UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from
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Commission File Number 0-7491
MOLEX INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 36-2369491
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2222 Wellington Court, Lisle, Illinois 60532
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 630-969-4550
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (applicable
only to corporate registrants). At September 30, 1996:
Common Stock 49,857,718 Shares
Class A Common Stock 50,753,509 Shares
Class B Common Stock 94,255 Shares
MOLEX INCORPORATED
FORM 10-Q
SEPTEMBER 30, 1996
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Information - Unaudited
Condensed Consolidated Balance Sheets -- 2
September 30, 1996 and June 30, 1996
Condensed Consolidated Statements of Income -- 3
Three Months Ended September 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows -- 4
Three Months Ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 10
-1-
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<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In Thousands)
ASSETS
------
<CAPTION>
Sept. 30, June 30,
1996 1996
CURRENT ASSETS: --------- ---------
<S> <C> <C>
Cash and cash equivalents $ 242,093 $ 242,779
Marketable securities 36,247 39,883
Accounts receivable - net 289,357 274,031
Inventories 149,885 147,612
Other current assets 35,450 30,284
--------- ---------
Total current assets 753,032 734,589
PROPERTY, PLANT AND EQUIPMENT - NET 621,092 613,125
OTHER ASSETS 114,492 113,285
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$1,488,616 $1,460,999
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 125,656 $ 127,557
Accrued expenses 100,600 93,104
Other current liabilities 48,470 54,521
--------- ---------
Total current liabilities 274,726 275,182
DEFERRED ITEMS 14,085 13,977
ACCRUED POSTRETIREMENT BENEFITS 31,853 30,401
LONG-TERM DEBT, less portion due currently 7,421 7,450
MINORITY INTEREST 2,730 2,718
SHAREHOLDERS' EQUITY
Common stock 5,256 5,251
Paid-in capital 117,567 116,510
Retained earnings 1,024,233 989,928
Treasury stock (68,284) (62,726)
Deferred unearned compensation (12,289) (13,583)
Cumulative translation adjustments 91,318 95,891
--------- ---------
Total shareholders' equity 1,157,801 1,131,271
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$1,488,616 $1,460,999
========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements.
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</TABLE>
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<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - In Thousands Except per Share)
<CAPTION>
THREE MONTHS ENDED
------------------------
Sept. 30, Sept. 30,
1996 1995
--------- ---------
<S> <C> <C>
NET REVENUE $359,595 $338,176
COST OF SALES 216,769 201,298
-------- --------
Gross Profit 142,826 136,878
OPERATING EXPENSES:
Selling 38,053 35,874
Administrative 48,879 47,763
-------- --------
Total Operating Expenses 86,932 83,637
Income from Operations 55,894 53,241
OTHER INCOME:
Foreign currency transaction gain 318 707
Interest 2,427 3,122
-------- --------
Total Other Income 2,745 3,829
INCOME BEFORE INCOME TAXES 58,639 57,070
INCOME TAXES 22,784 21,913
-------- --------
NET INCOME $ 35,855 $ 35,157
======== ========
EARNINGS PER COMMON SHARE $ 0.36 $ 0.35
======== ========
CASH DIVIDENDS PER COMMON SHARE $ 0.0150 $ 0.0150
======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
DURING THE PERIOD 100,791 100,743
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
-3-
</TABLE>
<PAGE>
<TABLE>
MOLEX INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In Thousands)
<CAPTION>
THREE MONTHS ENDED
-----------------------
Sept. 30, Sept. 30,
1996 1995
-------- --------
<S> <C> <C>
CASH AND CASH EQUIVALENTS, Beginning of Period $242,779 $253,552
CASH AND CASH EQUIVALENTS
PROVIDED FROM (USED FOR):
Operations:
Net income 35,855 35,157
Add (deduct) non-cash items included in net income:
Depreciation and amortization 32,560 29,034
Amortization of deferred unearned compensation 1,294 1,074
(Gain) loss on sale of property, plant and equipment (271) 237
Other charges to net income 37 46
Current items:
Accounts receivable (16,569) (4,374)
Inventories (3,039) (13,172)
Prepaid expenses (5,453) (5,668)
Accounts payable (1,039) (1,979)
Accrued expenses 9,368 18
Income taxes (5,949) (10,444)
-------- --------
NET CASH PROVIDED FROM OPERATIONS 46,794 29,929
Investments:
Purchases of property, plant and equipment (41,835) (54,227)
Proceeds from sale of property, plant and equipment 491 1,323
Proceeds from sale of marketable securities 399,585 416,701
Purchases of marketable securities (395,949) (415,096)
Increase in other assets (2,918) (10,176)
-------- --------
NET CASH USED FOR INVESTMENTS (40,626) (61,475)
Financing:
Increase in long-term debt - 227
Decrease in long-term debt (29) (58)
Cash dividends paid (1,515) (808)
Purchase of treasury stock (5,549) (11,103)
Disposition of treasury stock 334 818
Exercise of stock options 719 181
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NET CASH USED FOR FINANCING (6,040) (10,743)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (814) (16,551)
-------- --------
(686) (58,840)
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CASH AND CASH EQUIVALENTS, End of Period $242,093 $194,712
======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
-4-
</TABLE>
MOLEX INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Consolidated Financial Statements
The condensed consolidated financial statements have been prepared
from the Company's books and records without audit and are subject
to year-end adjustments. The interim financial statements reflect
all adjustments which are, in the opinion of management, necessary
for a fair presentation of information for the interim periods
presented. The condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements
and notes thereto included in the Molex Incorporated 1996 Annual
Report to Shareholders and the 1996 Annual Report on Form 10-K.
The results of operations for the interim periods should not be
considered indicative of results to be expected for the full year.
(2) Earnings per Common Share
Earnings per common share (including Common Stock, Class A Common
Stock and Class B Common Stock) have been computed using the
weighted average number of common shares outstanding during the
periods. For the periods ended September 30, 1996 and 1995, the
shares shown as outstanding in the Condensed Consolidated
Statements of Income do not require adjustments for common stock
equivalents, as they do not have a material dilutive effect after
applying the treasury stock method.
(3) 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 September 30, 1996 and 1995.
-5-
(4) Inventories
Inventories are valued at the lower of first-in, first-out cost or
market.
Inventories, in thousands of dollars, consisted of the following:
Sept. 30, June 30,
1996 1996
----------- -----------
Raw materials $ 30,741 $ 33,841
Work in process 52,492 54,687
Finished goods 66,652 59,084
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$149,885 $147,612
=========== ===========
-6-
MOLEX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net revenues were $359.6 million for the quarter
ended September 30, 1996, increasing 6.3 percent over net revenues
for the corresponding quarter of the prior fiscal year. Compared
to the same quarter in the prior year, the generally higher value
of the US dollar compared to other currencies worldwide decreased
net revenues by $17.0 million for the quarter. Excluding the
effects of currency fluctuation, growth in net revenues would have
equaled 11.4 percent for the three months ended September 30,
1996.
Management believes that Molex has continued to exceed its goal of
increasing net revenues at twice the growth rate of the worldwide
connector market. All geographic regions with the exception of
Europe experienced local currency growth in excess of 10 percent
for the three months ended September 30, 1996.
Far East South net revenues for the quarter ended September 30,
1996 increased 18.9 percent in U.S. dollars and 19.8 percent in
local currencies. Sales in this region remain strong due to
continued demand for personal computers and related peripheral
products.
For the three months ended September 30, 1996, revenues in the
Americas Region increased 15.8 percent from the prior year in
local currencies. Increased customer sales to the automotive
market and strong sales of telecommunications products continue to
drive revenue growth in this region.
Net revenues in the Far East North increased 11.0 percent in local
currencies for the quarter compared to the same period in the
prior year, but decreased 2.3 percent in U.S. dollars due to the
generally stronger U.S. dollar. Improvement in the overall
Japanese economy has created stronger demand for interconnection
products in this region.
In Europe, net revenue declined 8.5 percent in local currency and
11.5 percent in U.S. dollars. Demand continues to be soft within
the region due to difficult economic conditions in several
European countries, although some improvement was seen during the
quarter ended September 30, 1996.
-7-
For the three months ended September 30, 1996, 68 percent of
Molex's worldwide net revenues were generated from its
international operations, compared to 70 percent for the same
period during the prior fiscal year. Strong sales to the
automotive and telecommunications industries have increased the
Company's U.S. domestic revenue over the same period in the prior
fiscal year, while international revenue growth has remained
strong. International operations are subject to currency
fluctuations and government actions. Molex monitors its currency
exposure in each country and implements strategies to respond to
changing economic and political environments. Due to the
uncertainty of the foreign exchange markets, Molex cannot
reasonably predict future trends related to foreign currency
fluctuations. Foreign currency fluctuations have impacted results
in the past and may impact results in the future.
The gross profit percentage of 39.7 percent for the three months
ended September 30, 1996 decreased from the 40.5 percent reported
during the comparable period of the previous fiscal year. The
decline in the gross profit percentage is primarily due to start-
up costs for new automotive programs in Europe and several new
projects in Japan which were offset by improvements in the U.S.
automotive programs.
Operating expenses as a percent of net revenue for the three
months ended September 30, 1996 improved slightly from the same
period a year ago, reflecting continued management focus on the
control of expenses.
Foreign currency transaction gains were $.3 million for the
quarter ended September 30, 1996 compared to the $.7 million gain
in the same quarter of the prior year.
Interest income, net of interest expense, decreased 22.3 percent
for the quarter ended September 30, 1996, when compared to the
same quarter in the prior year. The decrease reflects the lower
average interest rates in countries where Molex has significant
short-term investments compared to the same period in the prior
year. Interest expense has remained relatively unchanged from the
prior year.
The effective tax rate for the quarter ended September 30, 1996
was 38.8 percent as compared to 38.3 percent reported for the same
period in the prior fiscal year. This increase is primarily
caused by increased pretax profitability in countries with higher
effective tax rates.
Net income for the quarter was $35.9 million or 36 cents per
share, a 2.0 percent increase compared with $35.2 million or 35
cents per share for the same quarter last fiscal year. Excluding
the effects of currency fluctuations, net income for the quarter
increased 7.1 percent over the same quarter last fiscal year.
-8-
LIQUIDITY AND CAPITAL
One of Molex's many financial strengths is its exceptionally
strong balance sheet. Working capital at September 30, 1996
remains strong at $478.3 million, an increase from $459.4 million
at June 30, 1996.
The Company purchased 175,000 shares of treasury stock during the
quarter ended September 30, 1996.
Management believes that the Company's current liquidity and
financial flexibility are adequate to support its current growth.
OUTLOOK
The prospects for the remainder of fiscal 1997 continue to look
good. To further expand the Company's global presence, offer
innovative products at an accelerated pace, and improve internal
productivity, 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.
Management believes the Company is well-positioned to continue
growing faster than the overall connector industry. 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 its customers worldwide.
FORWARD LOOKING STATEMENT
This document contains various forward-looking statements.
Statements that are not historical are forward looking statements
and are subject to various risks and uncertainties which could
cause actual results to vary materially from those stated. Such
risks and uncertainties include: economic conditions in various
regions, product and price competition, raw material prices,
foreign currency exchange rate changes, technology changes, patent
issues, litigation results, legal and regulatory developments, and
other risks and uncertainties described in documents filed with
the Securities and Exchange Commission.
-9-
Part II - Other Information
Items 1 - 6. Not Applicable
-10-
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
MOLEX INCORPORATED
-------------------
(Registrant)
Date November 8, 1996 /s/ ROBERT B. MAHONEY
------------------ -----------------------
Robert B. Mahoney
Corporate Vice President,
Treasurer and Chief
Financial Officer
Date November 8, 1996 /s/ LOUIS A. HECHT
------------------ -----------------------
Louis A. Hecht
Corporate Secretary and
General Counsel
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MOLEX
INC. REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 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> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 242,093
<SECURITIES> 36,247
<RECEIVABLES> 302,097
<ALLOWANCES> (12,740)
<INVENTORY> 149,885
<CURRENT-ASSETS> 753,032
<PP&E> 1,325,008
<DEPRECIATION> (703,916)
<TOTAL-ASSETS> 1,488,616
<CURRENT-LIABILITIES> 274,726
<BONDS> 7,421
<COMMON> 5,256
0
0
<OTHER-SE> 1,152,545
<TOTAL-LIABILITY-AND-EQUITY> 1,488,616
<SALES> 359,595
<TOTAL-REVENUES> 359,595
<CGS> 216,769
<TOTAL-COSTS> 86,932
<OTHER-EXPENSES> (318)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,427)
<INCOME-PRETAX> 58,639
<INCOME-TAX> 22,784
<INCOME-CONTINUING> 35,855
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,855
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
