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Molex Incorporated (NASDAQ: MOLX)(NASDAQ: MOLXA), a global
electronic components company, today reported results for its
fiscal 2011 first quarter ended September 30, 2010.
Three Months Ended
Sept. 30, Jun. 30, Sept. 30,
USD millions, except per share data 2010 2010 2009
Net revenue $ 897.7 $ 847.3 $ 674.0
Net income (loss) 75.1 39.8 (15.1 )
Earnings (loss) per share 0.43 0.23 (0.09 )
Revenue for the September 2010 quarter of $897.7 million
exceeded the high end of the guidance provided on August 3, 2010
and increased 6% from the June 2010 quarter and 33% from the
September 2009 quarter. The increase in local currency was 5%
compared with the June 2010 quarter and 32% compared with the prior
year. Orders for the quarter were $868.4 million, a decrease of 5%
from the June 2010 quarter but an increase of 20% from the prior
year quarter.
Net income for the September 2010 quarter was $75.1 million or
$0.43 per share, compared with net income of $39.8 million or $0.23
per share, for the June 2010 quarter. Net income for the current
quarter was impacted by investigative and legal costs related to
unauthorized activities in Japan of $5.5 million ($3.5 million
after-tax or $0.02 per share). In the June 2010 quarter, net income
included a pretax restructuring charge of $26.5 million ($24.7
million after-tax or $0.14 per share) and investigative and legal
costs related to unauthorized activities in Japan of $4.8 million
($3.0 million after-tax or $0.02 per share). The effective tax rate
for the current quarter was 32.2%, which included a charge of $2.3
million or $0.01 per share for the reversal of estimated tax
benefits resulting from the expiration of employee stock options
and vesting of restricted stock at amounts less than recorded book
value.
"Revenue and earnings per share reached all-time record levels
in the September quarter and customer demand continued to be
strong," commented Martin P. Slark, Molex's Chief Executive
Officer. "Our growth has been further supported by new product
launches and by our Focus Account program that continues to expand
and diversify our customer base, bringing us new opportunities for
growth. We have now exceeded pre-recession revenue and order levels
and are seeing the benefits of our new cost structure. In view of
the record revenue and profits along with a more efficient
organization resulting from the restructuring, we are increasing
our dividend by 14.8% effective with the payment in January,
2011."
Other financial highlights for the quarter ended September 30,
2010:
-- Gross profit margin increased to 30.6%, compared with 29.9% in the
June 2010 quarter and 28.4% in the September 2009 quarter,
primarily
due to higher absorption from increased production and lower
supply
chain costs, more than offsetting the impact of rising commodity
costs
and a weak US dollar.
-- SG&A expense decreased $1.6 million sequentially to $157.1 million, or
a record low of 17.5% of revenue as compared with 18.7% in the
June
2010 quarter and 21.6% in the September 2009 quarter. The
decrease in
SG&A is the result of our lower cost structure due to
restructuring
efforts and specific cost containment actions.
-- Capital expenditures were $71.2 million or 7.9% of revenue with
investments concentrated on new products and capacity that has
come on
line to increase manufacturing output commensurate with
customer
demand.
-- Backlog was $445 million, a decrease of $27.6 million or 6% from the
June 2010 quarter as new capacity enabled significant
progress
fulfilling customer backlog. The book-to-bill ratio was
0.97.
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. On October 13, 2010,
Molex filed a written answer requesting the court to dismiss the
complaint. The Company intends to vigorously contest the
enforceability of the outstanding unauthorized loans and any
attempt by the lender to obtain payment from Molex.
Increase in Cash Dividend
The Board of Directors has approved an increase in the quarterly
cash dividend to $0.175 per share, an increase of 14.8% from the
previous cash dividend of $0.1525 per share. The increase is
effective for the cash dividend payable on January 25, 2011 to
shareholders of record on December 31, 2010, for each share of
Common Stock (MOLX), Class A Common Stock (MOLXA) and Class B
Common Stock, and will continue quarterly until further action by
the Board.
Outlook
The Company has considered the modest slowing of orders in the
current quarter 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 December 2010 quarter.
At this level of revenue, the Company expects earnings per share in
a range of $0.38 to $0.44, assuming an effective tax rate of
30%.
Earnings Conference Call Information
A conference call will be held on Tuesday, October 26, 2010 at
4:00 pm central time. Please dial (888) 873-4896 to participate in
the call. International callers should dial (617) 213-8850. Please
dial in at least five minutes prior to the start of the call and
refer to participant pass code 32809915. Internet users will be
able to access the web-cast, 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 25960478.
Other Investor Events
December 7, 2010 - NASDAQ OMX 25th Investor Program in
London
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, the challenges
attendant to plant construction; 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 which is 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.
Molex Incorporated
Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, June 30,
2010 2010
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 340,644 $ 376,352
Marketable securities 18,261 18,508
Accounts receivable, less allowances 790,101 734,932
of $49,831 and $43,650 respectively
Inventories 546,808 469,369
Deferred income taxes 113,455 112,531
Other current assets 41,963 64,129
Total current assets 1,851,232 1,775,821
Property, plant and equipment, net 1,111,292 1,055,144
Goodwill 132,848 131,910
Non-current deferred income taxes 90,318 94,191
Other assets 181,831 179,512
Total assets $ 3,367,521 $ 3,236,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 116,200 $ 110,070
and short-term borrowings
Accounts payable 385,271 395,474
Accrued expenses:
Accrual for unauthorized activities in Japan 175,076 165,815
Income taxes payable 37,374 21,505
Other 214,599 219,832
Total current liabilities 928,520 912,696
Other non-current liabilities 18,672 19,869
Accrued pension and postretirement benefits 140,889 135,448
Long-term debt 171,907 183,434
Total liabilities 1,259,988 1,251,447
Commitments and contingencies
Total stockholders' equity 2,107,533 1,985,131
Total liabilities and stockholders' equity $ 3,367,521 $ 3,236,578
Molex Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,
2010 2009
Net revenue $ 897,672 $ 674,033
Cost of sales 622,596 482,614
Gross profit 275,076 191,419
Selling, general and administrative 157,056 145,628
Restructuring costs and asset impairments - 55,894
Unauthorized activities in Japan 5,542 5,554
Total operating expenses 162,598 207,076
Income (loss) from operations 112,478 (15,657 )
Interest (expense) income, net (1,335 ) (1,000 )
Other (expense) income (351 ) 3,484
Total other (expense) income (1,686 ) 2,484
Income (loss) before income taxes 110,792 (13,173 )
Income taxes 35,688 1,963
Net income (loss) $ 75,104 $ (15,136 )
Earnings (loss) per share:
Basic $ 0.43 $ (0.09 )
Diluted $ 0.43 $ (0.09 )
Dividends declared per share $ 0.1525 $ 0.1525
Average common shares outstanding:
Basic 174,370 173,486
Diluted 175,156 173,486
Molex Incorporated
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
September 30,
2010 2009
Operating activities:
Net income (loss) $ 75,104 $ (15,136 )
Add non-cash items included
in net income (loss):
Depreciation and amortization 59,108 60,589
Share-based compensation 5,149 7,092
Non-cash restructuring and other costs, net - 13,191
Other non-cash items 8,634 6,625
Changes in assets and liabilities:
Accounts receivable (29,343 ) (72,586 )
Inventories (57,988 ) 1,482
Accounts payable (24,876 ) 32,131
Other current assets and liabilities 27,886 39,092
Other assets and liabilities (1,079 ) (1,862 )
Cash provided from operating activities 62,595 70,618
Investing activities:
Capital expenditures (71,192 ) (45,634 )
Proceeds from sales of property, 643 3,192
plant and equipment
Proceeds from sales or maturities 2,184 35,303
of marketable securities
Purchases of marketable securities (1,257 ) (958 )
Other investing activities - (355 )
Cash used for investing activities (69,622 ) (8,452 )
Financing activities:
Proceeds from revolving credit 20,000 90,000
facility and short term loans
Payments on revolving credit facility (10,000 ) (40,000 )
Proceeds from issuance of long-term debt 797 -
Payments of long-term debt (24,840 ) (196 )
Cash dividends paid (26,565 ) (26,486 )
Exercise of stock options 358 266
Other financing activities (967 ) (700 )
Cash (used for) provided from (41,217 ) 22,884
financing activities
Effect of exchange rate changes on cash 12,536 11,242
Net (decrease) increase in (35,708 ) 96,292
cash and cash equivalents
Cash and cash equivalents, beginning of period 376,352 424,707
Cash and cash equivalents, end of period $ 340,644 $ 520,999
Molex Incorporated
Steve Martens
Vice President of Investor Relations
(630) 527-4344
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