• 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.

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 and Europe and in general, the movement of manufacturing activities at these plants to other facilities. Net restructuring cost during the quarter ended September 30, 2008 was $21.8 million, consisting of $2.7 million of asset impairments and $19.1 million of severance. These costs included $12.1 million relating to a planned plant closing in France. Net restructuring cost during the quarter ended December 31, 2008 was $39.8 million, consisting of $4.4 million in asset impairments and $35.4 million of severance. These costs include $7.8 million relating to a planned plant closing in Japan and $8.8 million relating to a planned plant closing in Germany. The cumulative expense since we announced the restructuring plan totals $129.7 million.
We expect to incur total restructuring and asset impairment costs related to these actions ranging from $200 - $220 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. 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. 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 quarter of fiscal 2009, we executed actions to reduce headcount and lower the cost of employee benefits. These actions included a reduction in headcount, 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 quarter. Due to the strengthening of the U.S. dollar in the second quarter, we recognized foreign currency exchange gains of $14.3 million.
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, 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.

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

                                                                  Percentage                            Percentage
                                                  2008            of Revenue            2007            of Revenue
Net revenue                                    $  666,728               100.0 %       $ 841,560               100.0 %
Cost of sales                                     490,656                73.6 %         588,445                69.9 %


Gross profit                                      176,072                26.4 %         253,115                30.1 %

Selling, general & administrative                 144,612                21.7 %         165,699                19.7 %
Restructuring costs and asset impairments         132,922                19.9 %           7,258                 0.9 %


Income (loss) from operations                    (101,462 )             (15.2 )%         80,158                 9.5 %

Other income, net                                  19,229                 2.9 %           4,437                 0.5 %


Income (loss) before income taxes                 (82,233 )             (12.3 )%         84,595                10.0 %
Income taxes                                        5,011                 0.8 %          25,379                 3.0 %


Net (loss) income                              $  (87,244 )             (13.1 )%      $  59,216                 7.0 %

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

                                                                   Percentage                              Percentage
                                                  2008             of Revenue             2007             of Revenue
Net revenue                                    $ 1,505,713               100.0 %       $ 1,634,170               100.0 %
Cost of sales                                    1,080,169                71.7 %         1,144,905                70.1 %


Gross profit                                       425,544                28.3 %           489,265                29.9 %

Selling, general & administrative                  310,963                20.7 %           326,334                20.0 %
Restructuring costs and asset impairments          154,700                10.3 %             9,887                 0.6 %


Income (loss) from operations                      (40,119 )              (2.7 )%          153,044                 9.3 %

Other income, net                                   23,029                 1.6 %             7,699                 0.5 %


Income (loss) before income taxes                  (17,090 )              (1.1 )%          160,743                 9.8 %
Income taxes                                        25,857                 1.7 %            48,223                 2.9 %


Net (loss) income                              $   (42,947 )              (2.8 )%      $   112,520                 6.9 %

Net Revenue
   We sell our products in five primary markets. Revenue has declined
significantly across all of the primary markets due to our customers' concerns
regarding global economies starting in November 2008. The estimated decrease in
revenue from each market during the second fiscal quarter of 2009 compared with
the same quarter last year (Comparable Quarter) and the first quarter of 2009
(Sequential Quarter) follows:

                                         Comparable      Sequential
                                           Quarter         Quarter
                   Consumer                  (11.3 )%        (10.9 )%
                   Telecommunications        (15.8 )         (25.7 )
                   Automotive                (37.8 )         (27.4 )
                   Data                      (19.2 )         (17.9 )
                   Industrial                (25.5 )         (19.8 )

Following are highlights of revenue changes by these primary markets:
• Consumer market revenue decreased against both the comparable quarter and the sequential quarter due to our customers' concerns regarding global economies and lower than expected pre-holiday production volumes, particularly in home entertainment and home appliance products. The decline was partially offset by increased revenue for gaming devices.

• Telecommunications market revenue decreased against both the comparable quarter and the sequential quarter due to lower demand for mobile products in the first half of 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 November and December 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 concerns over the current economic conditions. During fiscal 2008, the automotive market benefited from new products reflecting higher electronic content in automobiles. We believe the number of automobiles manufactured by our customers continues to decrease and automotive manufacturing companies' inventories are at elevated levels.

• Data market revenue for the second quarter of fiscal 2009 decreased over the comparable and sequential quarters due to a decrease in demand for 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 slows. The decreased revenue compared to the sequential quarter was partially offset by increased demand for industrial instruments.

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

                                 Three Months Ended          Six Months Ended
                                    December 31,               December 31,
                                 2008           2007         2008         2007
               Americas             29 %           26 %         28 %        27 %
               Asia Pacific         54             54           54          53
               Europe               17             20           18          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            Six Months
                                                                      Ended                   Ended
                                                                  Dec. 31, 2008           Dec. 31, 2008
Net revenue for prior year period                                 $      841,560         $     1,634,170
Components of net revenue change:
Organic net revenue decline                                             (178,234 )              (181,277 )
Currency translation                                                       1,148                  45,125
Acquisitions                                                               2,254                   7,695

Total change in net revenue from prior year period                      (174,832 )              (128,457 )

Net revenue for current year period                               $      666,728         $     1,505,713


Organic net revenue decline as a percentage of net revenue
from prior year period                                                     (21.2 )%                (11.1 )%

The decline in organic revenue due to extremely poor economic conditions has impacted all market areas. Of our five primary markets, the automotive market has experienced the sharpest decline in demand over the two quarters of fiscal 2009 as consumers are not purchasing as many new automobiles in the current

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.
The general weakening of the U.S. dollar increased revenue by approximately $45.1 million for the six months ended December 31, 2008 over the prior year period. During the three months ended December 31, 2008, the U.S. dollar strengthened to levels comparable to the prior year period, but gains were offset by losses from the strengthening Japanese yen. 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 December 31, 2008                         Six Months Ended December 31, 2008
                                   Local               Currency             Net                Local               Currency              Net
                                 Currency            Translation           Change            Currency             Translation           Change
Americas                       $     (24,902 )       $       (892 )      $  (25,794 )      $     (34,067 )       $        (678 )      $  (34,745 )
Asia Pacific                        (103,991 )              8,037           (95,954 )            (86,466 )              32,798           (53,668 )
Europe                               (43,976 )             (5,997 )         (49,973 )            (59,460 )              13,005           (46,455 )
Corporate & other                     (3,111 )                  -            (3,111 )              6,411                     -             6,411


Net change                     $    (175,980 )       $      1,148        $ (174,832 )      $    (173,582 )       $      45,125        $ (128,457 )

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

                                   Three Months        Six Months
                                       Ended             Ended
                                   Dec. 31, 2008     Dec. 31, 2008
                   Americas              (11.5 )%            (7.6 )%
                   Asia Pacific          (23.0 )            (10.0 )
                   Europe                (26.7 )            (18.6 )

                   Total                 (20.9 )%           (10.6 )%

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

                                            Percentage                     Percentage
                               2008         of Revenue        2007         of Revenue
       Connector             $ 377,610             56.6 %   $ 490,289             58.3 %
       Transportation           73,996             11.1       122,926             14.6
       Custom & Electrical     214,194             32.1       225,962             26.9
       Corporate & Other           928              0.2         2,383              0.2


       Total                 $ 666,728            100.0 %   $ 841,560            100.0 %

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

                                            Percentage                       Percentage
                              2008          of Revenue         2007          of Revenue
     Connector             $   852,478             56.6 %   $   942,543             57.7 %
     Transportation            180,238             12.0         242,979             14.9
     Custom & Electrical       471,528             31.3         444,165             27.2
     Corporate & Other           1,469              0.1           4,483              0.2


     Total                 $ 1,505,713            100.0 %   $ 1,634,170            100.0 %

Gross Profit
   The following table provides a summary of gross profit and gross margin for
the three and six months ended December 31 (in thousands):

                                Three Months Ended           Six Months Ended
                                   December 31,                December 31,
                                2008          2007          2008          2007
              Gross profit   $ 176,072     $ 253,115     $ 425,544     $ 489,265
              Gross margin        26.4 %        30.1 %        28.3 %        29.9 %

The reduction in gross margin was primarily due to price erosion and lower absorption due to the drop in our production during the second quarter of fiscal 2009. These reductions were partially offset by reductions in employee benefits of $5.0 million during the second quarter of fiscal 2009 and general cost reductions, a portion of which is related to restructuring activities.
A significant portion of our material cost is comprised of copper and gold costs. We purchased approximately 10 million pounds of copper and approximately 49,000 troy ounces of gold during the first two quarters of fiscal 2009. The following table shows the change in average prices related to our purchases of copper and gold for the three months and six months ended December 31 (in thousands):

                                         Three Months Ended         Six Months Ended
                                            December 31,              December 31,
                                         2008          2007         2008         2007
        Copper (price per pound)       $   2.66     $   3.46     $   3.20     $   3.48
        Gold (price per troy ounce)      795.00       786.00       834.00       733.00

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 six months ended December 31, 2008 and 2007.
The effect of certain significant impacts on gross profit compared with the prior year periods was as follows for the three and six months ended December 31 (in thousands):

                                       Three Months        Six Months
                                           Ended             Ended
                                       Dec. 31, 2008     Dec. 31, 2008
               Price erosion           $    (22,342 )     $    (54,599 )
               Currency translation           1,380             15,083
               Currency transaction          (3,084 )          (12,294 )

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 general weakening of the U.S. dollar against other currencies during the six months ended December 31, 2008 and a strengthening U.S. dollar offset by a stronger Japanese yen during the three months ended December 31, 2008.

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

                                                      Three Months Ended                     Six Months Ended
                                                         December 31,                          December 31,
                                                   2008               2007               2008               2007
Selling, general and administrative             $ 144,612          $ 165,699          $ 310,963          $ 326,334
Selling, general and administrative as a
percentage of revenue                                21.7 %             19.7 %             20.7 %             20.0 %
Restructuring costs and asset impairments       $  39,782          $   7,258          $  61,560          $   9,887
Goodwill impairment                                93,140                  -             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 quarter. Selling, general and administrative expenses included a $9.1 million reduction in expense related to reductions in employee benefits. The impact of currency translation increased selling, general and administrative expenses by approximately $0.9 million and $11.6 million for the three and six months ended December 31, 2008, respectively. A lower cost structure resulting from our restructuring initiative and specific cost containment activities further reduced selling, general and administrative expenses.
Research and development expenditures, which are classified as selling, general and administrative expense, were approximately 5.6% and 5.1% of net revenue for the six months ended December 31, 2008 and 2007, respectively.
Restructuring costs during the six months ended December 31, 2008 included $54.5 million for employee termination benefits and $7.1 million for asset impairments. Restructuring cost during the quarter ended September 30, 2008 was $21.8 million, consisting of $2.7 million of asset impairments and $19.1 million of severance. These costs included $12.1 million relating to a planned plant closing in France. Net restructuring cost during the quarter ended December 31, 2008 was $39.8 million, consisting of $4.4 million in asset impairments and $35.4 million of severance. These costs include $7.8 million relating to a planned plant closing in Japan and $8.8 million relating to a planned plant closing in Germany. The cumulative expense since we announced the restructuring plan totals $129.7 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.
Other Income
Other income for the three and six months ended December 31, 2008 was $18.4 million and $21.0 million, respectively, compared with $2.1 million and . . .