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, 1995
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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, 1995:
Common Stock 49,993,172 Shares
Class A Common Stock 50,649,337 Shares
Class B Common Stock 94,255 Shares
MOLEX INCORPORATED
FORM 10-Q
SEPTEMBER 30, 1995
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Information - Unaudited
Condensed Consolidated Balance Sheets -- 2
September 30, 1995 and June 30, 1995
Condensed Consolidated Statements of Income -- 3
Three Months Ended September 30, 1995 and 1994
Condensed Consolidated Statements of Cash Flows -- 4
Three Months Ended September 30, 1995 and 1994
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 10
-1-
<PAGE>
<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In Thousands)
ASSETS
------
<CAPTION>
Sept. 30, June 30,
1995 1995
CURRENT ASSETS: --------- ---------
<S> <C> <C>
Cash $ 194,712 $ 253,552
Short-term investments 57,818 59,563
Accounts receivable - net 269,371 282,814
Inventories 153,897 150,836
Other current assets 26,973 26,271
--------- ---------
Total current assets 702,771 773,036
PROPERTY, PLANT AND EQUIPMENT - NET 552,992 567,303
OTHER ASSETS 108,852 100,681
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$1,364,615 $1,441,020
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 114,682 $ 128,146
Accrued expenses 82,598 85,748
Other current liabilities 49,602 64,152
--------- ---------
Total current liabilities 246,882 278,046
DEFERRED ITEMS 13,085 13,310
ACCRUED POSTRETIREMENT BENEFITS 30,170 32,170
LONG-TERM DEBT, less portion due currently 8,349 8,122
MINORITY INTEREST 2,343 2,104
SHAREHOLDERS' EQUITY
Common stock 5,225 4,177
Paid-in capital 101,620 101,534
Retained earnings 884,684 850,533
Treasury stock (46,987) (35,749)
Deferred unearned compensation (12,697) (13,771)
Cumulative translation adjustments 131,941 200,544
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Total shareholders' equity 1,063,786 1,107,268
--------- ---------
$1,364,615 $1,441,020
========= =========
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,
1995 1994
-------- --------
<S> <C> <C>
NET REVENUE $338,176 $268,899
COST OF SALES 201,298 153,424
-------- --------
Gross Profit 136,878 115,475
OPERATING EXPENSES:
Selling 35,874 30,180
Administrative 47,763 38,504
-------- --------
Total Operating Expenses 83,637 68,684
Income from Operations 53,241 46,791
OTHER INCOME:
Foreign currency transaction gain (loss) 707 (54)
Interest 3,122 1,637
-------- --------
Total Other Income 3,829 1,583
Income before Income Taxes
and Minority Interest 57,070 48,374
INCOME TAXES 21,856 20,957
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Income before Minority Interest 35,214 27,417
MINORITY INTEREST (57) (63)
-------- --------
NET INCOME $ 35,157 $ 27,354
======== ========
EARNINGS PER COMMON SHARE $ .35 $ 0.28
======== ========
CASH DIVIDENDS PER COMMON SHARE $ 0.0150 $ 0.0064
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
DURING THE PERIOD 100,743 99,398
======== ========
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,
1995 1994
-------- --------
<S> <C> <C>
CASH AND CASH EQUIVALENTS, Beginning of Period $253,552 $220,681
CASH AND CASH EQUIVALENTS
PROVIDED FROM (USED FOR):
Operations:
Net income 35,157 27,354
Add (deduct) non-cash items included in net income:
Depreciation and amortization 29,034 24,127
Minority interest 57 63
Amortization of deferred unearned compensation 1,074 753
Loss on sale of property, plant and equipment 237 96
Other credits to net income (11) (770)
Current items:
Accounts receivable (4,374) 1,280
Inventories (13,172) (6,852)
Prepaid expenses (5,668) (3,935)
Accounts payable (1,979) (4,379)
Accrued expenses 18 1,741
Income taxes (10,444) (4,433)
-------- --------
NET CASH PROVIDED FROM OPERATIONS 29,929 35,045
Investments:
Purchases of property, plant and equipment (54,227) (32,204)
Proceeds from sale of property, plant and equipment 1,323 458
Increase in other assets (10,176) (8,768)
Decrease in short-term investments 1,605 1,040
-------- --------
NET CASH USED FOR INVESTMENTS (61,475) (39,474)
Financing:
Increase in long-term debt 227 23
Decrease in long-term debt (58) (125)
Cash dividends paid (808) (636)
Purchase of treasury stock (11,103) -
Disposition of treasury stock 818 183
Exercise of stock options 181 239
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NET CASH USED FOR FINANCING (10,743) (316)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (16,551) 446
-------- --------
(58,840) (4,299)
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CASH AND CASH EQUIVALENTS, End of Period $194,712 $216,382
======== ========
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 and records 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 1995 Annual
Report to Shareholders and the 1995 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
On October 21, 1994, the Board of Directors of Molex Incorporated
declared a twenty-five percent (25%) stock dividend. One quarter
(1/4) share of Common Stock was paid on November 28, 1994 to
shareholders of record as of November 7, 1994 for each share of
Common Stock and Class B Common Stock outstanding. In addition,
one quarter (1/4) share of Class A Common Stock was paid for each
share of Class A Common Stock outstanding. All shares
outstanding, earnings and dividends have been retroactively
restated for the stock split effected in the form of a stock
dividend.
On August 2, 1995, the Board of Directors of Molex Incorporated
declared a twenty-five percent (25%) stock dividend. One quarter
(1/4) share of Common Stock was paid on September 15, 1995 to
shareholders of record as of August 25, 1995 for each share of
Common Stock and Class B Common Stock outstanding. In addition,
one quarter (1/4) share of Class A Common Stock was distributed
for each share of Class A Common Stock outstanding. All shares
outstanding, earnings and dividends have been retroactively
restated for the stock split effected in the form of a stock
dividend.
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, 1995 and 1994, 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.
-5-
(3) Short-Term Investments
Short-term investments are available for sale and consist of a
variety of highly-liquid investments, with maturities generally
less than twelve months. Certain reclassifications have been made
to the prior year's financial statements in order to conform to
the 1996 classifications.
(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,
1995 1995
----------- -----------
Raw materials $ 29,471 $ 29,424
Work in process 55,832 59,042
Finished goods 68,594 62,370
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$153,897 $150,836
=========== ===========
-6-
MOLEX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net revenues were $338.2 million for the quarter
ended September 30, 1995, increasing 25.8 percent over net
revenues for the corresponding quarter of the prior fiscal year.
Compared to the same quarter in the prior year, the generally
lower value of the US dollar compared to other currencies
worldwide increased net revenues by $5.0 million for the quarter.
Excluding the effects of currency fluctuation, growth in net
revenues would have equaled 23.9 percent for the three months
ended September 30, 1995.
Molex continued to exceed its goal of increasing net revenues at
twice the growth rate of the worldwide connector market. All
geographic regions gained market share as local currency net
revenue growth was in excess of 10 percent for the three months
ended September 30, 1995. Net revenues in Europe increased 36.4
percent in U.S. dollars and 27.0 percent in local currencies for
the quarter ended September 30, 1995. We are continuing to see
increased demand for interconnection products in most of Europe,
and are pleased with the increased sales we are making to the
European automotive and mobile telecommunication industries.
For the three months ended September 30, 1995, revenues in the
Americas Region (including the U.S. Region and Americas Non-U.S.)
increased 33.1 percent from the prior year in local currencies.
We continue to see increased customer sales to the automotive
market and fiber optic sales continue to experience robust growth.
Net revenues in the Far East North increased 16.4 percent in U.S.
dollars and 11.7 percent in local currencies for the quarter
compared to the same period in the prior year. The Japanese
economy overall remains difficult. In spite of this, our Japanese
domestic sales improved slightly over the same quarter in the
prior year.
Far East South net revenues for the quarter ended September 30,
1995 increased 16.6 percent in U.S. dollars and 14.4 percent in
local currencies. Sales in this region remain strong due to
continued growth in the personal computer and hard 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.
-7-
For the three months ended September 30, 1995, 70 percent of
Molex's worldwide net revenues were generated from its
international operations, compared to 72 percent for the same
period during the prior fiscal year. International operations are
subject to currency fluctuations and government actions. Molex
monitors its 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 40.5 percent for the three months
ended September 30, 1995 decreased from the 42.9 percent reported
during the comparable period of the previous fiscal year. The
decline in the gross profit percentage is primarily due to start-
up costs for new automotive programs and several new projects in
Japan. For the three months ended September 30, 1995,
depreciation and amortization expenses have increased at a lower
rate than the increase in net revenues. Depreciation and
amortization expenses currently represent 8.6 percent of sales
compared to 9.0 percent of sales during the same period of the
prior fiscal year.
Operating expenses as a percent of net revenue for the three
months ended September 30, 1995 improved slightly from the same
period a year ago, reflecting the continued management focus on
the control of expenses.
Foreign currency transaction gains were $.7 million for the
quarter ended September 30, 1995 compared to the $.1 million loss
in the same quarter of the prior year. The foreign currency
transaction gain for the quarter is primarily due to the weakening
of the Japanese yen relative to the dollar during the quarter
ended September 30, 1995.
Interest income, net of interest expense, increased 90.7 percent
for the quarter ended September 30, 1995. 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.
The effective tax rate for the quarter ended September 30, 1995
equaled 38.3 percent as compared to 43.3 percent reported for the
same period in the prior fiscal year. This decrease is primarily
caused by increased pretax profitability in countries with lower
effective tax rates coupled with the ability of the Company
to utilize its foreign tax credits.
Net income for the quarter was $35.2 million or 35 cents per
share, a 28.5 percent increase compared with $27.4 million or 28
cents per share for the same quarter last fiscal year. Excluding
the effects of currency fluctuations, net income for the quarter
increased 26.3 percent over the same quarter last fiscal year.
-8-
LIQUIDITY AND CAPITAL
One of Molex's many financial strengths is its exceptionally
strong balance sheet. Working capital at September 30, 1995
remains strong at $455.9 million, down from $495.0 million at June
30, 1995 primarily due to the exchange effect of the stronger U.S.
dollar.
The Company purchased 260,000 shares of treasury stock during the
quarter ended September 30, 1995.
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 1996 continue to look
promising. Demand for interconnection products remains strong in
the United States and Europe. In Japan, Molex's business levels
continue to increase modestly over the prior year. Molex will
continue to push into new markets and expand our product line
through the introduction of new and innovative products. The Mod-
Tap W. Corporation acquisition is expected to better position
Molex to expand into the rapidly growing local area network
market.
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.
-9-
Part II - Other Information
Items 1 - 6. Not Applicable
-10-
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 10, 1995 /s/ JOHN C. PSALTIS
------------------ -----------------------
John C. Psaltis
Corporate Vice President,
Treasurer and Chief
Financial Officer
Date November 10, 1995 /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, 1995 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-30-1996
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 194,712
<SECURITIES> 57,818
<RECEIVABLES> 281,616
<ALLOWANCES> (12,245)
<INVENTORY> 153,897
<CURRENT-ASSETS> 702,771
<PP&E> 1,218,241
<DEPRECIATION> (665,249)
<TOTAL-ASSETS> 1,364,615
<CURRENT-LIABILITIES> 246,882
<BONDS> 8,349
<COMMON> 5,225
0
0
<OTHER-SE> 1,058,561
<TOTAL-LIABILITY-AND-EQUITY> 1,364,615
<SALES> 338,176
<TOTAL-REVENUES> 338,176
<CGS> 201,298
<TOTAL-COSTS> 83,637
<OTHER-EXPENSES> (707)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,122)
<INCOME-PRETAX> 57,070
<INCOME-TAX> 21,856
<INCOME-CONTINUING> 35,214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,157
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
