TIDMMOL
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Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic
components company, today reported results for its fiscal 2011
third quarter ended March 31, 2011.
Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
USD millions, except per share data 2011 2010 2010
Net revenue $ 874.5 $ 901.5 $ 756.3
Net income 68.1 78.3 38.4
Earnings per share 0.39 0.45 0.22
Revenue for the March 2011 quarter of $874.5 million increased
16% from the March 2010 quarter and declined 3% from the December
2010 quarter. Revenue in local currencies increased 13% compared
with the prior year quarter and declined 4% compared with the
December 2010 quarter. Orders for the quarter were $880 million, an
increase of 5% from the prior year quarter and 1% from the December
2010 quarter.
Net income for the March 2011 quarter was $68.1 million or $0.39
per share, compared with net income of $38.4 million, or $0.22 per
share, for the March 2010 quarter and $78.3 million, or $0.45 per
share, for the December 2010 quarter. The effective tax rate for
the current quarter was 30.4%. These periods include costs related
to unauthorized activities in Japan as outlined below in our update
on this matter. The March 2010 quarter also included restructuring
costs of $9.1 million ($7.4 million after-tax or $0.04 per
share).
"We were fortunate that the recent natural disasters in Japan
had only a minor impact on Molex this quarter. Our employees are
safe and our facilities are operational," commented Martin P.
Slark, Molex's Chief Executive Officer. "Financial results for the
March quarter were generally in line with our guidance and
expectations; however, we do expect additional impact on our
results in the June quarter due to supply chain disruptions in
Japan. Fortunately, we have significant new product introductions
and strong new orders outside of Japan which will help to mitigate
this situation."
"The rate of expansion of mobile computing, investments in data
and communication infrastructure and growth of the middle class in
emerging markets continues to accelerate, driving increased demand
for our many products. Our new organization structure, Focus
Account program and portfolio management initiatives position Molex
to benefit from these strong trends."
Other financial highlights for the quarter ended March 31,
2011:
-- Gross profit margin was 29.8% in the March 2011 quarter, compared with
31.2% in the March 2010 quarter and 30.1% in the December 2010
quarter.
-- SG&A expense was $159.4 million, or 18.2% of revenue compared with
20.7% in the March 2010 quarter and 17.6% in the December 2010
quarter.
-- Capital expenditures were $64.2 million or 7.3% of revenue.
-- Depreciation and amortization was $60.9 million or 7.0% of revenue.
-- Backlog was $425.4 million, an increase of $11.7 million or 2.8% from
the December 2010 quarter. The book-to-bill ratio was 1.01 for
the
March 2011 quarter.
Unauthorized Activities in Japan
As previously disclosed, in April 2010 Molex launched an
investigation into unauthorized activities in its Japanese
subsidiary after it was learned that an individual had obtained
unauthorized loans and entered into unauthorized trading in Molex
Japan's name. The Company retained outside legal counsel and they
retained forensic accountants to investigate the matter and that
investigation has been completed. On August 31, 2010, the bank
which holds the unauthorized loans filed a complaint in Tokyo
District Court requesting payment from Molex Japan. Molex Japan
intends to vigorously contest the enforceability of the outstanding
unauthorized loans and any attempt by the lender to obtain
payment.
Net income for the March 2011, December 2010 and March 2010
quarters were impacted by costs related to the unauthorized
activities in Japan of $2.9 million ($1.8 million after-tax or
$0.01 per share), $2.7 million ($1.7 million after-tax or $0.01 per
share), and $8.0 million ($5.1 million after-tax or $0.03 per
share), respectively.
Increase in Cash Dividend
The Board of Directors has approved an increase in the quarterly
cash dividend to $0.20 per share, an increase of 14.3% from the
previous cash dividend of $0.175 per share. The increase is
effective for the cash dividend payable on July 25, 2011 to
shareholders of record on June 30, 2011, for each share of Common
Stock (MOLX), Class A Common Stock (MOLXA) and Class B Common
Stock, and will continue quarterly until further action by the
Board.
Outlook
The Company has considered the estimated impact on revenue and
earnings from the natural disasters in Japan in setting its
guidance for the coming quarter. In consideration of these factors
and assuming constant foreign currency rates and commodity prices,
the Company estimates revenue in a range of $900 to $930 million
for the June 2011 quarter, even after a reduction of approximately
$20 million due to supply chain disruptions in Japan. At this level
of revenue, the Company expects earnings per share in a range of
$0.42 to $0.48 assuming an effective tax rate of 30%. In addition,
the guidance assumes unusual costs due to the events in Japan
including freight, production inefficiencies and asset related
charges totaling $3 to $4 million.
Earnings Conference Call Information
A conference call will be held on Tuesday, May 3, 2011 at 4:00
pm central time. Please dial (888) 680-0894 to participate in the
call. International callers should dial (617) 213-4860. Please dial
in at least five minutes prior to the start of the call and refer
to participant pass code 73185691. Internet users will be able to
access the webcast, including slide materials, live and in replay
in the "Investors" section of the Company's website at
www.molex.com. A 48-hour telephone replay will be available at
approximately 6:00 pm central time at (888) 286-8010 or (617)
801-6888 / pass code 47915877.
Other Investor Events
May 24, 2011 / 5thAnnual Barrington Research Industrial
& Business Services Conf / Chicago
June 16, 2011 / William Blair & Company's 31stAnnual
Growth Stock Conference / Chicago
June 21, 2011 / NASDAQ OMX 26thInvestor Program / London
Forward-Looking Statements
Statements in this release that are not historical are
forward-looking and are subject to various risks and uncertainties
that could cause actual results to vary materially from those
stated.Words such as "anticipates," "expects," "believes,"
"intends," "plans," "projects," "estimates," "potential," and
similar expressions are used to identify these forward-looking
statements.Forward-looking statements are based on currently
available information and include, among others, the discussion
under "Outlook."These statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions
including those associated with the operation of our business,
including the risk that customer demand will decrease either
temporarily or permanently, whether due to the Company's actions or
the demand for the Company's products, and that the Company may not
be able to respond through cost reductions in a timely and
effective manner; the risk that the value of our inventory may
decline; price cutting, new product introductions and other actions
by our competitors; fluctuations in the costs of raw materials that
the Company is not able to pass through to customers because of
existing contracts or market factors; the availability of credit
and general market liquidity; fluctuations in currency exchange
rates; natural disasters; the financial condition of our customers;
labor cost increases; the challenges attendant to plant closings
and restructurings, the difficulty of commencing or increasing
production at existing facilities, and the reactions of customers,
governmental units, employees and other groups; and the ability to
realize cost savings from restructuring activities, the outcome of
legal proceedings and losses resulting from unauthorized activities
in Molex Japan.
Other factors, risks and uncertainties are set forth in Item 1A
"Risk Factors" of the Company's Form 10-K for the year ended June
30, 2010, and for the Form 10-Q for the quarters ended September
30, 2010 and December 31, 2010, which are incorporated by reference
and in other reports that Molex files or furnishes with the
Securities and Exchange Commission.Forward-looking statements are
based upon assumptions as to future events that may not prove to be
accurate.Actual outcomes and results may differ materially from
what is expressed in these forward-looking statements.As a result,
this release speaks only as of its date and Molex disclaims any
obligation to revise these forward-looking statements or to provide
any updates regarding information contained in this release
resulting from new information, future events or otherwise.
Molex Incorporated is a 72-year-old global manufacturer of
electronic, electrical and fiber optic interconnection systems.
Based in Lisle, Illinois, USA, the Company operates 39
manufacturing locations in 16 countries. The Molex website is
www.molex.com.
Editor's note: Molex is traded on the NASDAQ Global Select
Market (MOLX and MOLXA) in the United States and on the London
Stock Exchange. The Company's voting common stock (MOLX) is
included in the S&P 500 Index.
Molex Incorporated
Condensed Consolidated Balance Sheets
(in thousands)
Mar. 31, June 30,
2011 2010
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 447,796 $ 376,352
Marketable securities 20,400 18,508
Accounts receivable, less allowances 780,761 734,932
of $47,275 and $43,650 respectively
Inventories 546,080 469,369
Deferred income taxes 115,278 112,531
Other current assets 36,978 64,129
Total current assets 1,947,293 1,775,821
Property, plant and equipment, net 1,139,918 1,055,144
Goodwill 148,422 131,910
Non-current deferred income taxes 81,767 94,191
Other assets 189,571 179,512
Total assets $ 3,506,971 $ 3,236,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 116,724 $ 110,070
and short-term borrowings
Accounts payable 353,188 395,474
Accrued expenses:
Accrual for unauthorized activities in Japan 178,339 165,815
Income taxes payable 20,906 21,505
Other 214,809 219,832
Total current liabilities 883,966 912,696
Other non-current liabilities 22,244 19,869
Accrued pension and postretirement benefits 130,033 135,448
Long-term debt 202,549 183,434
Total liabilities 1,238,792 1,251,447
Commitments and contingencies
Total stockholders' equity 2,268,179 1,985,131
Total liabilities and stockholders' equity $ 3,506,971 $ 3,236,578
Molex
Incorporated
Condensed
Consolidated
Statements
of Income
(unaudited)
(in thousands,
except
per share
data)
Three Months Ended Nine Months Ended
March 31, March 31,
2011 2010 2011 2010
Net revenue $ 874,531 $ 756,294 $ 2,673,668 $ 2,159,903
Cost of sales 613,917 520,564 1,866,933 1,520,218
Gross profit 260,614 235,730 806,735 639,685
Selling, 159,448 156,374 475,548 452,108
general
and
administrative
Restructuring - 9,068 - 90,596
costs and
asset
impairments
Unauthorized 2,855 8,032 11,110 22,129
activities
in Japan
Total 162,303 173,474 486,658 564,833
operating
expenses
Income from 98,311 62,256 320,077 74,852
operations
Interest (1,726 ) (2,298 ) (4,849 ) (4,584 )
(expense)
income, net
Other income 1,325 (2,721 ) 5,766 62
(expense)
Total other (401 ) (5,019 ) 917 (4,522 )
(expense)
income
Income before 97,910 57,237 320,994 70,330
income taxes
Income taxes 29,765 18,790 99,462 33,179
Net income $ 68,145 $ 38,447 $ 221,532 $ 37,151
Earnings per
share:
Basic $ 0.39 $ 0.22 $ 1.27 $ 0.21
Diluted $ 0.39 $ 0.22 $ 1.26 $ 0.21
Dividends $ 0.1750 $ 0.1525 $ 0.5025 $ 0.4575
declared
per share
Average common
shares
outstanding:
Basic 174,957 173,858 174,666 173,689
Diluted 176,449 174,838 175,678 174,523
Molex Incorporated
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended
March 31,
2011 2010
Operating activities:
Net income $ 221,532 $ 37,151
Add non-cash items included in net income:
Depreciation and amortization 181,716 180,699
Share-based compensation 17,009 21,024
Non-cash restructuring and other costs, net - 20,041
Other non-cash items 17,719 21,817
Changes in assets and liabilities:
Accounts receivable (2,143 ) (122,127 )
Inventories (43,112 ) (62,059 )
Accounts payable (63,725 ) 48,809
Other current assets and liabilities 3,903 21,701
Other assets and liabilities (5,968 ) 14,870
Cash provided from operating activities 326,931 181,926
Investing activities:
Capital expenditures (196,915 ) (150,001 )
Proceeds from sales of property, 1,460 8,082
plant and equipment
Proceeds from sales or maturities 5,568 47,339
of marketable securities
Purchases of marketable securities (6,062 ) (15,259 )
Acquisitions (18,847 ) (10,097 )
Other investing activities (196 ) (5,308 )
Cash used for investing activities (214,992 ) (125,244 )
Financing activities:
Proceeds from revolving credit facility 85,000 154,000
Payments on revolving credit facility (20,000 ) (79,000 )
Proceeds from short-term loans 28,856 -
Payments on short-term loans (31,843 ) -
Net change in long-term debt (47,908 ) (53,194 )
Cash dividends paid (83,766 ) (79,420 )
Exercise of stock options 5,935 2,257
Other financing activities (2,990 ) (2,056 )
Cash used for financing activities (66,716 ) (57,413 )
Effect of exchange rate changes on cash 26,221 7,778
Net increase in cash and cash equivalents 71,444 7,047
Cash and cash equivalents, beginning of period 376,352 424,707
Cash and cash equivalents, end of period $ 447,796 $ 431,754
Molex Incorporated
Steve Martens, VP Investor Relations
630-527-4344
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