Molex (MOLX) 10-Q 2007 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2006

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission File Number 0-7491

MOLEX INCORPORATED

(Exact name of registrant as specified in its charter)

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

2222 Wellington Court, Lisle, Illinois 60532
(Address of principal executive offices)

Registrant’s telephone number, including area code: (630) 969-4550

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

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ                    Accelerated filer o                    Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

     On January 31, 2007, the following numbers of shares of the Company’s common stock were outstanding:

Common Stock	99,539,686
Class A Common Stock	84,490,863
Class B Common Stock	94,255

Molex Incorporated

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2006 and June 30, 2006		3
	Condensed Consolidated Statements of Income for the three and six months ended December 31, 2006 and 2005		4
	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2006 and 2005		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 4.	Controls and Procedures		20
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		22
Item 1A.	Risk Factors		22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 6.	Exhibits		23
SIGNATURES			24
Section 302 Certification of Chief Executive Officer
Section 302 Certification of Chief Financial Officer
Section 906 Certification of Chief Executive Officer
Section 906 Certification of Chief Financial Officer

2

PART I

Item 1. Financial Statements

Molex Incorporated
Condensed Consolidated Balance Sheets
(in thousands)

	Dec. 31,			June 30,
	2006			2006
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	299,413		$	332,815
Marketable securities		44,097			152,728
Accounts receivable, less allowances of $32,807 and $26,513, respectively		705,497			660,665
Inventories		423,639			347,312
Other current assets		80,338			54,713
Total current assets		1,552,984			1,548,233
Property, plant and equipment, net		1,122,759			1,025,852
Goodwill		304,035			149,458
Other assets		281,170			250,877
Total assets	$	3,260,948		$	2,974,420
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	305,981		$	305,876
Accrued expenses		162,305			189,390
Other current liabilities		115,637			99,546
Total current liabilities		583,923			594,812
Other non-current liabilities		18,750			14,709
Accrued pension and postretirement benefits		78,877			75,055
Long-term debt		132,764			7,093
Minority interest in subsidiaries		945			882
Total liabilities		815,259			692,551
Commitments and contingencies		—			—
Stockholders’ equity:
Common stock		10,960			10,900
Paid-in capital		485,759			442,586
Retained earnings		2,579,774			2,464,889
Treasury stock		(768,882	)		(743,219	)
Accumulated other comprehensive income		138,078			106,713
Total stockholders’ equity		2,445,689			2,281,869
Total liabilities and stockholders’ equity	$	3,260,948		$	2,974,420

See accompanying notes to condensed consolidated financial statements.

3

Molex Incorporated
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)

	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2006			2005		2006			2005
Net revenue	$	837,467		$	697,348	$	1,667,012		$	1,357,163
Cost of sales		578,958			469,552		1,139,094			915,548
Gross profit		258,509			227,796		527,918			441,615
Selling, general and administrative		167,691			146,036		333,992			295,710
Restructuring costs		—			6,517		—			11,387
Total operating expenses		167,691			152,553		333,992			307,097
Income from operations		90,818			75,243		193,926			134,518
Equity income		1,868			3,402		3,752			6,511
Gain (loss) on investment		(34	)		114		(34	)		114
Interest income, net		2,009			2,659		4,089			4,972
Other income, net		3,843			6,175		7,807			11,597
Income before income taxes and minority interest		94,661			81,418		201,733			146,115
Income taxes		28,392			23,193		58,896			41,616
Minority interest		42			29		109			63
Net income	$	66,227		$	58,196	$	142,728		$	104,436
Earnings per share:
Basic	$	0.36		$	0.31	$	0.78		$	0.56
Diluted	$	0.36		$	0.31	$	0.77		$	0.55
Dividends declared per share	$	0.0750		$	0.0500	$	0.1500		$	0.1000
Average common shares outstanding:
Basic		184,058			186,042		183,895			186,697
Diluted		185,969			187,648		185,972			188,387

See accompanying notes to condensed consolidated financial statements.

4

Molex Incorporated
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

	Six Months Ended
	December 31,
	2006			2005
Operating activities:
Net income	$	142,728		$	104,436
Add non-cash items included in net income:
Depreciation and amortization		117,696			106,684
Share-based compensation		13,744			13,764
Other non-cash items		4,346			6,919
Changes in assets and liabilities:
Accounts receivable		5,445			(52,446	)
Inventories		(41,174	)		(22,476	)
Accounts payable		(30,620	)		8,265
Other current assets and liabilities		(44,070	)		7,267
Other assets and liabilities		(2,754	)		5,516
Cash provided from operating activities		165,341			177,929
Investing activities:
Capital expenditures		(155,806	)		(131,122	)
Proceeds from sales or maturities of marketable securities		3,818,536			645,136
Purchases of marketable securities		(3,709,724	)		(549,693	)
Acquisitions		(237,114	)		—
Other investing activities		6,090			(17,617	)
Cash used for investing activities		(278,018	)		(53,296	)
Financing activities:
Proceeds from revolving credit facility		44,000			—
Payments on revolving credit facility		(44,000	)		—
Proceeds from issuance of long-term debt		131,045			—
Payments of long-term debt		(26,337	)		(2,519	)
Cash dividends paid		(27,579	)		(16,351	)
Exercise of stock options		8,107			9,185
Purchase of treasury stock		(12,539	)		(95,114	)
Other financing activities		452			(1,401	)
Cash provided by (used for) financing activities		73,149			(106,200	)
Effect of exchange rate changes on cash		6,126			(498	)
Net (decrease) increase in cash and cash equivalents		(33,402	)		17,935
Cash and cash equivalents, beginning of period		332,815			309,756
Cash and cash equivalents, end of period	$	299,413		$	327,691

See accompanying notes to condensed consolidated financial statements.

5

Molex Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(in thousands, except per share data)

1. 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 65 plants in 20 countries on five continents.

     The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period have been included. Operating results for the three and six months ended December 31, 2006 are not necessarily an indication of the results that may be expected for the year ending June 30, 2007. The Condensed Consolidated Balance Sheet as of June 30, 2006 was derived from our audited consolidated financial statements for the year ended June 30, 2006. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended June 30, 2006.

     The preparation of the unaudited financial statements in conformity with GAAP requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. Significant estimates and assumptions are used in the estimation of income taxes, pension and retiree health care benefit obligations, share-based compensation, allowances for accounts receivable and inventory and impairment reviews for goodwill, intangible and other long-lived assets. Estimates are revised periodically. Actual results could differ from these estimates.

     Certain reclassifications have been made to the prior year financial statements to conform to the current year classifications. We made a change in accounting principle to classify shipping and handling costs associated with the distribution of finished products to our customers as cost of sales, which was previously recorded in selling, general and administrative expense. We made the change in principle because we believe the classification of these shipping and handling costs in cost of sales better reflects the cost of producing and distributing our products and aligns our external financial reporting with the results we use internally to evaluate segment operating performance. The impact of this change in principle was an increase to cost of goods sold and a reduction to selling, general and administrative expense of $14.1 million and $26.5 million in the three and six month periods ended December 31, 2005.

2. Restructuring Charges

     During the fourth quarter of 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. Production from the closed operations has been transferred to existing plants within the respective regions. Also included in the restructuring charge are costs to reduce our selling, general and administrative costs in the Americas, Europe and at the corporate office.

     The cumulative restructuring charges as of June 30, 2006 were $54.2 million, of which $27.0 million related to the Americas region, $19.2 million related to the European region and $8.0 million for corporate operations. The restructuring activities were substantially complete as of June 30, 2006.

     The change in the accrued severance balance related to the restructuring charge is summarized as follows:

Balance at June 30, 2006	$	15,941
Cash payments		(7,711	)
Balance at December 31, 2006	$	8,230

6

3. Acquisition

     On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an all cash transaction valued at approximately $237.1 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.

     The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

Current assets	$	100,738
Land and depreciable assets, net		53,764
Goodwill		147,960
Intangible assets		56,500
Other assets		1,078
Assets acquired		360,040
Liabilities assumed		122,926
Net assets acquired	$	237,114

     The above purchase price allocation for this acquisition is preliminary and subject to revision as more detailed analyses are completed and additional information about the fair value of assets and liabilities becomes available. We also plan to incur costs in connection with realigning portions of the business but it is impracticable to estimate a liability for such costs at this time. Any change in the fair value of the net assets of Woodhead and any realignment costs will change the amount of the purchase price allocable to goodwill.

     The following table illustrates the effect on operating results for the six months ended December 31, 2005, as if we had acquired Woodhead as of the beginning of that period. The pro forma effect on the six months ended December 31, 2006 was not material.

Net revenue	$	1,463,611
Income from operations		141,891
Net income		109,585
Net income per common share — basic	$	0.59
Net income per common share — diluted		0.58

     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.

4. Earnings Per Share

     A reconciliation of the basic average common shares outstanding to diluted average common shares outstanding is as follows:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2006		2005		2006		2005
Basic average common shares outstanding		184,058		186,042		183,895		186,697
Effect of dilutive stock options		1,911		1,606		2,077		1,690
Diluted average common shares outstanding		185,969		187,648		185,972		188,387

7

5. Comprehensive Income

     Total comprehensive income is summarized as follows:

	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2006		2005			2006		2005
Net income	$	66,227	$	58,196		$	142,728	$	104,436
Translation adjustments		31,126		(9,530	)		25,899		(16,333	)
Unrealized investment gain		1,323		295			5,466		518
Total comprehensive income	$	98,676	$	48,961		$	174,093	$	88,621

6. Inventories

     Inventories are valued at the lower of first-in, first-out cost or market. Inventories, net of allowances, consist of the following:

	Dec. 31,		June 30,
	2006		2006
Raw materials	$	88,563		62,288
Work in process		125,745		107,533
Finished goods		209,331		177,491
Total inventories	$	423,639	$	347,312

7. Pensions and Other Postretirement Benefits

     The components of pension benefit cost are as follows:

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2006			2005		��	2006			2005
Service cost	$	1,971		$	2,361		$	3,942		$	4,580
Interest cost		1,558			1,366			3,116			2,664
Expected return on plan assets		(1,606	)		(1,329	)		(3,212	)		(2,603	)
Amortization of prior service cost		57			27			114			55
Recognized actuarial losses		45			368			90			721
Amortization of transition obligation		10			10			20			19
Benefit cost	$	2,035		$	2,803		$	4,070		$	5,436

8

     The components of retiree health care benefit cost are as follows:

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2006			2005			2006			2005
Service cost	$	581		$	642		$	1,153		$	1,283
Interest cost		656			596			1,301			1,193
Amortization of prior service cost		(168	)		(18	)		(334	)		(35	)
Recognized actuarial losses		275			260			545			519
Benefit cost	$	1,344		$	1,480		$	2,665		$	2,960

8. Commitments and Contingencies

     Between March 2, 2005 and April 22, 2005 seven separate complaints were filed, each purporting to be on behalf of a class of Molex stockholders, against us, and certain of our officers and employees. The shareholder actions have been consolidated, and the consolidated amended complaint alleges, among other things, that during the period from July 27, 2004 to February 14, 2005 the named defendants made or caused to be made a series of materially false or misleading statements about our business, prospects, operations, and financial statements which constituted violations of securities laws and rules. The parties have reached a settlement in principle of this action, which is anticipated to be funded by insurance proceeds. The settlement was preliminarily approved by the court in November 2006 and a final hearing for approval of the settlement is set for March 1, 2007.

     In addition, in the Fall of 2005, two stockholder derivative actions were filed against us and certain of our directors and officers. The derivative actions arise principally out of the same facts as the stockholder actions described above. These two actions have been consolidated and an amended and consolidated complaint has been filed. In August 2006, plaintiffs asked the court for permission to file a further amended complaint, which adds allegations that stock options were priced and issued improperly. The amended complaint was filed in November 2006 and we filed a motion to dismiss the amended complaint in January 2007. We believe the stockholder derivative actions are without merit and intend to vigorously contest these actions.

9. Long-Term Debt

     During the six months ended December 31, 2006, we entered into two unsecured borrowing agreements approximating 15 billion Japanese yen ($127.7 million). Both agreements have three-year terms with weighted-average fixed interest rates approximating 1.3%. Interest on both loans is payable every six months with the principal due in September 2009.

10. New Accounting Pronouncements

     In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which, among other things, requires applying a “more likely than not” threshold to the recognition and derecognition of tax positions. The provisions of FIN 48 will be effective for us on July 1, 2007. We are currently evaluating the impact of adopting FIN 48 on the financial statements, but we do not expect its adoption to have a significant effect.

     In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB statements No. 87, 88, 106 and 132(R). This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status through comprehensive income in the year in which the changes occur. This statement also requires an employer to measure the funded status of its plans as of the date of its year-end statement of financial position. The requirement to initially recognize the funded status of plans will be effective for us on June 30, 2007. Based on the June 30, 2006 funded status of our plans, we expect that the adoption of this pronouncement will result in increasing our pension and retiree health care benefit liability by approximately $25 million with a corresponding decrease in other comprehensive income.

9

     In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 108, effective immediately, to address the diversity in practice in quantifying financial statement misstatements and the potential under current practice for the build up of improper amounts on the balance sheet. We are currently evaluating the impact of adopting SAB No. 108 on the financial statements, but we do not expect its adoption to have a significant effect.

11. Segments and Related Information

     We operate in one product segment, the manufacture and sale of electronic components, and four geographic regions. Revenue is recognized based on the location of the selling entity. Effective July 1, 2006, we realigned our management structure in the Asia regions. As part of the realignment, the Far East North region was renamed the Asia Pacific North region and the Far East South region was renamed the Asia Pacific South region. Additionally, our entity in Korea is now managed by Asia Pacific South and was included in Asia Pacific North prior to July 1, 2006. Our entity in Thailand is now managed by Asia Pacific North beginning July 1, 2006, and was included in Asia Pacific South prior to July 1, 2006. Regional operating results for the three months ended September 30, 2005, were reclassified to conform to the current year reporting structure. Woodhead has locations around the world but is included in the table below as corporate and other because it is aligned independently from the other regions and is immaterial for separate classification. Information by region for the three and six months ended December 31 is summarized as follows:

			Inter-
	Customer		Company			Net			Net
	Revenue		Revenue			Revenue			Income
Three months ended:
December 31, 2006:
Americas	$	198,763	$	61,969		$	260,732		$	11,199
Asia Pacific North		128,643		121,725			250,368			31,568
Asia Pacific South		297,067		41,292			338,359			29,165
Europe		133,476		17,057			150,533			1,669
Corporate and other		79,518		36,534			116,052			(7,374	)
Eliminations		—		(278,577	)		(278,577	)		—
Total	$	837,467	$	—		$	837,467		$	66,227
December 31, 2005:
Americas	$	198,110	$	44,639		$	242,749		$	9,237
Asia Pacific North		105,602		103,933			209,535			28,859
Asia Pacific South		258,778		36,473			295,251			34,290
Europe		117,301		10,669			127,970			(7,548	)
Corporate and other		17,557		30,533			48,090			(6,642	)
Eliminations		—		(226,247	)		(226,247	)		—
Total	$	697,348	$	—		$	697,348		$	58,196

			Inter-
	Customer		Company			Net			Net
	Revenue		Revenue			Revenue			Income
Six months ended:
December 31, 2006:
Americas	$	398,985	$	129,829		$	528,814		$	27,466
Asia Pacific North		258,964		235,080			494,044			64,825
Asia Pacific South		606,838		79,957			686,795			64,926
Europe		270,091		33,865			303,956			5,716
Corporate and other		132,134		71,590			203,724			(20,205	)
Eliminations		—		(550,321	)		(550,321	)		—
Total	$	1,667,012	$	—		$	1,667,012		$	142,728

10

			Inter-
	Customer		Company			Net			Net
	Revenue		Revenue			Revenue			Income
December 31, 2005:
Americas	$	383,322	$	91,585		$	474,907		$	14,899
Asia Pacific North		212,661		195,403			408,064			51,124
Asia Pacific South		497,295		72,147			569,442			64,490
Europe		231,830		21,571			253,401			(10,469	)
Corporate and other		32,055		59,848			91,903			(15,608	)
Eliminations		—		(440,554	)		(440,554	)		—
Total	$	1,357,163	$	—		$	1,357,163		$	104,436

11

Molex Incorporated

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     Unless otherwise indicated or the content otherwise requires, the terms “we,” “us” and “our” and other similar terms in this Quarterly Report on Form 10-Q refer to Molex Incorporated and its subsidiaries.

     The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and accompanying notes contained herein and our consolidated financial statements and accompanying notes and management’s discussion and analysis of results of operations and financial condition contained in our Annual Report on Form 10-K/A for the fiscal year ended June 30, 2006. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described below under the heading “Cautionary Statement Regarding Forward-Looking Information.”

Overview

     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 products including terminals, connectors, planar cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical and electronic switches in 65 plants in 20 countries on five continents. We also provide manufacturing services to integrate specific components into a customer’s product.

     On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an all cash transaction valued at approximately $237.1 million, including the assumption of debt and net of cash acquired. Woodhead develops, manufactures and markets network and electrical infrastructure products engineered for performance in harsh, demanding, and hazardous industrial environments and is a significant step in our strategy to expand our products and capabilities in the global industrial market. The acquisition of Woodhead contributed net revenue of $89.5 million and net income of $3.2 million for the six months ended December 31, 2006.

     In September 2006 we approved a plan to close our production facilities in Brazil. We expect to complete the closure of these facilities during the three months ended March 31, 2007, which we anticipate will reduce our quarterly revenue by approximately $10 million to $15 million after the facilities are closed. We recognized impairment charges and severance costs approximating $2.5 million during the six months ended December 31, 2006 in connection with our decision to shut-down the Brazil production facilities.

     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, develop, manufacture and successfully market new and enhanced products and product lines, control overhead, and attract, motivate and retain key personnel to manage our operational, financial and management information systems.

12

Critical Accounting Policies and Estimates

     This discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements. Estimates are revised periodically. Actual results could differ from these estimates.

     See the information concerning our critical accounting policies included under Management’s Discussion of Financial Condition and Results of Operations in our Annual Report on Form 10-K/A for the fiscal year ended June 30, 2006 filed with the Securities and Exchange Commission, which is incorporated by reference in this Form 10-Q.

Results of Operations

     The table below shows our results of operations and the absolute and percentage change in those results from period to period (in thousands). For the three and six months ended December 31, 2005, shipping and handling costs of $14.1 million and $26.5 million, respectively, have been reclassified from selling, general and administrative expenses to cost of sales to conform to the current year presentation.

	Three Months Ended				$ Change			% Change			Results as %
	December 31,				Favorable			Favorable			of Net Revenue
	2006		2005		(Unfavorable)			(Unfavorable)			2006			2005
Net revenue	$	837,467	$	697,348	$	140,119			20.1	%		100.0	%		100.0	%
Cost of sales		578,958		469,552		(109,406	)		(23.3	)		69.1			67.3
Gross profit		258,509		227,796		30,713			13.5			30.9			32.7
Selling, general & administrative		167,691		146,036		(21,655	)		(14.8	)		20.1			20.9
Restructuring costs		—		6,517		6,517			100.0			—			1.0
Income from operations		90,818		75,243		15,575			20.7			10.8			10.8
Other income, net		3,843		6,175		(2,332	)		(37.8	)		0.5			0.9
Income before income taxes		94,661		81,418		13,243			16.3			11.3			11.7
Income taxes & minority interest		28,434		23,222		(5,212	)		(22.4	)		3.4			3.4
Net income	$	66,227	$	58,196	$	8,031			13.8	%		7.9	%		8.3	%

	Six Months Ended				$ Change			% Change			Results as %
	December 31,				Favorable			Favorable			of Net Revenue
	2006		2005		(Unfavorable)			(Unfavorable)			2006			2005
Net revenue	$	1,667,012	$	1,357,163	$	309,849			22.8	%		100.0	%		100.0	%
Cost of sales		1,139,094		915,548		(223,546	)		(24.4	)		68.3			67.5
Gross profit		527,918		441,615		86,303			19.5			31.7			32.5
Selling, general & administrative		333,992		295,710		(38,282	)		(12.9	)		20.1			21.8
Restructuring costs		—		11,387		11,387			100.0			—			0.8
Income from operations		193,926		134,518		59,408			44.2			11.6			9.9
Other income, net		7,807		11,597		(3,790	)		(32.7	)		0.5			0.9
Income before income taxes		201,733		146,115		55,618			38.1			12.1			10.8
Income taxes & minority interest		59,005		41,679		(17,326	)		(41.6	)		3.5			3.1
Net income	$	142,728	$	104,436	$	38,292			36.7	%		8.6	%		7.7	%

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Net Revenue

     We estimate that the impact of price erosion reduced revenue by approximately $28.5 million compared with the prior year quarter. For the six months ended December 31, 2006, we estimate that the impact of price erosion reduced revenue by approximately $56.0 million. A significant portion of the price erosion occurred in our mobile phone products, which are part of our telecommunications market. We sell our products in five primary markets. The estimated change in revenue from each market during the second quarter of fiscal 2007 as compared with the same quarter last year (Comparable Quarter) and the first quarter of fiscal 2007 (Sequential Quarter) follows:

	Comparable			Sequential
	Quarter			Quarter
Consumer		15	%		(4	)%
Telecommunications		8			(5	)
Automotive		15			5
Data		3			(11	)
Industrial		125			21
Total		20			(1	)

     The Woodhead acquisition added $56.1 million to revenues in the current quarter. Woodhead contributed 97% of the 125% growth in industrial sales as compared with the prior year quarter and was representative of the sequential industrial growth. The remaining increase in revenue was derived primarily from unit volume increases with existing customers and existing products and sales of new products.

     We operate in one product segment, the manufacture and sale of electronic components, and four regions. Revenue is recognized based on the location of the selling entity. Effective July 1, 2006, we realigned our management structure in the Asia region. As part of the realignment, the Far East North region was renamed the Asia Pacific North region and the Far East South region was renamed the Asia Pacific South region. Additionally, our entity in Korea is now managed by Asia Pacific South and was included in the Asia Pacific North prior to July 1, 2006. Our entity in Thailand is now managed by Asia Pacific North beginning July 1, 2006 and was included in the Asia Pacific South prior to July 1, 2006. Regional operating results for the three and six months ended December 31, 2005, were reclassified to conform to the current year reporting structure. Woodhead has locations around the world but is included in the revenue-related tables below as corporate and other because the division is aligned independently from the other regions and is immaterial for separate classification. The following table sets forth information on customer revenue by geographic region for the periods indicated (in thousands):

	Three Months Ended				$ Change		% Change			Results as %
	December 31,				Favorable		Favorable			of Net Revenue
	2006		2005		(Unfavorable)		(Unfavorable)			2006			2005
Americas	$	198,763	$	198,110	$	653		0.3	%		23.7	%		28.4	%
Asia Pacific North		128,643		105,602		23,041		21.8			15.4			15.2
Asia Pacific South		297,067		258,778		38,289		14.8			35.5			37.1
Europe		133,476		117,301		16,175		13.8			15.9			16.8
Corporate and other		79,518		17,557		61,961		352.9			9.5			2.5
Total	$	837,467	$	697,348	$	140,119		20.1	%		100.0	%		100.0	%

	Six Months Ended				$ Change		% Change			Results as %
	December 31,				Favorable		Favorable			of Net Revenue
	2006		2005		(Unfavorable)		(Unfavorable)			2006			2005
Americas	$	398,985	$	383,322	$	15,663		4.1	%		23.9	%		28.2	%
Asia Pacific North		258,964		212,661		46,303		21.8			15.6			15.7
Asia Pacific South		606,838		497,295		109,543		22.0			36.4			36.6
Europe		270,091		231,830		38,261		16.5			16.2			17.1
Corporate and other		132,134		32,055		100,079		312.2			7.9			2.4
Total	$	1,667,012	$	1,357,163	$	309,849		22.8	%		100.0	%		100.0	%

     The weakening of the U.S. dollar against certain foreign currencies, principally the euro, Singapore dollar and Korean won increased revenue by approximately $18.6 million and $29.2 million, respectively, for the three and six months

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ended December 31, 2006 over the prior year periods. The following tables show the effect on the change in net revenue from foreign currency translations to the U.S. dollar:

	Three Months Ended December 31, 2006							Six Months Ended December 31, 2006
	Local		Currency			Net		Local		Currency			Net
	Currency		Translation			Change		Currency		Translation			Change
Americas	$	493	$	160		$	653	$	14,983	$	680		$	15,663
Asia Pacific North		23,709		(668	)		23,041		50,872		(4,569	)		46,303
Asia Pacific South		30,057		8,232			38,289		95,437		14,106			109,543
Europe		7,597		8,578			16,175		22,865		15,396			38,261
Corporate and other		59,615		2,346			61,961		96,446		3,633			100,079
Net change	$	121,471	$	18,648		$	140,119	$	280,603	$	29,246		$	309,849

     The change in revenue on a local currency basis is as follows:

	Three Months			Six Months
	Ended			Ended
	Dec. 31, 2006			Dec. 31, 2006
Americas		0.2	%		3.9	%
Asia Pacific North		22.5			23.9
Asia Pacific South		11.6			19.2
Europe		6.5			9.9
Total		17.4			20.7

     We continued our long-term commitment to reinvesting our profits in new product design and tooling to maintain and enhance our competitive position. Revenue derived from the sale of new products we released within the last 36 months as a percentage of net revenue is as follows:

	Three Months			Six Months
	Ended			Ended
	Dec. 31, 2006			Dec. 31, 2006
Americas		25.4	%		24.4	%
Asia Pacific North		29.1			28.4
Asia Pacific South		31.6			30.6
Europe		24.9			25.5
Total		26.1			26.5

Americas Region —North and South America

     Revenue in the Americas region increased from the prior year comparable period primarily due to stronger demand and new product offerings during the first quarter of fiscal 2007, particularly in high performance applications such as servers and routers. While growth during the first quarter of fiscal 2007 was across all channels for the connector products, revenue was relatively consistent during the second quarter of fiscal 2007, as compared with the respective prior year periods. Stronger demand for network products during the second quarter of fiscal 2007 was offset by a weaker mobile communications market.

     Brazil revenue for the six months ended December 31, 2006 declined $19.3 million as compared with the prior year period and $15.9 million as compared with the six months ended June 30, 2006 as we continue with our plan to close our production facilities in Brazil.

     We expect that the lower mobile communications demand experienced during the second quarter will extend into the third quarter of fiscal 2007. Additionally, while we believe that sales growth in the Americas region was negatively affected over the past 18 months by the movement offshore of original equipment manufacturers and contract manufacturers, we believe that this movement offshore by OEMs and contract manufacturers positively contributed to sales in other regions of our business, especially in the Asia Pacific South region.

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Asia Pacific North Region — Japan and Thailand

     Revenue in local currencies was higher during the six months ended December 31, 2006 as compared with the same period last year primarily due to stronger demand in the consumer and industrial markets. We believe that we are well positioned for growth in the satellite radio and games segment, where we have good connector content in Pachinko game machines and on the new wii machine and the Sony PS3.

     While demand for high-end mobile phones declined sequentially during the second quarter of fiscal 2007, the region continues to capitalize on its ability to design compact, higher performance products for the sophisticated end of the mobile phone business in the telecommunications market. The region has developed connectors for third generation (3G) phones. We believe that we are well positioned to grow our 3G technology business as global cell phone makers adopt this technology.

     The Asia Pacific North region generally operates at a high capacity level with significant resources allocated to support higher demand in the Asia Pacific South region. Revenue between regions is generally recognized as intercompany revenue, which is excluded from the revenue by region table above.

Asia Pacific South Region — Singapore, Malaysia, China, Korea, Taiwan and India

     The Asia Pacific South region continues to be our largest and one of our fastest growing in terms of revenue. The revenue growth in this region over the prior year period was driven by stronger demand across the mobile phone, computer and networking sectors, although sequentially we experienced a decline in the mobile phone and computer businesses from the first quarter of fiscal 2007. We expect this trend to continue during the third quarter.

     Sales in China represent 64% of total Asia Pacific South sales for the three and six months ended December 31, 2006 increasing by 21% during the quarter and 31% year-to-date as compared with the prior year periods, due to customer demand supported by increased production capacity. The drivers of this growth included (i) overall higher demand in the mobile phone, consumer electronics and computer markets, (ii) the trend of American, European and Japanese companies moving their design and production to China and (iii) greater penetration of Taiwanese multinational accounts. A significant portion of our integrated products that require a higher level of manual assembly are produced in China.

European Region

     For the three and six months ended December 31, 2006, revenue as compared with the prior year periods increased primarily due to higher revenue from consumer products in the industrial and automotive markets offset by the movement to Asia of original equipment manufacturers and contract manufacturers. Revenue growth in the automotive market was primarily due to new wins and higher content and industrial sector growth was primarily due to a large order for a cable assembly product. We believe that the movement of original equipment manufacturers to Asia is a trend that contributed to sales growth in our Asia Pacific South region.

     The region is focused on the markets that we believe are most likely to remain in Europe. These include connectors and integrated products for industrial, medical and automotive applications.

Gross Profit

     Gross profit as a percentage of net revenue declined during the three and six months ended December 31, 2006 primarily due to higher price erosion in the mobile phone business, higher commodity prices and an adverse shift in sales mix to a greater portion of sales into lower content and less profitable mobile phones. We estimate that we paid approximately $13.9 million and $33.7 million more for metal alloys (primarily copper) and gold due to higher commodity prices in the three and six month periods compared with the prior year periods. We expect price erosion in the mobile phone business to continue for the remainder of fiscal 2007. These cost increases, along with the impact of price erosion, were partially offset by selective price increases that were effective in February and September 2006 and improvements in manufacturing efficiencies. We recognized impairment charges and severance costs approximating $2.5 million during the six months ended December 31, 2006 in connection with our decision to shut-down the Brazil production facilities. During

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the second quarter of fiscal 2007, we increased our estimate of inventory reserves as a result of reduced customer orders and because some customers delayed taking deliveries in the later part of the second quarter.

     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. We estimate that the impact from currency transactions increased gross profit by approximately $3.2 million and $7.4 million for the three and six months ended December 31, 2006 compared with the prior year periods. These increases were primarily due to a stronger U.S. dollar compared with the yen during the respective periods ended December 31, 2006.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses for the six months ended December 31, 2006 improved as a percent of net revenue over the prior year period primarily due to leverage of fixed selling, general and administrative costs on higher revenue, lower cost structure resulting from our 2005 restructuring initiative and relatively lower compensation expense. Additionally, the prior year included bad debt expense of approximately $3.0 million in connection with an account receivable from an automotive customer that filed for bankruptcy. The impact of currency translation increased selling, general and administrative expenses by approximately $5.3 million for the six months ended December 31, 2006.

     Research and development expenditures, which are classified as selling, general and administrative expense were $81.1 million, or 4.9% of net revenue, for the six months ended December 31, 2006, compared with 5.2% in the prior year period.

Restructuring Costs

     We recorded a pre-tax restructuring charge of $11.4 million during the six months ended December 31, 2005, that consisted primarily of severance and other employee-related costs.

     During the fourth quarter of 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. Production from the operations closed has been transferred to existing plants within the respective regions. Also included in the restructuring charge are costs to reduce our selling, general and administrative costs in the Americas, Europe and at the corporate office. We reduced headcount by approximately 500 people after additions at the facilities where production was transferred. We substantially completed the restructuring activities as of June 30, 2006. (See Note 2 of the “Notes to the Condensed Consolidated Financial Statements.”)

Effective Tax Rate

     The effective tax rate was 30.0% and 29.2%, respectively, for the three and six months ended December 31, 2006 and was 28.5% for the three and six months ended December 31, 2005. The effective tax rates represent estimates of the full year effective tax rate. The effective tax rate for the six months ended December 31, 2006 is higher than the fiscal year 2006 effective tax rate of 28.0% due to our anticipation of greater earnings during fiscal 2007 in countries with tax rates that are higher relative to the fiscal 2006 earnings mix.

Backlog

     Our order backlog on December 31, 2006 was approximately $375.9 million, an increase of $78.4 million compared with $297.5 million at December 31, 2005. Orders for the three months ended December 31, 2006 were $778.7 million, an increase of 10.7% compared with $703.4 million for the prior year period. Woodhead contributed bookings of $52.2 million to the current quarter, and had a backlog of $19.8 million on December 31, 2006. Orders and backlog decreased sequentially due to lower demand in the telecommunications and data markets.

Financial Condition and Liquidity

     Our financial position remains strong and we continue to be able to fund capital projects and working capital needs

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principally out of operating cash flows and cash reserves. Cash, cash equivalents and marketable securities totaled $343.5 million and $485.5 million at December 31, 2006 and June 30, 2006, respectively. The primary source of our cash flow is cash generated by operations. Principal uses of cash are capital expenditures, share repurchases, dividend payments and business investments. Our long-term financing strategy is principally to rely on internal sources of funds for investing in plant, equipment and acquisitions, although we may elect to leverage our balance sheet with debt financing. We have historically used external borrowings only when a clear financial advantage exists. We believe that our liquidity and financial flexibility are adequate to support both current and future growth. Long-term debt at December 31, 2006 totaled $132.8 million.

Cash Flows

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

	Six Months			Six Months
	Dec. 31,			Dec. 31,
	2006			2005
Cash provided from operating activities	$	165,341		$	177,929
Cash used for investing activities		(278,018	)		(53,296	)
Cash provided by (used for) financing activities		73,149			(106,200	)
Effect of exchange rate changes on cash		6,126			(498	)
Net (decrease) increase in cash	$	(33,402	)	$	17,935

Operating Activities

     Cash provided from operating activities decreased by $12.6 million from the prior year period due mainly to greater use of funds to finance working capital needs compared with the prior year period. This working capital increase was primarily due to the revenue growth for the six months ended December 31, 2006 compared with the prior year period. Working capital is defined as current assets minus current liabilities.

Investing Activities

     On August 9, 2006, we completed the acquisition of Woodhead in an all cash transaction valued at approximately $237.1 million, including the assumption of debt and net of cash acquired. Capital expenditures were $155.8 million for the six months ended December 31, 2006 compared with $131.1 million in the prior year period. Capital expenditures for the six months ended December 31, 2006 were primarily related to increasing capacity in the Americas, Asia Pacific North and Asia Pacific South regions.

Financing Activities

     In order to fund the cash portion of our investment in Woodhead made during the first quarter, we entered into two term notes aggregating 15 billion Japanese yen ($127.7 million) and borrowed $44.0 million on our unsecured revolving credit line. The term note agreements have three-year terms with weighted-average fixed interest rates approximating 1.3%. The $44.0 million that we borrowed on our unsecured revolving line of credit was repaid during the second quarter of fiscal 2007.

     We purchased 422,500 shares of Class A Common Stock during the six months ended December 31, 2006, at an aggregate cost of $12.5 million and 3,683,000 shares of Common Stock and Class A Common Stock during the six months ended December 31, 2005, at an aggregate cost of $95.1 million. We use shares repurchased to replenish stock used for exercises of employee stock options, employee stock awards and our Employee Stock Purchase Plan.

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     Our Board of Directors previously authorized the repurchase of up to an aggregate $250.0 million of common stock though December 31, 2006. On October 27, 2006, the Board of Directors extended this authorization through September 30, 2007. Approximately $37.5 million was remaining under the authorization as of December 31, 2006.

     We have sufficient cash balances and cash flow to support our planned growth. In the future we may 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

     We have contractual obligations and commercial commitments as described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations and Commercial Commitments” of our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the Commission) for the year ended June 30, 2006. In addition, we have obligations under open purchase orders and the long-term liabilities reflected in our consolidated balance sheet, which principally consist of pension and retiree health care benefit obligations. There have been no material changes in our contractual obligations and commercial commitments since June 30, 2006 arising outside of the ordinary course of business other than the $44.0 million revolving line of credit borrowed last quarter and repaid during the current quarter and $127.7 million long-term debt borrowings.

Cautionary Statement Regarding Forward-Looking Information

     This Quarterly Report contains 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 such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of 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 outcome or results of operations in Part 1, Item 1A of our Annual Report on Form 10-K/A for the year ended June 30, 2006 (Form 10-K/A). You should carefully consider the risks described in our Form 10-K/A. Such risks are not the only ones facing our Company. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. If any of the risks occur, our business, financial condition or operating results could be materially adversely affected.

     We have based our forward looking statements on our management’s beliefs and assumptions based on information available to our management 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 particular to forward looking statements regarding growth strategies, industry trends, financial results, 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 distribution of this report, whether as a result of new information, future events, changes in assumptions, or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

     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.

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     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 December 31, 2006 or 2005.

     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-U.S. 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 $29.2 million and decreased income from operations of $0.1 million for the six months ended December 31, 2006, compared with the estimated results for the comparable period in the prior year.

     Our $44.1 million of marketable securities at December 31, 2006 are principally debt instruments that generate interest income for us on temporary excess cash balances. These instruments contain embedded derivative features that enhance the liquidity of the portfolio by enabling us to liquidate the instrument prior to the stated maturity date. Our exposure related to derivative instrument transactions is, in the aggregate, not material to our financial position, results of operations or cash flows.

     Interest rate exposure is generally limited to our marketable securities and long-term debt. Long-term debt increased during the six months ended December 31, 2006, as a result of two borrowings aggregating approximating 15 billion Japanese yen ($127.7 million) by an entity that we own in Japan. The 3-year unsecured debt financing has a weighted average fixed interest rate approximating 1.3%. Total long-term debt was $132.8 million at December 31, 2006. We do not actively manage the risk of interest rate fluctuations. However, such risk is mitigated by the relatively short duration 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 do not believe that we are generally subject to significant concentration risks relating to customers or products.

     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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     We have established disclosure controls and procedures to ensure that material information relating to Molex is timely communicated to the officers who certify our financial reports and to other members of our management and Board of Directors.

     Based upon their evaluation as of December 31, 2006, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) are effective in providing reasonable assurance that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

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Internal Control Over Financial Reporting

     During the three months ended December 31, 2006, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As permitted by the rules and regulations of the SEC, we excluded Woodhead from our assessment of our internal control over financial reporting for the quarter ended December 31, 2006 and also expect to exclude Woodhead from our annual assessment for the year ended June 30, 2007. We are in the process of integrating the internal control procedures of Woodhead into our internal control structure.

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PART II

Item 1. Legal Proceedings

     Between March 2, 2005 and April 22, 2005, seven separate complaints were filed, each purporting to be on behalf of a class of Molex shareholders, against us, and certain of our officers and employees. The shareholder actions have been consolidated before Judge Ruben Castillo in a case pending in the United States District Court for the Northern District of Illinois Eastern Division entitled The Takara Trust v. Molex Incorporated, et. al., Case No. 05C 1245. The Consolidated Amended Complaint alleges, among other things, that during the period from July 27, 2004 to February 14, 2005, the named defendants made or caused to be made a series of materially false or misleading statements about Molex’s business, prospects, operations, and financial statements which constituted violations of Section 10(b) of the Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act. The complaint also alleges that certain of the named defendants engaged in insider trading in violation of Section 10(b) and Rule 10b-5. On April 28, 2006, the Court denied defendants’ motion to dismiss the complaint. On July 6, 2005, the Court appointed City of Pontiac Group, Joan L. Weeks individually and as trustee, and James Baker as lead plaintiffs, and approved lead plaintiffs’ choice of lead counsel. On June 15, 2006, defendants answered the complaint, denying any liability to plaintiffs and asserting numerous defenses. The parties have reached a settlement in principle of this action, which will be funded by insurance proceeds. On November 7, 2006, the Court entered an Order Preliminarily Approving Settlement and Providing for Notice, in which the Court certified a class for purposes of settlement, granted preliminary approval of the settlement, authorized distribution of notice of the settlement to the prospective class, and set a schedule for the filing of objections to the settlement and briefs in support of the settlement. The Court set March 1, 2007 as the final hearing date for approval of the settlement. The deadline for class members to opt out of the class or to file objections to the settlement was January 9, 2007. To our knowledge, no objections or opt-outs were filed.

     In addition, in the Fall of 2005, two stockholder derivative actions were filed against us and certain of our directors and officers in the Circuit Court of Cook County, Illinois. The derivative actions arise principally out of the same facts as the stockholder actions described above. These two actions have been consolidated and an amended and consolidated complaint has been filed. In August 2006, plaintiffs asked the court for permission to file a further amended complaint, which adds allegations that stock options were priced and issued improperly. On November 9, 2006 the plaintiffs filed their amended complaint. On January 10, 2007, we and the individual defendants filed motions to dismiss the amended complaint, along with a brief in support of the motions. We believe the stockholder derivative actions are without merit and intend to continue vigorously contesting these actions.

     The Commission has commenced an informal inquiry into our stock option granting practices, and the Office of the U.S. Attorney for the Northern District of Illinois has also requested information on this subject. As previously disclosed, a Special Committee of our Board of Directors completed a review of our past option granting practices. Although we cannot predict the outcome of this matter, we do not expect that such matter will have a material adverse effect on our consolidated financial position or results of operations.

     On January 25, 2007, we filed a suit in the United States District Court in Nevada against FCI Americas Technology, Inc. (FCI) seeking a declaratory judgment that our I-Trac™ connectors are not covered by FCI’s shieldless connector patents, and further seeking an injunction against FCI’s continued assertions that such connectors infringe any of FCI’s patents. Following the filing of our suit, on January 26, 2007 FCI and FCI USA, Inc. filed a patent infringement suit against us in the United States District Court in Delaware that alleges that we are infringing certain of their patents relating to shieldless connectors. We believe that our I-Trac™ connectors do not infringe FCI’s patents and intend to vigorously pursue our position. Although we cannot predict the outcome of this matter, we do not expect that it will have a material adverse effect on our consolidated financial position or results of operations.

Item 1A. Risk Factors

     There have been no material changes from the risk factors disclosed in Part 1, Item 1A, of our Form 10-K/A.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     On April 25, 2005, our Board of Directors authorized the purchase of up to $250.0 million of Common Stock and/or Class A Common Stock during the period ending December 31, 2006. On October 27, 2006, the Board of Directors extended this authorization through September 30, 2007. Share purchases of Molex Common and/or Class A Common Stock for the quarter ended December 31, 2006 were as follows (in thousands, except price per share data):

					Total Number		Dollar Value
					of Shares		of Shares
	Total Number				Purchased as		That May Yet
	of Shares		Average Price		Part of Publicly		Be Purchased
	Purchased		Paid per Share		Announced Plan		Under the Plan
Class A Common Stock:
October 1 — October 31		84	$	31.14		—	$	45,059
November 1 — November 30		304		29.01		260		37,537
December 1 — December 31		—		—		—		37,537
Total		389	$	29.47		260	$	37,537

     Also during October, 28,267 shares of Common Stock were purchased at an average price of $34.85 per share that was not part of a publicly announced plan.

Item 6. Exhibits

Number	Description
31	Rule 13a-14(a)/15d-14(a) Certifications
	31.1	Section 302 certification by Chief Executive Officer
	31.2	Section 302 certification by Chief Financial Officer
32	Section 1350 Certifications
	32.1	Section 906 certification by Chief Executive Officer
	32.2	Section 906 certification by Chief Financial Officer

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SIGNATURES

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

	MOLEX INCORPORATED (Registrant)
Date: February 7, 2007	/S/ DAVID D. JOHNSON
	David D. Johnson
	Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer)

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