This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including any statements regarding trends in future revenues or results of operations, gross margin or operating margin, expenses, earnings or losses from operations, synergies or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning developments, performance or industry ranking; any statements regarding future economic conditions or performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Generally, the words "anticipate," "believe," "plan," "expect," "future," "intend," "may," "will," "should," "estimate," "predict," "potential," "continue" and similar expressions identify forward-looking statements. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this report with the Securities and Exchange Commission.

Overview

We are a leading independent global provider of customized, integrated electronics manufacturing services, or EMS. Our revenue is generated from sales of our services primarily to original equipment manufacturers, or OEMs, in the communications; personal and business computing; enterprise computing and storage; multimedia; industrial and semiconductor capital equipment; defense and aerospace; medical and automotive industries.

A relatively small number of customers have historically generated a significant portion of our net sales. Sales to our ten largest customers represented 60.2% and 61.4% of our net sales for the three months ended December 29, 2007 and December 30, 2006, respectively. Two customers represented 10% or more of our net sales during the three months ended December 29, 2007, and three customers represented 10% or more of our net sales during the three months ended December 30, 2006.

In recent periods, we have generated a significant portion of our net sales from international operations. During the three months ended December 29, 2007 and December 30, 2006, 76.9% and 74.6%, respectively, of our consolidated net sales were derived from non-U.S. operations. The concentration of international operations has resulted from a desire on the part of many of our customers to source production in lower cost locations and regions such as Asia, Latin America and Eastern Europe. We expect this trend to continue.

Historically, we have had substantial recurring sales to existing customers. We have also expanded our customer base through acquisitions. We typically enter into supply agreements with our major OEM customers. These agreements generally have terms ranging from three to five years and cover the manufacture of a range of products. Under these agreements, a customer typically agrees to purchase its requirements for particular products in particular geographic areas from us. These agreements generally do not obligate the customer to purchase minimum quantities of products.

We have experienced fluctuations in gross margins and in our results of operations in the past and may continue to experience such fluctuations in the future. Fluctuations in our gross margins may be caused by a number of factors, including pricing, changes in product mix, competitive pressures, transition of manufacturing to lower cost locations, operational efficiency and overall business levels.

As part of our restructuring strategy, we intend to exit the PC business. Accordingly, we are negotiating with third parties regarding the sale of certain portions of our PC business unit that includes personal business computers and industry standard servers and their related build-to-order, configure-to-order and logistics operations. We may sell or otherwise exit the business during the next three to six months.

If we exit the business, costs would be limited primarily to a potential goodwill write-off and severance related expenses, as our related fixed assets are almost fully depreciated and our customers are generally liable for inventory.

We would expect any sale, winding down or disposition of our PC business to materially reduce our net sales, our operating income and our cash flows. The PC segment as a whole, which does not include its associated logistics activities and which may or may not reflect the business operations ultimately included in any sale, disposition or winding down, had net sales of approximately $740.2 million and $837.1 million for the three months ended December 29, 2007 and December 30, 2006, respectively. For certain historical financial information regarding our PC segment as a whole, see note 11 of our notes to condensed consolidated financial statements included in this Form 10-Q.

Critical Accounting Policies and Estimates

We adopted FIN 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109", at the beginning of fiscal 2008. FIN 48 involves an assessment of whether each of a company's income tax positions is "more likely than not" of being sustained upon audit based on its technical merits. For each income tax position that meets the "more likely than not" threshold, a company then assesses the largest amount of tax benefit that is greater than 50% likely of being realized upon effective settlement with the taxing authority.

Upon adoption of FIN 48, we decreased current income taxes payable by $18.8 million and increased long-term income tax liabilities by the same amount, as cash payments of such amounts are not expected to be made within 12 months.

Management's discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate the process used to develop estimates for certain reserves and contingent liabilities, including those related to product returns, accounts receivable, inventories, investments, intangible assets, income taxes, warranty obligations, restructuring, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates.

For a complete description of our key critical accounting policies and estimates, refer to our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 28, 2007.

Summary Results of Operations

The following table presents items in the condensed consolidated statement of operations as a percentage of net sales. The table and the discussion below should be read in conjunction with the condensed consolidated financial statements and the notes thereto, which appear elsewhere in this report.

                                                   Three Months Ended
                                               December 29,   December 30,
                                                   2007           2006

         Net sales                                    100.0 %        100.0 %
         Cost of sales                                 94.0           93.9
         Gross profit                                   6.0            6.1
         Operating expenses:
         Selling, general and administrative            3.7            3.5
         Research and development                       0.2            0.3
         Restructuring costs                            0.2            0.1
         Amortization of intangible assets              0.1            0.1
         Total operating expenses                       4.2            4.0
         Operating income                               1.8            2.1
         Interest income                                0.2            0.4
         Interest expense                              (1.4 )         (1.6 )
         Other income (expense), net                   (0.1 )          0.4
         Interest and other expense, net               (1.3 )         (0.8 )
         Income before income taxes                     0.5            1.3
         Provision for income taxes                     0.2            0.3
         Net income                                     0.3 %          1.0 %

Key operating results were as follows:

                                           Three Months Ended
                                December 29, 2007      December 30, 2006
                                             (In thousands)
            Net sales          $         2,532,926   $           2,778,790
            Gross profit       $           153,046   $             168,678
            Operating income   $            46,294   $              58,533
            Net income         $             7,916   $              28,249

Key performance measures

Certain key performance measures that management utilizes to assess operating performance were as follows:

                                               Three Months Ended
                                December 29,                        December 30,
                                    2007       September 29, 2007       2006
    Days sales outstanding(1)             44                   44             50
    Inventory turns(2)                   8.8                  9.0            7.9
    Accounts payable days(3)              61                   56             52
    Cash cycle days(4)                    25                   29             45

(2) Inventory turns (annualized) are calculated as the ratio of four times our cost of sales for the quarter to inventory at period end.

(3) Accounts payable days is calculated as the ratio of 365 days divided by accounts payable turns, in which accounts payable turns is calculated as the ratio of four times our cost of sales for the quarter to accounts payable at period end.

(4) Cash cycle days is calculated as the ratio of 365 days to inventory turns, plus days sales outstanding minus accounts payable days.

Results of Operations

Net Sales

Net sales decreased 8.8%, from $2.8 billion in the first quarter of fiscal 2007 to $2.5 billion in the first quarter of fiscal 2008. The decrease was primarily due to reduced demand of approximately $104 million from existing customers in the personal computing end market, $86 million from our high-end computing end market, $41 million from our communications end market and $20 million from our industrial end market, partially offset by an increase of $34 million from our defense and aerospace end-market.

Gross Margin

Gross margin decreased from 6.1% in the first quarter of fiscal 2007 to 6.0% in the first quarter of fiscal 2008. The decrease was primarily a result of reduced demand in our communications and high-end computing end markets that impacted sales in our enclosures business and new product introduction/gateway business. Lower demand in these higher margin businesses had a larger than proportional impact on our profitability.

We expect gross margins to continue to fluctuate based on overall production and shipment volumes and changes in the mix of products demanded by our major customers.

Fluctuations in our gross margins may be caused by a number of factors, including:

† Greater competition in EMS and pricing pressures from OEMs due to greater focus on cost reduction;

†          Changes in the overall volume of our business;



†          Changes in the mix of high and low margin products demanded by our
customers;

† Changes in customer demand and sales volumes, including demand for our vertically integrated key system components and subassemblies;

† Provisions for excess and obsolete inventory that we are not able to charge back to a customer or sales of inventories previously written down;

† Operational inefficiencies;

† Pricing pressure on electronic components resulting from economic conditions in the electronics industry, with EMS companies competing more aggressively on cost to obtain new or maintain existing business; and

† Our ability to transition manufacturing and assembly operations to lower cost regions in an efficient manner.

We have experienced fluctuations in gross margin in the past and may continue to do so in the future.

Operating Expenses

Selling, general and administrative

Selling, general and administrative expenses decreased $3.1 million, from $96.3 million in the first quarter of fiscal 2007 to $93.2 million in the first quarter of fiscal 2008. As a percentage of net sales, selling, general and administrative expenses increased to 3.7% in the first quarter of fiscal 2008 from 3.5% in the first quarter of fiscal 2007. The decrease was primarily attributable to $2.0 million in reduced litigation expenses incurred in connection with the matters arising out of our stock option investigation and restatement and a $1.8 million reduction in Sarbanes-Oxley and audit fees, partially offset by a $1.3 million increase in spending for our defense and aerospace business as we continue to invest in this growing market. The increase as a percentage of net sales was primarily attributable to a decrease in net sales in the first quarter of fiscal 2008.

Research and Development

Research and development expenses decreased $4.4 million, from $9.0 million in the first quarter of fiscal 2007 to $4.6 million in the first quarter of fiscal 2008. Research and development expense as a percentage of net sales decreased to 0.2% for the first quarter of fiscal 2008 from 0.3% for the first quarter of fiscal 2007. The decrease in both dollars and as a percentage of net sales was primarily a result of our decision to realign original design manufacturing activities to focus on joint development activities.

Restructuring costs

In recent years, we have initiated restructuring plans in order to streamline our operations, reduce our cost structure, eliminate excess capacity, and relocate our operations to locations near our customers. These plans affected facilities across all services offered in our vertically integrated manufacturing organization. The majority of our restructuring charges were recorded as a result of plans related to facilities located in North America and Western Europe. In general, manufacturing activities at these plants were transferred to other facilities located in lower cost regions. Although some actions have been implemented, we expect to record additional charges of approximately $65.0 million to $75.0 million related to these anticipated actions in the near term including those related to the anticipated closure of our plant in Cherbourg, France.

Costs associated with restructuring activities, other than those activities related to business combinations, are accounted for in accordance with SFAS No. 146 or SFAS No. 112, as applicable. Pursuant to SFAS No. 112, restructuring costs related to employee severance are recorded when probable and estimable based on our severance policy. For all other

restructuring costs, a liability is recognized in accordance with SFAS No. 146 only when incurred. Costs associated with restructuring activities related to business combinations are accounted for in accordance with EITF 95-3.

Below is a summary of restructuring costs associated with facility closures and other consolidation efforts:

                                               Employee            Leases and           Impairment
                                             Termination /         Facilities            of Fixed
                                             Severance and        Shutdown and           Assets or
                                                Related           Consolidation       Redundant Fixed
                                               Benefits               Costs               Assets
                                                 Cash                 Cash               Non-Cash          Total
                                                                        (In thousands)
Balance at October 1, 2005                 $          34,429   $            14,466   $               -   $   48,895
Charges to operations                                 97,226                16,964              24,029      138,219
Charges utilized                                     (97,323 )             (21,166 )           (24,029 )   (142,518 )
Reversal of accrual                                   (5,528 )                (460 )                 -       (5,988 )
Balance at September 30, 2006                         28,804                 9,804                   -       38,608
Charges (recovery) to operations                      35,500                16,058              (4,010 )     47,548
Charges recovered (utilized)                         (49,654 )             (16,995 )             4,010      (62,639 )
Reversal of accrual                                   (2,505 )                (441 )                 -       (2,946 )
Balance at September 29, 2007                         12,145                 8,426                   -       20,571
Charges (recovery) to operations                       2,596                 3,567               1,232        7,395
Charges utilized                                      (4,118 )              (4,502 )            (1,232 )     (9,852 )
Reversal of accrual                                      (99 )                   -                   -          (99 )
Balance at December 29, 2007               $          10,524   $             7,491   $               -   $   18,015

During the three months ended December 29, 2007, we recorded restructuring charges for employee termination benefits for approximately 500 employees. We expect to pay remaining facilities related restructuring liabilities of $7.5 million through 2010.

Restructuring costs of $18.0 million were accrued as of December 29, 2007, of which $15.0 million was included in accrued liabilities and $3.0 million was included in other long-term liabilities on the condensed consolidated balance sheet.

Reportable Segments. The following table summarizes net restructuring costs by reportable segment:

                                           Three Months Ended
                                    December 29,       December 30,
                                        2007               2006
                                             (In thousands)
Personal Computing                  $         412     $       (1,997 )
Electronic Manufacturing Services           6,884              5,212
Total                               $       7,296     $        3,215

Cash                                $       6,064     $        6,089
Non-cash                                    1,232             (2,874 )
Total                               $       7,296     $        3,215

Cumulative restructuring costs per segment have not been disclosed as it is impractical due to the realignment of our reporting units. The recognition of restructuring charges requires us to make judgments and estimates regarding the nature, timing, and amount of costs associated with the planned exit activities, including estimating sublease income and the fair values, less selling costs, of property, plant and equipment to be disposed of. Our estimates of future liabilities may change, requiring us to record additional restructuring charges or reduce the amount of liabilities already recorded.

We plan to fund cash restructuring costs with cash flows generated by operating activities.

Interest Income and Expense

Interest income decreased from $10.9 million in the first quarter of fiscal 2007 to $6.2 million in the first quarter of fiscal 2008. The decrease is primarily attributable to a lower average cash balance in the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007. During the first quarter of fiscal 2007, the Company borrowed $600.0 million to fund the repayment of certain debt obligations that matured in the second quarter of fiscal 2007. Of the amount borrowed, $532.9 million was

distributed to a Trustee and held in an escrow account until repayment of the debt. The Company earned interest while the cash was held in escrow.

Interest expense decreased to $35.4 million in the first quarter of fiscal 2008, from $43.3 million in the first quarter of fiscal 2007. The decrease is primarily attributable to no interest expense during the first quarter of fiscal 2008 on the $600 million unsecured term loan we drew down in the first quarter of fiscal 2007 and repaid during the third quarter of fiscal 2007, decreased weighted average borrowings against our revolving credit facility during the first quarter of fiscal 2008, and no interest expense in the first quarter of fiscal 2008 on our 3% Notes due to repayment of these notes during the second quarter of fiscal 2007. These decreases were partially offset by interest expense incurred during the first quarter of fiscal 2008 on the two $300 million Senior Floating Rate Notes issued during the third quarter of fiscal 2007.

Other Income (Expense), net

Other income (expense), net was $(4.6) million for the three months ended December 29, 2007 and $11.0 million for the three months ended December 30, 2006. The following table summarizes the major components of other income (expense), net:

                                                           Three Months Ended
                                                     December 29,      December 30,
                                                         2007              2006
                                                             (In thousands)
Foreign exchange gains (losses)                     $        (2,749 ) $        2,852
Gain (loss) from fixed asset disposals                          (61 )          6,190
Write-off of deferred financing costs in
connection with redemption of debt                           (2,238 )              -
Other, net                                                      408            1,919
Total other income (expense), net                   $        (4,640 ) $       10,961

During the first quarter of fiscal 2007, we sold a building that had previously been recorded as held for sale and realized a gain on sale of approximately $6.0 million. We did not sell any such properties during the first quarter of fiscal 2008.

During the first quarter of fiscal 2008, we redeemed $120 million of debt that was due in 2010. In connection with this redemption, $2.2 million of deferred financing fees were expensed.

Provision for Income Taxes

Our effective tax rate for the three months ended December 29, 2007 and December 30, 2006 was approximately 36.7% and 23.8%, respectively. The effective rate for the three months ended December 29, 2007 differs from the same period in fiscal 2007 due primarily to the expiration of our tax holiday in Singapore on September 30, 2007 and the remeasurement of certain deferred tax assets due to newly enacted tax rates in Mexico, offset by the remeasurement of certain deferred tax assets due to newly enacted rates in China and the write-off of deferred tax liabilities on foreign fixed assets sold during the first quarter of fiscal 2008. We have received preliminary approval for an extension of our tax holiday in Singapore and expect to receive final approval in the near future, which would result in the reversal of the income tax expense recorded in the first quarter of fiscal 2008 for our Singapore operations.

Liquidity and Capital Resources



                                              Three Months Ended
                                         December 29,     December 30,
                                             2007             2006
                                                  (Unaudited)
                                                (In thousands)
Net cash provided by (used in):
Operating activities                    $      132,893   $      (10,532 )
Investing activities                           (11,039 )          1,713
Financing activities                          (120,000 )         60,534
Effect of exchange rate changes                  5,919           (4,716 )
Increase in cash and cash equivalents   $        7,773   $       46,999

Cash and cash equivalents were $941.2 million at December 29, 2007 and $933.4 million at September 29, 2007.

Net cash provided by (used in) operating activities was $132.9 million and $(10.5) million for the three months ended December 29, 2007 and December 30, 2006, respectively. Net cash provided by operating activities during the first quarter of fiscal 2008 was primarily the result of an increase in accounts payable. Working capital was $1.5 billion and $1.6 billion at December 29, 2007 and September 29, 2007, respectively.

Net cash provided by (used in) investing activities was $(11.0) million and $1.7 million during the three months ended December 29, 2007 and December 30, 2006, respectively. During the first quarter of fiscal 2008, we received $26.7 million in proceeds from sales of property, plant and equipment, primarily as a result of a sale leaseback transaction. We also purchased property, plant and equipment of $37.8 million during the first quarter of fiscal 2008.

Net cash provided by (used in) financing activities was $(120.0) million and $60.5 million during the three months ended December 29, 2007 and December 30, 2006, respectively. During the first quarter of fiscal 2008, we redeemed $120.0 million in aggregate principal amount of our Senior Floating Rate Notes due 2010 at par. Upon redemption, holders of the 2010 Notes received $120.0 . . .