SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  FORM 10-Q


(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 

      For the quarterly period ended September 27, 1998

                                      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 No. 0-12942

                             PARLEX CORPORATION
           (Exact Name of Registrant as Specified in its Charter)

             Massachusetts                         04-2464749
    (State or other jurisdiction of      (IRS Employer Identification 
     incorporation or organization)                  Number)

145 Milk Street, Methuen, Massachusetts              01844
(Address of principal executive offices)           (Zip Code)

                                978-685-4341
            (Registrant's telephone 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   [ ]

      The number of shares of the Registrant's Common Stock, par value $.10 
per share, outstanding at October 31, 1998 was 4,640,836 shares.

<PAGE>  -1-

                             PARLEX CORPORATION

                                    INDEX

Part I - Financial Statements:

Consolidated Balance Sheets - September 27, 1998 and June 30, 1998      3

Consolidated Statements of Income - For the Three Months
 Ended September 27, 1998 and September 28, 1997                        4

Consolidated Statements of Cash Flows - For the Three Months
 Ended September 27, 1998 and September 28, 1997                        5

Notes to Unaudited Consolidated Financial Statements                    6

Management's Discussion and Analysis of Financial Condition
 And Results of Operations                                              7

Part II - Other Information                                            11

Exhibit Index                                                          12

Signatures                                                             15

<PAGE>  -2-

                     PARLEX CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                    September 27, 1998 and June 30, 1998
                                 (Unaudited)

<TABLE>
<CAPTION>
                                          Sept 27, 1998      June 30, 1998
                                          -------------      -------------

                                   ASSETS

<S>                                        <C>               <C>
Current assets:
  Cash and cash equivalents                $ 5,554,783       $ 5,824,233
  Short-term Investments                     5,234,790         6,789,469
  Accounts receivable - net                 10,907,369        11,145,750
  Inventories:
    Raw material                             3,544,714         3,413,657
    Work in process                          6,088,973         5,933,000
  Refundable income taxes                      126,933           323,626
  Deferred income taxes                        372,725           372,725
  Other current assets                         927,363         1,706,367
                                           -----------------------------
    Total current assets                    32,757,650        35,508,827
                                           =============================
Property, plant and equipment:
  Land                                         468,864           468,864
  Buildings                                  7,724,022         7,724,022
  Machinery and equipment                   27,370,499        27,200,755
  Leasehold improvements and other           2,302,337         2,270,658
  Construction in progress                   7,069,851         4,390,805
                                           -----------------------------
      Total                                 44,935,573        42,055,104
  Less accumulated depreciation and
   Amortization                            (22,815,377)      (22,031,645)
                                           -----------------------------
      Property, plant and equipment
       - net                                22,120,196        20,023,459
                                           -----------------------------
Other assets                                 1,166,789           649,198
                                           -----------------------------
      Total                                $56,044,635       $56,181,484
                                           =============================

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt        $   307,300       $   121,158
  Bank loan                                    360,577           310,577
  Accounts payable                           5,298,107         6,437,169
  Accrued liabilities                        1,706,695         2,353,800
                                           -----------------------------
      Total current liabilities              7,672,679         9,222,704
                                           -----------------------------

Long-term debt                               2,062,757         1,165,751
                                           -----------------------------
Other non-current liabilities                2,269,365         2,247,444
                                           -----------------------------
Minority interest in Parlex (Shanghai)       2,244,958         1,954,472
                                           -----------------------------

Stockholders' equity
  Preferred stock                                  -0-               -0-
  Common stock                                 485,083           485,065
  Additional paid-in capital                23,873,819        23,872,745
  Retained earnings                         18,467,813        18,268,743
  Unrealized gain on short-term
   investments                                  13,472            10,192
  Cumulative translation adjustments            (7,686)           (8,007)
  Less treasury stock at cost               (1,037,625)       (1,037,625)
                                           -----------------------------
      Total Stockholders' equity            41,794,876        41,591,113
                                           -----------------------------
      Total                                $56,044,635       $56,181,484
                                           =============================
</TABLE>

See Notes to Unaudited Consolidated Financial Statements

<PAGE>  -3-

                     PARLEX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
     For the Three Months Ended September 27, 1998 and September 28, 1997
                                 (Unaudited)

<TABLE>
<CAPTION>
                                   September 27, 1998   September 28, 1997
                                   ------------------   ------------------

<S>                                    <C>                  <C>
Product sales                          $15,419,212          $13,672,226
License fees and royalties                  72,544               44,825
                                       --------------------------------
Total Revenues                         $15,491,756          $13,717,051
                                       ================================

Costs and Expenses:
  Cost of products sold                 13,051,471           10,538,912
  Selling, general and administrative
   expenses                              2,114,422            1,879,422
                                       --------------------------------
  Operating costs and expenses          15,165,893           12,418,334
                                       --------------------------------

Operating income                           325,863            1,298,717

Other income                               169,283               90,789

Interest expense                           (76,440)             (93,972)
                                       --------------------------------

Income before income taxes                 418,706            1,295,534

Credit (provision) for income taxes         70,850             (476,950)
                                       --------------------------------

Net income before minority interest        489,556              818,584

Minority interest (Note 2)                (290,486)             (90,305)
                                       --------------------------------

Net income                             $   199,070          $   728,279
                                       ================================

  Basic income per share               $       .04          $       .20
                                       ================================
  Diluted income per share             $       .04          $       .19
                                       ================================

Weighted average shares - basic          4,640,795            3,591,353
                                       ================================
Weighted average shares - diluted        4,788,893            3,802,747
                                       ================================
</TABLE>

See Notes to Unaudited Consolidated Financial Statements

<PAGE>  -4-

                     PARLEX CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
     For the Three Months Ended September 27, 1998 and September 28, 1997
                                 (Unaudited)

<TABLE>
<CAPTION>
                                   September 27, 1998   September 28, 1997
                                   ------------------   ------------------

<S>                                    <C>                  <C>
CASH FLOWS PROVIDED BY (USED FOR)
 OPERATING ACTIVITIES:

  Net Income                           $  199,077           $  728,279
                                       -------------------------------

ADJUSTMENTS TO RECONCILE NET
 INCOME TO CASH PROVIDED
 BY OPERATING ACTIVITIES:
  Depreciation and Amortization           796,526              571,792
  (Gain)Loss on sale of equipment               0              (67,872)
  Deferred compensation                    21,921               20,141
  Minority Interest                       290,486               90,305

Increase(Decrease) in cash from:
  Accounts Receivable - Net               238,381           (1,173,835)
  Other Current Assets                    766,210              201,854
  Refundable Income Taxes                 196,693                    0
  Inventories                            (287,030)            (583,421)
  Accounts Payable                     (1,139,062)             501,616
  Accrued Liabilities                    (647,105)            (184,549)
  Income Taxes Payable                          0              121,187
                                       -------------------------------
      Total Adjustments:                  237,020             (503,122)
                                       -------------------------------

Net cash provided by
 operating activities:                    436,090              235,157
                                       -------------------------------

INVESTING ACTIVITIES:

  Additions to property, plant
   and equipment                       (2,880,469)            (958,116)
  (Increase)Decrease in Other
   assets                                (517,591)               4,236
  Proceeds from sale of equipment               0               76,800
  Maturities of investments
   available for sale                   1,557,959                    0
                                       -------------------------------

  Net cash used for investing
   activities:                         (1,840,101)            (877,080)
                                       -------------------------------

FINANCING ACTIVITIES:
  Payments - Long-term debt              (116,852)                   0
  Loan Payable - JV                        50,000               99,435
  Borrowings under revolving
   credit agreement                     1,200,000               50,000
  Exercise of stock options                 1,092                4,299
                                       -------------------------------

      Net cash provided by
       financing activities:            1,134,240              153,734
                                       -------------------------------

EFFECT OF EXCHANGE RATE CHARGES ON
 CASH:                                        321                1,418
                                       -------------------------------

NET DECREASE IN CASH & CASH
 EQUIVALENTS:                            (269,450)            (496,771)

CASH & CASH EQUIVALENTS AT BEGINNING
 OF PERIOD:                             5,824,233              596,614
                                       -------------------------------

CASH & CASH EQUIVALENTS AT END
 OF PERIOD:                            $5,554,783           $   99,843
                                       ===============================
</TABLE>

<PAGE>  -5-

                     PARLEX CORPORATION AND SUBSIDIARIES

            Notes to Unaudited Consolidated Financial Statements

1.    Management Statement

      The financial statements as reported in Form 10-Q reflect all 
adjustments which are, in the opinion of management, necessary to present 
fairly the financial position as of September 27, 1998 and the results of 
operations and cash flows for the three months ended September 27, 1998 and 
September 28, 19976.  All adjustments made to the interim financial 
statements were of a normal recurring nature.  The results of operations
for the interim period are not necessarily indicative of the results of
operations to be expected for the entire fiscal year.

      The Company followed the same accounting policies in the preparation 
of this interim financial statement as described in the Company's annual 
filing on Form 10-K for the year ended June 30, 1998, and this filing should 
be read in conjunction with that annual report.

2.    Comprehensive Income

      During the first quarter of 1999, the Company adopted SFAS No. 130, 
"Reporting Comprehensive Income."  Comprehensive income for the three months 
ended September 27, 1998 and September 28, 1997 are as follows:

<TABLE>
<CAPTION>
                                                  1999        1998
                                                  ----        ----

<S>                                              <C>         <C>
Other Comprehensive Income:
  Unrealized gain on short term Investments      $3,280      $  -0-
  Cumulative translation adjustments                321       1,417
                                                 ------------------
                                                 $3,601      $1,417
                                                 ==================
</TABLE>

      The accumulated other comprehensive income balance is as follows:

<TABLE>
<CAPTION>
                        Unrealized gains   Cummulative
                         on Short term     Translation
                          Investments      Adjustments        Total
                        ----------------   -----------        -----

<S>                         <C>              <C>             <C>
Beginning Balance           $10,192          $(8,007)        $2,185
Current Period Change         3,280              321          3,601
                            ---------------------------------------
Ending Balance              $13,472          $(7,686)        $5,786
                            =======================================
</TABLE>

<PAGE>  -6-

                   Management's Discussion and Analysis of
                Financial Condition and Results of Operations

Results of Operations

      Total revenues in the first quarter of the current fiscal year were 
$15,491,756 versus $13,717,051 for the comparable quarter last year.  
Revenues were generated primarily from product sales, while some was derived 
from licensing and royalty fees.  The increase in total revenues was 
primarily attributable to an increase in the volume of units shipped.

      The cost of products sold was $13,051,471 or 84% of sales in the 
current quarter versus $10,538,912 or 77% of revenues in the first quarter 
last year.  While the laminated cable and Chinese operations performed well, 
some unanticipated losses were incurred in the manufacturing of flexible 
circuits associated with automotive applications.  Product shipped to the 
Company's Mexican facility was returned because of an unexpected delay by 
our customer to qualify the site for finishing operations.  As a result, the 
material was contaminated during unplanned storage and shipment back to our 
Methuen, Massachusetts facility.  These circuits required extensive rework 
with a significant quantity being scrapped.  The Company also failed to 
achieve desired yields on its recently introduced PALFlex (process for 
automotive applications.

      Selling, general, and administrative expenses as a percentage of 
revenue were 14% in the first quarter, both this year as well as last year.

      Other income of $169,283 this quarter was primarily associated with 
interest income on short-term investments; last year, other income of 
$90,789 related primarily to the gain on the sale of equipment.

      Interest expense was $76,440 this quarter as compared to $93,972 last 
year.  The decrease was due to a lower level of average borrowings.  The 
interest rate in the first quarter remained essentially unchanged from the 
same period last year.

      Income before income taxes was $418,706 in the first quarter this year 
versus $1,295,534 last year.  The decrease was due to the losses on 
automotive programs described above.

      The Company reflected a tax credit of $70,850 this year versus a 
provision of $476,950 (or 37% effective tax rate) last year.  The credit 
relates to the loss incurred in the Company's U.S. operations, while the 
Company continues to benefit from the income generated by the Chinese joint 
venture, which currently is not subject to tax.

      The Company's net income, after recognizing the minority interest in 
the Chinese joint venture, was $199,070 in the first quarter this year 
versus $728,279 last year.

<PAGE>  -7-

Liquidity and Capital Resources

      As of September 27, 1998, the Company had cash, marketable securities, 
and short term investment of approximately $10,800,000, after having 
expended over $2,800,000 in the first quarter to pay for its planned 
expansion.  In addition, the Company has a $10,000,000 unsecured revolving 
line of credit, of which $9,800,000 was available as of November 2, 1998.

      For the remainder of the year, the Company anticipates spending an 
additional $6,000,000 to expand its manufacturing facilities and purchase 
capital equipment that will increase its manufacturing capacity and 
accommodate various new technological processes.

      The Company believes that its cash on hand, its anticipated cash flow 
from operations, and the amount available under its revolving credit 
facility, should be sufficient to meet its foreseeable needs.

      The Company has a deferred compensation obligation that is owed to the
Chairman of the Board of Directors.  Amounts to be paid within one year are not 
deemed to be significant.

New Accounting Pronouncements

      In June 1997, the Financial Accounting Standards Board ("FASB") issued 
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures 
About Segments of an Enterprise and Related Information."  SFAS No. 131 
establishes standards for the way that public business enterprises report 
information about operating segments in annual financial statements and 
requires that these enterprises report selected information about operating 
segments in interim financial reports.  It also establishes standards for 
related disclosures about products and services, geographic areas and major 
customers.  SFAS No. 131 will be adopted by the Company during the fourth 
quarter of fiscal 1999.  This standard is not expected to have a material 
effect on its consolidated financial position, results of operations, and 
financial statement disclosures.

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative 
Instruments and Hedging Activities."  SFAS No. 133 establishes accounting 
and reporting standards for derivative instruments, including certain 
derivative instruments embedded in other contracts and for hedging 
activities.  SFAS No. 133 will be adopted by the Company during fiscal year 
2000.  This standard is not expected to have a material effect on its 
consolidated financial position, results of operations and financial 
statement disclosures.

Year 2000 Disclosure Statement

      The Year 2000 will effect not only the Company's internal computer 
systems, but also those external systems with which the Company exchanges 
any date related information, its customers, suppliers, banks, insurance 
companies, stockholders, etc.  In order to properly assess the extent this 
problem may have on  its operations, the Company has and is continuing to 
survey its key suppliers, service providers, and trading partners as to 
their level of preparedness and the effect it will have on the Company's 
operations.

      The Company has scheduled its enterprise system to be fully Year 2000 
compliant by the second quarter of 1999.  Quite apart from the Year 2000 
problem, the Company is in the process of replacing its legacy computer 
system with a client server system for which both the hardware and software 
has been certified as Year 2000 compliant.  The total cost of this project 
is approximately $1,050,000 of which approximately $300,000 was expended 
during fiscal 1998.

      The Company is in the process of inventorying all its mission critical 
manufacturing systems in order to determine any Year 2000 issues that may 
exist.  While the Company anticipates that some software upgrades will be 
required, it does not believe that any issues exist which will prevent these 
systems from operating as expected after January 1, 2000.

<PAGE>  -8-

      This inventory is scheduled to be completed by the fourth quarter of 
1998 and testing to identify needed remediation will be completed by the end 
of that quarter.  Any required remediation of all mission critical systems 
will be completed by the end of the first quarter of 1999 and the testing 
necessary to validate compliance is scheduled to be completed by mid 1999.

      The Year 2000 issue does present some risk that the company's 
operation may suffer disruption as a result of either a computer malfunction 
or a corruption of date sensitive data.  If this does occur, the Company 
believes that it most likely will be due to factors external to the company. 
 Because of the Company's internal Year 2000 program, the Company does not 
believe there is a significant risk of disruption of operations due to 
malfunction of its internal systems or equipment.

      There can be no assurance that the conversion of the Company's systems
 will be successful or that the Company's key contractors will have successful
conversion programs, and that any such "Year 2000" compliance failures will not
have a material effect on the Company's business, results of operations or
financial conditions.

Quantitative and Quality Disclosures About Market Risk

      As of September 27, 1998, the Company is exposed to market risks which
include changes in U.S. and foreign interest rates and fluctuations in exchange
rates.

      The Company maintains a portion of its cash and cash equivalents in 
financial instruments with purchased maturities of three months or less. 
These financial instruments are subject to interest rate risk and will decline
in value if interest rates decrease.  Due to the short duration of these
financial instruments, an immediate decrease in interest rates would not have
a material effect upon the Company's financial position.

      The Company's outstanding bank loan bears interest at a rate of 125 
basis points over the Singapore Interbank Offer Rate ("SIBOR") and is 
therefore affected by changes in market interest rates.  However, the 
Company has the option to pay the balance in full at any time without penalty.
As a result, the Company believes that the market risk is not material.

      The Company also has a revolving credit agreement which bears interest 
at the bank's corporate base rate which is also affected by changes in market
interest rates.  As of November 2, 1998, the Company owed $200,000 under this
arrangement and has the option to repay borrowings at anytime without
penalty and therefore believes that the market risk is not material.

      The remainder of the Company's long term debt bears interest at fixed
rates and are therefore not subject to market risk.

      The Company has a subsidiary located in Shanghai, China.  Sales are
typically denominated in the local currency (functional currency), thereby
creating exposure to changes in exchange rates.  The changes in the Chinese/
U.S. exchange rate may positively or negatively impace the Company's sales,
gross margins and retained earnings.  Based upon the current volume of 
transactions in China and the stable nature of the exchange rate between China
and the U.S., the Company does not believe the market risk is material.

<PAGE>  -9-

      "Safe Harbor" Statement Under the Private Securities Litigation Reform 
Act of 1995

      This quarterly Report on Form 10-Q contains certain forward-looking 
statements as defined under the Federal Securities Laws.  The Company's 
actual results of operations may differ significantly from those 
contemplated by such forward-looking statements as a result of various 
risk factors beyond its control, including, but not limited to, economic 
conditions in the electronics industry, particularly in the principal 
industry sectors served by the Company, changes in customer requirements and 
in the volume of sales to principal customers, competition and technological 
change.

<PAGE>  -10-

                         PART II - OTHER INFORMATION

Items 1-5    THESE ITEMS ARE INAPPLICABLE

Item 6       Exhibits and Reports on Form 8-K.

             (a)  Exhibits - See Exhibit Index

             (b)  Reports on Form 8-K - No reports on Form 8-K were
                  filed by the Company for the quarter ended
                  September 27, 1998.

<PAGE>  -11-

                                 SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, 
the Registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

                                       PARLEX CORPORATION

                                       By:  /s/ Peter J. Murphy
                                            Peter J. Murphy
                                            President


                                       By:  /s/ Steven M. Millstein

                                            Steven M. Millstein
                                            Vice President of Finance
                                            (Principal Accounting and 
                                            Financial Officer)

                                       November 12, 1998
                                       Date

<PAGE>  -15-

                                EXHIBIT INDEX

EXHIBIT      DESCRIPTION OF EXHIBIT                                PAGE
-------      ----------------------                                ----

  11         Statement Regarding Computation of Per
              Share Earnings                                        13

  27         Financial Data Schedule                                14