• 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.

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.

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 )

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

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 %

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.

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 . . .