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8-K - FORM 8-K - MOLEX INCc62655e8vk.htm
EX-99.2 - EX-99.2 - MOLEX INCc62655exv99w2.htm
EXHIBIT 99.1
Contact: Steve Martens
Vice President of Investor Relations
(630) 527-4344
MOLEX REPORTS RECORD REVENUE AND EARNINGS PER SHARE
Lisle, Ill., USA — January 25, 2011 — Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic components company, today reported results for its fiscal 2011 second quarter ended December 31, 2010.
                         
    Three Months Ended
    Dec. 31,   Sept. 30,   Dec. 31,
USD millions, except per share data   2010   2010   2009
 
                       
Net revenue
  $ 901.5     $ 897.7     $ 729.6  
Net income
    78.3       75.1       13.8  
Earnings per share
    0.45       0.43       0.08  
Revenue for the December 2010 quarter of $901.5 million exceeded the high end of the guidance provided on October 26, 2010, increased 24% from the December 2009 quarter and was incrementally higher than the September 2010 quarter. Revenue in local currencies increased 22% compared with the prior year but decreased 2% compared with the September 2010 quarter. Orders for the quarter were $872 million, an increase of 12% from the prior year quarter and in line with the September 2010 quarter.
Net income for the December 2010 quarter was $78.3 million or $0.45 per share, exceeding the high end of guidance, compared with net income of $13.8 million, or $0.08 per share, for the December 2009 quarter and $75.1 million, or $0.43 per share, for the September 2010 quarter. Net income for the current quarter was impacted by legal costs related to unauthorized activities in Japan of $2.7 million ($1.7 million after-tax or $0.01 per share). In the December 2009 quarter, net income included restructuring costs of $25.6 million ($22.2 million after-tax or $0.13 per share) and costs from unauthorized activities in Japan of $8.5 million ($5.4 million after-tax or $0.03 per share). In the September 2010 quarter, net income included legal costs related to unauthorized activities in Japan of $5.5 million ($3.5 million after-tax or $0.02 per share). The effective tax rate for the current quarter was 30.3%.
“Fiscal 2011 is off to a strong start with successive quarters of revenue and earnings per share records,” commented Martin P. Slark, Molex’s Chief Executive Officer. “We expect our expanded and more diversified customer base, coupled with our robust new product pipeline, to position us for a strong second half to our fiscal year. In addition to these organic growth opportunities, in January we announced the purchase of Luxtera’s active optical cable business which will give us a more complete offering in our high speed cable business and offer us considerable growth potential both now and for next generation technology. With our new, low cost platform, a strong balance sheet, our extensive presence in Asia and significant growth opportunities in the expanding global electronics market, we believe we are well positioned for the future.”

 


 

Other financial highlights for the quarter ended December 31, 2010:
    Gross profit margin was 30.1% in the December 2010 quarter, compared with 29.1% in the December 2009 quarter and 30.6% in the September 2010 quarter.
 
    SG&A expense was $159.0 million, or 17.6% of revenue compared with 20.6% in the December 2009 quarter and 17.5% in the September 2010 quarter.
 
    Capital expenditures were $61.5 million or 6.8% of revenue.
 
    Depreciation and Amortization was $61.7 million or 6.8% of revenue.
 
    Backlog was $413.7 million, a decrease of $31.8 million or 7.1% from the September 2010 quarter. The book-to-bill ratio was 0.97 for the December 2010 quarter.
Unauthorized Activities in Japan
As previously disclosed, in April 2010 Molex launched an investigation into unauthorized activities in its Japanese subsidiary after it was learned that an individual had obtained unauthorized loans and entered into unauthorized trading in Molex Japan’s name. The Company retained outside legal counsel and they retained forensic accountants to investigate the matter and that investigation has now been completed. On August 31, 2010, the bank which holds the unauthorized loans filed a complaint in Tokyo District Court requesting payment from Molex Japan. Molex Japan intends to vigorously contest the enforceability of the outstanding unauthorized loans and any attempt by the lender to obtain payment.
Outlook
The Company has considered the seasonal trends and the continued uncertainty in the global electronics market in setting its guidance for the coming quarter. In consideration of these factors and assuming constant foreign currency rates and commodity prices, the Company estimates revenue in a range of $850 to $890 million for the March 2011 quarter. At this level of revenue, the Company expects earnings per share in a range of $0.39 to $0.43 assuming an effective tax rate of 30%.
Earnings Conference Call Information
A conference call will be held on Tuesday, January 25, 2011 at 4:00 pm central time. Please dial (888) 680-0878 to participate in the call. International callers should dial (617) 213-4855. Please dial in at least five minutes prior to the start of the call and refer to participant pass code 90919051. Internet users will be able to access the webcast, including slide materials, live and in replay in the “Investors” section of the Company’s website at www.molex.com. A 48-hour telephone replay will be available at approximately 6:00 pm central time at (888) 286-8010 or (617) 801-6888 / pass code 81610425.
Other Investor Events
February 16, 2011 / Goldman Sachs Technology and Internet Conference 2011 / San Francisco
March 3, 2011 / Morgan Stanley Technology, Media and Telecom Conference / San Francisco

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Forward-Looking Statements
Statements in this release that are not historical are forward-looking and are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “projects,” “estimates,” “potential,” and similar expressions are used to identify these forward-looking statements. Forward-looking statements are based on currently available information and include, among others, the discussion under “Outlook.” These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions including those associated with the operation of our business, including the risk that customer demand will decrease either temporarily or permanently, whether due to the Company’s actions or the demand for the Company’s products, and that the Company may not be able to respond through cost reductions in a timely and effective manner; the risk that the value of our inventory may decline; price cutting, new product introductions and other actions by our competitors; fluctuations in the costs of raw materials that the Company is not able to pass through to customers because of existing contracts or market factors; the availability of credit and general market liquidity; fluctuations in currency exchange rates; the financial condition of our customers; labor cost increases; the challenges attendant to plant closings and restructurings, the difficulty of commencing or increasing production at existing facilities, and the reactions of customers, governmental units, employees and other groups; and the ability to realize cost savings from restructuring activities, the outcome of legal proceedings and losses resulting from unauthorized activities in Molex Japan.
Other factors, risks and uncertainties are set forth in Item 1A “Risk Factors” of the Company’s Form 10-K for the year ended June 30, 2010, and for the Form 10-Q for the quarter ended September 30, 2010, which are incorporated by reference and in other reports that Molex files or furnishes with the Securities and Exchange Commission. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed in these forward-looking statements. As a result, this release speaks only as of its date and Molex disclaims any obligation to revise these forward-looking statements or to provide any updates regarding information contained in this release resulting from new information, future events or otherwise.
Molex Incorporated is a 72-year-old global manufacturer of electronic, electrical and fiber optic interconnection systems. Based in Lisle, Illinois, USA, the Company operates 39 manufacturing locations in 16 countries. The Molex website is www.molex.com.
# # #
Editor’s note: Molex is traded on the NASDAQ Global Select Market (MOLX and MOLXA) in the United States and on the London Stock Exchange. The Company’s voting common stock (MOLX) is included in the S&P 500 Index.

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Molex Incorporated
Condensed Consolidated Balance Sheets

(in thousands)
                 
    Dec. 31,     June 30,  
    2010     2010  
    (unaudited)          
ASSETS
Current assets:
               
Cash and cash equivalents
  $ 392,390     $ 376,352  
Marketable securities
    18,239       18,508  
Accounts receivable, less allowances of $50,390 and $43,650 respectively
    759,814       734,932  
Inventories
    559,637       469,369  
Deferred income taxes
    114,944       112,531  
Other current assets
    55,713       64,129  
 
           
Total current assets
    1,900,737       1,775,821  
Property, plant and equipment, net
    1,129,141       1,055,144  
Goodwill
    134,218       131,910  
Non-current deferred income taxes
    85,222       94,191  
Other assets
    180,731       179,512  
 
           
Total assets
  $ 3,430,049     $ 3,236,578  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               
Current portion of long-term debt and short-term borrowings
  $ 107,668     $ 110,070  
Accounts payable
    377,592       395,474  
Accrued expenses:
               
Accrual for unauthorized activities in Japan
    180,074       165,815  
Income taxes payable
    18,842       21,505  
Other
    207,267       219,832  
 
           
Total current liabilities
    891,443       912,696  
Other non-current liabilities
    19,103       19,869  
Accrued pension and postretirement benefits
    129,420       135,448  
Long-term debt
    198,639       183,434  
 
           
Total liabilities
    1,238,605       1,251,447  
 
           
 
               
Commitments and contingencies
               
 
               
Total stockholders’ equity
    2,191,444       1,985,131  
 
           
Total liabilities and stockholders’ equity
  $ 3,430,049     $ 3,236,578  
 
           

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Molex Incorporated
Condensed Consolidated Statements of Operations

(in thousands, except per share data)
(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    December 31,     December 31,  
    2010     2009     2010     2009  
 
                               
Net revenue
  $ 901,465     $ 729,576     $ 1,799,137     $ 1,403,609  
Cost of sales
    630,420       517,040       1,253,016       999,654  
 
                       
Gross profit
    271,045       212,536       546,121       403,955  
 
                       
 
                               
Selling, general and administrative
    159,044       150,105       316,100       295,734  
Restructuring costs and asset impairments
          25,635             81,528  
Unauthorized activities in Japan
    2,713       8,543       8,255       14,097  
 
                       
Total operating expenses
    161,757       184,283       324,355       391,359  
 
                       
 
                               
Income from operations
    109,288       28,253       221,766       12,596  
 
                               
Interest (expense) income, net
    (1,788 )     (1,286 )     (3,123 )     (2,286 )
Other income (expense)
    4,792       (701 )     4,441       2,783  
 
                       
Total other income (expense)
    3,004       (1,987 )     1,318       497  
 
                       
 
                               
Income before income taxes
    112,292       26,266       223,084       13,093  
 
                               
Income taxes
    34,009       12,426       69,697       14,389  
 
                       
 
                               
Net income (loss)
  $ 78,283     $ 13,840     $ 153,387     $ (1,296 )
 
                       
 
                               
Earnings (loss) per share:
                               
Basic
  $ 0.45     $ 0.08     $ 0.88     $ (0.01 )
Diluted
  $ 0.45     $ 0.08     $ 0.88     $ (0.01 )
 
                               
Dividends declared per share
  $ 0.1750     $ 0.1525     $ 0.3275     $ 0.3050  
 
                               
Average common shares outstanding:
                               
Basic
    174,664       173,743       174,510       173,605  
Diluted
    175,556       174,575       175,329       173,605  

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Molex Incorporated
Condensed Consolidated Statements of Cash Flows

(in thousands)
(unaudited)
                 
    Six Months Ended  
    December 31,  
    2010     2009  
 
               
Operating activities:
               
Net income (loss)
  $ 153,387     $ (1,296 )
Add non-cash items included in net income (loss):
               
Depreciation and amortization
    120,804       121,263  
Share-based compensation
    11,460       15,127  
Non-cash restructuring and other costs, net
          19,922  
Other non-cash items
    7,275       27,428  
Changes in assets and liabilities:
               
Accounts receivable
    3,221       (58,715 )
Inventories
    (67,631 )     (18,589 )
Accounts payable
    (36,945 )     9,128  
Other current assets and liabilities
    (11,280 )     14,687  
Other assets and liabilities
    2,184       12,883  
 
           
Cash provided from operating activities
    182,475       141,838  
 
           
 
               
Investing activities:
               
Capital expenditures
    (132,728 )     (93,320 )
Proceeds from sales of property, plant and equipment
    1,400       6,554  
Proceeds from sales or maturities of marketable securities
    5,203       35,319  
Purchases of marketable securities
    (3,612 )     (1,485 )
Acquisitions
          (10,090 )
Other investing activities
          222  
 
           
Cash used for investing activities
    (129,737 )     (62,800 )
 
               
Financing activities:
               
Proceeds from revolving credit facility and short-term loans
    50,000       110,000  
Payments on revolving credit facility
    (15,000 )     (70,000 )
Payments of short-term and long-term debt
    (36,051 )     (15,336 )
Cash dividends paid
    (53,186 )     (52,919 )
Exercise of stock options
    1,820       991  
Other financing activities
    (1,954 )     (1,183 )
 
           
Cash used for financing activities
    (54,371 )     (28,447 )
 
               
Effect of exchange rate changes on cash
    17,671       11,020  
 
           
Net increase in cash and cash equivalents
    16,038       61,611  
Cash and cash equivalents, beginning of period
    376,352       424,707  
 
           
Cash and cash equivalents, end of period
  $ 392,390     $ 486,318  
 
           

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