<PAGE>

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

                                   FORM 10-Q

                                   (Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED  September 30, 2001

                                       OR

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

Commission file number  000-31223
                        ---------

                                  PEMSTAR INC.
             (Exact name of registrant as specified in its charter)

                Minnesota                             41-1771227
     -------------------------------              ------------------
     (State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)               Identification No.)


                           3535 TECHNOLOGY DRIVE N.W.
                              ROCHESTER, MN  55901
                   (Address of principal executive officers)
                                   (Zip Code)


                                (507) 288-6720
             ----------------------------------------------------
             (Registrant's telephone number, including area code)


                                Not applicable
             ----------------------------------------------------
             (Former name, former address and former fiscal year,
                         if changed since last report)


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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.

Common Stock, $0.01 Par Value -- 36,476,699 shares as of October 31, 2001.
<PAGE>

                                      -2-

Index
Pemstar Inc.

Part I.  Condensed Consolidated Financial Information                      Page

Item 1.  Financial Statements

         Condensed consolidated balance sheets - September 30, 2001
           (unaudited) and March 31, 2001.................................. 3

         Condensed consolidated statements of income (unaudited) -
           Three months ended September 30, 2001 and 2000 and six
           months ended September 30, 2001 and 2000........................ 4

         Condensed consolidated statements of cash flows (unaudited) -
           Six months ended September 30, 2001 and 2000.................... 5

         Notes to condensed consolidated financial statements (unaudited) -
           September 30, 2001.............................................. 6-8

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations....................................... 9-11

Item 3.  Quantitative and Qualitative Disclosure of Market Risk............ 12

Part II. Other Information

Item 1.  Legal Proceedings................................................. 13

Item 2.  Changes in Securities and Use of Proceeds......................... 13

Item 3.  Defaults upon Senior Securities................................... 13

Item 4.  Submission of Matters to a Vote of Security Holders............... 13

Item 5.  Other Information................................................. 13

Item 6.  Exhibits and Reports on Form 8-K.................................. 13

Signatures................................................................. 14
<PAGE>
                                      -3-

Part I.  Financial Information

Pemstar Inc.

<TABLE>
<CAPTION>
Condensed Consolidated Balance Sheets                       September 30,         March 31,
(In thousands, except per share data)                           2001                2001
                                                          ----------------     ---------------
                                                             (Unaudited)           (Note A)
<S>                                                         <C>                  <C>
Assets
Current assets
     Cash and equivalents                                         $ 12,621            $  5,882
     Accounts receivable, net                                      123,968             106,510
     Inventories, net                                              124,968             113,421
     Unbilled services                                              15,517               9,734
     Deferred income taxes                                           1,567               1,322
     Prepaid expenses and other                                     12,529               6,297
                                                          ----------------     ---------------
Total current assets                                               291,170             243,166

Property, plant and equipment                                      124,013              95,720
     Less accumulated depreciation                                 (28,803)            (21,914)
                                                          ----------------     ---------------
                                                                    95,210              73,806

Goodwill, net                                                       55,320              29,164
Deferred income taxes                                                  960                 893
Other assets                                                         4,329               2,048
                                                          ----------------     ---------------

Total assets                                                      $446,989            $349,077
                                                          ================     ===============

Liabilities and shareholders' equity
Current liabilities
     Bank overdraft                                               $  2,110            $ 13,443
     Accounts payable                                               74,045              70,791
     Accrued expenses and other                                     18,328              12,762
     Income taxes payable                                              557               1,197
     Current maturities of long-term debt                           15,328               9,041
     Current maturities of capitalized lease obligations             4,684               4,081
                                                          ----------------     ---------------
Total current liabilities                                          115,052             111,315

Long-term debt, less current maturities                             61,384              75,136
Capital lease obligations, less current maturities                   9,558               9,737
Other deferred credits                                               7,040               2,177

Shareholders' equity
   Common stock, par value $0.01 per share--authorized
    150,000 shares, issued and outstanding 36,464 at
    September 30, 2001 and 28,294 at March 31, 2001                    364                 283
   Additional paid-in capital                                      232,685             137,139
   Accumulated other comprehensive loss                             (1,631)             (2,299)
   Retained earnings                                                23,337              17,853
   Loans to shareholders                                              (800)             (2,264)
                                                          ----------------     ---------------
         Total shareholders' equity                                253,955             150,712
                                                          ----------------     ---------------
Total liabilities and shareholders' equity                        $446,989            $349,077
                                                          ================     ===============
</TABLE>

See notes to condensed consolidated financial statements.
<PAGE>
                                      -4-

Pemstar Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)

<TABLE>
<CAPTION>
                                                    Three Months Ended                  Six Months Ended
                                                       September 30,                      September 30,
                                                ---------------------------        ---------------------------
                                                     2001           2000               2001            2000
                                                ------------    -----------        -----------     -----------
<S>                                            <C>             <C>                <C>            <C>
Net sales                                           $173,380       $143,902           $340,584        $266,506
Costs of goods sold                                  158,343        132,535            310,108         245,231
                                                ------------    -----------        -----------     -----------
     Gross profit                                     15,037         11,367             30,476          21,275

Selling, general and administrative expenses          10,395          8,062             20,525          15,582
Amortization                                             516            503                994             846
                                                ------------    -----------        -----------     -----------
     Operating income                                  4,126          2,802              8,957           4,847

Other (income) expense--net                             (194)          (275)              (411)            (39)
Interest expense                                       1,491          1,622              3,496           3,485
                                                ------------    -----------        -----------     -----------
Income before income taxes                             2,829          1,455              5,872           1,401

Income tax (benefit) expense                            (143)           349                388             146
                                                ------------    -----------        -----------     -----------
Net income                                          $  2,972       $  1,106           $  5,484        $  1,255
                                                ============    ===========        ===========     ===========

Net income per common share:
     Basic                                             $0.08          $0.05              $0.17           $0.07
     Diluted                                            0.08           0.04               0.16            0.05

Shares used in computing net income per
 common share:
     Basic                                            35,532         21,813             32,857          17,874
     Diluted                                          37,268         25,932             34,746          23,207
</TABLE>

See notes to condensed consolidated financial statements.

<PAGE>

                                      -5-

Pemstar Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

<TABLE>
<CAPTION>
                                                                         Six Months Ended
                                                                           September 30,
                                                                      --------------------------
                                                                         2001             2000
                                                                       --------         --------
<S>                                                                  <C>             <C>
Cash flows from operating activities:
     Net income                                                        $  5,484         $  1,255
     Adjustments to reconcile net income to net
          cash used in operating activities:
          Depreciation                                                    8,397            5,601
          Amortization                                                    1,328              846
          Deferred revenue                                                 (174)            (133)
          Other                                                            (117)            (225)
          Change in operating assets and liabilities:
               Accounts receivable                                      (13,503)         (25,456)
               Inventories                                               (8,823)         (39,391)
               Prepaid expenses and other                               (15,310)          (5,870)
               Accounts payable                                           1,927           33,228
               Accrued expenses and other                                 8,238              627
                                                                       --------         --------
                    Net cash used in operating activities               (12,553)         (29,518)

Cash flows from investing activities:
     (Increase) decrease in restricted cash                              (1,393)             345
     Business acquisitions, net of cash acquired                        (23,779)         (20,159)
     Purchases of property and equipment                                (24,910)         (24,795)
     Other                                                                1,625              146
                                                                       --------         --------
                    Net cash used in investing activities               (48,457)         (44,463)

Cash flows from financing activities:
     Bank overdrafts                                                    (11,395)           2,261
     Proceeds from stock sales/exercise of stock options                 85,354           95,157
     Principal payments on long-term borrowings                         (43,010)         (71,493)
     Proceeds from long-term borrowings                                  37,177           54,424
     Other                                                                 (429)            (497)
                                                                       --------         --------
                     Net cash provided by financing activities           67,697           79,852

Effect of exchange rate changes on cash                                      52              175
                                                                       --------         --------
Net increase in cash and cash equivalents                                 6,739            6,046

Cash and cash equivalents:
     Beginning of period                                                  5,882            2,727
                                                                       --------         --------

     End of period                                                     $ 12,621         $  8,773
                                                                       ========         ========
</TABLE>

See notes to condensed consolidated financial statements.
<PAGE>

                                      -6-
Pemstar Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2001
(In thousands, except per share data)

Note A--Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the six-month period ended September 30,
2001, are not necessarily indicative of the results that may be expected for the
year ending March 31, 2002.

The balance sheet at March 31, 2001 has been derived from the audited financial
statements at that date, but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Pemstar Inc. Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets.  SFAS
141 is effective for business combinations completed subsequent to June 30,
2001.  The Company has elected to adopt the provisions of SFAS 142 for its
fiscal year beginning April 1, 2002.  The Company will continue to amortize
existing goodwill through March 31, 2002, for acquisitions completed prior to
June 30, 2001.  Amortizations of $516, $0.01 per diluted share, and $994, $0.03
per diluted share, for the three and six month periods ended September 30, 2001,
respectively, was recognized.

SFAS 142 requires goodwill and other indefinite lived intangible assets be
subjected to annual impairment tests.  The Company will perform the first of the
required impairment tests as of April 1, 2002, and has not determined the
effect, if any, of these adoption tests on the Company's earnings or financial
position.

Note B--Inventories

The components of inventory consist of the following:

                                               September 30,      March 31,
                                                    2001            2001
                                               -------------      ---------
                                                        In Thousands
Raw materials                                    $105,502          $ 94,971
Work in process                                    13,143            11,042
Finished goods                                      8,096             9,562
Less allowance for inventory obsolescence          (1,772)           (2,154)
                                                 --------          --------
                                                 $124,968          $113,421
                                                 ========          ========

The allowance for inventory obsolescence results from the decline in market
value of aged or technologically unusable materials, when identified, which
remain on hand at balance sheet dates.
<PAGE>

                                      -7-

Reductions in the allowance since March 31, 2001 are primarily the result of
material disposed of since that date.

Note C--Acquisitions

On August 1, 2000 the Company purchased the business of Turtle Mountain
Corporation (a provider of electronic manufacturing services to original
equipment manufacturers) in a stock acquisition for $20,201, including assumed
debt of $3,819, financed by borrowings on bank facilities.

On May 7, 2001, the Company acquired the business of U.S. Assemblies New
England, Inc. which operates through an 85, 000 square foot facility located in
Taunton, Massachusetts.  The acquisition was accounted for as a purchase.  The
acquired business is not material to Company's overall operations.  The
acquisition cost was $14,289, including the assumption of $1,646 of
indebtedness.

On September 20, 2001, the Company purchased the membership interests and
business of Pacific Consultants LLC (a provider of electromechanical design and
test consulting services) to complement and extend its engineering capabilities.
The initial purchase price was $20,107, including common stock valued at
$10,000, cash and costs of $4,404, and cash or common stock of $5,703 payable up
to two years from the date of the acquisition.  The purchase agreement provides
for additional purchase price, payable in cash or common stock, of up to
$40,000, if earnings targets are met for the acquired business in the two years
following the close.  The transaction was accounted for as a purchase, resulting
in a preliminary estimate of goodwill totaling $16,767, which is currently not
being amortized.  The purchase price allocation is preliminary pending
completion of valuations and receipt of certain other information.  The acquired
business is not material to the Company's overall operations.

The pro forma unaudited results of operations for the six months ended September
30, 2001 and 2000, assuming consummation of the purchase of Turtle Mountain
Corporation and existence of the additional related indebtedness as of April 1,
2000, are as follows:

                                                       Six Months Ended
                                                        September 30,
                                                ----------------------------
                                                   2001            2000
                                                ----------     -------------
                                                    In Thousands, except
                                                       per share data

Net sales                                         $340,584          $282,102
Net income (loss)                                    5,484             1,517
Per share data:
  Basic earnings                                  $   0.17          $   0.08
  Diluted earnings                                    0.16              0.07


Note D--Comprehensive Income

Total comprehensive income was $4,068 and $26 for the three months ended
September 30, 2001 and 2000, respectively, and $6,152 and $9 for the six months
ended September 30, 2001 and 2000, respectively.  Comprehensive income differs
from net income due to unrecognized foreign currency gains and losses.

Note E--Financing Arrangements

In June 2001, the Company completed a public offering of its common stock
raising $79.4 million in aggregate net proceeds from the issuance of 6,275 new
common shares.
<PAGE>

                                      -8-

The cash proceeds were used to repay existing indebtedness under the credit
facilities with IBM Credit Corporation and US Bank. As of March 31, 2001, the
credit facility with IBM had $40.0 million of outstanding borrowings, an
effective interest rate of 9.2% and a final maturity date of May 2002, and the
credit facility with US Bank had $21.2 million of outstanding borrowings, an
effective interest rate of 8.5% and a final maturity date of August 2002. Net
proceeds from this offering in excess of outstanding borrowings as of March 31,
2001 were used to repay additional borrowings under these credit facilities
incurred after that date.  On June 28, 2001, the credit facility with IBM was
expanded to provide for borrowings up to $80,000 and an incremental revolving
credit facility of $50,000 and the US Bank credit facility was amended to reduce
available borrowing from $55,000 to $30,000.  Both agreements were extended and
are now due June 28, 2004.  Borrowings in the six months ended September 30,
2001, under these credit facilities were used to fund working capital, capital
expenditures and the acquisition of the Taunton, Massachusetts, facility and
Pacific Consultants, LLC.

Note F--Income Taxes

The income tax benefit recorded for the three months ended September 30, 2001,
benefited $635 ($0.02 per share, basic EPS) from the cumulative effect of a
change in the estimated annual effective tax rate used for the six months ended
September 30, 2001 (6.6%) versus the rate estimated at June 30, 2001 (17.4%).
The downward revision of the estimated rate resulted from a change in the
expected mix of domestic and foreign earnings.  Generally, the Company's foreign
earnings are tax exempt or enjoy temporary rate reductions from ordinary
statutory rates.

Note G--Earnings Per Share Data

The following table sets forth the computation of basic and diluted earnings per
share for the periods indicated.

<TABLE>
<CAPTION>
                                                      Three Months Ended            Six Months Ended
                                                        September 30,                 September 30,
                                                    ----------------------         --------------------
                                                       2001         2000             2001        2000
                                                     --------      -------          -------     -------
                                                          In Thousands, except per share data
<S>                                              <C>           <C>              <C>          <C>
Basic:
  Net income                                          $ 2,972      $ 1,106          $ 5,484     $ 1,255
  Average shares outstanding                           35,532       21,813           32,857      17,874
  Basic EPS                                           $  0.08      $  0.05          $  0.17     $  0.07
                                                      =======      =======          =======     =======

Diluted:
  Net income                                          $ 2,972      $ 1,106          $ 5,484     $ 1,255
  Average shares outstanding                           35,532       21,813           32,857      17,874
  Net effect of dilutive stock options--based
   on the treasury stock method                         1,736        2,122            1,889       1,987
  Assumed conversion of redeemable preferred
   stock                                                    0        1,997                0       3,346
                                                      -------      -------         --------     -------
  Totals                                               37,268       25,932           34,746      23,207
                                                      =======      =======          =======     =======
  Diluted EPS                                         $  0.08      $  0.04          $  0.16     $  0.05
                                                      =======      =======          =======     =======
</TABLE>

During the three and six months ended September 30, 2001, employees exercised
stock options to acquire 377 and 1,088 shares at an average exercise price of
$4.88 and $4.93 per share, respectively.
<PAGE>

                                      -9-

Item 2--Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

Net sales for the second quarter of fiscal 2002 increased 20.5% to $173.4
million from $143.9 million for the second quarter of fiscal 2001.  Net sales
for the six months ended September 30, 2001 increased 27.8% to $340.6 million
from $266.5 million for the same period of fiscal 2001.  Increased net sales
resulted primarily from existing customers, principally in the communications
industry.  Net sales to communication customers for the second quarter increased
14.2% compared to the second quarter of fisca1 2001 and increased 19.0% compared
to the first half of fiscal 2001.  The Company's five largest customers in the
second quarter and first half of fiscal 2002 accounted for approximately 55% and
53%, respectively, of net sales with no single customer exceeding 25% of net
sales for the first half of fiscal 2002.

Gross profit increased $3.6 million to $15.0 million (8.7% of net sales) in the
second quarter of fiscal 2002 from $11.4 million (7.9% of net sales) in the same
quarter of fiscal 2001.  Gross profit increased $9.2 million to $30.5 million
(8.9% of net sales) during the first six months of fiscal 2002 from $21.3
million (8.0% of net sales) in the same period of fiscal 2001.  The increase in
gross profit was due primarily to the higher sales volume from existing
customers.

Selling, general and administrative expenses were $10.4 million (6.0% of net
sales) in the second quarter of fiscal 2002, an increase of $2.3 million from
$8.1 million (5.6% of net sales) for the same quarter of fiscal 2001.  Selling,
general and administrative expenses were $20.5 million (6.0% of net sales)
during the first six months of fiscal 2002, an increase of $4.9 million from
$15.6 million (5.8% of net sales) for the same period of fiscal 2001.  The
increase during the three and six-month periods ended September 30, 2001 was
primarily due to the selling, general, and administrative expenses of acquired
businesses and the continued building of our global selling and administrative
support infrastructure.

Amortization for the three and six-month periods ended September 30, 2001 was
$0.5 million and $1.0 million respectively compared to $0.5 million and $0.8
million respectively for the same periods of fiscal 2001.  The increase was due
to the amortization of goodwill arising out of the acquisitions of U.S.
Assemblies New England Inc. and Turtle Mountain Corporation.

Other income, net was $0.2 million for the second quarter of fiscal 2002
compared to $0.3 million income for the same period of fiscal 2001. Other
income, net increased from $0.0 million income in fiscal 2001 to $0.4 million
income for the six months ended September 30, 2001. This net change in the
quarter and six month periods ended September 30, 2001, was a result of gains on
sales of assets, decreased exchange losses in certain international operations,
and reduced earnings allocated to minority shareholders in a subsidiary, whose
interests have since been bought out.

Our interest expense(net) decreased $0.1 million to $1.5 million for the second
quarter of fiscal 2002 from $1.6 million for the same period of fiscal 2001.
This decrease was a result of reduced interest rates on our variable rate
primary line of credit.  Interest expense for the six months ended September 30,
2001, was unchanged at $3.5 million for the comparable period of the prior
fiscal year.

Income tax expense of $0.4 million represented an effective tax rate of 6.6% for
the six-month period ended September 30, 2001 compared with an effective tax
rate of 10.4% for the six-month period ended September 30, 2000.  This decrease
was due primarily to lower foreign tax rates applicable to an increased foreign
portion of pretax income for the six months ended September 30, 2001.
<PAGE>

                                     -10-

The accumulated other comprehensive loss was reduced by $1,096 and $668 for the
three and six months ended September 30, 2001.  These changes result primarily
from strengthening of the Dutch Guilder in relationship to the U.S. dollar
applied to our net asset exposure in The Netherlands ($13,844 at September 30,
2001).

Liquidity and Capital Resources

The Company has funded its operations from the proceeds of bank debt, private
offerings of debt, private and public offerings of equity, cash generated from
operations and lease financing of capital equipment.  Our principal uses of cash
have been to finance working capital, acquisitions, new operations, and capital
expenditures and to fulfill debt service requirements. We anticipate these uses
will continue to be our principal uses of cash in the future.

As of September 30, 2001, the Company had cash and cash equivalents balances of
$12.6 million and total bank and other interest bearing debt totaling $91.0
million.  Of these borrowings, we had approximately $0.9 million outstanding
under our US Bank revolving credit facility and $51.4 million outstanding under
our IBM Credit Corporation credit facility.  We also have a $3.2 million credit
facility serving our Netherlands operations. As of September 30, 2001, we had
$2.6 million outstanding under our Netherlands credit facility. Each credit
facility bears interest on outstanding borrowings at variable interest rates,
which as of September 30, 2001 were 7.61% for the IBM facility, 7.81% for the US
Bank facility and 6.5% for the Netherlands facility. All of these credit
facilities are secured by substantially all of our assets. We are also required
to meet financial covenants under these facilities relating to net income as a
percentage of net sales, the ratio of our liabilities to net worth, the ratio of
our current assets to current liabilities, the ratio of our earnings before
interest, taxes, depreciation and amortization, or EBITDA, less specified
expenditures, to our principal and interest payments, our tangible net worth and
capital expenditures. As of September 30, 2001 we were in compliance with all
debt covenants.

Net cash used in operating activities for the six months ended September 30,
2001 was $12.6 million compared to $29.5 million for the comparable period of
the prior fiscal year.  Fluctuations in net cash used in operating activities
were attributable to increases in accounts receivable and inventory balances due
to sales volume growth, which was partially offset by increased net income,
accounts payable, and depreciation.

Net cash used in investing activities for the six months ended September 30,
2001 was $48.5 million compared to $44.5 million for the comparable period of
the prior fiscal year.  Capital expenditures were $24.9 for the six months ended
September 30, 2001 compared to $24.8 million in the prior fiscal year.

Net cash provided by financing activities for the six months ended September 30,
2001 was $67.7 million compared to $79.9 million for the comparable period of
the prior fiscal year.  Our principal source of cash from financing activities
in the six months ended September 30, 2001 was net proceeds of $79.4 million
from our second public offering of our common stock and proceeds of $37.2
million from borrowing on existing and additional bank credit facilities, offset
by debt payments totaling $43.0 million.

We believe that cash flows from operating activities and borrowings available to
us will be sufficient to fund working capital, planned capital expenditures and
debt service requirements for the next 12 months. However, as a part of normal
business practice, we regularly review potential acquisitions and additional new
operations opportunities, as well as major new manufacturing program
opportunities with new or existing customers, any of which may require us to
sell additional equity or secure additional financing during that period.  The
sale of additional equity could result in additional dilution to our
shareholders.  Situations may occur, wherein, financing arrangements may not be
available in amounts or on terms acceptable to us.
<PAGE>

                                     -11-

Forward-looking Statements:  This discussion contains certain "forward-looking"
statements.  These forward-looking statements may contain statements of intent,
belief or current expectations of Pemstar  Inc. and its management.  Such
forward-looking statements are not guarantees of future results and involve
risks and uncertainties that may cause actual results to differ materially from
the potential results discussed in the forward-looking statements.  In addition
to factors discussed above, risks and uncertainties that may cause such
differences include but are not limited to:  a continued decline in economic
conditions or a recession; the effects of the September 11, 2001, terrorist
attacks in the United States and the engagement of military forces of the United
States and its allies in Afghanistan, as well as any future events in response
to these developments, including future terrorist attacks on the United States,
rumors or threats of war, actual conflicts or trade disruptions; changes in
demand for electronics manufacturing services; changes in demand by major
customers due to cancellations, reductions or delays of orders; shortages or
price fluctuations in component parts; difficulties managing our expansion and
integrating acquired businesses; increased competition and other risk factors
listed from time to time in the Company's Securities and Exchange Commission
filings, including but not limited to Exhibit 99 of the Company's Annual Report
on Form 10K for the fiscal year ended March 31, 2001.  The foregoing list is not
exhaustive and the Company disclaims any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements.
<PAGE>

                                     -12-

Item 3--Quantitative and Qualitative Disclosure of Market Risk

The accumulated other comprehensive loss was reduced by $1,096 and $668 for the
three and six months ended September 30, 2001.  These changes result primarily
from strengthening of the Dutch Guilder in relationship to the U.S. dollar
applied to our net asset exposure in The Netherlands ($13,844 at September 30,
2001).
<PAGE>

                                     -13-

Part II.  Other Information

Item 1--Legal Proceedings

During the period covered by this report, there were no legal proceedings
instituted that are reportable.

Item 2--Changes in Securities and Use of Proceeds

As previously disclosed in the Company's Registration Statement on Form S-1,
effective June 7, 2001, the company sold 6,275,000 of its common shares in its
public offering.  Proceeds of the offering were used to pay down the US Bank
facility by $26 million and the IBM Credit Corporation facility by $51 million.

Item 3--Default on Senior Securities

There have been no events of default on the Company's senior securities
agreements.

Item 4--Submission of Matters to a Vote of Security Holders

There have been no new matters submitted to a vote of security holders.

Item 5--Other Information

No information is required in response to this requirement.

Item 6--Exhibits and Reports on Form 8-K

(a)  Exhibit 10--Material contracts

     i.   Agreement and Plan of Merger - Pacific Consultants LLC dated August
          10, 2001.

(b)  The registrant did not file any reports on Form 8-K during the six months
     ended September 30, 2001.
<PAGE>

                                     -14-

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                Pemstar Inc.


Date: November 9, 2001          \s\ Allen J. Berning
      ----------------          --------------------
                                Allen J. Berning
                                Chairman and Chief Executive Officer


Date: November 9, 2001          \s\ William J. Kullback
      ----------------          -----------------------
                                William J. Kullback
                                Vice President and Chief Financial Officer
[{"type": "10-Q", "sequence": "1", "filename": "d10q.txt", "description": "FORM 10-Q", "secsgml_size_bytes": 39543}]
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UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

                                   (Mark One)

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED  September 30, 2001

                                       OR

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

Commission file number  000-31223
                        ---------

                                  PEMSTAR INC.
             (Exact name of registrant as specified in its charter)

                Minnesota                             41-1771227
     -------------------------------              ------------------
     (State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)               Identification No.)

                           3535 TECHNOLOGY DRIVE N.W.
                              ROCHESTER, MN  55901
                   (Address of principal executive officers)
                                   (Zip Code)

                                (507) 288-6720
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

                                Not applicable
             ----------------------------------------------------
             (Former name, former address and former fiscal year,
                         if changed since last report)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.

Common Stock, $0.01 Par Value -- 36,476,699 shares as of October 31, 2001.
-2-

Index
Pemstar Inc.

Part I.  Condensed Consolidated Financial Information                      Page

Item 1.  Financial Statements

         Condensed consolidated balance sheets - September 30, 2001
           (unaudited) and March 31, 2001.................................. 3

         Condensed consolidated statements of income (unaudited) -
           Three months ended September 30, 2001 and 2000 and six
           months ended September 30, 2001 and 2000........................ 4

         Condensed consolidated statements of cash flows (unaudited) -
           Six months ended September 30, 2001 and 2000.................... 5

         Notes to condensed consolidated financial statements (unaudited) -
           September 30, 2001.............................................. 6-8

Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations....................................... 9-11

Item 3.  Quantitative and Qualitative Disclosure of Market Risk............ 12

Part II. Other Information

Item 1.  Legal Proceedings................................................. 13

Item 2.  Changes in Securities and Use of Proceeds......................... 13

Item 3.  Defaults upon Senior Securities................................... 13

Item 4.  Submission of Matters to a Vote of Security Holders............... 13

Item 5.  Other Information................................................. 13

Item 6.  Exhibits and Reports on Form 8-K.................................. 13

Signatures................................................................. 14
-3-

Part I.  Financial Information

Pemstar Inc.
Condensed Consolidated Balance Sheets                       September 30,         March 31,
(In thousands, except per share data)                           2001                2001
                                                          ----------------     ---------------
                                                             (Unaudited)           (Note A)
Assets
Current assets
     Cash and equivalents                                         $ 12,621            $  5,882
     Accounts receivable, net                                      123,968             106,510
     Inventories, net                                              124,968             113,421
     Unbilled services                                              15,517               9,734
     Deferred income taxes                                           1,567               1,322
     Prepaid expenses and other                                     12,529               6,297
                                                          ----------------     ---------------
Total current assets                                               291,170             243,166

Property, plant and equipment                                      124,013              95,720
     Less accumulated depreciation                                 (28,803)            (21,914)
                                                          ----------------     ---------------
                                                                    95,210              73,806

Goodwill, net                                                       55,320              29,164
Deferred income taxes                                                  960                 893
Other assets                                                         4,329               2,048
                                                          ----------------     ---------------

Total assets                                                      $446,989            $349,077
                                                          ================     ===============

Liabilities and shareholders' equity
Current liabilities
     Bank overdraft                                               $  2,110            $ 13,443
     Accounts payable                                               74,045              70,791
     Accrued expenses and other                                     18,328              12,762
     Income taxes payable                                              557               1,197
     Current maturities of long-term debt                           15,328               9,041
     Current maturities of capitalized lease obligations             4,684               4,081
                                                          ----------------     ---------------
Total current liabilities                                          115,052             111,315

Long-term debt, less current maturities                             61,384              75,136
Capital lease obligations, less current maturities                   9,558               9,737
Other deferred credits                                               7,040               2,177

Shareholders' equity
   Common stock, par value $0.01 per share--authorized
    150,000 shares, issued and outstanding 36,464 at
    September 30, 2001 and 28,294 at March 31, 2001                    364                 283
   Additional paid-in capital                                      232,685             137,139
   Accumulated other comprehensive loss                             (1,631)             (2,299)
   Retained earnings                                                23,337              17,853
   Loans to shareholders                                              (800)             (2,264)
                                                          ----------------     ---------------
         Total shareholders' equity                                253,955             150,712
                                                          ----------------     ---------------
Total liabilities and shareholders' equity                        $446,989            $349,077
                                                          ================     ===============
See notes to condensed consolidated financial statements.
-4-

Pemstar Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Ended                  Six Months Ended
                                                       September 30,                      September 30,
                                                ---------------------------        ---------------------------
                                                     2001           2000               2001            2000
                                                ------------    -----------        -----------     -----------
Net sales                                           $173,380       $143,902           $340,584        $266,506
Costs of goods sold                                  158,343        132,535            310,108         245,231
                                                ------------    -----------        -----------     -----------
     Gross profit                                     15,037         11,367             30,476          21,275

Selling, general and administrative expenses          10,395          8,062             20,525          15,582
Amortization                                             516            503                994             846
                                                ------------    -----------        -----------     -----------
     Operating income                                  4,126          2,802              8,957           4,847

Other (income) expense--net                             (194)          (275)              (411)            (39)
Interest expense                                       1,491          1,622              3,496           3,485
                                                ------------    -----------        -----------     -----------
Income before income taxes                             2,829          1,455              5,872           1,401

Income tax (benefit) expense                            (143)           349                388             146
                                                ------------    -----------        -----------     -----------
Net income                                          $  2,972       $  1,106           $  5,484        $  1,255
                                                ============    ===========        ===========     ===========

Net income per common share:
     Basic                                             $0.08          $0.05              $0.17           $0.07
     Diluted                                            0.08           0.04               0.16            0.05

Shares used in computing net income per
 common share:
     Basic                                            35,532         21,813             32,857          17,874
     Diluted                                          37,268         25,932             34,746          23,207
See notes to condensed consolidated financial statements.
-5-

Pemstar Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended
                                                                           September 30,
                                                                      --------------------------
                                                                         2001             2000
                                                                       --------         --------
Cash flows from operating activities:
     Net income                                                        $  5,484         $  1,255
     Adjustments to reconcile net income to net
          cash used in operating activities:
          Depreciation                                                    8,397            5,601
          Amortization                                                    1,328              846
          Deferred revenue                                                 (174)            (133)
          Other                                                            (117)            (225)
          Change in operating assets and liabilities:
               Accounts receivable                                      (13,503)         (25,456)
               Inventories                                               (8,823)         (39,391)
               Prepaid expenses and other                               (15,310)          (5,870)
               Accounts payable                                           1,927           33,228
               Accrued expenses and other                                 8,238              627
                                                                       --------         --------
                    Net cash used in operating activities               (12,553)         (29,518)

Cash flows from investing activities:
     (Increase) decrease in restricted cash                              (1,393)             345
     Business acquisitions, net of cash acquired                        (23,779)         (20,159)
     Purchases of property and equipment                                (24,910)         (24,795)
     Other                                                                1,625              146
                                                                       --------         --------
                    Net cash used in investing activities               (48,457)         (44,463)

Cash flows from financing activities:
     Bank overdrafts                                                    (11,395)           2,261
     Proceeds from stock sales/exercise of stock options                 85,354           95,157
     Principal payments on long-term borrowings                         (43,010)         (71,493)
     Proceeds from long-term borrowings                                  37,177           54,424
     Other                                                                 (429)            (497)
                                                                       --------         --------
                     Net cash provided by financing activities           67,697           79,852

Effect of exchange rate changes on cash                                      52              175
                                                                       --------         --------
Net increase in cash and cash equivalents                                 6,739            6,046

Cash and cash equivalents:
     Beginning of period                                                  5,882            2,727
                                                                       --------         --------

     End of period                                                     $ 12,621         $  8,773
                                                                       ========         ========
See notes to condensed consolidated financial statements.
-6-
Pemstar Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2001
(In thousands, except per share data)

Note A--Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the six-month period ended September 30,
2001, are not necessarily indicative of the results that may be expected for the
year ending March 31, 2002.

The balance sheet at March 31, 2001 has been derived from the audited financial
statements at that date, but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Pemstar Inc. Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141,
Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets.  SFAS
141 is effective for business combinations completed subsequent to June 30,
2001.  The Company has elected to adopt the provisions of SFAS 142 for its
fiscal year beginning April 1, 2002.  The Company will continue to amortize
existing goodwill through March 31, 2002, for acquisitions completed prior to
June 30, 2001.  Amortizations of $516, $0.01 per diluted share, and $994, $0.03
per diluted share, for the three and six month periods ended September 30, 2001,
respectively, was recognized.

SFAS 142 requires goodwill and other indefinite lived intangible assets be
subjected to annual impairment tests.  The Company will perform the first of the
required impairment tests as of April 1, 2002, and has not determined the
effect, if any, of these adoption tests on the Company's earnings or financial
position.

Note B--Inventories

The components of inventory consist of the following:

                                               September 30,      March 31,
                                                    2001            2001
                                               -------------      ---------
                                                        In Thousands
Raw materials                                    $105,502          $ 94,971
Work in process                                    13,143            11,042
Finished goods                                      8,096             9,562
Less allowance for inventory obsolescence          (1,772)           (2,154)
                                                 --------          --------
                                                 $124,968          $113,421
                                                 ========          ========

The allowance for inventory obsolescence results from the decline in market
value of aged or technologically unusable materials, when identified, which
remain on hand at balance sheet dates.
-7-

Reductions in the allowance since March 31, 2001 are primarily the result of
material disposed of since that date.

Note C--Acquisitions

On August 1, 2000 the Company purchased the business of Turtle Mountain
Corporation (a provider of electronic manufacturing services to original
equipment manufacturers) in a stock acquisition for $20,201, including assumed
debt of $3,819, financed by borrowings on bank facilities.

On May 7, 2001, the Company acquired the business of U.S. Assemblies New
England, Inc. which operates through an 85, 000 square foot facility located in
Taunton, Massachusetts.  The acquisition was accounted for as a purchase.  The
acquired business is not material to Company's overall operations.  The
acquisition cost was $14,289, including the assumption of $1,646 of
indebtedness.

On September 20, 2001, the Company purchased the membership interests and
business of Pacific Consultants LLC (a provider of electromechanical design and
test consulting services) to complement and extend its engineering capabilities.
The initial purchase price was $20,107, including common stock valued at
$10,000, cash and costs of $4,404, and cash or common stock of $5,703 payable up
to two years from the date of the acquisition.  The purchase agreement provides
for additional purchase price, payable in cash or common stock, of up to
$40,000, if earnings targets are met for the acquired business in the two years
following the close.  The transaction was accounted for as a purchase, resulting
in a preliminary estimate of goodwill totaling $16,767, which is currently not
being amortized.  The purchase price allocation is preliminary pending
completion of valuations and receipt of certain other information.  The acquired
business is not material to the Company's overall operations.

The pro forma unaudited results of operations for the six months ended September
30, 2001 and 2000, assuming consummation of the purchase of Turtle Mountain
Corporation and existence of the additional related indebtedness as of April 1,
2000, are as follows:

                                                       Six Months Ended
                                                        September 30,
                                                ----------------------------
                                                   2001            2000
                                                ----------     -------------
                                                    In Thousands, except
                                                       per share data

Net sales                                         $340,584          $282,102
Net income (loss)                                    5,484             1,517
Per share data:
  Basic earnings                                  $   0.17          $   0.08
  Diluted earnings                                    0.16              0.07

Note D--Comprehensive Income

Total comprehensive income was $4,068 and $26 for the three months ended
September 30, 2001 and 2000, respectively, and $6,152 and $9 for the six months
ended September 30, 2001 and 2000, respectively.  Comprehensive income differs
from net income due to unrecognized foreign currency gains and losses.

Note E--Financing Arrangements

In June 2001, the Company completed a public offering of its common stock
raising $79.4 million in aggregate net proceeds from the issuance of 6,275 new
common shares.
-8-

The cash proceeds were used to repay existing indebtedness under the credit
facilities with IBM Credit Corporation and US Bank. As of March 31, 2001, the
credit facility with IBM had $40.0 million of outstanding borrowings, an
effective interest rate of 9.2% and a final maturity date of May 2002, and the
credit facility with US Bank had $21.2 million of outstanding borrowings, an
effective interest rate of 8.5% and a final maturity date of August 2002. Net
proceeds from this offering in excess of outstanding borrowings as of March 31,
2001 were used to repay additional borrowings under these credit facilities
incurred after that date.  On June 28, 2001, the credit facility with IBM was
expanded to provide for borrowings up to $80,000 and an incremental revolving
credit facility of $50,000 and the US Bank credit facility was amended to reduce
available borrowing from $55,000 to $30,000.  Both agreements were extended and
are now due June 28, 2004.  Borrowings in the six months ended September 30,
2001, under these credit facilities were used to fund working capital, capital
expenditures and the acquisition of the Taunton, Massachusetts, facility and
Pacific Consultants, LLC.

Note F--Income Taxes

The income tax benefit recorded for the three months ended September 30, 2001,
benefited $635 ($0.02 per share, basic EPS) from the cumulative effect of a
change in the estimated annual effective tax rate used for the six months ended
September 30, 2001 (6.6%) versus the rate estimated at June 30, 2001 (17.4%).
The downward revision of the estimated rate resulted from a change in the
expected mix of domestic and foreign earnings.  Generally, the Company's foreign
earnings are tax exempt or enjoy temporary rate reductions from ordinary
statutory rates.

Note G--Earnings Per Share Data

The following table sets forth the computation of basic and diluted earnings per
share for the periods indicated.
Three Months Ended            Six Months Ended
                                                        September 30,                 September 30,
                                                    ----------------------         --------------------
                                                       2001         2000             2001        2000
                                                     --------      -------          -------     -------
                                                          In Thousands, except per share data
Basic:
  Net income                                          $ 2,972      $ 1,106          $ 5,484     $ 1,255
  Average shares outstanding                           35,532       21,813           32,857      17,874
  Basic EPS                                           $  0.08      $  0.05          $  0.17     $  0.07
                                                      =======      =======          =======     =======

Diluted:
  Net income                                          $ 2,972      $ 1,106          $ 5,484     $ 1,255
  Average shares outstanding                           35,532       21,813           32,857      17,874
  Net effect of dilutive stock options--based
   on the treasury stock method                         1,736        2,122            1,889       1,987
  Assumed conversion of redeemable preferred
   stock                                                    0        1,997                0       3,346
                                                      -------      -------         --------     -------
  Totals                                               37,268       25,932           34,746      23,207
                                                      =======      =======          =======     =======
  Diluted EPS                                         $  0.08      $  0.04          $  0.16     $  0.05
                                                      =======      =======          =======     =======
During the three and six months ended September 30, 2001, employees exercised
stock options to acquire 377 and 1,088 shares at an average exercise price of
$4.88 and $4.93 per share, respectively.
-9-

Item 2--Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

Net sales for the second quarter of fiscal 2002 increased 20.5% to $173.4
million from $143.9 million for the second quarter of fiscal 2001.  Net sales
for the six months ended September 30, 2001 increased 27.8% to $340.6 million
from $266.5 million for the same period of fiscal 2001.  Increased net sales
resulted primarily from existing customers, principally in the communications
industry.  Net sales to communication customers for the second quarter increased
14.2% compared to the second quarter of fisca1 2001 and increased 19.0% compared
to the first half of fiscal 2001.  The Company's five largest customers in the
second quarter and first half of fiscal 2002 accounted for approximately 55% and
53%, respectively, of net sales with no single customer exceeding 25% of net
sales for the first half of fiscal 2002.

Gross profit increased $3.6 million to $15.0 million (8.7% of net sales) in the
second quarter of fiscal 2002 from $11.4 million (7.9% of net sales) in the same
quarter of fiscal 2001.  Gross profit increased $9.2 million to $30.5 million
(8.9% of net sales) during the first six months of fiscal 2002 from $21.3
million (8.0% of net sales) in the same period of fiscal 2001.  The increase in
gross profit was due primarily to the higher sales volume from existing
customers.

Selling, general and administrative expenses were $10.4 million (6.0% of net
sales) in the second quarter of fiscal 2002, an increase of $2.3 million from
$8.1 million (5.6% of net sales) for the same quarter of fiscal 2001.  Selling,
general and administrative expenses were $20.5 million (6.0% of net sales)
during the first six months of fiscal 2002, an increase of $4.9 million from
$15.6 million (5.8% of net sales) for the same period of fiscal 2001.  The
increase during the three and six-month periods ended September 30, 2001 was
primarily due to the selling, general, and administrative expenses of acquired
businesses and the continued building of our global selling and administrative
support infrastructure.

Amortization for the three and six-month periods ended September 30, 2001 was
$0.5 million and $1.0 million respectively compared to $0.5 million and $0.8
million respectively for the same periods of fiscal 2001.  The increase was due
to the amortization of goodwill arising out of the acquisitions of U.S.
Assemblies New England Inc. and Turtle Mountain Corporation.

Other income, net was $0.2 million for the second quarter of fiscal 2002
compared to $0.3 million income for the same period of fiscal 2001. Other
income, net increased from $0.0 million income in fiscal 2001 to $0.4 million
income for the six months ended September 30, 2001. This net change in the
quarter and six month periods ended September 30, 2001, was a result of gains on
sales of assets, decreased exchange losses in certain international operations,
and reduced earnings allocated to minority shareholders in a subsidiary, whose
interests have since been bought out.

Our interest expense(net) decreased $0.1 million to $1.5 million for the second
quarter of fiscal 2002 from $1.6 million for the same period of fiscal 2001.
This decrease was a result of reduced interest rates on our variable rate
primary line of credit.  Interest expense for the six months ended September 30,
2001, was unchanged at $3.5 million for the comparable period of the prior
fiscal year.

Income tax expense of $0.4 million represented an effective tax rate of 6.6% for
the six-month period ended September 30, 2001 compared with an effective tax
rate of 10.4% for the six-month period ended September 30, 2000.  This decrease
was due primarily to lower foreign tax rates applicable to an increased foreign
portion of pretax income for the six months ended September 30, 2001.
-10-

The accumulated other comprehensive loss was reduced by $1,096 and $668 for the
three and six months ended September 30, 2001.  These changes result primarily
from strengthening of the Dutch Guilder in relationship to the U.S. dollar
applied to our net asset exposure in The Netherlands ($13,844 at September 30,
2001).

Liquidity and Capital Resources

The Company has funded its operations from the proceeds of bank debt, private
offerings of debt, private and public offerings of equity, cash generated from
operations and lease financing of capital equipment.  Our principal uses of cash
have been to finance working capital, acquisitions, new operations, and capital
expenditures and to fulfill debt service requirements. We anticipate these uses
will continue to be our principal uses of cash in the future.

As of September 30, 2001, the Company had cash and cash equivalents balances of
$12.6 million and total bank and other interest bearing debt totaling $91.0
million.  Of these borrowings, we had approximately $0.9 million outstanding
under our US Bank revolving credit facility and $51.4 million outstanding under
our IBM Credit Corporation credit facility.  We also have a $3.2 million credit
facility serving our Netherlands operations. As of September 30, 2001, we had
$2.6 million outstanding under our Netherlands credit facility. Each credit
facility bears interest on outstanding borrowings at variable interest rates,
which as of September 30, 2001 were 7.61% for the IBM facility, 7.81% for the US
Bank facility and 6.5% for the Netherlands facility. All of these credit
facilities are secured by substantially all of our assets. We are also required
to meet financial covenants under these facilities relating to net income as a
percentage of net sales, the ratio of our liabilities to net worth, the ratio of
our current assets to current liabilities, the ratio of our earnings before
interest, taxes, depreciation and amortization, or EBITDA, less specified
expenditures, to our principal and interest payments, our tangible net worth and
capital expenditures. As of September 30, 2001 we were in compliance with all
debt covenants.

Net cash used in operating activities for the six months ended September 30,
2001 was $12.6 million compared to $29.5 million for the comparable period of
the prior fiscal year.  Fluctuations in net cash used in operating activities
were attributable to increases in accounts receivable and inventory balances due
to sales volume growth, which was partially offset by increased net income,
accounts payable, and depreciation.

Net cash used in investing activities for the six months ended September 30,
2001 was $48.5 million compared to $44.5 million for the comparable period of
the prior fiscal year.  Capital expenditures were $24.9 for the six months ended
September 30, 2001 compared to $24.8 million in the prior fiscal year.

Net cash provided by financing activities for the six months ended September 30,
2001 was $67.7 million compared to $79.9 million for the comparable period of
the prior fiscal year.  Our principal source of cash from financing activities
in the six months ended September 30, 2001 was net proceeds of $79.4 million
from our second public offering of our common stock and proceeds of $37.2
million from borrowing on existing and additional bank credit facilities, offset
by debt payments totaling $43.0 million.

We believe that cash flows from operating activities and borrowings available to
us will be sufficient to fund working capital, planned capital expenditures and
debt service requirements for the next 12 months. However, as a part of normal
business practice, we regularly review potential acquisitions and additional new
operations opportunities, as well as major new manufacturing program
opportunities with new or existing customers, any of which may require us to
sell additional equity or secure additional financing during that period.  The
sale of additional equity could result in additional dilution to our
shareholders.  Situations may occur, wherein, financing arrangements may not be
available in amounts or on terms acceptable to us.
-11-

Forward-looking Statements:  This discussion contains certain "forward-looking"
statements.  These forward-looking statements may contain statements of intent,
belief or current expectations of Pemstar  Inc. and its management.  Such
forward-looking statements are not guarantees of future results and involve
risks and uncertainties that may cause actual results to differ materially from
the potential results discussed in the forward-looking statements.  In addition
to factors discussed above, risks and uncertainties that may cause such
differences include but are not limited to:  a continued decline in economic
conditions or a recession; the effects of the September 11, 2001, terrorist
attacks in the United States and the engagement of military forces of the United
States and its allies in Afghanistan, as well as any future events in response
to these developments, including future terrorist attacks on the United States,
rumors or threats of war, actual conflicts or trade disruptions; changes in
demand for electronics manufacturing services; changes in demand by major
customers due to cancellations, reductions or delays of orders; shortages or
price fluctuations in component parts; difficulties managing our expansion and
integrating acquired businesses; increased competition and other risk factors
listed from time to time in the Company's Securities and Exchange Commission
filings, including but not limited to Exhibit 99 of the Company's Annual Report
on Form 10K for the fiscal year ended March 31, 2001.  The foregoing list is not
exhaustive and the Company disclaims any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements.
-12-

Item 3--Quantitative and Qualitative Disclosure of Market Risk

The accumulated other comprehensive loss was reduced by $1,096 and $668 for the
three and six months ended September 30, 2001.  These changes result primarily
from strengthening of the Dutch Guilder in relationship to the U.S. dollar
applied to our net asset exposure in The Netherlands ($13,844 at September 30,
2001).
-13-

Part II.  Other Information

Item 1--Legal Proceedings

During the period covered by this report, there were no legal proceedings
instituted that are reportable.

Item 2--Changes in Securities and Use of Proceeds

As previously disclosed in the Company's Registration Statement on Form S-1,
effective June 7, 2001, the company sold 6,275,000 of its common shares in its
public offering.  Proceeds of the offering were used to pay down the US Bank
facility by $26 million and the IBM Credit Corporation facility by $51 million.

Item 3--Default on Senior Securities

There have been no events of default on the Company's senior securities
agreements.

Item 4--Submission of Matters to a Vote of Security Holders

There have been no new matters submitted to a vote of security holders.

Item 5--Other Information

No information is required in response to this requirement.

Item 6--Exhibits and Reports on Form 8-K

(a)  Exhibit 10--Material contracts

     i.   Agreement and Plan of Merger - Pacific Consultants LLC dated August
          10, 2001.

(b)  The registrant did not file any reports on Form 8-K during the six months
     ended September 30, 2001.
-14-

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                Pemstar Inc.

Date: November 9, 2001          \s\ Allen J. Berning
      ----------------          --------------------
                                Allen J. Berning
                                Chairman and Chief Executive Officer

Date: November 9, 2001          \s\ William J. Kullback
      ----------------          -----------------------
                                William J. Kullback
                                Vice President and Chief Financial Officer