UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 September 30, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from
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Commission File Number 0-7491
MOLEX INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 36-2369491
-------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2222 Wellington Court, Lisle, Illinois 60532
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-969-4550
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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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (applicable
only to corporate registrants). At September 30, 1994:
Common Stock 31,915,681 Shares
Class A Common Stock 31,636,975 Shares
Class B Common Stock 94,255 Shares
MOLEX INCORPORATED
FORM 10-Q
SEPTEMBER 30, 1994
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Information - Unaudited
Condensed Consolidated Balance Sheets -- 2
September 30, 1994 and June 30, 1994
Condensed Consolidated Statements of Income -- 3
Three Months Ended September 30, 1994 and 1993
Condensed Consolidated Statements of Cash Flows -- 4
Three Months Ended September 30, 1994 and 1993
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION 9
-1-
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<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In Thousands)
ASSETS
------
<CAPTION>
Sept. 30, June 30,
1994 1994
CURRENT ASSETS: --------- ---------
<S> <C> <C>
Cash $ 21,554 $ 19,309
Short-term investments 222,943 209,617
Accounts receivable - net 221,834 221,674
Inventories 120,740 113,266
Other current assets 26,667 22,746
--------- ---------
Total current assets 613,738 586,612
PROPERTY, PLANT AND EQUIPMENT - NET 451,250 440,995
OTHER ASSETS 98,367 110,910
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$1,163,355 $1,138,517
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 92,715 $ 96,659
Accrued expenses 68,269 66,673
Other current liabilities 37,631 42,062
--------- ---------
Total current liabilities 198,615 205,394
DEFERRED ITEMS 14,797 14,612
ACCRUED POSTRETIREMENT BENEFITS 27,226 26,363
LONG-TERM DEBT, less portion due currently 7,373 7,350
MINORITY INTEREST 1,865 3,184
SHAREHOLDERS' EQUITY
Common stock 3,290 3,288
Paid-in capital 57,060 56,464
Retained earnings 756,265 729,547
Treasury stock (31,615) (31,749)
Deferred unearned compensation (6,470) (7,223)
Cumulative translation adjustments 134,949 131,287
--------- ---------
Total shareholders' equity 913,479 881,614
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$1,163,355 $1,138,517
========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements.
-2-
</TABLE>
<PAGE>
<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - In Thousands Except per Share)
<CAPTION>
THREE MONTHS ENDED
-----------------------
Sept. 30, Sept. 30,
1994 1993
-------- --------
<S> <C> <C>
NET REVENUE $268,899 $233,244
COST OF SALES 153,424 136,383
-------- --------
Gross Profit 115,475 96,861
OPERATING EXPENSES:
Selling 30,180 27,308
Administrative 38,504 32,846
-------- --------
Total Operating Expenses 68,684 60,154
Income from Operations 46,791 36,707
OTHER INCOME (EXPENSE):
Foreign currency transaction loss (54) (772)
Interest 1,637 1,207
-------- --------
Total Other Income 1,583 435
Income before Income Taxes
and Minority Interest 48,374 37,142
INCOME TAXES 20,957 15,357
-------- --------
Income before Minority Interest 27,417 21,785
MINORITY INTEREST (63) (403)
-------- --------
NET INCOME $ 27,354 $ 21,382
======== ========
EARNINGS PER COMMON SHARE $ 0.43 $ 0.34
======== ========
CASH DIVIDENDS PER COMMON SHARE $ 0.0100 $ 0.0075
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
DURING THE PERIOD 63,615 63,183
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
-3-
</TABLE>
<PAGE>
<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In Thousands)
<CAPTION>
THREE MONTHS ENDED
-----------------------
Sept. 30, Sept. 30,
1994 1993
-------- --------
<S> <C> <C>
CASH AND SHORT-TERM INVESTMENTS, Beginning of Period $228,926 $186,053
CASH AND SHORT-TERM INVESTMENTS
PROVIDED FROM (USED FOR):
Operations:
Net income 27,354 21,382
Add (Deduct) non-cash items included in net income:
Depreciation and amortization 24,127 22,577
Minority interest 63 403
Amortization of deferred unearned compensation 753 666
Loss (gain) on sale of property, plant and equipment 96 (56)
Other charges to net income (770) 212
Current items:
Accounts receivable 1,280 (1,583)
Inventories (6,852) (5,614)
Prepaid expenses (3,935) (6,475)
Accounts payable (4,379) 2,297
Accrued expenses 1,741 4,786
Income taxes (4,433) (12,248)
-------- --------
NET CASH PROVIDED FROM OPERATIONS 35,045 26,347
Investments:
Purchases of property, plant and equipment (32,204) (28,205)
Proceeds from sale of property, plant and equipment 458 647
Decrease in other assets 12,142 8,143
-------- --------
NET CASH USED FOR INVESTMENTS (19,604) (19,415)
Financing:
Increase in long-term debt 23 1,297
Decrease in long-term debt (125) (1,119)
Cash dividends paid (636) (474)
Disposition of treasury stock 183 298
Exercise of stock options 239 239
-------- --------
NET CASH (USED FOR) PROVIDED FROM FINANCING (316) 241
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND SHORT-TERM INVESTMENTS 446 1,666
-------- --------
15,571 8,839
-------- --------
CASH AND SHORT-TERM INVESTMENTS, End of Period $244,497 $194,892
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
-4-
</TABLE>
MOLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Consolidated Financial Statements
The condensed consolidated financial statements have been prepared
from the Company's books without audit and are subject to year-end
adjustments. The interim financial statements reflect all
adjustments which are, in the opinion of management, necessary for
a fair presentation of information for the interim periods
presented. The condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements
and notes thereto included in the Molex Incorporated 1994 Annual
Report to Shareholders and the 1994 Annual Report on Form 10-K.
The results of operations for the interim periods should not be
considered indicative of results to be expected for the full year.
(2) Earnings per Common Share
Earnings per common share (including Common Stock, Class A Common
Stock and Class B Common Stock) have been computed using the
weighted average number of common shares outstanding during the
periods. For the periods ended September 30, 1994 and 1993, the
shares shown as outstanding in the Condensed Consolidated
Statements of Income do not require adjustments for common stock
equivalents as they do not have a material dilutive effect after
applying the treasury stock method.
(3) Short-Term Investments
Short-term investments are available for sale and consist of a
variety of highly-liquid investments with original maturities of
three months or less. Short-term investments are carried at cost,
which approximates market.
(4) Inventories
Inventories are valued at the lower of first-in, first-out cost or
market.
Inventories, in thousands of dollars, consisted of the following:
Sept. 30, June 30,
1994 1994
----------- -----------
Raw materials $ 22,127 $ 20,940
Work in process 45,423 42,865
Finished goods 53,190 49,461
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$120,740 $113,266
=========== ===========
-5-
MOLEX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net revenues reached an all-time high for the quarter
ending September 30, 1994, increasing 15.3 and 0.6 percent over
the same quarter of the prior fiscal year and the fourth quarter
of fiscal year 1994, respectively. The generally lower value of
the U.S. dollar compared to other currencies worldwide increased
net revenues by $6.8 million for the quarter ending September 30,
1994 as compared to the same period in the prior fiscal year.
Excluding the effects of currency fluctuation, growth in net
revenues equaled 12.4 percent for the three months ending
September 30, 1994.
Molex continued to exceed its goal of increasing net revenues at
twice the growth rate of the worldwide connector market. All
geographic regions experienced U.S. dollar revenue growth in
excess of 10 percent for the quarter. Net revenues in Europe
increased 20.5 percent in local currencies and 27.0 percent in
U.S. dollars. We are continuing to see increased demand for
interconnection products in most of Europe, and we are pleased
with the increased sales we are making to the European automotive
and telecommunication markets. The significantly increased sales
level in Europe, along with the streamlining of our warehouse
operations, resulted in the net return on sales percent increasing
approximately two times from prior year levels and nearly reaching
our traditional goal of 10 percent net.
U.S. Region net revenues for the quarter increased 10.5 percent
from the prior year. Sales remain strong in this, the largest of
the world's connector markets. We continue to see strong revenue
growth in the home entertainment/appliance market and increased
customer demand for our fiber optic products. Continued price
erosion in the computer market was offset by improved
manufacturing efficiencies, resulting in a slight improvement in
net return on sales from the prior year.
Net revenues in the Far East North increased 13.0 percent in U.S.
dollars and 7.4 percent in local currencies as the value of the
U.S. dollar continued to decline against the Japanese yen. The
Japanese economy overall is showing some signs of improvement, but
the domestic electronic market remains flat as Japanese companies
continue to transfer some of their production out of Japan. In
spite of this, our Japanese domestic sales improved slightly from
last year, and demand for Molex Japan products remained strong
outside the region.
The Far East South net revenues for the quarter ending September
30, 1994 increased 17.2 percent in U.S. dollars and 15.1 percent
in local currencies. Sales in this region remain strong due to
continued growth in the personal computer and disk drive
industries. The region is also gaining market share due to
increased customer penetration at many of the multinational
companies that have relocated manufacturing operations to the
region.
Net revenues in the Americas (Non-U.S.) Region grew 17.5 percent
in U.S. dollars and 23.7 percent in local currencies from the
prior year due to increased net revenues in Brazil and continued
strong revenue growth in Mexico.
For the quarter ending September 30, 1994, 72 percent of Molex's
worldwide net revenues were generated from its international
operations, compared to 71 percent for the same period during the
prior fiscal year. International operations are subject to
currency exchange rate fluctuations and government actions. Molex
monitors its foreign currency exposure in each country and
implements strategies to respond to changing economic and
political environments. Due to the uncertainty of the foreign
exchange markets, Molex cannot reasonably predict future trends
related to foreign currency fluctuations. Foreign currency
fluctuations have impacted results in the past and may impact
results in the future.
The gross profit percentage of 42.9 percent for the quarter ending
September 30, 1994 increased from the 41.5 percent reported during
the comparable period of the previous fiscal year. The Company
was able to offset the effects of price erosion in some key
product lines with improved manufacturing efficiencies, greater
absorption of fixed costs due to the increased sales volume and
favorable changes in product mix. For the three months ended
September 30, 1994, depreciation and amortization expenses have
increased at a lower rate than the increase in net revenues.
Depreciation and amortization expenses currently represent 9.0
percent of sales compared to 9.7 percent of sales during the same
period of the prior fiscal year.
For the fiscal year ending June 30, 1995, we expect capital
expenditures to increase to between $165 and $175 million. This
increase in capital expenditures is a result of stronger sales and
the required investment in plants, equipment and technology to
meet our customers' needs.
Operating expenses as a percent of net revenue for the quarter
ending September 30, 1994 improved slightly from a year ago,
reflecting the continued management focus on the control of
expenses.
Foreign currency transaction losses decreased 93.0 percent for the
current fiscal quarter compared to the prior year quarter when the
Company incurred high losses due to the severe devaluation of the
Brazilian cruzeiro against the U.S. dollar.
Interest income, net of interest expense, increased 35.6 percent
for the quarter. The increase reflects the higher balance of cash
and short-term investments during the period coupled with a slight
increase in average interest rates in countries where Molex has
significant short-term investments. Interest expense has remained
relatively unchanged from the prior year.
-7-
The effective tax rate for the quarter ending September 30, 1994
equaled 43.3 percent as compared to 41.3 percent reported for the
same period in the prior fiscal year. This increase is primarily
caused by increased pretax profitability in countries with higher
effective tax rates coupled with the inability of the Company to
utilize all of its foreign tax credits.
Net income for the quarter was $27.4 million or 43 cents per
share, a 27.9 percent increase compared with $21.4 million or 34
cents per share for the same quarter last fiscal year. Excluding
the effects of currency fluctuations, net income for the quarter
increased 23.5 percent over the same quarter last fiscal year.
During the first quarter of fiscal 1995, Molex adopted Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115). SFAS 115
requires that the carrying value of certain investments be
adjusted to their fair value. Adoption of the statement did not
have a material effect on the financial condition or consolidated
results of operations of the Company.
LIQUIDITY AND CAPITAL
One of Molex's many financial strengths is its exceptionally
strong balance sheet. Working capital at September 30, 1994 was
$415.1 million, up from $381.2 million at June 30, 1994. Current
assets increased by $27.1 million, primarily due to increases in
short-term investments and inventory, and current liabilities
decreased slightly.
Management believes that the Company's current liquidity and
financial flexibility are adequate to support its current growth.
OUTLOOK
The prospects for the remainder of fiscal 1995 look promising.
Demand for interconnection products remains strong in the United
States and Far East South and continues to accelerate in Europe.
In Japan, we continue to see a modest improvement in our business,
although the overall level of economic activity in Japan remains
flat. Molex will continue to push into new markets and expand our
product line through the introduction of new and innovative
products. We expect this effort to produce worldwide sales in
excess of $1 billion for the full fiscal year ending June 30,
1995.
We continue to see the effects of Molex's ability to control costs
and improve productivity. We will continue to review and
challenge all activities in the Company with the goal of improving
customer service and operating efficiencies. We believe these
efforts will allow Molex to exceed its financial goal of
generating 10 percent net return on sales for the full fiscal year
ending June 30, 1995.
-8-
Part II - Other Information
Items 1 - 4. Not Applicable
Item 5. Other Information
On October 21, 1994, the Board of Directors of
Molex Incorporated declared a twenty-five
percent (25%) stock dividend payable on
November 28, 1994 to shareholders of record as
of November 7, 1994. One quarter (1/4) share
of Molex Common Stock (MOLX) will be paid for
each share of Common Stock and Molex Class B
Common Stock outstanding on the record date.
In addition, one quarter (1/4) share of Molex
Class A Common Stock (MOLXA) will be paid for
each share of Class A Stock outstanding on the
record date. This is the sixth stock dividend
within the last 12 years.
Item 6. Not Applicable
-9-
S I G N A T U R E S
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.
MOLEX INCORPORATED
-------------------
(Registrant)
Date November 11, 1994 /s/ JOHN C. PSALTIS
------------------ -----------------------
John C. Psaltis
Corporate Vice President,
Treasurer and Chief
Financial Officer
Date November 11, 1994 /s/ LOUIS A. HECHT
------------------ -----------------------
Louis A. Hecht
Corporate Secretary and
General Counsel
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MOLEX
INC. REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 21,5547
<SECURITIES> 222,943
<RECEIVABLES> 230,962
<ALLOWANCES> (9,128)
<INVENTORY> 120,740
<CURRENT-ASSETS> 613,738
<PP&E> 1,034,742
<DEPRECIATION> (583,492)
<TOTAL-ASSETS> 1,163,355
<CURRENT-LIABILITIES> 198,615
<BONDS> 7,373
<COMMON> 3,290
0
0
<OTHER-SE> 910,189
<TOTAL-LIABILITY-AND-EQUITY> 1,163,355
<SALES> 268,899
<TOTAL-REVENUES> 268,899
<CGS> 153,424
<TOTAL-COSTS> 68,684
<OTHER-EXPENSES> 54
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,637)
<INCOME-PRETAX> 48,374
<INCOME-TAX> 20,957
<INCOME-CONTINUING> 27,417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,354
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
