We may see a negative effect on our business due to disruptions in financial markets.

Economic downturns and economic uncertainty generally affect global credit markets. Financial markets in the United States, Europe and Asia have been experiencing volatility in security prices, diminished liquidity and credit availability, rating downgrades of certain investments and declining valuation of others. While these conditions have not impaired our ability to access credit markets and finance our operations, there can be no assurance that there will not be a further deterioration in financial markets and confidence in major economies. The tightening of credit in financial markets may adversely affect the ability of our customers and suppliers to obtain financing of significant purchases and operations and this can in turn have a material adverse affect on our business and results of operations.

We are dependent on the success of our customers.

We are dependent on the continued growth, viability and financial stability of our customers. Our customers generally are OEM’s in the telecommunications, data product, automotive, consumer, and industrial industries. These industries are subject to rapid technological change, vigorous competition and short product life ~~cycles.~~cycles and consumer demand. When our customers are adversely affected by these factors, we may be similarly affected.

We are subject to continuing pressure to lower our prices.

Over the past several years we have experienced, and we expect to continue to experience, pressure to lower our prices. In the last three years, we have experienced annual price erosion averaging from ~~2.9%~~3.8% to ~~3.9%~~4.0%. In order to maintain our margins, we must continue to reduce our costs by similar amounts. ~~There can be no assurance that continuing~~Continuing pressures to reduce our prices ~~will not~~could have a material adverse effect on our financial condition, results of operations and cash flows.

We face rising costs of commodity materials.

The cost and availability of certain commodity materials used to manufacture our products, such as plastic resins, copper-based metal alloys, gold and palladium salts, molded and stamped components and connector assemblies, is critical to our success. The price of many of these raw materials, including copper and gold, has increased in recent years, and continues to fluctuate. In addition, many of these commodity materials are produced in a limited number of regions around the world or are only available from a limited number of suppliers. Volatility in the prices and shortages of such materials may result in increased costs and lower operating margins if we are unable to pass such increased costs through to our customers. Our results of operation, financial conditions and cash flows may be materially and adversely affected if we have difficulty obtaining these commodity materials, the quality of available commodity materials deteriorates, or there are continued significant price increases for these commodity materials. From time to time, we use financial instruments to hedge the volatility of commodity material costs. The success of our hedging program depends on accurate forecast of transaction activity in the various commodity materials. To the extent that these forecasts are over or understated during periods of volatility, we could experience unanticipated commodity materials or hedge gains or losses.

We face intense competition in our markets.

Our markets are highly competitive and we expect that both direct and indirect competition will increase in the future. Our overall competitive position depends on a number of factors including the price, quality and performance of our products, the level of customer service, the development of new technology and our ability to participate in emerging markets. Within each of our markets, we encounter direct competition from other electronic components manufacturers and suppliers ~~and competition~~ranging in size from large, diversified manufacturers to small, highly specialized manufacturers. Competition may intensify from various U.S. andnon-U.S. competitors and new market entrants, some of which may be

our current customers. ~~The~~Our markets have continued to become increasingly concentrated and globalized in recent years, and our major competitors have significant financial resources and technological capabilities. Increased competition ~~in the future~~ may ~~in some cases,~~ result in price reductions, reduced margins or loss of market share, any of which could materially and adversely affect our business, operating results and financial condition. ~~In addition, market factors could cause a decline in spending for the technology products manufactured by our customers.~~

We are dependent on new products.

We expect that a significant portion of our future revenue will continue to be derived from sales of newly introduced products. Rapidly changing technology, evolving industry standards and changes in customer needs characterize the market for our products. If we fail to modify or improve our products in response to changes in technology, industry standards or customer needs, our products could rapidly become less competitive or obsolete. We must continue to make investments in research and development in order to continue to develop timely new products, enhance existing products and achieve market acceptance for such products. ~~However,~~As a result of our need to make these investments in research and development, our operating results could be materially affected if our net revenues fall below expectations. Moreover, there can be no assurance that development stage products will be successfully completed or, if developed, will achieve significant customer acceptance.

We may need to license new technologies to respond to technological change and these licenses may not be available to us on terms that we can accept or may materially change the gross profits that we are able to obtain on our products. We may not succeed in adapting our products to new technologies as they emerge. Development and manufacturing schedules for technology products are difficult to predict, and there can be no assurance that we will achieve timely initial customer shipments of new products. The timely availability of these products in volume and their acceptance by customers are important to our future success.

We face manufacturing challenges.

The volume and timing of sales to our customers may vary due to: variation in demand for our customers’ products; our customers’ attempts to manage their inventory; design changes; changes in

our customers’ manufacturing strategy; and acquisitions of or consolidations among customers. Due in part to these factors, many of our customers do not commit to long-term production schedules. Our inability to forecast the level of customer order with certainty makes it difficult to schedule production and maximize utilization of manufacturing capacity.

Our industry must provide increasingly rapid product turnaround for its customers. We generally do not obtain firm, long-term purchase commitments from our customers and we continue to experience reduced lead-times in customer orders. Customers may cancel their orders, change production quantities or delay production for a number of reasons and such actions could negatively impact our operating results. In addition, we make significant operating decisions based on our estimate of customer requirements. The short-term nature of our customers’ commitments and the possibility of rapid changes in demand for their products reduce our ability to accurately estimate the future requirements of those customers.

~~On occasion, customers~~We may ~~require rapid increases~~rely on third-party suppliers for the components used in ~~production, which can stress~~ our ~~resources~~products, and ~~reduce operating margins. In addition, because many~~we may rely on third-party manufacturers to manufacture certain of our ~~costs~~assemblies and ~~operating expenses~~finished products. Our results of operations, financial condition, and cash flows could be adversely affected if these third parties lack sufficient quality control or if there are ~~relatively fixed, a reduction~~significant changes in ~~customer demand can harm~~their financial or business condition. We also have third-party arrangements for the manufacture of various products, parts and components. If these third parties fail to deliver products, parts, and components of sufficient quality on time and at reasonable prices, we could have difficulties fulfilling our ~~gross profit~~orders, sales and ~~operating results.~~profits could decline, and our commercial reputation could be damaged.

From time to time, we have underutilized our manufacturing lines. This excess capacity means we incur increased fixed costs in our products relative to the revenues we generate, which could have an

adverse effect on our results of operations, particularly during economic downturns. If we are unable to improve utilization levels at these facilities and correctly manage capacity, the increased expense levels will have an adverse effect on our business, financial condition and results of operations.

We face industry consolidation.

Many of the industries to which we sell our products, as well as many of the industries from which we buy materials, have become increasingly concentrated in recent years, including the telecommunications, data products, automotive and consumer electronics industries. Consolidation of customers may lead to decreased product purchases from us. In ~~the current economic climate, consolidation~~addition, as our customers buy in industries that utilize electronics components may further increase as companies combine to achieve further economies of scale and other synergies. Consolidation in industries that utilize electronics components could result in an increase in excess manufacturing capacity as companies seek to divest manufacturing operations or eliminate duplicative product lines. Excess manufacturing capacitylarger volumes, their volume buying power has increased, and they may ~~continue~~be able to ~~increase,~~negotiate more favorable pricing and ~~competitive pressures~~find alternative sources from which to purchase. Our materials suppliers similarly have increased their ability to negotiate favorable pricing. These trends may adversely affect the profit margins on our products, particularly for our industry as a whole and for us in particular. Consolidation could also result in an increasing number of very large companies offering products in multiple industries. The significant purchasing power and market power of these large companies could increase pricing and competitive pressures for us.commodity components.

We depend on industries exposed to rapid technological change.

Our customers compete in markets that are characterized by rapidly changing technology, evolving industry standards and continuous improvements in products and services. These conditions frequently result in short product life cycles. Our success will depend largely on the success achieved by our customers in developing and marketing their products. If technologies or standards supported by our customers’ products become obsolete or fail to gain widespread commercial acceptance, our business could be materially adversely affected. In addition, if we are unable to offer technologically advanced, cost effective, quick response manufacturing services to customers, demand for our products may also decline.

We face the possibility that our gross margins may decline.

In response to changes in product mix, competitive pricing pressures, increased sales discounts, introductions of new competitive products, product enhancements by our competitors, increases in manufacturing or labor costs or other operating expenses, we may experience declines in prices, gross margins and profitability. To maintain our gross margins we must maintain or increase current shipment volumes, develop and introduce new products and product enhancements and reduce the costs to produce our products. If we are unable to accomplish this, our revenue, gross profit and operating results may be below our expectations and those of investors and analysts.

We face risks associated with inventory.

The value of our inventory may decline as a result of surplus inventory, price reductions or technological obsolescence. The life cycles of some of our products can be very short compared with the development cycle, which may result in excess or obsolete inventory or equipment that we may need to write off. We must identify the right product mix and maintain sufficient inventory on hand to meet customer orders. Failure to do so could adversely affect our revenue and operating results. However, if circumstances change (for example, an unexpected shift in market demand, pricing or customer defaults) there could be a material impact on the net realizable value of our inventory. We maintain an inventory valuation reserve account against diminution in the value or salability of our inventory. However, there is no guaranty that these arrangements will be sufficient to avoid write-offs in excess of our reserves in all circumstances.

We may encounter problems associated with our global operations.

~~Currently,~~For fiscal year 2009, more than 70% of our revenues come from international sales. In addition, a significant portion of our operations consists of manufacturing and sales activities outside of the U.S. Our ability to sell our products and conduct our operations globally is subject to a number of risks. Local economic, political and labor conditions in each country could adversely affect demand for

our products and services or disrupt our operations in these markets. We may also experience reduced intellectual property protection or longer and more challenging collection cycles as a result of different customary business practices in certain countries where we do business. Additionally, we face the following risks:


	•	International business conditions including the relationships between the U.S.~~, Chinese~~ and other governments;

	•	Unexpected changes in laws, regulations, trade, monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes in the rate of inflation in the U.S.~~, China or~~ and other foreign countries;

	•	Tariffs, quotas, customs and other import or export restrictions and other trade barriers;

	•	Difficulties in staffing and management;

	•	Language and cultural ~~barriers;~~barriers, including those related to employment regulation; and

	•	Potentially adverse tax consequences.

Many of our products that are manufactured outside of the United States are manufactured in Asia. In particular, we have sizeable operations in China. The legal system in China is still developing and is subject to change. Accordingly, our operations and orders for products in China could be adversely affected by changes to or interpretation of Chinese law.

We are exposed to fluctuations in currency exchange rates.

Since a significant portion of our business is conducted outside the U.S., we face substantial exposure to movements innon-U.S. currency exchange rates. This may harm our results of operations, and any measures that we may implement to reduce the effect of volatile currencies and other risks of our global operations may not be effective. Approximately 73% of our net sales for fiscal year 2009 were invoiced in currencies other than the U.S. dollar, and we expect revenues fromnon-U.S. markets to continue to represent a significant portion of our net revenue. Price increases caused by currency exchange rate fluctuations may make our products less competitive or have an adverse effect on our margins. Our international revenues and expenses generally are derived from sales and operations in currencies other than the U.S. dollar. Accordingly, when the U.S. dollar strengthens in relation to the currencies of the countries in which we sell our products, our U.S. dollar reported net revenue and income will decrease. Currency exchange rate fluctuations may also disrupt the business of our suppliers by making their purchases of raw materials more expensive and more difficult to finance. We mitigate our foreign currency exchange rate risk principally through the establishment of local production facilities in the markets we serve. This creates a “natural hedge” since purchases and sales within a specific country are both denominated in the same currency and therefore no exposure exists to hedge with a foreign exchange forward or option contract (collectively, “foreign exchange contracts”). Natural hedges exist in most countries in which we operate, although the percentage of natural offsets, as compared with offsets that need to be hedged by foreign exchange contracts, will vary from country to country. To reduce our exposure to fluctuations in currency exchange rates when natural hedges are not effective, we may use financial instruments to hedge U.S. dollar and other currency commitments and cash flows arising from trade accounts receivable, trade accounts payable and fixed purchase obligations.

If these hedging activities are not successful or we change or reduce these hedging activities in the future, we may experience significant unexpected expenses from fluctuations in exchange rates or financial instruments which become ineffective. The success of our hedging program depends on accurate forecasts of transaction activity in the various currencies. To the extent that these forecasts are over or understated during periods of currency volatility, we could experience unanticipated currency or hedge gains or losses.

We may find that our products have quality issues.

The fabrication of the products we manufacture is a complex and precise process. Our customers specify quality, performance and reliability standards. If flaws in either the design or manufacture of our products were to occur, we could experience a rate of failure in our products that could result in

significant delays in shipment and product re-work or replacement costs. ~~While~~Although we engage in extensive product quality programs and processes, these may not be sufficient to avoid a product ~~failure rate that results in substantial delays in shipment, significant repair or replacement costs, or potential~~ failures, which could cause us to:


	•	lose revenue;

	•	incur increased costs such as warranty expense and costs associated with customer support;

	•	experience delays, cancellations or rescheduling of orders for our products;

	•	experience increased product returns or discounts; or

	•	damage to our reputation.

All of which could negatively affect our financial condition and results of operations.

~~We face risks in making acquisitions.~~If we fail to manage our growth effectively or to integrate successfully any future acquisition, our business could be harmed.

We expect to continue to make investments in companies, products and technologies through acquisitions. While we believe that such acquisitions are an integral part of our long-term strategy, there are risks and uncertainties related to acquiring companies. Such risks and uncertainties include:


	•	Successfully identifying and completing transactions;

	•	Difficulty in integrating acquired operations, technology and products or realizing cost savings or other anticipated benefits from integration;

	•	Retaining customers and existing contracts;

	•	Retaining the key employees of the acquired operation;

	•	Potential disruption of our or the acquired company’s ongoing business;

	•	Charges for impairment of long-term assets;

	•	Unanticipated expenses related to integration; and

	•	Potential unknown liabilities associated with the acquired company.

In addition, if we were to undertake a substantial acquisition for cash, the acquisition would likely need to be financed in part through additional financing from banks, through public offerings or private placements of debt or equity securities, or other arrangements. This acquisition financing might decrease our ratio of earnings to fixed charges and adversely affect other leverage measures. ~~There can be no assurance that the~~Any necessary acquisition financing ~~would~~may not be available to us on acceptable terms if and when required. If we undertake an acquisition by issuing equity securities or equity-linked securities, the issued securities may have a dilutive effect on the interests of the holders of our stock.

We face risks arising from reorganizations of our operations.

In 2007, we announced plans to realign part of our manufacturing capacity in order to reduce costs and better optimize plant utilization. We recorded restructuring related charges of $219.6 million since we announced the plans, and we expect total charges to range from $240 to $250 million. The process of restructuring entails, among other activities, moving production between facilities, reducing staff levels, realigning our business processes, closing facilities, and reorganizing our management. During the course of executing the restructuring, we could incur material non-cash charges such as write-downs of inventories or other tangible assets. We test our goodwill and other intangible assets for impairment annually or when an event occurs indicating the potential for impairment. If we record an impairment charge as a result of this analysis, it could have a material impact on our results of operations. We continue to evaluate our operations and may need to undertake additional

restructuring initiatives in the future. If we incur additional restructuring related charges, our financial condition and results of operations may ~~suffer.~~be adversely affected.

In addition, ~~on July 1, 2007~~in fiscal 2009, we reorganized ~~into a~~our global ~~organizational structure that consists of product-focused~~product divisions ~~that~~to enable us to work more effectively as a global team to meet customer needs, as well as to better leverage design expertise and the low-cost production centers we have around the world. This reorganization entails risks, including: the need to implement financial and other systems and add management resources; in the ~~short-term we may fail~~challenge to maintain the quality of products and ~~services we have historically provided;~~services; the possible diversion of management’s attention to the

reorganization; the potential disruption ofto our ongoing business; greater than anticipated severance costs and ~~unanticipated~~other expenses ~~related to such reorganization.~~associated with the closing of a facility.

We depend on our key employees and face competition in hiring and retaining qualified employees.

Our future success depends partly on the continued contribution of our key employees, including executive, engineering, sales, marketing, manufacturing and administrative personnel. We ~~currently~~ do not have employment agreements with any of our key executive officers. We face intense competition for key personnel in several of our product and geographic markets. Our future success depends in large part on our continued ability to hire, assimilate and retain key employees, including qualified engineers and other highly skilled personnel needed to compete and develop successful new products. We may not be as successful as competitors at recruiting, assimilating and retaining highly skilled personnel.

We are subject to various laws and government regulations.

We are subject to a wide and ever-changing variety of U.S. and foreign federal, state and local laws and regulations, compliance with which may require substantial expense. Of particular note are two recent European Union (EU) directives known as the Restriction on Certain Hazardous Substances Directive (RoHS) and the Waste Electrical and Electronic Equipment Directive. These directives restrict the distribution of products within the EU of certain substances and require a manufacturer or importer to recycle products containing those substances. Failure to comply with these directives could result in fines or suspension of sales. Additionally, RoHS may result in our having non-compliant inventory that may be less readily salable or have to be written off.

In addition, some environment laws impose liability, sometimes without fault, for investigating or cleaning up contamination on or emanating from our currently or formerly owned, leased or operated property, as well as for damages to property or natural resources and for personal injury arising out of such contamination.

We rely on our intellectual property rights.

We rely on a combination of patents, copyrights, trademarks and trade secrets and confidentiality provisions to establish and protect our proprietary rights. To this end, we hold rights to a number of patents and registered trademarks and regularly file applications to attempt to protect our rights in new technology and trademarks. Even if approved, our patents or trademarks may be successfully challenged by others or otherwise become invalidated for a variety of reasons. Also, to the extent a competitor is able to reproduce or otherwise capitalize on our technology, it may be difficult, expensive or impossible for us to obtain necessary legal protection.

Third parties may claim that we are infringing their intellectual property rights. Such claims could have an adverse affect on our business and financial condition. From time to time we receive letters alleging infringement of patents. Litigation concerning patents or other intellectual property is costly and time consuming. We may seek licenses from such parties, but they could refuse to grant us a license or demand commercially unreasonable terms. Such infringement claims could also cause us to incur substantial liabilities and to suspend or permanently cease the manufacture and sale of affected products.

We could suffer significant business interruptions.

Our operations and those of our suppliers may be vulnerable to interruption by natural disasters such as earthquakes, tsunamis, typhoons, or floods, or other disasters such as fires, explosions, acts of terrorism or war, disease or failures of our management information or other systems. If a business interruption occurs, our business could be materially and adversely affected.

A decline in the market value of our pension plans’ investment portfolios could adversely affect our results of operations, financial condition and cash flows.

Concerns about deterioration in the global economy, together with the current credit crisis, have caused significant volatility in interest rates and equity prices, which could decrease the value of our pension plans’ investment portfolios. A decrease in the value of our pension plans’ investment portfolios could have an adverse affect on our results of operations, financial conditions and cash flows.

We may have exposure to income tax rate fluctuations and to additional tax liabilities, which could negatively affect our financial position.

As a corporation with operations both in the United States and abroad, we are subject to income taxes in both the United States and various foreign jurisdictions. Our effective tax rate is subject to significant fluctuation from one period to the next because the income tax rates for each year are a function of a number of factors, including the following:


	•	the effects of a mix of profits or losses earned by us and our subsidiaries in numerous foreign tax jurisdictions with a broad range of tax rates;

	•	our ability to use recorded deferred tax assets;

	•	changes in uncertain tax positions, interest or penalties resulting from tax audits; and

	•	changes in tax laws or the interpretation of these laws.

Changes in the mix of these items and other items may cause our effective tax rate to fluctuate between periods, which could have a material adverse effect on our results of operations and financial condition. Recently, the Obama administration proposed legislation that would change how U.S. multinational corporations are taxed on their foreign income. If such legislation is enacted, it may have a material adverse impact to our tax rate and in turn, our profitability.

We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions.

Significant judgment is required in determining our provision for income taxes and other tax liabilities. Although we believe our tax estimates are reasonable, we are regularly under audit by tax authorities with respect to both income and non-income taxes and may have exposure to additional tax liabilities as a result of these audits. Unfavorable audit findings and tax rulings may result in payment of taxes, fines and penalties for prior periods and higher tax rates in future periods, which may have a material adverse effect on our results of operations and financial condition.

Our certificate of incorporation and bylaws include antitakeover provisions, which may deter or prevent a takeover attempt.

Some provisions of our certificate of incorporation and bylaws may deter or prevent a takeover attempt, including a takeover that might result in a premium over the market price for our Common Stock and Class A Common Stock. Our governing documents establish a classified board, require shareholders to give advance notice prior to the annual meeting if they want to nominate a candidate for director or present a proposal, and contain a number of provisions subject to supermajority vote. In

1719

addition, the Board may issue up to 25,000,000 shares of preferred stock without action by our stockholders, which could be used to make it more difficult and costly to acquire our company.


Item 1B.	Unresolved Staff Comments

None.


Item 2.	Properties

We own and lease manufacturing, design, warehousing, sales and administrative space in locations around the world. The leases are of varying terms with expirations ranging from fiscal 2009 through fiscal 2018. The leases in aggregate are not considered material to the financial position of Molex.

As of June 30, ~~2008,~~2009, we owned or leased a total of approximately ~~8.8~~9.2 million square feet of space worldwide. We have vacated or plan to vacate several buildings in France, Germany, Ireland and Slovakia and are holding these buildings and related assets for sale. We own ~~88%~~91% of our manufacturing, design, warehouse and office space and lease the remaining ~~12%~~9%. Our manufacturing plants are equipped with machinery, most of which we own and which, in part, we developed to meet the special requirements of our manufacturing processes. We believe that our buildings, machinery and equipment are well maintained and adequate for our current needs.

Our principal executive offices are located at 2222 Wellington Court, Lisle, Illinois, United States of America. Molex owns 4543 manufacturing locations, 1618 of which are located in North America and 2925 of which are located in other countries. A listing of the locations of our principal manufacturing facilities by region is presented below:


	•	Americas: United States ~~Nogales, Guadalajara~~ and ~~Juarez~~Mexico

	•	~~Asia Pacific:~~Asia-Pacific: Japan, Korea, Vietnam, Thailand, China, India, Malaysia, Singapore and Taiwan

	•	Europe: France, Germany, Italy, Poland, Slovakia and Ireland


Item 3.	Legal Proceedings

We have no material legal proceedings.


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

None.

PART II


Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Molex is traded on the NASDAQ Global Select Market and on the London Stock Exchange and trades under the symbols MOLX for Common Stock and MOLXA for Class A Common Stock. Molex Class B Common Stock is not publicly traded.

The number of stockholders of record at June 30, ~~2008~~2009 was ~~2,460~~2,381 for Common Stock, ~~and 7,527~~8,302 for Class A Common Stock and 14 for Class B Common Stock.

The following table presents quarterly stock prices for the years ended June 30:

2008 2007 2006
Low — High Low — High Low — High

Common Stock 1st $ 23.89 $ 30.66 $ 29.66 $ 39.27 $ 25.34 $ 29.20
2nd 26.77 29.12 30.91 39.49 24.07 28.02
3rd 21.82 26.85 28.15 31.70 25.89 33.39
4th 23.97 29.95 28.01 31.53 32.48 39.36


		2009				2008
		Low — High				Low — High

Common Stock	1st	$	22.00	$	25.96	$	23.89	$	30.66
	2nd		10.72		22.19		26.77		29.12
	3rd		9.72		15.86		21.82		26.85
	4th		14.00		17.08		23.97		29.95

2008 2007 2006
Low — High Low — High Low — High

Class A Common Stock 1st $ 22.82 $ 27.54 $ 25.57 $ 33.12 $ 23.54 $ 26.50
2nd 25.25 27.68 27.22 33.27 22.82 27.15
3rd 21.08 25.89 24.72 27.78 24.33 29.87
4th 22.11 27.50 24.66 28.20 27.94 33.47


		2009				2008
		Low — High				Low — High

Class A Common Stock	1st	$	20.55	$	24.59	$	22.82	$	27.54
	2nd		9.24		20.66		25.25		27.68
	3rd		8.94		14.16		21.08		25.89
	4th		12.88		15.65		22.11		27.50

Cash dividends on common stock have been paid every year since 1977. The following table presents quarterly dividends declared per ~~common~~ share of Common Stock, Class A Common Stock and Class B Common Stock for the years ended June 30:


					Class A
	Common Stock				Common Stock
	2008		2007		2008		2007		2009		2008

Quarter ended:
September 30	$	0.1125	$	0.0750	$	0.1125	$	0.0750	$	0.1525	$	0.1125
December 31		0.1125		0.0750		0.1125		0.0750		0.1525		0.1125
March 31		0.1125		0.0750		0.1125		0.0750		0.1525		0.1125
June 30		0.1125		0.0750		0.1125		0.0750		0.1525		0.1125

Total	$	0.4500	$	0.3000	$	0.4500	$	0.3000	$	0.6100	$	0.4500

On August ~~13, 2007,~~1, 2008, our Board of Directors authorized the purchase of up to $200.0 million of Common Stockand/or Class A Common Stock during the period ending June 30, ~~2008.~~2009. Share purchases of Molex Commonand/or Class A Common Stock for the quarter ended June 30, ~~2008~~2009 were as follows (in thousands, except price per share data):


					Total Number of						Total Number of
					Shares Purchased as						Shares Purchased as
	Total Number of		Average Price		Part of Publicly		Total Number of		Average Price		Part of Publicly
	Shares Purchased		Paid per Share		Announced Plan		Shares Purchased*		Paid per Share		Announced Plan

April 1 — April 30
Common Stock		—	$	—		—		—	$	—		—
Class A Common Stock		14	$	21.89		—		19	$	12.71		—
May 1 — May 31
Common Stock		175	$	29.10		175		—	$	—		—
Class A Common Stock		894	$	26.92		850		51	$	15.60		—
June 1 — June 30
Common Stock		—	$	—		—		—	$	—		—
Class A Common Stock		212	$	26.39		205		2	$	14.58		—

Total		1,295	$	27.07		1,230		72	$	14.81		—


*		The shares purchased include exercises of employee stock options.

We did not repurchase any shares under this plan during the six months ended June 30, ~~2008, substantially all funds authorized by~~2009 as we temporarily suspended the ~~Board of Directors for the purchase~~program. The dollar value of shares ~~were used.~~not purchased under the plan was $123.7 million when the plan expired on June 30, 2009.

During the quarter ended June 30, ~~2008, 65,201~~2009, 71,888 shares of Class A Common Stock were transferred to us from certain employees to pay either the purchase priceand/or withholding taxes on the vesting of restricted stock or the exercise of stock options. The aggregate market value of the shares transferred totaled ~~$1.7~~$1.1 million.

Descriptions of our Common Stock appear under the caption “Molex Stock” in our ~~2008~~2009 Proxy Statement and in Note 15 of the Notes to Consolidated Financial Statements.

Performance Graph

The performance graph set forth below shows the value of an investment of $100 on June 30, ~~2003~~2004 in each of Molex Common Stock, Molex Class A Common Stock, the S&P 500 Index, and a Peer Group Index. The Peer Group Index includes 50 companies (including Molex) classified in the Global Sub-industry Classifications “Electronic Equipment Manufacturers,” “Electronic Manufacturing Services,” and “Technology Distributors.” All values assume reinvestment of the pre-tax value of dividends paid by Molex and the companies included in these indices, and are calculated as of June 30 of each year. The historical stock price performance of Molex’s Common Stock and Class A Common Stock is not necessarily indicative of future stock price performance.

Comparison of Five-Year Cumulative Total Return
(Value of Investment of $100 on June 30, ~~2003)~~2004)
Among Molex Incorporated, the S&P 500 Index
and a Peer Group

06/30/03 06/30/04 06/30/05 06/30/06 06/30/07 06/30/08
Molex Incorporated $ 100.00 $ 119.16 $ 97.25 $ 126.33 $ 114.00 $ 94.36
Molex Incorporated Class A 100.00 119.01 103.06 127.17 118.79 104.42
S&P 500 100.00 119.11 126.64 137.57 165.90 144.13
Peer Group 100.00 137.60 126.97 148.41 177.61 159.37


	06/30/04		06/30/05		06/30/06		06/30/07		06/30/08		06/30/09
Molex Incorporated	$	100.00	$	81.61	$	106.02	$	95.67	$	79.19	$	52.41
Molex Incorporated Class A		100.00		86.60		106.86		99.82		87.74		57.44
S&P 500		100.00		106.32		115.50		139.28		121.01		89.29
Peer Group		100.00		95.31		111.87		133.80		120.17		79.34

The material in this performance graph is not soliciting material, is not deemed filed with the Commission, and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made on, before or after the date of this filing and irrespective of any general incorporation language in such filing.

2022


Item 6.	Selected Financial Data

Molex Incorporated

Five-Year Financial Highlights Summary

(In thousands, except per share data)


	2008			2007			2006			2005			2004			2009			2008			2007			2006			2005

Operations:
Net revenue	$	3,328,347		$	3,265,874		$	2,861,289		$	2,554,458		$	2,249,018		$	2,581,841		$	3,328,347		$	3,265,874		$	2,861,289		$	2,554,458
Gross profit		1,014,235			1,016,708			942,630			832,662			732,832			656,177			1,014,235			1,016,708			942,630			832,662
Income from operations		317,950			321,550			309,744			203,264			213,462
Income before income taxes		338,648			338,257			327,884			223,201			231,757
Net income(1)		215,437			240,768			236,091			150,116			168,096
Earnings per share:
Income (loss) from operations																	(346,196	)		327,268			328,236			310,536			204,572
Income (loss) before income taxes																	(318,888	)		338,648			338,257			327,884			223,201
Net (loss) income(1)																	(321,287	)		215,437			240,768			236,091			150,116
Earnings (loss) per share:
Basic	$	1.19		$	1.31		$	1.27		$	0.80		$	0.88		$	(1.84	)	$	1.19		$	1.31		$	1.27		$	0.80
Diluted		1.19			1.30			1.26			0.79			0.87			(1.84	)		1.19			1.30			1.26			0.79
Net income percent of net revenue		6.5	%		7.4	%		8.3	%		5.9	%		7.5	%
Net (loss) income percent of net revenue																	(12.4	)%		6.5	%		7.4	%		8.3	%		5.9	%
Capital expenditures	$	234,626		$	296,861		$	276,783		$	230,895		$	189,724		$	177,943		$	234,626		$	296,861		$	276,783		$	230,895
Return on invested capital(2)		7.4	%		9.0	%		10.3	%		6.7	%		8.1	%		(12.4	)%		7.4	%		9.0	%		10.3	%		6.7	%
Financial Position:
Current assets	$	1,782,960		$	1,590,827		$	1,548,233		$	1,374,063		$	1,165,508		$	1,447,573		$	1,782,960		$	1,590,827		$	1,548,233		$	1,374,063
Current liabilities		649,438			530,951			594,812			469,504			424,766			714,152			649,438			530,951			594,812			469,504
Working capital(3)		1,133,522			1,059,876			953,421			904,559			740,742			733,421			1,133,522			1,059,876			953,421			904,559
Current ratio(4)		2.7			3.0			2.6			2.9			2.7			2.0			2.7			3.0			2.6			2.9
Property, plant and equipment, net	$	1,172,395		$	1,121,369		$	1,025,852		$	984,237		$	1,023,020		$	1,080,417		$	1,172,395		$	1,121,369		$	1,025,852		$	984,237
Total assets		3,599,537			3,316,108			2,974,420			2,730,162			2,575,286			2,942,157			3,599,537			3,316,108			2,974,420			2,730,162
Long-term debt and capital leases		151,085			130,779			8,815			9,975			14,039
Long-term debt																	30,311			146,333			127,821			7,093			9,975
Stockholders’ equity		2,676,846			2,523,031			2,281,869			2,170,754			2,070,422			2,062,564			2,676,846			2,523,031			2,281,869			2,170,754
Dividends declared per share	$	0.45		$	0.30		$	0.225		$	0.15		$	0.10		$	0.61		$	0.45		$	0.30		$	0.225		$	0.15
Average common shares outstanding:
Basic		180,474			183,961			185,521			188,646			190,207			174,598			180,474			183,961			185,521			188,646
Diluted		181,395			185,565			187,416			190,572			192,186			174,598			181,395			185,565			187,416			190,572


(1)		~~Fiscal 2008~~Operating results include a charge for restructuring costs and asset impairments of $31.2 million ($21.0 million after-tax). Fiscal 2007 results include a charge for restructuring costs and asset impairments of $36.9 million ($30.3 million after-tax). Fiscal 2006 results include a restructuring charge of $26.4 million ($19.2 million after-tax). Fiscal 2005 results include a charge for restructuring costs and asset impairments of $30.2 million ($23.0 million after-tax) and a charge for goodwill impairment of $22.9 million ($22.9 million after-tax). See Notes 5 and 8 of the ~~Notes to Consolidated Financial Statements for a discussion of our restructuring costs and goodwill impairment.~~following by year (in thousands):


	2009		2008		2007		2006		2005

After-tax restructuring costs and asset impairments	$	111,798	$	20,988	$	30,255	$	19,180	$	23,047
Goodwill impairments		264,140		—		—		—		22,876

See Notes 5 and 8 of the Notes to Consolidated Financial Statements for a discussion of our restructuring costs and goodwill impairments.


(2)		Return on invested capital is defined as the current year net income (loss) divided by the sum of average total assets less average current liabilities for the year.

(3)		Working capital is defined as current assets minus current liabilities.

(4)		Current ratio is defined as current assets divided by current liabilities.

2123


Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements relating to future events or the future financial performance of Molex, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion ~~includes~~regarding forward-looking statements included at the ~~use of organic net revenue growth, a non-GAAP financial measure. Refer to Non-GAAP Financial Measures below for additional information on the use~~end of this ~~measure.~~discussion, under the caption “Forward-Looking Statements” and Item 1A, “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these statements.

The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Annual Report onForm 10-K. All references to fiscal years relate to the fiscal year ended June 30.

Overview

Our Business

Our core business is the manufacture and sale of electronic components. Our products are used by a large number of leading original equipment manufacturers (OEMs) throughout the world. We design, manufacture and sell more than 100,000 different products including terminals, connectors, planar cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical and electronic switches. We also provide manufacturing services to integrate specific components into a customer’s product.

Our connectors, interconnecting devices and assemblies are used principally in the telecommunications, data, consumer products, ~~automotive~~industrial and ~~industrial~~automotive markets. Our products are used in a wide range of applications including desktop and notebook computers, computer peripheral equipment, mobile phones, digital electronics such as cameras and ~~plasma~~flat panel display televisions, automobile engine control units and adaptive braking systems, factory robotics and diagnostic equipment.

We believe that our sales mix ~~is balanced, with~~has growth prospects in ~~a number~~each of our product markets. Net ~~revenues~~revenue by market can fluctuate based on various factors including new technologies within the industry, composition of customers and changes in their revenue levels and new products or model changes that we or our customers introduce. The ~~approximate~~following table sets forth, for fiscal years 2009, 2008 and 2007 the percentage relationship to net revenue of our sales by primary product markets.


	Percentage of Net Revenue
	2009			2008			2007

Telecommunication		26	%		25	%		25	%
Data		21			20			20
Consumer		21			20			20
Industrial		15			16			18
Automotive		14			17			16
Other		3			2			1

Total		100	%		100	%		100	%

In fiscal 2009, we reclassified our net revenue by market to reflect our current estimate of how revenue to distributors and contract manufacturers reach the end market. Previously reported net revenue by market for fiscal ~~years~~ 2008 and 2007 ~~and 2006 is outlined below.~~was reclassified to reflect this change.

Percentage of Net Revenue
2008 2007 2006

Consumer 18 % 18 % 19 %
Telecommunication 26 26 30
Automotive 18 18 18
Data 22 21 22
Industrial 13 15 9
Other 3 2 2

Total 100 % 100 % 100 %

The following table sets forth, for fiscal years 2009, 2008 and 2007, the percentage relationship to net revenue of our sales by geographic region:


	2009			2008			2007

Americas		26.9	%		27.6	%		28.7	%
Asia-Pacific		54.4			52.0			51.1
Europe		18.7			20.4			20.2

Total		100.0	%		100.0	%		100.0	%

The following table sets forth, for fiscal years 2009, 2008 and 2007, the percentage relationship to net revenue of our sales by reporting segment:


	2009			2008			2007

Connector		69.3	%		71.4	%		72.2	%
Custom & Electrical		30.6			28.3			27.3
Corporate & Other		0.1			0.3			0.5

Total		100.0	%		100.0	%		100.0	%

We sell our products directly to OEMs and to their contract manufacturers and suppliers and, to a lesser extent, through distributors throughout the world. Our engineers work collaboratively with customers to develop products that meet their specific needs. Our connector products are designed to help manufacturers assemble their own products more efficiently. Our electronic components help enable manufacturers to break down their production into sub-assemblies that can be built on different production lines, in different factories or by subcontractors. Our connectors allow these sub-assemblies to be readily plugged together before selling the end product to a customer. Our connectors also enable users to connect together related electronic items, such as mobile phones to battery chargers and computers to printers.worldwide. Many of our customers are multi-national corporations that manufacture their products in multiple operations in several countries.

~~We service our customers through our global manufacturing footprint.~~ As of June 30, ~~2008,~~2009, we operated 4543 manufacturing locations, located in 17 countries. Manufacturing in many sectors has continued to move from the United States and Western Europe to lower cost regions. In addition, reduced trade barriers, lower freight cost and improved supply chain logistics have reduced the need for duplicate regional manufacturing capabilities. For these reasons, our strategy has been to

~~consolidate multiple plants of modest size in favor of operating fewer, larger and more integrated facilities in strategic locations around the world.~~

On July 1, 2007 we implemented a new global organizational structure that consists of five product-focused divisions and one worldwide sales and marketing organization. The new structure enables us to work more effectively as a global team to meet customer needs as well as to better leverage our design expertise and our low-cost production centers around the world. The new worldwide sales and marketing organization structure enhances our ability to sell any product, to any customer, anywhere in the world.

In connection with our reorganization, we undertook a multi-year restructuring plan in fiscal 2007 designed to reduce costs and to improve return on invested capital as a result of a new global organization that was effective July 1, 2007. We have revised our initial estimate and now expect to incur total restructuring and asset impairment costs related to this restructuring ranging from $125 to $140 million, of which the impact on each segment will be determined as the actions become more certain. Net restructuring cost during fiscal 2008 was $31.2 million, resulting in cumulative costs since we announced this restructuring plan of $68.1 million.

~~During fiscal 2008, we operated our business in~~18 countries throughout the Americas, Europe and Asia-Pacific regions. In fiscal ~~2008, 52%~~2009, 54.4% of our revenue was derived from sales in the Asia-Pacific region. We expect greater economic growth in Asia, particularly in China, than in the Americas and Europe. We ~~believe that~~continue to move our manufacturing operations from the ~~business is positioned~~United States and Western Europe to ~~benefit from this trend.~~lower cost regions. Approximately ~~48%~~52% of our manufacturing capacity is in lower cost areas such as China, Eastern Europe and Mexico. In addition, reduced trade barriers, lower freight cost and improved supply chain logistics have reduced our need to duplicate regional manufacturing capabilities. For these reasons, our strategy has been to consolidate multiple plants of modest size in favor of operating fewer, larger and more integrated facilities in strategic locations around the world. We believe that our business is positioned to benefit from this strategy.

Business Environment

The market in which we operate is highly fragmented with a limited number of large companies and a significant number of smaller companies making electronic connectors. We are one of the world’s ~~second-largest manufacturer~~largest manufacturers of electronic connectors. We believe that our global presence and our ability to design and manufacture our products throughout the world and to service our customers globally is a key advantage for us. Our growth has come primarily from new products that we develop, often in collaboration with our customers.

Our financial results are influenced by factors in the markets in which we operate and by our ability to successfully execute our business strategy. Marketplace factors include competition for customers, raw material prices, product and price competition, economic conditions in various geographic regions, foreign currency exchange rates, interest rates, changes in technology, fluctuations in customer demand, patent and intellectual property issues, litigation results and legal and regulatory developments. We expect that the marketplace environment will remain highly competitive. Our ability to execute our business strategy successfully will require that we meet a number of challenges, including our ability to accurately forecast sales demand and calibrate manufacturing to

such demand, manage rising raw material costs, develop, manufacture and successfully market new and enhanced products and product lines, control operating costs, and attract, motivate and retain key personnel to manage our operational, financial and management information systems.

Non-GAAP Financial Measures

Organic net revenue growth, which is included in Management’s Discussion & Analysis, is a non-GAAP financial measure. The tables presented in Results of Operations above provide reconciliations of U.S. GAAP reported net revenue growth (the most directly comparable GAAP financial measure) to organic net revenue growth.

We believe organic net revenue growth provides useful information to investors because it reflects the underlying growth from the ongoing activities of our business and provides investors with a view of our operations from management’s perspective. We use organic net revenue growth to monitor and evaluate performance, as it is an important measure of the underlying results of our operations. It excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition activity. Management uses organic net revenue growth together with GAAP measures such as net revenue growth and operating income in its decision making processes related to the operations of our reporting segments and our overall company. Because organic net revenue growth calculations may vary among other companies, organic net sales growth amounts presented below may not be comparable with similar measures of other companies.

Financial Highlights

Net revenue for fiscal ~~2008~~2009 of ~~$3.3~~$2.6 billion ~~increased 1.9% over~~decreased 22.4% from fiscal ~~2007.~~2008. Organic net revenue declined ~~3.3% for~~23.1% in fiscal ~~2008 from~~2009 compared with 2008. We recognized a net loss of $321.3 million in fiscal ~~2007. Net~~2009 compared with net income of $215.4 million ~~for~~in fiscal ~~2008 decreased $25.4 million from $240.8 million reported in the prior year.~~2008. Fiscal ~~2008~~2009 results include agoodwill impairment charges of $264.1 million and restructuring ~~charge~~costs of $131.3 million ($99.0 million after-tax), and intangible asset impairment costs of $16.3 million. Restructuring charges of $31.2 million ($21.0 million ~~after tax) and tax charges related to changes in prior years’ foreign tax credits of $17.2 million. Restructuring charges of $36.9 million ($30.3 million~~ after-tax) were recorded in fiscal ~~2007.~~2008. On June 25, 2009, we entered into a $195.0 million committed, unsecured, three-year revolving credit facility with an outstanding balance of $25.0 million as of June 30, 2009, which was used to pay down other unsecured debt balances.

Results of Operations

The following table sets forth, for fiscal years 2009, 2008 and 2007, certain consolidated statements of operations data as a percentage of net revenue (dollars in thousands):


				Percentage of					Percentage of					Percentage of
	2009			Revenue			2008		Revenue			2007		Revenue

Net revenue	$	2,581,841			100.0	%	$	3,328,347		100.0	%	$	3,265,874		100.0	%
Cost of sales		1,925,664			74.6	%		2,314,112		69.5	%		2,249,166		68.9	%

Gross profit		656,177			25.4	%		1,014,235		30.5	%		1,016,708		31.1	%
Selling, general & administrative		586,702			22.7	%		665,038		20.0	%		658,289		20.1	%
Restructuring costs and asset impairments		151,531			5.9	%		31,247		0.9	%		36,869		1.1	%
Goodwill impairments		264,140			10.2	%		—		0.0	%		—		0.0	%

Income (loss) from operations		(346,196	)		(13.4	)%		317,950		9.6	%		321,550		9.9	%
Other income, net		27,308			1.0	%		20,698		0.6	%		16,707		0.5	%

Income (loss) before income taxes		(318,888	)		(12.4	)%		338,648		10.2	%		338,257		10.4	%
Income taxes		2,399			(0.0	)%		123,211		3.7	%		97,489		3.0	%

Net (loss) income	$	(321,287	)		(12.4	)%	$	215,437		6.5	%	$	240,768		7.4	%

Net Revenue

The following table provides an analysis of the change in net revenue compared with the prior fiscal years (in thousands):


	2009			2008

Net revenue for prior year	$	3,328,347		$	3,265,874
Components of net revenue (decrease) increase:
Organic net revenue decline		(769,296	)		(106,863	)
Currency translation		5,243			169,336
Acquisitions		17,547			—

Total change in net revenue from prior year		(746,506	)		62,473

Net revenue for current year	$	2,581,841		$	3,328,347

Organic net revenue (decline) as a percentage of net revenue for prior year		(23.1	)%		(3.3	)%

Revenue declined significantly during fiscal 2009 across all of the primary markets due to deterioration in global economic conditions starting in November 2008 and subsequent inventory reductions in the supply chain, which decreased demand for components and our production levels.

The increase in net revenue attributed to currency translation in fiscal 2009 compared with 2008 was principally due to the strengthening Japanese yen. The increase in net revenue attributed to currency translation in fiscal 2008 was principally due to the general weakening of the U.S. dollar

against other currencies. The following tables show the effect on the change in geographic net revenue from foreign currency translations to the U.S. dollar (in thousands):


	June 30, 2009									June 30, 2008
	Local			Currency			Net			Local			Currency		Net
	Currency			Translation			Change			Currency			Translation		Change

Americas	$	(226,735	)	$	(2,627	)	$	(229,362	)	$	(23,304	)	$	3,637	$	(19,667	)
Asia-Pacific		(354,081	)		27,594			(326,487	)		(26,974	)		89,405		62,431
Europe		(177,647	)		(19,724	)		(197,371	)		(54,735	)		76,294		21,559
Corporate & Other		6,714			—			6,714			(1,850	)		—		(1,850	)

Net change	$	(751,749	)	$	5,243		$	(746,506	)	$	(106,863	)	$	169,336	$	62,473

The change in revenue on a local currency basis as of June 30 was as follows:


	2009			2008

Americas		(24.7	)%		(2.5	)%
Asia-Pacific		(20.5	)		(1.6	)
Europe		(26.1	)		(8.3	)

Total		(22.6	)%		(3.3	)%

We sell our products in five primary markets. The decline in organic revenue due to poor global economic conditions has impacted all of our market areas. Of our five primary markets, the automotive market has experienced the sharpest decline in demand during fiscal 2009 as consumers are not purchasing as many new automobiles in the current economic environment. Concerns about the global economy have also impacted our industrial market and telecommunications market for mobile devices as demand continues to be lower than in fiscal 2008. The following table sets forth, for fiscal years 2009 and 2008, changes in net revenue from each of our five primary product markets from the prior fiscal year:


	2009			2008

Telecommunications		(18	)%		3	%
Consumer		(18	)		2
Data		(18	)		4
Industrial		(27	)		(7	)
Automotive		(35	)		6

Telecommunications market revenue decreased in fiscal 2009 compared with 2008 due to lower demand for mobile products and supply chain inventory reductions. This decline is partially offset by higher demand for smartphones and our customers’ introduction of new smartphone models, many of which include our connector and antenna products. Telecommunications market revenue increased in fiscal 2008 compared with 2007 due to higher demand for our networking products.

Consumer market revenue decreased in home entertainment and home appliance products in fiscal 2009. These declines were partially offset by increased demand for our products used in electronic gaming equipment. Demand increased in fiscal 2009 for our components in portable navigation devices and flat panel display televisions, although the increased demand in flat panel display televisions was offset by cost pressures and price erosion. Consumer market revenue increased in fiscal 2008 compared with 2007 due to higher demand for our connectors used in home entertainment products.

Data market revenue for fiscal 2009 decreased from 2008 due to lower customer demand for storage networking products and computer peripherals due to the global economic uncertainties. These declines were partially offset by increased demand due to our customers’ release of lower end computers and notebook computers. Data market revenue increased in fiscal 2008 compared with

2007 due to our customers’ releases of new high-end products and their expansion in new optical and high speed technologies, for which we offered a strong product line.

The industrial market revenue for fiscal 2009 decreased compared with 2008 due to declines in residential and commercial construction, lower demand in the industrial communications business worldwide, particularly in North America and Europe, and lower demand for factory automation due to worldwide excess manufacturing capacity. Declines in non-residential, commercial and industrial construction had a negative impact on temporary power and lighting products used on jobsites. The global decline in the manufacturing economy resulted in the delay or cancellation of many industrial automation projects. The industrial market declined in fiscal 2008 compared with 2007 due largely to our customer enhancing its product line for a cable assembly product.

Automotive market revenue declined in fiscal 2009 compared with 2008 due to a decrease in demand related to poor economic conditions during fiscal 2009. The number of automobiles manufactured by our customers decreased in fiscal 2009 as automotive manufacturing companies’ reduced inventories in the automotive supply chain. There were a number of extended closings and bankruptcy filings by automotive manufacturers and automotive suppliers during fiscal 2009 that negatively impacted our revenue. The automobile market began to show signs of stabilization late in fiscal 2009 as new car sales increased in Western Europe due to government incentives. Revenue in the U.S. automotive market was higher in fiscal 2008 compared with 2007 as the automotive market benefited from new products reflecting higher electronic content in automobiles.

Gross Profit

We measure gross profit as net revenue less cost of sales. Cost of sales includes manufacturing costs, such as materials, direct and indirect labor, and factory overhead, as well as all of the costs of our customer service function such as labor, materials, travel and overhead. Our gross margins are primarily affected by the following drivers: product mix; volume; cost reduction efforts; competitive pricing pressure; commodity costs; and currency fluctuations.

The following table sets forth gross profit and gross margin for fiscal years 2009, 2008 and 2007 (dollars in thousands):


	2009			2008			2007

Gross profit	$	656,177		$	1,014,235		$	1,016,708
Gross margin		25.4	%		30.5	%		31.1	%

The reduction in gross margin during fiscal 2009 was primarily due to lower absorption from the rapid drop in our production caused by the poor global economic conditions. While we were unable to reduce factory-related costs as quickly as production declined, the expansion of our restructuring program should improve our gross margins over time. The reduction in gross margin in fiscal 2008 compared with 2007 was primarily related to higher commodity cost and price erosion partially offset by general cost reductions, a portion of which is related to restructuring activities.

A significant portion of our material cost consists of copper and gold costs. We purchased approximately 16 million pounds of copper and approximately 87,000 troy ounces of gold in fiscal 2009 compared with approximately 25 million pounds of copper and approximately 135,000 troy ounces of gold in fiscal 2008 and 2007. The following table sets forth the average prices of copper and gold we purchased in fiscal 2009, 2008 and 2007:


	2009		2008		2007

Average Price Copper (price per pound)	$	2.69	$	3.49	$	3.20
Gold (price per troy ounce)		872.00		825.00		636.00

Generally, we are able to pass through to our customers only a small a portion of the changes in the cost of copper and gold. However, we mitigated the impact of the change in copper and gold

prices by hedging with call options a portion of our projected net global purchases of copper and gold. The hedges did not materially affect operating results for fiscal 2009 and 2008.

In addition to commodity costs, the following table sets forth, for fiscal years 2009 and 2008, the effects of certain significant impacts on gross profit from the prior year (in thousands):


	2009			2008

Price erosion	$	(97,643	)	$	(132,758	)
Currency translation		4,590			48,842
Currency transaction		(14,382	)		(18,393	)

Price erosion is measured as the reduction in prices of our products year over year, which reduces our gross profit. A significant portion of the price erosion occurred in our mobile phone connector products, which are part of our telecommunications market.

The increase in gross profit due to currency translation gains in fiscal 2009 compared with 2008 was primarily due to a stronger Japanese yen against other currencies, partially offset by a general strengthening U.S. dollar against other currencies. The increase in gross profit due to currency translation gains in fiscal 2008 compared with fiscal 2007 was primarily due to a general weakening of the U.S. dollar against other currencies.

Certain products that we manufacture in Japan and Europe are sold in other regions of the world at selling prices primarily denominated in or closely linked to the U.S. dollar. As a result, changes in currency exchange rates may affect our cost of sales reported in U.S. dollars without a corresponding effect on net revenue. The decrease in gross profit due to currency transactions in fiscal 2009 was primarily due to a stronger Japanese yen, partially offset by a weaker euro against the U.S. dollar. The decrease in gross profit due to currency transaction losses in fiscal 2008 was primarily due to a general weakening of the U.S. dollar against other currencies.

Operating Expenses

The following table sets forth our operating expenses for fiscal years 2009, 2008 and 2007 (dollars in thousands):


	2009			2008			2007

Selling, general & administrative	$	586,702		$	665,038		$	658,289
Selling, general & administrative as a percentage of revenue		22.7	%		20.0	%		20.1	%
Restructuring costs and asset impairments		151,531			31,247			36,869
Goodwill impairments		264,140			—			—

Selling, general & administrative expenses

Selling, general and administrative expense increased as a percentage of revenue in fiscal 2009 compared with prior year periods primarily due to the significant drop in revenue. Selling, general and administrative expenses declined by $78.3 million or 11.8% primarily due to our restructuring efforts and cost- cutting initiatives in response to the significant drop in revenue. These initiatives included salary reductions and a $9.1 million decrease in expense related to reductions in employee benefits. We also reduced selling, general and administrative expenses through a lower cost structure resulting from our restructuring initiative and specific cost containment activities. Selling, general and administrative expense as a percentage of revenue was relatively consistent in fiscal 2008 compared with 2007 while organic net revenue declined. The impact of currency translation decreased selling, general and administrative expenses by approximately $4.1 million for fiscal 2009 compared with 2008 and increased selling, general and administrative expenses by approximately $35.4 million for fiscal 2008 compared with 2007.

Research and development expenditures, which are classified as selling, general and administrative expense, was $159.2 million, or 6.2% of net revenue, for fiscal 2009 compared with $163.7 million, or 4.9% of net revenue, for fiscal 2008 and $159.1 million, or 4.9% of net revenue, for fiscal 2007. The increase in expense as a percent of revenue is primarily due to the drop in revenue in fiscal 2009. Total research and development expenditures in fiscal 2009 were consistent with fiscal 2008, but increased as a percent of net revenue.

Restructuring costs and asset impairments

Restructuring costs and asset impairments consist of the following (in thousands):


	2009		2008		2007		Total

Severance costs	$	110,155	$	17,648	$	26,702	$	154,505
Asset impairments		21,128		13,599		8,667		43,394

Restructuring costs		131,283		31,247		35,369		197,899
Intangible asset impairments		16,300		—		—		16,300
Other charges		3,948		—		1,500		5,448

Total restructuring charges and asset impairments	$	151,531	$	31,247	$	36,869	$	219,647

During fiscal 2007, we undertook a multi-year restructuring plan designed to reduce costs, increase efficiencies and to improve customer service and return on invested capital in connection with a new global organization that was effective July 1, 2007. A majority of the plan relates to facilities located in North America, Europe and Japan and, in general, the movement of manufacturing activities at these plants to other lower-cost facilities. Restructuring costs during fiscal 2009 was $131.3 million, consisting of $110.2 million of severance costs and $21.1 million for asset impairments. The cumulative expense since we announced the restructuring plan totals $197.9 million.

We expect to incur total restructuring and asset impairment costs related to these actions ranging from $240 to $250 million, of which the impact on each segment will be determined as the actions become more certain. Management approved several actions related to this plan. The total cost estimates increased as we formulated detailed plans for the latest restructuring actions, which included a reduction from five product-focused divisions to three product-focused divisions. A portion of this plan involves cost savings or other actions that do not result in incremental expense, such as better utilization of assets, reduced spending and organizational efficiencies. This plan includes employee reduction targets throughout the company, and we expect to achieve these targets through ongoing employee attrition and terminations. We expect to complete the actions under this plan by June 30, 2010 with estimated annual cost savings ranging from $190 to $210 million.

In 2009, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 6,600 employees, resulting in a charge of $110.1 million. A large part of these employee terminations resulted from plant closings in Europe and Asia. We recognized asset impairment charges of $41.4 million to write-down assets to fair value less the cost to sell. Restructuring costs and asset impairments in fiscal 2009 include intangible asset impairments of $16.3 million due to lower projected future revenue and profit in our Transportation and Automation & Electrical business units.

In 2008, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 900 employees, resulting in a charge of $17.6 million. A large part of these employee terminations occurred in our corporate headquarters and U.S. and Mexican manufacturing operations. In accordance with our planned restructuring actions, we recorded additional asset impairment charges of $13.6 million to write-down assets to fair value less the cost to sell.

In 2007, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 335 employees. A substantial majority of these employee terminations occurred within our Ireland manufacturing operations and various administrative functions in the

Americas and European regions. In addition, we have vacated or plan to vacate several buildings and are holding these buildings and related assets for sale. This plan resulted in an impairment charge of $8.7 million to write-down these assets to fair value less the cost to sell these assets. The fair value of the asset groupings was determined using various valuation techniques.

The timing of the cash expenditures associated with these charges does not necessarily correspond to the period in which the accounting charge is taken. For additional information concerning the status of our restructuring programs see Note 5 of the Notes to Consolidated Financial Statements.

During fiscal 2009, we recorded an impairment charge of $16.3 million to our indefinite lived intangible assets on lower projected future revenue and profit growth in the Automation & Electrical business unit of our Custom & Electrical segment.

Goodwill

Fiscal 2009 income from operations included goodwill impairment charges of $264.1 million. We recorded $93.1 million and $171.0 million goodwill impairment charges in the Transportation business unit of our Connector segment and Automation & Electrical business unit of our Custom & Electrical segment, respectively. The economic downturn had a negative impact on the business units’ operating results. The potential liquidity risk extended our estimate for the automotive industry’s economic recovery and our Automation & Electrical business unit’s results were not recovering in line with other business units. These factors resulted in lower growth and profit expectations for these business units, which resulted in the goodwill impairment charges.

Other Income (net)

Other income consists primarily of net interest income, investment income and currency exchange gains or losses. Currency exchange gains for fiscal 2009 were $11.8 million. The increase in currency exchange gains in fiscal 2009 was due to a stronger U.S. dollar and Japanese yen against most other currencies. Prior to fiscal 2009, currency gains and losses were classified as selling, general and administrative expense. We recognized a $9.3 million and $6.7 million exchange losses in fiscal 2008 and 2007, respectively.

Effective Tax Rate

The effective tax rate for the three years ended June 30, was as follows:


	2009			2008			2007

Effective tax rate		(0.8	)%		36.4	%		28.8	%

The effective tax rate for fiscal 2009 was negative due to (1) a second quarter charge of $93.1 million to impair goodwill for which no tax benefit is available, (2) a fourth quarter charge of $171.0 million to impair goodwill for which no tax benefit is available, (3) increases in tax reserves based on evaluation of certain tax positions taken, and (4) tax losses generated in non-US jurisdictions for which no tax benefit has been recognized. The effective tax rate in fiscal 2008 was higher than fiscal 2007 due to changes in foreign tax credit estimates and carryforwards.

Results by Product Segment

During fiscal 2009, we reorganized our operations, which changed the configuration of our reportable segments into the Connector and Custom & Electrical segments. Our former Transportation segment was operationally merged into the Connector segment under the direction of one global Executive Vice President.

Connector. The following table sets forth the change in net revenue for fiscal years 2009 and 2008 (dollars in thousands):


	2009			2008

Net revenue for prior year	$	2,377,584		$	2,357,688
Components of net revenue increase (decrease):
Organic net revenue decline		(614,321	)		(104,637	)
Currency translation		18,572			124,533
Acquisitions		7,304			—

Total change in net revenue from prior year		(588,445	)		19,896

Net revenue for current year	$	1,789,139		$	2,377,584

Organic net revenue decline as a percentage of net revenue for prior year		(25.8	)%		(5.4	)%

The Connector segment sells primarily to the telecommunications, data, automotive and consumer markets, which are discussed above. Segment revenue decreased in fiscal 2009 with currency translation partially offsetting an organic revenue decline. Connector organic revenue decreased in fiscal 2009 primarily due to the significant drop in consumer spending in the current economic conditions, particularly the mobile phone sector of the telecommunications market and the automotive market. Connector organic revenue decreased in fiscal 2008 primarily due to general weakness in these markets, particularly the mobile phone sector. Additionally, price erosion, which is generally higher in the Connector segment compared with our other segments, was 4.6% and 5.7% in fiscal 2009 and 2008, respectively. We also completed an asset purchase of a company in Japan during fiscal 2009.

The following table sets forth information on income from operations and operating margins for fiscal years 2009, 2008 and 2007 (dollars in thousands):


	2009			2008			2007

Income (loss) from operations	$	(125,604	)	$	322,226		$	365,654
Operating margin		(7.0	)%		17.1	%		19.4	%

Connector segment income from operations decreased in fiscal 2009 compared with the prior year periods due to the decrease in revenue and a goodwill impairment charge. Fiscal 2009 income from operations was unfavorably impacted by restructuring charges of $93.9 million and a goodwill impairment charge of $93.1 million in our Transportation business unit due to lower projected future revenue and profit. The sharp decline was partially offset by reduced selling, general and administrative expenses against the prior year periods.

Custom & Electrical. The following table sets forth net revenue for fiscal years 2009 and 2008 (dollars in thousands):


	2009			2008

Net revenue for prior year	$	941,365		$	892,756
Components of net revenue increase:
Organic net revenue (decline) growth		(147,648	)		4,455
Currency translation		(13,359	)		44,154
Acquisition		10,243			—

Total change in net revenue from prior year		(150,764	)		48,609

Net revenue for current year	$	790,601		$	941,365

Organic net revenue (decline) growth as a percentage of net revenue for prior year		(15.7	)%		0.5	%

The sale of Custom and Electrical segment’s products is concentrated in the industrial, telecommunications and data markets. Custom and Electrical segment revenue declined in fiscal 2009 due to the decline in these markets discussed above. We also acquired a flexible circuit manufacturing business during fiscal 2009.

The following table sets forth income from operations and operating margins for the fiscal years 2009, 2008 and 2007 (dollars in thousands):


	2009			2008			2007

Income (loss) from operations	$	(152,443	)	$	97,393		$	54,955
Operating margin		(19.3	)%		10.3	%		6.2	%

Segment operating income decreased in fiscal 2009 from prior years due to slowing global demand and impairment charges for goodwill and intangible assets. Fiscal 2009 income from operations was unfavorably impacted by restructuring charges of $23.0 million, and a goodwill impairment charge of $171.0 million and intangible asset impairment charge of $16.3 million in our Automation & Electrical business unit due to lower projected future revenue and profit. Demand in our Automation & Electrical business unit declined significantly due to our customers’ global excess manufacturing capacity. Segment operating income increased in fiscal 2008 compared with 2007 due to efficiencies achieved with the Woodhead integration and an increase in revenue in the telecommunications market.

Financial Condition and Liquidity

We fund capital projects and working capital needs principally out of operating cash flows and cash reserves. Cash, cash equivalents and marketable securities totaled $467.9 million and $509.8 million at June 30, 2009 and 2008, respectively, of which approximately $457.4 million was innon-U.S. accounts as of June 30, 2009. Transferring cash, cash equivalents or marketable securities to U.S. accounts fromnon-U.S. accounts could subject us to additional U.S. income tax.

Our long-term financing strategy is to primarily rely on internal sources of funds for investing in plant, equipment and acquisitions. Long-term debt and obligations under capital leases totaled $242.1 million and $151.8 million at June 30, 2009 and 2008, respectively. We had available lines of credit totaling $282.5 million at June 30, 2009, including a $195.0 million committed, unsecured, three-year revolving credit facility with $170.0 million available as of June 30, 2009.

Cash Flows

Below is a table setting forth the key lines of our Consolidated Statements of Cash Flows (in thousands):


	2009			2008			2007

Cash provided from operating activities	$	369,898		$	479,134		$	451,434
Cash used for investing activities		(253,086	)		(218,156	)		(446,129	)
Cash (used for) provided by financing activities		(155,582	)		(197,306	)		28,529
Effect of exchange rate changes on cash		(12,030	)		33,474			11,712

Net (decrease) increase in cash and cash equivalents	$	(50,800	)	$	97,146		$	45,546

Operating Activities

Cash provided from operating activities in fiscal 2009 decreased by $109.2 million from the prior year due mainly to lower revenue and income, partially offset by a related decline in working capital needs in fiscal 2009 compared with fiscal 2008. Working capital is defined as current assets minus current liabilities. Net income in fiscal 2009 included non-cash impairment charges approximating $308.0 million. Our restructuring accrual as of June 30, 2009 was $69.9 million, which we expect to

reduce through cash outlays during fiscal 2010 and 2011. In addition, we anticipate additional cash outlays of approximately $30.0 million during fiscal 2010 and 2011 related to restructuring charges that we expect to recognize in fiscal 2010.

Cash provided from operating activities in fiscal 2008 increased by $27.7 million from fiscal 2007 due primarily to lower use of funds to finance working capital needs in fiscal 2008 compared with fiscal 2007, partially offset by lower net income.

Investing Activities

During fiscal 2009, we completed the acquisition of two companies and a joint venture in cash transactions approximating $74.8 million. We recorded additional goodwill of $27.9 million in connection with the acquisitions. The purchase price allocation for the acquisitions is substantially complete. On July 19, 2007, we completed an acquisition of aU.S.-based company in an all cash transaction approximating $42.5 million. On August 9, 2006, we completed the acquisition of Woodhead ~~Industries, Inc. (Woodhead)~~ in an all cash transaction ~~valued at~~for approximately $238.1 million, including the assumption of debt and net of cash acquired.

Capital expenditures declined $56.7 million and $62.2 million during fiscal 2009 and fiscal 2008, respectively, compared with prior year periods. The decrease in capital expenditures reflects our efforts to increase asset efficiency by lowering the incremental investment required to drive future growth.

Cash flow from investing activities also includes net purchases of marketable securities of $13.2 million in fiscal 2009, and proceeds in the amount of $46.8 million in fiscal 2008 and $71.2 million in fiscal 2007. Our marketable securities generally have a term of less than one year. Our investments in marketable securities are primarily based on our uses of cash in operating, other investing and financing activities.

Financing Activities

On June 25, 2009, we entered into a $195.0 million committed, unsecured, three-year revolving credit facility. Borrowings were $25.0 million as of June 30, 2009, which was used to pay down other uncommitted debt balances.

On August 1, 2008, our Board of Directors authorized the repurchase of up to an aggregate $200.0 million of common stock through June 30, 2009. We purchased shares of Common Stock and Class A Common Stock totaling 4.5 million shares, 8.0 million shares and 1.2 million shares during fiscal years 2009, 2008 and 2007, respectively. The aggregate cost of these purchases was $76.3 million, $199.6 million and $34.9 million in fiscal years 2009, 2008 and 2007, respectively.

In order to fund stock repurchases during fiscal 2008, we borrowed $125.0 million on our unsecured lines of credit, $75.0 million of which was repaid during fiscal 2008. In order to fund the cash portion of our investment in Woodhead ~~develops, manufactures~~made during fiscal 2007, we entered into two term notes aggregating 15 billion Japanese yen ($141.3 million) and ~~markets network~~borrowed $44.0 million on our unsecured lines of credit that was repaid the same year. The term notes are due in September 2009, with weighted-average fixed interest rates approximating 1.3%. We plan to refinance the term notes upon their expiration in September 2009.

Sources of Liquidity

We believe we have sufficient cash balances and ~~electrical infrastructure components engineered for performance~~cash flow to support our planned growth. As part of our growth strategy, we may, in ~~harsh, demanding,~~the future, acquire other companies in the same or complementary lines of business, and ~~hazardous industrial environments.~~pursue other business ventures. The timing and size of any new business ventures or acquisitions we complete may affect our cash requirements and debt balances.

2335

We had available lines of credit totaling $307.5 million at June 30, 2009 expiring between 2009 and 2013. On June 25, 2009, we entered into a $195.0 million committed, unsecured, three-year revolving credit facility with interest rates equivalent to the London interbank offered rate (LIBOR) plus 250 basis points. The ~~acquisition is a~~revolving line of credit also includes an accordion feature allowing us to increase the balance of the credit line by an amount not to exceed $75.0 million. The current portion of our long-term debt as of June 30, 2009 consists principally of three unsecured term loans approximating 20 billion Japanese yen ($208.0 million) due in September 2009, with weighted-average fixed interest rates approximating 1.3%. We plan to refinance the term notes upon their expiration in September 2009. Our long-term debt approximates $30.3 million, including an outstanding balance of $25.0 million on the revolving credit line at June 30, 2009. Our remaining long-term debt generally consists of mortgages and industrial development bonds with interest rates ranging from 5.9% to 7.8% and maturing through 2013. Certain assets, including land, buildings and equipment, secure our long-term debt. Principal payments on long-term debt obligations, including interest, are due as follows: fiscal 2010, $208.9 million; fiscal 2011, $3.9 million; fiscal 2012, $25.6 million; fiscal 2013, $0.6 million; and thereafter, $0.1 million.

The instrument governing our credit facility contains customary covenants regarding liens, debt, substantial asset sales and mergers, dividends and investments. Our credit facility also requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage, fixed charge coverage and liquidity. As of June 30, 2009, we were in compliance with all of these covenants.

Contractual Obligations and Commercial Commitments

The following table summarizes our significant ~~step~~contractual obligations at June 30, 2009, and the effect such obligations are expected to have on liquidity and cash flows in ~~our strategy~~future periods (in thousands):


			Less Than		1-3		3-5		More Than
	Total		1 Year		Years		Years		5 Years

Operating lease obligations	$	33,648	$	12,367	$	14,294	$	3,722	$	3,265
Capital lease obligations		3,108		2,060		1,046		2		—
Other long-term liabilities		14,512		3,520		1,335		239		9,418
Debt obligations		238,946		208,635		30,279		32		—

Total(1)	$	290,214	$	226,582	$	46,954	$	3,995	$	12,683


(1)		Total does not include contractual obligations recorded on the balance sheet as current liabilities or certain purchase obligations, as discussed below. Debt and capital lease obligations include interest payments.

Contractual obligations for purchases of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to ~~expand our products~~be purchased; fixed, minimum or variable price provisions; and ~~capabilities~~the approximate timing of the transaction. Our purchase orders are based on current manufacturing needs and are fulfilled by vendors within short time horizons. In addition, some purchase orders represent authorizations to purchase rather than binding agreements. We do not generally have significant agreements for the purchase of raw materials or other goods specifying minimum quantities and set prices that exceed expected requirements for three months. Agreements for outsourced services generally contain clauses allowing for cancellation without significant penalty, and are therefore not included in the ~~global industrial market.~~table above.

The expected timing of payments of the obligations above is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the time of receipt of goods or services, or changes toagreed-upon amounts for some obligations.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) a retained or a contingent interest in transferred assets, (iii) any obligation under certain derivative instruments or (iv) any obligation under a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to a company, or engages in leasing, hedging, or research and development services within a company.

We do not have material exposure to any off-balance sheet arrangements. We do not have any unconsolidated special purpose entities.

Critical Accounting Estimates

Our accounting and financial reporting policies are in conformity with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Significant accounting policies are summarized in Note 2 of the Notes to Consolidated Financial Statements. Noted here are a number of policies that require significant judgments or estimates.

Revenue Recognition

Our revenue recognition policies are in accordance with Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements,” and SAB No. 104, “Revenue Recognition,” as issued by the SEC and other applicable guidance.

We recognize revenue upon shipment of product and transfer of ownership to the customer. Contracts and customer purchase orders generally are used to determine the existence of an arrangement. Shipping documents, proof of delivery and customer acceptance (when applicable) are used to verify delivery. We assess whether an amount due from a customer is fixed and determinable based on the terms of the agreement with the customer, including, but not limited to, the payment terms associated with the transaction. The impact of judgments and estimates on revenue recognition is minimal. A reserve for estimated returns is established at the time of sale based on historical return experience to cover returns of defective product and is recorded as a reduction of revenue.

Income Taxes

As a result of the implementation of Financial Accounting Standards Board (FASB) interpretation No. 48, “Accounting for the Uncertainty in Income Taxes -— an interpretation of FASB Statement No. 109” (FIN 48), effective July 1, 2007, we recognize liabilities for uncertain tax positions based on the two-step process prescribed within the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

Prior to adoption of FIN 48, our policy was to establish accruals for taxes that may become payable in future years as a result of examinations by tax authorities. We established the accruals based upon management’s assessment of probable income tax contingencies.

We have operations in countries around the world that are subject to income and other similar taxes in these countries. The estimation of the income tax amounts that we record involves the interpretation of complex tax laws and regulations, evaluation of tax audit findings and assessment of

key assumptions are evaluated annually. Changes in these assumptions can result in different expense and liability amounts.

The effects of the indicated increase and decrease in selected assumptions for our pension plans as of June 30, ~~2008,~~2009, assuming no changes in benefit levels and no amortization of gains or losses, is shown below (in thousands):


	Increase (Decrease)						Increase (Decrease)						Increase (Decrease)						Increase (Decrease)
	in PBO						in Pension Expense						in PBO						in Pension Expense
	U.S. Plan			Int’l Plans			U.S. Plan			Int’l Plans			U.S. Plan			Int’l Plans			U.S. Plan			Int’l Plans

Discount rate change:
Increase 50 basis points	$	(3,795	)	$	(8,306	)	$	(325	)	$	(103	)	$	(4,024	)	$	(8,534	)	$	(279	)	$	(132	)
Decrease 50 basis points		4,104			9,331			336			123			4,491			9,649			287			141
Expected rate of return change:
Increase 100 basis points		N/A			N/A			(566	)		(689	)		N/A			N/A			(600	)		(723	)
Decrease 100 basis points		N/A			N/A			566			689			N/A			N/A			600			723

Other Postretirement Benefits

We have retiree health care plans that cover the majority of our U.S. employees. There are no significant postretirement health care benefit plans outside of the U.S. The health care cost trend rate assumption has a significant effect on the amount of the accumulated postretirement benefit obligation (APBO) and retiree health care benefit expense. ~~A 100 basis-point~~The effects of the indicated increase and decrease in the discount rate assumption for our retiree healthcare plans as of June 30, 1009, assuming no change in ~~the assumed health care cost trend rates would have the following effects~~benefit levels is shown below (in thousands):

2008 2007 2006

Increase (decrease) in total annual service and interest cost:
Increase 100 basis points $ 1,219 $ 1,287 $ 1,476
Decrease 100 basis points (968 ) (1,014 ) (1,211 )
Increase (decrease) in APBO:
Increase 100 basis points $ 7,987 $ 9,057 $ 9,951
Decrease 100 basis points (6,452 ) (7,270 ) (8,164 )


	Increase (Decrease)
	Total Annual Service			Increase (Decrease)
	and Interest Cost			in APBO

Increase 100 basis points:	$	708		$	4,882
Decrease 100 basis points:		(588	)		(4,095	)

Stock Options

We use the Black-Scholes option-pricing model to estimate the fair value of each option grant as of the date of grant. Expected volatilities are based on historical volatility of our common stock. We estimate the expected life of the option using historical data pertaining to option exercises and employee terminations. Separate groups of employees that have similar historical exercise behavior are considered separately for estimating the expected life. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant.

Fair Value of Financial Assets and Liabilities

The following table summarizes our financial assets and liabilities which are measured at fair value on a recurring basis and subject to the disclosure requirements of SFAS 157 as of June 30, 2009 (in thousands):


			Quoted Prices
			in Active		Significant
	Total		Markets for		Other		Significant
	Measured		Identical		Observable		Unobservable
	at Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)

Available for sale and trading securities	$	52,401	$	52,401	$	—	$	—
Derivative financial instruments, net		2,601		—		2,601		—

Total	$	55,002	$	52,401	$	2,601	$	—

We determine the fair value of our available for sale securities based on quoted market prices (Level 1). We generally use derivatives for hedging purposes pursuant to SFAS No. 133 and SFAS No. 149, which are valued based on Level 2 inputs in the SFAS 157 fair value hierarchy. The fair value of our financial instruments is determined by a mark to market valuation based on forward curves using observable market prices.

Goodwill

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

We perform an annual goodwill impairment analysis as of May 31, or earlier if indicators of potential impairment exist. In assessing the recoverability of goodwill, we review both quantitative as well as qualitative factors to support our assumptions with regard to fair value. Our impairment review process compares the estimated fair value of the reporting unit in which goodwill resides to our carrying value. Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a component. Components are defined as operations for which discrete financial information is available and reviewed by segment management.

The fair value of a reporting unit is estimated using a discounted cash flow model for the evaluation of impairment. The expected future cash flows are generally based on management’s estimates and are determined by looking at numerous factors including projected economic conditions and customer demand, revenue and margins, changes in competition, operating costs and new products introduced. In determining fair value, we make certain judgments. If these estimates or their related assumptions change in the future as a result of changes in strategy or market conditions, we may be required to record an impairment charge.

Although management believes its assumptions in determining the projected cash flows are reasonable, changes in those estimates could affect the evaluation.

Restructuring Costs and Asset Impairments

We have recorded charges in connection with restructuring our business. We recognize a liability for restructuring costs at fair value when the liability is incurred. The main components of our restructuring plans are related to workforce reductions and the closure and consolidation of excess facilities. Workforce-related charges are expensed and accrued when it is determined that a liability is probable, which is generally after individuals have been notified of their termination dates and expected severance payments, but under certain circumstances may be recognized upon approval of a restructuring plan by management or in future accounting periods when terminated employees continue to provide service. Plans to consolidate excess facilities result in charges for lease termination fees, future commitments to pay lease charges, net of estimated future sublease income, and adjustments to the fair value of buildings and equipment to be sold. Charges for the consolidation of excess facilities are based on an estimate of the amounts and timing of future cash flows related to the expected future remaining use and ultimate sale or disposal of buildings and equipment.

Other-Than-Temporary Impairments (OTTI)

For available-for-sale securities, we presume an OTTI decline in value if the quoted market price of the security is 20% or more below the investment’s cost basis for a continuous period of six months or more. However, the presumption of an OTTI decline in value may be overcome if there is persuasive evidence indicating that the decline is temporary in nature. For investments accounted for

under the equity method, we evaluate all known quantitative and qualitative factors in addition to quoted market prices in determining whether an OTTI decline in value exists. Factors that we consider important in evaluating for a potential OTTI, include historical operating performance, future financial projections, business plans for new products or concepts and strength of balance sheet.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we assess the impairment of long-lived assets, other than goodwill and trade names, including property and equipment, and identifiable intangible assets subject to amortization, whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors we consider important, which could trigger an impairment review, include significant changes in the manner of our use of the asset, changes in historical trends in operating performance, changes in projected operating performance, and significant negative economic trends.

New Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 141R, “Business Combinations” (SFAS 141R). SFAS 141R states that acquisition-related costs are to be recognized separately from the acquisition and expensed as incurred with restructuring costs being expensed in periods after the acquisition date. SFAS 141R also states that business combinations will result in all assets and liabilities of the acquired business being recorded at their fair values. We are required to adopt SFAS No. 141R effective July 1, 2009. The impact of the adoption of SFAS No. 141R will depend on the nature and extent of business combinations occurring on or after the effective date.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (SFAS 160) — an amendment of ARB No. 51. SFAS 160 requires identification and presentation of ownership interests in subsidiaries held by parties other than us in the consolidated financial statements within the equity section but separate from the equity. It also requires that (1) the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, (2) changes in ownership interest be accounted for similarly, as equity transactions, and (3) when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS 160, but do not expect it to have a material impact on our financial statements.

In February 2008, the FASB issued FASB Staff PositionNo. 157-2, which delays the effective date of SFAS 157 for nonfinancial assets and liabilities, which are not measured at fair value on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS 157 for nonfinancial assets and liabilities, but do not expect it to have a material impact on our financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS 161) — an amendment of FASB Statement No. 133. SFAS 161 requires

enhanced disclosures about an entity’s derivative and hedging activities and thus improves the transparency of financial reporting. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS 161, but do not expect it to have a material impact on our financial statements.

In December 2008, the FASB issued FASB Staff Position No. 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets(FAS 132R-1).FAS 132R-1 requires disclosures about plan assets of a defined benefit pension or other postretirement plan. This statement is effective for us on

July 1, 2009. The adoption ofFAS 132R-1 will result in enhanced disclosures, but will not otherwise have an impact on our financial statements.

~~Results of Operations~~Forward-looking Statements

~~Net revenue for fiscal 2008~~This Annual Report onForm 10-K and other documents we file with the Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs, and our management’s assumptions. Words such as “expect,” “anticipate,” “outlook,” “forecast,” “could,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “should,” “may,” “assume,” variations of ~~$3.3 billion increased 1.9% over fiscal 2007. Organic net revenue declined 3.3% for fiscal 2008 over fiscal 2007. Net income~~such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of ~~$215.4 million for fiscal 2008 decreased $25.4 million from $240.8 million reported in~~future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. We describe our respective risks, uncertainties, and assumptions that could affect the ~~prior year. Fiscal 2008~~outcome or results ~~include a restructuring charge~~ of $31.2 million ($21.0 million after tax) and tax charges related to changes in prior years’ foreign tax credits of $17.2 million. Restructuring charges of $36.9 million ($30.3 million after-tax) were recorded in fiscal 2007. The Woodhead acquisition added $202.5 million of net revenue and $12.2 million of income from operations ~~to the consolidated operating results in fiscal 2007.~~

~~The following table sets forth certain consolidated statements of income data as a percentage of net revenue for the periods indicated (in thousands):~~

Percentage of
Percentage of
Percentage of

2008 Revenue 2007 Revenue 2006 Revenue

Net revenue $ 3,328,347 100.0 % $ 3,265,874 100.0 % $ 2,861,289 100.0 %
Cost of sales 2,314,112 69.5 % 2,249,166 68.9 % 1,918,659 67.1 %

Gross profit 1,014,235 30.5 % 1,016,708 31.1 % 942,630 32.9 %
Selling, general & administrative 665,038 20.0 % 658,289 20.1 % 606,532 21.1 %
Restructuring costs and asset impairments 31,247 0.9 % 36,869 1.1 % 26,354 0.9 %
Income from operations 317,950 9.6 % 321,550 9.9 % 309,744 10.8 %
Other income, net 20,698 0.6 % 16,707 0.5 % 18,140 0.7 %

Income before income taxes 338,648 10.2 % 338,257 10.4 % 327,884 11.5 %
Income taxes 123,211 3.7 % 97,489 3.0 % 91,793 3.2 %
��
Net income $ 215,437 6.5 % $ 240,768 7.4 % $ 236,091 8.3 %

~~Net Revenue~~below.

We ~~sell~~have based our ~~products~~forward looking statements on our management’s beliefs and assumptions based on information available to them at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. Reference is made in ~~five primary markets. A summary follows~~particular to forward looking statements regarding growth strategies, industry trends, financial results, restructuring and other cost reduction initiatives, acquisition synergies, manufacturing strategies, product development and sales, regulatory approvals, and competitive strengths. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the filing of ~~the estimated change in revenue from each market during the fiscal years ended June 30:~~

2008 2007

Consumer 3 % 9 %
Telecommunications 3 3
Automotive 7 11
Data 4 6
Industrial (11 ) 100

~~Following are highlights of revenue changes by these primary markets:~~


	•	Consumer market revenue increased in fiscal 2008 due to higher demand for our connectors used in home entertainment products. However, revenue growth this year has moderated in part due to our customers’ concerns regarding global economies.


	•	Telecommunications market revenue was higher in fiscal 2008 due to higher demand for our networking products. While we experienced strong revenue growth in the telecommunications market in late fiscal 2006 and early 2007, we experienced a sharp decline in revenue from mobile phone customers during the second half of fiscal 2007. This negative trend began to stabilize during the second half of fiscal 2008.

	•	Revenue in the automotive sector was higher in fiscal 2008 and 2007 primarily due to higher revenue in Europe and Asia, a portion of which is attributed to the currency translation impact of a weaker U.S. dollar in fiscal 2008. Revenue in the U.S. automotive market was lower in fiscal 2008 compared with fiscal 2007. The automotive market has benefited from new products reflecting higher electronic content in automobiles and an increase in revenue of our standard products to traditional customers. We believe that the number of automobiles manufactured by our customers was lower in fiscal 2008; however, our customers have trended toward reducing their vendor list, which when coupled with the higher electronic content used in new automobiles, has resulted in an increase in our revenue.

	•	Data market revenue increased in fiscal 2008 due to our customers’ releases of new high end products and their expansion in new optical and high speed technologies, for which we offer a strong product line. Revenue growth in the data market has moderated during this year due in part to our customers’ concerns regarding global economies.

	•	The industrial market declined due largely to a cable assembly product that had high revenue levels in fiscal 2007 but little revenue in fiscal 2008 because our customer was enhancing their product line. Woodhead contributed 84% of the 100% growth in industrial sales in fiscal 2007 compared with fiscal 2006.

~~The following table shows the percentage of net revenue by geographic region:~~

2008 2007 2006

Americas 27.6 % 28.7 % 28.6 %
Asia Pacific 52.0 51.1 52.6
Europe 20.4 20.2 18.8

Total 100.0 % 100.0 % 100.0 %

~~The following table provides an analysis of the change in net revenue compared with the prior fiscal years (in thousands):~~

2008 2007

Net revenue for prior year $ 3,265,874 $ 2,861,289
Components of net revenue (decrease) increase:
Organic net revenue growth (decline) (106,863 ) 141,887
Currency translation 169,336 60,219
Woodhead acquisition — 202,479

Total change in net revenue from prior year 62,473 404,585

Net revenue for current year $ 3,328,347 $ 3,265,874

Organic net revenue growth (decline) as a percentage of net revenue for prior year (3.3 )% 5.0 %

Organic net revenue declined $106.9 million in fiscal 2008 due to lower revenue in local currencies for the consumer, telecommunications and data markets in our connector segment. We estimate that the impact of price erosion reduced revenue by approximately $132.8 million in fiscal 2008 compared with the prior year. A significant portion of the price erosion occurred in our mobile phone connector products, which are part of our telecommunications market.

The increase in net revenue attributed to currency translation in fiscal 2008 compared with fiscal 2007 was principally due to the general weakening of the U.S. dollar against other currencies. The increase in net revenue attributed to currency translation in fiscal 2007 compared with 2006 was principally due to the strengthening of the euro, Singapore dollar and Korean won against the U.S. dollar. The following tables show the effect on the change in geographic net revenue from foreign currency translations to the U.S. dollar (in thousands):

June 30, 2008 June 30, 2007
Local
Currency
Net
Local
Currency
Net

Currency Translation Change Currency Translation Change

Americas $ (23,304 ) $ 3,637 $ (19,667 ) $ 116,022 $ 1,640 $ 117,662
Asia Pacific (26,974 ) 89,405 62,431 145,537 17,158 162,695
Europe (54,735 ) 76,294 21,559 74,165 47,148 121,313
Corporate & Other (1,850 ) — (1,850 ) 2,915 — 2,915

Net change $ (106,863 ) $ 169,336 $ 62,473 $ 338,639 $ 65,946 $ 404,585

~~The change in revenue on a local currency basis as of June 30 was as follows:~~

2008 2007

Americas (2.5 )% 14.2 %
Asia Pacific (1.6 ) 9.7
Europe (8.3 ) 13.8

Total (3.3 )% 11.8 %

~~The following table sets forth information on revenue by segment as of June 30 (in thousands):~~

2008 2007 2006

Connector $ 1,879,443 $ 1,885,431 $ 1,721,459
Transportation 498,141 472,257 424,740
Custom & Electrical 941,365 892,756 650,332
Corporate & Other 9,398 15,430 64,758

Total $ 3,328,347 $ 3,265,874 $ 2,861,289

~~Gross Profit~~

~~The following table provides summary of gross profit and gross margin compared with the prior fiscal year (in thousands):~~

2008 2007 2006

Gross profit $ 1,014,235 $ 1,016,708 $ 942,630
Gross margin 30.5 % 31.1 % 32.9 %

~~The reduction in gross margin was primarily due to higher commodity cost and price erosion partially offset by general cost reductions, a portion of which is related to restructuring activities.~~

A significant portion of our material cost is comprised of copper and gold costs. We purchased approximately 25 million pounds of copper and approximately 135,000 troy ounces of gold in fiscal 2008. The following table shows the increase in average prices related to our purchases of copper and gold:

2008 2007 2006

Copper (price per pound) $ 3.49 $ 3.20 $ 2.28
Gold (price per troy ounce) 825.00 636.00 525.00

Generally, we are able to pass through to our customers only a small a portion of the increased cost of copper and gold. However, we mitigated the impact of the increase in gold prices by hedging approximately 40% of our gold purchases in fiscal 2008.

~~In addition to commodity costs, the increase (decrease) of certain other significant impacts on gross profit compared with the prior years was as follows as of June 30 (in thousands):~~

2008 2007

Price erosion $ (132,758 ) $ (131,435 )
Currency translation 48,842 12,595
Currency transaction (18,393 ) 18,166

The increase in gross profit due to currency translation gains was primarily due to a general weakening of the U.S. dollar against other currencies. Currency translation decreased gross margin by 10 basis points as revenue increased by $169.3 million, also due to the weaker dollar.

Certain products that we manufacture in Japan and Europe are sold in other regions of the world at selling prices primarily denominated in or closely linked to the U.S. dollar. As a result, changes in currency exchange rates may affect our cost of sales reported in U.S. dollars without a corresponding effect on net revenue. The decrease in gross profit due to currency transaction losses in fiscal 2008 was primarily due to a general weakening of the U.S. dollar against other currencies.

~~Operating Expenses~~

~~Operating expenses for the three years ended June 30, 2008 were as follows (in thousands):~~

2008 2007 2006

Selling, general & administrative $ 665,038 $ 658,289 $ 606,532
Selling, general & administrative as a percentage of revenue 20.0 % 20.1 % 21.1 %
Restructuring costs and asset impairments 31,247 36,869 26,354

Selling, general and administrative expense as a percentage of revenue was relatively consistent in fiscal 2008 compared with fiscal 2007 while organic net revenue declined. The impact of currency translation increased selling, general and administrative expenses by approximately $35.4 million for fiscal 2008 compared with fiscal 2007 and increased selling, general and administrative expenses by approximately $12.4 million for fiscal 2007 compared with fiscal 2006.

The decrease in selling, general and administrative expense as a percent of net revenue in fiscal 2008 compared with fiscal 2007 and in fiscal 2007 compared with fiscal 2006 was primarily due to a lower cost structure resulting from our restructuring initiative which began in fiscal 2007, lower incentive compensation expense in 2008 and 2007 and specific cost containment activities.

~~Research and development expenditures, which are classified as selling, general and administrative expense, were 4.9% of net revenue for fiscal years 2008, 2007 and 2006.~~

~~Restructuring costs and asset impairments~~

~~During fiscal 2007, we undertook a restructuring plan designed to reduce costs and to improve return on invested capital~~this report, whether as a result of a new ~~global organization that was effective July 1, 2007. A majority of the plan relates to facilities located~~information, future events, changes in North America and Europe and in general, the movement of manufacturing activities at these plants to other facilities. Net restructuring cost during the year ended June 30, 2008 was $31.2 million, resulting in cumulative costs since we announced the restructuring plan of $68.1 million. We have revised our initial estimate and now expect to incur total restructuring and asset impairment costs related to these actions ranging from $125 to $140 million, of which the impact on each segment will be determined as the actions become more certain. Management and the Board of Directors approved several actions related to this plan. A

~~portion of this plan involves cost savings~~assumptions, or other actions that do not result in incremental expense, such as better utilization of assets, reduced spending and organizational efficiencies. This plan includes employee reduction targets throughout the company, and we expect to achieve these targets through ongoing employee attrition and terminations. We expect to substantially complete the actions under this plan by June 30, 2010.otherwise.

During fiscal 2008, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 900 employees, resulting in a charge of $17.6 million. A large part of these employee terminations occurred in our corporate headquarters and U.S. and Mexican manufacturing operations. In accordance with our planned restructuring actions, we have recorded additional asset impairment charges of $13.6 million to write-down assets to fair value less the cost to sell.

During fiscal 2007, we recognized additional restructuring costs related to employee severance and benefit arrangements for approximately 335 employees. A substantial majority of these employee terminations occurred within our Ireland manufacturing operations and various administrative functions in the Americas and European regions. In addition, we have vacated or plan to vacate several buildings and are holding these buildings and related assets for sale. This plan resulted in an impairment charge of $8.7 million to write-down these assets to fair value less the cost to sell these assets. The fair value of the asset groupings was determined using various valuation techniques.

During fiscal 2005, we decided to close certain operations in the Americas and European regions in order to reduce operating costs and better align our manufacturing capacity with customer needs. In the Americas region, we closed an industrial manufacturing facility in New England and have ceased manufacturing in our Detroit area automotive facility. In Europe, we closed certain manufacturing facilities in Ireland and Portugal and reduced the size of a development center in Germany. We also closed a manufacturing facility in Slovakia. Production from these manufacturing facilities was transferred to existing plants within the region. We also took actions that reduced our selling, general and administrative costs in the Americas and European regions and at the corporate office. We reduced headcount by approximately 500 people after additions at the facilities where production was transferred. These actions were substantially complete as of June 30, 2006.

~~Effective Tax Rate~~

~~The effective tax rate for the three years ended June 30, 2008 was as follows:~~

2008 2007 2006

Effective tax rate 36.4 % 28.8 % 28.0 %

The effective tax rate for fiscal 2008 increased due to adjustments to foreign tax credits, including (1) a change in estimate of $6.3 million in the third quarter of fiscal 2008, resulting from a difference between foreign tax credits estimated in our fiscal 2007 financial statements and subsequently reflected in our fiscal 2007 tax return, and (2) a fourth quarter charge of $10.9 million to correct errors in the prior years’ tax pools used to calculate foreign tax credit carryforwards. The effective tax rate in fiscal 2007 was substantially unchanged from fiscal 2006.

~~Backlog~~

~~Backlog as of the three years ended June 30 was as follows (in thousands):~~

2008 2007 2006

Backlog $ 436,487 $ 332,479 $ 369,966

Backlog at June 30, 2008 increased due to orders received in the telecommunications and data markets and foreign currency translation. Foreign currency translation increased the backlog by $25.7 million compared with June 30, 2007. Excluding the foreign currency translation impact, backlog increased 23.6% from fiscal 2007 to fiscal 2008. Orders for fiscal 2008 were $3.4 billion compared with $3.2 billion for the prior year. Orders increased due to an increase in the telecommunications market and foreign currency translation. Foreign currency translation increased orders by $139.4 million.

Backlog decreased as of June 30, 2007 compared with June 30, 2006, primarily due to a decrease in demand at the end of fiscal 2007, particularly in the mobile communications market, and an increase in vendor managed inventory programs to customers. Under the vendor managed inventory program, the order and shipment occur simultaneously and without impacting reported backlog. The decrease in backlog as of June 30, 2007 compared with 2006 was offset by the acquisition of Woodhead, which had backlog of $24.3 million on June 30, 2007.

~~Connector~~

~~The following table provides an analysis of the change in net revenue compared with the prior fiscal year (in thousands):~~

2008 2007

Net revenue for prior year $ 1,885,431 $ 1,721,459
Components of net revenue increase (decrease):
Organic net revenue (decline) growth (101,466 ) 130,530
Currency translation 95,478 33,442

Total change in net revenue from prior year (5,988 ) 163,972

Net revenue for current year $ 1,879,443 $ 1,885,431

Organic net revenue (decline) growth as a percentage of net revenue for prior year (5.4 )% 7.6 %

The Connector segment’s core markets are telecommunication, data products and consumer, which are discussed above. Segment revenue decreased during fiscal 2008 with currency translation offsetting an organic revenue decline. Connector organic revenue decreased in fiscal 2008 primarily due to general weakness in these markets, particularly the mobile phone sector. Additionally, price erosion, which is generally higher in the Connector segment compared with our other segments, was 5.7% in fiscal 2008.

~~Organic net revenue growth in fiscal 2007 was a result of stronger demand in the consumer market with growth in both the satellite radio and games markets where we had significant connector content.~~

~~The following table provides information on income from operations and operating margins for the periods indicated (in thousands):~~

2008 2007 2006

Income from operations $ 302,240 $ 354,358 $ 411,329
Operating margin 16.1 % 18.8 % 23.9 %

Connector segment income from operations decreased compared with the prior year periods due to lower organic revenue in fiscal 2008 and price erosion and higher raw material cost in fiscal 2008 and 2007. We passed on to customers only a small amount of the commodity cost increase.

~~Transportation~~

~~The following table provides an analysis of the change in net revenue compared with the prior fiscal year (in thousands):~~

2008 2007

Net revenue for prior year $ 472,257 $ 424,740
Components of net revenue increase (decrease):
Organic net revenue (decline) growth (3,171 ) 39,565
Currency translation 29,055 7,952

Total change in net revenue from prior year 25,884 47,517

Net revenue for current year $ 498,141 $ 472,257

Organic net revenue (decline) growth as a percentage of net revenue for prior year (0.7 )% 9.3 %

Transportation segment organic net revenue declined in fiscal 2008 but was offset entirely by foreign currency translation. Revenue was negatively impacted during the second half of fiscal 2008 due to a strike at a key supplier of one of our customers. The organic net revenue growth in fiscal 2007 was primarily due to new U.S. program wins and higher electronic content in vehicles.

~~The following table provides information on income from operations and operating margins for the periods indicated (in thousands):~~

2008 2007 2006

Income from operations $ 15,356 $ 7,476 $ (4,472 )
Operating margin 3.1 % 1.6 % (1.1 )%

Segment operating income improved during the last three years due to higher gross margins resulting from cost reductions and more efficient use of capacity in connection with the restructuring activities that began in June 2007. Capacity utilization improved due to completion of the transition of manufacturing operations that was ongoing during the first half of fiscal 2007.

~~Custom & Electrical~~

~~The following table provides an analysis of the change in net revenue compared with the prior fiscal year (in thousands):~~

2008 2007

Net revenue for prior year $ 892,756 $ 650,332
Components of net revenue increase:
Organic net revenue growth 4,455 16,292
Currency translation 44,154 23,653
Acquisitions — 202,479

Total change in net revenue from prior year 48,609 242,424

Net revenue for current year $ 941,365 $ 892,756

Organic net revenue growth as a percentage of net revenue for prior year 0.5 % 2.5 %

The Custom and Electrical segment’s core markets are industrial, telecommunications and data, which are discussed above. Higher revenue from telecommunications infrastructure products was offset by lower revenue in the industrial market. Organic net revenue growth in fiscal 2007 was realized in both the industrial and telecommunications markets.

~~The following table provides information on income from operations and operating margins for the periods indicated (in thousands):~~

2008 2007 2006

Income from operations $ 94,076 $ 52,898 $ 29,047
Operating margin 10.0 % 5.9 % 4.5 %

Segment operating income increased in fiscal 2008 compared with fiscal 2007 due to efficiencies achieved with the Woodhead integration and an increase in revenue in the telecommunications market. Operating income increased in fiscal 2007 compared with fiscal 2006 due to higher revenue attributed to the Woodhead acquisition.

~~Non-GAAP Financial Measures~~

Organic net revenue growth, which is included in the discussion above, is a non-GAAP financial measure. The tables presented in Results of Operations above provide reconciliations of U.S. GAAP reported net revenue growth (the most directly comparable GAAP financial measure) to organic net revenue growth.

~~Financial Condition and Liquidity~~

Our financial position remains strong and we continue to be able to fund capital projects and working capital needs principally out of operating cash flows and cash reserves. Cash, cash equivalents and marketable securities totaled $509.8 million and $460.9 million at June 30, 2008 and 2007, respectively, of which approximately $480.0 was in~~non-U.S. accounts~~ ~~as of June 30, 2008. Transferring cash, cash equivalent or marketable securities to U.S. accounts fromnon-U.S. accounts~~ ~~could subject us to additional U.S. repatriation income tax.~~

Our long-term financing strategy is to primarily rely on internal sources of funds for investing in plant, equipment and acquisitions. Management believes that our liquidity and financial flexibility are adequate to support both current and future growth. We have historically used external borrowings only when a clear financial advantage exists. Long-term debt and obligations under capital leases at June 30, 2008 totaled $151.8 million. We have available lines of credit totaling $207.9 million at June 30, 2008.

~~Cash Flows~~

~~Below is a table setting forth the key lines of our Consolidated Statements of Cash Flows (in thousands):~~

2008 2007 2006

Cash provided from operating activities $ 479,134 $ 451,434 $ 443,856
Cash used for investing activities (218,156 ) (446,129 ) (240,779 )
Cash provided by (used for) financing activities (197,306 ) 28,529 (189,814 )
Effect of exchange rate changes on cash 33,474 11,712 9,796

Net increase in cash and cash equivalents $ 97,146 $ 45,546 $ 23,059

~~Operating Activities~~

Cash provided from operating activities in fiscal 2008 increased by $27.7 million for fiscal 2008 from the prior year due mainly to lower use of funds to finance working capital needs in the current year period compared with the prior year, partially offset by lower net income. Working capital is defined as current assets minus current liabilities.

Cash provided from operating activities increased by $7.6 million for fiscal 2007 from fiscal 2006 primarily due to higher net income as adjusted for non-cash items in fiscal 2006 offset by an increase in working capital. The working capital increase was primarily due to the revenue growth for fiscal 2007 compared with the prior year.

~~Investing Activities~~

~~On July 19, 2007, we completed an acquisition of aU.S.-based~~ company in an all cash transaction approximating $42.5 million. On August 9, 2006, we completed the acquisition of Woodhead in an all cash transaction for approximately $238.1 million, including the assumption of debt and net of cash acquired.

Capital expenditures declined $62.2 million during fiscal 2008 compared with fiscal 2007 reflecting our efforts to increase asset efficiency by lowering the incremental investment required to drive future growth. Capital expenditures increased $20.1 million for fiscal 2007 compared with fiscal 2006 in order to provide increased capability in the Americas, Asia-Pacific and European regions.

Cash flow from investing activities also includes proceeds from marketable securities in the net amount of $46.8 million in fiscal 2008, $71.2 million in fiscal 2007 and $37.3 million in fiscal 2006. Our marketable securities generally have a term of less than one year. Our investments in marketable securities are primarily based on our uses of cash in operating, other investing and financing activities.

~~Financing Activities~~

In order to fund the cash portion of our investment in Woodhead made during fiscal 2007, we entered into two term notes aggregating 15 billion Japanese yen ($141.3 million) and borrowed $44.0 million on our unsecured revolving credit line that was repaid the same year. The term notes are due in September 2009, with weighted-average fixed interest rates approximating 1.3%. In order to fund stock repurchases during fiscal 2008, we borrowed $125.0 million on our unsecured revolving line of credit, $75.0 million of which was repaid during fiscal 2008.

We purchased shares of Common Stock and Class A Common Stock totaling 8.0 million shares, 1.2 million shares and 6.0 million shares during fiscal years 2008, 2007 and 2006, respectively. The aggregate cost of these purchases was $199.6 million, $34.9 million and $165.3 million in fiscal years 2008, 2007 and 2006, respectively.

Our Board of Directors authorized the repurchase of up to an aggregate $200.0 million of common stock through June 30, 2008. Substantially all funds were used under the authorization as of June 30, 2008. On August 1, 2008, our Board of Directors authorized a repurchase of up to an aggregate $200.0 million of common stock through June 30, 2009.

We have sufficient cash balances and cash flow to support our planned growth. As part of our growth strategy, we may, in the future, acquire other companies in the same or complementary lines of business, and pursue other business ventures. The timing and size of any new business ventures or acquisitions we complete may impact our cash requirements and debt balances.

~~Contractual Obligations and Commercial Commitments~~

The following table summarizes our significant contractual obligations at June 30, 2008, and the effect such obligations are expected to have on liquidity and cash flows in future periods (in thousands):

Less Than
1-3
3-5
More Than

Total 1 Year Years Years 5 Years

Operating lease obligations $ 39,831 $ 13,774 $ 11,797 $ 8,757 $ 5,503
Capital lease obligations 5,118 2,858 2,212 47 1
Other long-term liabilities 17,798 4,673 3,930 626 8,569
Debt obligations 147,626 1,398 145,668 488 72

Total(1) $ 210,373 $ 22,703 $ 163,607 $ 9,918 $ 14,145


~~(1)~~		Total does not include contractual obligations recorded on the balance sheet as current liabilities or certain purchase obligations, as discussed below. Debt and capital lease obligations include interest payments.

Contractual obligations for purchases of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on current manufacturing needs and are fulfilled by vendors within short time horizons. In addition, some purchase orders represent authorizations to purchase rather than binding agreements. We do not generally have significant agreements for the purchase of raw materials or other goods specifying minimum quantities and set prices that exceed expected requirements for three months. Agreements for outsourced services generally contain clauses allowing for cancellation without significant penalty, and are therefore not included in the table above.

~~Off-Balance Sheet Arrangements~~

~~We do not have material exposure to any off-balance sheet arrangements. We do not have any unconsolidated special purpose entities.~~


Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk associated with changes in foreign currency exchange rates and interest rates.

We mitigate our foreign currency exchange rate risk principally through the establishment of local production facilities in the markets we serve. This creates a “natural hedge” since purchases and sales within a specific country are both denominated in the same currency and therefore no exposure exists to hedge with a foreign exchange forward or option contract (collectively, “foreign exchange contracts”). Natural hedges exist in most countries in which we operate, although the percentage of natural offsets, as compared with offsets that need to be hedged by foreign exchange contracts, will vary from country to country.

We also monitor our foreign currency exposure in each country and implement strategies to respond to changing economic and political environments. Examples of these strategies include the prompt payment of intercompany balances utilizing a global netting system, the establishing of contra-currency accounts in several international subsidiaries, development of natural hedges and use of foreign exchange contracts to protect or preserve the value of cash flows. No material foreign exchange contracts were in use at June 30, ~~2008~~2009 and ~~2007.~~2008.

We have implemented a formalized treasury risk management policy that describes the procedures and controls over derivative financial and commodity instruments. Under the policy, we do not use derivative financial or commodity instruments for speculative or trading purposes, and the use of such instruments is subject to strict approval levels by senior management. Typically, the use of derivative instruments is limited to hedging activities related to specific foreign currency cash flows and net receivable and payable balances.

The translation of the financial statements of the non-North American operations is impacted by fluctuations in foreign currency exchange rates. The increase in consolidated net revenue and income from operations was impacted by the translation of our international financial statements into

U.S. dollars resulting in increased net revenue of ~~$169.3~~$5.2 million and increased income from operations of ~~$12.5~~$1.7 million for ~~2008,~~2009, compared with the estimated results for ~~2007~~2008 using the average rates for ~~2007.~~2008.

Our ~~$34.3~~$43.2 million of marketable securities at June 30, ~~2008~~2009 are principally invested in time deposits.

Interest rate exposure is limited to our long-term debt. We do not actively manage the risk of interest rate fluctuations. However, such risk is mitigated by the relatively short-term nature of our investments (less than 12 months) and the fixed-rate nature of our long-term debt.

Due to the nature of our operations, we are not subject to significant concentration risks relating to customers, products or geographic locations.

We monitor the environmental laws and regulations in the countries in which we operate. We have implemented an environmental program to reduce the generation of potentially hazardous materials during our manufacturing process and believe we continue to meet or exceed local government regulations.

3843


Item 8.	Financial Statements and Supplementary Data

Molex Incorporated

Index to Consolidated Financial Statements


	Page

Consolidated Balance Sheets		4045
Consolidated Statements of ~~Income~~ Operations		4146
Consolidated Statements of Cash Flows		4247
Consolidated Statements of Stockholders’ Equity		4348
Notes to Consolidated Financial Statements		4449
Report of Independent Registered Public Accounting Firm		6977
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		7078

3944

Molex Incorporated

Consolidated Balance Sheets

(In thousands, except per share data)


		June 30,							June 30,
		2008			2007				2009			2008

ASSETS	ASSETS							ASSETS
Current assets:
Cash and cash equivalents		$	475,507		$	378,361			$	424,707		$	475,507
Marketable securities			34,298			82,549				43,234			34,298
Accounts receivable, less allowances of $40,243 in 2008 and $31,064 in 2007			740,827			685,666
Accounts receivable, less allowances of $32,593 in 2009 and $40,243 in 2008										528,907			740,827
Inventories			458,295			392,680				354,337			458,295
Deferred income taxes			23,444			16,171				27,939			23,444
Prepaid expenses			50,589			35,400				68,449			50,589

Total current assets			1,782,960			1,590,827				1,447,573			1,782,960
Property, plant and equipment, net			1,172,395			1,121,369				1,080,417			1,172,395
Goodwill			373,623			334,791				128,494			373,623
Non-current deferred income taxes			62,521			103,626				89,332			62,521
Other assets			208,038			165,495				196,341			208,038

Total assets		$	3,599,537		$	3,316,108			$	2,942,157		$	3,599,537


LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term loans		$	66,687		$	1,537			$	224,340		$	66,687
Accounts payable			350,413			279,847				266,633			350,413
Accrued expenses:
Salaries, commissions and bonuses			74,689			66,532				55,109			74,689
Restructuring										69,928			19,842
Other			84,525			121,358				93,392			64,683
Income taxes payable			73,124			61,677				4,750			73,124

Total current liabilities			649,438			530,951				714,152			649,438
Other non-current liabilities			21,346			25,612				21,862			21,346
Accrued pension and other postretirement benefits			105,574			108,693				113,268			105,574
Long-term debt			146,333			127,821				30,311			146,333

Total liabilities			922,691			793,077				879,593			922,691
Commitments and contingencies
Stockholders’ equity:
Common Stock, $0.05 par value; 200,000 shares authorized; 112,195 shares issued at 2008 and 111,730 shares issued at 2007			5,610			5,587
Class A Common Stock, $0.05 par value; 200,000 shares authorized; 109,841 shares issued at 2008 and 108,562 shares issued at 2007			5,492			5,428
Class B Common Stock, $0.05 par value; 146 shares authorized; 94 shares issued at 2008 and 2007			5			5
Common Stock, $0.05 par value; 200,000 shares authorized; 112,204 shares issued at 2009 and 112,195 shares issued at 2008										5,610			5,610
Class A Common Stock, $0.05 par value; 200,000 shares authorized; 110,468 shares issued at 2009 and 109,841 shares issued at 2008										5,523			5,492
Class B Common Stock, $0.05 par value; 146 shares authorized; 94 shares issued at 2009 and 2008										5			5
Paid-in capital			569,046			520,037				601,459			569,046
Retained earnings			2,785,099			2,650,470				2,355,991			2,785,099
Treasury stock (Common Stock, 13,744 shares at 2008 and 12,297 shares at 2007; Class A Common Stock, 30,948 shares at 2008 and 24,040 shares at 2007), at cost			(1,009,021	)		(799,894	)
Treasury stock (Common Stock, 16,644 shares at 2009 and 13,744 shares at 2008; Class A Common Stock, 32,789 shares at 2009 and 30,948 shares at 2008), at cost										(1,089,322	)		(1,009,021	)
Accumulated other comprehensive income			320,615			141,398				183,298			320,615

Total stockholders’ equity			2,676,846			2,523,031				2,062,564			2,676,846

Total liabilities and stockholders’ equity		$	3,599,537		$	3,316,108			$	2,942,157		$	3,599,537

See accompanying notes to consolidated financial statements.

4045

Molex Incorporated

Consolidated Statements of ~~Income~~Operations

(In thousands, except per share data)


	Years Ended June 30,								Years Ended June 30,
	2008			2007		2006			2009			2008		2007

Net revenue	$	3,328,347		$	3,265,874	$	2,861,289		$	2,581,841		$	3,328,347	$	3,265,874
Cost of sales		2,314,112			2,249,166		1,918,659			1,925,664			2,314,112		2,249,166

Gross profit		1,014,235			1,016,708		942,630			656,177			1,014,235		1,016,708
Selling, general and administrative		665,038			658,289		606,532			586,702			665,038		658,289
Restructuring costs and asset impairments		31,247			36,869		26,354			151,531			31,247		36,869
Goodwill impairments										264,140			—		—

Total operating expenses		696,285			695,158		632,886			1,002,373			696,285		695,158

Income from operations		317,950			321,550		309,744
Gain (loss) on investments		(119	)		1,159		(1,245	)
Equity income		11,625			6,966		9,456
Income (loss) from operations										(346,196	)		317,950		321,550
Interest income, net		9,192			8,582		9,929			1,961			9,192		8,582
Other income (loss)										25,347			11,506		8,125

Total other income, net		20,698			16,707		18,140			27,308			20,698		16,707

Income before income taxes		338,648			338,257		327,884
Income (loss) before income taxes										(318,888	)		338,648		338,257
Income taxes		123,211			97,489		91,793			2,399			123,211		97,489

Net income	$	215,437		$	240,768	$	236,091
Net (loss) income									$	(321,287	)	$	215,437	$	240,768

Earnings per share:
Earnings (loss) per share:
Basic	$	1.19		$	1.31	$	1.27		$	(1.84	)	$	1.19	$	1.31
Diluted	$	1.19		$	1.30	$	1.26		$	(1.84	)	$	1.19	$	1.30
Average common shares outstanding:
Basic		180,474			183,961		185,521			174,598			180,474		183,961
Diluted		181,395			185,565		187,416			174,598			181,395		185,565

See accompanying notes to consolidated financial statements.

4146

Molex Incorporated

Consolidated Statements of Cash Flows

(In thousands)


	Years Ended June 30,									Years Ended June 30,
	2008			2007			2006			2009			2008			2007

Operating activities:
Net income	$	215,437		$	240,768		$	236,091
Add (deduct) non-cash items included in net income:
Net (loss) income										$	(321,287	)	$	215,437		$	240,768
Add (deduct) non-cash items included in net income (loss):
Depreciation and amortization		252,344			237,912			214,657			251,902			252,344			237,912
Goodwill impairment											264,140			—			—
Asset write-downs included in restructuring costs		13,599			8,667			2,870			41,376			13,599			8,667
(Gain) loss on investments		111			(1,154	)		1,245			(143	)		111			(1,154	)
Deferred income taxes		31,096			20,998			(8,501	)		(26,606	)		31,096			20,998
Loss (gain) on sale of property, plant and equipment		296			1,800			(701	)
Loss on sale of property, plant and equipment											2,478			296			1,800
Share-based compensation		24,249			27,524			30,548			26,508			24,249			27,524
Other non-cash items		(6,778	)		23,373			3,859			(8,124	)		(6,778	)		23,373
Changes in assets and liabilities, excluding effects of foreign currency adjustments and acquisitions:
Accounts receivable		478			27,913			(112,873	)		201,080			478			27,913
Inventories		(26,240	)		(16,514	)		(45,987	)		95,529			(26,240	)		(16,514	)
Accounts payable		34,197			(57,479	)		43,875			(84,502	)		34,197			(57,479	)
Other current assets and liabilities		(45,798	)		(60,421	)		58,857			(24,967	)		(45,798	)		(60,421	)
Other assets and liabilities		(13,857	)		(1,953	)		19,916			(47,486	)		(13,857	)		(1,953	)

Cash provided from operating activities		479,134			451,434			443,856			369,898			479,134			451,434

Investing activities:
Capital expenditures		(234,626	)		(296,861	)		(276,783	)		(177,943	)		(234,626	)		(296,861	)
Proceeds from sales of property, plant and equipment		14,978			9,946			24,436			9,574			14,978			9,946
Proceeds from sales or maturities of marketable securities		811,724			4,856,301			1,351,165			29,549			811,724			4,856,301
Purchases of marketable securities		(764,966	)		(4,785,080	)		(1,313,829	)		(42,751	)		(764,966	)		(4,785,080	)
Acquisitions, net of cash acquired		(42,503	)		(238,072	)		(24,565	)		(74,789	)		(42,503	)		(238,072	)
Other investing activities		(2,763	)		7,637			(1,203	)		3,274			(2,763	)		7,637

Cash used for investing activities		(218,156	)		(446,129	)		(240,779	)		(253,086	)		(218,156	)		(446,129	)

Financing activities:
Proceeds from revolving credit facility and short-term loans		139,590			44,000			—			245,000			139,590			44,000
Payments on revolving credit facility		(75,000	)		(44,000	)		—			(295,000	)		(75,000	)		(44,000	)
Proceeds from issuance of long-term debt		—			131,045			—			78,060			—			131,045
Payments of long-term debt		(1,948	)		(26,937	)		(3,693	)		(1,827	)		(1,948	)		(26,937	)
Cash dividends paid		(74,598	)		(55,176	)		(34,843	)		(99,640	)		(74,598	)		(55,176	)
Exercise of stock options		16,732			15,416			15,783			1,692			16,732			15,416
Excess tax benefits from share-based compensation		1,677			1,714			369			1,693			1,677			1,714
Purchase of treasury stock		(199,583	)		(34,889	)		(165,323	)		(76,342	)		(199,583	)		(34,889	)
Other financing activities		(4,176	)		(2,644	)		(2,107	)		(9,218	)		(4,176	)		(2,644	)

Cash provided from (used for) financing activities		(197,306	)		28,529			(189,814	)
Cash (used for) provided from financing activities											(155,582	)		(197,306	)		28,529
Effect of exchange rate changes on cash		33,474			11,712			9,796			(12,030	)		33,474			11,712

Net increase in cash and cash equivalents		97,146			45,546			23,059
Net (decrease) increase in cash and cash equivalents											(50,800	)		97,146			45,546
Cash and cash equivalents, beginning of year		378,361			332,815			309,756			475,507			378,361			332,815

Cash and cash equivalents, end of year	$	475,507		$	378,361		$	332,815		$	424,707		$	475,507		$	378,361

Supplemental cash flow information:
Interest paid	$	3,599		$	2,857		$	928		$	5,487		$	3,599		$	2,857
Income taxes paid	$	64,641		$	96,531		$	70,092		$	83,904		$	64,641		$	96,531

See accompanying notes to consolidated financial statements.

4247

Molex Incorporated

Consolidated Statements of Stockholders’ Equity

(In thousands)


	Years Ended June 30,									Years Ended June 30,
	2008			2007			2006			2009			2008			2007

Common stock	$	11,107		$	11,020		$	10,900		$	11,138		$	11,107		$	11,020

Paid-in capital:
Beginning balance	$	520,037		$	442,586		$	425,259		$	569,046		$	520,037		$	442,586
Reclassification from deferred unearned compensation		—			—			(38,357	)
Stock-based compensation		24,249			27,524			30,548			26,508			24,249			27,524
Exercise of stock options		22,738			37,101			23,958			4,183			22,738			37,101
Issuance of stock awards		1,743			2,059			—			1,586			1,743			2,059
Reclass of directors’ deferred compensation plan		—			6,059			—			—			—			6,059
Other		279			4,708			1,178			136			279			4,708

Ending balance	$	569,046		$	520,037		$	442,586		$	601,459		$	569,046		$	520,037

Retained earnings:
Beginning balance	$	2,650,470		$	2,464,889		$	2,270,677		$	2,785,099		$	2,650,470		$	2,464,889
Net income		215,437			240,768			236,091
Net (loss) income											(321,287	)		215,437			240,768
Dividends		(80,756	)		(55,205	)		(41,613	)		(106,110	)		(80,756	)		(55,205	)
Other		(52	)		18			(266	)		(1,711	)		(52	)		18

Ending balance	$	2,785,099		$	2,650,470		$	2,464,889		$	2,355,991		$	2,785,099		$	2,650,470

Treasury stock:
Beginning balance	$	(799,894	)	$	(743,219	)	$	(568,917	)	$	(1,009,021	)	$	(799,894	)	$	(743,219	)
Purchase of treasury stock		(199,583	)		(34,889	)		(165,323	)		(76,342	)		(199,583	)		(34,889	)
Exercise of stock options		(9,544	)		(21,801	)		(8,736	)		(3,959	)		(9,544	)		(21,801	)
Other		—			15			(243	)		—			—			15

Ending balance	$	(1,009,021	)	$	(799,894	)	$	(743,219	)	$	(1,089,322	)	$	(1,009,021	)	$	(799,894	)

Deferred unearned compensation:
Beginning balance	$	—		$	—		$	(38,357	)
Reclassification to paid-in capital		—			—			38,357

Ending balance	$	—		$	—		$	—

Accumulated other comprehensive income, net of tax:
Beginning balance	$	141,398		$	106,713		$	71,296		$	320,615		$	141,398		$	106,713
Translation adjustments		165,706			51,009			34,934			(115,029	)		165,706			51,009
Pension adjustments, net of tax		3,309			(3,135	)		—			(22,137	)		3,309			(3,135	)
Adjustment for initially applying SFAS No. 158, net of tax		—			(17,965	)		—			—			—			(17,965	)
Unrealized investment gain, net of tax		10,202			4,776			483
Unrealized investment gain (loss), net of tax											(151	)		10,202			4,776

Ending balance	$	320,615		$	141,398		$	106,713		$	183,298		$	320,615		$	141,398

Total stockholders’ equity	$	2,676,846		$	2,523,031		$	2,281,869		$	2,062,564		$	2,676,846		$	2,523,031

Comprehensive income, net of tax:
Net income	$	215,437		$	240,768		$	236,091
Comprehensive (loss) income, net of tax:
Net (loss) income										$	(321,287	)	$	215,437		$	240,768
Translation adjustments		165,706			51,009			34,934			(101,945	)		165,706			51,009
Pension adjustments, net of tax		3,309			(3,135	)		—			(35,221	)		3,309			(3,135	)
Unrealized investment gain, net of tax		10,202			4,776			483			(151	)		10,202			4,776

Total comprehensive income, net of tax	$	394,654		$	293,418		$	271,508
Total comprehensive (loss) income, net of tax										$	(458,604	)	$	394,654		$	293,418

See accompanying notes to consolidated financial statements.

4348

Molex Incorporated

Notes to Consolidated Financial Statements


1.	Organization and Basis of Presentation

Molex Incorporated (together with its subsidiaries, except where the context otherwise requires, “we,” “us” and “our”) manufactures electronic components, including electrical and fiber optic interconnection products and systems, switches and integrated products in 4543 manufacturing locations in 1718 countries.


2.	Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Molex Incorporated and our majority-owned subsidiaries. All material intercompany balances and transactions are eliminated in consolidation. Equity investments in which we exercise significant influence but do not control and are not the primary beneficiary are accounted for using the equity method. Investments in which we are not able to exercise significant influence over the investee are accounted for under the cost method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from these estimates.

Currency Translation

Assets and liabilities of international entities are translated at period-end exchange rates and income and expenses are translated using weighted-average exchange rates for the period. Translation adjustments are included as a component of accumulated other comprehensive income.

Cash and Cash Equivalents

We consider all liquid investments with original maturities of three months or less to be cash equivalents.

Marketable Securities

Marketable securities consist primarily of time deposits held atnon-U.S. local banks. We generally hold these instruments for a period of greater than three months, but no longer than 12 months. Marketable securities are classified as available-for-sale securities.

No mark-to-market adjustments were required during fiscal years 2009, 2008 ~~2007~~ or ~~2006~~2007 because the carrying value of the securities approximated the market value. Proceeds from sales of available-for-sales securities, excluding maturities, during fiscal years 2008 ~~2007~~ and ~~2006~~2007 were $194.3 million ~~$273.1 million~~ and ~~$532.1~~$273.1 million, respectively. There were no associated gains or losses on these sales. We did not liquidate any available-for-sales securities prior to maturity in fiscal 2009.

Accounts Receivable

In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria. We believe that we have little concentration of credit risk due to the diversity of our customer base. Accounts receivable, as shown on the Consolidated Balance Sheets, were net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectability

4449

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

based on historical trends and an evaluation of the impact of current and projected economic conditions. We monitor the collectability of our accounts receivable on an ongoing basis by analyzing the aging of our accounts receivable, assessing the credit worthiness of our customers and evaluating the impact of reasonably likely changes in economic conditions that may impact credit risks. Our accounts receivable are not collateralized.

Inventories

Inventories are valued at the lower offirst-in, first-out cost or market value.

Property, Plant and Equipment

Property, plant and equipment are reported at cost less accumulated depreciation. Depreciation is primarily recorded on a straight-line basis for financial statement reporting purposes and using a combination of accelerated and straight-line methods for tax purposes.

The estimated useful lives are as follows:


Buildings			25 — 40 years
Machinery and equipment			3 — 10 years
Molds and dies			2 — 4 years

We perform reviews for impairment of long-lived assets whenever adverse events or circumstances indicate that the carrying value of an asset may not be recoverable. When indicators of impairment are present, we evaluate the carrying value of the long-lived assets in relation to the operating performance and future undiscounted cash flows of the underlying assets. We adjust the net book value of the underlying assets to fair value if the sum of the expected undiscounted future cash flows is less than book value.

Goodwill

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. We perform an annual review in the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine if the carrying value of the recorded goodwill is impaired. The impairment review process compares the fair value of the reporting unit in which goodwill resides to its carrying value. Reporting units may be operating segments as a whole or an operation one level below an operating segment, referred to as a component.

Our goodwill impairment reviews require a two-step process. The first step of the review compares the estimated fair value of the reporting unit against its aggregate carrying value, including goodwill. We estimate the fair value of our segments using the income and market methods of valuation, which includes the use of estimated discounted cash flows. Based on this analysis, if we determine the carrying value of the segment exceeds its fair value, then we complete the second step to determine the fair value of net assets in the segment and quantify the amount of goodwill impairment.

Other-Than-Temporary Impairments (OTTI)

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Pension and Other Postretirement Plan Benefits

Pension and other postretirement plan benefits are expensed as employees earn such benefits. The recognition of expense is significantly impacted by estimates made by management such as discount rates used to value certain liabilities, expected return on assets and future healthcare costs. We use third-party specialists to assist management in appropriately measuring the expense associated with pension and other postretirement plan benefits.

Revenue Recognition

We recognize revenue when in the normal course of our business the following conditions are met: (i) a purchase order has been received from the customer with a corresponding order acknowledgement sent to the customer confirming delivery, price and payment terms, (ii) product has been shipped (FOB origin) or delivered (FOB destination) and title has clearly transferred to the customer or customer

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

carrier, (iii) the price to the buyer is fixed and determinable for sales with an estimate of allowances made based on historical experience and (iv) there is reasonable assurance of collectability.

We record revenue on a consignment sale when a customer has taken title of product which is stored in either the customer’s warehouse or that of a third party.

From time to time, we will discontinue or obsolete products that we have formerly sold. When this is done, an accrual for estimated returns is established at the time of the announcement of product discontinuation or obsolescence.

We typically warrant that our products will conform to Molex specifications and that our products will be free from material defects in materials and manufacturing, and limit our liability to the replacement of defective parts or the cash value of replacement parts. We will not accept returned goods unless the customer makes a claim in writing and management authorizes the return. Returns result primarily from defective products or shipping discrepancies. A reserve for estimated returns is established at the time of sale based on historical return experience and is recorded as a reduction of revenue.

We provide certain distributors with an inventory allowance for returns or scrap equal to a percentage of qualified purchases. At the time of sale, we record as a reduction of revenue a reserve for estimated inventory allowances based on a fixed percentage of sales that we authorized to distributors.

From time to time we in our sole discretion will grant price allowances to customers. At the time of sale, we record as a reduction of revenue a reserve for estimated price allowances based on historical allowances authorized and approved solely at our discretion.

Other allowances include customer quantity and price discrepancies. At the time of sale, we record as a reduction of revenue a reserve for other allowances based on historical experience. We believe we can reasonably and reliably estimate the amounts of future allowances.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Research and Development

Costs incurred in connection with the development of new products and applications are charged to operations as incurred. Research and development costs are included in selling, general and administrative expenses and totaled $159.2 million, $163.7 million ~~$159.1 million~~ and ~~$140.9~~$159.1 million in fiscal 2009, 2008 ~~2007~~ and ~~2006,~~2007, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized based on differences between the financial statement and tax bases of assets and liabilities using presently enacted tax rates. We have operations that are subject to income and other similar taxes in foreign countries. The estimation of the income tax amounts that we record involves the interpretation of complex tax laws and regulations, evaluation of tax audit findings and assessment of the impact foreign taxes may have on domestic taxes. A valuation allowance is provided to offset deferred tax assets if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Derivative Instruments and Hedging Activities

We use derivative instruments primarily to hedge activities related to specific foreign currency cash ~~flows.~~flows and commodity purchases. We had no material derivatives outstanding at June 30, ~~2008~~2009 or ~~2007.~~2008. The net impact of gains and losses on such instruments was not material to the results of operations for fiscal 2009, 2008 ~~2007~~ and ~~2006.~~

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~2007.

Stock-Based Compensation

We have granted nonqualified and incentive stock options and restricted stock to our directors, officers and employees under our stock plans pursuant to the terms of such plans.

Accounting Changes

Uncertainty in Income Taxes

We adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for the Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”, (FIN 48) effective July 1, 2007. Among other things, FIN 48 requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. The adoption of FIN 48 did not have a material impact on our statement of financial position or on results of operations.

Pension and Postretirement Medical Benefit Plans

Effective for fiscal 2007, we adopted the provisions of SFAS No. 158 “Employers’ accounting for defined benefit pension and other postretirement plans.” SFAS No. 158 requires that the funded status of defined-benefit postretirement plans be recognized on the consolidated balance sheet, and changes in the funded status be reflected in comprehensive income. SFAS No. 158 also requires the measurement date of the plan’s funded status to be the same as our fiscal year-end in fiscal 2009. The adoption of the measurement date provision of SFAS No. 158 did not have a material impact on our statement of financial position or results of operations.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

New Accounting Pronouncements

Business Combinations

In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R states that acquisition-related costs are to be recognized separately from the acquisition and expensed as incurred with restructuring costs ~~being~~ expensed in periods after the acquisition date. SFAS No. 141R also states that business combinations will result in all assets and liabilities of the acquired business being recorded at their fair values. We are required to adopt SFAS No. 141R effective July 1, 2009. The impact of the adoption of SFAS No. 141R will depend on the nature and extent of business combinations occurring on or after the effective date.

Noncontrolling Interests

In December 2007, the FASB issued SFAS No. 160, ~~Noncontrolling~~“Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 requires identification and presentation of ownership interests in subsidiaries held by parties other than us in the consolidated financial statements within the equity section but separate from the equity. It also requires that (1) the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, (2) changes in ownership interest be accounted for similarly, as equity transactions, and (3) when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS No. 160 but do not expect it to have a material impact on our financial statements.

Fair Value

In February 2008, the FASB issued FASB Staff PositionNo. 157-2, which delays the effective date of SFAS No. 157 for nonfinancial assets and liabilities, which are not measured at fair value on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS 157 for nonfinancial assets and liabilities, but do not expect it to have a material impact on our financial statements.

Derivative Instruments

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities— an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thus improves the transparency of

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

financial reporting. This statement is effective for us on July 1, 2009. We are currently evaluating the requirements of SFAS No. 161 but do not expect it to have a material impact on our financial statements.

Pension and Postretirement Medical Benefit Plans

In December 2008, the FASB issued FASB Staff Position No. 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets(FAS 132R-1).FAS No. 132R-1 requires disclosures about plan assets of a defined benefit pension or other postretirement plan. This statement is effective for us on July 1, 2009. The adoption ofFAS No. 132R-1 will result in enhanced disclosures, but will not otherwise have an impact on our financial statements.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)


3.	Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted EPS is computed by dividing net income by the weighted-average number of common shares and dilutive common shares outstanding, which includes stock options, during the year. A reconciliation of the basic average common shares outstanding to diluted average common shares outstanding as of June 30 is as follows (in thousands, except per share data):


	2008		2007		2006		2009			2008		2007

Net income	$	215,437	$	240,768	$	236,091
Net (loss) income							$	(321,287	)	$	215,437	$	240,768

Basic average common shares outstanding		180,474		183,961		185,521		174,598			180,474		183,961
Effect of dilutive stock options		921		1,604		1,895		—			921		1,604

Diluted average common shares outstanding		181,395		185,565		187,416		174,598			181,395		185,565

Earnings per share:
Earnings (loss) per share:
Basic	$	1.19	$	1.31	$	1.27	$	(1.84	)	$	1.19	$	1.31
Diluted	$	1.19	$	1.30	$	1.26	$	(1.84	)	$	1.19	$	1.30

Excluded from the computations above were anti-dilutive shares of 9.2 million, 5.2 million ~~1.9 million~~ and ~~4.0~~1.9 million in fiscal 2009, 2008 ~~2007~~ and ~~2006,~~2007, respectively.


4.	Acquisitions

On July 19, 2007, we completed the acquisition of aU.S.-based company in an all cash transaction approximating $42.5 million. We recorded goodwill of $23.9 million in connection with this acquisition. ~~The purchase price allocation for this acquisition is substantially complete.~~

On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an all cash transaction valued at approximately $238.1 million, including the assumption of debt and net of cash acquired. Woodhead develops, manufactures and markets network and electrical infrastructure components engineered for performance in harsh, demanding, and hazardous industrial environments. The acquisition is a significant step in our strategy to expand our products and capabilities in the global industrial market.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed for Woodhead at the date of acquisition (in thousands). Goodwill is non-deductible for tax purposes. The majority of goodwill from this transaction was impaired during fiscal 2009 (see Note 8).


Current assets	$	95,724	$	95,724
Land and depreciable assets		47,946		47,946
Goodwill		177,093		177,093
Intangible assets		39,000		39,000

Assets acquired		359,763		359,763
Liabilities assumed		100,109		100,109
Restructuring (See Note 5)		3,999
Restructuring (see Note 5)				3,999
Non-current deferred tax liabilities, net		17,583		17,583

Total purchase price	$	238,072	$	238,072

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

The following table illustrates the pro forma effect on operating results for the year ended June 30, 2006, as if we had acquired Woodhead as of the beginning of the year (the pro forma effect on the year ended June 30, 2007 was not material) (in thousands, except per share data):


Net revenue	$	3,084,000
Income from operations		325,000
Net income		246,000
Net income per common share — basic		1.33
Net income per common share — diluted		1.31

The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we acquired Woodhead on the dates assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the combination of Molex and Woodhead.


5.	Restructuring Costs and Asset Impairments

Restructuring costs and asset impairments consist of the following (in thousands):


	2009		2008		2007		Total

Severance costs	$	110,155	$	17,648	$	26,702	$	154,505
Asset impairments		21,128		13,599		8,667		43,394

Restructuring costs		131,283		31,247		35,369		197,899
Intangible asset impairments		16,300		—		—		16,300
Other charges		3,948		—		1,500		5,448

Total restructuring charges and asset impairments	$	151,531	$	31,247	$	36,869	$	219,647

Molex Restructuring Plans

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

activities at these plants to other lower-cost facilities. ~~Net restructuring cost~~Restructuring costs during ~~the year ended June 30, 2008~~fiscal 2009 was ~~$31.2~~$131.3 million, ~~resulting in~~consisting of $110.2 million of severance costs and $21.1 million for asset impairments. The cumulative ~~costs~~expense since we announced the restructuring ~~of $68.1~~plan totals $197.9 million.

We ~~have revised our initial estimate and now~~ expect to incur total restructuring and asset impairment costs related to these actions ranging from ~~$125~~$240 to ~~$140~~$250 million, of which the impact on each segment will be determined as the actions become more certain. Management ~~and the Board of Directors~~ approved several actions related to this plan. The total cost estimates increased as we formulated detailed plans for the latest additions to the restructuring actions, which included reorganization of our global product divisions. A portion of this plan involves cost savings or other actions that do not result in incremental expense, such as better utilization of assets, reduced spending and organizational efficiencies. This plan includes employee reduction targets throughout the company, and we expect to achieve these targets through ongoing employee attrition and terminations. We expect to ~~substantially~~ complete the actions under this plan by June 30, ~~2010.~~2010 with estimated annual cost savings ranging from $190 to $210 million.

~~During fiscal~~In 2009, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 6,600 employees, resulting in a charge of $110.2 million. A large part of these employee terminations resulted from plant closings in Europe and Asia. We recognized asset impairment charges of $41.4 million to write-down assets to fair value less the cost to sell.

In 2008, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 900 employees, resulting in a charge of $17.6 million. A large part of these employee terminations occurred in our corporate headquarters and U.S. and Mexican manufacturing operations. In accordance with our planned restructuring actions, we ~~have~~ recorded additional asset impairment charges of $13.6 million to write-down ~~these~~ assets to fair value less the cost to sell.

~~During fiscal~~In 2007, we recognized net restructuring costs ~~of $26.7 million~~ related to employee severance and benefit arrangements for approximately 335 employees. A substantial majority of these employee terminations occurred within our Ireland manufacturing operations and various administrative functions in the Americas and European regions. In addition, we have vacated or plan to vacate several buildings and are holding these buildings and related assets for sale. This plan resulted in an impairment charge of $8.7 million to write-down these assets to fair value less the cost to sell these assets. The fair value of the asset groupings was determined using various valuation techniques.

~~During fiscal 2005, we decided to close certain operations in the Americas and European regions in order to reduce operating costs and better align our manufacturing capacity with customer needs.~~

4956

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

In the Americas region, we closed an industrial manufacturing facility in New England and have ceased manufacturing in our Detroit area automotive facility. In Europe, we closed certain manufacturing facilities in Ireland and Portugal and reduced the size of a development center in Germany. We also closed a manufacturing facility in Slovakia. Production from these manufacturing facilities was transferred to existing plants within the region. We also took actions that reduced our selling, general and administrative costs in the Americas and European regions and at the corporate office. We reduced headcount by approximately 500 people after additions at the facilities where production was transferred. These actions were substantially complete as of June 30, 2006.

A summary of the restructuring charges and ~~related~~asset impairments for the fiscal years ended June 30 is summarized as follows (in thousands):


	2008		2007		2006		2009		2008		2007

Connector:
Severance costs	$	2,492	$	3,492	$	1,519	$	73,658	$	3,154	$	6,674
Asset impairments		9,482		—		—		18,468		11,380		2,732

Total	$	11,974	$	3,492	$	1,519

Transportation:
Severance costs	$	662	$	3,182	$	7,789
Asset impairments		1,898		2,732		1,373
Other								1,750		—		—

Total	$	2,560	$	5,914	$	9,162	$	93,876	$	14,534	$	9,406

Custom & Electrical:
Severance costs	$	3,144	$	8,721	$	6,863	$	22,483	$	3,144	$	8,721
Asset impairments		193		3,485		426		529		193		3,485
Other								16,300		—		—

Total	$	3,337	$	12,206	$	7,289	$	39,312	$	3,337	$	12,206

Corporate and Other:
Severance costs	$	11,350	$	11,307	$	7,313	$	14,014	$	11,350	$	11,307
Asset impairments		2,026		2,450		1,071		2,131		2,026		2,450
Other		—		1,500		—		2,198		—		1,500

Total	$	13,376	$	15,257	$	8,384	$	18,343	$	13,376	$	15,257

Total:
Severance costs	$	17,648	$	26,702	$	23,484	$	110,155	$	17,648	$	26,702
Asset impairments		13,599		8,667		2,870		21,128		13,599		8,667
Other		—		1,500		—		20,248		—		1,500

Total	$	31,247	$	36,869	$	26,354	$	151,531	$	31,247	$	36,869

Cumulative restructuring costs by segment since the announcement of the fiscal 2007 restructuring plan are $15.4 million for Connector, $8.5 million for Transportation, $15.6 million for Custom & Electrical and $28.6 million for Corporate and Other.

Woodhead Restructuring Plan

During fiscal 2007, management finalized plans to restructure certain operations of Woodhead to eliminate redundant costs resulting from the acquisition of Woodhead and improve efficiencies in

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

operations. The restructuring charges recorded are based on restructuring plans that have been committed to by management.

The total estimated restructuring costs associated with Woodhead were $4.0 million, consisting primarily of severance costs. These costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Woodhead and, accordingly, resulted in an increase to goodwill (see Note 4). ~~Our restructuring expenses may change as management executes the approved plan. Future decreases~~

Molex Incorporated

Notes to ~~the estimates of executing the Woodhead restructuring plan will be recorded as an adjustment to goodwill indefinitely, whereas future increases to the estimates will be recorded as operating expenses.~~Consolidated Financial Statements — (Continued)

Changes in the accrued severance balance are summarized as follows (in thousands):


	Restructuring Plans									Restructuring Plans
	Molex			Woodhead			Total			Molex			Woodhead			Total

Balance at June 30, 2005	$	10,285		$	—		$	10,285
Charges to expense		23,484			—			23,484
Cash payments		(17,828	)		—			(17,828	)

Balance at June 30, 2006	$	15,941		$	—		$	15,941		$	15,941		$	—		$	15,941
Charges to expense		26,702			—			26,702			26,702			—			26,702
Purchase accounting allocation		—			3,999			3,999			—			3,999			3,999
Cash payments		(11,788	)		(30	)		(11,818	)		(11,788	)		(30	)		(11,818	)
Non-cash related costs		(2,659	)		—			(2,659	)		(2,659	)		—			(2,659	)

Balance at June 30, 2007	$	28,196		$	3,969		$	32,165		$	28,196		$	3,969		$	32,165
Charges to expense		20,711			655			21,366			20,711			655			21,366
Cash payments		(31,481	)		(3,498	)		(34,979	)		(31,481	)		(3,498	)		(34,979	)
Non-cash related costs		1,368			(78	)		1,290			1,368			(78	)		1,290

Balance at June 30, 2008	$	18,794		$	1,048		$	19,842		$	18,794		$	1,048		$	19,842
Charges to expense											110,155			—			110,155
Cash payments											(55,168	)		(535	)		(55,703	)
Non-cash related costs											(3,897	)		(469	)		(4,366	)

Balance at June 30, 2009										$	69,884		$	44		$	69,928


6.	Inventories

Inventories, less allowances of $41.0 million at June 30, 2009 and $42.8 million at June 30, 2008, ~~and $42.7 million at June 30, 2007,~~ consisted of the following (in thousands):


	2008		2007		2009		2008

Raw materials	$	81,407	$	85,320	$	58,720	$	81,407
Work in progress		144,683		107,394		113,782		144,683
Finished goods		232,205		199,966		181,835		232,205

Total inventories	$	458,295	$	392,680	$	354,337	$	458,295

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

~~7. Property, Plant and Equipment~~


7.	Property, Plant and Equipment

At June 30, property, plant and equipment consisted of the following (in thousands):


	2008			2007			2009			2008

Land and improvements	$	69,104		$	67,943		$	68,262		$	69,104
Buildings and leasehold improvements		663,524			614,466			692,108			663,524
Machinery and equipment		1,641,110			1,502,406			1,625,312			1,641,110
Molds and dies		754,589			668,452			761,748			754,589
Construction in progress		115,763			92,157			67,249			115,763

Total		3,244,090			2,945,424			3,214,679			3,244,090
Accumulated depreciation		(2,071,695	)		(1,824,055	)		(2,134,262	)		(2,071,695	)

Net property, plant and equipment	$	1,172,395		$	1,121,369		$	1,080,417		$	1,172,395

Depreciation expense for property, plant and equipment was $245.5 million, $246.9 million ~~$232.8 million~~ and ~~$212.1~~$232.8 million in fiscal 2009, 2008 and 2007, ~~and 2006,~~ respectively.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)


8.	Goodwill

At June 30, changes to goodwill were as follows (in thousands):


	2008		2007		2009			2008

Beginning balance	$	334,791	$	149,458	$	373,623		$	334,791
Additions		29,147		183,677		28,605			29,147
Impairment						(264,140	)		—
Foreign currency translation		9,685		1,656		(9,594	)		9,685

Ending balance	$	373,623	$	334,791	$	128,494		$	373,623

On July 1, 2008, we completed the acquisition of a flexible circuit company and recorded additional goodwill of $24.4 million. On December 19, 2008, we completed an asset purchase of a company in Japan and have initially recorded additional goodwill of $3.5 million. The purchase price allocation for these acquisitions is substantially complete.

We recorded a $93.1 million goodwill impairment charge during the second quarter of fiscal 2009 based on lower projected future revenue and profit growth in the Transportation business unit of our Connector segment. We determined that there were indicators of impairment resulting from the sudden economic downturn and potential liquidity risk in the automotive industry. The economic downturn had a negative impact on the business unit’s operating results and the potential liquidity risk extended our estimate for the industry’s economic recovery. These factors resulted in lower growth and profit expectations for the business unit, which resulted in the goodwill impairment charge.

We recorded a $171.0 million goodwill impairment charge during the fourth quarter of fiscal 2009 based on lower projected future revenue and profit growth in the Automation & Electrical business unit of our Custom & Electrical segment. The economic downturn had a negative impact on the business unit’s operating results and it became evident during the fourth quarter that the business unit’s operating results were not recovering in line with the other operating segments due to our customers’ global excess capacity. These factors resulted in lower growth and profit expectations for the business unit, which resulted in the goodwill impairment charge.


9.	Other Intangible Assets

All of the Company’s intangible assets other than goodwill are included in Other Assets. Assets with indefinite lives represent ~~the use of~~ acquired trade names. The value of these indefinite-lived intangible assets was ~~$20.6~~$4.3 million and ~~$18.7~~$20.6 million at June 30, ~~2008~~2009 and June 30, ~~2007,~~2008, respectively. During fiscal 2009, we recorded an impairment charge of $16.3 million to our indefinite lived intangible assets on lower projected future revenue and profit growth in the Automation & Electrical business unit of our Custom & Electrical segment. Intangible property assets with finite lives primarily represent customer relationships and rights acquired under technology licenses and are amortized over the periods of benefit.

5259

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The components of finite-lived intangible assets were as follows (in thousands):


	June 30, 2008							June 30, 2007							June 30, 2009							June 30, 2008
	Gross					Net		Gross					Net		Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount		Amount		Amortization			Amount		Amount		Amortization			Amount

Customer-related	$	24,546	$	(3,120	)	$	21,426	$	18,591	$	(1,425	)	$	17,166	$	31,191	$	(4,567	)	$	26,624	$	24,546	$	(3,120	)	$	21,426
Technology-based		19,192		(5,431	)		13,761		13,306		(2,859	)		10,447		21,403		(9,404	)		11,999		19,192		(5,431	)		13,761
License fees		9,561		(5,144	)		4,417		6,120		(4,799	)		1,321		7,660		(4,467	)		3,193		9,561		(5,144	)		4,417

Total	$	53,299	$	(13,695	)	$	39,604	$	38,017	$	(9,083	)	$	28,934	$	60,254	$	(18,438	)	$	41,816	$	53,299	$	(13,695	)	$	39,604

~~During fiscal year 2008 and 2007, we recorded additions to intangible assets of $18.0 million and $41.7 million, respectively.~~ We estimate that we have no significant residual value related to our intangible assets.

During fiscal year 2009 and 2008, we recorded additions to intangible assets of $9.2 million and $18.0 million, respectively. The components of intangible assets acquired during fiscal years ~~2008~~2009 and ~~2007~~2008 were as follows (in thousands):


	Year Ended June 30,								Year Ended June 30,
	2008				2007				2009				2008
			Weighted				Weighted				Weighted				Weighted
	Carrying		Average		Carrying		Average		Carrying		Average		Carrying		Average
	Amount		Life		Amount		Life		Amount		Life		Amount		Life

Customer-related	$	5,900		20 years	$	16,696		22 years	$	8,600		14 years	$	5,900		20 years
Technology-based		5,800		10 years		6,200		5 years		400		5 years		5,800		10 years
License fees		4,390		5 years		50		1 year		150		5 years		4,390		5 years
Trade names		1,900		Indefinite		18,700		Indefinite		—		Indefinite		1,900		Indefinite

Total	$	17,990			$	41,646			$	9,150			$	17,990

Acquired intangibles are generally amortized on a straight-line basis over weighted average lives. Intangible assets amortization expense was $6.3 million for fiscal year 2009, $5.5 million for fiscal year 2008, and $5.1 million for fiscal year ~~2007, and $2.0 million for fiscal year 2006.~~2007. The estimated future amortization expense related to intangible assets as of June 30, ~~2008~~2009 is as follows (in thousands):


	Amount		Amount

2009	$	5,578
2010		5,168	$	5,892
2011		4,099		4,717
2012		4,019		4,690
2013 and thereafter		20,740
2013				3,461
2014 and thereafter				23,056

Total	$	39,604	$	41,816


10.	~~Investments~~

At June 30, 2008, we owned approximately 20% of a publicly traded affiliate accounted for under the equity method. At June 30, 2008, our portion of the market value of the investment was $72.7 million.

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~


~~11.~~	Income Taxes

Income (loss) before income taxes and minority interest for the years ended June 30, is summarized as follows (in thousands):


	2008		2007		2006		2009			2008		2007

United States	$	133,969	$	86,229	$	57,177	$	(215,328	)	$	133,969	$	86,229
International		204,679		252,028		270,707		(103,560	)		204,679		252,028

Income before income taxes	$	338,648	$	338,257	$	327,884
Income (loss) before income taxes							$	(318,888	)	$	338,648	$	338,257

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The components of income tax expense (benefit) for the years ended June 30, were as follows (in thousands):


	2008			2007		2006			2009			2008			2007

Current:
U.S. Federal	$	26,211		$	5,406	$	8,204		$	5,613		$	26,211		$	5,406
State		2,803			318		1,649			1,122			2,803			318
International		63,101			70,767		90,441			22,270			63,101			70,767

Total currently payable	$	92,115		$	76,491	$	100,294		$	29,005		$	92,115		$	76,491

Deferred:
U.S. Federal	$	42,183		$	12,579	$	296		$	(3,653	)	$	42,183		$	12,579
State		(89	)		370		(289	)		759			(89	)		370
International		(10,998	)		8,049		(8,508	)		(23,712	)		(10,998	)		8,049

Total deferred		31,096			20,998		(8,501	)		(26,606	)		31,096			20,998

Total income tax expense	$	123,211		$	97,489	$	91,793		$	2,399		$	123,211		$	97,489

Our effective tax rate differs from the U.S. federal income tax rate for the years ended June 30, as follows:


	2008			2007			2006			2009			2008			2007

U.S. Federal income tax rate		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%
Permanent tax exemptions		(1.3	)		(1.6	)		(2.6	)		0.8			(1.3	)		(1.6	)
Repatriation of foreign earnings		(0.5	)		(4.5	)		(4.3	)		(1.4	)		(0.5	)		(4.5	)
Tax examinations and settlements		(0.2	)		(1.4	)		(0.9	)		—			(0.2	)		(1.4	)
Provision for tax contingencies		1.0			—			—			(2.5	)		1.0			—
Valuation allowance		(0.3	)		0.4			1.6			(8.3	)		(0.3	)		0.4
Investments		—			—			(0.8	)
Goodwill impairment											(30.1	)		—			—
State income taxes, net of Federal tax benefit		0.8			0.4			0.4			(0.2	)		0.8			0.4
Foreign tax rates less than U.S. Federal rate (net)		(4.4	)		(0.8	)		(0.8	)		4.3			(4.4	)		(0.8	)
Adjustments to foreign tax credits		5.1			—			—			—			5.1			—
Other		1.2			1.3			0.4			1.6			1.2			1.3

Effective tax rate		36.4	%		28.8	%		28.0	%		(0.8	)%		36.4	%		28.8	%

The effective tax rate for fiscal ~~2008 increased~~2009 was negative due to ~~adjustments to foreign tax credits, including~~ (1) a ~~change in estimate~~second quarter charge of ~~$6.3~~$93.1 million ~~in the third quarter of fiscal 2008, resulting from a difference between foreign~~to impair goodwill for which no tax ~~credits estimated in our fiscal 2007 financial statements and subsequently~~

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

~~reflected in our fiscal 2007 tax return, and~~benefit is available, (2) a fourth quarter charge of ~~$10.9~~$171 million to ~~correct errors~~impair goodwill for which no tax benefit is available, (3) increases in ~~the prior years’~~ tax ~~pools used to calculate foreign~~reserves based on evaluation of certain tax ~~credit carryforwards.~~positions taken, and (4) tax losses generated in non-US jurisdictions for which no tax benefit has been recognized. The effective tax rate in fiscal 2008 was higher than fiscal 2007 ~~was substantially unchanged from fiscal 2006.~~due to changes in foreign tax credit estimates and carryforwards.

At June 30, ~~2008,~~2009, we had approximately ~~$106.0~~$268.0 million ofnon-U.S. net operating loss carryforwards. ~~Substantially all~~Approximately half of thenon-U.S. net operating losses can be carried forward indefinitely.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. As of June 30, ~~2008~~2009 and ~~2007,~~2008, we have recorded valuation allowances of ~~$38.3~~$77.3 million and ~~$39.4~~$38.3 million, respectively, against thenon-U.S. net operating loss carryforwards.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The components of net deferred tax assets and liabilities as of June 30 are as follows (in thousands):


	2008			2007			2009			2008

Deferred tax assets:
Pension and other postretirement liabilities	$	40,339		$	37,548		$	44,518		$	40,339
Stock option and other benefits		24,968			22,619			23,215			24,968
Capitalized research and development		16,602			20,549			12,730			16,602
Foreign tax credits		—			24,157
Foreign Tax Credits								3,086			—
Net operating losses		38,931			39,917			93,672			38,931
Depreciation and amortization		2,812			—			2,887			2,812
Inventory		15,134			11,905			13,970			15,134
Minimum tax credit		—			15,414
Allowance for doubtful accounts		8,683			4,648			7,346			8,683
Patents								6,070			5,873
Severance								6,793			3,983
Other, net		14,117			15,003			13,793			4,261

Total deferred tax assets before valuation allowance		161,586			191,760			228,080			161,586
Valuation allowance		(38,289	)		(39,366	)		(77,399	)		(38,289	)

Total deferred tax assets		123,297			152,394			150,681			123,297
Deferred tax liabilities:
Investments		(25,465	)		(20,136	)		(27,877	)		(25,465	)
Depreciation and amortization		(11,867	)		(12,461	)		(5,533	)		(11,867	)

Total deferred tax liabilities		(37,332	)		(32,597	)		(33,410	)		(37,332	)

Total net deferred tax assets	$	85,965		$	119,797		$	117,271		$	85,965

The net deferred tax amounts reported in the consolidated balance sheet as of June 30 are as follows (in thousands):


	2008		2007		2009		2008

Net deferred taxes:
Current asset	$	23,444	$	16,171	$	27,939	$	23,444
Non-current asset		62,521		103,626		89,332		62,521

Total	$	85,965	$	119,797	$	117,271	$	85,965

We have not provided for U.S. deferred income taxes or foreign withholding taxes on approximately ~~$930~~$893 million of undistributed earnings of certain of ournon-U.S. subsidiaries as of June 30,

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

~~2008.~~ 2009. These earnings are intended to be permanently invested. It is not practicable to estimate the additional income taxes which would be paid if the permanently reinvested earnings were distributed.

We are subject to tax in U.S. federal, state and foreign tax jurisdictions. It is reasonably possible that the amount of unrecognized tax benefits that is, the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements, will change over the next

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

twelve months; however, we do not expect significant changes during that time. The balance of unrecognized tax benefits follows (in thousands):


	2008				2009
	June 30		July 1		June 30		July 1

Unrecognized tax benefits	$	14,559	$	12,581	$	23,509	$	14,559
Portion that, if recognized, would reduce tax expense and effective tax rate		14,559		10,481		23,509		14,559

A reconciliation of the beginning and ending amounts of unrecognized tax benefits follows (in thousands):


	2008			2008

Balance as of July 1, 2007	$	12,581
Balance as of July 1, 2008				$	14,559
Additions based on tax positions related to the current year		874			10,327
Additions for tax positions of prior years		4,735			4,783
Reductions for tax positions of prior years		(3,010	)		(5,356	)
Reductions due to lapse of applicable statute of limitations		(621	)		(804	)

Balance at June 30, 2008	$	14,559
Balance at June 30, 2009				$	23,509

We have substantially completed all U.S. federal income tax matters for tax years through ~~1999 and 2001.~~2005. The examination of federal income tax returns for 2000, 2002 and 2003 was completed ~~and we expect to receive the final report from the Internal Revenue Service~~ during fiscal 2009. The tax years 2004 through ~~2007~~2008 remain open to examination by all other major taxing jurisdictions to which we are subject.

It is our practice to recognize interest or penalties related to income tax matters in tax expense. As of June 30, ~~2008,~~2009, there were no material interest or penalty amounts to accrue.


~~12.~~11.	Profit Sharing, Pension and Post Retirement Medical Benefit Plans

Profit Sharing Plans

We provide discretionary savings and other defined contribution plans covering substantially all of our U.S. employees and certain employees in international subsidiaries. Employer contributions to these plans of $2.3 million, $17.2 million ~~$15.4 million~~ and ~~$16.5~~$15.4 million were charged to operations during fiscal 2009, 2008 ~~2007~~ and ~~2006,~~2007, respectively.

Pension Plans

We sponsorand/or contribute to pension plans, including defined benefit plans, covering substantially all U.S. plant hourly employees and certain employees innon-U.S. subsidiaries. The benefits are primarily based on years of service and the employees’ compensation for certain periods during their last years of employment. Our pension obligations are measured as of ~~March 31 for the U.S. plans and as of~~ June 30 for ~~the international~~all plans.Non-U.S. plans are primarily in France, Germany, Ireland, Japan, Korea and Taiwan.

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

Post Retirement Medical Benefit Plans

We have retiree health care plans that cover the majority of our U.S. employees. Employees hired before January 1, 1994 may become eligible for these benefits if they reach age 55, with age plus years of service equal to 70. Employees hired after January 1, 1994 may become eligible for these benefits if they reach age 60, with age plus years of service equal to 80. The cost of retiree health care is accrued over the period in which the employees become eligible for such benefits. We continue to fund benefit costs primarily as claims are paid. We discontinued the plans in January 2009

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

for all employees who were not within 10 years of qualifying. There are no significant postretirement health care benefit plans outside of the U.S.

Benefit Obligation and Plan Assets

The accumulated benefit obligations as of June 30, were as follows (in thousands):

U.S. Pension
Non-U.S. Pension
Postretirement
Benefits Benefits Medical Benefits
2008 2007 2008 2007 2008 2007

Accumulated benefit obligation $ 47,609 $ 48,004 $ 99,677 $ 93,330 $ 46,779 $ 50,756


	U.S. Pension				Non-U.S. Pension				Postretirement
	Benefits				Benefits				Medical Benefits
	2009		2008		2009		2008		2009		2008

Accumulated benefit obligation	$	49,758	$	47,609	$	101,084	$	99,677	$	36,781	$	46,779

The changes in the benefit obligations and plan assets for the plans described above were as follows (in thousands):


	U.S. Pension						Non-U.S. Pension						Postretirement						U.S. Pension						Non-U.S. Pension						Postretirement
	Benefits						Benefits						Medical Benefits						Benefits						Benefits						Medical Benefits
	2008			2007			2008			2007			2008			2007			2009			2008			2009			2008			2009			2008

Change in projected benefit obligation:
Beginning benefit obligation	$	60,401		$	39,768		$	107,097		$	94,587		$	50,756		$	42,191		$	52,980		$	60,401		$	115,436		$	107,097		$	46,779		$	50,756
Service cost		3,380			2,687			5,783			5,531			2,923			2,329			2,404			3,380			5,872			5,783			1,741			2,923
Interest cost		3,683			2,962			4,222			3,700			3,106			2,629			3,612			3,683			4,319			4,222			2,883			3,106
Plan participants’ contributions		—			—			293			293			584			460			—			—			207			293			831			584
Actuarial loss/(gain)		(9,804	)		4,737			(7,120	)		3,034			(8,564	)		4,480			(2,506	)		(9,804	)		8,834			(7,120	)		(2,970	)		(8,564	)
Plan amendment		—			—			—			3,106			—			—			—			—			—			—			(11,958	)		—
Special termination benefits																				—			—			—			—			321			—
Divestitures																				—			—			—			—						—
Retained Earnings Adjustment																				—			—			—			—						—
Actual expenses																				—			—			(86	)		—						—
Effect of curtailment/settlement		(2,336	)		(10	)		(3,211	)		—			—			—			(1,940	)		(2,336	)		(13,219	)		(3,211	)					—
Business combination		—			11,288			—			—			—			—			—			—			—			—						—
Impact of Measurement Date Change																				1,504			—			—			—			1,407			—
Benefits paid to plan participants		(2,344	)		(1,031	)		(6,182	)		(3,126	)		(2,026	)		(1,333	)		(1,554	)		(2,344	)		(2,653	)		(6,182	)		(2,253	)		(2,026	)
Changes in foreign currency		—			—			14,554			(28	)		—			—			—			—			(1,929	)		14,554			—			—

Ending projected benefit obligation	$	52,980		$	60,401		$	115,436		$	107,097		$	46,779		$	50,756		$	54,500		$	52,980		$	116,781		$	115,436		$	36,781		$	46,779

5764

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)


	U.S. Pension						Non-U.S. Pension						Postretirement						U.S. Pension						Non-U.S. Pension						Postretirement
	Benefits						Benefits						Medical Benefits						Benefits						Benefits						Medical Benefits
	2008			2007			2008			2007			2008			2007			2009			2008			2009			2008			2009			2008

Change in plan assets:
Beginning fair value of plan assets	$	57,311		$	41,916		$	61,019		$	42,977		$	—		$	—		$	58,840		$	57,311		$	66,463		$	61,019		$	—		$	—
Actual return on plan assets		623			5,436			(9,505	)		7,951			—			—			(11,707	)		623			(14,069	)		(9,505	)		—			—
Employer contributions		3,250			3,000			12,340			10,343			1,573			1,151			4,472			3,250			14,388			12,340			1,422			1,573
Settlements																				(1,486	)		—			(12,776	)		—			—			—
Contributions to fund termination benefits																				—			—			—			—			—			—
Divestitures																				—			—			—			—			—			—
Actual expenses																				—			—			(86	)		—			—			—
Plan participants’ contributions		—			—			293			293			584			460			—			—			207			293			831			584
Business combination		—			7,989			—			—			—			—			—			—			—			—			—			—
Benefits paid to plan participants		(2,344	)		(1,031	)		(6,182	)		(3,126	)		(2,157	)		(1,611	)		(1,554	)		(2,344	)		(2,653	)		(6,182	)		(2,253	)		(2,157	)
Changes in foreign currency		—			—			8,498			2,581			—			—			—			—			(4,897	)		8,498			—			—

Ending fair value of plan assets	$	58,840		$	57,310		$	66,463		$	61,019		$	—		$	—		$	48,565		$	58,840		$	46,577		$	66,463		$	—		$	—

The funded status, the amount by which plan assets exceed (or are less than) the projected benefit obligation, was as follows (in thousands):

U.S. Pension
Non-U.S. Pension
Postretirement
Benefits Benefits Medical Benefits
2008 2007 2008 2007 2008 2007

Funded Status $ 5,860 $ (3,091 ) $ (48,973 ) $ (46,078 ) $ (46,779 ) $ (50,756 )


	U.S. Pension					Non-U.S. Pension						Postretirement
	Benefits					Benefits						Medical Benefits
	2009			2008		2009			2008			2009			2008

Funded Status	$	(5,935	)	$	5,860	$	(70,204	)	$	(48,973	)	$	(36,781	)	$	(46,779	)

The amounts recognized in the consolidated balance sheets were as follows (in thousands):


	U.S. Pension						Non-U.S. Pension						Postretirement						U.S. Pension						Non-U.S. Pension						Postretirement
	Benefits						Benefits						Medical Benefits						Benefits						Benefits						Medical Benefits
	2008			2007			2008			2007			2008			2007			2009			2008			2009			2008			2009			2008

Prepaid expenses	$	7,275		$	595		$	8,406		$	8,110		$	—		$	—		$	—		$	7,275		$	—		$	8,406		$	—		$	—
Accrued pension and other post retirement benefits		(1,415	)		(3,686	)		(57,379	)		(54,251	)		(46,779	)		(50,756	)		(5,935	)		(1,415	)		(70,204	)		(57,379	)		(36,781	)		(46,779	)
Accumulated other comprehensive income		(1,426	)		4,333			20,160			12,328			7,695			16,850			12,894			(1,426	)		41,932			20,160			(2,672	)		7,695

Net amount recognized	$	4,434		$	1,242		$	(28,813	)	$	(33,813	)	$	(39,084	)	$	(33,906	)	$	6,959		$	4,434		$	(28,272	)	$	(28,813	)	$	(39,453	)	$	(39,084	)

The amounts comprising accumulated other comprehensive income before taxes were as follows (in thousands):


	U.S. Pension					Non-U.S. Pension				Postretirement						U.S. Pension					Non-U.S. Pension				Postretirement
	Benefits					Benefits				Medical Benefits						Benefits					Benefits				Medical Benefits
	2008			2007		2008		2007		2008			2007			2009		2008			2009		2008		2009			2008

Net transition liability	$	—		$	—	$	224	$	250	$	—		$	—		$	—	$	—		$	167	$	224	$	—		$	—
Net actuarial (gain) loss		(1,447	)		4,308		16,967		9,309		13,750			23,572			12,880		(1,447	)		39,215		16,967		9,804			13,750
Net prior service costs		21			25		2,969		2,769		(6,055	)		(6,722	)		14		21			2,550		2,969		(12,476	)		(6,055	)

Defined benefit plans, net	$	(1,426	)	$	4,333	$	20,160	$	12,328	$	7,695		$	16,850		$	12,894	$	(1,426	)	$	41,932	$	20,160	$	(2,672	)	$	7,695

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The net ~~gain~~loss recognized in other comprehensive income was ~~$7.6~~$38.2 million ~~for~~in fiscal ~~2008.~~

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~2009.

Assumptions

Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:


																									Non-U.S.
	U.S. Pension						Non-U.S. Pension						Postretirement						U.S. Pension						Pension						Postretirement
	Benefits						Benefits						Medical Benefits						Benefits						Benefits						Medical Benefits
	2008			2007			2008			2007			2008			2007			2009			2008			2009			2008			2009			2008

Discount rate		6.9	%		6.2	%		4.0	%		3.8	%		6.9	%		6.2	%		7.0	%		6.9	%		3.8	%		4.0	%		6.9	%		6.9	%
Rate of compensation increase		3.7	%		3.7	%		3.4	%		3.5	%		—			—			3.5	%		3.7	%		3.4	%		3.4	%		—			—
Health care cost trend		—			—			—			—			10.0	%		10.0	%		—			—			—			—			9.0	%		10.0	%
Ultimate health care cost trend		—			—			—			—			5.0	%		5.0	%		—			—			—			—			5.0	%		5.0	%
Years of ultimate rate		—			—			—			—			2013			2012			—			—			—			—			2017			2013

For the postretirement medical benefit plan, a one-percentage point change in the assumed health care cost trend rates would have the following effect (in thousands):


	2008			2007			2006			2009			2008			2007

Effect on total service and interest cost:
Increase 100 basis points	$	1,219		$	1,287		$	1,476		$	708		$	1,219		$	1,287
Decrease 100 basis points		(968	)		(1,014	)		(1,211	)		(588	)		(968	)		(1,014	)
Effect on benefit obligation:
Increase 100 basis points	$	7,987		$	9,057		$	9,951		$	4,882		$	7,987		$	9,057
Decrease 100 basis points		(6,452	)		(7,270	)		(8,164	)		(4,095	)		(6,452	)		(7,270	)

Weighted-average actuarial assumptions used to determine costs for the plans were as follows:


	U.S. Pension						Non-U.S. Pension						Postretirement						U.S. Pension						Non-U.S. Pension						Postretirement
	Benefits						Benefits						Medical Benefits						Benefits						Benefits						Medical Benefits
	2008			2007			2008			2007			2008			2007			2009			2008			2009			2008			2009			2008

Discount rate		6.2	%		6.3	%		3.8	%		3.9	%		6.2	%		6.3	%		6.9	%		6.2	%		4.0	%		3.8	%		6.9	%		6.2	%
Expected return on plan assets		8.2	%		8.4	%		6.5	%		6.5	%		—			—			8.3	%		8.2	%		5.8	%		6.5	%		—			—
Rate of compensation increase		3.7	%		3.7	%		3.5	%		3.4	%		—			—			3.7	%		3.7	%		3.4	%		3.5	%		—			—
Health care cost trend		—			—			—			—			10.0	%		10.0	%		—			—			—			—			9.0	%		10.0	%
Ultimate health care cost trend		—			—			—			—			5.0	%		5.0	%		—			—			—			—			5.0	%		5.0	%
Years of ultimate rate		—			—			—			—			2012			2011			—			—			—			—			2017			2012

The discount rate is determined based on high-quality fixed income investments that match the duration of expected benefit payments. The discount rate used to determine the present value of our future U.S. pension obligations is based on a yield curve constructed from a portfolio of high quality corporate debt securities with various maturities. Each year’s expected future benefit payments are discounted to their present value at the appropriate yield curve rate, thereby generating the overall discount rate for U.S. pension obligations. The discount rates for our foreign pension plans are selected by using a yield curve approach or by reference to high quality corporate bond rates in those countries that have developed corporate bond markets. In those countries where developed corporate bond markets do not exist, the discount rates are selected by reference to local government bond rates with a premium added to reflect the additional risk for corporate bonds. The expected return on plan assets noted above represents a forward projection of the average rate of earnings expected on

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

the pension assets. We estimated this rate based on historical returns of similarly diversified portfolios. The rate of compensation increase represents the long-term assumption for expected increases to salaries for pay-related plans.

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

Net Periodic Benefit Cost

The components of net periodic benefit cost for our plans consist of the following for the years ended June 30 (in thousands):


																			Postretirement																											Postretirement
	U.S. Pension Benefits									Non-U.S. Pension Benefits									Medical Benefits									U.S. Pension Benefits									Non-U.S. Pension Benefits									Medical Benefits
	2008			2007			2006			2008			2007			2006			2008			2007			2006			2009			2008			2007			2009			2008			2007			2009			2008			2007

Service cost	$	3,380		$	2,687		$	3,239		$	5,783		$	5,531		$	5,946		$	2,923		$	2,329		$	2,566		$	2,404		$	3,380		$	2,687		$	5,872		$	5,783		$	5,531		$	1,741		$	2,923		$	2,329
Interest cost		3,683			2,962			2,291			4,222			3,700			3,100			3,106			2,629			2,387			3,612			3,683			2,962			4,319			4,222			3,700			2,883			3,106			2,629
Expected return on plan assets		(4,652	)		(3,939	)		(3,070	)		(4,306	)		(2,901	)		(2,098	)		—			—			—			(4,789	)		(4,652	)		(3,939	)		(3,345	)		(4,306	)		(2,901	)		—			—			—
Amortization of prior service cost		4			4			110			232			218			—			(667	)		(676	)		(71	)		4			4			4			257			232			218			(1,354	)		(667	)		(676	)
Amortization of unrecognized transition obligation		—			—			—			43			40			40			—			—			—			—			—			—			40			43			40			—			—			—
Recognized actuarial losses		—			—			716			362			176			741			1,257			1,102			1,039			—			—			—			647			362			176			818			1,257			1,102
Curtailment (gain)/loss		(2,356	)		(12	)		4			(3,209	)		—			(45	)		132			278			—
Curtailment / settlement loss (gain)																													158			(2,356	)		(12	)		3,606			(3,209	)		—			(3,702	)		132			278

Net periodic benefit cost	$	59		$	1,702		$	3,290		$	3,127		$	6,764		$	7,684		$	6,751		$	5,662		$	5,921		$	1,389		$	59		$	1,702		$	11,396		$	3,127		$	6,764		$	386		$	6,751		$	5,662

The amount of accumulated other comprehensive income that was reclassified as a component of net period benefit cost in fiscal ~~2008~~2009 was ~~$2.9~~$0.4 million. The amount in accumulated other comprehensive income that is expected to be recognized as a component of net periodic benefit cost in fiscal ~~2009~~2010 is ~~$0.7~~$1.5 million.

Plan Assets

Our overall investment strategy for the assets in the pension funds is to achieve a balance between the goals of growing plan assets and keeping risks at a reasonable level over a long-term investment horizon. In order to reduce unnecessary risk, the pension funds are diversified across several asset classes with a focus on total return. The weighted-average asset allocations for our pension plans at June 30 are as follows:


	2008						2007						2009						2008
				Non-U.S.						Non-U.S.						Non-U.S.						Non-U.S.
	U.S. Plan			Plan			U.S. Plan			Plan			U.S. Plan			Plan			U.S. Plan			Plan
	Assets			Assets			Assets			Assets			Assets			Assets			Assets			Assets

Asset category:
Equity		65	%		64	%		68	%		70	%		65	%		58	%		65	%		64	%
Bonds		35	%		19	%		32	%		21	%		35	%		29	%		35	%		19	%
Other		—			17	%		—			9	%		—			13	%		—			17	%

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Funding Expectations

~~No contributions are required during 2009 under applicable law~~Expected funding for the U.S. ~~Pension Plan.~~pension plan and other postretirement benefit plans for fiscal 2010 is approximately $3.0 million and $1.5 million, respectively. Expected funding for thenon-U.S. plans during fiscal ~~2009~~2010 is approximately ~~$11.8~~$12.3 million.

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

Estimated Future Benefit Payments

The total benefits to be paid from the U.S. andnon-U.S. pension plans and other postretirement benefit plans are not expected to exceed ~~$15~~$13.0 million in any year through ~~2018.~~2019.

Curtailments

In fiscal 2009, we recognized a $1.6 million reduction in cost of sales and a $2.1 million reduction in selling, general and administrative expense due mainly to a curtailment adjustment in our postretirement benefit plan as a result of reducing the number of employees eligible for retiree medical coverage. Separately, we also recognized in fiscal 2009 $3.8 million in restructuring costs resulting from curtailment and settlement adjustments for the early termination of participants in connection with the ongoing restructuring plan.

In fiscal 2008, we recognized a $2.3 million reduction in selling, general and administrative expense due to a curtailment adjustment. The curtailment adjustment resulted from the freezing of benefits in a defined benefit plan after the participants transferred to another plan without credit for prior service. Separately, we also recognized in fiscal 2008 a $3.1 million reduction in restructuring costs resulting from a curtailment adjustment for the early termination of participants in connection with the ongoing restructuring plan.


~~13.~~12.	Debt

We had available lines of credit totaling ~~$207.9~~$282.5 million at June 30, ~~2008,~~2009 expiring between ~~2008~~2009 and 2013. On June 25, 2009, we entered into a $195.0 million committed, unsecured, three-year revolving credit facility that matures in June 2012. ~~Our long-term debt approximates $147.3 million~~Borrowings under our credit facility bear interest at a fluctuating interest rate (based on London InterBank Offered Rate) plus an applicable percentage based on our consolidated leverage. The applicable percentage was 250 basis points as of June 30, ~~2008. In order~~2009. The credit facility includes an accordion feature allowing us to ~~fund~~increase the ~~cash~~balance of the credit line by an amount not to exceed $75.0 million upon satisfaction of certain conditions. The instrument governing our credit facility contains customary covenants regarding liens, debt, substantial asset sales and mergers, dividends and investments. Our credit facility also requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage, fixed charge coverage and liquidity. As of June 30, 2009, we were in compliance with all of these covenants.

The current portion of our ~~investment in Woodhead made during fiscal 2007, we entered into two~~long-term debt as of June 30, 2009 consists principally of three unsecured term ~~notes aggregating 15~~loans approximating 20 billion Japanese yen ($~~141.3~~208.0 million) ~~and borrowed $44.0 million on our unsecured revolving credit line. The term note agreements are~~ due in September 2009, with weighted-average fixed interest rates approximating 1.3%. ~~The $44.0~~We plan to refinance the term upon their expiration in September 2009. Our long-term debt approximates $30.3 million, ~~that we borrowed on our unsecured revolving line~~including an outstanding balance of ~~credit was repaid during the second quarter of fiscal 2007. In order to fund stock repurchases during fiscal 2008, we borrowed $125.0~~$25.0 million on ~~our unsecured revolving line of~~the credit ~~$75.0 million of which was repaid as of~~facility at June 30, 2008. Principal payments on long-term debt obligations, including interest, are due as follows: fiscal 2009, $1.4 million; fiscal 2010, $142.4 million; fiscal 2011, $3.3 million; fiscal 2012, $0.3 million; fiscal 2013, $0.1 million; and thereafter, $0.1 million.

~~In addition to the two term notes above, our~~2009. Our remaining long-term debt generally consists of mortgages and industrial development bonds with interest rates ranging from ~~1.3%~~5.9% to 7.8% and maturing through ~~2012.~~2013. Certain assets, including land, buildings and equipment, secure our long-term debt. Principal payments on long-term debt obligations, including interest, are due as follows: fiscal 2010, $208.9 million; fiscal 2011, $4.0 million; fiscal 2012, $25.6 million; fiscal 2013, $0.6 million; and thereafter less than $0.1 million.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)


~~14.~~13.	Operating Leases

We rent certain facilities and equipment under operating lease arrangements. Some of the leases have renewal options. Future minimum lease payments are presented below (in thousands):


	Operating
	Leases

Year ending June 30:
2009	$	13,774
2010		7,065	$	12,367
2011		4,732		6,531
2012		3,740		4,714
2013		2,880		3,049
2014 and thereafter		7,640
2014				1,896
2015 and thereafter				5,091

Total lease payments	$	39,831	$	33,648

Rental expense was $10.6 million, $10.9 million ~~$10.4 million~~ and ~~$10.2~~$10.4 million in fiscal 2009, 2008 and 2007, respectively.


14.	Fair Value Measurements

Effective July 1, 2008, we adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157) for financial assets and ~~2006, respectively.~~liabilities recognized or disclosed on a recurring basis. The purpose of SFAS 157 is to define fair value, establish a framework for measuring fair value, and enhance disclosures about fair value measurements. The adoption of this statement had no effect on our consolidated financial statements and resulted only in increased disclosures.

In accordance with SFAS 157, fair value measurements are classified under the following hierarchy:


	•	Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

	•	Level 2: Observable inputs other than quoted prices substantiated by market data and observable, either directly or indirectly for the asset or liability. This includes quoted prices for similar assets or liabilities in active markets.

	•	Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.


			Quoted Prices
			in Active		Significant
	Total		Markets for		Other		Significant
	Measured		Identical		Observable		Unobservable
	at Fair		Assets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)

Available for sale and trading securities	$	52,401	$	52,401	$	—	$	—
Derivative financial instruments, net		2,601		—		2,601		—

Total	$	55,002	$	52,401	$	2,601	$	—

We determine the fair value of our available for sale securities based on quoted market prices (Level 1). We generally use derivatives for hedging purposes pursuant to SFAS No. 133 and

6169

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

SFAS No. 149, which are valued based on Level 2 inputs in the SFAS 157 fair value hierarchy. The fair value of our financial instruments is determined by a mark to market valuation based on forward curves using observable market prices.


15.	Capital Stock

The shares of Common Stock, Class A Common Stock and Class B Common Stock are identical except as to voting rights. Class A Common Stock has no voting rights except in limited circumstances. So long as more than 50% of the authorized number of shares of Class B Common Stock continues to be outstanding, all matters submitted to a vote of the stockholders, other than the election of directors, must be approved by a majority of the Class B Common Stock, voting as a class, and by a majority of the Common Stock, voting as a class. During such period, holders of a majority of the Class B Common Stock could veto corporate action, other than the election of directors, which requires stockholder approval. There are 25 million shares of preferred stock authorized, none of which were issued or outstanding during the three years ended June 30, ~~2008.~~2009.

The Class B Common Stock can be converted into Common Stock on a share-for-share basis at any time at the option of the holder. The authorized Class A Common Stock would automatically convert into Common Stock on a share-for-share basis at the discretion of the Board of Directors upon the occurrence of certain events. Upon such conversion, the voting interests of the holders of Common Stock and Class B Common Stock would be diluted. Our Class B Common Stock outstanding has remained at 94,255 shares during the three years ended June 30, ~~2008.~~2009.

The holders of the Common Stock, Class A Common Stock and Class B Common Stock participate equally, share-for-share, in any dividends that may be paid thereon if, as and when declared by the Board of Directors or in any assets available upon our liquidation or dissolution.

Changes in common stock for the years ended June 30 are as follows (in thousands):


					Class A													Class A
	Common Stock				Common Stock				Treasury Stock					Common Stock				Common Stock				Treasury Stock
	Shares		Amount		Shares		Amount		Shares		Amount			Shares		Amount		Shares		Amount		Shares		Amount

Outstanding at June 30, 2005		110,814	$	5,541		104,998	$	5,250		28,049	$	568,917
Exercise of stock options		483		24		1,584		79		309		8,736
Purchase of treasury stock		—		—		—		—		6,018		165,323
Issuance of stock awards		—		—		16		1		—		—
Other		—		—		—		—		8		243

Outstanding at June 30, 2006		111,297	$	5,565		106,598	$	5,330		34,384	$	743,219			111,297	$	5,565		106,598	$	5,330		34,384	$	743,219
Exercise of stock options		426		21		1,890		95		705		21,801			426		21		1,890		95		705		21,801
Purchase of treasury stock		—		—		—		—		1,248		34,889			—		—		—		—		1,248		34,889
Issuance of stock awards		—		—		25		1		—		—			—		—		25		1		—		—
Other		7		1		49		2		—		(15	)		7		1		49		2		—		(15	)

Outstanding at June 30, 2007		111,730	$	5,587		108,562	$	5,428		36,337	$	799,894			111,730	$	5,587		108,562	$	5,428		36,337	$	799,894
Exercise of stock options		457		23		1,210		60		376		9,543			457		23		1,210		60		376		9,543
Purchase of treasury stock		—		—		—		—		7,979		199,584			—		—		—		—		7,979		199,584
Issuance of stock awards		—		—		10		1		—		—			—		—		10		1		—		—
Other		8		—		59		3		—		—			8		—		59		3		—		—

Outstanding at June 30, 2008		112,195	$	5,610		109,841	$	5,492		44,692	$	1,009,021			112,195	$	5,610		109,841	$	5,492		44,692	$	1,009,021
Exercise of stock options															—		—		539		27		234		3,959
Purchase of treasury stock															—		—		—		—		4,507		76,342
Issuance of stock awards															—		—		7		—		—		—
Other															9		—		81		4		—		—

Outstanding at June 30, 2009															112,204	$	5,610		110,468	$	5,523		49,433	$	1,089,322

6270

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)


16.	Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income are as follows (in thousands):


	2008			2007			2009			2008

Foreign currency translation adjustments	$	322,709		$	157,002		$	222,183		$	335,793
Non-current deferred tax asset		8,637			12,411			12,734			8,637
Accumulated transition obligation		(224	)		(250	)		(167	)		(224	)
Accumulated prior service credit		3,064			3,928			9,912			3,064
Accumulated net loss		(29,269	)		(37,189	)
Accumulated actuarial net loss								(61,899	)		(29,269	)
Unrealized gains on investments		15,698			5,496			535			2,614

Total	$	320,615		$	141,398		$	183,298		$	320,615


17.	Stock Incentive Plans

Share-based compensation is comprised of expense related to stock options and stock awards. Share-based compensation cost was $26.5 million, $24.2 million ~~$27.5 million~~ and ~~$30.5~~$27.5 million for fiscal 2009, 2008 ~~2007~~ and ~~2006,~~2007, respectively. The income tax benefits related to share-based compensation were $9.7 million, $8.5 million ~~$9.6 million~~ and ~~$10.6~~$9.6 million for fiscal 2009, 2008 ~~2007~~ and ~~2006,~~2007, respectively.

Stock Options

~~Stock~~For fiscal 2009, stock options that we grant to employees who are not executive officers (“non-officer employees”) are options to purchase Class A Common Stock at an exercise price that is 100% of the fair market value of the stock on the grant date. These grants generally vest 25% per year beginning the first anniversary date of the grant with a term of 10 years. Stock options toU.S.-based non-officer employees are automatically exercised on the vesting date.

Prior to fiscal 2009, stock options granted to non-officer employees were options to purchase Class A Common Stock at an exercise price that is generally 50% of the fair market value of the stock on the grant date. These grants generally vest 25% per year beginning the first anniversary date of the ~~grant. Stock~~grant with a term of five years. Discounted stock options toU.S.-based non-officer employees are automatically exercised on the vesting date. ~~The number of shares authorized for employee stock option grants is 12.5 million.~~

The stock options that are approved for grant to executive officers and directors are generally options to purchase Class A Common Stock at an exercise price that is 100% of the fair market value of the stock on the grant date. These grants generally vest 25% per year beginning the first anniversary date of the award with a term of ~~five~~10 years. The total number of shares authorized for stock option grants to employees, executive officers and directors is ~~12.5~~30.0 million.

6371

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Stock option transactions are summarized as follows (exercise price represents a weighted-average, shares in thousands):


				Exercise					Exercise
	Shares			Price		Shares			Price

Outstanding at June 30, 2005		10,544		$	18.94
Granted		1,989			18.98
Exercised		(1,872	)		12.85
Forfeited or expired		(241	)		19.72

Outstanding at June 30, 2006		10,420		$	20.02		10,420		$	20.02
Granted		2,264			20.65		2,264			20.65
Exercised		(2,122	)		17.46		(2,122	)		17.46
Forfeited or expired		(343	)		21.93		(343	)		21.93

Outstanding at June 30, 2007		10,219		$	20.98		10,219		$	20.98
Granted		1,728			17.63		1,728			17.63
Exercised		(1,433	)		15.91		(1,433	)		15.91
Forfeited or expired		(1,111	)		27.81		(1,111	)		27.81

Outstanding at June 30, 2008		9,403		$	20.38		9,403		$	20.38
Granted							2,573			17.95
Exercised							(343	)		12.27
Forfeited or expired							(815	)		23.32

Exercisable at June 30, 2008		3,988		$	24.04
Outstanding at June 30, 2009							10,818		$	19.83

Exercisable at June 30, 2009							4,436		$	23.32

At June 30, ~~2008,~~2009, exercisable options had an aggregate intrinsic value of ~~$4.6~~$1.0 million with a weighted-average remaining contractual life of ~~2.1~~1.6 years. In addition, there were ~~5.1~~6.1 million options expected to vest, after consideration of expected forfeitures, with an aggregate intrinsic value of ~~$31.9~~$4.9 million. Total options outstanding had an aggregate intrinsic value of ~~$38.7~~$6.2 million with a weighted-average remaining contractual life of ~~3.0~~3.5 years. The total intrinsic value of options exercised during fiscal 2009, 2008 and 2007 ~~and 2006~~ was $1.7 million, $14.5 million ~~$10.6 million~~ and ~~$28.0~~$10.6 million, respectively.

We use the Black-Scholes option-pricing model to estimate the fair value of each option grant as of the date of grant. Expected volatilities are based on historical volatility of ~~Common Stock.~~our common stock. We estimate the expected life of the option using historical data pertaining to option exercises and employee terminations. Separate groups of employees that have similar historical exercise behavior are considered separately for estimating the expected life. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. The estimated weighted-average fair values of and related assumptions for options granted were as follows:


	2008			2007			2006			2009			2008			2007

Weighted-average fair value of options granted:
At market value of underlying stock	$	6.22		$	9.82		$	8.15		$	3.91		$	6.22		$	9.82
At less than market value of underlying stock	$	11.36		$	14.68		$	17.18		$	10.73		$	11.36		$	14.68
Assumptions:
Dividend yield		1.95	%		1.06	%		0.72	%		3.61	%		1.95	%		1.06	%
Expected volatility		27.44	%		28.44	%		28.25	%		32.33	%		27.44	%		28.44	%
Risk-free interest rate		3.55	%		4.79	%		4.06	%		2.53	%		3.55	%		4.79	%
Expected life of option (years)		4.14			3.94			3.66			5.37			4.14			3.94

As of June 30, ~~2008,~~2009, there were options outstanding to purchase ~~0.2~~0.1 million shares of Common Stock and ~~9.2~~10.7 million shares of Class A Common Stock.

6472

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Stock Awards

Stock awards are generally comprised of stock units that are convertible into shares of Class A Common Stock. Generally, these grants vest 25% per year over four years beginning the first anniversary date of the award. Stock awards transactions are summarized as follows (shares in thousands):


				Fair Market					Fair Market
	Shares			Value		Shares			Value

Nonvested shares at June 30, 2005		446		$	24.06
Granted		249			24.56
Vested		(195	)		20.43

Nonvested shares at June 30, 2006		500		$	24.33		500		$	24.33
Granted		271			29.51		271			29.51
Vested		(168	)		23.57		(168	)		23.57
Forfeited		(62	)		25.05		(62	)		25.05

Nonvested shares at June 30, 2007		541		$	27.08		541		$	27.08
Granted		295			22.82		295			22.82
Vested		(233	)		26.47		(233	)		26.47
Forfeited		(32	)		26.80		(32	)		26.80

Nonvested shares at June 30, 2008		571		$	25.14		571		$	25.14
Granted							944			19.48
Vested							(196	)		25.26
Forfeited							(23	)		23.38

Nonvested shares at June 30, 2009							1,296		$	21.03

As of June 30, ~~2008,~~2009, there was ~~$13.9~~$18.6 million of total unrecognized compensation cost related to the above nonvested stock ~~bonus~~ awards. We expect to recognize the cost of these stock awards over a weighted-average period of ~~2.6~~2.5 years. The total fair value of shares vested during fiscal 2009, 2008 and 2007 ~~and 2006~~ was $5.0 million, $6.2 million ~~$4.7 million~~ and ~~$4.0~~$4.7 million, respectively.

Directors’ Deferred Compensation Plan

Our non-employee directors are eligible to participate in a deferred compensation plan under which they may elect on a yearly basis to defer all or a portion of the following year’s compensation. A participant may elect to have the deferred amount (a) accrue interest during each calendar quarter at a rate equal to the average six month Treasury Bill rate in effect at the beginning of each calendar quarter, or (b) credited as stock “units” whereby each unit is equal to one share of Common Stock. The cumulative amount that is deferred for each participating director is subject to the claims of our general creditors.

If a non-employee director elects to have his or her compensation deferred as stock units, the compensation earned for a given quarter is converted to stock units at the closing price of common stock on the date the compensation would otherwise be paid. Stock units are distributed in shares of common stock.


18.	Segment and Related Information

~~On July 1, 2007,~~During fiscal 2009, we reorganized our operations, which changed the configuration of our reportable segments into the Connector ~~Transportation~~ and Custom & Electrical segments. ~~A summary~~Our former Transportation segment was operationally merged into the Connector segment under the direction of ~~the~~one global

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Executive Vice President. Our reportable segments ~~follows:~~are an aggregation of three operating segments. Prior year segment disclosures have been restated to reflect this organizational change.


	•	The Connector segment designs and manufactures products for high-speed, high-density, high signal-integrity applications as well as fine-pitch, low-profile connectors for the consumer and commercial markets.

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~


	•	~~The Transportation segment~~ It also designs and manufactures products that withstand environments such as heat, cold, dust, dirt, liquid and vibration for automotive and other transportation applications.

	•	The Custom & Electrical segment designs and manufactures integrated and customizable electronic components across all industries that provide original, differentiated solutions to customer requirements. It also leverages expertise in the use of signal, power and interface technology in industrial automation and other harsh environment applications.

Information by segment for the years ended June 30 is summarized as follows (in thousands):


			Trans-			Custom &		Corporate								Custom &			Corporate
	Connector		portation			Electrical		& Other			Total		Connector			Electrical			& Other			Total
2009:
Revenues from external customers													$	1,789,139		$	790,601		$	2,101		$	2,581,841
Income (loss) from operations(1)														(125,604	)		(152,443	)		(68,149	)		(346,196	)
Depreciation & amortization														201,303			33,283			17,316			251,902
Capital expenditures														144,176			18,613			15,153			177,942

2008:
Revenues from external customers	$	1,879,443	$	498,141		$	941,365	$	9,398		$	3,328,347	$	2,377,584		$	941,365		$	9,398		$	3,328,347
Income (loss) from operations		302,240		15,356			94,076		(93,722	)		317,950		317,596			94,076			(93,722	)		317,950
Depreciation & amortization		162,601		39,076			35,495		15,172			252,344		201,677			35,495			15,172			252,344
Capital expenditures		138,558		42,331			22,705		31,032			234,626		180,889			22,705			31,032			234,626

2007:
Revenues from external customers	$	1,885,431	$	472,257		$	892,756	$	15,430		$	3,265,874	$	2,357,688		$	892,756		$	15,430		$	3,265,874
Income (loss) from operations		354,358		7,476			52,898		(93,182	)		321,550		361,834			52,898			(93,182	)		321,550
Depreciation & amortization		140,191		38,422			41,197		18,102			237,912		178,613			41,197			18,102			237,912
Capital expenditures		176,263		66,213			34,100		20,285			296,861		242,476			34,100			20,285			296,861

2006:
Revenues from external customers	$	1,721,459	$	424,740		$	650,332	$	64,758		$	2,861,289
Income (loss) from operations		411,329		(4,472	)		29,047		(126,160	)		309,744
Depreciation & amortization		137,605		29,764			28,570		18,718			214,657
Capital expenditures		206,490		18,442			24,163		27,688			276,783


(1)		Fiscal 2009 operating results include the following charges (in thousands):


			Custom &		Corporate
	Connector		Electrical		& Other		Total

Restructuring costs and asset impairments	$	93,876	$	23,012	$	18,343	$	135,231
Goodwill impairments		93,140		171,000		—		264,140
Intangible asset impairments		—		16,300		—		16,300

Corporate & Other includes expenses primarily related to corporate operations that are not allocated to segments such as executive management, human resources, legal, finance and information technology. We also include in Corporate & Other the assets of certain plants that are not specific to a particular division.

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

Customer revenue and net property, plant and equipment by significant foreign country are summarized as follows (in thousands):


	2008		2007		2006		2009		2008		2007

Customer revenue:
United States	$	888,941	$	896,625	$	764,074	$	535,079	$	888,941	$	896,625
Japan		517,087		484,613		421,603		444,043		517,087		484,613
China		735,657		717,735		642,369		613,743		735,657		717,735
Net property, plant and equipment:
United States	$	296,843	$	313,109	$	293,055	$	274,840	$	296,843	$	313,109
Japan		299,447		280,246		276,696		272,753		299,447		280,246
China		231,764		188,670		161,717		233,487		231,764		188,670

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

Segment assets, which are comprised of accounts receivable, inventory and fixed assets, are summarized as follows for the years ended June 30 (in thousands):


			Trans-		Custom &		Corporate						Custom &		Corporate
	Connector		portation		Electrical		& Other		Total		Connector		Electrical		& Other		Total

2009											$	1,388,110	$	390,906	$	184,645	$	1,963,661
2008	$	1,293,342	$	413,233	$	500,197	$	164,745	$	2,371,517		1,706,575		500,197		164,745		2,371,517
2007		1,167,163		407,034		454,730		170,788		2,199,715

The reconciliation of segment assets to consolidated total assets is as follows (in thousands):


	June 30,		June 30,		June 30,		June 30,
	2008		2007		2009		2008

Segment assets	$	2,371,517	$	2,199,715	$	1,963,661	$	2,371,517
Other current assets		583,838		512,481		564,329		583,838
Other non current assets		644,182		603,912		414,167		644,182

Consolidated total assets	$	3,599,537	$	3,316,108	$	2,942,157	$	3,599,537

Amounts as of June 30, 2007, were recast to conform to the new organization structure. The recast data required the use of judgment in determining certain allocations of expense and assets related to manufacturing facilities and administrative services that are shared between segments.


19.	Quarterly Financial Information (Unaudited)

The following is a condensed summary of our unaudited quarterly results of operations and quarterly earnings per share data for fiscal ~~2008~~2009 (in thousands, except per share data):

First
Second
Third
Fourth

Quarter Quarter Quarter Quarter

Net revenue $ 792,610 $ 841,560 $ 822,285 $ 871,892
Gross profit 236,150 253,115 254,461 270,509
Net income 53,304 59,216 50,306 52,611
Basic earnings per share 0.29 0.33 0.28 0.30
Diluted earnings per share 0.29 0.33 0.28 0.29


	First		Second			Third			Fourth
	Quarter		Quarter			Quarter			Quarter

Net revenue	$	838,985	$	666,728		$	505,539		$	570,589
Gross profit		249,472		176,072			93,396			137,237
Net income (loss)		44,297		(87,244	)		(58,600	)		(219,740	)
Basic earnings (loss) per share		0.25		(0.50	)		(0.34	)		(1.27	)
Diluted earnings (loss) per share		0.25		(0.50	)		(0.34	)		(1.27	)

Molex Incorporated

Notes to Consolidated Financial Statements — (Continued)

The following is a condensed summary of our unaudited quarterly results of operations and quarterly earnings per share data for fiscal ~~2007~~2008 (in thousands, except per share data):


	First		Second		Third		Fourth		First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter

Net revenue	$	829,545	$	837,467	$	807,014	$	791,848	$	792,610	$	841,560	$	822,285	$	871,892
Gross profit		269,409		258,509		250,988		237,802		236,150		253,115		254,461		270,509
Net income		76,501		66,227		65,318		32,722		53,304		59,216		50,306		52,611
Basic earnings per share		0.42		0.36		0.36		0.18		0.29		0.33		0.28		0.30
Diluted earnings per share		0.41		0.36		0.35		0.18		0.29		0.33		0.28		0.29

~~Molex Incorporated~~

~~Notes to Consolidated Financial Statements — (Continued)~~

During fiscal 2009, 2008 and 2007, we recognized restructuring expenses ~~and asset impairment charges~~ related to our restructuring plan, goodwill impairment charges and asset impairment charges (see ~~Note 5)~~Notes 5, 8 and 9) and during fiscal 2008 we recognized adjustments to foreign tax credits (see Note ~~11)~~10). The table below summarizes the impact on net income of these items on each of the quarters during fiscal 2009, 2008 and 2007 (in thousands):


	Restructuring		Foreign		Restructuring
	Charges		Tax Credits		Costs and
	Asset		Goodwill		Foreign
					Impairments		Impairment		Tax Credits

Fiscal 2009:
First quarter					$	15,666	$	—	$	—
Second quarter						29,899		93,140		—
Third quarter						34,009		—		—
Fourth quarter						32,224		171,000		—
Fiscal 2008:
First quarter	$	1,476	$	—	$	1,476	$	—	$	—
Second quarter		4,716		—		4,716		—		—
Third quarter		4,902		6,344		4,902		—		6,344
Fourth quarter		9,894		10,871		9,894		—		10,871
Fiscal 2007:
Fourth quarter		30,255		—

6876

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Molex Incorporated

We have audited the accompanying consolidated balance sheets of Molex Incorporated as of June 30, ~~2008~~2009 and ~~2007,~~2008, and the related consolidated statements of ~~income,~~operations, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, ~~2008.~~2009. Our audits also included the financial statement schedule listed in the Index of Part IV, Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Molex Incorporated at June 30, ~~2008~~2009 and ~~2007,~~2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, ~~2008,~~2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

~~As discussed in Note 2 to the consolidated financial statements, the Company adopted the recognition and disclosure provisions of Statement of Financial Accounting No. 158,~~~~Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans~~~~, as of June 30, 2007. As discussed in Note 2 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation No. 48,~~~~Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109~~~~, as of July 1, 2007.~~

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Molex Incorporated’s internal control over financial reporting as of June 30, ~~2008,~~2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 4, ~~2008~~2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois

August 4, ~~2008~~2009

6977

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Molex Incorporated

We have audited Molex Incorporated’s internal control over financial reporting as of June 30, ~~2008,~~2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Molex Incorporated’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Molex Incorporated maintained, in all material respects, effective internal control over financial reporting as of June 30, ~~2008,~~2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Molex Incorporated as of June 30, ~~2008~~2009 and ~~2007,~~2008, and the related consolidated statements of ~~income,~~operations, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, ~~2008~~2009 of Molex Incorporated and our report dated August 4, ~~2008~~2009 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois

August 4, ~~2008~~2009

7078


Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None


Item 9A.	Controls and Procedures

Attached as exhibits to thisForm 10-K are certifications of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), which are required in accordance withRule 13a-14 under the Securities Exchange Act of 1934, as amended (the Exchange Act). This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications. Immediately preceding Part II, Item 9 of thisForm 10-K is the report of Ernst & Young LLP, our independent registered public accounting firm, regarding its audit of our internal control over financial reporting and of management’s assessment of internal control over financial reporting set forth below in this section. This section should be read in conjunction with the certifications and the Ernst & Young report for a more complete understanding of the topics presented.

Evaluation of Disclosure Controls and Procedures

Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (Disclosure Controls) as of the end of the period covered by thisForm 10-K. The controls evaluation was conducted under the supervision and with the participation of management, including our CEO and CFO. Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as thisForm 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of Disclosure Controls includes an evaluation of some components of our internal control over financial reporting, and internal control over financial reporting is also separately evaluated on an annual basis for purposes of providing the management report, which is set forth below.

The evaluation of our Disclosure Controls included a review of the controls’ objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in thisForm 10-K. In the course of the controls evaluation, management reviews identified data errors, control problems or acts of fraud, if any, and seeks to confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions of management, including the CEO and CFO, concerning the effectiveness of the Disclosure Controls can be reported in our periodic reports onForm 10-Q andForm 10-K. Many of the components of our Disclosure Controls are also evaluated on an ongoing basis by our Internal Audit department and by other personnel in the Finance organization. The overall goals of these various evaluation activities are to monitor our Disclosure Controls, and to modify them as necessary. Our intent is to maintain the Disclosure Controls as dynamic systems that change as conditions warrant.

Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that material information relating to us and our consolidated subsidiaries is made known to management, including the CEO and CFO, during the period when our periodic reports are being prepared.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002 and as defined in

7179

Exchange ActRule 13a-15(f). A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, ~~2008.~~2009. Under management’s supervision, an evaluation of the design and effectiveness of our internal control over financial reporting was conducted based on the framework inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30, ~~2008.~~2009.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.


Item 9B.	Other Information

None.

PART III


Item 10.	Directors, Executive Officers and Corporate Governance

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics applicable to all employees, officers and directors. The Code of Business Conduct incorporates our policies and guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. We have also adopted a Code of Ethics for Senior Financial Management applicable to our chief executive officer, chief financial officer, chief accounting officer and other senior financial managers. The Code of Ethics sets out our expectations that financial management produce full, fair, accurate, timely and understandable disclosure in our filings with the SEC and other public communications. Molex intends to post any amendments to or waivers from the Codes on its web site.

The full text of these Codes is published on the investor relations page of our web site at www.molex.com.

The information under the captions “Item 1 — Election of Directors,” “Board Independence” “Board and Committee Information,” “Corporate Governance Principles,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our 2009 Proxy Statement for the Annual Meeting of Stockholders to be held on October ~~31, 2008~~30, 2009 (“2009 Proxy Statement”) is incorporated herein by reference. The information called for by Item 401 ofRegulation S-K relating to the Executive Officers is furnished in Part I, Item 1 of thisForm 10-K and is also incorporated herein by reference in this section.


Item 11.	Executive Compensation

The information under the ~~caption~~captions “Compensation Discussion and Analysis,” “Report of the Compensation Committee” and “Executive Compensation” in our ~~2008~~2009 Proxy Statement is incorporated herein by reference.


Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information under the captions “Security Ownership of Directors and Executive ~~Officers,”~~Officers” and “Security Ownership of More than 5% Shareholders” ~~and “Equity Compensation Plan Information”~~ in our ~~2008~~2009 Proxy Statement is incorporated herein by reference.

We currently maintain equity compensation plans that provide for the issuance of Molex stock to directors, executive officers and other employees. The following table sets forth information regarding outstanding options and shares available for future issuance under these plans as of June 30, 2009.

(c)

Number of securities

remaining available

(a)

(b)

for future issuance

Number of shares

Weighted-average

under equity

to be issued upon

exercise price

compensation plans

exercise of outstanding

of outstanding

(excluding shares

options

reflected in column (a))

Common

Class A

Common

Class A

Common

Class A

Plan Category

Stock

Equity compensation plans approved by stockholders

106,250

12,007,451

27.55

17.62

—

10,098,583

Equity compensation plans not approved by stockholders

—


Item 13.	Certain Relationships and Related Transactions, and Director Independence

The information under the captions ~~“Item 1~~“Corporate Governance — ~~Election of Directors,~~Board Independence,” and ~~“Certain Relationships and~~“Transactions with Related ~~Transactions,~~Persons,” in our ~~2008~~2009 Proxy Statement is incorporated herein ~~incorporated~~ by reference.


Item 14.	Principal Accountant Fees and Services

The information under the ~~caption~~captions “Independent Auditor’s Fees” and “Policy on Audit Committee Pre-Approval of Services” in our ~~2008~~2009 Proxy Statement is incorporated herein ~~incorporated~~ by reference.

PART IV


Item 15.	Exhibits and Financial Statement Schedules

1. Financial Statements: See Item 8.

2. Financial Statement Schedule: See Schedule II — Valuation and Qualifying Accounts.

All other schedules are omitted because they are inapplicable, not required under the instructions, or the information is included in the consolidated financial statements or notes thereto.

Separate financial statements for the Company’s unconsolidated affiliated companies, accounted for by the equity method, have been omitted because they do not constitute significant subsidiaries.

3. Exhibits: Exhibits listed on the accompanying Index to Exhibits are filed or incorporated herein as part of this annual report onForm 10-K.

7382

Molex Incorporated

Schedule II — Valuation and Qualifying Accounts

For the Years Ended June 30, 2009, 2008, ~~2007,~~ and ~~2006~~2007

(Inin thousands)


	Balance at								Other/			Balance at		Balance at								Other/			Balance at
	Beginning of		Charges to						Currency			End of		Beginning		Charges						Currency			End
	Period		Income			Write-Offs			Translation			Period		of Period		to Income			Write-Offs			Translation			of Period

Receivable Reserves:
Year ended 2009														$	40,243	$	83,696		$	(89,794	)	$	(1,552	)	$	32,593
Year ended 2008	$	31,064	$	69,020		$	(62,520	)	$	2,679		$	40,243	$	31,064	$	69,020		$	(62,520	)	$	2,679		$	40,243
Year ended 2007	$	26,513	$	71,245		$	(67,422	)	$	728		$	31,064	$	26,513	$	71,245		$	(67,422	)	$	728		$	31,064
Year ended 2006	$	20,293	$	69,187		$	(63,524	)	$	557		$	26,513

Inventory Reserves:
Year ended 2009:
Slow and Excess														$	39,395	$	21,607		$	(21,492	)	$	(1,329	)	$	38,181
Blocked Stock															1,063		272			—			(135	)		1,200
Other															2,344		(364	)		—			(309	)		1,671

Total														$	42,802	$	21,515		$	(21,492	)	$	(1,773	)	$	41,052

Year ended 2008:
Slow and Excess	$	39,956	$	15,453		$	(16,946	)	$	932		$	39,395	$	39,956	$	15,453		$	(16,946	)	$	932		$	39,395
Blocked Stock		835		251			—			(23	)		1,063		835		251			—			(23	)		1,063
Other		1,936		237			—			171			2,344		1,936		237			—			171			2,344

Total	$	42,727	$	15,941		$	(16,946	)	$	1,080		$	42,802	$	42,727	$	15,941		$	(16,946	)	$	1,080		$	42,802

Year ended 2007:
Slow and Excess	$	30,309	$	23,607		$	(20,983	)	$	7,023		$	39,956	$	30,309	$	23,607		$	(20,983	)	$	7,023		$	39,956
Blocked Stock		936		94			—			(195	)		835		936		94			—			(195	)		835
Other		2,689		(299	)		—			(454	)		1,936		2,689		(299	)		—			(454	)		1,936

Total	$	33,934	$	23,402		$	(20,983	)	$	6,374		$	42,727	$	33,934	$	23,402		$	(20,983	)	$	6,374		$	42,727
Year ended 2006:
Slow and Excess	$	29,511	$	18,014		$	(17,959	)	$	743		$	30,309
Blocked Stock		1,626		(690	)		—			—			936
Other		3,061		(372	)		—			—			2,689

Total	$	34,198	$	16,952		$	(17,959	)	$	743		$	33,934
Deferred tax asset valuation allowance:
Year ended 2009														$	38,289	$	39,110		$	—		$	—		$	77,399
Year ended 2008	$	39,366	$	—		$	(1,077	)	$	—		$	38,289	$	39,366	$	—		$	(1,077	)	$	—		$	38,289
Year ended 2007	$	33,920	$	1,308		$	—		$	4,138		$	39,366	$	33,920	$	1,308		$	—			4,138		$	39,366
Year ended 2006	$	28,700	$	5,345		$	(125	)		—		$	33,920

7483

Molex Incorporated

Index of Exhibits


Exhibit	Exhibit				Exhibit
Number	Number		Description	Location	Number		Description	Location

	3	.1	Certificate of Incorporation (as amended and restated)	Incorporated by reference to Exhibit 3.1 to our annual report on Form 10-K for the year ended June 30, 2000	3	.1	Certificate of Incorporation (as amended and restated)	Incorporated by reference to Exhibit 3.1 to our annual report onForm 10-K for the year ended June 30, 2000. (FileNo. 000-07491)
	3	.2	By-laws (as amended and restated)	Incorporated by reference to Exhibit 3.1(ii) to our Form 8-K filed on November 19, 2007	3	.2	By-laws (as amended and restated)	Incorporated by reference to Exhibit 3.1(ii) to ourForm 8-K filed on November 19, 2007. (FileNo. 000-07491)
	4		Instruments defining rights of security holders	See Exhibit 3.1	4		Instruments defining rights of security holders	See Exhibit 3.1
	10	.1	Foreign Service Employees Policies and Procedures	Incorporated by reference to Exhibit 10.15 to our quarterly report on Form 10-Q for the period ended March 31, 2005	10	.1	Foreign Service Employees Policies and Procedures	Incorporated by reference to Exhibit 10.15 to our quarterly report onForm 10-Q for the period ended March 31, 2005. (FileNo. 000-07491)
	10	.2	Employment Offer Letter to David D. Johnson	Incorporated by reference to Exhibit 10.18 to our quarterly report on Form 10-Q for the period ended March 31, 2005	10	.2	Employment Offer Letter to David D. Johnson	Incorporated by reference to Exhibit 10.18 to our quarterly report onForm 10-Q for the period ended March 31, 2005. (FileNo. 000-07491)
	10	.3	Deferred Compensation Agreement between Molex and Frederick A. Krehbiel	Incorporated by reference to Exhibit 10.12 to our quarterly report on Form 10-Q for the period ended March 31, 2005	10	.3	Deferred Compensation Agreement between Molex and Frederick A. Krehbiel	Incorporated by reference to Exhibit 10.12 to our quarterly report onForm 10-Q for the period ended March 31, 2005. (FileNo. 000-07491)
	10	.4	Deferred Compensation Agreement between Molex and John H. Krehbiel, Jr.	Incorporated by reference to Exhibit 10.13 to our quarterly report on Form 10-Q for the period ended March 31, 2005	10	.4	Deferred Compensation Agreement between Molex and John H. Krehbiel, Jr.	Incorporated by reference to Exhibit 10.13 to our quarterly report onForm 10-Q for the period ended March 31, 2005. (FileNo. 000-07491)
	10	.5	2005 Molex Supplemental Executive Retirement Plan	Filed herewith	10	.5	2005 Molex Supplemental Executive Retirement Plan	Incorporated by reference to Exhibit 10.5 to our annual report onForm 10-K for the year ended June 30, 2008. (FileNo. 000-07491)
	10	.6	Molex Executive Deferred Compensation Plan	Filed herewith	10	.6	Molex Executive Deferred Compensation Plan	Incorporated by reference to Exhibit 10.6 to our annual report onForm 10-K for the year ended June 30, 2008. (FileNo. 000-07491)
	10	.7	Summary of Non-Employee Director Compensation	Filed herewith	10	.7	Summary of Non-Employee Director Compensation	Incorporated by reference to Exhibit 10.7 to our annual report onForm 10-K for the year ended June 30, 2008. (FileNo. 000-07491)
	10	.8	Molex Outside Directors’ Deferred Compensation Plan	Incorporated by reference to Exhibit 99.1 to our Form 8-K filed on August 1, 2006	10	.8	Molex Outside Directors’ Deferred Compensation Plan	Incorporated by reference to Exhibit 99.1 to ourForm 8-K filed on August 1, 2006. (FileNo. 000-07491)
	10	.9	2000 Molex Long-Term Stock Plan, as amended and restated	Incorporated by reference to Appendix V to our 2007 Proxy Statement	10	.9	2000 Molex Long-Term Stock Plan, as amended and restated	Incorporated by reference to Appendix V to our 2007 Proxy Statement. (FileNo. 000-07491)
	10	.10	Form of Stock Option Agreement under the 2000 Molex Long-Term Stock Plan	Filed herewith	10	.10	Form of Stock Option Agreement under the 2000 Molex Long-Term Stock Plan	Incorporated by reference to Exhibit 10.10 to our annual report onForm 10-K for the year ended June 30, 2008. (FileNo. 000-07491)
	10	.11	Form of Restricted Stock Agreement under the 2000 Molex Long-Term Stock Plan	Filed herewith	10	.11	Form of Restricted Stock Agreement under the 2000 Molex Long-Term Stock Plan	Incorporated by reference to Exhibit 10.11 to our annual report onForm 10-K for the year ended June 30, 2008. (FileNo. 000-07491)
	10	.12	2005 Molex Incentive Stock Option Plan, as amended and restated	Incorporated by reference to Appendix VI to our 2007 Proxy Statement	10	.12	2005 Molex Incentive Stock Option Plan, as amended and restated	Incorporated by reference to Appendix VI to our 2007 Proxy Statement. (FileNo. 000-07491)
	10	.13	Form of Stock Option Agreement under the 2005 Molex Incentive Stock Option Plan	Incorporated by reference to Exhibit 10.12 to our Form 10-K for the period ended June 30, 2007	10	.13	Form of Stock Option Agreement under the 2005 Molex Incentive Stock Option Plan	Incorporated by reference to Exhibit 10.12 to ourForm 10-K for the period ended June 30, 2007. (FileNo. 000-07491)
	21		Subsidiaries of the Company	Filed herewith	10	.14	Molex Incorporated Annual Incentive Plan	Incorporated by reference to Appendix III to our 2008 Proxy Statement. (FileNo. 000-07491)
	23		Consent of Ernst & Young, LLP	Filed herewith	10	.15	2008 Molex Stock Incentive Plan	Incorporated by reference to Appendix IV to our 2008 Proxy Statement. (FileNo. 000-07491)
	31	.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith	10	.16	Separation Agreement between David B. Root and Molex Incorporated dated April 6, 2009.	Incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on April 9, 2009. (FileNo. 000-07491)
	31	.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
	32	.1	Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
	32	.2	Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith


Exhibit
Number			Description	Location

	10	.17	Credit Agreement dated June 24, 2009 among Molex Incorporated, the Lenders named therein, J.P. Morgan Chase Bank, N.A. as Administrative Agent, Standard Charter Bank as Syndication Agent, The Northern Trust Company as Documentation Agent	Incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on June 30, 2009. (FileNo. 000-07491)
	21		Subsidiaries of the Company	Filed herewith
	23		Consent of Ernst & Young, LLP	Filed herewith
	31	.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
	31	.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
	32	.1	Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
	32	.2	Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

(All other exhibits are either inapplicable or not required.)

7585

Signatures

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report to be signed on its behalf by the undersigned, there unto duly authorized.

MOLEX INCORPORATED
(Company)


	By:	/s/ DAVID D. JOHNSON

David D. Johnson

Executive Vice President, Treasurer and Chief

Financial Officer (Principal Financial Officer)

August ~~6, 2008~~4, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



August ~~6, 2008~~4, 2009	Co-Chairman of the Board	/s/ FREDERICK A. KREHBIEL Frederick A. Krehbiel

August ~~6, 2008.~~4, 2009	Co-Chairman of the Board	/s/ JOHN H. KREHBIEL, JR. John H. Krehbiel, JrJr.

August ~~6, 2008~~4, 2009	Vice Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	/s/ MARTIN P. SLARK Martin P. Slark

August ~~6, 2008~~4, 2009	Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer)	/s/ DAVID D. JOHNSON David D. Johnson

August ~~6, 2008~~4, 2009	Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)	/s/ K. TRAVIS GEORGE K. Travis George

August ~~6, 2008~~4, 2009	Director	/s/ FRED L. KREHBIEL Fred L. Krehbiel

August ~~6, 2008~~4, 2009	Director	/s/ MICHAEL J. BIRCK Michael J. Birck

August ~~6, 2008~~4, 2009	Director	/s/ MICHELLE L. COLLINS Michelle L. Collins

August ~~6, 2008~~4, 2009	Director	/s/ EDGAR D. JANNOTTA Edgar D. Jannotta

7686



August ~~6, 2008~~	~~Director~~	~~/s/ KAZUMASA KUSAKA~~ ~~Kazumasa Kusaka~~

~~August 6, 2008~~4, 2009	Director	/s/ DAVID L. LANDSITTEL David L. Landsittel

August ~~6, 2008~~4, 2009	Director	/s/ JOE W. LAYMON Joe W. Laymon

August ~~6, 2008~~4, 2009	Director	/s/ DONALD G. LUBIN Donald G. Lubin

August ~~6, 2008~~4, 2009	Director	/s/ JAMES S. METCALF James S. Metcalf

August ~~6, 2008~~4, 2009	Director	/s/ ROBERT J. POTTER Robert J. Potter

7787


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended June 30, 2009
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to


Delaware	36-2369491
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.	)


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock, par value $0.05		The Nasdaq Stock Market, Inc.
Class A Common Stock, par value $0.05		The Nasdaq Stock Market, Inc.


Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting companyo


	Percentage of Fiscal ~~2008~~2009			Primary End Use Products
Markets	Net Revenue			Supported by Molex
Telecommunications		26	%	Mobile phones and devices, networking equipment, switches and transmission equipment

Data Products		2221	%	Desktop and notebook computers, peripheral equipment, servers, storage, copiers, printers and scanners

~~Automotive~~		18	%	~~Engine control units, body electronics, safety electronics, sensors, panel instrumentation and other automotive electronics~~

Consumer		1821	%	Digital electronics, CD and DVD players, cameras, flat panel display, plasma and LCD televisions, electronic games and major appliances

Industrial		1315	%	Factory automation, robotics, automated test equipment, vision systems and diagnostic equipment

Automotive		14	%	Engine control units, body electronics, safety electronics, sensors, panel instrumentation and other automotive electronics

Other		3	%	Electronic and electrical devices for a variety of markets


Common Stock			~~98,451,858~~95,560,076
Class A Common Stock			~~78,977,871~~77,751,195
Class B Common Stock			94,255


			Page

PART I
	Item 1.	Business		3
	Item 1A.	Risk Factors		12
	Item 1B.	Unresolved Staff Comments		1820
	Item 2.	Properties		1820
	Item 3.	Legal Proceedings		1820
	Item 4.	Submission of Matters to a Vote of Security Holders		1820

PART II
	Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		1820
	Item 6.	Selected Financial Data		2123
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2224
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		3742
	Item 8.	Financial Statements and Supplementary Data		3944
	Item 9.	Changes in and Disagreements with Accountants on Accounting Financial Disclosure		7179
	Item 9A.	Controls and Procedures		7179
	Item 9B.	Other Information		7280

PART III
	Item 10.	Directors, Executive Officers and Corporate Governance		7280
	Item 11.	Executive Compensation		7281
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		7381
	Item 13.	Certain Relationships and Related Transactions, and Director Independence		7381
	Item 14.	Principal Accountant Fees and Services		7381

PART IV
	Item 15.	Exhibits and Financial Statement Schedules		7382
		Schedule II — Valuation and Qualifying Accounts		7483
		Index to Exhibits		7584
		Signatures		7686
~~2005 Molex Supplemental Executive Retirement Plan~~
~~Molex Executive Deferred Compensation Plan~~
~~Summary of Non-Employee Director Compensation~~
~~Form of Stock Option Agreement~~
~~Form of Restricted Stock Agreement~~
~~Subsidiaries~~
~~Consent of Ernst & Young, LLP~~
~~Certification of CEO Pursuant to Section 302~~
~~Certification of CFO Pursuant to Section 302~~
~~Certification of CEO Pursuant to Section 906~~
~~Certification of CFO Pursuant to Section 906~~


	•	Globalization. Synergistic opportunities exist for the industry to design, manufacture and sell electronic products in different countries around the world in an efficient and seamless process. For example, electronic products may be designed in Japan, manufactured in China, and sold in the United States.

	•	Convergence of markets. Traditionally separate markets such as consumer electronics, data products and telecommunications are converging, resulting in single devices offering broad-based functionality.

	•	Increasing electronics content. Consumer demand for advanced product features, convenience and connectivity is driving connector growth at rates faster than the growth rates of the underlying electronics markets.

	•	Product size reduction. High-density, micro-miniature technologies are expanding to markets such as data and mobile phones, leading to smaller devices and greater mobility.

	•	Consolidating supply base. Generally, global OEMs are consolidating their supply chain by selecting global companies possessing broad product lines for the majority of their connector ~~requirements.~~requirements and a strong financial position.

	•	Price erosion. As unit volumes grow, production experience is accumulated and costs decrease, and as a result, prices decline.


	•	Broad and deep technological knowledge of microelectronic devices and techniques, power sources, coatings and materials;

	•	Strong intellectual property portfolio that underlies many key products;

	•	High product quality standards, backed with stringent systems designed to ensure consistent performance, that meet or surpass customers’ expectations;

	•	Strong technical collaboration with customers;

	•	Extensive experience with the product development process;

	•	Broad geographical presence in developed and developing markets;

	•	Continuous effort to develop an efficient, low-cost manufacturing footprint; and

	•	A broad range of products both for specific applications and for general consumption.


	•	Concentrate on core markets. We focus on markets where we have the expertise, qualifications and leadership position to sustain a competitive advantage. We have been an established supplier of interconnect solutions for ~~almost~~over 70 years. We are a principal supplier of connector components to the telecommunications, computer, consumer, automotive and industrial electronics markets.

	•	Grow through the development and release of new products.We invest strategically in the tools and resources to develop and market new products and to expand existing product lines. New products are essential to enable our customers to advance their solutions and their market leadership positions. In fiscal ~~2008,~~2009, we generated approximately ~~23%~~22% of our revenue from new products, which are defined as those products released in the last 36 months.

	•	Optimize ~~manufacturing.~~manufacturing and supply chain. We analyze the design and manufacturing patterns of our customers along with our own supply chain economics to help ensure that our manufacturing operations are of sufficient scale and are located strategically to minimize production costs and maximize customer service.

	•	Leverage financial strength. We use our expected cash flow from operations and strong balance sheet to invest aggressively in new product development, to pursue synergistic acquisitions, to align manufacturing capacity with customer requirements and to pursue productivity improvements. We invested approximately ~~12%~~13% of net revenue in capital expenditures and research and development activities in fiscal ~~2008.~~2009.


	•	~~52%~~54% of net revenue originated in Asia-Pacific (China, including Hong Kong and Taiwan, Indonesia, India, Malaysia, Philippines, Singapore, ~~Taiwan and~~ Korea, Japan and Thailand). Approximately ~~22%~~24% and ~~16%~~17% of net revenue in fiscal ~~2008~~2009 was derived from operations in China and Japan, respectively.

	•	~~28%~~27% of net revenue originated in the Americas.

	•	~~20%~~19% of net revenue originated in Europe.


	Positions Held with Registrant			Year
Name	During the Last Five Years	Age		Employed

Frederick A. Krehbiel(a)	Co-Chairman (1999-); Chief Executive Officer (2004-2005); Co-Chief Executive Officer (1999-2001).		67		1965	(b)
John H. Krehbiel, Jr.(a)	Co-Chairman (1999-); Co-Chief Executive Officer (1999-2001).		71		1959	(b)
Martin P. Slark	Vice-Chairman and Chief Executive Officer (2005-); President and Chief Operating Officer (2001-2005); Executive Vice President (1999-2001).		53		1976
Liam McCarthy	President and Chief Operating Officer (2005-); Regional Vice President of Operations, Europe (2000-2005); Interim General Manager of Molex Ireland Ltd. (2002-2004).		52		1976
David D. Johnson	Executive Vice President, Treasurer and Chief Financial Officer (2005-); Vice President, Treasurer and Chief Financial Officer, Sypris Solutions, Inc.(1998-2005).		52		2005


(a)		John H. Krehbiel, Jr. and Frederick A. Krehbiel (the Krehbiel Family) are brothers. The members of the Krehbiel Family may be considered to be “control persons” of the Registrant. The other executive officers listed above have no relationship, family or otherwise, to the Krehbiel Family, the Registrant or each other.

(b)		Includes period employed by our predecessor company.


	06/30/03		06/30/04		06/30/05		06/30/06		06/30/07		06/30/08
Molex Incorporated	$	100.00	$	119.16	$	97.25	$	126.33	$	114.00	$	94.36
Molex Incorporated Class A		100.00		119.01		103.06		127.17		118.79		104.42
S&P 500		100.00		119.11		126.64		137.57		165.90		144.13
Peer Group		100.00		137.60		126.97		148.41		177.61		159.37


Item 1.	Business


Item 1A.	Risk Factors