Revenue in the Americas region increased from the prior year comparable periods primarily due to stronger demand and new product offerings for electronic connector products, particularly in high performance applications.  We experienced some recovery in the telecommunications market, resulting in demand for cable harnesses in that area. Demand for these products was higher during the second fiscal quarter of 2006 as compared with the sequential quarter.

Sales growth in the Americas region was affected by the movement offshore of original equipment manufacturers and contract manufacturers.  We believe that this trend contributed to sales in other regions of our business, especially in the Far East South region.

Far East North Region – Japan and Korea

Revenue in local currencies was higher during the second fiscal quarter as compared with the same quarter last year primarily due to stronger demand in the consumer and telecom markets.  However, year-to-date revenue was lower than the comparable period last year due to lower revenue in the first fiscal quarter of 2006. Demand for our product was lower during the first quarter primarily due to a slowdown related to the Japanese standard PDC phone format and a shortage of flash memory components used in flat panel displays.

The region continues to capitalize on its ability to design compact, higher performance products for the sophisticated end of the mobile phone business in the telecommunications market.  The region is developing new connectors for third generation (3G) phones, which in Japan include such high-speed capabilities as video and camera functionality.  We believe that we are well positioned to grow our 3G technology business as global cell phone makers adopt this technology.

During the six months ended December 31, 2005, the region operated at a high capacity level with significant resources allocated to support higher demand in the Far East South region. Revenue between regions is generally recognized as intercompany revenue, which is excluded from the revenue by region table, above.

16

Far East South Region – Singapore, Malaysia, China, Thailand, Taiwan and India

Consistent with the migration of business from the Americas, Europe and Far East North regions to the Far East South region, customer revenue in the Far East South region increased from the prior year comparable periods.  As a result, this region is our largest and fastest growing in terms of revenue. The revenue growth in this region was driven by strong demand across the mobile phone and consumer products markets.

Our sales in China increased by 18% during the six months ended December 31, 2005 compared with the prior year period, due to customer demand supported by increased production capacity. The drivers of this growth were American, European and Japanese companies moving their design and production to China and greater penetration of Taiwanese multinational accounts.  In China, we experienced higher demand in the mobile phone, data, consumer electronics and automotive markets.

European Region

Customer revenue in the European region decreased from the prior year comparable periods due primarily to weakness in the European automotive market and the movement offshore of original equipment manufacturers and contract manufacturers.  We believe that the latter is a trend that contributed to sales in other regions of our business, especially in the Far East South region.

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

Gross Profit

Gross profit increased primarily due to the increase in net revenue. Gross profit as a percentage of net revenue during the three months ended December 31, 2005, as compared with the prior year period, was higher primarily due to operating efficiencies gained in the Far East South region.

Gross profit as a percentage of net revenue during the six months ended December 31, 2005, was consistent with that of the prior year period. Included in the results for the six months ended December 31, 2004 are corrections of errors that reduced gross profit by $7.3 million. Excluding the effect of this adjustment, gross profit as a percentage of net revenue would have increased to 35.1% for the six months ended December 31, 2004. See Note 2 to the “Notes to Condensed Consolidated Financial Statements” for further discussion.

We estimate that we paid approximately $6.0 million and $9.8 million more for metal alloys (primarily copper), gold and plastic resins in the three and six month periods compared with the prior year periods. These increases, along with the impact of price erosion, were partially offset by decreases in the cost of components and improvements in manufacturing efficiencies.

Certain products that we manufacture in Japan and Europe are sold in other regions of the world at selling prices primarily denominated in or closely linked to the U.S. dollar.  As a result, changes in currency exchange rates may affect our cost of sales reported in U.S. dollars without a corresponding effect on net revenue.  We estimate that the impact from currency transactions increased gross profit by approximately $9.1 million and $10.9 million for the three and six months ended December 31, 2005 compared with the prior year periods.  These increases were primarily due to a stronger U.S. dollar compared with the yen during the three months ended December 31, 2005.

17

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended December 31, 2005 included bad debt expense of approximately $3.0 million in connection with an account receivable from an automotive customer that filed for bankruptcy. A provision approximating $5.7 million was recorded for this receivable during the three months ended September 30, 2005, but because we factored this receivable during the three months ended December 31, 2005, bad debt expense was reduced by $2.7 million.

Effective in the 2006 fiscal year, we adopted Statement of Financial Accounting Standard (SFAS) No. 123(R), “Share-based Payments,” which resulted in additional compensation expense of approximately $2.9 million and $6.1 million for three and six months ended December 31, 2005, respectively. Total share-based compensation recorded in the Condensed Consolidated Statements of Income was $6.0 million and $12.7 million for the three and six months ended December 31, 2005 compared with $3.8 million and $7.6 million for the prior year period (see Note 3 of the “Notes to the Condensed Consolidated Financial Statements”).  

Research and development expenditures, which are classified as selling, general and administrative expense, increased to $70.3 million, or 5.2% of net revenue, for the six months ended December 31, 2005, a percentage comparable with the prior year period.  The impact of currency translation decreased selling, general and administrative expenses by approximately $3.6 million and $2.6 million for the three and six months ended December 31, 2005.

Restructuring Costs

We recorded a pre-tax charge of $27.9 million in the fourth quarter of fiscal 2005 in connection with our restructuring to reduce costs, better optimize plant utilization and reduce selling, general and administrative expenses. The restructuring includes facility closures that impact our operations in the Americas and European regions.  We estimate that we will reduce headcount by approximately 1,400 employees initially and then add back 800 employees at the facilities where production is being transferred, for a net reduction of 600 employees.

In the Americas region, we are in the process of closing an industrial manufacturing facility in New England and ceasing manufacturing in our Detroit area automotive facility. The automotive development center also located in the Detroit area will continue in operation. Production from these facilities will be transferred to existing plants within the region.

In Europe, we closed manufacturing facilities in Portugal and Ireland and reduced the size of a development center in Germany since announcing the restructuring plan during the fourth quarter of fiscal 2005.  We are in the process of closing a manufacturing facility in Slovakia. Production from these manufacturing facilities was or will be transferred to existing plants within the region.

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

The timing of the cash expenditures associated with these charges does not necessarily correspond to the period in which the accounting charge is taken. The actual timing of the facility closures and related headcount reductions and the resulting charges and cash expenditures will be dependent upon a number of factors including our efforts to achieve a phased and efficient transfer of production. Implementation of this restructuring program is expected to continue through fiscal 2006 for which we anticipate an estimated pre-tax charge of $20 million during fiscal 2006.  Approximately 65% of the additional charges are expected to impact the Americas region with the remainder impacting Europe. For additional information concerning the status of our restructuring programs see Note 4 of the “Notes to Condensed Consolidated Financial Statements.”  See also “Cautionary Statement Regarding Forward-Looking Information.”

18

Effective Tax Rate

The effective tax rate was 28.5% for the three and six months ended December 31, 2005 compared with 27.0% for the prior year periods. The increase in the effective tax rate from the prior year reflects increased taxable income in jurisdictions with higher tax rates.

 Backlog

Our order backlog on December 31, 2005 was approximately $297.5 million, an increase of $11.8 million compared with $285.7 million at December 31, 2004.  Orders for the three months ended December 31, 2005 were $703.4 million, an increase of 15.7% compared with $607.8 million for the prior year period.

Financial Condition and Liquidity  

Our financial position remains strong and we continue to be able to fund capital projects and working capital needs principally out of operating cash flows and cash reserves.  Cash, cash equivalents and marketable securities totaled $419.8 million and $497.6 million at December 31, 2005 and June 30, 2005, respectively.  The primary source of our cash flow is cash generated by operations. Principal uses of cash are capital expenditures, share repurchases, dividend payments and business investments.  Our long-term financing strategy is to rely on internal sources of funds for investing in plant, equipment and acquisitions.  We believe that our liquidity and financial flexibility are adequate to support both current and future growth.  We have historically used external borrowings only when a clear financial advantage exists. Long-term debt and obligations under capital leases at December 31, 2005 totaled $8.9 million.  

Cash Flows

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

Operating Activities

Cash provided from operating activities decreased by $5.3 million from the prior year period due mainly to greater use of funds to finance working capital needs compared with the prior year period.  This working capital increase was primarily due to the revenue growth for the six months ended December 31, 2005 compared with the prior year period.  Working capital is defined as current assets minus current liabilities.

Investing Activities

During the six months ended December 31, 2005, we realized net proceeds on the sale of marketable securities in the amount of $95.4 million. The net proceeds were used in funding capital expenditures of $131.1 million and the purchase of treasury stock. During the six months ended December 31, 2004, we realized net proceeds from the sale of our investment in an affiliate in the amount of $14.1 million.  The net proceeds were used in the funding of capital expenditures of $105.3 million.

19

Financing Activities

Cash was used primarily for the payment of dividends and the purchase of treasury stock.  We purchased 3,683,000 shares of Common Stock and Class A Common Stock during the six months ended December 31, 2005, at an aggregate cost of $95.1 million and 940,000 shares of Class A Common Stock during the six months ended December 31, 2004, at an aggregate cost of $23.6 million.

Our Board of Directors previously authorized the repurchase of up to an aggregate $250.0 million of common stock though December 31, 2006. Approximately $120.3 million was remaining under the authorization as of December 31, 2005.

We have a strong cash balance and cash flow and very little debt.  We believe at this time that share repurchases are a good investment as compared with investing our cash in short-term money instruments or marketable securities, particularly with the current low interest rates.  We also use shares repurchased to replenish stock used for exercises of employee stock options, employee stock awards and our Employee Stock Purchase Plan.

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, 2005.  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, 2005 arising outside of the ordinary course of business.  

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 foreign currency exchange rate risk principally through the establishment of local production facilities in the markets we serve and invoicing of customers in the same currency as the source of the products.  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, development of natural hedges and occasional use of foreign exchange contracts to protect or preserve the value of intercompany cash flows. No material foreign exchange contracts were outstanding at December 31, 2005 and 2004.

We have implemented a formalized treasury risk management policy that describes the procedures and controls over derivative financial and commodity instruments.  Under the policy, we do not use derivative financial or commodity instruments for speculative 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.

20

Our $92.2 million of marketable securities at December 31, 2005 are principally debt instruments that generate interest income on our temporary excess cash balances.  These instruments contain embedded derivative features that enhance the liquidity of the portfolio by enabling us to liquidate the instrument prior to the stated maturity date.  Our exposure related to derivative instrument transactions is, in the aggregate, not material to our financial position, results of operations or cash flows.

Interest rate exposure is limited to the marketable securities that we own 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, which is generally less than twelve months, and the fixed-rate nature of our long-term debt.

We do not have exposure to any off-balance-sheet arrangements with the exception of certain operating leases.  Due to the nature of our operations, we are not subject to significant concentration risks relating to customers, products or geographic locations.

We monitor the environmental laws and regulations in the countries in which we operate.  We have implemented an environmental program to reduce the generation of potentially hazardous materials during our manufacturing process and believe we continue to meet or exceed local government regulations.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Based upon their evaluation as of December 31, 2005, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) are effective in providing reasonable assurance that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

Internal Control Over Financial Reporting

During the three months ended December 31, 2005, 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 3, Item 4 and Item 5 of this Part II are either inapplicable or are answered in the negative and are omitted pursuant to the instructions to Part II.   

Item 1.  Legal Proceedings

Between March 2, 2005 and April 22, 2005 seven separate complaints were filed, each purporting to be on behalf of a class of Molex stockholders, against us and certain of our officers and employees.  The stockholders actions have been consolidated before Judge Ruben Castillo in a case pending in the United States District Court for the Northern District of Illinois Eastern Division entitled The Takara Trust v. Molex Incorporated, et al., Case No. 05C 1245.  The Consolidated Amended Complaint alleges, among other things, that during the period from July 27, 2004 to February 14, 2005 the named defendants made or caused to be made a series of materially false or misleading statements about our business, prospects,       

21

operations, and financial statements which constituted violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act.  The complaint also alleges that certain of the named defendants engaged in insider trading in violation of Section 10(b) and Rule 10b-5.  As relief, the complaint seeks, among other things, declaration that the action be certified as a proper class action, unspecified compensatory damages (including interest) and payment of costs and expenses (including fees for legal counsel and experts).  The individual defendants named in the Consolidated Amended Complaint are: J. Joseph King, Diane S. Bullock, John H. Krehbiel Jr., Frederick A. Krehbiel, Ronald L. Schubel and Martin A. Slark.  On July 6, 2005 the Court appointed City of Pontiac Group as lead plaintiff and approved City of Pontiac Group’s choice of lead counsel.  On September 6, 2006, the Court denied the plaintiff’s motion to permit limited discovery.  All named defendants have moved to dismiss the Consolidated Amended Complaint.  We believe the plaintiff’s allegations are without merit and intend to vigorously contest the complaint.

In addition, in the Fall of 2005, two stockholder derivative actions were filed against us and certain of our directors and officers in the Circuit Court of Cook County, Illinois. The derivative actions arise principally out of the same facts as the stockholder actions described above.  These two actions have been consolidated and the consolidated complaint has not been filed.  We believe the allegations in the stockholder derivative actions are without merit and intend to vigorously contest these actions.

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

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

Cautionary Statement Regarding Forward-Looking Information

Our disclosure and analysis in this report, including information incorporated by reference, contain forward-looking information about our Company’s current expectations or forecasts of future results.  You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “should,” “will,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.  We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

22

Among the factors that could cause actual results to differ materially from those stated are those risk factors listed in our annual report on Form 10-K for the fiscal year ended June 30, 2005, and also include the following: the risk that customer demand will decrease either temporarily or permanently, whether due to our actions or the demand for our products, and that we may not be able to respond through cost reductions in a timely and effective manner; price cutting, new product introductions and other actions by our competitors; fluctuations in the costs of raw materials that we are not able to pass through to customers because of existing contracts or market factors; the challenges attendant to plant closing and restructurings, including the difficulty of predicting plant closing and relocation costs, the difficulty of commencing or increasing production at existing facilities, and the reactions of customers, governmental units, employees and other groups; the challenges attendant to plant construction; and the ability to realize cost savings from restructuring activities.  You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this list to be a complete set of all potential risks or uncertainties.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 8-K, 10-Q, and 10-K reports to the Securities and Exchange Commission.   

Item 6.  Exhibits

23

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.  

24