UNITED STATES 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, 2008
Commission File Number 0-7491
MOLEX INCORPORATED
(Exact name of registrant as
specified in its charter)
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Delaware
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36-2369491
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2222 Wellington Court, Lisle, Illinois 60532
(Address of principal executive
offices)
Registrants telephone number, including area code:
(630) 969-4550
SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.05
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The Nasdaq Stock Market, Inc.
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Class A Common Stock, par value $0.05
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The Nasdaq Stock Market, Inc.
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SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark of the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
þ
No
o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes
o
No
þ
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
þ
No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
(Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K.
þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated
filer
þ
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Accelerated
filer
o
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Non-accelerated
filer
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(Do not check if a smaller reporting company)
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Smaller reporting
company
o
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes
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No
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On July 31, 2008, the following numbers of shares of the
Companys common stock were outstanding:
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Common Stock
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98,451,858
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Class A Common Stock
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78,977,871
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Class B Common Stock
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94,255
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The aggregate market value of the voting and non-voting shares
(based on the closing price of these shares on the NASDAQ Global
Select Market on December 31, 2007) held by
non-affiliates was approximately $3.7 billion.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of
Stockholders, to be held on October 31, 2008 are
incorporated by reference into Part III of this annual
report on
Form 10-K.
TABLE OF
CONTENTS
Molex Web
Site
We make available through our web site at www.molex.com our
annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and all amendments to those reports as soon as reasonably
practicable after such material is electronically filed with the
Securities and Exchange Commission (SEC).
Information relating to corporate governance at Molex, including
our Code of Business Conduct and Ethics, information concerning
executive officers, directors and Board committees (including
committee charters), and transactions in Molex securities by
directors and officers, is available on or through our web site
at www.molex.com under the Investors caption.
We are not including the information on our web site as a part
of, or incorporating it by reference into, this annual report on
Form 10-K.
2
PART I
Molex Incorporated (together with its subsidiaries, except where
the context otherwise requires, we, us
and our) was incorporated in the state of Delaware
in 1972 and originated from an enterprise established in 1938.
We are the worlds second-largest manufacturer of
electronic connectors in terms of revenue. Net revenue was
$3.3 billion for fiscal 2008. We operated 45 manufacturing
locations located in 17 countries, and employed
32,160 people worldwide as of June 30, 2008.
Our core business is the manufacture and sale of electronic
components. Our products are used by a large number of leading
original equipment manufacturers (OEMs) throughout the world. We
design, manufacture and sell more than 100,000 products,
including terminals, connectors, planar cables, cable
assemblies, interconnection systems, backplanes, integrated
products and mechanical and electronic switches. We also provide
manufacturing services to integrate specific components into a
customers product.
The Connector
Industry
The global connector industry is highly competitive and
fragmented and is estimated to represent approximately
$46 billion in revenue for fiscal 2008. The industry has
grown at a compounded annual rate of 6.1% over the past
25 years and is expected to grow at a rate of 7.3% in
calendar year 2008.
The connector industry is characterized by rapid advances in
technology and new product development. These advances have been
substantially driven by the increased functionality of
applications in which our products are used. Although many of
the products in the connector market are mature products, some
with
25-30 year
life spans, there is also a constant demand for new product
solutions.
Industry trends that we deem particularly relevant include:
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Globalization.
Synergistic opportunities exist
for the industry to design, manufacture and sell electronic
products in different countries around the world in an efficient
and seamless process. For example, electronic products may be
designed in Japan, manufactured in China, and sold in the United
States.
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Convergence of markets.
Traditionally separate
markets such as consumer electronics, data products and
telecommunications are converging, resulting in single devices
offering broad-based functionality.
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Increasing electronics content.
Consumer
demand for advanced product features, convenience and
connectivity is driving connector growth at rates faster than
the growth rates of the underlying electronics markets.
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Product size reduction.
High-density,
micro-miniature technologies are expanding to markets such as
data and mobile phones, leading to smaller devices and greater
mobility.
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Consolidating supply base.
Generally, global
OEMs are consolidating their supply chain by selecting global
companies possessing broad product lines for the majority of
their connector requirements.
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Price erosion.
As unit volumes grow,
production experience is accumulated and costs decrease, and as
a result, prices decline.
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Markets and
Products
The approximate percentage of our net revenue by market for
fiscal 2008 is summarized below:
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Percentage of Fiscal 2008
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Primary End Use Products
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Markets
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Net Revenue
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Supported by Molex
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Telecommunications
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26
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%
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Mobile phones and devices, networking equipment, switches and
transmission equipment
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Data Products
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22
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%
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Desktop and notebook computers, peripheral equipment, servers,
storage, copiers, printers and scanners
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Automotive
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18
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%
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Engine control units, body electronics, safety electronics,
sensors, panel instrumentation and other automotive electronics
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Consumer
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18
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Digital electronics, CD and DVD players, cameras, plasma and LCD
televisions, electronic games and major appliances
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Industrial
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13
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%
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Factory automation, robotics, automated test equipment, vision
systems and diagnostic equipment
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Other
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3
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%
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Electronic and electrical devices for a variety of markets
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Telecommunications.
In the telecommunications
market, we believe our key strengths include high speed optical
signal product lines, backplane connector systems, power
distribution product, micro-miniature connectors, global
coordination and complementary products such as keyboards and
antennas.
For mobile phones, we provide micro-miniature connectors, SIM
card sockets, keypads, electromechanical subassemblies and
internal antennas and subsystems. An area of particular
innovation is high-speed backplanes and cables for
infrastructure equipment. For example, our Plateau HS DockTM
incorporates a new plated plastic technology to increase
bandwidth, reduce crosstalk and control impedance in
applications such as telecommunication routers.
Data Products.
In the data market, our key
strengths include our high-speed signal product line, storage
input/output (I/O) products; standards committee
leadership, global coordination, low cost manufacturing and
strong relationships with OEMs, contract manufacturers and
original design manufacturers.
We manufacture power, optical and signal connectors and cables
for fast end-to-end data transfer, linking disk drives,
controllers, servers, switches and storage enclosures. Our
ongoing involvement in industry committees contributes to the
development of new standards for the connectors and cables that
transport data. For example, our family of small form-factor
pluggable products offers end-users both fiber optic and copper
connectivity and more efficient storage area network management.
We hold a strong position with connectors used in servers, the
segment of this market that accounts for the largest volume of
connector purchases. We offer a large variety of products for
power distribution, signal integrity, processor and memory
applications. We are also a leading designer in the industry for
storage devices.
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Our Serial ATA product enables higher-speed communication
between a computers disk drive and processor. In addition,
our product portfolio includes a wide range of interconnect
devices for copiers, printers, scanners and projectors.
Automotive.
In the automotive market, we
believe our strengths include new product development expertise,
entertainment, safety and convenience product features,
technical skills and integrated manufacturing capabilities.
Our interconnects are used in air bag, seatbelt and tire
pressure monitoring systems and powertrain, window and
temperature controls. Todays cars are mobile communication
centers, complete with navigation tools and multimedia
entertainment. Our Media Oriented System Transport (MOST)
connector system uses plastic optical fiber to transmit audio,
video and data at high speeds in devices such as CD and DVD
players.
Consumer.
In the consumer market, we believe
our key strengths include optical and micro-miniature connector
expertise, breadth of our high wattage (power) product line,
cable and wire application equipment and low cost manufacturing.
We design and manufacture many of the worlds smallest
connectors for home and portable audio, digital still and video
cameras, DVD players and recorders, as well as devices that
combine multiple functions. Our super micro-miniature products
support customer needs for increased power, speed and
functionality but with decreased weight and space requirements.
We believe that they provide industry leadership with advanced
interconnection products that help enhance the performance of
video and still cameras, DVD players, portable music players,
PDAs and hybrid devices that combine multiple capabilities into
a single unit.
We are a leading connector source and preferred supplier to some
of the worlds largest computer game makers and have been
awarded contracts that demonstrate our skill in designing
innovative connectors. In addition, we provide products for
video poker and slot machines. Pachinko machines, which are
popular in Japan, use our compact 2.00mm pitch
MicroClasp
TM
connector, which features an inner lock that helps
on-site
installers easily insert new game boards.
Industrial.
In the industrial market, we
believe our key strengths include optical and micro-miniature
connector expertise, breadth of our power and signal product
lines, distribution partnerships and global presence.
Our high-performance cables, backplanes, power connectors and
integrated products are found in products ranging from
electronic weighing stations to industrial microscopes and
vision systems. Advances in semiconductor technology require
comparable advances in equipment to verify quality, function and
performance. For this reason, we developed our Very High-Density
Metric (VHDM) connector system to help assure signal integrity
and overall reliability in high-speed applications such as chip
testers.
We increased our presence in the electrical and factory
automation market in fiscal 2007 with the acquisition of
Woodhead Industries. As a result, we have extended our
industrial product line to include industrial networks and
connectivity as well as industrial communications, both
electronics and software. In addition, we expanded our line of
compact robotic connectors and I/O connectors for servo motors,
as well as identified factory uses for the time-tested products
we have developed for other industries.
Other.
Medical electronics is a growing market
for our connectors, switch and assembly products. We provide
both connectors and custom integrated systems for diagnostic and
therapeutic equipment used in hospitals including x-ray,
magnetic resonance imaging (MRI) and dialysis machines. Military
electronics is also one of our emerging markets. We have found a
range of electronic applications for our products in the
commercial-off-the-shelf (COTS) segment of this market. Products
originally developed for the computer, telecommunications and
automotive markets can be used in an increasing number of
military applications.
5
Business
Objectives and Strategies
One of our primary business objectives is to develop or improve
our leadership position in each of our core connector markets by
increasing our overall position as a preferred supplier and
improve our competitiveness on a global scale.
We believe that our success in achieving industry-leading
revenue growth throughout our history is the result of the
following key strengths:
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Broad and deep technological knowledge of microelectronic
devices and techniques, power sources, coatings and materials;
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Strong intellectual property portfolio that underlies many key
products;
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High product quality standards, backed with stringent systems
designed to ensure consistent performance, that meet or surpass
customers expectations;
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Strong technical collaboration with customers;
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Extensive experience with the product development process;
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Broad geographical presence in developed and developing markets;
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Continuous effort to develop an efficient, low-cost
manufacturing footprint; and
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A broad range of products both for specific applications and for
general consumption.
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We intend to serve our customers and achieve our objectives by
continuing to do the following:
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Concentrate on core markets.
We focus on
markets where we have the expertise, qualifications and
leadership position to sustain a competitive advantage. We have
been an established supplier of interconnect solutions for
almost 70 years. We are a principal supplier of connector
components to the telecommunications, computer, consumer,
automotive and industrial electronics markets.
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Grow through the development and release of new
products.
We invest strategically in the tools
and resources to develop and market new products and to expand
existing product lines. New products are essential to enable our
customers to advance their solutions and their market leadership
positions. In fiscal 2008, we generated approximately 23% of our
revenue from new products, which are defined as those products
released in the last 36 months.
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Optimize manufacturing.
We analyze the design
and manufacturing patterns of our customers along with our own
supply chain economics to help ensure that our manufacturing
operations are of sufficient scale and are located strategically
to minimize production costs and maximize customer service.
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Leverage financial strength.
We use our
expected cash flow from operations to invest aggressively in new
product development, to pursue synergistic acquisitions, to
align manufacturing capacity with customer requirements and to
pursue productivity improvements. We invested approximately 12%
of net revenue in capital expenditures and research and
development activities in fiscal 2008.
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On July 1, 2007 we implemented a new global organizational
structure that consists of five product-focused divisions and
one worldwide sales and marketing organization. The new
structure enables us to work more effectively as a global team
to meet customer needs as well as to better leverage our design
expertise and our low-cost production centers around the world.
The new worldwide sales and marketing organization structure
enhances our ability to sell any product, to any customer,
anywhere in the world.
6
Competition
We compete with many companies in each of our product
categories. These competitors include Amphenol Corporation,
Framatome Connectors International, Hirose Electronic Co., Ltd,
Hon Hai Precision Industry Co., Ltd., Japan Aviation Electronics
Industry, Ltd., Japan Solderless Terminal Ltd. and Tyco
Electronics Ltd. as well as a significant number of smaller
competitors. The identity and significance of competitors may
change over time. We believe that the 10 largest connector
suppliers, as measured by revenue, represent approximately 54%
of the worldwide market in terms of revenue. Many of these
companies offer products in some, but not all, of the markets
and regions we serve.
Our products compete to varying degrees on the basis of quality,
price, availability, performance and brand recognition. We also
compete on the basis of customer service. Our ability to compete
also depends on continually providing innovative new product
solutions and worldwide support for our customers.
Customers, Demand
Creation and Sales Channels
We sell products directly to OEMs, contract manufacturers and
distributors. Our customers include global companies such as
Arrow, Cisco, Dell, Ford, General Motors, Hewlett Packard, IBM,
Matsushita, Motorola and Nokia. No customer accounted for more
than 10% of net revenues in fiscal 2008, 2007 or 2006.
Many of our customers operate in more than one geographic region
of the world and we have developed a global footprint to service
these customers. We are engaged in significant operations in
foreign countries. Our net revenue originating outside the
U.S. based on shipping point to the customer was
approximately 73% in fiscal years 2008, 2007 and 2006.
In fiscal 2008, the share of net revenue from the different
regions was approximately as follows:
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52% of net revenue originated in Asia-Pacific (China, Hong Kong,
Indonesia, India, Malaysia, Philippines, Singapore, Taiwan and
Korea, Japan and Thailand). Approximately 22% and 16% of net
revenue in fiscal 2008 was derived from operations in China and
Japan, respectively.
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28% of net revenue originated in the Americas.
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20% of net revenue originated in Europe.
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Revenues from customers are generally attributed to countries
based upon the location of our sales office. Most of our sales
in international markets are made by foreign sales subsidiaries.
In countries with low sales volumes, sales are made through
various representatives and distributors.
We sell our products primarily through our own sales
organization with a presence in most major connector markets
worldwide. To complement our own sales force, we work with a
network of distributors to serve a broader customer base and
provide a wide variety of supply chain tools and capabilities.
Sales through distributors represented approximately 25% of our
net revenue in fiscal 2008.
We seek to provide customers one-to-one service tailored to
their business. Our engineers work collaboratively with
customers, often with an innovative online design system, to
develop products for specific applications. We provide customers
the benefit of state-of-the-art technology for engineering,
design and prototyping, supported from 25 development centers in
15 countries. In addition, most customers have a single Molex
customer service contact and a specific field salesperson to
provide technical product and application expertise.
Our sales force around the world has access to our customer
relationship management database, which integrates with our
global information system to provide 24/7 visibility on orders,
pricing, contracts, shipping, inventory and customer programs.
We offer a self-service environment for our customers through
our web site at www.molex.com, so that customers can access our
entire product line, download drawings or 3D models, obtain
price quotes, order samples and track delivery.
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Information regarding our operations by operating segment
appears in Note 18 of the Notes to Consolidated Financial
Statements. A discussion of market risk associated with changes
in foreign currency exchange rates can be found in
Managements Discussion and Analysis of Financial Condition
and Results of Operations.
Research and
Development
We remain committed to investing in world-class technology
development, particularly in the design and manufacture of
connectors and interconnect systems. Our research and
development activities are directed toward developing technology
innovations, primarily high speed signal integrity,
miniaturization, higher power delivery, optical signal delivery
and sealed harsh environment connectors that we believe will
deliver the next generation of products. We continue to invest
in new manufacturing processes, as well as improve existing
products and reduce costs. We believe that we are well
positioned in the technology industry to help drive innovation
and promote industry standards that will yield innovative and
improved products for customers.
We incurred total research and development costs of
$164 million in fiscal 2008, $159 million in fiscal
2007 and $141 million in fiscal 2006. We believe this
investment, approximating 5% of net revenue, is among the
highest level relative to the largest participants in the
industry and helps us achieve a competitive advantage.
We strive to provide customers with the most advanced
interconnection products through intellectual property
development and participation in industry standards committees.
Our engineers are active in approximately 70 such committees,
helping give us a voice in shaping the technologies of the
future. In fiscal 2008, we commercialized approximately 239 new
products and received 539 patents.
We perform a majority of our design and development of connector
products in the U.S. and Japan, but have additional product
development capabilities in various locations, including China,
Germany, India, Ireland, Korea and Singapore.
Manufacturing
Our core manufacturing expertise includes molding, stamping,
plating and assembly operations. We utilize state of the art
plastic injection molding machines and metal stamping and
forming presses. We have created new processes to meet the
ongoing challenge of manufacturing smaller and smaller
connectors. We have also developed proprietary plated plastic
technology, which provides excellent shielding performance while
eliminating secondary manufacturing processes in applications
such as mobile phone antennas.
We also have expertise in printed circuit card, flexible circuit
and harness assembly for our integrated products operations,
which build devices that leverage our connector content. Because
integrated products require labor-intensive assembly, we operate
low-cost manufacturing centers in China, India, Malaysia,
Mexico, Poland, Slovakia and Thailand.
We continually look for ways to reduce our manufacturing costs
as we increase capacity, resulting in a trend of fewer but
larger factories. We achieved economies of scale and higher
capacity utilization while continuing to assure on-time delivery.
We incurred total capital expenditures of $234.6 million in
2008, $296.9 million in 2007 and $276.8 million in
2006, which was primarily related to increasing manufacturing
capacity.
Raw
Materials
The principal raw materials that we purchase for the manufacture
of our products include plastic resins for molding, metal alloys
(primarily copper based) for stamping and gold and palladium
salts for use in the plating process. We also purchase molded
and stamped components and connector
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assemblies. Most materials and components used in our products
are available from several sources. To achieve economies of
scale, we concentrate purchases from a limited number of
suppliers, and therefore in the short term may be dependent upon
certain suppliers to meet performance and quality specifications
and delivery schedules. We anticipate that our raw material
expenditures as a percentage of sales may increase due to growth
in our integrated products business and increases in certain
commodity costs.
Backlog and
Seasonality
The backlog of unfilled orders at June 30, 2008 was
approximately $436.5 million compared with backlog of
$332.5 million at June 30, 2007. Substantially all of
these orders are scheduled for delivery within 12 months.
The majority of orders are shipped within 30 days of
acceptance.
We do not believe that aggregate worldwide sales reflect any
significant degree of seasonality.
Employees
As of June 30, 2008, we employed approximately
32,160 people worldwide. We believe we have been successful
in attracting and retaining qualified personnel in highly
competitive labor markets due to our competitive compensation
and benefits as well as our rewarding work environment. We
consider our relations with our employees to be strong.
We are committed to employee development and place a high
priority on developing Molex leaders of the future through
training at all levels. This includes on-the-job and online
learning, as well as custom initiatives such as our two-year,
in-house global management training program.
Acquisitions and
Investments
Our strategy to provide a broad range of connectors requires a
wide variety of technologies, products and capabilities. The
rapid pace of technological development in the connector
industry and the specialized expertise required in different
markets make it difficult for a single company to organically
develop all of the required products. Though a significant
majority of our growth has come from internally developed
products, we will seek to make future acquisitions or
investments where we believe we can stimulate the development
of, or acquire, new technologies and products to further our
strategic objectives and strengthen our existing businesses.
On July 19, 2007, we completed the acquisition of a
U.S.-based
company in an all cash transaction approximating
$42.5 million. We recorded goodwill of $23.9 million
in connection with this acquisition. The purchase price
allocation for this acquisition is substantially complete.
On August 9, 2006, we completed the acquisition of Woodhead
Industries, Inc. (Woodhead) in an all cash transaction valued at
approximately $238.1 million, including the assumption of
debt and net of cash acquired. Woodhead develops, manufactures
and markets network and electrical infrastructure components
engineered for performance in harsh, demanding and hazardous
industrial environments. The acquisition was a significant step
in our strategy to expand our products and capabilities in the
global industrial market.
Intellectual
Property
Patents, trade secrets and trademarks and other proprietary
rights are important to our business. We review third-party
proprietary rights in an effort to develop an effective
intellectual property strategy, avoid infringement of
third-party proprietary rights, identify licensing
opportunities, and monitor the intellectual property claims of
others. We own an extensive portfolio of U.S. and foreign
patents and trademarks and are a licensee of various patents and
trademarks. Patents for individual products extend for varying
periods according to the date of patent filing or grant and the
legal term of patents in the various countries where patent
protection is obtained. Trademark rights may extent for longer
periods of time and are dependent upon national laws and use of
the trademarks. We believe
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that our intellectual property is important but do not consider
ourselves materially dependent upon any single patent or group
of patents.
Environmental
Matters
We are committed to achieving high standards of environmental
quality and product safety, and strive to provide a safe and
healthy workplace for our employees, contractors and the
communities in which we do business. We have environmental,
health and safety (EHS) policies and disciplines that are
applied to our operations. We closely monitor the environmental
laws and regulations in the countries in which we operate and
believe we are in compliance in all material respects with
federal, state and local regulations pertaining to environmental
protection.
Many of our worldwide manufacturing sites are certified to the
International Organization for Standardization (ISO) 14001
environmental management system standard, which requires that a
broad range of environmental processes and policies be in place
to minimize environmental impact, maintain compliance with
environmental regulations, and communicate effectively with
interested stakeholders. Our ISO 14001 environmental auditing
program includes not only compliance components, but also
modules on business risk, environmental excellence and
management systems. We have internal processes that focus on
minimizing and properly managing hazardous materials used in our
facilities and products. We monitor regulatory and resource
trends and set short and long-term targets to continually
improve our environmental performance.
The manufacture, assembly and testing of our products are
subject to a broad array of laws and regulations, including
restrictions on the use of hazardous materials. We have a
program for compliance with the European Union RoHS and WEEE
Directives, the China RoHS laws and similar laws.
Executive
Officers
Our executive officers are set forth in the table below.
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Positions Held with Registrant
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Year
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Name
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During the Last Five Years
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Age
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Employed
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Frederick A. Krehbiel(a)
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Co-Chairman (1999-); Chief Executive Officer (2004-2005);
Co-Chief Executive Officer (1999-2001).
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67
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1965
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(b)
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John H. Krehbiel, Jr.(a)
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|
Co-Chairman (1999-); Co-Chief Executive Officer (1999-2001).
|
|
|
71
|
|
|
|
1959
|
(b)
|
Martin P. Slark
|
|
Vice-Chairman and Chief Executive Officer (2005-); President and
Chief Operating Officer (2001-2005); Executive Vice President
(1999-2001).
|
|
|
53
|
|
|
|
1976
|
|
Liam McCarthy
|
|
President and Chief Operating Officer (2005-); Regional Vice
President of Operations, Europe (2000-2005); Interim General
Manager of Molex Ireland Ltd. (2002-2004).
|
|
|
52
|
|
|
|
1976
|
|
David D. Johnson
|
|
Executive Vice President, Treasurer and Chief Financial Officer
(2005-); Vice President, Treasurer and Chief Financial Officer,
Sypris Solutions, Inc.
(1998-2005).
|
|
|
52
|
|
|
|
2005
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Positions Held with Registrant
|
|
|
|
|
Year
|
|
Name
|
|
During the Last Five Years
|
|
Age
|
|
|
Employed
|
|
|
Graham C. Brock
|
|
Executive Vice President (2005-) and President, Global Sales
& Marketing Division (2006) and Regional President, Europe
(2005-); Regional Vice President Sales &
Marketing, Europe (2000-2005).
|
|
|
54
|
|
|
|
1976
|
|
James E. Fleischhacker
|
|
Executive Vice President (2001-) and President, Global
Transportation Products Division (2007); Corporate Vice
President (1994-2001); Regional President, Asia Pacific South
(1998-2001, 2003-2004).
|
|
|
64
|
|
|
|
1984
|
|
Katsumi Hirokawa
|
|
Executive Vice President (2005-) and President, Global Micro
Products Division (2007). Positions at Molex Japan Co., Ltd.:
President (2002-); Executive Vice President- Sales (2002-2002);
Senior Director-Sales (1996-2002).
|
|
|
61
|
|
|
|
1995
|
|
David B. Root
|
|
Executive Vice President and President, Global Commercial
Products Division (2007); Vice President and Regional
President, Americas (2005-); Vice President, Sales Americas
(2004-2005); President, Connector Products Division (2002-2004);
President, Data Comm Division (2001-2002).
|
|
|
54
|
|
|
|
1982
|
|
J. Michael Nauman
|
|
Senior Vice President and President, Global Integrated Products
Division (2007-); President, Integrated Products Division,
Americas Region (2005-2007); President, High Performance
Products Division, Americas Region (2004-2005); President, Fiber
Optics Division, Americas Region (2003-2004); General Manager,
High Performance Cable Assembly and Adapter Business Units
(1999-2003).
|
|
|
46
|
|
|
|
1994
|
|
Hans A. van Delft
|
|
Senior Vice President and President, Global Automation &
Electrical Products Division (2007-); President, Woodhead Group
(2006-2007); Division Manager, General Products Division, Europe
(2003-2006); Division Manager, Telecom Division (2001-2003);
General Manager, Molex Singapore (1999-2000).
|
|
|
53
|
|
|
|
1987
|
|
|
|
|
(a)
|
|
John H. Krehbiel, Jr. and Frederick A. Krehbiel (the Krehbiel
Family) are brothers. The members of the Krehbiel Family may be
considered to be control persons of the Registrant.
The other executive officers listed above have no relationship,
family or otherwise, to the Krehbiel Family, the Registrant or
each other.
|
|
(b)
|
|
Includes period employed by our predecessor company.
|
11
Code of Business
Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics applicable
to all employees, officers and directors. The Code of Business
Conduct incorporates our policies and guidelines designed to
deter wrongdoing and to promote honest and ethical conduct and
compliance with applicable laws and regulations. We have also
adopted a Code of Ethics for Senior Financial Management
applicable to our chief executive officer, chief financial
officer, chief accounting officer and other senior financial
managers. The Code of Ethics sets out our expectations that
financial management produce full, fair, accurate, timely and
understandable disclosure in our filings with the SEC and other
public communications. Molex intends to post any amendments to
or waivers from the Codes on its web site.
The full text of these Codes is published on the investor
relations page of our web site at www.molex.com.
Forward-looking
Statements
This Annual Report on
Form 10-K
and other documents we file with the Commission contain
forward-looking statements that are based on current
expectations, estimates, forecasts and projections about our
future performance, our business, our beliefs, and our
managements assumptions. In addition, we, or others on our
behalf, may make forward-looking statements in press releases or
written statements, or in our communications and discussions
with investors and analysts in the normal course of business
through meetings, web casts, phone calls, and conference calls.
Words such as expect, anticipate,
outlook, forecast, could,
project, intend, plan,
continue, believe, seek,
estimate, should, may,
assume, variations of such words and similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties, and
assumptions that are difficult to predict. We describe our
respective risks, uncertainties, and assumptions that could
affect the outcome or results of operations below.
We have based our forward looking statements on our
managements beliefs and assumptions based on information
available to them at the time the statements are made. We
caution you that actual outcomes and results may differ
materially from what is expressed, implied, or forecast by our
forward-looking statements. Reference is made in particular to
forward looking statements regarding growth strategies, industry
trends, financial results, cost reduction initiatives,
acquisition synergies, manufacturing strategies, product
development and sales, regulatory approvals, and competitive
strengths. Except as required under the federal securities laws,
we do not have any intention or obligation to update publicly
any forward-looking statements after the filing of this report,
whether as a result of new information, future events, changes
in assumptions, or otherwise.
Risk
Factors
You should carefully consider the risks described below. Such
risks are not the only ones facing our company. Additional risks
and uncertainties not presently known to us or that we currently
believe to be immaterial may also impair our business
operations. If any of the following risks occur, our business,
financial condition or operating results could be materially
adversely affected.
We are dependent
on the success of our customers.
We are dependent on the continued growth, viability and
financial stability of our customers. Our customers generally
are OEMs in the telecommunications, data product,
automotive, consumer, and industrial industries. These
industries are subject to rapid technological change, vigorous
competition and short product life cycles. When our customers
are adversely affected by these factors, we may be similarly
affected.
12
We are subject to
continuing pressure to lower our prices.
Over the past several years we have experienced, and we expect
to continue to experience, pressure to lower our prices. In the
last three years, we have experienced price erosion averaging
from 2.9% to 3.9%. In order to maintain our margins, we must
continue to reduce our costs by similar amounts. There can be no
assurance that continuing pressures to reduce our prices will
not have a material adverse effect on our financial condition,
results of operations and cash flows.
We face rising
costs of commodity materials.
The cost and availability of certain commodity materials used to
manufacture our products, such as plastic resins, copper-based
metal alloys, gold and palladium salts, molded and stamped
components and connector assemblies, is critical to our success.
Volatility in the prices and shortages of such materials may
result in increased costs and lower operating margins if we are
unable to pass such increased costs through to our customers.
From time to time, we use financial instruments to hedge the
volatility of commodity material costs. The success of our
hedging program depends on accurate forecast of transaction
activity in the various commodity materials. To the extent that
these forecasts are over or understated during periods of
volatility, we could experience unanticipated commodity
materials or hedge gains or losses.
We face intense
competition in our markets.
Our markets are highly competitive and we expect that both
direct and indirect competition will increase in the future. Our
overall competitive position depends on a number of factors
including the price, quality and performance of our products,
the level of customer service, the development of new technology
and our ability to participate in emerging markets. Within each
of our markets, we encounter direct competition from other
electronic components manufacturers and suppliers and
competition may intensify from various U.S. and
non-U.S. competitors
and new market entrants, some of which may be our current
customers. The competition in the future may, in some cases,
result in price reductions, reduced margins or loss of market
share, any of which could materially and adversely affect our
business, operating results and financial condition. In
addition, market factors could cause a decline in spending for
the technology products manufactured by our customers.
We are dependent
on new products.
We expect that a significant portion of our future revenue will
continue to be derived from sales of newly introduced products.
Rapidly changing technology, evolving industry standards and
changes in customer needs characterize the market for our
products. If we fail to modify or improve our products in
response to changes in technology, industry standards or
customer needs, our products could rapidly become less
competitive or obsolete. We must continue to make investments in
research and development in order to continue to develop new
products, enhance existing products and achieve market
acceptance for such products. However, there can be no assurance
that development stage products will be successfully completed
or, if developed, will achieve significant customer acceptance.
We may need to license new technologies to respond to
technological change and these licenses may not be available to
us on terms that we can accept or may materially change the
gross profits that we are able to obtain on our products. We may
not succeed in adapting our products to new technologies as they
emerge. Development and manufacturing schedules for technology
products are difficult to predict, and there can be no assurance
that we will achieve timely initial customer shipments of new
products. The timely availability of these products in volume
and their acceptance by customers are important to our future
success.
We face
manufacturing challenges.
The volume and timing of sales to our customers may vary due to:
variation in demand for our customers products; our
customers attempts to manage their inventory; design
changes; changes in
13
our customers manufacturing strategy; and acquisitions of
or consolidations among customers. Due in part to these factors,
many of our customers do not commit to long-term production
schedules. Our inability to forecast the level of customer order
with certainty makes it difficult to schedule production and
maximize utilization of manufacturing capacity.
Our industry must provide increasingly rapid product turnaround
for its customers. We generally do not obtain firm, long-term
purchase commitments from our customers and we continue to
experience reduced lead-times in customer orders. Customers may
cancel their orders, change production quantities or delay
production for a number of reasons and such actions could
negatively impact our operating results. In addition, we make
significant operating decisions based on our estimate of
customer requirements. The short-term nature of our
customers commitments and the possibility of rapid changes
in demand for their products reduce our ability to accurately
estimate the future requirements of those customers.
On occasion, customers may require rapid increases in
production, which can stress our resources and reduce operating
margins. In addition, because many of our costs and operating
expenses are relatively fixed, a reduction in customer demand
can harm our gross profit and operating results.
We face industry
consolidation.
In the current economic climate, consolidation in industries
that utilize electronics components may further increase as
companies combine to achieve further economies of scale and
other synergies. Consolidation in industries that utilize
electronics components could result in an increase in excess
manufacturing capacity as companies seek to divest manufacturing
operations or eliminate duplicative product lines. Excess
manufacturing capacity has increased, and may continue to
increase, pricing and competitive pressures for our industry as
a whole and for us in particular. Consolidation could also
result in an increasing number of very large companies offering
products in multiple industries. The significant purchasing
power and market power of these large companies could increase
pricing and competitive pressures for us.
We depend on
industries exposed to rapid technological change.
Our customers compete in markets that are characterized by
rapidly changing technology, evolving industry standards and
continuous improvements in products and services. These
conditions frequently result in short product life cycles. Our
success will depend largely on the success achieved by our
customers in developing and marketing their products. If
technologies or standards supported by our customers
products become obsolete or fail to gain widespread commercial
acceptance, our business could be materially adversely affected.
In addition, if we are unable to offer technologically advanced,
cost effective, quick response manufacturing services to
customers, demand for our products may also decline.
We face the
possibility that our gross margins may decline.
In response to changes in product mix, competitive pricing
pressures, increased sales discounts, introductions of new
competitive products, product enhancements by our competitors,
increases in manufacturing or labor costs or other operating
expenses, we may experience declines in prices, gross margins
and profitability. To maintain our gross margins we must
maintain or increase current shipment volumes, develop and
introduce new products and product enhancements and reduce the
costs to produce our products. If we are unable to accomplish
this, our revenue, gross profit and operating results may be
below our expectations and those of investors and analysts.
14
We face risks
associated with inventory.
The value of our inventory may decline as a result of surplus
inventory, price reductions or technological obsolescence. We
must identify the right product mix and maintain sufficient
inventory on hand to meet customer orders. Failure to do so
could adversely affect our revenue and operating results.
However, if circumstances change (for example, an unexpected
shift in market demand, pricing or customer defaults) there
could be a material impact on the net realizable value of our
inventory. We maintain an inventory valuation reserve account
against diminution in the value or salability of our inventory.
However, there is no guaranty that these arrangements will be
sufficient to avoid write-offs in excess of our reserves in all
circumstances.
We may encounter
problems associated with our global operations.
Currently, more than 70% of our revenues come from international
sales. In addition, a significant portion of our operations
consists of manufacturing and sales activities outside of the
U.S. Our ability to sell our products and conduct our
operations globally is subject to a number of risks. Local
economic, political and labor conditions in each country could
adversely affect demand for our products and services or disrupt
our operations in these markets. We may also experience reduced
intellectual property protection or longer and more challenging
collection cycles as a result of different customary business
practices in certain countries where we do business.
Additionally, we face the following risks:
|
|
|
|
|
International business conditions including the relationships
between the U.S., Chinese and other governments;
|
|
|
|
Unexpected changes in laws, regulations, trade, monetary or
fiscal policy, including interest rates, foreign currency
exchange rates and changes in the rate of inflation in the U.S.,
China or other foreign countries;
|
|
|
|
Tariffs, quotas and other import or export restrictions and
other trade barriers;
|
|
|
|
Difficulties in staffing and management;
|
|
|
|
Language and cultural barriers; and
|
|
|
|
Potentially adverse tax consequences.
|
Many of our products that are manufactured outside of the United
States are manufactured in Asia. In particular, we have sizeable
operations in China. The legal system in China is still
developing and is subject to change. Accordingly, our operations
and orders for products in China could be adversely affected by
changes to or interpretation of Chinese law.
We are exposed to
fluctuations in currency exchange rates.
Since a significant portion of our business is conducted outside
the U.S., we face substantial exposure to movements in
non-U.S. currency
exchange rates. This may harm our results of operations, and any
measures that we may implement to reduce the effect of volatile
currencies and other risks of our global operations may not be
effective. We mitigate our foreign currency exchange rate risk
principally through the establishment of local production
facilities in the markets we serve. This creates a natural
hedge since purchases and sales within a specific country
are both denominated in the same currency and therefore no
exposure exists to hedge with a foreign exchange forward or
option contract (collectively, foreign exchange
contracts). Natural hedges exist in most countries in
which we operate, although the percentage of natural offsets, as
compared with offsets that need to be hedged by foreign exchange
contracts, will vary from country to country. To reduce our
exposure to fluctuations in currency exchange rates when natural
hedges are not effective, we may use financial instruments to
hedge U.S. dollar and other currency commitments and cash
flows arising from trade accounts receivable, trade accounts
payable and fixed purchase obligations.
15
If these hedging activities are not successful or we change or
reduce these hedging activities in the future, we may experience
significant unexpected expenses from fluctuations in exchange
rates or financial instruments which become ineffective. The
success of our hedging program depends on accurate forecasts of
transaction activity in the various currencies. To the extent
that these forecasts are over or understated during periods of
currency volatility, we could experience unanticipated currency
or hedge gains or losses.
We may find that
our products have quality issues.
If flaws in either the design or manufacture of our products
were to occur, we could experience a rate of failure in our
products that could result in significant delays in shipment and
product re-work or replacement costs. While we engage in
extensive product quality programs and processes, these may not
be sufficient to avoid a product failure rate that results in
substantial delays in shipment, significant repair or
replacement costs, or potential damage to our reputation.
We face risks in
making acquisitions.
We expect to continue to make investments in companies, products
and technologies through acquisitions. While we believe that
such acquisitions are an integral part of our long-term
strategy, there are risks and uncertainties related to acquiring
companies. Such risks and uncertainties include:
|
|
|
|
|
Successfully identifying and completing transactions;
|
|
|
|
Difficulty in integrating acquired operations, technology and
products or realizing cost savings or other anticipated benefits
from integration;
|
|
|
|
Retaining customers and existing contracts;
|
|
|
|
Retaining the key employees of the acquired operation;
|
|
|
|
Potential disruption of our or the acquired companys
ongoing business;
|
|
|
|
Unanticipated expenses related to integration; and
|
|
|
|
Potential unknown liabilities associated with the acquired
company.
|
In addition, if we were to undertake a substantial acquisition
for cash, the acquisition would likely need to be financed in
part through additional financing from banks, through public
offerings or private placements of debt or equity securities, or
other arrangements. This acquisition financing might decrease
our ratio of earnings to fixed charges and adversely affect
other leverage measures. There can be no assurance that the
necessary acquisition financing would be available to us on
acceptable terms if and when required. If we undertake an
acquisition by issuing equity securities or equity-linked
securities, the issued securities may have a dilutive effect on
the interests of the holders of our stock.
We face risks
arising from reorganizations of our operations.
In 2007, we announced plans to realign part of our manufacturing
capacity in order to reduce costs and better optimize plant
utilization. The process of restructuring entails, among other
activities, moving production between facilities, reducing staff
levels, realigning our business processes and reorganizing our
management. We continue to evaluate our operations and may need
to undertake additional restructuring initiatives in the future.
If we incur additional restructuring related charges, our
financial condition and results of operations may suffer.
In addition, on July 1, 2007 we reorganized into a global
organizational structure that consists of product-focused
divisions that enable us to work more effectively as a global
team to meet customer needs, as well as to better leverage
design expertise and the low-cost production centers we have
around the world. This reorganization entails risks, including:
the need to implement financial and other systems and add
management resources; in the short-term we may fail to maintain
the quality of products and services we have historically
provided; diversion of managements attention to the
16
reorganization; potential disruption of our ongoing business;
and unanticipated expenses related to such reorganization.
We depend on our
key employees and face competition in hiring and retaining
qualified employees.
Our future success depends partly on the continued contribution
of our key employees, including executive, engineering, sales,
marketing, manufacturing and administrative personnel. We
currently do not have employment agreements with any of our key
executive officers. We face intense competition for key
personnel in several of our product and geographic markets. Our
future success depends in large part on our continued ability to
hire, assimilate and retain key employees, including qualified
engineers and other highly skilled personnel needed to compete
and develop successful new products. We may not be as successful
as competitors at recruiting, assimilating and retaining highly
skilled personnel.
We are subject to
various laws and government regulations.
We are subject to a wide and ever-changing variety of
U.S. and foreign federal, state and local laws and
regulations, compliance with which may require substantial
expense. Of particular note are two recent European Union (EU)
directives known as the Restriction on Certain Hazardous
Substances Directive (RoHS) and the Waste Electrical and
Electronic Equipment Directive. These directives restrict the
distribution of products within the EU of certain substances and
require a manufacturer or importer to recycle products
containing those substances. Failure to comply with these
directives could result in fines or suspension of sales.
Additionally, RoHS may result in our having non-compliant
inventory that may be less readily salable or have to be written
off.
In addition, some environment laws impose liability, sometimes
without fault, for investigating or cleaning up contamination on
or emanating from our currently or formerly owned, leased or
operated property, as well as for damages to property or natural
resources and for personal injury arising out of such
contamination.
We rely on our
intellectual property rights.
We rely on a combination of patents, copyrights, trademarks and
trade secrets and confidentiality provisions to establish and
protect our proprietary rights. To this end, we hold rights to a
number of patents and registered trademarks and regularly file
applications to attempt to protect our rights in new technology
and trademarks. Even if approved, our patents or trademarks may
be successfully challenged by others or otherwise become
invalidated for a variety of reasons. Also, to the extent a
competitor is able to reproduce or otherwise capitalize on our
technology, it may be difficult, expensive or impossible for us
to obtain necessary legal protection.
Third parties may claim that we are infringing their
intellectual property rights. Such claims could have an adverse
affect on our business and financial condition. From time to
time we receive letters alleging infringement of patents.
Litigation concerning patents or other intellectual property is
costly and time consuming. We may seek licenses from such
parties, but they could refuse to grant us a license or demand
commercially unreasonable terms. Such infringement claims could
also cause us to incur substantial liabilities and to suspend or
permanently cease the manufacture and sale of affected products.
We could suffer
significant business interruptions.
Our operations and those of our suppliers may be vulnerable to
interruption by natural disasters such as earthquakes, tsunamis,
typhoons, or floods, or other disasters such as fires,
explosions, acts of terrorism or war, or failures of our
management information or other systems. If a business
interruption occurs, our business could be materially and
adversely affected.
17
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
We own and lease manufacturing, design, warehousing, sales and
administrative space in locations around the world. The leases
are of varying terms with expirations ranging from fiscal 2009
through fiscal 2018. The leases in aggregate are not considered
material to the financial position of Molex.
As of June 30, 2008, we owned or leased a total of
approximately 8.8 million square feet of space worldwide.
We own 88% of our manufacturing, design, warehouse and office
space and lease the remaining 12%. Our manufacturing plants are
equipped with machinery, most of which we own and which, in
part, we developed to meet the special requirements of our
manufacturing processes. We believe that our buildings,
machinery and equipment are well maintained and adequate for our
current needs.
Our principal executive offices are located at 2222 Wellington
Court, Lisle, Illinois, United States of America. Molex owns 45
manufacturing locations, 16 of which are located in North
America and 29 of which are located in other countries. A
listing of the locations of our principal manufacturing
facilities by region is presented below:
|
|
|
|
|
Americas: United States, Nogales, Guadalajara and Juarez
|
|
|
|
Asia Pacific: Japan, Korea, Vietnam, Thailand, China, India,
Malaysia, Singapore and Taiwan
|
|
|
|
Europe: France, Germany, Italy, Poland, Slovakia and Ireland
|
|
|
Item 3.
|
Legal
Proceedings
|
We have no material legal proceedings.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
None.
PART II
|
|
Item 5.
|
Market
for the Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
Molex is traded on the NASDAQ Global Select Market and on the
London Stock Exchange and trades under the symbols MOLX for
Common Stock and MOLXA for Class A Common Stock.
The number of stockholders of record at June 30, 2008 was
2,460 for Common Stock and 7,527 for Class A Common Stock.
The following table presents quarterly stock prices for the
years ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
Low High
|
|
|
Low High
|
|
|
Low High
|
|
|
Common Stock
|
|
|
1st
|
|
|
$
|
23.89
|
|
|
$
|
30.66
|
|
|
$
|
29.66
|
|
|
$
|
39.27
|
|
|
$
|
25.34
|
|
|
$
|
29.20
|
|
|
|
|
2nd
|
|
|
|
26.77
|
|
|
|
29.12
|
|
|
|
30.91
|
|
|
|
39.49
|
|
|
|
24.07
|
|
|
|
28.02
|
|
|
|
|
3rd
|
|
|
|
21.82
|
|
|
|
26.85
|
|
|
|
28.15
|
|
|
|
31.70
|
|
|
|
25.89
|
|
|
|
33.39
|
|
|
|
|
4th
|
|
|
|
23.97
|
|
|
|
29.95
|
|
|
|
28.01
|
|
|
|
31.53
|
|
|
|
32.48
|
|
|
|
39.36
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
Low High
|
|
|
Low High
|
|
|
Low High
|
|
|
Class A Common Stock
|
|
|
1st
|
|
|
$
|
22.82
|
|
|
$
|
27.54
|
|
|
$
|
25.57
|
|
|
$
|
33.12
|
|
|
$
|
23.54
|
|
|
$
|
26.50
|
|
|
|
|
2nd
|
|
|
|
25.25
|
|
|
|
27.68
|
|
|
|
27.22
|
|
|
|
33.27
|
|
|
|
22.82
|
|
|
|
27.15
|
|
|
|
|
3rd
|
|
|
|
21.08
|
|
|
|
25.89
|
|
|
|
24.72
|
|
|
|
27.78
|
|
|
|
24.33
|
|
|
|
29.87
|
|
|
|
|
4th
|
|
|
|
22.11
|
|
|
|
27.50
|
|
|
|
24.66
|
|
|
|
28.20
|
|
|
|
27.94
|
|
|
|
33.47
|
|
Cash dividends on common stock have been paid every year since
1977. The following table presents quarterly dividends declared
per common share for the years ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Quarter ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
$
|
0.1125
|
|
|
$
|
0.0750
|
|
|
$
|
0.1125
|
|
|
$
|
0.0750
|
|
December 31
|
|
|
0.1125
|
|
|
|
0.0750
|
|
|
|
0.1125
|
|
|
|
0.0750
|
|
March 31
|
|
|
0.1125
|
|
|
|
0.0750
|
|
|
|
0.1125
|
|
|
|
0.0750
|
|
June 30
|
|
|
0.1125
|
|
|
|
0.0750
|
|
|
|
0.1125
|
|
|
|
0.0750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
0.4500
|
|
|
$
|
0.3000
|
|
|
$
|
0.4500
|
|
|
$
|
0.3000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On August 13, 2007, our Board of Directors authorized the
purchase of up to $200.0 million of Common Stock
and/or
Class A Common Stock during the period ending June 30,
2008. Share purchases of Molex Common
and/or
Class A Common Stock for the quarter ended June 30,
2008 were as follows (in thousands, except price per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
|
|
|
|
|
|
|
Shares Purchased as
|
|
|
|
Total Number of
|
|
|
Average Price
|
|
|
Part of Publicly
|
|
|
|
Shares Purchased
|
|
|
Paid per Share
|
|
|
Announced Plan
|
|
|
April 1 April 30
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Class A Common Stock
|
|
|
14
|
|
|
$
|
21.89
|
|
|
|
|
|
May 1 May 31
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
175
|
|
|
$
|
29.10
|
|
|
|
175
|
|
Class A Common Stock
|
|
|
894
|
|
|
$
|
26.92
|
|
|
|
850
|
|
June 1 June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Class A Common Stock
|
|
|
212
|
|
|
$
|
26.39
|
|
|
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,295
|
|
|
$
|
27.07
|
|
|
|
1,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2008, substantially all funds authorized by
the Board of Directors for the purchase of shares were used.
During the quarter ended June 30, 2008, 65,201 shares
of Class A Common Stock were transferred to us from certain
employees to pay either the purchase price
and/or
withholding taxes on the vesting of restricted stock or the
exercise of stock options. The aggregate market value of the
shares transferred totaled $1.7 million.
Descriptions of our Common Stock appear under the caption
Molex Stock in our 2008 Proxy Statement and in
Note 15 of the Notes to Consolidated Financial Statements.
19
Performance
Graph
The performance graph set forth below shows the value of an
investment of $100 on June 30, 2003 in each of Molex Common
Stock, Molex Class A Common Stock, the S&P 500 Index,
and a Peer Group Index. The Peer Group Index includes
50 companies (including Molex) classified in the Global
Sub-industry Classifications Electronic Equipment
Manufacturers, Electronic Manufacturing
Services, and Technology Distributors. All
values assume reinvestment of the pre-tax value of dividends
paid by Molex and the companies included in these indices, and
are calculated as of June 30 of each year. The historical stock
price performance of Molexs Common Stock and Class A
Common Stock is not necessarily indicative of future stock price
performance.
Comparison of
Five-Year Cumulative Total Return
(Value of Investment of $100 on June 30, 2003)
Among Molex Incorporated, the S&P 500 Index
and a Peer Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/30/03
|
|
|
06/30/04
|
|
|
06/30/05
|
|
|
06/30/06
|
|
|
06/30/07
|
|
|
06/30/08
|
Molex Incorporated
|
|
|
$
|
100.00
|
|
|
|
$
|
119.16
|
|
|
|
$
|
97.25
|
|
|
|
$
|
126.33
|
|
|
|
$
|
114.00
|
|
|
|
$
|
94.36
|
|
Molex Incorporated Class A
|
|
|
|
100.00
|
|
|
|
|
119.01
|
|
|
|
|
103.06
|
|
|
|
|
127.17
|
|
|
|
|
118.79
|
|
|
|
|
104.42
|
|
S&P 500
|
|
|
|
100.00
|
|
|
|
|
119.11
|
|
|
|
|
126.64
|
|
|
|
|
137.57
|
|
|
|
|
165.90
|
|
|
|
|
144.13
|
|
Peer Group
|
|
|
|
100.00
|
|
|
|
|
137.60
|
|
|
|
|
126.97
|
|
|
|
|
148.41
|
|
|
|
|
177.61
|
|
|
|
|
159.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The material in this performance graph is not soliciting
material, is not deemed filed with the Commission, and is not
incorporated by reference in any filing of the Company under the
Securities Act or the Exchange Act, whether made on, before or
after the date of this filing and irrespective of any general
incorporation language in such filing.
20
|
|
Item 6.
|
Selected
Financial Data
|
Molex
Incorporated
Five-Year
Financial Highlights Summary
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
3,328,347
|
|
|
$
|
3,265,874
|
|
|
$
|
2,861,289
|
|
|
$
|
2,554,458
|
|
|
$
|
2,249,018
|
|
Gross profit
|
|
|
1,014,235
|
|
|
|
1,016,708
|
|
|
|
942,630
|
|
|
|
832,662
|
|
|
|
732,832
|
|
Income from operations
|
|
|
317,950
|
|
|
|
321,550
|
|
|
|
309,744
|
|
|
|
203,264
|
|
|
|
213,462
|
|
Income before income taxes
|
|
|
338,648
|
|
|
|
338,257
|
|
|
|
327,884
|
|
|
|
223,201
|
|
|
|
231,757
|
|
Net income(1)
|
|
|
215,437
|
|
|
|
240,768
|
|
|
|
236,091
|
|
|
|
150,116
|
|
|
|
168,096
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.19
|
|
|
$
|
1.31
|
|
|
$
|
1.27
|
|
|
$
|
0.80
|
|
|
$
|
0.88
|
|
Diluted
|
|
|
1.19
|
|
|
|
1.30
|
|
|
|
1.26
|
|
|
|
0.79
|
|
|
|
0.87
|
|
Net income percent of net revenue
|
|
|
6.5
|
%
|
|
|
7.4
|
%
|
|
|
8.3
|
%
|
|
|
5.9
|
%
|
|
|
7.5
|
%
|
Capital expenditures
|
|
$
|
234,626
|
|
|
$
|
296,861
|
|
|
$
|
276,783
|
|
|
$
|
230,895
|
|
|
$
|
189,724
|
|
Return on invested capital(2)
|
|
|
7.4
|
%
|
|
|
9.0
|
%
|
|
|
10.3
|
%
|
|
|
6.7
|
%
|
|
|
8.1
|
%
|
Financial Position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
1,782,960
|
|
|
$
|
1,590,827
|
|
|
$
|
1,548,233
|
|
|
$
|
1,374,063
|
|
|
$
|
1,165,508
|
|
Current liabilities
|
|
|
649,438
|
|
|
|
530,951
|
|
|
|
594,812
|
|
|
|
469,504
|
|
|
|
424,766
|
|
Working capital(3)
|
|
|
1,133,522
|
|
|
|
1,059,876
|
|
|
|
953,421
|
|
|
|
904,559
|
|
|
|
740,742
|
|
Current ratio(4)
|
|
|
2.7
|
|
|
|
3.0
|
|
|
|
2.6
|
|
|
|
2.9
|
|
|
|
2.7
|
|
Property, plant and equipment, net
|
|
$
|
1,172,395
|
|
|
$
|
1,121,369
|
|
|
$
|
1,025,852
|
|
|
$
|
984,237
|
|
|
$
|
1,023,020
|
|
Total assets
|
|
|
3,599,537
|
|
|
|
3,316,108
|
|
|
|
2,974,420
|
|
|
|
2,730,162
|
|
|
|
2,575,286
|
|
Long-term debt and capital leases
|
|
|
151,085
|
|
|
|
130,779
|
|
|
|
8,815
|
|
|
|
9,975
|
|
|
|
14,039
|
|
Stockholders equity
|
|
|
2,676,846
|
|
|
|
2,523,031
|
|
|
|
2,281,869
|
|
|
|
2,170,754
|
|
|
|
2,070,422
|
|
Dividends declared per share
|
|
$
|
0.45
|
|
|
$
|
0.30
|
|
|
$
|
0.225
|
|
|
$
|
0.15
|
|
|
$
|
0.10
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
180,474
|
|
|
|
183,961
|
|
|
|
185,521
|
|
|
|
188,646
|
|
|
|
190,207
|
|
Diluted
|
|
|
181,395
|
|
|
|
185,565
|
|
|
|
187,416
|
|
|
|
190,572
|
|
|
|
192,186
|
|
|
|
|
(1)
|
|
Fiscal 2008 results include a charge for restructuring costs and
asset impairments of $31.2 million ($21.0 million
after-tax). Fiscal 2007 results include a charge for
restructuring costs and asset impairments of $36.9 million
($30.3 million after-tax). Fiscal 2006 results include a
restructuring charge of $26.4 million ($19.2 million
after-tax). Fiscal 2005 results include a charge for
restructuring costs and asset impairments of $30.2 million
($23.0 million after-tax) and a charge for goodwill
impairment of $22.9 million ($22.9 million after-tax).
See Notes 5 and 8 of the Notes to Consolidated Financial
Statements for a discussion of our restructuring costs and
goodwill impairment.
|
|
(2)
|
|
Return on invested capital is defined as the current year net
income divided by the sum of average total assets less average
current liabilities for the year.
|
|
(3)
|
|
Working capital is defined as current assets minus current
liabilities.
|
|
(4)
|
|
Current ratio is defined as current assets divided by current
liabilities.
|
21
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
The following discussion includes the use of organic net revenue
growth, a non-GAAP financial measure. Refer to
Non-GAAP Financial Measures below for additional
information on the use of this measure.
Overview
Our core business is the manufacture and sale of electronic
components. Our products are used by a large number of leading
original equipment manufacturers (OEMs) throughout the world. We
design, manufacture and sell more than 100,000 products
including terminals, connectors, planar cables, cable
assemblies, interconnection systems, backplanes, integrated
products and mechanical and electronic switches. We also provide
manufacturing services to integrate specific components into a
customers product.
Our connectors, interconnecting devices and assemblies are used
principally in the telecommunications, data, consumer products,
automotive and industrial markets. Our products are used in a
wide range of applications including desktop and notebook
computers, computer peripheral equipment, mobile phones, digital
electronics such as cameras and plasma televisions, automobile
engine control units and adaptive braking systems, factory
robotics and diagnostic equipment.
We believe that our sales mix is balanced, with growth prospects
in a number of markets. Net revenues by market can fluctuate
based on various factors including new technologies within the
industry, composition of customers and changes in their revenue
levels and new products or model changes that we or our
customers introduce. The approximate percentage of net revenue
by market for fiscal years 2008, 2007 and 2006 is outlined below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Net Revenue
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Consumer
|
|
|
18
|
%
|
|
|
18
|
%
|
|
|
19
|
%
|
Telecommunication
|
|
|
26
|
|
|
|
26
|
|
|
|
30
|
|
Automotive
|
|
|
18
|
|
|
|
18
|
|
|
|
18
|
|
Data
|
|
|
22
|
|
|
|
21
|
|
|
|
22
|
|
Industrial
|
|
|
13
|
|
|
|
15
|
|
|
|
9
|
|
Other
|
|
|
3
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We sell our products directly to OEMs and to their contract
manufacturers and suppliers and, to a lesser extent, through
distributors throughout the world. Our engineers work
collaboratively with customers to develop products that meet
their specific needs. Our connector products are designed to
help manufacturers assemble their own products more efficiently.
Our electronic components help enable manufacturers to break
down their production into sub-assemblies that can be built on
different production lines, in different factories or by
subcontractors. Our connectors allow these sub-assemblies to be
readily plugged together before selling the end product to a
customer. Our connectors also enable users to connect together
related electronic items, such as mobile phones to battery
chargers and computers to printers. Many of our customers are
multi-national corporations that manufacture their products in
multiple operations in several countries.
We service our customers through our global manufacturing
footprint. As of June 30, 2008, we operated 45
manufacturing locations, located in 17 countries. Manufacturing
in many sectors has continued to move from the United States and
Western Europe to lower cost regions. In addition, reduced trade
barriers, lower freight cost and improved supply chain logistics
have reduced the need for duplicate regional manufacturing
capabilities. For these reasons, our strategy has been to
22
consolidate multiple plants of modest size in favor of operating
fewer, larger and more integrated facilities in strategic
locations around the world.
On July 1, 2007 we implemented a new global organizational
structure that consists of five product-focused divisions and
one worldwide sales and marketing organization. The new
structure enables us to work more effectively as a global team
to meet customer needs as well as to better leverage our design
expertise and our low-cost production centers around the world.
The new worldwide sales and marketing organization structure
enhances our ability to sell any product, to any customer,
anywhere in the world.
In connection with our reorganization, we undertook a multi-year
restructuring plan in fiscal 2007 designed to reduce costs and
to improve return on invested capital as a result of a new
global organization that was effective July 1, 2007. We
have revised our initial estimate and now expect to incur total
restructuring and asset impairment costs related to this
restructuring ranging from $125 to $140 million, of which
the impact on each segment will be determined as the actions
become more certain. Net restructuring cost during fiscal 2008
was $31.2 million, resulting in cumulative costs since we
announced this restructuring plan of $68.1 million.
During fiscal 2008, we operated our business in the Americas,
Europe and Asia-Pacific regions. In fiscal 2008, 52% of our
revenue was derived from sales in the Asia-Pacific region. We
expect greater economic growth in Asia, particularly in China,
than in the Americas and Europe. We believe that the business is
positioned to benefit from this trend. Approximately 48% of our
manufacturing capacity is in lower cost areas such as China,
Eastern Europe and Mexico.
The market in which we operate is highly fragmented with a
limited number of large companies and a significant number of
smaller companies making electronic connectors. We are the
worlds second-largest manufacturer of electronic
connectors. We believe that our global presence and our ability
to design and manufacture our products throughout the world and
to service our customers globally is a key advantage for us. Our
growth has come primarily from new products that we develop,
often in collaboration with our customers.
Our financial results are influenced by factors in the markets
in which we operate and by our ability to successfully execute
our business strategy. Marketplace factors include competition
for customers, raw material prices, product and price
competition, economic conditions in various geographic regions,
foreign currency exchange rates, interest rates, changes in
technology, fluctuations in customer demand, patent and
intellectual property issues, litigation results and legal and
regulatory developments. We expect that the marketplace
environment will remain highly competitive. Our ability to
execute our business strategy successfully will require that we
meet a number of challenges, including our ability to accurately
forecast sales demand and calibrate manufacturing to such
demand, manage rising raw material costs, develop, manufacture
and successfully market new and enhanced products and product
lines, control operating costs, and attract, motivate and retain
key personnel to manage our operational, financial and
management information systems.
Financial
Highlights
Net revenue for fiscal 2008 of $3.3 billion increased 1.9%
over fiscal 2007. Organic net revenue declined 3.3% for fiscal
2008 from fiscal 2007. Net income of $215.4 million for
fiscal 2008 decreased $25.4 million from
$240.8 million reported in the prior year. Fiscal 2008
results include a restructuring charge of $31.2 million
($21.0 million after tax) and tax charges related to
changes in prior years foreign tax credits of
$17.2 million. Restructuring charges of $36.9 million
($30.3 million after-tax) were recorded in fiscal 2007.
On August 9, 2006, we completed the acquisition of Woodhead
Industries, Inc. (Woodhead) in an all cash transaction valued at
approximately $238.1 million, including the assumption of
debt and net of cash acquired. Woodhead develops, manufactures
and markets network and electrical infrastructure components
engineered for performance in harsh, demanding, and hazardous
industrial environments.
23
The acquisition is a significant step in our strategy to expand
our products and capabilities in the global industrial market.
Critical
Accounting Estimates
Our accounting and financial reporting policies are in
conformity with U.S. generally accepted accounting
principles (GAAP). The preparation of financial statements in
conformity with GAAP requires our management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the 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.
Significant accounting policies are summarized in Note 2 of
the Notes to Consolidated Financial Statements. Noted here are a
number of policies that require significant judgments or
estimates.
Revenue
Recognition
Our revenue recognition policies are in accordance with Staff
Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements, and
SAB No. 104, Revenue Recognition, as
issued by the SEC and other applicable guidance.
We recognize revenue upon shipment of product and transfer of
ownership to the customer. Contracts and customer purchase
orders generally are used to determine the existence of an
arrangement. Shipping documents, proof of delivery and customer
acceptance (when applicable) are used to verify delivery. We
assess whether an amount due from a customer is fixed and
determinable based on the terms of the agreement with the
customer, including, but not limited to, the payment terms
associated with the transaction. The impact of judgments and
estimates on revenue recognition is minimal. A reserve for
estimated returns is established at the time of sale based on
historical return experience to cover returns of defective
product and is recorded as a reduction of revenue.
Income
Taxes
As a result of the implementation of Financial Accounting
Standards Board (FASB) interpretation No. 48,
Accounting for the Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109
(FIN 48), effective July 1, 2007, we recognize
liabilities for uncertain tax positions based on the two-step
process prescribed within the interpretation. The first step is
to evaluate the tax position for recognition by determining if
the weight of available evidence indicates that it is more
likely than not that the position will be sustained on audit,
including resolution of related appeals or litigation processes,
if any. The second step requires us to estimate and measure the
tax benefit as the largest amount that is more than 50% likely
to be realized upon ultimate settlement. It is inherently
difficult and subjective to estimate such amounts, as this
requires us to determine the probability of various possible
outcomes. We re-evaluate these uncertain tax positions on a
quarterly basis. This evaluation is based on factors including,
but not limited to, changes in facts or circumstances, changes
in tax law, effectively settled issues under audit and new audit
activity. Such a change in recognition or measurement would
result in the recognition of a tax benefit or an additional
charge to the tax provision in the period.
Prior to adoption of FIN 48, our policy was to establish
accruals for taxes that may become payable in future years as a
result of examinations by tax authorities. We established the
accruals based upon managements assessment of probable
income tax contingencies.
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. We
have net deferred tax assets of $86.0 million at
June 30, 2008.
We have operations in countries around the world that are
subject to income and other similar taxes in these countries.
The estimation of the income tax amounts that we record involves
the interpretation of complex tax laws and regulations,
evaluation of tax audit findings and assessment of
24
how foreign taxes may affect domestic taxes. Although we believe
our tax accruals are adequate, differences may occur in the
future depending on the resolution of pending and new tax
matters.
We periodically assess the carrying value of our deferred tax
assets based upon our ability to generate sufficient future
taxable income in certain tax jurisdictions. If we determine
that we will not be able to realize all or part of our deferred
tax assets in the future, a valuation allowance is established
in the period such determination is made. We have determined
that it is unlikely that we will realize a net deferred asset in
the future relating to certain
non-U.S. net
operating losses. Entities with net operating losses were able
to utilize $1.1 million of these losses during fiscal 2008.
The cumulative valuation allowance relating to net operating
losses is approximately $38.3 million at June 30, 2008.
Inventory
Inventories are valued at the lower of
first-in,
first-out (FIFO) cost or market value. FIFO inventories recorded
in our consolidated balance sheet are adjusted for an allowance
covering inventories determined to be slow-moving or excess. The
allowance for slow-moving and excess inventories is maintained
at an amount management considers appropriate based on factors
such as historical usage of the product, open sales orders and
future sales forecasts. If our sales forecast for specific
products is greater than actual demand and we fail to reduce
manufacturing output accordingly, we could be required to write
down additional inventory, which would have a negative impact on
gross margin and operating results. Such factors require
judgment, and changes in any of these factors could result in
changes to this allowance.
Pension
Plans
The costs and obligations of our defined benefit pension plans
are dependent on actuarial assumptions. Three critical
assumptions used, which impact the net periodic pension expense
(income) and two of which impact the pension benefit obligation
(PBO), are the discount rate, expected return on plan assets and
rate of compensation increase. The discount rate is determined
based on high-quality fixed income investments that match the
duration of expected benefit payments. The discount rate used to
determine the present value of our future U.S. pension
obligations is based on a yield curve constructed from a
portfolio of high quality corporate debt securities with various
maturities. Each years expected future benefit payments
are discounted to their present value at the appropriate yield
curve rate, thereby generating the overall discount rate for
U.S. pension obligations. The discount rates for our
foreign pension plans are selected by using a yield curve
approach or by reference to high quality corporate bond rates in
those countries that have developed corporate bond markets. In
those countries where developed corporate bond markets do not
exist, the discount rates are selected by reference to local
government bond rates with a premium added to reflect the
additional risk for corporate bonds. The expected return on plan
assets represents a forward projection of the average rate of
earnings expected on the pension assets. We have estimated this
rate based on historical returns of similarly diversified
portfolios. The rate of compensation increase represents the
long-term assumption for expected increases to salaries for
pay-related plans. These key assumptions are evaluated annually.
Changes in these assumptions can result in different expense and
liability amounts.
25
The effects of the indicated increase and decrease in selected
assumptions for our pension plans as of June 30, 2008,
assuming no changes in benefit levels and no amortization of
gains or losses, is shown below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
Increase (Decrease)
|
|
|
|
in PBO
|
|
|
in Pension Expense
|
|
|
|
U.S. Plan
|
|
|
Intl Plans
|
|
|
U.S. Plan
|
|
|
Intl Plans
|
|
|
Discount rate change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 50 basis points
|
|
$
|
(3,795
|
)
|
|
$
|
(8,306
|
)
|
|
$
|
(325
|
)
|
|
$
|
(103
|
)
|
Decrease 50 basis points
|
|
|
4,104
|
|
|
|
9,331
|
|
|
|
336
|
|
|
|
123
|
|
Expected rate of return change:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 100 basis points
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
(566
|
)
|
|
|
(689
|
)
|
Decrease 100 basis points
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
566
|
|
|
|
689
|
|
Other
Postretirement Benefits
We have retiree health care plans that cover the majority of our
U.S. employees. There are no significant postretirement
health care benefit plans outside of the U.S. The health
care cost trend rate assumption has a significant effect on the
amount of the accumulated postretirement benefit obligation
(APBO) and retiree health care benefit expense. A 100
basis-point change in the assumed health care cost trend rates
would have the following effects (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Increase (decrease) in total annual service and interest cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 100 basis points
|
|
$
|
1,219
|
|
|
$
|
1,287
|
|
|
$
|
1,476
|
|
Decrease 100 basis points
|
|
|
(968
|
)
|
|
|
(1,014
|
)
|
|
|
(1,211
|
)
|
Increase (decrease) in APBO:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 100 basis points
|
|
$
|
7,987
|
|
|
$
|
9,057
|
|
|
$
|
9,951
|
|
Decrease 100 basis points
|
|
|
(6,452
|
)
|
|
|
(7,270
|
)
|
|
|
(8,164
|
)
|
Goodwill
Goodwill is recorded when the purchase price paid for an
acquisition exceeds the estimated fair value of the net
identified tangible and intangible assets acquired.
We perform an annual goodwill impairment analysis as of
May 31, or earlier if indicators of potential impairment
exist. In assessing the recoverability of goodwill, we review
both quantitative as well as qualitative factors to support our
assumptions with regard to fair value. Our impairment review
process compares the estimated fair value of the reporting unit
in which goodwill resides to our carrying value. Reporting units
may be operating segments as a whole or an operation one level
below an operating segment, referred to as a component.
Components are defined as operations for which discrete
financial information is available and reviewed by segment
management.
The fair value of a reporting unit is estimated using a
discounted cash flow model for the evaluation of impairment. The
expected future cash flows are generally based on
managements estimates and are determined by looking at
numerous factors including projected economic conditions and
customer demand, revenue and margins, changes in competition,
operating costs and new products introduced. In determining fair
value, we make certain judgments. If these estimates or their
related assumptions change in the future as a result of changes
in strategy or market conditions, we may be required to record
an impairment charge.
Although management believes its assumptions in determining the
projected cash flows are reasonable, changes in those estimates
could affect the evaluation.
26
Restructuring
Costs and Asset Impairments
We have recorded charges in connection with restructuring our
business. We recognize a liability for restructuring costs at
fair value when the liability is incurred. The main components
of our restructuring plans are related to workforce reductions
and the closure and consolidation of excess facilities.
Workforce-related charges are expensed and accrued when it is
determined that a liability is probable, which is generally
after individuals have been notified of their termination dates
and expected severance payments, but under certain circumstances
may be recognized upon approval of a restructuring plan by
management or in future accounting periods when terminated
employees continue to provide service. Plans to consolidate
excess facilities result in charges for lease termination fees,
future commitments to pay lease charges, net of estimated future
sublease income, and adjustments to the fair value of buildings
and equipment to be sold. Charges for the consolidation of
excess facilities are based on an estimate of the amounts and
timing of future cash flows related to the expected future
remaining use and ultimate sale or disposal of buildings and
equipment.
The timing of the cash expenditures associated with these
charges does not necessarily correspond to the period in which
the accounting charge is taken. For additional information
concerning the status of our restructuring programs see
Note 5 of the Notes to Condensed Consolidated Financial
Statements. See also Forward-Looking Statements.
Impairment of
Long-Lived Assets
In accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, we assess the impairment of long-lived
assets, other than goodwill and trade names, including property
and equipment, and identifiable intangible assets subject to
amortization, whenever events or changes in circumstances
indicate the carrying value may not be recoverable. Factors we
consider important, which could trigger an impairment review,
include significant changes in the manner of our use of the
asset, changes in historical trends in operating performance,
changes in projected operating performance, and significant
negative economic trends.
New Accounting
Pronouncements
In December 2007, the FASB issued Statement of Financial
Accounting Standards (SFAS) No. 141R, Business
Combinations (SFAS 141R). SFAS 141R states that
acquisition-related costs are to be recognized separately from
the acquisition and expensed as incurred with restructuring
costs being expensed in periods after the acquisition date.
SFAS 141R also states that business combinations will
result in all assets and liabilities of the acquired business
being recorded at their fair values. We are required to adopt
SFAS No. 141R effective July 1, 2009. The impact
of the adoption of SFAS No. 141R will depend on the
nature and extent of business combinations occurring on or after
the effective date.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements (SFAS 160) an amendment of ARB
No. 51. SFAS 160 requires identification and
presentation of ownership interests in subsidiaries held by
parties other than us in the consolidated financial statements
within the equity section but separate from the equity. It also
requires that (1) the amount of consolidated net income
attributable to the parent and to the noncontrolling interest be
clearly identified and presented on the face of the consolidated
statement of income, (2) changes in ownership interest be
accounted for similarly, as equity transactions, and
(3) when a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary and
the gain or loss on the deconsolidation of the subsidiary be
measured at fair value. This statement is effective for us on
July 1, 2009. We are currently evaluating the requirements
of SFAS 160, but do not expect it to have a material impact
on our financial statements.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities (SFAS 161) an amendment of
FASB Statement No. 133. SFAS 161 requires
27
enhanced disclosures about an entitys derivative and
hedging activities and thus improves the transparency of
financial reporting. This statement is effective for us on
July 1, 2009. We are currently evaluating the requirements
of SFAS 161, but do not expect it to have a material impact
on our financial statements.
Results of
Operations
Net revenue for fiscal 2008 of $3.3 billion increased 1.9%
over fiscal 2007. Organic net revenue declined 3.3% for fiscal
2008 over fiscal 2007. Net income of $215.4 million for
fiscal 2008 decreased $25.4 million from
$240.8 million reported in the prior year. Fiscal 2008
results include a restructuring charge of $31.2 million
($21.0 million after tax) and tax charges related to
changes in prior years foreign tax credits of
$17.2 million. Restructuring charges of $36.9 million
($30.3 million after-tax) were recorded in fiscal 2007. The
Woodhead acquisition added $202.5 million of net revenue
and $12.2 million of income from operations to the
consolidated operating results in fiscal 2007.
The following table sets forth certain consolidated statements
of income data as a percentage of net revenue for the periods
indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
Percentage of
|
|
|
|
2008
|
|
|
Revenue
|
|
|
2007
|
|
|
Revenue
|
|
|
2006
|
|
|
Revenue
|
|
|
Net revenue
|
|
$
|
3,328,347
|
|
|
|
100.0
|
%
|
|
$
|
3,265,874
|
|
|
|
100.0
|
%
|
|
$
|
2,861,289
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
2,314,112
|
|
|
|
69.5
|
%
|
|
|
2,249,166
|
|
|
|
68.9
|
%
|
|
|
1,918,659
|
|
|
|
67.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,014,235
|
|
|
|
30.5
|
%
|
|
|
1,016,708
|
|
|
|
31.1
|
%
|
|
|
942,630
|
|
|
|
32.9
|
%
|
Selling, general & administrative
|
|
|
665,038
|
|
|
|
20.0
|
%
|
|
|
658,289
|
|
|
|
20.1
|
%
|
|
|
606,532
|
|
|
|
21.1
|
%
|
Restructuring costs and asset impairments
|
|
|
31,247
|
|
|
|
0.9
|
%
|
|
|
36,869
|
|
|
|
1.1
|
%
|
|
|
26,354
|
|
|
|
0.9
|
%
|
Income from operations
|
|
|
317,950
|
|
|
|
9.6
|
%
|
|
|
321,550
|
|
|
|
9.9
|
%
|
|
|
309,744
|
|
|
|
10.8
|
%
|
Other income, net
|
|
|
20,698
|
|
|
|
0.6
|
%
|
|
|
16,707
|
|
|
|
0.5
|
%
|
|
|
18,140
|
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
338,648
|
|
|
|
10.2
|
%
|
|
|
338,257
|
|
|
|
10.4
|
%
|
|
|
327,884
|
|
|
|
11.5
|
%
|
Income taxes
|
|
|
123,211
|
|
|
|
3.7
|
%
|
|
|
97,489
|
|
|
|
3.0
|
%
|
|
|
91,793
|
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
215,437
|
|
|
|
6.5
|
%
|
|
$
|
240,768
|
|
|
|
7.4
|
%
|
|
$
|
236,091
|
|
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
We sell our products in five primary markets. A summary follows
of the estimated change in revenue from each market during the
fiscal years ended June 30:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Consumer
|
|
|
3
|
%
|
|
|
9
|
%
|
Telecommunications
|
|
|
3
|
|
|
|
3
|
|
Automotive
|
|
|
7
|
|
|
|
11
|
|
Data
|
|
|
4
|
|
|
|
6
|
|
Industrial
|
|
|
(11
|
)
|
|
|
100
|
|
Following are highlights of revenue changes by these primary
markets:
|
|
|
|
|
Consumer market revenue increased in fiscal 2008 due to higher
demand for our connectors used in home entertainment products.
However, revenue growth this year has moderated in part due to
our customers concerns regarding global economies.
|
28
|
|
|
|
|
Telecommunications market revenue was higher in fiscal 2008 due
to higher demand for our networking products. While we
experienced strong revenue growth in the telecommunications
market in late fiscal 2006 and early 2007, we experienced a
sharp decline in revenue from mobile phone customers during the
second half of fiscal 2007. This negative trend began to
stabilize during the second half of fiscal 2008.
|
|
|
|
Revenue in the automotive sector was higher in fiscal 2008 and
2007 primarily due to higher revenue in Europe and Asia, a
portion of which is attributed to the currency translation
impact of a weaker U.S. dollar in fiscal 2008. Revenue in
the U.S. automotive market was lower in fiscal 2008
compared with fiscal 2007. The automotive market has benefited
from new products reflecting higher electronic content in
automobiles and an increase in revenue of our standard products
to traditional customers. We believe that the number of
automobiles manufactured by our customers was lower in fiscal
2008; however, our customers have trended toward reducing their
vendor list, which when coupled with the higher electronic
content used in new automobiles, has resulted in an increase in
our revenue.
|
|
|
|
Data market revenue increased in fiscal 2008 due to our
customers releases of new high end products and their
expansion in new optical and high speed technologies, for which
we offer a strong product line. Revenue growth in the data
market has moderated during this year due in part to our
customers concerns regarding global economies.
|
|
|
|
The industrial market declined due largely to a cable assembly
product that had high revenue levels in fiscal 2007 but little
revenue in fiscal 2008 because our customer was enhancing their
product line. Woodhead contributed 84% of the 100% growth in
industrial sales in fiscal 2007 compared with fiscal 2006.
|
The following table shows the percentage of net revenue by
geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Americas
|
|
|
27.6
|
%
|
|
|
28.7
|
%
|
|
|
28.6
|
%
|
Asia Pacific
|
|
|
52.0
|
|
|
|
51.1
|
|
|
|
52.6
|
|
Europe
|
|
|
20.4
|
|
|
|
20.2
|
|
|
|
18.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides an analysis of the change in net
revenue compared with the prior fiscal years (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net revenue for prior year
|
|
$
|
3,265,874
|
|
|
$
|
2,861,289
|
|
Components of net revenue (decrease) increase:
|
|
|
|
|
|
|
|
|
Organic net revenue growth (decline)
|
|
|
(106,863
|
)
|
|
|
141,887
|
|
Currency translation
|
|
|
169,336
|
|
|
|
60,219
|
|
Woodhead acquisition
|
|
|
|
|
|
|
202,479
|
|
|
|
|
|
|
|
|
|
|
Total change in net revenue from prior year
|
|
|
62,473
|
|
|
|
404,585
|
|
|
|
|
|
|
|
|
|
|
Net revenue for current year
|
|
$
|
3,328,347
|
|
|
$
|
3,265,874
|
|
|
|
|
|
|
|
|
|
|
Organic net revenue growth (decline) as a percentage of net
revenue for prior year
|
|
|
(3.3
|
)%
|
|
|
5.0
|
%
|
Organic net revenue declined $106.9 million in fiscal 2008
due to lower revenue in local currencies for the consumer,
telecommunications and data markets in our connector segment. We
estimate that the impact of price erosion reduced revenue by
approximately $132.8 million in fiscal 2008 compared with
the prior year. A significant portion of the price erosion
occurred in our mobile phone connector products, which are part
of our telecommunications market.
29
The increase in net revenue attributed to currency translation
in fiscal 2008 compared with fiscal 2007 was principally due to
the general weakening of the U.S. dollar against other
currencies. The increase in net revenue attributed to currency
translation in fiscal 2007 compared with 2006 was principally
due to the strengthening of the euro, Singapore dollar and
Korean won against the U.S. dollar. The following tables
show the effect on the change in geographic net revenue from
foreign currency translations to the U.S. dollar (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
Local
|
|
|
Currency
|
|
|
Net
|
|
|
Local
|
|
|
Currency
|
|
|
Net
|
|
|
|
Currency
|
|
|
Translation
|
|
|
Change
|
|
|
Currency
|
|
|
Translation
|
|
|
Change
|
|
|
Americas
|
|
$
|
(23,304
|
)
|
|
$
|
3,637
|
|
|
$
|
(19,667
|
)
|
|
$
|
116,022
|
|
|
$
|
1,640
|
|
|
$
|
117,662
|
|
Asia Pacific
|
|
|
(26,974
|
)
|
|
|
89,405
|
|
|
|
62,431
|
|
|
|
145,537
|
|
|
|
17,158
|
|
|
|
162,695
|
|
Europe
|
|
|
(54,735
|
)
|
|
|
76,294
|
|
|
|
21,559
|
|
|
|
74,165
|
|
|
|
47,148
|
|
|
|
121,313
|
|
Corporate & Other
|
|
|
(1,850
|
)
|
|
|
|
|
|
|
(1,850
|
)
|
|
|
2,915
|
|
|
|
|
|
|
|
2,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
$
|
(106,863
|
)
|
|
$
|
169,336
|
|
|
$
|
62,473
|
|
|
$
|
338,639
|
|
|
$
|
65,946
|
|
|
$
|
404,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The change in revenue on a local currency basis as of June 30
was as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Americas
|
|
|
(2.5
|
)%
|
|
|
14.2
|
%
|
Asia Pacific
|
|
|
(1.6
|
)
|
|
|
9.7
|
|
Europe
|
|
|
(8.3
|
)
|
|
|
13.8
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(3.3
|
)%
|
|
|
11.8
|
%
|
|
|
|
|
|
|
|
|
|
The following table sets forth information on revenue by segment
as of June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Connector
|
|
$
|
1,879,443
|
|
|
$
|
1,885,431
|
|
|
$
|
1,721,459
|
|
Transportation
|
|
|
498,141
|
|
|
|
472,257
|
|
|
|
424,740
|
|
Custom & Electrical
|
|
|
941,365
|
|
|
|
892,756
|
|
|
|
650,332
|
|
Corporate & Other
|
|
|
9,398
|
|
|
|
15,430
|
|
|
|
64,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,328,347
|
|
|
$
|
3,265,874
|
|
|
$
|
2,861,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
The following table provides summary of gross profit and gross
margin compared with the prior fiscal year (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Gross profit
|
|
$
|
1,014,235
|
|
|
$
|
1,016,708
|
|
|
$
|
942,630
|
|
Gross margin
|
|
|
30.5
|
%
|
|
|
31.1
|
%
|
|
|
32.9
|
%
|
The reduction in gross margin was primarily due to higher
commodity cost and price erosion partially offset by general
cost reductions, a portion of which is related to restructuring
activities.
A significant portion of our material cost is comprised of
copper and gold costs. We purchased approximately
25 million pounds of copper and approximately 135,000 troy
ounces of gold in fiscal 2008. The following table shows the
increase in average prices related to our purchases of copper
and gold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Copper (price per pound)
|
|
$
|
3.49
|
|
|
$
|
3.20
|
|
|
$
|
2.28
|
|
Gold (price per troy ounce)
|
|
|
825.00
|
|
|
|
636.00
|
|
|
|
525.00
|
|
30
Generally, we are able to pass through to our customers only a
small a portion of the increased cost of copper and gold.
However, we mitigated the impact of the increase in gold prices
by hedging approximately 40% of our gold purchases in fiscal
2008.
In addition to commodity costs, the increase (decrease) of
certain other significant impacts on gross profit compared with
the prior years was as follows as of June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Price erosion
|
|
$
|
(132,758
|
)
|
|
$
|
(131,435
|
)
|
Currency translation
|
|
|
48,842
|
|
|
|
12,595
|
|
Currency transaction
|
|
|
(18,393
|
)
|
|
|
18,166
|
|
The increase in gross profit due to currency translation gains
was primarily due to a general weakening of the U.S. dollar
against other currencies. Currency translation decreased gross
margin by 10 basis points as revenue increased by
$169.3 million, also due to the weaker dollar.
Certain products that we manufacture in Japan and Europe are
sold in other regions of the world at selling prices primarily
denominated in or closely linked to the U.S. dollar. As a
result, changes in currency exchange rates may affect our cost
of sales reported in U.S. dollars without a corresponding
effect on net revenue. The decrease in gross profit due to
currency transaction losses in fiscal 2008 was primarily due to
a general weakening of the U.S. dollar against other
currencies.
Operating
Expenses
Operating expenses for the three years ended June 30, 2008
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Selling, general & administrative
|
|
$
|
665,038
|
|
|
$
|
658,289
|
|
|
$
|
606,532
|
|
Selling, general & administrative as a percentage of
revenue
|
|
|
20.0
|
%
|
|
|
20.1
|
%
|
|
|
21.1
|
%
|
Restructuring costs and asset impairments
|
|
|
31,247
|
|
|
|
36,869
|
|
|
|
26,354
|
|
Selling, general and administrative expense as a percentage of
revenue was relatively consistent in fiscal 2008 compared with
fiscal 2007 while organic net revenue declined. The impact of
currency translation increased selling, general and
administrative expenses by approximately $35.4 million for
fiscal 2008 compared with fiscal 2007 and increased selling,
general and administrative expenses by approximately
$12.4 million for fiscal 2007 compared with fiscal 2006.
The decrease in selling, general and administrative expense as a
percent of net revenue in fiscal 2008 compared with fiscal 2007
and in fiscal 2007 compared with fiscal 2006 was primarily due
to a lower cost structure resulting from our restructuring
initiative which began in fiscal 2007, lower incentive
compensation expense in 2008 and 2007 and specific cost
containment activities.
Research and development expenditures, which are classified as
selling, general and administrative expense, were 4.9% of net
revenue for fiscal years 2008, 2007 and 2006.
Restructuring
costs and asset impairments
During fiscal 2007, we undertook a restructuring plan designed
to reduce costs and to improve return on invested capital as a
result of a new global organization that was effective
July 1, 2007. A majority of the plan relates to facilities
located in North America and Europe and in general, the movement
of manufacturing activities at these plants to other facilities.
Net restructuring cost during the year ended June 30, 2008
was $31.2 million, resulting in cumulative costs since we
announced the restructuring plan of $68.1 million. We have
revised our initial estimate and now expect to incur total
restructuring and asset impairment costs related to these
actions ranging from $125 to $140 million, of which the
impact on each segment will be determined as the actions become
more certain. Management and the Board of Directors approved
several actions related to this plan. A
31
portion of this plan involves cost savings or other actions that
do not result in incremental expense, such as better utilization
of assets, reduced spending and organizational efficiencies.
This plan includes employee reduction targets throughout the
company, and we expect to achieve these targets through ongoing
employee attrition and terminations. We expect to substantially
complete the actions under this plan by June 30, 2010.
During fiscal 2008, we recognized net restructuring costs
related to employee severance and benefit arrangements for
approximately 900 employees, resulting in a charge of
$17.6 million. A large part of these employee terminations
occurred in our corporate headquarters and U.S. and Mexican
manufacturing operations. In accordance with our planned
restructuring actions, we have recorded additional asset
impairment charges of $13.6 million to write-down assets to
fair value less the cost to sell.
During fiscal 2007, we recognized additional restructuring costs
related to employee severance and benefit arrangements for
approximately 335 employees. A substantial majority of
these employee terminations occurred within our Ireland
manufacturing operations and various administrative functions in
the Americas and European regions. In addition, we have vacated
or plan to vacate several buildings and are holding these
buildings and related assets for sale. This plan resulted in an
impairment charge of $8.7 million to write-down these
assets to fair value less the cost to sell these assets. The
fair value of the asset groupings was determined using various
valuation techniques.
During fiscal 2005, we decided to close certain operations in
the Americas and European regions in order to reduce operating
costs and better align our manufacturing capacity with customer
needs. In the Americas region, we closed an industrial
manufacturing facility in New England and have ceased
manufacturing in our Detroit area automotive facility. In
Europe, we closed certain manufacturing facilities in Ireland
and Portugal and reduced the size of a development center in
Germany. We also closed a manufacturing facility in Slovakia.
Production from these manufacturing facilities was transferred
to existing plants within the region. We also took actions that
reduced our selling, general and administrative costs in the
Americas and European regions and at the corporate office. We
reduced headcount by approximately 500 people after
additions at the facilities where production was transferred.
These actions were substantially complete as of June 30,
2006.
The timing of the cash expenditures associated with these
charges does not necessarily correspond to the period in which
the accounting charge is taken. For additional information
concerning the status of our restructuring programs see
Note 5 of the Notes to Condensed Consolidated Financial
Statements. See also Forward-Looking Statements.
Effective Tax
Rate
The effective tax rate for the three years ended June 30,
2008 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Effective tax rate
|
|
|
36.4
|
%
|
|
|
28.8
|
%
|
|
|
28.0
|
%
|
The effective tax rate for fiscal 2008 increased due to
adjustments to foreign tax credits, including (1) a change
in estimate of $6.3 million in the third quarter of fiscal
2008, resulting from a difference between foreign tax credits
estimated in our fiscal 2007 financial statements and
subsequently reflected in our fiscal 2007 tax return, and
(2) a fourth quarter charge of $10.9 million to
correct errors in the prior years tax pools used to
calculate foreign tax credit carryforwards. The effective tax
rate in fiscal 2007 was substantially unchanged from fiscal 2006.
Backlog
Backlog as of the three years ended June 30 was as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Backlog
|
|
$
|
436,487
|
|
|
$
|
332,479
|
|
|
$
|
369,966
|
|
32
Backlog at June 30, 2008 increased due to orders received
in the telecommunications and data markets and foreign currency
translation. Foreign currency translation increased the backlog
by $25.7 million compared with June 30, 2007.
Excluding the foreign currency translation impact, backlog
increased 23.6% from fiscal 2007 to fiscal 2008. Orders for
fiscal 2008 were $3.4 billion compared with
$3.2 billion for the prior year. Orders increased due to an
increase in the telecommunications market and foreign currency
translation. Foreign currency translation increased orders by
$139.4 million.
Backlog decreased as of June 30, 2007 compared with
June 30, 2006, primarily due to a decrease in demand at the
end of fiscal 2007, particularly in the mobile communications
market, and an increase in vendor managed inventory programs to
customers. Under the vendor managed inventory program, the order
and shipment occur simultaneously and without impacting reported
backlog. The decrease in backlog as of June 30, 2007
compared with 2006 was offset by the acquisition of Woodhead,
which had backlog of $24.3 million on June 30, 2007.
Connector
The following table provides an analysis of the change in net
revenue compared with the prior fiscal year (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net revenue for prior year
|
|
$
|
1,885,431
|
|
|
$
|
1,721,459
|
|
Components of net revenue increase (decrease):
|
|
|
|
|
|
|
|
|
Organic net revenue (decline) growth
|
|
|
(101,466
|
)
|
|
|
130,530
|
|
Currency translation
|
|
|
95,478
|
|
|
|
33,442
|
|
|
|
|
|
|
|
|
|
|
Total change in net revenue from prior year
|
|
|
(5,988
|
)
|
|
|
163,972
|
|
|
|
|
|
|
|
|
|
|
Net revenue for current year
|
|
$
|
1,879,443
|
|
|
$
|
1,885,431
|
|
|
|
|
|
|
|
|
|
|
Organic net revenue (decline) growth as a percentage of net
revenue for prior year
|
|
|
(5.4
|
)%
|
|
|
7.6
|
%
|
The Connector segments core markets are telecommunication,
data products and consumer, which are discussed above. Segment
revenue decreased during fiscal 2008 with currency translation
offsetting an organic revenue decline. Connector organic revenue
decreased in fiscal 2008 primarily due to general weakness in
these markets, particularly the mobile phone sector.
Additionally, price erosion, which is generally higher in the
Connector segment compared with our other segments, was 5.7% in
fiscal 2008.
Organic net revenue growth in fiscal 2007 was a result of
stronger demand in the consumer market with growth in both the
satellite radio and games markets where we had significant
connector content.
The following table provides information on income from
operations and operating margins for the periods indicated (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Income from operations
|
|
$
|
302,240
|
|
|
$
|
354,358
|
|
|
$
|
411,329
|
|
Operating margin
|
|
|
16.1
|
%
|
|
|
18.8
|
%
|
|
|
23.9
|
%
|
Connector segment income from operations decreased compared with
the prior year periods due to lower organic revenue in fiscal
2008 and price erosion and higher raw material cost in fiscal
2008 and 2007. We passed on to customers only a small amount of
the commodity cost increase.
33
Transportation
The following table provides an analysis of the change in net
revenue compared with the prior fiscal year (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net revenue for prior year
|
|
$
|
472,257
|
|
|
$
|
424,740
|
|
Components of net revenue increase (decrease):
|
|
|
|
|
|
|
|
|
Organic net revenue (decline) growth
|
|
|
(3,171
|
)
|
|
|
39,565
|
|
Currency translation
|
|
|
29,055
|
|
|
|
7,952
|
|
|
|
|
|
|
|
|
|
|
Total change in net revenue from prior year
|
|
|
25,884
|
|
|
|
47,517
|
|
|
|
|
|
|
|
|
|
|
Net revenue for current year
|
|
$
|
498,141
|
|
|
$
|
472,257
|
|
|
|
|
|
|
|
|
|
|
Organic net revenue (decline) growth as a percentage of net
revenue for prior year
|
|
|
(0.7
|
)%
|
|
|
9.3
|
%
|
Transportation segment organic net revenue declined in fiscal
2008 but was offset entirely by foreign currency translation.
Revenue was negatively impacted during the second half of fiscal
2008 due to a strike at a key supplier of one of our customers.
The organic net revenue growth in fiscal 2007 was primarily due
to new U.S. program wins and higher electronic content in
vehicles.
The following table provides information on income from
operations and operating margins for the periods indicated (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Income from operations
|
|
$
|
15,356
|
|
|
$
|
7,476
|
|
|
$
|
(4,472
|
)
|
Operating margin
|
|
|
3.1
|
%
|
|
|
1.6
|
%
|
|
|
(1.1
|
)%
|
Segment operating income improved during the last three years
due to higher gross margins resulting from cost reductions and
more efficient use of capacity in connection with the
restructuring activities that began in June 2007. Capacity
utilization improved due to completion of the transition of
manufacturing operations that was ongoing during the first half
of fiscal 2007.
Custom &
Electrical
The following table provides an analysis of the change in net
revenue compared with the prior fiscal year (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net revenue for prior year
|
|
$
|
892,756
|
|
|
$
|
650,332
|
|
Components of net revenue increase:
|
|
|
|
|
|
|
|
|
Organic net revenue growth
|
|
|
4,455
|
|
|
|
16,292
|
|
Currency translation
|
|
|
44,154
|
|
|
|
23,653
|
|
Acquisitions
|
|
|
|
|
|
|
202,479
|
|
|
|
|
|
|
|
|
|
|
Total change in net revenue from prior year
|
|
|
48,609
|
|
|
|
242,424
|
|
|
|
|
|
|
|
|
|
|
Net revenue for current year
|
|
$
|
941,365
|
|
|
$
|
892,756
|
|
|
|
|
|
|
|
|
|
|
Organic net revenue growth as a percentage of net revenue for
prior year
|
|
|
0.5
|
%
|
|
|
2.5
|
%
|
The Custom and Electrical segments core markets are
industrial, telecommunications and data, which are discussed
above. Higher revenue from telecommunications infrastructure
products was offset by lower revenue in the industrial market.
Organic net revenue growth in fiscal 2007 was realized in both
the industrial and telecommunications markets.
34
The following table provides information on income from
operations and operating margins for the periods indicated (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Income from operations
|
|
$
|
94,076
|
|
|
$
|
52,898
|
|
|
$
|
29,047
|
|
Operating margin
|
|
|
10.0
|
%
|
|
|
5.9
|
%
|
|
|
4.5
|
%
|
Segment operating income increased in fiscal 2008 compared with
fiscal 2007 due to efficiencies achieved with the Woodhead
integration and an increase in revenue in the telecommunications
market. Operating income increased in fiscal 2007 compared with
fiscal 2006 due to higher revenue attributed to the Woodhead
acquisition.
Non-GAAP Financial
Measures
Organic net revenue growth, which is included in the discussion
above, is a non-GAAP financial measure. The tables presented in
Results of Operations above provide reconciliations of
U.S. GAAP reported net revenue growth (the most directly
comparable GAAP financial measure) to organic net revenue growth.
We believe organic net revenue growth provides useful
information to investors because it reflects the underlying
growth from the ongoing activities of our business and provides
investors with a view of our operations from managements
perspective. We use organic net revenue growth to monitor and
evaluate performance, as it is an important measure of the
underlying results of our operations. It excludes items that are
not completely under managements control, such as the
impact of changes in foreign currency exchange rates, and items
that do not reflect the underlying growth of the company, such
as acquisition activity. Management uses organic net revenue
growth together with GAAP measures such as net revenue growth
and operating income in its decision making processes related to
the operations of our reporting segments and our overall company.
Financial
Condition and Liquidity
Our financial position remains strong and we continue to be able
to fund capital projects and working capital needs principally
out of operating cash flows and cash reserves. Cash, cash
equivalents and marketable securities totaled
$509.8 million and $460.9 million at June 30,
2008 and 2007, respectively, of which approximately $480.0 was
in
non-U.S. accounts
as of June 30, 2008. Transferring cash, cash equivalent or
marketable securities to U.S. accounts from
non-U.S. accounts
could subject us to additional U.S. repatriation income tax.
Our long-term financing strategy is to primarily rely on
internal sources of funds for investing in plant, equipment and
acquisitions. Management believes that our liquidity and
financial flexibility are adequate to support both current and
future growth. We have historically used external borrowings
only when a clear financial advantage exists. Long-term debt and
obligations under capital leases at June 30, 2008 totaled
$151.8 million. We have available lines of credit totaling
$207.9 million at June 30, 2008.
Cash
Flows
Below is a table setting forth the key lines of our Consolidated
Statements of Cash Flows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Cash provided from operating activities
|
|
$
|
479,134
|
|
|
$
|
451,434
|
|
|
$
|
443,856
|
|
Cash used for investing activities
|
|
|
(218,156
|
)
|
|
|
(446,129
|
)
|
|
|
(240,779
|
)
|
Cash provided by (used for) financing activities
|
|
|
(197,306
|
)
|
|
|
28,529
|
|
|
|
(189,814
|
)
|
Effect of exchange rate changes on cash
|
|
|
33,474
|
|
|
|
11,712
|
|
|
|
9,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
$
|
97,146
|
|
|
$
|
45,546
|
|
|
$
|
23,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
Operating
Activities
Cash provided from operating activities in fiscal 2008 increased
by $27.7 million for fiscal 2008 from the prior year due
mainly to lower use of funds to finance working capital needs in
the current year period compared with the prior year, partially
offset by lower net income. Working capital is defined as
current assets minus current liabilities.
Cash provided from operating activities increased by
$7.6 million for fiscal 2007 from fiscal 2006 primarily due
to higher net income as adjusted for non-cash items in fiscal
2006 offset by an increase in working capital. The working
capital increase was primarily due to the revenue growth for
fiscal 2007 compared with the prior year.
Investing
Activities
On July 19, 2007, we completed an acquisition of a
U.S.-based
company in an all cash transaction approximating
$42.5 million. On August 9, 2006, we completed the
acquisition of Woodhead in an all cash transaction for
approximately $238.1 million, including the assumption of
debt and net of cash acquired.
Capital expenditures declined $62.2 million during fiscal
2008 compared with fiscal 2007 reflecting our efforts to
increase asset efficiency by lowering the incremental investment
required to drive future growth. Capital expenditures increased
$20.1 million for fiscal 2007 compared with fiscal 2006 in
order to provide increased capability in the Americas,
Asia-Pacific and European regions.
Cash flow from investing activities also includes proceeds from
marketable securities in the net amount of $46.8 million in
fiscal 2008, $71.2 million in fiscal 2007 and
$37.3 million in fiscal 2006. Our marketable securities
generally have a term of less than one year. Our investments in
marketable securities are primarily based on our uses of cash in
operating, other investing and financing activities.
Financing
Activities
In order to fund the cash portion of our investment in Woodhead
made during fiscal 2007, we entered into two term notes
aggregating 15 billion Japanese yen ($141.3 million)
and borrowed $44.0 million on our unsecured revolving
credit line that was repaid the same year. The term notes are
due in September 2009, with weighted-average fixed interest
rates approximating 1.3%. In order to fund stock repurchases
during fiscal 2008, we borrowed $125.0 million on our
unsecured revolving line of credit, $75.0 million of which
was repaid during fiscal 2008.
We purchased shares of Common Stock and Class A Common
Stock totaling 8.0 million shares, 1.2 million shares
and 6.0 million shares during fiscal years 2008, 2007 and
2006, respectively. The aggregate cost of these purchases was
$199.6 million, $34.9 million and $165.3 million
in fiscal years 2008, 2007 and 2006, respectively.
Our Board of Directors authorized the repurchase of up to an
aggregate $200.0 million of common stock through
June 30, 2008. Substantially all funds were used under the
authorization as of June 30, 2008. On August 1, 2008,
our Board of Directors authorized a repurchase of up to an
aggregate $200.0 million of common stock through
June 30, 2009.
We have sufficient cash balances and cash flow to support our
planned growth. As part of our growth strategy, we may, in the
future, acquire other companies in the same or complementary
lines of business, and pursue other business ventures. The
timing and size of any new business ventures or acquisitions we
complete may impact our cash requirements and debt balances.
36
Contractual
Obligations and Commercial Commitments
The following table summarizes our significant contractual
obligations at June 30, 2008, and the effect such
obligations are expected to have on liquidity and cash flows in
future periods (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than
|
|
|
1-3
|
|
|
3-5
|
|
|
More Than
|
|
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
Operating lease obligations
|
|
$
|
39,831
|
|
|
$
|
13,774
|
|
|
$
|
11,797
|
|
|
$
|
8,757
|
|
|
$
|
5,503
|
|
Capital lease obligations
|
|
|
5,118
|
|
|
|
2,858
|
|
|
|
2,212
|
|
|
|
47
|
|
|
|
1
|
|
Other long-term liabilities
|
|
|
17,798
|
|
|
|
4,673
|
|
|
|
3,930
|
|
|
|
626
|
|
|
|
8,569
|
|
Debt obligations
|
|
|
147,626
|
|
|
|
1,398
|
|
|
|
145,668
|
|
|
|
488
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(1)
|
|
$
|
210,373
|
|
|
$
|
22,703
|
|
|
$
|
163,607
|
|
|
$
|
9,918
|
|
|
$
|
14,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Total does not include contractual obligations recorded on the
balance sheet as current liabilities or certain purchase
obligations, as discussed below. Debt and capital lease
obligations include interest payments.
|
Contractual obligations for purchases of goods or services are
defined as agreements that are enforceable and legally binding
on us and that specify all significant terms, including fixed or
minimum quantities to be purchased; fixed, minimum or variable
price provisions; and the approximate timing of the transaction.
Our purchase orders are based on current manufacturing needs and
are fulfilled by vendors within short time horizons. In
addition, some purchase orders represent authorizations to
purchase rather than binding agreements. We do not generally
have significant agreements for the purchase of raw materials or
other goods specifying minimum quantities and set prices that
exceed expected requirements for three months. Agreements for
outsourced services generally contain clauses allowing for
cancellation without significant penalty, and are therefore not
included in the table above.
The expected timing of payments of the obligations above is
estimated based on current information. Timing of payments and
actual amounts paid may be different, depending on the time of
receipt of goods or services, or changes to
agreed-upon
amounts for some obligations.
Off-Balance Sheet
Arrangements
An off-balance sheet arrangement is any contractual arrangement
involving an unconsolidated entity under which a company has
(i) made guarantees, (ii) a retained or a contingent
interest in transferred assets, (iii) any obligation under
certain derivative instruments or (iv) any obligation under
a material variable interest in an unconsolidated entity that
provides financing, liquidity, market risk, or credit risk
support to a company, or engages in leasing, hedging, or
research and development services within a company.
We do not have material exposure to any off-balance sheet
arrangements. We do not have any unconsolidated special purpose
entities.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
We are subject to market risk associated with changes in foreign
currency exchange rates and interest rates.
We mitigate our foreign currency exchange rate risk principally
through the establishment of local production facilities in the
markets we serve. This creates a natural hedge since
purchases and sales within a specific country are both
denominated in the same currency and therefore no exposure
exists to hedge with a foreign exchange forward or option
contract (collectively, foreign exchange contracts).
Natural hedges exist in most countries in which we operate,
although the percentage of natural offsets, as compared with
offsets that need to be hedged by foreign exchange contracts,
will vary from country to country.
37
We also monitor our foreign currency exposure in each country
and implement 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 use of foreign exchange contracts to protect or
preserve the value of cash flows. No material foreign exchange
contracts were in use at June 30, 2008 and 2007.
We have implemented a formalized treasury risk management policy
that describes the procedures and controls over derivative
financial and commodity instruments. Under the policy, we do not
use derivative financial or commodity instruments for
speculative or trading purposes, and the use of such instruments
is subject to strict approval levels by senior management.
Typically, the use of derivative instruments is limited to
hedging activities related to specific foreign currency cash
flows and net receivable and payable balances.
The translation of the financial statements of the non-North
American operations is impacted by fluctuations in foreign
currency exchange rates. The increase in consolidated net
revenue and income from operations was impacted by the
translation of our international financial statements into
U.S. dollars resulting in increased net revenue of
$169.3 million and increased income from operations of
$12.5 million for 2008, compared with the estimated results
for 2007 using the average rates for 2007.
Our $34.3 million of marketable securities at June 30,
2008 are principally invested in time deposits.
Interest rate exposure is limited to our long-term debt. We do
not actively manage the risk of interest rate fluctuations.
However, such risk is mitigated by the relatively short-term
nature of our investments (less than 12 months) and the
fixed-rate nature of our long-term debt.
Due to the nature of our operations, we are not subject to
significant concentration risks relating to customers, products
or geographic locations.
We monitor the environmental laws and regulations in the
countries in which we operate. We have implemented an
environmental program to reduce the generation of potentially
hazardous materials during our manufacturing process and believe
we continue to meet or exceed local government regulations.
38
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
Molex
Incorporated
Index to
Consolidated Financial Statements
|
|
|
|
|
|
|
Page
|
|
|
|
|
40
|
|
|
|
|
41
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
44
|
|
|
|
|
69
|
|
|
|
|
70
|
|
39
Molex
Incorporated
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
475,507
|
|
|
$
|
378,361
|
|
Marketable securities
|
|
|
34,298
|
|
|
|
82,549
|
|
Accounts receivable, less allowances of $40,243 in 2008 and
$31,064 in 2007
|
|
|
740,827
|
|
|
|
685,666
|
|
Inventories
|
|
|
458,295
|
|
|
|
392,680
|
|
Deferred income taxes
|
|
|
23,444
|
|
|
|
16,171
|
|
Prepaid expenses
|
|
|
50,589
|
|
|
|
35,400
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,782,960
|
|
|
|
1,590,827
|
|
Property, plant and equipment, net
|
|
|
1,172,395
|
|
|
|
1,121,369
|
|
Goodwill
|
|
|
373,623
|
|
|
|
334,791
|
|
Non-current deferred income taxes
|
|
|
62,521
|
|
|
|
103,626
|
|
Other assets
|
|
|
208,038
|
|
|
|
165,495
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,599,537
|
|
|
$
|
3,316,108
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term loans
|
|
$
|
66,687
|
|
|
$
|
1,537
|
|
Accounts payable
|
|
|
350,413
|
|
|
|
279,847
|
|
Accrued expenses:
|
|
|
|
|
|
|
|
|
Salaries, commissions and bonuses
|
|
|
74,689
|
|
|
|
66,532
|
|
Other
|
|
|
84,525
|
|
|
|
121,358
|
|
Income taxes payable
|
|
|
73,124
|
|
|
|
61,677
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
649,438
|
|
|
|
530,951
|
|
Other non-current liabilities
|
|
|
21,346
|
|
|
|
25,612
|
|
Accrued pension and other postretirement benefits
|
|
|
105,574
|
|
|
|
108,693
|
|
Long-term debt
|
|
|
146,333
|
|
|
|
127,821
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
922,691
|
|
|
|
793,077
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common Stock, $0.05 par value; 200,000 shares
authorized; 112,195 shares issued at 2008 and
111,730 shares issued at 2007
|
|
|
5,610
|
|
|
|
5,587
|
|
Class A Common Stock, $0.05 par value;
200,000 shares authorized; 109,841 shares issued at
2008 and 108,562 shares issued at 2007
|
|
|
5,492
|
|
|
|
5,428
|
|
Class B Common Stock, $0.05 par value; 146 shares
authorized; 94 shares issued at 2008 and 2007
|
|
|
5
|
|
|
|
5
|
|
Paid-in capital
|
|
|
569,046
|
|
|
|
520,037
|
|
Retained earnings
|
|
|
2,785,099
|
|
|
|
2,650,470
|
|
Treasury stock (Common Stock, 13,744 shares at 2008 and
12,297 shares at 2007; Class A Common Stock,
30,948 shares at 2008 and 24,040 shares at 2007), at
cost
|
|
|
(1,009,021
|
)
|
|
|
(799,894
|
)
|
Accumulated other comprehensive income
|
|
|
320,615
|
|
|
|
141,398
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,676,846
|
|
|
|
2,523,031
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
3,599,537
|
|
|
$
|
3,316,108
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
40
Molex
Incorporated
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Net revenue
|
|
$
|
3,328,347
|
|
|
$
|
3,265,874
|
|
|
$
|
2,861,289
|
|
Cost of sales
|
|
|
2,314,112
|
|
|
|
2,249,166
|
|
|
|
1,918,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,014,235
|
|
|
|
1,016,708
|
|
|
|
942,630
|
|
Selling, general and administrative
|
|
|
665,038
|
|
|
|
658,289
|
|
|
|
606,532
|
|
Restructuring costs and asset impairments
|
|
|
31,247
|
|
|
|
36,869
|
|
|
|
26,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
696,285
|
|
|
|
695,158
|
|
|
|
632,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
317,950
|
|
|
|
321,550
|
|
|
|
309,744
|
|
Gain (loss) on investments
|
|
|
(119
|
)
|
|
|
1,159
|
|
|
|
(1,245
|
)
|
Equity income
|
|
|
11,625
|
|
|
|
6,966
|
|
|
|
9,456
|
|
Interest income, net
|
|
|
9,192
|
|
|
|
8,582
|
|
|
|
9,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income, net
|
|
|
20,698
|
|
|
|
16,707
|
|
|
|
18,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
338,648
|
|
|
|
338,257
|
|
|
|
327,884
|
|
Income taxes
|
|
|
123,211
|
|
|
|
97,489
|
|
|
|
91,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
215,437
|
|
|
$
|
240,768
|
|
|
$
|
236,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.19
|
|
|
$
|
1.31
|
|
|
$
|
1.27
|
|
Diluted
|
|
$
|
1.19
|
|
|
$
|
1.30
|
|
|
$
|
1.26
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
180,474
|
|
|
|
183,961
|
|
|
|
185,521
|
|
Diluted
|
|
|
181,395
|
|
|
|
185,565
|
|
|
|
187,416
|
|
See accompanying notes to consolidated financial statements.
41
Molex
Incorporated
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
215,437
|
|
|
$
|
240,768
|
|
|
$
|
236,091
|
|
Add (deduct) non-cash items included in net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
252,344
|
|
|
|
237,912
|
|
|
|
214,657
|
|
Asset write-downs included in restructuring costs
|
|
|
13,599
|
|
|
|
8,667
|
|
|
|
2,870
|
|
(Gain) loss on investments
|
|
|
111
|
|
|
|
(1,154
|
)
|
|
|
1,245
|
|
Deferred income taxes
|
|
|
31,096
|
|
|
|
20,998
|
|
|
|
(8,501
|
)
|
Loss (gain) on sale of property, plant and equipment
|
|
|
296
|
|
|
|
1,800
|
|
|
|
(701
|
)
|
Share-based compensation
|
|
|
24,249
|
|
|
|
27,524
|
|
|
|
30,548
|
|
Other non-cash items
|
|
|
(6,778
|
)
|
|
|
23,373
|
|
|
|
3,859
|
|
Changes in assets and liabilities, excluding effects of foreign
currency adjustments and acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
478
|
|
|
|
27,913
|
|
|
|
(112,873
|
)
|
Inventories
|
|
|
(26,240
|
)
|
|
|
(16,514
|
)
|
|
|
(45,987
|
)
|
Accounts payable
|
|
|
34,197
|
|
|
|
(57,479
|
)
|
|
|
43,875
|
|
Other current assets and liabilities
|
|
|
(45,798
|
)
|
|
|
(60,421
|
)
|
|
|
58,857
|
|
Other assets and liabilities
|
|
|
(13,857
|
)
|
|
|
(1,953
|
)
|
|
|
19,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided from operating activities
|
|
|
479,134
|
|
|
|
451,434
|
|
|
|
443,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(234,626
|
)
|
|
|
(296,861
|
)
|
|
|
(276,783
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
14,978
|
|
|
|
9,946
|
|
|
|
24,436
|
|
Proceeds from sales or maturities of marketable securities
|
|
|
811,724
|
|
|
|
4,856,301
|
|
|
|
1,351,165
|
|
Purchases of marketable securities
|
|
|
(764,966
|
)
|
|
|
(4,785,080
|
)
|
|
|
(1,313,829
|
)
|
Acquisitions, net of cash acquired
|
|
|
(42,503
|
)
|
|
|
(238,072
|
)
|
|
|
(24,565
|
)
|
Other investing activities
|
|
|
(2,763
|
)
|
|
|
7,637
|
|
|
|
(1,203
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used for investing activities
|
|
|
(218,156
|
)
|
|
|
(446,129
|
)
|
|
|
(240,779
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolving credit facility and short-term loans
|
|
|
139,590
|
|
|
|
44,000
|
|
|
|
|
|
Payments on revolving credit facility
|
|
|
(75,000
|
)
|
|
|
(44,000
|
)
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
|
|
|
|
131,045
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(1,948
|
)
|
|
|
(26,937
|
)
|
|
|
(3,693
|
)
|
Cash dividends paid
|
|
|
(74,598
|
)
|
|
|
(55,176
|
)
|
|
|
(34,843
|
)
|
Exercise of stock options
|
|
|
16,732
|
|
|
|
15,416
|
|
|
|
15,783
|
|
Excess tax benefits from share-based compensation
|
|
|
1,677
|
|
|
|
1,714
|
|
|
|
369
|
|
Purchase of treasury stock
|
|
|
(199,583
|
)
|
|
|
(34,889
|
)
|
|
|
(165,323
|
)
|
Other financing activities
|
|
|
(4,176
|
)
|
|
|
(2,644
|
)
|
|
|
(2,107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided from (used for) financing activities
|
|
|
(197,306
|
)
|
|
|
28,529
|
|
|
|
(189,814
|
)
|
Effect of exchange rate changes on cash
|
|
|
33,474
|
|
|
|
11,712
|
|
|
|
9,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
97,146
|
|
|
|
45,546
|
|
|
|
23,059
|
|
Cash and cash equivalents, beginning of year
|
|
|
378,361
|
|
|
|
332,815
|
|
|
|
309,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
475,507
|
|
|
$
|
378,361
|
|
|
$
|
332,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
3,599
|
|
|
$
|
2,857
|
|
|
$
|
928
|
|
Income taxes paid
|
|
$
|
64,641
|
|
|
$
|
96,531
|
|
|
$
|
70,092
|
|
See accompanying notes to consolidated financial statements.
42
Molex
Incorporated
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Common stock
|
|
$
|
11,107
|
|
|
$
|
11,020
|
|
|
$
|
10,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
520,037
|
|
|
$
|
442,586
|
|
|
$
|
425,259
|
|
Reclassification from deferred unearned compensation
|
|
|
|
|
|
|
|
|
|
|
(38,357
|
)
|
Stock-based compensation
|
|
|
24,249
|
|
|
|
27,524
|
|
|
|
30,548
|
|
Exercise of stock options
|
|
|
22,738
|
|
|
|
37,101
|
|
|
|
23,958
|
|
Issuance of stock awards
|
|
|
1,743
|
|
|
|
2,059
|
|
|
|
|
|
Reclass of directors deferred compensation plan
|
|
|
|
|
|
|
6,059
|
|
|
|
|
|
Other
|
|
|
279
|
|
|
|
4,708
|
|
|
|
1,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
569,046
|
|
|
$
|
520,037
|
|
|
$
|
442,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
2,650,470
|
|
|
$
|
2,464,889
|
|
|
$
|
2,270,677
|
|
Net income
|
|
|
215,437
|
|
|
|
240,768
|
|
|
|
236,091
|
|
Dividends
|
|
|
(80,756
|
)
|
|
|
(55,205
|
)
|
|
|
(41,613
|
)
|
Other
|
|
|
(52
|
)
|
|
|
18
|
|
|
|
(266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
2,785,099
|
|
|
$
|
2,650,470
|
|
|
$
|
2,464,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(799,894
|
)
|
|
$
|
(743,219
|
)
|
|
$
|
(568,917
|
)
|
Purchase of treasury stock
|
|
|
(199,583
|
)
|
|
|
(34,889
|
)
|
|
|
(165,323
|
)
|
Exercise of stock options
|
|
|
(9,544
|
)
|
|
|
(21,801
|
)
|
|
|
(8,736
|
)
|
Other
|
|
|
|
|
|
|
15
|
|
|
|
(243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(1,009,021
|
)
|
|
$
|
(799,894
|
)
|
|
$
|
(743,219
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred unearned compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(38,357
|
)
|
Reclassification to paid-in capital
|
|
|
|
|
|
|
|
|
|
|
38,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
141,398
|
|
|
$
|
106,713
|
|
|
$
|
71,296
|
|
Translation adjustments
|
|
|
165,706
|
|
|
|
51,009
|
|
|
|
34,934
|
|
Pension adjustments, net of tax
|
|
|
3,309
|
|
|
|
(3,135
|
)
|
|
|
|
|
Adjustment for initially applying SFAS No. 158, net of
tax
|
|
|
|
|
|
|
(17,965
|
)
|
|
|
|
|
Unrealized investment gain, net of tax
|
|
|
10,202
|
|
|
|
4,776
|
|
|
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
320,615
|
|
|
$
|
141,398
|
|
|
$
|
106,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
$
|
2,676,846
|
|
|
$
|
2,523,031
|
|
|
$
|
2,281,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
215,437
|
|
|
$
|
240,768
|
|
|
$
|
236,091
|
|
Translation adjustments
|
|
|
165,706
|
|
|
|
51,009
|
|
|
|
34,934
|
|
Pension adjustments, net of tax
|
|
|
3,309
|
|
|
|
(3,135
|
)
|
|
|
|
|
Unrealized investment gain, net of tax
|
|
|
10,202
|
|
|
|
4,776
|
|
|
|
483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income, net of tax
|
|
$
|
394,654
|
|
|
$
|
293,418
|
|
|
$
|
271,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
43
Molex
Incorporated
|
|
1.
|
Organization and
Basis of Presentation
|
Molex Incorporated (together with its subsidiaries, except where
the context otherwise requires, we, us
and our) manufactures electronic components,
including electrical and fiber optic interconnection products
and systems, switches and integrated products in 45
manufacturing locations in 17 countries.
|
|
2.
|
Summary of
Significant Accounting Policies
|
Principles of
Consolidation
The consolidated financial statements include the accounts of
Molex Incorporated and our majority-owned subsidiaries. All
material intercompany balances and transactions are eliminated
in consolidation. Equity investments in which we exercise
significant influence but do not control and are not the primary
beneficiary are accounted for using the equity method.
Investments in which we are not able to exercise significant
influence over the investee are accounted for under the cost
method.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires the use of estimates and assumptions related to the
reporting of assets, liabilities, revenues, expenses and related
disclosures. Actual results could differ from these estimates.
Currency
Translation
Assets and liabilities of international entities are translated
at period-end exchange rates and income and expenses are
translated using weighted-average exchange rates for the period.
Translation adjustments are included as a component of
accumulated other comprehensive income.
Cash and Cash
Equivalents
We consider all liquid investments with original maturities of
three months or less to be cash equivalents.
Marketable
Securities
Marketable securities consist primarily of time deposits held at
non-U.S. local
banks. We generally hold these instruments for a period of
greater than three months, but no longer than 12 months.
Marketable securities are classified as available-for-sale
securities.
No mark-to-market adjustments were required during fiscal years
2008, 2007 or 2006 because the carrying value of the securities
approximated the market value. Proceeds from sales of
available-for-sales securities, excluding maturities, during
fiscal years 2008, 2007 and 2006 were $194.3 million,
$273.1 million and $532.1 million, respectively. There
were no associated gains or losses on these sales.
Accounts
Receivable
In the normal course of business, we extend credit to customers
that satisfy pre-defined credit criteria. We believe that we
have little concentration of credit risk due to the diversity of
our customer base. Accounts receivable, as shown on the
Consolidated Balance Sheets, were net of allowances and
anticipated discounts. An allowance for doubtful accounts is
determined through analysis of the aging of accounts receivable
at the date of the financial statements, assessments of
collectability
44
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
based on historical trends and an evaluation of the impact of
current and projected economic conditions. We monitor the
collectability of our accounts receivable on an ongoing basis by
analyzing the aging of our accounts receivable, assessing the
credit worthiness of our customers and evaluating the impact of
reasonably likely changes in economic conditions that may impact
credit risks. Our accounts receivable are not collateralized.
Inventories
Inventories are valued at the lower of
first-in,
first-out cost or market value.
Property, Plant
and Equipment
Property, plant and equipment are reported at cost less
accumulated depreciation. Depreciation is primarily recorded on
a straight-line basis for financial statement reporting purposes
and using a combination of accelerated and straight-line methods
for tax purposes.
The estimated useful lives are as follows:
|
|
|
|
|
Buildings
|
|
|
25 40 years
|
|
Machinery and equipment
|
|
|
3 10 years
|
|
Molds and dies
|
|
|
2 4 years
|
|
We perform reviews for impairment of long-lived assets whenever
adverse events or circumstances indicate that the carrying value
of an asset may not be recoverable. When indicators of
impairment are present, we evaluate the carrying value of the
long-lived assets in relation to the operating performance and
future undiscounted cash flows of the underlying assets. We
adjust the net book value of the underlying assets to fair value
if the sum of the expected undiscounted future cash flows is
less than book value.
Goodwill
Goodwill is recorded when the purchase price paid for an
acquisition exceeds the estimated fair value of the net
identified tangible and intangible assets acquired. We perform
an annual review in the fourth quarter of each year, or more
frequently if indicators of potential impairment exist, to
determine if the carrying value of the recorded goodwill is
impaired. The impairment review process compares the fair value
of the reporting unit in which goodwill resides to its carrying
value. Reporting units may be operating segments as a whole or
an operation one level below an operating segment, referred to
as a component.
Pension and Other
Postretirement Plan Benefits
Pension and other postretirement plan benefits are expensed as
employees earn such benefits. The recognition of expense is
significantly impacted by estimates made by management such as
discount rates used to value certain liabilities, expected
return on assets and future healthcare costs. We use third-party
specialists to assist management in appropriately measuring the
expense associated with pension and other postretirement plan
benefits.
Revenue
Recognition
We recognize revenue when in the normal course of our business
the following conditions are met: (i) a purchase order has
been received from the customer with a corresponding order
acknowledgement sent to the customer confirming delivery, price
and payment terms, (ii) product has been shipped (FOB
origin) or delivered (FOB destination) and title has clearly
transferred to the customer or customer
45
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
carrier, (iii) the price to the buyer is fixed and
determinable for sales with an estimate of allowances made based
on historical experience and (iv) there is reasonable
assurance of collectability.
We record revenue on a consignment sale when a customer has
taken title of product which is stored in either the
customers warehouse or that of a third party.
From time to time, we will discontinue or obsolete products that
we have formerly sold. When this is done, an accrual for
estimated returns is established at the time of the announcement
of product discontinuation or obsolescence.
We typically warrant that our products will conform to Molex
specifications and that our products will be free from material
defects in materials and manufacturing, and limit our liability
to the replacement of defective parts or the cash value of
replacement parts. We will not accept returned goods unless the
customer makes a claim in writing and management authorizes the
return. Returns result primarily from defective products or
shipping discrepancies. A reserve for estimated returns is
established at the time of sale based on historical return
experience and is recorded as a reduction of revenue.
We provide certain distributors with an inventory allowance for
returns or scrap equal to a percentage of qualified purchases.
At the time of sale, we record as a reduction of revenue a
reserve for estimated inventory allowances based on a fixed
percentage of sales that we authorized to distributors.
From time to time we in our sole discretion will grant price
allowances to customers. At the time of sale, we record as a
reduction of revenue a reserve for estimated price allowances
based on historical allowances authorized and approved solely at
our discretion.
Other allowances include customer quantity and price
discrepancies. At the time of sale, we record as a reduction of
revenue a reserve for other allowances based on historical
experience. We believe we can reasonably and reliably estimate
the amounts of future allowances.
Research and
Development
Costs incurred in connection with the development of new
products and applications are charged to operations as incurred.
Research and development costs are included in selling, general
and administrative expenses and totaled $163.7 million,
$159.1 million and $140.9 million in fiscal 2008, 2007
and 2006, respectively.
Income
Taxes
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. We
have operations that are subject to income and other similar
taxes in foreign countries. The estimation of the income tax
amounts that we record involves the interpretation of complex
tax laws and regulations, evaluation of tax audit findings and
assessment of the impact foreign taxes may have on domestic
taxes. A valuation allowance is provided to offset deferred tax
assets if, based on available evidence, it is more likely than
not that some or all of the deferred tax assets will not be
realized.
Derivative
Instruments and Hedging Activities
We use derivative instruments primarily to hedge activities
related to specific foreign currency cash flows. We had no
material derivatives outstanding at June 30, 2008 or 2007.
The net impact of gains and losses on such instruments was not
material to the results of operations for fiscal 2008, 2007 and
2006.
46
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Stock-Based
Compensation
We have granted nonqualified and incentive stock options and
restricted stock to our directors, officers and employees under
our stock plans pursuant to the terms of such plans.
Accounting
Changes
Uncertainty in
Income Taxes
We adopted the provisions of Financial Accounting Standards
Board (FASB) Interpretation No. 48, Accounting for
the Uncertainty in Income Taxes an interpretation of
FASB Statement No. 109, (FIN 48) effective
July 1, 2007. Among other things, FIN 48 requires
application of a more likely than not threshold to
the recognition and derecognition of tax positions. The adoption
of FIN 48 did not have a material impact on our statement
of financial position or on results of operations.
Pension and
Postretirement Medical Benefit Plans
Effective for fiscal 2007, we adopted the provisions of
SFAS No. 158 Employers accounting for
defined benefit pension and other postretirement plans.
SFAS No. 158 requires that the funded status of
defined-benefit postretirement plans be recognized on the
consolidated balance sheet, and changes in the funded status be
reflected in comprehensive income. SFAS No. 158 also
requires the measurement date of the plans funded status
to be the same as our fiscal year-end in fiscal 2009.
New Accounting
Pronouncements
Business
Combinations
In December 2007, the FASB issued SFAS No. 141R,
Business Combinations. SFAS 141R states that
acquisition-related costs are to be recognized separately from
the acquisition and expensed as incurred with restructuring
costs being expensed in periods after the acquisition date.
SFAS 141R also states that business combinations will
result in all assets and liabilities of the acquired business
being recorded at their fair values. We are required to adopt
SFAS No. 141R effective July 1, 2009. The impact
of the adoption of SFAS No. 141R will depend on the
nature and extent of business combinations occurring on or after
the effective date.
Noncontrolling
Interests
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 51.
SFAS No. 160 requires identification and presentation
of ownership interests in subsidiaries held by parties other
than us in the consolidated financial statements within the
equity section but separate from the equity. It also requires
that (1) the amount of consolidated net income attributable
to the parent and to the noncontrolling interest be clearly
identified and presented on the face of the consolidated
statement of income, (2) changes in ownership interest be
accounted for similarly, as equity transactions, and
(3) when a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary and
the gain or loss on the deconsolidation of the subsidiary be
measured at fair value. This statement is effective for us on
July 1, 2009. We are currently evaluating the requirements
of SFAS No. 160 but do not expect it to have a
material impact on our financial statements.
Derivative
Instruments
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities an amendment of FASB Statement
No. 133. SFAS No. 161 requires enhanced
disclosures about an entitys derivative and hedging
activities and thus improves the transparency of
47
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
financial reporting. This statement is effective for us on
July 1, 2009. We are currently evaluating the requirements
of SFAS No. 161 but do not expect it to have a
material impact on our financial statements.
Basic earnings per share (EPS) is computed by dividing net
income by the weighted-average number of common shares
outstanding during the year. Diluted EPS is computed by dividing
net income by the weighted-average number of common shares and
dilutive common shares outstanding, which includes stock
options, during the year. A reconciliation of the basic average
common shares outstanding to diluted average common shares
outstanding as of June 30 is as follows (in thousands, except
per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Net income
|
|
$
|
215,437
|
|
|
$
|
240,768
|
|
|
$
|
236,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic average common shares outstanding
|
|
|
180,474
|
|
|
|
183,961
|
|
|
|
185,521
|
|
Effect of dilutive stock options
|
|
|
921
|
|
|
|
1,604
|
|
|
|
1,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average common shares outstanding
|
|
|
181,395
|
|
|
|
185,565
|
|
|
|
187,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.19
|
|
|
$
|
1.31
|
|
|
$
|
1.27
|
|
Diluted
|
|
$
|
1.19
|
|
|
$
|
1.30
|
|
|
$
|
1.26
|
|
Excluded from the computations above were anti-dilutive shares
of 5.2 million, 1.9 million and 4.0 million in
fiscal 2008, 2007 and 2006, respectively.
On July 19, 2007, we completed the acquisition of a
U.S.-based
company in an all cash transaction approximating
$42.5 million. We recorded goodwill of $23.9 million
in connection with this acquisition. The purchase price
allocation for this acquisition is substantially complete.
On August 9, 2006, we completed the acquisition of Woodhead
Industries, Inc. (Woodhead) in an all cash transaction valued at
approximately $238.1 million, including the assumption of
debt and net of cash acquired. Woodhead develops, manufactures
and markets network and electrical infrastructure components
engineered for performance in harsh, demanding, and hazardous
industrial environments. The acquisition is a significant step
in our strategy to expand our products and capabilities in the
global industrial market.
The following table summarizes the estimated fair values of the
assets acquired and liabilities assumed for Woodhead at the date
of acquisition (in thousands). Goodwill is non-deductible for
tax purposes.
|
|
|
|
|
Current assets
|
|
$
|
95,724
|
|
Land and depreciable assets
|
|
|
47,946
|
|
Goodwill
|
|
|
177,093
|
|
Intangible assets
|
|
|
39,000
|
|
|
|
|
|
|
Assets acquired
|
|
|
359,763
|
|
Liabilities assumed
|
|
|
100,109
|
|
Restructuring (See Note 5)
|
|
|
3,999
|
|
Non-current deferred tax liabilities, net
|
|
|
17,583
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
238,072
|
|
|
|
|
|
|
48
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
The following table illustrates the pro forma effect on
operating results for the year ended June 30, 2006, as if
we had acquired Woodhead as of the beginning of the year (the
pro forma effect on the year ended June 30, 2007 was not
material) (in thousands, except per share data):
|
|
|
|
|
Net revenue
|
|
$
|
3,084,000
|
|
Income from operations
|
|
|
325,000
|
|
Net income
|
|
|
246,000
|
|
Net income per common share basic
|
|
|
1.33
|
|
Net income per common share diluted
|
|
|
1.31
|
|
The above unaudited pro forma financial information is presented
for informational purposes only and does not purport to
represent what our results of operations would have been had we
acquired Woodhead on the dates assumed, nor is it necessarily
indicative of the results that may be expected in future
periods. Pro forma adjustments exclude cost savings from any
synergies resulting from the combination of Molex and Woodhead.
|
|
5.
|
Restructuring and
Asset Impairments
|
Molex
Restructuring Plans
During fiscal 2007, we undertook a restructuring plan designed
to reduce costs and to improve return on invested capital as a
result of a new global organization that was effective
July 1, 2007. A majority of the plan relates to certain
facilities located in North America and Europe and in general,
the movement of manufacturing activities at these plants to
other facilities. Net restructuring cost during the year ended
June 30, 2008 was $31.2 million, resulting in
cumulative costs since we announced the restructuring of
$68.1 million. We have revised our initial estimate and now
expect to incur total restructuring and asset impairment costs
related to these actions ranging from $125 to $140 million,
of which the impact on each segment will be determined as the
actions become more certain. Management and the Board of
Directors approved several actions related to this plan. A
portion of this plan involves cost savings or other actions that
do not result in incremental expense, such as better utilization
of assets, reduced spending and organizational efficiencies.
This plan includes employee reduction targets throughout the
company, and we expect to achieve these targets through ongoing
employee attrition and terminations. We expect to substantially
complete the actions under this plan by June 30, 2010.
During fiscal 2008, we recognized net restructuring costs
related to employee severance and benefit arrangements for
approximately 900 employees, resulting in a charge of
$17.6 million. A large part of these employee terminations
occurred in our corporate headquarters and U.S. and Mexican
manufacturing operations. In accordance with our planned
restructuring actions, we have recorded additional asset
impairment charges of $13.6 million to write-down these
assets to fair value less the cost to sell.
During fiscal 2007, we recognized restructuring costs of
$26.7 million related to employee severance and benefit
arrangements for approximately 335 employees. A substantial
majority of these employee terminations occurred within our
Ireland manufacturing operations and various administrative
functions in the Americas and European regions. In addition, we
have vacated or plan to vacate several buildings and are holding
these buildings and related assets for sale. This plan resulted
in an impairment charge of $8.7 million to write-down these
assets to fair value less the cost to sell these assets. The
fair value of the asset groupings was determined using various
valuation techniques.
During fiscal 2005, we decided to close certain operations in
the Americas and European regions in order to reduce operating
costs and better align our manufacturing capacity with customer
needs.
49
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
In the Americas region, we closed an industrial manufacturing
facility in New England and have ceased manufacturing in our
Detroit area automotive facility. In Europe, we closed certain
manufacturing facilities in Ireland and Portugal and reduced the
size of a development center in Germany. We also closed a
manufacturing facility in Slovakia. Production from these
manufacturing facilities was transferred to existing plants
within the region. We also took actions that reduced our
selling, general and administrative costs in the Americas and
European regions and at the corporate office. We reduced
headcount by approximately 500 people after additions at
the facilities where production was transferred. These actions
were substantially complete as of June 30, 2006.
A summary of the restructuring charges and related impairments
for the fiscal years ended June 30 is summarized as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Connector:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs
|
|
$
|
2,492
|
|
|
$
|
3,492
|
|
|
$
|
1,519
|
|
Asset impairments
|
|
|
9,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,974
|
|
|
$
|
3,492
|
|
|
$
|
1,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs
|
|
$
|
662
|
|
|
$
|
3,182
|
|
|
$
|
7,789
|
|
Asset impairments
|
|
|
1,898
|
|
|
|
2,732
|
|
|
|
1,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,560
|
|
|
$
|
5,914
|
|
|
$
|
9,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Custom & Electrical:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs
|
|
$
|
3,144
|
|
|
$
|
8,721
|
|
|
$
|
6,863
|
|
Asset impairments
|
|
|
193
|
|
|
|
3,485
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,337
|
|
|
$
|
12,206
|
|
|
$
|
7,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs
|
|
$
|
11,350
|
|
|
$
|
11,307
|
|
|
$
|
7,313
|
|
Asset impairments
|
|
|
2,026
|
|
|
|
2,450
|
|
|
|
1,071
|
|
Other
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,376
|
|
|
$
|
15,257
|
|
|
$
|
8,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance costs
|
|
$
|
17,648
|
|
|
$
|
26,702
|
|
|
$
|
23,484
|
|
Asset impairments
|
|
|
13,599
|
|
|
|
8,667
|
|
|
|
2,870
|
|
Other
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,247
|
|
|
$
|
36,869
|
|
|
$
|
26,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative restructuring costs by segment since the announcement
of the fiscal 2007 restructuring plan are $15.4 million for
Connector, $8.5 million for Transportation,
$15.6 million for Custom & Electrical and
$28.6 million for Corporate and Other.
Woodhead
Restructuring Plan
During fiscal 2007, management finalized plans to restructure
certain operations of Woodhead to eliminate redundant costs
resulting from the acquisition of Woodhead and improve
efficiencies in
50
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
operations. The restructuring charges recorded are based on
restructuring plans that have been committed to by management.
The total estimated restructuring costs associated with Woodhead
were $4.0 million, consisting primarily of severance costs.
These costs were recognized as a liability assumed in the
purchase business combination and included in the allocation of
the cost to acquire Woodhead and, accordingly, resulted in an
increase to goodwill (see Note 4). Our restructuring
expenses may change as management executes the approved plan.
Future decreases to the estimates of executing the Woodhead
restructuring plan will be recorded as an adjustment to goodwill
indefinitely, whereas future increases to the estimates will be
recorded as operating expenses.
Changes in the accrued severance balance are summarized as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Plans
|
|
|
|
Molex
|
|
|
Woodhead
|
|
|
Total
|
|
|
Balance at June 30, 2005
|
|
$
|
10,285
|
|
|
$
|
|
|
|
$
|
10,285
|
|
Charges to expense
|
|
|
23,484
|
|
|
|
|
|
|
|
23,484
|
|
Cash payments
|
|
|
(17,828
|
)
|
|
|
|
|
|
|
(17,828
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2006
|
|
$
|
15,941
|
|
|
$
|
|
|
|
$
|
15,941
|
|
Charges to expense
|
|
|
26,702
|
|
|
|
|
|
|
|
26,702
|
|
Purchase accounting allocation
|
|
|
|
|
|
|
3,999
|
|
|
|
3,999
|
|
Cash payments
|
|
|
(11,788
|
)
|
|
|
(30
|
)
|
|
|
(11,818
|
)
|
Non-cash related costs
|
|
|
(2,659
|
)
|
|
|
|
|
|
|
(2,659
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2007
|
|
$
|
28,196
|
|
|
$
|
3,969
|
|
|
$
|
32,165
|
|
Charges to expense
|
|
|
20,711
|
|
|
|
655
|
|
|
|
21,366
|
|
Cash payments
|
|
|
(31,481
|
)
|
|
|
(3,498
|
)
|
|
|
(34,979
|
)
|
Non-cash related costs
|
|
|
1,368
|
|
|
|
(78
|
)
|
|
|
1,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
18,794
|
|
|
$
|
1,048
|
|
|
$
|
19,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, less allowances of $42.8 million at
June 30, 2008 and $42.7 million at June 30, 2007,
consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Raw materials
|
|
$
|
81,407
|
|
|
$
|
85,320
|
|
Work in progress
|
|
|
144,683
|
|
|
|
107,394
|
|
Finished goods
|
|
|
232,205
|
|
|
|
199,966
|
|
|
|
|
|
|
|
|
|
|
Total inventories
|
|
$
|
458,295
|
|
|
$
|
392,680
|
|
|
|
|
|
|
|
|
|
|
51
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
7. Property,
Plant and Equipment
At June 30, property, plant and equipment consisted of the
following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Land and improvements
|
|
$
|
69,104
|
|
|
$
|
67,943
|
|
Buildings and leasehold improvements
|
|
|
663,524
|
|
|
|
614,466
|
|
Machinery and equipment
|
|
|
1,641,110
|
|
|
|
1,502,406
|
|
Molds and dies
|
|
|
754,589
|
|
|
|
668,452
|
|
Construction in progress
|
|
|
115,763
|
|
|
|
92,157
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,244,090
|
|
|
|
2,945,424
|
|
Accumulated depreciation
|
|
|
(2,071,695
|
)
|
|
|
(1,824,055
|
)
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
1,172,395
|
|
|
$
|
1,121,369
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for property, plant and equipment was
$246.9 million, $232.8 million and $212.1 million
in fiscal 2008, 2007 and 2006, respectively.
At June 30, changes to goodwill were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Beginning balance
|
|
$
|
334,791
|
|
|
$
|
149,458
|
|
Additions
|
|
|
29,147
|
|
|
|
183,677
|
|
Foreign currency translation
|
|
|
9,685
|
|
|
|
1,656
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
373,623
|
|
|
$
|
334,791
|
|
|
|
|
|
|
|
|
|
|
On July 19, 2007, we completed the acquisition of a
U.S.-based
company in an all cash transaction approximating
$42.5 million. We recorded goodwill of $23.9 million
in connection with this acquisition. The purchase price
allocation for this acquisition is substantially complete.
On August 9, 2006, we completed the acquisition of Woodhead
in an all cash transaction valued at approximately
$238.1 million, including the assumption of debt and net of
cash acquired.
|
|
9.
|
Other Intangible
Assets
|
All of the Companys intangible assets other than goodwill
are included in Other Assets. Assets with indefinite lives
represent the use of acquired trade names. The value of these
indefinite-lived intangible assets was $20.6 million and
$18.7 million at June 30, 2008 and June 30, 2007,
respectively. Intangible property assets with finite lives
primarily represent customer relationships and rights acquired
under technology licenses and are amortized over the periods of
benefit.
52
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
The components of finite-lived intangible assets were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Customer-related
|
|
$
|
24,546
|
|
|
$
|
(3,120
|
)
|
|
$
|
21,426
|
|
|
$
|
18,591
|
|
|
$
|
(1,425
|
)
|
|
$
|
17,166
|
|
Technology-based
|
|
|
19,192
|
|
|
|
(5,431
|
)
|
|
|
13,761
|
|
|
|
13,306
|
|
|
|
(2,859
|
)
|
|
|
10,447
|
|
License fees
|
|
|
9,561
|
|
|
|
(5,144
|
)
|
|
|
4,417
|
|
|
|
6,120
|
|
|
|
(4,799
|
)
|
|
|
1,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
53,299
|
|
|
$
|
(13,695
|
)
|
|
$
|
39,604
|
|
|
$
|
38,017
|
|
|
$
|
(9,083
|
)
|
|
$
|
28,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During fiscal year 2008 and 2007, we recorded additions to
intangible assets of $18.0 million and $41.7 million,
respectively. We estimate that we have no significant residual
value related to our intangible assets. The components of
intangible assets acquired during fiscal years 2008 and 2007
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
Carrying
|
|
|
Average
|
|
|
Carrying
|
|
|
Average
|
|
|
|
Amount
|
|
|
Life
|
|
|
Amount
|
|
|
Life
|
|
|
Customer-related
|
|
$
|
5,900
|
|
|
|
20 years
|
|
|
$
|
16,696
|
|
|
|
22 years
|
|
Technology-based
|
|
|
5,800
|
|
|
|
10 years
|
|
|
|
6,200
|
|
|
|
5 years
|
|
License fees
|
|
|
4,390
|
|
|
|
5 years
|
|
|
|
50
|
|
|
|
1 year
|
|
Trade names
|
|
|
1,900
|
|
|
|
Indefinite
|
|
|
|
18,700
|
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17,990
|
|
|
|
|
|
|
$
|
41,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired intangibles are generally amortized on a straight-line
basis over weighted average lives. Intangible assets
amortization expense was $5.5 million for fiscal year 2008,
$5.1 million for fiscal year 2007, and $2.0 million
for fiscal year 2006. The estimated future amortization expense
related to intangible assets as of June 30, 2008 is as
follows (in thousands):
|
|
|
|
|
|
|
Amount
|
|
|
2009
|
|
$
|
5,578
|
|
2010
|
|
|
5,168
|
|
2011
|
|
|
4,099
|
|
2012
|
|
|
4,019
|
|
2013 and thereafter
|
|
|
20,740
|
|
|
|
|
|
|
Total
|
|
$
|
39,604
|
|
|
|
|
|
|
At June 30, 2008, we owned approximately 20% of a publicly
traded affiliate accounted for under the equity method. At
June 30, 2008, our portion of the market value of the
investment was $72.7 million.
53
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Income before income taxes and minority interest for the years
ended June 30, is summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
United States
|
|
$
|
133,969
|
|
|
$
|
86,229
|
|
|
$
|
57,177
|
|
International
|
|
|
204,679
|
|
|
|
252,028
|
|
|
|
270,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
$
|
338,648
|
|
|
$
|
338,257
|
|
|
$
|
327,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of income tax expense (benefit) for the years
ended June 30, were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
26,211
|
|
|
$
|
5,406
|
|
|
$
|
8,204
|
|
State
|
|
|
2,803
|
|
|
|
318
|
|
|
|
1,649
|
|
International
|
|
|
63,101
|
|
|
|
70,767
|
|
|
|
90,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total currently payable
|
|
$
|
92,115
|
|
|
$
|
76,491
|
|
|
$
|
100,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
42,183
|
|
|
$
|
12,579
|
|
|
$
|
296
|
|
State
|
|
|
(89
|
)
|
|
|
370
|
|
|
|
(289
|
)
|
International
|
|
|
(10,998
|
)
|
|
|
8,049
|
|
|
|
(8,508
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
31,096
|
|
|
|
20,998
|
|
|
|
(8,501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
123,211
|
|
|
$
|
97,489
|
|
|
$
|
91,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our effective tax rate differs from the U.S. federal income
tax rate for the years ended June 30, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
U.S. Federal income tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Permanent tax exemptions
|
|
|
(1.3
|
)
|
|
|
(1.6
|
)
|
|
|
(2.6
|
)
|
Repatriation of foreign earnings
|
|
|
(0.5
|
)
|
|
|
(4.5
|
)
|
|
|
(4.3
|
)
|
Tax examinations and settlements
|
|
|
(0.2
|
)
|
|
|
(1.4
|
)
|
|
|
(0.9
|
)
|
Provision for tax contingencies
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(0.3
|
)
|
|
|
0.4
|
|
|
|
1.6
|
|
Investments
|
|
|
|
|
|
|
|
|
|
|
(0.8
|
)
|
State income taxes, net of Federal tax benefit
|
|
|
0.8
|
|
|
|
0.4
|
|
|
|
0.4
|
|
Foreign tax rates less than U.S. Federal rate (net)
|
|
|
(4.4
|
)
|
|
|
(0.8
|
)
|
|
|
(0.8
|
)
|
Adjustments to foreign tax credits
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
1.2
|
|
|
|
1.3
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
36.4
|
%
|
|
|
28.8
|
%
|
|
|
28.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effective tax rate for fiscal 2008 increased due to
adjustments to foreign tax credits, including (1) a change
in estimate of $6.3 million in the third quarter of fiscal
2008, resulting from a difference between foreign tax credits
estimated in our fiscal 2007 financial statements and
subsequently
54
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
reflected in our fiscal 2007 tax return, and (2) a fourth
quarter charge of $10.9 million to correct errors in the
prior years tax pools used to calculate foreign tax credit
carryforwards. The effective tax rate in fiscal 2007 was
substantially unchanged from fiscal 2006.
At June 30, 2008, we had approximately $106.0 million
of
non-U.S. net
operating loss carryforwards. Substantially all of the
non-U.S. net
operating losses can be carried forward indefinitely.
A valuation allowance is provided when it is more likely than
not that some portion of the deferred tax asset will not be
realized. As of June 30, 2008 and 2007, we have recorded
valuation allowances of $38.3 million and
$39.4 million, respectively, against the
non-U.S. net
operating loss carryforwards.
The components of net deferred tax assets and liabilities as of
June 30 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Pension and other postretirement liabilities
|
|
$
|
40,339
|
|
|
$
|
37,548
|
|
Stock option and other benefits
|
|
|
24,968
|
|
|
|
22,619
|
|
Capitalized research and development
|
|
|
16,602
|
|
|
|
20,549
|
|
Foreign tax credits
|
|
|
|
|
|
|
24,157
|
|
Net operating losses
|
|
|
38,931
|
|
|
|
39,917
|
|
Depreciation and amortization
|
|
|
2,812
|
|
|
|
|
|
Inventory
|
|
|
15,134
|
|
|
|
11,905
|
|
Minimum tax credit
|
|
|
|
|
|
|
15,414
|
|
Allowance for doubtful accounts
|
|
|
8,683
|
|
|
|
4,648
|
|
Other, net
|
|
|
14,117
|
|
|
|
15,003
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets before valuation allowance
|
|
|
161,586
|
|
|
|
191,760
|
|
Valuation allowance
|
|
|
(38,289
|
)
|
|
|
(39,366
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
123,297
|
|
|
|
152,394
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Investments
|
|
|
(25,465
|
)
|
|
|
(20,136
|
)
|
Depreciation and amortization
|
|
|
(11,867
|
)
|
|
|
(12,461
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(37,332
|
)
|
|
|
(32,597
|
)
|
|
|
|
|
|
|
|
|
|
Total net deferred tax assets
|
|
$
|
85,965
|
|
|
$
|
119,797
|
|
|
|
|
|
|
|
|
|
|
The net deferred tax amounts reported in the consolidated
balance sheet as of June 30 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Net deferred taxes:
|
|
|
|
|
|
|
|
|
Current asset
|
|
$
|
23,444
|
|
|
$
|
16,171
|
|
Non-current asset
|
|
|
62,521
|
|
|
|
103,626
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
85,965
|
|
|
$
|
119,797
|
|
|
|
|
|
|
|
|
|
|
We have not provided for U.S. deferred income taxes or
foreign withholding taxes on approximately $930 million of
undistributed earnings of certain of our
non-U.S. subsidiaries
as of June 30,
55
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
2008. These earnings are intended to be permanently invested. It
is not practicable to estimate the additional income taxes which
would be paid if the permanently reinvested earnings were
distributed.
We are subject to tax in U.S. federal, state and foreign
tax jurisdictions. It is reasonably possible that the amount of
unrecognized tax benefits that is, the aggregate tax effect of
differences between tax return positions and the benefits
recognized in our financial statements, will change over the
next twelve months; however, we do not expect significant
changes during that time. The balance of unrecognized tax
benefits follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
June 30
|
|
|
July 1
|
|
|
Unrecognized tax benefits
|
|
$
|
14,559
|
|
|
$
|
12,581
|
|
Portion that, if recognized, would reduce tax expense and
effective tax rate
|
|
|
14,559
|
|
|
|
10,481
|
|
A reconciliation of the beginning and ending amounts of
unrecognized tax benefits follows (in thousands):
|
|
|
|
|
|
|
2008
|
|
|
Balance as of July 1, 2007
|
|
$
|
12,581
|
|
Additions based on tax positions related to the current year
|
|
|
874
|
|
Additions for tax positions of prior years
|
|
|
4,735
|
|
Reductions for tax positions of prior years
|
|
|
(3,010
|
)
|
Reductions due to lapse of applicable statute of limitations
|
|
|
(621
|
)
|
|
|
|
|
|
Balance at June 30, 2008
|
|
$
|
14,559
|
|
|
|
|
|
|
We have substantially completed all U.S. federal income tax
matters for tax years through 1999 and 2001. The examination of
federal income tax returns for 2000, 2002 and 2003 was completed
and we expect to receive the final report from the Internal
Revenue Service during fiscal 2009. The tax years 2004 through
2007 remain open to examination by all other major taxing
jurisdictions to which we are subject.
It is our practice to recognize interest or penalties related to
income tax matters in tax expense. As of June 30, 2008,
there were no material interest or penalty amounts to accrue.
|
|
12.
|
Profit Sharing,
Pension and Post Retirement Medical Benefit Plans
|
Profit Sharing
Plans
We provide discretionary savings and other defined contribution
plans covering substantially all of our U.S. employees and
certain employees in international subsidiaries. Employer
contributions to these plans of $17.2 million,
$15.4 million and $16.5 million were charged to
operations during fiscal 2008, 2007 and 2006, respectively.
Pension
Plans
We sponsor
and/or
contribute to pension plans, including defined benefit plans,
covering substantially all U.S. plant hourly employees and
certain employees in
non-U.S. subsidiaries.
The benefits are primarily based on years of service and the
employees compensation for certain periods during their
last years of employment. Our pension obligations are measured
as of March 31 for the U.S. plans and as of June 30
for the international plans.
Non-U.S. plans
are primarily in France, Germany, Ireland, Japan, Korea and
Taiwan.
56
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Post Retirement
Medical Benefit Plans
We have retiree health care plans that cover the majority of our
U.S. employees. Employees hired before January 1,
1994 may become eligible for these benefits if they reach
age 55, with age plus years of service equal to 70.
Employees hired after January 1, 1994 may become
eligible for these benefits if they reach age 60, with age
plus years of service equal to 80. The cost of retiree health
care is accrued over the period in which the employees become
eligible for such benefits. We continue to fund benefit costs
primarily as claims are paid. There are no significant
postretirement health care benefit plans outside of the U.S.
Benefit
Obligation and Plan Assets
The accumulated benefit obligations as of June 30, were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
Non-U.S. Pension
|
|
Postretirement
|
|
|
Benefits
|
|
Benefits
|
|
Medical Benefits
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Accumulated benefit obligation
|
|
$
|
47,609
|
|
|
$
|
48,004
|
|
|
$
|
99,677
|
|
|
$
|
93,330
|
|
|
$
|
46,779
|
|
|
$
|
50,756
|
|
The changes in the benefit obligations and plan assets for the
plans described above were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning benefit obligation
|
|
$
|
60,401
|
|
|
$
|
39,768
|
|
|
$
|
107,097
|
|
|
$
|
94,587
|
|
|
$
|
50,756
|
|
|
$
|
42,191
|
|
Service cost
|
|
|
3,380
|
|
|
|
2,687
|
|
|
|
5,783
|
|
|
|
5,531
|
|
|
|
2,923
|
|
|
|
2,329
|
|
Interest cost
|
|
|
3,683
|
|
|
|
2,962
|
|
|
|
4,222
|
|
|
|
3,700
|
|
|
|
3,106
|
|
|
|
2,629
|
|
Plan participants contributions
|
|
|
|
|
|
|
|
|
|
|
293
|
|
|
|
293
|
|
|
|
584
|
|
|
|
460
|
|
Actuarial loss/(gain)
|
|
|
(9,804
|
)
|
|
|
4,737
|
|
|
|
(7,120
|
)
|
|
|
3,034
|
|
|
|
(8,564
|
)
|
|
|
4,480
|
|
Plan amendment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,106
|
|
|
|
|
|
|
|
|
|
Effect of curtailment/settlement
|
|
|
(2,336
|
)
|
|
|
(10
|
)
|
|
|
(3,211
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Business combination
|
|
|
|
|
|
|
11,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid to plan participants
|
|
|
(2,344
|
)
|
|
|
(1,031
|
)
|
|
|
(6,182
|
)
|
|
|
(3,126
|
)
|
|
|
(2,026
|
)
|
|
|
(1,333
|
)
|
Changes in foreign currency
|
|
|
|
|
|
|
|
|
|
|
14,554
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending projected benefit obligation
|
|
$
|
52,980
|
|
|
$
|
60,401
|
|
|
$
|
115,436
|
|
|
$
|
107,097
|
|
|
$
|
46,779
|
|
|
$
|
50,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning fair value of plan assets
|
|
$
|
57,311
|
|
|
$
|
41,916
|
|
|
$
|
61,019
|
|
|
$
|
42,977
|
|
|
$
|
|
|
|
$
|
|
|
Actual return on plan assets
|
|
|
623
|
|
|
|
5,436
|
|
|
|
(9,505
|
)
|
|
|
7,951
|
|
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
3,250
|
|
|
|
3,000
|
|
|
|
12,340
|
|
|
|
10,343
|
|
|
|
1,573
|
|
|
|
1,151
|
|
Plan participants contributions
|
|
|
|
|
|
|
|
|
|
|
293
|
|
|
|
293
|
|
|
|
584
|
|
|
|
460
|
|
Business combination
|
|
|
|
|
|
|
7,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid to plan participants
|
|
|
(2,344
|
)
|
|
|
(1,031
|
)
|
|
|
(6,182
|
)
|
|
|
(3,126
|
)
|
|
|
(2,157
|
)
|
|
|
(1,611
|
)
|
Changes in foreign currency
|
|
|
|
|
|
|
|
|
|
|
8,498
|
|
|
|
2,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending fair value of plan assets
|
|
$
|
58,840
|
|
|
$
|
57,310
|
|
|
$
|
66,463
|
|
|
$
|
61,019
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The funded status, the amount by which plan assets exceed (or
are less than) the projected benefit obligation, was as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
Non-U.S. Pension
|
|
Postretirement
|
|
|
Benefits
|
|
Benefits
|
|
Medical Benefits
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Funded Status
|
|
$
|
5,860
|
|
|
$
|
(3,091
|
)
|
|
$
|
(48,973
|
)
|
|
$
|
(46,078
|
)
|
|
$
|
(46,779
|
)
|
|
$
|
(50,756
|
)
|
The amounts recognized in the consolidated balance sheets were
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Prepaid expenses
|
|
$
|
7,275
|
|
|
$
|
595
|
|
|
$
|
8,406
|
|
|
$
|
8,110
|
|
|
$
|
|
|
|
$
|
|
|
Accrued pension and other post retirement benefits
|
|
|
(1,415
|
)
|
|
|
(3,686
|
)
|
|
|
(57,379
|
)
|
|
|
(54,251
|
)
|
|
|
(46,779
|
)
|
|
|
(50,756
|
)
|
Accumulated other comprehensive income
|
|
|
(1,426
|
)
|
|
|
4,333
|
|
|
|
20,160
|
|
|
|
12,328
|
|
|
|
7,695
|
|
|
|
16,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
4,434
|
|
|
$
|
1,242
|
|
|
$
|
(28,813
|
)
|
|
$
|
(33,813
|
)
|
|
$
|
(39,084
|
)
|
|
$
|
(33,906
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amounts comprising accumulated other comprehensive income
before taxes were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Net transition liability
|
|
$
|
|
|
|
$
|
|
|
|
$
|
224
|
|
|
$
|
250
|
|
|
$
|
|
|
|
$
|
|
|
Net actuarial (gain) loss
|
|
|
(1,447
|
)
|
|
|
4,308
|
|
|
|
16,967
|
|
|
|
9,309
|
|
|
|
13,750
|
|
|
|
23,572
|
|
Net prior service costs
|
|
|
21
|
|
|
|
25
|
|
|
|
2,969
|
|
|
|
2,769
|
|
|
|
(6,055
|
)
|
|
|
(6,722
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plans, net
|
|
$
|
(1,426
|
)
|
|
$
|
4,333
|
|
|
$
|
20,160
|
|
|
$
|
12,328
|
|
|
$
|
7,695
|
|
|
$
|
16,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net gain recognized in other comprehensive income was
$7.6 million for fiscal 2008.
58
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Assumptions
Weighted average actuarial assumptions used to determine benefit
obligations for the plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Discount rate
|
|
|
6.9
|
%
|
|
|
6.2
|
%
|
|
|
4.0
|
%
|
|
|
3.8
|
%
|
|
|
6.9
|
%
|
|
|
6.2
|
%
|
Rate of compensation increase
|
|
|
3.7
|
%
|
|
|
3.7
|
%
|
|
|
3.4
|
%
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
Health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.0
|
%
|
|
|
10.0
|
%
|
Ultimate health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Years of ultimate rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
For the postretirement medical benefit plan, a one-percentage
point change in the assumed health care cost trend rates would
have the following effect (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Effect on total service and interest cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 100 basis points
|
|
$
|
1,219
|
|
|
$
|
1,287
|
|
|
$
|
1,476
|
|
Decrease 100 basis points
|
|
|
(968
|
)
|
|
|
(1,014
|
)
|
|
|
(1,211
|
)
|
Effect on benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase 100 basis points
|
|
$
|
7,987
|
|
|
$
|
9,057
|
|
|
$
|
9,951
|
|
Decrease 100 basis points
|
|
|
(6,452
|
)
|
|
|
(7,270
|
)
|
|
|
(8,164
|
)
|
Weighted-average actuarial assumptions used to determine costs
for the plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension
|
|
|
Non-U.S. Pension
|
|
|
Postretirement
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
Discount rate
|
|
|
6.2
|
%
|
|
|
6.3
|
%
|
|
|
3.8
|
%
|
|
|
3.9
|
%
|
|
|
6.2
|
%
|
|
|
6.3
|
%
|
Expected return on plan assets
|
|
|
8.2
|
%
|
|
|
8.4
|
%
|
|
|
6.5
|
%
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
Rate of compensation increase
|
|
|
3.7
|
%
|
|
|
3.7
|
%
|
|
|
3.5
|
%
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
Health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.0
|
%
|
|
|
10.0
|
%
|
Ultimate health care cost trend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Years of ultimate rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
The discount rate is determined based on high-quality fixed
income investments that match the duration of expected benefit
payments. The discount rate used to determine the present value
of our future U.S. pension obligations is based on a yield
curve constructed from a portfolio of high quality corporate
debt securities with various maturities. Each years
expected future benefit payments are discounted to their present
value at the appropriate yield curve rate, thereby generating
the overall discount rate for U.S. pension obligations. The
discount rates for our foreign pension plans are selected by
using a yield curve approach or by reference to high quality
corporate bond rates in those countries that have developed
corporate bond markets. In those countries where developed
corporate bond markets do not exist, the discount rates are
selected by reference to local government bond rates with a
premium added to reflect the additional risk for corporate
bonds. The expected return on plan assets noted above represents
a forward projection of the average rate of earnings expected on
the pension assets. We estimated this rate based on historical
returns of similarly diversified portfolios. The rate of
compensation increase represents the long-term assumption for
expected increases to salaries for pay-related plans.
59
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Net Periodic
Benefit Cost
The components of net periodic benefit cost for our plans
consist of the following for the years ended June 30 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement
|
|
|
|
U.S. Pension Benefits
|
|
|
Non-U.S. Pension Benefits
|
|
|
Medical Benefits
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Service cost
|
|
$
|
3,380
|
|
|
$
|
2,687
|
|
|
$
|
3,239
|
|
|
$
|
5,783
|
|
|
$
|
5,531
|
|
|
$
|
5,946
|
|
|
$
|
2,923
|
|
|
$
|
2,329
|
|
|
$
|
2,566
|
|
Interest cost
|
|
|
3,683
|
|
|
|
2,962
|
|
|
|
2,291
|
|
|
|
4,222
|
|
|
|
3,700
|
|
|
|
3,100
|
|
|
|
3,106
|
|
|
|
2,629
|
|
|
|
2,387
|
|
Expected return on plan assets
|
|
|
(4,652
|
)
|
|
|
(3,939
|
)
|
|
|
(3,070
|
)
|
|
|
(4,306
|
)
|
|
|
(2,901
|
)
|
|
|
(2,098
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service cost
|
|
|
4
|
|
|
|
4
|
|
|
|
110
|
|
|
|
232
|
|
|
|
218
|
|
|
|
|
|
|
|
(667
|
)
|
|
|
(676
|
)
|
|
|
(71
|
)
|
Amortization of unrecognized transition obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
|
|
|
|
40
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized actuarial losses
|
|
|
|
|
|
|
|
|
|
|
716
|
|
|
|
362
|
|
|
|
176
|
|
|
|
741
|
|
|
|
1,257
|
|
|
|
1,102
|
|
|
|
1,039
|
|
Curtailment (gain)/loss
|
|
|
(2,356
|
)
|
|
|
(12
|
)
|
|
|
4
|
|
|
|
(3,209
|
)
|
|
|
|
|
|
|
(45
|
)
|
|
|
132
|
|
|
|
278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
59
|
|
|
$
|
1,702
|
|
|
$
|
3,290
|
|
|
$
|
3,127
|
|
|
$
|
6,764
|
|
|
$
|
7,684
|
|
|
$
|
6,751
|
|
|
$
|
5,662
|
|
|
$
|
5,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount of accumulated other comprehensive income that was
reclassified as a component of net period benefit cost in fiscal
2008 was $2.9 million. The amount in accumulated other
comprehensive income that is expected to be recognized as a
component of net periodic benefit cost in fiscal 2009 is
$0.7 million.
Plan
Assets
Our overall investment strategy for the assets in the pension
funds is to achieve a balance between the goals of growing plan
assets and keeping risks at a reasonable level over a long-term
investment horizon. In order to reduce unnecessary risk, the
pension funds are diversified across several asset classes with
a focus on total return. The weighted-average asset allocations
for our pension plans at June 30 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
Non-U.S.
|
|
|
|
|
|
Non-U.S.
|
|
|
|
U.S. Plan
|
|
|
Plan
|
|
|
U.S. Plan
|
|
|
Plan
|
|
|
|
Assets
|
|
|
Assets
|
|
|
Assets
|
|
|
Assets
|
|
|
Asset category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
65
|
%
|
|
|
64
|
%
|
|
|
68
|
%
|
|
|
70
|
%
|
Bonds
|
|
|
35
|
%
|
|
|
19
|
%
|
|
|
32
|
%
|
|
|
21
|
%
|
Other
|
|
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
9
|
%
|
Funding
Expectations
No contributions are required during 2009 under applicable law
for the U.S. Pension Plan. Expected funding for the
non-U.S. plans
during fiscal 2009 is approximately $11.8 million.
60
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Estimated Future
Benefit Payments
The total benefits to be paid from the U.S. and
non-U.S. pension
plans and other postretirement benefit plans are not expected to
exceed $15 million in any year through 2018.
Curtailments
In fiscal 2008, we recognized a $2.3 million reduction in
selling, general and administrative expense due to a curtailment
adjustment. The curtailment adjustment resulted from the
freezing of benefits in a defined benefit plan after the
participants transferred to another plan without credit for
prior service. Separately, we also recognized in fiscal 2008 a
$3.1 million reduction in restructuring costs resulting
from a curtailment adjustment for the early termination of
participants in connection with the ongoing restructuring plan.
We had available lines of credit totaling $207.9 million at
June 30, 2008, expiring between 2008 and 2012. Our
long-term debt approximates $147.3 million at June 30,
2008. In order to fund the cash portion of our investment in
Woodhead made during fiscal 2007, we entered into two term notes
aggregating 15 billion Japanese yen ($141.3 million)
and borrowed $44.0 million on our unsecured revolving
credit line. The term note agreements are due September 2009,
with weighted-average fixed interest rates approximating 1.3%.
The $44.0 million that we borrowed on our unsecured
revolving line of credit was repaid during the second quarter of
fiscal 2007. In order to fund stock repurchases during fiscal
2008, we borrowed $125.0 million on our unsecured revolving
line of credit, $75.0 million of which was repaid as of
June 30, 2008. Principal payments on long-term debt
obligations, including interest, are due as follows: fiscal
2009, $1.4 million; fiscal 2010, $142.4 million;
fiscal 2011, $3.3 million; fiscal 2012, $0.3 million;
fiscal 2013, $0.1 million; and thereafter,
$0.1 million.
In addition to the two term notes above, our remaining long-term
debt generally consists of mortgages and industrial development
bonds with interest rates ranging from 1.3% to 7.8% and maturing
through 2012. Certain assets, including land, buildings and
equipment, secure our long-term debt.
We rent certain facilities and equipment under operating lease
arrangements. Some of the leases have renewal options. Future
minimum lease payments are presented below (in thousands):
|
|
|
|
|
|
|
Operating
|
|
|
|
Leases
|
|
|
Year ending June 30:
|
|
|
|
|
2009
|
|
$
|
13,774
|
|
2010
|
|
|
7,065
|
|
2011
|
|
|
4,732
|
|
2012
|
|
|
3,740
|
|
2013
|
|
|
2,880
|
|
2014 and thereafter
|
|
|
7,640
|
|
|
|
|
|
|
Total lease payments
|
|
$
|
39,831
|
|
|
|
|
|
|
Rental expense was $10.9 million, $10.4 million and
$10.2 million in fiscal 2008, 2007 and 2006, respectively.
61
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
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 submitted to a vote of
the stockholders, other than the election of directors, 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, which requires stockholder
approval. There are 25 million shares of preferred stock
authorized, none of which were issued or outstanding during the
three years ended June 30, 2008.
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. Our Class B Common Stock
outstanding has remained at 94,255 shares during the three
years ended June 30, 2008.
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 our liquidation or dissolution.
Changes in common stock for the years ended June 30 are as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
|
Treasury Stock
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Outstanding at June 30, 2005
|
|
|
110,814
|
|
|
$
|
5,541
|
|
|
|
104,998
|
|
|
$
|
5,250
|
|
|
|
28,049
|
|
|
$
|
568,917
|
|
Exercise of stock options
|
|
|
483
|
|
|
|
24
|
|
|
|
1,584
|
|
|
|
79
|
|
|
|
309
|
|
|
|
8,736
|
|
Purchase of treasury stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,018
|
|
|
|
165,323
|
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2006
|
|
|
111,297
|
|
|
$
|
5,565
|
|
|
|
106,598
|
|
|
$
|
5,330
|
|
|
|
34,384
|
|
|
$
|
743,219
|
|
Exercise of stock options
|
|
|
426
|
|
|
|
21
|
|
|
|
1,890
|
|
|
|
95
|
|
|
|
705
|
|
|
|
21,801
|
|
Purchase of treasury stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,248
|
|
|
|
34,889
|
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
7
|
|
|
|
1
|
|
|
|
49
|
|
|
|
2
|
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2007
|
|
|
111,730
|
|
|
$
|
5,587
|
|
|
|
108,562
|
|
|
$
|
5,428
|
|
|
|
36,337
|
|
|
$
|
799,894
|
|
Exercise of stock options
|
|
|
457
|
|
|
|
23
|
|
|
|
1,210
|
|
|
|
60
|
|
|
|
376
|
|
|
|
9,543
|
|
Purchase of treasury stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,979
|
|
|
|
199,584
|
|
Issuance of stock awards
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
8
|
|
|
|
|
|
|
|
59
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2008
|
|
|
112,195
|
|
|
$
|
5,610
|
|
|
|
109,841
|
|
|
$
|
5,492
|
|
|
|
44,692
|
|
|
$
|
1,009,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
|
|
16.
|
Accumulated Other
Comprehensive Income
|
The components of accumulated other comprehensive income are as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Foreign currency translation adjustments
|
|
$
|
322,709
|
|
|
$
|
157,002
|
|
Non-current deferred tax asset
|
|
|
8,637
|
|
|
|
12,411
|
|
Accumulated transition obligation
|
|
|
(224
|
)
|
|
|
(250
|
)
|
Accumulated prior service credit
|
|
|
3,064
|
|
|
|
3,928
|
|
Accumulated net loss
|
|
|
(29,269
|
)
|
|
|
(37,189
|
)
|
Unrealized gains on investments
|
|
|
15,698
|
|
|
|
5,496
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
320,615
|
|
|
$
|
141,398
|
|
|
|
|
|
|
|
|
|
|
|
|
17.
|
Stock Incentive
Plans
|
Share-based compensation is comprised of expense related to
stock options and stock awards. Share-based compensation cost
was $24.2 million, $27.5 million and
$30.5 million for fiscal 2008, 2007 and 2006, respectively.
The income tax benefits related to share-based compensation were
$8.5 million, $9.6 million and $10.6 million for
fiscal 2008, 2007 and 2006, respectively.
Stock
Options
Stock options that we grant to employees who are not executive
officers (non-officer employees) are options to
purchase Class A Common Stock at an exercise price that is
generally 50% of the fair market value of the stock on the grant
date. These grants generally vest 25% per year beginning the
first anniversary date of the grant. Stock options to
U.S.-based
non-officer employees are automatically exercised on the vesting
date. The number of shares authorized for employee stock option
grants is 12.5 million.
The stock options that are approved for grant to executive
officers and directors are generally options to purchase
Class A Common Stock at an exercise price that is 100% of
the fair market value of the stock on the grant date. These
grants generally vest 25% per year beginning the first
anniversary date of the award with a term of five years. The
number of shares authorized for stock option grants to executive
officers and directors is 12.5 million.
63
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Stock option transactions are summarized as follows (exercise
price represents a weighted-average, shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
|
Outstanding at June 30, 2005
|
|
|
10,544
|
|
|
$
|
18.94
|
|
Granted
|
|
|
1,989
|
|
|
|
18.98
|
|
Exercised
|
|
|
(1,872
|
)
|
|
|
12.85
|
|
Forfeited or expired
|
|
|
(241
|
)
|
|
|
19.72
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2006
|
|
|
10,420
|
|
|
$
|
20.02
|
|
Granted
|
|
|
2,264
|
|
|
|
20.65
|
|
Exercised
|
|
|
(2,122
|
)
|
|
|
17.46
|
|
Forfeited or expired
|
|
|
(343
|
)
|
|
|
21.93
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2007
|
|
|
10,219
|
|
|
$
|
20.98
|
|
Granted
|
|
|
1,728
|
|
|
|
17.63
|
|
Exercised
|
|
|
(1,433
|
)
|
|
|
15.91
|
|
Forfeited or expired
|
|
|
(1,111
|
)
|
|
|
27.81
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2008
|
|
|
9,403
|
|
|
$
|
20.38
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2008
|
|
|
3,988
|
|
|
$
|
24.04
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2008, exercisable options had an aggregate
intrinsic value of $4.6 million with a weighted-average
remaining contractual life of 2.1 years. In addition, there
were 5.1 million options expected to vest, after
consideration of expected forfeitures, with an aggregate
intrinsic value of $31.9 million. Total options outstanding
had an aggregate intrinsic value of $38.7 million with a
weighted-average remaining contractual life of 3.0 years.
The total intrinsic value of options exercised during fiscal
2008, 2007 and 2006 was $14.5 million, $10.6 million
and $28.0 million, respectively.
We use the Black-Scholes option-pricing model to estimate the
fair value of each option grant as of the date of grant.
Expected volatilities are based on historical volatility of
Common Stock. We estimate the expected life of the option using
historical data pertaining to option exercises and employee
terminations. Separate groups of employees that have similar
historical exercise behavior are considered separately for
estimating the expected life. The risk-free interest rate is
based on U.S. Treasury yields in effect at the time of
grant. The estimated weighted-average fair values of and related
assumptions for options granted were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Weighted-average fair value of options granted:
|
|
|
|
|
|
|
|
|
|
|
|
|
At market value of underlying stock
|
|
$
|
6.22
|
|
|
$
|
9.82
|
|
|
$
|
8.15
|
|
At less than market value of underlying stock
|
|
$
|
11.36
|
|
|
$
|
14.68
|
|
|
$
|
17.18
|
|
Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend yield
|
|
|
1.95
|
%
|
|
|
1.06
|
%
|
|
|
0.72
|
%
|
Expected volatility
|
|
|
27.44
|
%
|
|
|
28.44
|
%
|
|
|
28.25
|
%
|
Risk-free interest rate
|
|
|
3.55
|
%
|
|
|
4.79
|
%
|
|
|
4.06
|
%
|
Expected life of option (years)
|
|
|
4.14
|
|
|
|
3.94
|
|
|
|
3.66
|
|
As of June 30, 2008, there were options outstanding to
purchase 0.2 million shares of Common Stock and
9.2 million shares of Class A Common Stock.
64
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Stock
Awards
Stock awards are generally comprised of stock units that are
convertible into shares of Class A Common Stock. Generally,
these grants vest 25% per year beginning the first anniversary
date of the award. Stock awards transactions are summarized as
follows (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Market
|
|
|
|
Shares
|
|
|
Value
|
|
|
Nonvested shares at June 30, 2005
|
|
|
446
|
|
|
$
|
24.06
|
|
Granted
|
|
|
249
|
|
|
|
24.56
|
|
Vested
|
|
|
(195
|
)
|
|
|
20.43
|
|
|
|
|
|
|
|
|
|
|
Nonvested shares at June 30, 2006
|
|
|
500
|
|
|
$
|
24.33
|
|
Granted
|
|
|
271
|
|
|
|
29.51
|
|
Vested
|
|
|
(168
|
)
|
|
|
23.57
|
|
Forfeited
|
|
|
(62
|
)
|
|
|
25.05
|
|
|
|
|
|
|
|
|
|
|
Nonvested shares at June 30, 2007
|
|
|
541
|
|
|
$
|
27.08
|
|
Granted
|
|
|
295
|
|
|
|
22.82
|
|
Vested
|
|
|
(233
|
)
|
|
|
26.47
|
|
Forfeited
|
|
|
(32
|
)
|
|
|
26.80
|
|
|
|
|
|
|
|
|
|
|
Nonvested shares at June 30, 2008
|
|
|
571
|
|
|
$
|
25.14
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2008, there was $13.9 million of total
unrecognized compensation cost related to the above nonvested
stock bonus awards. We expect to recognize the cost of these
stock awards over a weighted-average period of 2.6 years.
The total fair value of shares vested during fiscal 2008, 2007
and 2006 was $6.2 million, $4.7 million and
$4.0 million, respectively.
Directors
Deferred Compensation Plan
Our non-employee directors are eligible to participate in a
deferred compensation plan under which they may elect on a
yearly basis to defer all or a portion of the following
years compensation. A participant may elect to have the
deferred amount (a) accrue interest during each calendar
quarter at a rate equal to the average six month Treasury Bill
rate in effect at the beginning of each calendar quarter, or
(b) credited as stock units whereby each unit
is equal to one share of Common Stock. The cumulative amount
that is deferred for each participating director is subject to
the claims of our general creditors.
If a non-employee director elects to have his or her
compensation deferred as stock units, the compensation earned
for a given quarter is converted to stock units at the closing
price of common stock on the date the compensation would
otherwise be paid. Stock units are distributed in shares of
common stock.
|
|
18.
|
Segment and
Related Information
|
On July 1, 2007, we reorganized our operations, which
changed the configuration of our segments into the Connector,
Transportation and Custom & Electrical segments. A
summary of the segments follows:
|
|
|
|
|
The Connector segment designs and manufactures products for
high-speed, high-density, high signal-integrity applications as
well as fine-pitch, low-profile connectors for the consumer and
commercial markets.
|
65
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
The Transportation segment designs and manufactures products
that withstand environments such as heat, cold, dust, dirt,
liquid and vibration for automotive and other transportation
applications.
|
|
|
|
The Custom & Electrical segment designs and
manufactures integrated and customizable electronic components
across all industries that provide original, differentiated
solutions to customer requirements. It also leverages expertise
in the use of signal, power and interface technology in
industrial automation and other harsh environment applications.
|
Information by segment for the years ended June 30 is summarized
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trans-
|
|
|
Custom &
|
|
|
Corporate
|
|
|
|
|
|
|
Connector
|
|
|
portation
|
|
|
Electrical
|
|
|
& Other
|
|
|
Total
|
|
|
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
1,879,443
|
|
|
$
|
498,141
|
|
|
$
|
941,365
|
|
|
$
|
9,398
|
|
|
$
|
3,328,347
|
|
Income (loss) from operations
|
|
|
302,240
|
|
|
|
15,356
|
|
|
|
94,076
|
|
|
|
(93,722
|
)
|
|
|
317,950
|
|
Depreciation & amortization
|
|
|
162,601
|
|
|
|
39,076
|
|
|
|
35,495
|
|
|
|
15,172
|
|
|
|
252,344
|
|
Capital expenditures
|
|
|
138,558
|
|
|
|
42,331
|
|
|
|
22,705
|
|
|
|
31,032
|
|
|
|
234,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
1,885,431
|
|
|
$
|
472,257
|
|
|
$
|
892,756
|
|
|
$
|
15,430
|
|
|
$
|
3,265,874
|
|
Income (loss) from operations
|
|
|
354,358
|
|
|
|
7,476
|
|
|
|
52,898
|
|
|
|
(93,182
|
)
|
|
|
321,550
|
|
Depreciation & amortization
|
|
|
140,191
|
|
|
|
38,422
|
|
|
|
41,197
|
|
|
|
18,102
|
|
|
|
237,912
|
|
Capital expenditures
|
|
|
176,263
|
|
|
|
66,213
|
|
|
|
34,100
|
|
|
|
20,285
|
|
|
|
296,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers
|
|
$
|
1,721,459
|
|
|
$
|
424,740
|
|
|
$
|
650,332
|
|
|
$
|
64,758
|
|
|
$
|
2,861,289
|
|
Income (loss) from operations
|
|
|
411,329
|
|
|
|
(4,472
|
)
|
|
|
29,047
|
|
|
|
(126,160
|
)
|
|
|
309,744
|
|
Depreciation & amortization
|
|
|
137,605
|
|
|
|
29,764
|
|
|
|
28,570
|
|
|
|
18,718
|
|
|
|
214,657
|
|
Capital expenditures
|
|
|
206,490
|
|
|
|
18,442
|
|
|
|
24,163
|
|
|
|
27,688
|
|
|
|
276,783
|
|
Corporate & Other includes expenses primarily related
to corporate operations that are not allocated to segments such
as executive management, human resources, legal, finance and
information technology. We also include in Corporate &
Other the assets of certain plants that are not specific to a
particular division.
Customer revenue and net property, plant and equipment by
significant foreign country are summarized as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Customer revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
888,941
|
|
|
$
|
896,625
|
|
|
$
|
764,074
|
|
Japan
|
|
|
517,087
|
|
|
|
484,613
|
|
|
|
421,603
|
|
China
|
|
|
735,657
|
|
|
|
717,735
|
|
|
|
642,369
|
|
Net property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
296,843
|
|
|
$
|
313,109
|
|
|
$
|
293,055
|
|
Japan
|
|
|
299,447
|
|
|
|
280,246
|
|
|
|
276,696
|
|
China
|
|
|
231,764
|
|
|
|
188,670
|
|
|
|
161,717
|
|
66
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
Segment assets, which are comprised of accounts receivable,
inventory and fixed assets, are summarized as follows for the
years ended June 30 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trans-
|
|
Custom &
|
|
Corporate
|
|
|
|
|
Connector
|
|
portation
|
|
Electrical
|
|
& Other
|
|
Total
|
|
2008
|
|
$
|
1,293,342
|
|
|
$
|
413,233
|
|
|
$
|
500,197
|
|
|
$
|
164,745
|
|
|
$
|
2,371,517
|
|
2007
|
|
|
1,167,163
|
|
|
|
407,034
|
|
|
|
454,730
|
|
|
|
170,788
|
|
|
|
2,199,715
|
|
The reconciliation of segment assets to consolidated total
assets is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2008
|
|
|
2007
|
|
|
Segment assets
|
|
$
|
2,371,517
|
|
|
$
|
2,199,715
|
|
Other current assets
|
|
|
583,838
|
|
|
|
512,481
|
|
Other non current assets
|
|
|
644,182
|
|
|
|
603,912
|
|
|
|
|
|
|
|
|
|
|
Consolidated total assets
|
|
$
|
3,599,537
|
|
|
$
|
3,316,108
|
|
|
|
|
|
|
|
|
|
|
Amounts as of June 30, 2007, were recast to conform to the
new organization structure. The recast data required the use of
judgment in determining certain allocations of expense and
assets related to manufacturing facilities and administrative
services that are shared between segments.
|
|
19.
|
Quarterly
Financial Information (Unaudited)
|
The following is a condensed summary of our unaudited quarterly
results of operations and quarterly earnings per share data for
fiscal 2008 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Net revenue
|
|
$
|
792,610
|
|
|
$
|
841,560
|
|
|
$
|
822,285
|
|
|
$
|
871,892
|
|
Gross profit
|
|
|
236,150
|
|
|
|
253,115
|
|
|
|
254,461
|
|
|
|
270,509
|
|
Net income
|
|
|
53,304
|
|
|
|
59,216
|
|
|
|
50,306
|
|
|
|
52,611
|
|
Basic earnings per share
|
|
|
0.29
|
|
|
|
0.33
|
|
|
|
0.28
|
|
|
|
0.30
|
|
Diluted earnings per share
|
|
|
0.29
|
|
|
|
0.33
|
|
|
|
0.28
|
|
|
|
0.29
|
|
The following is a condensed summary of our unaudited quarterly
results of operations and quarterly earnings per share data for
fiscal 2007 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Net revenue
|
|
$
|
829,545
|
|
|
$
|
837,467
|
|
|
$
|
807,014
|
|
|
$
|
791,848
|
|
Gross profit
|
|
|
269,409
|
|
|
|
258,509
|
|
|
|
250,988
|
|
|
|
237,802
|
|
Net income
|
|
|
76,501
|
|
|
|
66,227
|
|
|
|
65,318
|
|
|
|
32,722
|
|
Basic earnings per share
|
|
|
0.42
|
|
|
|
0.36
|
|
|
|
0.36
|
|
|
|
0.18
|
|
Diluted earnings per share
|
|
|
0.41
|
|
|
|
0.36
|
|
|
|
0.35
|
|
|
|
0.18
|
|
67
Molex
Incorporated
Notes to
Consolidated Financial
Statements (Continued)
During fiscal 2008 and 2007, we recognized restructuring
expenses and asset impairment charges related to our
restructuring plan (see Note 5) and during fiscal 2008
we recognized adjustments to foreign tax credits (see
Note 11). The table below summarizes the impact of these
items on each of the quarters during fiscal 2008 and 2007 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
|
Foreign
|
|
|
|
Charges
|
|
|
Tax Credits
|
|
|
Fiscal 2008:
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
1,476
|
|
|
$
|
|
|
Second quarter
|
|
|
4,716
|
|
|
|
|
|
Third quarter
|
|
|
4,902
|
|
|
|
6,344
|
|
Fourth quarter
|
|
|
9,894
|
|
|
|
10,871
|
|
Fiscal 2007:
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
|
30,255
|
|
|
|
|
|
68
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of
Directors and Stockholders of Molex Incorporated
We have audited the accompanying consolidated balance sheets of
Molex Incorporated as of June 30, 2008 and 2007, and the
related consolidated statements of income, stockholders
equity, and cash flows for each of the three years in the period
ended June 30, 2008. Our audits also included the financial
statement schedule listed in the Index of Part IV,
Item 15. These financial statements and schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Molex Incorporated at
June 30, 2008 and 2007, and the consolidated results of its
operations and its cash flows for each of the three years in the
period ended June 30, 2008, in conformity with
U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the
information set forth therein.
As discussed in Note 2 to the consolidated financial
statements, the Company adopted the recognition and disclosure
provisions of Statement of Financial Accounting No. 158,
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans
, as of June 30, 2007. As
discussed in Note 2 to the consolidated financial
statements, the Company adopted Financial Accounting Standards
Board Interpretation No. 48,
Accounting for Uncertainty
in Income Taxes an interpretation of FASB Statement
No. 109
, as of July 1, 2007.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Molex Incorporateds internal control over
financial reporting as of June 30, 2008, based on criteria
established in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated August 4, 2008
expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Chicago, Illinois
August 4, 2008
69
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of
Directors and Stockholders of Molex Incorporated
We have audited Molex Incorporateds internal control over
financial reporting as of June 30, 2008, based on criteria
established in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Molex
Incorporateds management is responsible for maintaining
effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Managements Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the
companys internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Molex Incorporated maintained, in all material
respects, effective internal control over financial reporting as
of June 30, 2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Molex Incorporated as of
June 30, 2008 and 2007, and the related consolidated
statements of income, stockholders equity, and cash flows
for each of the three years in the period ended June 30,
2008 of Molex Incorporated and our report dated August 4,
2008 expressed an unqualified opinion thereon.
Chicago, Illinois
August 4, 2008
70
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
None
|
|
Item 9A.
|
Controls
and Procedures
|
Attached as exhibits to this
Form 10-K
are certifications of our Chief Executive Officer (CEO) and
Chief Financial Officer (CFO), which are required in accordance
with
Rule 13a-14
under the Securities Exchange Act of 1934, as amended (the
Exchange Act). This Controls and Procedures section
includes information concerning the controls and controls
evaluation referred to in the certifications. Immediately
preceding Part II, Item 9 of this
Form 10-K
is the report of Ernst & Young LLP, our independent
registered public accounting firm, regarding its audit of our
internal control over financial reporting and of
managements assessment of internal control over financial
reporting set forth below in this section. This section should
be read in conjunction with the certifications and the
Ernst & Young report for a more complete understanding
of the topics presented.
Evaluation of
Disclosure Controls and Procedures
Management conducted an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures
(Disclosure Controls) as of the end of the period covered by
this
Form 10-K.
The controls evaluation was conducted under the supervision and
with the participation of management, including our CEO and CFO.
Disclosure Controls are controls and procedures designed to
reasonably assure that information required to be disclosed in
our reports filed under the Exchange Act, such as this
Form 10-K,
is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms. Disclosure
Controls are also designed to reasonably assure that such
information is accumulated and communicated to management,
including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure. Our quarterly
evaluation of Disclosure Controls includes an evaluation of some
components of our internal control over financial reporting, and
internal control over financial reporting is also separately
evaluated on an annual basis for purposes of providing the
management report, which is set forth below.
The evaluation of our Disclosure Controls included a review of
the controls objectives and design, our implementation of
the controls and the effect of the controls on the information
generated for use in this
Form 10-K.
In the course of the controls evaluation, management reviews
identified data errors, control problems or acts of fraud, if
any, and seeks to confirm that appropriate corrective actions,
including process improvements, were being undertaken. This type
of evaluation is performed on a quarterly basis so that the
conclusions of management, including the CEO and CFO, concerning
the effectiveness of the Disclosure Controls can be reported in
our periodic reports on
Form 10-Q
and
Form 10-K.
Many of the components of our Disclosure Controls are also
evaluated on an ongoing basis by our Internal Audit department
and by other personnel in the Finance organization. The overall
goals of these various evaluation activities are to monitor our
Disclosure Controls, and to modify them as necessary. Our intent
is to maintain the Disclosure Controls as dynamic systems that
change as conditions warrant.
Based upon the controls evaluation, our CEO and CFO have
concluded that, as of the end of the period covered by this
report, our Disclosure Controls were effective to provide
reasonable assurance that information required to be disclosed
in our Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified by the SEC, and
that material information relating to us and our consolidated
subsidiaries is made known to management, including the CEO and
CFO, during the period when our periodic reports are being
prepared.
Managements
Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining
an adequate system of internal control over financial reporting
as required by the Sarbanes-Oxley Act of 2002 and as defined in
71
Exchange Act
Rule 13a-15(f).
A control system can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.
Our management assessed the effectiveness of our internal
control over financial reporting as of June 30, 2008. Under
managements supervision, an evaluation of the design and
effectiveness of our internal control over financial reporting
was conducted based on the framework in
Internal
Control Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on this evaluation, management concluded that our
internal control over financial reporting was effective as of
June 30, 2008.
Changes in
Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting that occurred during our most recently completed
fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
Inherent
Limitations on Effectiveness of Controls
Our management, including the CEO and CFO, do not expect that
our disclosure controls or our internal control over financial
reporting will prevent or detect all error and all fraud. A
control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the
control systems objectives will be met. The design of a
control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered
relative to their costs. Further, because of the inherent
limitations in all control systems, no evaluation of controls
can provide absolute assurance that misstatements due to error
or fraud will not occur or that all control issues and instances
of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur
because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in
part on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls
effectiveness to future periods are subject to risks. Over time,
controls may become inadequate because of changes in conditions
or deterioration in the degree of compliance with policies or
procedures.
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
The information under the captions Item 1
Election of Directors, Board Independence
Board and Committee Information, Corporate
Governance, and Section 16(a) Beneficial
Ownership Reporting Compliance in our Proxy Statement for
the Annual Meeting of Stockholders to be held on
October 31, 2008 is incorporated herein by reference. The
information called for by Item 401 of
Regulation S-K
relating to the Executive Officers is furnished in Part I,
Item 1 of this
Form 10-K
and is also incorporated by reference in this section.
|
|
Item 11.
|
Executive
Compensation
|
The information under the caption Executive
Compensation in our 2008 Proxy Statement is incorporated
herein by reference.
72
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information under the captions Security Ownership of
Directors and Executive Officers, Security Ownership
of More than 5% Shareholders and Equity Compensation
Plan Information in our 2008 Proxy Statement is
incorporated herein by reference.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information under the captions Item 1
Election of Directors, and Certain Relationships and
Related Transactions, in our 2008 Proxy Statement is
herein incorporated by reference.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
The information under the caption Independent
Auditors Fees in our 2008 Proxy Statement is herein
incorporated by reference.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
1. Financial Statements: See Item 8.
2. Financial Statement Schedule: See
Schedule II Valuation and Qualifying Accounts.
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 Companys
unconsolidated affiliated companies, accounted for by the equity
method, have been omitted because they do not constitute
significant subsidiaries.
3. Exhibits: Exhibits listed on the accompanying Index to
Exhibits are filed or incorporated herein as part of this annual
report on
Form 10-K.
73
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Other/
|
|
|
Balance at
|
|
|
|
Beginning of
|
|
|
Charges to
|
|
|
|
|
|
Currency
|
|
|
End of
|
|
|
|
Period
|
|
|
Income
|
|
|
Write-Offs
|
|
|
Translation
|
|
|
Period
|
|
|
Receivable Reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 2008
|
|
$
|
31,064
|
|
|
$
|
69,020
|
|
|
$
|
(62,520
|
)
|
|
$
|
2,679
|
|
|
$
|
40,243
|
|
Year ended 2007
|
|
$
|
26,513
|
|
|
$
|
71,245
|
|
|
$
|
(67,422
|
)
|
|
$
|
728
|
|
|
$
|
31,064
|
|
Year ended 2006
|
|
$
|
20,293
|
|
|
$
|
69,187
|
|
|
$
|
(63,524
|
)
|
|
$
|
557
|
|
|
$
|
26,513
|
|
Inventory Reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slow and Excess
|
|
$
|
39,956
|
|
|
$
|
15,453
|
|
|
$
|
(16,946
|
)
|
|
$
|
932
|
|
|
$
|
39,395
|
|
Blocked Stock
|
|
|
835
|
|
|
|
251
|
|
|
|
|
|
|
|
(23
|
)
|
|
|
1,063
|
|
Other
|
|
|
1,936
|
|
|
|
237
|
|
|
|
|
|
|
|
171
|
|
|
|
2,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
42,727
|
|
|
$
|
15,941
|
|
|
$
|
(16,946
|
)
|
|
$
|
1,080
|
|
|
$
|
42,802
|
|
Year ended 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slow and Excess
|
|
$
|
30,309
|
|
|
$
|
23,607
|
|
|
$
|
(20,983
|
)
|
|
$
|
7,023
|
|
|
$
|
39,956
|
|
Blocked Stock
|
|
|
936
|
|
|
|
94
|
|
|
|
|
|
|
|
(195
|
)
|
|
|
835
|
|
Other
|
|
|
2,689
|
|
|
|
(299
|
)
|
|
|
|
|
|
|
(454
|
)
|
|
|
1,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
33,934
|
|
|
$
|
23,402
|
|
|
$
|
(20,983
|
)
|
|
$
|
6,374
|
|
|
$
|
42,727
|
|
Year ended 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Slow and Excess
|
|
$
|
29,511
|
|
|
$
|
18,014
|
|
|
$
|
(17,959
|
)
|
|
$
|
743
|
|
|
$
|
30,309
|
|
Blocked Stock
|
|
|
1,626
|
|
|
|
(690
|
)
|
|
|
|
|
|
|
|
|
|
|
936
|
|
Other
|
|
|
3,061
|
|
|
|
(372
|
)
|
|
|
|
|
|
|
|
|
|
|
2,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
34,198
|
|
|
$
|
16,952
|
|
|
$
|
(17,959
|
)
|
|
$
|
743
|
|
|
$
|
33,934
|
|
Deferred tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 2008
|
|
$
|
39,366
|
|
|
$
|
|
|
|
$
|
(1,077
|
)
|
|
$
|
|
|
|
$
|
38,289
|
|
Year ended 2007
|
|
$
|
33,920
|
|
|
$
|
1,308
|
|
|
$
|
|
|
|
$
|
4,138
|
|
|
$
|
39,366
|
|
Year ended 2006
|
|
$
|
28,700
|
|
|
$
|
5,345
|
|
|
$
|
(125
|
)
|
|
|
|
|
|
$
|
33,920
|
|
74
Molex
Incorporated
Index of
Exhibits
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
Description
|
|
Location
|
|
|
3
|
.1
|
|
Certificate of Incorporation (as amended and restated)
|
|
Incorporated by reference to Exhibit 3.1 to our annual report on
Form 10-K for the year ended June 30, 2000
|
|
3
|
.2
|
|
By-laws (as amended and restated)
|
|
Incorporated by reference to Exhibit 3.1(ii) to our Form 8-K
filed on November 19, 2007
|
|
4
|
|
|
Instruments defining rights of security holders
|
|
See Exhibit 3.1
|
|
10
|
.1
|
|
Foreign Service Employees Policies and Procedures
|
|
Incorporated by reference to Exhibit 10.15 to our quarterly
report on Form 10-Q for the period ended March 31, 2005
|
|
10
|
.2
|
|
Employment Offer Letter to David D. Johnson
|
|
Incorporated by reference to Exhibit 10.18 to our quarterly
report on Form 10-Q for the period ended March 31, 2005
|
|
10
|
.3
|
|
Deferred Compensation Agreement between Molex and Frederick A.
Krehbiel
|
|
Incorporated by reference to Exhibit 10.12 to our quarterly
report on Form 10-Q for the period ended March 31, 2005
|
|
10
|
.4
|
|
Deferred Compensation Agreement between Molex and John H.
Krehbiel, Jr.
|
|
Incorporated by reference to Exhibit 10.13 to our quarterly
report on Form 10-Q for the period ended March 31, 2005
|
|
10
|
.5
|
|
2005 Molex Supplemental Executive Retirement Plan
|
|
Filed herewith
|
|
10
|
.6
|
|
Molex Executive Deferred Compensation Plan
|
|
Filed herewith
|
|
10
|
.7
|
|
Summary of Non-Employee Director Compensation
|
|
Filed herewith
|
|
10
|
.8
|
|
Molex Outside Directors Deferred Compensation Plan
|
|
Incorporated by reference to Exhibit 99.1 to our Form 8-K
filed on August 1, 2006
|
|
10
|
.9
|
|
2000 Molex Long-Term Stock Plan, as amended and restated
|
|
Incorporated by reference to Appendix V to our 2007 Proxy
Statement
|
|
10
|
.10
|
|
Form of Stock Option Agreement under the 2000 Molex Long-Term
Stock Plan
|
|
Filed herewith
|
|
10
|
.11
|
|
Form of Restricted Stock Agreement under the 2000 Molex
Long-Term Stock Plan
|
|
Filed herewith
|
|
10
|
.12
|
|
2005 Molex Incentive Stock Option Plan, as amended and restated
|
|
Incorporated by reference to Appendix VI to our 2007 Proxy
Statement
|
|
10
|
.13
|
|
Form of Stock Option Agreement under the 2005 Molex Incentive
Stock Option Plan
|
|
Incorporated by reference to Exhibit 10.12 to our Form 10-K for
the period ended June 30, 2007
|
|
21
|
|
|
Subsidiaries of the Company
|
|
Filed herewith
|
|
23
|
|
|
Consent of Ernst & Young, LLP
|
|
Filed herewith
|
|
31
|
.1
|
|
Certification by the Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
31
|
.2
|
|
Certification by the Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
32
|
.1
|
|
Certification by the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Furnished herewith
|
|
32
|
.2
|
|
Certification by the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Furnished herewith
|
(All other exhibits are either inapplicable or not required.)
75
Signatures
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)
David D. Johnson
Executive Vice President, Treasurer and Chief
Financial Officer (Principal Financial Officer)
August 6, 2008
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.
|
|
|
|
|
|
|
|
|
|
August 6, 2008
|
|
Co-Chairman of the Board
|
|
/s/ FREDERICK
A. KREHBIEL
Frederick
A. Krehbiel
|
|
|
|
|
|
August 6, 2008.
|
|
Co-Chairman of the Board
|
|
/s/ JOHN
H. KREHBIEL, JR.
John
H. Krehbiel, Jr
|
|
|
|
|
|
August 6, 2008
|
|
Vice Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ MARTIN
P. SLARK
Martin
P. Slark
|
|
|
|
|
|
August 6, 2008
|
|
Executive Vice President, Treasurer and Chief Financial
Officer
(Principal Financial Officer)
|
|
/s/ DAVID
D. JOHNSON
David
D. Johnson
|
|
|
|
|
|
August 6, 2008
|
|
Vice President, Corporate Controller and Chief Accounting
Officer
(Principal Accounting Officer)
|
|
/s/ K.
TRAVIS GEORGE
K.
Travis George
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ FRED
L. KREHBIEL
Fred
L. Krehbiel
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ MICHAEL
J. BIRCK
Michael
J. Birck
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ MICHELLE
L. COLLINS
Michelle
L. Collins
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ EDGAR
D. JANNOTTA
Edgar
D. Jannotta
|
76
|
|
|
|
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ KAZUMASA
KUSAKA
Kazumasa
Kusaka
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ DAVID
L. LANDSITTEL
David
L. Landsittel
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ JOE
W. LAYMON
Joe
W. Laymon
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ DONALD
G. LUBIN
Donald
G. Lubin
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ JAMES
S. METCALF
James
S. Metcalf
|
|
|
|
|
|
August 6, 2008
|
|
Director
|
|
/s/ ROBERT
J. POTTER
Robert
J. Potter
|
77
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Molex Incorporated (MM) (NASDAQ:MOLX)
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