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, 1999 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 27, 1999, the following numbers of shares of the Company's common
stock were outstanding:
Common Stock 78,506,562
Class A Common Stock 78,302,173
Class B Common Stock 94,255
The aggregate market value of the voting shares (based on the closing price of
these shares on the National Association of Securities Dealers Automated
Quotation System on such date) held by non-affiliates was approximately
$1.3 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended June 30, 1999,
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 22, 1999 are incorporated by reference into Part III of this
report.
Index to Exhibits listed on Pages 20 through 21.
1
TABLE OF CONTENTS
Part I Page
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Part II
Item 5. Market for the Registrant's Common Equity and 9
Related Stockholder Matters
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Item 7a. Quantitative and Qualitative Disclosures About 10
Market Risk
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on 10
Accounting and Financial Disclosure
Part III
Item 10. Directors and Executive Officers of the Registrant 11
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners 13
and Management.
Item 13. Certain Relationships and Related Transactions 13
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports 14
on Form 8-K
Independent Auditors' Report on Schedule 16
Statements of Changes in Shares Outstanding 17
Schedule II - Valuation and Qualifying Accounts 18
Index to Exhibits 19
Signature Page 21
2
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; value-added assemblies; and
application tooling. The Company operates 50 plants in 21 countries and
employs 14,700 people worldwide. In fiscal 1999, products manufactured and
sold outside the U.S. generated 66% of sales.
Molex serves original equipment manufacturers in industries that include
automotive, computer, computer peripheral, business equipment,
telecommunications, consumer products and premise wiring. The Company 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 6.3%
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:
3
Percentage of
Fiscal 1999
Market Net Revenue Products
Computer/business equipment/ 56% Computers, peripheral
telecommunications equipment, calculators,
copiers, pagers and
dictation equipment
Consumer Products 19% 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 10% Electronic medical
equipment, vending
machines, security
equipment and modular
office furniture and
premise wiring
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 1999, 1998 or 1997. 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 toward the
use of fewer vendors.
4
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 50 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
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, 1999, the Company owned 702 United States patents and had 273
patent applications on file with the United States Patent Office. The Company
also has 2,184 corresponding patents issued and 3,225 applied for in other
countries as of June 30, 1999. 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, 1999 was approximately $243.4
million; this compares to $231.0 million at June 30, 1998. 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 $105.9 million in 1999,
$93.9 million in 1998, and $89.5 million in 1997. The Company incurred costs
relating to obtaining patents of $5.2 million in 1999, $5.4 million in 1998,
and $5.6 million in 1997 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
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, 1999, the Company employed 14,700 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, 1999 was approximately 66% 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 9 on page 49 of the 1999 Annual Report to Shareholders
and is incorporated herein by reference.
7
Item 2 - Properties
Molex owns and leases manufacturing, warehousing and office space in several
locations around the world. The total square footage of these facilities is
presented below:
Owned Leased Total
3,303,151 1,912,428 5,215,579
The leases are of varying terms with expirations ranging from fiscal 1999
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:
Australia Ireland Republic of Korea
Melton, Victoria Millstreet Town Ansan City (2)
Shannon
Brazil Singapore
Manaus Italy Jurong Town
Sao Paulo Padova
South Africa
Canada Japan Midrand
Scarborough, Ontario Kagoshima
Okayama Taiwan
China (P.R.C.) Shioya Taipei
Dongguan Shizuoka
Shanghai Yamato Thailand
Bangkok
England Malaysia
Southhampton Perai, Penang United States
Auburn Hills, Michigan (2)
Mexico Maumelle, Arkansas (2)
France Guadalajara Manchester, New Hampshire
Chateau Gontier Magdalena Orange, California
Nogales (2) Pinellas Park, Florida
Germany St. Petersburg, Florida
Biberach Poland Downers Grove, Illinois
Ettlingen Starogard Lisle, Illinois
Naperville, Illinois (2)
India Puerto Rico Mooresville, Indiana
Bangalore Ponce Lincoln, Nebraska (3)
Gandhinagar
8
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.
PART II
Item 5 - Market for the Registrant's Common Equity and Related Stockholder
Matters
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 caption "Fiscal 1999, 1998, and 1997 by Quarter
(Unaudited)" on page 50 of the 1999 Annual Report to Shareholders is
incorporated herein by reference.
The following table presents quarterly dividends per common share for
the last two fiscal years. The fiscal 1998 dividends per share have
been restated for the 25% stock dividend issued in November, 1997.
Class A
Common Stock Common Stock
Fiscal 1999 Fiscal 1998 Fiscal 1999 Fiscal 1998
Quarter Ended -
September 30, 0.0150 0.0120 0.0150 0.0120
December 31, 0.0150 0.0150 0.0150 0.0150
March 31, 0.0150 0.0150 0.0150 0.0150
June 30, 0.0150 0.0150 0.0150 0.0150
Total 0.0600 0.0570 0.0600 0.0570
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 44 of
the 1999 Annual Report to Shareholders and is incorporated herein by reference.
On June 16, 1999, The Company acquired Cardell Corporation, an automotive
terminal and connector manufacturer. In connection with this acquisition,
the former shareholders of Cardell received 2.3 million shares of Molex
Common Stock (MOLX), approximate market value $69.4 million, which were exempt
from registration under Section 4(2) of the Securities Act of 1933.
9
Item 6 - Selected Financial Data
The information set forth under the caption "Ten Year Financial Highlight
Summary" (only the five years in the period ended June 30, 1999) on page 31 of
the 1999 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 32 through 36 of the
1999 Annual Report to Shareholders is incorporated herein by reference.
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
The information set forth under the caption "Quantitative and Qualitative
Disclosures About Market Risk" on page 36 of the 1999 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 38 through 49 of the 1999 Annual Report to Shareholders and the
independent auditors' report set forth on page 37 of the 1999 Annual Report
to Shareholders are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets - June 30, 1999 and 1998
Consolidated Statements of Income for the years ended June 30, 1999, 1998
and 1997
Consolidated Statements of Shareholders' Equity for the years ended June 30,
1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended June 30, 1999, 1998
and 1997
Notes to Consolidated Financial Statements
The supplementary data regarding quarterly results of operations, set forth
under the caption "Fiscal 1999, 1998, and 1997 by Quarter (Unaudited)" on page
50 of the 1999 Annual Report to Shareholders, is incorporated herein by
reference.
The statement of changes in shares outstanding appears on Page 19 of this Form
10-K.
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
10
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
22, 1999 (the "Company's 1999 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 below.
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.
Year
Employed
Positions Held with Registrant by
Name During the Last Five Years (a) Age Registrant
Frederick A. Krehbiel(b) Co-Chairman and Co-Chief 58 1965(c)
Executive Officer (1999-);
Chairman (1993-1999) and Chief
Executive Officer (1988-1999).
John H. Krehbiel, Jr.(b) Co-Chairman and Co-Chief 62 1959(c)
Executive Officer (1999-);
President (1975-1999) and Chief
Operating Officer (1996-1999).
J. Joseph King President and Chief Operating 55 1975
Officer (1999-); Executive
Vice President (1996-1999); Group
Vice President-International
Operations (1988-1996).
Martin P. Slark Executive Vice President (1999-); 44 1976
Corporate Vice President
(1990-1999) and President,
Americas (1996-1999);
President, U.S. (1994-1996).
Raymond C. Wieser Senior Vice President (1999-); 60 1965(c)
Senior Vice President, Americas
(1996-1999); Corporate Vice
President and President,
Commercial Division-U.S.
Operations (1994-1996).
11
Year
Employed
Positions Held with Registrant by
Name During the Last Five Years (a) Age Registrant
Robert B. Mahoney Corporate Vice President, 46 1995
Treasurer and Chief Financial
Officer (1996-); Vice President
(1994-1995) and Corporate
Controller (1990-1995) of
National Semiconductor Corporation.
Ronald L. Schubel Corporate Vice President (1982-) 56 1981
and President, Americas (1999-);
President, Far East South
(1994-1998); President, Commercial
Division-U.S. Operations
(1982-1994).
Werner W. Fichtner Corporate Vice President 56 1981
(1987-) and President,
Europe (1981-).
Goro Tokuyama Corporate Vice President 65 1985
(1990-)and President,
Far East North (1988-), and
President of Molex Japan Co.,
Ltd. (1985-).
James E. Fleischhacker Corporate Vice President 55 1984
(1994-) and President,
Far East South (1998-); President,
DataComm Division-Americas
(1989-1998).
Kathi M. Regas Corporate Vice President (1994-); 43 1985
Director, Human Resources
U.S. Operations (1989-1995).
Louis A. Hecht Corporate Secretary (1977-) and 55 1974
General Counsel (1975-).
__________________________________________________________________________
(a) All positions are with Registrant unless otherwise stated.
(b) 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.
(c) Includes period employed by Registrant's predecessor.
12
Item 11 - Executive Compensation
The information under the caption "Executive Compensation" in the Company's
1999 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 1999 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 1999 Proxy Statement is herein incorporated by
reference.
13
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
1999 Annual Report to Shareholders have been incorporated by reference in
Item 8.
Page(s) in
Annual Report
Item to Shareholders
Independent Auditors' Report 37
Consolidated Balance Sheets - June 30, 1999
and 1998 38-39
Consolidated Statements of Income - for
the years ended June 30, 1999, 1998 and 1997 40
Consolidated Statements of Shareholders' Equity -
for the years ended June 30, 1999, 1998 and 1997 41
Consolidated Statements of Cash Flows - for the
years ended June 30, 1999, 1998 and 1997 42
Notes to Consolidated Financial Statements 43-49
Fiscal 1999, 1998 and 1997 by Quarter (Unaudited) 50
(a) 2. Financial Statement Schedule
Page in the
Form 10-K
Independent Auditors' Report 16
Statement of Changes in Shares Outstanding
for the years ended June 30, 1999, 1998 and 1997 17
Schedule II - Valuation and Qualifying Accounts 18
14
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, 1999.
15
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, 1999 and 1998, and for each of the three
years in the period ended June 30, 1999, and have issued our report thereon
dated July 28, 1999; such financial statements and report are included in your
1999 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 subsdidiaries,
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
Chicago, Illinois
July 28, 1999
16
<TABLE>
<CAPTION>
Molex Incorporated
Statements of Changes in Shares Outstanding
For the Years Ended June 30, 1999, 1998, and 1997
Class A Class B
Common Common Common Treasury
Stock Stock Stock Stock
___________ ___________ __________ ___________
<S> <C> <C> <C> <C>
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
Purchase of business (59,477)
Stock splits effected in the form
of dividends 13,214,185 13,130,067 1,164,575
Other 11,856 (11,856) (40,933)
___________ ___________ __________ ___________
Shares outstanding at
June 30, 1997 66,053,711 65,658,150 94,255 6,327,425
Exercise of stock options 588,395 24,744
Purchase of treasury stock 1,540,000
Disposition of treasury stock 26,131 (59,814)
Stock splits effected in the form
of dividends 16,593,237 16,414,537 1,699,612
___________ ___________ __________ ___________
Shares outstanding at
June 30, 1998 83,261,474 82,072,687 94,255 9,531,967
Exercise of stock options 584,849 76,402
Purchase of treasury stock 1,707,323
Disposition of treasury stock (76,424)
Purchase of business 2,261,320
Issuance of stock bonus 41,118
Other (15,795)
___________ ___________ __________ ___________
Shares outstanding at
June 30, 1999 86,132,966 82,072,687 94,255 11,239,268
=========== =========== ========== ==========
</TABLE>
17
<TABLE>
<CAPTION>
Molex Incorporated
Schedule II - Valuation and Qualifying Accounts
For the Years Ended June 30, 1999, 1998, and 1997
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>
1999 $17,114
1998 $14,586 $3,707 ($644) ($535) $17,114
1997 $12,566 $3,019 ($488) ($511) $14,586
</TABLE>
18
MOLEX INCORPORATED EXHIBIT INDEX
Exhibit
Number Exhibit
3 3.1 Certificate of Incorporation
(as amended)(incorporated by reference to 1998
Form 10-K, Exhibit 3.1)
3.2 By-Laws (as amended)
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
(as amended)(incorporated by reference
to 1998 Form 10-K, Exhibit 10.2)
10.3 The 1990 Molex Incorporated
Stock Option Plan (as amended)
(incorporated by reference
to 1998 Form 10-K, Exhibit 10.3)
10.4 The 1991 Molex Incorporated Incentive
Stock Option Plan (as amended)
10.5 The 1998 Molex Incorporated
Stock Option Plan
13 Molex Incorporated Annual report to
Shareholders for the year ended
June 30, 1999. (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)
19
Exhibit
Number Exhibit
22 Subsidiaries of registrant
24 Independent Auditors' Consent
27 Financial Data Schedule
(All other exhibits are either inapplicable or not required)
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)
September 22, 1999 /S/ ROBERT B. MAHONEY
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 22, 1999 /S/ F. A. KREHBIEL
F. A. Krehbiel
Co-Chairman of the Board and
Co-Chief Executive Officer
September 22, 1999 /S/ J. H. KREHBIEL, JR.
J. H. Krehbiel, Jr.
Co-Chairman of the Board and
Co-Chief Executive Officer
September 22, 1999 /S/ J. JOSEPH KING
J. Joseph King
President and Chief Operating Officer
Director
September 22, 1999 /S/ ROBERT B. MAHONEY
Robert B. Mahoney
Corporate Vice President, Treasurer
and Chief Financial Officer
September 22, 1999 /S/ F. L. KREHBIEL
F. L. Krehbiel
Director
September 22, 1999 /S/ MICHAEL J. BIRCK
Michael J. Birck
Director
September 22, 1999 /S/ DOUGLAS K. CARNAHAN
Douglas K. Carnahan
Director
September 22, 1999 /S/ EDGAR D. JANNOTTA
Edgar D. Jannotta
Director
September 22, 1999 /S/ DONALD G. LUBIN
Donald G. Lubin
Director
September 22, 1999 /S/ MASAHISA NAITOH
Masahisa Naitoh
Director
September 22, 1999 /S/ DR. ROBERT J. POTTER
Dr. Robert J. Potter
Director
21
MOLEX INCORPORATED
RESTATEMENT OF BY-LAWS
(As of April 30, 1999)
TABLE OF CONTENTS
ARTICLE I. OFFICES. . . . . . . . . . . . . . . . . . .1
SECTION 1. PRINCIPAL OFFICE.. . . . . . . . . . . . . .1
SECTION 2. OTHER OFFICES. . . . . . . . . . . . . . . .1
ARTICLE II. STOCKHOLDERS . . . . . . . . . . . . . . . .1
SECTION 1. PLACE OF MEETING.. . . . . . . . . . . . . .1
SECTION 2. ANNUAL MEETING.. . . . . . . . . . . . . . .1
SECTION 3. SPECIAL MEETINGS.. . . . . . . . . . . . . .1
SECTION 4. NOTICE.. . . . . . . . . . . . . . . . . . .1
SECTION 5. ADJOURNED MEETINGS.. . . . . . . . . . . . .1
SECTION 6. QUORUM.. . . . . . . . . . . . . . . . . . .2
SECTION 7. VOTING.. . . . . . . . . . . . . . . . . . .2
SECTION 8. ACTION WITHOUT MEETING.. . . . . . . . . . .2
SECTION 9. STOCKHOLDER NOMINATIONS AND BUSINESS PROPOSALS.2
A. Annual Meetings of Stockholders.. . . . . . . . .2
1. Nominations and Business Proposals.. . . . .2
2. Notice to Corporation. . . . . . . . . . . .2
3. Increase in Number of Directors. . . . . . .3
B. Special Meetings of Stockholders. . . . . . . . .3
1. Nominations of Directors.. . . . . . . . . .3
2. Notice to Corporation. . . . . . . . . . . .3
C. General.. . . . . . . . . . . . . . . . . . . . .4
1. Acceptance of Nominations and Proposals. . .4
2. Compliance with Exchange Act.. . . . . . . .4
3. Definitions. . . . . . . . . . . . . . . . .4
ARTICLE III. DIRECTORS. . . . . . . . . . . . . . . . . .5
SECTION 1. NUMBER AND TENURE. . . . . . . . . . . . . .5
SECTION 2. VACANCIES. . . . . . . . . . . . . . . . . .5
SECTION 3. REGULAR MEETINGS.. . . . . . . . . . . . . .5
SECTION 4. SPECIAL MEETINGS.. . . . . . . . . . . . . .5
SECTION 5. NOTICE.. . . . . . . . . . . . . . . . . . .5
SECTION 6. QUORUM.. . . . . . . . . . . . . . . . . . .5
SECTION 7. ACTION WITHOUT MEETING.. . . . . . . . . . .5
SECTION 8. ACTION BY CONFERENCE TELEPHONE.. . . . . . .5
SECTION 9. COMMITTEES.. . . . . . . . . . . . . . . . .6
SECTION 10. COMPENSATION OF DIRECTORS. . . . . . . . . .6
ARTICLE IV. OFFICERS . . . . . . . . . . . . . . . . . .6
SECTION 1. NUMBER AND SALARIES. . . . . . . . . . . . .6
SECTION 2. ELECTION AND TERM OF OFFICE. . . . . . . . .6
SECTION 3. THE CHAIRMAN OF THE BOARD. . . . . . . . . .6
SECTION 4. THE PRESIDENT. . . . . . . . . . . . . . . .6
SECTION 5. THE VICE PRESIDENTS. . . . . . . . . . . . .7
SECTION 6. THE SECRETARY. . . . . . . . . . . . . . . .7
SECTION 7. THE TREASURER. . . . . . . . . . . . . . . .7
SECTION 8. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.7
SECTION 9. VICE CHAIRMAN OF THE BOARD.. . . . . . . . .7
SECTION 10. THE CHIEF EXECUTIVE OFFICER. . . . . . . . .7
ARTICLE V. CERTIFICATES OF STOCK. . . . . . . . . . . .7
SECTION 1. SIGNATURE BY OFFICERS. . . . . . . . . . . .7
SECTION 2. FACSIMILE SIGNATURES.. . . . . . . . . . . .8
SECTION 3. LOST CERTIFICATES. . . . . . . . . . . . . .8
SECTION 4. TRANSFER OF STOCK. . . . . . . . . . . . . .8
SECTION 5. FIXING OF RECORD DATE. . . . . . . . . . . .8
SECTION 6. REGISTERED STOCKHOLDERS. . . . . . . . . . .8
ARTICLE VI. CONTRACT, LOANS, CHECKS AND DEPOSITS . . . .8
SECTION 1. CONTRACTS. . . . . . . . . . . . . . . . . .8
SECTION 2. LOANS. . . . . . . . . . . . . . . . . . . .9
SECTION 3. CHECKS.. . . . . . . . . . . . . . . . . . .9
ARTICLE VII. DIVIDENDS . . . . . . . . . . . . . . . . . . . .9
SECTION 1. DECLARATION OF DIVIDENDS.. . . . . . . . . .9
SECTION 2. RESERVES.. . . . . . . . . . . . . . . . . .9
ARTICLE VIII. FISCAL YEAR . . . . . . . . . . . . . . . . . . .9
ARTICLE IX. WAIVER OF NOTICE . . . . . . . . . . . . . .9
ARTICLE X. SEAL . . . . . . . . . . . . . . . . . . . .9
ARTICLE XI. AMENDMENTS . . . . . . . . . . . . . . . . .9
MOLEX INCORPORATED
RESTATEMENT OF BY-LAWS
(As of April 30, 1999)
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.
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 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 A1 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 of 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 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 A2 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 by 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 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 A2 or B2 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.
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
twelve (12) 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 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 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.
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 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.
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.
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.
THE 1991 MOLEX INCORPORATED INCENTIVE STOCK OPTION PLAN
(As Amended and Restated as of October 23, 1998)
ARTICLE I. GENERAL
1.1 Name of Plan - The name of the plan described in detail herein shall be
The 1991 Molex Incorporated Incentive Stock Option Plan (the "Plan").
1.2 Purpose - The purpose of the Plan is to induce certain designated
employees and the directors to remain in the employ of Molex Incorporated, a
Delaware corporation (the "Company"), and any of its subsidiaries, and to
encourage such employees and directors to secure or increase on reasonable
terms their stock ownership in the Company. The Company believes the Plan will
promote continuity of management and increase incentive and personal interest
in the welfare of the Company by those who are primarily responsible for
shaping, carrying out the long-range plans of the Company and securing its
continued growth and financial success.
It is also the purpose of the Plan (except where otherwise noted) to be
qualified under Section 422(a) of the Internal Revenue Code, as amended.
Thus, all provisions of the Plan shall be interpreted and construed with this
goal in mind.
1.3 Eligibility - The following persons shall be eligible to receive a grant
under the Plan: any director or officer of Molex Incorporated.
ARTICLE II. TERM OF PLAN
2.1 Effective Date - The Plan shall become effective upon adoption by the
Board of Directors of the Company subject to the subsequent approval by the
stockholders of the Company within one (1) year of adoption by the Board of
Directors. If the stockholders do not approve the Plan within one (1) year of
adoption, then this Plan shall cease to exist and all options granted hereunder
shall become void.
2.2 Expiration - This Plan shall expire June 30, 2000 and no option shall be
granted on or after such expiration date. However, expiration of the Plan
shall not affect outstanding unexpired options previously granted.
ARTICLE III. STOCK SUBJECT TO PLAN
3.1 Class of Stock - The stock that shall be subject to option under the Plan
shall be Molex Incorporated Common Stock, par value $.05 per share (the
"Stock").
3.2 Number of Shares - Three million-fifty one thousand-seven hundred-fifty
seven (3,051,757) shares of the Stock shall be reserved for issue upon the
exercise of options granted under the Plan.
3.3 Expired, Forfeited or Canceled Options - If any such options granted under
the Plan shall expire, be forfeited or canceled for any reason without having
been exercised in full, the unexercised shares subject thereto shall again be
available for the purpose of the Plan.
ARTICLE IV. ADMINISTRATION
4.1 Committee - The Plan shall be administered by a committee (the "Committee")
under the terms and conditions and powers set forth herein
4.2 Makeup of the Committee - The Committee shall consist of two or more
members of the Board of Directors of the Company. The Committee shall be the
Compensation Committee of the Board of Directors or any other Board members
appointed by the Board of Directors.
4.3 Action by the Committee - A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be fully as
effective as if it had been made by a majority vote at a meeting duly called
and held.
4.4 Power to Grant Options - Subject to the express provisions of the Plan,
the Committee shall have complete authority, in its sole discretion, to
determine the employees to whom, and the time or times at which, options shall
be granted, the option periods, the vesting schedule and the number of shares
to be subject to each option, and such other terms and provisions of the option
agreements (which need not be identical). In making such determinations, the
Committee may take into account the nature of the services rendered by the
respective employee, his present and potential contribution to the Company's
success, and such other factors as the Committee in its discretion shall deem
relevant. The Committee shall have no power to grant options to directors or
to set the terms and conditions thereof.
4.5 Grants of Incentive Stock Option and Nonqualified Stock Options - The
Committee shall have complete authority, in its sole discretion, to determine
at the time an option is granted whether such option shall be an incentive
stock option qualified under Section 422 of the Internal Revenue Code, as
amended, ("ISO") or whether such option shall be a nonqualified stock option.
Unless the option agreement says otherwise, all options granted shall be ISOs.
The number of shares for which options may be granted to any one person in any
calendar year shall be limited and cannot exceed the following:
a. Overall Limitation - With respect to any option (whether ISOs or
nonqualified), ten percent (10%) of the number of shares
reserved for the Plan as set forth in paragraph 3.2 (adjusted as
set forth in Article IX) or two hundred-fifty thousand (250,000)
shares (adjusted as set forth in Article IX), whichever is less.
b. Incentive Stock Option - In addition, with respect to ISOs, the
number of shares which are subject to options that are first
exercisable in any given succeeding calendar year shall not have
a fair market value (as determined on the date of grant) that
exceeds:
- One Hundred Thousand Dollars ($100,000)
LESS
- the aggregate fair market value (as determined at the
respective times of their grants) of those shares of all
prior ISOs that are first exercisable in said succeeding
calendar year.
4.6 Automatic Grant of Options to Outside Directors - Notwithstanding
paragraphs 4.4 and 4.5, each director who is not an employee of the Company
shall receive only an automatic nondiscretionary stock option grant on the date
of the Annual Stockholders Meeting every year during the term of the Plan. Any
option granted to a director who is not an employee of the Company shall be a
nonqualified stock option. The amount of shares subject to the options that
will be automatically granted to each outside director or each year shall be
the amount of shares equal to 200 multiplied by the number of years of service
or fraction thereof that does not exceed 3,000 shares and whose fair market
value on the date of grant does not exceed $100,000.00. The amount of shares
shall increase to 500 multiplied by the number of years of service or fraction
thereof that does not exceed 3,000 shares and whose fair market value on the
date of grant does not exceed $100,000.00 if all of the following financial
conditions are met for the fiscal year immediately ended prior to the grant:
a. The Company's net profits (after taxes) are at least ten
percent (10%) of the net sales revenue as reported in the
audited financial statements; and
b. The Company's net sales revenue increase as compared to the
prior year's net sales revenue as reported in the audited
financial statements exceeds one and one-half (1.5) times
the "Worldwide Growth" of the general connector market as
determined by at least one outside independent connector
consultant. If more than one consultant is used, the average
growth shall be the Worldwide Growth. The disinterested
directors shall have the authority to choose the consultant
or consultants.
4.7 Other Powers - Subject to the express provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or advisable for the
administration of the Plan.
ARTICLE V. GRANT OF OPTION
5.1 Option Price - The option price shall be the fair market value of the
Stock on the date of granting the option. Notwithstanding, the foregoing, only
in the case of an ISO grant, if an optionee owns more than ten percent (10%) of
the voting power of all classes of the Company's Stock, then the option price
shall be one hundred-ten percent (110%) of the fair market value of the Stock
on the date of granting the option.
5.2 Fair Market Value - For the purposes of this Plan, fair market value shall
be the closing price of the Stock on the date of granting the option as
reported by the Wall Street Journal.
5.3 Evidence of Option - Options granted shall be evidenced by agreements,
warrants, and/or other instruments in such form as the Committee shall deem
advisable and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee.
ARTICLE VI. EXERCISE OF OPTION
6.1 Initial Waiting Period - No option shall be exercisable until at least
one (1) year after the date of grant unless one of the events set forth in
paragraph 6.4 occurs.
6.2 Vesting Periods - After the initial waiting period, an optionee may
exercise his option to the extent that shares covered by said option become
vested. The vesting schedule is as follows:
a. If an option grant is an ISO, or if an option is granted to a
director, the shares covered by such an option shall vest to the
maximum extent of 25% of the total number of shares covered
thereby during each of the succeeding four (4) years, each
commencing with the anniversary of the grant.
b. In all other options not falling within the scope of
subparagraph 6.2a, the shares covered by an option shall vest in
amounts and at times the Committee, in its sole discretion,
shall determine. The Committee shall also specifically have the
power to change the vesting schedule of any previously granted
options to a schedule which is more favorable to the option
holder; provided, however, that no such options shall vest in
amounts greater than, or at times prior to, the amounts and
times such options would have vested if such options were within
the scope of subparagraph 6.2a.
c. Notwithstanding the foregoing, all options must vest one hundred
percent (100%) within ten (10) years from the date of grant.
6.3 Cumulative Rights - The right to exercise any option as set forth in
paragraph 6.2 shall be cumulative. That is, an optionee may exercise in any
given year those unexpired shares he could have exercised in a previous year
but did not.
6.4 Accelerated Vesting - Notwithstanding the foregoing, all options shall
immediately vest and become immediately exercisable for a period of one (1)
year after one of the following events:
a. Death; or
b. Total disablement; or
c. Retirement, if all of the following conditions are met at the
time of termination of employment:
(1) The optionee has reached age 59-1/2; and
(2) The optionee was employed at least fifteen (15)
consecutive years with the Company and/or any of its
subsidiaries; and
(3) The Committee has determined that the reason for
termination is due to retirement; and
(4) The shares subject to the option are intended to be an
ISO. Notwithstanding the foregoing, if the shares subject
to the option are not intended to be an ISO, the
Committee, in its sole discretion, may allow accelerated
vesting to any extent it desires.
6.5 Expiration - No option may be exercised after two (2) years from the date
the option becomes one hundred percent (100%) vested. Notwithstanding the
foregoing, all ISOs must be exercised within one (1) year from the date the
option becomes one hundred percent (100%) vested.
6.6 Form of Exercise - The option may only be exercised according to the terms
and conditions established by the Committee, consistent with the limits set
forth herein, at the time the option is granted. Subject to the foregoing
terms and conditions, an option may be exercised by a written notice delivered
to the Company's principal office of intent to exercise the option with
respect to a specified number of shares of Stock and payment to the Company
of the amount of the option purchase price for the number of shares of Stock
with respect to which the option is then exercised. The payment may be either
in cash or in stock of the Company. If stock is used for payment, such stock
shall be valued at the closing price as reported by the Wall Street Journal on
the date of exercise.
6.7 Rights as a Shareholder - An optionee shall have no rights as a
stockholder with respect to shares covered by his option until the day of
issuance of a stock certificate to him and until after such shares are fully
paid.
ARTICLE VII. TERMINATION OF OPTION
7.1 Every option granted to each optionee under this Plan shall terminate and
expire at the earliest of:
a. the date of expiration set when such option was granted; or
b. one (1) year after one of the events set forth in paragraph 6.4;
or
c. immediately upon termination of employment of the optionee with
the Company (or termination of position as an outside director)
or any of its subsidiaries for any reason except if his
employment is terminated by reason of one of the events set
forth in paragraph 6.4.
ARTICLE VIII. TRANSFERABILITY
8.1 Non-Transferable - Any option granted under the Plan is not transferable
and can be exercised only by the optionee during his life subject to paragraph
8.2 of this Article.
8.2 Death - In the event of the death of an optionee while totally disabled,
retired, or still employed by the Company or a parent or a subsidiary, his
option, to the extent he could have exercised it on the date of his death, may
be exercised by the personal representative of the estate of the optionee
within one (1) year after the date of his death in accordance with the terms
established by the Committee at the time the option was granted, but (as set
forth in Article VII) not later than the expiration date set forth in paragraph
6.5.
ARTICLE IX. ADJUSTMENT OF NUMBER OF SHARES
9.1 Stock Dividends - In the event that a dividend shall be declared upon the
Stock payable in shares of stock of the Company, the number of shares of stock
then subject to any such option and the number of shares reserved for issuance
pursuant to the Plan, but, not yet covered by an option, shall be adjusted by
adding to each such share the number of shares which would be distributable
thereon (or any equivalent value of Stock as determined by the Committee in its
sole discretion) if such share had been outstanding on the date fixed for
determining the stock holders entitled to receive such stock dividend.
9.2 Reorganization - In the event that the outstanding shares of Stock shall
be changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company, or of another corporation, whether through
reorganization, recapitalization, stock split up, combination of shares, merger
or consolidation, then, there shall be substituted for each share of Stock
subject to any such option and for each share of Stock reserved for issuance
pursuant to the Plan, but, not yet covered by an option, the number and kind of
shares of stock or other securities into which each outstanding share of Stock
shall be so changed or for which each such share of Stock shall be exchanged.
9.3 Other Changes - In the event there shall be any change, other than as
specified above in this Article, in the number or kind of outstanding shares
of stock of the Company or of any stock or other securities into which such
stock shall have been changed or for which it shall have been exchanged, then,
if the Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in the number or kind of shares theretofore
reserved for issuance pursuant to the Plan, but, not yet covered by an option
and of the shares then subject to an option or options, such adjustments shall
be made by the Committee and shall be effective and binding for all purposes of
the Plan and of each stock option agreement. Notwithstanding the foregoing,
with respect to options granted to directors, the Committee shall make those
adjustments under this Article IX only to the extent necessary to preserve the
economic benefit of an unexercised option.
9.4 Adjusted Option Price - In the case of any substitution or adjustment as
provided for in this Article, the option price in each stock option agreement
for each share covered thereby prior to such substitution or adjustment will be
the option price for all shares of Stock or other securities which shall have
been substituted for such share or to which such share shall have been adjusted
pursuant to this Article.
9.5 Fractional Shares - No adjustment or substitutions provided for in this
Article shall require the Company to sell a fractional share, and the total
substitution or adjustment with respect to each stock option agreement
shall be limited accordingly.
ARTICLE X. SECURITIES REGULATION
10.1 Registered Stock - The Company shall not be obligated to sell or issue any
shares under any option granted hereunder unless and until the shares with
respect to which the option is being exercised are effectively registered
or exempt from registration under the Securities Act of 1933 and from any other
federal or state law governing the sale and issuance of such shares or any
securities exchange regulation to which the Company might be subject.
10.2 Unregistered Stock - In the event the shares are not effectively
registered, but, can be issued by virtue of an exemption, the Company may issue
option shares to an optionee if the optionee represents that he is acquiring
such shares as an investment and not with a view to, or for sale in connection
with, the distribution of any such shares. Certificates for shares of Stock
thus issued shall bear an appropriate legend reciting such representation.
ARTICLE XI. MISCELLANEOUS
11.1 No Contract of Employment - A grant or participation under the Plan shall
not be construed as giving an optionee a future right of employment with the
Company. Employment remains at the will of the Company.
11.2 Governing Law - This Plan and all matters relating to the Plan shall be
interpreted and construed under the laws of the State of Illinois.
11.3 Amendment of Plan - The Board of Directors, at its discretion, may amend
the Plan at any time, subject to stockholder approval if required by SEC rules
or the listing requirements of any national securities exchanges or trading
systems on which are listed any of the Company's equity securities.
11.4 Termination of Plan - The Board of Directors may, at its discretion,
terminate the Plan at any time for any reason. Termination of the Plan shall
not affect unexpired outstanding options previously granted.
THE 1998 MOLEX INCORPORATED STOCK OPTION PLAN
(Adopted October 23, 1998)
Date Printed: August 25, 1999 (9:33am)
THE 1998 MOLEX INCORPORATED STOCK OPTION PLAN
TABLE OF CONTENTS
ARTICLE I. GENERAL . . . . . . . . . . . . . . . . . . . . .1
1.1 Name of Plan.. . . . . . . . . . . . . . . . . . . . .1
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Eligibility. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II.TERM OF PLAN. . . . . . . . . . . . . . . . . . .1
2.1 Effective Date.. . . . . . . . . . . . . . . . . . . .1
2.2 Expiration.. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE III.STOCK SUBJECT TO PLAN . . . . . . . . . . . . . .1
3.1 Class of Stock.. . . . . . . . . . . . . . . . . . . .1
3.2 Number of Shares.. . . . . . . . . . . . . . . . . . .1
3.3 Source of Stock. . . . . . . . . . . . . . . . . . . .1
3.4 Expired, Forfeited or Canceled Options.. . . . . . . .1
ARTICLE IV.ADMINISTRATION. . . . . . . . . . . . . . . . . .1
4.1 Committee. . . . . . . . . . . . . . . . . . . . . . .1
4.2 Makeup of the Committee. . . . . . . . . . . . . . . .1
4.3 Action by the Committee. . . . . . . . . . . . . . . .2
4.4 Power to Grant Options.. . . . . . . . . . . . . . . .2
4.5 Power to Buy Option Stock. . . . . . . . . . . . . . .2
4.6 Other Powers.. . . . . . . . . . . . . . . . . . . . .2
ARTICLE V.GRANT OF OPTION . . . . . . . . . . . . . . . . .2
5.1 Option Price.. . . . . . . . . . . . . . . . . . . . .2
5.2 Fair Market Value. . . . . . . . . . . . . . . . . . .2
5.3 Evidence of Option.. . . . . . . . . . . . . . . . . .2
5.4 Rights as a Shareholder. . . . . . . . . . . . . . . .2
ARTICLE VI.EXERCISE OF OPTION. . . . . . . . . . . . . . . .2
6.1 Initial Waiting Period.. . . . . . . . . . . . . . . .2
6.2 Vesting Periods. . . . . . . . . . . . . . . . . . . .2
a. Normal Vesting. . . . . . . . . . . . . . . . . .2
b. Accelerated Vesting.. . . . . . . . . . . . . . .3
6.3 Cumulative Rights. . . . . . . . . . . . . . . . . . .3
6.4 Expiration.. . . . . . . . . . . . . . . . . . . . . .3
6.5 Form of Exercise.. . . . . . . . . . . . . . . . . . .3
ARTICLE VII.TERMINATION OF OPTION . . . . . . . . . . . . . .3
7.1 Expiration Date. . . . . . . . . . . . . . . . . . . .3
ARTICLE VIII.TRANSFERABILITY . . . . . . . . . . . . . . . . .3
8.1 Non-Transferable.. . . . . . . . . . . . . . . . . . .3
8.2 Death. . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IX.ADJUSTMENT OF NUMBER OF SHARES. . . . . . . . . .4
9.1 Stock Dividends. . . . . . . . . . . . . . . . . . . .4
9.2 Reorganization.. . . . . . . . . . . . . . . . . . . .4
9.3 Other Changes. . . . . . . . . . . . . . . . . . . . .4
9.4 Adjusted Option Price. . . . . . . . . . . . . . . . .4
9.5 Fractional Shares. . . . . . . . . . . . . . . . . . .4
ARTICLE X.SECURITIES REGULATION . . . . . . . . . . . . . .4
10.1 Registered Stock. . . . . . . . . . . . . . . . .4
10.2 Unregistered Stock. . . . . . . . . . . . . . . .4
THE 1998 MOLEX INCORPORATED STOCK OPTION PLAN
ARTICLE I. GENERAL
1.1 Name of Plan. The name of the plan described in detail herein shall be
The 1998 Molex Incorporated Stock Option Plan ("Plan").
1.2 Purpose. The purpose of the Plan is to induce certain designated
employees to remain in the employ of Molex Incorporated, a Delaware
corporation, (the "Company") or any of its subsidiaries and affiliates, and to
encourage such employees to secure or increase on reasonable terms their stock
ownership in the Company. The Company believes the Plan will promote
continuity of management and increase incentive and personal interest in the
welfare of the Company by those who are primarily responsible for shaping,
carrying out the long-range plans of the Company and securing its continued
growth and financial success.
1.3 Eligibility. Any regular employee of Molex Incorporated or any of its
subsidiary companies and affiliated companies, subject to the terms and
conditions of the Plan, may be granted an option under this Plan.
Notwithstanding the foregoing, the following Company personnel shall be
ineligible: any director or executive officer of Molex Incorporated.
ARTICLE II. TERM OF PLAN
2.1 Effective Date. The Plan shall become effective upon adoption by the
Board of Directors of the Company.
2.2 Expiration. This Plan shall expire June 30, 2009 and no option shall be
granted after such expiration date.
ARTICLE III. STOCK SUBJECT TO PLAN
3.1 Class of Stock. The stock that shall be subject to option under the Plan
shall be Molex Incorporated Class A Common Stock, $.05 par value (the "Stock").
3.2 Number of Shares. Ten million (10,000,000) shares of the Stock shall be
reserved for issue upon the exercise of options granted under the Plan.
3.3 Source of Stock. Upon the exercise of options granted under the Plan, the
Stock shall be issued from either authorized but unissued stock or Treasury
stock as directed by the Committee.
3.4 Expired, Forfeited or Canceled Options. If any such options granted under
the plan shall expire, be forfeited or canceled for any reason without having
been exercised in full, the unpurchased or unexercised shares subject thereto
shall again be available for the purposes of the Plan.
ARTICLE IV. ADMINISTRATION
4.1 Committee. The Plan shall be administered by a committee
(the "Committee") under the terms and conditions and powers set forth herein.
4.2 Makeup of the Committee. The Committee shall consist of at least two
members appointed by the Board of Directors of the Company. No members of the
Committee may be eligible to participate in the Plan.
4.3 Action by the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Unless and until the Board of Directors shall appoint
such Committee, the whole Board of Directors shall constitute the Committee.
Any decision or determination reduced to writing and signed by a majority of
the members shall be fully as effective as if it had been made by a majority
vote at a meeting duly called and held.
4.4 Power to Grant Options. Subject to the express provisions of the Plan,
the Committee shall have complete authority, in its sole discretion, to
determine the employees to whom, and the time or times at which, options shall
be granted, the option periods, the vesting schedule and the number of shares
to be subject to each option, and such other terms and provisions of the option
agreements (which need not be identical). In making such determinations, the
Committee may take into account the nature of the services rendered by the
respective employees, their present and potential contribution to the Company's
success, and such other factors as the Committee in its discretion shall deem
relevant.
4.5 Power to Buy Option Stock. The Committee, in its sole discretion, if it
believes that a particular optionee is suffering under an undue financial
hardship, may cause the Company to buy as Treasury Stock up to fifty percent
(50%) of the option stock actually exercised by that particular optionee. In
such a case, the Company shall pay to the optionee the fair market value of the
shares of option stock at the time the Committee elects to repurchase.
4.6 Other Powers. Subject to the express provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or advisable for the
administration of the Plan.
ARTICLE V. GRANT OF OPTION
5.1 Option Price. The option price shall be not less than ten percent (10%)
nor more than one hundred percent (100%) of the fair market value of the stock
of the Company on the date of granting the option as determined by the
Committee.
5.2 Fair Market Value. For the purposes of this Article, fair market value
shall be the closing price of the Stock on the date of granting the option as
reported by the Wall Street Journal.
5.3 Evidence of Option. Options granted shall be evidenced by agreements,
warrants, and/or other instruments in such form as the Committee shall deem
advisable and shall contain such terms, provisions, and conditions not
inconsistent herewith as may be determined by the Committee.
5.4 Rights as a Shareholder. An optionee shall have no rights as a
stockholder with respect to shares covered by his option until the day of
issuance of stock certificate to him and after such shares are fully paid.
ARTICLE VI. EXERCISE OF OPTION
6.1 Initial Waiting Period. No option shall be exercisable until at least one
year after the date of grant.
6.2 Vesting Periods. After the initial waiting period, an optionee may
exercise his option to the extent that the shares covered by said option become
vested. The vesting schedule is as follows:
a. Normal Vesting. The shares covered by such an option shall
vest in amounts and times determined by the Committee in its
sole discretion; provided that the time in which an option
becomes one hundred percent (100%) vested cannot exceed
eight (8) years.
b. Accelerated Vesting. Notwithstanding the foregoing, all
options shall immediately vest one hundred percent (100%) and
become immediately exercisable for a period of one (1) year
after one of the following events:
(1) Death;
(2) Total disablement;
(3) Retirement, if all of the following conditions at the time
of termination of employment are met:
(a) the optionee has reached age 59 1/2; and
(b) the optionee was employed at least fifteen (15)
consecutive years with the Company and/or any of its
subsidiaries; and
(c) The Committee has determined that the reason for
termination is due to retirement.
6.3 Cumulative Rights. The right to exercise any option as set forth in
Section 6.2 shall be cumulative. That is, an optionee may exercise in any
given year those shares he could have exercised in a previous year but did not.
6.4 Expiration. No option may be exercised after one (1) year from the date
the option becomes one hundred percent (100%) vested.
6.5 Form of Exercise. The option may only be exercised according to the
terms and conditions established by the Committee, consistent with the limits
set forth herein, at the time the option is granted. Subject to the foregoing
terms and conditions, an option may be exercised by a written notice delivered
to the Company's principal office of the optionee's intent to exercise the
option with respect to a specified number of shares of Stock along with payment
to the Company of the amount of the aggregate option purchase price for the
number of shares of Stock exercised. Stock that is already owned by an
optionee may be tendered as all or part of the aggregate option purchase price.
If Stock is used for payment, it shall be valued at the closing price on the
date of exercise as reported by the Wall Street Journal.
ARTICLE VII. TERMINATION OF OPTION
7.1 Expiration Date. Every option granted under this Plan shall terminate and
expire at the earliest of
a. the date of expiration set when such option was granted; or
b. one (1) year after one of the events set forth in
Subsection 6.2b; or
c. the day of termination of employment of the optionee for any
reason except if his or her employment is terminated by
reason of one of the events set forth in Subsection 6.2b.
ARTICLE VIII. TRANSFERABILITY
8.1 Non-Transferable. Any option granted under the plan is not transferable
and can be exercised only by the optionee during his or her life subject to
Section 8.2 of this Article.
8.2 Death. In the event of the death of an optionee while still employed by
the Company or a parent or a subsidiary, his option, to the extent he or she
could have exercised it on the date of his or her death, may be exercised by
the personal representative of the estate of the optionee within one (1) year
after the date of his or her death in accordance with the terms established by
the Committee at the time the option was granted, but (as set forth in Article
VII) not later than the expiration date set forth in Section 6.4.
ARTICLE IX. ADJUSTMENT OF NUMBER OF SHARES
9.1 Stock Dividends. In the event that a dividend shall be declared upon the
Stock payable in shares of Stock, the number of shares of stock then subject to
any such option and the number of shares reserved for issuance pursuant to the
Plan, but, not yet covered by an option, shall be adjusted by addition to each
such share the number of shares which would be distributable thereon if such
share had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend.
9.2 Reorganization. In the event that the outstanding shares of the Stock
shall be changed into or exchanged for a different number of kind of shares of
Stock or other securities of the Company, or of another corporation, whether
through reorganization, recapitalization, stock split up, combination of shares
merger or consolidation, then, there shall be substituted for each share of
Stock subject to any such option and for each share of Stock reserved for
issuance pursuant to the Plan, but, not yet covered by an option, the number
and kind of shares of Stock or other securities into which each outstanding
share of Stock shall be so changed or for which each such share of Stock shall
be exchanged.
9.3 Other Changes. In the event there shall be any change, other than as
specified above in this Article, in the number or kind of outstanding shares of
the Stock or of any stock or other securities into which such stock shall
have been changed or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares theretofore reserved
for issuance pursuant to the Plan, but, not yet covered by an option and of the
shares then subject to an option or options, such adjustments shall be made by
the Committee and shall be effective and binding for all purposes of the Plan
and of each stock option.
9.4 Adjusted Option Price. In the case of any substitution or adjustment as
provided for in this Article, the option price in each stock option agreement
for each share covered thereby prior to such substitution or adjustment will be
the option price for all shares of Stock or other securities which shall have
been substituted for such share or to which such share shall have been adjusted
pursuant to this Article.
9.5 Fractional Shares. No adjustment or substitutions provided for in this
Article shall require the Company in any stock option agreement to sell a
fractional share, and the total substitution or adjustment with respect to each
stock option agreement shall be limited accordingly.
ARTICLE X. SECURITIES REGULATION
10.1 Registered Stock. The Company shall not be obligated to sell or
issue any shares under any option granted hereunder unless and until the shares
with respect to which the option is being exercised are effectively registered
or exempt from registration under the Securities Act of 1933 and for any other
federal or state law governing the sale and issuance of such shares or any
securities exchange regulation to which the Company might be subject.
10.2 Unregistered Stock. In the event the shares are not effectively
registered, but, can be issued by virtue of an exemption, the Company may issue
option shares to an optionee if the optionee represents that he is acquiring
such shares as an investment and not with a view to, or for sale in connection
with, the distribution of any such shares. Certificates for shares of Stock
thus issued shall bear an appropriate legend reciting such representation.
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-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 Eletronica Ltda. Brazil 100.0%
Molex da Amazonia Ltda. Brazil 100.0%
Molex Brazil 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%
Molex Eastern Europe S.A. dba Molex France France 100.0%
Molex Holding GmbH Germany 100.0%
Molex Slovakia Management Germany 100.0%
Molex Elektronik GmbH Germany 100.0%
Molex Services GmbH Germany 100.0%
Molex GmbH Germany 100.0%
Molex Hong Kong/China Ltd. Hong Kong 100.0%
Molex (India) Ltd. India 95.0%
Mafatlal Micron India 51.0%
Molex Italia S.p.A. Italy 100.0%
Zetronic S.p.A. Italy 100.0%
Molex-Japan Co., Ltd. Japan 100.0%
Molex (Malaysia) Sdn. Bhd. Malaysia 100.0%
MEC Malaysia JV Malaysia 64.0%
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%
Molex Interconnect AG (MIAG) Netherlands 100.0%
Molex Deutschland GmbH Germany 100.0%
Moltech Poland 48.0%
Molex Far-East South Management Pte. Ltd. Singapore 100.0%
Molex Singapore Pte. Ltd. Singapore 100.0%
Moltes s.r.o. Slovak Republic 48.0%
Sylex s.r.o. Slovak Republic 45.0%
Molex South Africa (Pty.) Ltd. South Africa 87.0%
Molex Korea Co., Ltd. South Korea 100.0%
Molex Svenska A.B. Sweden 100.0%
Molex Ireland Ltd. Ireland 100.0%
Smithstown Light Engineering Ltd. Ireland 50.0%
Molex Taiwan Ltd. Taiwan (R.O.C.) 100.0%
Molex (Thailand) Ltd. Thailand 94.75%
Molex Electronics Ltd. United Kingdom 100.0%
Beta Phase, Inc. Delaware, U.S.A. 100.0%
Molex Fiber Optics Inc. Illinois, U.S.A. 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 Asia Pacific Pty Ltd Australia 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%
Silent Systems, Inc. Massachusetts, U.S.A. 100.0%
Cardell Corporation Michigan, U.S.A. 100.0%
Molex Connector Corp. Delaware, U.S.A. 100.0%
Molex Manufacturing Delaware, U.S.A. 100.0%
</TABLE>
EXHIBIT 24
-----------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
(File Nos. 33-9737, 33-32055, 33-37683, 333-141777, 333-38259, and
333-68481) of Molex Incorporated and its subsidiaries
on Form S-8 of our reports dated July 28,1999, appearing in and incorporated
by reference in the Annual Report on Form 10-K of Molex Incorporated for the
year ended June 30, 1999.
/S/ DELOITTE AND TOUCHE LLP
Chicago, Illinois
September 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 182992
<SECURITIES> 83874
<RECEIVABLES> 410335
<ALLOWANCES> 19215
<INVENTORY> 188861
<CURRENT-ASSETS> 881338
<PP&E> 1748808
<DEPRECIATION> 939206
<TOTAL-ASSETS> 1902012
<CURRENT-LIABILITIES> 342441
<BONDS> 0
0
0
<COMMON> 242221
<OTHER-SE> 1258316
<TOTAL-LIABILITY-AND-EQUITY> 1902012
<SALES> 1711649
<TOTAL-REVENUES> 1711649
<CGS> 1038311
<TOTAL-COSTS> 1038311
<OTHER-EXPENSES> 446980
<LOSS-PROVISION> 5027
<INTEREST-EXPENSE> (8883)
<INCOME-PRETAX> 230214
<INCOME-TAX> 52363
<INCOME-CONTINUING> 178029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178029
<EPS-BASIC> 1.15
<EPS-DILUTED> 1.14
</TABLE>
Ten-Year Financial Highlights Summary EXHIBIT 13
(in thousands, except per share data)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Operations
Net revenue $ 1,711,649 $ 1,622,975 $ 1,539,712 $ 1,382,673 $ 1,197,747
Gross profit 673,338 670,709 640,895 562,731 512,498
Income before income taxes
and minority interest 230,214 274,823 262,369 228,953 214,492
Income taxes 52,363 92,490 95,581 83,300 90,273
Net income 178,029 182,243 166,716 145,586 124,035
Earnings per common share:(1)
Basic 1.15 1.16 1.06 0.92 0.79
Diluted 1.14 1.15 1.05 0.92 0.79
Net income as a percent of
net revenue 10.4% 11.2% 10.8% 10.5% 10.4%
Financial Position
Current assets $ 881,338 $ 867,791 $ 873,614 $ 734,589 $ 773,036
Current liabilities 342,441 336,275 342,026 275,182 278,046
Working capital 538,897 531,516 531,588 459,407 494,990
Current ratio 2.6 2.6 2.6 2.7 2.8
Property, plant &
equipment, net 809,602 676,161 665,468 613,125 567,303
Total assets 1,902,012 1,639,634 1,636,931 1,460,999 1,441,020
Long-term debt 20,148 5,566 7,350 7,450 8,122
Shareholders' equity 1,500,537 1,261,570 1,235,912 1,131,271 1,107,268
Return on beginning
shareholders' equity 14.1% 14.7% 14.7% 13.1% 14.1%
Dividends per common share(1) 0.06 0.06 0.05 0.04 0.02
Weighted average common
shares outstanding:(1)
Basic 155,472 156,600 157,111 157,414 156,274
Diluted 156,505 158,377 158,679 159,055 157,931
</TABLE>
(1) Restated for the following stock split/dividends: 25%-November 1997;
25%-February 1997; 25%-August 1995; 25%-November 1994.
Management's Discussion of Financial Condition and Results of Operations
Financial Highlights
In fiscal 1999, Molex continued to produce revenue growth exceeding that of the
worldwide connector industry while maintaining profitability goals, despite
difficult economic conditions in certain geographic regions in which the
Company operates. Net revenue increased 5.5 percent to a record $1.71 billion
for the fiscal year. Net income was $178.0 million for fiscal 1999, a decline
of 2.3 percent from the prior year. 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 multinational
and/or multi-market companies worldwide.
The Growth of Molex vs. the Worldwide Connector Industry
Worldwide Molex
--------- -----
1989 100 100
1990 103 104
1991 104 124
1992 105 136
1993 105 150
1994 109 169
1995 133 209
1996 141 242
1997 147 269
1998 147 284
1999 147 299
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
19.1 percent on Molex Common Stock and 16.1 percent on Molex Class A Common
Stock.
A $100 investment in Molex Common Stock at June 30, 1994, together with the
reinvestment of dividends, would be worth $240 at June 30, 1999, and a similar
investment in Molex Common Class A Stock would be worth $211 at June 30, 1999.
In November 1997, the Molex Board of Directors distributed a 25 percent stock
dividend. All shares outstanding, earnings and dividends per share have been
retroactively restated for the stock dividend.
Molex Common Stock/High-Low-Close By Quarter
1995 1996 1997 1998 1999
1st QTR - High 18 23.4375 24.15625 36.20313 31
Low 15.36 17.3125 17.59375 29.25 23.625
Close 17.4375 23.2 23.84 35.5 29
2nd QTR - High 18.4375 23.67188 25.4375 38.40625 39
Low 15.875 19.53125 22.71875 25.75 24.5625
Close 17.75 20.32 25.04 32.125 38.125
3rd QTR - High 18.625 23.20313 25.59375 32.125 38
Low 15.875 17.4375 22.40625 24.8125 25.5
Close 18.3125 22.32 22.72 27.5 29.375
4th QTR - High 20.125 23.4375 31.59375 30.5 37.125
Low 18.4375 19.35938 21.59375 23 26.1875
Close 19.84 20.32 29.2 25 36.875
Five-Year Cumulative Total Return
Molex Molex S&P Peer
Common Class A MidCap Group
Stock Com Stk 400
1994 100.00 100.00 100.00 100.00
1995 127.60 124.29 122.34 143.08
1996 130.93 125.28 148.75 121.51
1997 188.47 186.27 183.45 172.54
1998 161.67 156.39 233.26 170.13
1999 239.71 211.20 262.58 229.62
Financial Position and Liquidity
Molex has an exceptionally strong balance sheet. Cash and marketable securities
at June 30, 1999 equaled $266.9 million and represented 14.0 percent of total
consolidated assets. Cash and marketable securities decreased $55.5 million
during fiscal 1999 due, in large part, to cash requirements necessary for
acquisitions and investments made during the year.
The Company's long-term financing strategy is to rely 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 $18.8 million, of which $11.8 million
remains unused at June 30, 1999.
Cash provided from operations was $314.5 million during fiscal 1999. The
Company's operations generate sufficient cash to support the current level of
capital expenditures and financing activities. In U.S. dollars, the average
days of sales outstanding in trade accounts receivable increased to 72 days
from the 70 days reported last fiscal year. Average inventory days in U.S.
dollars have increased to 79 days from the 77 days reported last fiscal year.
Cash used for investing activities was $247.7 million in fiscal 1999, primarily
due to capital expenditures and acquisitions. Molex continued its commitment to
investing in new tooling, equipment and facilities, with capital expenditures
totaling $228.7 million for fiscal 1999. Molex added new facilities in China
and Australia. In addition, facilities were expanded in Mexico, France, Germany
and the United States. These additions increased the worldwide facility floor
space to 5.2 million square feet.
Cash used for financing activities was $82.3 million in fiscal 1999, primarily
due to the assumption and repayment of $41.1 million of debt in connection with
the Cardell Corporation acquisition and $49.4 million to purchase Treasury
Stock. The Company purchased 1,707,323 shares of common stock during fiscal
1999. During fiscal 1998, Molex purchased 1,661,250 shares of common stock on
the open market.
Percentage of Net Revenue
Fiscal Year Ended June 30,
U.S. Dollar
Percentage Change
1999 1998 1997 1999-98 1998-97
Net revenue 100.0% 100.0% 100.0% 5.5 % 5.4%
Cost of sales 60.7 58.7 58.4 9.0 5.9
Gross profit 39.3 41.3 41.6 0.4 4.7
S, G & A expenses 26.1 25.1 25.3 9.8 4.5
Income from operations 13.2 16.2 16.3 (14.1) 4.9
Total other income 0.3 0.7 0.7 (39.7) 1.0
Income before income taxes 13.5 16.9 17.0 (16.2) 4.7
Income taxes 3.1 5.7 6.2 (43.4) (3.2)
Net income 10.4% 11.2% 10.8% (2.3)% 9.3%
Fiscal 1999 Compared to Fiscal 1998
Net revenue reached another all-time-high during fiscal 1999, rising 5.5
percent to $1.71 billion, compared to $1.62 billion during fiscal 1998.
Excluding the effect of exchange rates, net revenue increased 5.7 percent. In
fiscal 1999, international operations generated net revenue in excess of $1.0
billion for the third year in a row and represented 65.8 percent of total Molex
net revenue.
Customer net revenue in the Americas region increased 6.1 percent in U.S.
dollars and 6.3 percent in local currencies in fiscal 1999. While slower
economic growth in traditional products and intensified price erosion tempered
the region's growth within the highly competitive commercial and computer
desktop markets, fiscal 1999 proved to be another strong growth year within the
automotive sector helped by the healthy U.S. automotive market and the focus on
the Big Three auto manufacturers. Molex has increased penetration into the
automotive market and enhanced the potential to capture additional market share
with the recent acquisition of Cardell Corporation. Cardell is a Detroit-based
manufacturer of stamped and overmolded connector products. Outstanding
performance within the fiber optic and high speed cabling markets resulted in
continued rapid growth.
In the Far East North, customer net revenue increased 12.0 percent in U.S.
dollars and 9.1 percent in local currencies during fiscal 1999. Despite the
nation's stagnant economic situation, and unlike other competitors in the
market, Molex Japan has increased its market share in mobile telephones, PCs,
DVDs, LCDs and games and has shipped NTT-related telecommunications products.
Despite the continuing Korean economic crisis, Molex Korea maintained the
number-one position in the market, with growth mainly due to sales expansion
in the automotive and telecommunications markets.
In the Far East South, customer net revenue increased 19.7 percent in local
currencies during fiscal 1999 and 14.4 percent in U.S. dollars as several
regional currencies weakened against the dollar. Despite poor economic
conditions, Molex Singapore achieved record revenue in fiscal 1999, regaining
lost share in the storage industry. Despite steep desktop market price erosion,
Malaysia surpassed last year, and Molex Thailand has positioned itself as the
preferred connector company in Thailand. Molex Taiwan increased share in the
ODM-Taiwan notebook market and the motherboard PC market and entered the LCD
monitor market. In the face of a difficult economy in Hong Kong, Molex Hong
Kong and Molex Dongguan nevertheless exceeded last year. Capital expenditures,
including investment in China, continued.
Europe's net revenue declined 3.2 percent in U.S. dollars and 4.8 percent in
local currencies. A slowdown in business coupled with a reduction in planned
volumes by some key customers impacted the mobile and cellular business while
sales of automotive and consumer products experienced minimal growth due to
severe volume and pricing pressures.
The Company's consolidated gross profit declined to 39.3 percent of net revenue
in fiscal 1999 from 41.3 percent during fiscal 1998. The decrease was partially
due to a charge in fiscal 1999 of $20.4 million relating to the write-off of
certain production tooling and related capacity adjustments. Excluding the
charge, gross profit margin in fiscal 1999 would have been 40.5 percent.
Selling, general and administrative expenses as a percentage of net revenue
increased from 25.1 percent in fiscal 1998 to 26.1 percent during fiscal 1999,
including a charge of $6.0 million related to the cost to close manufacturing
operations in Taiwan, South Africa and Canada, and would have been 25.8 percent
in 1999 excluding the charge. Net revenue per employee decreased to $120,918 in
fiscal 1999 from $123,740 in 1998. Employee headcount, excluding Cardell
Corporation, increased 7.9 percent compared to the 5.5 percent increase in net
revenue.
Research and development expenditures increased to $105.9 million or 6.2
percent of sales, a 12.8 percent increase from the $93.9 million expended in
fiscal 1998. These expenditures contributed to the release of 350 new product
families and the granting of 476 new patents during fiscal 1999. During fiscal
1999, 31.1 percent of net revenue was derived from the sale of products
released by the Company within the last three years. Molex continued its
long-term commitment to reinvesting its profits in new product design and
tooling in order to maintain and enhance the Company's competitive position.
Net interest income decreased 20.2 percent during fiscal 1999 due to a lower
level of short-term investments than in fiscal 1998.
Other income consists mainly of net foreign exchange losses realized during
fiscal 1999.
The effective tax rate declined from 33.7 percent in fiscal 1998 to 22.8
percent during fiscal 1999, due to the utilization of foreign tax credits, a
tax holiday in several Far East jurisdictions, and resolution of various tax
issues.
Net income decreased 2.3 percent to $178.0 million during fiscal 1999 with a
negligible effect from foreign exchange rates. Earnings per share were $1.14
for fiscal 1999 and $1.15 for fiscal 1998.
Fiscal 1998 Compared to Fiscal 1997
Net revenue reached another all-time-high during fiscal 1998, rising 5.4
percent to $1.62 billion, compared to $1.54 billion during fiscal 1997.
Excluding the effect of exchange rates due to the generally stronger U.S.
dollar, which had the effect of reducing reported revenue by $124.3 million,
net revenue increased 13.5 percent.
Customer net revenue in the Americas region increased 13.4 percent in U.S.
dollars and 13.5 percent in local currencies in fiscal 1998. In the competitive
commercial products market, revenue and profits continued to increase. Molex
achieved solid growth in several niche markets. The Company continued its
penetration initiative with greater automotive product sales to the Big Three.
Sales growth in the telecommunications market was enhanced by a series of new
product introductions, as well as by sales of high speed cable assemblies.
Value-added assemblies experienced strong growth with increased sales into the
computer, computer peripheral, automotive and telecommunications markets. The
sale of fiber optic products continued its rapid growth in several market
segments.
In the Far East North, customer net revenue increased 1.8 percent in local
currencies during fiscal 1998. The increase in domestic sales was achieved
despite difficult economic conditions in both Japan and the Republic of Korea.
Molex Japan recorded the highest growth rate of any connector company in Japan
for the fiscal year, while Molex Korea maintained the number-one position in
its local market. Net revenue in the region decreased 9.9 percent in U.S.
dollars as the dollar strengthened considerably against both the Japanese yen
and the Korean won.
Customer revenue in the Far East South increased 10.0 percent in local
currencies, but decreased 3.9 percent in U.S. dollars due to the $41.7 million
unfavorable revenue impact of foreign currency translation in fiscal 1998.
Higher imported material costs, due primarily to currency devaluation, caused
a 6.2 percentage point drop in gross profit as a percent of net revenue. This
drop was partially offset by effective cost containment programs. Despite the
difficult current economic environment characterized by a slowing PC market and
currency devaluation, the Company continued its investment to pursue further
penetration in this very attractive market. Capital expenditures, which include
expansion in China, increased in fiscal 1998.
Europe's net revenue increased 17.9 percent in U.S. dollars and 31.2 percent in
local currencies. Strong growth in telecommunications and consumer products,
steady improvement in automotive and a general resurgence in European markets
served by Molex have all contributed to the growth. Higher volumes along with
the introduction of new products more than offset the effects of price erosion,
resulting in substantially improved profitability.
The consolidated gross profit as a percent of net revenue remained relatively
flat in fiscal 1998 at 41.3 percent, compared to 41.6 percent in fiscal 1997.
This gross margin performance can be attributed to higher imported material
costs in international operations, due primarily to the effect of currency
devaluation in those regions, offset by improvements in overall manufacturing
efficiencies and utilization.
Selling, general and administrative expenses as a percentage of net revenue
remained relatively flat during fiscal 1998 at 25.1 percent versus 25.3 percent
in the prior year period. Net revenue per employee increased to $130,307 in
fiscal 1998 from $128,879 in 1997. Employee headcount increased 4.3 percent
compared to the 5.4 percent increase in net revenue. This increase in headcount
can be attributed to continued focus on the value-added business.
Research and development expenditures increased to $93.9 million or 5.8 percent
of sales, a 4.9 percent increase from the $89.5 million expended in fiscal
1997. These expenditures contributed to the release of 428 new product families
and the granting of 498 new patents during fiscal 1998. During fiscal 1998,
30.2 percent of net revenue was derived from the sale of products released by
the Company within the last three years. Molex continued its long-term
commitment to reinvesting its profits in new product design and tooling in
order to maintain and enhance the Company's competitive position.
Net interest income increased 7.0 percent during fiscal 1998 due to a higher
level of short-term investments than in fiscal 1997 along with the improved
interest rates on those investments.
The effective tax rate declined from 36.4 percent in fiscal 1997 to 33.7
percent during fiscal 1998, due mainly to the current utilization of prior
years' foreign tax carryforwards and a change in the mix of pretax earnings
between countries.
Net income increased 9.3 percent to $182.2 million during fiscal 1998.
Excluding the effect of foreign exchange rates, which lowered net income by
$14.0 million, net income climbed 17.7 percent. Diluted earnings per share
increased to $1.15 during fiscal 1998 from $1.05 during fiscal 1997.
Future Accounting Changes
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 15, 1998. SOP 98-1 provides guidance on accounting for
the costs of computer software developed or obtained for internal use. This
statement will not have a material impact on the Company's financial position
or the results of its operations.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Originally effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999, it has since been
delayed one year. It establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The Company is
assessing the impact this statement will have on its statement of financial
position and the results of its operations.
Year 2000
Molex recognizes the importance of the Year 2000 issue and has been giving
high priority to it. The Company has completed an assessment of its business
and other information systems, as well as the non-information system aspects
of its business that could be impacted by the Year 2000 issue. Over the past
few years, the Company has developed and is currently implementing its Global
Information System (GIS), which is Year 2000 compliant. This GIS now covers
more than 80 percent of the Company's business, and the legacy business systems
in the remaining operations have been remediated. The Company believes that
with the modifications to existing software and the GIS implementation, the
Year 2000 issue will not pose material operational problems for its information
systems.
While the GIS implementation addresses many of the Company's Year 2000 issues,
the Company does not consider the GIS implementation costs to be related to the
Year 2000 issue as such costs are a strategic expenditure to enhance future
operations and would be incurred regardless of the Year 2000 issue. Total
implementation costs related to the GIS project are expected to reach $60
million once complete. Expenditures related to the Year 2000 date conversion
effort, principally the cost to remediate existing software or microprocessors
embedded in the Company's manufacturing systems, are not expected to be
significant, and management expects the total costs of such remediation effort
to be less than $3.0 million. Most of these costs have already been incurred
during fiscal year 1999. Any remaining costs should not have a material impact
on the Company's financial position, results of operations or cash flows.
Part of the risk inherent in the Year 2000 issue results from the general
uncertainty of the readiness of material third-party relationships. Although
the Company cannot know or foresee every eventuality that suppliers and
customers may face that could impact its operations, the Company is actively
involved in a broad-structured contingency planning effort to mitigate the
impact of potential failures in any of its critical third-party relationships.
The Company cannot estimate the cost it may incur as a result of the failure of
third parties to address their Year 2000 issues, and there can be no assurance
that there will not be a material adverse effect on the Company if third
parties do not convert their systems in a timely manner and in a way that is
compatible with the Company's systems. However, management believes that the
likelihood of such a significant failure is low.
Outlook
Fiscal 1999 was a challenging year for Molex as a result of difficult economic
conditions in Europe, a slowdown in distribution channels for commercial
products and price erosion above historical levels affecting the data
communications and desktop markets. The Company expects the impact from these
external factors to continue into the new fiscal year, but to a lesser degree
than in fiscal 1999. Management believes that the Company has strong overall
momentum and a positive outlook for fiscal 2000.
To further expand the Company's global presence, offer innovative products at
an accelerated pace and improve internal productivity, Molex plans to invest
approximately $210 million in capital expenditures and approximately $122
million in research and development for the fiscal year ending June 30, 2000.
The Company continues to emphasize expansion in rapidly growing markets such as
telecommunications, networking, automotive and value-added, while working to
further strengthen its significant position as a leader in the computer and
consumer markets. Molex remains committed to providing high quality products
and a full range of services to customers wherever they may be located in the
world. During fiscal 2000, the Company plans to open a new facility in Kosice,
Slovak Republic. Further expansion is planned for existing operations in Japan;
Shanghai, China; and Nogales, Mexico.
Worldwide, the connector industry is expected to experience minimal growth.
The Company expects to have dollar denominated growth rates in the range of 17
percent to 19 percent while generating a 10 percent net return on sales.
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.
Quantitative and Qualitative Disclosures About Market Risk
The Company is subject to market risk associated with changes in foreign
currency exchange rates, interest rates and certain commodity prices. The
Company mitigates its foreign currency exchange rate risk principally through
the establishment of local production facilities in the markets it serves and
invoicing of customers in the same currency as the source of the products.
Molex also 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, development of
natural hedges and occasional use of foreign exchange contracts. One of the
Company's subsidiaries utilizes derivative commodity futures contracts to hedge
against fluctuations in commodity price fluctuations. Such commodity futures
contracts are limited to a maximum duration of 18 months. A formalized treasury
risk management policy has been implemented by the Company that describes the
procedures and controls over derivative financial and commodity instruments.
Under the policy, the Company does not use derivative financial or commodity
instruments for trading purposes, and the use of such instruments is subject
to strict approval levels by senior officers. Typically, the use of such
derivative instruments is limited to hedging activities related to specific
foreign currency cash flows or inventory purchases. The Company's exposure
related to such transactions is, in the aggregate, not material to the
Company's financial position, results of operations and cash flows.
Interest rate exposure is principally limited to the $83.9 million of
marketable securities owned by the Company. Such securities are debt
instruments that generate interest income for the Company on temporary excess
cash balances. The Company does not actively manage the risk of interest rate
fluctuations, however, such risk is mitigated by the relatively short-term
nature - less than 12 months - of these investments.
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.
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, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended June 30, 1999. 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, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1999, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Chicago, Illinois
July 28, 1999
Consolidated Balance Sheets
(in thousands, except per share data)
<TABLE>
<CAPTION>
Assets June 30,
1999 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 182,992 $ 205,262
Marketable securities 83,874 117,151
Accounts receivable:
Trade, less allowance of $19,215 in 1999 and
$17,114 in 1998 for doubtful accounts 387,525 324,279
Employee 3,595 4,281
Inventories (Note 2) 188,861 184,433
Deferred income taxes (Note 5) 19,137 15,101
Prepaid expenses 15,354 17,284
Total current assets 881,338 867,791
Property, plant and equipment
at cost (Note 2):
Land and improvements 53,972 39,114
Buildings and leasehold improvements 355,980 269,607
Machinery and equipment 877,011 740,246
Molds and dies 372,272 315,537
Construction-in-progress 89,573 75,773
1,748,808 1,440,277
Less accumulated depreciation and amortization 939,206 764,116
Net property, plant and equipment 809,602 676,161
Goodwill, less accumulated amortization of
$22,547 in 1999 and $15,190 in 1998 (Notes 2 and 10) 137,378 40,660
Other assets 73,694 55,022
$ 1,902,012 $ 1,639,634
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity June 30,
1999 1998
<S> <C> <C>
Current liabilities:
Short-term loans (Note 4) $ 4,464 $ -
Current portion of long-term debt (Note 4) 499 -
Accounts payable 156,556 140,350
Accrued expenses:
Salaries, commissions and bonuses 68,084 51,231
Other 62,885 71,331
Income taxes (Note 5) 47,553 71,097
Dividends payable 2,400 2,266
Total current liabilities 342,441 336,275
Deferred items:
Investment grants 2,460 2,535
Income taxes (Note 5) 4,508 3,969
Total deferred items 6,968 6,504
Accrued postretirement benefits (Note 6) 30,706 27,135
Long-term debt (Note 4) 20,148 5,566
Minority interest in subsidiaries 1,212 2,584
Commitments and contingencies (Note 7) - -
Shareholders' equity (Notes 3 and 8):
Common Stock, $.05 par value; 200,000 shares authorized;
86,133 shares issued at 1999 and 83,261 shares issued at 1998 4,306 4,163
Class A Common Stock, $.05 par value; 200,000 shares authorized;
82,073 shares issued at 1999 and 1998 4,104 4,104
Class B Common Stock, $.05 par value; 146 shares authorized;
94 shares issued at 1999 and 1998 5 5
Paid-in capital 233,806 147,782
Retained earnings 1,491,337 1,322,775
Treasury stock (Common Stock, 7,794 shares at 1999 and 6,850
shares at 1998; Class A Common Stock, 3,445 shares at 1999
and 2,682 shares at 1998), at cost (193,317) (143,714)
Deferred unearned compensation (Note 8) (21,996) (19,988)
Accumulated other comprehensive income:
Cumulative translation and other adjustments (17,708) (53,557)
Total shareholders' equity 1,500,537 1,261,570
$ 1,902,012 $ 1,639,634
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the year ended June 30,
1999 1998 1997
<S> <C> <C> <C>
Net revenue $ 1,711,649 $ 1,622,975 $ 1,539,712
Cost of sales 1,038,311 952,266 898,817
Gross profit 673,338 670,709 640,895
Selling, general and administrative expenses:
Selling 134,526 127,643 140,080
Administrative 312,454 279,444 249,537
Total selling, general and administrative expenses 446,980 407,087 389,617
Income from operations 226,358 263,622 251,278
Other income (expense):
Interest, net 8,883 11,134 10,405
Other (5,027) 67 686
Total other income 3,856 11,201 11,091
Income before income taxes and minority interest 230,214 274,823 262,369
Income taxes (Note 5) 52,363 92,490 95,581
Income before minority interest 177,851 182,333 166,788
Minority interest 178 (90) (72)
Net income $ 178,029 $ 182,243 $ 166,716
Earnings per common share (Based upon weighted average
common shares outstanding) (Notes 2 and 3):
Basic $ 1.15 $ 1.16 $ 1.06
Diluted $ 1.14 $ 1.15 $ 1.05
Dividends per common share (Note 3) $ 0.06 $ 0.06 $ 0.05
Weighted average common shares outstanding (Notes 2 and 3):
Basic 155,472 156,600 157,111
Diluted 156,505 158,377 158,679
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Consolidated Statements of Shareholders' Equity
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Deferred Other Total
Common Stock Paid-In Retained Treasury Unearned Comprehensive Shareholders'
Common Class A Class B Capital Earnings Stock Compensation Income Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1996 $ 2,619 $ 2,627 $ 5 $ 116,510 $ 989,928 $ (62,726) $ (13,583) $ 95,891 $ 1,131,271
Comprehensive income:
Net income 166,716 166,716
Translation adjustments (36,962) (36,962)
Unrealized investment gain 400 400
Total comprehensive income 130,154
Cash dividends declared (6,924) (6,924)
Stock split (dividend) 661 656 (1,317) -
Stock options -granted 8,655 (8,655) -
-exercised 23 5,947 (917) 5,053
-cancelled (955) 682 (273)
Stock bonus 550 550
Treasury stock -purchases (31,918) (31,918)
-reissuances 203 583 786
Purchase of business 1,672 484 2,156
Deferred unearned
compensation amortization 5,057 5,057
Balance, June 30, 1997 3,303 3,283 5 131,265 1,149,720 (94,494) (16,499) 59,329 1,235,912
Comprehensive income:
Net income 182,243 182,243
Translation adjustments (112,486) (112,486)
Unrealized investment loss (400) (400)
Total comprehensive income 69,357
Cash dividends declared (9,188) (9,188)
Stock split (dividend) 829 821 (1,650) -
Stock options -granted 11,040 (11,040) -
-exercised 29 5,927 (792) 5,164
-cancelled (834) 834 -
Issuance of stock 2 2
Stock bonus 962 962
Treasury stock -purchases (49,255) (49,255)
-reissuances 1,072 827 1,899
Deferred unearned
compensation amortization 6,717 6,717
Balance, June 30, 1998 4,163 4,104 5 147,782 1,322,775 (143,714) (19,988) (53,557) 1,261,570
Comprehensive income:
Net income 178,029 178,029
Translation adjustments 36,906 36,906
Unrealized investment loss (1,057) (1,057)
Total comprehensive income 213,878
Cash dividends declared (9,467) (9,467)
Stock options -granted 9,179 (9,179) -
-exercised 28 5,672 (1,052) 4,648
-cancelled (185) (185)
Purchase of business 113 69,310 69,423
Stock bonus 2 1,067 1,069
Treasury stock -purchases (49,430) (49,430)
-reissuances 981 879 1,860
Deferred unearned
compensation amortization 7,171 7,171
Balance, June 30, 1999 $ 4,306 $ 4,104 $ 5 $ 233,806 $ 1,491,337 $(193,317) $ (21,996) $ (17,708) $ 1,500,537
</TABLE>
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
For the year ended June 30,
1999 1998 1997
<S> <C> <C> <C>
Cash and cash equivalents, beginning of period $ 205,262 $ 199,767 $ 242,779
Cash and cash equivalents were provided from (used for):
Operations:
Net income 178,029 182,243 166,716
Add (deduct) non-cash items included in net income:
Depreciation and amortization 168,856 148,920 138,675
Deferred income taxes 1,875 13,470 (13,671)
(Gain)/loss on sale of property, plant and equipment 16,383 696 (236)
Minority interest (178) 90 72
Amortization of deferred unearned compensation 7,171 6,717 5,057
Amortization of deferred investment grants (601) (608) (486)
Other debits (credits) to earnings, net 209 (1,232) (1,552)
Current items:
Accounts receivable (35,661) (31,146) (78,645)
Inventories 7,299 (31,926) (23,334)
Prepaid expenses 859 (13,810) (1,062)
Accounts payable (7,720) 16,780 31,143
Accrued expenses 4,987 14,843 25,842
Income taxes (26,990) (382) 26,833
Net cash provided from operations 314,518 304,655 275,352
Investments:
Purchases of property, plant and equipment (228,722) (227,188) (208,558)
Proceeds from sale of property, plant and equipment 4,793 7,207 3,104
Purchases of businesses, net of cash acquired (34,935) (1,171) -
Proceeds from sale of marketable securities 5,096,583 1,996,229 2,179,269
Purchases of marketable securities (5,063,306) (2,005,512) (2,260,518)
(Increase)/decrease in other assets (22,080) (4,170) 8,693
Net cash used for investments (247,667) (234,605) (278,010)
Financing:
Increase in investment grants 243 511 1,067
Increase in short-term loans 4,464 - -
Decrease in long-term debt (41,283) (3,000) (857)
Increase in long-term debt 6,490 1,216 654
Cash dividends paid (9,333) (8,622) (6,924)
Exercise of stock options 4,648 5,164 5,053
Purchase of treasury stock (49,430) (49,255) (31,918)
Reissuance of treasury stock 1,860 1,899 786
Net cash used for financing (82,341) (52,087) (32,139)
Effect of exchange rate changes on cash (6,780) (12,468) (8,215)
Net increase (decrease) in cash and cash equivalents (22,270) 5,495 (43,012)
Cash and cash equivalents, end of period $ 182,992 $ 205,262 $ 199,767
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 875 $ 604 $ 628
Income taxes $ 64,768 $ 80,983 $ 72,372
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
(1) Nature of Operations
Molex Incorporated manufactures electronic, electrical and fiber optic
interconnection products and systems; switches; value-added assemblies;
and 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.
(A) Principles of Consolidation
The consolidated financial statements include the accounts of Molex
Incorporated and its majority-owned subsidiaries (the Company). 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) Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.
(D) Marketable Securities
Marketable securities are available for sale and consist of a variety of
highly liquid investments, with maturities generally between three and 12
months. Unrealized holding gains and losses are recognized as a separate
component of shareholders' equity.
(E) 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.
(F) Inventories
Inventories are valued at the lower of first-in, first-out cost or market.
Inventories at June 30 consisted of the following:
1999 1998
Raw materials $ 46,767 $ 48,324
Work in progress 58,893 49,025
Finished goods 83,201 87,084
$ 188,861 $ 184,433
(G) Property, Plant and Equipment and Related Reserves
Depreciation and amortization are provided substantially on a straightline
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 periodically to determine if adjustment to the depreciation and
amortization period or to the unamortized balance is warranted.
(H) 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 $105,940 in 1999; $93,945 in 1998; and $89,450 in
1997.
Included in these totals are patent costs of $5,192, $5,379 and $5,607 for the
years ended June 30, 1999, 1998 and 1997, respectively.
(I) Revenue Recognition
The Company recognizes revenue at the date of shipment.
(J) Currency Translation
Assets and liabilities of international entities have been translated at
period-end exchange rates, and income and expenses have been translated using
average exchange rates for the period.
(K) Goodwill
Goodwill represents acquisition cost in excess of the fair value of net assets
acquired and is amortized using the straight-line method over periods ranging
from 10 to 25 years. The Company periodically re-evaluates the original
assumptions and rationale used in the establishment of the carrying value and
estimated life of this asset.
(L) Earnings Per Share
On December 31, 1997, the Company adopted SFAS No. 128, "Earnings Per Share."
This statement replaces primary and fully diluted earnings per share (EPS) with
basic and diluted EPS. Basic EPS is computed by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted EPS is computed by dividing net income by the weighted average number
of common shares and dilutive securities outstanding during the period.
The basic weighted-average shares outstanding reconciles to diluted
weighted-average shares outstanding as follows:
1999 1998 1997
Basic 155,472 156,600 157,111
Effect of dilutive
stock options 1,033 1,777 1,568
Diluted 156,505 158,377 158,679
(M) New Accounting Pronouncements
During the first quarter of fiscal 1999, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for reporting
and display of comprehensive income and its components.
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use,"
effective for fiscal years beginning after December 15, 1998. SOP 98-1 provides
guidance on accounting for the costs of computer software developed or obtained
for internal use. The Company is assessing the impact this statement will have
on its statement of financial position and the results of its operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Originally effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999, it has since been
delayed one year. It establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The Company is
assessing the impact this statement will have on its statement of financial
position and the results of its operations.
(N) Reclassifications
Certain reclassifications have been made to the prior years' financial
statements in order to conform to the 1999 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, other than the election of directors, that requires
shareholder approval. There are 25 million shares of preferred stock
authorized, none of which were issued or outstanding during the three years
ended June 30, 1999. 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.
In November 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. 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:
1999 1998
Mortgages $ 8,736 $ -
Bank loans 6,292 1,216
Industrial development bonds 4,350 4,350
Other 1,269 -
20,647 5,566
Less current portion 499 -
Total long-term debt $ 20,148 $ 5,566
Mortgages consist of two loans acquired as part of the purchase of Cardell
Corporation (see Note 10). Both loans are secured by certain buildings, carry
an interest rate of 7.79% and require periodic principal payments through 2012.
The Company has two bank loans with interest rates of 4.5% and 4.75%,
respectively, payable in periodic installments through March 2007.
Industrial development bonds, secured by certain land, buildings and equipment,
have interest rates ranging from 2% to 5%, with periodic principal payments
through November 2009.
The long-term debt as of June 30, 1999 matures as follows: $1,334 in 2001;
$1,396 in 2002; $1,433 in 2003; $1,478 in 2004; and $14,507 thereafter.
At June 30, 1999, the Company had available lines of credit of $18.8 million.
Short-term loans bear interest rates ranging from 2% to 3% and mature within a
12-month period.
(5) Income Taxes
The 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:
1999 1998 1997
United States $ 54,820 $ 89,945 $ 65,164
International 175,394 184,878 197,205
$ 230,214 $ 274,823 $ 262,369
Income tax provisions are as follows:
1999 1998 1997
Currently payable:
U.S. federal $ (20,399) $ 7,380 $ 33,397
State 1,755 5,839 4,952
International 69,132 65,801 70,903
50,488 79,020 109,252
Deferred:
United States 856 7,806 (8,843)
International 1,019 5,664 (4,828)
1,875 13,470 (13,671)
Total provision for
income taxes $ 52,363 $ 92,490 $ 95,581
The Company's tax rate differs from the U.S. federal income tax rate as
follows:
1999 1998 1997
U.S. federal income
tax rate 35.0% 35.0% 35.0%
Permanent tax exemptions (6.0) (4.7) (4.0)
Foreign tax credit (net) (14.5) - -
State income taxes,
net of federal
tax benefit 0.8 1.4 1.2
Foreign tax rates
in excess of
U.S. federal rate 7.5 2.0 4.2
22.8% 33.7% 36.4%
Net deferred income taxes arise from temporary differences as follows:
1999 1998
International/local taxes $ 2,060 $ 1,184
Employee benefit programs 12,196 10,329
Depreciation and amortization (13,361) (10,634)
Allowance for doubtful accounts 3,674 2,414
Inventory reserves 4,186 4,994
Inventory - other 3,956 3,938
Investments 368 1,209
Foreign tax credit carryforwards 5,396 5,670
Other deferred items 5,973 2,012
$ 24,448 $ 21,116
The net deferred tax accounts reported on the balance sheet as of June 30 are
as follows:
1999 1998
Net deferred:
Current asset $ 19,137 $ 15,101
Non-current asset 10,697 10,520
Current liability (878) (536)
Non-current liability (4,508) (3,969)
$ 24,448 $ 21,116
U.S. 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,
no additional U.S. income tax expense will be incurred, due to the availability
of foreign tax credits.
(6) Pension and Other Postretirement Benefits
Effective for fiscal 1999, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The provisions
of SFAS No. 132 revise employers' disclosures about pensions and other
postretirement benefit plans, but do not change the measurement or recognition
of these plans.
Pension
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.
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 to such plans of $10,903; $10,348;
and $7,226 were charged to operations during 1999, 1998 and 1997, respectively.
Other Postretirement Benefits
The Company provides 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.
Notes to Consolidated Financial Statements
(Continued)
Net periodic pension and postretirement benefit costs for the Company's plans
consist of the following for the year ended June 30:
<TABLE>
<CAPTION>
Interest Costs Recognized Amortization of Net
on Projected Expected Prior Unrecognized Recognized Periodic
Service Benefit Return on Service Transition (Gains) Pension
Costs Obligation Plan Assets Cost Obligation Losses Expense
<S> <C> <C> <C> <C> <C> <C> <C>
1999: Pension
U.S. Plans $ 1,233 $ 1,070 $ (1,331) $ 231 $ 110 $ - $ 1,313
International Plans 2,871 1,532 (1,227) - 3 (1,248) 1,931
Postretirement
Other Plans 635 651 - (313) - - 973
1998: Pension
U.S. Plans 944 734 (639) 231 110 - 1,380
International Plans 2,445 1,511 (868) - (201) - 2,887
Postretirement
Other Plans 630 632 - (280) - 3 985
1997: Pension
U.S. Plans 856 655 (641) - 340 - 1,210
International Plans 2,642 1,448 (860) - (17) - 3,213
Postretirement
Other Plans 668 563 - (214) - 11 1,028
</TABLE>
The following provides a reconciliation of benefit obligations, plan assets
and funded status of the plans.
<TABLE>
<CAPTION>
1999 1998
Pension Postretirement Pension Postretirement
U.S. Int'l. Other U.S. Int'l. Other
Plans Plans Plans Plans Plans Plans
<S> <C> <C> <C> <C> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 15,456 $ 32,676 $ 9,439 $ 10,180 $ 34,573 $ 8,528
Service cost 1,233 2,871 635 944 2,445 630
Interest cost 1,070 1,532 651 734 1,511 632
Participants contributions - 191 - - 217 -
Benefits paid (329) (1,576) (155) (300) (712) (49)
Liability (gains) losses (459) 1,413 (1,807) 3,898 (745) (304)
Changes in foreign currency - 1,892 - - (4,613) -
Benefit obligation at end of year $ 16,971 $ 38,999 $ 8,763 $ 15,456 $ 32,676 $ 9,439
Change in plan assets
Fair value of plan assets
at beginning of year $ 14,408 $ 19,186 $ - $ 9,529 $ 14,161 $ -
Actual return on plan assets 1,984 1,357 - 3,873 868 -
Employer contributions 1,094 286 302 1,306 523 181
Plan participants' contributions - 191 - - 217 -
Benefits paid (329) (27) (302) (300) (168) (181)
Assets gains (losses) - - - - 4,671 -
Changes in foreign currency - (1,051) - - (1,086) -
Fair value of plan assets at end of year $ 17,157 $ 19,942 $ - $ 14,408 $ 19,186 $ -
Funded status $ 186 $(19,057) $ (8,763) $ (1,048) $(13,490) $ (9,439)
Unrecognized net transition liability 66 1,456 - 176 1,461 -
Unrecognized net actuarial (gain) loss (837) (1,234) (1,106) 275 (4,054) 680
Unrecognized prior service cost 1,508 - (2,002) 1,739 0 (2,293)
Accrued pension asset (liability) included
in the consolidated balance sheet $ 923 $(18,835) $(11,871) $ 1,142 $(16,083) $ (11,052)
</TABLE>
The weighted average assumptions used in computing the previous information are
presented below:
<TABLE>
<CAPTION>
1999 1998
Post- Post-
Pension retirement Pension retirement
U.S. Int'l. Other U.S. Int'l. Other
Plans Plans Plans Plans Plans Plans
<S> <C> <C> <C> <C> <C> <C>
Discount rates 7.25% 4.6% 7.25% 7.0% 5.1% 7.0%
Rates of increase in compensation 4.5% 3.3% - 4.5% 3.8% -
Expected long-term rates of return
on plan assets 9.0% 6.8% - 7.0% 7.0% -
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 6.4 percent in 1999, declining annually
to an ultimate rate of 4.75 percent by 2017. The health care cost trend rate
assumption has a significant effect on the amount of the obligation and
periodic cost reported. A one-percentage-point change in assumed health care
cost trend rates would have the following effects:
1 Percentage 1 Percentage
Point Increase Point Decrease
Effect on total of service and
interest cost components $ 1,546 $ (1,081)
Effect on postretirement
benefit obligation $ 11,007 $ (8,157)
(7) 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, 1999 are $9,066
in 2000; $4,930 in 2001; $2,839 in 2002; $1,584 in 2003; $561 in 2004; and
$8,849 thereafter, totaling $27,829.
Rental expense was $9,999 in 1999; $9,656 in 1998; and $8,541 in 1997.
(8) Stock Option Plans
The Company has three stock option plans currently in effect, two of which may
issue future grants: the 1990 Stock Option Plan (the "1990 Plan"), the 1991
Stock Option Plan (the "1991 Plan"), and the 1998 Stock Option Plan (the "1998
Plan").
1990 Plan: This plan expired as of June 30, 1999. Future grants cannot be
issued from this plan, but all grants issued prior to this date can be
exercised. The most significant terms of this plan provide that (1) options
may be granted for 5.5 million shares of Common Stock and (2) the option price
shall be 50 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. Under the 1990 Plan, all shares issued are nonqualified.
Stock option transactions relating to the 1990 Plan are summarized as follows:
Wtd. Avg. Price
Shares Per Share
Outstanding at 6/30/96 2,394 $ 7.94
Granted 719 11.75
Exercised 513 6.59
Canceled 101 8.82
Outstanding at 6/30/97 2,499 $ 9.28
Granted 734 15.34
Exercised 483 7.61
Canceled 91 12.47
Outstanding at 6/30/98 2,659 $ 11.18
Granted 23 13.07
Exercised 490 9.35
Canceled 38 12.54
Outstanding at 6/30/99 2,154 $ 11.60
Options exercisable at 6/30/98 503 $ 8.91
Options exercisable at 6/30/99 395 $ 10.72
1991 Plan: The most significant terms of this plan provide that (1) options may
be granted for 3.1 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 11 years from the date of the grant.
Stock option transactions relating to the 1991 Plan are summarized as follows:
Wtd. Avg. Price
Shares Per Share
Outstanding at 6/30/96 841 $ 14.36
Granted 395 22.99
Exercised 144 11.27
Canceled 13 19.17
Outstanding at 6/30/97 1,079 $ 17.88
Granted 156 30.37
Exercised 164 12.28
Canceled 2 11.80
Outstanding at 6/30/98 1,069 $ 20.57
Granted 501 26.17
Exercised 95 16.43
Canceled 2 14.02
Outstanding at 6/30/99 1,473 $ 22.74
Options exercisable at 6/30/98 142 $ 18.17
Options exercisable at 6/30/99 135 $ 22.38
1998 Plan: The most significant terms of this plan provide that (1) options may
be granted for 10 million shares of Class A Common Stock and (2) the option
price shall be not less than 10 percent nor more than 100 percent of the fair
market value of the Class A stock of the Company on the date of grant. The
option term is five to nine years from the date of grant.
Stock option transactions relating to the 1998 Plan are summarized as follows:
Wtd. Avg. Price
Shares Per Share
Outstanding at 6/30/98 - $ -
Granted 771 11.79
Exercised - -
Canceled 8 11.79
Outstanding at 6/30/99 763 $ 11.79
Options exercisable at 6/30/99 - -
The option price per share for certain options in the 1990 and 1998 plans was
less than the fair market value at the date of grant, thus creating deferred
unearned compensation. Deferred unearned compensation is charged to operations
over the term of the option. In fiscal 1999, $7,171 was charged to operations
($6,717 in 1998 and $5,057 in 1997).
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, the effects on reported net
income and earnings per common share would have been as follows:
1999 1998 1997
Net income,
as reported $ 178,029 $ 182,243 $ 166,716
Pro forma net income 177,880 181,349 166,133
Earnings per share:
Basic 1.15 1.16 1.06
Diluted 1.14 1.15 1.05
Pro forma earnings per share:
Basic 1.14 1.16 1.05
Diluted 1.14 1.15 1.05
For purposes of computing pro forma net income and earnings per common share,
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:
1999 1998 1997
Dividend yield 0.2% 0.2% 0.2%
Expected volatility 29.84% 25.22% 30.25%
Risk-free interest rate 6.00% 6.00% 6.07-6.54%
Expected life of
option (years) 4.86 4.25 3.01-10.50
The following table summarizes information about options outstanding
at June 30, 1999:
<TABLE>
<CAPTION>
Wtd. Avg.
Range of Number Remaining Wtd. Avg. Number Wtd. Avg.
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
<S> <C> <C> <C> <C> <C>
$ 8.09 - $ 8.09 115 0.4 $ 8.09 115 $ 8.09
8.28 - 8.28 571 4.1 8.28 - -
8.58 - 11.52 890 4.8 11.19 221 10.76
11.75 - 13.94 1,010 5.4 12.58 3 12.29
14.00 - 16.00 624 5.2 15.32 56 15.87
16.10 - 23.68 507 6.1 22.37 101 20.09
24.64 - 24.64 9 1.3 24.64 7 24.64
26.00 - 35.10 659 7.8 27.05 26 29.74
38.61 - 38.61 5 3.3 38.61 1 38.61
4,390 530
</TABLE>
9) Segment and Related Information
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" for fiscal 1999, which requires the Company to report
information about its operating segments based on how management views its
business. The Company and its subsidiaries operate in one product segment: the
manufacture and sale of electrical components. Management operates the business
by geographic segments. The Americas region consists primarily of operations in
North America. The Far East North region is substantially Japan, but also
includes Korea, while the Far East South region includes China, Singapore and
the remaining countries in Asia. European operations are primarily located in
western Europe. Information by geographic area is summarized in the following
table:
<TABLE>
<CAPTION>
United Americas Far East Far East Corporate
States (Non-U.S.) North South Europe and Other Eliminations Total
1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer revenue $585,120 $88,683 $364,606 $341,526 $331,711 $ 3 $ - $1,711,649
Intercompany revenue 86,971 6,758 149,105 38,817 40,908 - (322,559) -
Total revenue 672,091 95,441 513,711 380,343 372,619 3 (322,559) 1,711,649
Net income 59,530 1,573 57,793 33,547 24,141 1,445 - 178,029
Identifiable assets 895,634 51,112 459,700 272,203 397,917 121,819 (296,373) 1,902,012
1998
Customer revenue $557,272 $93,274 $327,741 $290,908 $353,575 $ 205 $ - $1,622,975
Intercompany revenue 69,661 5,351 131,822 37,021 32,796 - (276,651) -
Total revenue 626,933 98,625 459,563 327,929 386,371 205 (276,651) 1,622,975
Net income 61,516 4,022 42,907 32,844 43,344 (2,528) 138 182,243
Identifiable assets 650,858 52,188 374,926 229,495 393,699 171,623 (233,155) 1,639,634
1997
Customer revenue $503,576 $69,970 $363,605 $302,305 $299,771 $ 485 $ - $1,539,712
Intercompany revenue 55,257 3,149 127,943 33,213 23,798 4,000 (247,360) -
Total revenue 558,833 73,119 491,548 335,518 323,569 4,485 (247,360) 1,539,712
Net income 48,517 6,621 46,560 51,711 28,072 (14,838) 73 166,716
Identifiable assets 571,051 39,224 477,799 283,022 249,642 80,060 (63,867) 1,636,931
</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 1999, 1998 and 1997, no customer accounted
for more than 10% of consolidated net revenue.
10) Acquisitions
On June 16, 1999, the Company acquired Cardell Corporation, an automotive
terminal and connector manufacturer. The purchase price of $129.0 million
consists of the issuance of $69.4 million of Molex common stock (approximately
2.26 million shares) to Cardell shareholders, cash of $18.5 million and the
repayment of $41.1 million in debt of Cardell assumed upon acquisition.
On September 4, 1998, the Company acquired 70 percent of the common stock of
Silent Systems, Inc., a manufacturer of acoustic noise reduction, heat sink
and thermal management products, for $14.8 million in cash.
On August 19, 1998, the Company acquired 51 percent of Mafatlal Micron, which
primarily supplies connectors to the telecommunications industry in India, for
$1.7 million in cash.
These acquisitions were accounted for by the purchase method of accounting. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the dates of acquisition. These
acquisitions are not material to the results of operations of the Company,
therefore proforma financial data is not presented. The purchase price for the
acquisitions was preliminarily allocated to the assets acquired based on their
estimated fair values as follows:
(In thousands)
Current assets $ 21,694
Property, plant and equipment 52,160
Intangibles and other assets 107,258
Liabilities assumed (35,637)
Net assets acquired 145,475
Value of stock issued (69,423)
Long-term debt repaid at acquisition (41,117)
Cash paid for acquisitions $ 34,935
Fiscal 1999, 1998 and 1997 by Quarter
(in thousands, except per share data-unaudited)
Quarter 1999 1998 1997
Net revenue 1st $409,892 $410,194 $359,595
2nd 429,718 405,497 377,005
3rd 426,178 409,228 387,053
4th 445,861 398,056 416,059
Gross profit 1st 165,577 170,333 145,252
2nd 176,597 168,508 155,680
3rd 173,674 168,523 161,091
4th 157,490 163,345 178,872
Income before income taxes and minority interest
1st 58,831 69,254 58,639
2nd 64,570 69,632 63,137
3rd 63,971 69,106 67,964
4th 42,842 66,831 72,628
Income taxes 1st 19,590 24,798 22,777
2nd 20,699 24,081 22,925
3rd 19,181 22,688 24,751
4th (7,107) 20,923 25,128
Net income 1st 39,173 44,456 35,855
2nd 43,873 45,551 40,197
3rd 44,960 46,418 43,190
4th 50,023 45,818 47,473
Earnings per common share(1)
Basic 1st 0.25 0.28 0.23
2nd 0.28 0.29 0.26
3rd 0.29 0.30 0.28
4th 0.32 0.29 0.30
Diluted 1st 0.25 0.28 0.23
2nd 0.28 0.29 0.25
3rd 0.29 0.29 0.27
4th 0.32 0.29 0.30
<TABLE>
<CAPTION>
LOW HIGH LOW HIGH LOW HIGH
National Market System
<S> <C> <C> <C> <C> <C> <C>
Price of Stock: Common Stock(1) 1st 23 5/8 31 29 1/4 36 13/64 17 19/32 24 5/32
2nd 24 9/16 39 25 3/4 38 13/32 22 23/32 25 7/16
3rd 25 1/2 38 24 13/16 32 1/8 22 13/32 25 19/32
4th 26 3/16 37 1/8 23 30 1/2 21 19/32 31 19/32
Class A Common Stock(1) 1st 22 1/4 28 1/8 27 1/2 33 19/64 16 15/64 21 59/64
2nd 21 3/4 34 7/8 23 35 1/2 20 9/16 23 17/32
3rd 22 1/2 32 23 3/4 30 3/8 20 31/32 24 5/32
4th 22 3/4 31 1/2 21 3/4 29 1/4 20 31/32 30 3/32
</TABLE>
(1) Restated for the following 25% stock dividends: November 1997 and February
1997.
During the fourth quarter of fiscal 1999, gross profit was impacted by a charge
of $20.4 million relating to the write-off of certain production tooling and
related capacity adjustments. Selling, general and administrative expenses
included a charge of $6.0 million related to the costs to close manufacturing
operations in Taiwan, South Africa and Canada. These combined charges reduced
net income $20.7 million (net of tax benefit of $5.7 million). The fourth
quarter also included a $20.7 million favorable tax adjustment due to the
utilization of foreign tax credits, a tax holiday in several Far East
jurisdictions and resolution of various tax issues.
