TIDMMOL
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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
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.
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 759,814 734,932
of $50,390 and $43,650 respectively
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 $ 107,668 $ 110,070
and short-term borrowings
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
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 159,044 150,105 316,100 295,734
and
administrative
Restructuring - 25,635 - 81,528
costs and
asset impairments
Unauthorized 2,713 8,543 8,255 14,097
activities
in Japan
Total operating 161,757 184,283 324,355 391,359
expenses
Income from 109,288 28,253 221,766 12,596
operations
Interest (expense) (1,788 ) (1,286 ) (3,123 ) (2,286 )
income, net
Other income 4,792 (701 ) 4,441 2,783
(expense)
Total other income 3,004 (1,987 ) 1,318 497
(expense)
Income before 112,292 26,266 223,084 13,093
income taxes
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 $ 0.1750 $ 0.1525 $ 0.3275 $ 0.3050
per share
Average common
shares
outstanding:
Basic 174,664 173,743 174,510 173,605
Diluted 175,556 174,575 175,329 173,605
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, 1,400 6,554
plant and equipment
Proceeds from sales or maturities 5,203 35,319
of marketable securities
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 50,000 110,000
facility and short-term loans
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
Molex IncorporatedSteve Martens, Vice President of Investor
Relations(630) 527-4344
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