SMTC Corp – IPO: ‘424B1’ on 7/24/00

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Initial Public Offering (IPO):  Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Form 424(B)(1) Filing                                201   1.02M 

Document Table of Contents

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                                              Filed pursuant to Rule 424(b)(1)
                                        Registration No. 333-33208

PROSPECTUS                                                                      
6,625,000 Shares
[SMTC LOGO APPEARS HERE]
SMTC CORPORATION

Common Stock

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

This is our initial public offering of shares of common stock. We are     
offering 6,625,000 shares of common stock. No public market currently exists    
for our shares.                                                                 

Our shares have been approved for quotation on the Nasdaq National Market 
under the symbol "SMTX."                                                        

Investing in the shares involves risks. "Risk Factors" begin on page 11.

                                                                [Download Table]

                                                         Per Share    Total    
                                                         --------- ------------
                                                                               
Public Offering Price...................................  $16.00   $106,000,000
Underwriting Discounts and Commissions..................  $ 1.12   $  7,420,000
Proceeds, before expenses, to SMTC Corporation..........  $14.88   $ 98,580,000

Concurrent with the offer and sale of shares of our common stock described
in this prospectus, our subsidiary, SMTC Manufacturing Corporation of Canada,   
or SMTC Canada, is offering exchangeable shares for sale in an underwritten     
offering in Canada. Each exchangeable share will be exchangeable by the holder  
into one share of our common stock. We and SMTC Canada will sell a combined     
total of 11,000,000 shares of our common stock and exchangeable shares. SMTC    
Canada will sell 4,375,000 exchangeable shares in the concurrent offering. See  
"Prospectus Summary--Concurrent Offering."                                      

  We have granted the underwriters a 30-day option to purchase up to 1,650,000
additional shares of common stock on the same terms and conditions as set forth 
above to cover over-allotments, if any.                                         

Neither the Securities and Exchange Commission nor any state securities   
commission has approved or disapproved of these securities or determined if     
this prospectus is accurate or complete. Any representation to the contrary is  
a criminal offense.                                                             

Lehman Brothers, on behalf of the underwriters, expects to deliver the    
common stock on or about July 27, 2000.                                         

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

Lehman Brothers                                          RBC Dominion Securities

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

Merrill Lynch & Co.                                          Robertson Stephens 

July 20, 2000                                                                   

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[COVER ART] 

Description of front cover art: The cover art is comprised of a map of the world
showing the location of SMTC's eight manufacturing and technology centers in    
"Denver, CO," "San Jose, CA," "Chihuahua, Mexico," "Toronto, Canada," "Boston,  
MA," "Charlotte, NC," "Austin, TX" and "Cork, Ireland," with captions over the  
map reading, "Fully Integrated Worldwide Facilities" and "Our global reach      
enables us to provide OEMs with the flexibility to manufacture products locally 
in several regions of the world." Bullet points appear under the map, reading "8
manufacturing & technology centers," "850,000 square feet of facilities," "3,000
employees worldwide" and "40 plus surface mount lines". It is also comprised of 
photographs of some of SMTC's facilities, products and processes, with captions 
reading "Fully Integrated Worldwide Facilities," "Web-Based Supply Chain        
Management Strategy," "Team Oriented Production System Focused by Customer," and
"A Leading Provider of Advanced Electronics Manufacturing Services."            

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TABLE OF CONTENTS 

                                                                [Download Table]
        
                                                                [Download Table]

                                      Page
                                      ----
                                          
Prospectus Summary..................    1 
About this Prospectus...............   10 
Risk Factors........................   11 
Use of Proceeds.....................   18 
The Reclassification................   18 
Dividend Policy.....................   19 
Capitalization......................   20 
Dilution............................   22 
Unaudited Pro Forma Consolidated          
 Financial Information..............   23 
Selected Consolidated Financial           
 Data...............................   39 
Management's Discussion and Analysis      
 of Financial Condition and Results       
 of Operations......................   45 
                                                                [Download Table]

                                   Page
                                   ----
                                       
Business.........................   61 
Management.......................   73 
Related Party Transactions.......   84 
Principal Stockholders...........   87 
Description of Indebtedness......   89 
Description of Capital Stock.....   90 
Shares Eligible for Future Sale..   95 
Underwriting.....................   98 
Legal Matters....................  101 
Experts..........................  101 
Additional Information...........  102 
Index to Financial Statements....  F-1 
                                                                [Download Table]
        

You should rely only on the information contained in this prospectus. We  
have not authorized anyone to provide you with information that is different    
from that contained in this prospectus. We are offering to sell, and seeking    
offers to buy, shares of our common stock only in jurisdictions where offers    
and sales are permitted. The information contained in this prospectus is        
accurate only as of the date of this prospectus, regardless of the time of      
delivery of this prospectus or of any sale of shares of our common stock.       

 Until August 14, 2000, all dealers that buy, sell or trade in shares of our
common stock, whether or not participating in this offering, may be required to 
deliver a prospectus. This requirement is in addition to the dealers'           
obligation to deliver a prospectus when acting as underwriters and with respect 
to their unsold allotments or subscriptions.                                    

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PROSPECTUS SUMMARY

This summary highlights information we present in greater detail elsewhere
in this prospectus. This prospectus contains forward-looking statements that    
involve risks and uncertainties. Our actual results could differ materially     
from those discussed in the forward-looking statements as a result of factors   
described under "Risk Factors" and elsewhere in this prospectus.                

SMTC Corporation

  We are a leading provider of advanced electronics manufacturing services, or
EMS, to electronics industry original equipment manufacturers, or OEMs,         
worldwide. We service our customers through eight manufacturing and technology  
centers strategically located in key technology corridors in the United States, 
Canada, Europe and a cost-effective region of Mexico. Our full range of value-  
added services include product design, procurement, prototyping, assembly,      
test, final system build, comprehensive supply chain management, packaging,     
global distribution and after-sales support. Our business is focused on the     
fast-growing communications, networking and computing sectors. Based upon a     
comparison of our 1999 pro forma revenue of approximately $503 million with     
1999 EMS industry revenue data provided by Technology Forecasters, Inc., or     
TFI, we are among the 15 largest EMS companies worldwide. We believe we are     
well-positioned to capitalize on the significant and growing market opportunity 
to provide advanced EMS solutions to OEMs on a global basis.                    

We have customer relationships with over 50 OEMs, many of which date back 
more than five years. Our customers include industry leading OEMs such as ATI,  
Dell, EMC, IBM and Lucent Technologies. We developed these relationships by     
capitalizing on the continuing trend of OEMs to outsource manufacturing         
services, to consolidate their supply base and to form long-term strategic      
partnerships with selected high quality EMS providers. We also have             
relationships with a number of emerging companies in the high-growth            
communications and networking sectors, including Carrier Access, Cobalt         
Networks, Netopia, Suite Technologies and Sycamore Networks. In 1999,           
approximately 55% of our pro forma revenue was generated from the               
communications and networking sectors. We expect to continue to grow our        
business both through the addition of new, high quality customers and the       
expansion of our relationships with our existing customers.                     

The EMS market is large and continues to grow rapidly. According to TFI,  
global EMS industry revenue is forecasted to grow at a compounded annual rate   
of approximately 20%, from $60.0 billion in 1998 to $149.4 billion in 2003. TFI 
forecasts that larger EMS companies with revenue of approximately $500 million  
or greater will grow at 30% or more annually during the same period. We believe 
that the growth for larger EMS companies is projected to be greater than the    
industry average because OEMs are increasingly outsourcing production to larger 
manufacturers that have the ability to provide a total service solution.        
Industry growth is being fueled by the overall growth of the electronics        
industry, the increased outsourcing of manufacturing by OEMs and the            
divestiture of OEM manufacturing assets to EMS businesses. We believe that OEMs 
decide to outsource in order to take advantage of the technology and            
manufacturing expertise of EMS companies, eliminate manufacturing overhead,     
reduce time-to-market of products and improve supply chain efficiency. TFI      
estimates that the percentage of total cost of goods sold in the electronics    
industry which is outsourced for manufacture by OEMs will increase from 9.5% in 
1998 to 17.1% by 2003. According to TFI, the EMS industry is highly fragmented  
with over 3,000 independent EMS companies in existence and the 15 largest       
companies accounting for 42% of the worldwide market in 1998 based on revenue.  
The EMS industry has experienced, and is anticipated to continue to experience, 
significant consolidation. We believe that the fragmented nature of the         
industry will allow us to take advantage of acquisition opportunities to        
increase our scale and geographic scope as well as expand our customer          
relationships and service offerings.                                            

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Since 1995 we and our predecessors have completed six acquisitions and one
new site development which have substantially expanded our geographic reach,    
added manufacturing capacity, enabled us to diversify into new markets and      
broadened our technological capabilities and service offerings. Our corporate   
structure is the result of the July 1999 combination of the former SMTC         
Corporation, or Surface Mount, and HTM Holdings, Inc., or HTM. Combining        
Toronto, Ontario based Surface Mount and Denver, Colorado based HTM provided us 
with increased strategic and operating scale and greater geographic breadth.    
After the combination, we purchased Zenith Electronics' facility in Chihuahua,  
Mexico, which expanded our cost-effective manufacturing capabilities in an      
important geographic region. In September 1999, we established a manufacturing  
presence in the Northeastern United States and expanded our value-added         
services to include high precision enclosures capabilities by acquiring Boston, 
Massachusetts based W.F. Wood. We intend to continue to capitalize on the       
attractive acquisition opportunities that exist in the EMS marketplace. We are  
actively considering potential acquisitions in North America and Europe and are 
presently targeting Asia as an area for future expansion.                       

Our Solutions 

Our solutions capitalize on our technological capabilities and the service
offerings we deliver to OEMs. Key elements of our solutions include:            

.  Customer-focused Team Oriented Production System, or T.O.P.S. Our cross- 
functional teams work as customer-focused business units without      
departmental barriers. As a result, we are able to tailor the         
  manufacturing process for each customer resulting in reduced cycle times
and quick time-to-market capabilities.                                

.  Comprehensive Supply Chain Management; Web-based System. Our supply      
chain management expertise enables us to rapidly scale operations to  
meet customer needs, shift capacity in response to product demand     
 fluctuations, reduce material costs and effectively distribute products
 to our customers or their end-customers. In addition, we have available
and are implementing a web-based supply chain management system which 
allows us to communicate, collaborate and plan with our suppliers and 
customers in real time.                                               

.  Fully Integrated Worldwide Factories. Our global reach enables us to     
provide OEMs with the flexibility to manufacture products locally in  
several regions of the world. All of our assembly locations operate   
under the same model and with the same systems, allowing customers to 
seamlessly transfer their production from one of our facilities to    
another. This gives our customers greater flexibility to transfer     
production to the facility that suits their needs, enhances           
communication among facilities and allows our employees to work       
effectively at any of our sites.                                      

Our Strategy

Our objective is to enhance our position as a leading EMS provider to OEMs
worldwide. We intend to achieve this objective by pursuing the following        
strategies:                                                                     

.  Expand our global presence in strategic markets;                         

.  Continue to provide leading edge supply chain management capabilities;   

.  Strengthen our relationships with leading and emerging global OEMs in    
attractive EMS segments;                                              

.  Provide advanced technological capabilities and comprehensive service    
offerings; and                                                        

.  Pursue selective acquisition opportunities, including asset divestitures 
by OEMs.                                                              

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Recent Developments 

 Pending Acquisition of Pensar Corporation. On May 23, 2000, we entered into
an agreement to acquire Pensar Corporation, or Pensar, an EMS company           
specializing in design engineering services, headquartered in Appleton,         
Wisconsin. We expect to consummate the Pensar acquisition concurrently with the 
closing of this offering or shortly thereafter, subject to satisfaction of      
customary closing conditions. The purchase price is expected to be              
approximately $36.6 million, including acquisition related expenses of          
approximately $0.6 million. The consideration that we will issue and pay to the 
current shareholders of Pensar will consist of 1,188,682 shares of our common   
stock having an aggregate fair market value of approximately $19.0 million, and 
$17.0 million in cash. We will also assume $4.4 million of Pensar's outstanding 
debt. The purchase price was determined through arm's-length negotiations       
between the parties and represents a premium over tangible net book value of    
approximately $26.8 million, which will be amortized over ten years. The        
shareholders of Pensar are not affiliated with us or our shareholders.          

For the fiscal year ended December 31, 1999, Pensar had revenue of $53.0  
million and earnings before interest, taxes, depreciation and amortization of   
$4.8 million. Pensar incurred approximately $0.5 million of one-time, non-      
recurring expenses and $0.1 million of acquisition related professional fees in 
1999. We do not expect these costs to continue after the acquisition. Pensar's  
earnings before interest, taxes, depreciation and amortization for the fiscal   
year ended December 31, 1999 adjusted for one-time charges was $5.4 million.    
We expect the Pensar acquisition to be accretive to earnings. See "Unaudited    
Pro Forma Consolidated Financial Information".                                  

Pensar provides a wide range of electronics design and manufacturing      
services to OEM customers primarily in the telecommunications, networking,      
medical, transportation and industrial sectors. Pensar operates a 75,000 square 
foot design and manufacturing facility in Appleton, Wisconsin, a design center  
in Minneapolis, Minnesota, and sales offices in Milwaukee, Wisconsin, Chicago,  
Illinois and Minneapolis, Minnesota. Pensar's front-end design engineering      
capabilities, extensive test development, design validation and electromagnetic 
compliance testing expertise make it an attractive acquisition for us. Pensar's 
focus on comprehensive front-end design services has positioned Pensar to       
support the needs of its OEM customers during the critical early phases of a    
product's life cycle. As a result of Pensar's design engineering strengths, it  
has become a preferred EMS supplier for the production of several customers'    
products. Pensar also has technology alliances with key partners such as        
Echelon, NETsilicon, SkyTel/MCI WorldCom and Texas Instruments, which           
strengthen Pensar's design engineering and build capabilities and enable it to  
accelerate the time-to-market of its customers' products. Pensar is also a      
developer of applications based on Echelon's LonWorks Technology and has        
expertise in providing design services in areas such as embedded Internet       
applications, control networking, digital signal processing, power electronics, 
and design for compliance with global safety and electromagnetic compatibility  
standards. Pensar's largest customer, Power Conversion Products, accounted for  
22.2% of revenue in 1999. Pensar's next four largest customers in 1999 were     
Best Power Technologies, Computer Network Technology, Hunt Technologies and IMI 
Cornelius, together representing 32.9% of revenues.                             

 We believe that our pending acquisition of Pensar is an important component
of our strategy to expand our value-added service offerings. Pensar will        
provide us with an enhanced design engineering and test capability, additional  
partnerships with leading technology suppliers, a diversification of our        
customer base and an expanded geographic presence in the Midwestern United      
States. Specifically, Pensar will expand our design engineering and test        
capabilities through the addition of 60 engineers and additional manufacturing  
capacity. We expect to achieve cost savings by combining our marketing efforts, 
shifting selected higher volume production to lower cost regions and through    
higher volume purchases of raw materials.                                       

Address 

SMTC Corporation is a Delaware corporation incorporated in 1998. Our      
principal executive office is located at 635 Hood Road, Markham, Ontario,       
Canada L3R 4N6 and our telephone number is (905) 479-1810. We maintain a        
website on the Internet at www.smtc.com. Our website, and the information       
contained therein, is not a part of this prospectus.                            

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The Offering

Shares offered.......................  11,000,000                               

Common Stock offered by SMTC.....    6,625,000 shares                       

Exchangeable Shares offered by                                              
SMTC Canada.....................    4,375,000 exchangeable shares         

Common Stock to be outstanding after   26,013,679 shares of common stock. In    
this offering.......................  calculating the number of shares, we    
                                    included shares issuable upon exchange
                                     of all exchangeable shares that will be
                                      outstanding after this offering pursuant
                                  to the concurrent offering described
                          under "Concurrent Offering."

Use of proceeds......................  We estimate we will receive              
                                    approximately $156.0 million from this
                          offering of common stock and
                                   exchangeable shares. We intend to use
                                      the proceeds from this offering to repay
                          a substantial portion of our
                               indebtedness and to fund the cash
                                   portion of the purchase price for the
                                     pending Pensar acquisition. See "Use of
                                      Proceeds" on page 18 of this prospectus.

Nasdaq National Market symbol for                                               
common stock........................  SMTX                                    

Toronto Stock Exchange symbol for                                               
exchangeable shares.................  SMX                                     

  In addition to the 26,013,679 shares of common stock and exchangeable shares
that will be outstanding after this offering, as of the closing of this         
offering and based on the number of shares issued and options and warrants      
granted as of July 19, 2000, we expect to have additional shares of common      
stock available for issuance after this offering under the following plans and  
arrangements:                                                                   

.  2,492,336 shares issuable under our stock option plans, consisting of:   

.  491,041 shares underlying options outstanding at a weighted average  
 exercise price of $5.78 per share, of which 54,271 are exercisable;

.  2,001,295 shares available for future issuance; and                  

.  578,441 shares issuable upon the exercise of warrants outstanding at a   
weighted average exercise price of $3.41 per share.                   

Concurrent Offering 

  Concurrent with the offer and sale of shares of our common stock pursuant to
this prospectus, our subsidiary, SMTC Canada, is offering exchangeable shares   
for sale in an underwritten offering in Canada. Each exchangeable share will be 
exchangeable at the option of the holder at any time into one share of our      
common stock, subject to compliance with applicable securities laws. We and     
SMTC Canada will sell a combined total of 11,000,000 shares of our common stock 
and exchangeable shares of SMTC Canada. SMTC Canada will sell 4,375,000         
exchangeable shares in the concurrent offering. The exchangeable shares issued  
in the Canadian offering may not be resold or otherwise transferred in the      
United States except pursuant to an effective registration statement under the  
Securities Act of 1933, as amended, or an exemption from registration under     
that Act. The issuance of the shares of our common stock issuable upon exchange 
of the exchangeable shares is registered under the same registration statement  
as the shares of common stock to be offered and sold pursuant to this           
prospectus. The offering of exchangeable shares will enable Canadian investors  
to acquire shares that are not foreign property for Canadian federal income tax 
purposes. The offering of common stock pursuant to this prospectus and the      
offering of the exchangeable shares by SMTC Canada are part of a single         
underwritten offering that will close at the same time.                         

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Summary Consolidated Historical and Pro Forma Financial Statements and Other
Data

The summary consolidated financial data set forth below is only a summary 
and you should read it together with "Selected Consolidated Financial Data,"    
"Unaudited Pro Forma Consolidated Financial Information," "Management's         
Discussion and Analysis of Financial Condition and Results of Operations" and   
our consolidated financial statements and the related notes appearing elsewhere 
in this prospectus.                                                             

.  The results of operations, other financial data and supplemental data    
for 1997 and 1998 represent the results of operations, financial data 
and supplemental data for HTM. For accounting purposes, HTM is        
 considered to have acquired Surface Mount in the July 1999 combination.

.  The historic results of operations included in this prospectus for the   
 year ended December 31, 1999 include a full year of results for HTM, as
well as the results for Surface Mount from July 30, 1999 through      
December 31, 1999 and results for W.F. Wood from September 4, 1999    
through December 31, 1999.                                            

.  The unaudited as adjusted pro forma consolidated statement of operations 
data, other financial data and supplemental data for the year ended   
December 31, 1999 and three months ended March 31, 1999 give effect to
the combination of Surface Mount and HTM, the acquisition of W.F. Wood
  and the pending acquisition of Pensar and reflect the receipt of the net
proceeds from the sale of shares offered by us at an assumed initial  
  public offering price of $16.00 per share and the application of the net
proceeds of the offering as if these transactions had occurred on     
January 1, 1999. The unaudited as adjusted pro forma consolidated     
balance sheet data at December 31, 1999 give effect to the pending    
acquisition of Pensar and this offering as if these transactions had  
occurred on December 31, 1999. See "Use of Proceeds."                 

.  The unaudited as adjusted pro forma consolidated statement of operations 
data, other financial data and supplemental data for the three months 
  ended April 2, 2000 give effect to the pending acquisition of Pensar and
the offering as if these transactions had occurred on January 1, 1999.
The unaudited as adjusted pro forma consolidated balance sheet data at
April 2, 2000 give effect to the pending acquisition of Pensar and the
offering as if these transactions occurred on April 2, 2000.          

Our consolidated financial statements and summary consolidated financial  
data have been prepared in accordance with generally accepted accounting        
principles, or GAAP, in the United States. These principles conform in all      
material respects with Canadian GAAP except as described in Note 23 to our      
consolidated financial statements. The differences between the line items under 
United States GAAP and those as determined under Canadian GAAP are not          
significant except that under Canadian GAAP the 1999 extraordinary loss would   
have been reported as a pre-tax expense of $2.1 million as part of other        
expenses; accordingly, the 1999 loss before income taxes recovery would be $2.8 
million, income taxes recovery would be $0.7 million and net loss would be      
unchanged at $2.1 million under Canadian GAAP.                                  

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                                                        [Enlarge/Download Table]


                                                       Pro forma                           Pro forma       
                                                      as adjusted                         as adjusted      
                                                       Year Ended     Quarter Ended      Quarter Ended     
                         Years Ended December 31,     December 31,  March 31, April 2, March 31, April 2,  
                         ---------------------------  ------------  --------- -------- --------- --------  
                          1997      1998      1999        1999        1999      2000     1999      2000    
                         -------- --------  --------  ------------  --------- -------- --------- --------  
                                       (in millions, except per share amounts)                             
                                                                                                           
SMTC Corporation                                                                                           
Consolidated Statement                                                                                     
of Operations Data:                                                                                        
United States GAAP (a)                                                                                     
Revenue................. $  59.0  $   89.7  $  258.0     $502.7       $23.3    $124.3   $115.3    $140.6   
Cost of sales...........    53.6      82.5     236.3      452.6        21.6     113.1    104.2     126.9   
                         -------  --------  --------     ------       -----    ------   ------    ------   
  Gross profit..........     5.4       7.2      21.7       50.1         1.7      11.2     11.1      13.7   
Selling, general and                                                                                       
 administrative                                                                                            
 expenses...............     2.8       3.2      12.6       29.1         0.7       7.5      6.8       8.9   
Amortization............     --        0.2       2.0        7.0         0.1       1.3      1.8       1.8   
Recapitalization                                                                                           
 expenses (b)...........     --        2.2       --         --          --        --       --        --    
Management fees (c).....     --        0.1       0.7        0.7         0.1       0.1      0.1       0.1   
Former shareholders'                                                                                       
 compensation (d).......     --        --        --         0.6         --        --       0.1       0.1   
Acquisition-related                                                                                        
 bonuses (e)............     --        --        --         2.6         --        --       --        --    
                         -------  --------  --------     ------       -----    ------   ------    ------   
Operating income........     2.6       1.5       6.4       10.1         0.8       2.3      2.3       2.8   
Interest................     0.7       2.0       7.1        1.2         0.8       3.8      --        1.3   
                         -------  --------  --------     ------       -----    ------   ------    ------   
Earnings (loss) before                                                                                     
 income taxes...........     1.9      (0.5)     (0.7)       8.9         --       (1.5)     2.3       1.5   
Income taxes                                                                                               
 (recovery).............     0.7      (0.2)      0.1        5.0         --       (0.1)     1.3       1.1   
                         -------  --------  --------     ------       -----    ------   ------    ------   
Earnings (loss) before                                                                                     
 extraordinary loss.....     1.2      (0.3)     (0.8)    $  3.9 (i)   $ --      $(1.4)    $1.0    $  0.4(i)
                                                         ======       =====    ======   ======    ======   
Extraordinary loss (f)..     --        --       (1.3)                                                      
                         -------  --------  --------                                                       
Net earnings (loss)..... $   1.2  $   (0.3) $   (2.1)                                                      
                         =======  ========  ========                                                       
Earnings (loss) before                                                                                     
 extraordinary loss per                                                                                    
 common share (g):                                                                                         
  Basic................. $  0.40  $  (0.44) $  (1.89)    $ 0.15       $0.03    $(1.16)  $ 0.04    $ 0.02   
  Diluted...............    0.40     (0.44)    (1.89)      0.14        0.03     (1.16)    0.04      0.02   
Weighted average number                                                                                    
 of shares outstanding                                                                                     
 (g):                                                                                                      
  Basic.................     3.1       2.1       1.6       26.0         1.4       2.4     26.0      26.0   
  Diluted...............     3.1       2.1       1.6       26.5         1.4       2.4     26.5      26.7   
Other Financial Data:                                                                                      
Depreciation............ $   2.2  $    2.9  $    6.5     $ 10.2       $ 0.9    $  2.5   $  2.3    $  2.7   
Amortization of                                                                                            
 goodwill...............     --        --        1.5        6.9         --        1.0      1.8       1.8   
Amortization of                                                                                            
 financing costs........     --        0.2       0.5        0.1         0.1       0.3      --        --    
Capital expenditures....     0.9       3.2       4.1       11.8         0.1       2.8      2.3       3.2   
Cash flows from                                                                                            
 operating activities...    (0.4)     (3.8)     (6.6)                   6.0     (25.6)                     
Cash flows from                                                                                            
 financing activities...     1.2       4.3      49.6                   (5.1)     31.1                      
Cash flows from                                                                                            
 investing activities...    (0.4)     (0.5)    (41.4)                  (0.1)     (2.5)                     
Supplemental Data:                                                                                         
EBITDA (h).............. $   4.8  $    4.6  $   14.9     $ 27.3       $ 1.8    $  6.1   $  6.4    $  7.3   
Adjusted EBITDA (h).....     4.9       6.9      15.8       31.4         1.9       6.2      6.6       7.5   

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                                                                [Download Table]

                                                               As of April 2,  
                                  As of December 31, 1999           2000       
                                  -------------------------- ------------------
                                                Pro forma            Pro forma 
                                   Actual      as adjusted   Actual as adjusted
                                  ----------- -------------- ------ -----------
                                                 (in millions)                 
                                                                               
Consolidated Balance Sheet Data:                                               
Cash and short-term                                                            
 investments....................  $       2.1   $       2.0  $  5.1   $  4.5   
Working capital.................         53.4          65.7    84.3     96.0   
Total assets....................        228.1         274.8   265.1    310.8   
Total debt, including current                                                  
 maturities.....................        134.0          15.5   165.4     45.6   
Shareholders' equity............          7.8         166.5     6.4    165.1   

--------                                                                        
(a) Refer to Note 23 to our consolidated financial statements for a description 
of differences between United States GAAP and Canadian GAAP.            

(b) Leveraged recapitalization expenses of $2.2 million for the year ended      
December 31, 1998 include transaction costs and compensation expense    
related to our leveraged recapitalization.                              

(c) The expenses will terminate upon the closing of the offering.               

(d) Reflects compensation paid to the former shareholders of W.F. Wood and      
Pensar.                                                                 

(e) Acquisition-related bonuses for pro forma as adjusted December 31, 1999     
consist of one-time bonuses of $2.3 million paid to management and $0.3 
million paid to employees of W.F. Wood.                                 

(f) The extraordinary loss of $1.3 million in 1999 arises from debt prepayment  
   penalties of $0.8 million, the write-off of unamortized debt financing fees
of $1.0 million and the write-off of unamortized debt discount of $0.3  
million, net of a tax recovery of $0.8 million.                         

(g) Earnings (loss) per common share is calculated after providing for priority 
 rights of preferred shares. Given the changes in our capital structure in
 connection with the 1999 combination of Surface Mount and HTM, historical
  earnings (loss) per share of common stock for the years ended December 31,
1997 and 1998 are not comparable to subsequent years. Pro forma earnings
per share and pro forma weighted average number of common shares        
outstanding include all outstanding common stock and exchangeable shares
   adjusted to give effect to the reclassification assuming that this offering
closes on July 27, 2000 and that the initial public offering price is   
$16.00.                                                                 

(h) EBITDA means earnings before interest expense, income taxes, depreciation   
and amortization. EBITDA is presented because we believe it is a widely 
accepted financial indicator of an entity's ability to incur and service
 debt. Adjusted EBITDA is presented because it is used by our lenders as a
basis for evaluating covenant compliance. Adjusted EBITDA means EBITDA  
 adjusted for management fees, former shareholders' compensation and other
charges described in the following table. However, neither EBITDA nor   
adjusted EBITDA should be considered as an alternative to cash flow from
   operating activities, as a measure of liquidity or as an alternative to net
 income as a measure of operating results in accordance with United States
and Canadian GAAP. Our definition of adjusted EBITDA may differ from    
definitions of adjusted EBITDA used by other companies.                 

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(h) Continued:                                                                  

The following table sets forth a reconciliation of EBITDA to adjusted       
EBITDA for each period included herein:                                     

                                                        [Enlarge/Download Table]


                                          Pro forma                          Pro forma     
                                         as adjusted                        as adjusted    
                                          Year Ended    Quarter Ended      Quarter Ended   
                           Year Ended    December 31, -----------------  ----------------- 
                          December 31,   (unaudited)  March 31, April 2, March 31, April 2,
                         --------------- ------------ --------- -------- --------- --------
                         1997 1998 1999      1999       1999      2000     1999      2000  
                         ---- ---- ----- ------------ --------- -------- --------- --------
                                                   (in millions)                           
                                                                                           
EBITDA.................. $4.8 $4.6 $14.9    $27.3       $1.8      $6.1     $6.4      $7.3  
Loss on disposal of                                                                        
 capital assets (1).....  0.1  --    0.2      0.2        --        --       --        --   
Leveraged                                                                                  
 recapitalization                                                                          
 expenses (2)...........  --   2.2   --       --         --        --       --        --   
Management fees (3).....  --   0.1   0.7      0.7        0.1       0.1      0.1       0.1  
Former W.F. Wood                                                                           
 shareholders'                                                                             
 compensation (4).......  --   --    --       0.1        --        --       0.1       --   
Acquisition-related                                                                        
 bonuses paid to W.F.                                                                      
 Wood management and                                                                       
 employees (5)..........  --   --    --       2.6        --        --       --        --   
Compensation paid to                                                                       
 former Pensar                                                                             
 shareholders (6).......  --   --    --       0.5        --        --       --        0.1  
                         ---- ---- -----    -----       ----      ----     ----      ----  
Adjusted EBITDA......... $4.9 $6.9 $15.8    $31.4       $1.9      $6.2     $6.6      $7.5  
                         ==== ==== =====    =====       ====      ====     ====      ====  

(1)  Reflects losses on disposal of capital assets included in selling,     
general and administrative expenses.                              

(2)  Reflects transaction costs and compensation expense related to our     
leveraged recapitalization.                                       

(3)  Reflects elimination of management fees paid to Bain Capital Partners  
    VI, L.P., Celerity Partners, Inc. and Kilmer Electronics Group Limited
    under our Management Agreement, which will be terminated in connection
with this offering.                                               

(4)  These expenses terminated at the time of the W.F. Wood acquisition.    

(5)  Reflects one-time bonuses paid to management and employees of W.F.     
  Wood in connection with our acquisition of W.F. Wood on September 3,
1999.                                                             

(6)  These expenses will terminate upon completion of the pending Pensar    
acquisition.                                                      

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(i)  The pro forma as adjusted earnings (loss) before extraordinary loss for    
  the year ended December 31, 1999 and for the quarter ended April 2, 2000
does not reflect the after-tax effect of adjusting for the following  
acquisition-related, non-recurring adjustments and interest income:   

.  $0.7 million and $0.1 million of pre-tax management fees paid to Bain    
Capital Partners VI, L.P., Celerity Partners, Inc. and Kilmer         
Electronics Group Limited for the year ended December 31, 1999 and for
the quarter ended April 2, 2000, respectively, under a management     
agreement which will be terminated in connection with this offering;  

.  $0.1 million of pre-tax compensation paid to former W.F. Wood            
shareholders for the year ended December 31, 1999;                    

.  $2.6 million of pre-tax acquisition-related bonuses paid to W.F. Wood    
  management ($2.3 million) and W.F. Wood employees ($0.3 million) for the
year ended December 31, 1999; and                                     

.  $0.5 million and $0.1 million of pre-tax compensation paid to former     
Pensar shareholders for the year ended December 31, 1999 and for the  
quarter ended April 2, 2000, respectively.                            

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                              Pro forma       Pro forma  
                                             as adjusted     as adjusted 
                                             Year Ended     Quarter Ended
                                          December 31, 1999 April 2, 2000
                                          ----------------- -------------
                                                   (in millions)         
                                                                         
Earnings before extraordinary loss.......       $ 3.9           $ 0.4    
Plus:                                                                    
  Management fees........................         0.7             0.1    
  Former W.F. Wood shareholders'                                         
   compensation..........................         0.1             --     
  Acquisition-related bonuses paid to                                    
   management and employees of                                           
   W.F. Wood.............................         2.6             --     
  Former Pensar shareholders'                                            
   compensation..........................         0.5             0.1    
Less:                                                                    
  Tax effect of above adjustments at                                     
   40%...................................        (1.6)           (0.1)   
                                                -----           -----    
  Adjusted earnings before extraordinary                                 
   loss..................................       $ 6.2           $ 0.5    
                                                =====           =====    

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ABOUT THIS PROSPECTUS 

The industry statistical data presented in this prospectus, except where  
otherwise noted, have been compiled from an electronics manufacturing services  
industry report, "Contract Manufacturing from a Global Perspective-1999         
Update," and other data prepared by TFI, a California-based management          
consulting firm specializing in the electronics manufacturing industry.         
Although we have not independently verified the data, we believe that TFI is a  
reliable source of information. In addition, certain statistical data relating  
to us presented in this prospectus have been compiled from our internal surveys 
and schedules that, while believed by us to be reliable, have not been verified 
by any independent sources.                                                     

Some of the statements under the captions "Prospectus Summary," "Risk     
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" and "Business" and elsewhere in this       
prospectus are forward-looking statements. These forward-looking statements     
include, but are not limited to, statements about our plans, objectives,        
expectations and intentions and other statements contained in this prospectus   
that are not historical facts. When used in this prospectus, the words          
"anticipates," "believes," "continue," "could," "estimate," "expects,"          
"intends," "may," "plans," "seeks," "should," or "will," or the negative of     
these terms or similar expressions, are generally intended to identify forward- 
looking statements. Because these forward-looking statements involve risks and  
uncertainties, there are important factors that could cause actual results to   
differ materially from those expressed or implied by these forward-looking      
statements, including the factors discussed under "Risk Factors." You should    
read this prospectus completely and with the understanding that our actual      
future results may be materially different from what we expect. We may not      
update these forward-looking statements after the date of this prospectus, even 
though our situation will change in the future. All forward-looking statements  
attributable to us are expressly qualified by these cautionary statements.      

We have applied for trademark protection for SMTC and the SMTC logo. This 
prospectus contains trademarks, service marks and trade names of companies and  
organizations other than SMTC Corporation.                                      

Except where the context otherwise requires,                              

.   references in this prospectus to "SMTC," "we," " our," "us" and similar   
expressions are references to SMTC Corporation, together with its direct
and indirect subsidiaries (and for periods prior to the July 1999       
 combination of our predecessors, SMTC Corporation and HTM Holdings, Inc.,
include both of our predecessors and their respective subsidiaries),    

.   references in this prospectus to "Surface Mount" are references to SMTC   
Corporation and its affiliated companies, including The Surface Mount   
Technology Centre Inc., prior to the July 1999 combination of SMTC      
Corporation and HTM Holdings, Inc.,                                     

.   references in this prospectus to "shares" are references, collectively, to
  shares of common stock offered by SMTC and the exchangeable shares offered
by SMTC Canada in the concurrent offering described under "Concurrent   
Offering,"                                                              

.   references in this prospectus to this "offering" are references to SMTC's 
   offering of common stock and SMTC Canada's offering of exchangeable shares,
and                                                                     

.   references in this prospectus to "US$" or "$" are to U.S. dollars and all 
references to "C$" are to Canadian dollars.                             

 Unless otherwise indicated, the information in this prospectus is presented
as though (i) the reclassification described under "The Reclassification" has   
occurred, (ii) the exchangeable shares of SMTC Canada outstanding on the        
closing of this offering have been exchanged for our common stock, and (iii)    
the underwriters' over-allotment option is not exercised.                       

With the exception of references to "pro forma revenue", unless otherwise 
indicated, the information in this prospectus is presented as though the        
pending acquisition of Pensar has not been completed.                           

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RISK FACTORS

You should carefully consider the risks described below before making a   
decision to buy our shares. If any of the following risks actually occur, our   
business could be harmed. In that event, the trading price of our shares might  
decline, and you could lose all or part of your investment. You should also     
refer to the other information set forth in this prospectus, including our      
financial statements and related notes.                                         

Risks Relating to Our Business and Industry                                     

A majority of our revenue comes from a small number of customers; if we lose    
any of our largest customers, our revenue could decline significantly.          

  Our largest customer in 1999 was Dell, which represented approximately 31.3%
of our total pro forma revenue in 1999. Our next five largest customers         
collectively represented an additional 26.4% of our total pro forma revenue in  
1999. We expect to continue to depend upon a relatively small number of         
customers for a significant percentage of our revenue. In addition to having a  
limited number of customers, we manufacture a limited number of products for    
each of our customers. If we lose any of our largest customers or any product   
line manufactured for one of our largest customers, we could experience a       
significant reduction in our revenue. For example, in 1999 we manufactured two  
products for Dell, servers, which represented 13.7%, or approximately $69       
million, of our total pro forma revenue in 1999 of approximately $503 million,  
and riser cards, which represented 17.6%, or approximately $88 million, of our  
total pro forma revenue in 1999. In 1999 Dell informed us that, as part of its  
efforts to rationalize its supplier network, it intends to consolidate its      
server product manufacturing by shifting additional business to us while at the 
same time it intends to discontinue using us to manufacture its riser cards, a  
component used in personal computers. We expect that the Dell riser card        
business will not contribute any revenue beyond the second half of 2000. Also,  
the insolvency of one or more of our largest customers or the inability of one  
or more of our largest customers to pay for its orders could decrease revenue.  
As many of our costs and operating expenses are relatively fixed, a reduction   
in net revenue can decrease our profit margins and adversely affect our         
business, financial condition and results of operations.                        

Our industry is very competitive and we may not be successful if we fail to     
compete effectively.                                                            

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

We may experience variability in our operating results, which could negatively  
impact the price of our shares.                                                 

Our annual and quarterly results have fluctuated in the past. The reasons 
for these fluctuations may similarly affect us in the future. Historically, our 
calendar fourth quarter revenue has been highest and our calendar first quarter 
revenue has been lowest. Prospective investors should not rely on results of    
operations in any past period to indicate what our results will be for any      
future period. Our operating results may fluctuate in the future as a result of 
many factors, including:                                                        

.  variations in the timing and volume of customer orders relative to our   
manufacturing capacity;                                               

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.  variations in the timing of shipments of products to customers;          

.  introduction and market acceptance of our customers' new products;       

.  changes in demand for our customers' existing products;                  

.  the accuracy of our customers' forecasts of future production            
requirements;                                                         

.  effectiveness in managing our manufacturing processes;                   

.  changes in competitive and economic conditions generally or in our       
customers' markets;                                                   

.  changes in the cost or availability of components or skilled labor; and  

.  the timing of, and the price we pay for, acquisitions and related        
integration costs.                                                    

In addition, most of our customers typically do not commit to firm        
production schedules more than 30 to 90 days in advance. Accordingly, we cannot 
forecast the level of customer orders with certainty. This makes it difficult   
to schedule production and maximize utilization of our manufacturing capacity.  
In the past, we have been required to increase staffing, purchase materials and 
incur other expenses to meet the anticipated demand of our customers. Sometimes 
anticipated orders from certain customers have failed to materialize, and       
sometimes delivery schedules have been deferred as a result of changes in a     
customer's business needs. Any material delay, cancellation or reduction of     
orders from our largest customers could cause our revenue to decline            
significantly. In addition, as many of our costs and operating expenses are     
relatively fixed, a reduction in customer demand can decrease our gross margins 
and adversely affect our business, financial condition and results of           
operations. On other occasions, customers have required rapid and unexpected    
increases in production which have placed burdens on our manufacturing          
capacity.                                                                       

  Any of these factors or a combination of these factors could have a material
adverse effect on our business, financial condition and results of operations.  

Shortages or price fluctuations in component parts specified by our customers   
could delay product shipment and affect our profitability.                      

A substantial portion of our revenue is derived from "turnkey"            
manufacturing. In turnkey manufacturing, we provide both the materials and the  
manufacturing services. If we fail to manage our inventory effectively, we may  
bear the risk of fluctuations in materials costs, scrap and excess inventory,   
all of which can have a material adverse effect on our business, financial      
condition and results of operations. We are required to forecast our future     
inventory needs based upon the anticipated demands of our customers.            
Inaccuracies in making these forecasts or estimates could result in a shortage  
or an excess of materials. A shortage of materials could lengthen production    
schedules and increase costs. An excess of materials may increase the costs of  
maintaining inventory and may increase the risk of inventory obsolescence, both 
of which may increase expenses and decrease profit margins and operating        
income.                                                                         

Many of the products we manufacture require one or more components that we
order from sole-source suppliers. Supply shortages for a particular component   
can delay production of all products using that component or cause cost         
increases in the services we provide. In addition, in the past, some of the     
materials we use, such as memory and logic devices, have been subject to        
industry-wide shortages. As a result, suppliers have been forced to allocate    
available quantities among their customers and we have not been able to obtain  
all of the materials desired. Our inability to obtain these needed materials    
could slow production or assembly, delay shipments to our customers, increase   
costs and reduce operating income. Also, we may bear the risk of periodic       
component price increases. Accordingly, some component price increases could    
increase costs and reduce operating income. Also, we rely on a variety of       
common carriers for materials transportation and route materials through        
various world ports. A work stoppage, strike or shutdown of a major port or     
airport could result in manufacturing and shipping delays or expediting         
charges, which could have a material adverse effect on our business, financial  
condition and results of operations.                                            

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We have experienced significant growth in a short period of time and may have   
trouble integrating acquired businesses and managing our expansion.             

Since 1996, we and Surface Mount have together completed six acquisitions.
Acquisitions may involve numerous risks, including difficulty in integrating    
operations, technologies, systems, and products and services of acquired        
companies, diversion of management's attention and disruption of operations,    
increased expenses and working capital requirements, entering markets in which  
we have limited or no prior experience and where competitors in such markets    
have stronger market positions and the potential loss of key employees and      
customers of acquired companies. In addition, acquisitions may involve          
financial risks, such as the potential liabilities of the acquired businesses,  
the dilutive effect of the issuance of additional equity securities, the        
incurrence of additional debt, the financial impact of transaction expenses and 
the amortization of goodwill and other intangible assets involved in any        
transactions that are accounted for using the purchase method of accounting,    
and possible adverse tax and accounting effects.                                

  We have a limited history of owning and operating our acquired businesses on
a consolidated basis. There can be no assurance that we will be able to meet    
performance expectations or successfully integrate our acquired businesses on a 
timely basis without disrupting the quality and reliability of service to our   
customers or diverting management resources. Our rapid growth has placed and    
will continue to place a significant strain on management, our financial        
resources, and on our information, operating and financial systems. If we are   
unable to manage this growth effectively, it may have an adverse effect on our  
business, financial condition and results of operations.                        

Our acquisition strategy may not succeed.                                       

 As part of our business strategy, we expect to continue to grow by pursuing
acquisitions of other companies, assets or product lines that complement or     
expand our existing business. Competition for attractive companies in our       
industry is substantial. We cannot assure you that we will be able to identify  
suitable acquisition candidates or finance and complete transactions that we    
select. Our failure to execute our acquisition strategy may have a material     
adverse effect on our business, financial condition and results of operations.  
Also, if we are not able to successfully complete acquisitions, we may not be   
able to compete with larger EMS providers who are able to provide a total       
customer solution.                                                              

Our pending acquisition of Pensar may not be consummated or may not be          
successful.                                                                     

On May 23, 2000, we entered into a stock purchase agreement to acquire    
Pensar. The agreement is subject to customary closing conditions, which must be 
satisfied or waived for this transaction to be completed. Although we intend to 
consummate this transaction concurrently with this offering or shortly          
thereafter, there can be no assurance we will successfully complete this        
acquisition. In addition, if we are unable to effectively integrate Pensar's    
business into our existing business, it may have an adverse effect on our       
earnings or revenue growth.                                                     

If we do not effectively manage the expansion of our operations, our business   
may be harmed.                                                                  

  We have grown rapidly in recent periods, and this growth may be difficult to
sustain. Internal growth and further expansion of services may require us to    
expand our existing operations and relationships. We plan to expand our design  
and development services and our manufacturing capacity by expanding our        
facilities and by adding new equipment. Expansion has caused, and is expected   
to continue to cause, strain on our infrastructure, including our managerial,   
technical, financial and other resources. Our ability to manage future growth   
effectively will require us to attract, train, motivate and manage new          
employees successfully, to integrate new employees into our operations and to   
continue to improve our operational and information systems. We may experience  
inefficiencies as we integrate new operations and manage geographically         
dispersed operations. We may incur cost overruns. We may encounter construction 
delays, equipment delays or shortages, labor shortages and disputes, and        
production start-up problems that could adversely affect our growth and our     
ability to meet customers' delivery schedules. We may not be able to obtain     
funds for this expansion on acceptable terms or at                              

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all. In addition, we expect to incur new fixed operating expenses associated    
with our expansion efforts, including increases in depreciation expense and     
rental expense. If our revenue does not increase sufficiently to offset these   
expenses, our business, financial condition and results of operations would be  
adversely affected.                                                             

We are dependent upon the electronics industry which produces technologically   
advanced products with short life cycles.                                       

  Substantially all of our customers are in the electronics industry, which is
characterized by intense competition, short product life-cycles and significant 
fluctuations in product demand. In addition, the electronics industry is        
generally subject to rapid technological change and product obsolescence. If    
our customers are unable to create products that keep pace with the changing    
technological environment, their products could become obsolete and the demand  
for our services could significantly decline. Our success is largely dependent  
on the success achieved by our customers in developing and marketing their      
products. Furthermore, this industry is subject to economic cycles and has in   
the past experienced downturns. A recession or a downturn in the electronics    
industry would likely have a material adverse effect on our business, financial 
condition and results of operations.                                            

If we are unable to respond to rapidly changing technology and process          
development, we may not be able to compete effectively.                         

The market for our products and services is characterized by rapidly      
changing technology and continuing process development. The future success of   
our business will depend in large part upon our ability to maintain and enhance 
our technological capabilities, to develop and market products and services     
that meet changing customer needs, and to successfully anticipate or respond to 
technological changes on a cost-effective and timely basis. In addition, the    
EMS industry could in the future encounter competition from new or revised      
technologies that render existing technology less competitive or obsolete or    
that reduce the demand for our services. There can be no assurance that we will 
effectively respond to the technological requirements of the changing market.   
To the extent we determine that new technologies and equipment are required to  
remain competitive, the development, acquisition and implementation of such     
technologies and equipment may require us to make significant capital           
investments. There can be no assurance that capital will be available for these 
purposes in the future or that investments in new technologies will result in   
commercially viable technological processes.                                    

Our business will suffer if we are unable to attract and retain key personnel   
and skilled employees.                                                          

We depend on the services of our key senior executives, including Paul    
Walker, Edward Johnson, Philip Woodard, Gary Walker and Derek D'Andrade. Our    
business also depends on our ability to continue to recruit, train and retain   
skilled employees, particularly executive management, engineering and sales     
personnel. Recruiting personnel in our industry is highly competitive. In       
addition, our ability to successfully integrate acquired companies depends in   
part on our ability to retain key management and existing employees at the time 
of the acquisition. There can be no assurance that we will be able to retain    
our executive officers and key personnel or attract additional qualified        
management in the future.                                                       

Risks particular to our international operations could adversely affect our     
overall results.                                                                

 Our success will depend among other things on successful expansion into new
foreign markets in order to offer our customers lower cost production options.  
Entry into new foreign markets may require considerable management time as well 
as start-up expenses for market development, hiring and establishing office     
facilities before any significant revenue is generated. As a result, operations 
in a new foreign market may operate at low profit margins or may be             
unprofitable.                                                                   

Pro forma revenue generated outside of the United States and Canada was   
approximately 5.5% in 1999. International operations are subject to inherent    
risks, including:                                                               

.  fluctuations in the value of currencies and high levels of inflation;    

.  longer payment cycles and greater difficulty in collecting accounts      
receivable;                                                           

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.  unexpected changes in and the burdens and costs of compliance with a     
variety of foreign laws;                                              

.  political and economic instability;                                      

.  increases in duties and taxation;                                        

.  inability to utilize net operating losses incurred by our foreign        
operations to reduce our U.S. and Canadian income taxes;              

.  imposition of restrictions on currency conversion or the transfer of     
funds; and                                                            

.  trade restrictions.                                                      

We are subject to a variety of environmental laws which expose us to potential  
financial liability.                                                            

Our operations are regulated under a number of federal, state, provincial,
local and foreign environmental and safety laws and regulations, which govern,  
among other things, the discharge of hazardous materials into the air and water 
as well as the handling, storage and disposal of such materials. Compliance     
with these environmental laws is a major consideration for us because we use    
metals and other hazardous materials in our manufacturing processes. We may be  
liable under environmental laws for the cost of cleaning up properties we own   
or operate if they are or become contaminated by the release of hazardous       
materials, regardless of whether we caused such release. In addition we, along  
with any other person who arranges for the disposal of our wastes, may be       
liable for costs associated with an investigation and remediation of sites at   
which we have arranged for the disposal of hazardous wastes, if such sites      
become contaminated, even if we fully comply with applicable environmental      
laws. In the event of a contamination or violation of environmental laws, we    
could be held liable for damages including fines, penalties and the costs of    
remedial actions and could also be subject to revocation of our discharge       
permits. Any such revocations could require us to cease or limit production at  
one or more of our facilities, thereby having a material adverse effect on our  
operations. Environmental laws could also become more stringent over time,      
imposing greater compliance costs and increasing risks and penalties associated 
with any violation, which could have a material adverse effect on our business, 
financial condition and results of operations.                                  

Risks Related to Our Capital Structure                                          

We expect to use substantially all of the net proceeds of this offering to      
repay indebtedness and, as a result, we may be unable to meet our future        
capital and liquidity requirements.                                             

We expect to use substantially all of the net proceeds of this offering to
repay indebtedness. We expect that our principal sources of funds following     
this offering will be cash generated from operating activities and borrowings   
under our senior credit facility. After this offering, we expect to have        
$100 million available to borrow under our senior credit facility. No assurance 
can be given that these funds will provide us with sufficient liquidity and     
capital resources for us to meet our current and future financial needs. In the 
past we have required and, after this offering we may require, additional       
equity or debt financing to meet our working capital requirements or to finance 
acquisitions. There can be no assurance that additional financing will be       
available when required or, if available, will be on terms satisfactory to us.  
Any failure to obtain such additional financing could prevent us from meeting   
our working capital requirements or from financing acquisitions, and could have 
a material adverse effect on our business, financial condition and results of   
operations.                                                                     

Our future indebtedness could adversely affect our financial health and         
severely limit our ability to plan for or respond to changes in our business.   

We plan to incur indebtedness from time to time to finance acquisitions or
capital expenditures or for other purposes. This debt could have adverse        
consequences for our business, including:                                       

.  We will be more vulnerable to adverse general economic conditions;       

.  We will be required to dedicate a substantial portion of our cash flow   
 from operations to repayment of debt, limiting the availability of cash
for other purposes;                                                   

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.  We may have difficulty obtaining additional financing in the future for  
working capital, capital expenditures, acquisitions, general corporate
purposes or other purposes;                                           

.  We may have limited flexibility in planning for, or reacting to, changes 
in our business and industry;                                         

.  We could be limited by financial and other restrictive covenants in our  
credit arrangements in our borrowing of additional funds; and         

.  We may fail to comply with the covenants under which we borrowed our     
indebtedness which could result in an event of default. If an event of
default occurs and is not cured or waived, it could result in all     
amounts outstanding, together with accrued interest, becoming         
immediately due and payable. If we were unable to repay such amounts, 
the lenders could proceed against any collateral granted to them to   
secure that indebtedness.                                             

There can be no assurance that our leverage and such restrictions will not
materially and adversely affect our ability to finance our future operations or 
capital needs or to engage in other business activities. In addition, our       
ability to pay principal and interest on our indebtedness, to meet our          
financial and restrictive covenants and to satisfy our other debt obligations   
will depend upon our future operating performance, which will be affected by    
prevailing economic conditions and financial, business and other factors,       
certain of which are beyond our control, as well as the availability of         
revolving credit borrowings under our senior credit facility or successor       
facilities.                                                                     

The terms of our indebtedness agreements impose significant restrictions on our 
ability to operate.                                                             

The terms of our current indebtedness agreements restrict, among other    
things, our ability to incur additional indebtedness, pay dividends or make     
certain other restricted payments, consummate certain asset sales, enter into   
certain transactions with affiliates, merge, consolidate or sell, assign,       
transfer, lease, convey or otherwise dispose of all or substantially all of our 
assets. We are also required to maintain specified financial ratios and satisfy 
certain financial condition tests, which further restrict our ability to        
operate as we choose. Substantially all our assets and those of our             
subsidiaries are pledged as security under our senior credit facility. See      
"Description of Indebtedness."                                                  

Investment funds affiliated with Bain Capital, Inc., investment funds           
affiliated with Celerity Partners, Inc., Kilmer Electronics Group Limited and   
certain members of management will continue to have significant influence over  
our business after this offering, and could delay, deter or prevent a change of 
control or other business combination.                                          

Upon completion of this offering, investment funds affiliated with Bain   
Capital, Inc., investment funds affiliated with Celerity Partners, Inc., Kilmer 
Electronics Group Limited and certain members of management will hold           
approximately 14.8%, 13.5%, 7.9% and 13.8%, respectively, of our outstanding    
shares. In addition, up to three of the ten directors who will serve on our     
board following this offering will be representatives of the Bain funds, up to  
two will be representatives of the Celerity funds, up to two will be            
representatives of Kilmer Electronics Group Limited and up to three will be     
members of management. By virtue of such stock ownership and board              
representation, the Bain funds, the Celerity funds, Kilmer Electronics Group    
Limited and certain members of management will continue to have a significant   
influence over all matters submitted to our stockholders, including the         
election of our directors, and to exercise significant control over our         
business, policies and affairs. Such concentration of voting power could have   
the effect of delaying, deterring or preventing a change of control or other    
business combination that might otherwise be beneficial to our stockholders.    

Provisions in our charter documents and state law may make it harder for others 
to obtain control of us even though some stockholders might consider such a     
development favorable.                                                          

  Provisions in our charter, by-laws and certain provisions under Delaware law
may have the effect of delaying or preventing a change of control or changes in 
our management that stockholders consider favorable or beneficial. If a change  
of control or change in management is delayed or prevented, the market price of 
our shares could suffer. Please see "Description of Capital Stock."             

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Risks Related to this Offering                                                  

There may not be an active market for our shares, making it difficult to sell   
the shares you purchase.                                                        

Prior to this offering, there has been no public market for our shares. We
cannot assure you that an active trading market for our shares will develop or  
be sustained after this offering. The initial public offering price for our     
shares was determined by negotiations between the underwriters and us. We       
cannot assure you that the initial public offering price will correspond to the 
price at which our shares will trade in the public market subsequent to the     
offering or that the price of our shares available in the public market will    
reflect our actual financial performance.                                       

Our share price could be volatile and could drop unexpectedly following this    
offering, possibly subjecting us to securities litigation.                      

Historically, stock prices and trading volumes for newly public companies 
fluctuate widely for a number of reasons, including some reasons that may be    
unrelated to their businesses or results of operations. This type of market     
volatility could depress the price of our shares without regard to our          
operating performance. In addition, our operating results may be below the      
expectations of public market analysts or investors. If this were to occur, the 
market price of our shares could decrease, perhaps significantly.               

In the past, following periods of volatility in the market price of a     
particular company's securities, securities class action litigation has often   
been brought against that company. Many companies have been subject to this     
type of litigation. We may also become involved in this type of litigation.     
Litigation is often expensive and diverts management's attention and resources. 
Such litigation, if it were to occur, could have a material adverse effect upon 
our business, financial condition and results of operations.                    

Future sales of our shares, including those purchased in this offering, may     
depress our stock price.                                                        

Sales of a substantial number of shares of our common stock in the public 
market by our stockholders after this offering could depress the market price   
of our common stock and could impair our ability to raise capital through the   
sale of additional equity securities. Based on shares outstanding as of May 31, 
2000, upon completion of this offering we will have outstanding 26,013,679      
shares of common stock, including shares of common stock issuable upon the      
exchange of exchangeable shares and assuming no exercise of the underwriters'   
over-allotment option. Of these shares, the shares of common stock sold in this 
offering will be freely tradeable, without restriction, in the public market.   
After the lock-up agreements pertaining to this offering expire 180 days from   
the date of this prospectus, an additional 13,527,799 shares of common stock    
will be eligible for sale in the public market, subject to compliance with      
applicable securities laws. See "Shares Eligible for Future Sale" for a         
description of shares of common stock that are available for future sale.       

In addition, 739,788 of the shares subject to outstanding options and     
warrants will be exercisable, and if exercised, available for sale 180 days     
after the date of this prospectus. Also, the exchangeable shares sold in this   
offering will be freely convertible to our common stock, and any such common    
stock will be freely tradeable without restriction in the public market in the  
United States, subject to compliance with applicable securities laws. After the 
lock-up agreements pertaining to this offering expire 180 days from the date of 
this prospectus, an additional 1,469,445 exchangeable shares will be freely     
convertible to our common stock, and any such common stock will be freely       
tradeable without restriction in the United States, subject to compliance with  
applicable securities laws. The exchange by the holders of exchangeable shares  
of a substantial number of exchangeable shares into shares of our common stock  
within a relatively short period of time could have the effect of depressing    
the market price of our common stock and could impair our ability to raise      
capital through the sale of additional equity securities.                       

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The initial public offering price is significantly higher than the book value   
of our shares and you will experience immediate and substantial dilution in the 
value of your investment.                                                       

The initial public offering price per share significantly exceeds the net 
tangible book value per share. Accordingly, investors purchasing shares in this 
offering will suffer immediate and substantial dilution of their investment.    
Additional dilution will occur upon the exercise of outstanding options. See    
"Dilution."                                                                     

USE OF PROCEEDS 

Our net proceeds from the sale of the 11,000,000 shares offered in this   
offering, after deducting the underwriting discounts and commissions and        
estimated offering expenses payable by us, including a fee of $1.8 million      
payable in connection with the termination of our management agreement, will be 
approximately $156.0 million. If the underwriters' over-allotment option is     
exercised in full, our net proceeds will be approximately $180.6 million. We    
intend to use the net proceeds to: (i) repay a portion of the amounts           
outstanding under the term loans and a portion of the amounts outstanding under 
the revolving credit facilities under our senior credit facility, (ii) repay    
all amounts outstanding under our subordinated notes, (iii) repay all amounts   
outstanding under our demand notes and (iv) finance the cash portion of the     
purchase price for the pending Pensar acquisition.                              

Our senior credit facility consists of multi-tranche term loans and a     
revolving credit facility with final maturity dates in September 2006 and July  
2004, respectively, and an aggregate principal balance of $162.4 million as of  
April 2, 2000. This indebtedness was incurred to refinance existing debt and to 
finance our acquisition of the Chihuahua facility and W.F. Wood. The loans      
under this facility bear interest at varying rates based, at our option, on     
either Eurodollar base rate plus 300 to 475 basis points or the bank rate plus  
125 to 175 basis points. The weighted average interest rate for the loans       
outstanding under the senior credit facility at April 2, 2000 was 9.7%. In      
order to obtain additional working capital to finance the growth of our         
business, we entered into a senior subordinated loan agreement on May 18, 2000, 
under which we issued an aggregate of $5.0 million in principal amount of       
subordinated notes to some of our shareholders or their affiliates, including   
some of the Bain funds, Celerity Partners III, L.P., Kilmer, Paul Walker, Derek 
D'Andrade, Philip Woodard and General Electric Capital Corporation, in the      
amounts of $1,589,782, $1,268,381, $909,605, $529,190, $529,190, $101,694 and   
$72,155, respectively. The subordinated notes bear simple interest at 15.0% per 
year and will be repaid on the completion of the offering with a portion of the 
net proceeds of the offering. In addition, on July 3, 2000 Kilmer and an        
affiliate of the Bain funds purchased demand notes from us, for a purchase      
price equal to the principal amount of the notes, in the amounts of $4,188,292  
and $5,736,708, respectively. Of these demand notes, $5,925,000 in aggregate    
principal amount are secured by a portion of our fixed assets and the fixed     
assets of some of our subsidiaries. The demand notes bear interest of 3% of the 
principal amount accruing on the date of issuance and 13.75% per year and are   
payable to the holders of the notes at any time upon demand. See "Description   
of Indebtedness."                                                               

The $1.8 million fee payable in connection with the termination of our    
management agreement will be paid to Bain Capital Partners VI, L.P., Celerity   
Partners, Inc. and Kilmer in the amounts of $720,000, $720,000 and $360,000,    
respectively. See "Related Party Transactions."                                 

Pending use of the net proceeds of this offering, we intend to invest the 
net proceeds in short-term, interest-bearing, investment-grade marketable       
securities.                                                                     

THE RECLASSIFICATION

SMTC currently has three classes of common stock, designated as Class A   
common stock, Class L common stock and Class N common stock. The Class L common 
stock is identical to the Class A common stock, except that each share of Class 
L common stock is entitled to a preferential payment upon any distribution by   
SMTC to holders of SMTC capital stock, whether by dividend, liquidating         
distribution or otherwise, equal to the original cost of such share, $162.00,   
plus an amount which accrues on a daily basis at a                              

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rate of 12.0% per annum, compounded quarterly. After payment of this            
preference amount, each share of Class A common stock and Class L common stock  
shares equally in all distributions to holders of SMTC capital stock. As of     
July 27, 2000, the expected closing date of this offering, the preference       
amount will be $182.16 per share of Class L common stock. The Class N common    
stock is non-participating and represents voting rights only.                   

In addition, SMTC Canada currently has outstanding Class L exchangeable   
shares that are exchangeable into shares of SMTC Class L common stock on a      
one-for-one basis. SMTC Canada also has outstanding Class Y shares that carry   
dividend and voting rights on the same basis as the Class L exchangeable        
shares. The holder of the Class Y shares has entered into an agreement with     
SMTC under which the Class Y shares are exchangeable for shares of Class L      
common stock on a one-for-one basis. See "Description of Capital Stock."        

Immediately prior to the completion of this offering, we will:            

.  purchase the outstanding SMTC Canada Class Y shares in exchange for      
shares of Class L common stock;                                       

.  convert each of the outstanding shares of Class L common stock into one  
share of Class A common stock plus an additional number of shares of  
  Class A common stock determined by dividing the preference amount by the
value of a share of Class A common stock based on the initial public  
offering price;                                                       

.  convert each share of Class A common stock into 3.6745 shares of common  
stock;                                                                

.  redeem all outstanding shares of Class N common stock and issue one      
share of special voting stock which will be held by a trustee for the 
benefit of the holders of exchangeable shares; and                    

.  convert each Class L exchangeable share into exchangeable shares of the  
 same class as those being offered in this offering in the same ratio as
 shares of Class L common stock are converted to shares of common stock.

The transactions described above are collectively referred to in this     
prospectus as the "reclassification."                                           

As of July 27, 2000, based on an initial public offering price of $16.00  
per share, 15,013,679 shares of common stock will be outstanding immediately    
after the reclassification but prior to this offering, assuming the exchange    
of all exchangeable shares and the issuance of 1,188,682 shares in connection   
with the Pensar acquisition. The actual number of shares of common stock that   
will be issued as a result of the reclassification is subject to change based   
on the closing date of this offering. Fractional shares otherwise issuable as   
a result of the reclassification will be rounded to the nearest whole number.   

DIVIDEND POLICY 

SMTC Corporation has never declared or paid a cash dividend on its shares,
and we currently do not anticipate paying any cash dividends in the             
foreseeable future. Our existing credit facilities restrict our ability to pay  
dividends. We currently intend to retain earnings and cash flow to finance      
future operations and expansion and to reduce indebtedness. See "Management's   
Discussion and Analysis of Financial Condition and Results of Operations."      

On closing of this offering, SMTC and its Canadian affiliates will enter  
into a support agreement under which SMTC will agree to maintain the economic   
equivalence of the exchangeable shares and the common stock by, among other     
things, not declaring and paying dividends on the common stock unless SMTC      
Canada is able to declare and pay economically equivalent dividends on the      
exchangeable shares in accordance with the terms of those shares. SMTC Canada   
may also declare stock dividends from time to time as necessary to maintain     
the one-for-one economic equivalence between exchangeable shares and shares of  
common stock. The SMTC Canada exchangeable shares do not carry any other right  
to receive dividends from SMTC Canada. Although SMTC Canada has paid dividends  
on its shares in the past, it does not currently anticipate paying any cash     
dividends on the exchangeable shares in the forseeable future.                  

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and our      
capitalization as of April 2, 2000 and April 30, 2000.                          

.  on an actual basis; and                                                  

.  on a pro forma as adjusted basis after giving effect to (1) the          
reclassification as if it had occurred on April 2, 2000 or April 30,  
2000, as applicable; (2) our sale of common stock and the common stock
  issuable upon exchange of the exchangeable shares offered by SMTC Canada
  (see "Prospectus Summary--Concurrent Offering"); and (3) the application
 of $156.0 million from the sale of shares in this offering to repay our
long-term debt as described in "Use of Proceeds", based on an initial 
public offering price of $16.00 per share and after deducting the     
estimated underwriting discounts and commissions and our estimated    
offering expenses.                                                    

You should read this information together with our consolidated financial 
statements and the related notes to those statements and "Management's          
Discussion and Analysis of Financial Condition and Results of Operations"       
included in this prospectus.                                                    

                                                                [Download Table]

                                     April 2, 2000         April 30, 2000       
                                   -------------------   ---------------------- 
                                            Pro Forma                Pro Forma  
                                   Actual  as adjusted   Actual     as adjusted 
                                   ------  -----------   ------     ----------- 
                                     (in millions, except share data)           
                                                                                
Cash and cash equivalents......... $  5.1    $  5.1      $  1.6       $  1.6    
                                   ======    ======      ======       ======    
Short-term obligations............    4.3       1.3         4.1          1.1    
Long-term obligations:                                                          
  Long-term debt..................  159.4       6.4       156.5          3.5    
  Capital lease obligations.......    1.6       1.6         1.5          1.5    
                                   ------    ------      ------       ------    
    Total long-term obligations...  161.0       8.0       158.0          5.0    
Shareholders' equity:                                                           
  Common stock, $0.01 par value,                                                
   no shares authorized or issued                                               
   on an actual basis; 60,000,000                                               
   shares authorized and                                                        
   26,013,679 shares issued and                                                 
   outstanding on a pro forma                                                   
   basis (a)......................     --       0.3          --          0.3    
  Class A common stock, $0.001 par                                              
   value, 12,820,000 shares                                                     
   authorized; 2,447,782 shares                                                 
   issued and outstanding on an                                                 
   actual basis; no shares                                                      
   authorized, issued and                                                       
   outstanding on a pro forma                                                   
   basis (b)......................     --        --          --           --    
  Class L common stock, $0.001 par                                              
   value, 300,000 shares                                                        
   authorized; 154,168 shares                                                   
   issued and outstanding on an                                                 
   actual basis; no shares                                                      
   authorized, issued and                                                       
   outstanding on a pro forma                                                   
   basis (c)......................     --        --          --           --    
  Class N common stock, $0.001 par                                              
   value, 125,000 shares                                                        
   authorized; 113,408 shares                                                   
   issued and outstanding on an                                                 
   actual basis; no shares                                                      
   authorized, issued and                                                       
   outstanding on a pro forma                                                   
   basis..........................     --        --          --           --    
Additional paid-in capital........   11.8     167.5        11.8        167.5    
Retained earnings (deficit).......   (5.8)     (8.1)(d)    (5.8)(e)     (8.1)(d)
Other.............................    0.3       0.3         0.3          0.3    
                                   ------    ------      ------       ------    
    Total shareholders' equity....    6.3     160.0         6.3        160.0    
                                   ------    ------      ------       ------    
    Total capitalization.......... $171.6    $169.3      $168.4       $166.1    
                                   ======    ======      ======       ======    

(a)   Does not include (i) 671,378 shares of common stock reserved for issuance 
   pursuant to our Amended and Restated 1998 Equity Incentive Plan or (ii)
578,441 shares of common stock reserved for issuance pursuant to    
outstanding warrants as of April 2, 2000 and April 30, 2000.        
(b)  Does not include shares of Class A common stock reserved for issuance      
pursuant to our stock option plan or shares of Class A common stock   
    reserved for issuance pursuant to outstanding warrants as of April 2, 2000
and April 30, 2000.                                                   

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(c)  Does not include shares of Class L common stock reserved for issuance      
    pursuant to our stock option plan, shares of Class L common stock reserved
  for issuance upon exchange of currently outstanding Class L exchangeable
shares and Class Y shares of SMTC Canada, or shares of Class L common 
   stock reserved for issuance pursuant to outstanding warrants, as of April
2, 2000 and April 30, 2000.                                           
(d) As at April 2, 2000, adjusted to reflect an after-tax charge estimated to   
be $2.3 million, net of a $1.5 million tax recovery, on repayment of    
indebtedness with the net proceeds of the offering, comprised of the    
 following items net of tax: $2.4 million for the write-off of unamortized
deferred financing costs and deferred costs associated with the         
  subordinated notes issued in May 2000; a $0.2 million premium payable with
  respect to the repayment of the senior credit facility; and a $0.3 million
gain on termination of an interest rate swap.                           
(e) Such amounts for April 30, 2000 reflect the balances as of April 2, 2000,   
the most recent period for which such information is available.         

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DILUTION  

Dilution in net tangible book value per share represents the difference   
between the amount per share paid by purchasers in this offering and the net    
tangible book value per share immediately after completion of this offering.    

As of April 2, 2000, assuming completion of the reclassification, net     
tangible book value was approximately $(38.4) million, or $(2.55) per share.    
Net tangible book value per share represents total tangible assets, less total  
liabilities, divided by the number of shares outstanding upon completion of     
the reclassification.                                                           

After giving effect to the sale of 11,000,000 shares in this offering, our
pro forma net tangible book value as of April 2, 2000 would have been           
approximately $125.6 million, or $4.83 per share. This represents an immediate  
increase in pro forma net tangible book value of $7.38 per share to our         
existing stockholders and an immediate dilution in pro forma net tangible book  
value of $11.17 per share to new investors in this offering.                    

 The following table illustrates the dilution in pro forma net tangible book
value per share to new investors:                                               

                                                                [Download Table]
                                                                         
Assumed initial public offering price per share..............     $16.00 
                                                                  ------ 
  Pro forma net tangible book value per share at April 2,                
   2000......................................................      (2.55)
  Increase per share attributable to this offering...........       7.38 
                                                                  ------ 
Pro forma net tangible book value per share after this                   
 offering....................................................       4.83 
                                                                  ------ 
Dilution of pro forma net tangible book value per share to               
 new investors...............................................     $11.17 
                                                                  ====== 

 The table below is based on the initial public offering price of $16.00 per
share before deducting underwriting discounts and commissions and estimated     
offering expenses payable by us and summarizes, as of April 2, 2000 on a pro    
forma basis, the differences between:                                           

.  the number of shares purchased from us by our existing stockholders      
 since our inception and the number of shares purchased by new investors
in this offering;                                                     

.  the aggregate cash consideration paid by existing stockholders and to be 
paid by new investors; and                                            

.  the average purchase price per share paid by the existing stockholders   
and to be paid by the new investors.                                  

                                                                [Download Table]

                                                                         Average
                                  Shares Purchased  Total Consideration   Price 
                                 ------------------ --------------------   Per  
                                   Number   Percent    Amount    Percent  Share 
                                 ---------- ------- ------------ ------- -------
                                                                                
Existing stockholders........... 15,013,679  57.7%  $ 30,807,000  14.9%  $ 2.05 
New investors................... 11,000,000  42.3    176,000,000  85.1   $16.00 
                                 ----------  ----   ------------  ----   ------ 
  Total......................... 26,013,679   100%  $206,807,000   100%         
                                 ==========  ====   ============  ====          

The above discussion and tables assume no exercise of any stock options or
warrants outstanding as of April 2, 2000. As of April 2, 2000, there were       
options and warrants outstanding to purchase a total of 1,069,482 shares with   
a weighted average exercise price of $4.50 per share. If all of the currently   
exercisable options and warrants were exercised, the percent dilution to new    
investors would be 1.7%, and the average price per share to existing            
stockholders would be $2.21. See "Capitalization" and "Management."             

The above discussion and tables treat the 1,188,682 shares issuable in    
conjunction with the acquisition of Pensar as existing shares.                  

The above discussion and tables also assume that this offering closes on  
July 27, 2000.                                                                  

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Quarter ended April 2, 2000 

The unaudited pro forma consolidated statement of earnings (loss) for the 
quarter ended April 2, 2000 gives pro forma effect to:                          

.  the pending acquisition of Pensar;                                       

.  the reclassification as described under "The Reclassification"; and      

.  the consummation of this offering and the application of the net         
proceeds therefrom, as described under "Use of Proceeds".             

The unaudited pro forma consolidated balance sheet gives effect to the    
acquisition, the reclassification and this offering as if each occurred on      
April 2, 2000.                                                                  

The unaudited pro forma consolidated statement of earnings (loss) gives   
effect to the acquisition, the reclassification and this offering as if each of 
these occurred on January 1, 1999.                                              

The accounting policies used in preparing the unaudited pro forma         
consolidated financial statements are those disclosed in our consolidated       
financial statements included in this prospectus.                               

  The unaudited pro forma consolidated financial information has been provided
for informational purposes only and is not necessarily indicative of the        
results of operations or financial condition that actually would have been      
achieved if the combination, acquisition and other transactions had been        
completed on the date indicated, or that may be reported in the future. The     
unaudited pro forma financial information does not reflect expenses expected to 
be incurred to finalize the integration of the combined or acquired operations, 
or potential cost savings or improvements in revenue that we believe can be     
realized as a result of the acquisitions.                                       

  The unaudited pro forma consolidated financial information has been prepared
based on the unaudited consolidated information of SMTC Corporation (formerly   
HTM Holdings, Inc.) as of and for the quarter ended April 2, 2000 and the       
unaudited financial information of Pensar as of and for the quarter ended March 
31, 2000.                                                                       

The unaudited pro forma consolidated financial information is based upon  
assumptions that we believe are reasonable and should be read in conjunction    
with the separate audited historical consolidated financial statements of SMTC  
Corporation (formerly HTM Holdings, Inc.) and Pensar. The assumptions           
underlying the offering and reclassification adjustments are subject to change  
when the initial offering price, gross proceeds and closing date are finalized. 

  There are no differences between United States and Canadian GAAP that impact
the pro forma consolidated financial information.                               

The unaudited pro forma consolidated statement of earnings (loss) does not
reflect the net after tax extraordinary loss of $2.3 million resulting from the 
prepayment of the $5.0 million subordinated notes issued in May 2000, the early 
extinguishment of debt resulting from the write-off of debt issuance costs,     
incurrence of the prepayment penalty and the gain from settlement of the        
interest rate swaps in connection with the prepayment of debt upon completion   
of the offering. The unaudited pro forma consolidated balance sheet, however,   
does reflect the extraordinary loss. The actual amount of this loss may be more 
or less depending on the closing date of the transaction.                       

The Reclassification                                                            

Concurrent with the effectiveness of the offering, SMTC Corporation will  
complete a share capital reorganization that will be effected as follows,       
assuming a closing date for the offering of July 27, 2000 and an initial public 
offering price of $16.00 per share:                                             

.  each outstanding Class Y share of SMTC Corporation's subsidiary, SMTC    
Manufacturing Corporation of Canada, will be purchased in exchange for
shares of Class L common stock;                                       

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.  each outstanding share of Class L common stock will be converted into    
  one share of Class A common stock plus an additional number of shares of
  Class A common stock determined by dividing the preference amount by the
value of a share of Class A common stock based on the initial public  
offering price;                                                       

.  each outstanding share of Class A common stock will be converted into    
3.6745 shares of common stock;                                        

.  all outstanding shares of Class N common stock will be redeemed and one  
share of special voting stock will be issued which will be held by a  
trustee for the benefit of the holders of the exchangeable shares; and

.  each SMTC Canada Class L exchangeable share will be converted into       
exchangeable shares of the same class as those being offered in the   
offering in the same ratio as shares of Class L common stock are      
converted to shares of common stock.                                  

Subsequent to the reclassification, the share capital of SMTC Corporation 
will be as follows:                                                             

                                                        [Enlarge/Download Table]

                                                    Number of shares                               
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, April 2, 2000..       --    2,447,782   154,168   113,408     113,408          --    --   
Stock conversions.......       --   (2,447,782) (154,168) (113,408)  1,356,037   11,878,502     1  
                          --------  ----------  --------  --------   ---------   ----------  ----  
                               --          --        --        --    1,469,445   11,878,502     1  
                          ========  ==========  ========  ========   =========   ==========  ====  

                                                              Common Stock                         
                          Class A    Class L              ----------------------                   
                          Options    Options    Warrants  Options     Warrants                     
                         ---------- ----------  --------  --------  ------------                   
                                                                                                   
Balance April 2, 2000...   116,860       3,856   115,983       --          --                      
Option conversions......  (116,860)     (3,856)      --    491,041         --                      
Warrant conversions.....       --          --   (115,983)      --      578,441                     
                          --------  ----------  --------  --------   ---------                     
                               --          --        --    491,041     578,441                     
                          ========  ==========  ========  ========   =========                     

                                            Amount (in thousands of dollars)                       
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, April 2, 2000..  $ 11,804  $        3  $    --   $    --    $     --    $      --   $--   
Stock conversions.......      (116)         (3)      --        --          --           119   --   
                          --------  ----------  --------  --------   ---------   ----------  ----  
                          $ 11,688  $      --   $    --   $    --    $     --    $      119  $--   
                          ========  ==========  ========  ========   =========   ==========  ====  

 The actual number of shares of common stock that will be issued as a result
of the reclassification is subject to change based on the actual offering price 
and the closing date of this offering.                                          

The Pending Acquisition of Pensar                                               

The unaudited pro forma consolidated financial information gives effect to
our acquisition of all of the issued and outstanding shares of Pensar on the    
closing date of the initial public offering for approximately $36.6 million     
consisting of $17.0 million cash consideration, 1,188,682 of shares of our      
common stock having an aggregate fair market value of approximately $19.0       
million and $600,000 of acquisition costs. The valuation of our shares to be    
issued as consideration is based on the initial public offering price. The      
total purchase price reflected in the unaudited pro forma consolidated          
financial information is preliminary and is based on the most recently          
available information. The final purchase price and purchase price allocation   
may vary from the preliminary amounts reflected herein and this may result in   
significant differences in certain pro forma adjustments.                       

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SMTC CORPORATION

PRO FORMA CONSOLIDATED BALANCE SHEET
(dollars in thousands)
April 2, 2000 
(Unaudited) 

                                                        [Enlarge/Download Table]

                            SMTC       Pensar                  Pro forma                    Pro forma 
                         Corporation Corporation               combined     Offering and   as adjusted
                          April 2,    March 31,  Acquisition   April 2,   reclassification  April 2,  
                            2000        2000     adjustments     2000       adjustments       2000    
                         ----------- ----------- -----------   ---------  ---------------- -----------
                                                                                                      
Assets                                                                                                
Current assets:                                                                                       
 Cash and short-term                                                                                  
  investments...........  $  5,111     $    27     $17,000 (a) $  4,538       $176,000 (b)  $  4,538  
                                                   (17,600)(a)                 (20,000)(b)            
                                                                              (141,075)(b)            
                                                                               (14,925)(b)            
                                                                                   (78)(b)            
                                                                                  (400)(c)            
                                                                                   478 (e)            
 Accounts receivable....    80,651       8,334                   88,985                       88,985  
 Inventories............    86,394       6,786                   93,180                       93,180  
 Prepaid expenses.......     5,341         246                    5,587                        5,587  
 Deferred income taxes..     1,044         --                     1,044            160 (c)            
                                                                                 1,192 (d)            
                                                                                  (191)(e)     2,644  
                                                                                   439 (f)            
                          --------     -------     -------     --------       --------      --------  
                           178,541      15,393        (600)     193,334          1,600       194,934  

Capital assets..........    35,311       4,859                   40,170                       40,170  
Goodwill and excess of                                                                                
 purchase price over                                                                                  
 tangible book value of                                                                               
 net assets acquired....    39,791         --       26,802 (a)   66,593                       66,593  
Other assets............    10,882         562                   11,444         (2,980)(d)     8,464  
Deferred income taxes...       592         --                       592            --            592  
                          --------     -------     -------     --------       --------      --------  
                          $265,117     $20,814     $26,202     $312,133       $ (1,380)     $310,753  
                          ========     =======     =======     ========       ========      ========  
Liabilities and                                                                                       
 Shareholders' Equity                                                                                 

Current liabilities:                                                                                  
 Line of credit.........  $    --      $ 3,000     $           $  3,000       $ (3,000)(b)  $    --   
 Accounts payable.......    59,039       4,996                   64,035                       64,035  
 Accrued liabilities....    31,908       1,645                   33,553                       33,553  
 Income taxes payable...       --          --                       --                                
 Current portion of                                                                                   
  long-term debt........     3,000         335                    3,335         (3,335)(b)       --   
 Current portion of                                                                                   
  capital lease                                                                                       
  obligation............     1,335         --                     1,335                        1,335  
                          --------     -------     -------     --------       --------      --------  
                            95,282       9,976                  105,258         (6,335)       98,923  

Capital lease                                                                                         
 obligations............     1,618         --                     1,618                        1,618  
Long-term debt..........   159,417       1,040      17,000 (a)  177,457       (134,818)(b)    42,639  
Deferred income taxes...     2,444         --                     2,444                        2,444  
Shareholders' equity:                                                                                 
 Capital stock..........         3           1          (1)(a)        3            203 (g)       206  
 Warrants...............       367         --                       367                          367  
 Loans receivable.......       (60)       (415)        415 (a)      (60)                         (60) 
 Additional paid-in                                                                                   
  capital...............    11,804       1,209      17,791 (a)   30,804        141,075 (b)   172,774  
                                                                                  (203)(g)            
                                                                                 1,098 (f)            
 Retained earnings                                                                                    
  (deficit).............    (5,758)      9,003      (9,003)(a)   (5,758)          (240)(c)    (8,158) 
                                                                                (1,788)(d)            
                                                                                   287 (e)            
                                                                                  (659)(f)            
                          --------     -------     -------     --------       --------      --------  
                             6,356       9,798       9,202       25,356        139,773       165,129  
                          --------     -------     -------     --------       --------      --------  
                          $265,117     $20,814     $26,202     $312,133       $ (1,380)     $310,753  
                          ========     =======     =======     ========       ========      ========  

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET 
(dollars in thousands)
April 2, 2000 
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the preliminary allocation of the purchase consideration for the  
pending acquisition of Pensar as follows:                             

                                                                [Download Table]
                                                                           
Current assets.................................................... $15,393 
Capital assets....................................................   4,859 
Other long-term assets............................................     562 
Excess of purchase price over tangible book value of net assets            
 acquired.........................................................  26,802 
Liabilities assumed............................................... (11,016)
                                                                   ------- 
                                                                   $36,600 
                                                                   ======= 

The purchase price consists of $17,000 cash consideration, an ascribed      
value of $19,000 in shares of common stock of SMTC Corporation and $600 in  
acquisition costs.                                                          

The pending acquisition will be accounted for by the purchase method. The   
total purchase consideration will be allocated to the identifiable assets   
acquired and liabilities assumed based on their respective fair values as   
at the date of acquisition, with the excess amounts allocated to goodwill,  
which will be amortized over ten years. The valuations and other studies    
required to determine the fair values of identifiable assets acquired and   
liabilities assumed has not been completed for the Pensar acquisition.      
Accordingly, the preliminary allocation is expected to change upon further  
study and as more current information becomes available.                    

(b)  Reflects our sale of 11,000,000 shares of common stock and exchangeable    
   shares generating gross proceeds of $176,000 and the use of the estimated
 net proceeds of $156,000, net of underwriting discounts and commissions
and the estimated offering expenses totaling $20,000, and the $78 of  
   proceeds from termination of the interest rate swap net of the prepayment
penalty (notes (c) and (e)) to repay a portion of our outstanding     
   indebtedness under our senior credit facility, Pensar debt, the $5,000 of
subordinated notes issued in May 2000 and the $9,925 of demand notes  
issued in July 2000. The adjustment assumes the underwriters' over-   
   allotment option is not exercised. See "Use of Proceeds" and "Description
of Indebtedness."                                                     

(c)  Reflects the prepayment premium of $400, before the $160 of related income 
   tax recovery (at a 40% effective tax rate), resulting in an extraordinary
    loss of $240 in connection with the prepayment of the subordinated debt in
  connection with the offering. Amounts will differ based on the effective
date of the offering.                                                 

(d)  Reflects the write-off of $2,980 in capitalized debt issuance costs,       
before $1,192 of related income tax recovery (at a 40% effective tax  
rate), resulting in an after-tax extraordinary loss of $1,788 in      
connection with the repayment of outstanding debt. Amounts will differ
based on the effective date of the offering.                          

(e)  Reflects the recognition of a $478 gain, in connection with the            
termination of the swap on debt outstanding under the senior credit   
    facility before $191 of related income tax expense (at a 40% effective tax
rate), resulting in an extraordinary gain of $287. Amounts will differ
based on the effective date of the offering.                          

(f)  Reflects the value of the warrants, in excess of proceeds received, issued 
in May 2000 in connection with the subordinated notes and the related 
  write-off of $1,098 before $439 of related income tax recovery (at a 40%
   effective tax rate) resulting in an extraordinary loss of $659 related to
the prepayment of the subordinated notes.                             

(g)  Represents the par value of shares issued in the offering and the          
reclassification of the existing common stock.                        

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SMTC CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS) 
(dollars in thousands, except share quantities and per share amounts) 
Quarter ended April 2, 2000 
(Unaudited) 

                                                        [Enlarge/Download Table]

                             SMTC       Pensar                                                  Pro forma    
                          Corporation Corporation                                              as adjusted   
                            Quarter     Quarter                                   Offering       Quarter     
                             ended       ended                                      and           ended      
                           April 2,    March 31,  Acquisition   Pro forma     reclassification  April 2,     
                             2000        2000     adjustments   combined        adjustments       2000       
                          ----------- ----------- -----------   ---------     ---------------- -----------   
                                                                                                             
Revenue.................   $ 124,333    $16,283     $   --      $140,616                       $   140,616   
Cost of sales...........     113,127     13,735         --       126,862                           126,862   
                           ---------    -------     -------     --------                       -----------   
Gross profit............      11,206      2,548         --        13,754                            13,754   
Selling, general and                                                                                         
 administrative                                                                                              
 expenses...............       7,548      1,359         --         8,907                             8,907   
Management fees.........         131        --          --           131                               131   
Amortization............       1,272        --          670 (a)    1,942           $ (148)(e)        1,794   
Former Pensar                                                                                                
 shareholders'                                                                                               
 compensation...........         --         114         --           114                               114   
                           ---------    -------     -------     --------           ------      -----------   
Operating income........       2,255      1,075        (670)       2,660              148            2,808   
Interest................       3,789        103         373 (b)    4,265           (2,995)(f)        1,270   
                           ---------    -------     -------     --------           ------      -----------   
Earnings (loss) before                                                                                       
 income taxes...........      (1,534)       972      (1,043)      (1,605)           3,143            1,538   
Income taxes (recovery):                                                                                     
 Current................        (316)       --         (313)(c)     (240)           1,198 (g)          958   
                                                        389 (d)                                              
 Deferred...............         225        --         (105)(c)      120               59 (g)          179   
                           ---------    -------     -------     --------           ------      -----------   
                                 (91)       --          (29)        (120)           1,257            1,137   
                           ---------    -------     -------     --------           ------      -----------   
Earnings (loss) ........   $  (1,443)   $   972     $(1,014)    $ (1,485)(h)       $1,886              401(h)
                           =========    =======     =======     ========           ======      ===========   
Income (loss) per common                                                                                     
 share:                                                                                                      
 Earnings (loss) .......   $  (1,443)                                                                        
 Less Class L preferred                                                                                      
  entitlement...........      (1,366)                                                                        
                           ---------                                                                         
Earnings (loss)                                                                                              
 attributable to common                                                                                      
 shareholders ..........   $  (2,809)                                                                        
                           =========                                                                         
Earnings (loss) per                                                                                          
 common share:                                                                                               
 Basic..................   $   (1.16)                                                          $      0.02   
                           =========                                                           ===========   
 Diluted................   $   (1.16)                                                          $      0.02   
                           =========                                                           ===========   
Weighted average number                                                                                      
 of shares outstanding:                                                                                      
 Basic..................   2,414,642                                                            26,013,679   
                           =========                                                           ===========   
 Diluted................   2,414,642                                                            26,696,417   
                           =========                                                           ===========   

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(dollars in thousands)
Quarter ended April 2, 2000 
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the additional amortization expense related to the excess of      
purchase price over the tangible net book value of net assets to be   
   acquired. The valuations and other studies required to determine the fair
values of identifiable assets acquired and liabilities assumed has not
 been completed for the Pensar acquisition. The amortization is based on
the estimated useful life of 10 years.                                

(b)  Reflects the additional interest expense related to the borrowings         
 required by us to complete the Pensar acquisition, based on our current
incremental borrowing rate on April 2, 2000 of LIBOR plus 350 basis   
points.                                                               

(c)  Reflects the income tax effect of adjustments (a) and (b) at a 40%         
  effective tax rate. The goodwill amortization of $670 in connection with
the pending acquisition of Pensar is tax deductible.                  

(d)  Reflects the income tax effect of treating Pensar as a "C" Corporation.    
    Prior to its pending acquisition by SMTC, Pensar held "S Corp." status for
  federal and state income tax purposes, thereby consenting to include the
company's income in the shareholders' individual income tax returns.  

(e)  Reflects the decrease in amortization of debt issuance costs.              

(f)  Reflects the decrease in interest expense in connection with the use of    
net proceeds from the offering to repay outstanding debt as follows:  

                                                                [Download Table]
                                                                             
Pro forma combined interest expense................................. $ 4,265 
Elimination of historical and pro forma interest....................  (2,995)
                                                                     ------- 
Pro forma interest expense subsequent to the offering............... $ 1,270 
                                                                     ======= 

The elimination of historical and pro forma interest is calculated by       
applying the assumed offering proceeds net of the prepayment penalty and    
swap termination proceeds to outstanding debt balances (including the debt  
related to our pending acquisition of Pensar) net of $5,000 to be applied   
to the subordinated notes issued in May 2000 and $9,925 of demand notes     
issued in July 2000 as if the proceeds were applied at January 1, 1999. The 
proceeds were applied against the entire balance outstanding on the         
subordinated debt, term loans, Pensar debt and a portion of the revolving   
credit facility.                                                            

(g)  Reflects the income tax effect of adjustments (e) and (f) at a 40%         
effective tax rate.                                                   

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(dollars in thousands)
Quarter ended April 2, 2000 
(Unaudited) 

(h)  The pro forma combined and pro forma as adjusted earnings (loss) before    
 extraordinary loss do not reflect the after-tax effect of adjusting for
   the following acquisition-related, non-recurring adjustments and interest
income:                                                               

.  $131 of pre-tax management fees paid to Bain Capital Partners VI, L.P.,  
Celerity Partners, Inc. and Kilmer Electronics Group Limited under a  
management agreement which will be terminated in connection with this 
offering.                                                             

.  $114 of pre-tax compensation paid to Pensar shareholders.                

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                                        Pro forma  Pro forma 
                                                        combined  as adjusted
                                                        --------- -----------
                                                                             
Earnings (loss) .......................................  $(1,485)    $401    

Plus:                                                                        
  Management fees......................................      131      131    
  Former Pensar shareholders' compensation.............      114      114    

Less:                                                                        
  Tax effect of above adjustments at 40%...............      (98)     (98)   
                                                         -------     ----    
  Adjusted earnings (loss) ............................  $(1,338)    $548    
                                                         =======     ====    

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Year Ended December 31, 1999

The unaudited pro forma consolidated statement of earnings (loss) for the 
year ended December 31, 1999 gives pro forma effect to:                         

.  the combination of Surface Mount and HTM;                                

.  the acquisition of W.F. Wood;                                            

.  the pending acquisition of Pensar;                                       

.  the reclassification as described under "The Reclassification"; and      

.  the consummation of the offering and the application of the net proceeds 
therefrom, as described under "Use of Proceeds".                      

The unaudited pro forma consolidated balance sheet gives effect to the    
pending acquisition of Pensar, the reclassification and the offering as if each 
occurred on December 31, 1999.                                                  

The unaudited pro forma consolidated statement of earnings (loss) gives   
effect to the combination, the acquisitions, the reclassification and the       
offering as if each of these occurred on January 1, 1999.                       

The accounting policies used in preparing the unaudited pro forma         
consolidated financial statements are those disclosed in our consolidated       
financial statements included in this prospectus.                               

  The unaudited pro forma consolidated financial information has been provided
for informational purposes only and is not necessarily indicative of the        
results of operations or financial condition that actually would have been      
achieved if the combination, acquisition and other transactions had been        
completed on the date indicated, or that may be reported in the future. The     
unaudited pro forma financial information does not reflect expenses expected to 
be incurred to finalize the integration of the combined or acquired operations, 
or potential cost savings or improvements in revenue that we believe can be     
realized as a result of the acquisitions.                                       

  The unaudited pro forma consolidated financial information has been prepared
based on the audited consolidated financial statements of SMTC Corporation (HTM 
Holdings, Inc.) as of and for the year ended December 31, 1999, the unaudited   
financial statements of Surface Mount as of and for the period from January 1,  
1999 to July 29, 1999, the audited financial statements of W.F. Wood,           
Incorporated as of and for the period from January 1, 1999 to September 3, 1999 
and the audited financial statements of Pensar as of and for the year ended     
December 31, 1999.                                                              

The unaudited pro forma consolidated financial information is based upon  
assumptions that we believe are reasonable and should be read in conjunction    
with the separate audited historical consolidated financial statements of SMTC, 
Surface Mount, W.F. Wood, Incorporated and Pensar. The assumptions underlying   
the offering and reclassification adjustments are subject to change when the    
initial offering price, gross proceeds and closing date are finalized.          

  The unaudited pro forma consolidated financial information has been prepared
in accordance with United States GAAP and the notes to the unaudited pro forma  
consolidated statement of earnings (loss) include a reconciliation to Canadian  
GAAP. There are no differences between United States and Canadian GAAP that     
impact the pro forma consolidated balance sheet.                                

The unaudited pro forma consolidated statement of earnings (loss) does not
reflect the net after-tax extraordinary loss of $2.4 million resulting from the 
prepayment of the $5.0 million subordinated notes issued in May 2000, the early 
extinguishment of debt resulting from the write-off of debt issuance costs,     
incurrence of the prepayment penalty and the gain from settlement of the        
interest rate swaps in connection with the prepayment of debt upon completion   
of the offering. The unaudited pro forma consolidated balance sheet, however,   
does reflect the extraordinary loss. The actual amount of this loss may be more 
or less than the pro forma amount based on the closing date of the transaction. 

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The Reclassification                                                            

Concurrent with the effectiveness of the offering, SMTC Corporation will  
complete a share capital reorganization that will be effected as follows,       
assuming a closing date for the offering of July 27, 2000 and an initial public 
offering price of $16.00 per share:                                             

.  each outstanding Class Y share of SMTC Corporation's subsidiary, SMTC    
Manufacturing Corporation of Canada, will be purchased in exchange for
shares of Class L common stock;                                       

.  each outstanding share of Class L common stock will be converted into    
  one share of Class A common stock plus an additional number of shares of
  Class A common stock determined by dividing the preference amount by the
value of a share of Class A common stock based on the initial public  
offering price;                                                       

.  each outstanding share of Class A common stock will be converted into    
3.6745 shares of common stock;                                        

.  all outstanding shares of Class N common stock will be redeemed and one  
share of special voting stock will be issued which will be held by a  
trustee for the benefit of the holders of the exchangeable shares; and

.  each SMTC Canada Class L exchangeable share will be converted into       
exchangeable shares of the same class as those being offered in the   
offering in the same ratio as shares of Class L common stock are      
converted to shares of common stock.                                  

Subsequent to the reclassification, the share capital of SMTC Corporation 
will be as follows:                                                             

                                                        [Enlarge/Download Table]

                                                    Number of shares                               
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, December 31,                                                                              
 1999...................       --    2,447,782   154,168   113,408     113,408          --     --  
Stock conversions.......       --   (2,447,782) (154,168) (113,408)  1,356,037   11,878,502      1 
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                               --          --        --        --    1,469,445   11,878,502      1 
                          ========  ==========  ========  ========   =========   ==========  ===== 

                                                              Common Stock                         
                                                          ----------------------                   
                          Class A    Class L                                                       
                          Options    Options    Warrants  Options     Warrants                     
                         ---------- ----------  --------  --------  ------------                   
                                                                                                   
Balance, December 31,                                                                              
 1999...................   116,860       3,856   115,983       --          --                      
Option conversions......  (116,860)     (3,856)      --    491,041         --                      
Warrant conversions.....       --          --   (115,983)      --      578,441                     
                          --------  ----------  --------  --------   ---------                     
                               --          --        --    491,041     578,441                     
                          ========  ==========  ========  ========   =========                     


                                            Amount (in thousands of dollars)                       
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, December 31,                                                                              
 1999...................  $ 11,804  $        3  $    --   $    --    $     --    $      --   $ --  
Stock conversions.......      (116)         (3)      --        --          --           119    --  
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                          $ 11,688  $      --   $    --   $    --    $     --    $      119  $ --  
                          ========  ==========  ========  ========   =========   ==========  ===== 

 The actual number of shares of common stock that will be issued as a result
of the reclassification is subject to change based on the actual offering price 
and the closing date of this offering.                                          

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The Pending Acquisition of Pensar                                               

The unaudited pro forma consolidated financial information gives effect to
our acquisition of all of the issued and outstanding shares of Pensar on the    
closing date of the initial public offering for approximately $36.6 million     
consisting of $17.0 million cash consideration, 1,188,682 of shares of our      
common stock having an aggregate fair market value of approximately $19.0       
million and $600,000 of acquisition costs. The valuation of our shares to be    
issued as consideration is based on the initial public offering price. The      
total purchase price reflected in the unaudited pro forma consolidated          
financial information is preliminary and is based on the most recently          
available information. The final purchase price and purchase price allocation   
may vary from the preliminary amounts reflected herein and this may result in   
significant differences in certain pro forma adjustments.                       

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SMTC CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
(dollars in thousands)
December 31, 1999 
(Unaudited) 

                                                        [Enlarge/Download Table]

                             SMTC        Pensar                                                Pro forma  
                         Corporation  Corporation                             Offering and    as adjusted 
                         December 31, December 31, Acquisition   Pro forma  reclassification  December 31,
                             1999         1999     adjustments   combined     adjustments         1999    
                         ------------ ------------ -----------   ---------  ----------------  ------------
                                                                                                          
Assets                                                                                                    
Current assets:                                                                                           
 Cash and short-term                                                                                      
  investments...........   $  2,083     $   512      $17,000 (a) $  1,995      $ 176,000 (b)    $  1,995  
                                                     (17,600)(a)                 (20,000)(b)              
                                                                                (141,075)(b)              
                                                                                 (14,925)(b)              
                                                                                     (78)(b)              
                                                                                    (400)(c)              
                                                                                     478 (e)              
 Accounts receivable....     71,597       9,781                    81,378                         81,378  
 Inventories............     61,680       5,273                    66,953                         66,953  
 Prepaid expenses.......      3,647         201                     3,848                          3,848  
 Deferred income taxes..      1,527         --                      1,527            160 (c)       3,192  
                                                                                   1,257 (d)              
                                                                                    (191)(e)              
                                                                                     439 (f)              
                           --------     -------      -------     --------      ---------        --------  
                            140,534      15,767         (600)     155,701          1,665         157,366  

Capital assets..........     35,003       4,721                    39,724                         39,724  
Goodwill and excess of                                                                                    
 purchase price over                                                                                      
 tangible book value of                                                                                   
 net assets acquired....     40,800         --        27,799 (a)   68,599                         68,599  
Other assets............     11,145         511                    11,656         (3,143)(d)       8,513  
Deferred income taxes...        623         --                        623                            623  
                           --------     -------      -------     --------      ---------        --------  
                           $228,105     $20,999      $27,199     $276,303      $  (1,478)       $274,825  
                           ========     =======      =======     ========      =========        ========  
Liabilities and                                                                                           
 Shareholders' Equity                                                                                     

Current liabilities:                                                                                      
 Line of credit.........   $    --      $ 4,215      $           $  4,215      $  (4,215)(b)    $    --   
 Accounts payable.......     53,119       5,277                    58,396                         58,396  
 Accrued liabilities....     29,307       1,293                    30,600                         30,600  
 Income taxes payable...      1,127         --                      1,127                          1,127  
 Current portion of                                                                                       
  long-term debt........      2,000         332                     2,332         (2,332)(b)         --   
 Current portion of                                                                                       
  capital lease                                                                                           
  obligation............      1,541         --                      1,541                          1,541  
                           --------     -------      -------     --------      ---------        --------  
                             87,094      11,117                    98,211         (6,547)         91,664  

Capital lease                                                                                             
 obligations............      1,537         --                      1,537                          1,537  
Long-term debt..........    128,942       1,081       17,000 (a)  147,023       (134,606)(b)      12,417  
Deferred income taxes...      2,733         --                      2,733                          2,733  
Shareholders' equity:                                                                                     
 Capital stock..........          3           1           (1)(a)        3            203 (g)         206  
 Warrants...............        367         --                        367                            367  
 Loans receivable.......        (60)       (455)         455 (a)      (60)                           (60) 
 Additional paid-in                                                                                       
  capital...............     11,804       1,209       17,791 (a)   30,804        141,075 (b)     172,774  
                                                                                    (203)(g)              
                                                                                   1,098 (f)              
 Retained earnings                                                                                        
  (deficit).............     (4,315)      8,046       (8,046)(a)   (4,315)          (240)(c)      (6,813) 
                                                                                  (1,886)(d)              
                                                                                     287 (e)              
                                                                                    (659)(f)              
                           --------     -------      -------     --------      ---------        --------  
                              7,799       8,801       10,199       26,799        139,675         166,474  
                           --------     -------      -------     --------      ---------        --------  
                           $228,105     $20,999      $27,199     $276,303      $  (1,478)       $274,825  
                           ========     =======      =======     ========      =========        ========  

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET 
(dollars in thousands)
December 31, 1999 
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the preliminary allocation of the purchase consideration for the  
pending acquisition of Pensar as follows:                             

                                                                [Download Table]
                                                                            
Current assets...................................................  $ 15,767 
Capital assets...................................................     4,721 
Other long-term assets...........................................       511 
Goodwill and excess of purchase price over tangible book value of           
 net assets acquired.............................................    27,799 
Liabilities assumed..............................................   (12,198)
                                                                   -------- 
                                                                   $ 36,600 
                                                                   ======== 

  The purchase price consists of $17,000 cash consideration, an ascribed value
of $19,000 in shares of common stock of SMTC Corporation and $600 in      
acquisition costs.                                                        

The pending acquisition will be accounted for by the purchase method. The   
total purchase consideration will be allocated to the identifiable assets   
acquired and liabilities assumed based on their respective fair values as   
at the date of acquisition, with the excess amounts allocated to goodwill,  
which will be amortized over ten years. The valuations and other studies    
required to determine the fair values of identifiable assets acquired and   
liabilities assumed has not been completed for the Pensar acquisition.      
Accordingly, the preliminary allocation is expected to change upon further  
study and as more current information becomes available.                    

(b)  Reflects our sale of 11,000,000 shares of common stock and exchangeable    
   shares generating gross proceeds of $176,000 and the use of the estimated
 net proceeds of $156,000, net of underwriting discounts and commissions
and the estimated offering expenses totaling $20,000, and the $78 of  
   proceeds from termination of the interest rate swap net of the prepayment
penalty (notes (c) and (e)) to repay a portion of our outstanding     
indebtedness under our senior credit facility, Pensar debt, the $5,000
subordinated notes issued in May 2000 and the $9,925 of demand notes  
issued in July 2000. The adjustment assumes the underwriters' over-   
   allotment option is not exercised. See "Use of Proceeds" and "Description
of Indebtedness."                                                     

(c)  Reflects the prepayment premium of $400, before the $160 of related income 
   tax recovery (at a 40% effective tax rate), resulting in an extraordinary
   loss of $240 in connection with the prepayment ofthe subordinated debt in
  connection with the offering. Amounts will differ based on the effective
date of the offering.                                                 

(d)  Reflects the write-off of $3,143 in capitalized debt issuance costs,       
before $1,257 of related income tax recovery (at a 40% effective tax  
rate), resulting in an after-tax extraordinary loss of $1,886 in      
connection with the repayment of outstanding debt. Amounts will differ
based on the effective date of the offering.                          

(e)  Reflects the recognition of a $478 gain, in connection with the            
termination of the swap on debt outstanding under the senior credit   
    facility before $191 of related income tax expense (at a 40% effective tax
rate), resulting in an extraordinary gain of $287. Amounts will differ
based on the effective date of the offering.                          

(f)  Reflects the value of the warrants, in excess of proceeds received, issued 
in May 2000 in connection with the subordinated notes and the related 
  write-off of $1,098 before $439 of related income tax recovery (at a 40%
    effective tax rate), resulting in an extraordinary loss of $659 related to
the prepayment of the subordinated notes.                             

(g)  Represents the par value of shares issued in the offering and the          
reclassification of the existing common stock.                        

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SMTC CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS) 
(dollars in thousands, except share quantities and per share amounts) 
Year ended December 31, 1999
(Unaudited) 

                                                        [Enlarge/Download Table]

                                                               W.F. Wood,                                                        
                                                              Incorporated                                                       
                                     SMTC      Surface Mount      from        Pensar                                 Offering    
                                 Corporation  from January 1,  January 1,  Corporation                                  and      
                                  Year ended      1999 to       1999 to     Year ended                               reclassi-   
                                 December 31,    July 29,     September 3, December 31, Acquisition   Pro forma      fication    
                                     1999          1999           1999         1999     adjustments   combined      adjustments  
                                 ------------ --------------- ------------ ------------ -----------   ---------     -----------  
                                                                                                                                 
Revenue.........                  $ 257,962      $168,553       $23,198      $52,996      $           $502,709       $           
Cost of sales...                    236,331       152,330        20,072       43,859                   452,592                   
                                  ---------      --------       -------      -------      -------     --------       --------    
Gross profit....                     21,631        16,223         3,126        9,137                    50,117                   
Selling, general                                                                                                                 
 and                                                                                                                             
 administrative                                                                                                                  
 expenses.......                     12,615        10,268         1,718        4,533                    29,134                   
Management                                                                                                                       
 fees...........                        717           --            --           --                        717                   
Amortization....                      1,990           --            --           --         5,395 (a)    7,385           (386)(f)
Former W.F. Wood                                                                                                                 
 shareholders'                                                                                                                   
 compensation...                        --            --            136          --                        136                   
Acquisition-                                                                                                                     
 related bonuses                                                                                                                 
 paid to                                                                                                                         
 management and                                                                                                                  
 employees of                                                                                                                    
 W.F. Wood......                        --            --          2,571          --                      2,571                   
Former Pensar                                                                                                                    
 shareholders'                                                                                                                   
 compensation...                        --            --            --           498                       498                   
Acquisition-                                                                                                                     
 related                                                                                                                         
 professional                                                                                                                    
 fees...........                        --            --            403           75         (478)(b)      --                    
                                  ---------      --------       -------      -------      -------     --------       --------    
Operating                                                                                                                        
 income.........                      6,309         5,955        (1,702)       4,031       (4,917)       9,676            386    
Interest........                      7,066         2,215            58          267        2,522 (c)   12,128        (10,906)(g)
                                  ---------      --------       -------      -------      -------     --------       --------    
Earnings (loss)                                                                                                                  
 before income                                                                                                                   
 taxes..........                       (757)        3,740        (1,760)       3,764       (7,439)      (2,452)        11,292    
Income taxes                                                                                                                     
 (recovery):                                                                                                                     
 Current........                        442         2,064           --           --        (1,875)(d)    1,433          4,362 (h)
                                                                                              802 (e)                            
 Deferred.......                       (335)         (195)          --           --          (521)(d)   (1,051)           155 (h)
                                  ---------      --------       -------      -------      -------     --------       --------    
                                        107         1,869           --           --        (1,594)         382          4,517    
                                  ---------      --------       -------      -------      -------     --------       --------    
Earnings                                                                                                                         
 (loss).........                  $    (864)     $  1,871       $(1,760)     $ 3,764      $(5,845)    $ (2,834)(i)   $  6,775    
                                  =========      ========       =======      =======      =======     ========       ========    
Income (loss) per common share:                                                                                                  
 Earnings                                                                                                                        
  (loss)........                  $    (864)                                                                                     
 Less Class L                                                                                                                    
  preferred                                                                                                                      
  entitlement...                     (2,185)                                                                                     
                                  ---------                                                                                      
Earnings (loss)                                                                                                                  
 attributable to                                                                                                                 
 common                                                                                                                          
 shareholders...                  $  (3,049)                                                                                     
                                  =========                                                                                      
Earnings (loss)                                                                                                                  
 per                                                                                                                             
 common share                                                                                                                    
 Basic..........                  $   (1.89)                                                                                     
                                  =========                                                                                      
 Diluted........                  $   (1.89)                                                                                     
                                  =========                                                                                      
Weighted average                                                                                                                 
 number of                                                                                                                       
 shares                                                                                                                          
 outstanding:                                                                                                                    
 Basic..........                  1,617,356                                                                                      
                                  =========                                                                                      
 Diluted........                  1,617,356                                                                                      
                                  =========                                                                                      

                                  Pro forma                                                                                      
                                 as adjusted                                                                                     
                                  Year ended                                                                                     
                                 December 31,                                                                                    
                                     1999                                                                                        
                                 ---------------                                                                                 
                                                                                                                                 
Revenue.........                 $   502,709                                                                                     
Cost of sales...                     452,592                                                                                     
                                 ---------------                                                                                 
Gross profit....                      50,117                                                                                     
Selling, general                                                                                                                 
 and                                                                                                                             
 administrative                                                                                                                  
 expenses.......                      29,134                                                                                     
Management                                                                                                                       
 fees...........                         717                                                                                     
Amortization....                       6,999                                                                                     
Former W.F. Wood                                                                                                                 
 shareholders'                                                                                                                   
 compensation...                         136                                                                                     
Acquisition-                                                                                                                     
 related bonuses                                                                                                                 
 paid to                                                                                                                         
 management and                                                                                                                  
 employees of                                                                                                                    
 W.F. Wood......                       2,571                                                                                     
Former Pensar                                                                                                                    
 shareholders'                                                                                                                   
 compensation...                         498                                                                                     
Acquisition-                                                                                                                     
 related                                                                                                                         
 professional                                                                                                                    
 fees...........                         --                                                                                      
                                 ---------------                                                                                 
Operating                                                                                                                        
 income.........                      10,062                                                                                     
Interest........                       1,222                                                                                     
                                 ---------------                                                                                 
Earnings (loss)                                                                                                                  
 before income                                                                                                                   
 taxes..........                       8,840                                                                                     
Income taxes                                                                                                                     
 (recovery):                                                                                                                     
 Current........                       5,795                                                                                     
 Deferred.......                        (896)                                                                                    
                                 ---------------                                                                                 
                                       4,899                                                                                     
                                 ---------------                                                                                 
Earnings                                                                                                                         
 (loss).........                 $     3,941(i)                                                                                  
                                 ===============                                                                                 
Income (loss) per common share:                                                                                                  
 Earnings                                                                                                                        
  (loss)........                                                                                                                 
 Less Class L                                                                                                                    
  preferred                                                                                                                      
  entitlement...                                                                                                                 
Earnings (loss)                                                                                                                  
 attributable to                                                                                                                 
 common                                                                                                                          
 shareholders...                                                                                                                 
Earnings (loss)                                                                                                                  
 per                                                                                                                             
 common share                                                                                                                    
 Basic..........                 $      0.15                                                                                     
                                 ===============                                                                                 
 Diluted........                 $      0.14                                                                                     
                                 ===============                                                                                 
Weighted average                                                                                                                 
 number of                                                                                                                       
 shares                                                                                                                          
 outstanding:                                                                                                                    
 Basic..........                  26,013,679                                                                                     
                                 ===============                                                                                 
 Diluted........                  26,522,485                                                                                     
                                 ===============                                                                                 

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(dollars in thousands)
Year ended December 31, 1999
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the additional amortization expense related to the allocation of  
   the purchase price to goodwill and excess of purchase price over tangible
    net book value of net assets acquired for the acquisitions. The valuations
 and other studies required to determine the fair values of identifiable
assets acquired and liabilities assumed has not been completed for the
   Pensar acquisition. The amortization is based on an estimated useful life
of 10 years for the goodwill.                                         

(b)  Reflects the elimination of the non-recurring acquisition-related          
professional fees incurred by W.F. Wood and Pensar.                   

(c)  Reflects the additional interest expense related to the borrowings         
required by us to complete the W.F. Wood acquisition and the pending  
Pensar acquisition, based on our current incremental borrowing rate on
December 31, 1999 of LIBOR plus 350 basis points.                     

(d)  Reflects the income tax effect of adjustments (a), (b) and (c) at a 40%    
    effective tax rate. The goodwill amortization of $4,527 in connection with
   the acquisition of W.F. Wood and the pending acquisition of Pensar is tax
deductible.                                                           

(e)  Reflects the income tax effect of treating W.F. Wood and Pensar as "C"     
Corporations. Prior to their acquisition by SMTC, W.F. Wood and Pensar
  held "S Corp." status for federal and state income tax purposes, thereby
consenting to include the companies' income in the shareholders'      
individual income tax returns.                                        

(f)  Reflects the decrease in amortization of debt issuance costs.              

(g)  Reflects the decrease in interest expense in connection with the use of    
net proceeds from the offering to repay outstanding debt as follows:  

                                                                [Download Table]
                                                                             
Pro forma combined interest expense................................ $ 12,128 
Elimination of historical and pro forma interest...................  (10,906)
                                                                    -------- 
Pro forma interest expense subsequent to the offering.............. $  1,222 
                                                                    ======== 

The elimination of historical and pro forma interest is calculated by       
applying the assumed offering proceeds net of the prepayment penalty and    
swap termination proceeds to outstanding debt balances (including the debt  
related to our acquisition of W.F. Wood and our pending acquisition of      
Pensar) as if the proceeds were applied at the beginning of the year. The   
proceeds, net of $5,000 applied to the subordinated notes issued in May     
2000 and $9,925 of demand notes issued in July 2000, were applied against   
the entire balance outstanding on the subordinated debt, term loans and a   
portion of the revolving credit facility.                                   

(h)  Reflects the income tax effect of adjustments (f) and (g) at a 40%         
effective tax rate.                                                   

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(dollars in thousands)
Year ended December 31, 1999
(Unaudited) 
(i) The pro forma combined and pro forma as adjusted earnings (loss) before     
   extraordinary loss do not reflect the after-tax effect of adjusting for the
following acquisition-related, non-recurring adjustments and interest   
income:                                                                 

.  $717 of pre-tax management fees paid to Bain Capital Partners VI, L.P.,  
Celerity Partners, Inc. and Kilmer Electronics Group Limited under a  
management agreement which will be terminated in connection with this 
offering;                                                             

.  $136 of pre-tax compensation paid to former W.F. Wood shareholders;      

.  $2,571 of pre-tax acquisition-related bonuses paid to W.F. Wood          
management ($2,321) and W.F. Wood employees ($250); and               

.  $498 of pre-tax compensation paid to Pensar shareholders.                

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                                      Pro forma  Pro forma 
                                                      combined  as adjusted
                                                      --------- -----------
                                                           (unaudited)     
                                                                           
Earnings (loss)......................................  $(2,834)   $ 3,941  

Plus:                                                                      
  Management fees....................................      717        717  
  Former W.F. Wood shareholders' compensation........      136        136  
  Acquisition-related bonuses paid to management and                       
   employees of W.F. Wood............................    2,571      2,571  
  Former Pensar shareholders' compensation...........      498        498  

Less:                                                                      
  Tax effect of above adjustments at 40%.............   (1,569)    (1,569) 
                                                       -------    -------  
  Adjusted earnings (loss)...........................  $  (481)   $ 6,294  
                                                       =======    =======  

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(dollars in thousands)
Year ended December 31, 1999
(Unaudited) 

(j) Differences between United States and Canadian GAAP:                        

The pro forma consolidated financial information has been prepared in 
accordance with generally accepted accounting principles as applied in the  
United States. The significant differences between United States GAAP and   
Canadian GAAP and their effect on the pro forma consolidated financial      
statements are described below:                                             

Extraordinary loss:                                                   

Under United States GAAP, the charges incurred as a result of early   
payment of the senior notes and subordinated notes and termination of the   
interest rate swap are recorded as an extraordinary loss and not presented  
for purposes of the pro forma consolidated statement of earnings (loss).    
Under Canadian GAAP, the charges would have been included in earnings       
(loss) before income taxes and the related tax benefit recorded in income   
taxes expense. Accordingly, the following amounts would have been reported  
in the pro forma consolidated statement of earnings (loss) under Canadian   
GAAP:                                                                       

                                                                [Download Table]
                                                                          
Operating income................................................. $10,062 
Interest.........................................................   1,222 
Debt extinguishment costs........................................   6,253 
                                                                  ------- 
Earnings before income taxes.....................................   2,587 
Income taxes (recovery):                                                  
  Current........................................................   5,233 
  Deferred.......................................................  (2,418)
                                                                  ------- 
                                                                    2,815 
                                                                  ------- 
Net loss ........................................................ $  (228)
                                                                  ======= 

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of and for the dates
and periods indicated have been derived from our consolidated financial         
statements.                                                                     

.  The results of operations, other financial data and supplemental data    
for 1995, 1996, 1997 and 1998 represent the results of operations,    
financial data and supplemental data for HTM. For accounting purposes,
HTM is considered to have acquired Surface Mount in the July 1999     
combination.                                                          

.  The results of operations, other financial data and supplemental data    
 for 1999 include a full year of results for HTM, as well as the results
for Surface Mount from July 30, 1999 through December 31, 1999 and    
 results for W.F. Wood from September 4, 1999 through December 31, 1999.

.  The unaudited combined pro forma results of operations, other financial  
 data and supplemental data for the year ended December 31, 1999 and the
three months ended March 31, 1999 give effect to the combination of   
Surface Mount and HTM, the acquisition of W.F. Wood and the pending   
acquisition of Pensar as if these transactions had occurred on January
1, 1999.                                                              

.  The unaudited combined pro forma results of operations, other financial  
  data and supplemental data for the three months ended April 2, 2000 give
effect to the pending acquisition of Pensar as if this transaction had
occurred on January 1, 1999. The unaudited combined pro forma         
consolidated balance sheet data as at April 2, 2000 give effect to the
pending acquisition of Pensar as if this transaction had occurred on  
April 2, 2000.                                                        

You should read the data set forth below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and   
our consolidated financial statements and the related notes thereto appearing   
elsewhere in this prospectus.                                                   

Our consolidated financial statements and our selected consolidated       
financial data have been prepared in accordance with United States GAAP. These  
principles conform in all material respects to Canadian GAAP except as          
described in Note 23 to our consolidated financial statements. The differences  
between the line items under United States GAAP and those as determined under   
Canadian GAAP are not significant except that under Canadian GAAP, the 1999     
extraordinary loss would have been reported as a pre-tax expense of             
$2.1 million as part of other expenses; accordingly the 1999 loss before income 
taxes recovery would be $2.8 million, income taxes recovery would be $0.7       
million and net loss would be unchanged at $2.1 million under Canadian GAAP.    

The consolidated financial statements and the selected consolidated       
financial data of Surface Mount have been prepared in accordance with Canadian  
GAAP. These principles conform in all material respects with United States GAAP 
except as disclosed in Note 17 to Surface Mount's consolidated financial        
statements.                                                                     

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                                                                [Download Table]

                                                                    Pro forma   
                                                                     combined   
                                 Year Ended December 31,            Year Ended  
                            -------------------------------------  December 31, 
                             1995    1996   1997    1998    1999       1999     
                            ------  ------  -----  ------  ------  ------------ 
                                 (in millions, except per share data)           
                                                                                
SMTC Corporation                                                                
Consolidated Statement of                                                       
 Operations Data:                                                               
United States GAAP (a)                                                          
Revenue...................  $ 67.5  $ 70.8  $59.0  $ 89.7  $258.0     $502.7    
Cost of sales.............    65.7    68.9   53.6    82.5   236.3      452.6    
                            ------  ------  -----  ------  ------     ------    
  Gross profit............     1.8     1.9    5.4     7.2    21.7       50.1    
Selling, general and                                                            
 administrative expenses..     2.5     2.8    2.8     3.2    12.6       29.1    
Amortization..............     --      --     --      0.2     2.0        7.4    
Relocation expenses (b)...     --      0.5    --      --      --         --     
Recapitalization expenses                                                       
 (c)......................     --      --     --      2.2     --         --     
Management fees (d).......     --      --     --      0.1     0.7        0.7    
Former shareholders'                                                            
 compensation (e).........     --      --     --      --      --         0.6    
Acquisition-related                                                             
 bonuses paid to                                                                
 management and employees                                                       
 of W.F. Wood (f).........     --      --     --      --      --         2.6    
                            ------  ------  -----  ------  ------     ------    
Operating income (loss)...    (0.7)   (1.4)   2.6     1.5     6.4        9.7    
Interest..................     0.6     0.7    0.7     2.0     7.1       12.1    
                            ------  ------  -----  ------  ------     ------    
Earnings (loss) before                                                          
 income taxes.............    (1.3)   (2.1)   1.9    (0.5)   (0.7)      (2.4)   
Income taxes (recovery)...    (0.4)   (0.8)   0.7    (0.2)    0.1        0.4    
                            ------  ------  -----  ------  ------     ------    
Earnings (loss) before                                                          
 extraordinary loss.......    (0.9)   (1.3)   1.2    (0.3)   (0.8)    $ (2.8)(j)
                                                                      ======    
Extraordinary loss (g)....     --      --     --      --     (1.3)              
                            ------  ------  -----  ------  ------               
Net earnings (loss).......  $ (0.9) $ (1.3) $ 1.2  $ (0.3) $ (2.1)              
                            ======  ======  =====  ======  ======               
Earnings (loss) before                                                          
 extraordinary loss per                                                         
 common share (h):                                                              
  Basic...................  $(0.30) $(0.40) $0.40  $(0.44) $(1.89)              
Weighted average number of                                                      
 shares outstanding (h):                                                        
  Basic...................     3.1     3.1    3.1     2.1     1.6               

Other Financial Data:                                                           
Depreciation..............  $  1.4  $  1.9  $ 2.2  $  2.9  $  6.5     $ 10.2    
Amortization of goodwill..     --      --     --      --      1.5        6.9    
Amortization of deferred                                                        
 financing costs..........     --      --     --      0.2     0.5        0.5    
Capital expenditures......     0.8     0.6    0.9     3.2     4.1       12.3    
Cash flows from operating                                                       
 activities...............    (5.3)    6.1   (0.4)   (3.8)   (6.6)              
Cash flows from financing                                                       
 activities...............     4.9    (5.5)   1.2     4.3    49.6               
Cash flows from investing                                                       
 activities...............    (0.6)   (0.6)  (0.4)   (0.5)  (41.4)              

Supplemental Data:                                                              
EBITDA (i)................  $  0.7  $  0.5  $ 4.8  $  4.6  $ 14.9     $ 27.3    
Adjusted EBITDA (i).......     0.7     1.0    4.9     6.9    15.8       31.4    

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                                                                [Download Table]

                                           Quarter Ended                        
                               ---------------------------------------------    
                                                          Pro forma             
                                     Actual                combined             
                               ---------------------  ----------------------    
                               March 31,    April     March 31,     April       
                                  1999     2, 2000       1999      2, 2000      
                               ----------- ---------  -----------  ---------    
                               (in millions, except per share data)             
                                                                                
SMTC Corporation                                                                
Consolidated Statement of                                                       
 Operations Data:                                                               
United States GAAP (a)                                                          
Revenue......................    $   23.3  $   124.3   $   115.3   $   140.6    
Cost of sales................        21.6      113.1       104.2       126.9    
                                 --------  ---------   ---------   ---------    
  Gross profit...............         1.7       11.2        11.1        13.7    
Selling, general and                                                            
 administrative expenses.....         0.7        7.5         6.8         8.9    
Amortization.................         0.1        1.3         1.8         1.9    
Management fees (d)..........         0.1        0.1         0.1         0.1    
Former shareholders'                                                            
 compensation (e)............         --         --          0.1         0.1    
                                 --------  ---------   ---------   ---------    
Operating income (loss)......         0.8        2.3         2.3         2.7    
Interest.....................         0.8        3.8         2.3         4.3    
                                 --------  ---------   ---------   ---------    
Earnings (loss) before income                                                   
 taxes.......................         --        (1.5)        --         (1.6)   
  Income taxes (recovery)....         --        (0.1)        0.4        (0.1)   
                                 --------  ---------   ---------   ---------    
Net earnings (loss)..........    $    --   $    (1.4)  $    (0.4)  $    (1.5)(j)
                                 ========  =========   =========   =========    
Earnings (loss) per common                                                      
 share (h):                                                                     
  Basic......................    $   0.03  $   (1.16)                           
Weighted average number of                                                      
 shares outstanding (h):                                                        
  Basic......................         1.4        2.4                            

Other Financial Data:                                                           
Depreciation.................    $    0.9  $     2.5   $     2.2   $     2.7    
Amortization of goodwill.....         --         1.0         1.7         1.6    
Amortization of deferred                                                        
 financing costs.............         0.1        0.3         0.1         0.3    
Capital expenditures.........         0.1        2.8         2.3         3.2    
Cash flows from operating                                                       
 activities..................         6.0      (25.6)                           
Cash flows from financing                                                       
 activities..................        (5.1)      31.1                            
Cash flows from investing                                                       
 activities..................        (0.1)      (2.5)                           

Supplemental Data:                                                              
EBITDA (i)...................    $    1.8  $     6.1   $     6.3   $     7.3    
Adjusted EBITDA (i)..........         1.9        6.2         6.5         7.5    

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                                                                [Download Table]

                                                               As of April 2, 
                                   As of December 31,               2000      
                             -------------------------------- ----------------
                                                                     Pro forma
                             1995  1996  1997   1998    1999  Actual combined 
                             ----- ----- ----- ------  ------ ------ ---------
                                              (in millions)                   
                                                                              
Consolidated Balance Sheet                                                    
 Data:                                                                        
Cash and short-term                                                           
 investments................ $ 0.1 $ 0.1 $ 0.4 $  0.5  $  2.1 $  5.1  $  4.5  
Working capital.............   2.5   0.7   4.1    8.1    53.4   84.3    88.1  
Total assets................  46.9  22.9  31.7   44.2   228.1  265.1   312.1  
Total debt, including                                                         
 current maturities.........  12.3   7.0   8.2   35.5   134.0  165.4   186.7  
Shareholders' equity                                                          
 (deficit)..................   8.3   7.1   8.4  (10.5)    7.8    6.4    25.4  

                                                                [Download Table]

                                               Fiscal  Year                     
                                             Ended August 31,     Period from   
                                            ------------------ September 1, 1998
                                              1997     1998    to July 29, 1999 
                                            -------- --------- -----------------
Statement of Operations Data:                          (in millions)            
                                                                                
Surface Mount                                                                   

Canadian GAAP (k)                                                               
                                                                                
Revenue.................................... $   96.8 $   210.2      $270.6      
Cost of sales..............................     81.7     188.4       245.6      
                                            -------- ---------      ------      
  Gross profit............................. $   15.1 $    21.8      $ 25.0      
                                            ======== =========      ======      


                                               Fiscal  Year       Period from   
                                            Ended December 31,  January 1, 1999 
                                            ------------------  to September 3, 
                                              1997     1998          1999       
                                            -------- --------- -----------------
W.F. Wood                                              (in millions)            
United States GAAP (l)                                                          
                                                                                
Net sales.................................. $   25.6 $    30.8      $ 23.2      
Cost of sales..............................     20.9      25.2        20.1      
                                            -------- ---------      ------      
  Gross profit............................. $    4.7 $     5.6      $  3.1      
                                            ======== =========      ======      

                                                                [Download Table]

                                                         Year Ended     Quarter 
                                                        December 31,     Ended  
                                                      ----------------- April 2,
                                                      1997  1998  1999    2000  
                                                      ----- ----- ----- --------
Pensar                                                      (in millions)       
United States GAAP (m)                                                          
                                                                                
Revenue.............................................. $51.0 $50.9 $53.0  $16.2  
Cost of sales........................................  41.9  41.9  43.9   13.7  
                                                      ----- ----- -----  -----  
  Gross profit....................................... $ 9.1 $ 9.0 $ 9.1  $ 2.5  
                                                      ===== ===== =====  =====  

--------                                                                        
(a)  Refer to Note 23 to our consolidated financial statements for a            
  description of differences between United States GAAP and Canadian GAAP.

(b)  Relocation expenses include costs incurred to move equipment and employees 
from a facility in Longmont, Colorado to Denver, Colorado.            

(c)  Leveraged recapitalization expenses of $2.2 million for the year ended     
December 31, 1998 include transaction costs and compensation expense  
related to our leveraged recapitalization.                            

(d)  These expenses will terminate in connection with the completion of this    
offering.                                                             

(e)  Reflects compensation paid to the former shareholders of W.F. Wood and     
Pensar.                                                               

(f) Acquisition-related bonuses consist of one-time bonuses of $2.3 million     
paid to management and $0.3 million paid to employees.                  

(g)  The extraordinary loss of $1.3 million in 1999 arises from debt prepayment 
penalties of $0.8 million, the write-off of unamortized debt financing
    fees of $1.0 million and the write-off of the unamortized debt discount of
$0.3 million net of a tax recovery of $0.8 million.                   

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(h)  Earnings (loss) per common share is calculated after providing for         
priority rights of preferred shares. Given the changes in our capital 
structure in connection with the 1999 combination of Surface Mount and
 HTM, historical earnings (loss) per share of common stock for the years
  ended December 31, 1997 and 1998 are not comparable to subsequent years.
   Diluted earnings (loss) per share has not been disclosed as the effect of
the potential conversion of dilutive securities is anti-dilutive.     

(i)  EBITDA means earnings before interest expense, income taxes, depreciation  
 and amortization. EBITDA is presented because we believe it is a widely
  accepted financial indicator of an entity's ability to incur and service
   debt. Adjusted EBITDA is presented because it is used by our lenders as a
basis for evaluating covenant compliance. Adjusted EBITDA means EBITDA
   adjusted for management fees, former shareholders' compensation and other
charges described in the following table. However, neither EBITDA nor 
  adjusted EBITDA should be considered as an alternative to cash flow from
 operating activities, as a measure of liquidity or as an alternative to
net income as a measure of operating results in accordance with United
States and Canadian GAAP. Our definition of adjusted EBITDA may differ
from definitions of adjusted EBITDA used by other companies.          

The following table sets forth a reconciliation of EBITDA to adjusted       
EBITDA for each period included herein:                                     

                                                        [Enlarge/Download Table]

                                          Pro forma             Quarter   Pro forma  
                                           combined    Quarter   Ended    combined   
                           Year Ended     Year Ended    Ended    April  Quarter Ended
                          December 31,   December 31, March 31,   2,      April 2,   
                         --------------- ------------ --------- ------- -------------
                         1997 1998 1999      1999       1999     2000       2000     
                         ---- ---- ----- ------------ --------- ------- -------------
                                                (in millions)                        
                                                                                     
EBITDA.................. $4.8 $4.6 $14.9    $27.3       $1.8     $6.1       $7.3     
Loss on disposal of                                                                  
 capital assets (a).....  0.1   --   0.2      0.2         --       --         --     
Recapitalization                                                                     
 expenses (b)...........   --  2.2    --       --         --       --         --     
Management fees (c).....   --  0.1   0.7      0.7        0.1      0.1        0.1     
Former W.F. Wood                                                                     
 shareholders'                                                                       
 compensation (d).......   --   --    --      0.1         --       --         --     
Acquisition-related                                                                  
 bonuses paid to W.F.                                                                
 Wood management and                                                                 
 employees (e)..........   --   --    --      2.6         --       --         --     
Former Pensar                                                                        
 shareholders'                                                                       
 compensation (f).......   --   --    --      0.5         --       --        0.1     
                         ---- ---- -----    -----       ----     ----       ----     
Adjusted EBITDA......... $4.9 $6.9 $15.8    $31.4       $1.9     $6.2       $7.5     
                         ==== ==== =====    =====       ====     ====       ====     

(a)  Reflects losses on disposal of capital assets included in selling,     
general and administrative expenses.                              

(b)  Reflects transaction costs and compensation expense related to our     
leveraged recapitalization.                                       

(c)  Reflects elimination of management fees paid to Bain Capital Partners  
    VI, L.P., Celerity Partners, Inc. and Kilmer Electronics Group Limited
    under our Management Agreement, which will be terminated in connection
with the offering.                                                

(d)  These expenses terminated at the time of the W.F. Wood acquisition.    

(e)  Reflects one-time bonuses paid to management and employees of W.F.     
  Wood in connection with our acquisition of W.F. Wood on September 3,
1999.                                                             

(f)  These expenses will terminate upon the completion of the pending       
Pensar acquisition.                                               

(j)  The pro forma combined earnings (loss) before extraordinary loss for the   
   year ended December 31, 1999 and for the quarter ended April 2, 2000 does
not reflect the after-tax effect of adjusting for the following       
acquisition-related and non-recurring adjustments:                    

.  $0.7 million and $0.1 million of pre-tax management fees paid to Bain    
Capital Partners VI, L.P., Celerity Partners, Inc. and Kilmer         
Electronics Group Limited for the year ended December 31, 1999        

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and for the quarter ended April 2, 2000, respectively, under a        
management agreement which will be terminated in connection with this 
offering;                                                             

.  $0.1 million of pre-tax compensation paid to former W.F. Wood            
shareholders for the year ended December 31, 1999;                    

.  $2.6 million of pre-tax acquisition-related bonuses paid to W.F. Wood    
  management ($2.3 million) and W.F. Wood employees ($0.3 million) for the
year ended December 31, 1999; and                                     

.  $0.5 million and $0.1 million of pre-tax compensation paid to former     
Pensar shareholders for the year ended December 31, 1999 and for the  
quarter ended April 2, 2000, respectively.                            

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                                       Pro forma   Pro forma
                                                        combined   combined 
                                                      December 31, April 2, 
                                                          1999       2000   
                                                      ------------ ---------
                                                          (in millions)     
                                                                            
Earnings (loss) before extraordinary loss...........     $(2.8)      $(1.5) 

Plus:                                                                       
  Management fees...................................       0.7         0.1  
  Former W.F. Wood shareholders' compensation.......       0.1         --   
  Acquisition-related bonuses paid to management and                        
   employees of W.F. Wood...........................       2.6         --   
  Former Pensar shareholders' compensation..........       0.5         0.1  

Less:                                                                       
  Tax effect of above adjustments at 40%............      (1.6)       (0.1) 
                                                         -----       -----  
  Adjusted earnings (loss) before extraordinary                             
   loss.............................................     $(0.5)      $(1.4) 
                                                         =====       =====  

(k)  Refer to Note 17 to Surface Mount's consolidated financial statements for  
a description of differences between Canadian and United States GAAP. 
These differences do not have a material effect on any statement of   
operations line item above operating income.                          

(l)  Refer to Note 14 to W.F. Wood's financial statements for a description of  
   differences between Canadian and United States GAAP. These differences do
not have a material effect on any statement of operations line item.  

(m)  Refer to Note 15 to Pensar's financial statements for a description of     
   differences between Canadian and United States GAAP. These differences do
not have a material effect on any statement of operations line item.  

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

You should read the following discussion in conjunction with the "Selected
Consolidated Financial Data" section of this prospectus and our consolidated    
financial statements and notes to those statements included elsewhere in this   
prospectus. The forward-looking statements in this discussion regarding the     
electronics manufacturing services industry, our expectations regarding our     
future performance, liquidity and capital resources and other non-historical    
statements in this discussion include numerous risks and uncertainties, as      
described in the "Risk Factors" section of this prospectus. Our actual results  
may differ materially from those contained in any forward-looking statements.   
You should read this discussion completely and with the understanding that our  
actual future results may be materially different from what we expect. We may   
not update these forward-looking statements after the date of this prospectus,  
even though our situation will change in the future. All forward-looking        
statements attributable to us are expressly qualified by these cautionary       
statements.                                                                     

Overview                                                                        

  We are a leading provider of advanced electronics manufacturing services, or
EMS, to electronics industry original equipment manufacturers, or OEMs,         
worldwide. Our full range of value-added services include product design,       
procurement, prototyping, assembly, test, final system build, comprehensive     
supply chain management, packaging, global distribution and after sales         
support.                                                                        

  SMTC Corporation, or SMTC, is the result of the July 1999 combination of the
former SMTC Corporation, or Surface Mount, and HTM Holdings, Inc., or HTM. Upon 
completion of the combination, the former stockholders of HTM held              
approximately 58.0% of the outstanding shares of SMTC. We have accounted for    
the combination under the purchase method of accounting as a reverse            
acquisition of Surface Mount by HTM. Because HTM acquired Surface Mount for     
accounting purposes, HTM's assets and liabilities are included in our           
consolidated financial statements at their historical cost and the comparative  
figures reflect the results of operations of HTM. The results of operations of  
Surface Mount are included in our consolidated financial statements from the    
date of the combination. Results of operations of Surface Mount for the three   
years prior to the combination are disclosed in separate financial statements   
which are also included in this prospectus. Surface Mount was established in    
Toronto, Ontario in 1985. HTM was established in Denver, Colorado in 1990. SMTC 
was established in 1998.                                                        

 Our revenue has grown from approximately $59.0 million in 1997 to pro forma
revenue of $502.7 million in 1999 through both internal growth and strategic    
acquisitions. Surface Mount developed a strategically located new site in San   
Jose, California in 1995. The July 1999 combination of Surface Mount and HTM    
provided us with increased strategic and operating scale and greater geographic 
breadth. In addition, as a result of the combination, we gained Carrier Access, 
Netopia, IBM and Lucent Technologies as customers. Collectively, since 1995 we  
have completed the following five acquisitions:                                 

.  Radian Electronics' operations, which enabled our expansion into Austin, 
Texas and established our relationship with Dell, in 1996;            

.  Ogden Atlantic Design's operations in Charlotte, North Carolina, which   
provided us with a facility in a major technology center in the       
Southeastern United States, in 1997;                                  

.  Ogden International Europe's operations in Cork, Ireland, which expanded 
our global presence into Europe, in 1998;                             

.  Zenith Electronics' facility in Chihuahua, Mexico, which expanded our    
cost-effective manufacturing capabilities and added Zenith as a       
customer, in July 1999; and                                           

.  W.F. Wood, based outside Boston, Massachusetts, which provided us with a 
manufacturing presence in the Northeastern United States and expanded 
our value-added services to include high precision enclosures         
capabilities, and added EMC and Sycamore Networks as customers, in    
September 1999.                                                       

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We seek acquisition opportunities that enable us to expand our geographic 
reach, add manufacturing capacity and diversify into new markets. Presently, we 
are actively considering potential acquisitions in North America and Europe and 
we are targeting Asia for future expansion. We intend to continue to capitalize 
on attractive acquisition opportunities in the EMS marketplace, and our goal is 
generally to have each acquisition be accretive to earnings after a transition  
period of approximately one year. We also plan to continue our strategy of      
augmenting our existing EMS capabilities with the addition of related value-    
added services. By expanding the services we offer, we believe that we will be  
able to expand our business with our existing customers and develop new         
opportunities with potential customers.                                         

 Consistent with our past practices and normal course of business, we engage
from time to time in discussions with respect to potential acquisitions. While  
we have identified several opportunities that would expand our global presence, 
add to our value-added services and establish strategic relationships with new  
customers, we are not currently party to any definitive acquisition agreements. 

 The July 1999 combination of Surface Mount and HTM, and the acquisitions we
completed in 1999 were financed with funds borrowed under the $155.0 million    
senior credit facility which we established in July 1999. As of April 2, 2000,  
we had borrowed approximately $162.4 million under this facility. We intend to  
repay the majority of our borrowings under the credit facility with the         
proceeds from this offering. We intend to borrow under either our existing      
credit facility or a new credit facility to finance working capital growth and  
to fund acquisitions.                                                           

The EMS industry generally does not operate under long-term contracts. We 
have only one long-term customer production contract with Zenith Electronics    
that resulted from our acquisition of Zenith's facility in Chihuahua, Mexico.   
Our production agreement with Zenith, which expires in October 2000, requires   
Zenith to purchase minimum volumes on a quarterly basis and over the term of    
the agreement. If Zenith fails to achieve such volume targets, funds currently  
held in escrow will be remitted to us.                                          

We currently provide turnkey manufacturing services to the majority of our
customers. In 1999, 96.9% of our pro forma revenue was from turnkey             
manufacturing services. By contrast, during 1999, under the terms of our        
production agreement with Zenith, we manufactured products for Zenith on a      
consignment basis. In a consignment arrangement we provide manufacturing        
services only, while the customer purchases the materials and components        
necessary for production. We expect that in 2000 we will begin to purchase      
materials for Zenith, and that as a result, our relationship with Zenith will   
evolve into a turnkey manufacturing relationship.                               

With our turnkey manufacturing customers, we generally operate under      
contracts that provide a general framework for our business relationship. Our   
actual production volumes are based on purchase orders under which our          
customers do not commit to firm production schedules more than 30 to 90 days in 
advance. In order to minimize customers' inventory risk, we generally order     
materials and components only to the extent necessary to satisfy existing       
customer purchase orders. We do not generally undertake inventory risk.         
Fluctuations in material costs are typically passed through to customers. We    
may agree, upon request from our customers, to temporarily delay shipments,     
which causes a corresponding delay in our revenue recognition. Ultimately,      
however, our customers are generally responsible for all materials purchased    
and all goods manufactured on their behalf.                                     

A recent trend in the EMS industry has emerged in which customers are     
seeking to consolidate suppliers and are seeking manufacturers who can provide  
complete manufacturing solutions. In connection with Dell's realignment of its  
production, Dell selected us to be its sole global manufacturing provider for   
its high value-added, high profit margin server business, which represented     
approximately $69.0 million, or 13.7%, of our 1999 pro forma revenue of         
approximately $503.0 million. We believe that Dell's decision will allow us to  
capitalize on an exciting high growth market opportunity, and we believe our    
revenue from our Dell server business will grow accordingly. Dell has advised   
us that it plans to discontinue using us to build their relatively lower profit 
margin riser card, a component used in personal computers. While our Dell riser 
card business represented approximately $88.0 million, or 17.6%, of our 1999    
pro forma revenue, we believe this realignment will provide us with an          
opportunity to focus our efforts on providing our services in a significantly   
more attractive market sector.                                                  

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We expect that the Dell riser card business will not contribute any revenue     
beyond the second half of 2000. We believe that in 2000 approximately 50.0% of  
the lost revenue from the discontinuation of our Dell riser card business will  
be replaced by additional Dell server business, and we anticipate that by 2002  
the volume of manufacturing services we will provide to Dell in connection with 
Dell's servers will more than offset the loss of Dell's riser card business.    

 We service our customers through a total of eight facilities located in the
United States, Canada, Mexico and Europe. In 1999, approximately 85.0% of our   
pro forma revenue was generated from operations in the United States,           
approximately 9.0% from Canada, approximately 2.0% from Mexico and              
approximately 4.0% from Europe. Our facility in Chihuahua was acquired in July  
1999 from Zenith Electronics Corporation. We expect to increase revenue from    
this facility in 2000 with the inclusion of a full year of operations, with the 
transfer of certain production from other facilities and with the addition of   
new business and increased volume from our current business.                    

  The pro forma results of operations included in this prospectus for the year
ended December 31, 1999 contain the results of Surface Mount, HTM, W.F. Wood,   
and Pensar as if both the combination of Surface Mount and HTM and the          
acquisition of W.F. Wood and the pending acquisition of Pensar had occurred on  
January 1, 1999. The historic results of operations included in this prospectus 
for the year ended December 31, 1999 include a full year of operating results   
for HTM, as well as the operating results for Surface Mount from July 30, 1999  
through December 31, 1999 and operating results for W.F. Wood from September 4, 
1999 through December 31, 1999. As such, the pro forma results have been        
adjusted to reflect seven months of additional goodwill amortization related to 
the reverse acquisition of Surface Mount by HTM, eight months of additional     
goodwill amortization related to the acquisition of W.F. Wood, twelve months of 
additional goodwill amortization related to the pending acquisition of Pensar,  
eight months of additional interest expense and income tax effects related to   
the borrowings required to complete the W.F. Wood acquisition, and twelve       
months of additional interest expense and income tax effects related to the     
borrowings required to complete the pending Pensar acquisition.                 

 Our fiscal year end is December 31. Prior to the combination, Surface Mount
and HTM had August 31 and December 31 fiscal year ends, respectively. The       
consolidated financial statements of SMTC, including the consolidated financial 
statements of HTM for periods prior to the combinations, are prepared in        
accordance with United States GAAP, which conforms in all material respects to  
Canadian GAAP, except as disclosed in Note 23 to those financial statements.    
The consolidated financial statements of Surface Mount are prepared in          
accordance with Canadian GAAP, which conforms in all material respects to       
United States GAAP, except as disclosed in Note 17 to those financial           
statements.                                                                     

  We begin our Management's Discussion and Analysis of Financial Condition and
Results of Operations with a discussion of the pro forma quarter ended April 2, 
2000 compared to the quarter ended March 31, 1999 and with a discussion of the  
pro forma year ended December 31, 1999. Because our historical financial        
statements do not fully reflect the July 1999 combination of HTM and Surface    
Mount, our September 1999 acquisition of W.F. Wood and our pending acquisition  
of Pensar, a discussion of our historical operations does not provide a         
sufficient understanding of the financial condition and results of operations   
of our business. Our pro forma results of operations include the results of     
operations of each of the businesses that will comprise our company following   
the consummation of our pending acquisition of Pensar. A discussion of our      
historical financial condition and results of operations follows our discussion 
of the pro forma quarter ended April 2, 2000 compared to the quarter ended      
March 31, 1999 and our discussion of the pro forma year ended December 31,      
1999.                                                                           

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Results of Operations                                                           

The following table sets forth certain operating data expressed as a      
percentage of revenue for the years indicated:                                  

                                                        [Enlarge/Download Table]

                                                          Pro forma                         Pro forma  
                          Years ended December 31,         combined     Quarter ended       combined   
                         -----------------------------    Year ended  ------------------  Quarter ended
                                                         December 31, March 31, April 2,    April 2,   
                           1997      1998       1999         1999       1999      2000        2000     
                         --------  --------   --------   ------------ --------- --------  -------------
                                                                                                       
Revenue.................    100.0%    100.0%     100.0%     100.0%      100.0%   100.0%       100.0%   
Cost of sales...........     90.8      92.0       91.6       90.0        92.7     91.0         90.2    
                         --------  --------   --------      -----       -----    -----        -----    
Gross profit............      9.2       8.0        8.4       10.0         7.3      9.0          9.8    
Selling, general and                                                                                   
 administrative                                                                                        
 expenses...............      4.7       3.6        4.9        5.8         3.1      6.1          6.3    
Amortization............      --        0.2        0.8        1.5         0.3      1.0          1.4    
Recapitalization                                                                                       
 expenses...............      --        2.5        --         --          --       --           --     
Management fees.........      --        0.1        0.3        0.2         0.2      0.1          0.1    
Former shareholders'                                                                                   
 compensation...........      --        --         --         0.1         --       --           0.1    
Acquisition-related                                                                                    
 bonuses paid to                                                                                       
 management and                                                                                        
 employees of                                                                                          
 W.F. Wood..............      --        --         --         0.5         --       --           --     
                         --------  --------   --------      -----       -----    -----        -----    
Operating income........      4.5       1.6        2.4        1.9         3.7      1.8          1.9    
Interest................      1.2       2.2        2.7        2.4         3.4      3.0          3.0    
                         --------  --------   --------      -----       -----    -----        -----    
Earnings (loss) before                                                                                 
 income taxes...........      3.3      (0.6)      (0.3)      (0.5)        0.3     (1.2)        (1.1)   
Income taxes                                                                                           
 (recovery).............      1.2      (0.2)       --         --          0.1      --          (0.1)   
                         --------  --------   --------      -----       -----    -----        -----    
Earnings (loss) before                                                                                 
 extraordinary loss.....      2.1      (0.4)      (0.3)      (0.5)%       0.2     (1.2)        (1.0)%  
                                                            =====                             =====    
Extraordinary loss......      --        --        (0.5)                   --       --                  
                         --------  --------   --------                  -----    -----                 
Net earnings (loss).....      2.1%     (0.4)%     (0.8)%                  0.2%    (1.2)%               
                         ========  ========   ========                  =====    =====                 

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SMTC Corporation                                                                

Pro Forma quarter ended April 2, 2000 compared to the quarter ended March 31,   
1999                                                                            

Pro Forma Revenue                                                             

 Pro forma revenue increased $25.3 million, or 21.9%, from $115.3 million in
the first quarter of 1999 to $140.6 million in the first quarter of 2000. This  
increase resulted from the growth of revenue generated by our United States     
operations and the acquisition of our Chihuahua facility in July 1999. In the   
first quarter of 2000, 86.1% of our revenue was generated from operations in    
the United States, 8.4% from Canada, 3.7% from Europe and 2.3% from Mexico. In  
the first quarter of 1999, 85.5% of our revenue was generated from operations   
in the United States, 10.4% from Canada, 4.1% from Europe and none from Mexico. 

 Revenue from Dell for the first quarter of 2000 was $32.6 million, or 23.2%
of total revenue. In the first quarter of 1999, revenue from Dell was $32.2     
million, or 27.9% of total revenue. No other customer represented more than     
10.0% of revenue in the first quarter of 1999 or 2000.                          

Pro Forma Gross Profit                                                        

 Gross profit increased $2.6 million from $11.1 million in the first quarter
of 1999 to $13.7 million in the first quarter of 2000. Our gross profit margin  
improved from 9.6% in the first quarter of 1999 to 9.7% in the first quarter of 
2000. The improvement in gross profit was due to the effect of the growth in    
revenue and the addition of our Chihuahua facility. The gross margin was higher 
in the first quarter of 2000 because revenues from our Chihuahua facility were  
on a consignment basis. Consignment sales typically result in lower revenue and 
higher gross profit margins but lower gross profit compared to turnkey          
services. In the second quarter of 2000 our Chihuahua facility became a turnkey 
operation.                                                                      

Pro Forma Selling, General and Administrative Expense                         

Selling, general and administrative expenses increased $2.1 million from  
$6.8 million in the first quarter of 1999 to $8.9 million in the first quarter  
of 2000. As a percentage of revenue, selling, general and administrative        
expenses increased from 5.9% to 6.3% because the Chihuahua facility was         
operating at less than capacity during the quarter. As the Chihuahua facility   
provides higher revenue, we expect that selling, general and administrative     
expenses will decline as a percentage of revenue.                               

Pro Forma Management Fees, Shareholder Bonuses                                

Management fees to shareholders of $0.1 million were expensed in both the 
first quarter of 1999 and 2000. The Pensar shareholder bonuses increased by     
$0.1 million from none in 1999 to $0.1 million in the first quarter of 2000.    
Both of these expenses will be discontinued following this offering. In the     
first quarter of 1999, $0.1 million of W.F. Wood shareholder bonuses were paid. 
These expenses discontinued after our acquisition of W.F. Wood.                 

Pro Forma Amortization                                                        

Amortization of intangible assets of $1.8 million and $1.9 million were   
expensed in the first quarter of 1999 and the first quarter of 2000,            
respectively. Amortization includes the amortization of $0.6 million of         
goodwill related to the combination of Surface Mount and HTM, $0.4 million of   
goodwill related to the acquisition of W.F. Wood and $0.6 million related to    
the pending acquisition of Pensar. Also included in the amortization of         
intangible assets is the amortization of $0.2 million of deferred finance costs 
related to the establishment of our $155.0 million senior credit facility in    
July 1999 and $0.1 million of deferred equipment lease costs.                   

Pro Forma Interest Expense                                                    

Interest expense increased $2.0 million from $2.3 million in the first    
quarter of 1999 to $4.3 million in the first quarter of 2000 due to the debt    
incurred to purchase our Chihuahua facility and increased working capital       
requirements with the growth of the business.                                   

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Pro Forma Income Tax Expense                                                  

In the first quarter of 1999, we had an income tax expense of $0.4 million
on income before taxes of zero as we were not able to claim a recovery on       
losses of $0.4 million incurred by our Irish subsidiary or deduct $0.1 million  
of goodwill expense related to the combination of Surface Mount and HTM.        

 In the first quarter of 2000, we had an income tax recovery of $0.1 million
on a loss before tax of $1.6 million as we were not able to claim a recovery on 
losses of $0.5 million incurred by our Irish subsidiary or deduct $0.6 million  
of goodwill expense related to the combination of Surface Mount and HTM.        

SMTC Corporation                                                                

Pro forma year ended December 31, 1999                                          

Pro Forma Revenue                                                             

Pro forma revenue for 1999 was $502.7 million, which consisted of $303.0  
million contributed by Surface Mount, $102.6 million contributed by HTM, $34.2  
million contributed by W.F. Wood, $53.0 million contributed by Pensar and       
$9.9 million contributed by our Chihuahua facility since our July 1999          
acquisition of that facility. We expect our proportion of revenue from Mexico   
to increase in 2000 with a full year of operations at our Chihuahua facility,   
the transfer of production from other facilities to our Chihuahua facility and  
the addition of new business volume. We expect our revenue to increase in 2000  
as we fully integrate and increase our utilization of capacity at our acquired  
facilities and as we include a full year of revenue for the acquired facilities 
in our results of operations. Revenue from Dell of $157.5 million represented   
approximately 31.3% of total pro forma revenue in 1999. Our next four largest   
customers in 1999, Carrier Access, EFI, EMC and IBM, together represented       
approximately 22.3% of our total pro forma revenue in 1999.                     

Pro Forma Gross Profit                                                        

Pro forma gross profit for 1999 was $50.1 million at a pro forma gross    
margin of 10.0%. Of this total, Surface Mount contributed $27.4 million at a    
pro forma gross margin of 9.0%, HTM contributed $7.5 million at a pro forma     
gross margin of 7.3%, W.F. Wood contributed $5.0 million at a pro forma gross   
margin of 14.6%, Pensar contributed $9.1 million at a gross margin of 17.2% and 
our Chihuahua facility contributed $1.1 million at a gross margin of 11.1%.     
Since our July 1999 acquisition of our Chihuahua facility, revenue from that    
facility was earned on a consignment basis, where revenue is lower and profit   
margins are higher than the revenue and profit margins in turnkey               
manufacturing. W.F. Wood's higher profit margin reflects the fact that the      
profit margins in the value-added high precision enclosure business are higher  
than profit margins in the electronics assembly business. We continue to seek   
to improve our overall profit margins by offering our customers a wider range   
of services and by pursuing acquisitions of businesses that provide value-added 
services.                                                                       

Pro Forma Selling, General and Administrative Expenses                        

Pro forma selling, general and administrative expenses for 1999 were $29.1
million, or 5.8% of pro forma revenue. Of this total, Surface Mount contributed 
$17.7 million, or 5.8% of pro forma revenue, HTM contributed $2.9 million, or   
2.8% of pro forma revenue, W.F. Wood contributed $2.6 million, or 7.6% of pro   
forma revenue, Pensar contributed $4.5 million, or 8.7% of revenue, and our     
Chihuahua facility contributed $1.4 million, or 14.1% of revenue. Pro forma     
selling, general and administrative expenses represent a higher percentage of   
our pro forma revenue than the corresponding percentages based on our           
historical selling, general and administrative expense and revenue figures      
described elsewhere in this discussion because the pro forma figures include    
full year results for acquired facilities that have administrative              
infrastructures capable of accommodating a higher volume of sales than was      
experienced in 1999. HTM's Denver facility has operated near full capacity and  
has leveraged its fixed administrative costs to a greater extent than the other 
facilities we acquired in 1999. In addition, the relatively higher gross        
margin, lower volume business conducted by                                      

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W.F. Wood causes pro forma selling, general and administrative expenses to      
represent a larger percentage of pro forma revenue than the relatively higher   
volume, lower profit margin business of HTM. Selling, general and               
administrative expenses represent a higher percentage of revenue for the        
Chihuahua facility because, as a consignment business in which costs of         
materials are paid directly by the customer, the Chihuahua facility produced    
relatively lower revenue.                                                       

Pro Forma Amortization                                                        

Pro forma amortization of intangible assets includes $2.4 million of      
goodwill amortization related to the combination of Surface Mount and HTM, $1.7 
million of goodwill amortization related to the acquisition of W.F. Wood and    
$2.8 million of goodwill amortization related to the pending acquisition of     
Pensar, in each case as if the transactions had occurred on January 1, 1999. We 
are amortizing goodwill of $24.9 million resulting from the combination of      
Surface Mount and HTM, goodwill of $17.4 million resulting from the acquisition 
of W.F. Wood and goodwill of $26.6 million resulting from the pending           
acquisition of Pensar, over a period of ten years. Also included in pro forma   
amortization of intangible assets is the amortization of $0.3 million of        
deferred financing costs related to the $155.0 million senior credit facility   
we established in July 1999 and $0.2 million of deferred financing costs        
related to HTM's credit facility prior to refinancing. The costs associated     
with our $155.0 million senior credit facility are being amortized over the six 
and one-half year average term of the debt. We expect to write-off $2.5 million 
of the outstanding unamortized deferred costs at April 2, 2000 upon application 
of the offering proceeds to repay a portion of our long-term debt.              

Pro Forma Management Fees, Former Shareholders' Compensation and Acquisition- 
Related and Other Charges                                                     

 Management fees of $0.7 million, or 0.2% of pro forma revenue, were paid to
certain of our principal stockholders during 1999. We expect these fees to      
discontinue after the completion of this offering. During pro forma 1999 we     
paid $0.1 million to the former shareholders of W.F. Wood. We also paid $2.6    
million, or 0.6% of pro forma revenue, consisting of $2.3 million of bonuses    
paid to W.F. Wood management and $0.3 million of bonuses paid to W.F. Wood      
employees just prior to the consummation of the W.F. Wood acquisition. Pensar   
paid discretionary shareholder bonuses of $0.5 million.                         

Pro Forma Interest Expense                                                    

Pro forma interest expense of $12.1 million includes an adjustment of $2.5
million to reflect the interest on the $19.7 million of debt incurred under our 
senior credit facility in connection with the acquisition of W.F. Wood and the  
$17.0 million of debt incurred in connection with the pending acquisition of    
Pensar.                                                                         

Pro Forma Income Tax Expense                                                  

No tax recovery is reflected on the pro forma loss before income taxes of 
$2.3 million because the goodwill expense of $2.4 million related to the        
combination of Surface Mount and HTM is non-deductible and the benefit of the   
losses of our Irish subsidiary has not been recorded. The $1.7 million of       
goodwill amortization and $2.7 million of goodwill amortization in connection   
with our acquisition of W.F. Wood and our pending acquisition of Pensar,        
respectively, is deductible.                                                    

Adjusted Pro Forma EBITDA                                                     

Adjusted EBITDA was $31.4 million, or 6.2% of pro forma revenue. For a    
description of our calculation of adjusted EBITDA refer to note (i) of the      
Selected Consolidated Financial Data.                                           

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Quarterly Pro Forma Combined Results of Operations                              

The following tables set forth our unaudited historical quarterly results 
and pro forma quarterly results for the nine quarters ended April 2, 2000 and   
the five quarters ended April 2, 2000, respectively. This information has been  
prepared on the same basis as our annual consolidated financial statements and  
it includes all adjustments necessary for a fair presentation of the financial  
results of such periods. This information should be read in conjunction with    
our annual consolidated financial statements, and our consolidated pro forma    
statements for the years ended December 31, 1999 and 1998 and the quarter ended 
April 2, 2000. The operating results for any previous quarter are not           
necessarily indicative of results for any future period.                        

                                                        [Enlarge/Download Table]

                                                               Historical Results                                        
                                                                  Quarter ended                                          
                        -------------------------------------------------------------------------------------------------
                        March 31, June 30, September 30, December 31, March 31, June 30, October 3, December 31, April 2,
                          1998      1998       1998          1998       1999      1999      1999        1999       2000  
                        --------- -------- ------------- ------------ --------- -------- ---------- ------------ --------
                                                     (in millions, except per share amounts)                             
                                                                                                                         
Revenue...............    $19.4    $ 17.3      $20.0        $33.0       $23.3    $23.3     $ 87.8      $123.6     $124.3 
Gross profit..........      1.6       1.2        1.6          2.6         1.7      1.5        6.7        11.8       11.2 
Earnings (loss) before                                                                                                   
 extraordinary loss...      0.4      (1.3)       0.1          0.5          --       --       (0.7)       (0.2)      (1.4)
Net (loss) earnings ..      0.4      (1.3)       0.1          0.5          --       --       (2.0)       (0.2)      (1.4)
Earnings (loss) before                                                                                                   
 extraordinary loss                                                                                                      
 per share............     0.13     (0.71)      0.07         0.36          --       --      (0.76)      (0.62)     (1.16)

                                                                [Download Table]

                                            Pro forma results                 
                                            Quarter ended (a)                 
                            ------------------------------------------------- 
                                                                       April  
                            March 31, June 30, October 3, December 31,   2,   
                              1999      1999      1999        1999      2000  
                            --------- -------- ---------- ------------ ------ 
                                              (in millions)                   
                                                                              
Revenue....................  $115.3    $111.7    $135.1      $140.6    $140.6 
Gross profit...............    11.1      10.4      13.2        15.4      13.7 
Earnings (loss) before ex-                                                    
 traordinary loss..........    (0.5)     (1.2)     (1.7)        0.6      (1.5)

--------                                                                        
(a)  Prior to the combination of Surface Mount and HTM and the acquisition of   
  W.F. Wood, the companies had different quarter ending dates. For Surface
Mount, the first and second quarters ended March 28, 1999 and June 27,
    1999, respectively, while HTM and W.F. Wood were on calendar quarter ends.
  Following the combination and acquisition, all three companies adopted a
13 week quarter reporting cycle and a December 31 year end.           

SMTC Corporation (formerly HTM Holdings, Inc.)                                  

Quarter ended April 2, 2000 compared to the quarter ended March 31, 1999        

Revenue                                                                       

  Revenue increased $101.0 million, or 433.5%, from $23.3 million in the first
quarter of 1999 to $124.3 million in the first quarter of 2000. This increase   
resulted from the combination of Surface Mount and HTM, the acquisition of our  
Chihuahua facility in July 1999 and our acquisition of W.F. Wood in September   
1999. Surface Mount, W.F. Wood and our Chihuahua facility contributed $75.4     
million, $11.3 million and $2.9 million, respectively to the increase in        
revenue. Revenue from Dell for the current quarter was $32.6 million, or 26.2%  
of total revenue. No other customer represented more than 10.0% of revenue.     
Revenue generated by our Denver facility, formerly HTM, increased $11.4         
million, or 48.9%, from $23.3 million in 1999 to $34.7 million in 2000. In      
1999, revenue from IBM of $11.0 million, from Carrier Access of $4.0 million    
and from Netopia of $2.8 million represented 47.2%, 17.2% and 12.0%,            
respectively, of total revenue.                                                 

In the first quarter of 2000, 85.4% of our revenue was generated from     
operations in the United States, 9.7% from Canada, 2.6% from Europe and 2.3%    
from Mexico. In the first quarter of 1999, all of HTM's revenue was generated   
in the United States from our Denver facility.                                  

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Gross profit                                                                  

Gross profit increased $9.5 million from $1.7 million in the first quarter
of 1999 to $11.2 million in the first quarter of 2000. Our gross profit margin  
improved from 7.3% in the first quarter of 1999 to 9.0% in the first quarter of 
2000. The improvements in gross profit and gross margin were due to the         
combination of Surface Mount and HTM as well as the acquisitions completed in   
1999. The combination of Surface Mount and HTM added $5.8 million of gross      
profit at a gross margin of 7.7%, our W.F. Wood operation contributed $1.8      
million at a gross margin of 15.9% and our Chihuahua facility added $1.2        
million of gross profit at a gross margin of 41.4%.                             

Our W.F. Wood operation contributed higher gross margins because the high 
precision enclosure products manufactured by that facility have higher profit   
margins than the products we have historically manufactured.                    

 Our Chihuahua facility provided us with higher gross margins because all of
its sales were on a consignment basis during the quarter. Consignment sales     
typically result in lower revenue and higher gross profit margins but lower     
gross profit compared to turnkey services. In the second quarter of 2000 our    
Chihuahua facility became a turnkey operation.                                  

At our Denver facility, formerly HTM, gross profit increased $0.7 million,
from $1.7 million in the first quarter of 1999 to $2.4 million in the first     
quarter of 2000 but the gross margin declined from 7.3% to 6.9% due to a change 
in customer mix.                                                                

Selling, General and Administrative Expenses                                  

Selling, general and administrative expenses increased $6.8 million from  
$0.7 million in the first quarter of 1999 to $7.5 million in the first quarter  
of 2000. As a percentage of revenue, selling, general and administrative        
expenses increased from 3.1% to 6.1% because the facilities added in the        
combination of Surface Mount and HTM and through the acquisitions were          
operating at a lower rate of capacity than our Denver facility. At our Denver   
facility, selling, general and administrative expenses were unchanged at $0.7   
million, but declined as a percentage of revenue from 3.1% to 2.0%.             

Management Fees                                                               

In the first quarter of 2000, management fees of $0.1 million were paid to
our principal stockholders. In the first quarter of 1999, management fees of    
$0.1 million were paid to the principal stockholders of HTM.                    

Amortization                                                                  

 Amortization of intangible assets in the first quarter of 2000 includes the
amortization of $0.6 million of goodwill related to the combination of Surface  
Mount and HTM and $0.4 million of goodwill related to the acquisition of W.F.   
Wood. Also included in the amortization of intangible assets is the             
amortization of $0.3 million of deferred finance costs related to the           
establishment of our $155.0 million senior credit facility in July 1999 and     
$0.1 million of deferred equipment lease costs.                                 

Interest Expense                                                              

Interest expense increased $3.0 million from $0.8 million in the first    
quarter of 1999 to $3.8 million in the first quarter of 2000 due to the debt    
incurred in connection with the combination of Surface Mount and HTM, the debt  
incurred to purchase our Chihuahua facility and W.F. Wood and increased working 
capital requirements with the growth of our business. The weighted average      
interest rates with respect to the debt for the first quarter of 1999 and the   
first quarter of 2000 were 9.8% and 10.0%, respectively.                        

Income Tax Expense                                                            

In the first quarter of 2000, an income tax recovery of $0.1 million on a 
loss before tax of $1.5 million produced an effective income tax recovery rate  
of 6.7% as we were not able to claim a recovery on losses of                    

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$0.5 million incurred by our Irish subsidiary or deduct $0.6 million of         
goodwill expense related to the combination of Surface Mount and HTM. The       
effective income tax rate in the first quarter of 1999 was 37.5% on income      
before tax of $0.1 million recorded by our Denver facility, formerly HTM.       

Year ended December 31, 1999 compared to the year ended December 31, 1998       

Revenue                                                                       

Revenue increased $168.3 million, or 187.6%, from $89.7 million in 1998 to
$258.0 million in 1999. This increase resulted largely from the combination of  
Surface Mount and HTM, the acquisition of our Chihuahua facility in July 1999   
and our acquisition of W.F. Wood in September 1999. Surface Mount, W.F. Wood    
and our Chihuahua facility contributed $134.5 million, $11.0 million and $9.9   
million, respectively, to the increase in revenue. Surface Mount's largest      
customer was Dell. Revenue from Dell for the five month period from the date of 
the combination of Surface Mount and HTM to December 31, 1999 was $76.3         
million, or 29.6% of total revenue for 1999. Revenue generated by our Denver    
facility, formerly HTM, increased $12.9 million, or 14.4%, from $89.7 million   
in 1998 to $102.6 million in 1999. In 1999, revenue from Carrier Access of      
$27.1 million and revenue from IBM of $25.7 million represented 10.5% and 10.0% 
of total revenue, respectively. No other customer represented more than 10.0%   
of our revenue in 1999.                                                         

In 1999, 85.9% of our revenue was generated from operations in the United 
States, 7.4% from Canada, 3.8% from Mexico and 2.9% from Europe. Revenue        
generated outside the United States increased from zero in 1998 to $36.4        
million or 14.1% of revenue in 1999. The increase is due to the combination of  
Surface Mount and HTM and the acquisition of our Chihuahua facility. We intend  
to enhance our position as a leading EMS provider by expanding our global       
presence in strategic markets with the addition of facilities in new cost-      
effective regions and geographic locations, and through the expansion of our    
international sales efforts.                                                    

Gross Profit                                                                  

Gross profit increased $14.5 million from $7.2 million in 1998 to $21.7   
million in 1999. Our gross margin improved from 8.0% in 1998 to 8.4% in 1999.   
The improvements in gross profit and gross margin were due to the acquisitions  
completed in 1999 as well as the combination of Surface Mount and HTM. The      
combination of Surface Mount and HTM added $11.1 million of gross profit at a   
gross margin of 8.3%, our Chihuahua facility contributed $1.1 million of gross  
profit at a gross margin of 11.1% and our W.F. Wood business added $1.8 million 
of gross profit at a gross margin of 16.4%.                                     

 Our Chihuahua facility provided us with higher gross margins because it had
a higher percentage of consignment sales, which typically result in lower       
revenue and higher gross profit margins but lower gross profit compared to      
turnkey services. We expect that in 2000 our Chihuahua facility will become     
primarily a turnkey manufacturing operation.                                    

Our W.F. Wood business contributes higher gross margins because the high  
precision enclosure products manufactured by that business have higher profit   
margins than the products we have historically manufactured. As we expand our   
range of value-added services through additional acquisitions, we will seek to  
manufacture higher gross margin products and to improve our overall gross       
margins.                                                                        

At our Denver facility, formerly HTM, gross profit increased $0.5 million,
from $7.2 million in 1998 to $7.7 million in 1999, but the gross margin         
declined from 8.0% to 7.5% due to a change in our business at that facility     
toward manufacturing products with higher volumes and lower profit margins.     

Selling, General and Administrative Expenses                                  

Selling, general and administrative expenses increased $9.4 million from  
$3.2 million in 1998 to $12.6 million in 1999. Due to the acquisitions we have  
completed as well as the combination of Surface Mount and HTM, we have grown    
from one to eight facilities. As a percentage of revenue, selling, general and  

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administrative expenses increased from 3.6% in 1998 to 4.9% in 1999 because the 
facilities added through our acquisitions and the combination of Surface Mount  
and HTM were operating at a lower rate of capacity than our Denver facility. We 
are focused on reducing selling, general and administrative expenses as a       
percentage of revenue. We plan to meet this goal by increasing utilization of   
our capacity. We believe that the facilities we have acquired have established  
an administrative infrastructure, including sales and marketing capabilities,   
that will enable us to develop and support a significant volume of new          
business. Selling, general and administrative expenses were unchanged from 1998 
to 1999 at our Denver facility.                                                 

Management Fees                                                               

In 1999 management fees of $0.7 million were paid to our principal        
stockholders. In 1998 $0.1 million of management fees were paid to the          
principal stockholders of HTM.                                                  

Amortization                                                                  

 Amortization of intangible assets in 1999 includes the amortization of $0.9
million of goodwill related to the combination of Surface Mount and HTM and     
$0.6 million of goodwill related to the acquisition of W.F. Wood. We are        
amortizing goodwill of $24.9 million resulting from the combination of Surface  
Mount and HTM, and goodwill of $17.4 million resulting from the acquisition of  
W.F. Wood, over a period of ten years. There were no intangible items amortized 
in 1998. Also included in the amortization of intangible assets is the          
amortization of $0.3 million of deferred finance costs related to the           
establishment of our $155.0 million senior credit facility in July 1999 and     
$0.2 million of deferred finance costs related to HTM's credit facility prior   
to refinancing. In 1998, amortization of deferred finance costs was $0.2        
million. The costs associated with our $155.0 million senior credit facility    
are being amortized over the six and one-half year average term of the debt.    

Interest Expense                                                              

Interest expense increased $5.1 million from $2.0 million in 1998 to $7.1 
million in 1999, primarily as the result of the increase in debt incurred in    
connection with the combination of Surface Mount and HTM and the debt incurred  
to purchase our Chihuahua facility and W.F. Wood. Debt of $35.5 million and     
$134.0 million was outstanding at December 31, 1998 and December 31, 1999,      
respectively. The weighted average interest rates with respect to such debt for 
1998 and 1999 were 10.1% and 9.6%, respectively.                                

Income Tax Expense                                                            

 Income tax expense in 1999 amounted to $0.1 million on a loss before tax of
$0.7 million, at an effective tax rate of recovery of 13.8%, as we were not     
able to claim a recovery on losses of $0.5 million incurred by our Irish        
subsidiary, and we were not able to deduct $1.0 million of goodwill expense     
related to the combination of Surface Mount and HTM. We were able to reduce our 
tax expense by $0.4 million by applying $1.0 million of net operating tax       
losses available to our subsidiaries in the United States. Income tax expense   
in 1998 amounted to a recovery of $0.2 million on a loss before tax of $0.5     
million, at an effective tax rate of 37.0%. As of December 31, 1999, we had     
total net operating loss carryforwards of $7.1 million available to apply       
against future income of certain subsidiaries.                                  

Extraordinary Loss                                                            

The extraordinary loss of $1.3 million in 1999, net of the tax benefit of 
$0.8 million, arose from early payment penalties of $0.8 million, the write-off 
of $1.0 million of unamortized deferred financing fees and the write-off of the 
unamortized debt discount of $0.3 million associated with the repayment of      
senior and subordinated notes which were refinanced under the $155.0 million    
senior credit facility entered into in connection with the July 1999            
combination of Surface Mount and HTM. There were no extraordinary gains or      
losses in 1998. The $1.3 million charge would not be presented as an            
extraordinary loss in accordance with Canadian GAAP. Rather, the $2.1 million   
pre-tax expense would be reported in loss before taxes and the tax benefit of   
$0.8 million would be reported as tax recovery.                                 

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SMTC Corporation (formerly HTM Holdings, Inc.)                                  

Year ended December 31, 1998 compared to the year ended December 31, 1997       

Revenue                                                                       

Revenue increased $30.7 million, or 52.0%, from $59.0 million in 1997 to  
$89.7 million in 1998. IBM, our largest customer in 1998, contributed $19.3     
million to such revenue growth, increasing from $19.2 million or approximately  
32.5% of revenue in 1997 to $38.5 million or approximately 42.9% of revenue in  
1998. The increase in revenue from IBM resulted largely from adding servers to  
the products manufactured for IBM in 1998. In 1997, revenue from Supra Products 
and from Lucent Technologies represented approximately 11.0% and 10.0% of       
sales, respectively.                                                            

Gross Profit                                                                  

Gross profit increased $1.8 million, from $5.4 million in 1997 to $7.2    
million in 1998, but the gross margin declined from 9.2% in 1997 to 8.0% in     
1998. The decline in gross margin was due to our focus on increasing our higher 
volume turnkey manufacturing business and decreasing our consignment            
manufacturing business, which is characterized by higher profit margins.        
Consignment sales represented 7.2% of total revenue in 1997, as compared to     
2.3% of total revenue in 1998.                                                  

Selling, General and Administrative Expenses                                  

Selling, general and administrative expenses increased $0.4 million, from 
$2.8 million in 1997 to $3.2 million in 1998. This increase was caused by the   
growth of our business. As a percentage of revenue, selling, general and        
administrative expenses fell from 4.7% in 1997 to 3.6% in 1998 due to our       
ability to leverage fixed administrative costs as revenue expanded.             

Leveraged Recapitalization Expenses                                           

Leveraged recapitalization expenses expensed in 1998 include transaction  
costs of $0.1 million related to our leveraged recapitalization and             
compensation expense of $2.1 million arising from the settlement of stock       
options. There were no other charges in 1997.                                   

Interest Expense                                                              

Interest expense increased $1.3 million, from $0.7 million in 1997 to $2.0
million in 1998 because of the leveraged recapitalization we consummated in     
June 1998. The recapitalization added approximately $25.0 million in new debt.  
Debt of $8.2 million and $35.5 million was outstanding at December 31, 1997 and 
December 31, 1998, respectively. The weighted average interest rates in         
connection with such debt for 1997 and 1998 were 9.3% and 10.1%, respectively.  

Income Tax Expense                                                            

 Income tax expense in 1998 amounted to a recovery of $0.2 million on a loss
before tax of $0.5 million, at an effective tax rate of 37.0%. This compares to 
an expense of $0.7 million on pre-tax income of $2.0 million in 1997, at an     
effective tax rate of 37.0%.                                                    

Surface Mount                                                                   

We have provided Management's Discussion and Analysis of revenue and gross
profit of Surface Mount for the eleven months ended July 29, 1999. Our revenue  
and gross profit for the year ended December 31, 1999 only includes the revenue 
and gross profit of Surface Mount from the date of acquisition and does not     
provide investors with information that reflects the historical operating       
results of the combined entity for periods prior                                

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to July 30, 1999. Due to the relative size of Surface Mount's revenue and gross 
profit compared to ours, we believe that this information is useful in          
understanding the impact of HTM's combination with Surface Mount on future      
operating results of the combined entity.                                       

Eleven Months ended July 29, 1999 compared to the year ended August 31, 1998    

Revenue                                                                       

Revenue increased $60.4 million, or 28.7%, from $210.2 million in 1998 to 
$270.6 million for the eleven month period ended July 29, 1999 (just prior to   
the combination of Surface Mount and HTM). The increase in revenue was due to   
organic growth and the inclusion of a full year of results from our Cork,       
Ireland facility, which we acquired in January 1998. Revenue from Dell          
increased $57.7 million from $70.1 million in 1998, or 33.3% of our total       
revenue, to $127.8 million in 1999, or 47.2% of our total revenue. Sales of     
risers and servers to Dell increased from $45.8 million and $24.3 million       
respectively, in 1998, to $74.1 million and $53.7 million, respectively, in     
1999. Revenue from EFI increased from $36.1 million in 1998, or 17.2% of our    
total revenue, to $37.2 million in 1999, or 13.7% of our total revenue.         

Gross Profit                                                                  

Gross profit increased $3.2 million from $21.8 million in 1998 to $25.0   
million in 1999. Gross margin declined from 10.4% in 1998 to 9.2% in 1999 due   
to general industry competitive price pressures and due to specific price       
pressure from Dell to produce risers at a low cost. Also, consignment sales     
fell to 1.7% of revenue in 1999 from 2.5% in 1998.                              

Year ended August 31, 1998 compared to the year ended August 31, 1997           

Revenue                                                                       

Revenue increased $113.4 million, or 117.1%, from $96.8 million in 1997 to
$210.2 million in 1998. Revenue increased due to our acquisition of Ogden       
Atlantic Design's operations in Charlotte, North Carolina in September 1997 and 
Ogden International Europe's operations in Cork, Ireland in January 1998. These 
acquisitions contributed $27.9 million of revenue from new customers and        
allowed us to expand our relationship with Dell beyond our Austin facility.     
Revenue from Dell was $70.1 million in 1998 or 33.3% of total revenue for the   
year. Revenue from EFI was $36.1 million or 17.2% of total 1998 revenue. No     
other customer represented more than 10.0% of revenue in 1998. In 1997, revenue 
from EFI, Aironet, IVI and Dell of $24.4 million, $19.7 million, $18.4 million  
and $12.2 million, respectively, represented 25.2%, 20.4%, 19.0% and 12.6%,     
respectively, of total revenue.                                                 

Gross Profit                                                                  

Gross profit increased $6.7 million from $15.1 million in 1997 to $21.8   
million in 1998. Gross margin declined from 15.6% in 1997 to 10.4% in 1998 as   
consignment sales represented 7.0% of total revenue in 1997 as compared to 2.5% 
of revenue in 1998. Also, we experienced profit margin pressure in 1998 as the  
result of the additional costs to ramp up for a significant volume of new       
business with Dell and the start-up costs associated with our Cork facility.    

Liquidity and Capital Resources                                                 

  Our principal source of liquidity is cash provided from borrowings under our
senior credit facility. Our principal uses of cash have been to finance mergers 
and acquisitions, meet debt service requirements and finance capital            
expenditures. We anticipate that these uses, including potential future         
acquisition opportunities, will continue to be our principal uses of cash in    
the future.                                                                     

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Net cash provided by operating activities for the quarter ended March 31, 
1999 was $6.0 million compared to net cash used in operating activities of      
$25.6 million for the quarter ended April 2, 2000. In 1999, our Denver          
facility, formerly HTM, reduced its working capital requirements while the      
growth of the combined companies in 2000 led to increased working capital       
needs.                                                                          

Net cash used by financing activities for the quarter ended March 31, 1999
was $5.1 million on the repayment of borrowings and capital lease payments. Net 
cash provided by financing activities for the quarter ended April 2, 2000 was   
$31.1 million due to increased borrowings under the revolving line of credit.   

Net cash used in investing activities was for capital expenditures of $0.1
million in the quarter ended March 31, 1999 compared to $2.5 million in the     
quarter ended April 2, 2000.                                                    

  Net cash used in operating activities for the years ended December 31, 1997,
1998 and 1999 was $0.4 million, $3.8 million, and $6.6 million, respectively.   
Fluctuations in net cash used by operating activities are primarily             
attributable to increases and decreases in working capital requirements related 
to revenue growth.                                                              

Net cash provided by financing activities for the years ended December 31,
1997, 1998 and 1999 was $1.2 million, $4.3 million, and $49.6 million,          
respectively. Our principal financing activities in 1997 included increased     
borrowings and payment of capital leases. Our principal financing activities in 
1998 included increased borrowings, issuances of common stock and repurchases   
of common stock. Our principal financing activities in 1999 included repayment  
of existing debt facilities and borrowings on our senior credit facility in     
connection with the combination of Surface Mount and HTM. As a result of our    
early repayment of this debt, we incurred charges of $2.1 million, or $1.3      
million net of taxes, related to early payment penalties, write-offs of         
unamortized deferred financing fees and write-offs of the unamortized debt      
discount.                                                                       

  Net cash used in investing activities for the years ended December 31, 1997,
1998 and 1999 was $0.4 million, $0.5 million and $41.4 million, respectively.   
Investing activities in 1999 included $31.6 million for acquisitions and $5.7   
million held in escrow in connection with the acquisition of our Chihuahua      
facility. Capital expenditures were $0.5 million in both 1997 and 1998. Capital 
expenditures in 1999 of $4.1 million were incurred principally to upgrade our   
Chihuahua facility and to purchase and install our web-based collaborative      
planning system. We anticipate capital expenditures for 2000 will be consistent 
with 1999 levels.                                                               

  As of April 2, 2000, we had borrowings of approximately $162.4 million under
our senior credit facility. The minimum principal payment obligation under our  
senior credit facility is $2.0 million for 2000. We intend to use the proceeds  
of this offering to repay the majority of our debt. We expect to incur an       
after-tax charge estimated to be $2.3 million, net of a $1.5 million tax        
recovery, on repayment of the debt comprised of the following items net of tax: 
$1.7 million for the write-off of unamortized financing fees and a $0.2 million 
premium payable net of a $0.3 million gain on the termination of the interest   
rate swap and a $0.7 million charge for the excess of the value of the warrants 
over proceeds received issued in connection with the subordinated notes.        

On May 15, 2000, the senior credit facility was amended to increase the   
revolving credit facility by $7.5 million to $67.5 million, and certain of the  
financial covenants were modified to give us more flexibility to support our    
continued business growth.                                                      

The senior credit facility is described below under "Description of       
Indebtedness."                                                                  

In May 2000, in order to provide us with additional working capital and to
finance the growth of our business, certain of our stockholders purchased       
subordinated notes in the amount of $5.0 million and warrants in the amount of  
$2.5 million in connection with a senior subordinated loan agreement dated May  
18, 2000. The subordinated notes were purchased by some of our shareholders or  
their affiliates, including some of the Bain funds, Celerity Partners III,      
L.P., Kilmer, Paul Walker, Derek D'Andrade, Philip Woodard and General Electric 
Capital Corporation, in the amounts of $1,589,782, $1,268,381, $909,605,        
$529,190, $529,190, $101,694 and                                                

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$72,155, respectively. The subordinated notes bear simple interest at the rate  
of 15% per year and will be repaid on completion of this offering with a        
portion of the net proceeds from this offering. The notes are subordinated to   
our senior indebtedness. The warrants will be exercised immediately prior to    
the consummation of this offering for an aggregate of 477,050 shares of common  
stock. Upon exercising these warrants, some of our shareholders or their        
affiliates, including some of the Bain funds, Celerity Partners III, L.P.,      
Kilmer, Paul Walker, Derek D'Andrade, Philip Woodard and General Electric       
Capital Corporation, will receive 151,681, 121,016, 86,785, 50,490, 50,490,     
9,703 and 6,884 shares, respectively. The warrants have been valued at          
approximately $3.6 million. No cash exercise price will be paid to us upon the  
exercise of the warrants in connection with the offering.                       

 On July 3, 2000, in order to provide us with additional working capital and
to finance the growth of our business, certain of our stockholders purchased    
demand notes from us in the amount of $9,925,000. These demand notes were       
purchased by Kilmer and an affiliate of the Bain funds, for a purchase price    
equal to the principal amount of the notes, in the amounts of $4,188,292 and    
$5,736,708, respectively. Of these demand notes, $5,925,000 in aggregate        
principal amount are secured by a portion of our fixed assets and the fixed     
assets of some of our subsidiaries. The demand notes bear interest of 3% of the 
principal amount accruing on the date of issuance and 13.75% per year, and are  
payable to the holders of the notes at any time upon demand.                    

Upon completion of this offering and application of the proceeds from this
offering as discussed in "Use of Proceeds," and based upon our current level of 
operations, we believe that cash generated from operations, available cash and  
amounts available under our senior credit facility will be adequate to meet our 
debt service requirements, capital expenditures and working capital needs for   
at least the next twelve months, although no assurance can be given in this     
regard. Accordingly, there can be no assurance that our business will generate  
sufficient cash flow from operations or that future borrowings will be          
available to enable us to service our indebtedness. We may require additional   
financing if we decide to consummate acquisitions.                              

Quantitative and Qualitative Disclosure Relating to Market Risk                 

Interest Rate Risk                                                            

Our senior credit facility bears interest at a floating rate. The weighted
average interest rate on our senior credit facility for 1999 was 9.5%. We       
reduce our exposure to interest rate risks through swap agreements. We have     
entered into swap agreements to hedge $65.0 million of our outstanding debt.    
Under the terms of our current swap agreement expiring on September 22, 2001,   
the maximum annual rate we will pay on the approximately $65.0 million of our   
debt is 9.66%. The remainder of our debt of $65.9 million bears interest based  
on the Eurodollar base rate. As of December 31, 1999, the Eurodollar base rate  
was 6.5%. If the Eurodollar base rate increased by 10% to 7.2%, our interest    
expense would increase by approximately $0.9 million in 2000.                   

The revolving credit facility portion of our senior credit facility bears 
interest at (1) 1.25% per annum plus the greater of the United States prime     
rate or the Federal Reserve reported overnight funds rate plus 0.5% or          
(2) 1.25% per annum plus the greater of a Canadian chartered bank's reference   
rate for U.S. dollar commercial loans made in Canada or the Federal Reserve     
reported overnight funds rate plus 0.5%. We do not anticipate having a material 
outstanding balance on this facility during the year ending December 31, 2000.  
Therefore, a 10% change in interest rates as of December 31, 1999 is not        
expected to materially affect the interest expense to be incurred on this       
facility during such period.                                                    

Foreign Currency Exchange Risk                                                

Most of our sales and purchases are denominated in U.S. dollars, and as a 
result we have relatively little exposure to foreign currency exchange risk     
with respect to sales made. We do not use forward exchange contracts to hedge   
exposures denominated in foreign currencies or any other derivative financial   
instrument for                                                                  

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trading or speculative purposes. Therefore, the effect of a 10.0% change in     
exchange rates as of December 31, 1999 would not have a material impact on our  
operating results for the year ending December 31, 2000.                        

Impact of Inflation                                                             

  We believe that our results of operations will not be significantly affected
by moderate changes in the inflation rate.                                      

Recent Accounting Developments                                                  

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101 and
in March 2000 issued SAB 101A "Revenue Recognition," which provide guidelines   
in applying U.S. generally accepted accounting principles to revenue            
recognition in financial statements. We will be required to implement SAB 101   
and 101A by the second quarter of 2000. We believe that our revenue recognition 
practices are consistent with the guidelines.                                   

 In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS   
No. 133 establishes methods of accounting for derivative financial instruments  
and hedging activities related to those instruments as well as other hedging    
activities. SFAS No. 133 requires all derivatives to be recognized either as    
assets or liabilities and measured at fair value. SFAS No. 137 delays the       
effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000.   
We will be required to implement SFAS No. 133 for our fiscal year ended         
December 31, 2001. We have not assessed the impact of the adoption of SFAS No.  
133 on our financial position, results of operations or cash flows.             

In March 1998, the American Institute of Certified Public Accountants     
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Cost   
of Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires 
that entities capitalize certain costs related to internal-use software once    
certain criteria have been met. As required, we implemented this standard in    
1999. The implementation did not have a material impact on our financial        
position, results of operations or cash flows.                                  

 In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
Up Activities." SOP 98-5 requires that all start-up costs related to new        
operations must be expensed as incurred. In addition, all start-up costs that   
were capitalized in the past must be written off when SOP 98-5 is adopted. As   
required, we implemented this standard in 1999. The implementation did not have 
a material impact on our financial position, results of operations or cash      
flows.                                                                          

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BUSINESS

Overview                                                                        

  We are a leading provider of advanced electronics manufacturing services, or
EMS, to electronics industry original equipment manufacturers, or OEMs,         
worldwide. We service our customers through eight manufacturing and technology  
centers strategically located in key technology corridors in the United States, 
Canada, Europe and a cost-effective region of Mexico. Our full range of value-  
added services include product design, procurement, prototyping, assembly,      
test, final system build, comprehensive supply chain management, packaging,     
global distribution and after-sales support. Our business is focused on the     
fast-growing fixed and wireless communications, networking and computing        
sectors. Based upon our comparison of our 1999 pro forma revenue of             
approximately $503 million, with 1999 EMS industry revenue data provided by     
TFI, we are among the 15 largest EMS companies worldwide. We believe we are     
well-positioned to capitalize on the significant and growing market opportunity 
to provide advanced EMS solutions to OEMs on a global basis.                    

We have customer relationships with over 50 OEMs, many of which date back 
more than five years. Our customers include industry leading OEMs such as ATI,  
Dell, EMC, IBM and Lucent Technologies. We developed these relationships by     
capitalizing on the continuing trend of OEMs to outsource manufacturing         
services to consolidate their supply base and to form long-term strategic       
partnerships with selected high quality EMS providers. We also have             
relationships with a number of emerging companies in the high-growth            
communications and networking sectors, including Carrier Access, Cobalt         
Networks, Netopia, Suite Technologies and Sycamore Networks. In 1999,           
approximately 55% of our pro forma revenue was generated from the               
communications and networking sectors. We expect to continue to grow our        
business through the addition of new, high quality customers and the expansion  
of our relationships with existing customers.                                   

We believe that our key competitive advantages include our global         
manufacturing capabilities, customer focused team-based approach, global supply 
chain management capabilities and leading edge equipment and processes that are 
consistent from site to site. In addition, we have introduced an advanced web-  
based collaborative planning tool that will electronically link us with our     
customers and suppliers in real time, enhancing our supply chain management     
capabilities.                                                                   

Industry Background                                                             

 The EMS industry provides manufacturing services to OEMs in the electronics
marketplace. The EMS market is large and continues to grow rapidly. According   
to TFI, global EMS industry revenue is forecasted to grow at a compounded       
annual growth rate of approximately 20%, from $60.0 billion in 1998 to $149.4   
billion in 2003. TFI forecasts that larger EMS companies with revenue of        
approximately $500 million or greater are expected to grow at 30% or more       
annually during the same period. We believe that the growth for larger EMS      
companies is projected to be greater than the industry average because OEMs are 
increasingly outsourcing production to larger manufacturers that have the       
ability to provide a total service solution. Industry growth is being fueled by 
the overall growth of the electronics industry, the increased outsourcing of    
manufacturing by OEMs, and the divestiture of OEM manufacturing assets to EMS   
businesses. We believe that OEMs decide to outsource in order to take advantage 
of the technology and manufacturing expertise of EMS companies, eliminate       
manufacturing overhead, reduce time-to-market of products, and improve supply   
chain efficiency. TFI estimates that the percentage of total cost of goods sold 
in the electronics industry which is outsourced for manufacture by OEMs will    
increase from 9.5% in 1998 to 17.1% by 2003, as depicted in the following       
chart.                                                                          

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[GRAPH APPEARS HERE]                                                            

In addition, according to TFI, the EMS industry is highly fragmented with 
over 3,000 independent EMS companies in existence and the 15 largest companies  
accounting for approximately 42% of the worldwide market in 1998. The EMS       
industry has experienced, and is anticipated to continue to experience,         
significant consolidation. We believe that the fragmented nature of the         
industry will allow us to take advantage of acquisition opportunities to        
increase our scale and geographic scope as well as to expand our customer       
relationships and service offerings.                                            

  Revenues generated by the EMS industry are relatively concentrated among the
computing and fixed and wireless communications sectors. The following charts   
illustrate the continued importance of these industry sectors to the global EMS 
industry.                                                                       

[PIE CHARTS APPEAR HERE]                                                        

Historically, OEMs were vertically integrated manufacturers that invested 
significantly in manufacturing assets and facilities around the world to        
manufacture, service and distribute their products. EMS originated as primarily 
labor intensive functions outsourced by OEMs to obtain additional capacity      
during periods of high demand. Early EMS providers were essentially             
subcontractors, providing production capacity on a transactional basis.         
However, with significant advances in manufacturing process technology, EMS     
providers developed additional capabilities and were able to improve quality    
and dramatically reduce OEMs' costs. Furthermore, as the capabilities of EMS    
companies expanded, an increasing number of OEMs adopted and became dependent   
upon EMS outsourcing strategies. Over time, OEMs came to rely on EMS providers  
to perform a broader array of manufacturing services, including design and      
development activities. In recent years, EMS providers have further expanded    
their range of services to include advanced manufacturing, packaging and        
distribution and overall supply chain management. In addition, many OEMs are    
reducing the number of vendors from which outsourced services are purchased,    
and are partnering with EMS suppliers that can provide a total service solution 
on a national or global basis, in order to further lower costs and increase     
supplier accountability.                                                        

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By using EMS providers, OEMs are able to focus on their core competencies,
including product development, sales and marketing, while leveraging the        
manufacturing efficiency and capital investment of EMS providers. OEMs use EMS  
providers to enhance their competitive position by:                             

.  Reducing Time-to-Market. Electronics products are experiencing           
 increasingly shorter product life cycles, requiring OEMs to continually
reduce the time required to bring new products to market. OEMs can    
significantly improve product development cycles and enhance time-to- 
market by benefitting from the expertise and infrastructure of EMS    
providers. This expertise includes capabilities relating to design,   
quick-turn prototype development and rapid ramp-up of new products to 
high volume production, with the critical support of worldwide supply 
chain management.                                                     

.  Improving Supply Chain Management. OEMs who manufacture internally are   
faced with greater complexities in planning, procurement and inventory
  management due to frequent design changes, short product life cycles and
product demand fluctuations. OEMs can address these complexities by   
outsourcing to EMS providers which (1) possess sophisticated supply   
  chain management capabilities and (2) can leverage significant component
procurement advantages to lower product costs.                        

.  Accessing Advanced Manufacturing Capabilities and Process                
Technologies. Electronics products and electronics manufacturing      
  technology have become increasingly sophisticated and complex, making it
difficult for many OEMs to maintain the necessary technological       
expertise and focus required to efficiently manufacture products      
internally. By working closely with EMS providers, OEMs gain access to
high quality manufacturing expertise and capabilities in the areas of 
advanced process, interconnect and test technologies.                 

.  Improving Access to Global Markets. OEMs are generally increasing their  
 international activities in an effort to expand sales through access to
foreign markets. EMS companies with worldwide capabilities are able to
offer such OEMs global manufacturing solutions enabling them to meet  
  local content requirements to distribute products efficiently around the
world at lower costs.                                                 

The SMTC Customer Solution                                                      

We believe that the key competitive advantages of our solution include our
customer-focused team based approach, comprehensive supply chain management     
capabilities and fully integrated worldwide facilities. Our customers benefit   
from the following components of the SMTC solution:                             

Customer-focused Team Oriented Production System, or T.O.P.S. Our cross-  
functional teams work as customer-focused business units, without departmental  
barriers which allow for faster and more direct communication between our       
customers and the team responsible for their product. The removal of            
departmental barriers eliminates time wasted by internal communication between  
departments. Our teams provide the customer with the entire range of services   
from prototype to production to distribution. In addition, our cross-functional 
team structure enables us to tailor each team to specific custom requirements.  
In some cases we have employees on-site at customer locations. The result is a  
manufacturing process tailored to each customer which we believe accelerates    
time-to-market for our customers.                                               

Comprehensive Supply Chain Management; Web-based System. The systems and  
processes we employ in supply chain management enable us to rapidly scale       
operations to meet customer needs, shift capacity in response to product demand 
fluctuations, reduce material costs and effectively distribute products to our  
customers or their end-customers. We have available and are implementing a web- 
based system through which we can communicate, collaborate and plan with our    
customers in real time. This web-based system enables us to manage information  
rather than inventory. As a result, inventory risk and exposure are reduced. In 
addition, our customers can commit to delivering products to their customers    
knowing that the materials and capacity are available because they can monitor  
the status of our materials and capacity in real time through use of our web-   
based collaborative planning system.                                            

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  Fully Integrated Worldwide Factories. Our global reach enables us to provide
OEMs with the flexibility to manufacture products locally in several regions of 
the world. All of our locations operate under the same model and with the same  
systems allowing customers to seamlessly transfer their production from one of  
our facilities to another. This gives our customers greater flexibility and the 
opportunity to reduce their costs by transferring production to the facility    
that suits their needs. The fact that each facility operates similarly also     
enhances communications among facilities, allows our employees to work          
effectively at any of our sites, improves quality control, allows us to acquire 
equipment at volume discounts and promotes adoption of best practices at each   
of our facilities. These factors reduce inefficiencies, improve product quality 
and ultimately reduce costs.                                                    

The SMTC Strategy                                                               

Our objective is to enhance our position as a leading EMS provider to OEMs
worldwide. We intend to achieve this objective by pursuing the following        
business strategies:                                                            

Expand our Global Presence in Strategic Markets. In order to enhance our  
existing high standards of service to our global customers, we intend to        
continue to expand our global presence. We expect to tailor each facility       
acquired to the same high standards of excellence and to a similar plant layout 
as our current facilities. This will allow us to continue to enjoy the benefits 
of fully integrated factories. Since 1995, we have expanded from our first      
facility located in Toronto, Ontario to eight facilities located in the United  
States, Canada, Europe and Mexico. We intend to continue to expand our global   
infrastructure and are currently targeting Asia as an area for future           
expansion.                                                                      

Continue to Provide Leading Edge Supply Chain Management Capabilities. We 
remain fully committed to maintaining our leadership position in supply chain   
management through the use of innovative management strategies. We believe the  
introduction of our web-based collaborative planning system will enable us to   
rapidly scale operations to meet customer needs, shift capacity in response to  
product demand fluctuations, reduce material costs and effectively distribute   
products to our customers or their end-customers.                               

Strengthen our Relationships with Leading and Emerging Global OEMs in     
Attractive EMS Segments. We plan to continue to focus on providing advanced     
electronic manufacturing services to industry leaders, particularly in the high 
growth, high value-added communications and networking sectors. Communications  
and networking companies, in particular, are dramatically increasing the amount 
of manufacturing they are outsourcing, and we believe our technological         
capabilities and global manufacturing platform are well suited to capitalize on 
this opportunity. In addition to our industry leading customers such as ATI,    
Dell, EMC, IBM and Lucent Technologies, we have relationships with a number of  
emerging companies in the communications and networking sectors including       
Carrier Access, Cobalt Networks, Netopia, Suite Technologies and Sycamore       
Networks.                                                                       

Provide Advanced Technological Capabilities and Comprehensive Service     
Offerings. We remain committed to enhancing our capabilities and value-added    
services to meet the ongoing needs of our customers. Through our continuing     
investment in leading-edge assembly and logistics technologies, as well as our  
investment in design, engineering and test capabilities, we are able to offer   
our customers a variety of advanced design and manufacturing solutions. These   
capabilities include micro ball grid arrays, complex circuitry layouts,         
manufacturing and testing of wireless products and manufacturing of ethernet    
cards, among others. Additionally, building on our integrated engineering and   
manufacturing capabilities, we provide our customers with services ranging from 
initial product design and prototype production to final product assembly, test 
and distribution directly to customers. We believe that this provides greater   
control over quality, delivery and costs and enables us to offer our customers  
a complete cost effective solution.                                             

 Pursue Selective Acquisition Opportunities, including Asset Divestitures by
OEMs. We intend to continue to target strategic acquisitions that will enable   
us to expand our geographic reach, add manufacturing capacity, secure key new   
customers, diversify into complementary product markets or broaden our          
technological                                                                   

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capabilities and value-added service offerings. We have successfully completed  
six acquisitions and one new site development since 1995. As a result, we have  
developed and deployed a comprehensive integration strategy which includes      
establishing our team-oriented production system at all locations with broad-   
based workforce participation, utilization of similar manufacturing equipment   
and processes, deploying common information technology platforms, transferring  
best practices among operations company wide and leveraging wide-scale          
procurement.                                                                    

Our Services                                                                    

Our full range of advanced value-added electronics manufacturing services 
include:                                                                        

New Product Development and Introduction. The key to our new product      
development approach is the cross-functionality of our teams. We integrate our  
design group, materials group and manufacturing group into a new product        
development team which works with our customers and suppliers throughout the    
development process to ensure that new designs are efficiently transitioned     
into production. We use advanced design tools to enable new product ideas to    
progress from design, to simulation and physical layout, to design for          
manufacturability. We work with our customers' product developers in the early  
stages of new product development. Our new product development team also        
coordinates the prototyping of new product designs, a critical stage in the     
development of new products. Our prototyping and new product introduction       
centers are strategically located, and we use electronic communications with    
our customers and suppliers in order to provide a quick response to customer    
demands and to facilitate greater collaboration between our new product         
development team, our customers and our suppliers.                              

 Supply Chain Management. We use our integrated resource planning and supply
chain management system to optimize efficient materials management from         
supplier to end-customer. We provide our customers with a complete supply chain 
management solution, using advanced electronic schedule sharing methods with    
our customers and suppliers to plan, purchase, expedite and warehouse           
components and materials. We believe our inventory management and volume        
procurement capabilities reduce costs and shorten total cycle time. Effective   
management of the supply chain is critical to the success of OEMs because it    
reduces the time required to deliver products to market and the capital         
requirements associated with carrying inventory. The introduction of our web-   
based collaborative planning system will further link our suppliers and         
customers in a real time environment.                                           

  Assembly and Integration. We use state-of-the-art technology in the assembly
process, and continually focus, together with our customers and suppliers, on   
developing assembly techniques, improving quality, improving time-to-market of  
our customers' products and reducing costs. We are able to apply a broad range  
of assembly techniques, from pin-through-hole and surface mount to micro ball   
grid array assemblies. Our extensive test capabilities allow us to identify the 
cause of defects and determine the most appropriate corrective action. Our      
engineers work proactively with our customers and suppliers to implement        
solutions to defects before products are shipped. We also design and test       
packaging of products for bulk shipment or single end-customer use. We provide  
fully-integrated system build services to our customers. These services         
capitalize on our sophisticated logistical capabilities to rapidly acquire and  
assemble source components, perform complex testing and deliver products to our 
customers around the world. Our complete system integration capabilities,       
coupled with our strength in supply chain management, position us to meet our   
customers' growing demand for build-to-order system solutions.                  

Global Distribution and After-sales Support. We have a sophisticated      
integrated system for managing complex international distribution, allowing us  
to efficiently ship worldwide and, in many cases, directly to the OEMs' end-    
customers. We also offer a wide range of after-sales support services including 
field failure analyses, product upgrades and repair services. We also assist    
our customers in improving design for manufacture.                              

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Our Customers                                                                   

 We target industry leading OEMs primarily in the high growth networking and
fixed and wireless communications sectors. Pro forma 1999 revenue from          
customers was allocated as follows:                                             

[PIE CHART APPEARS HERE]

We have customer relationships with over 50 OEMs, many of which date back 
more than five years. Our customers include industry leading OEMs such as ATI,  
Dell, EMC, IBM and Lucent Technologies. We also have relationships with a       
number of emerging companies in the high-growth communications and networking   
sectors, including Carrier Access, Cobalt Networks, Netopia, Suite Technologies 
and Sycamore Networks. The electronic products we assemble and manufacture can  
be found in a wide array of end-products including:                             

                                                                [Download Table]
                                                                     
.  PBX switches           .  Routers            .  Personal computers

.  Wireless base          .  Hubs               .  Multimedia        
   stations                                        peripherals       
                          .  Switches                                
.  Wireless loop                                .  Video broadcasting
   systems                .  Mass storage                            
                             devices            .  Ethernet PCMCIA   
.  Modems                                          cards             
                          .  Servers                                 
.  Fax machines                                 .  Semiconductor test
                          .  Workstations          equipment         
.  Components for T1                                                 
   and T3 broadband                                                  
   equipment                                                         

Marketing and Sales                                                             

We market our services through a focused strategy that emphasizes our team
based approach to servicing our customers. In addition to developing            
relationships with established industry leading OEMs, we also target selected   
emerging companies in high growth market segments. We target prospective        
customers in the networking, fixed and wireless communications, computing and   
peripheral and other industries which are leaders in their markets. We are      
focused on building relationships with customers that require a volume of       
production that complements our customer-focused team-based approach. In all    
cases, our goal is to allocate our program management, engineering and          
manufacturing resources, business systems and assets on a customer-by-customer  
basis, enabling each of our customers to have a dedicated environment that      
operates as a virtual extension of its business.                                

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 We have a direct sales force with a global presence that focuses on new and
existing customers to take advantage of our worldwide capabilities. We also     
have a mix of established direct sales representatives and manufacturer         
representative companies throughout Canada, the United States and Europe. Our   
sales offices are located within our manufacturing facilities. In addition, we  
have a sales office in Boston, Massachusetts. When a customer opportunity is    
identified by our direct or outside sales force, we dedicate a team to the      
potential customer, and that team becomes part of our marketing effort and will 
continue to service the customer throughout our relationship.                   

Supply Chain Management                                                         

We believe that the basis of true collaboration is seamless integration   
across the enterprise-wide system, encompassing the customers' worldwide        
facilities, our global manufacturing sites, and our suppliers. We provide our   
customers with a complete supply chain management solution, using advanced      
electronic schedule sharing methods with our customers and suppliers to plan,   
purchase, expedite and warehouse components and materials. The systems and      
processes we currently employ in supply chain management enable us to rapidly   
scale operations to meet customer needs, shift capacity in response to product  
demand fluctuations, reduce material costs and effectively distribute products  
to our customers or their end-customers.                                        

In April 1999, we launched a major new initiative with the development of 
our web-based collaborative planning system. This system will initially be used 
to enhance our manufacturing execution capabilities through the use of web-     
based master scheduling, real time materials requirement planning and factory   
scheduling software. In conjunction with our enhanced manufacturing execution   
processes, we have introduced our web-based tools for customer demand           
management and supplier management.                                             

We believe that in order to continue to offer our customers leading       
services, we and our customers and suppliers must create virtual enterprises,   
sharing information and making joint decisions to ensure a fast and cost-       
effective response to the market. Our web-based collaborative planning tool     
features a "capable to promise" ability that we expect will improve flexibility 
and reduce cycle times in the supply chain for our customers. Through a web-    
based user interface, our customers and suppliers will have direct access to    
our supply chain management database. Customers will be able to monitor the     
availability and supply of component parts in real time. Simulation features    
will allow customers to explore "what-if" scenarios, enhancing our customers'   
forecasting and planning efficiency. Communication will be streamlined          
throughout the supply chain, allowing our customers to receive timely feedback  
from us and allowing us to receive real time input from our suppliers.          

Our goal is to gauge and optimize performance in real time. Our web-based 
tools will enable all activities in the supply chain to be synchronized, and    
will enable us and our trading partners to rapidly analyze, revise and fine-    
tune plans based on the latest customer information. WebPLAN and Lotus Notes    
are the foundation for our e-business solution.                                 

  Our web-based collaborative planning system is currently operating at all of
our locations. In the first half of 2000, we introduced the system to our       
customers and suppliers. Because our customers and suppliers will need only     
standard, low-cost web access capabilities to access our collaborative planning 
tool, and because the system represents a major advance over traditional        
electronic data interchange systems, we believe our customers and suppliers     
will readily adopt our leading-edge e-business solution to supply chain         
management.                                                                     

Technology, Processes and Development                                           

We use advanced technology in the assembly and testing of the products we 
manufacture. We believe that our processes and skills are among the most        
sophisticated in the industry.                                                  

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Surface mount technology is the principal technology for the assembly of  
printed circuit boards. Our customer-focused factories include predominantly    
surface mount technology lines, which are highly flexible and are continually   
reconfigured to meet customer-specific product requirements. In addition to     
expertise in conventional surface mount technology, we have extensive           
capabilities utilizing a broad range of technologies, including:                

.  chip scale packaging, which is a method of using integrated circuits     
(chips) without encapsulating them in epoxy, thereby utilizing less   
space on the circuit board;                                           

.  flip chips, which are structures that house interconnected circuits and  
  are utilized to minimize printed circuit board surface area when compact
packaging is required;                                                

.  tape automated bonding, which is a specialized assembly-process          
technology that involves the application of components onto a circuit 
board using temperature and pressure;                                 

.  multichip module-laminates, which are a type of printed circuit board    
 design that allows for the placement of multiple integrated circuits or
other components in a limited surface area; and                       

.  micro ball grid array, which is a method of mounting an integrated       
  circuit or other component to a printed circuit board. Rather than using
pins, the component is attached with small balls of solder at each    
  contact. This method allows for greater component density and is used in
printed circuit boards with higher layer counts.                      

We also work with a wide range of substrate types from thin flexible      
printed circuit boards to highly complex, dense multilayer boards.              

Our assembly capabilities are complemented by advanced test capabilities. 
These technologies include:                                                     

.  high speed functional testing, a method of testing products by           
simulating actual use modes in high volume;                           

.  burn-in testing, a test method where products are powered on for 24      
hours to ensure product functionality;                                

.   vibration testing, a method that tests whether products can withstand   
forces encountered under normal use;                                

.  in-circuit testing, an automated test for workmanship defects; and       

.  in-situ dynamic thermal cycling stress testing, a test method of         
exposing products from high to low temperature extremes for several   
cycles, which identifies any early product failures.                  
We believe that our inspection technology is among the most sophisticated 
in the EMS industry. Our inspection technology includes:                        

.  x-ray laminography, a method that utilizes an x-ray to view thin layers  
of a circuit board;                                                   

.  three-dimensional laser paste, a volumetric inspection method that       
utilizes a microscope with lasers; and                                

.  scanning electron microscopy, a scanning method that utilizes a          
microscope with 200 times magnification or greater.                   

Our ongoing research and development activities include the development of
processes and test technologies as well as some focused product development.    
We are proactive in developing manufacturing techniques which take advantage    
of the latest component and product designs and packaging.                      

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Our Suppliers                                                                   

 We order raw materials and components based on purchase orders received and
accepted, and maintain minimal levels of inventory that are not identified for  
use in filling specific orders. We currently use electronic data interchange    
with our key suppliers, and ensure speed of supply through the use of automated 
receiving and full-service distribution capabilities. With the implementation   
of our web-based collaborative planning systems, our customers' needs will be   
integrated with our suppliers in a more efficient and cost effective manner     
than is achievable through traditional electronic data interchange. In pro      
forma 1999 we purchased in excess of $300 million in materials. We believe this 
volume of procurement enhances our ability to obtain better pricing, influence  
component packaging and design and obtain supply of components in constrained   
markets.                                                                        

We employ a strategy of risk minimization relative to our inventory and   
generally order materials and components only to the extent necessary to        
satisfy existing customer orders. We have implemented specific inventory        
management strategies with certain suppliers such as "line-side stocking"       
(pulling inventory at the production line on an as needed basis) and "real-time 
component pricing" (the ability to obtain the advantage of the most recent      
price change in component pricing) designed to minimize the risk to us of cost  
fluctuations. These strategies help protect us from the risk of fluctuations in 
inventory costs. In addition, these costs can generally be passed through to    
customers.                                                                      

During pro forma 1999, we did not rely significantly on any one supplier, 
with no supplier representing more than 10.0% of total purchases.               

Competition                                                                     

The EMS industry is highly fragmented and comprised of a large number of  
domestic and foreign companies. The intense competition we face is provided by  
many independent sources as well as in-house manufacturing capabilities of      
current and potential customers who evaluate our capabilities against the merit 
of manufacturing products internally. We compete with different companies       
depending on the type of service or geographic area. Our competitors include    
Celestica Inc., Flextronics International Ltd., Jabil Circuit, Inc., SCI        
Systems, Inc. and Solectron Corporation. Certain of our competitors may have    
greater manufacturing, financial, research and development and marketing        
resources than we do. We believe that we are a leading EMS provider and that we 
are well positioned to compete against these larger competitors due to our      
product quality, flexibility and timeliness in responding to design and         
schedule changes, reliability in meeting product delivery schedules, pricing,   
technological sophistication, the provision of value-added services and         
geographic location.                                                            

Governmental Regulation                                                         

Our operations are subject to certain federal, state, provincial and local
regulatory requirements relating to environmental compliance and site cleanups, 
waste management and health and safety matters. In particular, we are subject   
to regulations promulgated by regulatory agencies pertaining to health and      
safety in the workplace and the use, storage, discharge and disposal of         
hazardous chemicals used in the manufacturing processes.                        

  To date, the costs of compliance and environmental remediation have not been
material to us. Nevertheless, additional or modified requirements may be        
imposed in the future. If such additional or modified requirements are imposed  
on us, or if conditions requiring remediation were found to exist, we may be    
required to incur substantial additional expenditures.                          

Employees                                                                       

As of April 2, 2000, we employed approximately 3,000 full time employees  
worldwide. In addition, we employ varying levels of temporary employees as our  
production demands. Given the variable nature of our project flow and the quick 
response time required by our customers, it is critical that we be able to      
quickly ramp-up and ramp-down our production to maximize efficiency. To achieve 
this, our strategy has been to                                                  

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employ a skilled temporary labor force, as required. We use outside contractors 
to qualify our temporary employees on a site-by-site basis. Our production      
level temporary employees are compensated by the hour. We do not have any       
permanent leased employees. We believe we are team-oriented, dynamic and        
results-oriented with an emphasis on customer service and quality at all        
levels. We believe this environment is a critical factor for us to be able to   
fully utilize the intellectual capital of our employees. From time to time we   
relocate our management level employees as needed to fill open positions at our 
sites. Because of our training programs, we have not experienced difficulty in  
adequately staffing skilled employees.                                          

With the exception of approximately 400 of our employees in Mexico and 100
of our employees in Ireland, none of our employees is unionized. We have never  
experienced a work stoppage or strike and believe that our employee relations   
are good.                                                                       

Facilities                                                                      

We conduct our operations within approximately 850,000 square feet of     
building space. We believe our facilities are currently adequate for our        
operating needs. Our principal service at all locations is assembly of          
electronic components, with the exception of the larger Boston facility where   
we manufacture precision enclosures. Our facilities are as follows:             

                                                                [Download Table]

                                                       Approx.               
Location                                             Square Feet Leased/Owned
--------                                             ----------- ------------
                                                                             
Toronto, Ontario....................................   100,000      Leased   
San Jose, California................................    75,000      Leased   
Austin, Texas.......................................    75,000      Leased   
Charlotte, North Carolina...........................   120,000      Leased   
Cork, Ireland.......................................    50,000      Leased   
Denver, Colorado....................................   100,000      Leased   
Chihuahua, Mexico...................................   250,000       Owned   
Boston, Massachusetts...............................    50,000      Leased   
Boston, Massachusetts...............................    30,000      Leased   

We have exercised an option under our Austin, Texas lease to purchase 20  
acres adjacent to our existing facility. We are in the process of selling the   
property back to the developer in order to build a 145,000 square foot          
facility, which we intend to lease back. We expect to move our Austin           
operations to the new building and to be operational in the second quarter of   
2001. We are also in the process of consolidating our two Boston, Massachusetts 
facilities into a new, approximately 150,000 square foot facility which we plan 
to occupy in late 2000.                                                         

All of our principal facilities are ISO certified to ISO 9001 or ISO 9002 
standards. ISO 9001 and ISO 9002 are commonly recognized standards in the EMS   
industry that are published by the International Standardization Organization   
and relate to quality management systems. ISO 9001 contains requirements for    
quality assurance in design, development, production, installation and          
servicing. ISO 9002 contains requirements for quality assurance in production,  
installation and servicing.                                                     

The principal executive office of SMTC and SMTC Canada is located at 635  
Hood Road, Markham, Ontario, Canada L3R 4N6.                                    

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Our Structure and Our History                                                   

The following chart shows our current structure including our material    
subsidiaries and their jurisdictions of incorporation or organization. Unless   
otherwise indicated, all such subsidiaries are wholly-owned, directly or        
indirectly by SMTC.                                                             

[CHART APPEARS HERE]

SMTC Corporation                                                              

Our company's present corporate structure resulted from the July 1999     
combination of Surface Mount and HTM in a transaction accounted for under the   
purchase method of accounting as the acquisition of Surface Mount by HTM. The   
transaction provided us with increased strategic and operating scale, as well   
as greater geographic breadth. Subsequent to the combination, all of Surface    
Mount's operating subsidiaries other than SMTC Canada have become subsidiaries  
of HTM.                                                                         

  Since the combination, we acquired Zenith's facility in Chihuahua, Mexico, a
transaction which expanded our cost-effective manufacturing capabilities in an  
important geographic region. In September 1999, we acquired the Boston,         
Massachusetts based systems integration and precision enclosures business of    
W.F. Wood, which expanded our operations into the Northeastern United States.   
We plan to continue to capitalize on attractive acquisitions and internal       
growth opportunities in the EMS marketplace and are presently targeting Asia as 
an area for future expansion.                                                   

SMTC Canada                                                                   

SMTC Canada was incorporated in Canada in 1985 as The Surface Mount       
Technology Centre Inc., or SMTCI, and continued to Ontario in 1994. Prior to    
the July 1999 combination, SMTCI and its wholly-owned U.S. subsidiary, Surface  
Mount, completed a reorganization such that Surface Mount then became the       
parent of a group of companies which included SMTCI. In connection with the     
July 1999 reorganization, SMTC Nova Scotia Company, a wholly-owned subsidiary   
of SMTC, acquired all of the outstanding voting shares of SMTCI. On October 29, 
1999, SMTCI changed its name to SMTC Manufacturing Corporation of Canada. On    
June 1, 2000, SMTCI adopted a French form of its name and eliminated several    
classes of unissued shares from its authorized capital.                         

HTM Holdings, Inc.                                                            

In June 1998, Hi-Tech Manufacturing Inc., or Hi-Tech Manufacturing, was   
recapitalized by investors led by Bain Capital and Celerity Partners, Inc., and 
HTM, a Delaware corporation, was organized such that Hi-Tech                    

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Manufacturing became a wholly owned subsidiary of HTM. Organized in 1990,       
Thornton, Colorado based Hi-Tech Manufacturing was a turnkey contract           
manufacturer which focused on the assembly of completed printed circuit boards. 
Hi-Tech Manufacturing has changed its name to SMTC Manufacturing Corporation of 
Colorado.                                                                       

Legal Proceedings                                                               

We are a party to various legal actions arising in the ordinary course of 
our business. We believe that the resolution of these legal actions will not    
have a material adverse effect on our financial position or results of          
operations.                                                                     

Backlog                                                                         

Although we obtain firm purchase orders from our customers, our customers 
typically do not make firm orders for delivery of products more than 30 to 90   
days in advance. We do not believe that the backlog of expected product sales   
covered by firm purchase orders is a meaningful measure of future sales since   
orders may be rescheduled or canceled.                                          

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MANAGEMENT

Directors, Executive Officers and Key Employees                                 

The following table sets forth our directors and executive officers, their
ages as of December 31, 1999, the positions currently held by each person and   
their place of residence. All of the directors and executives have been with us 
since Surface Mount combined with HTM in July 1999, except Tom Harrington and   
Ian Loring.                                                                     

                                                        [Enlarge/Download Table]

Name and Municipality of                                                                      
Residence                 Age Office                                                          
------------------------  --- ------                                                          
                                                                                              
Paul Walker.............   42 President, Chief Executive Officer and Director(1)(2)           
Unionville, Ontario                                                                           

Edward Johnson..........   42 Executive Vice President, Business Development and Director     
Longmont, Colorado                                                                            

Philip Woodard..........   46 Senior Vice President, Enterprise Development and Integration(2)
Newmarket, Ontario                                                                            

Gary Walker.............   39 Vice President and General Manager, San Jose and Director(2)    
Monte Sereno, California                                                                      

Derek D'Andrade.........   46 Vice President, Quality(2)                                      
Richmond Hill, Ontario                                                                        

Gary Itenson............   40 Vice President, Sales                                           
Los Altos, California                                                                         

Richard Smith...........   40 Vice President, Finance & Administration(2)                     
Toronto, Ontario                                                                              

John Somerville.........   40 Vice President, Engineering                                     
Austin, Texas                                                                                 

Tom Harrington..........   49 Vice President and General Manager, Enclosure Services          
Westford, Massachusetts                                                                       

Mark Gordon.............   41 Vice President, Supply Chain Optimization                       
Newmarket, Ontario                                                                            

Robert Koss.............   53 Vice President, Strategic Accounts                              
Boulder, Colorado                                                                             

James Laurion...........   43 Vice President, Program Management and Internal Audit           
Boulder, Colorado                                                                             

Brad Tesch..............   39 Vice President, Access Centers                                  
Berthoud, Colorado                                                                            

David Dominik...........   43 Director                                                        
Belvedere, California                                                                         

Prescott Ashe...........   32 Director(1)                                                     
San Francisco,                                                                                
 California                                                                                   

Ian Loring..............   34 Director                                                        
Dedham, Massachusetts                                                                         

Stephen Adamson.........   43 Director                                                        
Los Angeles, California                                                                       

Mark Benham.............   49 Director                                                        
Woodside, California                                                                          

Michael Griffiths.......   48 Director(1)                                                     
Toronto, Ontario                                                                              

Anthony Sigel...........   36 Director                                                        
Toronto, Ontario                                                                              

--------                                                                        
(1)  Also a member of the board of directors of SMTC Canada.                    
(2)  Also an officer of SMTC Canada.                                            

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Paul Walker founded Surface Mount in 1985. Previously he was employed at  
Brock Electronics, a manufacturer and distributor of production equipment for   
the electronics industry, as Director of Business Management from 1982 to 1985  
and at Motorola Canada, an integrated communications and embedded electronics   
solutions provider, as Program Manager from 1979 to 1982. Paul Walker is Gary   
Walker's brother.                                                               

 Edward Johnson has served as Executive Vice President, Business Development
and Director of SMTC Corporation since the combination of Surface Mount and HTM 
in 1999. He was President and Chief Executive Officer of Hi-Tech Manufacturing, 
(the former operating subsidiary of HTM Holdings, Inc.) a turnkey contract      
manufacturer, from its inception in January 1990. He served as President of     
Digital Storage Systems, a provider of mass storage, back-up and archiving      
solutions from 1984 to 1990. Prior to joining Digital Storage, Mr. Johnson      
served as Controller of Aspen Peripherals, a tape drive systems manufacturer,   
and Cost Accountant at MiniScribe, a disk drive manufacturer.                   

Philip Woodard joined Surface Mount in 1992 as Vice President, Materials. 
Previously he was employed at Motorola Canada, an integrated communications and 
embedded electronics solutions provider from 1977 to 1992 where he progressed   
through various positions to Director of Materials.                             

Gary Walker founded Surface Mount in 1985. Previously he was employed at  
Brock Electronics, a manufacturer and distributor of production equipment for   
the electronics industry, as a Manufacturers Representative from 1982 to 1985   
and at Motorola Canada, an integrated communications and embedded electronics   
solutions provider, from 1980 to 1982. Gary Walker is Paul Walker's brother.    

Derek D'Andrade founded Surface Mount in 1985. Formerly Vice President    
Engineering, he was previously employed at Motorola Canada, as Manufacturing    
Engineering Manager from 1979 to 1985 and at Sunbeam Canada, a manufacturer of  
home appliances, as Manufacturing Manager from 1975 to 1979.                    

  Gary Itenson joined Surface Mount in April 1996. Previously, he was employed
at Future Electronics, an electronics components distributor, from 1981 to 1996 
where his career progressed from field sales, to sales management, to strategic 
account/multi-region sales management to division general management.           

Richard Smith joined Surface Mount in August 1998. Previously, he was     
employed as Chief Financial Officer of Wolf Group Integrated Communications, an 
advertising and public relations company, from 1997 to 1998; Vice President     
Finance of Green Forest Lumber Corporation, a Toronto Stock Exchange listed     
forest products manufacturer from 1988 to 1997; Account Manager at a Canadian   
chartered bank, from 1985 to 1988; and auditor, Price Waterhouse, a public      
accounting firm, from 1982 to 1985.                                             

John Somerville joined Surface Mount in January 1999 as Director of       
Engineering, North American Operations and Acting Site Operations Manager for   
Austin, Texas. Previously, he was employed as Manufacturing Manager at Motorola 
from 1995 to 1998 and IBM Canada Toronto Manufacturing (now Celestica), an EMS  
provider, from 1984 to 1995. At IBM, he progressed through various positions to 
Engineering Manager.                                                            

Tom Harrington has been with us since the acquisition of W.F. Wood in     
September 1999. He was President of W.F. Wood, a high precision enclosures      
manufacturer, from 1992 to 1999. Mr. Harrington worked for W. F. Wood for over  
twenty years.                                                                   

Mark Gordon joined Surface Mount in 1997 as Director of Logistics. He was 
promoted to Vice President, Supply Chain Optimization in April 1999. Prior to   
1997 he was the Director of Logistics for Today's Business Products, an office  
supply products distributor, from 1996 to 1997 and for Lily Cups, a food        
service industry container manufacturer, from 1994 to 1996. From 1989 to 1994,  
Mr. Gordon worked in supply chain management with Motorola Canada in the        
communications division.                                                        

 James Laurion joined Hi-Tech Manufacturing, the former operating subsidiary
of HTM Holdings, Inc., in July 1994 from Morton, Nehls & Tierney, SC, a         
Wisconsin and Florida public accounting firm where he was a principal and       
stockholder.                                                                    

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  Robert Koss joined Hi-Tech Manufacturing, the former operating subsidiary of
HTM Holdings, Inc., in November 1992. Prior to joining HTM, Mr. Koss was Vice   
President of Sales and Marketing at Precision Power Systems, a power supply     
manufacturer.                                                                   

 Brad Tesch joined Hi-Tech Manufacturing, the former operating subsidiary of
HTM Holdings, Inc., in August 1990. He previously served as a member of the     
process planning and technical staffs at AT&T Manufacturing and Bell Telephone  
Laboratories, both telecommunications equipment manufacturers.                  

  David Dominik has served as a Director since July 1999. Mr. Dominik is a co-
founder and managing director of Convergence Capital Group. He is also a        
special limited partner of Bain Capital, Inc., a private equity investment      
firm. He was a managing director of Bain Capital, Inc. from 1990 to March 2000. 
Previously, Mr. Dominik was a general partner of Zero Stage Capital, a venture  
capital firm focused on early-stage companies, and assistant to the chairman of 
Genzyme Corporation, a biotechnology firm. From 1982 to 1984, he worked as a    
management consultant at Bain & Company, a consulting firm. Mr. Dominik also    
serves as a director of ChipPAC, Inc., Integrated Circuit Systems, Inc., DDi    
Corp. and OneSource.                                                            

Prescott Ashe has served as a Director since July 1999. Mr. Ashe is a co- 
founder and managing director of Convergence Capital Group. Mr. Ashe was a      
principal at Bain Capital, Inc., a private equity investment firm from June     
1998 to March 2000 and was an associate at Bain Capital, Inc. from December     
1992 to June 1998. Prior to that, he was an analyst at Bain Capital, Inc. and a 
consultant at Bain & Company, a consulting firm. Mr. Ashe also serves as a      
director of ChipPAC, Inc., Integrated Circuit Systems, Inc. and DDi Corp.       

Ian Loring has served as a Director of SMTC since June 2000. Mr. Loring   
joined Bain Capital, Inc., a private equity investment firm, in 1996; he has    
been a principal there since 1997. From 1993 to 1996, Mr. Loring was a Vice     
President at Berkshire Partners, where he worked in the specialty               
manufacturing, technology and retail industries. Mr. Loring also serves as a    
director of Therma-Wave, Inc.                                                   

Stephen Adamson has served as a Director since July 1999. Mr. Adamson is a
Partner of Celerity Partners, Inc. Prior to joining Celerity Partners, Inc., he 
was a Managing Director of W. E. Myers & Co., a merchant banking firm. Prior to 
W. E. Myers & Co., Mr. Adamson was Managing Director with KD Equities, a        
private partnership specializing in middle market leveraged buyouts. Mr.        
Adamson is a director of Financial Pacific Insurance Group, Inc., Rapid Design  
Service, Inc., and Starcom Holdings, Inc.                                       

Mark Benham has served as a Director since July 1999. Mr. Benham was a co-
founder of Celerity Partners, Inc., a private equity investment firm, and has   
been a Partner since 1992. Previously he was a Senior Investment Officer of     
Citicorp Venture Capital, Ltd., and prior to that he was an advisor to Yamaichi 
UniVen Co., Ltd., the venture capital subsidiary of Yamaichi Securities         
International. Mr. Benham is a director of DDi Corporation, Rapid Design        
Service, Inc., and Starcom Holdings, Inc.                                       

Michael Griffiths has served as a Director since July 1999. Mr. Griffiths 
has been Executive Vice President of Kilmer Van Nostrand Co. Limited, or KVN, a 
private investment holding company, since 1988 and has served there in various  
other capacities since 1979. Previously, Mr. Griffiths was a manager with       
Clarkson Gordon Chartered Accountants (now Ernst & Young), a public accounting  
firm with responsibility for the audit, tax and related management matters of a 
variety of public clients.                                                      

Anthony Sigel has been Vice President, Corporate Development of KVN, a    
private investment holding company, since 1994. Mr. Sigel joined KVN in 1991 as 
Vice President of KVN's Palestra Group Limited. Prior to joining KVN, Mr. Sigel 
was an Associate within Bankers Trust Company's Merchant Bank, Toronto, Canada. 

Board Composition                                                               

Each of our directors is elected and serves until a successor is duly     
elected and qualified or until the earlier of his death, resignation or         
removal. All members of our board of directors set forth herein were elected by 
class vote pursuant to our certificate of incorporation. Paul Walker, Gary      
Walker and Mr. Johnson are representatives of management, Messrs. Dominik,      
Loring and Ashe are representatives of the Bain funds,                          

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Messrs. Adamson and Benham are representatives of the Celerity funds and        
Messrs. Griffiths and Sigel are representatives of Kilmer Electronics Group     
Limited. Our executive officers are elected by and serve at the discretion of   
the board of directors.                                                         

Prior to the completion of this offering, our board will be divided into  
three classes, as nearly equal in number as possible, with each director        
serving a three-year term and one class being elected at each year's annual     
meeting of stockholders. Gary Walker and Messrs. Dominik and Johnson will be in 
the class of directors whose term expires at the 2001 annual meeting of our     
stockholders. Messrs. Ashe, Benham and Sigel will be in the class of directors  
whose term expires at the 2002 annual meeting of our stockholders. Paul Walker  
and Messrs. Loring, Adamson and Griffiths will be in the class of directors     
whose term expires at the 2003 annual meeting of our stockholders. At each      
annual meeting of our stockholders, successors to the class of directors whose  
term expires at such meeting will be elected to serve for three-year terms or   
until their respective successors are elected and qualified.                    

Board Committees                                                                

Prior to this offering, our board of directors had three committees: the  
audit committee, the compensation committee and the nominating committee. The   
board may also establish other committees to assist in the discharge of its     
responsibilities.                                                               

The audit committee makes recommendations to the board of directors       
regarding the independent auditors to be nominated for election by the          
stockholders and reviews the independence of such auditors, approves the scope  
of the annual audit activities of the independent auditors, approves the audit  
fee payable to the independent auditors and reviews such audit results with the 
independent auditors. The audit committee is currently comprised of Messrs.     
Dominik, Griffiths and Sigel. KPMG LLP presently serves as our independent      
auditors.                                                                       

  The compensation committee provides a general review of our compensation and
benefit plans to ensure that they meet corporate objectives. In addition, the   
compensation committee reviews the chief executive officer's recommendations on 
compensation of all our officers and adopting and changing major compensation   
policies and practices, and reports its recommendations to the whole board of   
directors for approval and authorization. The compensation committee            
administers our stock plans and is comprised of Messrs. Ashe, Adamson and       
Sigel.                                                                          

The nominating committee identifies, screens and recommends qualified     
candidates to fill vacancies on the board of directors and is comprised of Paul 
Walker and Messrs. Loring, Adamson and Sigel.                                   

Compensation of Directors                                                       

We currently pay no compensation to our independent directors, and pay no 
additional remuneration to our employees or to our executives for serving as    
directors.                                                                      

Compensation Committee Interlocks and Insider Participation                     

No interlocking relationship exists between our board of directors or our 
compensation committee and the board of directors or compensation committee of  
any other company, nor has any interlocking relationship existed in the past.   

Executive Compensation                                                          

The following table sets forth information concerning the compensation for
the years ended December 31, 1999, 1998 and 1997 on a pro forma basis for our   
chief executive officer and four other most highly compensated executive        
officers at the end of our last fiscal year. For ease of reference, we          
collectively refer to these executive officers throughout this section as our   
"named executive officers."                                                     

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SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                    Annual              Long Term                     
                              Compensation(1)(2)      Compensation                    
                              ------------------- ---------------------               
                                                  Restricted Securities               
                                                    Stock    Underlying   All Other   
Name and Principal             Salary     Bonus     Awards    Options    Compensation 
Position                 Year    ($)       ($)       ($)        (#)          ($)      
------------------       ---- --------- --------- ---------- ----------  ------------ 
                                                                                      
Paul Walker............. 1999   168,612       --     --           --           --     
 President and Chief     1998   167,853    16,458    --           --           --     
 Executive Officer       1997   130,173       --     --           --           --     
Edward Johnson(3)....... 1999   164,408    53,437    --        37,884(4)     9,235(9) 
 Executive Vice                                                                       
  President,                                                   19,517(5)              
 Business Development                                           5,060(6)              
                         1998   123,950    49,185    --        33,108(7)   164,909(10)
                         1997    92,702       --     --           --           --     
Philip Woodard.......... 1999   134,889       --     --        26,640(8)       --     
 Senior Vice President,  1998   134,282     2,596    --           --           --     
 Enterprise Development                                                               
  and                    1997   109,068       --     --           --           --     
 Integration                                                                          
Gary Walker ............ 1999   200,000       --     --           --           --     
 Vice President and                                                                   
  General                1998   200,000   153,873    --           --           --     
 Manager, San Jose       1997   166,238   233,605    --           --           --     
Derek D'Andrade ........ 1999   134,889       --     --           --           --     
 Vice President, Quality 1998   134,282    16,458    --           --           --     
                         1997   117,716       --     --           --           --     

--------                                                                        
(1)  Compensation information for Messrs. Walker, Woodard, Walker and D'Andrade 
 includes compensation paid by Surface Mount during periods prior to the
July 30, 1999 combination of Surface Mount and HTM, and by SMTC during
 periods after the combination. Compensation information for Mr. Johnson
    includes compensation paid by HTM during periods prior to the combination,
and by SMTC during periods after the combination.                     

(2)  Excludes perquisites and other personal benefits because such compensation 
   did not exceed either $50,000 or 10% of the total annual salary and bonus
for any of the named executive officers.                              

(3)  During the years ended December 31, 1998 and 1997, and from January 1,     
1999 until the July 30, 1999 combination of Surface Mount and HTM, Mr.
Johnson served as President and Chief Executive Officer of HTM.       

(4)  The options represent options to purchase shares of our common stock at an 
exercise price equal to $0.50 per share issued in connection with the 
    combination of Surface Mount and HTM to replace options to purchase shares
of HTM common stock.                                                  

(5)  The options represent options to purchase shares of our common stock at an 
exercise price equal to $9.07 per share issued in connection with the 
    combination of Surface Mount and HTM to replace options to purchase shares
of HTM common stock.                                                  

(6)  The options represent options to purchase shares of common stock of HTM at 
  an exercise price of $5.13 per share, which options were replaced by the
options to purchase shares of our common stock in connection with the 
combination of Surface Mount and HTM described in footnotes 4 and 5.  

(7)  The options represent options to purchase shares of common stock of HTM at 
an exercise price of $5.13 per share issued in connection with the    
    recapitalization of HTM in June 1998 to replace options to purchase shares
of HTM common stock. These options were replaced by the options to    
   purchase shares of our common stock in connection with the combination of
Surface Mount and HTM described in footnotes 4 and 5.                 

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(8)  The options represent options to purchase shares of our common stock at an 
exercise price of $5.36 per share.                                    

(9)  Represents amounts paid to Mr. Johnson in respect of the cancellation of   
  vested stock options exercisable for HTM common stock in connection with
the June 1998 recapitalization of HTM.                                

(10)  Represents amounts paid to Mr. Johnson in respect of the cancellation of  
    vested stock options exercisable for HTM common stock in connection with
    the June 1998 recapitalization of HTM, which amounts were held in escrow
for one year following the date of the recapitalization and were    
subsequently paid to Mr. Johnson.                                   

Option Grants in Last Fiscal Year                                               

The following table sets forth information concerning grants of options to
purchase shares of our common stock made to the named executive officers during 
the fiscal year ended December 31, 1999.                                        

OPTION GRANTS IN FISCAL 1999

                                                        [Enlarge/Download Table]

                                                                       Potential Realizable Value
                                                                       at Assumed Annual Rates of
                                                                        Stock Price Appreciation 
                                       Individual Grants                  for Option Term (7)    
                         --------------------------------------------- --------------------------
                         Number of   Percent of                                                  
                         Securities Total Options                                                
                         Underlying  Granted to   Exercise                                       
                          Options   Employees in  Price Per                                      
                          Granted    Fiscal 1999    Share   Expiration                           
Name                        (#)        (%)(6)        ($)       Date       5% ($)       10% ($)   
----                     ---------- ------------- --------- ---------- ------------ -------------
                                                                                                 
Paul Walker.............       --        --          --           --            --            -- 
Edward Johnson (1)...... 32,862(2)       6.5        0.50     6/9/2008      8,973.86     22,103.05
                          5,022(2)       1.0        0.50    4/30/2009      1,564.42      3,964.56
                         16,930(3)       3.8        9.07     6/9/2008             0             0
                          2,587(4)       0.6        9.07    4/30/2009             0             0
Philip Woodard.......... 26,640(5)       5.3        5.36    9/30/2009     89,727.04    227,385.93
Gary Walker.............       --        --          --           --            --            -- 
Derek D'Andrade.........       --        --          --           --            --            -- 

--------                                                                        
(1)  In connection with the combination of Surface Mount and HTM, options to    
  purchase shares of common stock of HTM at an exercise price of $5.13 per
  share held by Mr. Johnson were rolled over and converted into options to
  purchase 37,884 shares of our common stock at an exercise price of $0.50
    per share, and options to purchase 19,517 shares of our common stock at an
exercise price of $9.07 per share.                                    

(2)  Represents options to purchase shares of our common stock. All of such     
options were vested and had been exercised as of December 31, 1999.   

(3)  Represents options to purchase shares of our common stock. Of this total,  
    4,231 were vested at December 31, 1999 and the remainder vested on June 8,
2000.                                                                 

(4)  Represents options to purchase shares of our common stock. None of the     
   options was vested at December 31, 1999. Of this total, 647 vested on May
1, 2000 and the remainder vested on June 8, 2000.                     

(5)  Represents options to purchase shares of our common stock. None of the     
   options was vested as of December 31, 1999. The options will vest in four
equal annual installments beginning September 30, 2000.               

(6)  Percentages are based upon the total number of options to purchase shares  
of common stock granted to our employees in 1999.                     

(7)  At the time of the grant, there was no market for our common stock. For    
  purposes of the calculations in this table, the fair market value of the
   common stock ($0.50 per share) issuable upon exercise of the options held
   by Mr. Johnson was determined by our board of directors based upon arm's-
  length sales of shares of common stock, and the fair market value of the
common stock issuable upon exercise of the                            

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options held by Mr. Woodard was determined by our board of directors based
upon its good faith estimate. There have been no arm's-length sales of    
common stock since July 30, 1999. In accordance with the rules of the     
Securities and Exchange Commission, the amounts shown on this table       
represent hypothetical gains that could be achieved for the respective    
options if exercised at the end of the option term. These gains are based 
on assumed rates of stock appreciation of 5% and 10% compounded annually  
 from the date the respective options were granted to their expiration date.
The gains shown are net of the option exercise price, but do not include  
 deductions for taxes or other expenses associated with the exercise. Actual
gains, if any, on stock option exercises will depend on the future        
performance of our common stock, the optionholder's continued employment  
through the option period and the date on which the options are exercised.

Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values          

 The following table sets forth information for the named executive officers
concerning stock option exercises during our last fiscal year and options       
outstanding at the end of the last fiscal year.                                 

AGGREGATED OPTION EXERCISES IN FISCAL 1999  
AND FISCAL YEAR-END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                       Number of Securities        Value of Unexercised    
                                                      Underlying Unexercised      In-The-Money Options At  
                         Shares Acquired   Value    Options At Fiscal Year-End        Fiscal Year-End      
                           On Exercise    Realized  (Exercisable/Unexercisable) (Exercisable/Unexercisable)
Name                           (#)         ($)(2)               (#)                       ($)(2)           
----                     --------------- ---------- --------------------------- ---------------------------
                                                                                                           
Paul Walker.............         --             --                   --                     --             
Edward Johnson..........    37,884(1)    184,138.39                  --                     --             
                                 --             --        4,231/12,697(3)                   0/0            
                                                               0/2,587(4)                   0/0            
Philip Woodard..........         --             --            0/26,640(5)                   0/0            
Gary Walker.............         --             --                   --                     --             
Derek D'Andrade.........         --             --                   --                     --             

-------                                                                         
(1)  Represents shares of common stock purchased at an exercise price of $0.50  
per share.                                                            

(2)  Value is based on the difference between the option exercise price and     
  the fair market value at December 31, 1999. The fair market value of the
   common stock, $5.36 per share, at December 31, 1999 was determined by the
board of directors based upon its good faith estimate.                

(3)  Represents options to purchase common stock at an exercise price of $9.07  
 per share. The options to purchase such shares of common stock replaced
 options to purchase shares of common stock of HTM that were rolled over
in connection with the combination of Surface Mount and HTM. Of this  
total, 4,231 were vested at December 31, 1999. Of the remaining 12,697
  options, 4,231 vested on May 1, 2000 and the remainder vested on June 8,
2000.                                                                 

(4)  Represents options to purchase common stock at an exercise price of $9.07  
 per share. The options to purchase such shares of common stock replaced
 options to purchase shares of common stock of HTM that were rolled over
in connection with the combination of Surface Mount and HTM. None of  
   these options was vested at December 31, 1999. Of this total, 647 options
vested on May 1, 2000 and the remainder vested on June 8, 2000.       

(5)   Represents options to purchase common stock at an exercise price of       
    $5.36 per share. None of the options was vested as of December 31, 1999.
The options will vest in four equal annual installments beginning   
September 30, 2000.                                                 

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Employment Contracts, Termination of Employment and Change of Control           
Arrangements                                                                    

Paul Walker is currently employed as our President and Chief Executive    
Officer pursuant to an employment agreement dated July 30, 1999 which is        
effective until December 31, 2001 and will automatically renew for successive   
one-year terms unless it is terminated by the parties in accordance with its    
terms. Under the employment agreement, Mr. Walker receives an annual salary of  
$250,000 per year and is eligible for an annual bonus based upon our            
achievement of certain EBITDA targets. Mr. Walker's employment agreement        
contains customary confidentiality provisions and a non-compete clause which is 
effective during the term of the agreement, for one year following termination  
of his employment if he is terminated for cause, and, under certain other       
circumstances, for two years following the termination of his employment. In    
the event Mr. Walker's employment is terminated by us without cause, or by Mr.  
Walker for good reason, the employment agreement provides that we will pay Mr.  
Walker his base salary for two years following such termination.                

 Mr. Johnson is currently employed as our Executive Vice President, Business
Development pursuant to an employment agreement dated May 18, 2000 which is     
effective until May 18, 2001 and will automatically renew for successive one-   
year terms unless it is terminated by the parties in accordance with its terms. 
Under the employment agreement, Mr. Johnson receives an annual salary of        
$225,000 per year and is eligible to participate in any bonus compensation      
program made available to management as determined by our board of directors.   
Mr. Johnson's employment agreement contains customary confidentiality           
provisions and a non-solicitation clause, which is effective during the term of 
the agreement and for six months following termination or expiration of his     
employment. In the event Mr. Johnson's employment is terminated by us without   
cause, or we elect not to renew Mr. Johnson's employment for an additional      
term, the employment agreement provides that we will pay Mr. Johnson his base   
salary for six months following such termination or expiration.                 

Mr. Woodard is currently employed as our Senior Vice President, Enterprise
Development and Integration pursuant to an employment agreement dated July 30,  
1999 which is effective until December 31, 2001 and will automatically renew    
for successive one-year terms unless it is terminated by the parties in         
accordance with its terms. Under the employment agreement, Mr. Woodard receives 
an annual salary of $200,000 per year and is eligible for an annual bonus based 
upon our achievement of certain EBITDA targets. Mr. Woodard's employment        
agreement contains customary confidentiality provisions and a non-compete       
clause which is effective during the term of the agreement, for one year        
following termination of his employment if he is terminated for cause, and,     
under certain other circumstances, for two years following the termination of   
his employment. In the event Mr. Woodard's employment is terminated by us       
without cause, or by Mr. Woodard for good reason, the employment agreement      
provides that we will pay Mr. Woodard his base salary for two years following   
such termination.                                                               

  Gary Walker is currently employed as our Vice President and General Manager,
San Jose pursuant to an employment agreement dated July 30, 1999 which is       
effective until December 31, 2001 and will automatically renew for successive   
one-year terms unless it is terminated by the parties in accordance with its    
terms. Under the employment agreement, Mr. Walker receives an annual salary of  
$200,000 per year and is eligible for an annual bonus based upon our            
achievement of certain EBITDA targets. Mr. Walker's employment agreement        
contains customary confidentiality provisions and a non-compete clause which is 
effective during the term of the agreement, for one year following termination  
of his employment if he is terminated for cause, and, under certain other       
circumstances, for two years following the termination of his employment. In    
the event Mr. Walker's employment is terminated by us without cause, or by Mr.  
Walker for good reason, the employment agreement provides that we will pay Mr.  
Walker his base salary for two years following such termination.                

 Mr. D'Andrade is currently employed as our Vice President, Quality pursuant
to an employment agreement dated July 30, 1999 which is effective until         
December 31, 2001 and will automatically renew for successive one-year terms    
unless it is terminated by the parties in accordance with its terms. Under the  
employment agreement, Mr. D'Andrade receives an annual salary of $200,000 per   
year and is eligible for an annual bonus based upon our achievement of certain  
EBITDA targets. Mr. D'Andrade's employment agreement contains customary         

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confidentiality provisions and a non-compete clause which is effective during   
the term of the agreement, for one year following termination of his employment 
if he is terminated for cause and, under certain other circumstances, for two   
years following the termination of his employment. In the event Mr. D'Andrade's 
employment is terminated by us without cause, or by Mr. D'Andrade for good      
reason, the employment agreement provides that we will pay Mr. D'Andrade his    
base salary for two years following such termination.                           

Mr. Koss is currently employed as our Vice President, Strategic Accounts  
pursuant to an employment agreement dated May 18, 2000 which is effective until 
May 18, 2001 and will automatically renew for successive one-year terms unless  
it is terminated by the parties in accordance with its terms. Under the         
employment agreement, Mr. Koss receives an annual salary of $105,000 per year   
and is eligible to participate in any bonus compensation program made available 
to management as determined by our board of directors. Mr. Koss's employment    
agreement contains customary confidentiality provisions and a non-solicitation  
clause, which is effective during the term of the agreement and for six months  
following termination or expiration of his employment. In the event Mr. Koss's  
employment is terminated by us without cause, or we elect not to renew Mr.      
Koss's employment for an additional term, the employment agreement provides     
that we will pay Mr. Koss his base salary for six months following such         
termination or expiration.                                                      

 Mr. Laurion is currently employed as our Vice President, Program Management
and Internal Audit pursuant to an employment agreement dated May 18, 2000 which 
is effective until May 18, 2001 and will automatically renew for successive     
one-year terms unless it is terminated by the parties in accordance with its    
terms. Under the employment agreement, Mr. Laurion receives an annual salary of 
$165,000 per year and is eligible to participate in any bonus compensation      
program made available to management as determined by our board of directors.   
Mr. Laurion's employment agreement contains customary confidentiality           
provisions and a non-solicitation clause, which is effective during the term of 
this agreement and for six months following termination or expiration of his    
employment. In the event Mr. Laurion's employment is terminated by us without   
cause, or we elect not to renew Mr. Laurion's employment for an additional      
term, the employment agreement provides that we will pay Mr. Laurion his base   
salary for six months following such termination or expiration.                 

Mr. Tesch is currently employed as our Vice President, Access Centers     
pursuant to an employment agreement dated May 18, 2000 which is effective until 
May 18, 2001 and will automatically renew for successive one-year terms unless  
it is terminated by the parties in accordance with its terms. Under the         
employment agreement, Mr. Tesch receives an annual salary of $150,000 per year  
and is eligible to participate in any bonus compensation program made available 
to management as determined by our board of directors. Mr. Tesch's employment   
agreement contains customary confidentiality provisions and a non-solicitation  
clause, which is effective during the term of the agreement and for six months  
following termination or expiration of his employment. In the event Mr. Tesch's 
employment is terminated by us without cause, or we elect not to renew Mr.      
Tesch's employment for an additional term, the employment agreement provides    
that we will pay Mr. Tesch's base salary for six months following such          
termination or expiration.                                                      

Stock Plans                                                                     

Amended and Restated 1998 Equity Incentive Plan                               

 On September 30, 1999, the board of directors adopted, and our stockholders
approved, our Amended and Restated 1998 Equity Incentive Plan, or the 1998      
Plan, which amended and restated in its entirety our 1998 Equity Incentive      
Plan. The 1998 Plan authorizes the granting of stock options to our executives  
or other key employees. Under the 1998 Plan, our board of directors is          
authorized to grant stock purchase options exercisable for up to 671,378 shares 
of our common stock, subject to adjustment upon the occurrence of certain       
events to prevent any dilution or expansion of the rights of participants that  
might otherwise result from the occurrence of such events, which grants may be  
made to such executives or key employees, in such quantities, at such exercise  
price and on such other terms and conditions as may be established by the board 
of directors. Currently there are options exercisable for 54,271 shares of      
common stock, available for issue under the 1998                                

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Plan. A total of 184,511 options exercisable for common stock under the 1998    
Plan were granted in connection with the July 1999 combination of Surface Mount 
and HTM in substitution of stock options previously granted by HTM to certain   
of its executives and key employees. Those options expire in April 2009 or June 
2008, subject to earlier expiration in connection with the termination of the   
optionholder's employment. A total of 121,774 of the substituted options        
exercisable for common stock were immediately exercisable upon grant, but the   
shares of common stock acquired upon exercise are subject to certain transfer   
restrictions which lapse over the four year period beginning on the date of     
grant. The remainder of the substituted options exercisable for common stock    
vest over the four year period beginning on the date of grant. On May 18, 2000, 
the terms of the options held by four former HTM executives were amended to     
provide for the restrictions to lapse with respect to 88,912 shares of common   
stock held by such optionholders on June 8, 2000, and for options exercisable   
for 45,800 shares of common stock to become fully vested on June 8, 2000. An    
additional 428,304 options exercisable for our common stock under the 1998 Plan 
were granted by the board of directors on September 30, 1999. Those options     
expire in September 2009, subject to earlier termination in connection with the 
termination of the optionholder's employment. Those options become exercisable  
in four equal annual installments beginning on September 30, 2000. The vesting  
of an optionholder's unvested options is dependent upon continued employment    
with us. Upon termination of employment, all unexercised and unvested options   
expire and are forfeited. In the event of the acquisition of a majority or more 
of our voting securities by any person or "group" as defined under Section      
13(d)(3) of the Securities Exchange Act of 1934, as amended, (other than our    
stockholders as of the date of the 1998 Plan and their affiliates), the         
compensation committee of the board of directors may provide for the automatic  
vesting of all unvested options, for the termination of unvested options, or    
for the receipt by holders of such options of the consideration offered per     
share of common stock less the exercise price of their options.                 

2000 Equity Incentive Plan                                                    

The SMTC/SMTC Manufacturing Corporation of Canada 2000 Equity Incentive   
Plan, or the 2000 Plan, is expected to be adopted by our board of directors and 
approved by our stockholders prior to the completion of this offering. As of    
the date of this prospectus, no awards have been made under the 2000 Plan. We   
intend to grant to some of our executive officers and employees options to      
purchase a total of approximately 150,000 shares of our common stock and        
exchangeable shares with an exercise price equal to the initial public offering 
price at the closing of this offering. No future grants will be made under      
existing plans upon the effectiveness of the 2000 Plan.                         

 The 2000 Plan provides for the grant of options to all employees, officers,
directors and consultants of SMTC and its affiliates worldwide. In the United   
States, incentive stock options may be granted to our employees (including      
officers and employee directors) and nonstatutory stock options may be granted  
to our employees, directors and consultants. A nonstatutory stock option is a   
stock option that is not intended to qualify as an incentive stock option under 
Section 422 of the Internal Revenue Code. The holder of a nonstatutory stock    
option generally is taxed on the difference between the exercise price and the  
fair market value when exercised. The 2000 Plan also provides for the grant of  
stock appreciation rights, restricted stock, unrestricted stock, deferred       
stock, and securities (other than stock options) which are convertible into or  
exchangeable for common stock, including options exercisable for SMTC Canada    
exchangeable shares, on such terms and conditions as our board determines.      

 A total of (1) 1,820,958 shares of common stock, (2) any shares returned to
existing plans as a result of the termination of options and (3) annual         
increases of 1.0% of our outstanding common stock to be added on the date of    
each annual meeting of our stockholders commencing in 2001, or such lesser      
amounts as may be determined by the board of directors, will be reserved for    
issuance pursuant to the 2000 Plan. For purposes of the preceding sentence, the 
following will not be considered to have been delivered under the 2000 Plan:    

.  shares remaining under an award that terminates without having been      
exercised in full;                                                    

.  shares subject to an award, where cash is delivered to a participant in  
lieu of such shares;                                                  

.  shares of restricted stock that have been forfeited in accordance with   
the terms of the applicable award; and                                

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.  shares held back, in satisfaction of the exercise price or tax           
withholding requirements, from shares that would otherwise have been  
delivered pursuant to an award.                                       

The number of shares of stock delivered under an award shall be determined
net of any previously acquired shares tendered by the participant in payment of 
the exercise price or of withholding taxes. The maximum number of incentive     
stock options that may be issued pursuant to the 2000 Plan is 3,000,000. The    
maximum number of options exercisable for exchangeable shares that may be       
issued pursuant to the 2000 Plan is 1,000,000.                                  

The administrator of the 2000 Plan has the power to determine the terms of
the options granted, including the exercise price of the option, the number of  
shares subject to each option, the exercisability thereof, and the form of      
consideration payable upon such exercise. In addition, our board of directors   
has the authority to amend, suspend or terminate the 2000 Plan, provided that   
no such action may affect any shares previously issued and sold or any option   
previously granted under the 2000 Plan. Cash performance grants, intended to    
qualify as "performance-based compensation," may be issued under the plan,      
subject to shareholder approval as required by Section 162(m) of the Internal   
Revenue Code.                                                                   

Options granted under the 2000 Plan are generally not transferable by the 
optionee, and each option is exercisable during the lifetime of the optionee    
and only by such optionee. Options granted under the 2000 Plan must generally   
be exercised within three months after the end of an optionee's status as an    
employee, director or consultant of SMTC, or within 12 months after such        
optionee's termination by death or disability, but in no event later than the   
expiration of the option term.                                                  

The exercise price of all incentive stock options granted under the 2000  
Plan must be at least equal to the fair market value of the underlying common   
stock or exchangeable shares on the date of the grant. The exercise price of    
nonstatutory stock options granted under the 2000 Plan is determined by the     
administrator, but with respect to nonstatutory stock options intended to       
qualify as "performance-based compensation" within the meaning of Section       
162(m) of the Internal Revenue Code, the exercise price must be at least equal  
to the fair market value of the common stock on the date of grant. With respect 
to any participant who owns stock possessing more than 10% of the voting power  
of all classes of our outstanding capital stock, the exercise price of any      
incentive stock option granted must be at least equal to 110% of the fair       
market value on the grant date. The term of options granted under the 2000 Plan 
shall be determined by the administrator, provided that the term of certain     
options must not exceed 10 years.                                               

 The 2000 Plan provides that in the event of our merger with or into another
corporation, or a sale of substantially all of our assets, each option shall be 
assumed or an equivalent option substituted for by the successor corporation.   
If the outstanding options are not assumed or substituted for by the successor  
corporation, the administrator shall provide for the optionee to have the right 
to exercise the option as to all of the optioned stock, including shares as to  
which it would not otherwise be exercisable. This may have the effect of        
discouraging a potential acquiror from making a tender offer or otherwise       
attempting to gain control of us because our employees might have a reduced     
incentive to remain with us following a merger or sale.                         

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RELATED PARTY TRANSACTIONS  

The following summary of the Reorganization and Merger Agreement, the     
Stockholders Agreement and the Management Agreement is a description of the     
material provisions of such agreements and is subject to, and qualified in its  
entirety by reference to, such agreements, each of which is filed as an         
exhibit hereto with the Securities and Exchange Commission.                     

Reorganization and Merger Agreement                                             

Surface Mount and HTM combined in July 1999 pursuant to a Reorganization  
and Merger Agreement.                                                           

Immediately prior to the consummation of the combination of Surface Mount 
and HTM, certain of our principal stockholders, directors and executive         
officers, including the Bain Capital Funds, Celerity EMSIcon L.L.C., and        
Messrs. Johnson, Laurion, Tesch, Koss, Dominik, Loring, Ashe, Benham and        
Adamson, were beneficial holders of HTM stock. In addition, immediately prior   
to the consummation of the combination of Surface Mount and HTM, certain of     
our principal stockholders, directors and executive officers, including Kilmer  
Electronics Group Limited, or Kilmer, Paul Walker, Gary Walker, and Messrs.     
D'Andrade and Woodard, were beneficial holders of Surface Mount stock.          

Stockholders Agreement                                                          

All of our current stockholders and optionholders are parties to a        
stockholders agreement that, among other things, provides for registration      
rights and restrictions on the transfer of shares.                              

Management Agreements                                                           

Under a management agreement entered into on July 30, 1999 among us, Bain 
Capital Partners VI, L.P., or Bain, Celerity Partners, Inc., or Celerity, and   
Kilmer, since the July 1999 combination of Surface Mount and HTM, Bain has      
been paid management fees of $104,166, Celerity has been paid management fees   
of $104,166 and Kilmer has been paid management fees of $52,083. In addition,   
we have reimbursed each of Bain, Celerity and Kilmer for their respective out-  
of-pocket expenses incurred in connection with the services provided under the  
management agreement. The management agreement contains customary               
indemnification provisions in favor of each of Bain, Celerity and Kilmer.       
Investment funds affiliated with Bain and Celerity are our largest              
stockholders. Our directors Messrs. Dominik, Loring and Ashe are affiliated     
with the Bain funds, our directors Messrs. Benham and Adamson are affiliated    
with the Celerity funds, and our directors Messrs. Griffiths and Sigel are      
affiliated with Kilmer. The management agreement will be terminated in          
connection with the offering for a termination fee of $1.8 million to be paid   
using a portion of the gross proceeds of the offering, with $720,000 to be      
paid to each of Bain and Celerity, and $360,000 to be paid to Kilmer.           

Under a management agreement entered into on June 8, 1998 among HTM, Bain 
and Celerity prior to the July 1999 combination of Surface Mount and HTM, Bain  
was paid management fees of approximately $83,333 and Celerity was paid         
management fees of approximately $83,333. In addition, Bain was paid a          
transaction fee of approximately $775,000 and Celerity was paid a transaction   
fee of approximately $775,000 in connection with the combination of Surface     
Mount and HTM. Also, each of Bain and Celerity was reimbursed for their         
respective out-of-pocket expenses incurred in connection with the services      
provided under the management agreement. The management agreement contained     
customary indemnification provisions in favor of each of Bain and Celerity.     
Investment funds affiliated with Bain and Celerity are our largest              
stockholders. Our directors Messrs. Dominik, Loring and Ashe are affiliated     
with the Bain funds, and our directors Messrs. Benham and Adamson are           
affiliated with the Celerity funds. The management agreement was terminated in  
connection with the combination of Surface Mount and HTM in July of 1999.       

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Certain Loans from Major Stockholders                                           

On April 26, 2000, Celerity Partners III, L.P., Kilmer, Paul Walker, Derek
D'Andrade, Gary Walker and Philip Woodard purchased demand notes from us for a  
purchase price equal to the principal amount of the notes, in the amount of     
$1,400,000, $910,000, $1,000,000, $677,874, $600,000 and $150,000,              
respectively. The demand notes bore interest at 15% per year, had a fee of 2%   
of the principal amount that was due upon repayment and were payable to the     
holders of the notes upon demand. The demand notes were repaid to Celerity      
Partners III, L.P., Kilmer, Paul Walker, Derek D'Andrade, Gary Walker and       
Philip Woodard in the aggregate amount of $1,441,233, $936,801, $1,029,452,     
$697,839, $617,671 and $154,418, respectively, on May 18, 2000. The demand      
notes were repurchased with cash proceeds from the sale of notes and warrants   
pursuant to a senior subordinated loan agreement and a warrant subscription     
agreement, each dated May 18, 2000. We repaid the demand notes and sold such    
notes and warrants in order to raise more capital than was originally provided  
by our sale of the demand notes in order to finance our growth and our working  
capital needs.                                                                  

Under a senior subordinated loan agreement dated May 18, 2000, some of our
shareholders or their affiliates, including some of the Bain funds, Celerity    
Partners III, L.P., Kilmer, Paul Walker, Derek D'Andrade, Philip Woodard and    
General Electric Capital Corporation, purchased notes from us in the amounts of 
$1,589,782, $1,268,381, $909,605, $529,190, $529,190, $101,694 and $72,155,     
respectively. The notes bear interest at 15% per year. Interest on the notes    
shall be paid through the issuance of additional notes on substantially the     
same terms. The notes, together with all accrued interest thereon, are          
mandatorily prepayable upon the consummation of this offering.                  

In connection with the sale of notes under the Senior Subordinated Loan   
Agreement dated May 18, 2000 described above, under a warrant subscription      
agreement dated May 18, 2000 we sold warrants for $2,500,000 that are           
exercisable, given an offering price per share of $16.00 and a closing date of  
the offering of July 27, 2000, for an aggregate of 477,050 shares of common     
stock immediately prior to the consummation of this offering. Upon exercising   
these warrants, some of our shareholders or their affiliates, including some of 
the Bain funds, Celerity Partners III, L.P., Kilmer, Paul Walker, Derek         
D'Andrade, Philip Woodard and General Electric Capital Corporation will receive 
151,681, 121,016, 86,785, 50,490, 50,490, 9,703 and 6,884 shares, respectively. 

On July 3, 2000 Kilmer and an affiliate of the Bain funds purchased demand
notes from us, for a purchase price equal to the principal amount of the notes, 
in the amounts of $4,188,292 and $5,736,708, respectively. Of these demand      
notes, $5,925,000 in aggregate principal amount are secured by a portion of our 
fixed assets and the fixed assets of some of our subsidiaries. The demand notes 
bear interest of 3% of the principal amount accruing on the date of issuance    
and 13.75% per year and are payable to the holders of the notes at any time     
upon demand. The notes, together with all accrued interest thereon, will be     
repaid upon the consummation of this offering.                                  

The sale of the subordinated notes and warrants and the demand notes      
provided us with additional working capital to finance the growth of our        
business.                                                                       

Directors' Relationships with Major Stockholders                                

All of our current directors are affiliated with our major stockholders.  
Paul Walker, Edward Johnson and Gary Walker are executive officers,             
stockholders and directors. David Dominik, Ian Loring and Prescott Ashe are     
affiliated with the Bain Capital Funds. Stephen Adamson and Mark Benham are     
affiliated with Celerity Partners. Michael Griffiths and Anthony Sigel are      
affiliated with Kilmer Electronics Group Limited.                               

Other Related Party Payments                                                    

The Bain Capital Funds and Celerity Partners, two of our principal        
stockholders, were stockholders of HTM prior to the combination of Surface      
Mount and HTM. In connection with the combination of Surface                    

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Mount and HTM, the Bain Capital Funds and Celerity Partners, Inc. received      
shares of our capital stock in exchange for their shares of HTM and an          
additional cash payment of approximately $16.2 million. In addition, certain    
affiliates of the Bain Capital Funds held subordinated debt of HTM in the       
amount of approximately $13.5 million that was repaid in connection with the    
combination.                                                                    

The Surface Mount stockholders received a combination of cash and stock in
exchange for their shares of Surface Mount. They reinvested a portion of their  
cash proceeds in our capital stock.                                             

Purchases from an Affiliate of a Major Stockholder                              

 Investment funds affiliated with Bain and Celerity are also stockholders of
DDi Corp., one of our suppliers. Our transactions with DDi, which totalled less 
than $2.5 million in 1999, are on equivalent terms as those with our other      
suppliers.                                                                      

Certain Loans and Payments Made to Named Executive Officers                     

 Gary Walker holds all the Class Y shares of SMTC Canada. In connection with
the reclassification, we have agreed to purchase all of his Class Y shares in   
exchange for an equivalent number of shares of Class L common stock. This       
purchase is subject to the conditions that we agree to fund any tax liability   
incurred by Mr. Walker as a result of the exchange by making an interest-free   
loan to him and that we compensate him for any tax payable by him on any        
imputed interest on such loan. We expect that we will be required to lend       
approximately $2.0 million to Mr. Walker pursuant to this arrangement. The loan 
will be secured by a first priority security interest over all of Mr. Walker's  
shares of capital stock of SMTC and will be repayable at such time and to the   
extent that Mr. Walker receives after-tax cash proceeds in respect of such      
shares.                                                                         

  In connection with the exercise of certain options and the purchase of Class
A common stock in 1999, we accepted as payment from Edward Johnson and other    
employees, secured promissory notes bearing interest at 5.70%. The aggregate    
principal amount outstanding as at July 30, 1999 under these promissory notes   
was approximately $60,000. We have agreed to permit these employees to repay    
their respective loan obligations with proceeds received from the sale of       
stock. As security for their obligations to us under their respective notes,    
these employees have pledged, pursuant to pledge agreements, certain of our     
shares that they own.                                                           

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PRINCIPAL STOCKHOLDERS

The following table sets forth, as of May 31, 2000, information regarding 
the beneficial ownership after giving effect to the reclassification, based on  
an offering price of $16.00 per share and a closing date of July 27, 2000. The  
table sets forth the number of shares beneficially owned, and the percentage    
ownership before the offering and after the completion of the offering and      
Pensar acquisition, for:                                                        

.  each person who is known by us to own beneficially more than 5% of our   
outstanding shares of common stock;                                   

.  each executive officer named in our summary compensation table and each  
director; and                                                         

.  all executive officers and directors as a group.                         

The actual number of shares of common stock to be issued to each holder of
Class L common stock in the reclassification is subject to change based on the  
initial public offering price and the closing date of this offering. See "The   
Reclassification." The percentage ownership may change based on the final       
number of shares issued to holders of Pensar shares in consideration for the    
acquisition of Pensar. See "Prospectus Summary--Recent Developments" and        
"Unaudited Pro Forma Consolidated Financial Data."                              

As of May 31, 2000, our outstanding equity securities consisted of        
13,347,947 shares after giving effect to the reclassification, assuming an      
offering price of $16.00 per share and a closing date of July 27, 2000.         

  Unless otherwise indicated below, to our knowledge, all persons listed below
have sole voting and investment power with respect to their shares of common    
stock, except to the extent authority is shared by spouses under applicable     
law. Unless otherwise indicated below, each entity or person listed below       
maintains a mailing address of c/o SMTC Corporation, 635 Hood Road, Markham,    
Ontario, Canada, L3R 4N6.                                                       

The number of shares beneficially owned by each stockholder is determined 
under rules promulgated by the Securities and Exchange Commission and assumes   
the underwriters do not exercise their over-allotment option. The information   
is not necessarily indicative of beneficial ownership for any other purpose.    
Under these rules, beneficial ownership includes any shares as to which the     
individual or entity has sole or shared voting or investment power and any      
shares as to which the individual or entity has the right to acquire beneficial 
ownership within 60 days after May 31, 2000 through the exercise of any stock   
option, warrant or other right. The inclusion in the following table of those   
shares, however, does not constitute an admission that the named stockholder is 
a direct or indirect beneficial owner.                                          

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                                                                [Download Table]

                                                                    Percentage 
                                   Shares Beneficially Owned (*)    of Shares  
                                 --------------------------------- Beneficially
                                           Warrants                   Owned    
                                             and                      After    
Name and Address                  Shares   Options    Total    %     Offering  
----------------                 --------- -------- --------- ---- ------------
                                                                               
Principal Stockholders:                                                        
Bain Capital Funds(1)(2)(3)....  3,714,625 730,122  4,444,747 31.6     16.6    
  c/o Bain Capital, Inc.                                                       
   Two Copley Place                                                            
   Boston, Massachusetts 02116                                                 
Celerity EMSIcon L.L.C.(1)(3)..  3,415,373  91,452  3,506,825 26.1     13.4    
  c/o Celerity Partners                                                        
   11111 Santa Monica Boulevard                                                
   Suite 1127                                                                  
   Los Angeles, California                                                     
   90025                                                                       
Kilmer Electronics Group,                                                      
 Limited.......................  1,958,478  86,785  2,045,263 15.2      7.8    
  50 Ashwarren Road                                                            
   Downsview, Ontario M3J 1Z5                                                  
Directors and Executive                                                        
 Officers:                                                                     
Paul Walker(4).................  1,139,404  50,490  1,189,894  8.9      4.6    
Gary Walker....................  1,139,404       0  1,139,404  8.5      4.4    
Derek D'Andrade(5).............  1,139,404  50,490  1,189,894  8.9      4.6    
Philip Woodard.................    218,960   9,703    228,663  1.7      0.9    
Edward Johnson(1)(3)...........    119,716  19,517    139,234  1.0      0.5    
David Dominik(1)(3)(6).........    861,112  48,309    909,421  6.8      3.5    
Prescott Ashe(1)(3)(7).........    127,700   6,302    134,002  1.0      0.5    
Ian Loring(1)(3)(8)............    127,700   6,302    134,002  1.0      0.5    
Mark Benham(9).................  3,415,373  91,452  3,506,825 26.1     13.4    
Stephen Adamson(9).............  3,415,373  91,452  3,506,825 26.1     13.4    
Michael Griffiths..............        --      --         --   --       --     
Anthony Sigel..................        --      --         --   --       --     
All Directors and executive                                                    
 officers as a group                                                           
 (20 persons)..................  8,223,587 394,004  8,617,591 62.7     32.6    

--------                                                                        
*  The number of shares of common stock deemed outstanding on May 31, 2000    
with respect to a person or group includes (a) 13,347,947 shares        
outstanding on such date and (b) all options and warrants that are      
   currently exercisable or will be exercisable within 60 days of May 31, 2000
by the person or group in question.                                     
(1)  The shares of common stock included in the table include shares held       
through investment in EMSIcon Investments, LLC. Each member of EMSIcon
    Investments, LLC has sole voting and investment power as to shares held on
such member's behalf by EMSIcon Investments, LLC.                     
(2)  Includes shares of common stock held by Bain Capital Fund VI, L.P., ("Fund 
   VI"); BCIP Associates II ("BCIP II"); BCIP Associates II-B ("BCIP II-B");
BCIP Associates II-C ("BCIP II-C"); Sankaty High Yield Asset Partners,
  L.P. ("Sankaty"); Bain Capital V Mezzanine Fund, L.P. ("Mezzanine"); BCM
   Capital Partners, L.P. ("BCM"); and BCIP Trust Associates II ("BCIP Trust
    II" and collectively with Fund VI, BCIP II, BCIP II-B, BCIP II-C, Sankaty,
Mezzanine and BCM, the "Bain Capital Funds"). Does not include shares 
owned by other stockholders that are subject to the Stockholders      
Agreement.                                                            
(3)  The shares of common stock included in the table include shares held       
through J&L Investments, LLC.                                         
(4)  Consists of shares owned by P.N. Walker Consulting Inc. Paul Walker is the 
sole stockholder of P.N. Walker Consulting Inc. and may be deemed to  
beneficially own shares owned by P.N. Walker Consulting Inc.          
(5)  Consists of shares owned by Nichal, Inc. Derek D'Andrade is the sole       
  stockholder of Nichal, Inc. and may be deemed to beneficially own shares
owned by Nichal, Inc.                                                 
(6)  The shares of common stock included in the table represent shares held by  
BCIP II, BCIP II-C and BCIP Trust II. Mr. Dominik is a former Managing
    Director of Bain Capital, Inc. and is a former general partner of BCIP II,
BCIP II-C and BCIP Trust II and, accordingly, may be deemed to        
beneficially own shares owned by such funds. Mr. Dominik disclaims    
beneficial ownership of any such shares in which he does not have a   
   pecuniary interest. The address of Mr. Dominik is c/o Bain Capital, Inc.,
Two Copley Place, Boston, Massachusetts 02116.                        
(7)  The shares of common stock included in the table represent shares held by  
  BCIP II-B. Mr. Ashe is a former principal of Bain Capital, Inc. and is a
former partner of BCIP II-B, and, accordingly, may be deemed to       
    beneficially own shares owned by such funds. Mr. Ashe disclaims beneficial
ownership of any such shares in which he does not have a pecuniary    
 interest. The address of Mr. Ashe is c/o Bain Capital, Inc., Two Copley
Plaza, Boston, Massachusetts 01116.                                   
(8)  The shares of common stock included in the table represent shares held by  
BCIP II-B. Mr. Loring is a principal of Bain Capital, Inc. and is a   
   partner of BCIP II-B, and, accordingly, may be deemed to beneficially own
  shares owned by such funds. Mr. Loring disclaims beneficial ownership of
any such shares in which he does not have a pecuniary interest. The   
    address of Mr. Loring is c/o Bain Capital, Inc., Two Copley Plaza, Boston,
Massachusetts 01116.                                                  
(9)  Mr. Benham and Mr. Adamson are both Managing Members of Celerity EMSIcon,  
 LLC, and accordingly, may be deemed to beneficially own shares owned by
Celerity EMSIcon, LLC. Mr. Benham and Mr. Adamson disclaim beneficial 
ownership of any such shares in which they do not have a pecuniary    
    interest. The address for Mr. Benham is c/o Celerity Partners, 11111 Santa
Monica Boulevard, Suite 1127, Los Angeles, California 90025.          

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DESCRIPTION OF INDEBTEDNESS 

After giving effect to this offering, we and our subsidiaries will have   
outstanding debt under our senior credit facility.                              

Senior Credit Facility                                                          

 We, together with our subsidiaries HTM Holdings Inc. and SMTC Manufacturing
Corporation of Canada, have entered into an agreement with various banks and    
financial institutions, including Lehman Commercial Paper Inc. as a lender and  
as general administrative agent for the other lenders, providing for the senior 
credit facilities, which currently consist of:                                  

.  a US Tranche A facility of up to $20,000,000 in term loans;              

.  a US Tranche B facility of up to $50,000,000 in term loans;              

.  a US Tranche C facility of up to $10,000,000 in term loans;              

.  a US revolving credit facility of up to $59,062,500 in revolving credit  
loans, swing line loans and letters of credit;                        

.  a Canadian facility of up to US $15,000,000 in term loans; and           

.  a Canadian revolving credit facility of up to US $8,437,500 in revolving 
 credit loans, swing line loans, letters of credit, depository notes and
bills of exchange.                                                    

 The indebtedness under this facility was approximately $162.4 million as of
April 2, 2000.                                                                  

The senior credit facility is jointly and severally guaranteed by and     
secured by the assets and capital stock of our subsidiaries other than certain  
foreign subsidiaries, and our future subsidiaries, other than certain foreign   
subsidiaries, will guarantee the senior credit facility and secure that         
guarantee with their assets. The capital stock of our future subsidiaries,      
other than certain foreign subsidiaries, will also be pledged to secure the     
senior credit facility. The senior credit facility requires us to meet          
financial ratios and benchmarks and requires us and our subsidiaries to comply  
with other restrictive covenants. The senior credit facility contains customary 
restrictions on our ability to incur additional indebtedness or guarantee the   
indebtedness of others, create liens on our assets, enter into business         
combinations, liquidate or dissolve, dispose of assets other than in the        
ordinary course of business, declare or pay cash dividends, make capital        
expenditures in excess of established limits, make investments in third         
parties, modify or prepay debt instruments, engage in transactions with our     
affiliates, enter into sale and leaseback arrangements with respect to real     
property, change our fiscal year, enter into agreements that restrict our       
ability to create liens to secure the senior credit facility, restrict the      
ability of our subsidiaries to make distributions to us, engage in unrelated    
lines of business, conduct operating activities at SMTC or enter into hedging   
agreements other than in the ordinary course of business.                       

 We intend to repay a substantial portion of our borrowings under the senior
credit facility with proceeds from this offering. The revolving credit facility 
terminates in July 2004. The Canadian revolving credit facility terminates in   
July 2004.                                                                      

 Our borrowings under the US senior credit facility bear interest at varying
rates based, at our option, on either the Eurodollar base rate plus 300 basis   
points or the US base rate plus 125 basis points (in the case of US Tranche A   
and the US revolving credit facility), the Eurodollar base rate plus 350 basis  
points or the US base rate plus 175 basis points (in the case of US Tranche B)  
and the Eurodollar base rate plus 475 basis points or the US base rate plus 300 
basis points (in the case of US Tranche C).                                     

Our borrowings under the Canadian senior credit facility bear interest at 
varying rates based, at our option, on either the Eurodollar base rate plus 300 
basis points or the Canadian base rate plus 125 basis points (in the case of    

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the Canadian term loan) and the Eurodollar base rate plus 300 basis points, the 
Canadian base rate plus 125 basis points or the Canadian prime rate plus 125    
basis points (in the case of the Canadian revolving credit facility).           

The overall effective interest rate at April 2, 2000 was 9.7%. We are     
required to pay to the lenders under the senior credit facility a commitment    
fee on the average unused portion of our US and Canadian revolving credit       
facility and a letter of credit fee on any letters of credit outstanding. We    
are required to pay to the lenders under the Canadian portion of the senior     
credit facility a stamping fee on depository notes and bills of exchange        
outstanding. We must apply proceeds of sales of debt, equity or material assets 
to prepayment of the senior credit facility, subject to some exceptions, and    
must also, in some circumstances, pay excess cash flow to the lenders under the 
senior credit facility.                                                         

We anticipate amending our senior credit facility. Under the proposed     
amendment, our senior credit facility would include:                            

.  a US Tranche A facility of up to $50,000,000 in term loans;                

.  a US Tranche C facility of up to $10,000,000 in term loans; and            

.  a revolving credit facility of up to $100,000,000.                         

  The existing US Tranche B term loan facility and Canadian term loan facility
will be repaid with proceeds from this offering and would be eliminated under   
the proposed amendment.                                                         

The senior credit facility, as proposed to be amended, would continue to  
require us to meet financial ratios and benchmarks, and would continue to       
require us and our subsidiaries to comply with other restrictive covenants.     

Senior Subordinated Loan Agreement                                              

Under a Senior Subordinated Loan Agreement dated May 18, 2000, we issued  
subordinated notes in the aggregate principal amount of $5 million. The notes   
bear simple interest at 15% per year and will be repaid on completion of this   
offering.                                                                       

Demand Notes                                                                    

  On July 3, 2000, we issued demand notes in the aggregate principal amount of
$9.925 million. Of these demand notes, $5,925,000 in aggregate principal amount 
are secured by a portion of our fixed assets and the fixed assets of some of    
our subsidiaries. The demand notes bear interest of 3% of the principal amount  
accruing on the date of issuance and 13.75% per year and are payable to the     
holders of the notes at any time upon demand and will be repaid on completion   
of this offering.                                                               

  The above summaries of the material provisions of the senior credit facility
and the senior subordinated loan agreement are qualified in their entirety by   
reference to all of the provisions of the senior credit facility and the senior 
subordinated loan agreement, which have been filed as exhibits to the           
registration statement of which this prospectus forms a part.  See "Additional  
Information."                                                                   

DESCRIPTION OF CAPITAL STOCK

General Matters                                                                 

  Upon completion of this offering, the total amount of our authorized capital
stock will consist of 60,000,000 shares of common stock and 5,000,000 shares of 
one or more series of preferred stock.                                          

After giving effect to the offering, based on an offering price of $16.00 
per share and a closing date of July 27, 2000, we will have 26,013,679 shares   
of common stock outstanding (consisting of our common stock and exchangeable    
shares issued by SMTC Canada that may be exchangeable into our common stock).   
We will                                                                         

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have no shares of any series of preferred stock outstanding, other than the one 
share of special voting stock described below. As of April 2, 2000, we had 22   
stockholders of record. The following summary of provisions of our capital      
stock describes all material provisions of, but does not purport to be complete 
and is subject to, and qualified in its entirety by, our certificate of         
incorporation and our by-laws, and by the provisions of applicable law.         

 The certificate and by-laws contain provisions that are intended to enhance
the likelihood of continuity and stability in the composition of the board of   
directors and which may have the effect of delaying, deferring or preventing a  
future takeover or change in control of our company unless such takeover or     
change in control is approved by our board of directors.                        

Common Stock                                                                    

The issued and outstanding shares of common stock are, and the shares of  
common stock to be issued by us in connection with the offering will be,        
validly issued, fully paid and nonassessable. Subject to the prior rights of    
the holders of any series of preferred stock, the holders of outstanding shares 
of common stock are entitled to receive dividends out of assets legally         
available therefor at such time and in such amounts as the board of directors   
may from time to time determine. Please see "Dividend Policy." The shares of    
common stock are not convertible and the holders thereof have no preemptive or  
subscription rights to purchase any of our securities. Upon liquidation,        
dissolution or winding up of our company, the holders of common stock are       
entitled to receive pro rata our assets which are legally available for         
distribution, after payment of all debts and other liabilities and subject to   
the prior rights of any holders of any series of preferred stock then           
outstanding. Each outstanding share of common stock is entitled to one vote on  
all matters submitted to a vote of stockholders. There is no cumulative voting. 
Except as otherwise required by law or the restated certificate, the holders of 
common stock vote together as a single class on all matters submitted to a vote 
of stockholders.                                                                

Our common stock has been approved for quotation on the Nasdaq National   
Market under the symbol "SMTX."                                                 

Preferred Stock                                                                 

  Our board of directors may, without further action by our stockholders, from
time to time, direct the issuance of shares of preferred stock in a series and  
may, at the time of issuance, determine the rights, preferences and limitations 
of each series. Satisfaction of any dividend preferences of outstanding shares  
of preferred stock would reduce the amount of funds available for the payment   
of dividends on shares of common stock. Holders of shares of preferred stock    
may be entitled to receive a preference payment in the event of any             
liquidation, dissolution or winding-up of our company before any payment is     
made to the holders of shares of common stock. The issuance of shares of        
preferred stock may render more difficult or tend to discourage a merger,       
tender offer or proxy contest, the assumption of control by a holder of a large 
block of our securities or the removal of incumbent management. Upon the        
affirmative vote of a majority of the total number of directors then in office, 
the board of directors, without stockholder approval, may issue shares of       
preferred stock with voting and conversion rights which could adversely affect  
the holders of shares of common stock.                                          

There are no shares of preferred stock outstanding, and we have no current
intention to issue any of our unissued, authorized shares of preferred stock,   
other than the one share of special voting stock described below. However, the  
issuance of any shares of preferred stock in the future could adversely affect  
the rights of the holders of common stock.                                      

SMTC Canada Share Capital                                                       

Each of the newly issued exchangeable shares will be exchangeable, at the 
option of the holder, at any time for one share of our common stock. Holders of 
the exchangeable shares will be entitled to dividend and liquidation rights     
that are, as nearly as practicable, economically equivalent to those of holders 
of shares of our common stock. However, the exchangeable shares generally do    
not have any voting rights in respect of                                        

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SMTC Canada. Holders of exchangeable shares will have certain rights to receive 
common stock in the event of any liquidation, dissolution or winding-up of SMTC 
Canada or SMTC or any other distribution of the assets of SMTC Canada or SMTC   
for the purpose of winding-up its respective affairs.                           

 On closing of this offering, we will enter into a voting and exchange trust
agreement and issue one share of SMTC special voting stock to a trustee to be   
held for the benefit of the holders of exchangeable shares, other than          
companies with which we are affiliated. By furnishing instructions to the       
trustee, holders of exchangeable shares will be able to exercise essentially    
the same voting rights with respect to SMTC as they would have if they had      
exchanged their exchangeable shares for shares of our common stock.             

On closing of this offering, we will also enter into a support agreement  
under which we will agree to maintain the economic equivalency of the           
exchangeable shares and the common stock by, among other things, not declaring  
and paying dividends on the common stock unless SMTC Canada is able to declare  
and pay economically equivalent dividends on the SMTC Canada exchangeable       
shares in accordance with the terms of those shares. SMTC Canada may also       
declare stock dividends from time to time as necessary to maintain the one-for- 
one economic equivalence between SMTC Canada exchangeable shares and shares of  
common stock. The SMTC Canada exchangeable shares do not carry any other right  
to receive dividends from SMTC Canada.                                          

  The support agreement provides that, in the event that a tender offer, share
exchange offer, issuer bid, take-over bid or similar transaction with respect   
to the common stock is proposed by SMTC or is proposed to SMTC or its           
stockholders and is recommended by the board of directors of SMTC, or is        
otherwise effected or to be effected with the consent or approval of the board  
of directors of SMTC, and the exchangeable shares are not otherwise redeemed by 
SMTC Canada or SMTC Nova Scotia Company, SMTC will use its reasonable efforts   
to enable and permit holders of exchangeable shares to participate in such an   
offer to the same extent and on an economically equivalent basis as the holders 
of SMTC common stock. Without limiting the generality of the foregoing, SMTC    
will use its reasonable efforts to ensure that holders of exchangeable shares   
may participate in all such offers without being required to exercise their     
right to retract their exchangeable shares or, if so required, to ensure that   
any such retraction shall be effective only upon, and shall be conditional      
upon, the closing of the offer and only to the extent necessary to tender to or 
deposit under the offer.                                                        

The exchangeable shares are subject to adjustment or modification in the  
event of a stock split or other change to our capital structure so as to        
maintain the initial one-to-one relationship between the exchangeable shares    
and our common stock. On or after July 27, 2015, subject to acceleration in     
certain circumstances, the board of directors of SMTC Canada may redeem all of  
the outstanding exchangeable shares by delivering to the holders one share of   
our common stock for each exchangeable share held.                              

The exchangeable shares of SMTC Canada that will be outstanding on closing
of the concurrent offering may not be resold or otherwise transferred in the    
United States except pursuant to an effective registration statement under the  
Securities Act or an exemption from registration under the Act. The issuance of 
the shares of our common stock issuable upon the exercise of the exchange       
rights granted to the holders of the exchangeable shares of SMTC Canada is      
registered by a prospectus included with the registration statement filed for   
this offering.                                                                  

SMTC Nova Scotia Company owns all of the 9,477,847 common shares and      
6,331,517 Class C preferred shares that have been issued by SMTC Canada. Gary   
Walker holds all the 23,092 Class Y shares that have been issued by SMTC        
Canada. In connection with the reclassification, SMTC Nova Scotia Company has   
agreed to purchase all his Class Y shares in exchange for an equivalent number  
of Class L common shares. The Class Y shares entitle the holder to dividends    
based on the dividends payable on the exchangeable shares. Holders of Class Y   
shares are also entitled to receive, on a liquidation, dissolution or winding   
up of SMTC Canada, an amount based on the value of the exchangeable shares, as  
determined by our board of directors. The terms of the SMTC Canada common       
shares are substantially the same as the terms of our common stock. The Class C 
preferred shares are redeemable at any time at the option of SMTC Canada and    
entitle the holder to receive fixed preferential non-cumulative cash dividends  
of C$0.06 per share per year in priority to the holders of Class L exchangeable 
shares, Class Y shares and common shares. Holders of Class C preferred shares   
are also entitled to a preference payment of C$1.00 per share in the event of   
any liquidation, dissolution or winding-up                                      

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of SMTC Canada, before any payment is made to the holders of SMTC Canada Class  
L exchangeable shares, Class Y shares and common shares. The common shares, the 
Class C preferred shares and the Class Y shares will not be changed in the      
reclassification and will remain outstanding after completion of this offering. 

The Toronto Stock Exchange has conditionally approved the listing of the  
exchangeable shares under the symbol "SMX." Listing is subject to SMTC Canada   
fulfilling all of the requirements of the Toronto Stock Exchange on or before   
August 30, 2000, including distribution of the exchangeable shares to a minimum 
number of public shareholders.                                                  

Registration Rights                                                             

Under the stockholders agreement dated July 30, 1999 between us and our   
current stockholders, some of our stockholders will be entitled to rights with  
respect to the registration under the Securities Act of some or all of their    
shares as described below.                                                      

  Majority Stockholders Demand Registration Rights. At any time after 180 days
following the effective date of any registration statement filed with this      
offering, the holders of a majority of the aggregate number of shares of common 
stock held by our stockholders who are parties to the stockholders agreement    
can request that we register all or a portion of their shares. We will only be  
required to file up to three registration statements on forms other than Form   
S-3 in response to such demand registration rights.                             

Other Demand Registration Rights. At any time after July 30, 2003,        
stockholders holding a majority of the shares of common stock held by the Bain  
Capital Funds and their affiliates, by Celerity EMSIcon, LLC and its            
affiliates, and by P. N. Walker Consulting, Inc., Paul Walker, Nichal Inc.,     
Derek D'Andrade, Gary Walker, Philip Woodard and Kilmer Electronics Group       
Limited, taken as a group, in each case holding at least 15% of our common      
stock then held by the parties to our stockholders agreement, can request that  
we register all or a portion of their shares. We will only be required to file  
up to three registration statements on forms other than Form S-3 in response to 
such demand registration rights. We will not be required to file a registration 
statement in response to their demand registration rights within 180 days       
following the effective date of any registration statement filed by us with     
respect to an underwritten public offering of our securities for our own        
account.                                                                        

  Piggyback Registration Rights. If we register any securities for public sale
after this initial public offering, the holders of shares of our common stock   
who are parties to the stockholders agreement will have the right to include    
their shares in the registration statement. This right does not apply to a      
registration statement relating to any of our employee benefit plans, a         
corporate reorganization or qualified public offerings unless such public       
offering has been initiated pursuant to the majority demand registration rights 
or other demand registration rights described above. The managing underwriter   
of any underwritten offering will have the right to limit the number of shares  
registered by these holders for marketing reasons.                              

  All shares could potentially be required to be registered in connection with
the exercise of any of the registration rights described above.                 

We will pay all expenses incurred in connection with the registrations    
described above, except for underwriters' and brokers' discounts and            
commissions, which will be paid by the selling stockholders.                    

Holders of these registration rights have waived the exercise of these    
registration rights for 180 days following the date of this prospectus.         

Other Provisions of the Certificate of Incorporation and By-laws                

Our certificate of incorporation provides for the board to be divided into
three classes, as nearly equal in number as possible, serving staggered terms.  
Approximately one-third of the board will be elected each year. Please see      
"Management." Under the Delaware General Corporation Law, directors serving on  
a classified board can only be removed for cause. The provision for a           
classified board could prevent a party who acquires control of a majority of    
the outstanding voting stock from obtaining control of the board until the      
second                                                                          

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annual stockholders meeting following the date the acquiror obtains the         
controlling stock interest. The classified board provision could have the       
effect of discouraging a potential acquiror from making a tender offer or       
otherwise attempting to obtain control of SMTC and could increase the           
likelihood that incumbent directors will retain their positions.                

Our certificate of incorporation provides that stockholder action can be  
taken only at an annual or special meeting of stockholders and cannot be taken  
by written consent in lieu of a meeting. The certificate of incorporation and   
the by-laws provide that, except as otherwise required by law, special meetings 
of the stockholders can only be called by the chairman of the board, the chief  
executive officer or pursuant to a resolution adopted by a majority of the      
board of directors. Stockholders will not be permitted to call a special        
meeting or to require the board to call a special meeting.                      

 The by-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of our stockholders, including proposed  
nominations of persons for election to the board. Stockholders at an annual     
meeting may only consider proposals or nominations specified in the notice of   
meeting or brought before the meeting by or at the direction of the board or by 
a stockholder who was a stockholder of record on the record date for the        
meeting, who is entitled to vote at the meeting and who has given to our        
secretary timely written notice, in proper form, of such stockholder's          
intention to bring that business before the meeting. Although the by-laws do    
not give the board the power to approve or disapprove stockholder nominations   
of candidates or proposals regarding other business to be conducted at a        
special or annual meeting, the by-laws may have the effect of precluding the    
conduct of business at a meeting if the proper procedures are not followed or   
may discourage or defer a potential acquiror from conducting a solicitation of  
proxies to elect its own slate of directors or otherwise attempting to obtain   
control of SMTC.                                                                

The certificate of incorporation and by-laws provide that the affirmative 
vote of holders of at least 75% of the total votes eligible to be cast in the   
election of directors is required to amend, alter, change or repeal some of     
their provisions, unless such amendment or change has been approved by a        
majority of the directors not affiliated or associated with any person or       
entity holding 10% or more of the voting power of our outstanding capital       
stock. For purposes of calculating the votes of directors in such               
circumstances, neither the Bain Capital Funds, Celerity Partners nor Kilmer     
Electronics Group shall be deemed at any time to be an entity holding 10% or    
more of the voting power of SMTC's outstanding capital stock, without regard to 
the actual percentage of the voting power SMTC's capital stock held from time   
to time by any of them. This requirement of a super-majority vote to approve    
amendments to the certificate of incorporation and by-laws could enable a       
minority of our stockholders to exercise veto power over any such amendments.   

Provisions of Delaware Law Governing Business Combinations                      

Following the consummation of this offering, we will be subject to the    
"business combination" provisions of the Delaware General Corporation Law. In   
general, such provisions prohibit a publicly held Delaware corporation from     
engaging in various "business combination" transactions with any "interested    
stockholder" for a period of three years after the date of the transaction in   
which the person became an "interested stockholder," unless:                    

.  the transaction is approved by the board of directors prior to the date  
the "interested stockholder" obtained such status;                    

.  upon consummation of the transaction which resulted in the stockholder   
  becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining 
the number of shares outstanding those shares owned by (a) persons who
are directors and also officers and (b) employee stock plans in which 
 employee participants do not have the right to determine confidentially
 whether shares held subject to the plan will be tendered in a tender or
exchange offer; or                                                    

.  on or subsequent to such date the "business combination" is approved by  
  the board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the       
outstanding voting stock which is not owned by the "interested        
stockholder."                                                         

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A "business combination" is defined to include mergers, asset sales and   
other transactions resulting in financial benefit to a stockholder. In general, 
an "interested stockholder" is a person who, together with affiliates and       
associates, owns 15% or more of a corporation's voting stock or within three    
years did own 15% or more of a corporation's voting stock. However, our         
Certificate of Incorporation provides that a stockholder affiliated or          
associated with the Bain Capital Funds, Celerity Partners or Kilmer Electronics 
Group Limited will not be considered an "interested stockholder,"               
notwithstanding that stockholder's percentage of our voting stock. None of such 
stockholders has a present intention to engage in any transaction which would   
constitute a "business combination." The statute could prohibit or delay        
mergers or other takeover or change in control attempts with respect to SMTC    
and, accordingly, may discourage attempts to acquire SMTC.                      

Limitations on Liability and Indemnification of Officers and Directors          

Our certificate of incorporation limits the liability of directors to the 
fullest extent permitted by the Delaware General Corporation Law. In addition,  
our certificate of incorporation provides that we will indemnify our directors  
and officers to the fullest extent permitted by such law. We expect to enter    
into indemnification agreements with our current directors and executive        
officers prior to the completion of the offering and expect to enter into a     
similar agreement with any new directors or executive officers.                 

Transfer Agent and Registrar                                                    

The transfer agent and registrar for the common stock is ChaseMellon      
Shareholder Services, L.L.C. The transfer agent and registrar for the           
exchangeable shares is CIBC Mellon Trust Company.                               

SHARES ELIGIBLE FOR FUTURE SALE 

The sale of a substantial amount of our shares in the public market after 
this offering could adversely affect the prevailing market price of our shares. 
Furthermore, the sale of a substantial amount of shares in the public market    
after the contractual and legal restrictions on resale described below lapse    
could adversely affect the prevailing market price of our shares and our        
ability to raise equity capital in the future.                                  

Upon completion of this offering, we will have outstanding an aggregate of
26,013,679 shares, assuming no exercise of the underwriters' over-allotment     
option and no exercise of outstanding options. Of these shares, all of the      
shares sold in this offering will be freely tradable without restriction or     
further registration under the Securities Act, unless the shares are purchased  
by "affiliates" as that term is defined in Rule 144 under the Securities Act.   
Any shares purchased by an affiliate may not be resold except pursuant to an    
effective registration statement or an applicable exemption from registration,  
including an exemption under Rule 144 of the Securities Act. The remaining      
shares of common stock held by existing stockholders are "restricted            
securities" as that term is defined in Rule 144 under the Securities Act. These 
restricted securities may be sold in the public market only if they are         
registered or if they qualify for an exemption from registration under Rule 144 
or Rule 701 under the Securities Act. These rules are summarized below.         

  Upon the expiration of the lock-up agreements described below and subject to
the provisions of Rule 144 and Rule 701, restricted shares totaling 15,013,679  
will be available for sale in the public market 180 days after the date of this 
prospectus. The sale of these restricted securities is subject to the volume    
restrictions contained in those rules.                                          

Lock-up Agreements                                                              

We, our directors and executive officers and all of our stockholders, who 
own in the aggregate 15,013,679 shares of our common stock, have entered into   
lock-up agreements with the underwriters. Under those agreements, neither we    
nor any of our directors or executive officers nor any of those stockholders    
may dispose of or hedge any shares of common stock or securities convertible    
into or exchangeable for shares of common stock. These restrictions will be in  
effect for a period of 180 days after the date of this prospectus. At any time  

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and without notice, both Lehman Brothers and RBC Dominion Securities may        
release all or some of the securities from these lock-up agreements. Transfers  
or dispositions can be made sooner, provided the transferee becomes bound by    
the terms of the lockup:                                                        

.  with the prior written consent of both Lehman Brothers and RBC Dominion  
Securities;                                                           

.  in the case of some transfers to affiliates;                             

.  as a bona fide gift; or                                                  

.  to any trust.                                                            

Rule 144                                                                        

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our  
common stock for at least one year from the later of the date those shares of   
common stock were acquired from us or from an affiliate of ours would be        
entitled to sell within any three-month period a number of shares that does not 
exceed the greater of:                                                          

.  one percent of the number of shares of common stock then outstanding,    
which will equal approximately 260,000 shares immediately after this  
offering; or                                                          

.  the average weekly trading volume of the common stock on the Nasdaq      
  National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale of any shares of common   
stock.                                                                

The sales of any shares of common stock under Rule 144 are also subject to      
manner of sale provisions and notice requirements and to the availability of    
current public information about us.                                            

Rule 144(k)                                                                     

Under Rule 144(k), a person who is not one of our affiliates at any time  
during the three months preceding a sale, and who has beneficially owned the    
shares proposed to be sold for at least two years from the later of the date    
such shares of common stock were acquired from us or from an affiliate of ours, 
including the holding period of any prior owner other than an affiliate, is     
entitled to sell those shares without complying with the manner of sale, public 
information, volume limitation or notice provisions of Rule 144. Immediately    
upon completion of this offering, no shares will be eligible for sale under     
Rule 144(k).                                                                    

Rule 701                                                                        

In general, under Rule 701 of the Securities Act as currently in effect,  
each of our employees, consultants or advisors who purchased shares from us in  
connection with a compensatory stock plan or other written agreement is         
eligible to resell those shares 90 days after the effective date of this        
offering in reliance on Rule 144, but without compliance with some of the       
restrictions, including the holding period, contained in Rule 144.              

No precise prediction can be made as to the effect, if any, that market   
sales of shares or the availability of shares for sale will have on the market  
price of our common stock prevailing from time to time. We are unable to        
estimate the number of our shares that may be sold in the public market         
pursuant to Rule 144 or Rule 701 because this will depend on the market price   
of our common stock, the personal circumstances of the sellers and other        
factors. After this offering, there will be 54,271 shares available for sale    
under Rule 701. Nevertheless, sales of significant amounts of our common stock  
in the public market could adversely affect the market price of our common      
stock.                                                                          

Stock Plans                                                                     

  We intend to file a registration statement under the Securities Act covering
2,492,336 shares of common stock reserved for issuance under our 1998 Plan and  
our 2000 Plan. This registration statement is expected to be filed as soon as   
practicable after the effective date of this offering.                          

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 Currently, there are options to purchase 491,041 shares of our common stock
outstanding under our 1998 Plan. In addition, we intend to grant options to     
purchase approximately 150,000 shares of common stock under our 2000 Plan prior 
to the completion of this offering. All of these shares will be eligible for    
sale in the public market from time to time, subject to vesting provisions,     
Rule 144 volume limitations applicable to our affiliates and, in the case of    
some of the options, the expiration of lock-up agreements.                      

Registration Rights under Stockholders Agreement                                

Following this offering, some of our stockholders will, under some        
circumstances, have the right to require us to register their shares for future 
sale. See "Description of Capital Stock--Registration Rights."                  

Sales in Canada--Exchangeable Shares                                            

 On closing of this offering, excluding any exchangeable shares purchased in
this offering and after giving effect to the share capital reclassification     
described under "The Reclassification", Canadian residents will hold 1,469,445  
exchangeable shares and no options to purchase exchangeable shares. All of the  
outstanding exchangeable shares will be freely tradeable in Canada without      
restriction except for shares that may be held by controlling persons of SMTC   
Canada (generally, persons or companies, who alone or in combination with       
others hold a sufficient number of securities to affect materially the control  
of SMTC Canada or SMTC).                                                        

Exchangeable shares issuable upon exercise of such options may not be sold
or otherwise disposed of for value in Canada, except pursuant to a prospectus,  
a discretionary exemption or a statutory exemption available only in specific   
limited circumstances, for 12 months from the date that the Ontario Securities  
Commission issues a receipt for the prospectus to be used by SMTC Canada in     
connection with the concurrent offering of exchangeable shares.                 

 All of the exchangeable shares are freely exchangeable into common stock on
a one-for-one basis and freely tradeable in the United States as such common    
stock, subject to compliance with applicable securities laws.                   

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UNDERWRITING

Subject to the terms and conditions stated in the underwriting agreement  
dated the date hereof, the underwriters of the offering of shares of common     
stock and exchangeable shares, for whom Lehman Brothers Inc., RBC Dominion      
Securities Corporation, FleetBoston Robertson Stephens Inc. and Merrill Lynch,  
Pierce, Fenner & Smith Incorporated are acting as representatives, have each    
agreed to purchase from us the respective number of shares of common stock and  
exchangeable shares shown opposite its name below:                              

                                                                [Download Table]

                                                                 Number of Shares
U.S. Underwriters of Common Stock                                of Common Stock 
---------------------------------                                ----------------
                                                                                 
Lehman Brothers Inc.............................................     1,778,875   
RBC Dominion Securities Corporation.............................     1,778,875   
FleetBoston Robertson Stephens Inc..............................     1,559,250   
Merrill Lynch, Pierce, Fenner & Smith                                            
         Incorporated...........................................       903,000   
Fidelity Capital Markets                                                         
                                                    a division                   
                          of National Financial Services                         
                          Corporation...........................        85,000   
CIBC World Market Corp..........................................        85,000   
Deutsche Bank Securities Inc....................................        85,000   
Donaldson, Lufkin & Jenrette Securities Corporation.............        85,000   
A.G. Edwards & Sons, Inc........................................        85,000   
Edward D. Jones & Co., L.P......................................        45,000   
C.L. King & Associates, Inc.....................................        45,000   
Raymond James & Associates, Inc.................................        45,000   
Sanders Morris Harris...........................................        45,000   
                                                                    ----------   
  Subtotal......................................................     6,625,000   

                                                                    Number of    
                                                                   Exchangeable  
Canadian Underwriters of Exchangeable Shares                          Shares     
--------------------------------------------                     ----------------
                                                                                 
Lehman Brothers Canada Inc......................................     1,859,375   
RBC Dominion Securities Inc.....................................     1,859,375   
Merrill Lynch Canada Inc........................................       656,250   
                                                                    ----------   
  Subtotal......................................................     4,375,000   
                                                                    ----------   
  Total.........................................................    11,000,000   
                                                                    ==========   

The underwriting agreement provides that the obligations of the several   
underwriters to purchase shares included in this offering depend on the         
satisfaction of the conditions contained in the underwriting agreement, and     
that if any of the shares are purchased by the underwriters under the           
underwriting agreement, then all of the shares which the underwriters have      
agreed to purchase under the underwriting agreement must be purchased. The      
conditions contained in the underwriting agreement include the requirement that 
the representations and warranties made by us to the underwriters are true,     
that there is no material change in the financial markets and that we deliver   
to the underwriters customary closing documents.                                

The representatives have advised us that the underwriters propose to offer
the shares directly to the public at the public offering price set forth on the 
cover page of this prospectus, and to dealers, who may include the              
underwriters, at a public offering price less a selling concession not in       
excess of $0.66 per share of common stock or C$0.97 per exchangeable share. The 
underwriters may allow, and the dealers may reallow, a concession not in excess 
of $0.10 per share of common stock or C$0.15 per exchangeable share to brokers  
and dealers. After the offering, the underwriters may change the offering price 
and other selling terms.                                                        

  We have granted to the underwriters an option to purchase up to an aggregate
of 1,650,000 additional shares of common stock, exercisable to cover over-      
allotments, if any, at the public offering price less the                       

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underwriting discounts and commissions shown on the cover page of this          
prospectus. The underwriters may exercise this option at any time until 30 days 
after the date of the underwriting agreement. If this option is exercised, each 
underwriter will be committed, so long as the conditions of the underwriting    
agreement are satisfied, to purchase a number of additional shares              
proportionate to the initial commitment of each underwriter as indicated in the 
preceding tables and we will be obligated, under the over-allotment option, to  
sell the shares to the underwriters.                                            

We have agreed that, without the prior consent of both Lehman Brothers and
RBC Dominion Securities, we will not directly or indirectly, offer, sell or     
otherwise dispose of any shares of common stock or any securities which may be  
converted into or exchanged for any such shares of common stock (including      
exchangeable shares) for a period of 180 days from the date of this prospectus. 
All of our executive officers, directors, key employees and our current         
stockholders have agreed under lock-up agreements that, without the prior       
written consent of both Lehman Brothers and RBC Dominion Securities, they will  
not, directly or indirectly, offer, sell or otherwise dispose of any shares of  
common stock or any securities which may be converted into or exchanged for any 
of these shares of common stock (including exchangeable shares) for the period  
ending 180 days after the date of this prospectus.                              

Prior to the offering, there has been no public market for the shares of  
common stock or the exchangeable shares. The initial public offering price of   
the shares will be negotiated between the representatives and us. In            
determining the initial public offering price the representatives will consider 
various factors, including:                                                     

.  prevailing market conditions;                                            

.  our historical performance and capital structure;                        

.  estimates of our business potential and earning prospects;               

.  an overall assessment of our management; and                             

.  the consideration of the above factors in relation to market valuation   
of companies in related businesses.                                   

Our shares of common stock will be quoted on the Nasdaq National Market   
under the symbol "SMTX." The Toronto Stock Exchange has conditionally approved  
the listing of the exchangeable shares under the symbol "SMX." Listing is       
subject to SMTC Canada fulfilling all of the requirements of the Toronto Stock  
Exchange on or before August 30, 2000, including distribution of the            
exchangeable shares to a minimum number of public shareholders.                 

We have agreed in the underwriting agreement to indemnify the underwriters
against certain liabilities under the Securities Act and the securities         
legislation of each Canadian province and to contribute to payments that the    
underwriters may be required to make for these liabilities.                     

 Until the distribution of the shares of common stock is completed, rules of
the Securities and Exchange Commission may limit the ability of the             
underwriters and selling group members to bid for and purchase shares of common 
stock. As an exception to these rules, the representatives are permitted to     
engage in transactions that stabilize the price of the shares of common stock.  
These transactions may consist of bids or purchases for the purposes of         
pegging, fixing or maintaining the price of the shares of common stock.         

The underwriters may create a short position in the shares of common stock
in connection with the offering, which means that they may sell more shares of  
common stock than are set forth on the cover page of this prospectus. If the    
underwriters create a short position, then the representatives may reduce that  
short position by purchasing shares of common stock in the open market. The     
representatives also may elect to reduce any short position by exercising all   
or part of the over-allotment option. The underwriters have informed us that    
they do not intend to confirm sales to discretionary accounts that exceed 5% of 
the total number of shares of common stock offered by them.                     

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The representatives also may impose a penalty bid on underwriters and     
selling group members. This means that if the representatives purchase shares   
of common stock in the open market to reduce the underwriters' short position   
or to stabilize the price of the shares of common stock, they may reclaim the   
amount of the selling concession from the underwriters and selling group        
members who sold those shares of common stock as part of the offering.          

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be   
higher than it might otherwise be in the absence of these purchases. The        
imposition of a penalty bid might have an effect on the price of a security to  
the extent that it were to discourage resales of the security by purchasers in  
an offering.                                                                    

 In accordance with a policy statement of the Ontario Securities Commission,
the underwriters may not, throughout the period of distribution, bid for or     
purchase exchangeable shares. Exceptions, however, exist where the bid or       
purchase is not made to create the appearance of active trading in, or raising  
prices of the exchangeable shares. These exceptions include a bid or purchase   
permitted under the by-laws and rules of the Toronto Stock Exchange relating to 
market stabilization and passive market making activities and a bid or purchase 
made for and on behalf of a customer where the order was not solicited during   
the period of distribution. We have been advised that in connection with this   
offering and pursuant to the first exception mentioned above, the underwriters  
may over-allot or effect transactions which stabilize or maintain the market    
price of the exchangeable shares at levels other than those which might         
otherwise prevail on the open market.                                           

Neither we nor any of the underwriters makes any representation or        
prediction as to the direction or magnitude of any effect that the transactions 
described above may have on the price of the shares of common stock or the      
exchangeable shares. In addition, neither we nor any of the underwriters makes  
any representation that the representatives will engage in these transactions   
or that such transactions, once commenced, will not be discontinued without     
notice.                                                                         

No action will be taken by us or by the underwriters in any other         
jurisdiction where action is required to permit a public offering offered in    
this prospectus. People who obtain this prospectus are required by us and the   
underwriters to inform themselves about and to observe any restrictions on the  
offering of the shares and the distribution of this prospectus.                 

Purchasers of the shares offered in this prospectus may be required to pay
stamp taxes and other charges under the laws and practices of the country of    
purchase, in addition to the offering price listed on the over page of this     
prospectus.                                                                     

 At our request, the underwriters have reserved up to 481,250 shares offered
by this prospectus for sale to our officers, directors, employees and their     
family members and to our business associates at the initial offering price set 
forth on the cover page of this prospectus. These persons must commit to        
purchase no later than the close of business on the day following the date of   
this prospectus. The number of shares available for sale to the general public  
will be reduced to the extent these persons purchase the reserved shares.       

Merrill Lynch will be facilitating Internet distribution for this offering
to certain of its Internet subscription customers. Merrill Lynch intends to     
allocate a limited number of shares for sale to its online brokerage customers. 
An electronic prospectus is available on the website maintained by Merrill      
Lynch. Other than the prospectus in electronic format, the information on the   
Merrill Lynch website relating to this offering is not a part of this           
prospectus.                                                                     

An affiliate of Lehman Brothers is a lender under our senior credit       
facility, a portion of which will be repaid using the proceeds from this        
offering. Approximately $46 million was owed to the Lehman Brothers affililate  
under this facility as at December 31, 1999. Because more than ten percent of   
the net proceeds of the offering may be paid to members or affiliates of        
members of the National Association of Securities                               

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Dealers, Inc., or NASD, participating in the offering, the offering will be     
conducted in accordance with Rule 2710(c)(8) of the Conduct of Rules of the     
NASD, which requires that the public offering price of an equity security be no 
higher than the price recommended by a "qualified independent underwriter"      
which has participated in the preparation of the registration statement and     
performed its usual standard of due diligence with respect thereto. RBC         
Dominion Securities Corporation has agreed to act as qualified independent      
underwriter with respect to the offering, and the price of the common stock     
will be no higher than that recommended by RBC Dominion Securities Corporation. 

Persons associated with one of the underwriters own approximately 4,796   
shares of Class A common stock and 558 shares of Class L common stock of SMTC   
which will be converted into common stock in the reclassification. Under        
applicable rules of the NASD, these shares have been deemed to be underwriting  
compensation and such persons have agreed not to sell, transfer, assign, pledge 
or hypothecate such shares for a period of one year from the date of this       
prospectus.                                                                     

LEGAL MATTERS 

  The validity of the shares to be issued in the offerings will be passed upon
for us by Ropes & Gray, Boston, Massachusetts and McMillan Binch, Toronto,      
Ontario. Some partners of Ropes & Gray are members in RGIP LLC, which           
beneficially owns 27,971 shares of common stock. RGIP LLC is also an investor   
in certain of the Bain Capital Funds. Legal matters in connection with this     
offering will be passed upon for the underwriters by Skadden, Arps, Slate,      
Meagher & Flom LLP, New York, New York and Blake, Cassels & Graydon LLP,        
Toronto, Ontario. Blake, Cassels & Graydon LLP, Toronto, Ontario has, from time 
to time, represented and may continue to represent Bain Capital Funds in        
connection with certain legal matters. Ropes & Gray, Boston, Massachusetts has, 
from time to time, represented and may continue to represent some of the        
underwriters in connection with various legal matters and the Bain Capital      
Funds and some of their affiliates, including us, in connection with certain    
legal matters. McMillan Binch, Toronto, Ontario has, from time to time,         
represented and may continue to represent some of the underwriters in           
connection with various legal matters and Kilmer Electronics Group Limited and  
Bain Capital Funds and some of their affiliates, including us, in connection    
with certain legal matters.                                                     

EXPERTS 

  Our consolidated financial statements and financial statement schedule as of
December 31, 1999 and for the year then ended and the consolidated financial    
statements of SMTC Corporation, or Surface Mount, as of July 29, 1999 and       
August 31, 1998 and for the period from September 1, 1998 to July 29, 1999 and  
each of the years in the two year period ended August 31, 1998 included in this 
prospectus and elsewhere in the registration statement have been so included in 
reliance on the reports of KPMG LLP, independent accountants, appearing         
elsewhere herein, and upon the authority of said firm as experts in accounting  
and auditing.                                                                   

The audited consolidated financial statements and financial statement     
schedule of SMTC Corporation (formerly HTM Holdings, Inc.) as of and for the    
year ended December 31, 1998 included in this prospectus and elsewhere in the   
registration statement have been audited by Arthur Andersen LLP, independent    
public accountants, as indicated in their reports with respect thereto, and are 
included herein in reliance upon the authority of said firm as experts in       
giving said reports.                                                            

The financial statements of SMTC Corporation (formerly Hi-Tech            
Manufacturing, Inc., subsequently HTM Holdings, Inc.) as of and for the year    
ended December 31, 1997 included in this prospectus and elsewhere in this       
registration statement have been audited by PricewaterhouseCoopers LLP,         
independent public accountants, as indicated in their report thereto, and are   
so included and given on the authority of said firm as experts in auditing and  
accounting.                                                                     

 The financial statements of W.F. Wood, Incorporated as of September 3, 1999
and December 31, 1998 and 1997, and for the period from January 1, 1999 to      
September 3, 1999 and each of the three years in the period                     

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ended December 31, 1998 included in this prospectus have been so included in    
reliance on the report of Canby, Maloney & Co., Inc., independent accountants,  
appearing elsewhere herein, and upon the authority of such firm as experts in   
auditing and accounting.                                                        

 The financial statements of Pensar as of December 31, 1998 and 1999 and for
each of the years in the three-year period ended December 31, 1999 included in  
this prospectus and elsewhere in the registration statement have been so        
included in reliance upon the report of KPMG LLP, independent certified public  
accountants, appearing elsewhere herein, and upon the authority of said firm as 
experts in accounting and auditing.                                             

On or about December 23, 1998, Hi-Tech Manufacturing, Inc. notified Arthur
Andersen LLP that it would be engaged as its independent auditors, replacing    
PricewaterhouseCoopers LLP, who were dismissed as Hi-Tech Manufacturing, Inc.'s 
independent auditors during the last week of December 1998. The decision to     
change independent auditors was approved by Hi-Tech Manufacturing, Inc.'s board 
of directors. During their engagement, PricewaterhouseCoopers LLP issued no     
audit report which was qualified or modified as to uncertainty, audit scope or  
accounting principles, no adverse opinions or disclaimers of opinion on any of  
Hi-Tech Manufacturing, Inc.'s financial statements, and there were no           
disagreements with PricewaterhouseCoopers LLP on any matter of accounting       
principles or practices, financial statement disclosure, or auditing scope or   
procedures.                                                                     

 On September 20, 1999, we notified KPMG LLP that it would be engaged as our
independent auditors, replacing Arthur Andersen LLP, who were dismissed as our  
independent auditors on September 20, 1999. KPMG LLP was the independent        
auditor for Surface Mount prior to the July 1999 combination of Surface Mount   
and HTM. The decision to change independent auditors was approved by our board  
of directors on September 17, 1999. During their engagement, Arthur Andersen    
LLP issued no audit report which was qualified or modified as to uncertainty,   
audit scope or accounting principles, no adverse opinions or disclaimers of     
opinion on any of our financial statements, and there were no disagreements     
with Arthur Andersen LLP on any matter of accounting principles or practices,   
financial statement disclosure, or auditing scope or procedures.                

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration  
statement on Form S-1, including exhibits and schedules, under the Securities   
Act with respect to the common stock to be sold in this offering. This          
prospectus, which constitutes a part of the registration statement, does not    
contain all of the information set forth in the registration statement or the   
exhibits and schedules which are part of the registration statement. For        
further information about us and our common stock, you should refer to the      
registration statement. Any statements made in this prospectus as to the        
contents of any contract, agreement or other document are necessarily           
incomplete. With respect to each such contract, agreement or other document     
filed as an exhibit to the registration statement we refer you to the exhibit   
for a more complete description of the matter involved, and each statement in   
this prospectus shall be deemed qualified in its entirety by this reference.    

You may read and copy all or any portion of the registration statement or 
any reports, statements or other information in the files at the public         
reference facilities of the SEC at Room 1024, Judiciary Plaza, 450 Fifth        
Street, N.W., Washington, D.C., 20549 and at the regional offices of the SEC    
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and   
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request   
copies of these documents upon payment of a duplicating fee by writing to the   
SEC. You may call the SEC at 1-800-SEC-0330 for further information on the      
operation of its public reference rooms. Our filings, including the             
registration statement, will also be available to you on the Internet site      
maintained by the SEC at http://www.sec.gov.                                    

We will also file annual, quarterly and current reports, proxy statements 
and other information with the SEC. You can request copies of these documents,  
for a copying fee, by writing to the SEC. We intend to furnish our stockholders 
with annual reports containing financial statements audited by our independent  
auditors.                                                                       

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SMTC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                                            Page
                                                                            ----
                                                                                
SMTC Corporation:                                                               
Unaudited Pro Forma Consolidated Financial Information for the three            
 months ended April 2, 2000...............................................   F-3
Notes to Pro Forma Consolidated Financial Information for the three months      
 ended April 2, 2000 (unaudited)..........................................   F-4
Pro Forma Consolidated Balance Sheet as of April 2, 2000 (unaudited)......   F-7
Notes to Pro Forma Consolidated Balance Sheet as of April 2, 2000               
 (unaudited)..............................................................   F-8
Pro Forma Consolidated Statement of Earnings (Loss) for the three months        
 ended April 2, 2000 (unaudited)..........................................   F-9
Notes to Pro Forma Consolidated Statement of Earnings (Loss) for the three      
 months ended April 2, 2000 (unaudited)...................................  F-10
Unaudited Pro Forma Consolidated Financial Information for the year ended       
 December 31, 1999........................................................  F-12
Notes to Pro Forma Consolidated Financial Information for the year ended        
 December 31, 1999 (unaudited)............................................  F-13
Pro Forma Consolidated Balance Sheet as of December 31, 1999 (unaudited)..  F-16
Notes to Pro Forma Consolidated Balance Sheet as of December 31, 1999           
 (unaudited)..............................................................  F-17
Pro Forma Consolidated Statement of Earnings (Loss) for the year ended          
 December 31, 1999 (unaudited)............................................  F-18
Notes to Pro Forma Consolidated Statement of Earnings (Loss) for the year       
 ended December 31, 1999 (unaudited)......................................  F-19
SMTC Corporation (formerly HTM Holdings, Inc.):                                 
Independent Auditors' Report..............................................  F-22
Report of Independent Public Accountants..................................  F-23
Report of Independent Accountants.........................................  F-24
Consolidated Balance Sheets as of December 31, 1998 and 1999 and April 2,       
 2000 (unaudited).........................................................  F-25
Consolidated Statements of Earnings (Loss) for the years ended December         
 31, 1997, 1998 and 1999 and the three months ended March 31, 1999 and          
 April 2, 2000 (unaudited)................................................  F-26
Consolidated Statements of Changes in Shareholders' Equity (Deficiency)         
 for the years ended December 31, 1997, 1998 and 1999 and the three months      
 ended April 2, 2000 (unaudited)..........................................  F-27
Consolidated Statements of Cash Flows for the years ended December 31,          
 1997, 1998 and 1999 and the three months ended March 31, 1999 and April        
 2, 2000 (unaudited)......................................................  F-28
Notes to Consolidated Financial Statements................................  F-29
SMTC Corporation (formerly The Surface Mount Technology Centre                  
 Inc.)("Surface Mount"):                                                        
Auditors' Report..........................................................  F-53
Consolidated Balance Sheets as of August 31, 1998 and July 29, 1999.......  F-54
Consolidated Statements of Earnings and Retained Earnings (Deficit) for         
 the years ended August 31, 1997 and 1998 and the period from September 1,      
 1998 to July 29, 1999....................................................  F-55
Consolidated Statements of Cash Flows for the years ended August 31, 1997       
 and 1998 and the period from September 1, 1998 to July 29, 1999 .........  F-56
Notes to Consolidated Financial Statements................................  F-57

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                                                                [Download Table]

                                                                           Page
                                                                           ----
                                                                               
W.F. Wood, Incorporated:                                                       
Independent Auditor's Report.............................................  F-69
Balance Sheets as of December 31, 1997 and 1998 and September 3, 1999....  F-70
Statements of Income for the years ended December 31, 1996, 1997 and 1998      
 and the period from January 1, 1999 to September 3, 1999................  F-71
Statements of Stockholders Equity for the years ended December 31, 1996,       
 1997 and 1998 and the period from January 1, 1999 to September 3, 1999..  F-72
Statements of Cash Flows for years ended December 31, 1996, 1997, 1998,        
 and the period from January 1, 1999 to September 3, 1999................  F-73
Notes to Financial Statements............................................  F-75
Pensar Corporation:                                                            
Independent Auditors' Report.............................................  F-81
Balance Sheets as of December 31, 1998 and 1999 and March 31, 2000             
 (unaudited).............................................................  F-82
Statements of Income for the years ending December 31, 1997, 1998 and          
 1999 and the three months ended March 31, 1999 and 2000 (unaudited).....  F-83
Statements of Stockholders' Equity for the years ending December 31,           
 1997, 1998 and 1999 and the three months ended March 31, 2000                 
 (unaudited).............................................................  F-84
Statements of Cash Flows for the years ending December 31, 1997, 1998 and      
 1999 and the three months ended March 31, 1999 and 2000 (unaudited).....  F-85
Notes to Financial Statements............................................  F-86

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION OF SMTC CORPORATION 
Three months ended April 2, 2000

The unaudited pro forma consolidated statement of earnings (loss) for the 
three months ended April 2, 2000 gives pro forma effect to (1) the pending      
acquisition of Pensar Corporation by SMTC Corporation, (2) the reclassification 
as described under "The Reclassification" and (3) the consummation of the       
offering and the application of the net proceeds therefrom, as described under  
"Use of Proceeds". The unaudited pro forma consolidated statement of earnings   
(loss) gives effect to the acquisition, the reclassification and the offering   
as if each of these occurred on January 1, 1999. The unaudited pro forma        
consolidated balance sheet as at April 2, 2000 gives effect to the acquisition, 
reclassification and offering as if each had occurred on April 2, 2000. The     
accounting policies used in preparing the unaudited pro forma consolidated      
financial information are those disclosed in the SMTC Corporation consolidated  
financial statements included in this prospectus.                               

  The unaudited pro forma consolidated financial information has been provided
for information purposes only and is not necessarily indicative of the results  
of operations or financial condition that actually would have been achieved if  
the acquisition and other transactions had been completed on the date indicated 
or that may be reported in the future. The unaudited pro forma financial        
information does not reflect expenses expected to be incurred to finalize the   
integration of the acquired operations or potential cost savings or             
improvements in revenue that SMTC Corporation believes can be realized as a     
result of the acquisition. The pro forma financial information should be read   
in conjunction with the consolidated financial statements of SMTC Corporation   
and the acquired operation, including the respective notes, included elsewhere  
in this prospectus.                                                             

  The unaudited pro forma consolidated financial information has been prepared
in accordance with United States GAAP. There are no differences between United  
States and Canadian GAAP that impact the unaudited pro forma consolidated       
financial information.                                                          

The unaudited pro forma consolidated statement of earnings (loss) does not
reflect the net after-tax extraordinary loss of $2.3 million resulting from the 
prepayment of the $5.0 million subordinated notes that were issued in May 2000, 
the early extinguishment of debt resulting from the write-off of debt issuance  
costs, incurrence of the prepayment penalty and the gain from settlement of the 
interest rate swaps in connection with the prepayment of debt upon completion   
of the offering. The unaudited pro forma consolidated balance sheet, however,   
does reflect the extraordinary loss. The actual amount of this loss may be more 
or less depending on the closing date of the transaction.                       

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Three months ended April 2, 2000
(Unaudited) 
1. Basis of presentation:                                                       

The unaudited pro forma consolidated financial information has been   
prepared in accordance with U.S. generally accepted accounting principles.  

The pro forma consolidated balance sheet and statement of earnings    
(loss) give effect to the following transactions:                           

(i)  The reclassification of the capital stock of the Company where all 
Class L common stock will be converted to Class A common stock
which in turn will be converted to new common stock of the    
    Company. Existing exchangeable shares of the Company's subsidiary,
  SMTC Manufacturing Corporation of Canada, will be converted into
 exchangeable shares of the same class as those being offered in
    this offering or exchanged for shares of Class L common stock that
will be converted in the reclassification. See "The           
    Reclassification", note 22(b) of the SMTC Corporation consolidated
    financial statements for the year ended December 31, 1999 and note
3 to the pro forma consolidated financial information.        

(ii)  The initial public offering of common stock of the Company and    
    exchangeable shares of its subsidiary with the net proceeds used
    to repay indebtedness. See "Use of Proceeds" and "Description of
Indebtedness".                                              

(iii)  SMTC Corporation's pending acquisition of all of the issued and  
     outstanding shares of Pensar Corporation on the closing date of
     the initial public offering for approximately $36,600 including
acquisition costs. The purchase consideration consists of 
   $17,000 in cash, and 1,188,682 shares of common stock of SMTC
     Corporation. The valuation of the Company's shares to be issued
as consideration is based on the Company's initial public 
offering price. The total purchase price reflected in the 
unaudited pro forma consolidated financial information is 
preliminary and is based on the most recently available   
information. The final purchase price and purchase price  
allocation may vary from the preliminary amounts reflected
      herein and this may result in significant differences in certain
pro forma adjustments.                                    

  The unaudited pro forma consolidated financial information for the three
months ended April 2, 2000 has been prepared by management of SMTC          
Corporation based on the unaudited consolidated financial information of    
SMTC Corporation (formerly HTM Holdings, Inc.) for the three months ended   
April 2, 2000, and the unaudited financial information of Pensar            
Corporation for the three months ended April 2, 2000.                       

The pending acquisition will be accounted for by the purchase method. 
The total purchase consideration will be allocated to the identifiable      
assets acquired and liabilities assumed based on their respective fair      
values as at the date of acquisition, with the excess amounts allocated to  
goodwill, which will be amortized over ten years. The valuations and other  
studies required to determine the fair values of identifiable assets        
acquired and liabilities assumed has not been completed for the Pensar      
Corporation acquisition. Accordingly, the preliminary allocation is         
expected to change upon further study and as more current information       
becomes available.                                                          

Accounting policies used in the preparation of the unaudited pro forma
consolidated information are those disclosed in the SMTC Corporation        
consolidated financial statements as at and for the year ended December 31, 
1999 presented elsewhere in this prospectus. The unaudited pro forma        
consolidated information should be read in conjunction with the separate    
historical audited consolidated financial statements of SMTC Corporation    
(formerly HTM Holdings, Inc.), and Pensar Corporation.                      

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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Three months ended April 2, 2000
(Unaudited) 

The pro forma consolidated financial information is not necessarily   
indicative of the actual results that would have occurred had the           
acquisition occurred on the date indicated and is not necessarily           
indicative of the results of operations or financial condition that         
actually would have been achieved if the acquisition had been completed on  
the date indicated, or that may be reported in the future. In preparing pro 
forma information, no adjustments have been made to reflect expenses        
expected to be incurred to finalize the integration of the acquired         
operations or the full impact of the operating synergies expected to result 
from combining the operations of SMTC Corporation and the acquired          
operations.                                                                 

2. Significant assumptions and adjustments:                                     

The unaudited pro forma consolidated balance sheet gives effect to the
pending Pensar acquisition, the reclassification and offering as if they    
had taken place April 2, 2000.                                              

The unaudited pro forma consolidated statement of earnings (loss) for 
the three months ended April 2, 2000 gives effect to the pending            
acquisition, the reclassification and offering as if these transactions had 
taken place on January 1, 1999.                                             

  The assumptions underlying the offering and reclassification adjustments
are subject to change when the initial offering price, gross proceeds and   
closing date are finalized.                                                 

3.The Reclassification:                                                         

Concurrent with the effectiveness of the offering, SMTC Corporation will  
complete a share capital reorganization that will be effected as follows,       
assuming a closing date for the offering of July 27, 2000 and an initial public 
offering price of $16.00 per share:                                             

.  each outstanding Class Y share of the Company's subsidiary, SMTC         
Manufacturing Corporation of Canada, will be purchased in exchange for
shares of Class L common stock;                                       

.  each outstanding share of Class L common stock will be converted into    
  one share of Class A common stock plus an additional number of shares of
  Class A common stock determined by dividing the preference amount by the
value of a share of Class A common stock based on the initial public  
offering price;                                                       

.  each outstanding share of Class A common stock will be converted into    
3.6745 shares of common stock;                                        

.  all outstanding Class N common stock will be redeemed and one share of   
 special voting stock will be issued which will be held by a trustee for
the benefit of the holders of the exchangeable shares; and            

.  each Class L exchangeable share will be converted into exchangeable      
shares of the same class as those being offered in the offering in the
 same ratio as shares of Class L common stock are converted to shares of
common stock.                                                         

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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Three months ended April 2, 2000
(Unaudited) 

  Subsequent to the reclassification, the share capital of the company will be
as follows:                                                                     

                                                        [Enlarge/Download Table]

                                                    Number of shares                               
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, April 2, 2000..       --    2,447,782   154,168   113,408     113,408          --     --  
Stock Conversions.......       --   (2,447,782) (154,168) (113,408)  1,356,037   11,878,502      1 
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                               --          --        --        --    1,469,445   11,878,502      1 
                          ========  ==========  ========  ========   =========   ==========  ===== 

                                                              Common Stock                         
                          Class A    Class L              ----------------------                   
                          Options    Options    Warrants  Options     Warrants                     
                         ---------- ----------  --------  --------  ------------                   
                                                                                                   
Balance Apri1 2, 2000...   116,860       3,856   115,983       --          --                      
Option Conversions......  (116,860)     (3,856)      --    491,041         --                      
Warrant Conversions.....       --          --   (115,983)      --      578,441                     
                          --------  ----------  --------  --------   ---------                     
                               --          --        --    491,041     578,441                     
                          ========  ==========  ========  ========   =========                     


                                                         Amount                                    
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Shares      Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, April 2, 2000..  $ 11,804  $        3  $    --   $    --    $     --    $      --   $ --  
Stock Conversions.......      (116)         (3)      --        --          --           119    --  
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                          $ 11,688  $      --   $    --   $    --    $     --    $      119  $ --  
                          ========  ==========  ========  ========   =========   ==========  ===== 

 The actual number of shares of common stock that will be issued as a result
of the reclassification is subject to change based on the actual offering price 
and the closing date of this offering.                                          

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PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands of U.S. dollars)
April 2, 2000 
(Unaudited) 

                                                        [Enlarge/Download Table]

                            SMTC       Pensar                  Pro forma                     Pro forma 
                         Corporation Corporation               combined     Offering and    as adjusted
                          April 2,    March 31,  Acquisition   April 2,   reclassification   April 2,  
                            2000        2000     adjustments     2000       adjustments        2000    
                         ----------- ----------- -----------   ---------  ----------------  -----------
                                                                                                       
Assets                                                                                                 
Current assets:                                                                                        
 Cash and short-term                                                                                   
  investments...........  $  5,111     $    27     $17,000 (a) $  4,538      $ 176,000 (b)   $  4,538  
                                                   (17,600)(a)                 (20,000)(b)             
                                                                              (141,075)(b)             
                                                                               (14,925)(b)             
                                                                                   (78)(b)             
                                                                                  (400)(c)             
                                                                                   478 (e)             
 Accounts receivable....    80,651       8,334                   88,985                        88,985  
 Inventories............    86,394       6,786                   93,180                        93,180  
 Prepaid expenses.......     5,341         246                    5,587                         5,587  
 Deferred income taxes..     1,044         --                     1,044            160 (c)             
                                                                                 1,192 (d)             
                                                                                  (191)(e)      2,644  
                                                                                   439 (f)             
                          --------     -------     -------     --------      ---------       --------  
                           178,541      15,393        (600)     193,334          1,600        194,934  

Capital assets..........    35,311       4,859                   40,170                        40,170  
Goodwill and excess of                                                                                 
 purchase price over                                                                                   
 tangible book value of                                                                                
 net assets acquired....    39,791         --       26,802 (a)   66,593                        66,593  
Other assets............    10,882         562                   11,444         (2,980)(d)      8,464  
Deferred income taxes...       592         --                       592            --             592  
                          --------     -------     -------     --------      ---------       --------  
                          $265,117     $20,814     $26,202     $312,133      $  (1,380)      $310,753  
                          ========     =======     =======     ========      =========       ========  
Liabilities and                                                                                        
 Shareholders' Equity                                                                                  

Current liabilities:                                                                                   
 Line of credit.........  $    --      $ 3,000     $           $  3,000      $  (3,000)(b)   $    --   
 Accounts payable.......    59,039       4,996                   64,035                        64,035  
 Accrued liabilities....    31,908       1,645                   33,553                        33,553  
 Income taxes payable...       --          --                       --                                 
 Current portion of                                                                                    
  long-term debt........     3,000         335                    3,335         (3,335)(b)        --   
 Current portion of                                                                                    
  capital lease                                                                                        
  obligation............     1,335         --                     1,335                         1,335  
                          --------     -------     -------     --------      ---------       --------  
                            95,282       9,976                  105,258         (6,335)        98,923  

Capital lease                                                                                          
 obligations............     1,618         --                     1,618                         1,618  
Long-term debt..........   159,417       1,040      17,000 (a)  177,457       (134,818)(b)     42,639  
Deferred income taxes...     2,444         --                     2,444                         2,444  
Shareholders' equity:                                                                                  
 Capital stock..........         3           1          (1)(a)        3            203 (g)        206  
 Warrants...............       367         --                       367                           367  
 Loans receivable.......       (60)       (415)        415 (a)      (60)                          (60) 
 Additional paid-in                                                                                    
  capital...............    11,804       1,209      17,791 (a)   30,804        141,075 (b)    172,774  
                                                                                  (203)(g)             
                                                                                 1,098 (f)             
 Retained earnings                                                                                     
  (deficit).............    (5,758)      9,003      (9,003)(a)   (5,758)          (240)(c)     (8,158) 
                                                                                (1,788)(d)             
                                                                                   287 (e)             
                                                                                  (659)(f)             
                          --------     -------     -------     --------      ---------       --------  
                             6,356       9,798       9,202       25,356        139,773        165,129  
                          --------     -------     -------     --------      ---------       --------  
                          $265,117     $20,814     $26,202     $312,133      $  (1,380)      $310,753  
                          ========     =======     =======     ========      =========       ========  

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET 
(In thousands of U.S. dollars)
April 2, 2000 
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the preliminary allocation of the purchase consideration for the  
pending acquisition of Pensar Corporation as follows:                 

                                                                [Download Table]
                                                                           
Current assets................................................... $ 15,393 
Capital assets...................................................    4,859 
Other long-term assets...........................................      562 
Excess of purchase price over tangible book value of net assets            
 acquired........................................................   26,802 
Liabilities assumed..............................................  (11,016)
                                                                  -------- 
                                                                  $ 36,600 
                                                                  ======== 

The purchase price consists of $17,000 cash consideration, an ascribed      
value of $19,000 in shares of common stock of SMTC Corporation and $600 in  
acquisition costs.                                                          

(b)  Reflects the sale of 11,000,000 shares of common stock and exchangeable    
   shares generating gross proceeds of $176,000 and the use of the estimated
 net proceeds of $156,000, net of underwriting discounts and commissions
and the estimated offering expenses totaling $20,000, and the $78 of  
   proceeds from termination of the interest rate swap net of the prepayment
penalty (notes (c) and (e)) to repay a portion of our outstanding     
 indebtedness under our senior credit facility, Pensar Corporation debt,
the $5,000 of subordinated notes issued in May 2000 and the $9,925 of 
    demand notes issued in July 2000. The adjustment assumes the underwriters'
over-allotment option is not exercised. See "Use of Proceeds" and     
"Description of Indebtedness."                                        

(c)  Reflects the prepayment premium of $400, before the $160 of related income 
   tax recovery (at a 40% effective tax rate), resulting in an extraordinary
    loss of $240 in connection with the prepayment of the subordinated debt in
  connection with the offering. Amounts will differ based on the effective
date of the offering.                                                 

(d)  Reflects the write-off of $2,980 in capitalized debt issuance costs,       
before $1,192 of related income tax recovery (at a 40% effective tax  
rate), resulting in an after-tax extraordinary loss of $1,788 in      
connection with the repayment of outstanding debt. Amounts will differ
based on the effective date of the offering.                          

(e)  Reflects the recognition of a $478 gain, in connection with the            
termination of the swap on debt outstanding under the senior credit   
    facility before $191 of related income tax expense (at a 40% effective tax
rate), resulting in an extraordinary gain of $287. Amounts will differ
based on the effective date of the offering.                          

(f)  Reflects the value of the warrants, in excess of proceeds received, issued 
in May 2000 in connection with the subordinated notes and the related 
  write-off of $1,098 before $439 of related income tax recovery (at a 40%
   effective tax rate) resulting in an extraordinary loss of $659 related to
the prepayment of the subordinated notes.                             

(g)  Represents the par value of shares issued in the offering and the          
reclassification of the existing common stock.                        

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SMTC CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS) 
(dollars in thousands, except share quantities and per share amounts) 
Three months ended April 2, 2000
(Unaudited) 

                                                        [Enlarge/Download Table]

                             SMTC                                                                              
                          Corporation     Pensar                                                  Pro forma    
                             Three     Corporation                                               as adjusted   
                            months     Three months                                 Offering     Three months  
                             ended        ended                                       and           ended      
                           April 2,     March 31,   Acquisition   Pro forma     reclassification   April 2,    
                             2000          2000     adjustments   combined        adjustments        2000      
                          -----------  ------------ -----------   ---------     ---------------- ------------  
                                                                                                               
Revenue.................  $  124,333     $16,283                  $140,616                       $   140,616   
Cost of sales...........     113,127      13,735                   126,862                           126,862   
                          ----------     -------                  --------                       -----------   
Gross profit............      11,206       2,548                    13,754                            13,754   
Selling, general and                                                                                           
 administrative                                                                                                
 expenses...............       7,548       1,359                     8,907                             8,907   
Management fees.........         131         --                        131                               131   
Amortization............       1,272         --       $   670 (a)    1,942           $ (148)(e)        1,794   
Pensar Corporation                                                                                             
 shareholder bonuses....         --          114                       114                               114   
                          ----------     -------      -------     --------           ------      -----------   
Operating income........       2,255       1,075         (670)       2,660              148            2,808   
Interest................       3,789         103          373 (b)    4,265           (2,995)(f)        1,270   
                          ----------     -------      -------     --------           ------      -----------   
Earnings (loss) before                                                                                         
 income taxes...........      (1,534)        972       (1,043)      (1,605)           3,143            1,538   
Income taxes (recovery):                                                                                       
 Current................        (316)        --          (313)(c)     (240)           1,198 (g)          958   
                                                          389 (d)                                              
 Deferred...............         225         --          (105)(c)      120               59 (g)          179   
                          ----------     -------      -------     --------           ------      -----------   
                                 (91)        --           (29)        (120)           1,257            1,137   
                          ----------     -------      -------     --------           ------      -----------   
Earnings (loss).........  $   (1,443)    $   972      $(1,014)    $ (1,485)(h)       $1,886      $       401(h)
                          ==========     =======      =======     ========           ======      ===========   
Income (loss) per common                                                                                       
 share:                                                                                                        
 Earnings (loss)........  $   (1,443)                                                                          
 Less Class L preferred                                                                                        
  entitlement...........      (1,366)                                                                          
                          ----------                                                                           
Earnings (loss)                                                                                                
 attributable to common                                                                                        
 shareholders...........  $   (2,809)                                                                          
                          ==========                                                                           
 Earnings (loss) per                                                                                           
 common share:                                                                                                 
  Basic.................  $    (1.16)                                                            $      0.02   
                          ==========                                                             ===========   
  Diluted...............  $    (1.16)                                                            $      0.02   
                          ==========                                                             ===========   
Weighted average number                                                                                        
 of shares outstanding:                                                                                        
 Basic..................   2,414,642                                                              26,013,679   
                          ==========                                                             ===========   
 Diluted................   2,414,642                                                              26,696,417   
                          ==========                                                             ===========   

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) 
(In thousands of U.S. dollars)
Three months ended April 2, 2000
(Unaudited) 
Pro forma adjustments:                                                    

 The pro forma consolidated statement of earnings (loss) gives effect to the
acquisition of Pensar Corporation as if it had taken place on January 1, 1999.  
The following reflects the preliminary allocation of the purchase consideration 
for the pending acquisition in accordance with the purchase method of           
accounting.                                                                     

                                                                [Download Table]
                                                                           
Current assets................................................... $ 15,393 
Capital assets...................................................    4,859 
Other long-term assets...........................................      562 
Excess of purchase price over tangible book value of net assets            
 acquired........................................................   26,802 
Liabilities assumed..............................................  (11,016)
                                                                  -------- 
Net assets acquired.............................................. $ 36,600 
                                                                  ======== 

(a)  Reflects the additional amortization expense related to the excess of      
   purchase price over tangible book value of net assets to be acquired. The
valuations and other studies required to determine the fair values of 
identifiable assets acquired and liabilities assumed has not been     
completed for the Pensar acquisition. The amortization is based on an 
estimated useful life of 10 years.                                    

(b)  Reflects the additional interest expense related to the borrowings         
required by SMTC Corporation to complete the Pensar Corporation       
  acquisition based on the Company's current incremental borrowing rate on
April 2, 2000 of LIBOR plus 350 basis points.                         

(c)  Reflects the income tax effect of adjustments (a) and (b) at a 40%         
  effective tax rate. The goodwill amortization of $670 in connection with
the acquisition of Pensar Corporation is tax deductible.              

(d)  Reflects the income tax effect of treating Pensar Corporation as a "C"     
Corporation. Prior to its acquisition by SMTC Corporation, Pensar     
 Corporation held subchapter "S" status for federal and state income tax
purposes, thereby consenting to include the Company's income in the   
shareholders' individual income tax returns.                          

(e)  Reflects the decrease in amortization of debt issuance costs.              

(f)  Reflects the decrease in interest expense in connection with the use of    
net proceeds from the offering to repay outstanding debt as follows:  

                                                                [Download Table]
                                                                             
Pro forma combined interest expense................................. $ 4,265 
Elimination of historical and pro forma interest....................  (2,995)
                                                                     ------- 
Pro forma interest expense subsequent to the offering............... $ 1,270 
                                                                     ======= 

The elimination of historical and pro forma interest is calculated by       
applying the assumed offering proceeds net of the prepayment penalty,       
interest rate swap termination proceeds to outstanding debt balances        
(including the debt related to the Pensar Corporation acquisition) net of   
$5,000 to be applied to the subordinated notes issued in May 2000 and       
$9,925 of demand notes issued in July 2000, as if the proceeds were applied 
at January 1, 1999. The proceeds were applied against the entire balance    
outstanding on the subordinated debt, term loans, Pensar Corporation debt   
and a portion of the revolving credit facility.                             

(g)  Reflects the income tax effect of adjustments (e) and (f) at a 40%         
effective tax rate.                                                   

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NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) 
(In thousands of U.S. dollars)
Three months ended April 2, 2000
(Unaudited) 
(h)  The pro forma combined and pro forma as adjusted earnings (loss) before    
 extraordinary loss do not reflect the after-tax effect of adjusting for
   the following acquisition-related, non-recurring adjustments and interest
income:                                                               

.  $131 of pre-tax management fees paid to Bain Capital Partners VI, L.P.,  
Celerity Partners, Inc. and Kilmer Electronics Group Limited under a  
management agreement which is expected to be terminated in connection 
with this offering, although a termination agreement has not yet been 
finalized; and                                                        

.  $114 of pre-tax bonuses paid to Pensar Corporation shareholders.         

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                                        Pro forma  Pro forma 
                                                        combined  as adjusted
                                                        --------- -----------
                                                             (unaudited)     
                                                                             
Earnings (loss)........................................  $(1,485)    $401    
Plus:                                                                        
  Management fees......................................      131      131    
  Former W.F. Wood shareholders' compensation..........      114      114    
Less:                                                                        
  Tax effect of above adjustments at 40%...............      (98)     (98)   
                                                         -------     ----    
  Adjusted earnings (loss).............................  $(1,338)    $548    
                                                         =======     ====    

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION OF SMTC CORPORATION 
Year ended December 31, 1999

The unaudited pro forma consolidated statement of earnings (loss) for the 
year ended December 31, 1999 gives pro forma effect to (1) the acquisitions of  
SMTC Corporation (formerly The Surface Mount Technology Centre Inc.), W.F.      
Wood, Incorporated and the pending acquisition of Pensar Corporation by SMTC    
Corporation (pre-combination HTM Holdings, Inc.), (2) the reclassification as   
described under "The Reclassification" and (3) the consummation of the offering 
and the application of the net proceeds therefrom, as described under "Use of   
Proceeds". The unaudited pro forma consolidated statement of earnings (loss)    
gives effect to the acquisitions, the reclassification and the offering as if   
each of these occurred on January 1, 1999. The unaudited pro forma consolidated 
balance sheet as at December 31, 1999 gives effect to the acquisition of Pensar 
Corporation, the reclassification and offering as if each had occurred on       
December 31, 1999. The accounting policies used in preparing the unaudited pro  
forma consolidated financial information are those disclosed in the SMTC        
Corporation consolidated financial statements included in this prospectus.      

  The unaudited pro forma consolidated financial information has been provided
for information purposes only and is not necessarily indicative of the results  
of operations or financial condition that actually would have been achieved if  
the acquisitions and other transactions had been completed on the date          
indicated or that may be reported in the future. The unaudited pro forma        
financial information does not reflect expenses expected to be incurred to      
finalize the integration of SMTC Corporation and the acquired operations or     
potential cost savings or improvements in revenue that SMTC Corporation         
believes can be realized as a result of the acquisitions. The pro forma         
financial information should be read in conjunction with the consolidated       
financial statements of SMTC Corporation and the acquired operations, including 
the respective notes, included elsewhere in this prospectus.                    

  The unaudited pro forma consolidated financial information has been prepared
in accordance with United States GAAP and the notes to the unaudited pro forma  
consolidated statement of earnings (loss) include a reconciliation to Canadian  
GAAP. There are no differences between United States and Canadian GAAP that     
impact the unaudited pro forma consolidated balance sheet.                      

The unaudited pro forma consolidated statement of earnings (loss) does not
reflect the net after-tax extraordinary loss of $2.4 million resulting from the 
prepayment of the $5.0 million subordinated notes issued in May 2000, the early 
extinguishment of debt resulting from the write-off of debt issuance costs,     
incurrence of the prepayment penalty and the gain from settlement of the        
interests rate swaps in connection with the prepayment of debt upon completion  
of the offering. The unaudited pro forma consolidated balance sheet, however,   
does reflect this extraordinary loss. The actual amount of this loss may be     
more or less than the pro forma amount based on the closing date of the         
transaction.                                                                    

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 
1. Basis of presentation:                                                       

The unaudited pro forma consolidated financial information has been   
prepared in accordance with U.S. generally accepted accounting principles.  

The pro forma consolidated balance sheet gives effect to the following
transactions:                                                               

(i)  The reclassification of the capital stock of the Company where all 
Class L common stock will be converted to Class A common stock
which in turn will be converted to new common stock of the    
    Company. Existing exchangeable shares of the Company's subsidiary,
  SMTC Manufacturing Corporation of Canada, will be converted into
 exchangeable shares of the same class as those being offered in
    this offering or exchanged for shares of Class L common stock that
will be converted in the reclassification. See "The           
    Reclassification", note 22(b) of the SMTC Corporation consolidated
    financial statements for the year ended December 31, 1999 and note
3 to the pro forma consolidated financial information.        

(ii)  The initial public offering of common stock of the Company and    
    exchangeable shares of its subsidiary with the net proceeds used
    to repay indebtedness. See "Use of Proceeds" and "Description of
Indebtedness".                                              

(iii)  SMTC Corporation's pending acquisition of all of the issued and  
     outstanding shares of Pensar Corporation on the closing date of
     the initial public offering for approximately $36,600 including
acquisition costs. The purchase consideration consists of 
  $17,000 in cash and 1,188,682 shares of common stock of SMTC
     Corporation. The valuation of the Company's shares to be issued
as consideration is based on the Company's initial public 
offering price. The total purchase price reflected in the 
unaudited pro forma consolidated financial information is 
preliminary and is based on the most recently available   
information. The final purchase price and purchase price  
allocation may vary from the preliminary amounts reflected
      herein and this may result in significant differences in certain
pro forma adjustments.                                    

 The pro forma consolidated statement of earnings (loss) gives effect to
the reclassification and the initial public offering described above, as    
well as the following transactions:                                         

(i)  SMTC Corporation's acquisition of all of the issued and            
   outstanding shares of HTM Holdings, Inc. on July 31, 1999 as part
of a series of transactions including the issuance of SMTC    
  Corporation shares to the shareholders of HTM Holdings, Inc. The
  acquisition is treated as a reverse takeover of SMTC Corporation
by HTM Holdings, Inc. and is accounted for under the purchase 
method. The consolidated financial statements of the combined 
entity are issued under the name of the legal parent, SMTC    
 Corporation, but are considered a continuation of the financial
statements of the legal subsidiary, HTM Holdings, Inc.        

(ii)  SMTC Corporation's acquisition of all of the issued and           
 outstanding shares of W.F. Wood, Incorporated on September 3,
1999 for a total cash consideration of $19,672.             

(iii)  SMTC Corporation's pending acquisition of all of the issued and  
     outstanding shares of Pensar Corporation on the closing date of
     the initial public offering for approximately $36,600 including
acquisition costs. The purchase consideration consists of 
  $17,000 in cash and 1,188,682 shares of common stock of SMTC
     Corporation. The valuation of the Company's shares to be issued
as consideration is based on the Company's initial public 
offering price. The total purchase price                  

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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 
reflected in the unaudited pro forma consolidated financial       
information is preliminary and is based on the most recently      
available information. The final purchase price and purchase price
allocation may vary from the preliminary amounts reflected herein 
 and this may result in significant differences in certain pro forma
adjustments.                                                      

 The unaudited pro forma consolidated financial information for the year
ended December 31, 1999 has been prepared by management of SMTC Corporation 
based on the audited consolidated financial statements of SMTC Corporation  
(formerly HTM Holdings, Inc.) for the year ended December 31, 1999, the     
unaudited financial statements of SMTC Corporation (formerly The Surface    
Mount Technology Centre Inc.) for the period from January 1, 1999 to July   
29, 1999, the audited financial statements of W.F. Wood, Incorporated for   
the period from January 1, 1999 to September 3, 1999, and the audited       
financial statements of Pensar Corporation for the year ended December 31,  
1999.                                                                       

The acquisitions have been accounted for by the purchase method. The  
total purchase considerations were allocated to the identifiable assets     
acquired and liabilities assumed based on their respective fair values as   
at the date of acquisition, with the excess amounts allocated to goodwill,  
which is being amortized over ten years. The valuations and other studies   
required to determine the fair values of identifiable assets acquired and   
liabilities assumed has not been completed for the Pensar Corporation       
acquisition. Accordingly, the preliminary allocation is expected to change  
upon further study and as more current information becomes available.       

Accounting policies used in the preparation of the unaudited pro forma
consolidated information are those disclosed in the SMTC Corporation        
consolidated financial statements as at and for the year ended December 31, 
1999 presented elsewhere in this prospectus. The unaudited pro forma        
consolidated information should be read in conjunction with the separate    
historical audited consolidated financial statements of SMTC Corporation    
(formerly HTM Holdings, Inc.), SMTC Corporation (formerly The Surface Mount 
Technology Centre Inc.), W.F. Wood, Incorporated and Pensar Corporation.    

The pro forma consolidated financial information is not necessarily   
indicative of the actual results that would have occurred had the           
acquisitions occurred on the date indicated and is not necessarily          
indicative of the results of operations or financial condition that         
actually would have been achieved if the acquisitions had been completed on 
the date indicated, or that may be reported in the future. In preparing pro 
forma information, no adjustments have been made to reflect expenses        
expected to be incurred to finalize the integration of SMTC Corporation and 
the acquired operations or the full impact of the operating synergies       
expected to result from combining the operations of SMTC Corporation and    
the acquired operations.                                                    

2. Significant assumptions and adjustments:                                     

The unaudited pro forma consolidated balance sheet gives effect to the
Pensar acquisition, the reclassification and offering as if they had taken  
place December 31, 1999.                                                    

The unaudited pro forma consolidated statement of earnings (loss) for 
the year ended December 31, 1999 gives effect to the acquisitions, the      
reclassification and offering as if these transactions had taken place at   
the beginning of the year.                                                  

  The assumptions underlying the offering and reclassification adjustments are
subject to change when the initial offering price, gross proceeds and closing   
date are finalized.                                                             

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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION 
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 

3. The Reclassification:                                                        

  Concurrent with the effectiveness of the offering, SMTC Corporation will
complete a share capital reorganization that will be effected as follows,   
assuming a closing date for the offering of July 27, 2000 and an initial    
public offering price of $16.00 per share:                                  

.  each outstanding Class Y share of the Company's subsidiary, SMTC         
Manufacturing Corporation of Canada, will be purchased in exchange for
shares of Class L common stock;                                       

.  each outstanding share of Class L common stock will be converted into    
  one share of Class A common stock plus an additional number of shares of
  Class A common stock determined by dividing the preference amount by the
value of a share of Class A common stock based on the initial public  
offering price;                                                       

.  each outstanding share of Class A common stock will be converted into    
3.6745 shares of common stock;                                        

.  all outstanding Class N common stock will be redeemed and one share of   
 special voting stock will be issued which will be held by a trustee for
the benefit of the holders of the exchangeable shares, and            

.  each Class L exchangeable share will be converted into exchangeable      
shares of the same class as those being offered in the offering in the
 same ratio as shares of Class L common stock are converted to shares of
common stock.                                                         

  Subsequent to the reclassification, the share capital of the company will be
as follows:                                                                     

                                                        [Enlarge/Download Table]

                                                          Number of shares                         
                                    ---------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Stock       Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, December 31,                                                                              
 1999...................       --    2,447,782   154,168   113,408     113,408          --     --  
Stock Conversions ......            (2,447,782) (154,168) (113,408)  1,356,037   11,878,502      1 
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                               --          --        --        --    1,469,445   11,878,502      1 
                          ========  ==========  ========  ========   =========   ==========  ===== 

                                                              Common Stock                         
                          Class A    Class L              ----------------------                   
                          Options    Options    Warrants  Options     Warrants                     
                         ---------- ----------  --------  --------  ------------                   
                                                                                                   
Balance December 31,                                                                               
 1999...................   116,860       3,856   115,983       --          --                      
Option conversions......  (116,860)     (3,856)      --    491,041         --                      
Warrant conversions.....       --          --   (115,983)      --      578,441                     
                          --------  ----------  --------  --------   ---------                     
                               --          --        --    491,041     578,441                     
                          ========  ==========  ========  ========   =========                     

                                                         Amount                                    
                         --------------------------------------------------------------------------
                         Additional                                                         Special
                          Paid in    Class A    Class L   Class N   Exchangeable   Common   Voting 
                          Capital     Stock      Stock     Stock       Stock       Stock     Stock 
                         ---------- ----------  --------  --------  ------------ ---------- -------
                                                                                                   
Balance, December 31,                                                                              
 1999...................  $ 11,804  $        3  $    --   $    --    $     --    $      --   $ --  
Stock Conversions ......      (116)         (3)      --        --          --           119    --  
                          --------  ----------  --------  --------   ---------   ----------  ----- 
                          $ 11,688  $      --   $    --   $    --    $     --    $      119  $ --  
                          ========  ==========  ========  ========   =========   ==========  ===== 

 The actual number of shares of common stock that will be issued as a result
of the reclassification is subject to change based on the actual offering price 
and the closing date of this offering.                                          

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SMTC CORPORATION

PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands of U.S. dollars)
December 31, 1999 
(Unaudited) 

                                                        [Enlarge/Download Table]

                             SMTC        Pensar                                               Pro forma  
                         Corporation  Corporation                             Offering and   as adjusted 
                         December 31, December 31, Acquisition   Pro forma  reclassification December 31,
                             1999         1999     adjustments   combined     adjustments        1999    
                         ------------ ------------ -----------   ---------  ---------------- ------------
                                                                                                         
Assets                                                                                                   
Current assets:                                                                                          
 Cash and short-term                                                                                     
  investments...........   $  2,083     $   512      $17,000 (a) $  1,995       $176,000 (b)   $  1,995  
                                                     (17,600)(a)                 (20,000)(b)             
                                                                                (141,075)(b)             
                                                                                 (14,925)(b)             
                                                                                     (78)(b)             
                                                                                    (400)(c)             
                                                                                     478 (e)             
 Accounts receivable....     71,597       9,781                    81,378                        81,378  
 Inventories............     61,680       5,273                    66,953                        66,953  
 Prepaid expenses.......      3,647         201                     3,848                         3,848  
 Deferred income taxes..      1,527         --                      1,527            160 (c)      3,192  
                                                                                   1,257 (d)             
                                                                                    (191)(e)             
                                                                                     439 (f)             
                           --------     -------      -------     --------       --------       --------  
                            140,534      15,767         (600)     155,701          1,665        157,366  
Capital assets..........     35,003       4,721                    39,724                        39,724  
Goodwill and excess of                                                                                   
 purchase price over                                                                                     
 tangible book value of                                                                                  
 net assets acquired....     40,800         --        27,799 (a)   68,599                        68,599  
Other assets............     11,145         511                    11,656         (3,143)(d)      8,513  
Deferred income taxes...        623         --                        623                           623  
                           --------     -------      -------     --------       --------       --------  
                           $228,105     $20,999      $27,199     $276,303       $ (1,478)      $274,825  
                           ========     =======      =======     ========       ========       ========  
Liabilities and Shareholders' Equity                                                                     
Current liabilities:                                                                                     
 Line of credit.........   $    --      $ 4,215      $           $  4,215       $ (4,215)(b)   $    --   
 Accounts payable.......     53,119       5,277                    58,396                        58,396  
 Accrued liabilities....     29,307       1,293                    30,600                        30,600  
 Income taxes payable...      1,127         --                      1,127                         1,127  
 Current portion of                                                                                      
  long-term debt........      2,000         332                     2,332         (2,332)(b)        --   
 Current portion of                                                                                      
  capital lease                                                                                          
  obligation............      1,541         --                      1,541                         1,541  
                           --------     -------      -------     --------       --------       --------  
                             87,094      11,117                    98,211         (6,547)        91,664  
Capital lease                                                                                            
 obligations............      1,537         --                      1,537                         1,537  
Long-term debt..........    128,942       1,081       17,000 (a)  147,023       (134,606)(b)     12,417  
Deferred income taxes...      2,733         --                      2,733                         2,733  
Shareholders' equity:                                                                                    
 Capital stock..........          3           1           (1)(a)        3            203 (g)        206  
 Warrants...............        367         --                        367                           367  
 Loans receivable.......        (60)       (455)         455 (a)      (60)                          (60) 
 Additional paid-in                                                                                      
  capital...............     11,804       1,209       17,791 (a)   30,804        141,075 (b)    172,774  
                                                                                    (203)(g)             
                                                                                   1,098 (f)             
 Retained earnings                                                                                       
  (deficit).............     (4,315)      8,046       (8,046)(a)   (4,315)          (240)(c)     (6,813) 
                                                                                  (1,886)(d)             
                                                                                     287 (e)             
                                                                                    (659)(f)             
                           --------     -------      -------     --------       --------       --------  
                              7,799       8,801       10,199       26,799        139,675        166,474  
                           --------     -------      -------     --------       --------       --------  
                           $228,105     $20,999      $27,199     $276,303       $ (1,478)      $274,825  
                           ========     =======      =======     ========       ========       ========  

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET 
(In thousands of U.S. dollars)
December 31, 1999 
(Unaudited) 
Pro forma adjustments:                                                          

(a)  Reflects the preliminary allocation of the purchase consideration for the  
pending acquisition of Pensar Corporation as follows:                 

                                                                [Download Table]
                                                                           
Current assets.................................................... $15,767 
Capital assets....................................................   4,721 
Other long-term assets............................................     511 
Excess of purchase price over tangible book value of net assets            
 acquired.........................................................  27,799 
Liabilities assumed............................................... (12,198)
                                                                   ------- 
                                                                   $36,600 
                                                                   ======= 

The purchase price consists of $17,000 cash consideration, an ascribed      
value of $19,000 in shares of common stock of SMTC Corporation and $600 in  
acquisition costs.                                                          

(b)  Reflects the sale of 11,000,000 shares of common stock and exchangeable    
   shares generating gross proceeds of $176,000 and the use of the estimated
 net proceeds of $156,000, net of underwriting discounts and commissions
and the estimated offering expenses totaling $20,000, and the $78 of  
   proceeds from termination of the interest rate swap net of the prepayment
penalty (notes (c) and (e)), to repay a portion of our outstanding    
 indebtedness under our senior credit facility, Pensar Corporation debt,
the $5,000 of subordinated notes issued in May 2000 and the $9,925 of 
    demand notes issued in July 2000. The adjustment assumes the underwriters'
over-allotment option is not exercised. See "Use of Proceeds" and     
"Description of Indebtedness."                                        

(c)  Reflects the prepayment premium of $400, before the $160 of related income 
   tax recovery (at a 40% effective tax rate), resulting in an extraordinary
    loss of $240 in connection with the prepayment of the subordinated debt in
  connection with the offering. Amounts will differ based on the effective
date of the offering.                                                 

(d)  Reflects the write-off of $3,143 in capitalized debt issuance costs,       
before $1,257 of related income tax recovery (at a 40% effective tax  
rate), resulting in an after-tax extraordinary loss of $1,886 in      
connection with the repayment of outstanding debt. Amounts will differ
based on the effective date of the offering.                          

(e)  Reflects the recognition of a $478 gain, in connection with the            
termination of the swap on debt outstanding under the senior credit   
    facility before $191 of related income tax expense (at a 40% effective tax
rate), resulting in an extraordinary gain of $287. Amounts will differ
based on the effective date of the offering.                          

(f)  Reflects the value of the warrants, in excess of proceeds received, issued 
in May 2000 in connection with the subordinated notes and the related 
  write-off of $1,098 before $439 of related income tax recovery (at a 40%
   effective tax rate) resulting in an extraordinary loss of $659 related to
the prepayment of the subordinated notes.                             

(g)  Represents the par value of shares issued in the offering and the          
reclassification of the existing common stock.                        

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SMTC CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS) 
(In thousands of U.S. dollars, except share quantities and per share amounts) 
Year ended December 31, 1999
(Unaudited) 

                                                        [Enlarge/Download Table]

                                       SMTC Corporation                                                                    
                                        (formerly The                                                                      
                                        Surface Mount    W.F. Wood                                                         
                                          Technology    Incorporated                                                       
                              SMTC       Centre Inc.)       from        Pensar                                 Offering    
                          Corporation  from January 1,   January 1,  Corporation                                  and      
                           year ended      1999 to        1999 to     year ended                               reclassi-   
                          December 31,     July 29,     September 3, December 31, Acquisition   Pro forma      fication    
                              1999           1999           1999         1999     adjustments   combined      adjustments  
                          ------------ ---------------- ------------ ------------ -----------   ---------     -----------  
                                                                                                                           
Revenue..........          $  257,962      $168,553       $23,198      $52,996      $           $502,709        $          
Cost of sales....             236,331       152,330        20,072       43,859                   452,592                   
                           ----------      --------       -------      -------      -------     --------        -------    
Gross profit.....              21,631        16,223         3,126        9,137                    50,117                   
Selling, general                                                                                                           
 and                                                                                                                       
 administrative                                                                                                            
 expenses........              12,615        10,268         1,718        4,533                    29,134                   
Management fees..                 717           --            --           --                        717                   
Amortization.....               1,990           --            --           --         5,395 (a)    7,385           (386)(f)
Former W.F. Wood                                                                                                           
 shareholders'                                                                                                             
 compensation....                 --            --            136          --                        136                   
Acquisition-                                                                                                               
 related bonuses                                                                                                           
 paid to                                                                                                                   
 management and                                                                                                            
 employees of                                                                                                              
 W.F. Wood.......                 --            --          2,571          --                      2,571                   
Pensar                                                                                                                     
 Corporation                                                                                                               
 shareholder                                                                                                               
 bonuses.........                 --            --            --           498                       498                   
Acquisition-                                                                                                               
 related                                                                                                                   
 professional                                                                                                              
 fees............                 --            --            403           75         (478)(b)      --                    
                           ----------      --------       -------      -------      -------     --------        -------    
Operating income                                                                                                           
 (loss)..........               6,309         5,955        (1,702)       4,031       (4,917)       9,676            386    
Interest.........               7,066         2,215            58          267        2,522 (c)   12,128        (10,906)(g)
                           ----------      --------       -------      -------      -------     --------        -------    
Earnings (loss)                                                                                                            
 before income                                                                                                             
 taxes...........                (757)        3,740        (1,760)       3,764       (7,439)      (2,452)        11,292    
Income taxes                                                                                                               
 (recovery):                                                                                                               
 Current.........                 442         2,064           --           --        (1,875)(d)    1,433          4,362 (h)
                                                                                        802 (e)                            
 Deferred........                (335)         (195)          --           --          (521)(d)   (1,051)           155 (h)
                           ----------      --------       -------      -------      -------     --------        -------    
                                  107         1,869           --           --        (1,594)         382          4,517    
                           ----------      --------       -------      -------      -------     --------        -------    
Earnings (loss)                                                                                                            
 ................          $     (864)     $  1,871       $(1,760)     $ 3,764      $(5,845)    $ (2,834)(i)    $ 6,775    
                           ==========      ========       =======      =======      =======     ========        =======    
Income (loss) per                                                                                                          
 common share:                                                                                                             
 Earnings (loss)                                                                                                           
  ...............          $     (864)                                                                                     
 Less Class L                                                                                                              
  preferred                                                                                                                
  entitlement....              (2,185)                                                                                     
                           ----------                                                                                      
Earnings (loss)                                                                                                            
 attributable                                                                                                              
 to common shareholders..  $   (3,049)                                                                                     
                           ==========                                                                                      
Earnings (loss)                                                                                                            
 per common                                                                                                                
 share...........          $    (1.89)                                                                                     
                           ==========                                                                                      
 Diluted.........          $    (1.89)                                                                                     
                           ==========                                                                                      
Weighted average                                                                                                           
 number of shares                                                                                                          
 outstanding:                                                                                                              
 Basic...........           1,617,356                                                                                      
                           ==========                                                                                      
 Diluted.........           1,617,356                                                                                      
                           ==========                                                                                      

                           Pro forma                                                                                       
                          as adjusted                                                                                      
                           year ended                                                                                      
                          December 31,                                                                                     
                              1999                                                                                         
                          ---------------                                                                                  
                                                                                                                           
Revenue..........         $   502,709                                                                                      
Cost of sales....             452,592                                                                                      
                          ---------------                                                                                  
Gross profit.....              50,117                                                                                      
Selling, general                                                                                                           
 and                                                                                                                       
 administrative                                                                                                            
 expenses........              29,134                                                                                      
Management fees..                 717                                                                                      
Amortization.....               6,999                                                                                      
Former W.F. Wood                                                                                                           
 shareholders'                                                                                                             
 compensation....                 136                                                                                      
Acquisition-                                                                                                               
 related bonuses                                                                                                           
 paid to                                                                                                                   
 management and                                                                                                            
 employees of                                                                                                              
 W.F. Wood.......               2,571                                                                                      
Pensar                                                                                                                     
 Corporation                                                                                                               
 shareholder                                                                                                               
 bonuses.........                 498                                                                                      
Acquisition-                                                                                                               
 related                                                                                                                   
 professional                                                                                                              
 fees............                 --                                                                                       
                          ---------------                                                                                  
Operating income                                                                                                           
 (loss)..........              10,062                                                                                      
Interest.........               1,222                                                                                      
                          ---------------                                                                                  
Earnings (loss)                                                                                                            
 before income                                                                                                             
 taxes...........               8,840                                                                                      
Income taxes                                                                                                               
 (recovery):                                                                                                               
 Current.........               5,795                                                                                      
 Deferred........                (896)                                                                                     
                          ---------------                                                                                  
                                4,899                                                                                      
                          ---------------                                                                                  
Earnings (loss)                                                                                                            
 ................         $     3,941(i)                                                                                   
                          ===============                                                                                  
Income (loss) per                                                                                                          
 common share:                                                                                                             
 Earnings (loss)                                                                                                           
  ...............                                                                                                          
 Less Class L                                                                                                              
  preferred                                                                                                                
  entitlement....                                                                                                          
Earnings (loss)                                                                                                            
 attributable                                                                                                              
 to common shareholders..                                                                                                  
Earnings (loss)                                                                                                            
 per common                                                                                                                
 share...........         $      0.15                                                                                      
                          ===============                                                                                  
 Diluted.........         $      0.14                                                                                      
                          ===============                                                                                  
Weighted average                                                                                                           
 number of shares                                                                                                          
 outstanding:                                                                                                              
 Basic...........          26,013,679                                                                                      
                          ===============                                                                                  
 Diluted.........          26,522,485                                                                                      
                          ===============                                                                                  

See accompanying notes to pro forma consolidated financial information. 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 
Pro forma adjustments:                                                    

 The pro forma consolidated statement of earnings (loss) gives effect to the
acquisitions as if they had taken place at the beginning of the year. The       
following reflects the allocation of the purchase consideration for the two     
acquisitions in accordance with the purchase method of accounting as described  
in notes 1 and 3 to the SMTC Corporation consolidated financial statements for  
the year ended December 31, 1999:                                               

                                                                [Download Table]

                               SMTC Corporation                             
                                 (formerly The                              
                                 Surface Mount       W.F. Wood,    Pensar   
                            Technology Centre Inc.) Incorporated Corporation
                            ----------------------- ------------ -----------
                                                                            
Current assets.............        $ 84,423           $ 6,354      $15,767  
Capital assets.............          21,093             1,695        4,721  
Other long-term assets.....             --                 20          511  
Goodwill and excess of                                                      
 purchase price over                                                        
 tangible book value of net                                                 
 assets acquired...........          24,863            17,468       27,799  
Liabilities assumed........        (105,676)           (5,865)     (12,198) 
                                   --------           -------      -------  
Net assets acquired........        $ 24,703           $19,672      $36,600  
                                   ========           =======      =======  

(a)  Reflects the additional amortization expense related to the allocation of  
   the purchase price to goodwill and excess of purchase price over tangible
    book value of net assets acquired for the acquisitions. The valuations and
    other studies required to determine the fair values of identifiable assets
acquired and liabilities assumed has not been completed for the Pensar
  acquisition. The amortization is based on an estimated useful life of 10
years.                                                                

(b)  Reflects the elimination of acquisition-related professional fees incurred 
by W.F. Wood and Pensar Corporation.                                  

(c)  Reflects the additional interest expense related to the borrowings         
  required by SMTC Corporation to complete the W.F. Wood, Incorporated and
Pensar Corporation acquisitions, based on the Company's current       
 incremental borrowing rate on December 31, 1999 of LIBOR plus 350 basis
points.                                                               

(d)  Reflects the income tax effect of adjustments (a), (b) and (c) at a 40%    
  effective tax rate. The amortization of $4,527 of goodwill in connection
with the acquisitions of W.F. Wood and Pensar Corporation is tax      
deductible.                                                           

(e)  Reflects the income tax effect of treating W.F. Wood, Incorporated and     
Pensar Corporation as "C" Corporations. Prior to acquisition by SMTC  
    Corporation, W.F. Wood, Incorporated and Pensar Corporation held "S Corp."
 status for federal and state income tax purposes, thereby consenting to
  include the Companies' income in the shareholders' individual income tax
returns.                                                              

(f)  Reflects the decrease in amortization of debt issuance costs.              

(g)  Reflects the decrease in interest expense in connection with the use of    
net proceeds from the offering to repay outstanding debt as follows:  

                                                                [Download Table]
                                                                             
Pro forma combined interest expense................................. $12,128 
Elimination of historical and pro forma interest.................... (10,906)
                                                                     ------- 
Pro forma interest expense subsequent to the offering............... $ 1,222 
                                                                     ======= 

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 
The elimination of historical and pro forma interest is calculated by       
applying the assumed offering proceeds net of the prepayment penalty and    
interest rate swap termination proceeds to outstanding debt balances        
(including the debt related to the W.F. Wood and Pensar Corporation         
acquisitions) net of $5,000 to be applied to the subordinated notes issued  
in May 2000 and $9,925 of demand notes issued in July 2000 as if the        
proceeds were applied at the beginning of the year. The proceeds were       
applied against the entire balance outstanding on the subordinated debt,    
term loans and a portion of the revolving credit facility.                  

(h)  Reflects the income tax effect of adjustments (f) and (g) at a 40%         
effective tax rate.                                                   

(i)  The pro forma combined and pro forma as adjusted earnings (loss) before    
 extraordinary loss do not reflect the after-tax effect of adjusting for
   the following acquisition-related, non-recurring adjustments and interest
income:                                                               

.  $717 of pre-tax management fees paid to Bain Capital Partners VI, L.P.,  
Celerity Partners, Inc. and Kilmer Electronics Group Limited under a  
management agreement which is expected to be terminated in connection 
with this offering, although a termination agreement has not yet been 
finalized;                                                            

.  $136 of pre-tax compensation paid to former W.F. Wood shareholders;      

.  $2,571 of pre-tax acquisition-related bonuses paid to W.F. Wood          
management ($2,321) and W.F. Wood employees ($250); and               

.  $498 of pre-tax bonuses paid to Pensar Corporation shareholders.         

The effect of these adjustments is reflected in the following table:      

                                                                [Download Table]

                                                      Pro forma  Pro forma 
                                                      combined  as adjusted
                                                      --------- -----------
                                                           (unaudited)     
                                                                           
Earnings (loss)......................................  $(2,834)   $3,941   

Plus:                                                                      
  Management fees....................................      717       717   
  Former W.F. Wood shareholders' compensation........      136       136   
  Acquisition-related bonuses paid to management and                       
   employees of W.F. Wood............................    2,571     2,571   
  Pensar Corporation shareholder bonuses.............      498       498   

Less:                                                                      
  Tax effect of above adjustments at 40%.............   (1,569)   (1,569)  
                                                       -------    ------   
  Adjusted earnings (loss)...........................  $  (481)   $6,294   
                                                       =======    ======   

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SMTC CORPORATION

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
(In thousands of U.S. dollars)
Year ended December 31, 1999
(Unaudited) 

(j) Differences between United States and Canadian GAAP:                        

The pro forma consolidated financial information has been prepared in 
accordance with generally accepted accounting principles as applied in the  
United States. The significant differences between United States GAAP and   
Canadian GAAP and their effect on the pro forma consolidated financial      
statements are described below:                                             

Extraordinary loss:                                                   

Under United States GAAP, the charges incurred as a result of early   
payment of the senior notes and subordinated notes and termination of the   
interest rate swap are recorded as an extraordinary loss and not presented  
for purposes of the pro forma consolidated statement of earnings (loss).    
Under Canadian GAAP, the charges would have been included in earnings       
(loss) before income taxes and the related tax benefit recorded in income   
taxes expense. Accordingly, the following amounts would have been reported  
in the pro forma consolidated statement of earnings (loss) under Canadian   
GAAP:                                                                       

                                                                [Download Table]
                                                                          
Operating income................................................. $10,062 
Interest.........................................................   1,222 
Debt extinguishment costs........................................   6,253 
                                                                  ------- 
Earnings before income taxes.....................................   2,587 
Income taxes (recovery):                                                  
  Current........................................................   5,233 
  Deferred.......................................................  (2,418)
                                                                  ------- 
                                                                    2,815 
                                                                  ------- 
Net loss......................................................... $  (228)
                                                                  ======= 

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INDEPENDENT AUDITORS' REPORT

To the Directors of SMTC Corporation                                            

  We have audited the consolidated balance sheet of SMTC Corporation (formerly
HTM Holdings, Inc.) as at December 31, 1999 and the consolidated statements of  
earnings (loss) and changes in shareholders' equity (deficiency) and cash flows 
for the year then ended. These financial statements are the responsibility of   
the Company's management. Our responsibility is to express an opinion on these  
financial statements based on our audit.                                        

We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit   
to obtain reasonable assurance 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.                                                         

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31, 
1999 and the results of its operations and its cash flows for the year then     
ended in accordance with United States generally accepted accounting            
principles.                                                                     

United States generally accepted accounting principles vary in certain    
significant respects from accounting principles generally accepted in Canada.   
Application of accounting principles generally accepted in Canada would have    
affected results of operations for the year ended December 31, 1999 and         
shareholders' equity (deficiency) as at December 31, 1999 to the extent         
summarized in note 23 to the consolidated financial statements.                 

                                                                  /s/ KPMG LLP
                                                         Chartered Accountants

Toronto, Canada                                                                 
February 18, 2000, except                                                       
as to note 22 which is as of                                                    
July 20, 2000                                                                   

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of SMTC Corporation (formerly HTM Holdings, Inc.):    

We have audited the accompanying consolidated balance sheet of SMTC       
Corporation (a Delaware corporation, formerly HTM Holdings, Inc.) and its       
subsidiary as of December 31, 1998, and the related consolidated statements of  
earnings (loss), changes in shareholders' equity (deficiency) and cash flows    
for the year then ended. These consolidated financial statements are the        
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audit.                       

We conducted our audit in accordance with auditing standards generally    
accepted in the United States. 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 audit provides a          
reasonable basis for our opinion.                                               

In our opinion, the consolidated financial statements referred to above   
present fairly, in all material respects, the consolidated financial position   
of SMTC Corporation (formerly HTM Holdings, Inc.) and its subsidiary as of      
December 31, 1998, and the results of their operations and their cash flows for 
the year then ended in conformity with accounting principles generally accepted 
in the United States.                                                           

                                                         /s/ ARTHUR ANDERSEN LLP

Denver, Colorado                                                                
March 10, 1999                                                                  

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REPORT OF INDEPENDENT ACCOUNTANTS 

To the Board of Directors and Shareholders of                                   
SMTC Corporation (formerly Hi-Tech Manufacturing, Inc., subsequently HTM      
Holdings, Inc.):                                                                

In our opinion, the consolidated statements of earnings (loss), changes in
shareholders' equity (deficiency) and cash flows for the year ended December    
31, 1997 (appearing on pages F-25 through F-52 of the SMTC Corporation          
registration statement on Form S-1) present fairly, in all material respects,   
the results of operations and cash flows of SMTC Corporation and its            
subsidiaries (formerly Hi-Tech Manufacturing, Inc., subsequently HTM Holdings,  
Inc. and the "Company") for the year ended December 31, 1997, in conformity     
with accounting principles generally accepted in the United States. These       
financial statements are the responsibility of the Company's management; our    
responsibility is to express an opinion on these consolidated financial         
statements based on our audit. We conducted our audit of these statements in    
accordance with auditing standards generally accepted in the United States,     
which 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, assessing the accounting principles    
used and significant estimates made by management, and evaluating the overall   
financial statement presentation. We believe that our audit provides a          
reasonable basis for the opinion expressed above. We have not audited the       
consolidated financial statements of SMTC Corporation for any period subsequent 
to December 31, 1997.                                                           

Broomfield, Colorado                              /s/ PricewaterhouseCoopers LLP
March 22, 2000                                                                  

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

CONSOLIDATED BALANCE SHEETS 
(Expressed in thousands of U.S. dollars)

                                                                [Download Table]

                                                 December 31,                 
                                               ------------------   April 2,  
                                                 1998      1999       2000    
                                               --------  --------  -----------
                                                                   (unaudited)
                                                                              
Assets                                                                        
Current assets:                                                               
  Cash and short-term investments............. $    486  $  2,083   $  5,111  
  Accounts receivable (note 4)................   21,780    71,597     80,651  
  Inventories (note 5)........................   12,485    61,680     86,394  
  Prepaid expenses............................       79     3,647      5,341  
  Deferred income taxes.......................      855     1,527      1,044  
                                               --------  --------   --------  
                                                 35,685   140,534    178,541  
Capital assets (note 6).......................    7,071    35,003     35,311  
Goodwill (note 7).............................      --     40,800     39,791  
Other assets (note 8).........................    1,489    11,145     10,882  
Deferred income taxes.........................      --        623        592  
                                               --------  --------   --------  
                                               $ 44,245  $228,105   $265,117  
                                               ========  ========   ========  
Liabilities and Shareholders' Equity                                          
 (Deficiency)                                                                 
Current liabilities:                                                          
  Bank indebtedness (note 9).................. $  6,559  $    --      $  --   
  Accounts payable............................   10,399    53,119     59,039  
  Accrued liabilities.........................    8,208    29,307     31,908  
  Income taxes payable........................      --      1,127        --   
  Current portion of long-term debt (note 9)..      725     2,000      3,000  
  Current portion of capital lease obligations                                
   (note 9)...................................    1,740     1,541      1,335  
                                               --------  --------   --------  
                                                 27,631    87,094     95,282  
Capital lease obligations (note 9)............    2,419     1,537      1,618  
Long-term debt (note 9).......................   24,063   128,942    159,417  
Deferred income taxes.........................      600     2,733      2,444  
Shareholders' equity (deficiency):                                            
  Capital stock issued and outstanding as at                                  
   December 31,1999 and                                                       
   April 2, 2000 (note 10):                                                   
    1,946,404 Common shares...................        6       --         --   
    2,447,782 Class A shares..................      --          3          3  
    154,168 Class L shares....................      --        --         --   
    113,408 Class N shares....................      --        --         --   
  Treasury stock..............................  (21,938)      --         --   
  Warrants (note 10)..........................      367       367        367  
  Loans receivable (note 10)..................      --        (60)       (60) 
  Additional paid-in-capital..................   13,269    11,804     11,804  
  Deficit.....................................   (2,172)   (4,315)    (5,758) 
                                               --------  --------   --------  
                                                (10,468)    7,799      6,356  
Commitments and contingencies (notes 15 and                                   
 16)..........................................                                
Subsequent events (note 22)...................                                
United States and Canadian accounting policy                                  
 differences (note 23)........................                                
                                               --------  --------   --------  
                                               $ 44,245  $228,105   $265,117  
                                               ========  ========   ========  

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

                                                                [Download Table]

                           Years ended December 31,        Three months ended   
                         ------------------------------  -----------------------
                                                          March 31,   April 2,  
                           1997      1998       1999        1999        2000    
                         --------- ---------  ---------  ----------- -----------
                                                         (unaudited) (unaudited)
                                                                                
Revenue................. $  59,031 $  89,687  $ 257,962   $  23,268   $ 124,333 
Cost of sales...........    53,603    82,528    236,331      21,566     113,127 
                         --------- ---------  ---------   ---------   --------- 
Gross profit............     5,428     7,159     21,631       1,702      11,206 
Selling, general and                                                            
 administrative                                                                 
 expenses...............     2,769     3,144     12,615         715       7,548 
Management fees (note                                                           
 13)....................       --        136        717          55         131 
Amortization............       --        151      1,990          65       1,272 
Leveraged                                                                       
 recapitalization                                                               
 expenses (note 2(a))...       --      2,219        --          --          --  
                         --------- ---------  ---------   ---------   --------- 
Operating income........     2,659     1,509      6,309         867       2,255 
Interest (note 9).......       673     2,030      7,066         795       3,789 
                         --------- ---------  ---------   ---------   --------- 
Earnings (loss) before                                                          
 income taxes...........     1,986      (521)      (757)         72      (1,534)
Income taxes:                                                                   
  Current...............        34        15        442           1        (316)
  Deferred (recovery)...       708      (208)      (335)         26         225 
                         --------- ---------  ---------   ---------   --------- 
                               742      (193)       107          27         (91)
                         --------- ---------  ---------   ---------   --------- 
Earnings (loss) before                                                          
 extraordinary loss.....     1,244      (328)      (864)         45      (1,443)
Extraordinary loss (net                                                         
 of tax recovery of                                                             
 $811) (note 17)........       --        --      (1,279)        --          --  
                         --------- ---------  ---------   ---------   --------- 
Net earnings (loss)..... $   1,244 $    (328) $  (2,143)  $      45   $  (1,443)
                         ========= =========  =========   =========   ========= 
Earnings (loss) per                                                             
 Class A share (note                                                            
 20):                                                                           
  Earnings (loss) before                                                        
   extraordinary loss... $   1,244 $    (328) $    (864)  $      45   $  (1,443)
  Less preferred share                                                          
   dividends............       --       (609)       --          --              
  Less Class L preferred                                                        
   entitlement..........       --                (2,185)        --       (1,366)
                         --------- ---------  ---------   ---------   --------- 
  Earnings (loss) before                                                        
   extraordinary loss                                                           
   attributable to Class                                                        
   A shareholders.......     1,244      (937)    (3,049)         45      (2,809)
  Extraordinary loss....       --        --      (1,279)        --          --  
                         --------- ---------  ---------   ---------   --------- 
  Earnings (loss)                                                               
   attributable to Class                                                        
   A shareholders....... $   1,244 $    (937) $  (4,328)  $      45   $  (2,809)
                         ========= =========  =========   =========   ========= 
  Earnings (loss) per                                                           
   Class A share before                                                         
   extraordinary loss... $    0.40 $   (0.44) $   (1.89)  $    0.03   $   (1.16)
  Extraordinary loss per                                                        
   Class A share........       --        --       (0.79)        --          --  
                         --------- ---------  ---------   ---------   --------- 
                         $    0.40 $   (0.44)  $ (2.68)   $    0.03   $   (1.16)
                         ========= =========  =========   =========   ========= 
Diluted earnings (loss)                                                         
 per common share....... $    0.40 $   (0.44) $   (2.68)  $    0.03   $   (1.16)
                         ========= =========  =========   =========   ========= 
Weighted average number                                                         
 of shares outstanding:                                                         
  Basic................. 3,122,921 2,147,130  1,617,356   1,393,971   2,414,642 
                         ========= =========  =========   =========   ========= 

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) 
(Expressed in thousands of U.S. dollars)

                                                        [Enlarge/Download Table]

                                                          Additional            Retained  Shareholders'
                                                Treasury   paid-in     Loans    earnings      equity   
                         Capital stock Warrants  stock     capital   receivable (deficit)  (deficiency)
                         ------------- -------- --------  ---------- ---------- --------  -------------
                           (note 10)                                                                   
                                                                                                       
Balance, December 31,                                                                                  
 1996...................      $ 4        $ --   $     --   $ 5,971      $ --    $(3,088)    $  2,887   
Net earnings............       --          --         --        --        --      1,244        1,244   
                              ---        ----   --------   -------      ----    -------     --------   
Balance, December 31,                                                                                  
 1997...................        4          --         --     5,971        --     (1,844)       4,131   
Shares issued...........        2          --         --     7,907        --         --        7,909   
Warrants issued.........       --         367         --        --        --         --          367   
Preferred share                                                                                        
 dividends..............       --          --         --      (609)       --         --         (609)  
Shares repurchased......       --          --    (21,938)       --        --         --      (21,938)  
Loss for the year.......       --          --         --        --        --       (328)        (328)  
                              ---        ----   --------   -------      ----    -------     --------   
Balance, December 31,                                                                                  
 1998...................        6         367    (21,938)   13,269        --     (2,172)     (10,468)  
Acquisition of SMTC                                                                                    
 Corporation............       (3)         --     21,938    (1,525)       --         --       20,410   
Options exercised.......       --          --         --        60       (60)        --           --   
Loss for the year.......       --          --         --        --        --     (2,143)      (2,143)  
                              ---        ----   --------   -------      ----    -------     --------   
Balance, December 31,                                                                                  
 1999...................        3         367         --    11,804       (60)    (4,315)       7,799   
Loss for the three                                                                                     
 months.................       --          --         --        --        --     (1,443)      (1,443)  
                              ---        ----   --------   -------      ----    -------     --------   
Balance April 2, 2000...      $ 3        $367   $     --   $11,804      $(60)   $(5,758)    $  6,356   
                              ===        ====   ========   =======      ====    =======     ========   

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Expressed in thousands of U.S. dollars)

                                                                [Download Table]

                            Years ended December 31,       Three months ended   
                            ---------------------------  -----------------------
                                                          March 31,   April 2,  
                             1997      1998      1999       1999        2000    
                            -------  --------  --------  ----------- -----------
                                                         (unaudited) (unaudited)
                                                                                
Cash provided by (used                                                          
 in):                                                                           
Operations:                                                                     
  Net earnings (loss).....  $ 1,244  $   (328) $ (2,143)   $   45     $ (1,443) 
  Items not involving                                                           
   cash:                                                                        
    Amortization..........      --        151     1,990        65        1,272  
    Depreciation..........    2,194     2,869     6,452       895        2,475  
    Deferred income tax                                                         
     provision (benefit)..      708      (208)     (335)       26          225  
    Loss (gain) on                                                              
     disposition of                                                             
     capital assets.......      118        (6)      160       --           (44) 
    Loss on early                                                               
     extinguishment of                                                          
     debt.................      --        --      1,279       --           --   
  Change in non-cash                                                            
   operating working                                                            
   capital:                                                                     
    Accounts receivable...   (4,534)   (9,895)    4,441     7,583       (9,054) 
    Inventory.............   (5,822)   (1,170)  (15,217)    2,721      (24,714) 
    Prepaid expenses and                                                        
     other................      158       105    (1,705)     (100)      (1,694) 
    Accounts payable and                                                        
     accrued liabilities..    5,493     4,709    (1,487)   (5,209)       7,394  
                            -------  --------  --------    ------     --------  
                               (441)   (3,773)   (6,565)    6,026      (25,583) 
Financing:                                                                      
  Increase in bank                                                              
   indebtedness...........    2,261     1,212       --        --           --   
  Repayment of bank                                                             
   indebtedness...........      --        --     (6,559)   (4,605)         --   
  Increase (decrease) in                                                        
   restricted cash........      400      (250)      --        --           --   
  Increase in long-term                                                         
   debt...................      --        --    130,942       --        31,475  
  Repayment of long-term                                                        
   debt...................      --        --    (69,261)      (81)         --   
  Principal payments on                                                         
   notes payable..........     (265)     (175)       --       --           --   
  Principal payments on                                                         
   capital leases.........   (1,235)   (1,319)   (1,571)     (418)        (418) 
  Proceeds from notes                                                           
   payable................      --     25,000       --        --           --   
  Proceeds from issuance                                                        
   of common stock........      --      9,252       --        --           --   
  Dividends paid on                                                             
   preferred stock........      --       (609)      --        --           --   
  Stock issuance costs....      --     (1,342)      --        --           --   
  Repurchase of stock.....      --    (26,160)      --        --           --   
  Debt issuance costs.....      --     (1,296)   (3,975)      --           --   
                            -------  --------  --------    ------     --------  
                              1,161     4,313    49,576    (5,104)      31,057  
Investments:                                                                    
  Acquisition of SMTC                                                           
   Corporation, net of                                                          
   $698 cash acquired.....      --        --     (3,595)      --           --   
  Acquisition of W.F. Wood                                                      
   and Chihuahua, Mexico                                                        
   facility...............      --        --    (28,024)      --           --   
  Purchases of capital                                                          
   assets.................     (469)     (505)   (4,130)      (62)      (2,490) 
  Proceeds from sale of                                                         
   capital assets.........       55        30         8       --            44  
  Cash in escrow..........      --        --     (5,735)      --           --   
  Other...................       49       --         62       --           --   
                            -------  --------  --------    ------     --------  
                               (365)     (475)  (41,414)      (62)      (2,446) 
                            -------  --------  --------    ------     --------  
Increase in cash and cash                                                       
 equivalents..............      355        65     1,597       860        3,028  
Cash and cash equivalents,                                                      
 beginning of year........       66       421       486       486        2,083  
                            -------  --------  --------    ------     --------  
Cash and cash equivalents,                                                      
 end of year..............  $   421  $    486  $  2,083    $1,346     $  5,111  
                            =======  ========  ========    ======     ========  

Supplemental cash flow disclosures (note 14)                                    

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

1. Nature of business:                                                          

The Company is a worldwide provider of advanced electronics           
manufacturing services to original equipment manufacturers. The Company     
services its customers through eight manufacturing and technology centers   
located in the United States, Canada, Europe and Mexico.                    

The Company's accounting principles are in accordance with accounting 
principles generally accepted in the United States, and, except as outlined 
in note 23, are, in all material respects, in accordance with accounting    
principles generally accepted in Canada.                                    

2. Significant accounting policies:                                             

(a) Basis of presentation:                                              

(i) Business combination between HTM Holdings, Inc. and SMTC        
Corporation:                                                                

Effective July 30, 1999, SMTC Corporation acquired 100% of the
outstanding common shares of HTM Holdings Inc. SMTC Corporation     
issued 1,393,971 Class A shares and 154,168 Class L shares to the   
shareholders of HTM Holdings, Inc. for $16,739 cash consideration   
and 100% of the outstanding shares of HTM Holdings, Inc.            
Simultaneously, the former shareholders of SMTC Corporation         
subscribed for an additional 26,701 Class N shares for nominal      
consideration. Upon completion of these transactions, the former HTM
Holdings, Inc. shareholders held 58% of the outstanding shares of   
SMTC Corporation. Accordingly, the acquisition is recorded as a     
reverse takeover of SMTC Corporation by HTM Holdings, Inc. and      
accounted for using the purchase method. Application of reverse     
takeover accounting results in the following:                       

(a) The consolidated financial statements of the combined entity are
    issued under the name of the legal parent (SMTC Corporation) but
    are considered a continuation of the financial statements of the
legal subsidiary (HTM Holdings, Inc.).                      

(b) As HTM Holdings, Inc. is deemed to be the acquiror for          
   accounting purposes, its assets and liabilities are included in
  the consolidated financial statements of the continuing entity
    at their carrying values and the comparative figures reflect the
results of operations of HTM Holdings, Inc.                 

(c) Control of the net assets and operations of SMTC Corporation is 
  deemed to be acquired by HTM Holdings, Inc. effective July 30,
    1999. For purposes of this transaction, the deemed consideration
is $24,703, being the $20,410 fair value of the outstanding 
common shares of SMTC Corporation immediately prior to the  
business combination plus transaction costs of $4,293.      

Details of net assets acquired at fair value are as follows:  

                                                                [Download Table]
                                                                       
Current assets.............................................. $  84,423 
Capital assets..............................................    21,093 
Goodwill....................................................    24,863 
Liabilities assumed.........................................  (105,676)
                                                             --------- 
Net assets acquired......................................... $  24,703 
                                                             ========= 

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(ii) Recapitalization transaction:                                

On June 8, 1998, HTM Holdings, Inc. completed a leveraged     
recapitalization and reorganization in which it sold 1,800,424 new  
shares to an investment company, reacquired 92% of its then         
outstanding common shares, retired its preferred stock and settled  
all options outstanding under its 1993 stock option plan.           

  In connection with the recapitalization, the Company contributed
substantially all of its assets and liabilities to a newly formed   
subsidiary in exchange for 100% of the subsidiary's stock, and      
changed its name from Hi-Tech Manufacturing, Inc. to HTM Holdings,  
Inc. The subsidiary adopted the Hi-Tech Manufacturing, Inc. name.   
The subsidiary borrowed $13,000 in senior debt and $12,000 in       
subordinated debt and entered into a $15,000 revolving line of      
credit agreement. The stock of the subsidiary was pledged as        
collateral for the senior debt and line of credit. The subsidiary   
loaned approximately $21,000 to the Company.                        

The net sources and uses of proceeds were as follows:         

                                                                [Download Table]
                                                                         
Borrowings...................................................... $23,700 
Stock proceeds..................................................   7,900 
Repurchase of stock............................................. (26,800)
                                                                 ------- 
                                                                 $ 4,800 
                                                                 ======= 

Subsequent to the leveraged recapitalization, an investment   
company held 92% of the outstanding common stock of the parent.     

 Transaction costs related to the leveraged recapitalization and
compensation expense arising from the settlement of stock options   
resulted in a $2,219 charge to operating income in fiscal 1998.     

(b) Principles of consolidation:                                        

The consolidated financial statements include the accounts of the     
Company and its wholly owned subsidiaries. All significant intercompany     
transactions and balances have been eliminated on consolidation.            

(c) Use of estimates:                                                   

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and    
assumptions that affect the reported amounts of assets and liabilities and  
disclosures of contingent assets and liabilities at the date of the         
financial statements and the reported amounts of revenue and expenses       
during the reporting year. Actual results may differ from those estimates.  

(d) Revenue recognition:                                                

Revenue from the sale of products is recognized when goods are shipped
to customers. Revenue from the provision of services is recognized when     
services are provided. The earnings process is complete upon shipment of    
products and provision of services.                                         

(e) Cash and short-term investments:                                    

Cash and short-term investments include cash on hand and deposits with
banks with original maturities of less than three months.                   

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(f) Inventories:                                                        

Inventories are valued on a first-in, first-out basis at the lower of 
cost and replacement cost for raw materials and at the lower of cost and    
net realizable value for work in progress. Inventories include an           
application of relevant overhead.                                           

(g) Capital assets:                                                     

Capital assets are recorded at cost and depreciated on a straight-line
basis over their estimated useful lives as follows:                         

                                                                [Download Table]
----------------------------------------------------------------------------
                                                                            
 Buildings....................................................      20 years
 Machinery and equipment......................................       7 years
 Office furniture and equipment...............................       7 years
 Computer hardware and software...............................       3 years
 Leasehold improvements....................................... Term of lease
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(h) Goodwill:                                                           

Goodwill represents the excess of cost over the fair value of net     
tangible assets acquired in facility acquisitions and other business        
combinations. Goodwill is amortized on a straight-line basis over 10 years. 
The recoverability of goodwill is reviewed whenever events or changes in    
circumstances indicate that the carrying amount may not be recoverable. An  
impairment of value is recorded if undiscounted projected future net cash   
flows of the acquired operation are determined to be insufficient to        
recover goodwill. The amount of goodwill impairment, if any, is measured    
based on projected discounted future net cash flows using a discount rate   
reflecting the Company's average cost of funds.                             

(i) Other assets:                                                       

Costs incurred relating to the issuance of debt are deferred and      
amortized over the term of the related debt. Amortization of debt issuance  
costs is included in amortization expense in the statement of earnings      
(loss). Deferred lease costs are amortized over the term of the lease.      

(j) Income taxes:                                                       

 Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and    
their financial reporting amounts at each year end, based on enacted tax    
laws and statutory tax rates applicable to the periods in which the         
differences are expected to affect taxable earnings. Valuation allowances   
are established when necessary to reduce deferred tax assets to the amount  
more likely than not to be realized. The effect of changes in tax rates is  
recognized in the period in which the rate change occurs.                   

(k) Stock-based compensation:                                           

The Company accounts for stock options issued to employees using the  
intrinsic value method of Accounting Principles Board Opinion No. 25.       
Compensation expense is recorded on the date stock options are granted only 
if the current fair value of the underlying stock exceeds the exercise      
price. The Company has provided the pro forma disclosures required by       
Statement of Financial Accounting Standards No. 123.                        

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(l) Foreign currency translation:                                       

 The functional currency of all foreign subsidiaries is the U.S. dollar.
Monetary assets and liabilities denominated in foreign currencies are       
translated into U.S. dollars at the year-end rate of exchange. Non-monetary 
assets and liabilities denominated in foreign currencies are translated at  
historic rates and revenues and expenses are translated at average exchange 
rates prevailing during the month of the transaction. Exchange gains or     
losses are reflected in the consolidated statements of earnings (loss).     

(m) Financial instruments and hedging:                                  

The Company enters into interest rate swap contracts to hedge its     
exposure to changes in interest rates on its long-term debt. The contracts  
have the effect of converting the floating rate of interest on $65,000 of   
the senior credit facility to a fixed rate. Net receipts, payments and      
accruals under the swap contracts are recorded as adjustments to interest   
expense.                                                                    

If a swap is terminated prior to its maturity, the gain or loss is    
recognized over the remaining original life of the swap if the item hedged  
remains outstanding or immediately, if the item hedged does not remain      
outstanding. If the swap is not terminated prior to maturity, but the       
underlying hedged item is no longer outstanding, the interest rate swap is  
marked to market and any unrealized gain or loss is recognized immediately. 

(n) Impairment of long-lived assets:                                    

The Company accounts for long-lived assets in accordance with the     
provisions of SFAS No. 121 "Accounting for the Impairment of Long-Lived     
Assets to be Disposed Of". This Statement requires that long-lived assets   
and certain identifiable intangibles be reviewed for impairments whenever   
events or changes in circumstances indicate that the carrying amount of an  
asset may not be recoverable. Recoverability of assets to be held and used  
is measured by a comparison of the carrying amount of an asset to future    
net cash flows expected to be generated by the asset. If such assets are    
considered impaired, the impairment to be recognized is measured by the     
amount by which the carrying amount of the assets exceeds the fair value of 
the assets.                                                                 

(o) Recently issued accounting pronouncements:                          

(i) Effective January 1, 1998, the Company adopted the provisions of    
SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
SFAS No. 130 establishes standards for reporting comprehensive  
income and its components in financial statements. Comprehensive
income, as defined, includes all changes in equity (net assets) 
during a period from non-owner sources. During the years ended  
   December 31, 1999, 1998 and 1997, comprehensive income was equal to
net earnings as shown in the consolidated statements of earnings
(loss).                                                         

(ii) In fiscal 1999, the Company adopted the American Institute of      
Certified Public Accountants ("AICPA") Statement of Position  
("SOP") 98-1 "Accounting for the Costs of Computer Software   
Developed or Obtained for Internal Use". SOP 98-1 provides    
guidance on accounting for the costs of computer software     
 developed or obtained for internal use and for determining when
specific costs should be capitalized and when they should be  
  expensed. The impact of adopting SOP 98-1 was not significant to
 the Company's financial position, results of operations or cash
flows.                                                        

(iii) In fiscal 1999, the Company adopted AICPA SOP 98-5 "Reporting on  
 the Costs of Start-Up Activities". SOP 98-5 requires that all
start-up costs related to new operations be expensed as     

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

  incurred. The impact of adopting SOP 98-5 was not significant to the
Company's financial position, results of operations or cash flows.

(iv) In June 1998, the FASB issued SFAS No. 133, "Accounting for        
  Derivative Instruments and Hedging Activities" ("SFAS No. 133").
SFAS No. 133 establishes methods of accounting for derivative 
financial instruments and hedging activities related to those 
instruments as well as other hedging activities. SFAS No. 133 
requires all derivatives to be recognized either as assets or 
liabilities and measured at fair value. As per SFAS No. 137,  
"Accounting for Derivative Instruments and Hedging Activities 
  Deferral of the Effective Date of SFAS 133", the Company will be
required to implement SFAS No. 133 for its fiscal year ended  
   December 31, 2001. The Company has not yet determined the impact,
if any, of SFAS No. 133 on its financial position, results of 
operations or cash flows.                                     

(p) Unaudited Financial Information                                     

 The unaudited interim financial statements furnished herein reflect all
adjustments, consisting only of normal recurring accruals, which are, in    
the opinion of management, necessary to present fairly the financial        
position of the Company as of April 2, 2000 and the results of operations   
and cash flows for the three months ended March 31, 1999 and April 2, 2000. 
The unaudited interim financial statements should be read in conjunction    
with the annual financial statements and notes thereto included herein.     
Results for the three months ended April 2, 2000 are not necessarily        
indicative of results to be achieved for the year ending December 31, 2000. 

3. Acquisitions:                                                                

In addition to the business combination between HTM Holdings, Inc. and
SMTC Corporation (note 2(a)(i)), the Company completed two acquisitions     
during 1999 which were accounted for as purchases. The results of           
operations of the facilities acquired are included in these financial       
statements from their respective dates of acquisition.                      

Acquisitions completed in 1999 were:                                  

(a) In July 1999, the Company acquired a manufacturing facility 
operated by Zenith Electronics Corporation in Chihuahua, Mexico. Zenith 
used the facility to manufacture components included in Zenith          
products. The transaction was effected through the acquisition of the   
outstanding shares of Cableproducts de Chihuahua, S.A. de C.V.          
("Cableproducts") and Radio Components de Mexico, S.A. de C.V.          
("Radio"). The total purchase price of $8,352 was financed with cash.   
Under the provisions of the purchase agreement, Zenith may claim        
additional consideration in the form of cash if certain production      
volumes are achieved through 2000. The contingent consideration will be 
amortized over the remaining term of the supply contract with Zenith if 
and when paid. $5,735 of the purchase price is being held in escrow and 
will be released pending the resolution of certain liabilities,         
including the settlement of a portion of the contingent consideration.  

  (b) In September 1999, the Company acquired 100% of the issued and
outstanding shares of W.F. Wood, Incorporated. W.F. Wood, Incorporated  
operates a manufacturing facility in Boston, Massachusetts. The total   
purchase price of $19,672 was financed with cash.                       

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

  Details of the net assets acquired in these acquisitions, at fair value,
are as follows:                                                             

                                                                [Download Table]

                                                    Chihuahua               
                                                  Manufacturing  W.F. Wood, 
                                                    Facility    Incorporated
                                                  ------------- ------------
                                                                            
Current assets...................................    $   --       $ 6,354   
Capital assets...................................     9,094         1,695   
Other long-term assets...........................        --            20   
Goodwill.........................................        --        17,468   
Liabilities assumed..............................        --        (5,865)  
Deferred income taxes............................      (742)           --   
                                                     ------       -------   
Net assets acquired..............................    $8,352       $19,672   
                                                     ======       =======   

The following unaudited pro forma consolidated financial information  
reflects the impact of the business combination with SMTC Corporation and   
the acquisition of W.F. Wood, Incorporated, assuming the acquisitions had   
occurred at the beginning of the periods presented. This unaudited pro      
forma consolidated financial information has been provided for information  
purposes only and is not necessarily indicative of the results of           
operations or financial condition that actually would have been achieved if 
the acquisitions had been on the date indicated, or that may be reported in 
the future:                                                                 

                                                                [Download Table]

                                                            1998      1999   
                                                          --------  -------- 
                                                             (Unaudited)     
                                                                             
Revenue.................................................. $372,880  $449,713 
Loss before extraordinary loss...........................     (413)   (2,611)
Basic loss per share before extraordinary loss...........    (0.26)    (3.43)

  The pro forma results do not give effect to any contingent payments that
may be made in connection with the acquisition of Cableproducts and Radio.  

4. Accounts receivable:                                                         

Accounts receivable at December 31, 1999 are net of an allowance for  
doubtful accounts of $514 (1998--$195).                                     

5. Inventories:                                                                 

                                                                [Download Table]

                                                      December 31,              
                                                     ---------------  April 2,  
                                                      1998    1999      2000    
                                                     ------- ------- -----------
                                                                     (Unaudited)
                                                                                
Raw materials....................................... $ 6,036 $35,371   $54,588  
Work in process.....................................   5,900  17,124    23,815  
Finished goods......................................     298   8,578     7,184  
Other...............................................     251     607       807  
                                                     ------- -------   -------  
                                                     $12,485 $61,680   $86,394  
                                                     ======= =======   =======  

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

6. Capital assets:                                                              

                                                                [Download Table]

                                                                       Net  
                                                        Accumulated   book  
December 31, 1998                                Cost   depreciation  value 
-----------------                               ------- ------------ -------
                                                                            
Machinery and equipment........................ $13,899   $ 8,066    $ 5,833
Office furniture and equipment.................     404       276        128
Computer hardware and software.................     988       709        279
Leasehold improvements.........................   1,259       428        831
                                                -------   -------    -------
                                                $16,550   $ 9,479    $ 7,071
                                                =======   =======    =======

                                                                       Net  
                                                        Accumulated   book  
December 31, 1999                                Cost   depreciation  value 
-----------------                               ------- ------------ -------
                                                                            
Land........................................... $ 2,060   $    --    $ 2,060
Buildings......................................   5,099        59      5,040
Machinery and equipment........................  31,150    12,789     18,361
Office furniture and equipment.................   2,540       479      2,061
Computer hardware and software.................   3,838     1,371      2,467
Leasehold improvements.........................   6,065     1,051      5,014
                                                -------   -------    -------
                                                $50,752   $15,749    $35,003
                                                =======   =======    =======

Property and equipment recorded under capital leases included above at
December 31, 1999 was $8,981 (1998--$ 8,583) and accumulated amortization   
of equipment under capital leases at December 31, 1999 was $8,123 (1998--   
$6,765).                                                                    

Included in the total depreciation expense for the year ended December
31, 1999 of $6,452 (1998--$2,869; 1997--$2,194) is $1,358 (1998--$1,305;    
1997--$1,123) relating to the depreciation of equipment under capital       
lease.                                                                      

7. Goodwill:                                                                    

                                                                [Download Table]

                                                         December 31, 1999      
                                                    ----------------------------
                                                                           Net  
                                                            Accumulated   book  
                                                     Cost   amortization  value 
                                                                                
                                                    ----------------------------
Goodwill........................................... $42,331    $1,531    $40,800
                                                    =======    ======    =======

8. Other assets:                                                                

                                                                [Download Table]

                                                                 December 31,  
                                                                ---------------
                                                                 1998    1999  
                                                                ------ --------
                                                                               
Deferred financing costs net of accumulated amortization of                    
 $277 (1998--$151)............................................  $1,145 $  3,698
Restricted cash and cash held in escrow (note 3(b))...........     250    5,985
Deferred lease costs, net of accumulated amortization of $30..      --    1,430
Other.........................................................      94       32
                                                                ------ --------
                                                                $1,489 $ 11,145
                                                                ====== ========

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SMTC CORPORATION  
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share  
amounts)  

9. Long-term debt, bank indebtedness and capital leases:                        

                                                                [Download Table]

                                                                December 31,   
                                                              -----------------
                                                               1998     1999   
                                                              ------- ---------
                                                                               
Term loans (a)............................................... $    -- $  85,000
Revolving credit facilities (a)..............................      --    35,942
Subordinated debt (a)........................................      --    10,000
Senior notes payable (b).....................................  12,825        --
Subordinated notes (c).......................................  11,963        --
                                                              ------- ---------
                                                               24,788   130,942
Less current portion.........................................     725     2,000
                                                              ------- ---------
                                                              $24,063 $ 128,942
                                                              ======= =========

   (a) Concurrent with the business combination between HTM Holdings, Inc.
and SMTC Corporation, the Company and certain of its subsidiaries entered   
into a senior credit facility that provides for $85,000 in term loans,      
$10,000 in subordinated debt and $60,000 in revolving credit loans, swing   
line loans and letters of credit. The senior credit facility is secured by  
a security agreement over all assets and requires the Company to meet       
certain financial ratios and benchmarks and to comply with certain          
restrictive covenants. The revolving credit facilities terminate in July    
2004. The term loans mature in quarterly instalments from September 2000 to 
June 2004 for $35,000 of the term loans and from September 2000 to December 
2005 for $50,000 of the term loans. The $10,000 subordinated debt is        
payable in one instalment on September 30, 2006.                            

 The credit loans and term loans bear interest at varying rates based on
either the Eurodollar base rate plus 3.00% to 3.50%, the U.S. base rate     
plus 1.25% to 1.75% or the Canadian prime rate plus 1.25% to 1.75%.         

  The subordinated debt bears interest at the Eurodollar plus 4.75% or the
U.S. base rate plus 3.00%.                                                  

 The Company has entered into interest rate swaps to exchange the 90-day
floating LIBOR rates on $65,000 of borrowings for a two-year fixed interest 
rate of 6.16% (before credit spread) per annum (note 12).                   

The weighted average interest rate on the borrowings in 1999 was 9.5%.

The Company is required to pay the lenders a commitment fee of 0.5% of
the average unused portion of the revolving credit facility. $37 of         
commitment fees were incurred in 1999.                                      

As at December 31, 1999, principal repayments due within each of the  
next five years and thereafter are as follows:                              

                                                                [Download Table]
                                                                             
2000............................................................... $   2,000
2001...............................................................     5,750
2002...............................................................     9,250
2003...............................................................    12,750
2004...............................................................    59,192
Thereafter.........................................................    42,000
                                                                    ---------
                                                                    $ 130,942
                                                                    =========

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

 (b) The senior notes payable outstanding in 1998 and through July 30,
1999 bore interest based on the prime rate or LIBOR. The weighted average   
interest rate was 7.64% in 1999 and 8.3% in 1998.                           

 (c) The subordinated notes were issued in 1998 in connection with the
leveraged recapitalization and were held by affiliates of certain           
shareholders of HTM Holdings, Inc. The weighted average interest rate was   
11.5% in 1999 and 1998.                                                     

(d) Lines of credit:                                                

  For the period up to July 30, 1999, the Company had a line of credit for
borrowings up to a maximum of $15,000. The weighted average interest rate   
on the line of credit was 7.35% in 1999 (1998--8.75%).                      

(e) Capital lease obligations:                                      

Minimum lease payments for capital leases consist of the following at 
December 31, 1999:                                                          

                                                                [Download Table]
                                                                            
2000................................................................. $1,725
2001.................................................................    749
2002.................................................................    494
2003.................................................................    426
2004.................................................................     27
                                                                      ------
Total minimum lease payments.........................................  3,421
Less amount representing interest (8% to 11%)........................    343
                                                                      ------
                                                                       3,078
Less current portion.................................................  1,541
                                                                      ------
Long-term capital lease obligations.................................. $1,537
                                                                      ======

 The Company is required to maintain $250 in a certificate of deposit in
connection with certain capital lease obligations.                          

(f) Interest expense:                                               

                                                                [Download Table]

                                                        1997  1998   1999 
                                                        ---- ------ ------
                                                                          
Short-term obligations................................. $359 $  584 $  702
Long-term:                                                                
  Bank debt and subordinated notes.....................   --  1,105  6,061
  Obligations under capital leases.....................  314    341    303
                                                        ---- ------ ------
                                                        $673 $2,030 $7,066
                                                        ==== ====== ======

10.Capital stock:                                                               

(a) Authorized:                                                         

To July 30, 1999:                                                     

The authorized share capital of HTM Holdings, Inc. consists of:       

(i) 10,000,000 common shares, $0.01 par value per share;                

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(ii)  100,000 Series A preferred shares, convertible, $0.001 par value  
per share, mandatorily redeemable for $11.48 per share;     

(iii) 100,000 Series B preferred shares--$0.001 par value per share;    
mandatorily redeemable for $11.48 per share; and            

(iv)  250,000 Series C preferred shares, convertible, $0.001 par value  
per share, mandatorily redeemable for $11.25 per share.     

As a result of the business combination, described in note 2(a), HTM  
Holdings, Inc. became a wholly owned subsidiary of SMTC Corporation on July 
30, 1999. The authorized share capital of SMTC Corporation at December 31,  
1999 consists of:                                                           

(i)   11,720,000 Class A-1 voting common shares, par value $0.001 per   
share:                                                      

Holders are entitled to one vote per share and to share in dividends
pro rata subject to any preferential rights of the Class L shares.  

(ii)   1,100,000 Class A-2 voting common shares, par value $0.001 per   
share:                                                    

Holders are entitled to one vote per share and to share in dividends
pro rata subject to any preferential rights of the Class L shares.  

(iii)  300,000 Class L voting common shares, par value $0.001 per share:

The number of votes per share is determined by a prescribed formula 
and the holders are entitled to receive all dividends declared on   
common stock until there has been paid a specified amount based on  
an internal rate of return of 12% compounded quarterly and a        
recovery of the initial amount of $162 per Class L share, after     
which point, they are entitled to receive dividends pro rata.       

(iv)   125,000 Class N voting common shares, par value $0.001 per share:

The number of votes per share is determined by a prescribed formula 
and the holders are not entitled to receive dividends. The holders  
of the Class N shares hold the exchangeable shares described in note
10(c).                                                              

Each share of Class L and Class A-2 stock shall convert             
automatically, under certain conditions, into Class A-1 shares based
on a prescribed formula for Class L shares and on a one-for-one     
basis for Class A-2 shares.                                         

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(b) Issued and outstanding:                                             

HTM Holdings, Inc. to July 30, 1999:                                  

                                                                [Download Table]

                                                      Common    Preferred
Number of shares                                      shares     shares  
----------------                                    ----------  ---------
                                                                         
Balance, December 31, 1997.........................  4,361,621   450,000 
Shares issued (i)..................................  1,800,424       --  
Shares repurchased (i)............................. (4,215,641) (450,000)
                                                    ----------  -------- 
Balance, December 31, 1998, being balance July 30,                       
 1999..............................................  1,946,404       --  
                                                    ==========  ======== 

The 4,215,641 common shares repurchased are held in treasury stock.      

                                                      Common    Preferred
Amount                                                shares     shares  
------                                              ----------  ---------
                                                                         
Balance, December 31, 1997......................... $        4  $      1 
Shares issued (i)..................................          2       --  
Shares repurchased (i).............................        --         (1)
                                                    ----------  -------- 
Balance, December 31, 1998, being balance July 30,                       
 1999.............................................. $        6  $    --  
                                                    ==========  ======== 

Capital transactions to July 30, 1999:                                  

(i) On June 8, 1998, HTM Holdings, Inc. completed a leveraged           
  recapitalization and reorganization in which it sold 1,800,424 new
shares to an investment company, reacquired 92% of its then     
 outstanding common shares, declared and paid dividends of $609 on
its preferred stock, retired its preferred stock at the original
 issued price of $4,500, and settled all options outstanding under
its 1993 stock option plan. The mandatorily redeemable preferred
   stock was recorded outside of permanent shareholders' equity in the
consolidated balance sheet.                                     

In connection with the recapitalization, the Company contributed    
substantially all of its assets and liabilities to a newly formed   
subsidiary in exchange for 100% of the subsidiary's stock, and      
changed its name from Hi-Tech Manufacturing, Inc. to HTM Holdings,  
Inc. The subsidiary adopted the Hi-Tech Manufacturing, Inc. name.   
The subsidiary borrowed $13,000 in senior debt and $12,000 in       
subordinated debt and entered into a $15,000 revolving line of      
credit agreement. The stock of the subsidiary was pledged as        
collateral for the senior debt and line of credit. The subsidiary   
loaned approximately $21,000 to the Company.                        

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

SMTC Corporation from July 30, 1999 to December 31, 1999:               

 As a result of the application of reverse acquisition accounting to
the business combination with HTM Holdings, Inc., the number of         
outstanding shares of the continuing consolidated entity consists of    
the number of outstanding shares of SMTC Corporation outstanding at     
July 30, 1999.                                                          

                                                                [Download Table]

                                    Class A  Class L Class N Exchangeable
Number of shares                    shares   shares  shares     shares   
----------------                   --------- ------- ------- ------------
                                                                         
Balance, July 29, 1999............ 1,020,671     --   86,707       --    
Issued to existing shareholders                                          
 (i)..............................       --      --   26,701   113,408   
Share transactions related to the                                        
 reverse acquisition (ii)......... 1,393,971 154,168     --        --    
Options exercised (iii)...........    33,140     --      --        --    
                                   --------- ------- -------   -------   
Balance, December 31, 1999........ 2,447,782 154,168 113,408   113,408   
                                   ========= ======= =======   =======   

                                    Class A  Class L Class N Exchangeable
Amount                              shares   shares  shares     shares   
------                             --------- ------- ------- ------------
                                                                         
Ascribed value at the date of the                                        
 reverse takeover (ii)............ $       3 $   --  $   --    $   --    
Options exercised (iii)...........       --      --      --        --    
                                   --------- ------- -------   -------   
Balance, December 31, 1999........ $       3 $   --  $   --    $   --    
                                   ========= ======= =======   =======   

The difference between the par value of the capital stock and the 
accounting value ascribed at the date of the reverse takeover has been  
credited to additional paid-in capital.                                 

Capital transactions from July 30, 1999 to December 31, 1999:         

(i) In connection with the business combination on July 30, 1999, SMTC  
Corporation issued 26,701 Class N shares to its existing        
shareholders for nominal cash consideration. The existing       
   shareholders also received the exchangeable shares described in (c)
below.                                                          

(ii) On July 30, 1999, SMTC Corporation issued 1,393,971 Class A shares 
 and 154,168 Class L shares to the shareholders of HTM Holdings,
 Inc. in exchange for $16,739 cash consideration and 100% of the
    outstanding shares of HTM Holdings, Inc. The ascribed value of the
shares issued is equal to the $20,410 fair value of SMTC      
Corporation at the time of the transaction.                   

(iii) On July 30, 1999, 33,140 Class A restricted shares were granted   
upon the exercise of options for consideration of $60 in    
    promissory notes receivable. The notes are secured by the shares
   granted and bear interest at 5.7%. The notes have been recorded
 as a reduction of shareholders' equity. The restrictions vest
    over the original vesting period of the underlying 1998 HTM Plan
options. At December 31, 1999, 24,855 of the issued Class A 
shares are subject to restrictions.                         

(c) Exchangeable shares:                                                    

  On July 30, 1999, SMTC Manufacturing Corporation of Canada, a 100% owned
subsidiary of the Company, issued two classes of non-voting shares which    
can be exchanged into 113,408 Class L common shares of the Company on a     
one-for-one basis. The holders of the exchangeable shares are entitled to   
receive dividends equivalent to the dividends declared on Class L shares.   

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(d) Warrants:                                                               

1998 transactions:                                                    

In connection with the subordinated note, 384,619 detachable warrants 
were issued to the lenders who are also affiliates of shareholders of HTM   
Holdings, Inc. The warrants have a term of 10 years and an exercise price   
of $5.14 per share. The warrants are exercisable from the date of grant.    
The estimated fair value of the warrants at December 31, 1998 was $0.95 per 
warrant.                                                                    

1999 transactions:                                                    

  In connection with the business combination between SMTC Corporation and
HTM Holdings, Inc., each existing warrant holder of HTM Holdings, Inc. was  
granted equivalent warrants in SMTC Corporation and the previous HTM        
Holdings, Inc. warrants were cancelled.                                     

At December 31, 1999, the following warrants are outstanding:         

                                                                [Download Table]

                                                     Number  Exercise price
                                                     ------- --------------
                                                                           
Class A warrants.................................... 103,895    $  1.82    
Class L warrants....................................  12,088     147.57    

The warrants have a term of 10 years and are exercisable from the date
of grant. Each warrant is convertible into one Class A common share or one  
Class L common share, respectively.                                         

(e) Stock options:                                                          

1993 HTM Holdings Equity Plan:                                        

In connection with the leveraged recapitalization in 1998, the stock  
option plan adopted by HTM Holdings, Inc. in 1993 (the "1993 Plan") was     
cancelled. HTM Holdings, Inc. permitted its employees to exercise all       
outstanding options prior to the cancellation of the 1993 Plan by executing 
notes payable for the exercise price. The shares issued to the exercising   
employees were reacquired in connection with the leveraged recapitalization 
and both the shares issued and the notes payable were retired, resulting in 
a $2,108 non-recurring charge.                                              

The weighted average grant date fair value of options granted during  
1998 was $3.46 (1997 - $0.54) per share.                                    

1998 HTM Plan:                                                        

In June 1998, HTM Holdings, Inc. adopted a new stock option plan (the 
"1998 Plan") pursuant to which incentive stock options and non-qualified    
stock options to purchase shares of common stock may be issued. The Board   
of Directors authorized 122,685 shares to be issued under the 1998 Plan.    
Incentive stock options are granted at an exercise price not less than the  
fair market value of the common stock on the date of grant, as determined   
by the Board of Directors. Options generally vest over four years and       
expire 10 years from their respective dates of grant.                       

The weighted average grant date fair value of options granted during  
1998 was $0.95 per share.                                                   

1998 SMTC Plan:                                                       

In July 1999, the Company replaced the 1998 Plan with an equivalent   
stock option plan. Each HTM option holder was granted equivalent options in 
SMTC Corporation's stock. The Board of Directors                            

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

authorized 165,000 Class A and 4,000 Class L options to be issued under the 
plan. The Class A options vest immediately and are exercisable for Class A  
restricted shares. The restrictions expire on the same basis as the Class L 
vesting periods. The Class L options vest over a four year period and       
expire after 10 years from the original grant date of the 1998 Plan         
options.                                                                    

The weighted average grant date fair value of options granted during  
1999 was $17.13 per share.                                                  

Stock option transactions were as follows:                            

                                                        [Enlarge/Download Table]

                                       HTM Plans                                                   
                         ---------------------------------------                                   
                              1993 Plan           1998 Plan               1998 SMTC Plan           
                         -------------------- ------------------ ----------------------------------
                                     Weighted           Weighted          Weighted         Weighted
                                     average            average           average          average 
                                     exercise           exercise Class A  exercise Class L exercise
                           Shares     price    Shares    price   Shares    price   Shares   price  
                         ----------  -------- --------  -------- -------  -------- ------- --------
                                                                                                   
Options outstanding,                                                                               
 January 1, 1997........    506,042   $4.59        --    $ --        --    $  --      --   $   --  
Granted.................    925,347    3.14        --      --        --       --      --       --  
Forfeited...............   (180,897)   4.89        --      --        --       --      --       --  
                         ----------   -----   --------   -----   -------   ------   -----  ------- 
Balance, December 31,                                                                              
 1997...................  1,250,492    3.48        --      --        --       --      --       --  
Granted.................     33,212    3.10    115,603    5.14       --       --      --       --  
Forfeited...............    (26,000)   3.67        --      --        --       --      --       --  
Exercised............... (1,257,704)   3.46        --      --        --       --      --       --  
                         ----------   -----   --------   -----   -------   ------   -----  ------- 
Balance, December 31,                                                                              
 1998...................        --      --     115,603    5.14       --       --      --       --  
Exchanged and issued at                                                                            
 combination date.......        --      --    (115,603)  (5.14)   33,140     1.82   3,856   147.57 
Issued..................        --      --         --      --    116,860    19.68     --       --  
Exercised...............        --      --         --      --    (33,140)   (1.82)    --       --  
                         ----------   -----   --------   -----   -------   ------   -----  ------- 
Balance, December 31,                                                                              
 1999...................        --    $ --         --    $ --    116,860   $19.68   3,856  $147.57 
                         ==========   =====   ========   =====   =======   ======   =====  ======= 

The following options were outstanding as at December 31, 1999:       

                                                                [Download Table]

                                   Weighted             Weighted            
                                   average              average   Remaining 
                       Outstanding exercise Exercisable exercise contractual
Option plan              options    price     options    price      life    
-----------            ----------- -------- ----------- -------- -----------
                                                                            
1998 SMTC plan:                                                             
  Class L shares......     3,856   $147.57      964     $147.57        3    
  Class A shares......   116,860     19.68      --          --         4    

The Company accounts for its employee stock plans using the intrinsic 
value method under APB No. 25. Compensation expense related to these plans  
has been recognized in the Company's financial statements as follows:       

                                                                [Download Table]

                                                             1997  1998  1999
                                                             ---- ------ ----
                                                                             
Compensation expense........................................ $--  $2,108 $-- 

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

  The table below sets out the pro forma amounts of earnings (loss) before
extraordinary loss and earnings (loss) per share before extraordinary loss  
that would have resulted if the Company had accounted for its employee      
stock plans under the fair value recognition provisions of SFAS No. 123,    
"Accounting for Stock-Based Compensation".                                  

                                                                [Download Table]

                                                     1997   1998    1999   
                                                    ------ ------  ------- 
                                                                           
Earnings (loss) before extraordinary loss:                                 
  As reported...................................... $1,244 $ (328) $  (864)
  Pro forma........................................  1,088    975   (1,122)

                                                     1997   1998    1999   
                                                    ------ ------  ------- 
                                                                           
Basic earnings (loss) per share before                                     
 extraordinary loss:                                                       
  As reported...................................... $ 0.40 $(0.44) $ (1.89)
  Pro forma........................................   0.35   0.16    (2.04)

  For purposes of computing pro forma net earnings, the fair value of each
option grant is estimated on the date of grant using the minimum value      
method under which no volatility is assumed. Assumptions used to calculate  
the fair value were:                                                        

                                                                [Download Table]

                                                         1997     1998  1999
                                                         ----     ----  ----
                                                                            
Risk-free interest rate............................. 6.0% to 6.2% 5.5%  6.0%
Dividend yield......................................          --  --    --  
Expected life (years)...............................            3   4   3-4 

11. Income taxes:                                                               

The components of income taxes are:                                   

                                                                [Download Table]

                                                            1997 1998   1999 
                                                            ---- -----  ---- 
                                                                             
Current:                                                                     
  Federal.................................................. $ 34 $  15  $--  
  Foreign..................................................  --    --    442 
                                                            ---- -----  ---- 
                                                              34    15   442 
Deferred:                                                                    
  Federal..................................................  642  (198) (267)
  State....................................................   66   (10)  (47)
  Foreign..................................................  --    --    (21)
                                                            ---- -----  ---- 
                                                             708  (208) (335)
                                                            ---- -----  ---- 
                                                            $742 $(193) $107 
                                                            ==== =====  ==== 

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

The overall effective income tax rate (expressed as a percentage of   
financial statement earnings (loss) before income taxes) varied from the    
U.S. statutory income tax rate as follows:                                  

                                                                [Download Table]

                                                     1997   1998    1999    
                                                    ------  -----  -------  
                                                                            
 Federal tax rate..................................   34.0%  34.0%    34.0% 
 State income tax, net of federal tax benefit......    3.0    3.0      6.0  
 Income of international subsidiaries taxed at                              
  different rates..................................    --     --       4.9  
 Change in valuation allowance.....................    --     --      (6.3) 
 Non-deductible goodwill amortization..............    --     --     (50.1) 
 Other.............................................    --     --      (2.3) 
                                                    ------  -----  -------  
 Effective income tax rate.........................   37.0%  37.0%   (13.8)%
                                                    ======  =====  =======  

   A tax benefit of $811 has been allocated to the extraordinary loss.      

   Worldwide earnings (loss) before income taxes consisted of the           
following:                                                                  


                                                     1997   1998    1999    
                                                    ------  -----  -------  
                                                                            
 U.S............................................... $1,986  $(521) $(1,269) 
 Non-U.S...........................................    --     --       512  
                                                    ------  -----  -------  
                                                    $1,986  $(521)  $ (757) 
                                                    ======  =====  =======  

Deferred income taxes reflect the net tax effects of temporary        
differences between the carrying amounts of assets and liabilities for      
financial reporting purposes and the amounts used for income tax purposes.  
The Company's deferred tax liabilities and assets are comprised of the      
following at December 31:                                                   

                                                                [Download Table]

                                                               1998   1999  
                                                               ----  ------ 
                                                                            
Deferred tax assets:                                                        
  Net operating loss carryforwards............................ $467  $1,275 
  Reserves, allowances and accruals...........................  388   1,429 
                                                               ----  ------ 
                                                                855   2,704 
  Valuation allowance.........................................  --     (554)
                                                               ----  ------ 
                                                                855   2,150 
                                                               ----  ------ 
Deferred tax liabilities:                                                   
  Capital and other assets.................................... (600) (2,733)
                                                               ----  ------ 
Net deferred tax assets (liabilities)......................... $255  $ (583)
                                                               ====  ====== 

At December 31, 1999, the Company had total net operating loss        
carryforwards of approximately $7,100, which begin to expire in 2013. $1.4  
million of losses in one of the subsidiaries may only be used against       
taxable income generated by that subsidiary. In assessing the realization   
of deferred tax assets, management considers whether it is more likely than 
not that some portion or all of its deferred tax assets will not be         
realized. The ultimate realization of deferred tax assets is dependent upon 
the generation of future taxable income by the appropriate subsidiaries     
during those periods when the temporary differences become deductible.      
Management considers the scheduled reversal of deferred tax liabilities,    
change of                                                                   

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

control limitations, projected future taxable income and tax planning       
strategies in making this assessment. Based upon consideration of these     
factors, management believes the recorded valuation allowance related to    
the loss carryforwards of a specific subsidiary is appropriate.             

The valuation allowance in 1999 is higher than 1998 by $554 due to the
acquisition of certain loss carryforwards in the business combination       
between HTM Holdings, Inc. and SMTC Corporation.                            

12.Financial instruments:                                                       

(a) Interest rate swaps:                                                

On September 30, 1999, the Company entered into two interest rate swap
transactions with a Canadian chartered bank for hedging purposes. The swaps 
expire on September 22, 2001 and involve the exchange by the Company of 90- 
day floating LIBOR rates for a two-year fixed interest rate of 6.16% before 
the credit spread of 3.00% to 3.50% per annum on a notional amount of       
$65,000.                                                                    

(b) Fair values:                                                        

The following methods and assumptions were used to estimate the fair  
value of each class of financial instrument:                                

(i) The carrying amounts of cash and short-term investments, restricted 
   cash, accounts receivable, accounts payable and accrued liabilities
approximate fair values due to the short-term nature of these   
instruments.                                                    

(ii) The fair value of long-term debt, including the current portion,   
    is based on rates currently available to the Company for debt with
similar terms and maturities.                                 

(iii) The fair value of interest rate swap contracts is estimated by    
obtaining quotes from a financial institution.                    

 The carrying amounts and fair values of the Company's financial
instruments, where there are differences at December 31, 1999 and   
1998, are as follows:                                               

                                                                [Download Table]

                                      1998                 1999          
                                ------------------  -------------------- 
                                Carrying    Fair    Carrying     Fair    
Asset (liability)                amount    value     amount      value   
-----------------               --------  --------  ---------  --------- 
                                                                         
Long-term debt................. $(24,788) $(24,346) $(130,942) $(130,942)
Interest rate swaps............      --        --         --         478 

13.Related party transactions:                                                  

The Company entered into related party transactions with certain      
shareholders as follows:                                                    

                                                                [Download Table]

                                                          1997 1998  1999 
                                                          ---- ---- ------
                                                                          
Management fees expensed under formal management                          
 agreements.............................................. $--  $136 $  717
Share issue costs incurred...............................  --   650    -- 
Financing and acquisition related fees paid..............  --   --   1,741
Lease costs expensed for the Colorado facility...........  456  535    535

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

14.Cash flows:                                                                  

Cash paid for interest and income taxes:                              

                                                                [Download Table]

                                                             Three months ended
                                                             ------------------
                                                             March 31, April 2,
                                        1997   1998   1999     1999      2000  
                                        ----- ------ ------- --------- --------
                                                                (unaudited)    
                                                                               
Interest..............................  $ 300 $1,627 $ 6,767   $456     $3,919 
Income taxes..........................     34     15   1,460    --         837 

     Non-cash financing and investing activities:                              


                                                             Three months ended
                                                             ------------------
                                                             March 31, April 2,
                                        1997   1998   1999     1999      2000  
                                        ----- ------ ------- --------- --------
                                                                (unaudited)    
                                                                               
Acquisition of equipment under capital                                         
 leases...............................  $ 401 $2,673 $   --     --        $293 
Acquisition of SMTC Corporation for                                            
 capital stock........................    --     --   20,410    --         --  
Deferred lease costs arising from                                              
 trade in of equipment................    --     --    1,460    --         --  
Issuance of capital stock for notes                                            
 receivable under option plan.........    --     --       60    --         --  

15.Commitments:                                                                 

The Company leases manufacturing equipment and office space under     
various non-cancellable operating leases. Minimum future payments under     
non-cancellable operating lease agreements are as follows at December 31,   
1999:                                                                       

                                                                [Download Table]
                                                                             
2000................................................................. $10,332
2001.................................................................   7,789
2002.................................................................   6,486
2003.................................................................   2,931
2004.................................................................     661
Subsequent to 2004...................................................      75
                                                                      -------
                                                                      $28,274
                                                                      =======

Operating lease expenses were approximately $4,585, $1,414 and $1,225 
for the years ended December 31, 1999, 1998 and 1997, respectively.         

16.  Contingencies:                                                             

(a) General:                                                            

In the normal course of business, the Company may be subject to       
litigation and claims from customers, suppliers and former employees.       
Management believes that adequate provisions have been recorded in the      
accounts where required. Although it is not possible to estimate the extent 
of potential costs, if any, management believes that ultimate resolution of 
such contingencies would not have a material adverse effect on the          
financial position, results of operations and cash flows of the Company.    

(b) Acquisitions:                                                       

A claim has been filed against one of the Company's subsidiaries      
alleging commissions are owing as a result of the acquisition of certain    
assets in Chihuahua, Mexico. The claim is for $800 plus interest and        

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

costs. The Company is vigorously defending this matter and management       
believes it has a strong defense against the claim. Future settlement, if   
any, of this claim will be accounted for as a cost of the asset             
acquisition.                                                                

17. Extraordinary loss:                                                         

As a result of the early payment of the senior notes payable and      
subordinated notes that occurred concurrent with the business combination   
between SMTC Corporation and HTM Holdings, Inc., the Company incurred       
charges of $2,090 ($1,279 after tax) related to early payment penalties,    
write-off of unamortized deferred financing fees and write-off of the       
unamortized debt discount.                                                  

18. Segmented information:                                                      

 The Company derives its revenue from one dominant industry segment, the
electronics manufacturing services industry. The Company is operated and    
managed geographically and has eight facilities in the United States,       
Canada, Europe and Mexico. The Company monitors the performance of its      
geographic operating segments based on EBITA (earnings before interest,     
taxes and amortization). Intersegment adjustments reflect intersegment      
sales that are generally recorded at prices that approximate arm's-length   
transactions. Information about the operating segments is as follows:       

                                                        [Enlarge/Download Table]

                                                                Three months ended       
                                                                  April 2, 2000          
                          Year ended December 31, 1999             (unaudited)           
                         -------------------------------  ------------------------------ 
                                                  Net                             Net    
                           Total   Intersegment external   Total   Intersegment external 
                          revenue    revenue    revenue   revenue    revenue    revenue  
                         --------- ------------ --------  -------- ------------ -------- 
                                                                                         
United States........... $ 223,006   $(1,419)   $221,587  $106,796   $  (674)   $106,122 
Canada..................    21,675    (2,676)     18,999    13,038      (985)     12,053 
Europe..................     9,507    (1,995)      7,512     4,727    (1,476)      3,251 
Mexico..................     9,864       --        9,864     2,921       (14)      2,907 
                         ---------   -------    --------  --------   -------    -------- 
                         $ 264,052   $(6,090)   $257,962  $127,482   $(3,149)   $124,333 
                         =========   =======    ========  ========   =======    ======== 

EBITA:                                                                                   
  United States.........                        $  6,917                        $  3,576 
  Canada................                           2,107                             728 
  Europe................                            (222)                           (494)
  Mexico................                            (503)                           (284)
                                                --------                        -------- 
                                                   8,299                           3,527 

Interest................                           7,066                           3,789 
Amortization............                           1,990                           1,272 
                                                --------                        -------- 
Loss before income                                                                       
 taxes..................                        $   (757)                       $ (1,534)
                                                ========                        ======== 
Capital expenditures:                                                                    
  United States.........                        $  2,713                        $  1,264 
  Canada................                             840                             665 
  Europe................                              30                             178 
  Mexico................                             547                             676 
                                                --------                        -------- 
                                                $  4,130                        $  2,783 
                                                ========                        ======== 

  Prior to July 30, 1999, the Company operated in one geographic segment--
the United States.                                                          

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

This segmented information incorporates the operations of SMTC        
Corporation and W.F. Wood, Incorporated from July 30, 1999 and September 4, 
1999, as discussed in note 2(a) and note 3, respectively. SMTC Corporation  
has operated facilities in Canada, the United States and Europe for 14      
years, 4 years and 2 years, respectively.                                   

The following enterprise-wide information is provided. Geographic     
revenue information reflects the destination of the product shipped. Long-  
lived assets information is based on the principal location of the asset.   

                                                                [Download Table]

                                Year ended December 31,    Three months ended
                              ---------------------------- ------------------
                                                           March 31, April 2,
                               1997    1998       1999       1999      2000  
                              ------- ------- ------------ --------- --------
                                                              (unaudited)    
                                                                             
Geographic revenue:                                                          
  United States.............. $58,799 $84,668   $225,772    $21,934  $110,881
  Canada.....................     --      --       8,983        --      3,304
  Europe.....................     232   5,019     19,965      1,125     7,795
  Asia.......................     --      --       3,242        209     2,353
                              ------- -------   --------    -------  --------
                              $59,031 $89,687   $257,962    $23,268  $124,333
                              ======= =======   ========    =======  ========

                                              December 31, March 31, April 2,
                                                  1999       1999      2000  
                                              ------------ --------- --------
                                                              (unaudited)    
                                                                             
Long-lived assets:                                                           
  United States..............................   $ 40,304    $ 7,568  $ 44,234
  Canada.....................................     25,585        --     25,415
  Europe.....................................        735        --        837
  Mexico.....................................      9,179        --     15,498
                                                --------    -------  --------
                                                $ 75,803    $ 7,568  $ 85,984
                                                ========    =======  ========

  In 1998 and 1997, all of the Company's long-lived assets were located in
the United States.                                                          

19. Significant customers and concentration of credit risk:                     

Financial instruments that potentially subject the Company to         
concentrations of credit risk consist principally of trade receivables.     
Sales of the Company's products are concentrated among specific customers   
in the same industry. The Company generally does not require collateral.    
The Company considers concentrations of credit risk in establishing the     
reserves for bad debts and believes the recorded reserves are adequate.     

 During 1999, three customers individually comprised 29%, 10% and 10% of
total revenue across all geographic segments. At December 31, 1999, these   
customers represented 33%, 6% and 3%, respectively of the Company's         
accounts receivable.                                                        

During 1998, one customer individually comprised 43% of total revenue 
generated in the United States. At December 31, 1998, this customer         
represented 48% of the Company's accounts receivable.                       

 During 1997, three customers individually comprised 33%, 11% and 10% of
total revenue generated in the United States. At December 31, 1997, these   
customers represented 33%, 9% and 4%, respectively of the Company's         
accounts receivable.                                                        

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

20. Earnings per share:                                                         

 The following table sets forth the computation of basic earnings (loss)
per share before extraordinary loss:                                        

                                                                [Download Table]

                             Year ended December 31,         Three months ended   
                         ---------------------------------  --------------------- 
                                                            March 31,   April 2,  
                            1997       1998        1999        1999       2000    
                         ---------- ----------  ----------  ---------- ---------- 
                                                                 (unaudited)      
                                                                                  
Earnings (loss) before                                                            
 extraordinary loss..... $    1,244 $     (328) $     (864) $       45 $   (1,443)
Less preferred share                                                              
 dividends..............        --        (609)        --          --         --  
Less Class L preferred                                                            
 entitlement............        --         --       (2,185)        --      (1,366)
                         ---------- ----------  ----------  ---------- ---------- 
Earnings (loss) before                                                            
 extraordinary loss                                                               
 available to Class A                                                             
 shareholders........... $    1,244 $     (937) $   (3,049) $       45 $   (2,809)
                         ========== ==========  ==========  ========== ========== 
Weighted average                                                                  
 shares--basic..........  3,122,921  2,147,130   1,617,356   1,393,971  2,422,927 
                         ========== ==========  ==========  ========== ========== 
Net earnings (loss) per                                                           
 share--basic........... $     0.40 $    (0.44) $    (1.89) $     0.03 $    (1.16)
                         ========== ==========  ==========  ========== ========== 

 For purposes of calculating the basic number of weighted average shares
outstanding, the Class A restricted shares have been excluded. Under        
reverse takeover accounting, the number of shares outstanding prior to July 
30, 1999 is deemed to be the number of shares of SMTC Corporation issued to 
the shareholders of HTM Holdings, Inc., appropriately adjusted to take into 
account the effect of any change in the number of HTM Holdings, Inc. shares 
outstanding in that period.                                                 

During fiscal 1999 and fiscal 1998, the exercise prices of the options
and warrants were less than the average fair value price and were not       
included in the calculation of diluted loss per share as the effect would   
have been anti-dilutive. In addition, in fiscal 1999, the calculation did   
not include the Class A shares issuable upon conversion of the Class L      
shares and exchangeable shares as the effect would have been anti-dilutive. 

  During fiscal 1997, the exercise prices of the options and warrants were
higher than the average fair value price and were not included in the       
calculation of diluted earnings per share as the effect would have been     
anti-dilutive.                                                              

21. Comparative figures:                                                        

 Certain of the 1998 and 1997 figures presented for comparative purposes
have been reclassified to conform with the current year's presentation.     

22. Subsequent events:                                                          

(a) Initial public offering:                                            

In March 2000, the Company filed a registration statement on Form S-1 
with the U.S. Securities and Exchange Commission and a preliminary          
prospectus with the securities commission or similar regulatory authority   
in each of the Canadian provinces in connection with an initial public      
offering of common stock of the Company and exchangeable shares of its      
subsidiary, SMTC Manufacturing Corporation of Canada. The completion of     
this offering is subject to certain conditions. If successful, the          
estimated net proceeds of                                                   

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

this offering of approximately $156,000 will be used by the Company to      
reduce its indebtedness under the senior credit facility and the            
subordinated notes issued in May, 2000 (note 22(d)). The Company will       
record an after-tax charge on repayment of the indebtedness and             
subordinated notes amounting to approximately $2,400 for the write-off of   
unamortized deferred financing costs and early payment fee for the          
subordinated debt, net of the gain on termination of the interest rate      
swap. The charge will be recorded as an extraordinary loss.                 

The assumptions underlying the offering and reclassification adjustments    
are subject to change when the initial offering price, gross proceeds and   
closing date are finalized.                                                 

(b)  Share reclassification:                                          

  Concurrent with the effectiveness of the offering, SMTC Corporation will
complete a share capital reorganization that will be effected as follows:   

.  each outstanding Class Y share of the Company's subsidiary, SMTC     
Manufacturing Corporation of Canada, will be purchased in exchange
for shares of Class L common stock;                               

.  each outstanding share of Class L common stock will be converted     
 into one share of Class A common stock plus an additional number of
  shares of Class A common stock determined by dividing the preference
 amount by the value of a share of Class A common stock based on the
initial public offering price;                                    

.  each outstanding share of Class A common stock will be converted     
into approximately 3.67 shares of common stock;                   

.  all outstanding Class N common stock will be redeemed and one share  
of special voting stock will be issued which will be held by a    
trustee for the benefit of the holders of the exchangeable shares;
and                                                               

.  each Class L exchangeable share will be converted into exchangeable  
shares of the same class as those being offered in the offering in
the same ratio as shares of Class L common stock are converted to 
shares of common stock.                                           

Subsequent to the reclassification, the share capital of the Company  
will be as follows on a pro forma basis (unaudited) assuming a closing date 
for the offering of July 27, 2000 and an initial public offering price of   
$16.00 per share:                                                           

                                                                [Download Table]

                         Additional Class  Class                          
                          Paid-in     A      L    Exchangeable   Common   
                          Capital   Shares Shares    Shares       Stock   
                         ---------- ------ ------ ------------ -----------
                                                                          
Number of shares                                                          
 outstanding............      --      --     --     1,469,445   11,878,502
Amount..................  $11,688   $ --   $ --    $      --   $       119

The calculation of pro forma basic loss per share was determined by   
dividing net loss by the pro forma weighted average common shares           
outstanding after giving retroactive effect to the conversion of Class L    
common stock and exchangeable shares into shares of common stock upon the   
anticipated effectiveness of the Registration Statement on Form S-1.        

                                                                [Download Table]

                                            Year ended   Three months ended
                                           December 31,       April 2,     
                                               1999             2000       
                                           ------------  ------------------
                                                            (unaudited)    
                                                                           
Pro forma net loss per share.............. $     (0.08)     $     (0.11)   
Pro forma weighted average shares                                          
 outstanding..............................  11,006,155       13,242,419    

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(c) Pending acquisition of Pensar Corporation:                          

In May 2000 the Company entered into an agreement to acquire Pensar   
Corporation, an electronics manufacturing services company specializing in  
design services and located in Wisconsin, United States. The Company        
expects to consummate the acquisition on the closing date of the initial    
public offering. The total purchase price including transaction costs is    
expected to be approximately $36,600. The purchase consideration consists   
of $17,000 cash and the balance in common shares of the Company.            

(d) Long-term debt and capital transactions:                            

In May 2000 the Company's lenders increased the revolving credit      
facility from $60,000 to $67,500. The Company issued senior subordinated    
notes to certain shareholders for proceeds of $5,000. The notes bear        
interest at 15% per annum and mature in 2010. The Company also issued       
41,667 warrants to certain shareholders for proceeds of $2,500. The         
warrants have a term of 10 years and are exercisable from November 2000.    
Each warrant is convertible into 9 Class A-1 common shares and 1 Class L    
common share. The exercise price for each warrant is equal to the Class L   
preference amount less $42.                                                 

On July 3, 2000, we issued demand notes in the aggregate principal    
amount of $9,925. Of these demand notes, $5,925,000 in aggregate principal  
amount are secured by a portion of our fixed assets and the fixed assets of 
some of our subsidiaries. The demand notes bear interest of 3% of the       
principal amount accruing on the date of issuance and 13.75% per year and   
are payable to the holders of the notes at any time upon demand.            

23. United States and Canadian accounting policy differences:                   

 The consolidated financial statements of the Company have been prepared
in accordance with generally accepted accounting principles ("GAAP") as     
applied in the United States ("U.S."). The significant differences between  
U.S. GAAP and Canadian GAAP and their effect on the consolidated financial  
statements of the Company are described below:                              

(a) Extraordinary loss:                                                 

  Under U.S. GAAP the charges incurred as a result of the early payment of
the senior notes payable and subordinated notes described in note 17 are    
recorded as an extraordinary loss. Under Canadian GAAP, the charges would   
have been included in earnings (loss) before income taxes and the related   
tax benefit recorded in income taxes expense. Accordingly the following     
amounts would have been reported in fiscal 1999 under Canadian GAAP:        

                                                                [Download Table]
                                                                            
Operating income.................................................. $  6,309 
Interest..........................................................    7,066 
Debt extinguishment costs.........................................    2,090 
                                                                   -------- 
Earnings (loss) before income taxes...............................   (2,847)
Income taxes (recovery):                                                    
  Current.........................................................     (289)
  Deferred........................................................     (415)
                                                                   -------- 
                                                                       (704)
                                                                   -------- 
Net earnings (loss)............................................... $ (2,143)
                                                                   ======== 

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SMTC CORPORATION
(FORMERLY HTM HOLDINGS, INC.) 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars, except share quantities and per share
amounts)

(b) Income taxes:                                                       

The Company has adopted, on a retroactive basis, the new accounting   
standards approved by The Canadian Institute of Chartered Accountants       
dealing with accounting for income taxes. These new standards are           
substantially identical to U.S. GAAP as contained in FASB Statement No.     
109.                                                                        

(c) Diluted earnings per share:                                         

Under Canadian GAAP, fully diluted earnings per share is calculated by
assuming that all the outstanding options at the end of the year have been  
exercised at the beginning of the year or at the date                       
granted, if later, and proceeds from the exercise of options have been used 
to generate investment income. Under U.S. GAAP, the calculations assume     
that the proceeds were used to acquire common shares of the Company at the  
average market price. Diluted earnings per share under Canadian GAAP is as  
follows:                                                                    

                                                                [Download Table]

                                                           1997  1998 1999
                                                           ----- ---- ----
                                                                          
Fully diluted earnings per share in accordance with                       
 Canadian GAAP............................................ $0.36 N/A  N/A 

N/A--Fully diluted loss per share has not been disclosed as the effect
of the potential conversion of dilutive securities is anti-dilutive under   
Canadian GAAP.                                                              

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AUDITORS' REPORT

To the Directors of SMTC Corporation (formerly The Surface Mount Technology     
Centre Inc.) ("Surface Mount"):                                                 

We have audited the consolidated balance sheets of SMTC Corporation       
(formerly The Surface Mount Technology Centre Inc.) as at July 29, 1999 and     
August 31, 1998 and the consolidated statements of earnings and retained        
earnings (deficit) and cash flows for the period from September 1, 1998 to July 
29, 1999 and for each of the years ended August 31, 1998 and 1997. These        
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We conducted our audits in accordance with Canadian generally accepted    
auditing standards. Those standards require that we plan and perform an audit   
to obtain reasonable assurance 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.                                                         

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at July 29,     
1999 and August 31, 1998 and the results of its operations and its cash flows   
for the period from September 1, 1998 to July 29, 1999 and for each of the      
years ended August 31, 1998 and 1997 in accordance with Canadian generally      
accepted accounting principles.                                                 

Canadian generally accepted accounting principles vary in certain         
significant respects from accounting principles generally accepted in the       
United States. Application of accounting principles generally accepted in the   
United States would have affected results of operations for the period from     
September 1, 1998 to July 29, 1999 and each of the years ended August 31, 1998  
and 1997 and shareholders' equity (deficiency) as at July 29, 1999 and August   
31, 1998, to the extent summarized in note 17 to the consolidated financial     
statements.                                                                     

                                                                    /s/ KPMG LLP
                                                           Chartered Accountants

Toronto, Canada                                                                 
December 3, 1999                                                                

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

CONSOLIDATED BALANCE SHEETS 
(Expressed in thousands of U.S. dollars)

                                                                [Download Table]

                                                           August 31, July 29, 
                                                              1998      1999   
                                                           ---------- -------- 
                                                                               
Assets                                                                         
Current assets:                                                                
  Cash and short-term investments.........................  $ 4,704   $    698 
  Accounts receivable.....................................   39,379     51,639 
  Inventories.............................................   31,067     30,388 
  Prepaid expenses........................................      864      1,698 
                                                            -------   -------- 
                                                             76,014     84,423 
Capital assets (note 4)...................................   18,501     21,093 
                                                            -------   -------- 
                                                            $94,515   $105,516 
                                                            =======   ======== 
Liabilities and Shareholders' Equity (Deficiency)                              
Current liabilities:                                                           
  Bank indebtedness (note 5)..............................  $27,099   $    --  
  Accounts payable and accrued liabilities................   34,839     36,183 
  Income taxes payable....................................    1,860      2,247 
  Note payable............................................    3,335        --  
  Preferred and non-voting shares of subsidiary (note 8)..      --      42,035 
  Current portion of long-term debt (note 6)..............    2,378        --  
  Current portion of obligations under capital leases                          
   (note 7)...............................................      191         95 
                                                            -------   -------- 
                                                             69,702     80,560 
Long-term debt (note 6)...................................    4,098     43,376 
Obligations under capital leases (note 7).................       88        --  
Deferred income taxes.....................................      787        512 
Shareholders' equity (deficiency):                                             
  Share capital (note 8)..................................    3,604          1 
  Additional paid-in capital..............................      --           4 
  Retained earnings (deficit).............................   15,856    (19,317)
  Currency translation account (note 2(c))................      380        380 
                                                            -------   -------- 
                                                             19,840    (18,932)
Commitments (note 13).....................................                     
Contingencies (note 14)...................................                     
Subsequent events (note 16)...............................                     
                                                            -------   -------- 
                                                            $94,515   $105,516 
                                                            =======   ======== 

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT) 
(Expressed in thousands of U.S. dollars)

                                                                [Download Table]

                                       Year ended Year ended September 1, 1998
                                       August 31, August 31,    to July 29,   
                                          1997       1998          1999       
                                       ---------- ---------- -----------------
                                                                              
Revenue...............................  $96,761    $210,213      $270,578     
Cost of sales.........................   81,662     188,397       245,575     
                                        -------    --------      --------     
Gross profit..........................   15,099      21,816        25,003     
Selling, general and administrative...    5,132      11,774        14,978     
                                        -------    --------      --------     
Operating income......................    9,967      10,042        10,025     
Interest (note 9).....................      955       2,468         3,111     
                                        -------    --------      --------     
Earnings before income taxes..........    9,012       7,574         6,914     
Income taxes:                                                                 
  Current.............................    3,335       4,195         3,251     
  Deferred (recovery).................      176         (71)         (195)    
                                        -------    --------      --------     
                                          3,511       4,124         3,056     
                                        -------    --------      --------     
Net earnings..........................    5,501       3,450         3,858     
Retained earnings, beginning of                                               
 period...............................    7,517      12,856        15,856     
Dividends (note 8)....................     (162)       (450)         (387)    
Increase in stated capital (note 8)...      --          --        (17,582)    
Premium on redemption of shares of                                            
 subsidiary (note 8)..................      --          --        (20,850)    
Reorganization costs, net of tax of                                           
 $79 (note 2(a))......................      --          --           (212)    
                                        -------    --------      --------     
Retained earnings (deficit), end of                                           
 period...............................  $12,856    $ 15,856      $(19,317)    
                                        =======    ========      ========     

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Expressed in thousands of U.S. dollars)

                                                                [Download Table]

                                                                  September 1,
                                            Year ended Year ended     1998    
                                            August 31, August 31, to July 29, 
                                               1997       1998        1999    
                                            ---------- ---------- ------------
                                                                              
Cash provided by (used in):                                                   
Operating activities:                                                         
  Net earnings.............................  $ 5,501    $  3,450    $  3,858  
  Items not involving cash:                                                   
    Depreciation of capital assets.........    2,558       3,899       4,005  
    Loss (gain) on disposal of capital                                        
     assets................................       37         (23)        --   
    Unrealized foreign exchange loss                                          
     (gain)................................      (96)       (422)          8  
    Deferred income taxes..................      176         (71)       (195) 
  Change in non-cash operating working                                        
   capital.................................   (8,557)    (19,777)    (10,684) 
                                             -------    --------    --------  
                                                (381)    (12,944)     (3,008) 
Financing activities:                                                         
  Increase (decrease) in bank                                                 
   indebtedness............................      878      22,589     (27,099) 
  Increase in long-term debt...............    3,610       1,793      39,348  
  Repayment of long-term debt..............   (3,008)     (2,260)     (2,450) 
  Repayment of note payable................      --          --       (3,335) 
  Issuance of shares.......................      --          --            5  
  Redemption of shares.....................      --          --           (1) 
  Decrease in obligations under capital                                       
   leases..................................     (214)       (458)       (184) 
  Dividends paid...........................     (162)       (450)       (387) 
                                             -------    --------    --------  
                                               1,104      21,214       5,897  
Investing activities:                                                         
  Purchase of capital assets...............   (3,657)     (1,555)     (6,596) 
  Reorganization costs.....................      --          --         (291) 
  Acquisitions.............................      --       (1,744)        --   
  Proceeds on disposal of capital assets...      176          72         --   
                                             -------    --------    --------  
                                              (3,481)     (3,227)     (6,887) 
Foreign exchange gain (loss) on cash held                                     
 in foreign currency.......................       69          55          (8) 
                                             -------    --------    --------  
Increase (decrease) in cash................   (2,689)      5,098      (4,006) 
Cash and short-term investments (bank                                         
 indebtedness), beginning of period........    2,295        (394)      4,704  
                                             -------    --------    --------  
Cash and short-term investments (bank                                         
 indebtedness), end of period..............  $  (394)   $  4,704    $    698  
                                             =======    ========    ========  

Cash is defined as cash and short-term investments.                       

Supplemental cash flow disclosures (note 11).                             

See accompanying notes to consolidated financial statements.

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. dollars, except for share quantities and per
share amounts)

1. Nature of business:                                                          

SMTC Corporation (formerly The Surface Mount Technology Centre Inc.)  
(the "Company") is a worldwide provider of electronics manufacturing        
services to original equipment manufacturers. The Company services its      
customers through five manufacturing and technology centres located in the  
United States, Canada and Europe.                                           

The Company's accounting principles are in accordance with accounting 
principles generally accepted in Canada, and, except as outlined in note    
17, are in all material respects, in accordance with accounting principles  
generally accepted in the United States.                                    

2. Significant accounting policies:                                             

(a) Basis of presentation:                                              

 On July 28, 1999, The Surface Mount Technology Centre Inc. and its 100%
owned U.S. subsidiary, SMTC Corporation, completed a reorganization such    
that SMTC Corporation then became the parent company of the group of        
companies which includes The Surface Mount Technology Centre Inc. ("the     
Reorganization.") The Reorganization provides a more effective corporate    
structure for tax, investing and financing purposes. As the Reorganization  
involved the transfer of entities under common control, the Reorganization  
has been accounted for as a continuity of interests in a manner similar to  
a pooling of interests. The expenses incurred in connection with the        
Reorganization have been charged directly to retained earnings.             

(b) Principles of consolidation:                                        

The consolidated financial statements include the accounts of the     
Company and its wholly owned subsidiaries. All significant intercompany     
transactions and balances have been eliminated on consolidation.            

(c) Change in functional currency:                                      

  As a result of changes in underlying circumstances resulting in the U.S.
dollar becoming the measurement currency in which most of the Company's and 
its subsidiaries' business was transacted, effective September 1, 1997 the  
Company adopted the U.S. dollar as its measurement currency for preparation 
of its consolidated financial statements resulting in a change from the     
previous use of the Canadian dollar as its measurement currency.            

(d) Revenue recognition:                                                

Revenue from sales of products is recognized when goods are shipped.  
Revenue from services is recognized when the services are provided.         

(e) Income taxes:                                                       

 The Company follows the deferral method of tax allocation in accounting
for income taxes whereby the provision for income taxes is based on         
accounting income. Income taxes related to timing differences between       
accounting and taxable income are recorded as deferred income taxes.        

(f) Cash and short-term investments:                                    

Cash and short-term investments include cash on hand and deposits with
banks with original maturities of less than three months.                   

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

(g) Inventories:                                                        

Inventories are valued at the lower of cost, on a first-in, first-out 
basis, and net realizable value. Inventories include an application of the  
relevant overhead.                                                          

(h) Capital assets:                                                     

Capital assets are stated at cost. Depreciation is provided using the 
following methods and annual rates:                                         

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

                                                                [Download Table]

 Asset                                            Basis           Rate     
---------------------------------------------------------------------------
                                                                           
 Manufacturing machinery and equipment..... Straight line        5-10 years
 Furniture and equipment................... Declining balance           20%
 Computer software and hardware............ Straight line           3 years
 Leasehold improvements.................... Straight line     Term of lease
---------------------------------------------------------------------------
---------------------------------------------------------------------------

(i) Foreign currency translation:                                       

Transactions in foreign currencies are translated at the exchange rate
in effect on the transaction date. Monetary items expressed in foreign      
currencies are translated at the exchange rate in effect at the balance     
sheet date. The resulting exchange gains and losses are included in the     
determination of net earnings for the period.                               

 The Company's foreign subsidiaries are classified as integrated foreign
operations. As such, their monetary assets and monetary liabilities are     
translated using period-end exchange rates, and other assets and            
liabilities are translated at applicable historical rates of exchange.      
Revenue and expenses are translated at monthly average exchange rates,      
except for depreciation, which is translated at historical rates. Exchange  
gains and losses are included in earnings in the period they are incurred.  

(j) Accounting estimates:                                               

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and    
assumptions that affect the reported amounts of assets and liabilities and  
disclosure of contingent assets and liabilities at the date of the          
financial statements and the reported amounts of revenue and expenses       
during the period. Actual results could differ from those estimates.        

(k) Statement of cash flows:                                            

 Effective September 1, 1998, the Company adopted retroactively, the new
recommendations of The Canadian Institute of Chartered Accountants ("CICA") 
with respect to the preparation of the statement of cash flows. As a        
result, this change has revised the definition of cash and cash equivalents 
to include only cash and highly liquid investments with a maturity of 90    
days or less and does not include the Company's bank indebtedness under its 
credit facilities as was the case in prior years. In addition, non-cash     
transactions previously presented in the statement of changes in financial  
position are no longer presented in the statement of cash flows.            

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

(l) Recently issued accounting pronouncements:                          

The CICA has issued Section 3465, "Income Taxes", that establishes new
standards for accounting for income taxes. The recommendations require the  
use of the liability method whereby deferred income taxes are recognized    
for the tax consequences in future years of differences between the tax     
bases of assets and liabilities and their financial reporting amounts at    
each year end. The Company will adopt the new recommendations effective     
July 30, 1999 and has estimated that the impact would be to decrease the    
recorded deferred income tax liability by $247.                             

3. Acquisitions:                                                                

(a) On January 1, 1998, the Company acquired 100% of the issued and 
outstanding shares of Ogden Atlantic Design (Europe) Ltd. for $353. The     
purchase price consisted of $219 paid at closing and $134 of acquisition-   
related expenses. This acquisition was accounted for by the purchase method 
with the purchase price being allocated to capital assets.                  

   (b) Effective September 1, 1997, the Company acquired certain assets of
Ogden Atlantic Design Company, Inc. located in Charlotte, North Carolina    
for $4,726. Under the terms of the purchase, the Company also assumed the   
property lease and certain operating leased equipment. The purchase price   
consisted of $1,155 paid at closing, $236 of acquisition related expenses   
and a $3,335 one year note, subordinated to the bank and bearing interest   
at 9% per annum. $1,391 of the purchase price was allocated to capital      
assets and $3,335 was allocated to inventory.                               

4. Capital assets:                                                              

                                                                [Download Table]

                                                        Accumulated  Net book
August 31, 1998                                  Cost   depreciation  value  
---------------                                 ------- ------------ --------
                                                                             
Manufacturing machinery and equipment.......... $21,904   $ 7,623    $14,281 
Furniture and equipment........................   1,331       489        842 
Computer software and hardware.................   2,210     1,080      1,130 
Leasehold improvements.........................   3,513     1,265      2,248 
                                                -------   -------    ------- 
                                                $28,958   $10,457    $18,501 
                                                =======   =======    ======= 


                                                        Accumulated  Net book
July 29, 1999                                    Cost   depreciation  value  
-------------                                   ------- ------------ --------
                                                                             
Manufacturing machinery and equipment.......... $23,791   $ 9,571    $14,220 
Furniture and equipment........................   2,114       866      1,248 
Computer software and hardware.................   3,296     1,691      1,605 
Leasehold improvements.........................   6,005     1,985      4,020 
                                                -------   -------    ------- 
                                                $35,206   $14,113    $21,093 
                                                =======   =======    ======= 

Included in machinery and equipment at December 31, 1999 is equipment 
under capital lease with a cost of $443 (1998--$1,133) and accumulated      
depreciation of $203 (1998--$757).                                          

Included in the total depreciation expense for the year ended December
31, 1999 of $4,005 (1998--$3,899; 1997--$2,558) is $128 (1998--$402; 1997-- 
$363) relating to the depreciation of equipment under capital lease.        

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

5. Bank indebtedness:                                                           

Up to July 29, 1999, the operating lines of credit were due on demand,
bore interest at LIBOR plus 0.45% and rates ranging from the Company's bank 
prime rate (prime) plus 0.25% to prime plus 1% and were secured by a        
general security agreement covering all assets of the Company. All bank     
indebtedness outstanding on July 29, 1999 was refinanced under a new senior 
credit facility on July 30, 1999. The indebtedness has been classified as   
long-term, consistent with the terms of that facility (note 6).             

6. Long-term debt:                                                              

 Up to July 29, 1999, the term loans bore interest at rates ranging from
the Company's bank prime or base rate plus 0.50% to prime or base rate plus 
1.5%. The loans could be repaid at any time or times without payment of     
bonus interest.                                                             

On July 30, 1999, concurrent with the business combination with HTM   
Holdings, Inc. ("HTM") (note 16) the Company and HTM entered into a new     
senior credit facility that provides for $95,000 in term loans and $60,000  
in revolving credit loans, swing line loans and letters of credit. The      
senior credit facility is secured by a security agreement over all assets   
and requires the Company to meet certain financial ratios and benchmarks    
and to comply with certain restrictive covenants. The revolving credit      
facilities terminate in July 2004. The term loans mature in quarterly       
instalments from September 2000 to June 2004 for $35,000 of the term loans  
and from September 2000 to December 2005 for $50,000 of the term loans.     
$10,000 of the term loans is payable in one instalment on September 30,     
2006. The borrowings will bear interest at varying rates based on either    
the Eurodollar base rate plus 3%, the U.S. bank rate plus 1.25% or the      
Canadian prime rate plus 1.25%.                                             

 The future minimum repayments under the new senior credit facility are:

                                                                [Download Table]
                                                                             
2000................................................................. $   -- 
2001.................................................................   2,668
2002.................................................................   5,335
2003.................................................................   8,003
2004 and thereafter..................................................  27,370
                                                                      -------
                                                                      $43,376
                                                                      =======

7. Obligations under capital leases:                                            

  Obligations under capital leases consist of several leases for equipment
bearing interest from 7% to 8% per annum.                                   

8. Share capital:                                                               

(a) Authorized:                                                         

At July 29, 1999 (SMTC Corporation):                                  

(i) 1,720,000 Class A-1 voting common shares, par value $0.001 per      
share, holders are entitled to one vote per share, entitled to  
 share in dividends pro rata subject to any preferential rights to
the Class L shares;                                             

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SMTC CORPORATION  
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)  

(ii) 1,100,000 Class A-2 voting common shares, par value $0.001 per     
share, holders are entitled to one vote per share, entitled to
   share in dividends pro rata subject to any preferential rights of
the Class L shares;                                           

(iii) 300,000 Class L voting common shares, par value $0.001 per share, 
the number of votes per share is determined by a prescribed 
 formula, entitled to receive all dividends declared on common
  stock until there has been paid a specified amount based on an
internal annual rate of return of 12%; and                  

(iv) 125,000 Class N voting common shares, par value $0.001 per share,  
the number of votes per share are determined by a prescribed  
formula, not entitled to receive dividends.                   

Each share of Class L and Class A-2 stock shall convert automatically   
under certain conditions into Class A-1 shares based on a prescribed    
formula for Class L shares and on a one-for-one basis for Class A-2     
shares.                                                                 

Prior to July 28, 1999 (The Surface Mount Technology Centre Inc.):        

The Company completed a capital reorganization on July 28, 1999 such that 
The Surface Mount Technology Centre Inc. became a wholly owned subsidiary 
of SMTC Corporation. Prior to the reorganization, the authorized capital  
stock of The Surface Mount Technology Centre Inc. was:                    

(i) An unlimited number of Class B common shares, voting, convertible   
into 0.78 common or Class D shares and 0.22 Class C or Class E  
shares each;                                                    

(ii) An unlimited number of Class C non-cumulative shares, voting,      
   redeemable at $3.03 each, convertible into one common share each,
and subject to a maximum dividend of $0.33 per share per year;

(iii) An unlimited number of Class D non-cumulative shares, voting,     
convertible into one common share each;                     

(iv) An unlimited number of Class E non-cumulative shares, voting,      
   redeemable at $3.03 each, convertible into one common share each,
    and subject to a maximum dividend of $0.33 per share per year; and

(v) An unlimited number of common shares.                               

In order to facilitate the share capital reorganization, the Company      
amended its authorized share capital on July 28, 1999 to include new      
classes of shares including:                                              

(i) Unlimited number of Class A, Class B and Class C preferred shares,  
   redeemable by the Company at $0.66 per share with an annual 6% non-
cumulative dividend;                                            

(ii) Unlimited number of subordinate non-voting Class D and Class E     
     shares; the Class D shares are convertible into Class E shares; and

(iii) Class V voting shares.                                            

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

(b) Issued and outstanding:                                             

The Surface Mount Technology Centre Inc.                              

                                                                [Download Table]

                                                      1998                 
                                       ----------------------------------- 
                                        Common   Class C   Class D Class E 
Number of shares                        shares    shares   shares  shares  
----------------                       --------- --------  ------- ------- 
                                                                           
Balance, August 31, 1997.............. 1,272,224  169,444  390,278  84,722 
Share conversion (i)..................   254,166 (169,444)     --  (84,722)
                                       --------- --------  ------- ------- 
Balance, August 31, 1998.............. 1,526,390      --   390,278     --  
                                       ========= ========  ======= ======= 

                                        Common   Class C   Class D Class E 
Amount                                  shares    shares   shares  shares  
------                                 --------- --------  ------- ------- 
                                                                           
Balance, August 31, 1997.............. $   2,392 $    319  $   734 $   159 
Share conversion (i)..................       478     (319)     --     (159)
                                       --------- --------  ------- ------- 
Balance, August 31, 1998.............. $   2,870 $    --   $   734 $   --  
                                       ========= ========  ======= ======= 

1998 capital transactions:                                              

(i) On September 5, 1997, the issued Class C and Class E shares were    
converted into an equal number of common shares.                

(ii) During fiscal 1998, the Company paid dividends on its common and   
Class C shares in the amount of $397 and $53, respectively.   

                                                                [Download Table]

                                                  1999                          
                          ------------------------------------------------------
                                                 Class D    Class E             
                                      Class D     shares     shares             
                            Common     shares     (non-      (non-    Preferred 
Number of shares            shares    (voting)   voting)    voting)     shares  
----------------          ----------  --------  ---------- ---------- ----------
                                                                                
Balance, August 31,                                                             
 1998...................   1,526,390   390,278         --         --         -- 
Share capital                                                                   
 reorganization (i).....  (1,521,390) (390,278) 12,301,570 26,399,229 32,731,788
                          ----------  --------  ---------- ---------- ----------
Balance, July 29, 1999..       5,000       --   12,301,570 26,399,229 32,731,788
                          ==========  ========  ========== ========== ==========


                                                 Class D    Class E             
                                      Class D     shares     shares             
                            Common     shares     (non-      (non-    Preferred 
Amount                      shares    (voting)   voting)    voting)     shares  
------                    ----------  --------  ---------- ---------- ----------
                                                                                
Balance, August 31,                                                             
 1998...................  $    2,870  $    734  $      --  $      --  $      -- 
Share capital                                                                   
 reorganization (i).....      (2,865)     (734)        --         --      21,185
                          ----------  --------  ---------- ---------- ----------
Balance, July 29, 1999..  $        5  $    --   $      --  $      --  $   21,185
                          ==========  ========  ========== ========== ==========

As a result of the capital reorganization, The Surface Mount      
Technology Centre Inc. acquired 100% of the outstanding voting shares   
of SMTC Corporation. The number of issued and outstanding shares of     
SMTC Corporation become the number of issued and outstanding shares of  
the continuing consolidated entity. The recorded value of the issued    
and outstanding shares of the continuing                                

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

consolidated entity is the recorded value of the capital stock of The   
Surface Mount Technology Centre Inc. The issued and outstanding shares  
of the continuing consolidated entity are as follows:                   

                                                                [Download Table]

                                                              Number Amount
                                                              ------ ------
                                                                           
Class A-2 shares:                                                          
  Recorded value of The Surface Mount Technology Centre Inc.               
   shares...................................................  2,500   $ 1  
                                                              -----   ---  
Balance, July 29, 1999......................................  2,500   $ 1  
                                                              =====   ===  

The $4 excess of The Surface Mount Technology Centre Inc. shares  
recorded value over the $1 par value of the Class A-2 shares has been   
recorded as additional paid-in capital.                                 

1999 capital transactions:                                              

(i)  On July 27, 1999 and July 28, 1999, The Surface Mount Technology   
Centre Inc. and SMTC Corporation completed a series of        
transactions to complete the reorganization described in note 
    2(a). As a result of the reorganization, the Company increased the
stated capital of certain classes of common shares with a     
  corresponding charge to retained earnings of $17,582 and reduced
 the stated capital of other classes of shares; converted common
shares into Class A, B or C common shares which in turn were  
exchanged into Class E non-voting shares, preferred shares and
   Class V voting shares; exchanged Class D shares into Class D non-
voting shares and Class V voting shares; issued 5,000 common  
shares for $5 cash consideration; and redeemed the outstanding
Class V voting shares for $1 cash consideration.              

(ii)  In connection with the reorganization agreement and the business  
    combination with HTM Holdings, Inc. that was consummated on July
30, 1999 (note 16), the Company committed to redeem the     
 outstanding preferred shares and a portion of the outstanding
   Class D non-voting and Class E non-voting shares of The Surface
   Mount Technology Centre Inc. for $42,035. The redemption amount
    of these shares has been presented as a current liability in the
   consolidated financial statements at July 29, 1999. The $20,850
   excess of the redemption amount over the $21,185 stated capital
   for the Class D, Class E and preferred shares has been recorded
as a charge to retained earnings.                           

(iii)  During fiscal 1999, The Surface Mount Technology Centre Inc.     
    paid dividends on its common shares in the amount of $387. The
dividends were paid prior to the reorganization.          

Due to the corporate reorganization that took place effective July 29,
1999, the capital stock amount for accounting purposes differs from the     
legal stated capital amount.                                                

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

9. Interest expense:                                                            

                                                                [Download Table]

                             Year ended      Year ended    September 1, 1998
                           August 31, 1997 August 31, 1998 to July 29, 1999 
                           --------------- --------------- -----------------
                                                                            
Short-term:                                                                 
  Bank indebtedness......       $533           $1,665           $2,615      
  Interest on acquisition                                                   
   note payable..........        --               288              --       
                                ----           ------           ------      
                                 533            1,953            2,615      
Long-term:                                                                  
  Interest on bank debt..        349              469              478      
  Interest on obligations                                                   
   under capital leases..         73               46               18      
                                ----           ------           ------      
                                 422              515              496      
                                ----           ------           ------      
                                $955           $2,468           $3,111      
                                ====           ======           ======      

10. Income taxes:                                                               

Certain of the Company's subsidiaries have approximately $7,322 of    
losses available to reduce income taxes in future years. The losses begin   
to expire in 2017. The benefit of approximately $991 of these losses has    
been recognized in the financial statements as a reduction in the deferred  
tax liability. In fiscal 1998, tax expense was reduced by the benefit of    
losses of $1,100 which had not been previously recognized.                  

11. Cash flows:                                                                 

Change in non-cash operating working capital:                         

                                                                [Download Table]

                                    Year ended Year ended September 1, 1998
                                    August 31, August 31,    to July 29,   
                                       1997       1998          1999       
                                    ---------- ---------- -----------------
                                                                           
Accounts receivable................  $(3,188)   $(24,289)     $(12,260)    
Inventories........................   (7,355)    (18,787)          679     
Prepaid expenses...................     (147)       (553)         (835)    
Accounts payable and accrued lia-                                          
 bilities..........................    1,727      23,704         1,345     
Income taxes payable...............      406         148           387     
                                     -------    --------      --------     
                                     $(8,557)   $(19,777)     $(10,684)    
                                     =======    ========      ========     

Cash paid for interest and income taxes:                              

                                                                [Download Table]

                                      Year ended Year ended September 1, 1998
                                      August 31, August 31,    to July 29,   
                                         1997       1998          1999       
                                      ---------- ---------- -----------------
                                                                             
Interest.............................   $1,023     $2,258        $3,193      
Income taxes.........................    2,998      4,062         3,054      

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

Non-cash financing and investing activities:                              

1999:                                                                       

Certain transactions arising from the share capital reorganization    
(notes 2(a) and 8) were non-cash transactions including the increase in     
stated capital and the exchange of common shares for preferred and non-     
voting shares.                                                              

1998:                                                                       

On September 1, 1997, the Company acquired certain assets of Ogden    
Atlantic Design Company, Inc. located in Charlotte, North Carolina. A       
portion of the acquisition was financed by the issuance of a $3,335 one     
year note payable.                                                          

12. Economic dependence and concentration of credit risk:                       

84% of sales for the period ended July 29, 1999 (year ended August 31,
1998--74%; year ended August 31, 1997--84%) and 81% of accounts receivable  
at July 29, 1999 (August 31, 1998--61%) arise from transactions with the    
Company's five largest customers.                                           

13. Commitments:                                                                

The Company is committed to future payments on operating leases for   
premises and equipment at July 29, 1999 as follows:                         

                                                                [Download Table]
                                                                             
2000.................................................................. $7,294
2001..................................................................  6,635
2002..................................................................  5,650
2003..................................................................  2,659
2004..................................................................    635
Subsequent years......................................................    169

14. Contingencies:                                                              

(a) General:                                                            

In the normal course of business, the Company may be subjected to     
litigation and claims from customers, suppliers and former employees.       
Management believes that adequate provisions have been recorded in the      
accounts where required. Although it is not possible to estimate the extent 
of potential costs, if any, management believes the ultimate resolution of  
such contingencies would not have a material adverse effect on the          
financial position, results of operations or cash flows of the Company.     

(b) Uncertainty due to the Year 2000 Issue:                             

The Year 2000 Issue arises because many computerized systems use two  
digits rather than four to identify a year. Date-sensitive systems may      
recognize the year 2000 as 1900 or some other date, resulting in errors     
when information using year 2000 dates is processed. In addition, similar   
problems may arise in some systems which use certain dates in 1999 to       
represent something other than a date. The effects of the Year 2000 Issue   
may be experienced before, on, or after January 1, 2000, and, if not        
addressed, the impact on operations and financial reporting may range from  
minor errors to a significant systems failure which could affect an         
entity's ability to conduct normal business operations. It is not possible  
to be certain that                                                          

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

all aspects of the Year 2000 Issue affecting the Company, including those   
related to the efforts of customers, suppliers, or other third parties,     
will be fully resolved.                                                     

15. Comparative figures:                                                        

  Certain prior years' figures presented have been reclassified to conform
with the current year's presentation.                                       

16. Subsequent events:                                                          

(a) Capital transactions:                                               

  On July 30, 1999, the Company issued 1,018,171 Class A shares and 86,707
Class N shares to its existing shareholders for $2,036 cash consideration.  

 (b) Business combination between HTM Holdings, Inc. and SMTC Corporation:

Effective July 30, 1999, the Company acquired 100% of the outstanding 
common shares of HTM Holdings, Inc., a contract manufacturer in Denver,     
Colorado. The Company issued 1,393,971 Class A shares and 154,168 Class L   
shares to the shareholders of HTM Holdings, Inc. for $16,739 cash           
consideration and 100% of the outstanding shares of HTM Holdings, Inc.      
Simultaneously, the former shareholders of the Company subscribed for an    
additional 26,701 Class N shares for nominal consideration.                 

Upon completion of these transactions, the former shareholders of HTM 
Holdings, Inc. held 58% of the outstanding shares of the Company and HTM    
Holdings, Inc. became a wholly owned subsidiary of the Company. As a        
result, the acquisition will be recorded as a reverse takeover of the       
Company by HTM Holdings, Inc. and accounted for using the purchase method.  
The purchase price is $24,703, including transaction costs of $4,293. The   
purchase price will be allocated to the fair value of the Company's net     
assets as follows:                                                          

                                                                [Download Table]
                                                                           
Current assets.................................................. $  84,423 
Capital assets..................................................    21,093 
Goodwill........................................................    24,863 
Liabilities and other...........................................  (105,676)
                                                                 --------- 
Net assets acquired............................................. $  24,703 
                                                                 ========= 

(c) Stock options and warrants:                                         

 On July 30, 1999, in connection with the business combination described
in note 16(b), each existing warrant holder and stock option holder of HTM  
Holdings, Inc. was granted equivalent warrants and stock options for Class  
A and Class L shares of SMTC Corporation.                                   

 On September 30, 1999, the Company issued an additional 116,860 Class A
stock options to certain employees.                                         

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

(d) Hedging activities:                                                 

On September 20, 1999, the Company entered into, for hedging purposes,
two interest rate swap transactions with a Canadian chartered bank. The     
swaps expire on September 22, 2001 and involve the exchange of 90-day       
floating LIBOR rates for a two-year fixed interest rate of 6.16% (before    
credit spread) per annum on a notional amount of $65,000.                   

17. Canadian and United States accounting policy differences:                   

 The consolidated financial statements of the Company have been prepared
in accordance with the generally accepted accounting principles ("GAAP") in 
Canada. Material measurement differences between Canadian and U.S. GAAP and 
their effect on the Company's consolidated financial statements are         
summarized below:                                                           

Consolidated statements of earnings:                                  

                                                                [Download Table]

                                   Year ended Year ended September 1, 1998
                                   August 31, August 31,    to July 29,   
                                      1997       1998          1999       
                                   ---------- ---------- -----------------
                                                                          
Net earnings for the year in                                              
 accordance with Canadian GAAP....   $5,501     $3,450        $3,858      
Adjustment to foreign                                                     
 exchange(i)......................      --         (87)          (58)     
Adjustment to deferred income                                             
 taxes(ii)........................     (143)        48           152      
Adjustment to reorganization                                              
 costs(iii).......................      --         --           (212)     
                                     ------     ------        ------      
Net earnings for the year in                                              
 accordance with U.S. GAAP........    5,358      3,411         3,740      
Currency translation adjustment...      380        --            --       
                                     ------     ------        ------      
Comprehensive income--U.S. GAAP...   $5,738     $3,411        $3,740      
                                     ======     ======        ======      

As a result of the adjustments to foreign exchange and deferred taxes,
deferred income taxes would be $600 and $969 at July 29, 1999 and August    
31, 1998, respectively and shareholders' equity (deficiency) would be       
$(19,020) and $19,658 at July 29, 1999 and August 31, 1998, respectively.   

(i)  Under Canadian GAAP, deferred taxes of operations using the        
    temporal method are translated at historical exchange rates, while
  under U.S. GAAP, deferred income taxes are translated at current
exchange rates.                                               

(ii)  Under Canadian GAAP, deferred income taxes are computed based on  
 accounting income using the deferral method. Under U.S. GAAP,
    deferred income taxes are recognized for the tax consequences in
   future years of differences between the tax bases of assets and
  liabilities and their financial reporting amounts at each year
  end, based on enacted tax rates applicable in periods in which
the differences are expected to reverse.                    

(iii)  Under Canadian GAAP, the costs associated with the               
     Reorganization are charged directly to retained earnings. Under
  U.S. GAAP, because the transaction is between entities under
  common control and is accounted for in a manner similar to a
   pooling of interests, these costs are recorded as a charge to
earnings.                                                 

(iv)  U.S. GAAP requires the reporting of comprehensive income in       
addition to net earnings. Comprehensive income includes net 
earnings plus other comprehensive income; specifically, all 

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SMTC CORPORATION
(FORMERLY THE SURFACE MOUNT TECHNOLOGY CENTRE INC.) ("SURFACE MOUNT") 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 
(Expressed in thousands of U.S. dollars except for share quantities and per 
share amounts)

changes in equity of a company during the period arising from     
transactions and other events from non-owner sources.             

(v)  Under Canadian GAAP, changes in bank overdraft balances are        
considered cash reductions and are not presented as financing 
 activities. Under U.S. GAAP, any changes in bank overdrafts are
considered to be financing activities. Accordingly, the cash  
provided by financing activities would have been $1,498 and   
$20,820 for the years ended August 31, 1998 and 1997,         
 respectively, in accordance with U.S. GAAP. In addition, at the
end of 1997 and beginning of 1998 cash would have been nil.   

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INDEPENDENT AUDITORS' REPORT

To the Board of Directors of SMTC Corporation (formerly HTM Holdings, Inc):     

We have audited the accompanying balance sheets of W.F. Wood, Incorporated
(a Massachusetts corporation and a wholly owned subsidiary of HTM Holdings,     
Inc.) as of September 3, 1999, December 31, 1998, and 1997, and the related     
statements of income, stockholders' equity, and cash flows for the period ended 
September 3, 1999 and the years ended December 31, 1998, 1997 and 1996. These   
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

 We conducted our audits in accordance with United States 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 financial statements referred to above present fairly,
in all material respects, the financial position of W.F. Wood, Incorporated as  
of September 3, 1999, December 31, 1998, and 1997, and the results of its       
operations and its cash flows for the period ended September 3, 1999 and the    
years ended December 31, 1998, 1997, and 1996 in conformity with United States  
generally accepted accounting principles.                                       

Boston, Massachusetts                             /s/ Canby, Maloney & Co., Inc.
February 9, 2000.                                                               

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W.F. WOOD, INCORPORATED 

BALANCE SHEETS
AS OF THE DATES INDICATED 

                                                                [Download Table]

                                         December 31, December 31, September 3,
                                             1997         1998         1999    
                                         ------------ ------------ ------------
                                                                               
Assets                                                                         
Current Assets:                                                                
  Cash..................................  $   70,282   $   22,991   $        3 
  Accounts receivable, net of allowance                                        
   for doubtful accounts of $20,000.....   1,953,774    2,599,745    2,619,517 
  Inventories...........................   3,011,002    2,971,547    3,590,236 
  Prepaid state income taxes............         --           --        59,820 
  Other current assets..................      33,041       91,347       84,751 
                                          ----------   ----------   ---------- 
    Total current assets................   5,068,099    5,685,630    6,354,327 
                                          ----------   ----------   ---------- 
Equipment and Improvements, Net.........   1,412,241    1,414,924    1,695,208 
                                          ----------   ----------   ---------- 
Other Assets:                                                                  
  Due from related party................     624,609      484,609          --  
  Deposits..............................       8,732        8,732       20,160 
                                          ----------   ----------   ---------- 
                                             633,341      493,341       20,160 
                                          ----------   ----------   ---------- 
                                          $7,113,681   $7,593,895   $8,069,695 
                                          ==========   ==========   ========== 
Liabilities and Stockholders' Equity                                           
Current Liabilities:                                                           
  Demand note payable to a bank.........  $1,670,764   $      --    $      --  
  Current maturities of capital lease                                          
   obligations..........................      63,088       33,726        6,626 
  Current maturities of long-term debt..     350,744      275,930      183,835 
  Accounts payable......................   1,879,225    2,710,425    3,855,502 
  Accrued expenses......................     211,369      279,862      570,166 
  Accrued state income taxes............      26,703       26,000          --  
                                          ----------   ----------   ---------- 
    Total current liabilities...........   4,201,893    3,325,943    4,616,129 
                                          ----------   ----------   ---------- 
Capital Lease Obligations, less current                                        
 maturities.............................      43,303          --           --  
                                          ----------   ----------   ---------- 
Long-Term Debt, less current                                                   
 liabilities............................     473,529      465,013      394,833 
                                          ----------   ----------   ---------- 
    Total Liabilities...................   4,718,725    3,790,956    5,010,962 
                                          ==========   ==========   ========== 
Stockholders' Equity:                                                          
Common stock, no par value                                                     
  Authorized--200,000 shares                                                   
  Issued and outstanding--80,000                                               
  shares................................     985,000      985,000    3,806,393 
Retained earnings (accumulated                                                 
 deficit)...............................   1,409,956    2,817,939     (747,660)
                                          ----------   ----------   ---------- 
                                           2,394,956    3,802,939    3,058,733 
                                          ----------   ----------   ---------- 
                                          $7,113,681   $7,593,895   $8,069,695 
                                          ==========   ==========   ========== 

The accompanying notes are an integral part of these financial statements.

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W.F. WOOD, INCORPORATED 

STATEMENTS OF INCOME
FOR THE PERIODS INDICATED 

                                                                [Download Table]

                          For the Years Ended December 31,                          
                         -------------------------------------                      
                                                                For the Period Ended
                            1996         1997         1998       September 3, 1999  
                         -----------  -----------  -----------  --------------------
                                                                                    
Net Sales............... $16,822,612  $25,618,654  $30,783,620      $23,198,095     
Cost of Sales...........  12,700,384   20,883,967   25,196,045       20,071,521     
                         -----------  -----------  -----------      -----------     
  Gross profit..........   4,122,228    4,734,687    5,587,575        3,126,574     
                         -----------  -----------  -----------      -----------     
Selling, General, and                                                               
 Administrative                                                                     
 Expenses:                                                                          
  Stockholders'                                                                     
   compensation.........     166,057      248,805      214,619          135,525     
  Professional fees                                                                 
   related to sale                                                                  
   transaction..........          --           --           --          402,610     
  Bonuses paid to                                                                   
   management and                                                                   
   employees related to                                                             
   sale transaction.....          --           --           --        2,571,176     
  Other selling,                                                                    
   general, and                                                                     
   administrative                                                                   
   expenses.............   2,204,506    2,370,845    2,965,395        1,717,789     
                         -----------  -----------  -----------      -----------     
    Total selling,                                                                  
     general, and                                                                   
     administrative                                                                 
     expenses...........   2,370,563    2,619,650    3,180,014        4,827,100     
                         -----------  -----------  -----------      -----------     
    Income (loss) from                                                              
     operations.........   1,751,665    2,115,037    2,407,561       (1,700,526)    
                         -----------  -----------  -----------      -----------     
Other Income (Expense):                                                             
  Interest expense,                                                                 
   net..................    (179,160)    (220,593)    (132,578)         (58,078)    
    Income (loss) before                                                            
     provision for state                                                            
     income taxes.......   1,572,505    1,894,444    2,274,983       (1,758,604)    
Provision for State                                                                 
 Income Taxes...........      45,000       79,000      103,000               --     
                         -----------  -----------  -----------      -----------     
  Net income (loss)..... $ 1,527,505  $ 1,815,444  $ 2,171,983      $(1,758,604)    
                         ===========  ===========  ===========      ===========     

The accompanying notes are an integral part of these financial statements.

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W.F. WOOD, INCORPORATED 

STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIODS INDICATED 

                                                                [Download Table]

                                                  Common Stock                 
                                              --------------------             
                                              Number of             Retained   
                                               Shares               Earnings   
                                               Issued     Amount    (Deficit)  
                                              --------- ---------- ----------- 
                                                                               
BALANCE, December 31, 1995...................  80,000   $  985,000 $   220,385 
  Net income.................................     --           --    1,527,505 
  Distributions to stockholders..............     --           --   (1,069,810)
                                               ------   ---------- ----------- 
BALANCE, December 31, 1996...................  80,000      985,000     678,080 
  Net income.................................     --           --    1,815,444 
  Distributions to stockholders..............     --           --   (1,083,568)
                                               ------   ---------- ----------- 
BALANCE, December 31, 1997...................  80,000      985,000   1,409,956 
  Net income.................................     --           --    2,171,983 
  Distributions to stockholders..............     --           --     (764,000)
                                               ------   ---------- ----------- 
BALANCE, December 31, 1998...................  80,000      985,000   2,817,939 
  Additional paid-in capital.................     --     2,821,393         --  
  Net loss...................................     --           --   (1,758,604)
  Distributions to stockholders..............     --           --   (1,806,995)
                                               ------   ---------- ----------- 
BALANCE, September 3, 1999...................  80,000   $3,806,393 $  (747,660)
                                               ======   ========== =========== 

The accompanying notes are an integral part of these financial statements.

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W.F. WOOD, INCORPORATED 

STATEMENTS OF CASH FLOWS
FOR THE PERIODS INDICATED 

                                                                [Download Table]

                            For the Years Ended December 31,                    
                         ----------------------------------------               
                                                                     For the    
                                                                   Period Ended 
                                                                   September 3, 
                             1996          1997          1998          1999     
                         ------------  ------------  ------------  ------------ 
                                                                                
Operating Activities:                                                           
  Collections from                                                              
   customers............ $ 15,693,172  $ 26,008,142  $ 30,137,649  $ 23,178,323 
  Interest income                                                               
   collected............        3,750         4,143           555            36 
  Payment of state                                                              
   income taxes.........      (22,033)     (103,730)     (111,470)      (82,564)
  Payment of operating                                                          
   expenses.............  (14,290,962)  (24,485,261)  (27,127,288)  (23,798,966)
  Payment of interest...     (193,518)     (215,707)     (161,872)      (66,169)
                         ------------  ------------  ------------  ------------ 
    Net cash provided by                                                        
     (used for)                                                                 
     operating                                                                  
     activities.........    1,190,409     1,207,587     2,737,574      (769,340)
                         ------------  ------------  ------------  ------------ 
Investing Activities:                                                           
  Proceeds from sale of                                                         
   equipment............       18,500        10,301        45,757         5,704 
  Purchase of equipment                                                         
   and improvements.....     (638,596)     (281,560)     (181,863)     (222,911)
  Payment of deposits...      (19,402)       (3,576)           --       (11,428)
                         ------------  ------------  ------------  ------------ 
    Net cash used for                                                           
     investing                                                                  
     activities.........     (639,498)     (274,835)     (136,106)     (228,635)
                         ------------  ------------  ------------  ------------ 
Financing Activities:                                                           
  Net proceeds from                                                             
   (payment of) demand                                                          
   note payable to a                                                            
   bank.................      232,734       259,581    (1,670,764)           -- 
  Proceeds from long-                                                           
   term debt............      389,920        71,469            --            -- 
  Payment of long-term                                                          
   debt.................     (181,605)     (205,387)     (281,330)     (227,776)
  Payment of capital                                                            
   lease obligations....       (8,219)      (62,674)      (72,665)      (27,100)
  Proceeds from                                                                 
   (payments to) related                                                        
   party................      (11,622)       27,101       140,000        83,496 
  Additional paid-in                                                            
   capital..............           --            --            --     2,552,249 
  Distributions to                                                              
   stockholders.........   (1,069,810)   (1,083,568)     (764,000)   (1,405,882)
                         ------------  ------------  ------------  ------------ 
    Net cash provided by                                                        
     (used for)                                                                 
     financing                                                                  
     activities.........     (648,602)     (993,478)   (2,648,759)      974,987 
                         ------------  ------------  ------------  ------------ 
Net decrease in cash....      (97,691)      (60,726)      (47,291)      (22,988)
Cash balance, beginning                                                         
 of period..............      228,699       131,008        70,282        22,991 
                         ------------  ------------  ------------  ------------ 
Cash balance, end of                                                            
 period................. $    131,008  $     70,282  $     22,991  $          3 
                         ============  ============  ============  ============ 

The accompanying notes are an integral part of these financial statements.

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W.F. WOOD, INCORPORATED 

STATEMENTS OF CASH FLOWS--(Continued) 
FOR THE PERIODS INDICATED 

                                                                [Download Table]

                              For the Years Ended December 31,                 
                              -----------------------------------              
                                                                     For the   
                                                                     Period    
                                                                      Ended    
                                                                    September  
                                 1996         1997        1998       3, 1999   
                              -----------  ----------  ----------  ----------- 
                                                                               
Reconciliation of Net Income                                                   
 (Loss) to Net Cash Provided                                                   
 by (Used for) Operating                                                       
 Activities                                                                    
Net income (loss)...........  $ 1,527,705  $1,815,444  $2,171,983  $(1,758,604)
Adjustments to reconciled                                                      
 net income (loss) to net                                                      
 cash provided by (used for)                                                   
 operating activities:                                                         
  Depreciation and                                                             
   amortization.............      242,315     321,615     365,624      264,160 
  (Gain) loss on disposal of                                                   
   equipment................       19,339      (8,307)    (34,301)       7,408 
  (Increase) decrease in:                                                      
    Accounts receivable.....   (1,129,440)    389,488    (645,971)     (19,772)
    Inventories.............   (1,166,871)   (591,976)     39,455     (618,689)
    Prepaid state income                                                       
     taxes..................           --          --          --      (59,820)
    Other current assets....       (1,957)     18,588     (58,306)       6,596 
  Increase (decrease) in:                                                      
    Accounts payable........    1,576,965    (656,910)    831,200    1,145,077 
    Accrued expenses........       99,386     (65,737)     68,493      290,304 
    Accrued state income                                                       
     taxes..................       22,967     (14,618)       (703)     (26,000)
                              -----------  ----------  ----------  ----------- 
    Net cash provided by                                                       
     (used for) operating                                                      
     activities.............  $ 1,190,409  $1,207,587  $2,737,574  $  (769,340)
                              ===========  ==========  ==========  =========== 
Non-Cash Investing and                                                         
 Financing Activities                                                          
Payment of long-term debt                                                      
 with stockholders'                                                            
 additional paid-in                                                            
 capital....................  $        --  $       --  $       --  $   269,144 
                              ===========  ==========  ==========  =========== 
Distribution of due from                                                       
 related party to                                                              
 stockholders...............  $        --  $       --  $       --  $   401,113 
                              ===========  ==========  ==========  =========== 
Purchase of equipment in                                                       
 exchange for long-term                                                        
 debt.......................  $    32,778  $       --  $  198,000  $   334,645 
                              ===========  ==========  ==========  =========== 
Purchase of equipment in                                                       
 exchange for capital lease                                                    
 obligations................  $   105,689  $   71,595  $       --  $        -- 
                              ===========  ==========  ==========  =========== 
Deposit applied to equipment                                                   
 purchase...................  $        --  $   17,746  $       --  $        -- 
                              ===========  ==========  ==========  =========== 

The accompanying notes are an integral part of these financial statements.

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS 

(1) Summary of Significant Accounting Policies                                  

W.F. Wood, Incorporated (the "Company"), is engaged in the design,        
manufacture, finishing, and sale of sheet metal fabrication and metal products. 
The accompanying financial statements reflect the application of certain        
accounting policies as described in this note. Other policies and practices are 
covered in the remaining notes.                                                 

(a) Inventories:                                                              

 Inventories, which include material, labor, and manufacturing overhead, are
stated at the lower of cost (first-in, first-out) or market.                    

(b) Equipment and Improvements:                                               

  Purchased property and equipment is recorded at cost. Capital lease property
and equipment is recorded at the lesser of cost or the present value of minimum 
lease payments required. The Company provides for depreciation and amortization 
by charges to income in amounts estimated to recover the cost of its equipment  
and improvements over their estimated useful lives or term of lease, using the  
straight-line method, as follows:                                               

                                                                [Download Table]
                                                                             
Machinery and equipment........................................    5-10 Years
Building improvements.......................................... Term of Lease
Office equipment...............................................    3-10 Years
Vehicles.......................................................       5 Years
Office equipment under capital lease........................... Term of Lease

(c) Income Taxes:                                                             

As discussed in Note 10, the outstanding common stock of the Company was  
sold effective September 3, 1999 to HTM Holdings, Inc. This transaction         
terminated the Company's subchapter "S" status. Prior to this transaction, the  
former stockholders of the Company had elected subchapter "S" status for        
federal and Massachusetts income tax purposes, thereby consenting to include    
the Company's income in their individual income tax returns. Massachusetts "S"  
corporations with sales over $9 million are subject to a state corporate income 
tax of 4.5%. The Company accounts for income taxes in accordance with Statement 
of Financial Accounting Standards No. 109, "Accounting for Income Taxes". This  
Statement requires the use of the asset and liability approach for financial    
accounting and reporting for income taxes.                                      

(d) Reclassification:                                                         

Certain accounts in the financial statements for the years ended December 
31, 1998 and 1997 have been reclassified to conform to the financial statement  
presentation for the period ended September 3, 1999.                            

(e) Estimates:                                                                

The preparation of financial statements in conformity with generally      
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenue and expenses during the          
reporting period. Actual results may differ from those estimates.               

(2) Related Party Transactions                                                  

(a) Due from Related Party:                                                   

Due from related party represents an amount due from Airedale Realty Trust
(the "Trust"), which is an entity that the former majority stockholders of the  
Company are beneficiaries of. On September 3, 1999, the amount due from the     
Trust was distributed to the former majority stockholders. The due from related 
party was unsecured with no interest.                                           

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS--(Continued)

(b) Facility Lease:                                                           

In connection with the sale of stock described in Note 10, the Company    
entered into a lease agreement with the Trust to lease a manufacturing facility 
for a term of one year with a four-year extension at the option of the Company. 
The annual base rent is $300,000, plus operating costs, as defined. The annual  
rent will range from approximately $319,000 in the first extension year to      
approximately $362,000 in the fourth extension year.                            

Prior to the lease agreement described above, the Company leased the      
facility from the Trust on a tenant-at-will basis. Total rent expense was       
$202,500 for the period ended September 3, 1999 and $300,000 for each of the    
years ended December 31, 1998, 1997, and 1996.                                  

(3) Inventories                                                                 

                                                                [Download Table]

                                       December 31, December 31, September 3,
                                           1997         1998         1999    
                                       ------------ ------------ ------------
                                                                             
Raw material..........................  $1,642,463   $1,360,722   $1,556,381 
Work in process.......................   1,228,417    1,524,611    1,994,284 
Finished goods........................     140,122       86,214       39,571 
                                        ----------   ----------   ---------- 
                                        $3,011,002   $2,971,547   $3,590,236 
                                        ==========   ==========   ========== 

(4) Equipment and Improvements                                                  

Equipment and improvements consisted of the following:                    

                                                                [Download Table]

                                     December 31, December 31, September 3,
                                         1997         1998         1999    
                                     ------------ ------------ ------------
                                                                           
Machinery and equipment.............  $1,823,555   $2,003,146   $2,484,866 
Building improvements...............     251,093      325,593      377,248 
Office equipment....................     525,855      584,989      609,169 
Vehicles............................      49,023       32,778           -- 
                                      ----------   ----------   ---------- 
                                       2,649,526    2,946,506    3,471,283 
Less--Accumulated depreciation and                                         
 amortization.......................   1,237,285    1,531,582    1,776,075 
                                      ----------   ----------   ---------- 
                                      $1,412,241   $1,414,924   $1,695,208 
                                      ==========   ==========   ========== 

  Depreciation and amortization expense related to equipment and improvements,
including the equipment under capital lease, was $264,160 for the period ended  
September 3, 1999 and $365,624, $321,615, and $242,315 for the years ended      
December 31, 1998, 1997, and 1996, respectively.                                

(5) Demand Note Payable to a Bank                                               

  In connection with the sale of common stock described in Note 10, the demand
note payable to a bank and the security interest provided to the bank was       
terminated.                                                                     

In 1998 and 1997, the demand note payable to a bank represents borrowings 
under a line-of-credit agreement, renewable annually, in which the Company may  
borrow against qualified accounts receivable and inventories, less letters of   
credit, as defined in the loan agreement, subject to a maximum limit of         
$2,500,000. Borrowings under the agreement bear interest at the bank's prime    
rate (7.75% at December 31, 1998) plus 0.5%, are collateralized by              
substantially all assets of the Company and the Trust and are fully guaranteed  
by the Trust.                                                                   

  The provisions of this agreement require, among other things, the Company to
(a) maintain a minimum cash flow coverage ratio as defined, (b) maintain a      
minimum tangible capital base (stockholders' equity less intangibles plus       
subordinated debt) as defined, (c) not allow senior debt to be four times       
greater than the tangible capital base and (d) places certain limits on         
distributions to the Company's stockholders.                                    

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS--(Continued)

(6) Capital Lease Obligations                                                   

The Company leases various office equipment under capital lease agreements
with monthly principal and interest installments ranging from $3,300 to $6,672, 
expiring at various dates through October 2000, with effective interest rates   
of approximately 8% to 10%. The related equipment collateralizes each lease.    

At September 3, 1999, and December 31, 1998 and 1997, the capitalized cost
of leased office equipment was approximately $177,000 as of each date and the   
related accumulated amortization was approximately $167,000, $126,000, and      
$67,000, respectively.                                                          

(7) Long-Term Debt                                                              

Long-term debt at September 3, 1999, and December 31, 1998 and 1997,      
consists of the following:                                                      

                                                                [Download Table]

                                         December 31, December 31, September 3,
                                             1997         1998         1999    
                                         ------------ ------------ ------------
                                                                               
(a)  Installment note payable to a                                             
     bank, due in monthly principal                                            
     payments of $8,929 through January                                        
     1999, with a final payment of                                             
     $61,343 due February 1999. The                                            
     note bears interest at the bank's                                         
     prime rate (7.75% at December 31,                                         
     1998) plus 0.5% and is                                                    
     collateralized by substantially                                           
     all assets of the Company and the                                         
     Trust. This note payable was                                              
     refinanced in 1998 to extend its                                          
     maturity date from November 1998                                          
     to February 1999..................    $177,415     $ 70,272     $     --  
(b)  Installment note payable to a                                             
     bank, due in monthly principal                                            
     payments of $7,690 plus interest                                          
     at the bank's prime rate (7.75% at                                        
     December 31, 1998) plus 0.5%                                              
     through August 2002. Borrowings                                           
     are collateralized by                                                     
     substantially all assets of the                                           
     Company and the Trust ............     430,631      338,353           --  
(c)  9.9% Installment note payable to a                                        
     finance company, due in monthly                                           
     principal and interest payments of                                        
     $833 through March 2000. The note                                         
     is collateralized by a motor                                              
     vehicle ..........................      19,934       11,534           --  
(d)  8.0% Installment note payable to a                                        
     finance company, due in monthly                                           
     principal and interest payments of                                        
     $4,015 through August 2003. The                                           
     note is collateralized by the                                             
     related equipment ................          --      187,115      164,456  
(e)  7.25% Installment note payable to                                         
     a finance company, due in monthly                                         
     principal and interest payments of                                        
     $6,666 through May 2004. The note                                         
     is collateralized by the related                                          
     equipment.........................          --           --      320,628  
(f)  10.2% Installment note payable to                                         
     a finance company, due in monthly                                         
     principal and interest payments of                                        
     $6,672 through October 2000. The                                          
     note is collateralized by the                                             
     related equipment.................     196,293      133,669       93,584  
                                           --------     --------     --------  
                                            824,273      740,943      578,668  
Less--Current maturities...............     350,744      275,930      183,835  
                                           --------     --------     --------  
                                           $473,529     $465,013     $394,833  
                                           ========     ========     ========  

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS--(Continued)

 The installment notes payable to a bank in (a) and (b) were fully repaid in
connection with the sale of common stock described in Note 10, and the security 
interest provided to the bank was terminated.                                   

Principal payments on the long-term debt at September 3, 1999 are due as  
follows:                                                                        

                                                                [Download Table]

Year Ending September 3,                                          Amount 
------------------------                                         --------
                                                                         
  2000.........................................................  $183,835
  2001.........................................................   116,058
  2002.........................................................   111,110
  2003.........................................................   115,771
  2004.........................................................    51,894
                                                                 --------
                                                                 $578,668
                                                                 ========

(8) Commitments                                                                 

(a) Facility Lease:                                                           

The Company leases a second manufacturing facility under a five-year lease
agreement expiring January 2004. The lease requires the Company to pay annual   
base rent, plus a share of real estate taxes, operating costs and management    
fees as defined in the agreement. The agreement provides for one five-year      
option to extend the lease term.                                                

Future minimum lease payments (without regard to real estate taxes,       
operating costs and management fees) on the operating lease are as follows:     

                                                                [Download Table]

Year Ending September 3,                                          Amount 
------------------------                                         --------
                                                                         
  2000.........................................................  $189,092
  2001.........................................................   189,092
  2002.........................................................   198,791
  2003.........................................................   203,637
  2004.........................................................    67,877
                                                                 --------
                                                                 $848,489
                                                                 ========

(b) Employment Agreements:                                                    

 The Company has entered into employment agreements with two officers of the
Company. The Company is obligated to pay the officers one year's salary as      
severance if their employment is terminated by the Company without cause or     
terminated by the officers with good reason, as defined. The terms of the       
agreements expire in December 2001 and are automatically renewed each year      
until terminated by either party.                                               

(c) Employee Bonus Plan:                                                      

In connection with the sale of stock described in Note 10, the Company    
adopted an employee bonus plan in which the Company provided a $250,000 bonus   
to its employees in recognition of their past service and will pay a $250,000   
retention bonus as an incentive for employees to remain with the Company for at 
least six months subsequent to the sale of stock. As of September 3, 1999, the  
past service bonus of $250,000 has been reflected in the accompanying financial 
statements. The retention bonus will be recognized upon the completion of the   
required term of employment.                                                    

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS--(Continued)

(9) Profit Sharing Plan                                                         

The Company has a defined contribution profit sharing plan covering both  
salaried and hourly employees under Section 401(k) of the Internal Revenue      
Code. Under the plan, employees may reduce up to 15% of their compensation per  
year as a contribution to the plan, subject to the limitations imposed under    
Section 401(k). The matching contribution to the plan, if any, is determined    
annually at the discretion of the Company's directors. During the period ended  
September 3, 1999 and the years ended December 31, 1998, 1997, and 1996, there  
were no matching contributions by the Company.                                  

(10) Concentrations                                                             

(a) Concentration of Credit Risk:                                             

The Company extends credit to customers primarily located in Massachusetts
who are manufacturers of various equipment, such as computers, computer-related 
equipment, and production equipment.                                            

 The Company generally does not require its customers to secure the accounts
receivable. Total accounts receivable outstanding at September 3, 1999, and     
December 31, 1998 and 1997, from Massachusetts customers in computer-related    
industries is approximately $1,794,000, $2,083,000, and $1,317,000,             
respectively.                                                                   

(b) Concentration of Credit Risk Arising from Cash Deposits in Excess of      
Insured Limits:                                                               

The Company maintains its cash balances in one financial institution. The 
balances are insured up to $100,000. At September 3, 1999, the Company's        
uninsured cash balances totaled $1,021,812. The Company has not experienced any 
losses in such cash accounts and believes it is not exposed to any significant  
credit risk on cash.                                                            

(c) Significant Customer:                                                     

 One customer accounted for approximately 80%, 87%, and 77% of net sales for
the period ended September 3, 1999 and the years ended December 31, 1998 and    
1997, respectively. Two customers accounted for approximately 67% of net sales  
for the year ended December 31, 1996. Total receivables from this significant   
customer was approximately $1,850,000, $1,989,000, and $1,033,000 at September  
3, 1999 and December 31, 1998 and 1997, respectively.                           

(11) Sale of Common Stock and Change in Tax Status                              

 Effective on September 3, 1999, the stockholders sold their common stock of
the Company to HTM Holdings, Inc. This transaction terminated the Company's     
subchapter "S" status and will become a taxable corporation. SFAS No. 109       
requires recognizing a deferred tax asset and liability for temporary           
differences that exist at the date the Company's tax status changes from        
nontaxable to taxable. The deferred tax liability due to this change was        
immaterial and has not been reflected in the accompanying financial statements. 

As part of the stock purchase agreement relating to the sale of stock, HTM
Holdings, Inc. may make an election under Section 338(h)(10) of the Internal    
Revenue Code, thereby treating the common stock sale of the Company as a sale   
of assets for tax reporting purposes. This would result in a gain on sale of    
assets for Massachusetts income tax reporting purposes. The potential state tax 
liability as a result of this election would be approximately $680,000. The     
accompanying financial statements do not reflect any adjustments for this as    
the election has not been made as of the date of this report.                   

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W.F. WOOD, INCORPORATED 

NOTES TO FINANCIAL STATEMENTS--(Continued)

(12) Sale Related Professional Fees and Bonuses Paid to Management and          
Employees                                                                       

  Professional fees reflected in the accompanying statements of income for the
period ended September 3, 1999 are non-recurring professional fees related to   
the Sale of the Company. Acquisition-related bonuses paid to management and     
employees reflect non-recurring bonuses paid by the Company upon sale of the    
Company to HTM Holdings, Inc.                                                   

(13) Additional paid-in capital                                                 

The existing shareholders of the Company funded the bonuses paid to       
management and employees and certain professional fees (notes 12 and 8(c)) and  
paid off certain bank debt by contributing cash of $2,821,393 to the Company.   

(14) Material Differences Between Generally Accepted Accounting Principles      
(GAAP) in United States and Canada                                      

The financial statements have been prepared in accordance with generally  
accepted accounting principles as applied in the United States. The financial   
statements also conform, in all material respects, with Canadian generally      
accepted accounting principles.                                                 

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INDEPENDENT AUDITORS' REPORT

Board of Directors                                                              
Pensar Corporation:                                                             

 We have audited the accompanying balance sheets of Pensar Corporation as of
December 31, 1998 and 1999, and the related statements of income, stockholders' 
equity and cash flows for each of the years in the three-year period ended      
December 31, 1999. These financial statements are the responsibility of the     
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

 We conducted our audits in accordance with United States 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 financial statements referred to above present fairly,
in all material respects, the financial position of Pensar Corporation as of    
December 31, 1998 and 1999, and the results of its operations and its cash      
flows for each of the years in the three-year period ended December 31, 1999 in 
conformity with United States generally accepted accounting principles.         

                                                                        KPMG LLP

Milwaukee, Wisconsin                                                            
May 9, 2000                                                                     

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PENSAR CORPORATION

BALANCE SHEETS
December 31, 1998, 1999 and March 31, 2000

                                                                [Download Table]

                                              December 31,                     
                                         ------------------------   March 31,  
                                            1998         1999         2000     
                                         -----------  -----------  ----------- 
                                                                   (unaudited) 
                                                                               
Assets                                                                         
Current assets:                                                                
  Cash.................................. $   427,285  $   511,740  $    26,519 
  Trade accounts receivable, net of                                            
   allowance for doubtful receivables of                                       
   $20,000 in 1998 and 1999.............   7,506,530    9,780,860    8,334,521 
  Inventories...........................   2,473,339    5,273,489    6,785,942 
  Prepaid expenses......................      65,960      200,994      245,777 
                                         -----------  -----------  ----------- 
      Total current assets..............  10,473,114   15,767,083   15,392,759 
                                         -----------  -----------  ----------- 
Property, plant and equipment, net......   3,436,303    4,720,574    4,858,638 
Other assets............................     456,085      511,048      562,052 
                                         -----------  -----------  ----------- 
                                         $14,365,502  $20,998,705  $20,813,449 
                                         ===========  ===========  =========== 
Liabilities and Stockholders' Equity                                           

Current liabilities:                                                           
  Lines of credit....................... $ 1,500,000  $ 4,215,000  $ 3,000,000 
  Current installments of long-term                                            
   debt.................................     290,000      331,631      334,873 
  Accounts payable......................   2,810,627    5,138,413    4,995,547 
  Accrued liabilities...................   1,239,201    1,292,407    1,644,600 
  Stockholders' distributions payable...     560,000      138,666          --  
                                         -----------  -----------  ----------- 
      Total current liabilities.........   6,399,828   11,116,117    9,975,020 
Long-term debt, less current                                                   
 installments...........................     830,000    1,080,867    1,039,705 
                                         -----------  -----------  ----------- 
      Total liabilities.................   7,229,828   12,196,984   11,014,725 
                                         -----------  -----------  ----------- 

Stockholders' equity:                                                          
  Common stock, $1 par value:                                                  
    Voting; 10,000 shares authorized,                                          
     1,000 shares issued and                                                   
     outstanding........................       1,000        1,000        1,000 
    Nonvoting; 40,000 shares authorized,                                       
     no shares issued...................         --           --           --  
    Additional paid-in capital..........   1,209,423    1,209,423    1,209,423 
    Retained earnings...................   6,564,314    8,046,298    9,003,301 
    Notes receivable from officers and                                         
     stockholders.......................    (639,063)    (455,000)    (415,000)
                                         -----------  -----------  ----------- 
      Total stockholders' equity........   7,135,674    8,801,721    9,798,724 
                                         -----------  -----------  ----------- 
                                         $14,365,502  $20,998,705  $20,813,449 
                                         ===========  ===========  =========== 

See accompanying notes to financial statements. 

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PENSAR CORPORATION

STATEMENTS OF INCOME
Years ended December 31, 1997, 1998, 1999 and 
quarters ended March 31, 1999 and 2000

                                                                [Download Table]

                               Year ended December 31,       Quarter ended March 31,
                         ----------------------------------- -----------------------
                            1997        1998        1999        1999        2000    
                         ----------- ----------- ----------- ----------- -----------
                                                             (unaudited) (unaudited)
                                                                                    
Revenue:                                                                            
  Manufacturing......... $49,863,694 $48,919,471 $50,018,206 $10,338,738 $15,441,633
  Engineering services..   1,167,940   1,978,051   2,977,675     444,740     841,160
                         ----------- ----------- ----------- ----------- -----------
    Total revenue.......  51,031,634  50,897,522  52,995,881  10,783,478  16,282,793
Cost of goods sold or                                                               
 services provided......  41,858,905  41,867,805  43,858,748   9,315,431  13,734,594
                         ----------- ----------- ----------- ----------- -----------
    Gross profit........   9,172,729   9,029,717   9,137,133   1,468,047   2,548,199
Operating expenses:                                                                 
  Executive bonus                                                                   
   compensation.........     642,037     528,764     497,692      17,253     114,213
  Professional fees                                                                 
   related to sale                                                                  
   transaction..........         --          --       75,000         --          -- 
  Other selling, general                                                            
   and administrative...   4,482,527   4,408,246   4,532,716     955,041   1,358,979
                         ----------- ----------- ----------- ----------- -----------
    Total selling,                                                                  
     general                                                                        
     administrative                                                                 
     expenses...........   5,124,564   4,937,010   5,105,408     972,294   1,473,192
                         ----------- ----------- ----------- ----------- -----------
Operating income........   4,048,165   4,092,707   4,031,725     495,753   1,075,007
Other expense:                                                                      
  Interest expense......     387,891     216,985     267,697      38,518     103,335
                         ----------- ----------- ----------- ----------- -----------
Net income.............. $ 3,660,274 $ 3,875,722 $ 3,764,028 $   457,235 $   971,672
                         =========== =========== =========== =========== ===========
Basic net income per                                                                
 common share........... $  3,812.79 $  3,875.72 $  3,764.03 $    457.24 $    971.67
                         =========== =========== =========== =========== ===========
Weighted average shares                                                             
 of common stock                                                                    
 outstanding............         960       1,000       1,000       1,000       1,000
                         =========== =========== =========== =========== ===========
Diluted net income per                                                              
 common share........... $  3,734.97 $  3,875.72 $  3,764.03 $    457.24 $    971.67
                         =========== =========== =========== =========== ===========
Weighted average shares                                                             
 of common stock                                                                    
 outstanding............         980       1,000       1,000       1,000       1,000
                         =========== =========== =========== =========== ===========

See accompanying notes to financial statements. 

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PENSAR CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1997, 1998 and 1999 and
quarter ended March 31, 2000

                                                        [Enlarge/Download Table]

                                                                             Notes                   
                                                 Additional             receivable from     Total    
                                Voting Nonvoting  paid-in    Retained    officers and   stockholders'
                         Shares common  common    capital    earnings    stockholders      equity    
                         ------ ------ --------- ---------- ----------  --------------- -------------
                                                                                                     
Balance at December 31,                                                                              
 1996...................   960  $  960    --       809,463   4,116,635     (416,000)      4,511,058  
Net income..............   --      --     --           --    3,660,274          --        3,660,274  
Distributions...........   --      --     --           --   (2,256,121)         --       (2,256,121) 
Collections of notes                                                                                 
 receivable.............   --      --     --           --          --        69,600          69,600  
                         -----  ------    ---    ---------  ----------     --------      ----------  
Balance at December 31,                                                                              
 1997...................   960     960    --       809,463   5,520,788     (346,400)      5,984,811  
Issuance of voting                                                                                   
 common stock...........    40      40    --       399,960         --      (400,000)            --   
Net income..............   --      --     --           --    3,875,722          --        3,875,722  
Distributions...........   --      --     --           --   (2,832,196)         --       (2,832,196) 
Collections of notes                                                                                 
 receivable.............   --      --     --           --          --       107,337         107,337  
                         -----  ------    ---    ---------  ----------     --------      ----------  
Balance at December 31,                                                                              
 1998................... 1,000   1,000    --     1,209,423   6,564,314     (639,063)      7,135,674  
Net income..............   --      --     --           --    3,764,028          --        3,764,028  
Distributions...........   --      --     --           --   (2,282,044)         --       (2,282,044) 
Collections of notes                                                                                 
 receivable.............   --      --     --           --          --       184,063         184,063  
                         -----  ------    ---    ---------  ----------     --------      ----------  
Balance at December 31,                                                                              
 1999................... 1,000  $1,000    --     1,209,423   8,046,298     (455,000)      8,801,721  
Net income..............   --      --     --           --      971,672                      971,672  
Distributions...........   --      --     --           --      (14,669)                     (14,669) 
Collections of notes                                                                                 
 receivable.............   --      --     --           --                    40,000          40,000  
                         -----  ------    ---    ---------  ----------     --------      ----------  
Balance at March 31,                                                                                 
 2000................... 1,000  $1,000    --     1,209,423   9,003,301     (415,000)      9,798,724  
                         =====  ======    ===    =========  ==========     ========      ==========  

See accompanying notes to financial statements. 

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PENSAR CORPORATION

STATEMENTS OF CASH FLOWS
Years ended December 31, 1997, 1998, 1999 and 
quarters ended March 31, 1999 and 2000

                                                        [Enlarge/Download Table]

                               Year ended December 31,           Quarter ended March 31, 
                         --------------------------------------  ------------------------
                             1997         1998         1999         1999         2000    
                         ------------  -----------  -----------  -----------  -----------
                                                                 (unaudited)  (unaudited)
                                                                                         
Cash flows from                                                                          
 operating activities:                                                                   
 Net income............. $  3,660,274    3,875,722    3,764,028     457,235      971,672 
 Adjustments to                                                                          
  reconcile net income                                                                   
  to net cash provided                                                                   
  by operating                                                                           
  activities:                                                                            
 Depreciation...........      623,057      631,904      752,457     159,906      223,625 
 Amortization of debt                                                                    
  issuance costs........       15,684       15,680       26,729       6,684        2,814 
 Loss (gain) on sale of                                                                  
  property, plant and                                                                    
  equipment.............          --        (2,913)       4,004         --           --  
 Increase in cash                                                                        
  surrender value of                                                                     
  life insurance........      (72,040)     (78,119)     (83,766)    (21,600)     (53,818)
 Changes in assets and                                                                   
  liabilities:                                                                           
  Accounts receivable...   (1,416,342)     419,131   (2,274,330)  1,379,078    1,446,339 
  Inventories...........      675,672      136,718   (2,800,150)   (924,056)  (1,512,453)
  Prepaid expenses......          194      (17,837)    (135,034)    (69,435)     (44,783)
  Accounts payable......     (331,939)    (541,775)   2,327,786     759,492     (142,866)
  Accrued liabilities...      441,783      (16,695)      53,206     117,267      352,193 
                         ------------  -----------  -----------  ----------   ---------- 
   Net cash provided by                                                                  
    operating                                                                            
    activities..........    3,596,343    4,421,816    1,634,930   1,864,571    1,242,723 
                         ------------  -----------  -----------  ----------   ---------- 
Cash flows from                                                                          
 investing activities:                                                                   
 Purchase of property,                                                                   
  plant and equipment...     (321,365)    (691,407)  (2,054,857)   (344,349)    (361,689)
 Proceeds from sale of                                                                   
  property, plant and                                                                    
  equipment.............          --         3,325       14,125         --           --  
 (Increase) decrease in                                                                  
  debt service trust                                                                     
  funds.................           (3)          (8)       2,074       2,074          --  
                         ------------  -----------  -----------  ----------   ---------- 
   Net cash used for                                                                     
    investing                                                                            
    activities..........     (321,368)    (688,090)  (2,038,658)   (342,275)    (361,689)
                         ------------  -----------  -----------  ----------   ---------- 
Cash flows from                                                                          
 financing activities:                                                                   
 Proceeds from lines of                                                                  
  credit................   30,385,000   18,625,000   26,050,000   4,875,000    5,135,000 
 Payments on lines of                                                                    
  credit................  (31,450,000) (18,325,000) (23,335,000) (6,225,000)  (6,350,000)
 Repayment of                                                                            
  stockholders' notes                                                                    
  payable...............          --      (300,000)         --          --           --  
 Proceeds from issuance                                                                  
  of long-term debt.....          --           --       500,000         --           --  
 Repayments of long-term                                                                 
  debt..................     (442,250)    (928,865)    (207,502)        --       (37,920)
 Distributions to                                                                        
  stockholders..........   (1,402,121)  (3,126,196)  (2,703,378)   (659,444)    (153,335)
 Proceeds from                                                                           
  collection of notes                                                                    
  receivable from                                                                        
  officers and                                                                           
  stockholders..........       91,700      107,337      184,063      80,170       40,000 
                         ------------  -----------  -----------  ----------   ---------- 
   Net cash provided by                                                                  
    (used for) financing                                                                 
    activities..........   (2,817,671)  (3,947,724)     488,183  (1,929,274)  (1,366,255)
                         ------------  -----------  -----------  ----------   ---------- 
   Increase (decrease)                                                                   
    in cash.............      457,304     (213,998)      84,455    (406,978)    (485,221)
Cash:                                                                                    
 Beginning of period....      183,979      641,283      427,285     427,285      511,740 
                         ------------  -----------  -----------  ----------   ---------- 
 End of period.......... $    641,283  $   427,285  $   511,740  $   20,307   $   26,519 
                         ============  ===========  ===========  ==========   ========== 
Supplemental cash flow                                                                   
 information--Cash paid                                                                  
 for interest........... $    372,467  $   213,917  $   227,749  $   31,832   $  100,521 
                         ============  ===========  ===========  ==========   ========== 
Non-cash investing and                                                                   
 financing activities--                                                                  
 Receipt of notes                                                                        
 receivable for issuance                                                                 
 of common stock........ $    --       $   400,000  $       --   $      --    $      --  
                         ============  ===========  ===========  ==========   ========== 

See accompanying notes to financial statements. 

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PENSAR CORPORATION

NOTES TO FINANCIAL STATEMENTS 
December 31, 1997, 1998 and 1999

(1)Nature of Business                                                           

 Pensar Corporation (the Company), based in Appleton, Wisconsin, designs
and assembles custom made electronic products, most of which include        
printed circuit boards, for domestic manufacturers. The Company also        
provides engineering services relating to board design and microchip        
programming. The Company's raw materials are readily available, and the     
Company is not dependent on a single supplier or a limited number of        
suppliers.                                                                  

The Company's accounting principles are in accordance with accounting 
principles generally accepted in the United States, and, except as outlined 
in note 15, are, in all material respects, in accordance with accounting    
principles generally accepted in Canada.                                    

(2)Summary of Significant Accounting Policies                                   

(a) Use of Estimates                                                    

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and    
assumptions that affect the reported amounts of assets and liabilities and  
disclosures of contingent assets and liabilities at the date of the         
financial statements and the reported amounts of revenue and expenses       
during the reporting year. Actual results may differ from those estimates.  

(b) Revenue Recognition                                                 

Revenue from the sale of products is recognized when goods are shipped
to customers. Revenue from the provision of engineering services is         
recognized as services are provided.                                        

(c) Inventories                                                         

Inventories are valued on a first-in, first-out basis at the lower of 
cost or replacement value for raw materials and at the lower of cost or net 
realizable value for work in process and finished goods.                    

(d) Property, Plant and Equipment                                       

Property, plant and equipment are recorded at cost and depreciated    
predominantly on a straight-line basis over their estimated useful lives as 
follows:                                                                    

                                                                [Download Table]
----------------------------------------------------------------------------
                                                                            
 Building........................................................   40 years
 Building improvements...........................................    5 years
 Machinery and equipment......................................... 5-10 years
 Office furniture and equipment..................................    7 years
 Computer hardware and software..................................  3-5 years
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(e) Other Assets                                                        

Costs incurred relating to the issuance of debt are deferred and      
amortized to interest expense over the term of the related debt.            

(f) Income Taxes                                                        

The Company has elected to be taxed as an S corporation under the     
provisions of the Internal Revenue Code and Wisconsin state statutes. Under 
those provisions, the Company does not pay Federal or Wisconsin corporate   
income taxes on its taxable income. Rather, the stockholders are            
individually liable                                                         

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PENSAR CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

for Federal and Wisconsin income taxes on their respective shares of the    
Company's taxable income. The Company makes periodic distributions to its   
stockholders to enable them to pay the personal income taxes related to     
their respective shares of the Company's taxable income.                    

(g) Impairment of Long-Lived Assets                                     

The Company reviews long-lived assets and certain identifiable        
intangibles for impairment whenever events or changes in circumstances      
indicate that the carrying amount of an asset may not be recoverable.       
Recoverability of assets to be held and used is measured by a comparison of 
the carrying amount of an asset to future net cash flows expected to be     
generated by the asset. If such assets are considered permanently impaired, 
the impairment to be recognized is measured by the amount by which the      
carrying amount of the assets exceeds the fair value of the assets. Assets  
to be disposed of are reported at the lower of the carrying value or the    
fair value less costs to sell.                                              

(h) Recently Issued Accounting Pronouncements                           

In June 1998, the Financial Accounting Standards Board (FASB) issued  
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. 
This Statement establishes methods of accounting for derivative financial   
instruments and hedging activities related to those instruments as well as  
other hedging activities. The Statement requires all derivatives to be      
recognized either as assets or liabilities and measured at fair value. In   
1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments   
and Hedging Activities Deferral of the Effective Date of SFAS 133, which    
defers the effective date of SFAS No. 133. The Company will be required to  
implement SFAS No. 133 for its fiscal year ended December 31, 2001. It is   
anticipated that SFAS No. 133 will not have a significant impact on the     
Company's financial position, results of operations or cash flows since it  
does not maintain any derivative financial instruments.                     

(i) Advertising                                                         

Advertising costs are charged to operations as selling expense when   
incurred. Advertising expense for the years ended December 31, 1997, 1998   
and 1999 was approximately $21,700, $21,200 and $34,100, respectively.      

(j) Research and Development                                            

  The Company expenses all research and development costs as incurred. For
the years ending December 31, 1997, 1998 and 1999, research and development 
costs included in the respective statements of income were not significant  
to the Company's operations.                                                

(k) Earnings Per Share                                                  

Basic net income per common share is computed by dividing net income  
available to common stockholders by the weighted average number of common   
shares outstanding for the period. Basic net income per common share does   
not consider common stock equivalents. Diluted net income per common share  
reflects the dilution that would occur if convertible debt securities and   
stock options were exercised or converted into common shares or resulted in 
the issuance of common shares that then shared in the net income of the     
entity. The computation of diluted net income per common share uses the "if 
converted" and "treasury stock" methods to reflect dilution. The difference 
between basic net income per common                                         

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

share and diluted net income per common share in 1997 relates to the        
outstanding stock options discussed in note 12.                             

(l) Unaudited Financial Information                                     

 The unaudited interim financial statements furnished herein reflect all
adjustments which are, in the opinion of management, necessary to present   
fairly the financial position of the Company as of March 31, 2000 and the   
results of its operations and its cash flows for the three months ended     
March 31, 1999 and 2000. The unaudited interim financial statements should  
be read in conjunction with the annual financial statements and notes       
thereto included herein.                                                    

(3)Inventories                                                                  

Inventories as of December 31, 1998 and 1999 and March 31, 2000 are   
summarized as follows:                                                      

                                                                [Download Table]

                                                    December 31,                
                                                --------------------  March 31, 
                                                   1998      1999       2000    
                                                ---------- --------- -----------
                                                                     (unaudited)
                                                                                
Raw materials.................................. $1,646,169 2,865,416 $4,206,041 
Work in process................................    806,766 2,406,257  2,508,329 
Finished goods.................................     20,404     1,816     71,572 
                                                ---------- --------- ---------- 
  Total inventories............................ $2,473,339 5,273,489 $6,785,942 
                                                ========== ========= ========== 

(4)Property, Plant and Equipment                                                

Property, plant and equipment at December 31, 1998 and 1999 are       
summarized as follows:                                                      

                                                                [Download Table]

                                                       1998               
                                         ---------------------------------
                                                    Accumulated  Net book 
                                            Cost    depreciation   value  
                                         ---------- ------------ ---------
                                                                          
Land.................................... $  162,847        --      162,847
Building and building improvements......  2,497,237    418,633   2,078,604
Machinery and equipment.................  4,032,582  3,261,890     770,692
Office furniture and equipment..........    190,846    139,749      51,097
Computer hardware and software..........  1,188,601    815,538     373,063
                                         ----------  ---------   ---------
                                         $8,072,113  4,635,810   3,436,303
                                         ==========  =========   =========

                                                       1999               
                                         ---------------------------------
                                                    Accumulated  Net book 
                                            Cost    depreciation   value  
                                         ---------- ------------ ---------
                                                                          
Land.................................... $  162,847        --      162,847
Building and building improvements......  2,596,407    495,301   2,101,106
Machinery and equipment.................  5,529,471  3,676,185   1,853,286
Office furniture and equipment..........    318,068    160,244     157,824
Computer hardware and software..........  1,389,469    943,958     445,511
                                         ----------  ---------   ---------
                                         $9,996,262  5,275,688   4,720,574
                                         ==========  =========   =========

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

(5)Other Assets                                                                 

Other assets at December 31, 1998 and 1999 are summarized as follows: 

                                                                [Download Table]

                                                             1998    1999  
                                                           -------- -------
                                                                           
Cash surrender value of life insurance.................... $396,559 480,325
Deferred financing costs, net.............................   57,452  30,723
Debt service trust funds..................................    2,074     -- 
                                                           -------- -------
                                                           $456,085 511,048
                                                           ======== =======

(6)Accrued Liabilities                                                          

Accrued liabilities at December 31, 1998 and 1999 are summarized as   
follows:                                                                    

                                                                [Download Table]

                                                       1998      1999   
                                                    ---------- ---------
                                                                        
Salaries and wages, payroll taxes and related                           
 withholdings...................................... $  402,571   574,595
Vacation...........................................    429,889   480,381
Health and dental benefits.........................    133,806   144,000
Warranty costs.....................................     90,000       -- 
Property taxes.....................................     68,691    64,392
Customer rebates...................................     63,000     9,436
Other..............................................     51,244    19,603
                                                    ---------- ---------
                                                    $1,239,201 1,292,407
                                                    ========== =========

(7)Lines of Credit                                                              

 The lines of credit balance at December 31, 1998 and 1999 is summarized
as follows:                                                                 

                                                                [Download Table]

                                                       1998      1999   
                                                    ---------- ---------
                                                                        
Bank line of credit, $3,800,000 maximum available,                      
 interest at the prime rate minus 0.75% (7.75% at                       
 December 31, 1999) on the principal balance                            
 outstanding of $1,900,000 or less and prime rate                       
 minus 1.00% (7.50% at December 31, 1999) on the                        
 principal balance outstanding in excess of                             
 $1,900,000, due July 31, 2000....................  $1,500,000 3,800,000
Bank line of credit, $500,000 maximum available,                        
 interest at the prime rate minus 0.75% (7.75% at                       
 December 31, 1999), due December 20, 2001........         --    415,000
                                                    ---------- ---------
                                                    $1,500,000 4,215,000
                                                    ========== =========

  At December 31, 1998 and 1999, the Company also has available a $400,000
line of credit with interest at prime minus 0.75% (7.75% at December 31,    
1999). The line of credit is available through July 2000. At December 31,   
1998 and 1999, there were no outstanding borrowings on this line of credit. 

 The weighted average interest rates for the lines of credit outstanding
during 1998 and 1999 were 7.85% and 7.35% respectively.                     

 The Company pays a commitment fee on the unused portion of its lines of
credit at an annual rate of 0.25%.                                          

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

The line of credit agreements contain various restrictive covenants   
including maintaining certain working capital and net worth requirements    
and prohibition against change in control of the Company. At December 31,   
1999, the Company was in compliance with or has obtained waivers for        
covenants with which it was not in compliance. It is management's intent to 
pay off the $415,000 line of credit within the next year, and accordingly,  
it is presented as a current liability.                                     

(8)Long-term Debt                                                               

Long-term debt at December 31, 1998 and 1999 is summarized as follows:

                                                                [Download Table]

                                                       1998       1999   
                                                    ---------- ----------
                                                                         
1993 City of Appleton, Wisconsin Industrial                              
 Development Revenue Bonds, due December 2003,                           
 variable interest rate adjusted weekly (5.6% at                         
 December 31, 1999), interest payments due                               
 monthly..........................................  $  600,000 $  600,000
1994 City of Appleton, Wisconsin Industrial                              
 Development Revenue Bonds, due August 2001,                             
 variable interest rate adjusted weekly (5.6% at                         
 December 31, 1999), interest payments due                               
 monthly, with mandatory sinking fund payments of                        
 $175,000 due each August.........................     520,000    350,000
Note payable to a financial institution, with                            
 interest at 7.9%, principal and interest payments                       
 of $15,660 due monthly through September 2002....         --     462,498
                                                    ---------- ----------
  Total long-term debt............................   1,120,000  1,412,498
Less current installments.........................     290,000    331,631
                                                    ---------- ----------
  Long-term debt, less current installments.......  $  830,000 $1,080,867
                                                    ========== ==========

The 1993 City of Appleton, Wisconsin Industrial Development Revenue   
Bonds are secured by an irrevocable bond letter of credit in the amount of  
$607,398. The letter of credit expires on December 15, 2003 and is secured  
by the assets of the Company.                                               

The 1994 City of Appleton, Wisconsin Industrial Development Revenue   
Bonds are secured by an irrevocable bond letter of credit in the amount of  
$354,375. The letter of credit expires on August 15, 2001 and is secured by 
the assets of the Company.                                                  

The Industrial Development Revenue Bonds contain various restrictive  
covenants including maintaining certain working capital and net worth       
requirements and prohibition against change in control of the Company. At   
December 31, 1999, the Company was in compliance with or has obtained       
waivers for covenants with which it was not in compliance.                  

Aggregate long-term debt principal payments and mandatory sinking fund
payments due within the next five years and thereafter follows:             

                                                                [Download Table]

Year ending December 31,                                                   
------------------------                                                   
                                                                           
  2000.......................................................... $  331,631
  2001..........................................................    344,674
  2002..........................................................    136,193
  2003..........................................................    600,000
                                                                 ----------
                                                                 $1,412,498
                                                                 ==========

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

(9)Leases                                                                       

The Company leases certain manufacturing equipment and vehicles under     
noncancellable operating leases with initial or remaining terms in excess of    
one year.                                                                       

  Future minimum rental payments required under these operating leases for
the next five years and thereafter follows:                                 

                                                                [Download Table]

Year ending December 31,                                                   
------------------------                                                   
                                                                           
  2000.......................................................... $  708,657
  2001..........................................................    426,172
  2002..........................................................    327,461
  2003..........................................................    211,876
  2004..........................................................    211,876
    Thereafter..................................................     12,397
                                                                 ----------
                                                                 $1,898,439
                                                                 ==========

 Rent expense, including executory costs, under all operating leases for
the years ended December 31, 1997, 1998 and 1999 amounted to $322,568,      
$416,133 and $463,378, respectively.                                        

(10)Employee Benefit Plans                                                      

  Substantially all employees participate in a discretionary bonus program
in which cash payments are made to participants based on a guideline of net 
income in excess of a minimum return on total stockholders' equity at the   
beginning of the year. Bonus expense amounted to $1,658,620, $1,575,823 and 
$1,422,469 for the years ended December 31, 1997, 1998 and 1999,            
respectively.                                                               

The Company maintains a 401(k) profit sharing plan. Virtually all     
employees are eligible to participate in the plan. During 1997 and 1998,    
employees could elect to contribute up to 20% of their compensation to the  
plan and during 1999, employees could elect to contribute up to 25% of      
their compensation to the plan. The Company's contribution to the plan is   
determined annually by the Board of Directors. There were no Company        
contributions for the years ended December 31, 1997, 1998 and 1999.         

  On September 1, 1998, the Company entered into a Phantom Stock Agreement
with an officer of the Company. Under the agreement, the officer received   
50 phantom share units. Upon separation from service, the officer will      
receive his vested portion of the difference between the ending certificate 
of agreed value of the shares over the beginning certificate of agreed      
value of the shares. The agreed value is established at the discretion of   
the Board of Directors. The officer was immediately 40% vested and will     
vest an additional 15% per year on January 1, 2000 through January 1, 2003. 
At December 31, 1998 and 1999, the certificate of agreed value of the       
phantom shares was the same as the beginning certificate of agreed value,   
and thus the Company has not recorded a liability for this agreement.       

(11)Stock and Related Party Transactions                                        

In the event of the death of a stockholder, the deceased stockholder's
estate has the option to require the Company to purchase all stock owned by 
the estate. The Company is the beneficiary on life insurance policies of    
the major shareholders that would help cover the Company's obligation to    
purchase stock from a deceased stockholder's estate. The Company has the    
right of first refusal on all other transfers of common stock. Also, upon   
termination of employment, certain stockholders are required to sell and    
the Company is obligated to buy all of their shares of stock.               

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

 During 1994 and 1998, certain officers purchased common stock partially
financed with notes payable to the Company. The notes, with interest at     
6.25%, are collateralized by the stock. Interest is payable quarterly and   
principal is due annually in minimum amounts of $84,000 through 2004 and    
then $32,000 through 2008. During 1997, 1998 and 1999, the Company received 
$69,600, $107,337 and $184,063, respectively, in principal repayments and   
recorded approximately $26,000, $41,000 and $33,200, respectively, of       
interest income in connection with these notes.                             

The Company recorded approximately $20,388 of interest expense for the
year ended December 31, 1998, in connection with certain notes payable to   
the stockholders. The notes payable to the stockholders were paid in full   
by the Company during 1998.                                                 

(12)Stock Options                                                               

  In 1994, the Company awarded an employee stockholder options to purchase
40 shares of voting common stock at $10,000 per share, the estimated fair   
market value of the common stock. The employee vested in 10 shares of the   
options each January 1 from 1995 through 1998. The options were exercised   
on January 1, 1998 with the issuance to the Company of a $400,000 note, as  
discussed in note 11.                                                       

The Company accounts for its stock option plan in accordance with the 
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting  
for Stock Issued to Employees; as permitted by Statement of Financial       
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based             
Compensation. Under APB Opinion No. 25, compensation expense is recorded on 
the date of grant only if the current market price of the underlying stock  
exceeds the exercise price of the stock option.                             

The table below sets out the pro forma amounts of net income and net  
income per common share that would have resulted if the Company had         
accounted for its employee stock plans under the fair value recognition     
provisions of SFAS No. 123, Accounting for Stock-Based Compensation.        

                                                                [Download Table]

                                                                   1997   
                                                                ----------
                                                                          
Net income:                                                               
  As reported.................................................. $3,660,274
  Pro forma....................................................  3,638,363
                                                                ==========
Basic net income per common share:                                        
  As reported..................................................   3,812.79
  Pro forma.................................................... $ 3,712.62
                                                                ==========

For purposes of computing pro forma net income, the fair value of each
optional grant is estimated on the date of grant using the minimum value    
method under which no volatility is assumed. Assumptions used to calculate  
the fair value was a risk-free interest rate of 6.3%, no dividend yield and 
an expected life of 4 years.                                                

(13)Fair Value of Financial Instruments                                         

The following methods and assumptions were used to estimate the fair  
value of each class of financial instruments:                               

(i) The carrying amounts of cash, trade accounts receivable, accounts   
   payable, accrued liabilities and stockholders' distribution payable
approximate fair values due to the short-term nature of these   
instruments.                                                    

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

(ii) The carrying amounts of the bank lines of credit approximate fair  
 values due to the current interest rates approximating interest
   rates currently available to the Company for bank lines of credit
with similar terms and availability.                          

(iii) The fair value of long-term debt, including the current portion,  
     is based on interest rates currently available to the Company for
   debt with similar terms and maturities. The fair value of long-
    term debt at December 31, 1998 and 1999 approximates book value.

(14)Segment Information                                                         

The Company's principal operating segments are identified by the types
of products and services from which revenues are derived and are consistent 
with the reporting structure of the Company's internal organization.        

The Company has two reportable segments: printed circuit boards and   
engineering services. The printed circuit boards segment includes the       
manufacture of surface mount, through-hole and mixed technology custom      
printed circuit boards for industrial uses. The engineering services        
segment includes various engineering services such as custom design,        
product research and development, prototyping and testing.                  

 The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates    
performance based on gross profit, which excludes operating expenses and    
other income and expenses. The Company's reportable segments are strategic  
business units that offer different products and services. They are managed 
separately due to the difference in the products and services offered by    
each segment.                                                               

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

The following is a summary of financial information concerning each of
the Company's reportable segments:                                          

                                                                [Download Table]

                           Printed                                                 
                           circuit   Engineering     Total                         
December 31, 1997          boards      services     Segments   Corporate   Total   
-----------------        ----------- ------------ ------------ --------- ----------
                                                                                   
Total revenue........... $49,863,694  1,167,940    51,031,634        --  51,031,634
Depreciation and                                                                   
 amortization...........     357,387     38,372       395,759    242,982    638,741
Gross profit (loss).....   9,351,413   (178,684)   10,093,536        --   9,172,729
Total assets............  10,957,829    328,742    11,286,571  3,709,403 14,995,974
Capital expenditures....      88,180     68,496       156,676    164,689    321,365

                           Printed                                                 
                           circuit   Engineering     Total                         
December 31, 1998          boards      services     Segments   Corporate   Total   
-----------------        ----------- ------------ ------------ --------- ----------
                                                                                   
Total revenue........... $48,919,471  1,978,051    50,897,522        --  50,897,522
Depreciation and                                                                   
 amortization...........     362,400     63,600       426,000    221,584    647,584
Gross profit............   8,912,281    117,436     9,029,717        --   9,029,717
Total assets............  10,486,696    464,438    10,951,134  3,414,368 14,365,502
Capital expenditures....     445,562    107,478       553,040    138,367    691,407

                           Printed                                                 
                           circuit   Engineering     Total                         
December 31, 1999          boards      services     Segments   Corporate   Total   
-----------------        ----------- ------------ ------------ --------- ----------
                                                                                   
Total revenue........... $50,018,206  2,977,675    52,995,881        --  52,995,881
Depreciation and                                                                   
 amortization...........     461,492    107,942       569,434    209,752    779,186
Gross profit............   8,564,217    572,916     9,137,133        --   9,137,133
Total assets............  16,296,672  1,039,411    17,336,083  3,662,622 20,998,705
Capital expenditures....   1,673,837    201,282     1,875,119    179,738  2,054,857

                           Printed                                                 
March 31, 1999             circuit   Engineering     Total                         
(unaudited)                boards      services     Segments   Corporate   Total   
--------------           ----------- ------------ ------------ --------- ----------
                                                                                   
Total revenue........... $10,338,738    444,740    10,783,478        --  10,783,478
Depreciation and                                                                   
 amortization...........      89,250     26,406       115,656     50,934    166,590
Gross profit (loss).....   1,621,789   (153,742)    1,468,047        --   1,468,047
Total assets............  10,099,444    516,102    10,615,546  3,154,676 13,770,222
Capital expenditures....     211,223     27,417       238,640    105,709    344,349

                           Printed                                                 
March 31, 2000             circuit   Engineering     Total                         
(unaudited)                boards      services     Segments   Corporate   Total   
--------------           ----------- ------------ ------------ --------- ----------
                                                                                   
Total revenue........... $15,441,633    841,160    16,282,793        --  16,282,793
Depreciation and                                                                   
 amortization...........     139,520     38,955       178,475     47,964    226,439
Gross profit............   2,472,738     75,461     2,548,199        --   2,548,199
Total assets............  16,540,858    962,605    17,503,463  3,309,986 20,813,449
Capital expenditures....     175,880     78,739       254,619    107,070    361,689

Reconciliation of                                                                  
segment                   December   December 31, December 31, March 31, March 31, 
data to net income:       31, 1997       1998         1999       1999       2000   
-------------------      ----------- ------------ ------------ --------- ----------
                                                                                   
Gross profit............ $ 9,172,729  9,029,717     9,137,133  1,468,047  2,548,199
Selling, general                                                                   
 administrative                                                                    
 expenses...............   5,124,564  4,937,010     5,105,408    972,294  1,473,192
                         -----------  ---------    ----------  --------- ----------
Operating income........   4,048,165  4,092,707     4,031,725    495,753  1,075,007
Interest expense........     387,891    216,985       267,697     38,518    103,335
                         -----------  ---------    ----------  --------- ----------
Net income.............. $ 3,660,274  3,875,722     3,764,028    457,235    971,672
                         ===========  =========    ==========  ========= ==========

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NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997, 1998 and 1999

At December 31, 1997, 1998 and 1999 segment assets represent the      
segments' respective share of trade accounts receivable, inventories and    
net property plant and equipment. All other assets are considered corporate 
assets.                                                                     

All of the Company's long-lived assets are located within the United  
States. Further, all of the Company's shipments of goods or engineering     
services are provided to domestic manufacturers.                            

During 1997, a significant portion of the Company's net sales were    
generated from two customers, accounting for approximately 41% and 22% of   
the Company's total net sales. During 1998, a significant portion of the    
Company's net sales were generated from two customers, which comprised      
approximately 26% and 25%, of the Company's net sales, respectively and     
comprising approximately $1,251,000 and $1,477,000 of total trade accounts  
receivable, respectively at December 31, 1998. During 1999, a significant   
portion of the Company's net sales were generated from two customers, which 
comprised approximately 22% and 11%, of the Company's net sales,            
respectively and comprising approximately $1,404,000 and $1,305,000 of      
total trade accounts receivable, respectively at December 31, 1999.         

(15)United States and Canadian Accounting Principle Differences                 

  The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles (GAAP) as applied in the      
United States (U.S.). The significant differences between U.S. GAAP and     
Canadian GAAP and their effect on the consolidated financial statements of  
the Company are described below and relate to the calculation of diluted    
net income per common share.                                                

Under Canadian GAAP, fully diluted net income per common share is     
calculated by assuming that all of the outstanding options at the end of    
the year have been exercised at the beginning of the year or at the date    
granted, if later, and proceeds from the exercise of options have been used 
to generate investment income. Under U.S. GAAP, fully diluted net income    
per common share is calculated by assuming that the proceeds were used to   
acquire common shares of the Company at the average market price. Diluted   
net income per common share under Canadian GAAP is $3,681.61 in 1997.       

(16)Subsequent Event                                                            

Subsequent to December 31, 1999, the Company's shareholders signed a  
memorandum of understanding to sell all of its outstanding common stock to  
SMTC Corporation. In 2000, 100% of the Company's outstanding common stock   
will be sold to SMTC Corporation.                                           

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6,625,000 Shares

[LOGO OF SMTC]
SMTC Corporation

Common Stock
------------- 
PROSPECTUS
July 20, 2000 
------------- 

Lehman Brothers                    RBC Dominion Securities          
------------- 

Merrill Lynch & Co. 

Robertson Stephens

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		7/27/15		95
		9/30/06		141		165
		12/15/03		195
		7/30/03		96
		1/1/03		196
		12/31/01		63		192			10-K
		12/20/01		194
		9/22/01		62		172
		8/15/01		195					10-Q,  424B3
		5/18/01		83		84
		12/31/00		45		138			10-K
		9/30/00		81		85
		8/30/00		96		102
		8/14/00		3
		7/31/00		194
		7/27/00		1		155
Filed on:		7/24/00
		7/20/00		1		201			S-1/A
		7/19/00		7
		7/3/00		21		156
		6/15/00		63
		6/8/00		81		85
		6/1/00		74
		5/31/00		20		91
		5/23/00		6		16			S-1/A
		5/18/00		21		93
		5/15/00		61
		5/9/00		186
		5/1/00		81		82
		4/30/00		23		24
		4/26/00		88
		4/2/00		8		152
		3/31/00		26		199
		3/22/00		129
		2/18/00		127
		2/9/00		174
		1/1/00		170		196
		12/31/99		6		200
		12/3/99		158
		10/29/99		74
		9/30/99		84		171
		9/20/99		105		172
		9/17/99		105
		9/4/99		8		153
		9/3/99		11		185
		7/31/99		118
		7/30/99		8		171
		7/29/99		33		172
		7/28/99		162		168
		7/27/99		168
		6/27/99		55
		3/31/99		8		199
		3/28/99		55
		3/10/99		128
		1/1/99		8		119
		12/31/98		10		200
		12/23/98		105
		9/1/98		45		196
		8/31/98		60		173
		6/8/98		87		144
		1/1/98		137		197
		12/31/97		10		200
		9/5/97		167
		9/1/97		162		170
		8/31/97		60		173
		1/1/97		147
		12/31/96		107		189
		12/31/95		177
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