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 the "Risk Factors" section of this report on pages 35 through 43.

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 including certain judgments, assumptions and 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 associated costs.

Actual results could differ from these estimates. 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

In February 2009, we announced our intention to explore monetization alternatives with respect to our Electrical segment, a producer of a full array of precious metal electrical contact products that range from materials used in the fabrication of electrical contacts to completed contact subassemblies. During the second quarter of 2009, we determined that Electrical met the qualifications to be reported as a discontinued operation in our Consolidated Statement of Operations for all periods presented. Also, the assets and liabilities of Electrical are considered held for sale and reported as current on our Consolidated Balance Sheet. Whether in whole or in part, we expect a disposition to be completed by the end of June 2010. In addition, on June 25, 2009, we divested Electronics' Medtech components business for approximately $201.4 million. These proceeds are subject to final working capital and financial indebtedness adjustments. All open customer orders were transferred at the date of sale. We have no material continuing involvement with the operations of Medtech after June 25, 2009.

As a result of reporting Electrical as a discontinued operation, we only have one reportable segment, our Electronic Components Group, which we refer to as Electronics and is known as Pulse in its markets. Electronics is a world-wide producer of precision-engineered electronic components. 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.

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

Historically, our gross margin has been significantly affected by acquisitions, product mix and capacity utilization. Our markets are characterized by relatively short product life cycles. As a result, significant product turnover occurs each year and, subsequently, there are frequent variations in the prices of products sold. Due to the constantly changing quantity of part numbers we offer and frequent changes in our average selling prices, we cannot isolate the impact of changes in unit volume and unit prices on our net sales and gross margin in any given period. Changes in foreign exchange rates, especially the U.S. dollar to the euro and the U.S. dollar to the Chinese renminbi also affect U.S. dollar reported sales.

We believe our focus on acquisitions, technology and cost reduction programs provides 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 our product mix. We have made numerous acquisitions in recent years which have broadened our product offerings in new or existing markets. We may pursue additional acquisition opportunities in the future.

Divestitures. We engage in divestitures to streamline our operations, focus on our core businesses and strengthen our financial position. For example, in June 2009 we divested our Medtech components business for approximately $201.4 million, subject to final working capital and financial indebtedness adjustments. Medtech was purchased as part of the Sonion acquisition. Also, in April 2009 we divested our non-core MEMS business for an amount immaterial to our Consolidated Financial Statements. In February 2009, we announced our intention to explore monetization alternatives with respect to Electrical. As of September 25, 2009, the assets and liabilities of Electrical and the remaining assets and liabilities of MEMS are classified as held for sale in our Consolidated Balance Sheet. Medtech, MEMS and Electrical are classified as discontinued operations on our Consolidated Statements of Operations for all periods presented.

Technology. Our products must evolve along with changes in technology, availability and price of raw materials, design and preferences of the end users of our products. Also, regulatory requirements occasionally 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 metrics to evaluate 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 free cash flow, days sales outstanding, days payables outstanding, inventory turnover and cash conversion efficiency. 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 our operations so that capacity is optimally matched to current and anticipated future revenues and unit demand. Future expenses associated with these programs will depend on specific

actions taken. Actions taken over the past several years such as divestitures, plant closures, plant relocations, asset impairments and reduction in personnel at certain locations have resulted in the elimination of a variety of costs. The majority of the non-impairment related costs that were eliminated represent the annual salaries and benefits of terminated employees, including both those related to manufacturing and those providing selling, general and administrative services. Also, we've had depreciation savings from disposed equipment and rental payments from the termination of lease agreements. We have also reduced overhead costs as a result of relocating factories to lower-cost locations. Savings from these actions will impact cost of sales and selling, general and administrative expenses. However, the timing of such savings may not be apparent due to many factors such as unanticipated changes in demand, changes in unit selling prices, operational challenges or changes in operating strategies.

During the nine months ended September 25, 2009, we determined that approximately $71.0 million of our wireless group's goodwill was impaired. Refer to Note 5 in the Notes to the Unaudited Consolidated Financial Statements for further details. Additionally, we incurred a charge of $11.9 million for a number of cost reduction actions. These accruals include severance and related payments of $3.0 million and fixed asset impairments of $8.9 million. The impaired assets include production lines associated with products that have no expected future demand and two properties which were disposed.

During the year ended December 26, 2008, we determined that $310.4 million of goodwill and other intangibles were impaired, including $170.3 goodwill and identifiable intangibles of a discontinued operation. Additionally, we incurred a charge of $13.2 million to our continuing operations 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 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.

International Operations. At September 25, 2009, we had manufacturing operations in five countries, three of which only manufacture Electrical products, and had significant net sales in U.S. dollars, euros 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 and the U.S. dollar and the euro and each of these and other foreign currencies relative to each other. 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. Certain divisions of our wireless and power groups' sales are denominated primarily in euros and renminbi. Net earnings may also be affected by the mix of sales and expenses by currency within each group. 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. 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 currency to be hedged and the costs associated with the contracts. At September 25, 2009, we had eight foreign exchange forward contracts outstanding to sell forward approximately 8.0 million euro, or approximately $11.7 million, to receive Chinese renminbi. The fair value of these forward contracts was $(0.9) million as determined through use of Level 2 fair value inputs. These contracts are used to mitigate the risk of currency fluctuations at our Chinese operations.

Income Taxes. Our effective income tax rate is affected by the proportion of our income earned in high-tax jurisdictions, such as those in Europe and the U.S. and income earned in low-tax jurisdictions, such as Hong Kong 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. Such earnings may include our pre-acquisition earnings of foreign entities acquired through stock purchases, which, with the exception of approximately $40.0 million, are intended to be reinvested outside of the U.S. indefinitely.

Results of Operations

Three months ended September 25, 2009 compared to the three months ended
September 26, 2008

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


                                     Three Months Ended                                                    Results as %
                              September 25,        September 26,          Change         Change            of Net Sales
                                        2009                 2008              $              %            2009           2008
Net sales                   $        101,381     $        168,974     $  (67,593 )        (40.0 )%        100.0 %        100.0 %
Cost of sales                         74,154              126,339         52,185           41.3           (73.1 )        (74.8 )

Gross profit                          27,227               42,635        (15,408 )        (36.1 )          26.9           25.2

Selling, general
and administrative
expenses                              23,399               29,144          5,745           19.7           (23.1 )        (17.2 )
Severance, impairment and
other associated costs                 2,619                4,860          2,241           46.1            (2.6 )         (2.9 )

Operating income                       1,209                8,631         (7,422 )        (86.0 )           1.2            5.1

Interest expense, net                   (757 )             (1,022 )          265           25.9            (0.7 )         (0.6 )
Other income (expense),
net                                    3,190                 (833 )        4,023          483.0             3.1           (0.5 )

Earnings from
continuing operations
before income taxes                    3,642                6,776         (3,134 )        (46.3 )           3.6            4.0

Income tax expense
(benefit)                              1,368               (2,902 )       (4,270 )       (147.1 )          (1.3 )          1.7

Net earnings from
continuing operations       $          2,274     $          9,678     $   (7,404 )        (76.5 )%          2.3 %          5.7 %

Net Sales. Our consolidated net sales decreased by 40.0% as a result of the decline in customer demand resulting from the adverse developments in the global economy. Specifically, decreased demand for certain Electronics' wireless, network communications and power products negatively affected sales in the third quarter of 2009 as compared to the same period of 2008. Also, a stronger U.S. dollar relative to

the euro experienced in the third quarter of 2009 versus the comparable period in the prior year resulted in lower U.S. dollar reported sales.

Cost of Sales. As a result of lower sales, our cost of sales decreased. Our consolidated gross margin for the three months ended September 25, 2009 was 26.9% compared to 25.2% for the three months ended September 26, 2008. The primary factors that caused our consolidated gross margin increase were the positive effects of cost-reducing and price-increasing activities initiated in late 2008 as a response to the adverse conditions in the global economy.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses decreased primarily due to our overall emphasis on cost reducing measures initiated in late-2008. Expenses were reduced in virtually all areas. Intangible amortization expense declined compared to the 2008 period as a result of the impairment charges incurred in the fourth quarter of 2008. Partially offsetting these decreases were $1.2 million of unplanned legal expenses and dispute settlements.

Research, development and engineering expenses ("RD&E") are included in selling, general and administrative expenses. For the three months ended September 25, 2009 and September 26, 2008, respectively, RD&E was as follows (in thousands):

                         2009        2008
RD&E                  $ 7,022     $ 9,538
Percentage of sales       6.9 %       5.6 %

The decrease in research, development and engineering expenses is due to cost reducing measures initiated in late 2008. However, as a percentage of sales, 2009 spending was at a higher level than the 2008 period. 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.

Severance, Impairment and Other Associated Costs. We recorded approximately $2.6 million of severance and fixed asset impairments during the three months ended September 25, 2009. These charges primarily relate to writing down a property held for sale prior to its disposal.

Interest. Net interest expense decreased primarily as a result of decreased debt levels and lower interest rates incurred during the three months ended September 25, 2009 as compared to the comparable period ended September 26, 2008. Interest expense on our outstanding loans was allocated between continuing and discontinued operations on a pro-rata basis for the third quarters of 2009 and 2008, based upon the debt expected to be retired from the dispositions compared to total debt outstanding. Amortization of our capitalized loan fees was also allocated in a similar manner.

Other. The change from other expense to other income from the third quarter of 2008 to the comparable period in 2009 is primarily attributable to net foreign exchange gains of approximately $3.0 million realized during the three months ended September 25, 2009, as compared to foreign exchange losses of approximately $0.8 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 in the third quarter of 2009 as compared to the same period of 2008. Gains were also 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 September 25, 2009 was 37.6% compared to a benefit of (42.8)% for the three months ended September 26, 2008. The increase in the effective tax rate is primarily due to certain losses and restructuring charges incurred by entities in high-tax jurisdictions where the future tax benefit is unlikely to be realized.

Nine months ended September 25, 2009 compared to the nine months ended September 26, 2008

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

                                   Nine Months Ended                                                    Results as %
                            September 25,        September 26,         Change        Change             of Net Sales
                                     2009                 2008              $             %           2009           2008
Net sales                 $       293,425     $        501,978     $ (208,553 )       (41.5 )%       100.0 %        100.0 %
Cost of sales                     220,305              381,827        161,522          42.3          (75.1 )        (76.1 )

Gross profit                       73,120              120,151        (47,031 )       (39.1 )         24.9           23.9

Selling, general
and administrative
expenses                           66,503               93,136         26,633          28.6          (22.7 )        (18.6 )
Severance, impairment
and other associated
costs                              82,867                9,272        (73,595 )      (793.7 )        (28.2 )         (1.8 )

Operating (expense)
income                            (76,250 )             17,743        (93,993 )      (529.7 )        (26.0 )          3.5

Interest expense, net              (2,091 )             (2,147 )           56          (2.6 )         (0.7 )         (0.4 )
Other income, net                   5,083                6,051            968          16.0            1.7            1.2

(Loss) earnings
from continuing
operations before
income taxes                      (73,258 )             21,647        (94,905 )      (438.4 )        (25.0 )          4.3

Income tax expense                  2,856                  589         (2,267 )      (384.9 )         (1.0 )         (0.1 )

Net (loss) earnings
from continuing
operations                $       (76,114 )   $         21,058     $  (97,172 )      (461.4 )%       (26.0 )%         4.2 %

Net Sales. Our consolidated net sales decreased by 41.5% as a result of the decline in customer demand resulting from the adverse developments in the global economy. Specifically, decreased demand for certain Electronics' wireless, network communications and power products negatively affected sales in the nine months ended September 25, 2009 as compared to the comparable period of 2008. Also, a stronger U.S. dollar relative to the euro experienced during the nine months ended September 25, 2009 as compared to the same period of 2008 resulted in lower U.S. dollar reported sales.

Cost of Sales. As a result of lower sales, our cost of sales decreased. Our consolidated gross margin for the nine months ended September 25, 2009 was 24.9 % compared to 23.9 % for the nine months ended September 26, 2008. The primary factors that caused our consolidated gross margin increase were the positive effects of cost-reduction and price increasing activities initiated in late 2008 as a response to the adverse conditions in the global economy. Results for the nine months ended September 26, 2008 were also negatively affected by increased training and overtime costs caused by a temporary decline in China's workforce, which were partially offset by a decline in operating leverage as a result of decreased sales of Electronics' wireless, network communications and power products during 2009.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses decreased primarily due to our overall emphasis on cost reducing measures initiated in late-2008. Expenses were reduced in virtually all areas. Also, intangible amortization expense declined compared to the 2008 period as a result of the impairment charges incurred in the fourth quarter of 2008.

Research, development and engineering expenses ("RD&E") are included in selling, general and administrative expenses. For the nine months ended September 25, 2009 and September 26, 2008, respectively, RD&E was as follows (in thousands):

                        2009         2008
RD&E                  $ 20,087     $ 29,944
Percentage of sales        6.8 %        6.0 %

The decrease in research, development and engineering expenses is due to cost reducing measures initiated in 2008. However, as a percentage of sales, 2009 spending was at a higher level as compared to the 2008 period. 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 that is consistent with market activity.

Severance, Impairment and Other Associated Costs. During the nine months ended September 25, 2009, we determined that approximately $71.0 million of our wireless group's goodwill was impaired. Refer to Note 5 in the Notes to the Unaudited Consolidated Financial Statements for further details. Additionally, we incurred a charge of $11.9 million for a number of cost reduction actions. These accruals include severance and related payments of $3.0 million and fixed asset impairments of $8.9 million. The impaired assets include production lines associated with products that have no expected future demand and two properties which were disposed.

Interest. Net interest expense in the nine months ended September 25, 2009 was equivalent to the amount realized in the same period of 2008. Interest on our outstanding loans was allocated between continuing and discontinued operations on a pro-rata basis for the nine months ended September 25, 2009 and the comparable period in 2008, based upon the actual and expected debt to be retired from the dispositions compared to total debt outstanding. Amortization of our capitalized loan fees was also allocated in a similar manner.

Other. The decrease in other income is primarily attributable to lower net foreign exchange gains of approximately $4.8 million realized during the nine months ended September 25, 2009, as compared to foreign exchange gains of approximately $5.9 million realized during the comparable period of 2008. The primary reason for the decrease in foreign exchange gains during the nine months ended September 25, 2009 was due to the effects of a larger strengthening of the U.S. dollar to euro during 2008 as compared to 2009.

Income Taxes. The effective tax rate for the nine months ended September 25, 2009 was an expense of (3.9)% as compared to an expense of 2.7% for the nine months ended September 26, 2008. The 2009 effective tax rate was impacted by the $71.0 million of goodwill impairment charges recorded in 2009 which were . . .