Molex Incorporated (NASDAQ: MOLX)(NASDAQ: MOLXA), a global
electronic components company, today reported results for its
fiscal 2011 first quarter ended September 30, 2010.
Three Months Ended Sept. 30, Jun. 30, Sept.
30,
USD millions, except per share data
2010 2010
2009
Net revenue $ 897.7 $ 847.3 $ 674.0 Net income (loss) 75.1
39.8 (15.1 ) Earnings (loss) per share 0.43 0.23 (0.09 )
Revenue for the September 2010 quarter of $897.7 million
exceeded the high end of the guidance provided on August 3, 2010
and increased 6% from the June 2010 quarter and 33% from the
September 2009 quarter. The increase in local currency was 5%
compared with the June 2010 quarter and 32% compared with the prior
year. Orders for the quarter were $868.4 million, a decrease of 5%
from the June 2010 quarter but an increase of 20% from the prior
year quarter.
Net income for the September 2010 quarter was $75.1 million or
$0.43 per share, compared with net income of $39.8 million or $0.23
per share, for the June 2010 quarter. Net income for the current
quarter was impacted by investigative and legal costs related to
unauthorized activities in Japan of $5.5 million ($3.5 million
after-tax or $0.02 per share). In the June 2010 quarter, net income
included a pretax restructuring charge of $26.5 million ($24.7
million after-tax or $0.14 per share) and investigative and legal
costs related to unauthorized activities in Japan of $4.8 million
($3.0 million after-tax or $0.02 per share). The effective tax rate
for the current quarter was 32.2%, which included a charge of $2.3
million or $0.01 per share for the reversal of estimated tax
benefits resulting from the expiration of employee stock options
and vesting of restricted stock at amounts less than recorded book
value.
“Revenue and earnings per share reached all-time record levels
in the September quarter and customer demand continued to be
strong,” commented Martin P. Slark, Molex’s Chief Executive
Officer. “Our growth has been further supported by new product
launches and by our Focus Account program that continues to expand
and diversify our customer base, bringing us new opportunities for
growth. We have now exceeded pre-recession revenue and order levels
and are seeing the benefits of our new cost structure. In view of
the record revenue and profits along with a more efficient
organization resulting from the restructuring, we are increasing
our dividend by 14.8% effective with the payment in January,
2011.”
Other financial highlights for the
quarter ended September 30, 2010:
- Gross profit margin increased to 30.6%,
compared with 29.9% in the June 2010 quarter and 28.4% in the
September 2009 quarter, primarily due to higher absorption from
increased production and lower supply chain costs, more than
offsetting the impact of rising commodity costs and a weak US
dollar.
- SG&A expense decreased $1.6 million
sequentially to $157.1 million, or a record low of 17.5% of revenue
as compared with 18.7% in the June 2010 quarter and 21.6% in the
September 2009 quarter. The decrease in SG&A is the result of
our lower cost structure due to restructuring efforts and specific
cost containment actions.
- Capital expenditures were $71.2 million
or 7.9% of revenue with investments concentrated on new products
and capacity that has come on line to increase manufacturing output
commensurate with customer demand.
- Backlog was $445 million, a decrease of
$27.6 million or 6% from the June 2010 quarter as new capacity
enabled significant progress fulfilling customer backlog. The
book-to-bill ratio was 0.97.
Unauthorized Activities in
Japan
As previously disclosed, in April 2010 Molex launched an
investigation into unauthorized activities in its Japanese
subsidiary after it was learned that an individual had obtained
unauthorized loans and entered into unauthorized trading in Molex
Japan’s name. The Company retained outside legal counsel and they
retained forensic accountants, to investigate the matter and that
investigation has now been completed. On August 31, 2010, the bank
which holds the unauthorized loans filed a complaint in Tokyo
District Court requesting payment from Molex. On October 13, 2010,
Molex filed a written answer requesting the court to dismiss the
complaint. The Company intends to vigorously contest the
enforceability of the outstanding unauthorized loans and any
attempt by the lender to obtain payment from Molex.
Increase in Cash
Dividend
The Board of Directors has approved an increase in the quarterly
cash dividend to $0.175 per share, an increase of 14.8% from the
previous cash dividend of $0.1525 per share. The increase is
effective for the cash dividend payable on January 25, 2011 to
shareholders of record on December 31, 2010, for each share of
Common Stock (MOLX), Class A Common Stock (MOLXA) and Class B
Common Stock, and will continue quarterly until further action by
the Board.
Outlook
The Company has considered the modest slowing of orders in the
current quarter and the continued uncertainty in the global
electronics market in setting its guidance for the coming quarter.
In consideration of these factors and assuming constant foreign
currency rates and commodity prices, the Company estimates revenue
in a range of $850 to $890 million for the December 2010 quarter.
At this level of revenue, the Company expects earnings per share in
a range of $0.38 to $0.44, assuming an effective tax rate of
30%.
Earnings Conference Call
Information
A conference call will be held on Tuesday, October 26, 2010 at
4:00 pm central time. Please dial (888) 873-4896 to participate in
the call. International callers should dial (617) 213-8850. Please
dial in at least five minutes prior to the start of the call and
refer to participant pass code 32809915. Internet users will be
able to access the web-cast, including slide materials, live and in
replay in the “Investors” section of the Company’s website at
www.molex.com. A 48-hour telephone replay will be available at
approximately 6:00 pm central time at (888) 286-8010 or (617)
801-6888 / pass code 25960478.
Other Investor Events
December 7, 2010 – NASDAQ OMX 25th Investor Program in
London
Forward-Looking
Statements
Statements in this release that are not historical are
forward-looking and are subject to various risks and uncertainties
that could cause actual results to vary materially from those
stated. Words such as “anticipates,” “expects,” “believes,”
“intends,” “plans,” “projects,” “estimates,” “potential,” and
similar expressions are used to identify these forward-looking
statements. Forward-looking statements are based on currently
available information and include, among others, the discussion
under “Outlook.” These statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions
including those associated with the operation of our business,
including the risk that customer demand will decrease either
temporarily or permanently, whether due to the Company's actions or
the demand for the Company's products, and that the Company may not
be able to respond through cost reductions in a timely and
effective manner; the risk that the value of our inventory may
decline; price cutting, new product introductions and other actions
by our competitors; fluctuations in the costs of raw materials that
the Company is not able to pass through to customers because of
existing contracts or market factors; the availability of credit
and general market liquidity; fluctuations in currency exchange
rates; the financial condition of our customers; labor cost
increases; the challenges attendant to plant closings and
restructurings, the difficulty of commencing or increasing
production at existing facilities, and the reactions of customers,
governmental units, employees and other groups, the challenges
attendant to plant construction; and the ability to realize cost
savings from restructuring activities, the outcome of legal
proceedings and losses resulting from unauthorized activities in
Molex Japan.
Other factors, risks and uncertainties are set forth in Item 1A
“Risk Factors” of the Company’s Form 10-K for the year ended June
30, 2010 which is incorporated by reference and in other reports
that Molex files or furnishes with the Securities and Exchange
Commission. Forward-looking statements are based upon assumptions
as to future events that may not prove to be accurate. Actual
outcomes and results may differ materially from what is expressed
in these forward-looking statements. As a result, this release
speaks only as of its date and Molex disclaims any obligation to
revise these forward-looking statements or to provide any updates
regarding information contained in this release resulting from new
information, future events or otherwise.
Molex Incorporated is a 72-year-old global manufacturer of
electronic, electrical and fiber optic interconnection systems.
Based in Lisle, Illinois, USA, the Company operates 39
manufacturing locations in 16 countries. The Molex website is
www.molex.com.
Editor’s note: Molex is traded on the NASDAQ Global Select
Market (MOLX and MOLXA) in the United States and on the London
Stock Exchange. The Company’s voting common stock (MOLX) is
included in the S&P 500 Index.
Molex Incorporated
Condensed Consolidated Balance
Sheets
(in thousands)
Sept. 30, June 30, 2010 2010
(unaudited)
ASSETS
Current assets: Cash and cash equivalents $ 340,644 $ 376,352
Marketable securities 18,261 18,508 Accounts receivable, less
allowances of $49,831 and $43,650 respectively 790,101 734,932
Inventories 546,808 469,369 Deferred income taxes 113,455 112,531
Other current assets 41,963 64,129 Total current
assets 1,851,232 1,775,821 Property, plant and equipment, net
1,111,292 1,055,144 Goodwill 132,848 131,910 Non-current deferred
income taxes 90,318 94,191 Other assets 181,831
179,512 Total assets $ 3,367,521 $ 3,236,578
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities: Current portion of long-term debt and
short-term borrowings $ 116,200 $ 110,070 Accounts payable 385,271
395,474 Accrued expenses: Accrual for unauthorized activities in
Japan 175,076 165,815 Income taxes payable 37,374 21,505 Other
214,599 219,832 Total current liabilities 928,520
912,696 Other non-current liabilities 18,672 19,869 Accrued pension
and postretirement benefits 140,889 135,448 Long-term debt
171,907 183,434 Total liabilities 1,259,988
1,251,447 Commitments and contingencies Total
stockholders’ equity 2,107,533 1,985,131 Total
liabilities and stockholders’ equity $ 3,367,521 $ 3,236,578
Molex Incorporated
Condensed Consolidated Statements of
Operations
(in thousands, except per share data) (unaudited)
Three Months Ended September 30, 2010 2009 Net
revenue $ 897,672 $ 674,033 Cost of sales 622,596
482,614 Gross profit 275,076
191,419 Selling, general and administrative 157,056
145,628 Restructuring costs and asset impairments - 55,894
Unauthorized activities in Japan 5,542 5,554
Total operating expenses 162,598
207,076 Income (loss) from operations 112,478 (15,657
) Interest (expense) income, net (1,335 ) (1,000 ) Other
(expense) income (351 ) 3,484 Total other
(expense) income (1,686 ) 2,484 Income
(loss) before income taxes 110,792 (13,173 ) Income taxes
35,688 1,963 Net income (loss) $
75,104 $ (15,136 ) Earnings (loss) per share: Basic $
0.43 $ (0.09 ) Diluted $ 0.43 $ (0.09 ) Dividends declared
per share $ 0.1525 $ 0.1525 Average common shares
outstanding: Basic 174,370 173,486 Diluted 175,156 173,486
Molex Incorporated
Condensed Consolidated Statements of
Cash Flows
(in thousands) (unaudited) Three Months Ended
September 30, 2010 2009 Operating activities: Net
income (loss) $ 75,104 $ (15,136 ) Add non-cash items included in
net income (loss): Depreciation and amortization 59,108 60,589
Share-based compensation 5,149 7,092 Non-cash restructuring and
other costs, net - 13,191 Other non-cash items 8,634 6,625 Changes
in assets and liabilities: Accounts receivable (29,343 ) (72,586 )
Inventories (57,988 ) 1,482 Accounts payable (24,876 ) 32,131 Other
current assets and liabilities 27,886 39,092 Other assets and
liabilities (1,079 ) (1,862 ) Cash provided from
operating activities 62,595 70,618
Investing activities: Capital expenditures (71,192 ) (45,634
) Proceeds from sales of property, plant and equipment 643 3,192
Proceeds from sales or maturities of marketable securities 2,184
35,303 Purchases of marketable securities (1,257 ) (958 ) Other
investing activities - (355 ) Cash used for investing
activities (69,622 ) (8,452 ) Financing activities: Proceeds
from revolving credit facility and short term loans 20,000 90,000
Payments on revolving credit facility (10,000 ) (40,000 ) Proceeds
from issuance of long-term debt 797 - Payments of long-term debt
(24,840 ) (196 ) Cash dividends paid (26,565 ) (26,486 ) Exercise
of stock options 358 266 Other financing activities (967 )
(700 ) Cash (used for) provided from financing activities
(41,217 ) 22,884 Effect of exchange rate changes on cash
12,536 11,242 Net (decrease) increase
in cash and cash equivalents (35,708 ) 96,292 Cash and cash
equivalents, beginning of period 376,352
424,707 Cash and cash equivalents, end of period $ 340,644
$ 520,999
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