<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, 1997 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 29, 1997, the following numbers of shares of the Company's
common stock were outstanding:
<TABLE>
<S> <C>
Common Stock 66,109,049
Class A Common Stock 65,658,158
Class B Common Stock 94,255
</TABLE>
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 $1.3 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended June 30,
1997, 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 24, 1997 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>
<CAPTION>
Part I Page
----
<S> <C>
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 13
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 14
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 47 plants in 21 countries and employs 12,000 people worldwide. More
than 67% of Fiscal 1997 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 $27.1 billion*. With a 5.7% 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 1% 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 1997
Market Net Revenue Products
------ ------------- --------
<S> <C> <C>
Computer/business equipment/ 51% Computers, peripheral telecommunications equipment,
calculators, copiers, pagers and dictation equipment
Consumer Products 25% Televisions, stereo high fidelity systems, compact
disc players, video tape recorders, camcorders,
electronic games, microwave ovens, refrigerators,
freezers, dishwashers, disposals and air conditioners
Automotive 15% Automobiles, trucks, recreational vehicles and farm
equipment
Other 9% 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 1997, 1996 or 1995. 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, Republic of 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 47 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, 1997, the Company owned 633 United States patents and had 198
patent applications on file with the United States Patent Office. The Company
also has 1,629 corresponding patents issued and 2,486 applied for in other
countries as of June 30, 1997. 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, 1997 was approximately $261.1
million; this compares to $225.7 million at June 30, 1996. 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 $89.5 million in 1997,
$85.5 million in 1996, and $78.1 million in 1995. The Company incurred costs
relating to obtaining patents of $5.6 million in 1997, $6.7 million in 1996,
and $4.9 million in 1995 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, 1997, the Company employed 12,000 people 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, 1997 was approximately 67% 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 page 40 of the 1997 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:
Owned Leased Total
----- ------ -----
3,478,773 469,960 3,948,733
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
Seo Paulo Padova
SOUTH AFRICA
Midrand
CANADA JAPAN
Scarborough, Ontario Kagoshima
Okayama TAIWAN
CHINA (P.R.C.) Shioya Taipei
Dongguan Shizuoka Shanghai
Yamato THAILAND
Bangkok
ENGLAND MALAYSIA
Bordon Prai, Penang UNITED STATES
Southhampton North Little Rock, Arkansas
MEXICO Maumelle, Arkansas
FRANCE Guadalajara Menlo Park, California
Chateau Gontier Magdalena Orange, California Nogales
Pinellas Park, Florida
GERMANY St. Petersburg, Florida
Biberach POLAND Downers Grove, Illinois
Ettlingen Starogard Lisle, Illinois (2)
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 56 1965(b)
Executive Officer (1988-);
Vice Chairman (1988-1993).
John H. Krehbiel, Jr.(a) President (1975-); Chief 60 1959(b)
Operating Officer (1996-).
J. Joseph King Executive Vice President
(1996-); Group Vice President- 53 1975
International Operations (1988-
1996).
Raymond C. Wieser Senior Vice President, Americas
Region (1996-); Corporate Vice
President and President, 59 1965(b)
Commercial Division-U.S.
Operations (1994-1996);
Group Vice President-
U.S. Operations (1989-1994).
Robert B. Mahoney Corporate Vice President, 44 1995
Treasurer and Chief Financial
Officer (1996-).
Ronald L. Schubel Corporate Vice President (1982-) 54 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 54 1981
(1987-) and Regional President,
Europe (1981-).
Goro Tokuyama Corporate Vice President 63 1985
(1990-), Regional President,
Far East North (1988-) and
President of Molex Japan Co.,
Ltd. (1985-).
Martin P. Slark Corporate Vice President 42 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 53 1984
(1994-) and President,
DataComm Division Americas
(1989-).
Kathi M. Regas Corporate Vice President 41 1985
(1994-); Director, Human
Resources-U.S. Operations
(1989-1994).
Louis A. Hecht Corporate Secretary (1977-) 53 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 1997, 1996, and 1995 by Quarter
(Unaudited)" in the foldout and page 41, respectively, of the 1997
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 1997 and 1996 dividends per
share have been restated for the February, 1997 25% stock dividend.
Class A
Common Stock Common Stock
Fiscal 1997 Fiscal 1996 Fiscal 1997 Fiscal 1996
----------- ----------- ----------- -----------
Quarter Ended -
September 30, 0.0120 0.0120 0.0120 0.0120
December 31, 0.0120 0.0120 0.0120 0.0120
March 32, 0.0150 0.0120 0.0150 0.0120
June 30, 0.0150 0.0120 0.0150 0.0120
------ ------ ------ ------
Total 0.0540 0.0480 0.0540 0.0480
====== ====== ====== ======
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
36 of the 1997 Annual Report to Shareholders and is incorporated
herein by reference.
On June 6, 1997, the Company issued 59,477 shares of Class A Common Stock
to holders of a class of securities in a subsidiary of the Company in
exchange for all of the shares of that class of securities owned by such
holders. The transaction was exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) thereunder in that the
issuance to this limited group of sophisticated investors did not involve
a public offering.
12
<PAGE> 13
ITEM 6 - SELECTED FINANCIAL DATA
The information set forth under the caption "Ten Year Financial Highlight
Summary" (only the five years ended June 30, 1997) on page 23 of the 1997
Annual Report to Shareholders is incorporated herein by reference.
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 24 through 27 of
the 1997 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 30 through 40 of the 1997 Annual Report to Shareholders and the
independent auditors' report set forth on page 29 of the 1997 Annual
Report to Shareholders are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets - June 30, 1997 and 1996
Consolidated Statements of Income for the years ended June 30, 1997,
1996 and 1995
Consolidated Statements of Shareholders' Equity for the years ended
June 30, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended June 30,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
The supplementary data regarding quarterly results of operations, set
forth under the caption "Fiscal 1997, 1996, and 1995 by Quarter
(Unaudited)" on page 41 of the 1997 Annual Report to Shareholders, is
incorporated herein by reference.
13
<PAGE> 14
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.
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 24, 1997 (the "Company's 1997 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 1997 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 1997 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 1997 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 1997 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 29
Consolidated Balance Sheets - June 30, 1997
and 1996 30-31
Consolidated Statements of Income - for
the years ended June 30, 1997, 1996 and 1995 32
Consolidated Statements of Shareholders' Equity -
for the years ended June 30, 1997, 1996 and 1995 33
Consolidated Statements of Cash Flows - for the
years ended June 30, 1997, 1996 and 1995 34
Notes to Consolidated Financial Statements 35-40
Fiscal 1997, 1996 and 1995 by Quarter (Unaudited) 41
(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,
1997.
16
<PAGE> 17
Molex Incorporated
Statements of Changes in Shares
For the Year Ended June 30, 1997, 1
<TABLE>
<CAPTION>
Class A Class B
Common Common Common Treasury
Stock Stock Stock Stock
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
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
Exercise of stock options 448,849 39,447
Purchase of treasury stock 1,026,250
Disposition of treasury stock
Purchase of business (59,477)
Stock splits effected in the form 13,214,185 13,130,067 1,164,575
of dividends
Other 11,856 (11,856) (40,933)
----------- ---------- --------- ----------
Shares outstanding at
June 30, 1997 66,053,711 65,658,150 94,255 6,327,425
=========== ========== ========= ==========
</TABLE>
17
<PAGE> 18
Molex Incorporated
Schedule II - Valuation and Qualifying Accounts
For the Year Ended June 30, 1997, 1996, and 1995
<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>
1997 $12,566 $3,019 ($488) ($511) $14,586
========== ========== ============ =========== =========
1996 $11,934 $1,831 ($548) ($651) $12,566
========== ========== ============ =========== =========
1995 $8,916 $3,332 ($828) $514 $11,934
========== ========== ============ =========== =========
</TABLE>
18
<PAGE> 19
[DELOITTE & TOUCHE LLP LETTERHEAD]
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, 1997 and 1996, and for each of the three years
in the period ended June 30, 1997, and have issued our report thereon dated
July 22, 1997; such financial statements and report are included in your 1997
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 of changes in shares outstanding 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
Deloitte & Touche LLP
Chicago, Illinois
July 22, 1997
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/ ROBERT B. MAHONEY
------------------------------
September 23, 1997 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 23, 1997 /S/ F. A. KREHBIEL F. A. Krehbiel
------------------------------
Chairman of the Board and
Chief Executive Officer
September 23, 1997 /S/ J. H. KREHBIEL, JR.
------------------------------
J. H. Krehbiel, Jr.
President, Chief Operating Officer and
Director
September 23, 1997 /S/ ROBERT B. MAHONEY
------------------------------
Robert B. Mahoney
Corporate Vice President, Treasurer
and Chief Financial Officer
September 23, 1997 /S/ F. L. KREHBIEL
------------------------------
F. L. Krehbiel
Director
September 23, 1997 /S/ MICHAEL J. BIRCK
--------------------
Michael J. Birck
Director
September 23, 1997 /S/ DONALD G. LUBIN
------------------------------
Donald G. Lubin
Director
20
<PAGE> 21
MOLEX INCORPORATED
EXHIBIT INDEX
<TABLE>
Exhibit
Number Exhibit
- ------- ----------------------------------
<S> <C> <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, 1997. (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>
21
<PAGE> 22
<TABLE>
Exhibit
Number Exhibit
- ------- -----------------------------
<S> <C>
22 Subsidiaries of registrant
24 Independent Auditors' Consent
27 Financial Data Schedule
</TABLE>
(All other exhibits are either inapplicable or not required)
22
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
MOLEX INCORPORATED
(Restated to include all amendments through June 30, 1997)
FIRST: The name of the corporation is
MOLEX INCORPORATED
SECOND: The address of its registered office in the State of Delaware is
NO. 100 WEST TENTH STREET, in the City of WILMINGTON, County of NEW CASTLE. The
name of its registered agent at such address is THE CORPORATION TRUST COMPANY.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
Merchandise, manufacture, buy, sell, deal in and with plastic moldings,
electrical and electronic assemblies, electrical and electronic devices,
machines, tools, parts for tools or machines; and further to manufacture, buy,
sell, distribute, deal in and with goods, wares and merchandise or all kinds,
at wholesale or retail or on consignment.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares and merchandise and personal property of every class and
description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trade-marks and trade names, relating
to or useful in connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the shares of the capital stock, or any
voting trust certificates in respect of the shares of capital stock, scrip,
warrants, rights, bonds, debentures, notes, trust receipts, and other
securities, obligations, choses in action and evidences of indebtedness or
interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or
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persons, public or private, or by the government of the United States of
America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in the value thereof.
To borrow or raise moneys for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or personal property, or any interest therein, wherever
situated, and to sell, convey, lease, exchange, transfer or otherwise dispose
of, or mortgage or pledge, all or any of the corporation's property and assets,
or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or
by this certificate of incorporation together with any powers incidental
thereto, so far as such powers and privileges are necessary or convenient to
the conduct, promotion or attainment of the business or purposes of the
corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in this certificate of
incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
FOURTH:
A. AUTHORIZED CAPITAL STOCK
(1) COMMON STOCK: The total number of shares of common stock which the
corporation shall have authority to issue is TWO HUNDRED MILLION ONE HUNDRED
FORTY-SIX THOUSAND SEVENTY-EIGHT (200,146,078) SHARES, consisting of: (i) ONE
HUNDRED MILLION (100,000,000 SHARES OF COMMON STOCK, par value $.05 per share
(the "COMMON STOCK"), subject to paragraph E of this Article FOURTH, (ii) ONE
HUNDRED MILLION (100,000,000) SHARES OF CLASS A COMMON STOCK, par value $.05
per share (the "CLASS A COMMON STOCK"), subject
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to paragraph E of this Article FOURTH and (iii) ONE HUNDRED FORTY-SIX THOUSAND
SEVENTY-EIGHT (146,078) SHARES OF CLASS B COMMON STOCK, par value $.05 per
share (the "CLASS B COMMON STOCK").
(2) PREFERRED STOCK: The total number of shares of preferred stock
which the corporation shall have authority to issue is TWENTY FIVE MILLION
(25,000,000) SHARES, par value $.01 per share ("PREFERRED STOCK"). Shares of
Preferred Stock may be dividend into and issued in series or classes as from
time to time determined by the board of directors of the corporation, the
shares of each series or class to have such voting rights, designations,
preferences, and relative, participating, optional or special rights, and
qualifications, limitations or restrictions thereof as determined by the board
of directors of the corporation as hereinafter provided. Each series or class
shall be so designated as to distinguish the shares thereof from the shares of
all other series and classes.
Authority is hereby expressly granted to the board of directors of the
corporation, subject to the provisions of this Article FOURTH and to the
limitations prescribed by the General Corporation Law of Delaware, to authorize
the issuance of one or more series or classes of Preferred Stock and with
respect to each such series or class to fix for such series or class the voting
powers, designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof.
The authority of the board of directors of the corporation with respect to each
series or class shall include, but not be limited to, the determination or
fixing of the following:
(i) the designation of such series or class;
(ii) the dividend rate of such series or class, the conditions and
dates upon which such dividends shall be payable, the
relation which such dividends shall bear to the dividends payable
on any other class or classes of stock or any other series of
such dividends shall be cumulative or non-cumulative;
(iii) whether the shares of such series or class shall be subject to
redemption by the corporation and, if made subject to such
redemption, the times, prices and other terms and conditions of
such redemption;
(iv) the terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series or class;
(v) whether or not the shares of such series or class shall be
convertible into or exchangeable for shares of any other class or
classes of any stock or any other series of any class of stock of
the corporation, and, if provision is made for conversion or
exchange, the times, prices, rates, adjustments, and other terms
and
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conditions of such conversion or exchange;
(vi) the extent, if any, to which the holders of shares of such
series or class shall be entitled to vote with respect to
the election of directors or otherwise;
(vii) the restrictions, if any on the issue or reissue of any
additional Preferred Stock; and
(viii) the rights of the holders of the shares of such series or
class upon the liquidation, dissolution, or distribution
of assets of the corporation.
A statement of the designations of each class of common stock and the
powers, preferences and rights, qualifications, limitations or restrictions
thereof is as follows:
B. DIVIDENDS
After the corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as purchase, retirement of
sinking funds, and subject to the priorities and preferences of the Preferred
Stock, then and not otherwise the holders of the Common Stock, Class A Common
Stock, and Class B Common Stock shall be entitled to receive such dividends if,
as and when declared from time to time by the board of directors. Dividends and
stock splits shall be declared and paid to holders of any class of common stock
only if such dividends and stock splits are declared and paid to holders of all
classes of common stock on an equal per share basis.
If at any time a distribution of Common Stock, Class B Common Stock, Class
A Common Stock or any other securities of the company is to be made to holders
of any class of common stock (hereinafter sometimes referred to as "SHARE
DISTRIBUTION"), such share distribution may be declared and paid only as
follows:
(i) a share distribution consisting of shares of Common Stock
to holders of Common Stock and Class B Common Stock on an
equal per share basis; provided, there shall also be a
simultaneous share distribution of Class A Common Stock
to holders of Class A Common Stock consisting of shares of
Class A Common Stock on an equal per share basis;
(ii) a share distribution consisting of shares of Class A
Common Stock to holders of Class A Common Stock on
an equal per share basis; provided, there shall also be a
simultaneous share distribution of Common Stock to holders
of Common Stock and Class B Common Stock on an equal per
share basis; and
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(iii) a share distribution consisting of any other class of
securities of the corporation to the holders of
Common Stock, Class B Common Stock and Class A Common
Stock on an equal per share basis.
Notwithstanding the preceding sentence, a share distribution consisting of
shares of Class A Common Stock may be declared and paid to holders of Common
Stock and Class B Common Stock on an equal per share basis if such distribution
represents the initial issuance of shares of Class A Common Stock.
C. OTHER DISTRIBUTIONS
Notwithstanding anything to the contrary contained in Article THIRTEENTH
hereof, in the event of any merger or consolidation, voluntary or involuntary
liquidation, dissolution, distribution of assets of winding-up of the
corporation and subject to the priorities and preferences of the Preferred
Stock, each share of Common Stock, Class A Common Stock, and Class B Common
Stock shall entitle the holder thereof to receive the identical consideration
with respect to whatever kind of assets are available for distribution to
holders of common stock or stock into which shares of common stock of the
corporation are converted.
D. VOTING RIGHTS AND POWERS
(1) COMMON STOCK: Each holder of Common Stock shall be entitled to one
vote for each share of Common Stock held on any matter required to be approved,
by vote or otherwise, by the stockholders of the corporation.
(2) CLASS A COMMON STOCK: No share of Class A Common Stock shall entitle
the holder thereof to any vote, consent or approval with respect to any matter
requiring approval, by vote or otherwise, by the stockholders of the
corporation except as otherwise required by law.
(3) CLASS B COMMON STOCK: Each holder of Class B Common Stock shall be
entitled to one vote for each share of Class B Common Stock held by him upon
any matter coming before any annual or special meeting of the stockholders of
the corporation; and, so long as more than fifty percent (50%) of the
authorized number of shares of Class B Common Stock are outstanding, the
holders of said shares of Class B Common Stock shall vote as a separate class
upon any corporate matter, except the election of directors of the corporation,
submitted to a vote of the stockholders of the corporation at any annual or
special meeting thereof, and the approval of the holders of said shares of
Class B Common Stock, voting as a class, shall be a prerequisite to the
adoption of any matter submitted to a vote of the stockholders.
E. CONVERSION
In the event that at any time the board of directors determines, in good
faith, that either
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of the following events has occurred (i) the aggregate number of outstanding
shares of Common Stock and Class B Common Stock together is less than 10% of
the aggregate number of outstanding shares of Common Stock, Class B Common
Stock, and Class A Common Stock together, or (ii) any "person", as such term is
defined in Article THIRTEENTH, paragraph B(1) of this Certificate of
Incorporation, other than one or more members of the Krehbiel Family (as
defined below), becomes or is the Beneficial Owner, as such term is defined in
Article THIRTEENTH, paragraph B(3) of this Certificate of Incorporation, of a
majority of the outstanding shares of Common Stock; each authorized share of
Class A Common Stock (whether or not then issued) shall automatically be
converted into one share of Common Stock. Upon such conversion, the total
number of shares of Common Stock the corporation shall have authority to issue
shall be ONE HUNDRED TWENTY MILLION (120,000,000) SHARES and the total number
of shares of Class A Common Stock the corporation shall have authority to issue
shall be zero (0) shares. Such conversion ratio as set forth in this paragraph,
shall, in all events, be equitably preserved in the event of any
recapitalization of the corporation by means of a stock dividend on, or split
or combination of outstanding Common Stock or Class A Common Stock, or in the
event of any merger, consolidation or other reorganization of the corporation
with another corporation. In making such determination, the board of directors
may conclusively rely on any information or documentation available to it,
including filings made with the Securities and Exchange Commission, any stock
exchange, the National Association of Securities Dealers, Inc. or any other
governmental or regulatory agencies, or any written instrument purporting to be
authentic. Upon the board of director's determination of the happening of
either of the events set forth in (i) or (ii) above, the shares of Class A
Common Stock shall be deemed without further action to be immediately and
automatically converted into shares of Common Stock, and stock certificates
formerly representing Class A Common Stock shall thereupon and thereafter be
deemed to represent a like number of shares of Common Stock. The determination
by the board of directors that either (i) or (ii) of this paragraph has
occurred shall be conclusive and binding and the conversion of each share of
Class A Common Stock into one share of Common Stock shall remain effective
regardless of whether either (i) or (ii) of this paragraph has occurred in
fact.
As used herein, the term "Krehbiel Family" shall mean:
(i) John H. Krehbiel, John H. Krehbiel, Jr. and Frederick A.
Krehbiel (collectively, the "Krehbiels"), any of their
respective descendants, and any spouse, widow or widower
of any of the Krehbiels or any of their respective
descendants (collectively, the "FAMILY MEMBERS");
(ii) any trust established by one or more of the Family Members;
(iii) any estate of a Family Member;
(iv) any foundation and any charitable organization that
qualifies as an exempt organization under the Internal
Revenue Code of 1986, as
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amended, or any successor statute, established by one or more of the
Family Members; and
(v) any corporation or partnership of which a majority of the voting
power and a majority of the equity interest is held, directly or
indirectly, by or for the benefit of one or more of the Family
Members.
Shares of Class B Common Stock shall be convertible into shares of the
Common Stock of the corporation at the option of the holder thereof at any time
on a share for share basis. Such conversion ratio shall in all events be
equitably preserved in the event of any recapitalization of the corporation by
means of a stock dividend on, or stock split or combination of, outstanding
Common Stock or Class B Common Stock, or in the event of any merger,
consolidation or other reorganization of the corporation with another
corporation. Upon the conversion of Class B Common Stock into shares of Common
Stock, said shares of Class B Common Stock shall be retired and shall not be
subject to reissue.
FIFTH: The name and mailing address of each incorporator is as follows:
Name Mailing Address
S. E. Widdoes 100 West Tenth Street, Wilmington, Delaware
W. J. Reif 100 West Tenth Street, Wilmington, Delaware
R. A. Finger 100 West Tenth Street, Wilmington, Delaware
SIXTH: The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a
successor is elected and qualified, is as follows:
Name Mailing Address
John H. Krehbiel, Sr. 2222 Wellington
Lisle, Illinois 60532
John H. Krehbiel, Jr. 2222 Wellington
Lisle, Illinois 60532
Frederick A. Krehbiel 2222 Wellington
Lisle, Illinois 60532
Marie Manatte 2222 Wellington
Lisle, Illinois 60532
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SEVENTH: The corporation is to have perpetual existence.
EIGHTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed the mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the board of
directors, or in the by-laws of the corporation, shall have and may exercise
all the powers and authority of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws of the corporation; and, unless the resolution or
by-laws expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
NINTH:
SECTION 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS.
To the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended, a director of this corporation
shall not be liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
SECTION 2. INDEMNIFICATION AND INSURANCE.
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or
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is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "PROCEEDING"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment), against all expenses, liability and loss (including
attorney's fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of his or her heirs, executors and administrators:
provided, however, that, except as provided in paragraph (b) hereof, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the board of directors of
the corporation. The right to indemnification conferred in this Section shall
be a contract right and shall include the right to be paid by the corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition: provided, however, that if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The corporation may, by action of its board of directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(B) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a) of
this Section is not paid in full by the corporation within thirty days after a
written claim has been received by the corporation, the claimant may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim and if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law
for the corporation to indemnify the claimant for the amount claimed, but the
burden of proving
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such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard or
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(C) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(D) INSURANCE. The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
TENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
ELEVENTH: Meetings of stockholders may be held within or without the State
of Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation. Elections of directors
need not be by written ballot unless the by-laws of the
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corporation shall so provide.
TWELFTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH:
A. BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
Notwithstanding paragraph D of Article FOURTH, in addition to any
affirmative vote required by law or this Certificate of Incorporation, the
affirmative vote of holders of 75 % of the outstanding shares of Common Stock
and Class B Common Stock that are beneficially owned by stockholders other than
the Interested Stockholder who is a party to the Business Combination of the
corporation with an Interested Stockholder; provided however, that such 75%
voting requirement shall not be applicable if:
(i) the Business Combination is solely between the corporation and
any Subsidiary and does not have the effect of increasing
the actual or potential voting power of such Interested
Stockholder; or
(ii) the Continuing Directors of the corporation, by at least a
majority vote of such Continuing Directors, have
expressly approved such Business Combination either in advance
of or subsequent to such Interested Stockholder's having become
an Interested Stockholder; or
(iii) all of the Minimum Price and Procedural Conditions are
satisfied.
B. CERTAIN DEFINITIONS
(1) The term "INTERESTED STOCKHOLDER" shall mean (a) any person other
than the corporation or a Subsidiary which, together with its Affiliates and
Associates, is the Beneficial Owner of an aggregate of 10% or more of the
outstanding shares of voting stock of the corporation, and (b) any Affiliate or
Associate of any such person; provided however, that the term Interested
Stockholder shall not include (i) a person whose acquisition of such aggregate
percentage of Common Stock and Class B Common Stock was approved in advance by
at least a majority of the Continuing Directors or (ii) any trustee or
fiduciary when acting in such capacity with respect to employee benefit plans
of the corporation or a Subsidiary. An Interested Stockholder shall be deemed
the Beneficial Owner of all Common Stock and Class B Common Stock of which any
Affiliate or Associate of such Interested Stockholder is the Beneficial Owner.
The term "person" shall mean any individual, corporation, partnership or
other entity, including any group comprised of any person and any other person
with whom such person of any
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Affiliate or Associate thereof has any agreement, arrangement or understanding,
directly or indirectly, for the purpose of acquiring, holding, voting or
disposing of Common Stock or Class B Common Stock.
(2) The term "Business Combination" includes, when entered into by the
corporation or a Subsidiary with, or upon the proposal by, an Interested
Stockholder, the following transactions or series of related transactions:
(i) the acquisition, merger or consolidation of the corporation or
any Subsidiary;
(ii) any sale, lease, exchange, transfer or other disposition,
including without limitation, creation of any mortgage or
security interest, of any assets of the corporation or any
Subsidiary having a fair market value, as determined by at least
a majority of the Continuing Directors, equal to 10% or more of
the total consolidated assets of the corporation (including
without limitation, any voting securities of a Subsidiary) as of
the end of its most recent fiscal year prior to the time the
determination is being made;
(iii) the issuance or transfer of any securities of the corporation or
a Subsidiary having a fair market value of 10% or more, as
determined by at least a majority of the Continuing Directors,
of the total consolidated assets of the corporation as of the
end of its most recent fiscal year prior to the time the
determination is being made, in exchange for cash or property
(including stock or other securities);
(iv) the approval of a plan or proposal for the liquidation or
dissolution of the corporation or any Subsidiary;
(v) any reclassification of securities, recapitalization,
consolidation or any other transaction that would have the
direct or indirect effect of increasing the voting power
(whether or not then exercisable) of an Interested Stockholder
in any class or series of capital stock of the corporation or
any Subsidiary; and
(vi) any agreement, contract or other arrangement providing for
directly or indirectly any of the transactions described in this
definition of Business Combination.
(3) The term "BENEFICIAL OWNER" shall mean any person who beneficially
owns any Common Stock or Class B Common Stock within the meaning ascribed in
Rule 13d-3
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of the General Rules and Regulations under the Securities Exchange Act of 1934,
as in effect on the date of approval of this Article by the stockholders of the
corporation, or who has the right to acquire any such beneficial ownership
(whether or not such right is exercisable immediately) pursuant to any
agreement, contract, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise.
(4) The term "CONTINUING DIRECTOR" shall mean a director of the
corporation who is not an Interested Stockholder entering into or proposing the
Business Combination at issue and (i) who was a member of the board of
directors of the corporation immediately prior to the time that such Interested
Stockholder became an Interested Stockholder or (ii) any successor to a
Continuing Director as described in (i) of this subparagraph (4) who is
recommended or elected to succeed a Continuing Director by the affirmative vote
of a majority of the Continuing Directors then on the board of directors of the
corporation, provided that, in either such case, such Continuing Director has
continued in office after becoming a Continuing Director.
(5) An Interested Stockholder shall be deemed to have acquired a share of
Common Stock or Class B Common Stock at the time when such Interested
Stockholder became the Beneficial Owner thereof. The price deemed to have been
paid by an Interested Stockholder for Common Stock or Class B Common Stock of
which an "Affiliate" or "Associate" is the Beneficial Owner shall be the price,
as determined by vote of at least a majority of the Continuing Directors, which
is the highest of (i) the price paid upon the acquisition thereof by the
relevant "Affiliate" or "Associate" (if any, and whether or not such
"Affiliate" or "Associate" was an "Affiliate" or "Associate" at the time of
such acquisition), (ii) the highest market price of the Common Stock or Class B
Common Stock at the time when the Interested Stockholder became the Beneficial
Owner thereof and (iii) the highest price previously paid by such Interested
Stockholder or an Affiliate or Associate thereof for such Common Stock or Class
B Common Stock.
(6) The term "SUBSIDIARY" means any entity which the corporation owns,
directly or indirectly, (i) a majority of the outstanding shares of equity
securities of such entity, or (ii) shares having a majority of the voting power
represented by all of the outstanding voting stock of such entity.
(7) "MINIMUM PRICE AND PROCEDURAL CONDITIONS" shall mean all of the
following conditions:
(i) the aggregate amount of cash and Fair Market Value, as of
the date of the consummation of the Business Combination (the
"CONSUMMATION DATE"), of consideration other than cash, to be
received per share of common stock in such Business Combination
by holders thereof, shall be at least equal in value to the
higher of (a) the highest per share price, including any
brokerage commissions, transfer taxes and soliciting dealers'
fees (with
13
<PAGE> 14
appropriate adjustments for recapitalizations,
reclassifications, stock splits, reverse stock splits and stock
dividends) paid by the Interested Stockholder in acquiring any
shares of Common Stock or Class B Common Stock within the three
year period immediately prior to the first public announcement
of the proposed Business Combination or the per share price paid
by the Interested Stockholder in the transaction in which it
became an Interested Stockholder, whichever is higher, or (b)
the Fair Market Value per share of Common Stock as determined by
the Continuing Directors on the date the Business Combination is
first publicly announced;
(ii) the Business Combination shall be consummated within the
three year period after the later of (a) the date the
Interested Stockholder became an Interested Stockholder or (b)
the first public announcement of the proposed Business
Combination;
(iii) after such Interested Stockholder has become an
Interested Stockholder and prior to the Consummation Date, (a)
there shall have been (i) no reduction in the annual rate of
dividends paid on the common stock of the corporation (except as
necessary to reflect any stock dividend or stock split or
distribution with respect to the common stock,), except as
approved by the affirmative vote of a majority of the Continuing
Directors, and (ii) an increase in such annual rate of dividends
as necessary to reflect any reclassification (including any
reverse stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing the number
of outstanding shares of the common stock, unless the failure so
to increase such annual rate is approved by the affirmative vote
of a majority of the Continuing Directors; (b) such Interested
Stockholder shall not have become the Beneficial Owner of any
additional shares of voting stock of the corporation except as
part of the transaction which results in such Interested
Stockholder becoming an Interested Stockholder; (c) neither such
Interested Stockholder nor any Affiliate or Associate thereof
shall have received the benefit, directly or indirectly (except
proportionately as a stockholder of the corporation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided
by the corporation; and (d) a proxy or information statement
describing the proposed Business Combination and complying with
the requirements of the Securities Exchange Act of 1934 and the
General Rules and Regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) and
disclosing the terms and conditions of the proposed Business
Combination shall be mailed
14
<PAGE> 15
to the stockholders of the corporation at least 30 days prior
to the Consummation Date (whether or not such proxy or
information statement is required to be mailed pursuant to such
Act or subsequent provisions thereof).
(8) The term "FAIR MARKET VALUE" shall mean (i) in the case of stock,
the highest closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not reported on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not listed
on such Exchange, on the principal United States securities exchange registered
under the Exchange Act on which such stock is listed or, if such stock is not
listed on any such exchange, the highest closing bid quotation with respect to
a share of such stock during the 30-day period preceding the date in question
on the National Association of Securities Dealers, Inc. Automated Quotations
System or any similar interdealer quotation system then in use, or, if no such
quotation is available, the fair market value on the date in question of a
share of such stock as determined by a majority of the Continuing Directors in
good faith; and (ii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by a
majority of the Continuing Directors in good faith.
(9) The terms "AFFILIATE" AND "ASSOCIATE" shall have the same meaning as
in Rule 12b-2 of the general Rules and Regulations under the Securities
Exchange Act of 1934 is in effect on the date of the approval of this Article by
the stockholders of the corporation.
The Continuing Directors shall have the power to make all determinations
with respect to the definitions as set forth in this Section B of Article
THIRTEENTH.
This Article THIRTEENTH shall be subject to the provisions of Article
FOURTH hereof.
C. AMENDMENTS, ALTERATION, OR REPEAL OF ARTICLE THIRTEENTH
In addition to any requirements of law and any other provisions of this
Certificate of Incorporation or any resolution or resolutions of the board of
directors adopted pursuant to this Certificate of Incorporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Certificate of Incorporation or any such resolutions), the affirmative vote of
the holders of 75% of the then outstanding Common Stock held by stockholders
other than an Interested Stockholder and Class B Common Stock shall be required
to amend, alter or repeal, or adopt any provision inconsistent with the
requirements of, this Article.
15
<PAGE> 16
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 8th day of September, 1972.
________________________________________
________________________________________
________________________________________
16
<PAGE> 1
EXHIBIT 3.2
MOLEX INCORPORATED
RESTATEMENT
OF
BY-LAWS
--------------------
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The registered office of the Corporation
shall be located in the City of Wilmington, County of New Castle, State of
Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. PLACE OF MEETING. Meetings of stockholders may be held at such
place, either within or without the State of Delaware, as may be designated by
the Board of Directors or officers calling such meetings. If no designation is
made, the place of the meeting shall be the principal office of the
Corporation.
SECTION 2. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on a weekday on such date as the Board of Directors may determine, and
shall be held at a time and place to be determined by a resolution of the
Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may properly come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated for any annual meeting, or
at any adjournment thereof, the Board of Directors shall cause the election to
be held at a meeting of the stockholders as soon thereafter as the Board of
Directors determines is reasonably convenient.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called by the Chairman, Chief Executive Officer, President, the Secretary or
the Board of Directors.
(Restatement as of July 29, 1995) 1
<PAGE> 2
SECTION 4. NOTICE. Written notice stating the date, time and place of the
meeting, and in case of a special meeting, the purpose or purposes thereof,
shall be given to each stockholder entitled to vote thereat not less than 10
or more than 60 days prior thereto, either personally or by mail or telegraph,
addressed to each stockholder at his address as it appears on the records of
the Corporation. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company. Any previously
scheduled meeting of the stockholders may be postponed by resolution of the
Board of Directors upon public notice given prior to the date previously
scheduled for such meeting of stockholders.
SECTION 5. ADJOURNED MEETINGS. When a meeting is adjourned to another
time or place, notice of the adjourned meeting need not be given if the time
and place thereof are announced at the meeting at which the adjournment is
taken, if the adjournment is for not more than 30 days, and if no new record
date is fixed for the adjourned meeting. At the adjourned meeting, the
Corporation may transact only such business, which might have been transacted
at the original meeting as originally notified.
SECTION 6. QUORUM. The holders of a majority of each class of the shares
of stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business, except as otherwise provided
by statute or by the Certificate of Incorporation. Whether or not such quorum
is present or represented at any meeting of the stockholders, the chairman of
the meeting or, subject to the provisions of the Certificate of Incorporation,
the holders of a majority of the shares entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum shall be present or represented, only such
business which might have been transacted at the meeting as originally
notified may be transacted. When a quorum is present at any meeting, the vote
of the holders of a majority of the shares of stock having voting power
present in person or represented by proxy shall decide any questions brought
before such meeting, unless the questions is one upon which by express
provision of the statutes or of the Certificate of Incorporation, a different
vote or a vote by class is required, in which case such express provision
shall govern and control the decision of such question.
SECTION 7. VOTING. Subject to the provisions of the Certificate of
Incorporation, including the rights of any holder of Preferred Stock, each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted after three years from
its date, unless the proxy provides for a longer period. Elections of
directors need not be by written ballot.
SECTION 8. ACTION WITHOUT MEETING. Unless otherwise restricted by
statute or the Certificate of Incorporation, any action required or permitted
to be taken at any
(Restatement as of July 29, 1995) 2
<PAGE> 3
annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all the shares entitled to
vote thereon were present and voted, provided that prompt notice of such
action shall be given to those stockholders who have not so consented in
writing to such action without a meeting.
SECTION 9. STOCKHOLDER NOMINATIONS AND BUSINESS PROPOSALS.
(A) ANNUAL MEETINGS OF STOCKHOLDERS:
(1) Nominations and Business Proposals: Nominations of persons
for election to the Board of Directors of the Corporation and the
proposal of business to be considered by the stockholders at an
annual meeting of stockholders may be made only (a) by or at the
direction of the Board of Directors or (b) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of
notice provided for in this Section 9, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in this
Section 9. In order for business to be properly brought before the
meeting by a stockholder, such business, as determined by the
chairman of the meeting, must be a proper subject under Delaware
corporate law.
(2) Notice to Corporation: For nominations or other business to
be properly brought before an annual meeting by a stockholder
pursuant to clause (b) of paragraph (A)(1) of this Section 9, the
stockholder must have given timely notice thereof in writing to the
Secretary. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal executive office of the Corporation
not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting of stockholders;
provided, however that in the event the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder must be so delivered
not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior
to such annual meeting or the 10th day following the day on which
public announcement f the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to
be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if
elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business
desired to be brought
(Restatement as of July 29, 1995) 3
<PAGE> 4
before the meeting, the reasons for conducting such business at
the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the
proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or
proposal is made, (i) the name and address of such stockholder and of
such beneficial owner, and (ii) the class and number of shares of the
Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Increase in Number of Directors: Notwithstanding anything
in the second sentence of paragraph (A)(2) of this Section 9 to the
contrary, in the event that the number of directors to be elected to
the Board of Directors of the Corporation is increased and there is
no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the
Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting of stockholders, a stockholder's
notice required by this Section 9 shall also be considered timely,
but only with respect to nominees for any new positions created by
such increase, if it shall be delivered to the Secretary at the
principal executive office of the Corporation not later than the
close of business on the 10th day following the day on which such
public announcement is first made by the Corporation.
(B) SPECIAL MEETINGS OF STOCKHOLDERS:
(1) Nominations of Directors: Nominations of persons for
election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected only (a) by or
at the direction of the Board of Directors or (b) by any stockholder
of the Corporation who is a stockholder of record at the time of
giving of notice provided for in this Section 9, who shall be
entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 9.
(2) Notice to Corporation: Only such business shall be
conducted at a special meeting of stockholders as shall have been set
forth as the purpose or purposes of such special meeting in the
Corporation's notice of such special meeting. Nominations by
stockholders of such persons for election to the Board of Directors
may be made at such a special meeting of stockholders if a
stockholder's notice shall be delivered to the Secretary at the
principal executive office of the Corporation not earlier than the
90th day prior to such special meeting and not later than the close
of business on the later of the 60th day prior to such special
meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of
the nominees proposed b, the Board of Directors to be elected at such
meeting. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder
(Restatement as of July 29, 1995) 4
<PAGE> 5
proposes to nominate for election or reelection as a director,
all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or
is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act (including such person's written consent to being
named in the proxy statement as a nominee and to serving as director
if elected) and (b) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal
is made, (i) the name and address of such stockholder and of such
beneficial owner, and (ii) the class and number of shares of the
Corporation which are owned beneficially and of records by such
stockholder and such beneficial owner.
(C) GENERAL:
(1) Acceptance of Nominations and Proposals: The Secretary
shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Section 9. The
Secretary shall make any such determination and shall notify the
interested stockholder of such determination (including the reasons
for any determination that the interested stockholder's nomination or
proposal was not made in compliance with this Section 9) within
fifteen days after the Corporation's receipt of the stockholder's
notice required by paragraph (A)(2) or (B)(2) of this Section 9. If
the Secretary determines that such nomination or proposal is not in
compliance with this Section 9, the interested stockholder shall have
until the later of the expiration of the applicable notice period or
five days after receipt by such stockholder of any such notice
declaring that such stockholder's nomination or proposal was not made
in compliance with this Section 9 to rectify any deficiency cited in
such notice and to resubmit such stockholder's nomination or proposal
to the Secretary at the principal business office of the Corporation.
Any resubmitted nomination or proposal shall contain only such
nominations or proposals as were submitted to the Corporation in such
stockholder's notice which did not comply with this Section 9. The
Secretary shall determine whether any such resubmitted nomination or
proposal is in compliance with this Section 9, and shall notify the
interested stockholder of such determination (including the reasons
for any determination that the interested stockholder's resubmitted
nomination or proposal was not made in compliance with this Section
9), within five additional days of the Corporation's receipt of such
stockholder's resubmitted nomination or proposal.
(2) Compliance with Exchange Act: Notwithstanding the foregoing
provisions of this Section 9, a stockholder shall also comply with
all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this
Section 9. Nothing in this Section 9 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the
Exchange Act.
(Restatement as of July 29, 1995) 5
<PAGE> 6
(3) Definitions: For purposes of this Section 9, "public
announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or a comparable national
news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TENURE. The business and affairs of the Corporation
shall be managed by a board of not less than six (6) nor more than ten (10)
directors as determined by resolution of the Board of Directors. The directors
shall be elected at each annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until the next succeeding annual meeting or until their respective
successors are duly elected and qualified. Directors need not be stockholders.
SECTION 2. VACANCIES. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, and the
directors so chosen shall hold office until the next annual election or until
their respective successors are duly elected and qualified.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this by-law, immediately after, and at
the same place as, the annual meeting of stockholders. The Board of Directors
may provide, by resolution, the time and place, whether within or without the
State of Delaware, for the holding of additional regular meetings without
other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any director. The
person or persons authorized to call special meetings of the Board of
Directors may fix any place for holding any special meeting of the Board of
Directors called by them.
SECTION 5. NOTICE. Written notice of any special meeting shall be given
at least two (2) days prior thereto, either personally or by mail or
telegraph, addressed to each director at his address as it appears on the
records of the Corporation. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company.
SECTION 6. QUORUM. At all meetings of the Board, a majority of the total
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by state or by the
(Restatement as of July 29, 1995) 6
<PAGE> 7
Certificate of Incorporation. If a quorum shall not be present at any meeting
of the Board of Directors the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. A director present at a meeting
shall be counted in determining the presence of a quorum, regardless of
whether a contract or transaction between the Corporation and such director of
between the Corporation and any other Corporation, partnership, association,
or other organization in which such director is a director or officer, or has
financial interest, is authorized or considered at such meeting.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise restricted by statute
or the Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board or such committee, as
the case may be, consent thereto in writing and such written consent is filed
with the minutes of proceedings of the Board or committee.
SECTION 8. ACTION BY CONFERENCE TELEPHONE. Unless otherwise restricted by
statute or the Certificate of Incorporation, members of the Board of Directors
or any committee thereof may participate in a meeting of such Board or
committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at such meeting.
SECTION 9. COMMITTEES. The Board of Directors, by resolution adopted by
the majority of the whole Board, may designate one (1) or more committees,
each committee to consist of two (2) or more directors. The Board may
designate one (1) or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not a member of the Board of Directors, to act at the meeting in
the place of any such absent or disqualified member. Any such committee, to
the extent provided in such resolution, shall have any may exercise all of the
powers of the Board of Directors in the management of the business and affairs
of the Corporation and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such committee shall have the power
or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending
the by-laws of the Corporation; and, unless the resolution expressly so
provides, such committee shall not have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 10. COMPENSATION OF DIRECTORS. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of a committee may be allowed
(Restatement as of July 29, 1995) 7
<PAGE> 8
like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND SALARIES. The officers of the Corporation shall
consist of a Chairman of the Board, a President, one (1) or more Vice
Presidents (the number thereof to be determined by the Board of Directors), a
Secretary, and a Treasurer. Such other officers and assistant officers and
agents as may be deemed necessary may be elected or appointed by the Board of
Directors. Any two (2) or more officers may be held by the same person. The
salaries of all officers and agents of the Corporation shall be fixed by the
Board of Directors.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as is convenient. However, any
officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors.
Vacancies or new offices may be filled at any meeting of the Board of
Directors. An officer may resign at any time upon written notice to the
Corporation. Each officer shall hold his office until his successor is elected
and qualified or until his earlier resignation or removal.
SECTION 3. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
elected by the Board of Directors from their own number by ballot; he shall
preside at all meetings of the stockholders and of the Board of Directors; he
shall be a member of the Finance Committee in the event such committee is
created; and he shall have such duties and shall supervise such matters as may
be designated to him by the Board of Directors.
SECTION 4. THE PRESIDENT. The President shall be the principal executive
officer of the Corporation; in the absence of the Chairman of the Board, he
shall preside at all meetings of the stockholders and of the Board of
Directors; he shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect; and he shall have the general powers and
duties of supervision and management usually vested in the office of the
President of a corporation.
SECTION 5. THE VICE PRESIDENTS. In the absence of the President or in
the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. He shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
(Restatement as of July 29, 1995)
8
<PAGE> 9
SECTION 6. THE SECRETARY. The Secretary shall keep the minutes of the
proceedings of the stockholders and the Board of Directors; he shall
give, or cause to be given; all notices in accordance with the provisions of
these by-laws or as required by law; he shall be custodian of the corporate
records and of the seal of the Corporation; he shall keep at the registered
office or principal place of business of the Corporation a record of the
stockholders of the Corporation, giving the names and addresses of all such
stockholders (which addresses shall be furnished to the Secretary by such
stockholders) and the number and class of the shares held by each; he shall
have general charge of the stock transfer books of the Corporation; and in
general he shall perform all duties as from time to time may be assigned to him
by the President or by the Board of Directors.
SECTION 7. THE TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep, or cause to be kept, correct and
complete books and records of account, including full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors; and in general he shall perform all the duties incident to the
office of Treasurer and such other duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the
President or the Board of Directors.
SECTION 8. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers, if any, in general shall
perform such duties as from time to time may be assigned to them by the
Secretary, or the Treasurer, respectively, or by the President or the Board of
Directors.
SECTION 9. VICE CHAIRMAN OF THE BOARD. The Board of Directors may, at
its discretion, elect one or more Vice Chairman of the Board of Directors. In
the absence of the Chairman or his inability to perform his duties, the Vice
Chairman shall preside at any stockholders meetings and of the Board of
Directors and otherwise perform whatever duties that are performed by the
Chairman.
SECTION 10. THE CHIEF EXECUTIVE OFFICER. The Board of Directors may, at
is discretion, elect a Chief Executive Officer. If a Chief Executive Officer is
elected, he shall be the principal executive officer of the Corporation with
all responsibilities usually vested therein.
ARTICLE V
CERTIFICATES OF STOCK
SECTION 1. SIGNATURE BY OFFICERS. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman of the Board of Directors, the President or a
Vice President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the
(Restatement as of July 29, 1995)
9
<PAGE> 10
Corporation, certifying the number of shares owned by him in the Corporation.
SECTION 2. FACSIMILE SIGNATURES. Where a certificate is signed by a
Transfer Agent of the Corporation, the signature of the Chairman of the Board
of Directors, President, Vice President, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary may be facsimile. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on any such certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by
the Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the Corporation.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued by the Corporation alleged to have
been lost or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
SECTION 4. TRANSFER OF STOCK. Upon surrender to the Corporation of or the
Transfer Agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 5. FIXING OF RECORD DATE. The Board of Directors shall fix
in advance a date, in accordance with the requirements of applicable law,
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to notice of,
and to vote at, any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any change, conversion or exchange of
capital stock, or to give such consent, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such consent
as the case may be notwithstanding any transfer of any stock on the books of
the Corporation after any such record date fixed as aforesaid.
(Restatement as of July 29, 1995)
10
<PAGE> 11
SECTION 6. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Delaware.
ARTICLE VI
CONTRACT, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. When the execution of any contract or other
instrument has been authorized by the Board of Directors without specification
of the executing officers, the President, or any Vice President, and the
Secretary, or any Assistant Secretary, may execute the same in the name of and
on behalf of the Corporation and may affix the corporate seal thereto.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors.
SECTION 3. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
ARTICLE VII
DIVIDENDS
SECTION 1. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest
of the Corporation, and the directors may modify or abolish any such reserve
in the manner in which it was created.
(Restatement as of July 29, 1995)
11
<PAGE> 12
ARTICLE VIII
FISCAL YEAR
The fiscal year shall begin the first day of July and end on the last day
of June in each year but this determination shall be subject to change by the
Board of Directors.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice whatever is required to be given by law, the
Certificate of Incorporation or these by-laws, a written waiver thereof,
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transactions of business because the meeting is not lawfully called or
convened.
ARTICLE X
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to the
impressed or affixed or reproduced otherwise.
ARTICLE XI
AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws adopted
at any regular or special meeting of the Board of Directors by a majority vote
of the directors present at the meeting.
(Restatement as of July 29, 1995)
12
<PAGE> 1
TEN-YEAR FINANCIAL HIGHLIGHTS SUMMARY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net revenue $ 1,539,712 $ 1,382,673 $ 1,197,747 $ 964,108 $ 859,283
Gross profit 629,255 555,284 505,697 406,079 352,603
Income before income taxes
and minority interest 262,369 228,953 214,492 159,477 133,478
Income taxes 95,581 83,300 90,273 63,186 58,371
Net income 166,716 145,586 124,035 94,852 71,055
Earnings per common share(1) 1.33 1.16 0.99 0.77 0.58
Net income as a percent of
net revenue 10.8% 10.5% 10.4% 9.8% 8.3%
FINANCIAL POSITION
Current assets $873,614 $734,589 $773,036 $635,104 $497,560
Current liabilities 342,026 275,182 278,046 205,394 165,368
Working capital 531,588 459,407 494,990 429,710 332,192
Current ratio 2.6 2.7 2.8 3.1 3.0
Property, plant &
equipment, net 665,468 613,125 567,303 440,995 385,828
Total assets 1,636,931 1,460,999 1,441,020 1,138,517 961,775
Long-term debt 7,350 7,450 8,122 7,350 7,510
Shareholders equity 1,235,912 1,131,271 1,107,268 881,614 751,654
Return on beginning
shareholders equity 14.7% 13.1% 14.1% 12.6% 10.8%
Dividends per common share(1) 0.06 0.05 0.02 0.02 0.02
Weighted average common
shares outstanding(1) 125,689 125,931 125,019 123,720 123,049
<CAPTION>
1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net revenue $ 776,192 $ 707,950 $ 594,372 $ 571,892 $ 502,368
Gross profit 318,361 297,954 256,581 257,154 240,062
Income before income taxes
and minority interest 117,412 117,936 110,041 104,672 106,133
Income taxes 49,814 53,402 47,495 46,475 46,473
Net income 67,464 64,631 62,087 57,698 59,276
Earnings per common share(1) 0.55 0.53 0.51 0.47 0.48
Net income as a percent of
net revenue 8.7% 9.1% 10.4% 10.1% 11.8%
FINANCIAL POSITION
Current assets $ 434,277 $ 402,208 $ 355,107 $ 315,958 $ 298,295
Current liabilities 168,209 155,593 109,949 99,270 96,111
Working capital 266,068 246,615 245,158 216,688 202,184
Current ratio 2.6 2.6 3.2 3.2 3.1
Property, plant &
equipment, net 362,719 280,761 228,968 214,373 183,461
Total assets 849,689 726,740 606,899 541,253 498,953
Long-term debt 7,949 9,136 8,046 5,760 6,566
Shareholders equity 660,389 550,742 481,281 428,788 389,735
Return on beginning
shareholders equity 12.2% 13.4% 14.5% 14.8% 18.8%
Dividends per common share(1) 0.01 0.01 0.01 0.01 0.01
Weighted average common
shares outstanding(1) 122,365 121,695 122,119 123,591 123,815
</TABLE>
(1)Restated for the following stock split/dividends: 25%-February, 1997;
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.
MOLEX 1997 ANNUAL REPORT - 23
<PAGE> 2
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
Molex continued to produce strong revenue growth while maintaining profitability
goals in fiscal 1997, reflecting the general improvement in economic conditions
in several geographic regions in which the Company operates. Net revenue
increased 11.4 percent to a record $1.54 billion for the fiscal year. The
Company's net revenue continues to increase faster than the worldwide connector
industry. Net income increased 14.5 percent to a record $167 million, or 10.8
percent of net revenue. The Company's continued growth is believed to be the
result of the Company's ability to expand and increase market share 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 WORLD CONNECTOR INDUSTRY
[CHART]
The Growth of Molex vs the Worldwide Connector Industry
Using 1987 as a base year.
Worldwide Molex
--------- -----
1987 100* 100*
1988 112* 130*
1989 113* 148*
1990 116* 154*
1991 117* 183*
1992 118* 200*
1993 118* 221*
1994 123* 248*
1995 150* 308*
1996 159* 336*
1997 164* 397*
* Source: Fleck International
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
23.5 percent on Molex Common Stock and 24.2 percent on Molex Class A Common
Stock. This compares to the 17.6 percent return on the S & P MidCap 400 over the
same period.
A $100 investment in Molex Common Stock at June 30, 1992, together with
the reinvestment of dividends, would be worth $287 at June 30, 1997, and a
similar investment in Molex Common Class A Stock would be worth $296 at June
30, 1997. During this same period, an investment in an index fund weighted
exclusively by the S&P MidCap 400 would be worth $225.
In April, 1997, the Molex Board of Directors distributed a 25 percent
stock dividend. In addition, the Board increased the annual cash dividend by 25
percent to $0.06 per share. All shares outstanding, earnings and dividends per
share have been retroactively restated for the stock dividend.
MOLEX COMMON STOCK/
HIGH-LOW-CLOSE BY QUARTER
[LINE GRAPH]
<TABLE>
<S> <C> <C> <C>
1993 High Low Close
- ---- ---- --- -----
1st 15.50 12.20 14.34
2nd 15.80 13.30 13.63
3rd 16.90 13.20 16.38
4th 16.50 14.70 15.87
1994 High Low Close
- ---- ---- --- -----
1st 19.60 5.62 18.56
2nd 18.70 16.30 18.18
3rd 19.70 17.20 17.28
4th 19.90 15.50 19.46
1995 High Low Close
- ---- ---- --- -----
1st 28.12 24.00 21.76
2nd 28.75 24.75 22.08
3rd 29.12 24.75 22.88
4th 31.37 28.25 24.80
1996 High Low Close
- ---- ---- --- -----
1st 29 19/64 21 41/64 23.20
2nd 29 19/32 24 13/32 25.40
3rd 29 21 51/64 27.90
4th 29 19/64 24 13/64 25.40
1997 High Low Close
- ---- ---- --- -----
1st 30 13/64 22 29.80
2nd 31 51/64 28 13/32 31.30
3rd 32 28 28.40
4th 39 1/2 27 36.50
</TABLE>
Restated for the following stock splits: 25% - February, 1997; 25% - August,
1995; 25% - November, 1994; 25% - November, 1992
FIVE-YEAR CUMULATIVE TOTAL RETURN
(Fiscal Years ended June 30)
[LINE GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Molex Common Stock 100.00 124.12 152.31 194.34 199.42 287.02
Molex CL A Comm Stock 100.00 120.88 158.70 197.28 198.86 295.67
S & P MidCap 400 100.00 122.69 122.62 150.01 182.38 224.93
</TABLE>
INTERNATIONAL OPERATIONS
With Molexs almost 30 years in the international connector market, foreign
operations generated, in fiscal 1997, net revenue in excess of $1.0 billion for
the first time, and represented 67.3 percent of total Molex net revenue. Net
revenue from foreign operations in fiscal 1997 were nearly four times greater
than in fiscal 1987. 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
establishing of contra-currency accounts in several international subsidiaries
and
24 - MOLEX 1997 ANNUAL REPORT
<PAGE> 3
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, 1997, equaled $325.3 million and represented 19.9 percent of total
consolidated assets. Cash and marketable securities increased $42.7 million
during fiscal 1997.
The Company's long-term financing strategy is to rely almost exclusively on
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 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 $20.5 million, which remain unused at
June 30, 1997.
Cash provided from operations was $275.4 million during fiscal 1997. The
Company's operations generate sufficient cash to support the current level of
capital expenditures and financing activities. In U.S. dollars, the 76 average
days' sales outstanding in trade accounts receivable remained the same as in the
prior year. Average inventory days in U.S. dollars have improved to 71 days from
the 73 days reported last fiscal year.
Cash used for investing activities was $278.0 million in fiscal 1997,
primarily due to capital expenditures. Molex continued its commitment to
investing in new tooling, equipment and facilities, with capital expenditures
totaling $208.6 million for fiscal 1997. Molex added new facilities in China and
Puerto Rico. In addition, facilities were expanded in the Republic of Korea,
Taiwan, India and Florida. These additions increased the worldwide facility
floor space to 3.9 million square feet.
The weighted average shares outstanding of Common Stock, Class A Common
Stock and Class B Common Stock for the current fiscal year decreased to 125.7
million from the 125.9 million for fiscal 1996. The Company purchased 1,077,500
shares of common stock during fiscal 1997. During fiscal 1996, Molex purchased
785,000 shares of common stock on the open market.
Percentage of Net Revenue
Fiscal Year Ended June 30,
<TABLE>
<CAPTION>
U.S. Dollar
Percentage Change
1997 1996 1995 1997-96 1996-95
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 11.4% 15.4%
Cost of sales 59.1 59.8 57.8 10.0 19.6
- -----------------------------------------------------------------------------
Gross profit 40.9 40.2 42.2 13.3 9.8
Operating expenses 24.5 24.5 24.9 11.3 13.6
- -----------------------------------------------------------------------------
Income from operations 16.4 15.7 17.3 16.5 4.4
Total other income 0.6 0.9 0.6 (17.7) 74.2
- -----------------------------------------------------------------------------
Income before income taxes 17.0 16.6 17.9 14.6 6.7
Income taxes 6.2 6.1 7.5 14.7 -7.7
- -----------------------------------------------------------------------------
Net income 10.8% 10.5% 10.4% 14.5% 17.4%
=============================================================================
</TABLE>
FISCAL 1997 COMPARED TO FISCAL 1996
Net revenue increased 11.4 percent to an all-time high of $1.54 billion during
fiscal 1997, compared to $1.38 billion during fiscal 1996. Excluding the effect
of exchange rates due to the generally stronger U.S. dollar, which had the
affect of reducing reported revenue, net revenue increased 16.3 percent.
In the Far East North, customer net revenue increased 15.4 percent in local
currencies. The increase in domestic sales in fiscal 1997 was achieved despite
difficult economic conditions in the Republic of Korea during much of the year
and continuing price erosion in Japan. Net revenue in the region increased 2.6
percent in U.S. dollars as the dollar strengthened considerably against both the
Japanese yen and the Korean won. Development of high precision and miniaturized
products have made Molex Japan a leading supplier to the notebook PC industry.
Molex became the No. 3 connector maker in Japan. Molex further advanced its
entry into NTT-related telecommunications and mobile phone business with release
of several new interconnection products.
Customer net revenue in the Americas region increased 15.9 percent in U.S.
dollars and 18.8 percent in local currencies in fiscal 1997. In the Commercial
Division, revenue growth and profitability continue in competitive traditional
markets and growth increased in niche markets. Sales growth in the Data/Comm
Division was a result of continued strength in the PC market, introduction of
new products and high speed cable assemblies used in the telecommunications
industry. The Fiber Optics Division continued its strong sales growth, and the
Value-Added Division experienced significant growth in the computer and computer
peripheral markets.
Customer net revenue in the Far East South increased 20.4 percent in U.S.
dollars and 21.0 percent in local currencies. The region continues to experience
revenue growth due to demand for personal computers and related peripheral
products, along with new products developed for local demand and export.
MOLEX 1997 ANNUAL REPORT - 25
<PAGE> 4
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Europe's net revenue increased 6.2 percent in U.S. dollars and 12.7 percent
in local currencies. Slow growth and softened demand during the first half of
the year was compensated by strong sales in the second half of the year. Price
erosion and initial start-up costs affecting profitability were offset by
reductions in material costs and an increase in new product sales.
The consolidated gross profit increased from 40.2 percent of net revenue in
fiscal 1996 to 40.9 percent during fiscal 1997. The gross margin performance
improvement in fiscal 1997 can be attributed to improvement in overall
manufacturing effiencies, general softening of raw material prices and the
Company's ability to overcome the prior year's start-up costs, which plagued
automotive and other new product programs.
Operating expenses as a percentage of net revenue remained steady at 24.5
percent in fiscal 1997 and fiscal 1996. Net revenue per employee decreased to
$128.9 thousand during fiscal 1997 from $136.9 during fiscal 1996. Employee
headcount increased 18.3 percent compared to the 11.4 percent increase in net
revenue. This increase in headcount can be attributed to the aforementioned
growth in revenue, as well as significant increases in the Value-Added
Division.
Research and development expenditures increased to $89.5 million or 5.8
percent of sales, a 4.7 percent increase from the $85.5 million in fiscal 1996.
These expenditures contributed to the release of 319 new product families and
the granting of 541 new patents during fiscal 1997. During fiscal 1997, 30.5
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 enhance the Company's competitive position.
The foreign currency transactions balanced out through the year, resulting
in a net de minimus gain in fiscal 1997, compared to a net gain of $2.1 million
in fiscal 1996.
Interest income decreased slightly from fiscal 1996. This decrease can be
attributed to the relatively lower interest rates earned on the cash balances in
many countries where the Company has significant short-term investments.
Interest expense remained relatively unchanged from fiscal 1996.
The effective tax rate remained unchanged at 36.4 percent from fiscal 1996
to 1997.
Net income increased 14.5 percent to $166.7 million. Earnings per share
increased to $1.33 during fiscal 1997 from $1.16 during fiscal 1996.
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. Development of high
precision and miniaturized products has made Molex a leading supplier to the
notebook PC industry, as well as positioned the Company to further penetrate
growth industries such as telecommunications and automotive.
Customer net revenue in the Americas region 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 telecommunications
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 15.8 percent in U.S.
dollars and 14.3 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.
26 - MOLEX 1997 ANNUAL REPORT
<PAGE> 5
Europe's net revenues increased 22.5 percent in U.S. dollars and 16.0
percent in local currencies. 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 increased 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 that can be recognized for tax purposes.
Net income increased 17.4 percent to $145.6 million. Earnings per share
increased to $1.16 during fiscal 1996 from $0.99 during fiscal 1995.
OUTLOOK
Fiscal 1997 was another fine year for Molex, with sales growing significantly
faster than the overall connector industry. The outlook for fiscal 1998 is for
another good year. Management anticipates steady growth in sales and earnings
throughout the year.
To further expand the Company's global presence and provide customers with
innovative products at an accelerated pace, Molex plans to invest approximately
$240 million in capital expenditures and $100 million in research and
development for the fiscal year ending June 30, 1998. During fiscal 1998, the
Company plans to open new facilities in Segensworth, England; Merrimack, New
Hampshire; and Indianapolis, Indiana. Further expansion is planned for existing
operations in Kagoshima, Japan; Chateau Gontier, France; Guadalajara and
Nogales, Mexico; and Maumelle, Arkanas. Molex is also planning to increase its
presence in the southern region of the Republic of Korea and Northern China.
Worldwide, the connector industry is expected to increase between five
percent and six percent. The Company expects to once again surpass its goal of
growing at twice the connector industry while generating a 10 percent net return
on sales. The Company continues to emphasize expansion in rapidly growing
markets such as computers, computer peripherals, telecommunications and
automotive. Molex remains committed to providing high quality products and a
full range of services to customers wherever they may be located in the world.
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.
MOLEX 1997 ANNUAL REPORT - 27
<PAGE> 6
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.
Frederick A. Krehbiel John H. Krehbiel, Jr. Robert B. Mahoney
Frederick A. Krehbiel John H. Krehbiel, Jr. Robert B. Mahoney
Chairman of the Board and President and Corporate Vice President,
Chief Executive Officer Chief Operating Officer Treasurer and Chief
Financial Officer
28 - MOLEX 1997 ANNUAL REPORT
<PAGE> 7
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, 1997 and 1996, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended June 30, 1997. 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, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois
July 22, 1997
MOLEX 1997 ANNUAL REPORT - 29
<PAGE> 8
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Assets June 30,
1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 199,767 $ 242,779
Marketable securities 125,570 39,883
Accounts receivable:
Trade, less allowance of $14,586 in 1997 and
$12,566 in 1996 for doubtful accounts 332,350 269,675
Employee 5,415 4,356
Inventories 166,660 147,612
Deferred income taxes (Note 5) 35,801 22,562
Prepaid expenses 8,051 7,722
- ---------------------------------------------------------------------------------------------------------
Total current assets 873,614 734,589
- ---------------------------------------------------------------------------------------------------------
Property, plant and equipment
- ---------------------------------------------------------------------------------------------------------
at cost (Note 4):
Land and improvements 44,107 42,815
Buildings and leasehold improvements 277,020 252,372
Machinery and equipment 730,258 633,990
Molds and dies 307,627 281,038
Construction-in-progress 56,886 82,682
- ---------------------------------------------------------------------------------------------------------
1,415,898 1,292,897
Less accumulated depreciation and amortization 750,430 679,772
- ---------------------------------------------------------------------------------------------------------
Net property, plant and equipment 665,468 613,125
- ---------------------------------------------------------------------------------------------------------
Other assets 97,849 113,285
- ---------------------------------------------------------------------------------------------------------
$ 1,636,931 $ 1,460,999
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30 - MOLEX 1997 ANNUAL REPORT
<PAGE> 9
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity June 30,
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt (Note 4) $ -- $ 103
Accounts payable 151,934 127,557
Accrued expenses:
Salaries, commissions and bonuses 44,111 28,384
Other 64,899 63,205
Income taxes (Note 5) 79,197 54,418
Dividends payable 1,885 1,515
- -----------------------------------------------------------------------------------------------------
Total current liabilities 342,026 275,182
- -----------------------------------------------------------------------------------------------------
Deferred items:
Investment grants 3,341 2,991
Income taxes (Note 5) 11,417 10,986
- -----------------------------------------------------------------------------------------------------
Total deferred items 14,758 13,977
- -----------------------------------------------------------------------------------------------------
Accrued postretirement benefits (Notes 6 and 7) 33,779 30,401
- -----------------------------------------------------------------------------------------------------
Long-term debt (Note 4) 7,350 7,450
- -----------------------------------------------------------------------------------------------------
Minority interest in subsidiaries 3,106 2,718
- -----------------------------------------------------------------------------------------------------
Shareholders equity (Notes 3 and 9):
Common Stock, $.05 par value; 100,000 shares authorized;
66,054 shares issued at 1997 and 65,474 shares issued at 1996 3,303 2,619
Class A Common Stock, $.05 par value; 100,000 shares authorized;
65,658 shares issued at 1997 and 65,675 shares issued at 1996 3,283 2,627
Class B Common Stock, $.05 par value; 146 shares authorized;
94 shares issued at 1997 and 1996 5 5
Paid-in capital 131,265 116,510
Retained earnings 1,149,720 989,928
Treasury stock (Common Stock, 4,171 shares at 1997 and 3,015
shares at 1996; Class A Common Stock, 2,157 shares at 1997
and 2,231 shares at 1996), at cost (94,494) (62,726)
Deferred unearned compensation (16,499) (13,583)
Cumulative translation and other adjustments 59,329 95,891
- -----------------------------------------------------------------------------------------------------
Total shareholders' equity 1,235,912 1,131,271
- -----------------------------------------------------------------------------------------------------
$ 1,636,931 $ 1,460,999
=====================================================================================================
</TABLE>
MOLEX 1997 ANNUAL REPORT - 31
<PAGE> 10
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the year ended June 30,
1997 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue $ 1,539,712 $ 1,382,673 $ 1,197,747
Cost of sales 910,457 827,389 692,050
- --------------------------------------------------------------------------------------------
Gross profit 629,255 555,284 505,697
- --------------------------------------------------------------------------------------------
Operating expenses:
Selling 153,483 142,805 129,152
Administrative 223,833 196,202 169,331
- --------------------------------------------------------------------------------------------
Total operating expenses 377,316 339,007 298,483
- --------------------------------------------------------------------------------------------
Income from operations 251,939 216,277 207,214
- --------------------------------------------------------------------------------------------
Other income (expense):
Foreign currency transaction gain (loss) 25 2,114 (2,759)
Interest, net 10,405 10,562 10,037
- --------------------------------------------------------------------------------------------
Total other income 10,430 12,676 7,278
- --------------------------------------------------------------------------------------------
Income before income taxes and minority interest 262,369 228,953 214,492
Income taxes (Note 5) 95,581 83,300 90,273
- --------------------------------------------------------------------------------------------
Income before minority interest 166,788 145,653 124,219
Minority interest (72) (67) (184)
- --------------------------------------------------------------------------------------------
Net income $ 166,716 $ 145,586 $ 124,035
============================================================================================
Earnings per common share (Based upon weighted
average common shares outstanding) $ 1.33 $ 1.16 $ 0.99
- --------------------------------------------------------------------------------------------
Dividends per common share (Note 3) $ 0.06 $ 0.05 $ 0.02
- --------------------------------------------------------------------------------------------
Weighted average common shares outstanding (Note 3) 125,689 125,931 125,019
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
32 - MOLEX 1997 ANNUAL REPORT
<PAGE> 11
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the year ended June 30,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock
Balance at beginning of period $ 2,619 $ 2,075 $ 1,646
Exercise of stock options 23 23 16
Stock split effected in the form of a dividend 661 521 413
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period 3,303 2,619 2,075
Class A Common Stock
Balance at beginning of period 2,627 2,097 1,637
Exercise of stock options -- -- 1
Purchase of business -- 6 49
Stock split effected in the form of a dividend 656 524 410
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period 3,283 2,627 2,097
Class B Common Stock
Balance at beginning and end of period 5 5 5
Paid-in capital
Balance at beginning of period 116,510 101,534 56,464
Exercise of stock options 5,947 6,822 4,493
Disposition of treasury stock 203 920 1,112
Stock options granted 8,655 4,396 9,983
Stock option cancellations (955) -- --
Purchase of business 1,672 3,516 30,420
Issuance of stock bonus 550 367 --
Stock split effected in the form of a dividend (1,317) (1,045) (938)
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period 131,265 116,510 101,534
Retained earnings
Balance at beginning of period 989,928 850,533 729,547
Net income 166,716 145,586 124,035
Cash dividends (6,924) (6,191) (3,049)
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period 1,149,720 989,928 850,533
Treasury stock
Balance at beginning of period (62,726) (35,749) (31,749)
Purchase of treasury stock (31,918) (26,662) (3,712)
Exercise of stock options (917) (1,049) (898)
Purchase of business 484 -- --
Disposition of treasury stock 583 734 610
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period (94,494) (62,726) (35,749)
Deferred unearned compensation
Balance at beginning of period (13,583) (13,771) (7,223)
Stock options granted (8,655) (4,396) (9,983)
Stock option cancellations 682 -- --
Amortization of deferred unearned compensation 5,057 4,584 3,435
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period (16,499) (13,583) (13,771)
Cumulative translation and other adjustments
Balance at beginning of period 95,891 200,544 131,287
Net effect of translation adjustment (36,962) (104,653) 69,257
Unrealized investment gain 400 -- --
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of period 59,329 95,891 200,544
- ----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity $ 1,235,912 $ 1,131,271 $ 1,107,268
======================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
MOLEX 1997 ANNUAL REPORT - 33
<PAGE> 12
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the year ended June 30,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and cash equivalents, beginning of period $ 242,779 $ 253,552 $ 220,681
Cash and cash equivalents were provided from (used for):
Operations:
Net income 166,716 145,586 124,035
Add (deduct) non-cash items included in net income:
Depreciation and amortization 138,675 119,909 104,857
Deferred income taxes (13,671) (4,629) (603)
Gain on sale of property, plant and equipment (236) (361) (51)
Minority interest 72 67 184
Amortization of deferred unearned compensation 5,057 4,584 3,435
Amortization of deferred investment grants (486) (289) (187)
Other (credits) charges to earnings net (1,552) (1,055) (553)
Current items:
Accounts receivable (78,645) (19,533) (35,289)
Inventories (23,334) (12,355) (23,705)
Prepaid expenses (1,062) (4,451) (257)
Accounts payable 31,143 15,784 16,846
Accrued expenses 25,842 12,878 15,482
Income taxes 26,833 (2,903) 20,455
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided from operations 275,352 253,232 224,649
- ------------------------------------------------------------------------------------------------------------------------
Investments:
Purchases of property, plant and equipment (208,558) (222,389) (186,877)
Proceeds from sale of property, plant and equipment 3,104 3,860 3,041
Purchases of businesses, net of cash acquired -- (1,677) (16,338)
Proceeds from sale of marketable securities 2,179,269 1,921,024 1,454,008
Purchases of marketable securities (2,260,518) (1,901,504) (1,456,834)
Increase in other assets 8,693 (10,290) (1,329)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for investments (278,010) (210,976) (204,329)
- ------------------------------------------------------------------------------------------------------------------------
Financing:
Increase in investment grants 1,067 787 --
Decrease in long-term debt (857) (987) (945)
Increase in long-term debt 654 269 --
Cash dividends paid (6,924) (5,556) (2,998)
Exercise of stock options 5,053 5,796 2,992
Purchase of treasury stock (31,918) (26,662) (3,712)
Disposition of treasury stock 786 1,654 1,722
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for financing (32,139) (24,699) (2,941)
- ------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (8,215) (28,330) 15,492
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (43,012) (10,773) 32,871
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 199,767 $ 242,779 $ 253,552
========================================================================================================================
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 628 $ 1,140 $ 931
Income taxes $ 72,372 $ 78,611 $ 70,251
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
34 - MOLEX 1997 ANNUAL REPORT
<PAGE> 13
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 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 12 months. Gross
unrealized holding gains and losses are not material as of June 30, 1997 and
1996.
(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 consist of the following:
1997 1996
- -----------------------------------------------------------------
Raw materials $ 38,335 $ 33,841
Work in progress 55,309 54,687
Finished goods 73,016 59,084
- -----------------------------------------------------------------
$ 166,660 $ 147,612
=================================================================
(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:
Buildings 25-45 years
Machinery and equipment 3-10 years
Molds and dies 3-4 years
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 $89,450 in 1997; $85,484 in 1996; and $78,092 in
1995.
Included in these totals are patent costs of $5,607; $6,739; and $4,895
for the years ended June 30, 1997, 1996 and 1995, 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) New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
effective for fiscal and interim periods ending after December 15, 1997. This
statement replaces primary Earnings Per Share (EPS) with basic EPS. Basic EPS
is computed by dividing net income by the weighted average number of common
shares outstanding during the period. Diluted EPS, formerly fully diluted EPS,
must be presented in all cases with basic EPS. Basic and diluted EPS for the
year ended June 30, 1997 would not be materially different than the primary
EPS presented in the Consolidated Statements of Income.
In June 1997 FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," both of which are effective for fiscal years
MOLEX 1997 ANNUAL REPORT - 35
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
beginning after December 15, 1997. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components. SFAS No. 131
establishes standards for reporting information about operating segments and
related disclosures about products and services, geographic areas and major
customers. The requirements of both statements only impact financial statement
disclosure. Accordingly, these statements will not have a material impact on
the Company's financial position or the results of its operations.
(L) Reclassifications
Certain reclassifications have been made to the prior years' financial
statements in order to conform to the 1997 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 continues 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, 1997.
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 August 2, 1995 and February 10, 1997, the Board of Directors declared
25 percent 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 August 1995
stock dividend was distributed on September 15, 1995 to shareholders of record
as of August 25, 1995. The February 1997 stock dividend was distributed on
April 25, 1997 to shareholders of record as of March 31, 1997. 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
The details relative to long-term debt are as follows:
1997 1996
- --------------------------------------------------------------
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
- --------------------------------------------------------------
7,350 7,553
Less current portion - 103
- --------------------------------------------------------------
Long-term portion $ 7,350 $ 7,450
==============================================================
The long-term portion as of June 30, 1997 is due 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:
1997 1996 1995
- --------------------------------------------------------------
United States $ 75,014 $ 68,713 $ 52,740
International 187,355 160,240 161,752
- --------------------------------------------------------------
$ 262,369 $ 228,953 $ 214,492
==============================================================
Income tax provisions are as follows:
1997 1996 1995
- --------------------------------------------------------------
Currently payable:
U.S. federal $ 33,397 $ 22,480 $ 21,685
State 4,952 4,152 3,130
International 70,903 61,152 66,350
- --------------------------------------------------------------
109,252 87,784 91,165
- --------------------------------------------------------------
Deferred:
United States (8,843) (4,049) (307)
International (4,828) (435) (585)
- --------------------------------------------------------------
(13,671) (4,484) (892)
- --------------------------------------------------------------
Total provision for
income taxes $ 95,581 $ 83,300 $ 90,273
==============================================================
36 - MOLEX 1997 ANNUAL REPORT
<PAGE> 15
The Company's tax rate differs from the U.S. federal income tax rate as follows:
1997 1996 1995
- -------------------------------------------------------------------------
U.S. federal income tax rate 35.0% 35.0% 35.0%
Certain tax exemptions (4.0) (3.9) (3.8)
State income taxes,
net of federal tax benefit 1.2 1.2 1.0
International tax rates
different from U.S. federal rate 4.2 4.1 9.9
- -------------------------------------------------------------------------
36.4% 36.4% 42.1%
=========================================================================
Net deferred taxes arise from temporary differences as follows:
1997 1996
- ---------------------------------------------------------------------------
International/local taxes $ 6,892 $ 4,084
Employee benefit plans 13,135 8,562
Depreciation and amortization (9,074) (8,110)
Allowance for doubtful accounts 1,979 1,682
Inventory reserves 3,198 2,677
Inventory - other 5,170 4,318
Investments 3,647 1,159
Other deferred items 9,639 7,336
- ---------------------------------------------------------------------------
$34,586 $21,708
===========================================================================
The net deferred tax accounts reported on the balance sheet as of June
30 are as follows:
1997 1996
- ---------------------------------------------------------------------------
Net deferred:
Current asset $35,801 $22,562
Long-term asset 10,430 10,502
Current liability (228) (370)
Long-term liability (11,417) (10,986)
- ---------------------------------------------------------------------------
$34,586 $21,708
===========================================================================
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 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 Company's U.S. 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 1997, 1996
and 1995 included the following components:
1997 1996 1995
- ------------------------------------------------------------------------------
Service cost, benefits attributed
to employee service during the period $ 668 $ 573 $ 515
Interest cost on accumulated
postretirement benefit obligation 563 538 422
Unrecognized prior service cost (374) (515) (354)
Unrecognized net gain 171 295 118
- ------------------------------------------------------------------------------
Net periodic postretirement benefit cost $1,028 $ 891 $ 701
==============================================================================
The following table sets forth the plans' combined status as
of June 30:
1997 1996
- ---------------------------------------------------------------------------
Accumulated postretirement
benefit obligation (APBO):
Retirees and beneficiaries $ 1,210 $ 801
Active employees 7,318 7,320
- ---------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 8,528 8,121
Fair value of plan assets -- --
- ---------------------------------------------------------------------------
Unfunded accumulated benefit
obligation in excess of plan assets 8,528 8,121
Unrecognized prior service cost 2,585 1,907
Unrecognized net loss (997) (915)
- ---------------------------------------------------------------------------
Accrued postretirement benefit costs $10,116 $ 9,113
===========================================================================
The discount rate used in determining the APBO was 7.5 percent at
June 30, 1997, and 7.0 percent at June 30, 1996 and 7.5 percent at June 30,
1995. The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 7.6 percent in 1997, declining per year to
an ultimate rate of 5.0 percent by 2017. 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 1.0
percent in each year would increase the APBO as of June 30, 1997 by $1,476 and
the aggregate of the service and interest cost components of the net periodic
postretirement benefit cost for the year then ended by $249.
MOLEX 1997 ANNUAL REPORT - 37
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(7) PENSION AND PROFIT SHARING PLANS
The Company sponsors and/or contributes to pension plans, including defined
benefit plans, covering substantially all U.S. hourly employees and certain
employees in international subsidiaries. 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 $6,633 in 1997, $6,330 in 1996 and $6,044 in 1995. Net
periodic pension expense for the Company's defined benefit plans consists of
the following for the year ended June 30:
<TABLE>
<CAPTION>
1997 1997 1996 1996 1995 1995
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Int'l U.S. Int'l U.S. Int'l
Plans Plans Plans Plans Plans Plans
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service costs $ 856 $2,642 $ 597 $2,541 $ 515 $2,211
Interest costs on projected
benefit obligation 655 1,448 560 1,343 487 1,356
Actual return on plan assets (641) (860) (500) (793) (207) (585)
Net amortization and deferral 340 (17) 215 75 (99) 343
- ------------------------------------------------------------------------------------------------------------------------------------
Net periodic pension expense $1,210 $3,213 $ 872 $3,166 $ 696 $3,325
====================================================================================================================================
</TABLE>
The funded status for the Company's defined benefit plans is as follows:
<TABLE>
<CAPTION>
1997 1997 1996 1996
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Int'l U.S. Int'l
Plans Plans Plans Plans
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
- ------------------------------------------------------------------------------------------------------------------------------------
Vested benefit obligation $ 7,058 $ 20,216 $ 7,006 $ 16,497
Nonvested benefit obligation 447 162 296 108
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 7,595 20,378 7,302 16,605
Projected benefit obligation 10,180 29,711 9,987 26,642
Plans assets at fair value 9,529 11,945 8,998 10,238
- ------------------------------------------------------------------------------------------------------------------------------------
Plans assets in excess of (less than) projected
benefit obligation (651) (17,766) (989) (16,404)
Unrecognized net transition liability 287 56 397 62
Unrecognized prior service costs 1,969 -- 2,200 --
Unrecognized net gain (389) 1,318 (732) 654
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued pension asset (liability) included
in the consolidated balance sheet $ 1,216 $(16,392) $ 876 $(15,688)
====================================================================================================================================
</TABLE>
The assumption used in computing the above information are presented
below:
<TABLE>
<CAPTION>
1997 1997 1996 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Int'l Int'l
Plans Plans
U.S. (weighted U.S. (weighted
Plans average) Plans average)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rates 7.5% 5.2% 7.0% 5.4%
Rates of increase in compensation 4.5% 4.0% 4.5% 4.3%
Expected long-term rates of return on
plan assets 7.5% 7.5% 7.0% 8.5%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The 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 $7,226, $6,611 and $5,626 were
charged to operations during 1997, 1996, and 1995, respectively.
38 - MOLEX 1997 ANNUAL REPORT
<PAGE> 17
(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, 1997 are $7,003
in 1998; $4,683 in 1999; $2,765 in 2000; $1,921 in 2001; $1,375 in 2002; and
$17,037 thereafter, totaling $34,784.
Rental expense was $8,541 in 1997; $9,961 in 1996; and $11,132 in 1995.
(9) STOCK OPTION PLANS
The Company has two stock option plans currently in effect under which future
grants may be issued: the 1990 Stock Option Plan (the "1990 Plan") and the 1991
Stock Option Plan (the "1991 Plan").
1990 Plan: The most significant terms of this plan provide that (1)
options may be granted for 3.7 million shares of Common Stock and (2) the
option price shall be fifty percent of the fair market value of the stock of
the Company on the date of grant. The option term is five to nine years from
the date of the grant.
Stock option transactions relating to the 1990 Plan are summarized as
follows:
Wtd. Avg.
Shares Price
(in thousands) Per Share
- -----------------------------------------------------------------
Outstanding at 6/30/95 2,059 $ 8.66
Granted 348 12.85
Exercised 429 6.38
Canceled 63 9.17
- -----------------------------------------------------------------
Outstanding at 6/30/96 1,915 $ 9.92
Granted 575 14.69
Exercised 410 8.25
Canceled 81 11.00
- -----------------------------------------------------------------
Outstanding at 6/30/97 1,999 $ 11.60
Options exercisable at 6/30/96 423 7.83
Options exercisable at 6/30/97 403 9.24
- -----------------------------------------------------------------
Under the 1990 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 1997, $5,057 was charged to
operations ($4,584 in 1996 and $3,435 in 1995).
1991 Plan: The most significant terms of this plan provide that (1) options may
be granted for 2.4 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 option
term is five to eleven years from the date of the grant.
Stock option transactions relating to the 1991 Plan are summarized as
follows:
Wtd. Avg.
Shares Price
(in thousands) Per Share
- -----------------------------------------------------------------
Outstanding at 6/30/95 660 $ 16.21
Granted 94 27.51
Exercised 71 14.36
Canceled 10 18.42
- -----------------------------------------------------------------
Outstanding at 6/30/96 673 $ 17.95
Granted 316 28.74
Exercised 115 14.11
Canceled 11 22.65
- -----------------------------------------------------------------
Outstanding at 6/30/97 863 $ 22.35
Options exercisable at 6/30/96 181 14.47
Options exercisable at 6/30/97 167 17.28
- -----------------------------------------------------------------
In fiscal 1997 the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation." As provided by SFAS No. 123, the Company has elected to
continue to account for its stock-based compensation programs according to the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." The Company has adopted the disclosure provisions
required by SFAS No. 123. Had the Company elected to apply the provisions of
SFAS No. 123 regarding recognition of compensation expense to the extent of the
calculated fair value of stock options granted in 1996 and 1997, the effects on
reported net income and earnings per common share would have been as follows:
1997 1996
- -----------------------------------------------------------------
Net income, as reported $166,716 $145,586
Pro forma net income 166,133 145,312
Earnings per share, as reported 1.33 1.16
Pro forma earnings per share 1.32 1.15
- -----------------------------------------------------------------
For purpose of the SFAS No. 123 pro forma net income and earnings per common
share calculation, the fair value of each option grant is estimated as of the
date of grant using the Black-Scholes option pricing model with the following
assumptions:
1997 1996
- -----------------------------------------------------------------
Dividend yield 0.2% 0.2%
Expected volatility 30.25% 31.45%
Risk-free interest rate 6.07-6.54% 5.21-6.18%
Expected life of option (years) 3.01-10.50 3.01-10.62
- -----------------------------------------------------------------
MOLEX 1997 ANNUAL REPORT - 39
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table summarizes information about options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------- -----------------------
Wtd. Avg.
Range of Remaining Wtd. Avg. Wtd. Avg.
Exercise Number Life of Exercise Number Exercise
Prices Outstanding Contract Price Exercisable Price
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0 to 10 346,036 0.9 yrs. $ 8.05 242,172 $ 7.91
10 to 15 1,493,488 2.9 yrs. 11.91 216,890 11.76
15 to 20 550,693 4.5 yrs. 16.16 64,056 16.13
20 to 33 471,984 7.2 yrs. 27.45 46,420 23.72
--------- -------
2,862,201 569,538
========= =======
</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
1997 Revenue Revenue Total
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 503,576 $ 55,257 $ 558,833
Americas (Non-U.S.) 69,970 3,149 73,119
Far East North 363,605 127,943 491,548
Far East South 302,305 33,213 335,518
Europe 299,771 23,798 323,569
Other 485 4,000 4,485
Eliminations -- (247,360) (247,360)
- --------------------------------------------------------------------
Consolidated $1,539,712 -- $1,539,712)
====================================================================
</TABLE>
<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 251,063 29,016 280,079
Europe 282,164 18,450 300,614
Other 51 40,213 40,264
Eliminations -- (235,243) (235,243)
- --------------------------------------------------------------------
Consolidated $1,382,673 -- $1,382,673
====================================================================
</TABLE>
<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 216,749 24,175 240,924
Europe 230,248 11,874 242,122
Other 55 41,339 41,394
Eliminations -- (213,068) (213,068)
- --------------------------------------------------------------------
Consolidated $1,197,747 -- $1,197,747
====================================================================
</TABLE>
Net income by geographic area is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 48,517 $ 43,773 $ 34,655
Americas (Non-U.S.) 6,621 5,492 3,209
Far East North 46,560 41,592 50,623
Far East South 51,711 39,193 35,956
Europe 28,072 21,039 22,200
Other (14,838) (5,097) (22,782)
Eliminations 73 (406) 174
- --------------------------------------------------------------------
Consolidated $ 166,716 $ 145,586 $ 124,035
====================================================================
</TABLE>
Identifiable assets by geographic area are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- --------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 563,721 $ 475,207 $ 423,971
Americas (Non-U.S.) 39,224 27,018 18,395
Far East North 477,799 440,438 543,557
Far East South 283,022 245,280 210,888
Europe 256,972 239,236 211,415
Other 80,060 56,318 54,419
Eliminations (63,867) (22,498) (21,625)
- --------------------------------------------------------------------
Consolidated $1,636,931 $1,460,999 $1,441,020
====================================================================
</TABLE>
Intercompany net revenue is 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 1997,
1996 and 1995, no customer accounted for more than 10% of consolidated net
revenue.
(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. Therefore, pro forma financial data is
not presented. Such transactions are accounted for as purchases and,
accordingly, any 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.
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.
On June 6, 1997, the Company issued 59,477 shares of Class A Common
Stock to holders of a class of securities in a subsidiary of the Company in
exchange for all of the shares of that class of securities owned by such
holders.
40 - MOLEX 1997 ANNUAL REPORT
<PAGE> 19
FISCAL 1997, 1996 AND 1995 BY QUARTER
(IN THOUSANDS, EXCEPT PER SHARE DATA-UNAUDITED)
<TABLE>
<CAPTION>
Quarter 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue 1st $ 359,595 $ 338,176 $ 268,899
2nd 377,005 344,483 274,961
3rd 387,053 347,065 305,755
4th 416,059 352,949 348,132
Gross profit 1st 142,826 136,878 115,475
2nd 153,053 136,938 116,466
3rd 158,340 138,294 127,697
4th 175,035 143,174 146,059
Income before income taxes and minority interest 1st 58,639 57,070 48,374
2nd 63,137 57,303 47,861
3rd 67,964 57,365 54,328
4th 72,628 57,215 63,929
Income taxes 1st 22,777 21,856 20,957
2nd 22,925 22,228 19,884
3rd 24,751 21,244 22,504
4th 25,128 17,972 26,928
Net income 1st 35,855 35,157 27,354
2nd 40,197 35,057 27,910
3rd 43,190 36,123 31,794
4th 47,473 39,249 36,977
Earnings per common share(1) 1st 0.29 0.28 0.22
2nd 0.32 0.28 0.22
3rd 0.34 0.29 0.25
4th 0.38 0.31 0.30
LOW HIGH LOW HIGH LOW HIGH
- -----------------------------------------------------------------------------------------------------------------------------
National Market System
Price of Stock: Common Stock(1) 1st 22 30 13/64 21 41/64 29 19/64 19 13/64 22 1/2
2nd 28 13/32 31 51/64 24 13/32 29 19/32 19 51/64 23
3rd 28 32 21 51/64 29 19 51/64 23 19/64
4th 27 39 1/2 24 13/64 29 19/64 22 19/32 25 3/32
Class A Common Stock(1) 1st 20 19/64 27 13/32 23 13/64 27 19/32 18 13/32 21
2nd 25 45/64 29 13/32 23 13/64 27 13/32 18 13/64 21 19/32
3rd 26 13/64 30 13/64 22 13/64 27 51/64 30 29/32 22 13/64
4th 26 13/64 37 5/8 22 27 21 19/64 24
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Restated for the following 25% stock dividends: February, 1997;
August, 1995; November, 1994.
MOLEX 1997 ANNUAL REPORT - 41
<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.) 95.0%
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 34.0%
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 95.0%
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%
</TABLE>
<PAGE> 2
<TABLE>
<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 30.8%
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
[DELOITTE &
TOUCHE LLP LETTERHEAD]
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,
33-37683 and 333-141777) of Molex Incorporated and its subsidiaries on Form S-8
of our reports dated July 22, 1997, 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, 1997.
/S/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Chicago, Illinois
September 23, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MOLEX
INC. ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 199,767
<SECURITIES> 125,570
<RECEIVABLES> 346,936
<ALLOWANCES> (14,586)
<INVENTORY> 166,660
<CURRENT-ASSETS> 873,614
<PP&E> 1,415,898
<DEPRECIATION> (750,430)
<TOTAL-ASSETS> 1,636,931
<CURRENT-LIABILITIES> 342,026
<BONDS> 7,350
0
0
<COMMON> 6,591
<OTHER-SE> 1,229,321
<TOTAL-LIABILITY-AND-EQUITY> 1,636,931
<SALES> 1,539,712
<TOTAL-REVENUES> 1,539,712
<CGS> 910,457
<TOTAL-COSTS> 377,316
<OTHER-EXPENSES> 25
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,405)
<INCOME-PRETAX> 262,369
<INCOME-TAX> 95,581
<INCOME-CONTINUING> 166,788
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166,716
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
