Molex (MOLX) 10-Q 2009 Q3 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 March 31, 2009

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. Yesþ Noo

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

Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Noþ

     On April 27, 2009, the following numbers of shares of the Company’s common stock were outstanding:

Common Stock	95,551,858
Class A Common Stock	77,630,150
Class B Common Stock	94,255

Molex Incorporated

INDEX

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2009 and June 30, 2008		3
Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2009 and 2008		4
Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2009 and 2008		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3. Quantitative and Qualitative Disclosures About Market Risk		26
Item 4. Controls and Procedures		26
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		27
Item 1A. Risk Factors		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3. Defaults Upon Senior Securities		27
Item 4. Submission of Matters to a Vote of Security Holders		28
Item 5. Other Information		28
Item 6. Exhibits		28
SIGNATURES		29
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)

	Mar. 31,		June 30,
	2009		2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	457,548	$	475,507
Marketable securities		48,384		34,298
Accounts receivable, less allowances of $30,336 and $40,243 respectively		444,617		740,827
Inventories		360,776		458,295
Other current assets		110,795		74,033
Total current assets		1,422,120		1,782,960
Property, plant and equipment, net		1,081,469		1,172,395
Goodwill		294,359		373,623
Other assets		275,193		270,559
Total assets	$	3,073,141	$	3,599,537
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	182,363	$	350,413
Accrued expenses		205,426		154,015
Current portion of long-term debt and short-term borrowings		280,897		66,687
Other current liabilities		4,285		78,323
Total current liabilities		672,971		649,438
Other non-current liabilities		23,884		21,346
Accrued pension and postretirement benefits		98,376		105,574
Long-term debt		5,167		146,333
Total liabilities		800,398		922,691

Commitments and contingencies

Stockholders’ equity:
Common stock		11,130			11,107
Paid-in capital		592,675			569,046
Retained earnings		2,602,472			2,785,099
Treasury stock		(1,088,258	)		(1,009,021	)
Accumulated other comprehensive income		154,724			320,615
Total stockholders’ equity		2,272,743			2,676,846
Total liabilities and stockholders’ equity	$	3,073,141		$	3,599,537

     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					Nine Months Ended
	March 31,					March 31,
	2009			2008		2009			2008
Net revenue	$	505,539		$	822,285	$	2,011,252		$	2,456,455
Cost of sales		412,143			567,824		1,492,312			1,712,729
Gross profit		93,396			254,461		518,940			743,726
Selling, general and administrative		139,071			167,639		450,034			493,973
Restructuring costs and asset impairments		44,344			6,399		105,904			16,286
Goodwill impairment		—			—		93,140			—
Total operating expenses		183,415			174,038		649,078			510,259
Income (loss) from operations		(90,019	)		80,423		(130,138	)		233,467
Interest income, net		251			2,044		2,287			6,964
Other income		3,259			4,462		24,252			7,241
Total other income		3,510			6,506		26,539			14,205
Income (loss) before income taxes		(86,509	)		86,929		(103,599	)		247,672
Income taxes		(27,909	)		36,623		(2,052	)		84,846
Net (loss) income	$	(58,600	)	$	50,306	$	(101,547	)	$	162,826
Earnings (loss) per share:
Basic	$	(0.34	)	$	0.28	$	(0.58	)	$	0.90
Diluted	$	(0.34	)	$	0.28	$	(0.58	)	$	0.89
Dividends declared per share	$	0.1525		$	0.1125	$	0.4575		$	0.3375
Average common shares outstanding:
Basic		173,228			179,385		174,985			181,260
Diluted		173,228			180,086		174,985			182,156

See accompanying notes to condensed consolidated financial statements.

4

Molex Incorporated

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended
	March 31,
	2009			2008
Operating activities:
Net (loss) income	$	(101,547	)	$	162,826
Add non-cash items included in net (loss) income:
Depreciation and amortization		190,085			184,675
Share-based compensation		19,393			18,539
Goodwill impairment		93,140			—
Other non-cash items		9,392			3,568
Changes in assets and liabilities:
Accounts receivable		282,082			12,604
Inventories		93,916			(22,540	)
Accounts payable		(167,781	)		(6,179	)
Other current assets and liabilities		(50,148	)		8,915
Other assets and liabilities		(56,947	)		(9,551	)
Cash provided from operating activities		311,585			352,857
Investing activities:
Capital expenditures		(127,688	)		(163,440	)
Proceeds from sales of property, plant and equipment		7,561			11,417
Proceeds from sales or maturities of marketable securities		11,694			843,493
Purchases of marketable securities		(33,399	)		(798,921	)
Acquisitions		(73,447	)		(42,503	)
Other investing activities		655			(9,733	)
Cash used for investing activities		(214,624	)		(159,687	)
Financing activities:
Proceeds from revolving credit facility		115,000			65,000
Payments on revolving credit facility		(105,000	)		—
Net change in long-term debt		47,300			(1,705	)
Cash dividends paid		(73,222	)		(54,557	)
Exercise of stock options		1,233			8,534
Purchase of treasury stock		(76,342	)		(166,199	)
Other financing activities		(870	)		(900	)
Cash used for financing activities		(91,901	)		(149,827	)
Effect of exchange rate changes on cash		(23,019	)		32,150
Net increase (decrease) in cash and cash equivalents		(17,959	)		75,493
Cash and cash equivalents, beginning of period		475,507			378,361
Cash and cash equivalents, end of period	$	457,548		$	453,854

     See accompanying notes to condensed consolidated financial statements.

5

Molex Incorporated

Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 45 manufacturing locations in 18 countries.

     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 nine months ended March 31, 2009 are not necessarily an indication of the results that may be expected for the year ending June 30, 2009. The Condensed Consolidated Balance Sheet as of June 30, 2008 was derived from our audited consolidated financial statements for the year ended June 30, 2008. 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 for the year ended June 30, 2008.

     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, stock options, 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.

2. Restructuring Costs and Asset Impairments

     During fiscal 2007, we undertook a restructuring plan designed to reduce costs and to improve 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 facilities. Net restructuring cost during the quarter ended March 31, 2009 was $44.3 million, consisting of $15.4 million of asset impairments and $28.9 million for employee termination benefits. These costs included $13.0 million relating to planned plant closings in Japan and Korea. Restructuring costs during the nine months ended March 31, 2009 included $22.5 million for asset impairments and $83.4 million for employee termination benefits. The cumulative expense since we announced the restructuring plan totals $174.0 million.

     We expect to incur total restructuring and asset impairment costs related to these actions ranging from $240 — $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 additions to the restructuring actions, which will include 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 — $210 million.

6

     The following table sets forth restructuring costs by segment (in thousands):

			Trans-		Custom &		Corporate
	Connector		portation		Electrical		and Other		Total
Cumulative costs at June 30, 2008	$	15,466	$	8,474	$	15,543	$	28,633	$	68,116
Net restructuring costs during the first quarter		280		14,991		3,779		2,728		21,778
Cumulative costs at Sept. 30, 2008	$	15,746	$	23,465	$	19,322	$	31,361	$	89,894
Net restructuring costs during the second quarter		12,075		14,766		6,324		6,617		39,782
Cumulative costs at Dec. 31, 2008	$	27,821	$	38,231	$	25,646	$	37,978	$	129,676
Net restructuring costs during the third quarter		17,557		13,021		7,452		6,314		44,344
Cumulative costs at Mar. 31, 2009	$	45,378	$	51,252	$	33,098	$	44,292	$	174,020

     The cumulative change in the accrued employee termination benefits balance related to restructuring charges is summarized as follows (in thousands):

Balance at June 30, 2008	$	19,842
Cash payments		(5,321	)
Charges to expense		19,106
Non-cash related costs		(2,978	)
Balance at September 30, 2008	$	30,649
Cash payments		(6,713	)
Charges to expense		35,362
Non-cash related costs		327
Balance at December 31, 2008	$	59,625
Cash payments		(23,311	)
Charges to expense		28,946
Non-cash related costs		(999	)
Balance at March 31, 2009	$	64,261

     The accrued employee termination benefits balance at March 31, 2009 is recorded in accrued expenses and includes $1.7 million related to a restructuring plan announced in fiscal 2005 that was substantially complete as of June 30, 2006.

3. Goodwill Impairment

     We recorded a $93.1 million goodwill impairment charge during the second quarter of fiscal 2009 to write-off goodwill based on lower projected future revenue and profit growth in our Transportation segment. During the second quarter, we determined that there were indicators of impairment in our Transportation segment resulting from the sudden economic downturn and potential liquidity risk in the automotive industry. The economic downturn had a negative impact on the segment’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 segment, which resulted in the goodwill impairment charge.

     Our goodwill impairment review required a two-step process. The first step of the review compared the estimated fair value of the reporting unit against its aggregate carrying value, including goodwill. We estimated the fair value of our Transportation segment using the income method of valuation, which included the use of estimated discounted cash flows. Based on this analysis, we determined the carrying value of the segment exceeded its fair value.

7

     Accordingly, we performed the second step of the test, comparing the implied fair value of the division’s goodwill with the carrying value of that goodwill. Based on this assessment, we determined that the goodwill had no value and recorded an impairment charge of $93.1 million to write-off the full value of the goodwill.

4. Acquisitions

     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 $3.1 million. The purchase price allocation for these acquisitions is preliminary and subject to revision as more detailed analysis is completed and additional information about the fair value of assets and liabilities becomes available.

5. Earnings (Loss) Per Share

     A reconciliation of the basic average common shares outstanding to diluted average common shares outstanding is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2009		2008		2009		2008
Basic average common shares outstanding		173,228		179,385		174,985		181,260
Effect of dilutive stock options		—		701		—		896
Diluted average common shares outstanding		173,228		180,086		174,985		182,156

     During the three months and nine months ended March 31, 2009, we incurred a net loss. As common stock equivalents had an anti-dilutive effect on the net loss, the equivalents were not included in the computation of diluted loss per share for the three and nine months ended March 31, 2009.

6. Comprehensive Income (Loss)

     Total comprehensive income (loss) is summarized as follows (in thousands):

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2009			2008		2009			2008
Net (loss) income	$	(58,600	)	$	50,306	$	(101,547	)	$	162,826
Translation adjustments		(67,650	)		88,758		(159,939	)		172,559
Unrealized investment gain (loss)		5,564			1,942		(5,952	)		8,427
Total comprehensive (loss) income	$	(120,686	)	$	141,006	$	(267,438	)	$	343,812

8

7. Inventories

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

	Mar. 31,		June 30,
	2009		2008
Raw materials	$	57,402	$	81,407
Work in process		118,466		144,683
Finished goods		184,908		232,205
Total inventories	$	360,776	$	458,295

8. Investments

     At March 31, 2009, we owned approximately 20% of a publicly traded affiliate accounted for under the equity method. Our portion of the market value of the investment based on per share quoted market prices was $54.1 million as of March 31, 2009 compared with the carrying value of $77.7 million. We concluded that any impairment of our investment was temporary. The market value of the investment based on per share quoted market prices approximated the carrying value as of June 30, 2008.

9. Pensions and Other Postretirement Benefits

     During the three months ended March 31, 2009, we recognized curtailment expenses of $1.2 million related to our U.S. and Japan pension plans and a $0.3 million special termination benefits expense in our postretirement medical benefit plan in connection with the early termination of participants resulting from our restructuring plans. During the nine months ended March 31, 2009, we also recognized a $4.0 million curtailment gain in our postretirement medical benefit plan by reducing the number of employees eligible for retiree medical coverage. The curtailment adjustments and special termination benefits reduced cost of sales by $1.6 million and reduced selling, general and administrative expense by $2.4 million and increased restructuring expense by $1.5 million for the nine months ended March 31, 2009.

     During the nine months ended March 31, 2008, we recognized curtailment gains of $5.4 million. 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. We also recognized 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.

9

     Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS 158) required re-measurement of our postretirement medical benefit plan liability in connection with the curtailment, that otherwise was required on June 30, 2009. The adoption of SFAS 158 resulted in a $1.4 million reduction in retained earnings during the nine months ended March 31, 2009.

     The components of pension benefit cost are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Service cost	$	2,066		$	2,346		$	6,198		$	7,037
Interest cost		2,064			2,148			6,192			6,443
Expected return on plan assets		(2,180	)		(2,533	)		(6,540	)		(7,598	)
Amortization of prior service cost		11			53			33			159
Recognized actuarial losses		62			85			186			255
Amortization of transition obligation		106			10			318			31
Curtailment adjustment		1,151			—			1,151			(5,444	)
Benefit cost	$	3,280		$	2,109		$	7,538		$	883

     The components of retiree health care benefit cost are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Service cost	$	611		$	767		$	1,833		$	2,291
Interest cost		796			815			2,388			2,434
Amortization of prior service cost		(160	)		(175	)		(480	)		(523	)
Recognized actuarial losses		157			330			471			986
Curtailment adjustment		299			—			(3,701	)		—
Benefit cost	$	1,703		$	1,737		$	511		$	5,188

10. Debt

     The current portion of our long-term debt as of March 31, 2009 consists principally of three unsecured borrowing agreements approximating 20 billion Japanese yen ($204.2 million), with weighted-average fixed interest rates approximating 1.3%. Interest on the loans is payable semi-annually with the principal due in September 2009. As of March 31, 2009, we had short-term borrowings in the U.S. of $75.7 million, including borrowings on uncommitted lines of credit totaling $60 million.

11. Income Taxes

     The effective tax rate was 32.3% for the three months ended March 31, 2009 and 42.1% for the three months ended March 31, 2008. During the three months ended March 31, 2008, we recorded an income tax charge of $10.5 million due primarily to a lowered estimate of available foreign tax credits. As of March 31, 2009, unrecognized tax benefits were $12.4 million, which if recognized, would reduce the effective income tax rate. Changes in the amount of unrecognized tax benefits in the nine months ended March 31, 2009 were not significant.

     We are subject to tax in U.S. Federal, State and foreign tax jurisdictions. We have substantially completed all U.S. federal income tax matters for tax years through 2003. The tax years 2004 through 2008 remain open to examination by all major taxing jurisdictions to which we are subject.

10

     It is our practice to recognize interest and/or penalties related to income tax matters in tax expense. As of March 31, 2009, there were no material interest or penalty amounts to accrue.

12. 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 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.

     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 March 31, 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 securities	$	4,821	$	4,821	$	—	$	—
Derivative financial instruments, net		1,054		—		1,054		—
Total	$	5,875	$	4,821	$	1,054	$	—

     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.

13. New Accounting Pronouncements

     In December 2007, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards 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 141R effective July 1, 2009.  The impact of the adoption of SFAS 141R will depend on the nature and extent of business combinations occurring on or after the effective date.

     In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (SFAS 160). 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 (3) and 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

11

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 Position No. 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 Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities— an amendment of FASB Statement No. 133 (SFAS 161). 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 of FAS 132R-1 will result in enhanced disclosures, but will not otherwise have an impact on our financial statements.

14. Segments and Related Information

     On July 1, 2007, we reorganized our operations, which changed the configuration of our segments into the Connector, Transportation and Custom & Electrical segments. A summary of the segments follows:

• 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.

• The Transportation segment 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.

12

     Information by segment is summarized as follows (in thousands):

				Trans-			Custom &		Corporate
	Connector			portation			Electrical		& Other			Total
For the three months ended:
March 31, 2009:
Revenues from external customers	$	289,329		$	60,505		$	155,178	$	527		$	505,539
Income (loss) from operations		(13,850	)		(37,627	)		586		(39,128	)		(90,019	)
Depreciation & amortization		42,522			8,888			8,111		4,215			63,736
Capital expenditures		17,657			6,739			2,985		3,671			31,052
March 31, 2008:
Revenues from external customers	$	457,542		$	127,410		$	234,246	$	3,087		$	822,285
Income (loss) from operations		68,826			3,297			19,867		(11,567	)		80,423
Depreciation & amortization		41,128			9,613			8,454		4,123			63,318
Capital expenditures		32,853			13,419			2,754		11,997			61,023
For the nine months ended:
March 31, 2009:
Revenues from external customers	$	1,141,807		$	240,743		$	626,706	$	1,996		$	2,011,252
Income (loss) from operations		74,758			(187,120	)		36,749		(54,525	)		(130,138	)
Depreciation & amortization		124,550			27,307			25,260		12,968			190,085
Capital expenditures		72,381			26,693			15,613		13,001			127,688
March 31, 2008:
Revenues from external customers	$	1,400,085		$	370,389		$	678,411	$	7,570		$	2,456,455
Income (loss) from operations		226,418			7,824			54,001		(54,776	)		233,467
Depreciation & amortization		118,236			29,004			26,119		11,316			184,675
Capital expenditures		91,977			30,033			11,717		29,713			163,440

     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. The loss from operations for the Transportation segment for the nine months ended March 31, 2009 includes a $93.1 million goodwill impairment charge during the second quarter.

     Segment assets, which are comprised of accounts receivable, inventory and fixed assets, are summarized as follows (in thousands):

			Trans-		Custom &		Corporate
	Connector		portation		Electrical		& Other		Total
March 31, 2009	$	1,013,287	$	310,887	$	393,788	$	168,900	$	1,886,862
June 30, 2008		1,293,342		413,233		500,197		164,745		2,371,517

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

	Mar. 31,		June 30,
	2009		2008
Segment net assets	$	1,886,862	$	2,371,517
Other current assets		616,727		583,838
Non current assets		569,552		644,182
Consolidated total assets	$	3,073,141	$	3,599,537

13

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 for the fiscal year ended June 30, 2008. 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 electromechanical 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 45 manufacturing locations in 18 countries. We also provide manufacturing services to integrate specific components into a customer’s product.

     Our three operating segments consist of the Connector, Transportation and Custom & Electrical segments. A summary of the segments follows:

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

• The Transportation segment 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 manufactures and sells 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.

     Our sales are dependent on end markets impacted by consumer, industrial and infrastructure spending, and our operating results can be adversely affected by reduced demand in those markets. Worldwide economic conditions and the current instability in the global economy led to a significant drop in demand for our connectors during the three and nine months ended March 31, 2009 compared to the prior year periods. The drop in revenue was significant as our customers attempted to manage their inventory. As a result, we experienced lower net revenue and reduced gross margins and an operating loss during the three and nine months ended March 31, 2009 compared to the prior year periods.

     As a result of the deteriorating economic conditions, in the second quarter of fiscal 2009 we increased the scope of our restructuring program that we began in fiscal 2007 to reduce costs and to improve 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 facilities. Net restructuring cost during the quarter ended March 31, 2009 was $44.3 million, consisting of $15.4 million of asset impairments and $28.9 million for employee termination benefits. These costs included $13.0 million relating to planned plant closings in Japan and Korea. Restructuring costs during the nine months ended March 31, 2009 included $22.5 million for asset impairments and $83.4 million for employee termination benefits. The cumulative expense since we announced the restructuring plan totals $174.0 million.

14

     We expect to incur total restructuring and asset impairment costs related to these actions ranging from $240 — $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 additions to the restructuring actions, which include 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 reductions throughout the company, and we expect to achieve these reductions 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 - $210 million. See Note 2 of the “Notes to the Condensed Consolidated Financial Statements” for further discussion.

     We recorded a $93.1 million goodwill impairment charge during the second quarter of fiscal 2009 to write-off goodwill based on lower projected future revenue growth in our Transportation segment. During the second quarter, we determined that there were indicators of impairment in our Transportation segment resulting from the sudden economic downturn and potential liquidity risk in the automotive industry. The economic downturn had a negative impact on the segment’s operating results and the potential liquidity risk extended our estimate for the industry’s economic recovery.

     During the second and third quarters of fiscal 2009, we executed actions to reduce headcount and lower the cost of employee benefits. These actions included a reduction in headcount, salary reductions, changes in retirement medical benefits, a reduction in planned contributions to the profit sharing trust and a reduction in the planned incentive bonus payout. In addition, manufacturing employees worked reduced hours in the plants most impacted by the economic slowdown. The one-time cost reductions relating to employee benefits decreased cost of sales and selling, general and administrative expense by $14.2 million during the second quarter. Due to the strengthening of the U.S. dollar in the second quarter, we recognized foreign currency exchange gains of $12.9 million for the nine months ended March 31, 2009.

     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, availability of credit and general market liquidity, 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 volatile raw material costs, develop, manufacture and successfully market new and enhanced products and product lines, control operating costs through successful execution of our restructuring plans, and attract, motivate and retain key personnel to manage our operational, financial and management information systems.

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.

     The information concerning our critical accounting policies can be found under Management’s Discussion of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008 filed with the Securities and Exchange Commission, which is incorporated by reference in this Form 10-Q.

15

Results of Operations

     The following table sets forth consolidated statements of income data as a percentage of net revenue for the three months ended March 31 (in thousands):

				Percentage					Percentage
	2009			of Revenue			2008		of Revenue
Net revenue	$	505,539			100.0	%	$	822,285		100.0	%
Cost of sales		412,143			81.5	%		567,824		69.1	%
Gross profit		93,396			18.5	%		254,461		30.9	%
Selling, general & administrative		139,071			27.5	%		167,639		20.4	%
Restructuring costs and asset impairments		44,344			8.8	%		6,399		0.7	%
Income (loss) from operations		(90,019	)		(17.8	)%		80,423		9.8	%
Other income, net		3,510			0.7	%		6,506		0.8	%
Income (loss) before income taxes		(86,509	)		(17.1	)%		86,929		10.6	%
Income taxes		(27,909	)		(5.5	)%		36,623		4.5	%
Net (loss) income	$	(58,600	)		(11.6	)%	$	50,306		6.1	%

     The following table sets forth consolidated statements of income data as a percentage of net revenue for the nine months ended March 31 (in thousands):

				Percentage					Percentage
	2009			of Revenue			2008		of Revenue
Net revenue	$	2,011,252			100.0	%	$	2,456,455		100.0	%
Cost of sales		1,492,312			74.2	%		1,712,729		69.7	%
Gross profit		518,940			25.8	%		743,726		30.3	%
Selling, general & administrative		450,034			22.4	%		493,973		20.1	%
Restructuring costs and asset impairments		199,044			9.9	%		16,286		0.7	%
Income (loss) from operations		(130,138	)		(6.5	)%		233,467		9.5	%
Other income, net		26,539			1.3	%		14,205		0.6	%
Income (loss) before income taxes		(103,599	)		(5.2	)%		247,672		10.1	%
Income taxes		(2,052	)		(0.1	)%		84,846		3.5	%
Net (loss) income	$	(101,547	)		(5.1	)%	$	162,826		6.6	%

Net Revenue

     We sell our products in five primary markets. Revenue has declined significantly across all of the primary markets due to contracting global economic conditions starting in November 2008 and subsequent inventory reductions in the supply chain, which decreased our production levels and demand for components. The estimated decrease in revenue from each market during the third fiscal quarter of 2009 compared with the same quarter last year (Comparable Quarter) and the second quarter of 2009 (Sequential Quarter) follows:

	Comparable			Sequential
	Quarter			Quarter
Consumer		(27.3	)%		(24.7	)%
Telecommunications		(38.5	)		(27.2	)
Automotive		(53.7	)		(23.4	)
Data		(34.4	)		(23.6	)
Industrial		(39.7	)		(20.2	)

16

     Following are highlights of revenue changes by these primary markets:

• Consumer market revenue decreased against both the comparable quarter and the sequential quarter in home entertainment and home appliance products. The declines in both the comparable and sequential quarters were partially offset by our customers’ release of lower end computer products.

• Telecommunications market revenue decreased against both the comparable quarter and the sequential quarter due to lower demand for mobile products and supply chain inventory reductions in fiscal 2009. We had strong revenue growth during the first quarter of fiscal 2009 and the second half of fiscal 2008 in our antenna products for mobile devices, but demand decreased significantly in the second and third quarters of fiscal 2009.

• Automotive market revenue declined against both the comparable quarter and the sequential quarter due to a sharp decrease in demand related to the current economic conditions. During fiscal 2008, the automotive market benefited from new products reflecting higher electronic content in automobiles. The number of automobiles manufactured by our customers continues to decrease as automotive manufacturing companies’ continue to reduce inventories in the automotive supply chain.

• Data market revenue for the third quarter of fiscal 2009 decreased over the comparable and sequential quarters due to a decrease in demand for storage networking products, computers and peripherals.

• Industrial market revenue for fiscal 2009 decreased compared with fiscal 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 as the manufacturing sector contracts. The decreased revenue compared to the comparable quarter was partially offset by increased demand for production equipment.

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Americas		27	%		27	%		27	%		28	%
Asia Pacific		54			52			54			52
Europe		19			21			19			20
Total		100	%		100	%		100	%		100	%

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

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Net revenue for prior year period	$	822,285		$	2,456,455
Components of net revenue change:
Organic net revenue decline		(309,894	)		(491,171	)
Currency translation		(11,977	)		33,148
Acquisitions		5,125			12,820
Total change in net revenue from prior year period		(316,746	)		(445,203	)
Net revenue for current year period	$	505,539		$	2,011,252
Organic net revenue decline as a percentage of net revenue from prior year period		(37.7	)%		(20.0	)%

     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 over the three quarters of fiscal 2009 as consumers are not purchasing as many new automobiles in the current

17

economic environment. Concerns about the global economy have also significantly impacted the market for mobile devices as demand continues to be lower than fiscal 2008.

     During the three months ended March 31, 2009, revenue decreased $12.0 million due to a weaker euro over the prior year period. Revenue increased by approximately $33.1 million for the nine months ended March 31, 2009 due to the strengthening Japanese yen over the prior year period. The following tables show the effect on the change in geographic net revenue from foreign currency translations to the U.S. dollar (in thousands):

	Three Months Ended March 31, 2009									Nine Months Ended March 31, 2009
	Local			Currency			Net			Local			Currency			Net
	Currency			Translation			Change			Currency			Translation			Change
Americas	$	(83,586	)	$	(1,225	)	$	(84,811	)	$	(117,653	)	$	(1,903	)	$	(119,556	)
Asia Pacific		(153,727	)		1,850			(151,877	)		(240,193	)		34,648			(205,545	)
Europe		(66,165	)		(12,602	)		(78,767	)		(125,625	)		403			(125,222	)
Corporate & other		(1,291	)		—			(1,291	)		5,120			—			5,120
Net change	$	(304,769	)	$	(11,977	)	$	(316,746	)	$	(478,351	)	$	33,148		$	(445,203	)

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

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Americas		(37.4	)%		(17.5	)%
Asia Pacific		(36.5	)		(18.7	)
Europe		(37.5	)		(25.3	)
Total		(37.1	)%		(19.5	)%

     The following table sets forth information on revenue by segment as of the three months ended March 31 (in thousands):

			Percentage					Percentage
	2009		of Revenue			2008		of Revenue
Connector	$	289,329		57.2	%	$	457,542		55.6	%
Transportation		60,505		12.0			127,410		15.5
Custom & Electrical		155,178		30.7			234,246		28.5
Corporate & Other		527		0.1			3,087		0.4
Total	$	505,539		100.0	%	$	822,285		100.0	%

     The following table sets forth information on revenue by segment as of the nine months ended March 31 (in thousands):

			Percentage					Percentage
	2009		of Revenue			2008		of Revenue
Connector	$	1,141,807		56.8	%	$	1,400,085		57.0	%
Transportation		240,743		12.0			370,389		15.1
Custom & Electrical		626,706		31.1			678,411		27.6
Corporate & Other		1,996		0.1			7,570		0.3
Total	$	2,011,252		100.0	%	$	2,456,455		100.0	%

18

Gross Profit

     The following table provides a summary of gross profit and gross margin for the three and nine months ended March 31 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Gross profit	$	93,396		$	254,461		$	518,940		$	743,726
Gross margin		18.5	%		30.9	%		25.8	%		30.3	%

     The reduction in gross margin was primarily due to lower absorption from the sharp drop in our production caused by the poor global economic conditions during the second and third quarters of fiscal 2009. 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. During the second and third quarters of fiscal 2009, we reduced employee salaries and benefits, reduced the size of our labor force and implemented other cost reduction initiatives.

     A significant portion of our material cost is comprised of copper and gold costs. We purchased approximately 12 million pounds of copper and approximately 64,000 troy ounces of gold during the nine months ended March 31, 2009. The following table shows the average prices related to our purchases of copper and gold for the three months and nine months ended March 31 (in thousands):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2009		2008		2009		2008
Copper (price per pound)	$	1.56	$	3.19	$	2.96	$	3.38
Gold (price per troy ounce)		908.00		925.00		854.30		797.07

     Generally, we are able to pass through to our customers only a small portion of changes in cost of copper and gold. However, we mitigate the impact of any significant increases in gold and copper prices by hedging with call options a portion of our projected net global purchases of gold and copper. The hedges did not materially affect operating results for the three and nine months ended March 31, 2009 and 2008.

     The effect of certain significant impacts on gross profit compared with the prior year periods was as follows for the three and nine months ended March 31 (in thousands):

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Price erosion	$	(20,284	)	$	(73,976	)
Currency translation		(4,159	)		10,924
Currency transaction		(7,222	)		(12,057	)

     Price erosion reduces our gross profit, particularly in our Connector segment, where we have the largest impacts of price erosion. 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 was primarily due to a stronger Japanese yen, partially offset by a weaker euro against the U.S. dollar during the three months ended March 31, 2009 and a stronger Japanese yen against the U.S. dollar during the three months ended March 31, 2009.

19

Operating Expenses

     Operating expenses were as follows as of March 31 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Selling, general and administrative	$	139,071		$	167,639		$	450,034		$	493,973
Selling, general and administrative as a percentage of revenue		27.5	%		20.4	%		22.4	%		20.1	%
Restructuring costs and asset impairments	$	44,344		$	6,399		$	105,904		$	16,286
Goodwill impairment	$	—		$	—		$	93,140		$	—

     Selling, general and administrative expenses increased as a percent of net revenue over the prior year periods primarily due to the significant drop in revenue during the second and third quarters. Year to date selling, general and administrative expenses included a $9.1 million decrease in expense related to reductions in employee benefits during the second quarter. The impact of currency translation decreased selling, general and administrative expenses by approximately $1.7 million for the three months ended March 31, 2009 and increased selling, general and administrative expenses by $9.9 million for the nine months ended March 31, 2009. We also reduced selling, general and administrative expenses through a lower cost structure resulting from our restructuring initiative and specific cost containment activities.

     Research and development expenditures, which are classified as selling, general and administrative expense, were approximately 5.9% and 5.1% of net revenue for the nine months ended March 31, 2009 and 2008, respectively. Improvements in new design activity increased research and development expenditures in the three months ended March 31, 2009, and consistent with the company’s goal of remaining a technology leader, we expect to increase research and development expenditures in future quarters.

     Net restructuring cost during the quarter ended March 31, 2009 was $44.3 million, consisting of $15.4 million of asset impairments and $28.9 million for employee termination benefits. These costs included $13.0 million relating to planned plant closings in Japan and Korea. Restructuring costs during the nine months ended March 31, 2009 included $22.5 million for asset impairments and $83.4 million for employee termination benefits. The cumulative expense since we announced the restructuring plan totals $174.0 million.

     We recorded a $93.1 million goodwill impairment charge during the second quarter of fiscal 2009 to write-off goodwill based on lower projected future revenue growth in our Transportation segment. During the second quarter, we determined that there were indicators of impairment in our Transportation segment resulting from the sudden economic downturn and potential liquidity risk in the automotive industry. The economic downturn had a negative impact on the segment’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 segment, which resulted in the goodwill impairment charge. Additional goodwill impairment charges could occur in the future depending upon the severity and length of the economic downturn.

Other Income

     Other income for the three and nine months ended March 31, 2009 was $3.5 million and $26.5 million, respectively, compared with $6.5 million and $14.2 million for the same prior year periods. The increase in the nine months ended March 31, 2009 primarily related to foreign currency exchange gains during the second quarter of fiscal 2009 resulting from strengthening of the U.S. dollar against most currencies. Foreign currency exchange gains were $12.9 million for the nine months ended March 31, 2009.

20

Effective Tax Rate

     The effective tax rate was 32.3% and 2.0% for the three and nine months ended March 31, 2009, respectively. The lower effective tax rate for the nine months ended March 31, 2009 reflects the goodwill impairment charge recorded during the second quarter that does not result in a tax benefit. The effective tax rate was 42.1% and 34.3% for the three and nine months ended March 31, 2008, respectively. During the three months ended March 31, 2008, we recorded an income tax charge of $10.5 million due primarily to a lowered estimate of available foreign tax credits.

Backlog

     Our order backlog on March 31, 2009 was approximately $251.0 million compared with $460.7 million at March 31, 2008. Orders for the third quarter of fiscal 2009 were $474.5 million compared with $897.9 million for the prior year period, representing the sharp decline in demand due to the global economic conditions and subsequent supply chain inventory reductions compared with the prior year period.

Segments

Connector

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

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Net revenue for prior year period	$	457,542		$	1,400,085
Components of net revenue change:
Organic net revenue decline		(171,755	)		(294,698	)
Currency translation		(41	)		32,837
Acquisitions		3,583			3,583
Total change in net revenue from prior year period		(168,213	)		(258,278	)
Net revenue for current year period	$	289,329		$	1,141,807
Organic net revenue decline as a percentage of net revenue for prior year period		(37.5	)%		(21.0	)%

     The Connector segment sells primarily to the telecommunication, data products and consumer markets, which are discussed above. Segment revenue decreased in the first three quarters of fiscal 2009 with currency translation partially offsetting an organic revenue decline. Organic revenue declined in the three and nine months ended March 31, 2009, compared with the prior year period primarily due to lower revenue in the mobile sector of the telecommunications market. The mobile sector was growing during the first two quarters of fiscal 2008. Additionally, price erosion is generally higher in the Connector segment compared with our other segments, particularly in the mobile business.

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Income from operations	$	(13,850	)	$	68,826		$	74,758		$	226,418
Operating margin		(4.8	)%		15.0	%		6.5	%		16.2	%

     Connector segment income from operations decreased compared with the prior year periods due to the drop in demand resulting from the uncertainty in the global economies and price erosion. Lower selling, general and

21

administrative expenses compared to prior year periods partially offset the drop in revenue. Income from operations was also unfavorably impacted by fiscal 2009 restructuring charges of $45.4 million.

Transportation

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

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Net revenue for prior year period	$	127,410		$	370,389
Components of net revenue change:
Organic net revenue decline		(63,274	)		(131,216	)
Currency translation		(3,631	)		1,570
Total change in net revenue from prior year period		(66,905	)		(129,646	)
Net revenue for current year period	$	60,505		$	240,743
Organic net revenue decline as a percentage of net revenue for prior year period		(49.6	)%		(35.4	)%

     Transportation segment revenue decreased in fiscal 2009 due to a decrease in the automotive market revenue discussed above.

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Income from operations	$	(37,627	)	$	3,297		$	(187,120	)	$	7,824
Operating margin		(62.2	)%		2.6	%		(77.7	)%		2.1	%

     Segment operating income decreased in the three and nine months ended March 31, 2009, compared with the same periods last year due to the decrease in revenue and a goodwill impairment charge. Fiscal 2009 income from operations was unfavorably impacted by restructuring charges of $51.3 million and a goodwill impairment charge of $93.1 million due to lower projected future segment revenue and profit. The sharp revenue decline was partially offset by reduced selling, general and administrative expenses against the prior year periods.

22

Custom & Electrical

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

	Three Months			Nine Months
	Ended			Ended
	Mar. 31, 2009			Mar. 31, 2009
Net revenue for prior year period	$	234,246		$	678,411
Components of net revenue change:
Organic net revenue decline		(72,326	)		(59,630	)
Currency translation		(8,284	)		(1,312	)
Acquisitions		1,542			9,237
Total change in net revenue from prior year period		(79,068	)		(51,705	)
Net revenue for current year period	$	155,178		$	626,706
Organic net revenue decline as a percentage of net revenue for prior year period		(30.9	)%		(8.8	)%

     Custom and Electrical segment revenue declined in the three and nine months ended March 31, 2009 due to the decline in the industrial market discussed above. We also acquired a flexible circuit manufacturing business during first quarter of fiscal 2009 and a fiber optics manufacturing business during the first quarter of 2008.

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Income from operations	$	586		$	19,867		$	36,749		$	54,001
Operating margin		0.4	%		8.5	%		5.9	%		8.0	%

     Segment operating income decreased over the first three quarters of fiscal 2009 compared with the prior year period primarily due to slowing global demand. Selling, general and administrative expenses increased in fiscal 2009 against the comparable periods in fiscal 2008. Income from operations was also unfavorably impacted by fiscal 2009 restructuring charges of $33.1 million.

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.

     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.

Financial Condition and Liquidity

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

23

principally out of operating cash flows and cash reserves. Cash, cash equivalents and marketable securities totaled $505.9 million and $509.8 million at March 31, 2009 and June 30, 2008, respectively, of which $485.5 million was in non-U.S. accounts as of March 31, 2009. Transferring cash, cash equivalents or marketable securities to U.S. accounts from non-U.S. accounts could subject us to additional U.S. repatriation income tax. 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 strong balance sheet to secure a committed line of credit. We believe that our liquidity and financial flexibility are adequate to support both current and future growth.

     Our outstanding debt and short-term borrowings at March 31, 2009 totaled $286.1 million. The current portion of our long-term debt as of March 31, 2009 consists principally of three unsecured borrowing agreements approximating 20 billion Japanese yen ($204.2 million), with weighted-average fixed interest rates approximating 1.3%. Interest on the loans is payable semi-annually with the principal due in September 2009. As of March 31, 2009, we had short-term borrowings in the U.S. of $75.7 million, including borrowings on uncommitted lines of credit totaling $60 million. We expect to refinance the debt in Japan by September 2009, although no assurances can be made regarding the cost and availability of future financing.

Cash Flows

     Our cash balance decreased $18.0 million during the nine months ended March 31, 2009. Operating cash flow was $311.6 million, of which we used $127.7 million to fund capital expenditures. Our primary sources of cash were operating cash flows and $57.0 million in net borrowings. We used capital during the period to acquire businesses totaling $73.4 million, fund capital expenditures, repurchase stock of $76.3 million and pay dividends of $73.2 million. The translation of our cash to U.S. dollars reduced our cash balance by $23.0 million as compared with the balance as of June 30, 2008.

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

	Nine Months Ended
	March 31,
	2009			2008
Cash provided from operating activities	$	311,585		$	352,857
Cash used for investing activities		(214,624	)		(159,687	)
Cash used for financing activities		(91,901	)		(149,827	)
Effect of exchange rate changes on cash		(23,019	)		32,150
Net (decrease) increase in cash	$	(17,959	)	$	75,493

Operating Activities

     Cash provided from operating activities declined by $41.3 million from the prior year period due mainly to lower revenue and income, partially offset by a related decline in working capital needs in the current year period compared with the prior year. The sequential nine-month growth in net revenue was higher in the prior year period, requiring a greater use of funds to build working capital. Working capital is defined as current assets minus current liabilities. We anticipate the need for more working capital to finance expected increases in production and revenue during the fourth quarter, which may result in a reduction of cash flows from operations for that quarter.

Investing Activities

     Capital expenditures were $127.7 million for the nine months ended March 31, 2009 compared with $163.4 million in the prior year period, reflecting our efforts to increase asset efficiency by lowering the incremental investment required to drive future growth. Capital expenditures for the nine months ended March 31, 2009 were primarily related to capital improvements in the U.S. and certain Asian entities. We invested $73.4 million in acquisitions during the first nine months of fiscal 2009 compared with $42.5 million in the prior year period. In fiscal 2009, we had net purchases of $21.7 million in marketable securities, which decreased cash flow and a net decrease of $44.6 million in marketable securities in fiscal 2008, which increased cash flow.

24

Financing Activities

     We used less cash from financing activities during the nine months ended March 31, 2009, as compared with the prior year period because we repurchased less treasury stock.

     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 did not repurchase any shares under this plan during the three months ended March 31, 2009 and we temporarily suspended the purchase of additional treasury shares as long as the economy remains weak. Approximately $123.7 million was remaining under the authorization as of March 31, 2009. We purchased 4,507,000 shares of Common Stock and Class A Common Stock during the nine months ended March 31, 2009, at an aggregate cost of $76.3 million and 6,750,000 shares of Common Stock and Class A Common Stock during the nine months ended March 31, 2008, at an aggregate cost of $166.2 million.

     As part of our growth strategy, 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.

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 filed with the Securities and Exchange Commission (the Commission) for the year ended June 30, 2008. 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, 2008 arising outside of the ordinary course of business.

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. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, web casts, phone calls, and conference calls. 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 for the year ended June 30, 2008 (Form 10-K) and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (Form 10-Q). You should carefully consider the risks described in our Form 10-K and Form 10-Q. 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.

25

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, 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 establishment of contra-currency accounts in several international subsidiaries, and the 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 March 31, 2009 or June 30, 2008.

     We have implemented a formalized treasury risk management policy that describes 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, net receivable and payable balances and call options on certain commodities. No material derivative instruments were in use at March 31, 2009 or June 30, 2008.

     The translation of the financial statements of the non-North American operations is impacted by fluctuations in foreign currency exchange rates. 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 $33.1 million and increased income from operations of $1.8 million for the nine months ended March 31, 2009, compared with the estimated results for the comparable period in the prior year.

     Our $48.4 million of marketable securities at March 31, 2009 are principally invested in time deposits.

     Interest rate exposure is generally limited to our marketable securities and 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 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 accumulated and timely communicated to the Chief Executive Officer, Chief Financial Officer and other members of our management.

     Based upon their evaluation as of March 31, 2009, 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

26

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.

Internal Control Over Financial Reporting

     During the three months ended March 31, 2009, 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.

PART II

Item 1. Legal Proceedings

     None

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 or Part II, Item 1A of our Form 10-Q for the quarterly period ended September 30, 2008.

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

     On August 1, 2008, our Board of Directors authorized the purchase of up to $200.0 million of Common Stock and/or Class A Common Stock during the period ending June 30, 2009. Share purchases of Molex Common and/or Class A Common Stock for the quarter ended March 31, 2009 were as follows (in thousands, except price per share data):

					Total Number
					of Shares
	Total Number				Purchased as
	of Shares		Average Price		Part of Publicly
	Purchased*		Paid per Share		Announced Plan
January 1 — January 31
Common Stock		3	$	12.25		—
Class A Common Stock		—	$	—		—
February 1 — February 28
Common Stock		62	$	11.81		—
Class A Common Stock		—	$	—		—
March 1 — March 31
Common Stock		—	$	—		—
Class A Common Stock		—	$	—		—
Total		65	$	11.83		—

* The shares purchased include exercises of employee stock options.

     As of March 31, 2009, the dollar value of shares that may yet be purchased under the plan was $123.7 million.

Item 3. Defaults Upon Senior Securities

     None

27

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

     None

Item 5. Other Information

     None

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

28

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: April 30, 2009	/S/ DAVID D. JOHNSONDavid D. Johnson
	Executive Vice President, Treasurer and Chief Financial Officer
	(Principal Financial Officer)

29