10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2008.

or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 1-7201

(Exact name of registrant as specified in its charter)

Delaware	33-0379007
(State or other jurisdiction of incorporation or organization)	(IRS Employer ID No.)
801 17th Avenue South, Myrtle Beach, South Carolina	29577
(Address of principle executive offices)	(Zip Code)
(843) 448-9411
(Registrant's phone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]		Accelerated filer	[   ]
Non-accelerated filer	[   ]	(Do not check if a smaller reporting company)	Smaller reporting company	[   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at August 1, 2008
Common Stock, par value $0.01 per share	170,862,303

AVX CORPORATION

INDEX

		Page Number
PART I:	Financial Information:
ITEM 1.	Financial Statements:
	Consolidated Balance Sheets as of March 31, 2008 and June 30, 2008	3
	Consolidated Statements of Operations for the three months ended June 30, 2007 and 2008	4
	Consolidated Statements of Cash Flows for the three months ended June 30, 2007 and 2008	5
	Notes to Consolidated Financial Statements	6
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	24
ITEM 4.	Controls and Procedures	24
PART II:	Other Information:
ITEM 1.	Legal Proceedings	24
ITEM 1A.	Risk Factors	25
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
ITEM 4.	Submission of Matters to a Vote of Security Holders	25
ITEM 6.	Exhibits	26
Signature		27

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AVX Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(in thousands, except per share data)

ASSETS		March 31,		June 30,
Current assets:		2008		2008
Cash and cash equivalents	$	568,864	$	561,885
Short-term investments in securities		50,000		-
Available-for-sale securities		44,790		45,005
Accounts receivable - trade		198,641		204,285
Accounts receivable - affiliates		5,121		2,820
Inventories		421,216		430,559
Deferred income taxes		38,940		39,464
Prepaid and other		49,633		47,134
Total current assets		1,377,205		1,331,152
Long-term investments in securities		108,999		169,001
Long-term available-for-sale securities		42,666		31,326
Property and equipment		1,707,265		1,730,524
Accumulated depreciation		(1,390,693)		(1,410,057)
		316,572		320,467
Goodwill		159,013		165,117
Intangible assets - net		95,046		93,932
Other assets		9,577		9,507
Total Assets	$	2,109,078	$	2,120,502
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	66,601	$	61,062
Accounts payable - affiliates		70,551		66,937
Income taxes payable		10,616		13,718
Accrued payroll and benefits		45,987		43,421
Accrued expenses		26,761		23,926
Total current liabilities		220,516		209,064
Other liabilities		59,211		58,044
Total Liabilities		279,727		267,108
Commitments and contingencies (Note 7)
Stockholders' Equity:
Preferred stock, par value $.01 per share:		-		-
Authorized, 20,000 shares; None issued and outstanding
Common stock, par value $.01 per share:		1,764		1,764
Authorized, 300,000 shares; issued, 176,368 shares
Additional paid-in capital		342,843		343,107
Retained earnings		1,349,349		1,372,833
Accumulated other comprehensive income		207,350		209,850
Treasury stock, at cost:		(71,955)		(74,160)
5,303 and 5,474 shares at March 31 and June 30, 2008, respectively
Total Stockholders' Equity		1,829,351		1,853,394
Total Liabilities and Stockholders' Equity	$	2,109,078	$	2,120,502

See accompanying notes to consolidated financial statements.

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AVX Corporation and Subsidiaries

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

	Three Months Ended June 30,
		2007		2008
Net sales	$	383,158	$	396,889
Cost of sales		308,433		333,458
Restructuring Charges		-		1,279
Gross profit		74,725		62,152
Selling, general and administrative expenses		30,568		34,149
Restructuring Charges		-		12
Other operating income		-		(4,051)
Profit from operations		44,157		32,042
Other income (expense):
Interest income		12,082		6,620
Interest expense		(242)		(110)
Other, net		(844)		1,866
Income before income taxes		55,153		40,418
Provision for income taxes		15,994		9,413
Net income	$	39,159	$	31,005
Income per share:
Basic	$	0.23	$	0.18
Diluted	$	0.23	$	0.18
Weighted average common shares outstanding:
Basic		171,797		170,976
Diluted		172,587		171,292

See accompanying notes to consolidated financial statements.

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AVX Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended June 30,
		2007		2008
Operating Activities:
Net income	$	39,159	$	31,005
Adjustment to reconcile net income to net cash from operating activities:
Depreciation and amortization		12,036		16,025
Stock-based compensation expense		732		622
Deferred income taxes		2,687		7
(Gain) Loss on available-for-sale securities		-		(37)
(Gain) Loss on property, plant & equipment, net of retirements		-		(3,831)
Changes in operating assets and liabilities:
Accounts receivable		(2,501)		(3,807)
Inventories		(5,380)		(4,471)
Accounts payable and accrued expenses		(8,475)		(15,583)
Income taxes payable		6,149		3,128
Other assets		(3,158)		(253)
Other liabilities		(2,146)		(5,630)
Net cash provided by (used in) operating activities		39,103		17,175
Investing Activities:
Purchases of property and equipment		(13,673)		(14,693)
Purchases of investment securities		(59,000)		(89,002)
Sales and redemptions of available-for-sale securities		-		11,736
Sales and redemptions of investment securities		114,000		79,000
Proceeds from property, plant & equipment dispositions		-		5,478
Contingent consideration for a prior acquisition		-		(6,201)
Other investing activities		-		134
Net cash provided by (used in) investing activities		41,327		(13,548)
Financing Activities:
Dividends paid		(6,871)		(6,844)
Purchase of treasury stock		-		(3,391)
Proceeds from exercise of stock options		2,442		700
Excess tax benefit from stock-based payment arrangements		417		128
Net cash provided by (used in) financing activities		(4,012)		(9,407)
Effect of exchange rate on cash		2,584		(1,199)
Increase (decrease) in cash and cash equivalents		79,002		(6,979)
Cash and cash equivalents at beginning of period		684,382		568,864
Cash and cash equivalents at end of period	$	763,384	$	561,885

See accompanying notes to consolidated financial statements.

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AVX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except per share data)

1.   Basis of Presentation:

The consolidated financial statements of AVX Corporation and subsidiaries ("AVX" or the "Company") include all accounts of the Company and its subsidiaries.  All significant intercompany transactions and accounts have been eliminated.  The accompanying financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting.  These consolidated financial statements are unaudited, and in the opinion of management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for the fair presentation of the consolidated balance sheets, operating results and cash flows for the periods presented.  Operating results for the three months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2009 due to cyclical and other factors.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted in accordance with the rules and regulations of the SEC.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

Critical Accounting Policies and Estimates:

The Company has identified the accounting policies and estimates that are critical to its business operations and understanding the Company's results of operations.  Those policies and estimates can be found in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements and in "Critical Accounting Policies and Estimates", in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2008. Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2008.  During the three month period ended June 30, 2008, except as noted below, there were no significant changes to any critical accounting policies, judgments involved in applying those policies or to the methodology used in determining estimates including those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes and contingencies.

New Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, provides guidance for measuring fair value and requires additional disclosures.  This statement does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.  For financial assets and liabilities, SFAS 157 is effective for financial statements issued for fiscal years beginning after December 31, 2007.  The Company adopted these provisions of SFAS 157 effective April 1, 2008. The related disclosures are included in Note 4.  On February 12, 2008, the FASB delayed the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. The Company does not expect the adoption of these provisions of SFAS 157 to have a material impact on its consolidated financial statements.

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As described in Note 10 below, effective March 31, 2007, the Company adopted the provisions of Statement of Financial Accounting Standard No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”), which requires an employer to recognize the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.  Measurement of the plans’ assets and obligations that determine its funded status as of the end of the employer’s fiscal year is required to be adopted for fiscal years ending after December 15, 2008. The Company adopted the measurement date provisions of SFAS 158 effective April 1, 2008. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115” (“SFAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. The Company adopted this statement as of April 1, 2008 and has elected not to apply the fair value accounting option to any of its applicable financial instruments.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141(R), “Business Combinations” (“SFAS 141(R)”), which replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how an acquirer in a business combination, 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest, 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and 3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after an entity’s fiscal year that begins after December 15, 2008. The application of SFAS 141(R) will result in a significant change in accounting for future acquisitions after the effective date.

In March 2008, the FASB issued Statement of Financial Accounting Standard No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand how and why an entity uses derivative instruments, how they are accounted for under Statement of Financial Accounting Standard No. 133 “Accounting for Derivative Instruments and Hedging Activities” and related interpretations, and their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements.

 In April 2008, the FASB issued FASB Staff Position No. 142-3, "Determination of the Useful Lives of Intangible Assets", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. This interpretation is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Company is assessing the potential impact of adoption on its consolidated financial statements.

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2.   Earnings Per Share:

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period.  Stock options are the only common stock equivalents currently used by the Company and are computed using the treasury stock method.

The table below represents the basic and diluted weighted average number of shares of common stock and potential common stock equivalents:

		Three Months Ended June 30,
		2007		2008
Net Income	$	39,159	$	31,005
Computation of Basic EPS:
Weighted Average Shares Outstanding used in computing Basic EPS		171,797		170,976
Basic earnings per share	$	0.23	$	0.18
Computation of Diluted EPS:
Weighted Average Shares Outstanding		171,797		170,976
Effect of stock options		790		316
Shares used in computing Diluted EPS (1)		172,587		171,292
Diluted Income per share	$	0.23	$	0.18

(1) Common stock equivalents, not included in the computation of diluted earnings per share because the impact would have been antidilutive were 2,779 shares and 4,775 shares for the three months ended June 30, 2007 and 2008, respectively.

3.   Trade Accounts Receivable:

			March 31, 2008		June 30, 2008
Gross Accounts Receivable - Trade		$	222,138	$	228,205
Less:
	Allowances for doubtful accounts		1,303		1,386
	Stock rotation and ship from stock and debit		12,941		13,528
	Sales returns and discounts		9,253		9,006
	Total allowances		23,497		23,920
	Net Accounts Receivable - Trade	$	198,641	$	204,285

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Charges related to allowances for doubtful accounts are charged to selling, general and administrative expenses.  Charges related to stock rotation, ship from stock and debit, sales returns and sales discounts are reported as deductions from revenue.

		Three Months Ended June 30,
		2007		2008
Allowances for doubtful accounts:
Beginning Balance	$	1,705	$	1,303
Charges		-		36
Applications		(75)		52
Translation and other		13		(5)
Ending Balance	$	1,643	$	1,386

Stock rotation and ship from stock and debit:
Beginning Balance		11,918		12,941
Charges		10,824		10,478
Applications		(9,677)		(9,888)
Translation and other		17		(3)
Ending Balance	$	13,082	$	13,528

Sales returns and discounts:
Beginning Balance		9,140		9,253
Charges		8,488		6,282
Applications		(7,816)		(6,509)
Translation and other		17		(20)
Ending Balance	$	9,829	$	9,006

4.   Fair Value:

Fair Value Hierarchy:

The fair value framework described in SFAS 157 requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to value the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

§   Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

§   Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

§   Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

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Assets (Liabilities) Measured at Fair Value on a Recurring Basis:

		Based on
	Fair Value at June 30, 2008	Quoted prices in active markets (Level 1)	Other observable inputs (Level 2)	Unobservable inputs (Level 3)
Assets measured at fair value on a recurring basis:
Available-for-sale marketable securities - ST	$    45,005	$          37	$     36,977	$         7,991
Available-for-sale marketable securities - LT	31,326	-	25,759	5,567
Assets held in the non-qualified deferred  compensation program(1)	8,390	8,390	-	-
Foreign currency derivatives(2)	2,753	-	2,753	-
Total	$    87,474	$     8,427	$     65,489	$       13,558

		Based on
	Fair Value at June 30, 2008	Quoted prices in active markets (Level 1)	Other observable inputs (Level 2)	Unobservable inputs (Level 3)
Liabilities measured at fair value on a recurring basis:
Obligation related to assets held in the non-qualified deferred compensation program(1)	$      8,390	$     8,390	$            -	$              -
Total	$      8,390	$     8,390	$            -	$              -

(1) The market value of the assets held in the trust is included as an asset and a liability of the Company because the trust’s assets are available to the Company’s general creditors in the event of the Company’s insolvency.

(2) Foreign currency derivatives in the form of forward contracts are included in prepaid and other in the June 30, 2008 consolidated balance sheet. Unrealized gains and losses on derivatives classified as cash flow hedges under SFAS 133 are recorded in other comprehensive income. Gains and losses on derivatives not designated as hedges under SFAS 133 are recorded in other income (expense).

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the quarter ended June 30, 2008.

	Available-for-sale marketable securities
Balance, beginning of period	$     14,364
Realized and unrealized gains/(losses) included in earnings	-
Unrealized gains/(losses) included in comprehensive income	(806)
Purchases, issuances and settlements	-
Transfers in and/or out of Level 3	-
Balance, end of period	$     13,558

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Valuation Techniques:

To appropriately assign fair value to assets and liabilities, SFAS No. 157 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The following describes valuation techniques used to appropriately value the Company’s available-for-sale securities and derivatives.

Investment Securities

Assets valued using Level 1 inputs in the table above represent 1) cash equivalents that are a part of the Company’s investment in a portfolio classified on the consolidated balance sheet as available-for-sale and 2) assets from the Company’s non-qualified deferred compensation program. The funds in the non-qualified deferred compensation program are valued based on the number of shares in the funds using a price per share traded in an active market.

Assets valued using Level 2 inputs in the table above represent a portfolio including certificate of deposits, foreign bonds, corporate bonds, asset backed obligations and mortgage-backed securities. Valuation inputs used include benchmark yields, reported trades, broker and dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

Assets valued using Level 3 inputs in the table above represent a portfolio including corporate bonds, asset backed obligations and mortgage-backed securities. Unobservable inputs for valuation are based on a third party pricing vendor using valuation inputs described above for Level 2 and then adjusted based on the best economic and industry information available in the circumstances.

Derivatives

The Company primarily uses forward contracts, with maturities generally less than four months, designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted transactions related to purchase commitments and sales, denominated in various currencies. The Company also uses derivatives not designated as hedging instruments to hedge foreign currency balance sheet exposures. These derivatives are used to offset currency changes in the fair value of the hedged assets and liabilities. Fair values for all of the Company’s derivative financial instruments are valued by adjusting the market spot rate by forward points, based on the date of the contract. The spot rates and forward points used are an average rate from an actively traded market. At June 30, 2008, all of the Company’s forward contracts have been designated as Level 2 measurements in the SFAS 157 hierarchy.

5.   Inventories:

		March 31, 2008		June 30, 2008
Finished goods	$	119,433	$	121,575
Work in process		111,748		109,995
Raw materials and supplies		190,035		198,989
	$	421,216	$	430,559

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6.   Stock-Based Compensation:

In May 2008, the Company granted 500 options to employees pursuant to the 2004 Stock Option Plan described in Note 11, “Stock Based Compensation”, of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008. The weighted average grant date fair value per share and the weighted average exercise price per share for these options is $3.55 and $13.15, respectively.

7.   Commitments and Contingencies:

On March 8, 2004, AVX filed an action in U.S. District Court for the District of Massachusetts against Cabot Corporation (“Cabot”) alleging certain violations of the federal antitrust laws. In essence, AVX asserts that Cabot tied the sale of certain tantalum products to the sale of other patented tantalum products in violation of the Sherman Anti-Trust Act.  AVX seeks, pursuant to this action, injunctive relief, actual and treble damages in amounts to be determined at trial and attorney's fees.  The case is currently pending.

On September 6, 2005, AVX filed an action against Cabot in Massachusetts Superior Court which arises out of allegations that Cabot breached certain pricing provisions of the current contract between AVX and Cabot (which contract is itself the subject of the litigation described above).  In essence, AVX alleges that Cabot has failed to abide by a “most favored nation” clause and that it is entitled to additional rebates from Cabot.  The case is currently pending.

The Company is involved in disputes, warranty, and legal proceedings arising in the normal course of business.  While the Company cannot predict the outcome of these disputes and proceedings, management believes, based upon a review with legal counsel, that none of these proceedings will have a material impact on our financial position, results of operations, or cash flows. However, the Company cannot be certain of the eventual outcome and any adverse results in these or other matters that may arise from time to time that may harm its financial position, results of operations, or cash flows.

The Company from time to time enters into delivery contracts with selected suppliers for certain metals used in its production processes.  The delivery contracts represent routine purchase orders for delivery within three months and payment is due upon receipt.  As of June 30, 2008, the Company did not have any of these delivery contracts outstanding.

The Company has been named as a potentially responsible party in state and federal administrative proceedings seeking contribution for costs associated with the correction and remediation of environmental conditions at various waste disposal and operating sites.  The Company continues to monitor these actions and proceedings and to vigorously defend its interests.  The Company's liability in connection with environmental claims depends on many factors, including its volumetric share of waste, the total cost of remediation and the financial viability of other companies that also sent waste to a given site.  The Company also operates on sites that may have potential future environmental issues.  Once it becomes probable that the Company will incur costs in connection with remediation of a site and such costs can be reasonably estimated, the Company establishes or adjusts its reserves for its projected share of these costs.  These reserves are not discounted and do not reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at multiple party sites or indemnification of the Company's liability by a third party.  The Company currently has reserves for current remediation, compliance and legal cost totaling $2,318 at June 30, 2008 related to these matters.  Based upon information known to the Company concerning the size of these sites, their years of operations and the number of past users, except for matters discussed below, management believes that it has adequate reserves with respect to the current activities related to these matters.

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In July 2007, the Company received oral notification from the U.S. Department of Justice, and in December 2007, written notification from the U.S. Department of Justice indicating that the United States is preparing to exercise the reopener provision under a 1991 consent decree relating to the environmental conditions at, and remediation of, New Bedford Harbor in the Commonwealth of Massachusetts.  In 1991, in connection with that consent decree, the Company paid $66,000, plus interest, toward the environmental conditions at, and remediation of, the harbor in settlement with the EPA and the Commonwealth of Massachusetts, subject to reopener provisions, including a reopener if certain remediation costs for the site exceed $130,500.  The EPA has indicated that remediation costs through December 6, 2007 (which remediation is ongoing) are approximately $318,500. The Company has not yet completed an investigation of the monies spent or its available defenses in light of the notification.  The Company has also not yet determined whether or to what extent other parties may bear responsibility for these costs.  On April 1, 2008, the U.S. Department of Justice indicated that the future work to be performed at the harbor is expected to exceed hundreds of millions of dollars under current estimates.  The Company met with the U.S. Department of Justice, the EPA, and the Commonwealth of Massachusetts most recently in June 2008, and toured the harbor area in July 2008.  At those meetings, the EPA described the ongoing remediation activity, and potential changes to such remediation.  The EPA indicated that the timing and ultimate cost of the remediation depends on the level of annual funding available, and the effectiveness of various remediation methods.  The Company anticipates further discussions with the U.S. Department of Justice, the EPA and the Commonwealth of Massachusetts.  The Company is investigating the claim as well as potential defenses and other actions, including the engagement of environmental engineering consultants to study and analyze documentation made available by the EPA with respect to the site.  The potential impact of this matter on the Company’s financial position, results of operations and cash flows cannot be determined at this time.

On June 2, 2006, the Company received a “Confirmation of Potential Liability; Demand and Notice of Decision Not to Use Special Notice Procedures” dated May 31, 2006 from the EPA with regard to $1,600 (subsequently modified to $900) of past costs, as well as future costs for environmental remediation, related to the purported release of hazardous substances at a facility referred to as the “Aerovox Facility” (the “Facility”), located at 740 Belleville Avenue, New Bedford, Massachusetts.  A predecessor of AVX sold this Facility to an unrelated third party in 1973. The Company has investigated the claim as well as potential defenses and other actions, including the engagement of environmental engineering consultants to study and analyze documentation made available by the EPA with respect to the Facility.  In August 2006, the Company provided a written response to the EPA, denying liability.  On April 3, 2008, the EPA indicated that the proposed plan of remediation has been modified, and that its provisional estimate of future costs for such remediation is $14,300.  The Company is cooperating with the EPA, the Commonwealth of Massachusetts, and the City of New Bedford in discussions regarding the potential remediation actions that could be considered, and the potential responsibilities that each party could assume, although no conclusions or agreements have been reached.  The Company anticipates further discussions with the EPA, the Commonwealth of Massachusetts, and the City of New Bedford.  The potential impact on the Company’s financial position, results of operations and cash flows cannot be determined at this time.

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In September 2007, the Company received notice from Horry Land Company, the owner of property adjacent to the Company’s South Carolina factory, that Horry Land Company’s property value had been negatively impacted by alleged migration of certain pollutants from the Company’s property and demanding $5.4 million in compensatory damages, exclusive of costs that have not been determined.  The Company investigated the allegations and determined that the demanded payment was not justified and that issues of liability, among other issues, exist under environmental laws.  As a result, in October 2007, the Company filed a declaratory judgment action in United States District Court for the District of South Carolina under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Federal Declaratory Judgment Act, seeking a declaration that the Company is not liable for the property damages claimed by Horry Land Company and for a determination and allocation of past and future environmental response costs.  Horry Land Company has asserted its claims in this suit and it is now proceeding. In addition, two other suits have been filed against the Company relating to the same contamination.  One suit was filed in the South Carolina State Court on November 27, 2007 by certain individuals seeking certification as a class action which has not yet been determined.  The other suit is a commercial suit filed on January 16, 2008 in South Carolina State Court by John H. Nance and JDS Development of Myrtle Beach, Inc.  At this early stage of the litigation, there has not been a determination as to responsible parties or the amount, if any, of damages.  With respect to the related environmental assessment, the Company is in the process of a feasibility study to evaluate possible remedies and at this stage has not been able to determine what measures may have to be undertaken or the likely costs of any such measures.  Accordingly, the potential impact of any of the lawsuits or the remediation on the Company’s financial position, results of operations, and cash flows cannot be determined at this time.

The Company also operates on sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX.  Even though the Company may have rights of indemnity for such environmental matters at certain sites, regulatory agencies in those jurisdictions may require the Company to address such issues.  Once it becomes probable that the Company will incur costs in connection with remediation of a site and such costs can be reasonably estimated, the Company establishes reserves or adjusts its reserve for its projected share of these costs.

8.   Comprehensive Income:

Comprehensive income represents changes in equity during a period except those resulting from investments by and distributions to shareholders.  The specific components include net income, pension liability adjustments, deferred gains and losses resulting from foreign currency translation adjustments, qualified foreign currency cash flow hedges and unrealized gains and losses on available-for-sale securities.

Comprehensive income includes the following components:

		Three Months Ended June 30,
			2007		2008
Net income		$	39,159	$	31,005
Other comprehensive income:
	Pension liability adjustment, net of tax		426		486
	Foreign currency translation adjustment		8,119		6,105
	Foreign currency cash flow hedges		(1,362)		(3,961)
	Unrealized gain (loss) on available-for-sale securities		-		(130)
Comprehensive income		$	46,342	$	33,505

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9.   Segment and Geographic Information:

The Company has three reportable segments: Passive Components, KED Resale and Connectors. The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, tantalum capacitors, film capacitors, ceramic and film power capacitors, super capacitors, EMI filters, thick and thin film packages, varistors, thermistors, inductors and resistive products.  The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, resistive products, RF modules, actuators, acoustic devices and connectors produced by Kyocera, and resold by AVX.  The Connectors segment consists primarily of Elco automotive, telecom and memory connectors manufactured by AVX.  Sales and operating results from these reportable segments are shown in the tables below.  In addition, the Company has a corporate administration group consisting of finance and administrative activities and a separate Research and Development group.

The Company evaluates performance of its segments based upon sales and operating profit.  There are no intersegment revenues.  The Company allocates the costs of shared resources between segments based on each segment's usage of the shared resources.  Cash, accounts receivable, investments in securities and certain other assets, which are centrally managed, are not readily allocable to operating segments.

The tables below present information about reported segments:

		Three Months Ended June 30,
		2007		2008
Net sales:
Passive Components	$	226,426	$	249,155
KED Resale		131,154		117,304
Connectors		25,578		30,430
Total	$	383,158	$	396,889

		Three Months Ended June 30,
		2007		2008
Operating profit:
Passive Components	$	47,150	$	33,121
KED Resale		11,479		4,431
Connectors		2,293		1,877
Research & development		(2,864)		(2,933)
Corporate administration		(13,901)		(4,454)
Total	$	44,157	$	32,042

		March 31, 2008		June 30, 2008
Assets:
Passive Components	$	755,897	$	749,287
KED Resale		48,024		49,743
Connectors		55,928		55,727
Research & development		6,797		7,569
Cash, A/R and investments in securities		1,019,081		1,014,322
Goodwill - Passive components		148,736		154,840
Goodwill - Connectors		10,277		10,277
Corporate administration		64,338		78,737
Total	$	2,109,078	$	2,120,502

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The following geographic data is based upon net sales generated by operations located within particular geographic areas:

		Three Months Ended June 30,
		2007		2008
Net sales:
Americas	$	102,633	$	113,008
Europe		92,628		110,459
Asia		187,897		173,422
Total	$	383,158	$	396,889

10.   Pension Plans:

The following table shows the components of the net periodic pension cost for the three months ended June 30, 2007 and 2008 for the Company’s defined benefit plans:

		U.S. Plans				International Plans
		Three Months Ended June 30,				Three Months Ended June 30,
		2007		2008		2007		2008
Service cost	$	107	$	111	$	373	$	308
Interest cost		409		451		1,513		1,809
Expected return on plan assets		(426)		(504)		(1,366)		(1,771)
Amortization of prior service cost		21		16		17		-
Recognized actuarial loss		66		27		371		234
Net periodic pension cost	$	177	$	101	$	908	$	580

As described in Note 1 Critical Accounting Policies and Estimates: New Accounting Standards, effective April 1, 2008, the Company adopted the measurement date provision of SFAS 158.  In accordance with this statement, the Company has changed the measurement date of the assets in the Company’s defined benefit plans to March 31 from December 31.  As a result of the adoption, the Company recognized adjustments of $680 and $278 to beginning retained earnings as of April 1, 2008 and to other comprehensive income, respectively.

Based on current actuarial computations during the quarter ended June 30, 2008, the Company made contributions of $293 to the U.S. plans, and $1,663 to the international plans, respectively. The Company expects to make additional contributions of approximately $879 and $4,823 to the U.S. plans and to the international plans, respectively, over the remainder of fiscal 2009.

11.   Restructuring:

During the quarter ended June 30, 2008 restructuring plans were developed and implemented. Related restructuring charges have been accrued in accordance with Statement of Financial Accounting Standard No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. The Company recorded termination benefit charges of $1,291 related to workforce reductions during the quarter ended June 30, 2008. The restructuring charges cover the termination of 69 employees. The Company expects additional restructuring charges; however the amounts can not be reasonably estimated at this time. Of the total charges, $888 was paid out during the quarter ended June 30, 2008 and the remainder is expected be paid out by the end of the quarter ending September 30, 2008.

12.   Subsequent Event:

On July 23, 2008, the Board of Directors of the Company declared a $0.04 dividend per share of common stock with respect to the quarter ended June 30, 2008.  The dividend will be paid to stockholders of record on August 1, 2008 and will be disbursed on August 15, 2008.

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ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact, including statements regarding industry prospects and future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking.  The forward-looking information may include, among other information, statements concerning the Company's outlook for fiscal year 2009, overall volume and pricing trends, cost reduction and acquisition strategies and their anticipated results, expectations for research and development, and capital expenditures.  There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts.  Forward-looking statements reflect management's expectations and are inherently uncertain.  The forward-looking information and statements in this report are subject to risks and uncertainties, including those discussed in the Company's Annual Report on Form 10-K for fiscal year ended March 31, 2008, that could cause actual results to differ materially from those expressed in or implied by the information or statements herein.  Forward-looking statements should be read in context with, and with the understanding of, the various other disclosures concerning the Company and its business made elsewhere in this quarterly report as well as other public reports filed by the Company with the SEC.  You should not place undue reliance on any forward-looking statements as a prediction of actual results or developments.

The Company does not intend to update or revise any forward-looking statement contained in this quarterly report to reflect new events or circumstances unless and to the extent required by applicable law.  All forward-looking statements contained in this quarterly report constitute "forward-looking statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934 and, to the extent it may be applicable by way of incorporation of statements contained in this quarterly report by reference or otherwise, Section 27A of the United States Securities Act of 1933, each of which establishes a safe-harbor from private actions for forward-looking statements as defined in those statutes.

Critical Accounting Policies and Estimates

"Management's Discussion and Analysis of Financial Condition and Results of Operations" is based upon the Company's Consolidated Financial Statements and Notes thereto, which have been prepared in accordance with generally accepted accounting principles in the United States.  The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.  On an ongoing basis, management evaluates its estimates and judgments, including those related to investment securities, revenue recognition, inventories, property and equipment, goodwill, intangible assets, income taxes and contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  There can be no assurance that actual results will not differ from those estimates.

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The Company has identified the accounting policies and estimates that are critical to our business operations and understanding the Company's results of operations.  Those policies and estimates can be found in Note 1, "Summary of Significant Accounting Policies", of the Notes to Consolidated Financial Statements and in "Critical Accounting Policies and Estimates", in “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and in Note 1, "Critical Accounting Policies and Estimates", in the Notes to Consolidated Financial Statements in this Form 10-Q.  Accordingly, this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2008.  During the three month period ended June 30, 2008, except as noted in Note 1, “Critical Accounting Policies and Estimates”, of the Company’s Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q, there were no significant changes to any critical accounting policies, judgments involved in applying those policies or the methodology used in determining estimates with respect to those related to investment securities, revenue recognition, inventories, goodwill, intangible assets, property and equipment, income taxes and contingencies.

Business Overview

AVX is a leading worldwide manufacturer and supplier of a broad line of passive electronic components. Virtually all types of electronic devices use our passive component products to store, filter or regulate electric energy.  We also manufacture and supply high-quality electronic connectors and inter-connect systems for use in electronic products.

We have manufacturing, sales and distribution facilities located throughout the world which are divided into three main geographic regions: the Americas, Asia and Europe.  AVX is organized into five main product groups with three reportable segments: Passive Components, KED Resale and Connectors.  The Passive Components segment consists primarily of surface mount and leaded ceramic capacitors, RF thick and thin film components, tantalum capacitors, film capacitors, ceramic and film power capacitors, super capacitors, EMI filters, thick and thin film packages, varistors, thermistors, inductors and resistive products.  The KED Resale segment consists primarily of ceramic capacitors, frequency control devices, SAW devices, resistive products, RF modules, actuators, acoustic devices and connectors produced by Kyocera, and resold by AVX.  The Connectors segment consists primarily of Elco automotive, telecom and memory connectors manufactured by AVX.

Our customers are multi-national original equipment manufacturers, or OEMs, independent electronic component distributors and electronic manufacturing service providers, or EMSs.  We market our products through our own direct sales force and independent manufacturers' representatives, based upon market characteristics and demands.  We coordinate our sales, marketing and manufacturing organizations by strategic customer account and globally by region.

We sell our products to customers in a broad array of industries, such as telecommunications, information technology hardware, automotive electronics, medical devices and instrumentation, industrial instrumentation, defense and aerospace electronic systems and consumer electronics.

Results of Operations - Three Months Ended June 30, 2008 and 2007

Net income for the quarter ended June 30, 2008 was $31.0 million, or diluted earnings per share of $0.18, compared to $39.2 million, or $0.23 diluted earnings per share, for the quarter ended June 30, 2007. This decrease is a result of the factors set forth below.

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in thousands, except per share data		Three Months Ended June 30,
		2007		2008
Net Sales	$	383,158	$	396,889
Gross Profit		74,725		62,152
Operating Income		44,157		32,042
Net Income		39,159		31,005
Diluted Earnings per Share	$	0.23	$	0.18

Net sales in the three months ended June 30, 2008 increased $13.7 million, or 3.6%, to $396.9 million compared to $383.2 million in the three months ended June 30, 2007. This increase is a result of sales from the September 25, 2007 acquisition of American Technical Ceramics Corp. (“ATC”) partially offset by lower demand resulting primarily from weakness in the consumer electronics markets reflecting uncertainty in global economic conditions.  Supply chain inventory levels have remained lean during the quarter.  Overall sales prices for our commodity components decreased approximately 2% during this first quarter as we experienced decreased capacity utilization and an increase in demand for less complex electronic devices.

The table below represents product group revenues for the three-month periods ended June 30, 2007 and June 30, 2008.

Sales Revenue		Three Months Ended June 30,
$(000's)		2007		2008
Ceramic Components	$	54,077	$	51,006
Tantalum Components		79,677		78,255
Advanced Components		92,672		119,894
Total Passive Components		226,426		249,155
KDP and KKC Resale		110,061		97,699
KEC Resale		21,093		19,605
Total KED Resale		131,154		117,304
Connectors		25,578		30,430
Total Revenue	$	383,158	$	396,889

Passive Component sales increased $22.7 million, or 10.0%, to $249.2 million in the three months ended June 30, 2008 from $226.4 million during the same quarter last year.  The sales increase in Passive Components was primarily due to the acquisition of ATC and the Company’s strategy to focus on a higher mix of value added products partially offset by the lower demand in the consumer electronics markets reflecting overall uncertainty in global economic conditions. The decrease in sales of Ceramic Components reflects a stable volume of unit sales with a higher mix of commodity priced components.  The decrease in sales of Tantalum Components is due to a lower sales unit volume due to a slight decrease in demand for these components as customers reduced inventory levels or changed product designs.

KDP and KKC Resale sales decreased 11.2% to $97.7 million in the three months ended June 30, 2008 compared to $110.1 million during the same period last year.  When compared to the same period last year, the decrease during the quarter ended June 30, 2008 is primarily attributable to a 9.6% decrease in unit sales volume resulting from lower demand resulting from a shift in consumer demand, primarily in the Asian market, to low end products that have fewer components.

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Total Connector sales, including AVX manufactured and KEC Resale connectors, increased $3.3 million, or 7.2%, to $50.0 million in the three months ended June 30, 2008 compared to $46.7 million during the same period last year.  When compared to the same period last year, this increase was mostly attributable to an 11.5% increase in unit sales in Europe primarily in the automotive sector, as more electronic functionality is being built into today’s vehicles.

The Company's sales to independent electronic distributor customers represented 36.2% of total sales for the three months ended June 30, 2008, compared to 43.9% for the three months ended June 30, 2007.  This decline is due to caution in the distributor market as distributor customers sought to reduce inventory levels.  The Company's sales to distributor customers involve specific ship and debit and stock rotation programs for which sales allowances are recorded as reductions in sales.  Such allowance charges were $10.5 million, or 6.8% of gross sales to distributor customers, for the three months ended June 30, 2008 and $10.8 million, or 6.0% of gross sales to distributor customers, for the three months ended June 30, 2007. Applications under such programs for the quarters ended June 30, 2008 and 2007 were approximately $9.9 million and $9.7 million, respectively.

Geographically, compared to the same period last year, sales increased 19.3% in Europe and 10.1% in the Americas. This reflects the continued higher demand in Europe for Connector Components and some Advanced Components products as well as the addition of ATC sales in the Americas and Europe regions.  These increases were partially offset by lower demand in Asia, where sales decreased 7.7% compared to the same period last year. In addition, the weakening of the U.S. dollar against certain foreign currencies positively impacted reported sales by approximately $17.6 million, when compared to the same quarter last year.

Gross profit in the three months ended June 30, 2008 was 15.7% of sales or $62.2 million compared to a gross profit margin of 19.5% or $74.7 million in the three months ended June 30, 2007.  This decrease is a result of increases in material and operating costs chiefly related to the increased cost for energy and transportation, metals and other materials used in production.  In addition, the U.S. dollar weakened against certain foreign currencies when compared to those currencies at June 30, 2007. The negative effect of currency movement on costs was approximately $26.3 million when compared to the same quarter last year.  Compared to the same period last year, depreciation and amortization expense was $4.0 million higher primarily due to the acquisition of ATC.  In addition, we recorded $1.3 million of restructuring charges in connection with headcount reductions to reduce ongoing operating expenses.

Selling, general and administrative expenses in the three months ended June 30, 2008 were $34.1 million, or 8.6% of net sales, compared to $30.6 million, or 8.0% of net sales, in the three months ended June 30, 2007.  The overall increase in selling, general and administrative expenses was primarily due to higher selling and other costs resulting from the addition of ATC, higher wages, the effects of general inflation and the weaknesses of the U.S. Dollar.

As a result of the above factors, income from operations declined $12.1 million to $32.0 million in the three months ended June 30, 2008 compared to $44.2 million in the three months ended June 30, 2007. This decline was partially offset by other operating income of $4.1 million from gains on the sale of excess assets during the quarter.

Other income decreased $2.6 million to $8.4 million in the three months ended June 30, 2008 compared to $11.0 million in the same period last year. This decrease is primarily due to lower interest income resulting from lower interest rates on cash and securities investment balances partially offset by net currency exchange gains for the quarter.

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The Company's effective tax rate for the period ended June 30, 2008 was 23.3% compared to 29.0% for the same period last year. This lower effective tax rate is due in part to the recognition of a net tax benefit of $2.0 million for reinvestment allowances related to additional capital investments in Malaysia.  In addition, the effective tax rate continues to be favorably impacted from the benefit of our foreign branch losses taken as deductions in prior years’ U.S. tax returns no longer subject to U.S. income tax recapture regulations.  In March 2007, the Internal Revenue Service enacted a change in tax regulations that reduced the U.S. income tax recapture period from 15 to 5 years.  As a result, we will reduce deferred tax liabilities by approximately $8.5 million during the fiscal year.

Outlook

Near-Term:

The electronic component industry in which we operate is cyclical. Near-term results for us will depend on the impact of the overall uncertainty in global economic conditions and their impact on telecommunications, information technology hardware, automotive, consumer electronics and other electronic markets.  We expect to see continued pricing pressure in the markets we serve as our customers look to offset the impacts of inflation and rising production costs and additional industry production capacity comes on stream.  We expect to continue to focus on cost reductions and expect additional restructuring actions in the near term for headcount reductions and product line rationalization.  We also continue to focus on process improvements and enhanced production capabilities in conjunction with our focus on the sales of value added electronic components to support today’s advanced electronic devices.

Long-Term:

We continue to be optimistic that opportunities for long-term growth and profitability will continue due to: (a) the continued increase as a long-term trend in worldwide demand for electronic devices which require our electronic components, (b) cost reductions and improvements in our production processes and (c) opportunities for growth in our Advanced Component and Connector product lines due to advances in component design and our production capabilities.

Liquidity and Capital Resources

The Company's liquidity needs arise primarily from working capital requirements, dividend payments, capital expenditures and acquisitions.  Historically, the Company has satisfied its liquidity requirements through funds from operations and investment income from cash and investments in securities.  As of June 30, 2008, the Company had a current ratio of 6.4 to 1, $807.2 million of cash, cash equivalents and short-term and long-term investments in securities, $1.9 billion of stockholders' equity and no debt.

Net cash provided by operating activities was $17.2 million in the three months ended June 30, 2008 compared to $39.1 million of cash provided by operating activities in the three months ended June 30, 2007.  The decrease in cash flow from operating activities compared to the same period last year was primarily a result of a reduction in earnings and of accounts payable.

Purchases of property and equipment were $14.7 million in the three month period ended June 30, 2008 compared to $13.7 million in the three month period ended June 30, 2007.  Expenditures for both periods were primarily in connection with the expansion of passive component manufacturing operations in lower cost regions, process improvements in passive component product lines and expansion of production of certain advanced component and connector product lines.  The carrying value for our equipment reflects the use of the accelerated double-declining balance method to compute depreciation expense for machinery and equipment.  We continue to make strategic investments in our advanced passive component and connector products and expect to incur capital expenditures of approximately $50 million to $60 million in fiscal 2009.  The actual amount of capital expenditures will depend upon the outlook for end-market demand.  During the quarter ended June 30, 2008, the Company paid out $6.1 million related to contingent consideration from a previous acquisition whose purchase price was based on future sales and profitability of products related to the acquisition.

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The majority of the Company's funding is internally generated through operations and investment income from cash and investments in securities.  Since March 31, 2008, there have been no significant changes in the Company's contractual obligations or commitments for the acquisition or construction of plant and equipment or future minimum lease commitments under noncancellable operating leases.  Based on the financial condition of the Company as of June 30, 2008, the Company believes that cash on hand and cash expected to be generated from operating activities and investment income from cash and investments in securities will be sufficient to satisfy the Company's anticipated financing needs for working capital, capital expenditures, environmental clean-up costs, research, development and engineering expenses, any acquisitions of businesses and any dividend payments or stock repurchases to be made during the year.  While changes in customer demand have an impact on the Company's future cash requirements, changes in those requirements are mitigated by the Company's ability to adjust manufacturing capabilities to meet increases or decreases in customer demand.  The Company does not anticipate any significant changes in its ability to generate or meet its liquidity needs in the long-term.

From time to time we enter into delivery contracts with selected suppliers for certain precious metals used in our production processes.  The delivery contracts represent routine purchase orders for delivery within three months and payment is due upon receipt.  As of June 30, 2008, we did not have any of these delivery contracts outstanding.

We are involved in disputes, warranty and legal proceedings arising in the normal course of business. While we cannot predict the outcome of these proceedings, we believe, based upon a review with legal counsel, that none of these proceedings will have a material impact on our financial position, results of operations, or cash flows. However, we cannot be certain if the eventual outcome and any adverse result in these or other matters that may arise from time to time may harm our financial position, results of operations, or cash flows.

We have been named as a potentially responsible party in state and federal administrative proceedings seeking contribution for costs associated with the correction and remediation of environmental conditions at various waste disposal and operating sites.  In addition, we operate on sites that may have potential future environmental issues as a result of activities at sites during AVX’s long history of manufacturing operations or prior to the start of operations by AVX.  Even though we may have rights of indemnity for such environmental matters at certain sites, regulatory agencies in those jurisdictions may require us to address such issues.  Once it becomes probable that we will incur costs in connection with remediation of a site and such costs can be reasonably estimated, we establish reserves or adjust our reserves for our projected share of these costs.  A separate account receivable is recorded for any indemnified costs. Our environmental reserves are not discounted and do reflect any possible future insurance recoveries, which are not expected to be significant, but do reflect a reasonable estimate of cost sharing at multiple party sites or indemnification of our liability by a third party.

We currently have environmental reserves for current remediation, compliance and legal costs totaling $2.3 million at June 30, 2008.  Additional information related to environmental and legal issues can be found in Note 7 “Commitments and Contingencies” of the Company’s Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

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New Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, provides guidance for measuring fair value and requires additional disclosures.  This statement does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.  For financial assets and liabilities, SFAS 157 is effective for financial statements issued for fiscal years beginning after December 31, 2007.  We adopted these provisions of SFAS 157 effective April 1, 2008. The related disclosures are in Note 4 “Fair Value” of the Company’s Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.  On February 12, 2008, the FASB delayed the effective date of SFAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. We do not expect the adoption of these provisions of SFAS 157 to have a material impact on our consolidated financial statements.

As described in Note 10 “Pension Plans” of the Company’s Notes to Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q, effective March 31, 2007, we adopted the provisions of Statement of Financial Accounting Standard No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”), which requires an employer to recognize the overfunded or underfunded status of its defined benefit postretirement plans as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.  Measurement of the plans’ assets and obligations that determine its funded status as of the end of the employer’s fiscal year is required to be adopted for fiscal years ending after December 15, 2008. We adopted the measurement date provisions of SFAS 158 effective April 1, 2008. The adoption of this statement did not have a material impact on our consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115” (“SFAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. We adopted this statement as of April 1, 2008 and have elected not to apply the fair value accounting option to any of its applicable financial instruments.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141(R), “Business Combinations” (“SFAS 141(R)”), which replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how an acquirer in a business combination, 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest, 2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and 3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is to be applied prospectively to business combinations for which the acquisition date is on or after an entity’s fiscal year that begins after December 15, 2008. The application of SFAS 141(R) will result in a significant change in accounting for future acquisitions after the effective date.

In March, 2008, the FASB issued Statement of Financial Accounting Standard No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand how and why an entity uses derivative instruments, how they are accounted for under Statement of Financial Accounting Standard No. 133 “Accounting for Derivative Instruments and Hedging Activities” and related interpretations, and their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the impact of SFAS 161 on the consolidated financial statements.

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 In April 2008, the FASB issued FASB Staff Position No. 142-3, "Determination of the Useful Lives of Intangible Assets", which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. This interpretation is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. We are assessing the potential impact of adoption on the consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s sales are denominated in various foreign currencies in addition to the U.S. dollar. Certain manufacturing and operating costs denominated in local currencies are incurred in Europe, Asia, Mexico and Central and South America. Additionally, purchases of resale products from Kyocera may be denominated in Yen.  As a result, fluctuations in currency exchange rates affect our operating results and cash flow. In order to minimize the effect of movements in currency exchange rates, we periodically enter into forward exchange contracts to hedge external and intercompany foreign currency transactions. We do not hold or issue derivative financial instruments for speculative purposes.  Accordingly, we have hedging commitments to cover a portion of our exchange risk on purchases, operating expenses and sales. There have been no material net changes in the Company’s exposure to its foreign currency exchange rate as reflected in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered in this report, the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

In addition, there were no changes in the Company’s internal control over financial reporting during the Company’s first quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I Item 3, “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008. In addition, see Note 7, “Commitments and Contingencies”, in our Notes to Consolidated Financial Statements in Part I, Item 1 to this Form 10-Q for a discussion of our involvement as a PRP at certain environmental remediation sites.

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ITEM 1A. RISK FACTORS

Please refer to Part I, Item 1A., Risk Factors, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008 for information regarding factors that could affect the Company’s results of operations, financial condition and liquidity. There have been no material changes to our risk factors during the three months ended June 30, 2008.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table shows the Company’s purchases of its common stock during the quarter.

Period	Total Number of Shares Purchased (1)(2)(3)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2)(3)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs (1)(2)(3)
04/01/08 - 04/30/08	28,863	$       13.48	28,863	8,979,437
05/01/08 - 05/31/08	143,234	13.13	143,234	8,836,203
06/01/08 - 06/30/08	86,800	12.92	86,800	8,749,403
Total	258,897	$       13.10	258,897	8,749,403

(1)   On April 19, 2001, the Board of Directors of the Company authorized the repurchase of up to 5,000,000 shares of our common stock from time to time in the open market.  The repurchased shares are held as treasury stock and are available for general corporate purposes.

(2)   On October 19, 2005, the Board of Directors of the Company authorized the repurchase of an additional 5,000,000 shares of our common stock from time to time in the open market.  The repurchased shares are held as treasury stock and are available for general corporate purposes.

(3)   On October 17, 2007, the Board of Directors of the Company authorized the repurchase of an additional 5,000,000 shares of our common stock from time to time in the open market.  The repurchased shares are held as treasury stock and are available for general corporate purposes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Stockholders on July 23, 2008.  Proxies for the meeting were solicited pursuant to Regulation 14A of the Securities Exchange Act of 1934, and there was no solicitation in opposition to management's solicitations.

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Proposal 1:

Class III directors with terms expiring at the Annual Stockholders Meeting in 2011 were elected with the following votes:

		Shares Voted "For"	Shares "Withheld"
Class III	Kensuke Itoh	149,316,423	19,235,437
Class III	Yuzo Yamamura	149,318,045	19,233,815
Class III	Donald B. Christiansen	167,809,999	741,861

The following is a summary of directors who were not up for election and continue in office:

Class I	Kazuo Inamori
Class I	Noboru Nakamura
Class I	David A. DeCenzo
Class II	John S. Gilbertson
Class II	Makoto Kawamura
Class II	Rodney N. Lanthorne
Class II	Joseph Stach

Proposal 2:

Ratification of appointment of PricewaterhouseCoopers, LLP as the Company's independent accountants for the fiscal year ending March 31, 2009 was approved with the following votes:

Shares	Shares
Voted	Voted	Shares
"For"	"Against"	"Abstaining"
168,412,828	124,680	14,350

ITEM 6.	EXHIBITS
10.1	AVX Corporation 2004 Stock Option Plan amended July 23, 2008.
10.2	AVX Corporation 2004 Non-Employee Directors' Stock Option Plan amended July 23, 2008.
31.1	Certification of John S. Gilbertson, Chief Executive Officer, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 4, 2008.
31.2	Certification of Kurt P. Cummings, Chief Financial Officer, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 4, 2008.
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - John S. Gilbertson and Kurt P. Cummings

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Signature

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.

Date:   August 4, 2008

AVX Corporation
By:	/s/ Kurt P. Cummings

Kurt P. Cummings

Vice President,

Chief Financial Officer,

Treasurer and Secretary

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, John S. Gilbertson, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of AVX Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ John S. Gilbertson
Date: August 4, 2008	John S. Gilbertson
	Chief Executive Officer and President

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to AVX Corporation and will be retained by AVX Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Kurt P. Cummings, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of AVX Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ Kurt P. Cummings
Date: August 4, 2008	Kurt P. Cummings
	Vice President, Chief Financial Officer, Treasurer and Secretary

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to AVX Corporation and will be retained by AVX Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AVX Corporation (the "Registrant") on Form 10-Q for the period ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, John S. Gilbertson and Kurt P. Cummings, Chief Executive Officer and Chief Financial Officer, respectively, of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the results of operations and financial condition of the Registrant.

Date: August 4, 2008

/s/ John S. Gilbertson

John S. Gilbertson

Chief Executive Officer

/s/ Kurt P. Cummings

Kurt P. Cummings

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to AVX Corporation and will be retained by AVX Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-10.1

EXHIBIT 10.1

AVX CORPORATION

2004 STOCK OPTION PLAN

As amended through July 23, 2008

1.  Adoption and Purpose.  The Company hereby adopts this Plan providing for the granting of stock options to selected employees of the Company and its Subsidiaries.  The general purpose of the Plan is to promote the interests of the Company and its Subsidiaries by providing to their employees incentives to continue and increase their efforts with respect to, and remain in the employ of, the Company and its Subsidiaries.

Options granted under the Plan may be "incentive stock options" within the meaning of Section 422 of the Code or "nonqualified stock options", and the specific type of option granted shall be designated by the Committee upon grant.

2.  Administration.  The Plan will be administered by the Equity Compensation Committee (the "Committee"), or, at the discretion of the Board from time to time, the Plan may be administered by the Board.  It is intended that at least two of the directors appointed to serve on the Committee shall qualify as (a) "outside directors" within the meaning of Section 162(m) of the Code and the regulations thereunder and (b) "Non-Employee Directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated under the Exchange Act and that any such members of the Committee who do not so qualify shall abstain from participating in any decision to make or administer stock options that are made to participants who at the time of consideration for such stock option are, or who are anticipated to become, either (i) a "covered employee", as defined in Code Section 162(m)(3) or (ii) a person subject to the short-swing profit rules of Section 16 of the Exchange Act.  However, the mere fact that a Committee member shall fail to qualify under either of the foregoing requirements or shall fail to abstain from such action shall not invalidate any award made by the Committee which award is otherwise validly made under the Plan.  To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 2) shall include the Board.

Subject to the express provisions of the Plan, the Committee shall have plenary authority, in its discretion, to administer the Plan and to exercise all powers and authority either specifically granted to it under the Plan or necessary and advisable in the administration of the Plan, including without limitation the authority to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms of all options granted under the Plan (which need not be identical), the purchase price of the shares covered by each option, the individuals to whom and the time or times at which options shall be granted, whether an option shall be an incentive stock option or a nonqualified stock option, when an option can be exercised and whether in whole or in installments, and the number of shares covered by each option; and to make all other necessary or advisable determinations with respect to the Plan.  The determination of the Committee on such matters shall be conclusive.

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To the extent permitted under Delaware law, the Board or the Committee may expressly delegate to any individual or group of individuals some or all of the Committee's authority to grant awards under this Plan, except that no delegation of its duties and responsibilities may be made with respect to awards to any participant who is, or who is anticipated to be become, either (i) a "covered employee", as defined in Code Section 162(m)(3) or (ii) a person subject to the short-swing profit rules of Section 16 of the Exchange Act.  The acts of such delegates shall be treated hereunder as acts of the Committee, and such delegates shall report to the Committee regarding the delegated duties and responsibilities.

3.  Participants.  The Committee shall from time to time select the officers and key employees of the Company and its Subsidiaries to whom options are to be granted, and who will, upon such grant, become participants in the Plan.

4.  Shares Subject to Plan.  The Committee may not grant options under the Plan for more than 10,000,000 shares of Common Stock, subject to any adjustment as provided in Section 13 hereof.  Shares to be optioned and sold may be made available from either authorized but unissued Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased on the open market.  Shares that by reason of the expiration of an option or otherwise are no longer subject to purchase pursuant to an option granted under the Plan will again be available for issuance under the Plan.

5.  Limitation on Number of Options.  The aggregate Fair Market Value (determined as of the time an incentive stock option is granted) of the stock with respect to which incentive stock options granted to an employee under the Plan are exercisable for the first time during any calendar year may not exceed $100,000.  To the extent that this dollar limitation is exceeded, the excess options shall be deemed to be non-qualified stock options.

Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 13), the maximum number of shares of Common Stock with respect to one or more options that may be granted during any one calendar year under the Plan to any one participant shall be 1,000,000.

6.  Grant of Options.  All options under the Plan shall be granted by the Committee or such person delegated by the Committee pursuant to Section 2.  The Committee or such delegate shall determine the number of shares of Common Stock to be offered from time to time by grant of options to employees who are participants of the Plan (it being understood that more than one option may be granted to the same employee).  The grant of an option to an employee shall not be deemed either to entitle the employee to, or to disqualify the employee from, participation in any other grant of options under the Plan.

7.  Option Price.  The purchase price per share of the Common Stock for any option granted under the Plan shall be determined by the Committee, but shall not be less than 100% of the Fair Market Value per share of the Common Stock at the time the option is granted.  Notwithstanding the foregoing, no incentive stock option shall be granted to an employee who, at the time of such grant, is a Ten Percent Shareholder unless the option price per share is at least 110% of the Fair Market Value per share of the Common Stock subject to the incentive stock option at the time the option is granted.

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8.  Option Period.  The option period will begin on the date the option is granted, which will be the date the Committee authorizes the option unless the Committee specifies a later date.  No option may terminate later than the day prior to the tenth anniversary of the date the option is granted; provided, however, that an incentive stock option granted to an employee who, at the time of such grant, is a Ten Percent Shareholder shall not be exercisable after the expiration of five years after the date of grant.  The Committee may provide for the exercise of options in installments and upon such terms, conditions and restrictions as it may determine.

9.  Exercisability of Options.  The Committee shall prescribe the installments, if any, in which an option granted under the Plan shall become vested and exercisable.

If the participant voluntarily terminates his employment or his employment with the Company or Subsidiary is terminated for Cause, neither the Company, the Parent nor any Subsidiary shall have any further obligation to the participant hereunder, and the options (whether or not vested) shall immediately terminate in full.  In the event a participant's employment is terminated by the Company for any reason other than for Cause, options may be exercised, to the extent vested and exercisable as of his date of termination of employment, by the participant in accordance with its terms but in no event beyond the earlier of (x) 90 days after the date of termination, unless such period is extended in the discretion of the Committee, or (y) the scheduled expiration of such option.

10.  Payment; Method of Exercise.  Payment shall be made in cash or in shares of Common Stock already owned by the holder of the option (valued at Fair Market Value on the date of exercise) or partly in cash and partly in such shares; provided, however, that if shares are used to pay the exercise price of an option, such shares must have been held by the participant for at least such period of time, if any, as necessary to avoid variable accounting for the option.  The Committee, in its sole discretion, may authorize additional methods by which the exercise price of an option may be paid (including "cashless exercise" arrangements), and by which shares of Common Stock shall be delivered or deemed to be delivered to participants.  No shares may be issued until full payment of the purchase price therefore has been made, and a participant will have none of the rights of a stockholder until shares are issued to him.

Options shall be exercised by written notice to the Company.  Such notice shall state that the holder of the option elects to exercise the option, the number of shares in respect of which it is being exercised and the manner of payment for such shares and shall be accompanied by payment of the full purchase price of such shares.

11.  Withholding Taxes.  The Company or any Parent or Subsidiary shall have the authority and the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the participant's FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan.  If shares of Common Stock are surrendered to the Company to satisfy withholding obligations in excess of the minimum withholding obligation, such shares must have been held by the participant as fully vested shares for such period of time, if any, as necessary to avoid variable accounting for the option.  With respect to withholding required upon any taxable event under the Plan, the Committee may require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding from the option shares of Common Stock having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee may establish.

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12.  Rights in the Event of Death, Retirement or Incapacity.  If a participant's employment is terminated due to death, Retirement or Incapacity prior to the termination of his or her right to exercise an option in accordance with the provisions of his or her stock option without having fully exercised the option, then the total number of shares of Common Stock then underlying the option shall thereupon become exercisable.  Such exercisable options may only be exercised prior to the date of their original expiration.  In the event of a termination of a participant's employment due to death or Incapacity, or a participant's death following his or her termination of employment during the period in which his or her option remains exercisable, then notwithstanding the foregoing, such option may be exercised to the extent the option could have been exercised by the participant, by the participant's estate or by the person who acquired the right to exercise the option by bequest or inheritance only during the period within one year after the date of death or termination for Incapacity, but in no event beyond the original expiration date of the option.

13.  Effect of Certain Changes.

(a)  If there is any change in the number of outstanding shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination, exchange of shares, merger, consolidation, liquidation, split-up, spin-off or other similar change in capitalization, any distribution to common shareholders, including a rights offering, other than cash dividends, or any like change, then the number of shares of Common Stock available for grant under Section 4, the authorization limits in Section 5, the number of such shares covered by outstanding options, and the price per share of such options shall be proportionately adjusted by the Committee to reflect such change or distribution; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.  Without limiting the foregoing, in the event of a subdivision of the outstanding shares of Common Stock (stock-split), a declaration of a dividend payable in shares of Common Stock, or a combination or consolidation of the outstanding shares of Common Stock into a lesser number of shares, the authorization limits under Sections 4 and 5 shall automatically be adjusted proportionately, and the shares of Common Stock then subject to each option shall automatically be adjusted proportionately without any change in the aggregate purchase price therefor.

 (b)  In the event of a change in the Common Stock of the Company as presently constituted, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan.

(c)  In the event of a reorganization, recapitalization, merger, consolidation, acquisition of property or stock, extraordinary dividend or distribution, separation or liquidation of the Company, or any other event similarly affecting the Company, the Board or the Committee shall have the right, but not the obligation, notwithstanding anything to the contrary in this Plan, to provide that outstanding options granted under this Plan shall (i) be canceled in respect of a cash payment or the payment of securities or property, or any combination thereof, with a per share value determined by the Board in good faith to be equal to the value received by the stockholders of the Company in such event in the respect of each share of Common Stock, with appropriate deductions of exercise prices, or (ii) be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction.

(d)  To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. The Committee's determination need not be uniform and may be different for different participants whether or not such participants are similarly situated.

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14.  Nonexclusive Plan.  Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

15.  Assignability.  Nonqualified options may be transferred by gift to any member of the optionee's immediate family or to a trust for the benefit of one or more of such immediate family members, and nonqualified and incentive stock options may be transferred by the laws of descent and distribution.  Incentive stock options are otherwise non-transferable.  During an optionee's lifetime, options granted to an optionee may be exercised only by such optionee or by his or her guardian or legal representative unless the option has been transferred in accordance with the preceding sentence, in which case, it shall be exercisable only by such transferee.  For purposes of this Section 15, immediate family shall mean the optionee's spouse, children and grandchildren.

16.  Amendment or Discontinuance.  The Plan may be amended or discontinued by the Board without the approval of the stockholders of the Company, except that stockholder approval shall be required for any amendment that would (a) materially increase (except as provided in Section 13 hereof) the maximum number of shares of Common Stock for which options may be granted under the Plan, (b) materially expand the class of employees eligible to participate in the Plan, (c) expand the types of awards available under the Plan, (d) otherwise materially increase the benefits to participants under the Plan, or (e) otherwise constitute a material change requiring stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of the principal stock exchange or the NASDAQ National Market on which the Common Stock is then listed or traded.

17.  Options Previously Granted.At any time and from time to time, the Committee may amend, modify or terminate any outstanding option without approval of the participant; provided, however:

(a)  Such amendment, modification or termination shall not, without the participant's consent, reduce or diminish the value of such option determined as if the option had been exercised on the date of such amendment or termination (with the per-share value of an option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise price of such option);

(b)  The original term of an option may not be extended without the prior approval of the stockholders of the Company;

(c)  Except as otherwise provided in Section 13, the exercise price of an option may not be reduced, directly or indirectly, without the prior approval of the stockholders of the Company; and

(d)  No termination, amendment, or modification of the Plan shall adversely affect any option previously granted under the Plan, without the written consent of the participant affected thereby.  An outstanding option shall not be deemed to be "adversely affected" by a Plan amendment if such amendment would not reduce or diminish the value of such option determined as if the option had been exercised on the date of such amendment (with the per-share value of an option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise price of such option).

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18.  Effect of Plan.  Neither the adoption of the Plan nor any action of the Board or Committee shall be deemed to give any officer or employee any right to be granted an option to purchase Common Stock or any other rights except as may be evidenced in a valid resolution, action, or minutes of the Committee (or of such person delegated by the Committee pursuant to Section 2), or by a stock option agreement or notice, or any amendment thereto, duly authorized by the Board or Committee (or by such person delegated by the Committee pursuant to Section 2) and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein.

19.  Term.  Unless sooner terminated by action of the Board, this Plan will terminate on August 1, 2014.  The Committee may not grant options under the Plan after that date, but options granted before that date will continue to be effective in accordance with their terms.  No incentive stock option may be granted pursuant to the Plan after the day immediately prior to the tenth anniversary of the date the Plan was adopted by the Board, or the termination of the Plan, if earlier.

20.  Effectiveness; Approval of Stockholders.  The Plan shall take effect upon its adoption by the Board, but its effectiveness and the exercise of any options shall be subject to the approval of the holders of a majority of the voting shares of the Company, which approval must occur within twelve months after the date on which the Plan is adopted by the Board.

21.  Definitions.  For the purpose of this Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:

(a)  "Board" means the board of directors of the Company.

(b)  "Cause" means the commission of an act of dishonesty, gross incompetency or intentional or willful misconduct, which act occurs in the course of participant's performance of his duties as an employee.

(c)  "Code" means the Internal Revenue Code of 1986, as amended.

(d)  "Common Stock" means the Common Stock which the Company is currently authorized to issue or may in the future be authorized to issue (as long as the Common Stock varies from that currently authorized, if at all, only in amount of par value).

(e)  "Company" means AVX Corporation, a Delaware corporation.

(f)  "Exchange Act" means the Securities Exchange Act of 1934, as from time to time amended.

(g)  "Fair Market Value" means the closing price for options granted after April 1, 2007 or the average of the high and the low sales prices for options granted before April 1, 2007 of a share of Common Stock on the date of grant (or, if not a trading day, on the last preceding trading day) as reported on the New York Stock Exchange Composite Transactions Tape or, if not listed on the New York Stock Exchange, the principal stock exchange or the NASDAQ National Market on which the Common Stock is then listed or traded; provided, however, that if the Common Stock is not so listed or traded then the Fair Market Value shall be determined in good faith by the Board.

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(h)  "Incapacity" means any material physical, mental or other disability rendering the participant incapable of substantially performing his services hereunder that is not cured within 180 days of the first occurrence of such incapacity.  If the determination of Incapacity relates to an incentive stock option, "Incapacity" means Permanent and Total Disability, as defined in Section 22(e)(3) of the Code.  In the event of any dispute between the Company and the participant as to whether the participant is incapacitated as defined herein, the determination of whether the participant is so incapacitated shall be made by an independent physician selected by the Company's Board of Directors and the decision of such physician shall be binding upon the Company and the participant.

(i)  "Option Period" means the period during which an option may be exercised.

(j)  "Parent" means any corporation in an unbroken chain of corporations ending with the Company if, at the time of granting of the option, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

(k)  "Plan" means this AVX Corporation 2004 Stock Option Plan as amended from time to time.

(l)  “Retirement” means, with respect to any participant, the participant's retirement as an employee of the Company on or after reaching age 65, or as otherwise provided under a participant's terms of employment governed by a separate agreement.

(m)  "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.  The "Subsidiaries" means more than one of any such corporations.

(n)  "Ten Percent Shareholder" means an individual who owns (or is treated as owning under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary.

EX-10.2

EXHIBIT 10.2

AVX CORPORATION

2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

As amended through July 23, 2008

1.  Adoption and Purpose.  The AVX Corporation (the "Company") hereby adopts the 2004 AVX Corporation Non-Employee Directors' Stock Option Plan (the "Plan") to secure for the Company and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors (the "Board") of the Company who are not employees of the Company or any of its subsidiaries (a "Non-Employee Director").

2.  Administration.  The Plan shall be administered by the Board.  The Board shall have all the powers vested in it by the terms of the Plan, such powers to include authority (within the limitations described herein) to prescribe the form of the agreement embodying awards of stock options made under the Plan (the "Options") and the power to determine the restrictions, if any, on the ability of participants to earn-out and to dispose of any stock issued in connection with the exercise of any Options granted pursuant to the Plan.  The Board shall, subject to the provisions of the Plan, have the power to interpret the Plan and to prescribe, amend and rescind rules and regulations for the administration of the Plan as it may deem desirable.  Any decisions of the Board in the administration of the Plan, as described herein, shall be final and conclusive.  The Board may authorize any one or more of their number (each, a "Director") or the Secretary or any other officer of the Company to execute and deliver documents on behalf of the Board.  The Board hereby authorizes the Secretary to execute and deliver all documents to be delivered by the Board pursuant to the Plan.  No member of the Board shall be liable for anything done or omitted to be done by such member or by any other member of the Board in connection with the Plan, except for such member's own willful misconduct or as expressly provided by statute.

3.  Shares Subject to Plan.  The stock which may be issued and sold under the Plan will be the Common Stock (par value $0.01 per share) of the Company.  The total amount of stock for which Options may be granted under the Plan shall not exceed 1,000,000 shares of Common Stock, subject to adjustment as provided in Section 6 below.  The stock to be issued may be either authorized and unissued shares, shares held by the Company in its treasury, or Common Stock purchased on the open market.  Shares that by reason of the expiration of an option or otherwise are no longer subject to purchase pursuant to an Option granted under the Plan may be reoffered under the Plan.

4.  Participants.  Each Non-Employee Director shall be eligible to receive an Option in accordance with Section 5 below.

5.  Terms and Conditions of Options.  Each Option granted under the Plan shall comply with the following terms and conditions:

(a)  The Option exercise price shall be the "Fair Market Value" of the Common Stock shares subject to such Option on the date the Option is granted, which shall be the closing price for options granted after July 1, 2008 or the average of the high and the low sales prices for options granted before July 1, 2008 of a share of Common Stock on the date of grant (or, if not a trading day, on the last preceding trading day) as reported on the New York Stock Exchange Composite Transactions Tape or, if not listed on the New York Stock Exchange, the principal stock exchange or the NASDAQ National Market on which the Common Stock is then listed or traded; provided, however, that if the Common Stock is not so listed or traded then the Fair Market Value shall be determined in good faith by the Board.

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(b)  Each new Non-Employee Director elected on the date of an Annual Meeting of Stockholders of the Company shall automatically receive an Option for 15,000 shares of Common Stock as of the first day of the month following such annual meeting.  Each Non-Employee Director who has been re-elected as a Non-Employee Director shall automatically receive an additional Option for 15,000 shares of Common Stock in the year in which the third anniversary of his or her latest option grant occurs provided that he/she has been re-elected as a Non-Employee Director in such year.  Such Option shall be granted as of the first day of the month following the Annual Meeting of Stockholders of the Company in such year.

(c)  Each Non-Employee Director may also be granted Options from time to time upon prior approval by the full Board.

(d)  No Option or any part of an Option shall be exercisable:

(i)  after the expiration of ten years from the date the Option was granted,

(ii)  unless written notice of the exercise is delivered to the Company specifying the number of shares to be purchased and payment in full is made for the shares of Common Stock being acquired thereunder at the time of exercise; such payment shall be made

(A)  in cash or by check,

(B)  by tendering to the Company Common Stock shares owned by the person exercising the Option and having a Fair Market Value equal to the cash exercise price applicable to such Option, it being understood that the Board shall determine acceptable methods for tendering Common Stock shares and may impose such conditions on the use of Common Stock shares to exercise Options as it deems appropriate, or

(C)  by a combination of cash or check and Common Stock shares as aforesaid; or

(D)  by additional methods as may be authorized by the Board in it sole discretion (including "cashless exercise" arrangements); and

(iii)  unless the person exercising the Option has been, at all times during the period beginning with the date of grant of the Option and ending on the date of such exercise, a Director of the Company, except that if such person shall cease to be such a Director by reason of Retirement (as defined below), Incapacity (as defined below) or death while holding an Option that has not expired and has not been fully exercised, such person, or in the case of death, the executors, administrators, or distributees, as the case may be, may at any time after the date such person ceased to be such a Director (but in no event after the Option has expired under the provisions of subparagraph 5(d)(i) above) exercise the Option (to the extent exercisable by the Director on the date he ceased to be a Director) with respect to any shares of Common Stock as to which such person has not exercised the Option on the date the person ceased to be such a Director.

If any person who has ceased to be a Director for any reason other than death, shall die holding an Option that has not expired and has not been fully exercised, such person's executors, administrators, or distributees, as the case may be, may exercise the Option (to the extent vested and exercisable by the decedent on his date of death) provided that in no event may the Option be exercised after it has expired pursuant to subparagraph 5(d)(i).

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In the event any Option is exercised by the executors, administrators, legatees, or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the Option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof.

(e)  One-third of the total number of shares of Common Stock covered by all Options shall become exercisable beginning with the first anniversary date of the grant of the Option; thereafter an additional one-third of the total number of shares of Common Stock covered by the Option shall become exercisable on each subsequent anniversary date of the grant of the Option until on the third anniversary date of the grant of the Option the total number of shares of Common Stock covered by the Option shall become exercisable.  In the event the Non-Employee Director ceases to be a Director by reason of Retirement, Incapacity or death, the total number of shares of Common Stock covered by the Option shall thereupon become exercisable. Such exercisable options must be exercised prior to the earlier of (i) one year after the date of such Retirement, Incapacity or death and (ii) the date of their original expiration.

(f)  Options granted to a person shall automatically be forfeited by such person if such person shall cease to be a Director for reasons other than Retirement, Incapacity or death.

(g)  As used in this Section 5, the term "Retirement" means the termination of a Director's service on the Board pursuant to (i) resignation from the Board upon reaching retirement age or (ii) otherwise resigning or not standing for reelection with the approval of the Board; provided, however, that "Retirement" shall not include any termination of service resulting from an act of (i) fraud or intentional misrepresentation or (ii) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any direct or indirect majority-owned subsidiary of the Company, by such Director.  The determination of whether termination results from any such act shall be made by the Board, whose determination shall be conclusive.

(h)  As used in this Section 5, the term "Incapacity" means any material physical, mental or other disability rendering the Director incapable of substantially performing his or her services hereunder that is not cured within 180 days of the first occurrence of such incapacity.  In the event of any dispute between the Company and the Director as to whether he or she is incapacitated as defined herein, the determination of whether the Director is so incapacitated shall be made by an independent physician selected by the Board and the decision of such physician shall be binding upon the Company and the Director.

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6.  Adjustment in the Event of Certain Changes in Stock.

(a)  If there is any change in the number of outstanding shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination, exchange of shares, merger, consolidation, liquidation, split-up, spin-off or other similar change in capitalization, any distribution to common stockholders, including a rights offering, other than cash dividends, or any like change, then the number of shares of Common Stock available for options, the number of such shares covered by outstanding options, and the price per share of such options shall be proportionately adjusted by the Board to reflect such change or distribution; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.  Without limiting the foregoing, in the event of a subdivision of the outstanding shares of Common Stock (stock-split), a declaration of a dividend payable in shares of Common Stock, or a combination or consolidation of the outstanding shares of Common Stock into a lesser number of shares, the authorization limit under Section 3 and the award amounts under Section 5 shall automatically be adjusted proportionately, and the shares of Common Stock then subject to each option shall automatically be adjusted proportionately without any change in the aggregate purchase price therefor.

(b)  In the event of change in the Common Stock of the Company as presently constituted, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan.

(c)  In the event of a reorganization, recapitalization, merger, consolidation, acquisition of property or stock, extraordinary dividend or distribution (other than as covered by Section 6(a) hereof), separation or liquidation of the Company, or any other event similarly affecting the Company, the Board shall have the right, but not the obligation, notwithstanding anything to the contrary in this Plan, to provide that outstanding options granted under this Plan shall (i) be canceled in respect of a cash payment or the payment of securities or property, or any combination thereof, with a per share value determined by the Board in good faith to be equal to the value received by the stockholders of the Company in such event in the respect of each share of Common Stock, with appropriate deductions of exercise prices, or (ii) be adjusted to represent options to receive cash, securities, property, or any combination thereof, with a per share value determined by the Board in good faith to be equal to the value received by the stockholders of the Company in such event in respect of each share of Common Stock, at such exercise prices as the Board in its discretion may determine is appropriate.

(d)  To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive.

7.  Nonexclusive Plan.  Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

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8.  Nonassignability.  Options may be transferred by gift to any member of the optionee's immediate family or to a trust for the benefit of one or more of such immediate family members, by the laws of descent and distribution, or as otherwise permitted by the Board.  During a Director's lifetime, options granted to a Director may be exercised only by the Director or by his or her guardian or legal representative or his or her permitted transferee.

9.  Amendment or Discontinuance.  The Plan may be amended or discontinued by the Board without the approval of the stockholders of the Company, except that stockholder approval shall be required for any amendment that would (a) materially increase (except as provided in Section 6 hereof) the maximum number of shares of Common Stock for which Options may be granted under the Plan, (b) materially expand the class of persons eligible to participate in the Plan, (c) expand the types of awards available under the Plan, (d) otherwise materially increase the benefits to participants under the Plan, or (e) otherwise constitute a material change requiring stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of the principal stock exchange or the NASDAQ National Market on which the Common Stock is then listed or traded.

10.  Options Previously Granted.  At any time and from time to time, the Board may amend, modify or terminate any outstanding Option without approval of the optionee; provided, however:

(a)  Such amendment, modification or termination shall not, without the optionee's consent, reduce or diminish the value of such Option determined as if the Option had been exercised on the date of such amendment or termination (with the per-share value of an Option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise price of such Option);

(b)  The original term of an Option may not be extended without the prior approval of the stockholders of the Company;

(c)  Except as otherwise provided in Section 6, the exercise price of an Option may not be reduced, directly or indirectly, without the prior approval of the stockholders of the Company; and

(d)  No termination, amendment, or modification of the Plan shall adversely affect any Option previously granted under the Plan, without the written consent of the optionee affected thereby.  An outstanding option shall not be deemed to be "adversely affected" by a Plan amendment if such amendment would not reduce or diminish the value of such Option determined as if the Option had been exercised on the date of such amendment (with the per-share value of an Option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise price of such Option).

11.  Effect of Plan.  Neither the adoption of the Plan nor any action of the Board shall be deemed to give any Non-Employee Director any right to be granted an option to purchase Common Stock or any other rights except as may be evidenced in a valid resolution, action, or minutes of the Committee, or by a stock option agreement or notice, or any amendment thereto, duly authorized by the Board and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein.

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12.  Term.  Unless sooner terminated by action of the Board, this Plan will terminate on August 1, 2014.  The Board may not grant Options under the Plan after that date, but Options granted before that date will continue to be effective in accordance with their terms.

13.  Effectiveness; Approval of Stockholders.  The Plan shall take effect upon its adoption by the Board, but its effectiveness and the exercise of any options shall be subject to the approval of the holders of a majority of the voting shares of the Company, which approval must occur within twelve months after the date on which the Plan is adopted by the Board.

14.  Withholding Taxes.  The Company shall have the authority and the right to deduct or withhold, or require an optionee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan.  If shares of Common Stock are surrendered to the Company to satisfy withholding obligations in excess of the minimum withholding obligation, such shares must have been held by the participant as fully vested shares for such period of time, if any, as necessary to avoid variable accounting for the option.  With respect to withholding required upon any taxable event under the Plan, the Board may require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding from the option shares of Common Stock having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Board may establish.