<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996 Commission File number 0-7491
MOLEX INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2369491
------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2222 Wellington Court, Lisle, Illinois 60532
- -------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 969-4550
-------------------
Securities registered pursuant to Section 12 (b) of the Act: None
----
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $0.05
------------------------------
Class A Common Stock, par value, $0.05
--------------------------------------
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
--- ---
On August 30, 1996, the following numbers of shares of the Company's
common stock were outstanding:
Common Stock 50,090,034
Class A Common Stock 50,749,436
Class B Common Stock 94,255
The aggregate market value of the voting shares (based on the closing
price of these shares on the National Association of Securities
Dealers Automated Quotation System on such date) held by non-affiliates
was approximately $890.4 million.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Portions of the Annual Report to Shareholders for the year ended June 30,
1996, are incorporated by reference into Parts I, II and IV of this
report.
Portions of the Proxy Statement for the annual meeting of Stockholders, to
be held on October 25, 1996 are incorporated by reference into Part III of
this report.
Index to Exhibits listed on Pages 21 through 22.
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Part I Page
----
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of the Registrant 10
Part II
Item 5. Market for the Registrant's Common Equity and 12
Related Stockholder Matters
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes in and Disagreements with Accountants on 13
Accounting and Financial Disclosure
Part III
Item 10. Directors and Executive Officers of the Registrant 14
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain Beneficial Owners 14
and Management.
Item 13. Certain Relationships and Related Transactions 14
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports 15
on Form 8-K
Statements of Changes in Shares Outstanding 17
Schedule II-Valuation and Qualifying Accounts 18
Independent Auditors' Report on Schedule 19
Signature Page 20
Index to Exhibits 21
</TABLE>
2
<PAGE> 3
PART I
ITEM 1 - BUSINESS
GENERAL DEVELOPMENT OF THE BUSINESS
Molex Incorporated originated from an enterprise established in 1938. It was
incorporated in 1972 in the state of Delaware. As used herein the term "Molex"
or "Company" includes Molex Incorporated and its United States and
international subsidiaries.
GENERAL DESCRIPTION OF THE BUSINESS
Molex is a leading manufacturer of electronic, electrical and fiber optic
interconnection products and systems; switches; and application tooling. Molex
operates 46 plants in 21 countries and employs more than 10,000 people
worldwide. More than 67% of Fiscal 1996 sales were generated from products
manufactured and sold outside the U.S.
Molex serves original equipment manufacturers in industries that include
automotive, computer, business equipment, consumer products, telecommunications
and premise wiring. Molex offers more than 100,000 products to customers
primarily through direct sales people and authorized distributors. The
worldwide market for electronic connectors, cable assemblies and backplanes was
estimated at $25.8 billion*. With a 5.4% market share, Molex is the
second-largest connector manufacturer in the world in what is a fragmented but
highly competitive industry.
Molex conducts business in one industry segment: the manufacture and sale of
electrical components. The Company designs, manufactures, and distributes
electrical and electronic devices such as terminals, connectors, planer cables,
cable assemblies, interconnection systems, fiber optic interconnection systems,
backplanes and mechanical and electronic switches. Crimping machines and
terminal inserting equipment (known as "application tooling") are offered on a
lease or purchase basis to the Company's customers for the purpose of applying
the Company's components to the customers' products. Net revenue from
application tooling constitutes approximately 2% of the Company's net
revenues. Molex products are designed for use in a broad range of electrical
and electronic applications as set forth below:
* Source: Fleck International
3
<PAGE> 4
<TABLE>
<CAPTION>
Percentage of
Fiscal 1996
Market Net Revenue Products
- ------ --- ------- --------
<S> <C> <C>
Computer/business equipment/ 49% Computers, peripheral
telecommunications equipment, calculators, copiers, pagers and dictation equipment
Consumer Products 28% Televisions, stereo high fidelity systems, compact disc players,
video tape recorders, camcorders and electronic games, microwave ovens,
refrigerators, freezers, dishwashers, disposals and air conditioners
Automotive 15% Automobiles, trucks, recreational vehicles and farm equipment.
Other 8% Electronic medical equipment, vending machines, security equipment and
modular office furniture and premise wiring
</TABLE>
The Company sells its products primarily to original equipment manufacturers
and their subcontractors and suppliers. The Company's customers include
various multinational companies, including Apple, AT&T, Canon, Compaq, Delco,
Ford, Hewlett Packard, IBM, JVC, Matsushita, Motorola, Philips, Sony, Thomson,
Toshiba, and Xerox, many of which Molex serves on a global basis. Net revenues
contributed by different industry groups fluctuate due to various factors
including model changes, new technology, introduction of new products and
composition of customers. No customer accounted for 10% or more of net
revenues in fiscal years 1996, 1995 or 1994. While its customers generally
make purchasing decisions on a decentralized basis, Molex believes that, due to
its financial strength and product development capabilities, it has and will
continue to benefit from the trend of many of its customers towards the use of
fewer vendors.
4
<PAGE> 5
In the United States and Canada, the Company sells its products primarily
through direct sales engineers and industrial distributors. Internationally,
Molex sells primarily through its own sales organizations in Japan, Hong Kong,
Singapore, Taiwan, South Korea, Malaysia, Thailand, China, Australia, England,
Italy, Ireland, France, Spain, Germany, the Netherlands, Switzerland, Poland,
Sweden, Norway, Denmark, South Africa, India, Canada, Mexico and Brazil.
Outside of the United States and Canada, Molex also sells its products through
manufacturers' representative organizations, some of which act as distributors,
purchasing from the Company for resale. The manufacturers' representative
organizations are granted exclusive territories and are compensated on a
commission basis. These relationships are terminable by either party on short
notice. All sales orders received are subject to approval by the Company.
The Company promotes its products through leading trade magazines, direct
mailings, catalogs and other promotional literature. Molex is a frequent
participant in trade shows and also conducts educational seminars for its
customers and its manufacturers' representative organizations.
There was no significant change in the Company's suppliers, products, markets
or methods of distribution during the last fiscal year.
Molex generally seeks to locate manufacturing facilities to serve local
customers and currently has 46 manufacturing facilities in 21 countries on six
continents.
The principal raw materials and component parts Molex purchases for the
manufacture of its products include brass, copper, aluminum, steel, tin,
nickel, gold, silver, nylon and other molding materials, and nuts, bolts,
screws and rivets. Virtually all materials and components used in the
Company's products are available from several sources. Although the
availability of such materials has generally been adequate, no assurance can be
given that additional cost increases or material shortages or allocations
imposed by its suppliers in the future will not have a materially adverse
effect on the operations of the Company.
5
<PAGE> 6
COMPETITION
The business in which the Company is engaged is highly competitive. Most of
the Company's competitors offer products in some but not all of the industries
served by the Company. Molex believes that the ability to meet customer
delivery requirements and maintenance of product quality and reliability are
competitive factors that are as important as product pricing. Some of the
Company's competitors have been established longer and have substantially
larger manufacturing, sales, research and financial resources.
PATENTS/TRADEMARKS
As of June 30, 1996, the Company owned 592 United States patents and had 169
patent applications on file with the United States Patent Office. The Company
also has 1,183 corresponding patents issued and 2,348 applied for in other
countries as of June 30, 1996. No assurance can be given that any patents will
be issued on pending or future applications. As the Company develops products
for new markets and uses, it normally seeks available patent protection. The
Company believes that its patents are of importance but does not consider
itself materially dependent upon any single patent or group of related patents.
BACKLOG
The backlog of unfilled orders at June 30, 1996 was approximately $225.7
million; this compares to $245.7 million at June 30, 1995. Substantially all
of these orders are scheduled for delivery within twelve months. The Company's
experience is that orders are normally delivered within ninety days from
acceptance.
RESEARCH AND DEVELOPMENT
Molex incurred total research and development costs of $85.5 million in 1996,
$78.1 million in 1995, and $64.8 million in 1994. The Company incurred costs
relating to obtaining patents of $6.7 million in 1996, $4.9 million in 1995,
and $3.3 million in 1994 which are included in total research and development
costs. The Company's policy is to charge these costs to operations as incurred.
The Company introduced many new products during the year; however, in the
aggregate, these products did not require a material investment of assets.
6
<PAGE> 7
COMPLIANCE
The Company believes it is in full compliance with federal, state and local
regulations pertaining to environmental protection. The Company does not
anticipate that the costs of compliance with such regulations will have a
material effect on its capital expenditures, earnings or competitive position.
EMPLOYEES
As of June 30, 1996, the Company employed 10,100 persons worldwide. The
Company believes its relations with its employees are favorable.
INTERNATIONAL OPERATIONS
The Company is engaged in material operations in foreign countries. Net
revenue derived from international operations for the fiscal year ended June
30, 1996 was approximately 68% of consolidated net revenue.
The Company believes the international net revenue and earnings will continue
to be significant. The analysis of the Company's operations by geographical
area appears in footnote 10 on pages 49 - 50 of the 1996 Annual Report to
Shareholders and is incorporated herein by reference.
7
<PAGE> 8
ITEM 2 - PROPERTIES
Molex owns and leases manufacturing, warehousing and office space in over 110
locations around the world. The total square footage of these facilities is
presented below:
<TABLE>
<CAPTION>
Owned Leased Total
- ----- ------ -----
<S> <C> <C>
3,334,000 477,000 3,811,000
</TABLE>
The leases are of varying terms with expirations ranging from fiscal 1997
through fiscal 2025. The leases in aggregate are not considered material to
the financial position of the Company.
The Company's buildings, machinery and equipment have been well maintained and
are adequate for its current needs.
A listing of principal manufacturing facilities is presented below:
<TABLE>
<S> <C> <C>
AUSTRALIA IRELAND REPUBLIC OF KOREA
Melton, Victoria Millstreet Town Ansan City (2)
Shannon
BRAZIL SINGAPORE
Manaus ITALY Jurong Town
Sao Paulo Padova
SOUTH AFRICA
CANADA JAPAN Bergvlei (Johannesburg)
Scarborough, Ontario Kagoshiam
Okayama
Shioya
Shizuoka TAIWAN
CHINA (P.R.C.) Yamato City Taipei
Shilong Town
Shanghai THAILAND
Bangkok
ENGLAND MALAYSIA
Bordon Prai, Penang UNITED STATES
Southhampton Huntsville, Alabama
MEXICO North Little Rock, Arkansas
FRANCE Guadalajara Maumelle, Arkansas
Chateau Gontier Magdalena Orange, California
Nogales Pinellas Park, Florida
GERMANY St. Petersburg, Florida
Biberach POLAND Downers Grove, Illinois
Ettlingen Starogard Lisle, Illinois
Naperville, Illinois
INDIA PUERTO RICO Lincoln, Nebraska (3)
Bangalore Ponce (2) Manchester, New Hampshire
</TABLE>
8
<PAGE> 9
ITEM 3 - LEGAL PROCEEDINGS
None deemed material to the Company's financial position or consolidated
results of operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE> 10
Executive Officers of the Registrant
The following information relates to the executive officers of the
Registrant who serve at the discretion of the Board of Directors and are
customarily elected for one-year terms at the Regular Meeting of the Board of
Directors held immediately following the Annual Stockholders' Meeting. All of
the executive officers named hold positions as officers and/or directors of one
or more subsidiaries of the Registrant. For purposes of this disclosure, only
the principal positions are set forth.
<TABLE>
<CAPTION>
Year
Employed
Positions Held with Registrant by
Name During the Last Five Years Age Registrant
- ------------------------ ----------------------------------------- --- ----------
<S> <C> <C> <C>
Frederick A. Krehbiel(a) Chairman (1993-); Chief Executive Officer 55 1965(b)
(1988-);Vice Chairman (1988-1993).
John H. Krehbiel, Jr.(a) President (1975-); Chief 59 1959(b)
Operating Officer (1996-).
J. Joseph King Executive Vice President 52 1975
(1996-); Group Vice President-
International Operations (1988-
1996).
Raymond C. Wieser Senior Vice President, Americas 58 1965(b)
Region (1996-); Corporate Vice
President and President,
Commercial Division-U.S.
Operations (1994-1996);
Group Vice President-U.S. Operations
(1989-1994).
Robert B. Mahoney Corporate Vice President, 43 1995
Treasurer and Chief Financial
Officer (1996-).
Ronald L. Schubel Corporate Vice President (1982-) 53 1981
and Regional President, Far East
South (1994-); President,
Commercial Division-U.S. Operations
(1982-1994).
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION> Year
Employed
Positions Held with Registrant by
Name During the Last Five Years Age Registrant
- ------------------ ----------------------------- ----- -----------
<S> <C> <C> <C>
Werner W. Fichtner Corporate Vice President 53 1981
(1987-) and Regional President,
Europe (1981-).
Goro Tokuyama Corporate Vice President 62 1985
(1990-), Regional President,
Far East North (1988-) and
President of Molex Japan Co.,
Ltd. (1985-).
Martin P. Slark Corporate Vice President 41 1976
(1990-) and Regional President,
Americas (1996-); Regional
President, U.S. (1994-1996);
Regional President, Far East
South (1988-1994).
James E. Fleischhacker Corporate Vice President 52 1984
(1994-) and President,
DataComm Division Americas
(1989-).
Kathi M. Regas Corporate Vice President 40 1985
(1994-); Director, Human
Resources-U.S. Operations
(1989-1994).
Louis A. Hecht Corporate Secretary (1977-) 52 1974
and General Counsel (1975-).
</TABLE>
(a) John H. Krehbiel, Jr. and Frederick A. Krehbiel (the "Krehbiel Family")
are brothers. The members of the Krehbiel Family may be considered to be
"control persons" of the Registrant. The other officers listed above have no
relationship, family or otherwise, to the Krehbiel family, Registrant or each
other.
(b) Includes period employed by Registrant's predecessor.
11
<PAGE> 12
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Molex is traded on the National Market System of the NASDAQ in the
& United States and on the London Stock Exchange. The information
set forth under the captions
(b) "Financial Highlights" and "Fiscal 1996, 1995, and 1994 by Quarter
(Unaudited)" in the foldout and page 51, respectively, of the 1996
Annual Report to Shareholders is incorporated herein by reference.
(c) The following table presents quarterly dividends per common share for
the last two fiscal years. The fiscal 1995 dividends per share have
been restated for the August, 1995 25% stock dividend and November,
1994 25% stock dividend.
<TABLE>
<CAPTION>
Class A
Common Stock Common Stock
Fiscal 1996 Fiscal 1995 Fiscal 1996 Fiscal 1995
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Quarter Ended -
September 30, 0.0150 0.0064 0.0150 0.0064
December 31, 0.0150 0.0080 0.0150 0.0080
March 31, 0.0150 0.0080 0.0150 0.0080
June 30, 0.0150 0.0080 0.0150 0.0080
------ ------ ------ ------
Total 0.0600 0.0304 0.0600 0.0304
====== ====== ====== ======
</TABLE>
Cash dividends on Common Shares have been paid every year since 1977.
A description of the Company's Common Stock appears in footnote 3 on
page 46 of the 1996 Annual Report to Shareholders and is incorporated
herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information set forth under the caption "Ten Year Financial Highlight
Summary" (only the five years ended June 30, 1996) on page 33 of the 1996
Annual Report to Shareholders is incorporated herein by reference.
12
<PAGE> 13
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion of
Financial Condition and Results of Operations" on pages 34 through 38
of the 1996 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company set forth
on pages 40 through 50 of the 1996 Annual Report to Shareholders and the
independent auditors' report set forth on page 39 of the 1996 Annual
Report to Shareholders are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets - June 30, 1996 and 1995
Consolidated Statements of Income for the years ended
June 30, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
June 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
The supplementary data regarding quarterly results of operations, set
forth under the caption "Fiscal 1996, 1995, and 1994 by Quarter
(Unaudited)" on page 51 of the 1996 Annual Report to Shareholders, is
incorporated herein by reference.
The statement of changes in shares outstanding appears on Page 17 of
this Form 10-K.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
<PAGE> 14
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under the caption "Election of Directors" in the Company's
Proxy Statement for the annual meeting of Stockholders to be held on
October 25, 1996 (The "Company's 1996 Proxy Statement") is incorporated
herein by reference. The information called for by Item 401 of
Regulation S-K relating to the Executive Officers is furnished in a
separate item captioned "Executive Officers of the Registrant" in Part I
of this report.
ITEM 11 - EXECUTIVE COMPENSATION
The information under the caption "Executive Compensation" in the
Company's 1996 Proxy Statement is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information under the caption "Security Ownership of Management and of
Certain Beneficial Owners" in the Company's 1996 Proxy Statement is
incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the captions "Election of Directors",
"Indebtedness of Management" and "Security Ownership of Management and of
Certain Beneficial Owners" in the Company's 1996 Proxy Statement is
herein incorporated by reference.
14
<PAGE> 15
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements contained in the Company's 1996
Annual Report to Shareholders have been incorporated by reference in Item 8.
<TABLE>
<CAPTION>
Page(s) in
Annual Report
Item to Shareholders
------------------------------ ---------------
<S> <C>
Independent Auditors' Report 39
Consolidated Balance Sheets - June 30, 1996
and 1995 40-41
Consolidated Statements of Income - for
the years ended June 30, 1996, 1995 and 1994 42
Consolidated Statements of Shareholders' Equity -
for the years ended June 30, 1996, 1995 and 1994 43
Consolidated Statements of Cash Flows - for the
years ended June 30, 1996, 1995 and 1994 44
Notes to Consolidated Financial Statements 45-50
Fiscal 1996, 1995 and 1994 by Quarter (Unaudited) 51
(a) 2. Financial Statement Schedule
Page in the
Form 10-K
---------
Schedule II - Valuation and Qualifying Accounts 18
</TABLE>
15
<PAGE> 16
All other schedules are omitted because they are inapplicable, not
required under the instructions, or the information is included in the
consolidated financial statements or notes thereto.
Separate financial statements for the Company's unconsolidated
affiliated companies, accounted for by the equity method, have been
omitted because they do not constitute significant subsidiaries.
(a) 3. Exhibits
The exhibits listed on the accompanying Index to Exhibits are filed or
incorporated herein as part of this Report.
(b) Reports on Form 8-K
Molex filed no reports on Form 8-K with the Securities and Exchange
Commission during the last quarter of the fiscal year ended June 30,
1996.
16
<PAGE> 17
MOLEX INCORPORATED
Statements of Changes in Shares Outstanding
For the Year Ended June 30, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Class A Class B
Common Common Common Treasury
Stock Stock Stock Stock
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Shares outstanding at
June 30, 1993 32,637,286 32,599,585 94,255 2,172,208
Exercise of stock options 281,551 155,704
Purchase of treasury stock 30,849
Disposition of treasury stock (32,770)
----------- ---------- --------- ---------
Shares outstanding at
June 30, 1994 32,918,837 32,755,289 94,255 2,170,287
Exercise of stock options 310,593 24,528
Purchase of treasury stock 125,452
Disposition of treasury stock (47,247)
Purchase of business 974,998
Stock splits effected in the form 18,666,350 18,677,884 1,236,233
of dividends
----------- ---------- --------- ---------
Shares outstanding at
June 30, 1995 51,895,780 52,432,699 94,255 3,484,725
Exercise of stock options 471,229
Purchase of treasury stock 785,000
Disposition of treasury stock (72,162)
Purchase of business 108,257
Issuance of stock bonus 11,812
Other (1,017)
----------- ---------- --------- ---------
Shares outstanding at
June 30, 1996 52,378,821 52,539,939 94,255 4,197,563
=========== ========== ========= =========
</TABLE>
17
<PAGE> 18
MOLEX INCORPORATED
Schedule II - Valuation and Qualifying Accounts
For the Year Ended June 30, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Allowance for Losses Balance at Balance
and Adjustments on Beginning Charged to Accounts Translation at End
Receivables: of Period Income Written Off Adjustments of Period
- ------------------- --------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1996 $11,934 $ 1,831 ($548) ($651) $12,566
======= ======= ===== ===== =======
1995 $ 8,916 $ 3,332 ($828) $514 $11,934
======= ======= ===== ===== =======
1994 $ 8,789 $ 2,354 ($2,344) $117 $ 8,916
======= ======= ===== ===== =======
</TABLE>
18
<PAGE> 19
INDEPENDENT AUDITORS REPORT
To the Board of Directors and
Shareholders of Molex Incorporated
Lisle, Illinois
We have audited the consolidated financial statements of Molex Incorporated and
its subsidiaries as of June 30, 1996 and 1995, and for each of the three years
in the period ended June 30, 1996, and have issued our report thereon dated
July 25, 1996; such financial statements and report are included in your 1996
Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the statements of changes in shares outstanding and the
financial statement schedule of Molex Incorporated and its subsidiaries, listed
in Item 14 (a) 2. These statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such statements of changes in
shares outstanding and financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Chicago, Illinois
July 1996
19
<PAGE> 20
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Company has duly caused this Annual Report to be signed on its
behalf by the undersigned, there unto duly authorized.
MOLEX INCORPORATED
------------------
(Company)
/s/ JOHN C. PSALTIS
----------------------------------------
September 20, 1996 By: John C. Psaltis
Corporate Vice President, Treasurer
and Chief Financial Officer (Retired)
/s/ ROBERT B. MAHONEY
September 20, 1996 ----------------------------------------
By: Robert B. Mahoney
Corporate Vice President, Treasurer
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
September 20, 1996 /s/ F. A. KREHBIEL
---------------------------------------
F. A. Krehbiel
Chairman of the Board and
Chief Executive Officer
September 20, 1996 /s/ J. H. KREHBIEL, JR.
---------------------------------------
J. H. Krehbiel, Jr.
President, Chief Operating Officer
and Director
September 20, 1996 /s/ JOHN C. PSALTIS
---------------------------------------
John C. Psaltis
Corporate Vice President, Treasurer
and Chief Financial Officer (Retired)
September 20, 1996 /s/ ROBERT B. MAHONEY
---------------------------------------
Robert B. Mahoney
Corporate Vice President, Treasurer
and Chief Financial Officer
September 20, 1996 /s/ F. L. KREHBIEL
---------------------------------------
F. L. Krehbiel
Director
September 20, 1996 /s/ MICHAEL J. BIRCK
---------------------------------------
Michael J. Birck
Director
September 20, 1996 /s/ E. D. JANNOTTA
---------------------------------------
E. D. Jannotta
Director
<PAGE> 21
<TABLE>
<CAPTION>
MOLEX INCORPORATED
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ ---------------------------------------------
<S> <C>
3 3.1 Certificate of Incorporation
(incorporated by reference to 1990
Form 10-K, Exhibit 3.1)
3.2 By-Laws (as amended)
(incorporated by reference to 1995
Form 10-K, Exhibit 3.2)
4 Instruments defining rights of
security holders including
indentures. See Exhibit 3.1
10 Material Contracts
10.1 The Molex Deferred Compensation
Plan (incorporated by reference
to 1984 Form 10-K, Exhibit 10.6)
10.2 The 1990 Molex Incorporated
Executive Stock Bonus Plan
(incorporated by reference to
1991 From 10-K, Exhibit 10.4)
10.3 The 1990 Molex Incorporated
Stock Option Plan (incorporated
by reference to 1991 Form 10-K,
Exhibit 10.5)
10.4 The 1991 Molex Incorporated
Incentive Stock Option Plan
(incorporated by reference to
Appendix A of the registrant's
Proxy Statement for 1991).
13 Molex Incorporated Annual report to
Shareholders for the year ended
June 30, 1996. (Such Report, except
to the extent incorporated herein by
reference, is being furnished for the
information of the Securities and
Exchange Commission only and is not
to be deemed filed as a part of this
annual report on Form 10-K)
</TABLE>
Exhibit
Number Exhibit
- ------ --------------------------
22 Subsidiaries of registrant
24 Independent Auditors' Consent
27 Financial Data Schedule
(All other exhibits are either inapplicable or not required)
<PAGE> 1
*FOLDOUT
FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
<TABLE>
<CAPTION>
1996 1995 Change
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
- ---------------------------------------------------------------------------------------------
Net revenue $1,382,673 $ 1,197,747 15%
Income before income taxes and minority interest 228,953 214,492 7%
Net income 145,586 124,035 17%
Net income as a percent of net revenue 10.5% 10.4% -
Return on beginning shareholders' equity 13.1% 14.1% -
PER SHARE
- ---------------------------------------------------------------------------------------------
Net income 1.45 1.24 17%
Dividends per common share .06 .03 100%
Book value 11.22 10.97 2%
Outstanding shares of stock 100,815,452 100,938,010 -
Number of shareholders:
Common Stock 6,159 6,062 -
Class A Common Stock 4,565 3,639 -
FINANCIAL POSITION
- ---------------------------------------------------------------------------------------------
Total assets $1,460,999 $ 1,441,020 1%
Working capital 459,407 494,990 (7%)
Long term debt 7,450 8,122 (8%)
Backlog 225,737 245,702 (8%)
Shareholders' equity 1,131,271 1,107,268 2%
Long term debt/Shareholders' equity 0.7% 0.7% -
Number of employees 10,100 9,500 6%
Current ratio 2.7/1 2.8/1 -
- ---------------------------------------------------------------------------------------------
</TABLE>
USE OF NET REVENUES
27.6% Materials
19.9% Energy, Rent, Insurance, Interest, etc.
8.6% Taxes: Business, Income and Payroll
0.4% Dividends [PIE CHART]
24.3% Wages, Salaries, Benefits
8.7% Depreciation and Amortization
10.5% Net Income
19.2% Reinvested in Business
MOLEX SALES BY REGION
35.8% Americas $494.9 Million
17.9% Far East South $247.4 Million
20.2% Europe $279.6 Million [PIE CHART]
25.6% Far East North $354.5 Million
0.5% Other $6.3 Million
MOLEX SALES BY INDUSTRY
15% Automotive
36% Computer/Business Equipment
13% Telecommunications [PIE CHART]
28% Consumer Products
8% Other
The global connector market is estimated at $25.8 billion.* As the world's
second-largest supplier, Molex has a 5.4% market share. There are more than
900 connector suppliers worldwide. *Source: Fleck International
<PAGE> 2
Ten-Year Financial Highlights Summary
(in thousands, except per share data)>>
<TABLE>
<CAPTION>
1996 1995 1994 1993(2) 1992
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net revenue $1,382,673 $1,197,747 $964,108 $859,283 $776,192
Gross profit 555,284 505,697 406,079 352,603 318,361
Income before
income taxes
and minority
interest 228,953 214,492 159,477 133,478 117,412
Income taxes 83,300 90,273 63,186 58,371 49,814
Net income 145,586 124,035 94,852 71,055 67,464
Earnings per
common share(1) 1.45 1.24 .96 .72 .69
Net income as
a percent of
net revenue 10.5% 10.4% 9.8% 8.3% 8.7%
- ----------------------------------------------------------------------
FINANCIAL POSITION
Current
assets $ 734,589 $ 773,036 $635,104 $497,560 $434,277
Current
liabilities 275,182 278,046 205,394 165,368 168,209
Working
capital 459,407 494,990 429,710 332,192 266,068
Current ratio 2.7 2.8 3.1 3.0 2.6
Property, plant &
equipment,
net 613,125 567,303 440,995 385,828 362,719
Total assets 1,460,999 1,441,020 1,138,517 961,775 849,689
Long-term debt 7,450 8,122 7,350 7,510 7,949
Shareholders'
equity 1,131,271 1,107,268 881,614 751,654 660,389
Return on
beginning
shareholders'
equity 13.1% 14.1% 12.6% 10.8% 12.2%
Dividends per
common share(1) 0.06 0.03 0.02 0.02 0.01
Weighted average
common shares
outstanding
(1) 100,745 100,015 98,976 98,439 97,892
- ----------------------------------------------------------------------
(1)Restated for the following stock split/dividends: 25%-August, 1995; 25%-November, 1994; 25%-November, 1992; 100%-
June, 1990.
(2)1993 results include a charge of $3,605, net of tax, for the cumulative effect of the change in accounting for
postretirement benefits other than pensions.
</TABLE>
p33
Molex
<PAGE> 3
Management's Discussion of Financial Condition and Results of Operations
FINANCIAL HIGHLIGHTS
Molex continued to produce strong revenue growth and improved
profitability in fiscal 1996, despite difficult economic conditions in several
geographic regions in which the Company operates. Net revenue increased 15.4
percent to a record $1.4 billion for the fiscal year. The Company's net revenue
continues to increase faster than the worldwide connector industry, which is
estimated to have grown between 5 and 6 percent during fiscal 1996. Net income
increased 17.4 percent to a record of $146 million, or 10.5 percent of net
revenue. The Company's continued growth is believed by management to be the
result of the Company's ability to expand in the fastest growing market segments
and geographic regions of the world. The Company's global presence allows it to
be a primary supplier for global and multinational companies worldwide.
- --------------------------------------------------------------------------------
THE GROWTH OF MOLEX VS.
THE WORLDWIDE CONNECTOR INDUSTRY
[CHART]
The Growth of Molex vs the Worldwide Connector Industry
Using 1986 as a base year.
Worldwide Molex
--------- -----
1986 100 100
1987 116 132
1988 130 172
1989 131 196
1990 135 204
1991 136 243
1992 137 266
1993 137 294
1994 143 330
1995 174 410
1996 184 474
INVESTOR RETURNS
Molex is committed to providing its shareholders with a high return on
their investment. The Company's total shareholder return (including reinvestment
of dividends) over the last five years has averaged an annual compounded return
of 18.0 percent on Molex Common Stock and 17.1 percent on Molex Class A Common
Stock, compared to the 16.7 percent return of the S & P MidCap 400 over the same
period of time. A $100 investment in Molex Common Stock at June 30, 1991,
together with the reinvestment of dividends, would be worth $229 at June 30,
1996 and the same investment in Molex Class A Common Stock would be worth $220
at June 30, 1996.
In September, 1995, the Molex Board of Directors distributed a 25
percent stock dividend. In addition, the Board of Directors increased the annual
cash dividend to $0.06 per share, a total increase of 87.5 percent including the
impact of the stock dividend. This is the seventh stock dividend Molex has paid
to shareholders within the last 13 years. All shares outstanding, earnings and
dividends per share have been retroactively restated for the stock dividend.
- --------------------------------------------------------------------------------
MOLEX COMMON STOCK/HIGH-LOW-CLOSE BY QUARTER
[CHART]
HI LO CLOSE GRAPH
High Low Close
FY'92 Q1 17.84 14.08 14.976
FY'92 Q2 18.56 14.64 18.304
FY'92 Q3 20.24 15.52 15.872
FY'92 Q4 17.68 15.12 16
FY'93 Q1 19.36 15.28 17.92
FY'93 Q2 19.76 16.64 17.043
FY'93 Q3 21.12 16.48 20.48
FY'93 Q4 20.64 18.4 19.84
FY'94 Q1 24.48 19.36 23.2
FY'94 Q2 23.36 20.32 22.72
FY'94 Q3 24.64 21.44 21.44
FY'94 Q4 24.88 19.36 24.32
FY'95 Q1 28.16 24 27.25
FY'95 Q2 28.8 24.8 27.625
FY'95 Q3 29.1 24.8 28.625
FY'95 Q4 31.4 28.2 31
FY'96 Q1 36.625 30.8 36.25
FY'96 Q2 37 30.5 31.75
FY'96 Q3 36.25 27.25 34.875
FY'96 Q4 36.625 30.25 31.75
INTERNATIONAL OPERATIONS
- --------------------------------------------------------------------------------
SALES BY REGION
JUNE 30,
- --------------------------------------------------------------------------------
1996 1986
[PIE CHART] ------ ------
International 68% International 63.5%
United States 32% United States 36.5%
In fiscal 1968, Molex entered the international connector market with
annual net revenue of $54 thousand. Today, 28 years later, international
customer sales have grown to $940 million and represent approximately 68 percent
of the Company's worldwide net revenue in U.S. dollars. Domestic revenue, as a
percent of total net revenue, increased from 29 percent in fiscal 1995 to 32
percent in fiscal 1996. Sales to the U.S. automotive market, in addition to the
sales of the Company's Mod-Tap subsidiary
p34
Molex
<PAGE> 4
acquired in the second half of fiscal 1995, increased the Company's
total net revenue by $109.9 million or 9.2 percent in fiscal 1996, while
international net revenue growth remained strong.
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. Examples of these strategies include the
prompt payment of intercompany balances utilizing a global netting system, the
establishment of contra-currency accounts in several international
subsidiaries, and occasional use of forward exchange contracts. Due to the
uncertainty of the foreign currency exchange markets, Molex cannot reasonably
predict future trends related to foreign currency fluctuations. Foreign
currency fluctuations have impacted the Company's results in the past and may
impact results in the future.
FINANCIAL POSITION AND LIQUIDITY
Molex has an exceptionally strong balance sheet. Cash and marketable securities
at June 30, 1996, equaled $282.7 million and represented 19.3 percent of total
consolidated assets. Cash and marketable securities decreased $30.5 million
during fiscal 1996. The exchange effect of the stronger U.S. dollar,
coupled with significant purchases of treasury stock during the year, are
primarily responsible for the decline in cash and marketable securities.
The Company's long-term financing strategy is to utilize internal
sources of funds for investing in plant, equipment and acquisitions. Management
is confident that the Company's liquidity and financial flexibility are
adequate to support its current and future growth. Molex has historically used
external borrowings only when a clear financial advantage exists. The Company
has available lines of credit totaling $57.4 million, $57.3 million of which
remains unused at June 30, 1996.
Cash provided from operations was $253.2 million during fiscal 1996. At
this level, the Company's operations generate sufficient cash to support all
investing and financing activities. In U.S. dollars, the average day's sales
outstanding in trade accounts receivable of 76 improved from the 79 days
reported last fiscal year. Average inventory days in U.S. dollars have improved
to 73 days from the 76 days reported last fiscal year.
Cash used for investing activities increased $6.6 million over fiscal 1995
as Molex continued its commitment to investing in new tooling, equipment and
facilities. Capital expenditures equaled $222.4 million for fiscal 1996,
increasing 19.0 percent from $186.9 million expended during the previous fiscal
year. Molex invested $19.4 million to add new facilities in Japan and South
Africa. In addition, facilities were expanded in Singapore, Mexico, Ireland
and Nebraska. These additions increased the worldwide facility floor space to
3.8 million square feet.
During fiscal 1996, $1.7 million was invested and 108,257 shares of
Class A Common Stock were issued to acquire or increase the Company's ownership
in various operations. These expenditures were much lower than fiscal 1995 when
$16.3 million was expended along with the issuance of 1.2 million shares of
Class A Common Stock for similar activities.
The weighted average shares outstanding of Common Stock, Class A Common
Stock and Class B Common Stock for the current fiscal year increased to 100.7
million from the 100.0 million for fiscal 1995. The Company purchased 785,000
shares of common stock for the treasury during fiscal year 1996. During fiscal
1995, Molex purchased 125,000 shares of treasury stock on the open market.
The Company is subject to environmental laws and regulations in the
countries where it operates. Molex has designed an environmental program to
reduce the generation of potentially hazardous materials during its
manufacturing process and believes it continues to meet or exceed local
governmental regulations.
The Company is a defendant in several pending proceedings incidental to
the normal conduct of business. Management believes that the ultimate
disposition of these matters will not have a materially adverse impact on the
financial condition or consolidated results of operations of the Company.
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUE
Fiscal Year Ended June 30,
U.S. Dollar
Percentage Change
1996 1995 1994 1996-95 1995-94
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 15.4% 24.2%
Cost of sales 59.8 57.8 57.9 19.6% 24.0%
- --------------------------------------------------------------------
Gross profit 40.2 42.2 42.1 9.8% 24.5%
Operating expenses 24.5 24.9 25.8 13.6% 20.0%
- --------------------------------------------------------------------
Income from operations 15.7 17.3 16.3 4.4% 31.7%
Total other income 0.9 0.6 0.2 74.2% 249.6%
- --------------------------------------------------------------------
Income before income taxes 16.6 17.9 16.5 6.7% 34.5%
Income taxes 6.1 7.5 6.7 -7.7 42.9%
- --------------------------------------------------------------------
Net income 10.5% 10.4% 9.8% 17.4% 30.8%
====================================================================
</TABLE>
p35
Molex
<PAGE> 5
Management's Discussion of Financial Condition and Results of Operations
(Continued)
FISCAL 1996 COMPARED TO FISCAL 1995
Net revenue increased 15.4 percent to an all-time high of $1.4 billion during
fiscal 1996, compared to $1.2 billion during fiscal 1995. Excluding the change
in exchange rates due to the generally stronger U.S. dollar which had the
affect of reducing reported revenue, net revenue increased 19.0 percent.
In the Far East North, customer net revenue increased 3.7 percent in local
currencies. The increase in domestic sales in fiscal 1996 was achieved despite
difficult economic conditions in Japan during much of the year and the impact
of price erosion. Net revenue in the region decreased 3.6 percent in U.S.
dollars as the dollar strengthened against the Japanese yen. Molex Japan's
development of high precision and miniaturized products have made them a leading
supplier to the notebook PC industry, as well as positioning the Company to
enter other growth industries such as telecommunications and automotive.
Customer net revenue in the Americas region (which includes the former
U.S. and Americas non-U.S. regions) increased 29.2 percent in U.S. dollars and
32.6 percent in local currencies in fiscal 1996, including the net revenue for
Mod-Tap for the full fiscal year. In the U.S. Commercial Division, sales to the
automotive market increased substantially over the prior year as several major
programs began commercial production in fiscal 1996. Revenues and profits in the
U.S. Data/Comm Division were strong in the first half of the fiscal year, with
slower growth in the second half. Price erosion in this sector continues to
offset unit growth. Fiber optics and related telecommunication products
continue to be the fastest growing market segments in the Americas region. The
newly-formed Value-Added Division, centered in Mexico, experienced strong growth
during the year. Molex is well-positioned to take advantage of opportunities in
this rapidly growing market as well.
Customer net revenue in the Far East South increased 16.7 percent in U.S.
dollars and 14.0 percent in local currencies. The region continues to
experience revenue growth due to demand for personal computers and related
peripheral products, as well as introduction of new products for local demand
and export.
Europe's net revenues increased 10.6 percent in U.S. dollars and 9.5
percent in local currencies. Net revenue increased 23.1 percent in U.S. dollars
when the European sales of Mod-Tap are included. Sales to the mobile telephone
and automotive industries were strong during the first half of the fiscal year,
but demand softened during the second half and revenue growth slowed somewhat.
Start-up costs for automotive programs placed pressure on profitability in the
region during much of the year.
The consolidated gross profit decreased from 42.2 percent of net revenue
in fiscal 1995 to 40.2 percent during fiscal 1996. Price erosion, coupled with
start-up costs for automotive programs in the U.S. and Europe and new products
in Japan, placed pressure on margins during fiscal 1996.
Operating expenses as a percentage of net revenue decreased slightly from
24.9 percent in fiscal 1995 to 24.5 percent in fiscal 1996. Net revenue per
employee increased to $136.9 thousand in fiscal 1996 from $126.1 thousand
during fiscal 1995. Employee headcount increased only 6.3 percent as compared
to the 15.4 percent increase in net revenue.
Research and development expenditures reached an all-time high of $85.5
million or 6.2 percent of sales, a 9.5 percent increase from the $78.1 million
spent in fiscal 1995. These expenditures, coupled with the efforts of the
engineering department, resulted in the release of 283 new product families and
the granting of 519 new patents during fiscal 1996. During fiscal 1996, 27.5
percent of net revenue was derived from the sale of products released by the
Company within the last three years. Molex has a long-term commitment to
reinvesting its profits in new product design and tooling in order to maintain
and improve the Company's competitive position.
Foreign currency transactions resulted in a net gain of $2.1 million in
fiscal 1996 compared to a net loss of $2.8 million in fiscal 1995 mainly due to
the weakening of the Japanese yen when compared to the U.S. dollar.
Interest income, net of interest expense for fiscal 1996 increased 5.2
percent from fiscal 1995. This increase is the result of higher interest rates
earned on relatively constant cash balances in many of the countries where the
Company has significant short-term investments. Interest expense remained
relatively unchanged from fiscal 1995.
The effective tax rate decreased to 36.4 percent during fiscal 1996 from
42.1 percent during fiscal 1995. The decrease was due to the mix of pretax
earnings between the U.S. and Japan and to changes in the valuation reserve for
losses which can be
p36
Molex
<PAGE> 6
recognized for tax purposes.
Net income increased 17.4 percent to $145.6 million. Earnings per share
increased to $1.45 during fiscal 1996 from $1.24 during fiscal 1995. Excluding
the effects of currency fluctuation, net income increased 21.1 percent over
fiscal 1995 income.
FISCAL 1995 COMPARED TO FISCAL 1994
During fiscal 1995, net revenues increased 24.2 percent to $1.2 billion,
compared to $964.1 million during fiscal 1994. Excluding the change in exchange
rates due to the generally weaker U.S. dollar, net revenue increased 18.2
percent. Net revenues of Mod-Tap added $16.5 million or 1.7 percent to fiscal
1995 net revenue.
Customer net revenues in the Far East North increased 21.3 percent in U.S.
dollars and 8.9 percent in local currencies as the value of the Japanese yen
strengthened against the U.S. dollar. Domestic sales in Japan improved slightly
from fiscal 1994 as business levels in the electronic industry improved
modestly. Price erosion continued to impact sales, but strong demand for new
products, including micro-miniature connectors, helped to overcome this
pressure. Sales and profits in Korea were very strong due to the robust growth
in the automotive and telecommunications industries.
Customer net revenues in the Americas Region increased 19.5 percent during
fiscal 1995. Included in this total were the sales from Mod-Tap since the date
of acquisition. Excluding the impact of Mod-Tap's net revenue, customer sales
in the U.S. Region increased 14.3 percent from fiscal 1994. The U.S. Commercial
Division's sales were strong due to increased demand in the home appliance,
automotive and the high-end TV market. Revenue in the U.S. Data/Comm Division
was somewhat depressed during the first six months of fiscal 1995, but improved
during the second half. Unit sales volume to the computer notebook and
workstation markets increased, but intense price erosion continued to impact
operating margins. Fiber optic sales were the fastest growing segment of the
U.S. Region as fiber optics was becoming the wiring of choice in the
telecommunications industry. The severe devaluation of the Mexican peso during
fiscal 1995 did not have a material effect on the consolidated results, as the
Company's operations in Mexico transact business primarily in U.S. dollars.
The Far East South was the fastest growing connector market in the world.
Customer revenue in the region increased 22.2 percent in U.S. dollars and 17.8
percent in local currencies. Sales in this region were strong due to continued
growth in the personal computer and hard disk drive industries. In addition to
the strong revenue growth, profits increased from 13.4 percent of sales in
fiscal 1994 to 15.0 percent in fiscal 1995, despite continuing price erosion.
In Europe, customer net revenues increased 42.4 percent in U.S. dollars
and 28.8 percent in local currencies as the value of the U.S. dollar weakened
against most of the major European currencies. Overall, the European connector
market emerged from several years of recession and negative growth. Revenues
increased significantly to the mobile telecommunication and automotive
industries. Molex made significant market share gains in the European cellular
phone industry. The increase in sales, continued tight control of expenses and
the favorable effects of ongoing restructuring, increased the net return on
sales to 9.2 percent in fiscal 1995 from 6.7 percent of sales during fiscal
1994.
The consolidated gross profit improved slightly to 42.2 percent of net
revenues during fiscal 1995 from 42.1 percent during fiscal 1994. The Company
was able to offset the effects of higher raw material prices and price erosion
with improved factory utilization and product mix.
Operating expenses as a percent of net revenue decreased slightly from
25.8 percent in fiscal 1994 to 24.9 percent in fiscal 1995. This decrease is
the result of controlled headcount additions despite the 24.2 percent increase
in net revenue. Net revenue per employee increased from $118.1 thousand in
fiscal 1994 to $126.1 thousand in fiscal 1995.
Research and development expenditures reached an all-time high of $78.1
million and represented 6.5 percent of sales during fiscal 1995, decreasing
from 6.7 percent of sales during fiscal 1994. Approximately 23 percent of
fiscal 1995 net revenue resulted from the sale of products that Molex released
within the prior three years. These expenditures, coupled with the efforts of
the engineering department, resulted in the release of a record 207 new product
families and the granting of 259 new patents during fiscal 1995.
Foreign currency transaction losses decreased 16.2 percent from fiscal
1994 losses when the Company incurred high losses in Brazil as a result of the
severe devaluation of the cruzeiro against the U.S. dollar.
Interest income, net of interest expense for fiscal 1995 increased 86.8
percent from fiscal 1994. This increase was the result of higher short-term
investment balances during fiscal 1995 coupled with the return of higher
interest rates earned in many of the
p37
Molex
<PAGE> 7
Management's Discussion of Financial Condition and Results of
of Operations (Continued)
countries where the Company has significant short-term investments. Interest
expense remained relatively unchanged from fiscal 1994.
The effective tax rate increased to 42.1 percent during fiscal 1995 from
39.6 percent during fiscal 1994. The increase reflects 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 generated
during fiscal 1995.
Net income increased 30.8 percent to $124.0 million. Earnings per share
increased to $1.24 during fiscal 1995 from $0.96 during fiscal 1994. Excluding
the effects of currency fluctuations, net income increased 23 percent over
fiscal 1994 net income.
OUTLOOK
Fiscal 1996 was an outstanding year for Molex, with sales growing
significantly faster than the overall connector industry. The outlook for
fiscal 1997 is for another good year. Management anticipates more modest growth
in sales and earnings during the first half, with stronger growth in the second
half as the Japanese economy continues to improve and the impact of
year-over-year currency comparison eases.
To further expand the Company's global presence and provide customers
with innovative products at an accelerated pace, Molex plans to invest
approximately $215 million in capital expenditures and $95 million in research
and development for the fiscal year ending June 30, 1997. During fiscal 1997,
the Company plans to open a new facility in China and further expand the
facilities in Singapore, Korea, India and Lisle, Illinois.
Worldwide, the connector industry is expected to increase between 5 and
6 percent. The Company expects to, once again, surpass its goals of growing at
twice the connector industry rate and generating a 10 percent net return on
sales for the fiscal year ending June 30, 1997. Management believes that Molex
is well-positioned to continue growing faster than the overall connector
industry while achieving its profit goals. The Company continues to emphasize
expansion in rapidly growing industry segments, product lines and geographic
regions. Molex remains committed to providing high quality products and a full
range of services to the customer, wherever they may be located in the world.
Management's Statement of Responsibility
The management of the Company is responsible for the information contained in
the consolidated financial statements and in the other parts of this report.
The accompanying consolidated financial statements of Molex Incorporated and
its subsidiaries have been prepared in accordance with generally accepted
accounting principles. In preparing these statements, management has made
judgments based upon available information. To ensure that this information
will be as complete, accurate and factual as possible, management has
communicated to all appropriate employees requirements for accurate record
keeping and accounting.
The Company maintains an internal control structure designed to provide
reasonable assurance for the safeguarding of assets against loss from
unauthorized use or disposition and reliability of financial records.
Management believes that through the careful selection of employees, the
division of responsibilities and the application of formal policies and
procedures, the Company has an effective and responsive internal control
structure that is intended, consistent with reasonable cost, to provide
reasonable assurance that transactions are executed as authorized.
The Company's independent auditors, Deloitte & Touche LLP, are responsible
for conducting an audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and for expressing their
opinion as to whether these consolidated financial statements present fairly,
in all material respects, the financial position, results of operations and
cash flows of Molex Incorporated and its subsidiaries in conformity with
generally accepted accounting principles.
/S/ Frederick A. Krehbiel
- -------------------------
Frederick A. Krehbiel
Chairman of the Board and
Chief Executive Officer
/S/ John H. Krehbiel, Jr.
- --------------------------
John H. Krehbiel, Jr.
President and Chief Operating
Officer
/S/John C. Psaltis
- ------------------------------
John C. Psaltis
Corporate Vice President,
Treasurer and Chief Financial
Officer (Retired)
/S/Robert B. Mahoney
- -------------------------------
Robert B. Mahoney
Corporate Vice President,
Treasurer and Chief Financial
Officer
p38
Molex
<PAGE> 8
Independent Auditors' Report
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS,
MOLEX INCORPORATED
LISLE, ILLINOIS
We have audited the accompanying consolidated balance sheets of Molex
Incorporated and its subsidiaries as of June 30, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Molex Incorporated and its
subsidiaries as of June 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1996 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
July 25, 1996
p39
Molex
<PAGE> 9
Consolidated Balance Sheets
(in thousands, except per share data)
<TABLE>
<CAPTION>
ASSETS June 30,
1996 1995
-----------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $242,779 $253,552
Marketable securities 39,883 59,563
Accounts receivable:
Trade, less allowance of $12,566 in 1996 and
$11,934 in 1995 for doubtful accounts 269,675 277,993
Employee 4,356 4,821
Inventories 147,612 150,836
Deferred income taxes (Note 5) 22,562 19,874
Prepaid expenses 7,722 6,397
-----------------------------------------------------------------------
Total current assets 734,589 773,036
-----------------------------------------------------------------------
Property, plant and equipment
-----------------------------------------------------------------------
at cost (Note 4):
Land and improvements 43,504 49,919
Buildings and leasehold improvements 266,643 249,104
Machinery and equipment 683,310 658,655
Molds and dies 299,440 308,627
-----------------------------------------------------------------------
1,292,897 1,266,305
Less accumulated depreciation and amortization 679,772 699,002
-----------------------------------------------------------------------
Net property, plant and equipment 613,125 567,303
-----------------------------------------------------------------------
Other assets 113,285 100,681
-----------------------------------------------------------------------
$1,460,999 $1,441,020
=======================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
p40
Molex
<PAGE> 10
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY June 30,
1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt (Note 4) $ 103 $ 152
Accounts payable 127,557 128,146
Accrued expenses:
Salaries, commissions and bonuses 28,384 33,535
Other 63,205 51,405
Income taxes (Note 5) 54,418 64,000
Dividends payable 1,515 808
- ------------------------------------------------------------------------------------------
Total current liabilities 275,182 278,046
- ------------------------------------------------------------------------------------------
Deferred items:
Investment grants 2,991 2,574
Income taxes (Note 5) 10,986 10,736
- ------------------------------------------------------------------------------------------
Total deferred items 13,977 13,310
- ------------------------------------------------------------------------------------------
Accrued postretirement benefits (Notes 6 and 7) 30,401 32,170
- ------------------------------------------------------------------------------------------
Long-term debt (Note 4) 7,450 8,122
- ------------------------------------------------------------------------------------------
Minority interest in subsidiaries 2,718 2,104
- ------------------------------------------------------------------------------------------
Shareholders' equity (Notes 3 and 9):
Common Stock, $.05 par value; 100,000 shares authorized;
52,379 shares issued at 1996 and 51,896 shares issued at 1995 2,619 2,075
Class A Common Stock, $.05 par value; 100,000 shares authorized;
52,540 shares issued at 1996 and 52,433 shares issued at 1995 2,627 2,097
Class B Common Stock, $.05 par value; 146 shares authorized;
94 shares issued at 1996 and 1995 5 5
Paid-in capital 116,510 101,534
Retained earnings 989,928 850,533
Treasury stock (Common Stock, 2,412 shares at 1996 and 1,706
shares at 1995; Class A Common Stock, 1,785 shares at 1996
and 1,779 shares at 1995), at cost (62,726) (35,749)
Deferred unearned compensation (13,583) (13,771)
Cumulative translation adjustments 95,891 200,544
- -------------------------------------------------------------------------------------------
Total shareholders' equity 1,131,271 1,107,268
- -------------------------------------------------------------------------------------------
$1,460,999 $1,441,020
===========================================================================================
</TABLE>
p41
Molex
<PAGE> 11
<TABLE>
<CAPTION>
Consolidated Statements of Income
(in thousands, except per share data)
For the year ended June 30,
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Net revenue $1,382,673 $1,197,747 $964,108
Cost of sales 827,389 692,050 558,029
- -----------------------------------------------------------------------------------------
Gross profit 555,284 505,697 406,079
- -----------------------------------------------------------------------------------------
Operating expenses:
Selling 142,805 129,152 109,531
Administrative 196,202 169,331 139,153
- ------------------------------------------------------------------------------------------
Total operating expenses 339,007 298,483 248,684
- ------------------------------------------------------------------------------------------
Income from operations 216,277 207,214 157,395
- ------------------------------------------------------------------------------------------
Other income (expense):
Foreign currency transaction gain (loss) 2,114 (2,759) (3,291)
Interest, net 10,562 10,037 5,373
- ------------------------------------------------------------------------------------------
Total other income 12,676 7,278 2,082
- ------------------------------------------------------------------------------------------
Income before income taxes and minority interest 228,953 214,492 159,477
Income taxes (Note 5) 83,300 90,273 63,186
- ------------------------------------------------------------------------------------------
Income before minority interest 145,653 124,219 96,291
Minority interest (67) (184) (1,439)
- ------------------------------------------------------------------------------------------
Net income $145,586 $124,035 $94,852
==========================================================================================
Earnings per common share (Based upon weighted average
common shares outstanding) $1.45 $1.24 $.96
- ------------------------------------------------------------------------------------------
Dividends per common share (Note 3) $.0600 $.0304 $.0240
- ------------------------------------------------------------------------------------------
Weighted average common shares outstanding (Note 3) 100,745 100,015 98,976
- -----------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
p42
Molex
<PAGE> 12
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
(in thousands)
For the year ended June 30,
1996 1995 1994
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Common Stock
Balance at beginning of period $2,075 $1,646 $1,632
Exercise of stock options 23 16 14
Stock split effected in the form of a dividend 521 413 --
- -----------------------------------------------------------------------------------
Balance at end of period 2,619 2,075 1,646
Class A Common Stock
Balance at beginning of period 2,097 1,637 1,630
Exercise of stock options -- 1 7
Purchase of business 6 49 --
Stock split effected in the form of a dividend 524 410 --
- -----------------------------------------------------------------------------------
Balance at end of period 2,627 2,097 1,637
Class B Common Stock
Balance at beginning and end of period 5 5 5
Paid-in capital
Balance at beginning of period 101,534 56,464 47,052
Exercise of stock options 6,822 4,493 4,952
Disposition of treasury stock 920 1,112 650
Stock options granted 4,396 9,983 3,810
Purchase of business 3,516 30,420 --
Issuance of stock bonus 367 -- --
Stock split effected in the form of a dividend (1,045) (938) --
- -----------------------------------------------------------------------------------
Balance at end of period 116,510 101,534 56,464
Retained earnings
Balance at beginning of period 850,533 729,547 637,074
Net income 145,586 124,035 94,852
Cash dividends (6,191) (3,049) (2,379)
- -----------------------------------------------------------------------------------
Balance at end of period 989,928 850,533 729,547
Treasury stock
Balance at beginning of period (35,749) (31,749) (31,107)
Purchase of treasury stock (26,662) (3,712) --
Exercise of stock options (1,049) (898) (1,120)
Disposition of treasury stock 734 610 478
- -----------------------------------------------------------------------------------
Balance at end of period (62,726) (35,749) (31,749)
Deferred unearned compensation
Balance at beginning of period (13,771) (7,223) (6,235)
Stock options granted (4,396) (9,983) (3,810)
Amortization of deferred unearned compensation 4,584 3,435 2,822
- -----------------------------------------------------------------------------------
Balance at end of period (13,583) (13,771) (7,223)
Cumulative translation adjustments
Balance at beginning of period 200,544 131,287 101,603
Net effect of translation adjustment (104,653) 69,257 29,684
- -----------------------------------------------------------------------------------
Balance at end of period 95,891 200,544 131,287
- -----------------------------------------------------------------------------------
Total shareholders' equity $1,131,271 $1,107,268 $881,614
===================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
p43
Molex
<PAGE> 13
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(in thousands)
For the year ended June 30,
1996 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents, beginning of period $253,552 $220,681 $174,526
Cash and cash equivalents were provided from (used for):
Operations:
Net income 145,586 124,035 94,852
Add (deduct) non-cash items included in net income:
Depreciation and amortization 119,909 104,857 88,787
Deferred income taxes (4,629) (603) (1,212)
Gain on sale of property, plant and equipment (361) (51) (1,047)
Minority interest 67 184 1,439
Amortization of deferred unearned compensation 4,584 3,435 2,822
Amortization of deferred investment grants (289) (187) (240)
Other (credits) charges to earnings--net (1,055) (553) 613
Current items:
Accounts receivable (19,533) (35,289) (23,903)
Inventories (12,355) (23,705) (4,454)
Prepaid expenses (4,451) (257) 172
Accounts payable 15,784 16,846 12,615
Accrued expenses 12,878 15,482 17,285
Income taxes (2,903) 20,455 3,385
- ----------------------------------------------------------------------------------------------
Net cash provided from operations 253,232 224,649 191,114
- ----------------------------------------------------------------------------------------------
Investments:
Purchases of property, plant and equipment (222,389) (186,877) (129,458)
Proceeds from sale of property, plant and equipment 3,860 3,041 4,709
Purchases of businesses, net of cash acquired (1,677) (16,338) (3,106)
Proceeds from sale of marketable securities 1,921,024 1,454,008 942,239
Purchases of marketable securities (1,901,504) (1,456,834) (966,077)
Increase in other assets (10,290) (1,329) (3,601)
- ----------------------------------------------------------------------------------------------
Net cash used for investments (210,976) (204,329) (155,294)
- ----------------------------------------------------------------------------------------------
Financing:
Increase in investment grants 787 -- --
Decrease in long-term debt (987) (945) (169)
Increase in long-term debt 269 -- --
Cash dividends paid (5,556) (2,998) (2,217)
Exercise of stock options 5,796 2,992 2,915
Purchase of treasury stock (26,662) (3,712) --
Disposition of treasury stock 1,654 1,722 1,128
- ----------------------------------------------------------------------------------------------
Net cash (used for) provided from financing (24,699) (2,941) 1,657
- ----------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (28,330) 15,492 8,678
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (10,773) 32,871 46,155
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $242,779 $253,552 $220,681
==============================================================================================
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 1,140 $ 931 $ 795
Income taxes $ 78,611 $ 70,251 $ 57,721
- ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
p44
Molex
<PAGE> 14
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
(1) NATURE OF OPERATIONS
Molex Incorporated manufactures a broad line of electronic, electrical and
fiber optic connectors, flat cables, switches and associated application
tooling.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the major accounting policies and practices of
Molex Incorporated and subsidiaries that affect significant elements of the
accompanying consolidated financial statements. Supplemental disclosure of
noncash investing and financing activities are included in note 11.
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Molex
Incorporated (the Parent Company) and its subsidiaries. All material
intercompany balances and transactions have been eliminated.
(B) USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(C) MARKETABLE SECURITIES
Marketable securities are available for sale and consist of a variety of
highly-liquid investments, with maturities generally less than twelve months.
Gross unrealized holding gains and losses are not material as of June 30, 1996
and 1995.
(D) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include accounts receivable and payable,
marketable securities and long-term debt. The carrying amounts of the financial
instruments approximate their fair value.
(E) INVENTORIES
Inventories are valued at the lower of first-in, first-out cost or market.
Inventories at June 30 consisted of the following:
<TABLE>
<S> <C> <C>
1996 1995
- ------------------------------------
Raw materials $ 33,841 $ 29,424
Work in progress 54,687 59,042
Finished goods 59,084 62,370
- ------------------------------------
$147,612 $150,836
</TABLE>
===========================================================
(F) Property, Plant and Equipment and Related Reserves
Depreciation and amortization are provided substantially on a straight-line
basis for financial statement purposes and on accelerated methods for tax
purposes. The estimated useful lives are as follows:
<TABLE>
<S> <C>
Buildings 25-45 years
Machinery and equipment 3-10 years
Molds and dies 3-4 years
</TABLE>
Costs of leasehold improvements are amortized over the terms of the
related leases using various methods. The carrying value of all long-lived
assets is evaluated annually to determine if adjustment to the depreciation and
amortization period or to the unamortized balance is warranted.
(G) RESEARCH AND DEVELOPMENT AND PATENT COSTS
Costs incurred in connection with the development of new products and
applications are charged to operations as incurred. Total research and
development costs equaled $ 85,484 in 1996; $78,092 in 1995; and $64,772 in
1994.
Included in these totals are patent costs of $ 6,739, $4,895, and $3,252
for the years ended June 30, 1996, 1995 and 1994, respectively.
(H) REVENUE RECOGNITION
The Company recognizes revenue at the date of shipment.
(I) CURRENCY TRANSLATION
Assets and liabilities of international entities have been translated at
current exchange rates, and income and expenses have been translated using
average exchange rates.
(J) GOODWILL
Goodwill is charged to earnings on a straight-line basis over the periods
estimated to be benefited, currently not exceeding 20 years.
(K) CHANGES IN ACCOUNTING POLICY
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123) which the Company must adopt in fiscal 1997. This
statement allows for, and the Company intends to, retain the current method of
accounting for stock-based compensation expense with certain additional
disclosures. Therefore, the new standard will have no effect on the Company's
net income or financial position.
p45
Molex
<PAGE> 15
Notes to Consolidated Financial Statements (Continued)
(L) RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements in order to conform to the 1996 classifications.
(3) CAPITAL STOCK
The shares of Common Stock, Class A Common Stock and Class B Common Stock are
identical except as to voting rights. Class A Common Stock has no voting rights
except in limited circumstances. So long as more than 50% of the authorized
number of shares of Class B Common Stock continue to be outstanding, all
matters, other than the election of directors, submitted to a vote of the
shareholders must be approved by a majority of the Class B Common Stock, voting
as a class, and by a majority of the Common Stock, voting as a class. During
such period, holders of a majority of the Class B Common Stock could veto
corporate action that requires shareholder approval other than the election of
directors. There are 25 million shares of preferred stock authorized, none of
which were issued or outstanding during the three years ended June 30, 1996.
The Class B Common Stock can be converted into Common Stock on a
share-for-share basis at any time at the option of the holder. The authorized
Class A Common Stock would automatically convert into Common Stock on a
share-for-share basis at the discretion of the Board of Directors upon the
occurrence of certain events. Upon such conversion, the voting interests of the
holders of Common Stock and Class B Common Stock would be diluted.
The holders of the Common Stock, Class A Common Stock, and Class B Common
Stock participate equally, share for share, in any dividends that may be paid
thereon, if, as and when declared by the Board of Directors, or in any assets
available upon liquidation or dissolution of the Company.
On October 21, 1994 and August 2, 1995, the Board of Directors declared
25% stock dividends. One quarter share of Molex Common Stock was distributed
for each share of Common Stock and Class B Common Stock outstanding. In
addition, one quarter share of Class A Common Stock was distributed for each
share of Class A Common Stock outstanding. The October, 1994 stock dividend was
distributed on November 28, 1994 to shareholders of record as of November 7,
1994. The August, 1995 stock dividend was distributed on September 15, 1995 to
shareholders of record as of August 25, 1995. All stock and stock option
amounts, as well as earnings, dividends and market prices per common share have
been retroactively restated for the stock dividends.
(4) DEBT
<TABLE>
<CAPTION>
The details relative to long-term debt are as follows:
1996 1995
--------------------------------------------------------------------------
<S> <C> <C>
Industrial development bonds
2% to 5%, secured by certain
land, buildings and equipment;
payable in periodic installments
through November, 2009 $7,350 $7,350
Other 203 924
---------------------------------------------------------------------------
7,553 8,274
Less current portion 103 152
---------------------------------------------------------------------------
Long-term portion $7,450 $8,122
===========================================================================
</TABLE>
The long-term portion as of June 30, 1996, is due as follows: $77 in 1998,
$23 in 1999, and $7,350 in 2002 and thereafter. The provisions of certain loan
agreements contain restrictive covenants, the more significant of which require
the Company to maintain specified liquidity and debt-to-equity ratios.
(5) INCOME TAXES
The deferred tax provision is determined under the liability method. Under this
method, deferred tax assets and liabilities are recognized based on differences
between the financial statement and tax bases of assets and liabilities using
presently enacted tax rates.
Income before income taxes and minority interest is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 68,713 $ 52,740 $ 46,584
International 160,240 161,752 112,893
- ---------------------------------------------------------------------------------------------------------------------
$228,953 $ 214,492 $159,477
=====================================================================================================================
</TABLE>
Income tax provisions are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
Currently payable:
<S> <C> <C> <C>
U.S. federal $22,480 $ 21,685 $ 9,921
State 4,152 3,130 2,426
International 61,152 66,350 52,031
- -----------------------------------------------------------------------------------------------------------------------
87,784 91,165 64,378
- -----------------------------------------------------------------------------------------------------------------------
Deferred:
United States (4,049) (307) (359)
International (435) (585) (833)
- ------------------------------------------------------------------------------------------------------------------------
(4,484) (892) (1,192)
- ------------------------------------------------------------------------------------------------------------------------
Total provision for
income taxes $83,300 $90,273 $ 63,186
=========================================================================================================================
</TABLE>
p46
Molex
<PAGE> 16
The Company's tax rate differs from the U.S. federal income tax rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal income
tax rate 35.0% 35.0% 35.0%
Certain tax exemptions (3.9) (3.8) (4.4)
State income taxes,
net of federal
tax benefit 1.2 1.0 1.0
International tax rates
different from
U.S. federal rate 4.1 9.9 8.0
- ---------------------------------------------------------------------------------------------------------------------------
36.4% 42.1% 39.6%
=============================================================================================================================
</TABLE>
Net deferred taxes arise from temporary differences as follows:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
International/local taxes $4,084 $3,825
Employee benefit plans 8,562 9,713
Depreciation and amortization (8,110) (5,421)
Allowance for doubtful accounts 1,682 1,920
Inventory reserves 2,677 2,106
Inventory - other 4,318 3,528
Other deferred items 8,495 6,604
- ---------------------------------------------------------------------------------------------------------------------
$21,708 $22,275
=====================================================================================================================
</TABLE>
The net deferred tax accounts reported on the balance sheet as of June 30 are
as follows:
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net deferred:
Current asset $22,562 $19,874
Long-term asset 10,502 13,684
Current liability (370) (547)
Long-term liability (10,986) (10,736)
- ----------------------------------------------------------------------------------------------------------------------
$21,708 $22,275
======================================================================================================================
</TABLE>
Income taxes are generally not provided on the accumulated undistributed
earnings of certain international subsidiaries. It is intended that these
earnings will be permanently reinvested. Should these earnings be distributed,
foreign withholding taxes can be used, with limitations, to reduce U.S. income
taxes.
(6) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Parent Company and certain of its subsidiaries provide certain
retiree health care and life insurance benefits to its employees. The cost of
retiree insurance benefits is accrued over the period in which the employees
become eligible for such benefits. The majority of the Parent Company employees
may become eligible for these benefits if they reach age 55, with age plus years
of service equal to 70. There are no significant postretirement health care
benefit plans outside of the United States. The Company continues to fund
benefit costs primarily as claims are paid.
Net periodic postretirement benefit cost for fiscal years 1996, 1995 and
1994 included the following components:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost, benefits
attributed to
employee service
during the period $ 573 $ 515 $ 492
Interest cost on
accumulated
postretirement
benefit obligation 538 422 405
Unrecognized prior
service cost (515) (354) (107)
Unrecognized net gain 295 118 --
- ---------------------------------------------------------------------------------------------------------------
Net periodic postretirement
benefit cost $891 $ 701 $ 790
================================================================================================================
</TABLE>
The following table sets forth the plans' combined status as of June 30:
<TABLE>
<CAPTION>
1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation (APBO):
Retirees and beneficiaries $ 801 $ 614
Active employees 7,320 6,185
- ------------------------------------------------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 8,121 6,799
Fair value of plan assets -- --
- -------------------------------------------------------------------------------------------------------------------
Unfunded accumulated benefit
obligation in excess of
plan assets 8,121 6,799
Unrecognized prior service cost 1,907 2,121
Unrecognized net loss (915) (557)
- -------------------------------------------------------------------------------------------------------------------
Accrued postretirement benefit costs $9,113 $8,363
===================================================================================================================
</TABLE>
The discount rate used in determining the APBO was 7.0% at June 30, 1996
and 7.5% at June 30, 1995 and 1994. The assumed health care cost trend rate
used in measuring the accumulated postretirement benefit obligation was 7.0% in
1996, declining per year to an ultimate rate of 4.5% by 2016. The health care
cost trend rate assumption has a significant effect on the amount of the
obligation and periodic cost reported. An increase in the assumed health care
cost trend rate by 1% in each year would increase the APBO as of June 30, 1996
by $1,392 and the aggregate of the service and interest cost components of the
net periodic postretirement benefit cost for the year then ended by $219.
p47
Molex
<PAGE> 17
Notes to Consolidated Financial Statements (Continued
(7) PENSION AND PROFIT SHARING PLANS
The Company sponsors and/or contributes to pension plans covering substantially
all U.S. hourly employees and certain employees in international subsidiaries.
The Company also sponsors several defined benefit plans for certain domestic
and international employees. The benefits are primarily based on years of
service and the employees' compensation for certain periods during the last
years of employment.
Total pension expense for all benefit plans, including defined benefit
plans, amounted to $5,613 in 1996, $5,575 in 1995, and $4,775 in 1994. Net
periodic pension expense for the Company's defined benefit plans consists of
the following for the year ended June 30:
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL International International
U.S. PLANS PLANS U.S. Plans Plans U.S. Plans Plans
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service costs $ 597 $ 2,541 $ 515 $ 2,211 $ 412 $ 1,826
Interest costs on projected benefit obligation 560 1,343 487 1,356 368 1,039
Actual return on plan assets (1,061) (793) (207) (585) (198) (444)
Net amortization and deferral 776 75 (99) 343 (142) 33
- ---------------------------------------------------------------------------------------------------------------------------------
Net periodic pension expense $ 872 $ 3,166 $ 696 $ 3,325 $ 440 $ 2,454
=================================================================================================================================
</TABLE>
The funded status for the Company's defined benefit plans is as follows:
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL International
U.S. PLANS PLANS U.S. Plans Plans
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 7,006 $ 16,497 $ 5,379 $ 15,537
Nonvested benefit obligation 296 4,152 211 2,949
- ---------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 7,302 20,649 5,590 18,486
Projected benefit obligation 9,987 26,642 7,448 24,424
Plan assets at fair value 8,998 10,238 7,118 8,254
- ----------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation (989) (16,404) (330) (16,170)
Unrecognized net transition liability 397 62 507 67
Unrecognized prior service costs 2,200 -- 2,431 --
Unrecognized net gain (732) 654 (2,260) (2,346)
- ------------------------------------------------------------------------------------------------------------------
Accrued pension asset (liability) included
in the consolidated balance sheet $ 876 $(15,688) $348 $(18,449)
===================================================================================================================
</TABLE>
The assumptions used in computing the above information are presented below:
<TABLE>
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL International
PLANS Plans
(WEIGHTED (Weighted
U.S. PLANS AVERAGE) U.S. Plans average)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rates 7.0% 5.4% 8.0% 6.2%
Rates of increase in compensation 4.5% 4.3% 4.5% 4.1%
Expected long-term rates of return on plan assets 7.0% 8.5% 7.0% 9.0%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The Parent Company and certain of its subsidiaries also provide
discretionary savings and other defined contribution plans covering
substantially all of their salaried employees. Employer contributions of
$6,611, $5,626, and $4,892 were charged to operations during 1996, 1995 and
1994, respectively.
p48
Molex
<PAGE> 18
(8) COMMITMENTS
The Company and its subsidiaries rent certain facilities and equipment under
lease arrangements classified as operating leases. Some of the leases have
renewal options.
Future minimum rental payments under noncancellable operating leases with
initial or remaining terms of one year or more as of June 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Fiscal Year Amount
- -----------------------------------------------------------
<S> <C>
1997 $ 7,007
1998 4,207
1999 2,752
2000 2,577
2001 1,530
Thereafter 9,259
- -----------------------------------------------------------
$27,332
===========================================================
</TABLE>
Rental expense was $9,961 in 1996, $11,132 in 1995, and $9,872 in 1994.
(9) STOCK OPTION PLANS:
1990 Stock Option Plan: The most significant terms of this plan provide that
(1) options may be granted for 3 million shares of Common Stock, and (2) the
option price shall be fifty percent (50%) of the fair market value of the stock
of the Company on the date of grant. The options expire five years from the
date of the grant.
Stock option transactions relating to the 1990 Plan are summarized as
follows:
<TABLE>
<CAPTION>
Shares Price
in thousands) Per Share
- ----------------------------------------------------------
<S> <C> <C>
Outstanding at 6/30/94 1,188 $ 4.93-$11.36
Granted 799 $12.64-$14.60
Exercised 310 $ 4.93-$11.36
Cancelled 30
- -----------------------------------------------------------
Outstanding at 6/30/95 1,647 $ 4.93-$14.60
Granted 278 $15.88-$17.44
Exercised 343 $ 4.99-$14.60
Cancelled 50
- -----------------------------------------------------------
Outstanding at 6/30/96 1,532 $ 7.42-$17.44
Options exercisable at 6/30/95 342
Options exercisable at 6/30/96 338
- -----------------------------------------------------------
</TABLE>
Under the 1990 Stock Option Plan, all shares issued are nonqualified. The
option price per share is less than the fair market value at the date of grant,
thus creating deferred unearned compensation. The difference between the fair
market value and the option price was recorded as deferred unearned
compensation and is charged to operations over the term of the option. In
fiscal 1996, $4,584 was charged to operations ($3,435 in 1995 and $2,822 in
1994).
1991 Stock Option Plan: The most significant terms of this plan provide that
(1) options may be granted for 2 million shares of Common Stock, and (2) the
option price shall be the fair market value of the stock on the date of the
grant. The options expire five years from the date of the grant.
Stock option transactions relating to the 1991 Plan are summarized as
follows:
<TABLE>
<CAPTION>
Shares Price
(in thousands) Per Share
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at 6/30/94 481 $15.49-$24.12
Granted 89 $25.88-$30.62
Exercised 42 $15.49-$24.12
- ------------------------------------------------------------------------------------------
Outstanding at 6/30/95 528 $15.49-$30.62
Granted 75 $33.25-$38.50
Exercised 57 $15.49-$27.84
Cancelled 8
- -----------------------------------------------------------------------------------------
Outstanding at 6/30/96 538 $15.49-$38.50
Options exercisable at 6/30/95 117
Options exercisable at 6/30/96 145
- -----------------------------------------------------------------------------------------
</TABLE>
(10) OPERATIONS BY GEOGRAPHIC AREA
The Company and its subsidiaries operate in one product segment: the
manufacture and sale of electrical components.
Net revenue by geographic area is summarized in the following tables:
<TABLE>
<CAPTION>
Customer Intercompany
1996 Revenue Revenue Total
- ------------------------------------------------------------
<S> <C> <C> <C>
United States $ 443,116 $ 42,881 $ 485,997
Americas (Non-U.S.) 51,757 1,441 53,198
Far East North 354,522 103,242 457,764
Far East South 247,360 27,765 275,125
Europe 279,564 18,449 298,013
Other 6,354 41,465 47,819
Eliminations -- (235,243) (235,243)
- ------------------------------------------------------------
Consolidated $1,382,673 -- $1,382,673
============================================================
</TABLE>
p49
Molex
<PAGE> 19
<TABLE>
<CAPTION>
Customer Intercompany
1995 Revenue Revenue Total
- -----------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 344,653 $ 38,548 $ 383,201
Americas (Non-U.S.) 38,353 1,405 39,758
Far East North 367,689 95,727 463,416
Far East South 211,943 23,500 235,443
Europe 227,159 11,874 239,033
Other 7,950 42,014 49,964
Eliminations -- (213,068) (213,068)
- -----------------------------------------------------------------------
Consolidated $1,197,747 -- $1,197,747
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
Customer Intercompany
1994 Revenue Revenue Total
- --------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 288,732 $ 28,729 $ 317,461
Americas (Non-U.S.) 31,841 811 32,652
Far East North 303,161 68,161 371,322
Far East South 173,425 18,151 191,576
Europe 159,553 11,479 171,032
Other 7,396 31,016 38,412
Eliminations -- (158,347) (158,347)
- --------------------------------------------------------------------------
Consolidated $ 964,108 -- $ 964,108
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
Net income by geographic area is as follows:
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 43,773 $ 34,655 $ 30,020
Americas (Non-U.S.) 5,492 3,209 1,099
Far East North 41,592 50,623 40,083
Far East South 39,326 35,264 25,656
Europe 21,017 22,057 11,529
Other (5,208) (21,947) (13,362)
Eliminations (406) 174 (173)
- -----------------------------------------------------------------------------------------
Consolidated $ 145,586 $ 124,035 $ 94,852
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Identifiable assets by geographic area are as follows:
1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 475,207 $ 423,971 $ 357,261
Americas (Non-U.S.) 27,018 18,395 17,102
Far East North 440,438 543,557 447,384
Far East South 235,676 200,843 157,975
Europe 236,328 207,817 149,604
Other 68,830 68,062 40,218
Eliminations (22,498) (21,625) (31,027)
- --------------------------------------------------------------------------------------
Consolidated $1,460,999 $1,441,020 $ 1,138,517
======================================================================================
</TABLE>
Intercompany net revenues are generally recorded at cost plus the normal
mark-up charged to unaffiliated customers. Identifiable assets are those assets
of the Company that are identified with operations in each country. During
1996, 1995 and 1994, the largest single customer accounted for less than 10% of
consolidated net revenues.
(11) ACQUISITIONS AND INVESTMENTS
The Company periodically engages in the acquisition and/or divestiture of
companies within the connector industry. These transactions have not been
material to the financial position or results of operations of the Company,
either individually or in the aggregate and therefore proforma financial data
is not presented.
On February 17, 1995, Molex acquired Mod-Tap W. Corp., a manufacturer of
interconnection products and systems for data and voice communications, for 1.2
million shares of Molex Class A Common Stock and $9.3 million in cash. The
transaction has been accounted for as a purchase and accordingly, the purchase
price in excess of the fair value of the net assets acquired has been
classified as goodwill and included in other assets in the accompanying
consolidated balance sheet and is being amortized over 20 years. In fiscal
1996, 108,257 shares of Class A Common Stock were issued pursuant to the
Mod-Tap W. Corp. acquisition.
The majority owned investments have been accounted for as purchases.
Operating results have been included in the financial statements from the date
of acquisition and did not have a significant effect on consolidated operating
results. The minority investments have been accounted for on the equity basis
of accounting.
p50
Molex
<PAGE> 20
<TABLE>
<CAPTION>
Fiscal 1996, 1995 and 1994 by Quarter
(in thousands, except per share data-unaudited)
Quarter 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue 1st $ 338,176 $ 268,899 $ 233,244
2nd 344,483 274,961 224,896
3rd 347,065 305,755 238,568
4th 352,949 348,132 267,400
Gross profit 1st 136,878 115,475 96,861
2nd 136,938 116,466 94,196
3rd 138,294 127,697 100,103
4th 143,174 146,059 114,919
Income before income taxes and minority interest 1st 57,070 48,374 37,142
2nd 57,303 47,861 35,917
3rd 57,365 54,328 39,659
4th 57,215 63,929 46,759
Income taxes 1st 21,856 20,957 15,357
2nd 22,228 19,884 14,256
3rd 21,244 22,504 15,761
4th 17,972 26,928 17,812
Net income 1st 35,157 27,354 21,382
2nd 35,057 27,910 21,405
3rd 36,123 31,794 23,596
4th 39,249 36,977 28,469
Earnings per common share(1) 1st 0.35 0.28 0.22
2nd 0.35 0.28 0.21
3rd 0.36 0.31 0.24
4th 0.39 0.37 0.29
LOW HIGH LOW HIGH LOW HIGH
- -------------------------------------------------------------------------------------------------------------------------
National Market System
Price of Stock: Common Stock(1) 1st 30 51/64 36 5/8 24 28 1/8 19 3/8 24 1/2
2nd 30 1/2 37 24 3/4 28 3/4 20 3/8 23 3/8
3rd 27 1/4 36 1/4 24 3/4 29 1/8 21 1/2 24 5/8
4th 30 1/4 36 5/8 28 1/4 31 3/8 19 3/8 24 7/8
Class A Common Stock(1) 1st 29 34 1/2 23 26 1/4 17 5/8 22 3/8
2nd 29 34 1/4 22 3/4 27 18 7/8 22 1/4
3rd 27 3/4 34 3/4 23 5/8 27 3/4 20 7/8 23 1/2
4th 27 1/2 33 3/4 26 5/8 30 19 3/8 23 1/2
- ----------------------------------------------------------------------------------------------------------------------------
(1) Restated for the following 25% stock dividends: August, 1995; November, 1994.
</TABLE>
p51
Molex
<PAGE> 1
EXHIBIT 22
- --------------------------------------------------------------------------------
REGISTRANT'S SUBSIDIARIES
- -------------------------
The following list sets forth the subsidiaries of Registrant, the state or
country of incorporation or organization of each, and the names under which the
subsidiaries do business. All of the listed subsidiaries are included in the
consolidated financial statements of the Registrant. Unless otherwise
indicated, all the subsidiaries are wholly-owned by the Registrant either
directly or indirectly through one or more intermediaries.
<TABLE>
<CAPTION>
COMPANY NAME JURISDICTION OWNERSHIP
- ------------ ------------ ---------
<S> <C> <C>
Molex US Inc. Delaware, U.S.A. 100.0%
Molex Caribe Inc. Delaware, U.S.A. 100.0%
* Molex Electrical Systems Inc. Delaware, U.S.A. 100.0%
Molex-ETC Inc. Delaware, U.S.A. 100.0%
ETC Leasing Inc. Delaware, U.S.A. 100.0%
Molex S.A. de C.V. Mexico 100.0%
Molex International, Inc. Delaware, U.S.A. 100.0%
Ulti-Mate, Inc. California, U.S.A. 100.0%
Molex Overseas Inc. dba Molex Espana Delaware, U.S.A. 100.0%
Molex Eletronica Ltda. Brazil 100.0%
Molex da Amazonia Ltda. Brazil 100.0%
Molex Electronics Ltd. Canada 100.0%
Dongguan Molex South-China Connector Co. Ltd. China (P.R.C.) 90.0%
Molex (Shanghai) Co., Ltd. China (P.R.C.) 95.0%
G. Ostervig-Molex A/S Denmark 30.0%
Molex Eastern Europe S.A. dba Molex France France 100.0%
Decoupage Moulage De Savoie S.A. France 19.0%
Molex Elektronik GmbH Germany 100.0%
Molex Services GmbH Germany 100.0%
Molex GmbH Germany 90.0%
* Molex Hong Kong Ltd. Hong Kong 100.0%
Molex Hong Kong/China Ltd. Hong Kong 100.0%
Molex (India) Ltd. India 87.0%
Molex Italia S.p.A. Italy 100.0%
Zetronic S.p.A. Italy 49.0%
Molex-Japan Co., Ltd. Japan 100.0%
Molex (Malaysia) Sdn. Bhd. Malaysia 100.0%
Molex de Mexico S.A. de C.V. Mexico 100.0%
Molex B.V. Netherlands 100.0%
Molex European Distribution Center B.V. Netherlands 100.0%
<CAPTION>
COMPANY NAME JURISDICTION OWNERSHIP
- ------------ ------------ ---------
<S> <C> <C>
Molex - G. Knutsen A/S Norway 25.0%
Molex Far East-South Management Pte. Ltd. Singapore 100.0%
Molex Singapore Pte. Ltd. Singapore 100.0%
MEC International Pte. Ltd. Singapore 30.0%
Hi-P Tool & Die Pte.Ltd. Singapore 34.0%
Moltes s.r.o. Slovak Republic 48.0%
Sylex s.r.o. Slovak Republic 35.0%
* Molex Property Holding Pty. Ltd. South Africa 100.0%
Molex South Africa (Pty.) Ltd. South Africa 87.0%
Molex Korea Co., Ltd. South Korea 100.0%
* Suministro Iberico de Conexiones S.A. Spain 25.0%
Molex Svenska A.B. Sweden 100.0%
Molex Interconnect AG Switzerland 100.0%
Molex Illinois S.A. Switzerland 100.0%
Molex Ireland Ltd. Ireland 100.0%
Smithstown Light Engineering Ltd. Ireland 50.0%
* Molex Electronics (Ireland) Ltd. Ireland 100.0%
Molex Taiwan Ltd. Taiwan (R.O.C.) 100.0%
Land Win Electronic Corporation Taiwan (R.O.C.) 20.0%
Molex (Thailand) Ltd. Thailand 94.75%
Molex Electronics Ltd. United Kingdom 100.0%
* Molex European Management Ltd. United Kingdom 100.0%
* Molex Ltd. United Kingdom 100.0%
Beta Phase, Inc. Delaware, U.S.A. 100.0%
Molex Fiber Optics Inc. Illinois, U.S.A. 100.0%
*Molex Alin International, Incorporated British Virgin Is. 100.0%
Mod-Tap W Corp. Delaware, U.S.A. 100.0%
Mod-Tap NA Corp. Massachusetts, U.S.A. 100.0%
Mod-Tap System Europe SARL France 100.0%
Mod-Tap Limited United Kingdom 100.0%
Mod-Tap (Australia) Pty. Limited Delaware, U.S.A. 100.0%
Mod-Tap GmbH Germany 100.0%
Mod-Tap Japan Limited Delaware, U.S.A. 100.0%
Mod-Tap Far East Limited Delaware, U.S.A. 100.0%
Mod-Tap Sp. z.o.o. Poland 100.0%
</TABLE>
- -----------------
*Inactive company
<PAGE> 1
EXHIBIT 24
INDEPENDENT AUDITORS CONSENT
We consent to the incorporation by reference in Registration Statements (File
Nos. 33-9737, 33-9738, 33-1138, 2-87344, 2-79949, 2-74447, 2-71557, 33-32055
and 33-37683) of Molex Incorporated and its subsidiaries on Form S-8 of our
reports dated July 25, 1996, appearing in and incorporated by reference in this
Annual Report on Form 10-K of Molex Incorporated and its subsidiaries for the
year ended June 30, 1996.
/s/ Deloitte & Touche LLP
Chicago, Illinois
September 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MOLEX
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 242,779
<SECURITIES> 39,883
<RECEIVABLES> 282,241
<ALLOWANCES> (12,566)
<INVENTORY> 147,612
<CURRENT-ASSETS> 734,589
<PP&E> 1,292,897
<DEPRECIATION> (679,772)
<TOTAL-ASSETS> 1,460,999
<CURRENT-LIABILITIES> 275,182
<BONDS> 7,450
0
0
<COMMON> 5,251
<OTHER-SE> 1,126,020
<TOTAL-LIABILITY-AND-EQUITY> 1,460,999
<SALES> 1,382,673
<TOTAL-REVENUES> 1,382,673
<CGS> 827,389
<TOTAL-COSTS> 339,007
<OTHER-EXPENSES> 2,114
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,562)
<INCOME-PRETAX> 228,953
<INCOME-TAX> 83,300
<INCOME-CONTINUING> 145,653
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,586
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.45
</TABLE>
