Introduction

This discussion and analysis of our financial condition and results of operations as well as other sections of this report contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in "Risk Factors" section of this report on pages 33 through 41.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires us to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the period ended December 26, 2008 describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Actual results could differ from these estimates.

The following critical accounting policies are impacted significantly by judgments, assumptions and estimates and were used in the preparation of the Consolidated Financial Statements:

• Inventory valuation;

• Purchase accounting;

• Goodwill and identifiable intangibles;

• Income taxes;

• Defined benefit plans;

• Contingency accruals; and

• Severance, impairment and other associates costs.

Please see information concerning our critical accounting policies in Item
7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the period ended December 26, 2008.

Overview

We are a global producer of precision-engineered electronic components and electrical contact products and materials. We believe we are a leading global producer of these products and materials in the primary markets we serve based on our estimates of the annual revenues of our primary markets and our share of those markets relative to our competitors. We currently operate our business in two segments:

• our Electronic Components Group, which we refer to as Electronics and is known as Pulse in its markets, and

• our Electrical Contact Products Group, which we refer to as Electrical and is known as AMI Doduco in its markets.

General. We define net sales as gross sales less returns and allowances. We sometimes refer to net sales as revenue.

Historically, the gross margin at Electronics has been significantly higher than at Electrical. As a result, the mix of net sales generated by Electronics and Electrical during a period affects our consolidated gross margin. Our gross margin is also affected by acquisitions, product mix within each segment and capacity utilization. Electrical's gross margin is also affected by prices of precious and non-precious metals, which are passed through to customers at varying margins. Electronics' markets are characterized by

We believe our focus on acquisitions, technology and cost reduction programs provide us opportunities for future growth in net sales and operating profit. However, unfavorable economic and market conditions may result in a reduction in demand for our products, thus negatively impacting our financial performance.

Acquisitions. Acquisitions have been an important part of our growth strategy. In many cases, our moves into new product lines and extensions of our existing product lines or markets have been facilitated by acquisitions. Our acquisitions continually change the mix of our net sales. We have made numerous acquisitions in recent years which have broadened our product offerings in new or existing markets. For example, Sonion was acquired in February 2008. Sonion was headquartered in Roskilde, Denmark and produces microacoustic transducers and electromechanical components used in hearing instruments and medical devices and speakers and receivers used in mobile communication devices. We may pursue additional acquisition opportunities in the future.

Divestitures. In February 2009, we announced our intentions to explore monetization alternatives with respect to our Electrical segment. A disposition, if consummated, may be in whole or in part. This process is in an early exploratory phase as there is no requirement or immediate need to commence or complete any transaction or series of transactions. While this process is pending, Electrical will operate normally in all aspects. In April 2009, we divested Electronics' non-core MEMS business which was purchased ancillary to the Sonion acquisition. We have reflected the results of the MEMS business as a discontinued operation in our Consolidated Financial Statements for all periods presented.

Technology. Our products must evolve along with changes in technology, changes in availability and price of raw materials, changes in design and changes in preferences of the end users of our products. Regulatory requirements also impact the design and functionality of our products. We address these conditions, as well as our customers' demands, by continuing to invest in product development and by maintaining a diverse product portfolio which contains both mature and emerging technologies.

Management Focus. Our executives focus on a number of important factors in evaluating our financial condition and operating performance. For example, we use revenue growth, gross profit as a percentage of revenue, operating profit as a percentage of revenue and economic profit as performance measures. We define economic profit as after-tax operating profit less our cost of capital. Operating leverage, or incremental operating profit as a percentage of incremental sales, is also reviewed, as this reflects the benefit of absorbing fixed overhead and operating expenses. In evaluating working capital management, liquidity and cash flow, our executives also use performance measures such as days sales outstanding, days payables outstanding, inventory turnover, cash conversion efficiency and free cash flow. Additionally, as the continued success of our business is largely dependent on meeting and exceeding customers' expectations, non-financial performance measures relating to product development, on-time delivery and quality assist our management in monitoring customer satisfaction on an on-going basis.

Cost Reduction Programs. As a result of our focus on both economic and operating profit, we continue to aggressively size both segments so that costs are optimally matched to current and anticipated future revenues and unit demand. The amounts of future expenses associated with these actions will depend

During the three months ended March 27, 2009, we determined that approximately $68.9 million of goodwill was impaired. Additionally, we incurred a charge of $8.5 million for a number of cost reduction actions. These accruals include severance and related payments of $2.6 million at Electronics and $0.3 million at Electrical. The majority of these accruals will be paid by December 25, 2009. Also, included in the $8.5 million are fixed asset impairments of $5.6 million at Electronics.

During the year ended December 26, 2008, we determined that $310.4 million of goodwill and other intangibles were impaired. Additionally, we incurred a charge of $15.0 million for a number of cost reduction actions. These accruals include severance and related payments and other associated costs of $5.5 million resulting from the termination of manufacturing and support personnel at Electronics' operations primarily in Asia, Europe and North America, $1.3 million of severance and related payments resulting from the termination of manufacturing and support personnel at Electrical and $4.1 million of other costs primarily resulting from the transfer of manufacturing operations from Europe and North Africa to Asia. Additionally, we recorded fixed asset impairments of $3.6 million and $0.5 million at Electronics and Electrical, respectively.

International Operations. As of March 27, 2009, we had manufacturing operations in seven countries and had significant net sales in U.S. dollar, euro and Chinese renminbi. A majority of our sales in recent years has been outside of the United States. Changing exchange rates often impact our financial results and our period-over-period comparisons. This is particularly true of movements in the exchange rate between the U.S. dollar and the renminbi, the U.S. dollar and the euro, the U.S. dollar and the Danish krone and each of these and other foreign currencies relative to each other, especially the euro and renminbi. Sales and net earnings denominated in currencies other than the U.S. dollar may result in higher or lower dollar sales and net earnings upon translation for our U.S. Consolidated Financial Statements. Electrical's European operations are denominated primarily in euro. Certain divisions of Electronics' wireless, medical technology and power groups' sales are denominated primarily in euro and renminbi. Net earnings may also be affected by the mix of sales and expenses by currency within each division. We may also experience a positive or negative translation adjustment to equity because our investments in non-U.S. dollar-functional subsidiaries may translate to more or less U.S. dollars for our U.S. Consolidated Financial Statements. For example, during the year ended March 27, 2009, we experienced a negative translation adjustment of approximately $39.0 million. Foreign currency gains or losses may also be incurred when non-functional currency denominated transactions are remeasured to an operation's functional currency for financial reporting purposes. If a higher percentage of our transactions are denominated in non-U.S. currencies, increased exposure to currency fluctuations may result.

In order to reduce our exposure to currency fluctuations, we may purchase currency exchange forward contracts and/or currency options. These contracts guarantee a predetermined range of exchange rates at the time the contract is purchased. This allows us to shift the majority of the risk of currency fluctuations from the date of the contract to a third party for a fee. In determining the use of forward exchange contracts and currency options, we consider the amount of sales, purchases and net assets or liabilities denominated in local currencies, the type of currency and the costs associated with the contracts. At March 27, 2009, we had twelve foreign exchange forward contracts outstanding to sell forward approximately $12.0 million U.S. dollars to receive Danish krone, and eight foreign exchange forward

Precious Metals. Our Electrical segment uses silver and other precious metals in manufacturing some of its electrical contacts, contact materials and contact subassemblies. Historically, we have leased or held these materials through consignment-type arrangements with our suppliers. Leasing and consignment costs have typically been lower than the costs to borrow funds to purchase the metals and, more importantly, these arrangements eliminate the effects of fluctuations in the market price of owned precious metal and enable us to minimize our inventories. Electrical's terms of sale generally allow us to charge customers for precious metal content based on the market value of precious metal on the day after shipment to the customer. Our suppliers invoice us based on the market value of the precious metal on the day after shipment to the customer as well. Thus far, we have been successful in managing the costs associated with our precious metals. While limited amounts are purchased for use in production, the majority of our precious metal inventory continues to be leased or held on consignment. If our leasing or consignment costs increase significantly in a short period of time, and we are unable to recover these increased costs through higher sales prices, a negative impact on our results of operations and liquidity may result. Leasing and consignment fee increases are primarily caused by increases in interest rates or volatility in the price of the consigned material. Similarly, if we are unable to maintain the precious metal leasing and consignment facilities, or obtain alternative facilities on a timely basis, we may be required to finance the direct purchase of precious metals or take other actions that could negatively impact our financial condition and results of operations.

Income Taxes. Our effective income tax rate is affected by the proportion of our income earned in high-tax jurisdictions, such as those among many countries in Europe and the U.S. and income earned in low-tax jurisdictions, such as Hong Kong, Vietnam and the PRC. This mix of income can vary significantly from one period to another. Additionally, our effective income tax rate will be impacted from period to period by significant transactions and the deductibility of severance, impairment, financing and other associated costs. We have benefited over the years from favorable tax incentives and other tax policies, however, there is no guarantee as to how long these benefits will continue to exist. Also, changes in operations, tax legislation, estimates, judgments and forecasts may affect our tax rate from period to period.

Except in limited circumstances, we have not provided for U.S. income and foreign withholding taxes on our non-U.S. subsidiaries' undistributed earnings as per Accounting Principles Board ("APB") Opinion No. 23, Accounting for Income Taxes - Special Areas ("APB 23"). Such earnings may include pre-acquisition earnings of foreign entities acquired through stock purchases, and, with the exception of approximately $40.0 million, are intended to be reinvested outside of the U.S. indefinitely.

Business Outlook

The adverse developments in the financial markets and the dramatic contractions in the global economy that began in 2008 have increased our exposure to possible liquidity and credit risks. We are exposed to market risk resulting from changes in prices of commodities, such as precious and non-precious metals, fuel and plastic resins. To the extent we cannot transfer these costs to our customers, fluctuations in commodity prices will impact our gross margin and available cash. We are also exposed to financial risk resulting from changes in interest and foreign currency rates.

Considering the issues mentioned above, as well as other risks inherent in our business, we believe we have ample liquidity to fund our business requirements. This belief is based on our current balances of cash and cash equivalents, our history of positive cash flows from operations, including $7.0 million for the three months ended March 27, 2009, and access to our multi-currency credit facility. We did not experience any limitations in our ability to access funds in the first three months of 2009.

• reductions of selling, general and administrative expenses by approximately $20.0 million per year through a combination of furloughs, short work weeks, tightened overall spending controls and reduction in personnel;

• comprehensively re-sizing our indirect labor force and production overhead in both segments resulting in approximately $8.0 million of savings per year;

• limiting capital expenditures to an annual rate of approximately 50% of fiscal 2008 levels, focusing spending on projects important to high-growth portions of our product offerings; and

• initiating the monetization of certain assets, including the Electrical segment and MEMS.

We began to realize the benefits of these cost reduction activities late in the fourth quarter of 2008 and continuing through the first quarter of 2009. For example, despite the sizable decline in revenues in the three months ended March 27, 2009 as compared to the three months ended March 28, 2008, our consolidated gross margin was approximately 20% in both periods due to reductions in both direct and indirect labor costs as well as a reduction in other components of overhead. Additionally, selling, general and administrative expenses declined approximately 19%, or $7.5 million, for the same period. Although some actions undertaken, such as furloughs and short work weeks, are not sustainable for the long-term, we expect the majority of these savings to continue at least through the end of the second quarter of 2009.

Results of Operations

     Three months ended March 27, 2009 compared to the three months ended March
28, 2008

     The table below presents our results of operations and the change in those
results from period to period in both U.S. dollars and percentage (in
thousands):


                           Three Months Ended                                     Results as %
                         March 27,     March 28,       Change       Change        of Net Sales
                              2009          2008            $            %        2009        2008

Net sales               $  182,207    $  274,004    $ (91,797 )      (33.5 )%    100.0 %     100.0 %
Cost of sales              146,741       217,789       71,048         32.6       (80.5 )     (79.5 )


Gross profit                35,466        56,215      (20,749 )      (36.9 )      19.5        20.5
Selling, general and
administrative
expenses                    32,899        40,373        7,474         18.5       (18.1 )     (14.7 )
Severance,
impairment and other
associated costs            77,315         1,965      (75,350 )    (3834.6 )     (42.4 )      (0.7 )


Operating (loss)
profit                     (74,748 )      13,877      (88,625 )     (638.6 )     (41.0 )       5.1

Interest expense,
net                         (4,985 )      (2,086 )     (2,899 )     (139.0 )      (2.7 )      (0.8 )
Other income, net            8,914         3,977        4,937        124.1         4.9         1.5


(Loss) earnings from
continuing
operations before
income taxes               (70,819 )      15,768      (86,587 )     (549.1 )     (38.8 )       5.8

Income tax (benefit)
expense                       (129 )         521          650        124.8         0.0        (0.2 )


Net (loss) earnings
from continuing
operations              $  (70,690 )  $   15,247    $ (85,937 )     (563.6 )%    (38.8 )%      5.6 %

The following table shows our net sales by segment (in thousands):

                               Three Months Ended
                              March 27,    March 28,      Change    Change
                                   2009         2008           $         %


               Electronics   $  123,583   $  170,016   $ (46,433 )   (27.3 )%
               Electrical        58,624      103,988     (45,364 )   (43.6 )

               Total         $  182,207   $  274,004   $ (91,797 )   (33.5 )%

Cost of Sales. As a result of lower sales, our cost of sales decreased. Our consolidated gross margin for the three months ended March 27, 2009 was 19.5% compared to 20.5% for the three months ended March 28, 2008. The primary factors that caused our consolidated gross margin decrease were a decline in operating leverage as a result of decreased sales of Electronics' wireless, network communications and power products as well as products from Electrical's North American and European operations, which were partially offset by the positive effects of cost-reduction and price increasing activities initiated in 2008 and the inclusion of approximately $1.4 million of Mianyang earthquake insurance proceeds during the three months ended March 27, 2009.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses decreased primarily due to an overall emphasis on cost reducing measures initiated in mid-2008. Expenses were reduced in areas such as research, development and engineering, general and administrative and selling. Intangible amortization expense also declined compared to the 2008 period as a result of the impairment charges incurred in the fourth quarter of 2008. These decreases were partially offset by the inclusion of two additional months of Sonion expenses in 2009.

Research, development and engineering expenses are included in selling, general and administrative expenses. We refer to research, development and engineering expenses as RD&E. For the three months ended March 27, 2009 and March 28, 2008, respectively, RD&E by segment was as follows (in thousands):

                                                   2009       2008

                  Electronics                   $ 8,467   $ 10,581
                  Percentage of segment sales       6.9 %      6.2 %




                                                    2009      2008

                   Electrical                    $ 1,084   $ 1,614
                   Percentage of segment sales       1.8 %     1.6 %

The decrease in research, development and engineering expenses is due to cost reducing measures initiated in 2008. Particularly, these reductions occurred in non-core businesses, such as MEMS. In addition, a reduction of certain foreign currency rates relative to the U.S. dollar resulted in lower RD&E in our companies with non-U.S. dollar functional currencies. Partially offsetting this decrease in RD&E is the inclusion of two additional months of Sonion RD&E in 2009. Excluding Sonion, RD&E as a percentage of Electronics' sales remained at a consistent level of spending as compared to the 2008 period, despite a sales decline. We believe that future sales in the electronic components markets will be driven by next-generation products. As a result, design and development activities with our OEM customers continue at an aggressive pace.

Interest. Net interest charges increased primarily as a result of the amortization of approximately $1.4 million of capitalized loan fees resulting from the February 2009 credit facility amendment and silver leasing fees that were slightly above the comparable period in 2008, both of which are included in net interest expense.

Other. The increase in other income is primarily attributable to higher net foreign exchange gains of approximately $9.0 million realized during the three months ended March 27, 2009, as compared to foreign exchange gains of approximately $3.8 million realized during the comparable period of 2008. The increase in foreign exchange gains was due to the effects of the overall strengthening of the U.S. dollar to euro, the U.S. dollar to Polish zloty and the U.S. dollar to Danish krone in 2009 as compared to 2008. Gains were realized as a result of remeasuring intercompany advances and loans into their respective functional currencies.

Income Taxes. The effective tax rate for the three months ended March 27, 2009 was 0.2%, including the impact of the non-deductibility of the goodwill impairment charge. The effective income tax rate for the three months ended March 27, 2009 would have been 6.6% compared to 3.3% for the three months ended March 28, 2008 without the effects of the 2009 impairment charge. The increase in the effective tax rate is primarily a result of the non-deductibility of certain foreign exchange losses, a higher proportion of net earnings being recognized in higher tax jurisdictions in 2009 as compared to the same period of 2008 and a release of tax reserves in 2008 that did not occur in 2009.

Liquidity and Capital Resources

Working capital as of March 27, 2009 was $150.8 million, compared to $175.9 million as of December 26, 2008. This $25.1 million decrease was primarily due to decreases in cash and cash equivalents, trade receivables, prepaid expenses, inventories and an increase in current-installments of long term debt. Partially offsetting these decreases were reductions in accounts payable and accrued expenses and other current liabilities. Cash and cash equivalents, which are . . .