
Plan") was adopted by the Board of Directors in November 1992 and approved by
the stockholders in December 1992. A total of 2,410,000 shares of common stock
have been reserved for issuance under the Purchase Plan. The Purchase Plan is
intended to qualify under Section 423 of the Internal Revenue Code.

Employees are eligible to participate after one year of employment
with the Company. The Purchase Plan permits eligible employees to purchase
Common Stock through payroll deductions, which may not exceed 10% of an
employee's compensation, as defined, at a price equal to 85% of the fair market
value of the Common Stock at the beginning or end of the offering period,
whichever is lower. Unless terminated sooner, the Purchase Plan will terminate
ten years from its effective date. As of August 31, 1999, a total of 1,940,320
shares had been issued under the Purchase Plan.

The per-share weighted-average fair value of stock issued to
employees in 1997, 1998 and 1999, respectively, under the Company's 1992
Employee Stock Purchase Plan was $6.88, $13.76, and $16.32, respectively, using
the Black-Scholes option-pricing model with the identical assumptions as those
listed for stock options granted during those years.

d. PRO FORMA RESULTS

The Company applies APB Opinion No. 25 in accounting for its stock
options and, accordingly, no compensation cost has been recognized for its
stock options in the consolidated financial statements. Additionally, no
compensation costs are reflected for the discount related to shares granted to
employees under the 1992 Employee Stock Purchase Plan. Had the Company
determined compensation cost based on Statement 123, the Company's net income
would have been as follows:

1997 1998 1999
-------------------- --------------------- -------------------
Net Diluted Net Diluted Net Diluted
Income EPS Income EPS Income EPS
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
As Reported $52,497 $0.72 $56,933 $0.74 $91,474 $1.12

Statement 123 Compensation
(Net of tax) (262) 0.00 (1,580) (0.02) (5,219) (0.06)

Pro forma disclosure $52,235 $0.72 $55,353 $0.72 $86,255 $1.06
</TABLE>

As discussed in Note 1(l) the disclosure presented above represents
only the estimated fair value of stock options granted in fiscal 1996 and
subsequent years. Such disclosure is not necessarily indicative of the fair
value of stock options that could be granted by the Company in future fiscal
years or of all options currently outstanding.

<PAGE> 49

7. CONCENTRATION OF RISK AND SEGMENT DATA

a. CONCENTRATION OF RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral. The Company maintains reserves for potential credit
losses.

Sales of the Company's products are concentrated among specific
customers. Sales to the following customers, expressed as a percentage of
consolidated net revenue, and the percentage of accounts receivable for each
customer, were as follows:

PERCENTAGE OF PERCENTAGE OF
NET REVENUE ACCOUNTS RECEIVABLE
YEAR ENDED AUGUST 31, AUGUST 31, AUGUST 31,
------------------------ ----------------------------
1997 1998 1999 1998 1999
---- ---- ---- ------- ---------
<S> <C> <C> <C> <C> <C>
Hewlett-Packard Company............................ 15% 10% 25% 28% 19%
Cisco Systems, Inc................................. 20% 20% 20% * *
3Com............................................... 21% 18% * * *
Quantum Corporation................................ 10% * * * *
</TABLE>
* Amount was less than 10% of total

b. SEGMENT DATA

The Company adopted the Financial Accounting Standards Board issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" in fiscal year 1999. Statement No. 131 establishes standards for
reporting information about segments in financial statements. Operating
segments are defined as components of an enterprise about which separate
financial information is available and that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.

The Company derives its revenues from providing manufacturing
services to major electronic OEM's on a contract basis. Operating segments
consist of the Company's manufacturing locations. The services provided, the
manufacturing processes, class of customers and the order fulfillment process
is similar and generally interchangeable across manufacturing locations. The
Company has aggregated its operating segments into the Electronic Manufacturing
Services segment.

The following table sets forth information (in thousands):

Year ended August 31,
1997 1998 1999
-------- ---------- ----------
<S> <C> <C> <C>

Net revenue $978,102 $1,277,374 $2,000,346
Depreciation and amortization $ 24,233 $ 32,110 $ 53,442
Income before income tax $ 90,351 $ 108,014 $ 151,877
Corporate adjustments and
Non-recurring charges (10,109) (26,034) (12,340)
-------- ---------- ----------
$ 80,242 $ 81,980 $ 139,537

Long-lived assets $129,865 $ 216,597 $ 297,629
Capital expenditure $ 88,281 $ 96,281 $ 133,303

</TABLE>

<PAGE> 50
The Company operates in the following geographic areas: the United
States, Mexico, Malaysia, Scotland and Other. Sales to unaffiliated customers
are based on the Company's manufacturing location providing services. The
following table sets forth information concerning these geographic areas (in
thousands):

YEAR ENDED
AUGUST 31,
--------------------------------------
1997 1998 1999
-------- -------- ----------
<S> <C> <C> <C>
REVENUE:
United States................................................... $682,333 $ 869,849 $1,341,927
Mexico.......................................................... -- 41,570 197,039
Malaysia........................................................ 87,919 143,431 138,715
Scotland........................................................ 207,850 211,907 140,452
Other........................................................... -- 10,617 182,213
-------- ---------- ----------
978,102 1,277,374 2,000,346
======== ========== ==========
LONG-LIVED ASSETS:
United States................................................... 100,960 136,796 189,172
Mexico.......................................................... -- 30,499 63,344
Malaysia........................................................ 16,749 27,235 27,272
Scotland........................................................ 22,196 27,821 34,170
Other........................................................... -- 13,973 18,793
-------- ---------- ----------
139,905 236,324 332,751
======== ========== ==========

</TABLE>

8. FOREIGN CURRENCY EXCHANGE CONTRACTS

The purpose of the Company's foreign currency hedging activity is to
protect the Company from the risk that the eventual dollar net cash flows
resulting from the sale and purchase of products in foreign currencies will be
adversely affected by changes in the exchange rates. It is the Company's policy
to utilize derivative financial instruments to reduce foreign exchange risks
where internal netting strategies cannot be effectively employed. The Company
does not hold or issue financial instruments for trading purposes. Fluctuations
in the value of hedging instruments are offset by fluctuations in the
underlying exposures being hedged, and deferred gains and losses on these
contracts are recognized when the future purchases and sales being hedged are
realized.

The Company had no foreign currency exchange contracts outstanding
at August 31, 1999, with $5 million outstanding at August 31, 1998 related to
the United Kingdom. Unrealized gains and losses on these contracts were not
material.

9. COMMITMENTS AND CONTINGENCIES

a. LEASE AGREEMENTS

The Company leases certain facilities and computer services under
non-cancelable operating leases. The future minimum lease payments under
noncancelable operating leases outstanding August 31, 1999 are as follows (in
thousands):

49
<PAGE> 51

FISCAL YEAR ENDING AUGUST 31,
-----------------------------
<S> <C>
2000.......................................................... $11,971
2001.......................................................... 10,154
2002.......................................................... 9,083
2003.......................................................... 6,980
2004.......................................................... 6,381
Thereafter.................................................... 18,722
-------
Total minimum lease payments.................................. $63,291
=======
</TABLE>

Total rent expense for operating leases was approximately $3.9
million, $5.3 million, and $12.2 million for the years ended August 31, 1997,
1998, and 1999, respectively.

b. LITIGATION

The Company is party to certain lawsuits in the ordinary course of
business. Management does not believe that these proceedings individually or in
the aggregate, will have a material adverse effect on the Company's financial
position, results of operations or cash flows.

We were named as a defendant, along with 87 other companies engaged
in the electronics and other industries, in a patent infringement lawsuit filed
by the Lemelson Medical, Education & Research Foundation Limited Partnership
("Lemelson") in the U.S. District Court for the District of Arizona on February
26, 1999. The defendants include suppliers, customers and competitors of ours.
The complaint alleges that Jabil and the other defendants are each infringing
as many as 18 patents held by Lemelson relating to the defendants'
manufacturing processes and products. The complaint seeks to enjoin the
defendants from further alleged acts of infringement, an unspecified amount of
damages to compensate Lemelson for alleged past infringement, together with
interest and costs, such damages to be trebled due to alleged willful
infringement, reasonable attorney's fees, and such other relief that the court
may award. We, along with several other defendants, jointly hired legal counsel
to represent us in the litigation and filed an answer to the complaint denying
the substantive allegations in the complaint and raising various affirmative
defenses. Lemelson has offered to license the patents alleged to be infringed.
Based on our understanding of the terms that Lemelson has made available to
certain licensees, we believe that obtaining a license from Lemelson under the
same or similar terms would not have a material adverse effect on our results
of operations or financial condition. We have not yet determined, however,
whether to seek such a license, and we cannot assure you that, if sought, we
would be offered the same or similar terms or that the ultimate resolution of
this matter will not have a material adverse effect on us.

10. ACQUISITIONS

On August 3, 1998 the Company acquired certain assets (primarily raw
material inventory and property, plant and equipment) relating to the LaserJet
Formatter Manufacturing Organization business unit of Hewlett-Packard Company
located in Boise, Idaho, and Bergamo, Italy. The acquisition price was
approximately $80 million and was accounted for under the purchase method of
accounting. The acquisition resulted in goodwill and other intangible assets of
approximately $11.2 million, which is being amortized on a straight-line basis
over ten years.

Simultaneously, the Company entered into a manufacturing arrangement
to continue to produce the Laserjet circuit board assemblies being produced by
the Hewlett-Packard operations in Boise and Bergamo.

<PAGE> 52

In conjunction with the HP Acquisition, the Company recorded an
acquisition-related charge of $20.8 million consisting of an in-process
technology write-off of $6.5 million, work force related expenses of $10.0
million, and $4.3 million of other expenses.

On September 1, 1999 the Company, through its Jabil Global Services
subsidiary, acquired the net assets of EFTC Services, Inc., an electronic
product service and repair business. Jabil Global Services will continue to
offer repair and warranty services for existing and future customers from its
hub-based operations in Memphis, Tennessee; Louisville, Kentucky; and Tampa,
Florida. The purchase price of approximately $28 million was paid in cash. The
acquisition will be accounted for as a purchase.

On September 13, 1999 the Company issued approximately 5.6 million
shares of its common stock for all the outstanding common stock of GET
Manufacturing, Inc., a China-based electronics manufacturing services provider.
The transaction will be accounted for as a pooling-of-interests and,
accordingly, the Company's historical consolidated financial statements
presented in future reports will be restated to include the accounts and
results of operations of GET Manufacturing, Inc.

The following unaudited pro forma data summarizes the combined
results of operations of Jabil Circuit, Inc. and GET Manufacturing, Inc. for
all periods presented as if the combination had been consummated on August 31,
1999 and did not require any material adjustments to conform the accounting
methods of GET Manufacturing with those of Jabil. Prior to the combination, GET
Manufacturing, Inc.'s fiscal year ended March 31. GET Manufacturing's financial
statements for the twelve months ended March 31, 1998 and 1999 were combined
with Jabil's financial statements for the twelve months ended August 31, 1997
and 1998, shown as 1997 and 1998, respectively. GET Manufacturing's financial
statements for the twelve months ended August 31, 1999, were combined with
Jabil's financial statements for the same period, shown as 1999.

In thousands, except per share data Years Ended
(unaudited) -----------------------------------------------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Net Sales $ 1,178,644 $ 1,484,245 $ 2,238,391
============ ============ ============

Net Income $ 59,313 $ 57,469 $ 85,436(1)
============ ============ ============

Diluted Earnings per share $ 0.72 $ 0.69 $ 0.98(1)
============ ============ ============
</TABLE>

(1) Includes non-recurring charges aggregating $10.9 million ($9.2 million
after-tax). Net income excluding this charge was $94.0 million and diluted
earnings per share was $1.08.

11. NEW ACCOUNTING PRONOUNCEMENTS

During 1997 and 1998, the Financial Accounting Standards Board
("FASB") issued several Statements of Financial Accounting Standards
(Statements) which are pending implementation by the Company. They are as
follows:

Statement 133 - Accounting for Derivative Instruments and Hedging Activities.
Statement 133 establishes methods of accounting for derivative financial
instruments and hedging activities related to those instruments as well as
other hedging activities. The Company is currently evaluating this Statement
and has yet to form an opinion on whether its adoption will have any
significant impact on the Company's consolidated financial statements. The
Company will be required to implement Statement 133 for its fiscal year ending
August 31, 2001.

Statement of Position 98-5 Reporting on the Costs of Start Up Activities. SOP
98-5 establishes standards on the financial reporting of start-up costs and
organization costs. SOP 98-5 requires costs of start-up activities

<PAGE> 53

and organization costs to be expensed as incurred. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. As the
Company has historically made a practice of expensing costs related to both the
establishment of greenfield manufacturing facilities and the set-up of
production lines as such costs are incurred, it does not anticipate that the
adoption of SOP 98-5 will have any material impact on its consolidated
financial statements.

<PAGE> 54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized on this
12th day of November 1999.

JABIL CIRCUIT, INC.
By: /s/ TIMOTHY L. MAIN
---------------------------
Date: November 12, 1999

POWER OF ATTORNEY

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Timothy L. Main and Chris A.
Lewis and each of them, jointly and severally, his attorneys-in-fact, each with
full power of substitution, for him in any and all capacities, to sign any and
all amendments to this Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorneys-in-fact or his substitute or substitutes, may do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report on Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
By: /s/ WILLIAM D. MOREAN Chairman of the Board of Directors November 12, 1999
----------------------- and Chief Executive Officer
William D. Morean (Principal Executive Officer)

By: /s/ THOMAS A. SANSONE Vice Chairman of the Board of November 12, 1999
----------------------- Directors
Thomas A. Sansone

By: /s/ TIMOTHY L. MAIN President November 12, 1999
-----------------------
Timothy L. Main

By: /s/ CHRIS A. LEWIS Chief Financial Officer November 12, 1999
----------------------- (Principal Financial and Accounting
Chris A. Lewis Officer)

By: /s/ LAWRENCE J. MURPHY Director November 12, 1999
-----------------------
Lawrence J. Murphy

By: /s/ MEL S. LAVITT Director November 12, 1999
-----------------------
Mel S. Lavitt

By: /s/ STEVEN A. RAYMUND Director November 12, 1999
-----------------------
Steven A. Raymund

By: /s/ FRANK NEWMAN Director November 12, 1999
-----------------------
Frank Newman
</TABLE>

<PAGE> 55

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C> <C>
3.1(1) -- Registrant's Certificate of Incorporation, as amended.
3.2(1) -- Registrant's Bylaws.
4.1(2) -- Form of Certificate for Shares of Registrant's Common Stock.
4.2(1) -- Form of Agreement and Plan of Merger dated February 27, 1992 between Jabil
Circuit Co., Inc., a Michigan corporation, and Jabil Circuit, Inc., a
Delaware corporation.
10.1(1)(8) -- 1983 Stock Option Plan and forms of agreement used thereunder.
10.2(1)(8) -- 1989 Non-Qualified Stock Option Plan and forms of agreement used thereunder.
10.3(1)(8) -- 1992 Stock Option Plan and forms of agreement used thereunder.
10.4(1)(8) -- 1992 Employee Stock Purchase Plan and forms of agreement used thereunder.
10.5(1)(8) -- Restated cash or deferred profit sharing plan under section 401(k).
10.6(1)(8) -- Form of Indemnification Agreement between Registrant and its officers and
Directors.
10.7(1) -- Lease for 2220 Lundy Avenue, San Jose, California, between Registrant and
Lundy Associates dated April 1, 1992.
10.8(1) -- Letter Agreement dated November 27, 1992 between Registrant and Scottish Office
Industry Department relating to grant to establish Scottish facility.
10.9(3)(8) -- Amendment to 1989 Non-Qualified Stock Option Plan.
10.10(4) -- Renewal dated March 21, 1994 of Lease for 2220 Lundy Avenue, San Jose,
California, between Registrant and Lundy Associates.
10.11(5) -- Lease Agreement dated October 1, 1997 between registrant and Charrington
Estates.
10.12(5) -- Lease Agreement dated October 30, 1997 between registrant and Teachers
Insurance and Annuity Association.
10.13(6) -- Lease Agreement dated May 12, 1998 between registrant and Lincoln-RECP Great
Oaks OPCO. LLC.
10.14(5) -- Amended and Restated Loan Agreement dated as of August 3, 1998 between
registrant and certain banks and the First National Bank Of Chicago as agent
for banks.
10.15(7) -- Agreement and Plan of Merger among Jabil Circuit, Inc., JG Acquisition, Inc.,
Get Manufacturing, Inc. and Mr. Shin Fang dated August 11, 1999 and amended
September 13, 1999
21.1 -- List of Subsidiaries.
23.1 -- Independent Auditors' Consent.
24.1 -- Power of Attorney (See Signature page).
27.1 -- Financial Data Schedule.
</TABLE>
- ----------
(1) Incorporated by reference to the Registration Statement on Form S-1 filed
by the Registrant on March 3, 1993 (File No. 33-58974).
(2) Incorporated by reference to exhibit Amendment No. 1 to the Registration
Statement on Form S-1 filed by the Registrant on March 17, 1993 (File No.
33-58974).
(3) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994.
(4) Incorporated by reference to exhibit to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1994.
(5) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1997.
(6) Incorporated by reference to exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1998.
(7) Incorporated by reference to exhibit to the Registrant's Current Report on
Form 8-K filed by the Registrant on September 28, 1999.
(8) Indicates management compensatory plan, contract or arrangement.

<PAGE> 56

SCHEDULE II

JABIL CIRCUIT, INC. AND SUBSIDIARIES

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES WRITE-OFFS PERIOD
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1997:
Allowance for uncollectible accounts receivable $1,170 $1,520 -- $2,690
Reserve for excess and obsolete inventory ..... $2,301 $3,690 $1,248 $4,743
====== ====== ====== ======
YEAR ENDED AUGUST 31, 1998:
Allowance for uncollectible accounts receivable $2,690 $1,789 $1,400 $3,079
Reserve for excess and obsolete inventory ..... $4,743 $7,026 $3,432 $8,337
====== ====== ====== ======
YEAR ENDED AUGUST 31, 1999:
Allowance for uncollectible accounts receivable $3,079 $1,246 $ 545 $3,780
Reserve for excess and obsolete inventory ..... $8,337 $6,148 $5,322 $9,163
====== ====== ====== ======
</TABLE>

See accompanying independent auditors' report.

S-5

<PAGE> 1
EXHIBIT 21.1

JABIL CIRCUIT, INC. SUBSIDIARIES
Ownership is 100% except where designated

Jabil Circuit Limited (United Kingdom)
Jabil Circuit Sdn. Bhd. (Malaysia)
Jabil Circuit of Michigan, Inc. (Michigan, USA)
Jabil Circuit Foreign Sales Corporation (Barbados)
Jabil Circuit de Mexico, S.A. de C.V. (Mexico)
Jabil Partners (Scotland)
Jabil Circuit Luxembourg, SARL (Luxembourg)
Jabil Circuit Srl, (Italy)
Jabil MPC, LLC (Florida, USA)
Jabil Circuit of Texas, LP (Florida, USA)
Jabil Texas Holdings LLC (Florida, USA)
Jabil Global Services, Inc. (Florida, USA)
GET Manufacturing, Inc. (British Virgin Islands)
General Electronics (HK) Ltd (Hong Kong)
General Electronics Services, Ltd (Hong Kong)
General Electronics (China) Ltd (Guernsey)
General Electronics Telecommunication (Panyu) Ltd (China) (85%)
Digitek Electronics Ltd (Hong Kong)
Link Win (Far East) Ltd (Hong Kong)
GET Manufacturing USA, Inc. (USA)
GETM Mexico S.A. de C.V. (Mexico)
GET Manufacturing Services GmbH (Germany)
GET Manufacturing Europe (Belgium)
General Electronic Development (Hong Kong)
Skytop International Ltd (Hong Kong)
CGE International Ltd (Hong Kong)

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Jabil Circuit, Inc:

We consent to the incorporation by reference in the registration statements on
Form S-3 (No. 333-71479) and Form S-8 (No. 333-86217) of Jabil Circuit, Inc. of
our report dated September 15, 1999 relating to the consolidated balance sheets
of Jabil Circuit, Inc. and subsidiaries as of August 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows and related schedule for each of the years in the three-year period ended
August 31, 1999, which report appears in the August 31, 1999 Annual Report on
Form 10-K of Jabil Circuit, Inc.

/s/ KPMG LLP
------------

St. Petersburg, Florida
November 12, 1999

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> AUG-31-1999
<EXCHANGE-RATE> 1
<CASH> 113,556
<SECURITIES> 27,176
<RECEIVABLES> 232,411
<ALLOWANCES> 3,780
<INVENTORY> 191,482
<CURRENT-ASSETS> 587,900
<PP&E> 456,111
<DEPRECIATION> 141,829
<TOTAL-ASSETS> 920,651
<CURRENT-LIABILITIES> 330,797
<BONDS> 0
0
0
<COMMON> 82
<OTHER-SE> 545,750
<TOTAL-LIABILITY-AND-EQUITY> 920,651
<SALES> 2,000,346
<TOTAL-REVENUES> 2,000,346
<CGS> 1,772,735
<TOTAL-COSTS> 1,859,117
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,692
<INCOME-PRETAX> 139,537
<INCOME-TAX> 48,063
<INCOME-CONTINUING> 91,474
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91,474
<EPS-BASIC> 1.17
<EPS-DILUTED> 1.12

</TABLE>