UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-K

(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, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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.)

10800 ROOSEVELT BLVD., ST. PETERSBURG, FLORIDA 33716
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (813) 577-9749

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

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.001 PAR VALUE PER SHARE
(TITLE OF CLASS)

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

The aggregate market value of the voting stock held by non-affiliates
of the Registrant (based on the closing sale price of the Common Stock as
reported on the NASDAQ National Market on October 31, 1997) was approximately
$971,497,581. 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 31, 1997,
was 37,028,152. The Company does not have any non-voting stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's definitive Proxy Statement for the 1997 Annual Meeting
of Stockholders to be held on January 22, 1998 is incorporated by reference in
Part III of this Annual Report on Form 10-K to the extent stated herein.

PART I

ITEM 1. BUSINESS

This Business discussion contains trend analysis and a number of
forward-looking statements. These statements are based on current
expectations and actual results may differ materially. Among the factors
that could cause actual results to vary are those described in the section
Factors Affecting Future Results.

THE COMPANY

Jabil Circuit, Inc. ("Jabil" or 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, computer peripherals, automotive and consumer
industries. Jabil's business strategy is to create and support long-term
manufacturing partnerships with leading electronics companies in growth
industries. The Company executes this strategy by offering its customers a
complete turnkey solution, including circuit and production design; component
selection, sourcing and procurement; automated assembly; design and
implementation of product test; and shipment to end-users. Jabil's turnkey
approach enables customers to transfer virtually all internal manufacturing
responsibilities to the Company. Management believes the Company is a leader in
offering expanded turnkey services such as circuit and production design and in
the early implementation of new manufacturing technologies.

The Company's manufacturing services combine a high volume, highly
automated manufacturing approach with advanced design and manufacturing
technologies. Jabil is organized in resource and product line-dedicated business
units that the Company refers to as "work cells". Management believes this work
cell structure promotes a high level of responsiveness to customers and
facilitates highly responsive global, multi-location production that is adaptive
to changing customer needs.

The Company currently conducts operations in Scotland, Malaysia and in
three regions of the United States, and is in the process of opening an
operation in Mexico. The Company believes that localized global production is an
important factor in mitigating risks of inventory obsolescence for global
customer products and reducing logistic costs such as freight and duty.

The Company was incorporated in Delaware on February 21, 1992 to
succeed to the business of a Michigan Corporation named "Jabil Circuit Co.,
Inc." that was incorporated in 1969. Unless the context otherwise requires, the
"Company" and "Jabil" refer to Jabil Circuit, Inc., a Delaware corporation, its
predecessor and its subsidiaries. The Company's executive offices are located at
10800 Roosevelt Boulevard, St. Petersburg, Florida 33716, and its telephone
number is (813) 577-9749.

INDUSTRY OVERVIEW

The contract manufacturing industry has seen rapid growth over the past
several years as an increasing number of electronics companies have chosen or
adopted an external manufacturing strategy. This growth has been also been
impacted by OEMs divesting of internal manufacturing capacity. Other factors
driving OEMs to favor contract manufacturing outsourcing include:

Reducing product cost. Contract manufacturers have the ability 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.

Accelerating product time-to-market. Contract manufacturers have the
ability to deliver accelerated production start-ups and high efficiencies in
transferring new products into production. In addition, contract manufacturers
have the ability 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.

Access to advanced technologies. Customers of contract manufacturers
have access to advanced technologies in manufacturing processes, as well as
circuit and production design. Circuit and production design services offer
customers significant improvements in the performance, cost and
manufacturability of products.

Reducing capital investment in manufacturing. OEMs are increasingly
electing to lower their investment in inventory, buildings and machinery used in
manufacturing and choosing instead to allocate capital to other activities such
as marketing and research and development. This shift in capital deployment has
placed a greater emphasis on utilizing external manufacturing specialists.

Improving inventory management and purchasing power. Contract
manufacturers have the ability 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 material
marketplace.

STRATEGY

The Company's objective is to expand its position as a global provider
of electronic manufacturing services. Key elements in meeting this objective
include:

Long-term Relationships. The core strategy of the company is to
establish itself with leading electronics companies in expanding industries that
have the critical mass and growth goals to take advantage of highly automated,
continuous flow manufacturing, and global manufacturing when advantageous. Since
Jabil derives most of its growth in revenue from its existing customer base, the
Company strives to maintain long-term, mutually beneficial relationships with
its customers. Jabil offers customers a complete turnkey solution, including
circuit and production design; component selection, sourcing and procurement;
automated assembly; design and implementation of product test; system assembly,
order configuration and distribution to end users. Jabil's turnkey approach
enables a customer to transfer virtually all-internal manufacturing and
distribution responsibilities to the Company.

Work Cell Structure. Jabil is organized in a decentralized,
functionally-matrixed organization. In this structure each customer's line of
business is produced with a high level of autonomy, utilizing dedicated
production equipment, production workers, supervisors, buyers, planners and
engineers. Jabil refers to these decentralized business-units as "work cells."
Each Business Unit Manager, who is the direct interface with the customer,
manages their own customer work cell. Management believes the work cell
structure promotes an increased responsiveness to customer needs, particularly
as that relationship grows to multiple production locations.

Systems Assembly and Order Fulfillment. Management believes systems
assembly and order fulfillment are services that can reduce product cost and
risk of product obsolescence by reducing total work in process and finished
goods inventory. The Company offers systems assembly at multiple locations as
well as direct order fulfillment (direct shipment to the end customer) services.

Parallel Global Production. The Company believes its customers need to
produce the same products simultaneously in different markets of the world.
Jabil believes that parallel global production is a key strategy to reduce
obsolescence risk, secure the lowest landed cost and simultaneously supply
products of equivalent or comparable quality throughout the world. In order to
accommodate this need, the Company has significantly added to its manufacturing
space in Scotland, Malaysia and the United States. In addition, Jabil is
increasing manufacturing resources in North America by establishing a
Guadalajara, Mexico plant.

MANUFACTURING SERVICES

THE JABIL APPROACH TO MANUFACTURING

In order to achieve high levels of manufacturing performance, the
Company has adopted the following approach:

Work Cells. The Company organizes manufacturing activities on the basis
of work cells operating under the leadership of business unit managers. Each
work cell has dedicated production lines consisting of equipment, production
workers, supervisors and engineers. A work cell is typically dedicated to the
needs of a single customer line-of-business and is empowered to formulate
strategies tailored to its customer's needs. The work cell approach enables the
Company to grow incrementally without disrupting the production of other work
cells and without significantly adding to management bureaucracy. As a result,
work cell members have direct responsibility for manufacturing results and
time-to-volume production, promoting a sense of individual commitment and
ownership.

Business Unit Managers. A Jabil Business Unit Manager coordinates all
financial, manufacturing and engineering commitments for each customer
relationship. Managers have the authority to develop customer relationships;
make design strategy decisions and production commitments; establish pricing and
implement production and circuit design changes. Business unit managers are also
responsible for assisting customers with strategic planning for future products,
including developing cost and technology goals. These managers operate
autonomously, with responsibility for the development of customer relationships
and direct profit and loss accountability for work cell performance.

Continuous Flow. The Company uses 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.) Continuous flow manufacturing provides significant
cost reduction and quality improvement when applied to volume manufacturing. The
elimination of queue times prior to sequential operations result in increased
manufacturing velocity, which improves production efficiencies and shortens
quality feedback loops.

Computer Integration. The Company supports all aspects of its
manufacturing activities with computerized control and monitoring systems.
Component inspection and vendor qualities are monitored electronically.
Materials planning, purchasing, stockroom and shop floor control systems are
supported through a computerized Manufacturing Resources Planning ("MRP")
system, providing instantaneous visibility to material availability and
real-time tracking of work in process. Manufacturing processes are supported by
a real-time, computerized statistical process control ("SPC") system. In-circuit
test, functional test and final burn-in are all monitored and analyzed using
other proprietary systems. Production design centers located in each domestic
facility are supported by advanced CAD/CAE systems. These CAD/CAE systems
support automated test design and using Jabil's proprietary computer-integrated
manufacturing software, manufacturing equipment programming. Many of the
Company's computer systems are

networked, allowing a sharing of data and programs. For example, employees in
Florida can instantaneously access data relating to Jabil's operations in other
locations. More importantly, the Company's customers can remotely access the
Company's computer systems to monitor real-time yields, inventory positions,
work-in-process status and vendor quality data for their products. See
"Technology."

The Company also utilizes an electronic commerce system/electronic data
interchange ("EDI") with customers and suppliers to implement a variety of
supply chain management programs. The Company's customers utilize the EDI supply
chain management to share demand and product forecasts and deliver purchase
orders. The Company uses the EDI system with suppliers for just-in-time
delivery, supplier-managed inventory, and consigned supplier-managed inventory.

The Company is in the process of installing a new enterprise resource planning
system ("ERP System") that will replace the current Manufacturing Resource
Planning ("MRP") system and financial information systems. This system is
believed to be "Year 2000 Compliant". The Company is also identifying and
implementing changes to its other information systems in order to make them
compliant. While the Company currently expects that the Year 2000 will not pose
significant operational problems, delays in the implementation of new
information systems, or a failure to fully identify all Year 2000 dependencies
in the Company's systems could result in material adverse consequences,
including disruption of operations, loss of information and unanticipated
increases in costs.

DESIGN ACTIVITIES

Circuit Design. The Company provides circuit design activities for
certain of its customers. Circuit design involves the creation of electronic
circuit architecture, which ordinarily includes application specific integrated
circuit ("ASIC") design or selection and implementation, circuit function and
speed analysis, schematic development, net list generation and firmware
development. The Company's circuit design activities have resulted in designs
for video set-top boxes, personal computers, notebook computers, consumer
appliance controls, workstation I/O (input/output) cards, cellular telephone
accessories, and electronic products for use in automotive applications. The
resulting products are usually offered to customers on an exclusive basis in
exchange for customer's commitment to use Jabil to manufacture the product. The
goals of the Company's circuit design activities are to create a more stable
stream of volume turnkey manufacturing and an elevated level of strategic
partnering with principal customers. The Company has testing and validation
capability to accelerate the time to market of products designed internally and
externally.

Production Design. The Company engages in significant production design
activities. Production design is the process of designing the circuit board
using CAD and CAE tools, concurrently with component package selection and the
development of the bill of materials, approved vendors list, assembly equipment
configuration and processes, solder processes, in-circuit test and functional
test, test fixture design, "burn-in" and reliability monitoring plan. The
production design process improves manufacturability and generally eliminates
conflicts between disciplines while the product is still in the design phase.
Overall board costs are considered in connection with assembly costs, materials
costs and availability, process yield considerations and targeted sources for
board production. In this way, total costs can be minimized prior to production
launch. Management believes the Company's production design process reduces
product cost and accelerates time-to-volume production. The process generally
includes computer simulation and optimization of electrical signal speed and
circuit timing, simulation of thermal characteristics and minimization of radio
frequency interference ("RFI") emissions. This computer simulation activity
greatly reduces the risks of subsequent engineering revisions and enhances
attainment of time to volume production goals.

Industrial/Mechanical Design. The Company offers Industrial and
Mechanical Design to its customers. Plastic and metal enclosures designed to
house printed circuit assemblies are the typical output of this activity. When
coupled with circuit and production design, this service provides complete
turnkey

product support for OEMs. Industrial and Mechanical Design includes conceptual
design, industrial design, mechanical design, supplier selection, prototype
parts using stereolithography ("SLA") or metal fabrication, tooling management,
compliance certification management and volume assembly management, all tightly
integrated with the Jabil production work cell.

Other Design Services. The Company procures additional mechanical and
other design services from external engineering firms in response to the needs
of its customers. The Company's engineering staff coordinates the efforts of
these external engineering firms to ensure integration of the external portions
of the design with the overall production and product design to achieve optimal
product manufacturability and efficiency.

SYSTEM ASSEMBLY AND TEST

The Company offers system assembly and test services to its customers.
The Company maintains significant system assembly capacity and has seen this
portion of the business grow as an extension to the assembly of circuit boards.
This process involves the assembly of higher level sub-systems and systems
incorporating printed circuit boards. In some cases, the final product is
shipped directly to the end-user.

TECHNOLOGY

The Company believes that its experience and expertise in advanced
manufacturing technologies and its investment in state-of-the-art manufacturing
equipment are a significant competitive advantage, enabling Jabil to provide
customers with reliable and high-quality leading edge products and processes.
Among the technologies in which the Company has invested are:

Surface Mount Technology. Surface mount technology ("SMT") is a method
of assembling printed circuit boards on which components are fixed directly to
the surface of the board instead of being inserted and soldered into plated
holes in the board (the latter method being commonly known as "pin through hole"
or "PTH"). SMT offers the advantages of miniaturization and significant cost
reductions. The higher density also allows shorter signal lengths, with
resulting increases in signal speed potential and thermal performance. SMT
packages are generally more resistant to vibration and often broadcast lower
levels of electrical emissions which cause radio frequency interference.

Tape Automated Bonding. Tape automated bonding ("TAB") technology is a
complementary process to SMT and involves the use of semiconductors that are
attached to a gold or tin-plated copper lead frame using a complex bumping and
thermocompression mass bonding method. The result is a component that can be
directly mounted on the surface of the circuit board and that can be
electrically tested prior to assembly onto the substrate. TAB is well suited for
applications involving high manufacturing volumes, high lead counts, component
pre-testing and high electrical speeds.

Ball Grid Array. Ball grid array ("BGA") utilizes an array of solder
bumps across the underside of the package versus fine-pitch leads that are
exposed around the component perimeter. The BGA package design is more durable
than fine-leaded quad flat package ("QFP") components and has proven to be
manufacturable with higher yields.

Chip Scale Packages, Micro-Surface Mount Technology, Micro-Ball Grid
Array ("Chip Scale Packages", "Micro-SMT" and "Micro-BGA"). Chip Scale Packages,
Micro-SMT and Micro-BGA packages are a selection of the recently emerging
miniature package styles. These reduced size packages are a further reduction of
the smaller footprint created by BGA and approach the density of Flip Chip.
These packages are fully SMT compatible, can be economically tested prior to
assembly, and are well-suited for small form factor, high density, SMT circuitry
typical of portable products.

Flip Chip / Direct Chip Attach. Flip chip or direct chip attach
technology is the assembly technology that, in the opinion of management,
provides users with the smallest size, high performance package which is
commercially practical. Jabil is developing technology that makes flip chip
attach compatible with standard surface mount processes. The silicon die is
attached directly to the substrate by means of miniature solder bumps. The
Company's research activities in this area are subsidized in part by a
government-sponsored Low Cost Flip Chip Program composed of process-specific
industry participants.

Thin Substrate Processes. Thin substrate processes involve the use of
specialized placement, rigidization and soldering techniques to achieve the
automated assembly and soldering of multilayer substrates having a thickness of
less than .020 of an inch. These substrates are commonly used in the design of
thin products, such as PCMCIA cards and cellular telephones. The lack of
stiffness typical in these substrates makes assembly with conventional
processing techniques difficult and expensive. The Company has a patent
application pending covering processes associated with these applications. See
"Proprietary Rights."

Reflow Solder of Mixed Technology Circuit Boards. Reflow soldering of
PTH devices utilizing SMT soldering processes (sometimes referred to as "Mixed
Technology Reflow" or "Reflow/reflow") involves the placement of PTH devices
through solder paste, with subsequent reflow using SMT processes to form solder
joints. Mixed Technology Reflow eliminates design miniaturization constraints
required by conventional wave solder processes used for PTH devices, allows
surface-mounted devices to be soldered using the higher yielding reflow
processes, and reduces processing costs. Mixed Technology Reflow requires
significant product-specific materials engineering, design of the substrate for
the process and specialized reflow soldering techniques.

Application Specific Robotic Assembly. Application specific robotic
assembly ("Robotics") involves the use of computer-controlled robotic arms with
custom-designed transfer mechanisms, feeders, sensors and grippers to perform
assembly functions ordinarily performed manually. Although intensive in capital
and engineering, the use of Robotics to replace manual operations promotes
higher yields, relieves assemblers from repetitive motion injuries and offers
significant cost reduction for long-lived products.

Computer Integrated Manufacturing. Computer integrated manufacturing
("CIM") involves the direct link of CAD data to computer-controlled assembly and
test equipment used to produce the product. By directly linking CAD data files
to production machines, waste generated in adjusting processes is reduced,
higher levels of mechanical precision are attained in placement and test
fixturing programs, and generally, cost is lowered with improved time to volume
production.

CUSTOMERS AND MARKETING

The Company's revenue was distributed over the following significant
industry segments:

SIGNIFICANT INDUSTRY SEGMENTS

YEAR ENDED AUGUST 31
--------------------
1995 1996 1997
---- ---- ----

Communications....................................... 20% 30% 51%
Personal Computers................................... 46% 36% 21%
Computer Peripherals................................. 23% 25% 16%
Automotive and other................................. 11% 9% 12%

A small number of customers have historically comprised a major portion
of the Company's net revenue. The table below sets forth the respective portion
of net revenue for the applicable period attributable to customers who accounted
for more than 10% of net revenue in any respective period:

PERCENTAGE OF NET REVENUE

YEAR ENDED AUGUST 31
--------------------
1995 1996 1997
---- ---- ----

Hewlett Packard Company.............................. 28% 20% 15%
NEC Technologies, Inc................................ 14% 15% *
Quantum Corporation.................................. 17% 23% 10%
3Com................................................. * 11% 21%
Cisco Systems Inc. ................................. * 10% 20%
* less than 10% of net revenues

In fiscal 1995, 1996 and 1997, 18 customers accounted for
substantially all the Company's net revenue. The Company expects to continue to
depend upon a relatively small number of customers for a significant percentage
of its net revenue. Significant reductions or delays in sales to any of the
Company's large customers would have a material adverse effect on the Company's
results of operations. In the past, some of the Company's customers have
terminated their manufacturing arrangement with the Company, and other customers
have significantly reduced or delayed the volume of manufacturing services
ordered from the Company. There can be no assurance that present or future
customers will not terminate their manufacturing arrangements with the Company
or significantly change, reduce or delay the amount of manufacturing services
ordered from the Company or that the Company will not terminate arrangements
with customers. Any such termination of a manufacturing relationship by the
Company or its customers or change, reduction or delay in orders could have a
material adverse effect on the Company's results of operations. See note 8 of
Notes to Consolidated Financial Statements.

The Company has pursued diversification of its customer base and
sought multiple customers in the markets it serves. The Company's principal
sources of new business are the expansion of existing relationships, referrals,
and direct sales through its 32 business unit managers and executive staff. The
Company does not rely on sales or manufacturers' representatives. Business unit
managers, supported by the executive staff, identify and attempt to develop
relationships with potential customers who meet a certain profile. This profile
includes financial stability, need for technology-driven turnkey manufacturing,
anticipated unit volume and long-term relationship stability. Unlike traditional
sales managers, business unit managers are responsible for ongoing management of
production for their customers.

The Company is dependent upon the continued growth, viability and
financial stability of its customers, which are in turn substantially dependent
on the growth of the communications, personal computer, computer peripherals,
and automotive industries. These industries have been characterized by rapid
technological change, short product life cycles, pricing and margin pressures.
In addition, many of the Company's customers in these industries are affected by
general economic conditions. The factors affecting the communications, personal
computer, computer peripherals, and automotive industries in general, and/or the
Company's customers in particular, could have a material adverse effect on the
Company's results of operations. In addition, the Company generates significant
accounts receivable in connection with providing manufacturing services to its
customers. If one or more of the Company's customers were to become insolvent or
otherwise were unable to pay for the manufacturing services provided by the
Company, the Company's operating results and financial condition would be
adversely affected.

INTERNATIONAL EXPANSION

A key element in the Company's strategy is to provide localized
production of the global products produced for OEMs in the major consuming
regions of the European Community and Asia. In order to offer this localized
production, in fiscal 1993 the Company established a manufacturing facility in
Livingston, Scotland, which began volume production in May 1993. The Scotland
facility targets existing European customers, those North American customers
having significant sales in the European Community and potential European
customers who meet the profile discussed above. Additionally, the Company began
volume production in October 1995, in Penang, Malaysia. This location enables
the Company to provide manufacturing services to the Asian market from an Asian
location 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. In order to increase
capacity both in Europe and in the Asian market, the Company has expanded both
locations, and expects to be in larger, newly completed facilities in the early
portion of fiscal 1998. See note 3 of Notes to Consolidated Financial
Statements.

As an addition to the North American market, the Company commenced
construction of a manufacturing facility in Guadalajara, Mexico in fiscal 1997.
This operation will allow for continued expansion in North America, while
providing a competitive cost structure and close proximity to the United States
market. The Company has completed construction of a facility in this location in
early fiscal 1998.

The Company's international operations may be subject to a number of
other risks, including fluctuations in the value of currencies, export duties,
import controls and trade barriers (including quotas), restrictions on the
transfer of funds, employee turnover, work stoppages, longer payment cycles,
greater difficulty in accounts receivable collection, and burdens of complying
with a wide variety of foreign laws. In addition, net-operating losses incurred
by foreign operations cannot be utilized by the Company to reduce U.S. income
taxes.

COMPETITION

Competition in the contract manufacturing industry is intense. The
Company competes against numerous domestic and foreign manufacturers, including
SCI Systems, Inc., Solectron Corporation, Avex, Inc., and Flextronics
International. In addition, the Company may in the future encounter competition
from other large electronic manufacturers that are selling, or may begin to
sell, contract manufacturing services. Several of the Company's competitors have
international operations and some have substantially greater manufacturing,
financial, research and development and marketing resources than the Company.
The Company also faces competition from the manufacturing operations of its
current and potential customers, who are continually evaluating the merits of
manufacturing products internally versus the merits of external manufacturing.

The Company believes that the primary bases of competition in its
targeted markets are capability, price, manufacturing quality, advanced
manufacturing technology, design expertise, time to volume production, reliable
delivery and regionally dispersed manufacturing. Management believes the Company
competes favorably with respect to these factors. To remain competitive, the
Company must continue to provide technologically advanced manufacturing
services, maintain quality levels, offer flexible delivery schedules, deliver
finished products on a reliable basis and compete favorably on the basis of
price. There can be no assurance that the Company will be able to compete
favorably with respect to these factors in the future.

BACKLOG

The Company's order backlog at August 31, 1997 was approximately $450
million, compared to backlog of $210 million at August 31, 1996. Although the
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 the
Company's relationships with its customers, it frequently allows customers to
cancel or reschedule deliveries. Although the Company may seek to negotiate fees
to cover the costs of such cancellations or rescheduling, it may not be
successful in doing so.

The level and timing of orders placed by a customer of the Company
varies due to the customer's attempts to balance its inventory, design changes,
changes in the customer's manufacturing strategy, acquisitions of or
consolidations among customers and variation in demand for the customer's
products due to, among other things, product life cycles, competitive conditions
or general economic conditions. The Company's 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, the Company has
been required to increase staffing and other expenses in order to meet the
anticipated demand of its customers. Anticipated orders from the Company's
customers have, in the past, failed to materialize in certain instances or
delivery schedules have been deferred as a result of changes in the customer's
business needs, thereby adversely affecting the Company's results of operations.
On other occasions, customers have required rapid increases in production, which
have placed an excessive burden on the Company's resources. Such customer order
fluctuations and deferrals have had a material adverse effect on the Company's
results of operations in the past, and there can be no assurance that the
Company will not experience such effects in the future.

RESEARCH AND DEVELOPMENT

To meet the increasingly sophisticated needs of its customers, Jabil
continually works to develop and refine new manufacturing processes, enhance
production design and develop new circuit designs. For fiscal 1995, 1996 and
1997, the Company expended $1,819,000, $2,112,000, and $3,117,000, respectively,
on research and development activities. To date, substantially all of the
Company's research and development expenditures have related to internal
research and development activities.

MANUFACTURING PROCESSES

The Company conducts research and development in connection with the
development and refinement of new manufacturing processes that the Company
believes have near-term commercial potential. This research and development
activity, which is accounted for as a research and development expense, is
performed primarily at Jabil's advanced engineering facility in San Jose,
California. Other manufacturing process developments and refinements are made in
connection with providing manufacturing services for particular customers and
related expenses are charged to cost of revenue.

PRODUCTION DESIGN

The Company performs research and development for its customers in
connection with providing production design. This ongoing research and
development is associated with providing manufacturing services to these
customers and is charged to cost of revenue.

CIRCUIT DESIGN

From time to time, the Company performs research and development
related to new products on a project-by-project basis. The research and
development consists of design of the circuit board assembly and the related
production design necessary to manufacture the circuit board assembly in the
most cost-effective and reliable manner. The Company expenses these costs to
research and development expense.

The market for the Company's manufacturing services is characterized
by rapidly changing technology and continuing process development. The Company
is continually evaluating the advantages and feasibility of new manufacturing
processes, such as TAB, chip on board and thin substrate processes. The Company
believes that its future success will depend upon its ability to develop and
market manufacturing services that meet changing customer needs, maintain
technological leadership and successfully anticipate or respond to technological
changes in manufacturing processes on a cost-effective and timely basis. There
can be no assurance that the Company's process development efforts will be
successful.

COMPONENTS

The Company procures components from a broad group of suppliers,
determined on an assembly-by-assembly basis. Almost all the products
manufactured by Jabil 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. The Company attempts to ensure continuity of supply of these
components. In cases where unanticipated customer demand or supply shortages
occur, the Company attempts to arrange for alternative sources of supply, where
available, or defers 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 certain electronic
components, particularly memory and logic devices. There can be no assurance
that such shortfalls will not have a material adverse effect on the Company's
results of operations in the future.

PROPRIETARY RIGHTS

The Company regards its manufacturing processes and circuit designs as
proprietary trade secrets and confidential information. Jabil relies largely
upon a combination of trade secret laws, non-disclosure agreements with its
customers and suppliers and its internal security systems, confidentiality
procedures and employee confidentiality agreements to maintain the trade secrecy
of its circuit designs and manufacturing processes. Although the Company takes
steps to protect its trade secrets, there can be no assurance that
misappropriation will not occur.

The Company currently has nine patents and three patent applications
pending. However, Jabil believes 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 the Company's ability to develop,
enhance and market manufacturing services.

The Company licenses some technology from third parties that it uses in
providing manufacturing services to its customers. The Company believes that
such licenses are generally available on commercial terms from a number of
licensors. Generally, the agreements governing such technology grant to Jabil
non-exclusive, worldwide licenses with respect to the subject technology and
terminate upon a material breach by the Company.

Although the Company does not believe that its circuit designs or
manufacturing processes infringe on the proprietary rights of third parties,
there can be no assurance that third parties will not assert infringement claims
against the Company in the future with respect to current or future designs or
processes. Any such assertion may require the Company to enter into an expensive
royalty arrangement or result in costly litigation.

EMPLOYEES

As of August 31, 1997, the Company had 3,661 full-time employees. This
compares to 2,649 full-time employees at August 31, 1996. None of the Company's
employees is currently represented by a union.

Recruitment of personnel in the contract manufacturing industry is
highly competitive. The Company believes that its future success will depend, in
part, on its ability to continue to attract and retain highly skilled technical
and management personnel. The Company does not have employment agreements or
noncompetition agreements with its key employees. Although to date the Company
has been successful in retaining key managerial and technical employees, the
loss of services of certain of these key employees could have a material adverse
effect on the Company.

GEOGRAPHIC INFORMATION

The information regarding revenue, operating profit, identifiable
assets and export sales set forth in Note 8 of Notes to Consolidated Financial
Statements, set forth elsewhere herein, is hereby incorporated by reference into
this Part I, Item 1.

ENVIRONMENTAL

The Company is 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 its manufacturing process. Although
the Company believes that it is currently in substantial compliance with all
material environmental regulations, any failure by the Company to comply with
present and future regulations could subject it to future liabilities or the
suspension of production. In addition, such regulations could

restrict the Company's ability to expand its facilities or could require the
Company to acquire costly equipment or to incur other significant expense to
comply with environmental regulations.

ITEM 2. PROPERTIES

The Company has manufacturing facilities located in the United States,
Livingston, Scotland, Penang, Malaysia, and Guadalajara, Mexico. The
Company's leased facilities in Scotland are being replaced by a larger facility
owned by the Company. Additionally, in order to accommodate increased growth in
the United States, the Company has increased manufacturing space during fiscal
1997 in its Florida location.

A summary of building locations is as follows:

Year Approximate
Location Commenced Owned/Leased Square Feet Description
- -------- --------- ------------ ----------- -----------

CURRENT FACILITIES

St. Petersburg, Florida 1988 Owned 110,000 High volume mfg.,
Corporate office
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
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 1987 Leased 21,000 Design/prototype mfg.
Penang, Malaysia 1997 Owned 150,000 High volume mfg.
Guadalajara, Mexico 1997 Owned 150,000 High volume mfg.
Livingston, Scotland 1997 Owned 130,000 High volume mfg.

LEASED FACILITIES TO BE REPLACED BY CURRENT FACILITIES

St. Petersburg, Florida 1995 (1) Leased 75,000 High volume mfg.
Livingston, Scotland 1994 (2) Leased 40,000 High volume mfg.
Bathgate, Scotland 1995 (2) Leased 30,000 High volume mfg.

(1) Lease expires December, 1997
(2) Lease expires January, 1998

ITEM 3. LEGAL PROCEEDINGS

On May 31, 1997, the Company reached an agreement with Epson of
America, Inc. ("Epson") to settle all outstanding claims relating to previous
manufacturing agreements between the parties. Such claims arose during fiscal
years 1994 and 1995. The actual terms and conditions of the agreement are
subject to a confidentiality agreement between the Company and Epson; however,
the settlement had no material impact on the Company's results of operations for
the fiscal year ended August 31, 1997.

The Company is party to certain other 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
statements.

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

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

PART II

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

The common stock of the Company trades publicly on The NASDAQ National
Market under the symbol JBIL. The following table sets forth, for the periods
indicated, the high and low closing sales prices per share for the Company's
common stock as reported by the NASDAQ National Market.

On June 17, 1997, the Company's Board of Directors approved a
two-for-one stock split of the Company's common stock, effected in the form of a
stock dividend to holders of record on July 8, 1997. This table reflects the
impact of the common stock split:

HIGH LOW
---- ---

YEAR ENDED AUGUST 31, 1996
First Quarter(September 1, 1995--November 30, 1995) $11.06 $ 6.00
Second Quarter(December 1, 1995--February 29, 1996) $11.50 $ 2.94
Third Quarter(March 1, 1996--May 31, 1996) $ 7.32 $ 3.88
Fourth Quarter(June 1, 1996--August 31, 1996) $ 7.00 $ 4.32
YEAR ENDED AUGUST 31, 1997
First Quarter(September 1, 1996--November 30, 1996) $13.63 $ 5.75
Second Quarter(December 1, 1996--February 28, 1997) $12.63 $24.69
Third Quarter(March 1, 1997--May 31, 1997) $32.63 $16.50
Fourth Quarter(June 1, 1997--August 31, 1997) $60.00 $27.50

As of August 31, 1997, there were approximately 879 holders of record.

The Company has never paid cash dividends on its capital stock and does
not anticipate paying any cash dividends in the foreseeable future.

ITEM 6. SELECTED 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.

YEARS ENDED AUGUST 31,
----------------------------------------------------
1993 1994 1995 1996 1997
----- ----- ----- ----- ----

(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue ................................ $334,662 $375,815 $559,474 $863,285 $978,102
Cost of revenue ........................... 304,454 351,608 523,338 790,311 857,245
-------- -------- -------- -------- --------
Gross profit ............................... 30,208 24,207 36,136 72,974 120,857
Selling, general and administrative ....... 11,812 14,038 17,898 25,456 35,886
Research and development .................. 1,663 1,768 1,819 2,112 3,117
-------- -------- -------- -------- --------
Operating income ........................... 16,733 8,401 16,419 45,406 81,854
Interest expense, net ..................... 3,288 3,470 6,347 7,333 1,612
-------- -------- -------- -------- --------
Income before income taxes ................. 13,445 4,931 10,072 38,073 80,242
Income taxes .............................. 5,300 2,363 2,792 13,724 27,745
-------- -------- -------- -------- --------

Net income ................................. $ 8,145 $ 2,568 $ 7,280 $ 24,349 $ 52,497
======== ======== ======== ======== ========
Net income per share ....................... $ 0.29 $ 0.08 $ 0.23 $ 0.67 $ 1.37

Number of shares used in computing per share
amounts .................................. 27,784 30,894 31,100 36,334 38,340

AUGUST 31,
-------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(IN THOUSANDS)

CONSOLIDATED BALANCE SHEET DATA:
Working capital ............................ $ 29,116 $ 27,639 $ 33,333 $115,758 $ 97,349
Total assets ............................... 115,763 174,318 280,961 299,940 405,903
Notes payable to bank and current
installments of long-term obligations .... 20,369 48,562 81,130 2,451 2,475
Long-term obligations, excluding current
installments ............................. 18,176 18,215 27,932 58,371 50,000
Net stockholders' equity ................... $ 47,553 $ 51,231 $ 59,595 $124,234 $181,485

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

OVERVIEW

This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains trend analysis and a number of
forward-looking statements. These statements are based on current
expectations and actual results may differ materially. Among the factors
that could cause actual results to vary are those described in the section
Factors Affecting Future Results.

The Company provides high volume turnkey manufacturing services using
surface mount technology for leading electronics OEMs in the personal computer,
disk drive and peripherals, communications, consumer and automotive industries.
In turnkey manufacturing, unlike manufacturing on consignment, the Company is
responsible for procuring the components utilized in the manufacturing process.
The component procurement responsibility requires the Company to provide
significant working capital, materials management, purchasing, receiving
inspection and stockroom management. This approach transfers the economic risks
of materials cost fluctuations, excess scrap and inventory obsolescence to the
Company. The Company believes that turnkey manufacturing generates higher net
revenue than consignment manufacturing due to the generation of revenue from
materials as well as labor and manufacturing overhead, but also results in lower
gross margins than consignment manufacturing because the Company generally
realizes lower gross margins on materials-based revenue than on
manufacturing-based revenue.

The Company's annual and quarterly operating results are affected by a
number of factors. The primary factors affecting operating results are the level
and timing of customer orders, fluctuations in materials costs and the mix of
materials costs versus labor and manufacturing overhead costs. The level and
timing of orders placed by a customer vary due to the customer's attempts to
balance its inventory, design changes, changes in a customer's manufacturing
strategy, acquisitions of or consolidations among customers, and variation in
demand for a customer's products due to, among other things, product life
cycles, competitive conditions and general economic conditions. In the past,
changes in orders from customers have had a significant effect on results of
operations due to corresponding changes in the level of overhead absorption.
Other factors affecting the Company's annual and quarterly operating results
include price competition, the Company's level of experience in manufacturing a
particular product, the degree of automation used in the assembly process, the
efficiencies achieved by the Company in managing inventories and fixed assets,
the timing of expenditures in anticipation of increased sales, customer product
delivery requirements and shortages of components or labor.

The level of capacity utilization of manufacturing facilities, indirect
labor and selling, general and administrative expenses also affects operating
results. Accordingly, gross margins and operating income margins have generally
improved during periods of high volume and high capacity utilization. Jabil
generally has idle capacity and reduced operating margins during periods of
lower-volume production.

The Company has continued to depend upon a relatively small number of
customers for a significant percentage of its net revenue. Significant
reductions in sales to any of the Company's large customers would have a
material adverse effect on the Company's results of operations. In the past some
of the Company's customers have terminated their manufacturing arrangement with
the Company, and other customers have significantly reduced or delayed the
volume of manufacturing services ordered from the Company. There can be no
assurance that present or future customers will not terminate their
manufacturing arrangements with the Company or significantly change, reduce or
delay the amount of manufacturing services ordered from the Company. Any such
termination of a manufacturing relationship

or change, reduction or delay in orders could have an adverse effect on the
Company's results of operations or financial condition. See note 8 of Notes to
Consolidated Financial Statements.

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,
-----------------------------------
1995 1996 1997
---- ---- ----

Net revenue.......................................... 100.0% 100.0% 100.0%
Cost of revenue...................................... 93.6 91.5 87.6
----- ----- -----
Gross margin......................................... 6.4 8.5 12.4
Selling, general and administrative.................. 3.2 2.9 3.7
Research and development............................. 0.3 0.3 0.3
----- ----- -----
Operating income..................................... 2.9 5.3 8.4
Interest expense, net................................ 1.1 0.9 0.2
----- ----- -----
Income before income taxes........................... 1.8 4.4 8.2
Income taxes......................................... 0.5 1.6 2.8
----- ----- -----
Net income........................................... 1.3% 2.8% 5.4%
===== ===== =====

NET REVENUE

Net revenue increased 54.3% over fiscal 1995 to $863.3 million in
fiscal 1996. The increase was due primarily to an increase in manufacturing
services provided to established customers, the addition of five new customers
and the addition of new divisions within existing customers. Net revenue
increased 13.3% over fiscal 1996 to $978.1 million in fiscal 1997. The increase
was due primarily to manufacturing services provided to both new and existing
customers, offset by the end of production of certain hard drive products.

Foreign source revenue represented 21% of net revenue for fiscal 1995
and 31% of net revenue for fiscal 1996. Foreign source revenue in 1997
represented 30% of net revenue reflecting a decrease in exports from the
Company's domestic locations.

GROSS MARGIN

Cost of revenue includes the cost of materials and the cost of labor
and manufacturing overhead, as well as provisions for inventory adjustments. The
Company's various customers typically require different manufacturing services.
Different manufacturing services have different gross margins depending upon (i)
the mix of materials costs versus manufacturing costs, and (ii) the Company's
experience in manufacturing a particular product. The Company typically realizes
better gross margins on manufacturing-based revenue than it does on
materials-based revenue, and better gross margins on manufacturing services for
products with which it has more experience due to the increased efficiencies
achieved over time. Gross margins also fluctuate due to changes in materials
costs.

GROSS MARGIN (CONTINUED)

Gross margin increased from 6.4% in fiscal 1995 to 8.5% in fiscal 1996.
Gross margin in 1995 was negatively impacted by write-offs related to an Epson
notebook product. The increase in gross margin in fiscal 1996 was due to
increased capacity utilization and a shift to more manufacturing-based revenue.
Gross margin increased from 8.5% in fiscal 1996 to 12.4% in fiscal 1997 due to a
continuing shift toward manufacturing-based revenues and increased capacity
utilization. The portion of manufacturing based revenue in fiscal 1997 was
significantly higher than in fiscal 1996. The manufacturing based revenue was
the largest impact on the gross margin percentage increase from fiscal 1996, or
previous fiscal years.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses decreased from 3.2% of net
revenue in fiscal 1995 to 2.9% of net revenue in fiscal 1996, while increasing
in absolute dollars from $17.9 million in fiscal 1995 to $25.5 million in fiscal
1996. This dollar increase was primarily due to increased staffing to support
higher revenue levels. Selling, general and administrative expenses increased
from $25.5 million (2.9% of net revenue) in fiscal 1996 to $35.9 million (3.7%
of net revenue) in fiscal 1997. This increase was primarily due to increased
staffing and related departmental expenses at all the Company's locations along
with investments in information systems staff to support the expansion of the
Company's business.

RESEARCH AND DEVELOPMENT

Research and development expenses in fiscal 1996 increased by
approximately $0.3 million over fiscal 1995. Research and development expenses
in fiscal 1997 increased by $1.0 million , reflecting an increase in
design-based activity.

INTEREST EXPENSE

Net interest expense increased from $6.3 million in fiscal 1995 to $7.3
million in fiscal 1996 due primarily to increased borrowing levels offset by
somewhat lower interest rates and a significant reduction of borrowings in the
fourth quarter or fiscal 1996. Interest expense decreased to $1.6 million in
fiscal 1997 primarily reflecting significantly reduced short-term borrowings and
increased income on cash balances. See notes 4 and 5 of Notes to Consolidated
Financial Statements.

INCOME TAXES

The Company's effective tax rate increased from 28% in fiscal 1995 to
36% in fiscal 1996. This increase in the effective tax rate was attributable to
the decrease in the availability of net operating losses of foreign
subsidiaries. In fiscal 1997, the effective tax rate decreased slightly to 35%,
primarily as a result of the granting of a tax holiday for the Company's
Malaysian operations. This tax holiday expires in October 2000. See note 6 of
Notes to Consolidated Financial Statements.

QUARTERLY RESULTS

The following tables set forth certain unaudited quarterly financial
information for the 1996 and 1997 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 certain
non-recurring adjustments) 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 of the Company and related notes
thereto. The operating results for any quarter are not necessarily indicative of
results for any future period.

FISCAL 1996 FISCAL 1997
----------------------------------------- -----------------------------------------
NOV. 30, FEB. 29, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31,
1995 1996 1996 1996 1996 1997 1997 1997
--------- -------- -------- ------- -------- -------- ------ -----------

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net revenue................ $233,855 $235,628 $219,701 $174,101 $203,070 $222,187 $247,637 $305,208
Cost of revenue.......... 216,537 217,360 201,142 155,272 179,978 195,711 215,603 265,953
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit............... 17,318 18,268 18,559 18,829 23,092 26,476 32,034 39,255

Selling, general and
administrative......... 5,561 6,070 6,612 7,213 7,727 7,918 9,252 10,989
Research and development 399 528 576 609 705 804 723 885
-------- -------- -------- -------- -------- -------- -------- --------
Operating income........... 11,358 11,670 11,371 11,007 14,660 17,754 22,059 27,381
Interest expense,net..... 2,663 2,323 1,768 611 658 389 406 159
-------- -------- -------- -------- -------- -------- -------- --------
Income before income
taxes.................... 8,695 9,347 9,603 10,396 14,002 17,365 21,653 27,222
Income tax expense..... 3,480 3,009 3,366 3,869 5,174 6,306 7,081 9,184
-------- -------- -------- -------- -------- -------- -------- --------

Net income ................ $ 5,215 $ 6,338 $ 6,237 $ 6,527 $ 8,828 $ 11,059 $ 14,572 $ 18,038
======== ======== ======== ======== ======== ======== ======== ========
Net income per share...... $ 0.16 $ 0.17 $ 0.17 $ 0.17 $ 0.23 $ 0.29 $ 0.38 $ 0.47
======== ======== ======== ======== ======== ======== ======== ========
Number of shares used in
computing net income per
share.................... 33,554 37,040 37,216 37,526 37,884 38,326 38,392 38,760
======== ======== ======== ======== ======== ======== ======== ========

LIQUIDITY AND CAPITAL RESOURCES

During the fiscal years ended August 31, 1995 and 1996, the Company
primarily funded operations through borrowings under credit facilities with
several banks, a public offering of Common Stock in fiscal 1996, and a private
placement of debt in fiscal 1996. During the most recent fiscal year, the
Company experienced modest growth in net revenue while still generating cash
flows from operations. Cash and cash equivalents decreased from $73.3 million at
the 1996 fiscal year end to $45.5 million at 1997 fiscal year end primarily due
to the acquisition of property, plant and equipment.

At August 31, 1997, the Company's principal sources of liquidity
consisted of cash and available borrowings under the Company's credit
facilities.

Net cash provided by operating activities for the year ended August
31, 1997 was $69.4 million. This consisted primarily of $52.5 million of net
income, $24.9 million of depreciation and amortization and $56.8 million of
increases in accounts payable and accrued expenses, offset by $32.1 million of
increases in accounts receivable and $31.3 million of increases in inventories.

Net cash used in investing activities of $93.4 million for the year
ended August 31, 1997 was primarily a result of the Company's capital
expenditures for equipment and facilities domestically, in Scotland, and in
Malaysia to support increased manufacturing activities.

Net cash used by financing activities of $3.8 million for the year
ended August 31, 1997 resulted primarily from $3.6 million proceeds from
issuance of common stock under employee stock plans offset by payments of term
debt. See notes 4,5 and 7 of Notes to Consolidated Financial Statements.

The Company believes that current cash balances, available borrowings,
and funds provided by operations will be sufficient to satisfy working capital
requirements for at least the next 12 months.

FACTORS AFFECTING FUTURE RESULTS

VARIABILITY OF OPERATING RESULTS

The Company's annual and quarterly operating results are affected by a
number of factors. The primary factors affecting operating results are the level
and timing of customer orders, fluctuations in materials costs and the mix of
materials costs versus labor and manufacturing overhead costs. The level and
timing of orders placed by customer vary due to the customer's attempts to
balance its inventory, changes in a customer's manufacturing strategy and
variation in demand for a customer's products due to, among other things,
product life cycles, competitive conditions and general economic conditions. In
the past, changes in orders from customers have had a significant effect on
results of operations due to corresponding changes in the level of overhead
absorption. Other factors affecting the Company's annual and quarterly operating
results include price competition, the Company's level of experience in
manufacturing a particular product, the degree of automation used in the
assembly process, the efficiencies achieved by the Company in managing
inventories and fixed assets, the timing of expenditures in anticipation of
increased sales, customer product delivery requirements and shortages of
components or labor. Any one of these factors or a combination thereof could
adversely affect the Company's annual and quarterly results of operations in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS

For the fiscal year ended August 31, 1997, the Company's three largest
customers accounted for approximately 56% of net revenue and 18 customers
accounted for substantially all net revenue. 3Com Corporation ("3Com"), Cisco
Systems, Inc. ("Cisco"), and Hewlett Packard Company ("Hewlett Packard"),
accounted for approximately 21%, 20%, 15% of net revenue, respectively. The
Company expects to continue to depend upon a relatively small number of
customers for a significant percentage of its net revenue. Significant
reductions in sales to any of the Company's large customers would have a
material adverse effect on the Company's results of operations. In the past,
some of the Company's customers have terminated their manufacturing arrangement
with the Company, and other customers have significantly reduced or delayed the
volume of manufacturing services ordered from the Company. There can be no
assurance that present or future customers will not terminate their
manufacturing arrangements with the Company or significantly change, reduce or
delay the amount of manufacturing services ordered from the Company. Any such
termination of a manufacturing relationship or change, reduction or delay in
orders could have an adverse effect on the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Customers and Marketing."

LIMITED AVAILABILITY OF COMPONENTS

Substantially all the Company's net revenue is derived from turnkey
manufacturing in which the Company provides both materials procurement and
assembly. In turnkey manufacturing, the Company typically bears the risk of
component price increases, which could adversely affect the Company's gross
profit margins. Almost all the products manufactured by Jabil require one or
more components that are available from only a single source. Some of these
components are allocated 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 there have been industry
wide shortages of electronic components, particularly memory and logic devices.
Such circumstances have produced significant levels of short-term interruption
of the Company's operations in the past. There can be no assurance that such
shortfalls will not have a material adverse effect on the Company's results of
operations in the future. See

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Components."

DEPENDENCE ON CERTAIN INDUSTRIES

The Company is dependent upon the continued growth, viability and
financial stability of its customers, which are in turn substantially dependent
on the growth of the personal computer, computer peripherals, communications and
automotive industries. These industries have been characterized by rapid
technological change, short product life cycles and have pricing and margin
pressures. In addition, many of the Company's customers in these industries are
affected by general economic conditions. The factors affecting the personal
computer, computer peripherals, communications and automotive industries in
general, and/or the Company's customers in particular, could have a material
adverse effect on the Company's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Customers and Marketing."

VARIABILITY OF CUSTOMER REQUIREMENTS AND CUSTOMER FINANCING

The level and timing of sales to a customer of the Company varies due
to the customer's attempts to balance its inventory, design changes, changes in
the customer's manufacturing strategy, acquisitions of or consolidations among
customers and variation in demand for its products due to, among other things,
product life cycles, competitive conditions or general economic conditions. Due
in part to these factors, most of the Company's customers do not commit to firm
production schedules for more than one quarter in advance. The Company's
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, the Company has been required to increase staffing and
other expenses in order to meet the anticipated demand of its customers.
Anticipated orders from many of the Company's customers have, in the past,
failed to materialize or delivery schedules have been deferred as a result of
changes in the customer's business needs, thereby adversely affecting the
Company's results of operations. On other occasions, customers have required
rapid increases in production, which have placed an excessive burden on the
Company's resources. Such customer order fluctuations and deferrals have had a
material adverse effect on the Company's results of operations in the past, and
there can be no assurance that the Company will not experience such effects in
the future. In addition, the Company generates significant accounts receivables
in connection with providing manufacturing services to its customers. If one or
more of the Company's customers were to become insolvent or otherwise were
unable to pay for the manufacturing services provided by the Company, the
Company's operating results and financial condition would be adversely affected.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Backlog."

MANAGEMENT OF GROWTH

The Company has experienced a period of rapid growth which has placed,
and could continue to place, a significant strain on the Company's management,
operational and financial resources. The Company's ability to manage growth
effectively will require it to continue to implement and improve its
operational, financial and management information systems, to develop the
management skills of its managers and supervisors and to train, motivate and
manage its employees. The Company's failure to effectively manage growth could
have a material adverse effect on the Company's results of operations.

COMPETITION

Competition in the contract manufacturing industry is intense. The
Company competes against numerous domestic and foreign manufacturers, including
SCI Systems, Inc., Solectron Corporation, Avex, Inc., and Flextronics
International. In addition, the Company may in the future encounter competition
from other large electronic manufacturers that are selling, or may begin to
sell, contract manufacturing services. Most of the Company's competitors have
international operations and some have substantially greater manufacturing,
financial, research and development and marketing resources than the Company.
The Company also faces competition from the manufacturing operations of its
current and potential customers, which are continually evaluating the merits of
manufacturing products internally versus the advantages of using external
manufacturers. See "Business--Competition."

TECHNOLOGICAL CHANGE AND PROCESS DEVELOPMENT

The market for the Company's manufacturing services is characterized
by rapidly changing technology and continuing process development. The Company
is continually evaluating the advantages and feasibility of new manufacturing
processes, such as Tape Automated Bonding, chip on board and thin substrate
processes. The Company believes that its future success will depend upon its
ability to develop and market manufacturing services which meet changing
customer needs, maintain technological leadership and successfully anticipate or
respond to technological changes in manufacturing processes on a cost-effective
and timely basis. There can be no assurance that the Company's process
development efforts will be successful. See "Business--Technology" and "Research
and Development."

DEPENDENCE ON KEY PERSONNEL

The Company's continued success depends to a large extent upon the
efforts and abilities of key managerial and technical employees. Although to
date the Company has been successful in retaining key managerial and technical
employees, the loss of services of certain of these key employees could have a
material adverse effect on the Company. The Company's business will also depend
upon its ability to continue to attract and retain qualified employees. The
Company does not have employment agreements or noncompetition agreements with
its key employees.

ENVIRONMENTAL COMPLIANCE

The Company is 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 its manufacturing process. Although
the Company is currently in substantial compliance with all material
environmental regulations, any failure by the Company to comply with present and
future regulations could subject it to future liabilities or the suspension of
production. In addition, such regulations could restrict the Company's ability
to expand its facilities or could require the Company to acquire costly
equipment or to incur other significant expense to comply with environmental
regulations. See "Business--Environmental."

CONTROL BY EXISTING STOCKHOLDERS

Officers, directors, principal stockholders and their affiliates own
approximately 47% of the Company's common stock outstanding. Consequently, the
officers, directors, principal stockholders and their affiliates have
significant control over the election of Jabil's directors, determine the
outcome of most corporate actions requiring stockholder approval, and otherwise
control the business of the Company.

POSSIBLE VOLATILITY OF STOCK PRICE

The trading price of the Company's Common Stock could be subject to
significant fluctuations in response to variations in quarterly operating
results, general conditions in the contract manufacturing, personal computer,
computer peripheral, communications or automotive industries and other factors.
In addition, the stock market is subject to price and volume fluctuations that
affect the market price for many high technology companies in particular, and
that often are unrelated to operating performance. See "Market for Registrant's
Common Equity and Related Stockholder Matters."

INTERNATIONAL EXPANSION

A key element in the Company's strategy is to provide localized
production of the global products produced for OEMs in the major consuming
regions of the European Community and Asia. In order to offer this localized
production, in fiscal 1993 the Company established a manufacturing facility in
Livingston, Scotland, which began volume production in May 1993. The Scotland
facility targets existing European customers, those North American customers
having significant sales in the European Community and potential European
customers who meet the profile discussed above. Additionally, the Company began
volume production in October 1995, in Penang, Malaysia. This location enables
the Company to provide manufacturing services to the Asian market from an Asian
location 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. In order to increase
capacity both in Europe and in the Asian market, the Company has recently
expanded both locations. See note 3 of Notes to Consolidated Financial
Statements.

As an addition to the North American market, the Company commenced
construction of a manufacturing facility in Guadalajara, Mexico in fiscal 1997.
This operation will allow for continued expansion in North America, while
providing a competitive cost structure and close proximity to the United States
market. The Company completed construction of a facility in this location in
early fiscal 1998.

COMPUTER INTEGRATION

The Company is in the process of installing a new enterprise resource
planning system ("ERP System") that will replace the current Manufacturing
Resource Planning ("MRP") system and financial information systems. This system
is believed to be Year 2000 Compliant. The Company is also identifying and
implementing changes to its other information systems in order to make them Year
2000 Compliant. While the Company currently expects that the Year 2000 will not
pose significant operational problems, delays in the implementation of new
information systems, or a failure to fully identify all Year 2000 dependencies
in the Company's systems could result in material adverse consequences,
including disruption of operations, loss of information, and unanticipated
increases in costs.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Certain information required by this item is included on page 15 in
Item 6 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 on pages "31" to "50" in Item 14 of Part IV of this Report and
is incorporated into this item by reference.

During 1997, 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 128 - Earnings Per Share. Statement 128 supersedes APB Opinion No. 15,
Earnings Per Share and specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS") for entities with publicly held
common stock. Statement 128 is effective for financial statements for both
interim and annual periods ending after December 15, 1997. Earlier application
is not permitted. After adoption, all prior period EPS data presented shall be
restated to conform to Statement 128. As the Statement addresses the computation
of EPS only, there will be no impact on earnings from its adoption.

Statement 130 - Reporting Comprehensive Income. Statement 130 establishes
standards for reporting comprehensive income. The Statement defines
comprehensive income as the change in equity of an enterprise except those
resulting from shareholder transactions. All components of comprehensive income
are required to be reported in a new financial statement that is displayed with
equal prominence as existing financial statements. The Company will be required
to adopt this statement September 1, 1998. As the Statement addresses reporting
and presentation issues only, there will be no impact on earnings from its
adoption.

Statement 131 - Disclosures about Segments of an Enterprise and Related
Information. Statement 131 establishes standards for related disclosures about
the products and services, geographic areas, and major customers of an
enterprise The Company will be required to adopt this Statement for financial
statements for the fiscal year ending August 31, 1998. As this Statement
addresses reporting and disclosure issues only, there will be no impact on
earnings from its adoption.

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

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors of the Company is incorporated by
reference to the information set forth under the caption "Proposal No. 1:
Election of Directors" in the Company's Proxy Statement for the 1997 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission
(the "Commission") within 120 days after the end of the Company's fiscal year
ended August 31, 1997.

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 [Information Concerning Solicitation and Voting]
Section 16(a) Beneficial Ownership Reporting Compliance in the Proxy Statement.

EXECUTIVE OFFICERS OF THE COMPANY

At August 31, 1997 the executive officers of the Company were as
follows:

NAME AGE POSITION
---- --- --------

William D. Morean..................... 41 Chief Executive Officer and Chairman of the Board
Thomas A. Sansone..................... 48 President and Director
Ronald J. Rapp........................ 44 Executive Vice President, Operations and Director
Robert L. Paver....................... 41 Corporate Secretary and General Counsel
Wesley B. Edwards..................... 44 Senior Vice President, Operations
Timothy L. Main....................... 39 Senior Vice President, Business Development
Frank Krajcirovic..................... 49 Vice President, Quality Control
Paul H. Bittner....................... 52 Vice President, Advanced Engineering
David S. Ebeling...................... 55 Vice President, Procurement
Randon A. Haight...................... 47 Vice President, Business Development
Chris A. Lewis........................ 37 Chief Financial Officer
Forbes I. J. Alexander................ 36 Treasurer
Jeffrey J. Lumetta.................... 34 Vice President, Design Services

Officers are appointed by the Board of Directors and serve at the
discretion of the Board. Each executive 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 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 has served as President of the Company since
September 1988 and as a director since 1983. Sansone joined the Company in 1983
as Vice President. 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.

RONALD J. RAPP has served as Executive Vice President, Operations since
August 1996 and as a director since September 1988. Rapp joined the Company in
1983 as Controller, was promoted in 1984 to Treasurer and to CFO in 1988. 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.

ROBERT L. PAVER joined Jabil 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, Florida. Paver holds a B.A. from the University of
Florida and a J.D. from Stetson University College of Law.

WESLEY B. EDWARDS 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 a M.B.A. from the University of Florida.

TIMOTHY L. MAIN was named Senior Vice President, Business Development
in August 1996. 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 holds a B.S. from
Michigan State University and an MIM from the American Graduate School of
International Management (Thunderbird).

FRANK KRAJCIROVIC has been Vice President, Quality Control since June
1988. Krajcirovic joined the Company in 1982 as a Quality Engineer, was promoted
to Manager of Quality in 1983 and was promoted 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.

PAUL H. BITTNER 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.

DAVID S. EBELING joined Jabil as Vice President, Procurement in
November 1992. Prior to joining Jabil, he held the position of Director of
Procurement, Quality & Traffic at NEC Technology, a manufacturer of personal
computers, printers and monitors. Ebeling also held the position of Director of
Materials at Eastman Kodak and held similar positions at Unisys, Wang Labs and
Motorola. He holds a B.S. in Industrial Engineering from Northeastern University
in Boston.

RANDON A. HAIGHT has served as Vice President, Business Development
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.

CHRIS A. LEWIS 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 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.

FORBES I. J. ALEXANDER 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 positions with Hewlett Packard and
Apollo Computer. Alexander is a Chartered Management Accountant. He holds a B.A.
in Accounting from Dundee College, Scotland.

JEFFREY J. LUMETTA 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.

Subsequent to the end of fiscal year 1997, the following officer
appointments have been made:

SCOTT D. BROWN was named Vice President, Corporate Development in
September 1997. He joined Jabil 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 in Bloomfield Hills, Michigan. Brown
holds a B.S. in Economics from the University of Michigan.

MARK MONDELLO was named Vice President, Business Development in
September 1997. He joined Jabil in 1992 as Production Line Supervisor and was
promoted to Project Manager in 1994. Prior to Jabil, Mondello served as project
manager on commercial and defense-related aerospace programs for Moog, Inc.
Mondello attended the University of Florida and holds a B.S. in Mechanical
Engineering 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 the Company's Proxy Statement for the 1997 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
the Company's fiscal year ended August 31, 1997.

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 the Company's Proxy Statement for the 1997 Annual Meeting of
Stockholders to be filed with the Commission within 120 days after the end of
the Company's fiscal year ended August 31, 1997.

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 the Company's Proxy Statement for the 1997 Annual
Meeting of Stockholders to be filed with the Commission within 120 days after
the end of the Company's fiscal year ended August 31, 1997.

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 30 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 30 of this report. The independent auditors' report
as presented on page 31 of this report also applies to the financial
statement schedule. 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. The Company filed no Current Reports on Form 8-K
during the last quarter of the fiscal year ended August 31, 1997.

(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.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

PAGE
----

Independent Auditors' Report................................................................ 31
Consolidated Financial Statements:
Consolidated Balance Sheets--August 31, 1996 and 1997.................................. 32
Consolidated Statements of Operations--Years ended August 31, 1995,
1996, and 1997........................................................................ 33
Consolidated Statements of Stockholders' Equity--Years ended
August 31, 1995, 1996, and 1997....................................................... 34
Consolidated Statements of Cash Flows--Years ended August 31, 1995,
1996, and 1997........................................................................ 35
Notes to Consolidated Financial Statements............................................. 36
Financial Statement Schedule:
Schedule VIII -- Valuation and Qualifying Accounts..................................... S-5

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, 1996 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended August 31, 1997, 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.

St. Petersburg, Florida
October 3, 1997

/s/ KPMG Peat Marwick LLP
-------------------------

JABIL CIRCUIT, INC. AND SUBSIDIARIES

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

AUGUST 31,
----------
1996 1997
--------- ---------

ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 73,319 $ 45,457
Accounts receivable, less allowance for doubtful accounts of $1,170
in 1996 and $2,690 in 1997 (note 8)................................... 84,839 116,987
Inventories (note 2)..................................................... 64,869 96,187
Prepaid expenses and other current assets................................ 340 776
Deferred income taxes (note 6)........................................... 3,971 6,591
--------- ---------
Total current assets.................................................. 227,338 265,998
Property, plant and equipment, net (note 3)................................ 70,704 139,520
Other assets............................................................... 1,898 385
--------- ---------
$ 299,940 $ 405,903
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current installments of long-term debt (note 5).......................... $ 1,979 $ 2,475
Current installments of capital lease obligations ....................... 472 --
Accounts payable......................................................... 78,600 125,741
Accrued expenses......................................................... 24,550 34,248
Income taxes payable .................................................... 5,979 6,186
--------- ---------
Total current liabilities............................................. 111,580 168,650
Long-term debt, less current installments (note 5)......................... 57,257 50,000
Capital lease obligations, less current installments....................... 1,114 --
Deferred income taxes (note 6)............................................. 2,883 3,663
Deferred grant revenue..................................................... 2,872 2,105
--------- ---------
Total liabilities..................................................... 175,706 224,418
--------- ---------
Stockholders' equity (notes 1 and 7):
Preferred stock, $.001 par value, authorized 1,000,000 shares; no shares
issued and outstanding................................................ -- --
Common stock, $.001 par value, authorized 60,000,000 shares;
issued and outstanding, 35,596,446 shares in 1996, and...............
37,000,092 in 1997 ................................................... 36 37
Additional paid-in capital............................................... 56,906 61,632
Retained earnings........................................................ 67,319 119,816
--------- ---------
124,261 181,485
Less unearned compensation from grant of stock option................. 27 --
--------- ---------
Net stockholders' equity.............................................. 124,234 181,485

Commitments and contingencies (note 10).................................... --------- ---------
$ 299,940 $ 405,903
========= =========

See accompanying notes to consolidated financial statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

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

YEARS ENDED AUGUST 31,
----------------------
1995 1996 1997
----- ----- ----

Net revenue (note 8).......................................... $ 559,474 $ 863,285 $ 978,102
Cost of revenue............................................... 523,338 790,311 857,245
--------- ---------- ----------
Gross profit.................................................. 36,136 72,974 120,857
Operating expenses:
Selling, general and administrative........................... 17,898 25,456 35,886
Research and development...................................... 1,819 2,112 3,117
--------- ---------- ----------
Operating income.............................................. 16,419 45,406 81,854
Interest expense, net......................................... 6,347 7,333 1,612
--------- ---------- ----------
Income before income taxes.................................... 10,072 38,073 80,242
Income taxes (note 6)......................................... 2,792 13,724 27,745
--------- ---------- ----------
Net income.................................................... $ 7,280 $ 24,349 $ 52,497
========= ========== ==========
Net income per share.......................................... $ 0.23 $ 0.67 $ 1.37
========= ========== ==========
Weighted average number of shares of common stock and
common stock equivalents.................................... 31,100 36,334 38,340
========= ========== ==========

See accompanying notes to consolidated financial statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

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

UNEARNED
COMMON STOCK ADDITIONAL COMPENSATION NET
SHARES PAID-IN RETAINED FROM GRANT OF STOCKHOLDERS'
OUTSTANDING PAR VALUE CAPITAL EARNINGS STOCK OPTION EQUITY
----------- --------- ------- -------- ------------ ------

Balance at August 31, 1994 ..... 28,717,044 $28 $15,703 $ 35,690 $ (190) $ 51,231
Exercise of stock options ..... 592,252 2 324 -- -- 326
Amortization of unearned
compensation ................. -- -- -- -- 82 82
Shares issued under Employee
Stock Purchase Plan .......... 240,518 -- 409 -- -- 409
Tax benefit of options exercised -- -- 267 -- -- 267
Net income ..................... -- -- -- 7,280 -- 7,280
---------- --- ------- -------- -------- ---------
Balance at August 31, 1995 ..... 29,549,814 $30 16,703 42,970 $ (108) $ 59,595
Exercise of stock options ...... 129,800 -- 268 -- -- 268
Public offering ................ 5,750,000 6 39,146 -- -- 39,152
Amortization of unearned
compensation ................. -- -- -- -- 81 81
Shares issued under Employee
Stock Purchase Plan .......... 166,832 -- 678 -- -- 678
Tax benefit of options exercised -- -- 111 -- -- 111
Net income ..................... -- -- -- 24,349 -- 24,349
---------- --- ------- -------- -------- ---------
Balance at August 31, 1996 ..... 35,596,446 $36 $56,906 $67,319 $ (27) $ 124,234
Exercise of stock options ...... 1,265,010 1 2,386 -- -- 2,387
Amortization of unearned
compensation ................. -- -- -- -- 27 27
Shares issued under Employee
Stock Purchase Plan .......... 138,636 -- 1,237 -- -- 1,237
Tax benefit of options exercised 1,103 1,103
Net income ..................... -- -- -- 52,497 -- 52,497
---------- --- ------- -------- -------- ---------
Balance at August 31, 1997 ..... 37,000,092 $37 $61,632 $119,816 -- $ 181,485
========== === ======= ======== ======== =========

See accompanying notes to consolidated financial statements.

36
JABIL CIRCUIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEARS ENDED AUGUST 31,
----------------------------------------------
1995 1996 1997
--------- --------- -----------

Cash flows from operating activities:
Net income ..................................................... $ 7,280 $ 24,349 $ 52,497
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization ................................ 11,991 18,210 24,924
Recognition of grant revenue ................................. (1,103) (2,073) (1,705)
Deferred income taxes ........................................ 2,275 (2,876) (1,840)
Gain on sale of property ..................................... (56) 168 (275)
Change in operating assets and liabilities:
Accounts receivable ........................................ (44,659) 28,828 (32,148)
Inventories ................................................ (36,747) 26,789 (31,318)
Prepaid expenses and other current assets .................. (488) 361 (436)
Refundable income taxes .................................... (1,644) 2,154 --
Other assets ............................................... (586) (1,241) 1,513
Accounts payable and accrued expenses ...................... 50,689 (584) 56,838
Income taxes payable ....................................... -- 5,979 1,310
-------- --------- --------
Net cash provided by (used in) operating activities ....... (13,048) 100,064 69,360
-------- --------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment ............... (25,821) (27,252) (93,805)
Proceeds from sale of property and equipment ............... 397 358 368
-------- --------- --------
Net cash used in investing activities .................... (25,424) (26,894) (93,437)
-------- --------- --------
Cash flows from financing activities:
Increase (decrease) in note payable to bank ................ 29,400 (73,000) --
Proceeds from long-term debt ............................... 15,142 57,994 --
Payments of long-term debt ................................. (4,792) (32,575) (6,761)
Payments of capital lease obligations ...................... (1,000) (659) (1,586)
Net proceeds from issuance of common stock ................. 735 40,098 3,624
Proceeds from grants ....................................... 2,675 2,805 938
-------- --------- --------
Net cash provided by (used in) financing activities ...... 42,160 (5,337) (3,785)
-------- --------- --------
Net increase (decrease) in cash and cash equivalents ......... 3,688 67,833 (27,862)
Cash and cash equivalents at beginning of period ............. 1,798 5,486 73,319
-------- --------- --------
Cash and cash equivalents at end of period ................... $ 5,486 $ 73,319 $ 45,457
======== ========= ========
Supplemental disclosure information:
Interest paid .............................................. $ 6,163 $ 7,639 $ 4,707
======== ========= ========
Income taxes paid, net of refunds received ................. $ 2,428 $ 8,578 $ 29,378
======== ========= ========
Long-term obligations incurred to acquire property, plant
and equipment ............................................ $ 3,535 $ -- $ --
======== ========= ========
Tax benefit of options exercised ........................... $ 267 $ 111 $ 1,103
======== ========= ========

See accompanying notes to consolidated financial statements.

35
37

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, computer
peripherals and automotive industries. The Company's manufacturing services
combine a high volume, highly automated manufacturing approach with advanced
design and manufacturing technologies.

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 wholly owned subsidiaries Jabil Circuit Limited,
a corporation organized on December 24, 1992 under the laws of the United
Kingdom, Jabil Circuit SDN BHD, a corporation organized on March 18, 1995 under
the laws of Malaysia, and Jabil de Mexico, S.A. de C.V., a corporation organized
on January 8, 1997 under the laws of Mexico. All significant intercompany
accounts and transactions have been eliminated in preparing the consolidated
financial statements.

B. REVENUE RECOGNITION

The Company recognizes revenue typically at the time of product shipment.
Such revenue is recorded net of estimated product return and warranty costs. At
August 31, 1996 and 1997, such estimated amounts for returns and warranties are
not considered material.

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 amount 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.

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.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. CASH EQUIVALENTS

The Company considers all highly liquid instruments with original
maturities of 90 days or less to be cash equivalents for financial statement
purposes. At August 31, 1996 and 1997, cash equivalents totaled approximately
$54,679,000 and $281,000, respectively.

G. GRANT REVENUE

During the years ended August 31, 1993 and 1994, the Company was awarded
certain 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. During the year ended August 31, 1995, the Company
attained all milestones related to certain of the grants. Based on this
achievement, the Company changed the amortization of these grants from five
years to two years. The effect of this change in amortization was an increase of
approximately $342,000 to operating income for the year ended August 31, 1995.

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 has a contributory profit-sharing plan with a 401(k) feature.
Company contributions are at the discretion of the Company's Board of Directors.
To participate, an employee must have completed a 12-month period of service in
which the employee worked at least 1,000 hours. Vesting is immediate. The
Company contributed approximately $1,091,000, $1,650,000, and $4,483,000 for the
years ended August 31, 1995, 1996, and 1997, respectively.

J. FOREIGN CURRENCY TRANSACTIONS

Gains or losses on foreign currency transactions are included in the
determination of net income.

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. Foreign currency
exchange contracts outstanding at August 31, 1997 are described further in note
9.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

K. NET INCOME PER SHARE

Net income per share is computed using the weighted average number of
common shares and dilutive common equivalent shares outstanding during the
related period. Common equivalent shares consist of stock options, using the
treasury stock method.

L. 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 and pro forma net income
per share disclosures for employee stock options made in fiscal 1996 and future
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.

M. STOCK SPLIT

On June 17, 1997, the Company's Board of Directors approved a two-for-one
stock split of the Company's common stock, effected in the form of a 100% stock
dividend to holders of record on July 8, 1997. Financial information in the
accompanying consolidated financial statements and notes has been adjusted to
reflect the impact of the common stock split for all periods presented.

2. INVENTORIES

Inventories consist of the following (in thousands):

AUGUST 31,
----------------------
1996 1997
------- -------

Raw materials ................ $54,197 $75,433
Work in process .............. 7,685 15,160
Finished goods ............... 2,987 5,594
------- -------
$64,869 $96,187
======= =======

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY, PLANT AND EQUIPMENT

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

AUGUST 31,
------------------------
1996 1997
----------- -----------

Land and improvements......................... $ 6,006 $ 9,232
Buildings .................................... 12,262 23,336
Leasehold improvements........................ 3,346 3,682
Machinery and equipment....................... 89,695 123,294
Furniture, fixtures and office equipment...... 13,979 22,287
Transportation equipment...................... 1,817 3,937
Construction in progress...................... 826 30,743
----------- -----------
127,931 216,511
Less accumulated depreciation and amortization 57,227 76,991
----------- -----------
$70,704 $139,520
=========== ===========

During the year ended August 31, 1997, the Company completed construction
of a new manufacturing facility in Florida, began construction on new
manufacturing facilities for its Scotland and Malaysia operations to replace its
existing leased facilities in those locations, and began construction on a new
greenfield facility in Guadalajara, Mexico. During the year ended August 31,
1997, the Company capitalized approximately $720,000 in interest related to the
constructed facilities.

Maintenance and repairs expense was approximately $2,652,000, $4,320,000,
and $5,229,000 for the years ended August 31, 1995, 1996, and 1997,
respectively.

4. NOTE PAYABLE TO BANK

In May 1996, the Company renegotiated its secured line of credit facility
and established a $60,000,000 unsecured revolving credit facility with a
syndicate of banks ("Revolver"). At August 31, 1996 and 1997, there were no
borrowings under the Revolver and the entire $60,000,000 was available. Under
the terms of the Revolver, borrowings could be made under either floating rate
loans or Eurodollar rate loans. The Company paid interest on outstanding
floating rate loans at the banks' prime rate. The Company paid interest on
outstanding Eurodollar loans at the London Interbank Offering Rate (LIBOR) in
effect at the loan inception date plus a factor of .75% to 1.25% depending on
the Company's funded debt to total capitalization ratios. The Company paid a
commitment fee on the unused portion of the Revolver at .175% to .25% depending
on the Company's funded debt to total capitalization ratios.

Subsequent to August 31, 1997, the Company renegotiated the Revolver
establishing a $100,000,000 unsecured revolving credit facility. Under the terms
of the renegotiated Revolver, the Company pays interest at the LIBOR in effect
plus a factor of .45% to .75% depending on the Company's funded debt to total
capitalization ratios. The Company pays a commitment fee of .15% to .25%
depending on the Company's funded debt to total capitalization ratios. The
renegotiated Revolver expires on August 6, 2000.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. LONG-TERM DEBT

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

AUGUST 31,
----------------------
1996 1997
---------- ----------

Term loans (a)............................... $53,916 $50,000
Industrial revenue bonds (b)................. 2,676 ---
Mortgage (c)................................. 2,644 2,475
---------- ----------
Total long-term debt......................... 59,236 52,475
Less current installments of long-term debt.. 1,979 2,475
---------- ----------
Long-term debt, less current installments.... $57,257 $50,000
========== ==========

(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 beginning May 30, 1999. The Company's Scottish subsidiary
entered into a $5.7 million term loan facility in March 1995. Interest was based
on LIBOR plus 3.25%. This borrowing was repaid during the year ended August 31,
1997.

(b) The Company borrowed an aggregate of $5,880,000 pursuant to two
industrial revenue bonds related to the development of the Florida facility, one
dated June 1, 1983 in the principal amount of $1,880,000 and a second dated
August 29, 1988 in the principal amount of $4,000,000. Interest accrued at a
rate of 91.7% of prime and prime plus 1%, respectively. These bonds were repaid
during the year ended August 31, 1997.

(c) The Company obtained a $3,375,000 mortgage in December 1992 in
connection with the construction of its Auburn Hills, Michigan facility. The
Company pays interest on outstanding borrowings at 7.65% per annum. The mortgage
is to be repaid in 19 quarterly installments of $56,000 plus interest through
December 31, 1997, with a final balloon payment of $2,306,000 due on March 31,
1998.

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, 1997.

Aggregate annual maturities for long-term debt for the succeeding five
fiscal years are as follows (in thousands):

AMOUNT
--------

1998................................................. $ 2,475
1999................................................. 8,333
2000................................................. 8,333
2001................................................. 8,333
2002................................................. 8,333
Thereafter........................................... 16,668
-------
$52,475
=======

42
JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES

Income tax expense amounted to $2,792,000, $13,724,000, and $27,745,000 for
the years ended August 31, 1995, 1996 and 1997, respectively (an effective rate
of 28%, 36%, and 35%, 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,
--------------------------------------
1995 1996 1997
-------- -------- --------

Computed "expected" tax expense ............................ $ 3,525 $ 13,326 $ 28,085
State taxes, net of Federal benefit ........................ 63 698 1,352
Losses incurred by foreign subsidiaries .................... 75 -- 268
Utilization of net operating loss from
Scottish subsidiary ........................................ (1,063) (389) --
Nondeductible interest expense ............................. 205 (34) --
Income of Malaysian subsidiary ............................. -- -- (2,706)
Other, net ................................................. (13) 123 746
-------- -------- --------
$ 2,792 $ 13,724 $ 27,745
======== ======== ========

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 year ended August 31, 1997,
resulting in a tax holiday of approximately $2,320,000 ($0.06 per share). The
Company intends to indefinitely re-invest income from all of its foreign
subsidiaries.

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

CURRENT DEFERRED TOTAL
-------- --------- --------

1995:
Federal ..................................................... $ 564 $ 1,653 $ 2,217
State ....................................................... (47) 142 95
Foreign ..................................................... -- 480 480
-------- --------- --------
$ 517 $ 2,275 $ 2,792
======== ========= ========
1996:
Federal ..................................................... $ 14,496 $ (2,360) $ 12,136
State ....................................................... 1,280 (204) 1,076
Foreign ..................................................... 824 (312) 512
-------- --------- --------
$ 16,600 $ (2,876) $ 13,724
======== ========= ========
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
======== ========= ========

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES (CONTINUED)

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,
------------------
1996 1997
------ ------

Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful
accounts ........................................................... $ 406 $1,015
Grant receivable ..................................................... 494 707
Inventories, principally due to reserves and additional costs
inventoried for tax purposes pursuant to the Tax Reform Act of
1986 ............................................................... 701 2,211
Compensated absences, principally due to accrual for financial
reporting purposes ................................................. 661 878
Accrued expenses, principally due to deferrals for financial
reporting purposes ................................................. 1,596 1,457
Other ................................................................ 130 490
------ ------
Total gross deferred tax assets .................................... 3,988 6,758
Less valuation allowance ........................................... 17 167
------ ------
Net deferred tax assets ............................................ $3,971 $6,591
====== ======
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in
depreciation and amortization ...................................... $2,883 $3,663
====== ======

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.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. STOCKHOLDERS' EQUITY

PUBLIC OFFERING

The Company completed a public offering of 8,050,000 shares on November 3,
1995 in which the Company sold 5,750,000 shares (including an over-allotment of
750,000 shares) and certain selling stockholders sold 2,300,000 shares. Net
proceeds to the Company (net of underwriters' discounts and commissions and
other offering costs of approximately $350,000) were approximately $39,152,000.

STOCK OPTION PLANS

As of August 31, 1997, options to purchase a total of 1,456,880 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 2,610,000 shares of common stock have been reserved
for issuance under the 1992 Plan. As of August 31, 1997, options to purchase
877,470 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.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTION PLANS (CONTINUED)

The following table summarizes option activity from September 1, 1994
through August 31, 1997:

OPTIONS OUTSTANDING
-------------------
SHARES WEIGHTED
AVAILABLE AVERAGE AGGREGATE
FOR GRANT SHARES OPTION PRICE VALUE
----------- ---------- ------------ -----------

Balance at August 31, 1994 191,960 3,439,200 $ 1.17 $ 4,027,000
Options authorized 1,000,000 -- -- --
Options granted (596,000) 596,000 2.57 1,531,000
Options cancelled 50,000 (184,068) 1.53 (281,000)
Options exercised -- (592,252) 0.55 (326,000)
----------- ---------- ------ -----------
Balance at August 31, 1995 645,960 3,258,880 $ 1.52 $ 4,951,000

Options granted (364,000) 364,000 4.21 1,533,000
Options cancelled 37,080 (37,080) 2.81 (104,000)
Options exercised -- (129,800) 2.07 (268,000)
----------- ---------- ------ -----------
Balance at August 31, 1996 319,040 3,456,000 $ 1.77 $ 6,112,000

Options granted (148,000) 148,000 25.23 3,734,000
Options cancelled 4,640 (4,640) 2.59 (12,000)
Options exercised -- (1,265,010) 1.87 (2,369,000)
----------- ---------- ------ -----------
Balance at August 31, 1997 $ 175,680 2,334,350 $ 3.20 $ 7,465,000
=========== ========== ====== ===========

At August 31, 1997, options for 1,753,070 shares were excercisable.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTION PLANS (CONTINUED)

The range of exercise prices, shares, weighted average contractual life and
exercise price for the options outstanding as of August 31, 1997 are presented
below:

Range of Exercise Weighted-Average Weighted-Average
Prices Shares Contractual Life Exercise Price
---------------- --------- ---------------- ----------------

$ 0.44 - 0.88 1,456,880 4 $ 0.86
3.50 - 7.44 769,470 8 3.51
22.00 - 50.56 108,000 10 32.09
--------------- --------- -- ------
$ 0.44 - 50.56 2,334,350 10 $ 3.20
=============== ========= == ======

The range of exercise prices, shares and weighted average exercise price of
the options exercisable at August 31, 1997 are presented below:

Range of Exercise Shares Weighted-Average
Prices Exercisable Exercise Price
----------------- ----------- ----------------

$ 0.44 - 0.88 1,456,880 $0.86
3.50 - 7.44 296,190 3.32
22.00 - 50.56 -- --
-------------- --------- -----
$ 0.44 - 50.56 1,753,070 $1.27
============== ========= =====

The per-share weighted-average fair value of stock options granted during
1996 and 1997 was $2.78 and $16.69, respectively, on the date of the grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions: 1996 - Expected dividend yield of 0%, risk-free interest rate of
6.5%, expected volatility of 72%, and an expected life of 5 years; 1997 -
Expected dividend yield of 0%, risk-free interest rate of 6.2%, expected
volatility of 76% and an expected life of 5 years.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. STOCKHOLDERS' EQUITY (CONTINUED)

STOCK OPTION PLANS (CONTINUED)

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. Had the Company determined
compensation cost based on the fair market value at the grant date for its stock
options under Statement 123, the Company's net income would have been as
follows:

1996 1997
Net Net
Income EPS Income EPS
------ -------- ------ ---

As Reported $ 24,349 $ 0.67 $ 52,497 $ 1.37

Statement 123 Compensation
(Net of tax) (84) (0.00) (262) (0.01)

Pro-forma disclosure $ 24,265 $ 0.67 $ 52,235 $ 1.36

The disclosure presented above represents the estimated fair value of stock
options granted during the fiscal years ended August 31, 1996 and 1997. Such
disclosure is not necessarily indicative of the fair value of stock options that
could be granted by the Company in future fiscal years.

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 1,205,000 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, 1997, a total of 775,590 shares had been
issued under the Purchase Plan.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CONCENTRATION OF RISK AND GEOGRAPHIC DATA

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,
--------------------- ------------------- -----------------
1995 1996 1997 1996 1997
---- ----- ---- ------------------- -----------------

Hewlett Packard Company(1).. 28% 20% 15% * 13%
NEC Technologies, Inc....... 14% 15% * 24% *
Quantum Corporation......... 17% 23% 10% 21% 13%
3Com........................ * 11% 21% * 14%
Cisco Systems Inc........... * 10% 20% * *

* Amount was less than 10% of total

(1) Includes activity related to a subcontractor of Hewlett Packard Company.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CONCENTRATION OF RISK AND GEOGRAPHIC DATA (CONTINUED)

GEOGRAPHIC DATA

The Company has defined the three geographic regions for the segment in
which it operates: North America (including Mexico), Europe and Asia. The
following data does not consider fully the extent of interrelated activities
between the regions including product development, manufacturing, engineering,
marketing and corporate management. Accordingly, the following amounts are not
necessarily indicative of the operating contribution of the geographic regions.
The following table sets forth information concerning these geographic segments
(in thousands):

YEAR ENDED
AUGUST 31
--------------------------------------
Sales to Unaffiliated Customers: 1995 1996 1997
--------- -------- --------

North America ............................. $ 459,179 $595,941 $682,333
Europe .................................... 100,295 161,195 207,850
Asia ...................................... -- 106,149 87,919
Export Sales ................................ 27,973 88,150 2,494
Operating Income:
North America ............................. 12,085 40,811 62,770
Europe .................................... 4,547 3,244 11,381
Asia ...................................... (213) 1,351 7,703
Identifiable Assets:
North America, including corporate ........ 219,504 239,582 285,440
Europe .................................... 61,299 48,022 74,698
Asia ...................................... 158 12,336 45,765

Foreign source revenue for the years ended August 31, 1995, 1996, and 1997
was approximately 21%, 31%, and 30%, respectively.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. 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 approximately $26,000,000 of net foreign currency exchange
contracts outstanding at August 31, 1997, relating to the United Kingdom and
Malaysia, with no balances outstanding at August 31, 1996. Unrealized gains and
losses on these contracts were not material.

10. COMMITMENTS AND CONTINGENCIES

LEASE AGREEMENTS

The future minimum lease payments under noncancelable operating leases
outstanding August 31, 1997 are as follows (in thousands):

FISCAL YEAR ENDING AUGUST 31,
-----------------------------
1998..................................... $1,625
1999..................................... 799
2000..................................... 401
2001..................................... 401
2002..................................... 401
Thereafter............................... 617
------
Total minimum lease payments............. $4,244
======

Total rent expense for operating leases was approximately $1,129,000,
$3,354,000, and $3,868,000 for the years ended August 31, 1995, 1996, and 1997,
respectively.

LITIGATION

On May 31, 1997, the Company reached an agreement with Epson of America,
Inc. ("Epson") to settle all outstanding claims relating to previous
manufacturing agreements between the parties. Such claims arose during fiscal
years 1994 and 1995. The actual terms and conditions of the agreement are
subject to a confidentiality agreement between the Company and Epson; however,
the settlement had no material impact on the Company's results of operations for
the year ended August 31, 1997.

The Company is party to certain other 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
statements.

JABIL CIRCUIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. NEW ACCOUNTING PRONOUNCEMENTS

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 26th day of
November 1997.

JABIL CIRCUIT, INC.

By: /s/ THOMAS A. SANSONE
------------------------------
Date: November 26, 1997

POWER OF ATTORNEY

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas A. Sansone and Ronald J. Rapp 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:

SIGNATURE TITLE DATE
- ---------------------------- -------------------------------------- -----------------

By: /s/ WILLIAM D. MOREAN Chief Executive Officer November 26, 1997
------------------------ (Principal Executive Officer)
William D. Morean and Chairman of the Board

By: /s/ THOMAS A. SANSONE President and Director November 26, 1997
------------------------
Thomas A. Sansone

By: /s/ CHRIS A. LEWIS Chief Financial Officer November 26, 1997
--------------------- (Principal Financial and Accounting
Chris A. Lewis Officer)

By: /s/ RONALD J. RAPP Executive Vice President - Operations
---------------------- and Director November 26, 1997
Ronald J. Rapp

By: /s/ LAWRENCE J. MURPHY Director November 26, 1997
--------------------------
Lawrence J. Murphy

By: /s/ MEL S. LAVITT Director November 26, 1997
--------------------
Mel S. Lavitt

By: /s/ STEVEN A. RAYMUND Director November 26, 1997
------------------------
Steven A. Raymund

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
- ----------- -----------

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)(12) -- 1983 Stock Option Plan and forms of agreement used thereunder.
10.2(1)(12) -- 1989 Non-Qualified Stock Option Plan and forms of agreement used thereunder.
10.3(1)(12) -- 1992 Stock Option Plan and forms of agreement used thereunder.
10.4(1)(12) -- 1992 Employee Stock Purchase Plan and forms of agreement used thereunder.
10.5(1)(12) -- Restated cash or deferred profit sharing plan under section 401(k).
10.6(1)(12) -- Form of Indemnification Agreement between Registrant and its officers and directors.
10.8 (1) -- Term Loan between Registrant and Chrysler Capital Corporation dated November 15, 1990.
10.10(1) -- Term Loan between Registrant and NBD Bank, N.A. dated June 30, 1992.
10.11(1) -- Term Loan between Registrant and NBD Bank, N.A. dated as of December 11, 1992.
10.14(1) -- Master Equipment Lease Agreement between Registrant and ELLCO Leasing Corporation and
the related schedules thereto, dated October 1, 1990.
10.16(1) -- Lease for 2220 Lundy Avenue, San Jose, California, between Registrant and
Lundy Associates dated April 1, 1992.
10.18(1) -- $1,880,000 Pinellas County Industry Council Industrial Development Revenue
Bonds, Series 1983.
10.19(1) -- $4,000,000 Pinellas County Industry Council Industrial Development Revenue
Bonds, Series 1988.
10.20(1) -- Real Estate Purchase Agreement between Registrant and the Morean
Investment Partnership dated August 24, 1988, for the purchase of the
manufacturing facility located in St. Petersburg Florida, and the related
documents thereto.
10.21(1) -- Agreement of Sale between Registrant and Metro Tech Associates Limited
Partnership dated December 10, 1991, for the facility located in Auburn
Hills, Michigan.
10.23(1) -- Junior Mortgage Loan dated December 29, 1992 between Registrant and
Barnett Bank of Pinellas County.
10.24(1) -- Construction Loan Agreement dated as of December 1, 1992 between
Registrant and NBD Bank, N.A.
10.25(1) -- Letter Agreement dated November 27, 1992 between Registrant and Scottish
Office Industry Department relating to L.5,000,000 grant to establish
Scottish facility.

II-1

EXHIBIT INDEX (CONTINUED)

EXHIBIT NO. DESCRIPTION
- ----------- -----------

10.26(1) -- Lease Agreement dated December 22, 1992 between Registrant and Lothian
and Edinburgh Enterprise Limited for facilities at Fleming Road, Livingston, Scotland,
as amended.
10.27(1)+ -- Basic Order Agreement between Registrant and Quantum Corporation dated
March 2, 1992.
10.29(3) -- Term Loan between Registrant and Sun Trust (previously known as Sun Bank
of Tampa Bay) dated April 16, 1993.
10.32(4) -- Joint Venture Agreement dated August 17, 1993 between Registrant and Noise
Cancellation Technologies.
10.33(5) -- Lease Agreement between Connie and Vincent Dotolo and Jabil Circuit, Inc.
dated November 30, 1993.
10.34(6)(12) -- Amendment to 1989 Non-Qualified Stock Option Plan.
10.40(7) -- Renewal dated March 21, 1994 of Lease for 2220 Lundy Avenue, San Jose,
California, between Registrant and Lundy Associates.
10.41(7) -- Term Loan between Registrant and NBD Bank, N.A. dated May 2, 1994.
10.42(8) -- First Amendment to Term Loan between Registrant and NBD Bank, N.A. dated
September 20, 1994.
10.43(8) -- Agreement of Sale between Registrant and Metro North Technology Park dated
September 24, 1994.
10.44(9) -- Capital Lease between Jabil Circuit Limited and Lombard North Central PLC
dated November 25, 1994.
10.48(10) -- Lease dated March 30, 1995, for 2 Inchmuir Road, Whitehill Industrial
Estate, Bathgate, West Lothian, Scotland between Registrant and C&W Assets Ltd
10.49(10) -- Closing Package dated April 7, 1995, for purchase of Lot 6, Gateway
Industrial Park, St. Petersburg, Florida between Registrant and City of
St. Petersburg.
10.50(10) -- Term Promissory Note dated April 21, 1995, between Registrant and Heller
Financial, Inc.
10.51(10) -- Tenancy Agreement dated May 12, 1995, for Plot 63, Mukim 12, Daerah Barat
Daya, Penang, Malaysia between Registrant and Mastex Sendirian Berhard.
10.52(10) -- Loan Agreement dated May 30, 1995, between Registrant and NBD Bank, N.A.
10.53(11) -- Epson/Jabil Retrofit Agreement dated February 17, 1995 between Registrant
and Epson America, Inc.
10.54(11) -- Agreement dated July 1, 1995 between the Registrant and Motorola Ltd.
10.55(11) -- Development Agreement dated as of September 15, 1993 between
Hewlett-Packard France and Registrant
10.56(11) -- International Purchase Agreement dated as of September 23, 1993 between
Hewlett-Packard France and Registrant
10.57(11) -- Letter of Intent dated as of July 1, 1994 between Hewlett-Packard France
and Registrant.

II-2

EXHIBIT INDEX (CONTINUED)

EXHIBIT NO. DESCRIPTION
- ----------- -----------

10.58(11) -- Product Purchase Agreement dated as of October 1, 1994 between Hewlett
Packard France and Registrant.
10.59(13) -- First Amendment to Loan Agreement dated July 31, 1995, between Registrant
and NBD Bank, N.A.
10.60(13) -- Lease Agreement dated September 8, 1995, between Registrant and Connie and
Vincent Dotolo.
10.61(14) -- Note Purchase Agreement and Notes dated May 30, 1996 between registrant and
certain lenders and NBD Bank as collateral agent.
10.62(14) -- Loan Agreement dated May 30, 1996 between registrant and certain banks and
NBD Bank as agent for banks.
10.63 -- Loan Agreement dated August 6, 1997 between registrant and certain banks and
The First National Bank Of Chicago as agent for banks.
10.64 -- Lease Agreement dated October 1, 1997 between registrant and Charrington
Estates.
10.65 -- Lease Agreement dated October 30, 1997 between registrant and Teachers Insurance
and Annuity Association.
11.1 -- Statement of Computation of Earnings Per Share.
21.1 -- List of Subsidiaries.
23.1 -- Independent Auditors' Consent.
24.1 -- Power of Attorney (see Page 39).
27.1 -- Financial Data Schedule.

- ----------------
+ Confidential treatment has been previously granted as to portions of this
exhibit. The confidential portions that were omitted from these exhibits
were filed separately with the Securities and Exchange Commission.

++ Confidential treatment has been requested as to portions of this exhibit.
The confidential portions that have been omitted from these exhibits have
been filed separately with the Securities and Exchange Commission.

(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 May 31, 1993.

(4) Incorporated by reference to exhibit the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1993.

(5) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1993.

II-3

(6) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994.

(7) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1994.

(8) Incorporated by reference to exhibit the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1994.

(9) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1994.

(10) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1995.

(11) Incorporated by reference to exhibit the Registration Statement on Form S-1
filed by the Registrant on September 15, 1995.

(12) Indicates management compensatory plan, contract or arrangement.

(13) Incorporated by reference to exhibit the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1995.

(14) Incorporated by reference to exhibit the Registrant's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1996.

II-4
57

SCHEDULE VIII

JABIL CIRCUIT, INC. AND SUBSIDIARIES

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COST AND END OF
OF PERIOD EXPENSE WRITE-OFFS PERIOD
---------- ------------ ----------- -----------

YEAR ENDED AUGUST 31, 1995:
Allowance for uncollectible accounts
receivable ........................... $ 200 $ 837 $ 368 $ 669
Inventory reserve ...................... $5,158 $5,034 $9,219 $ 973
====== ====== ====== ======
YEAR ENDED AUGUST 31, 1996:
Allowance for uncollectible accounts
receivable ........................... $ 669 $ 501 -- $1,170
Inventory reserve ...................... $ 973 $5,178 $3,850 $2,301
====== ====== ====== ======
YEAR ENDED AUGUST 31, 1997:
Allowance for uncollectible accounts
receivable ........................... $1,170 $1,520 -- $2,690
Inventory reserve ...................... $2,301 $3,690 $1,248 $4,743
====== ====== ====== ======

S-5