##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-7491
 MOLEX INCORPORATED
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    36-2369491
(I.R.S. Employer
Identification No.)
 2222 Wellington Court, Lisle, Illinois 60532
 
 þ o
  þ o o
 o þ
  Common Stock
    
    
    98,882,308Class A Common Stock
    
    
    82,514,660Class B Common Stock
    
    
    94,255




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##### 



Molex Incorporated
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of
September 30, 2007 and June 30, 2007
    
    
    3Condensed Consolidated Statements of Income for the
three months ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for the
three months ended September 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 6. Exhibits
    
    
    23SIGNATURES
    
    
    24Section 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer
  2




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##### 



PART I
 
 Item 1. Financial Statements
 Molex Incorporated
 
 Condensed Consolidated Balance Sheets
  Sept. 30,
    
    
    June 30,2007
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    395,381
    
    
    $
    378,361Marketable securities
    
    
    51,913
    
    
    
    82,549Accounts receivable, less allowances of $36,322 and $31,064, respectively
    
    
    692,523
    
    
    
    685,666Inventories
    
    
    396,093
    
    
    
    392,680Other current assets
    
    
    57,479
    
    
    
    51,571Total current assets
    
    
    1,593,389
    
    
    
    1,590,827Property, plant and equipment, net
    
    
    1,135,333
    
    
    
    1,121,369Goodwill
    
    
    365,286
    
    
    
    334,791Other assets
    
    
    292,036
    
    
    
    269,121Total assets
    
    $
    3,386,044
    
    
    $
    3,316,108LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    277,197
    
    
    $
    279,847Accrued expenses
    
    
    202,759
    
    
    
    187,890Other current liabilities
    
    
    87,150
    
    
    
    63,214Total current liabilities
    
    
    567,106
    
    
    
    530,951Other non-current liabilities
    
    
    24,993
    
    
    
    25,612Accrued pension and postretirement benefits
    
    
    111,861
    
    
    
    108,693Long-term debt
    
    
    135,581
    
    
    
    127,821Total liabilities
    
    
    839,541
    
    
    
    793,077Commitments and contingenciesStockholders equity:Common stock
    
    
    11,034
    
    
    
    11,020Paid-in capital
    
    
    529,178
    
    
    
    520,037Retained earnings
    
    
    2,682,928
    
    
    
    2,650,470Treasury stock
    
    
    (862,026
    )
    
    
    (799,894
    )Accumulated other comprehensive income
    
    
    185,389
    
    
    
    141,398Total stockholders equity
    
    
    2,546,503
    
    
    
    2,523,031Total liabilities and stockholders equity
    
    $
    3,386,044
    
    
    $
    3,316,108
  3




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##### 



Molex Incorporated
 
 Condensed Consolidated Statements of Income
   Three Months EndedSeptember 30,2007
    
    
    2006Net revenue
    
    $
    792,610
    
    
    $
    829,545Cost of sales
    
    
    556,460
    
    
    
    560,136Gross profit
    
    
    236,150
    
    
    
    269,409Selling, general and administrative
    
    
    160,635
    
    
    
    166,301Restructuring costs and asset impairments
    
    
    2,629
    
    
    
    Total operating expenses
    
    
    163,264
    
    
    
    166,301Income from operations
    
    
    72,886
    
    
    
    103,108Investment income
    
    
    698
    
    
    
    1,817Interest income, net
    
    
    2,564
    
    
    
    2,080Other income, net
    
    
    3,262
    
    
    
    3,897Income before income taxes
    
    
    76,148
    
    
    
    107,005Income taxes
    
    
    22,844
    
    
    
    30,504Net income
    
    $
    53,304
    
    
    $
    76,501Earnings per share:Basic
    
    $
    0.29
    
    
    $
    0.42Diluted
    
    $
    0.29
    
    
    $
    0.41Dividends declared per share
    
    $
    0.1125
    
    
    $
    0.0750Average common shares outstanding:Basic
    
    
    183,290
    
    
    
    183,763Diluted
    
    
    184,276
    
    
    
    185,992
  4




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##### 



Molex Incorporated
 
 Condensed Consolidated Statements of Cash Flows
   Three Months EndedSeptember 30,2007
    
    
    2006Operating activities:Net income
    
    $
    53,304
    
    
    $
    76,501Add non-cash items included in net income:Depreciation and amortization
    
    
    60,973
    
    
    
    58,122Share-based compensation
    
    
    7,591
    
    
    
    7,639Other non-cash items
    
    
    1,494
    
    
    
    3,351Changes in assets and liabilities:Accounts receivable
    
    
    12,671
    
    
    
    (28,279
    )Inventories
    
    
    7,702
    
    
    
    (32,722
    )Accounts payable
    
    
    (11,698
    )
    
    
    (9,382
    )Other current assets and liabilities
    
    
    16,510
    
    
    
    (37,232
    )Other assets and liabilities
    
    
    (3,446
    )
    
    
    (1,230
    )Cash provided from operating activities
    
    
    145,101
    
    
    
    36,768Investing activities:Capital expenditures
    
    
    (49,144
    )
    
    
    (75,566
    )Proceeds from sales of property, plant and equipment
    
    
    2,097
    
    
    
    1,559Proceeds from sales or maturities of marketable securities
    
    
    650,140
    
    
    
    3,060,202Purchases of marketable securities
    
    
    (619,473
    )
    
    
    (2,925,068
    )Acquisitions
    
    
    (42,100
    )
    
    
    (236,626
    )Other investing activities
    
    
    (1,135
    )
    
    
    2,476Cash used for investing activities
    
    
    (59,615
    )
    
    
    (173,023
    )Financing activities:Proceeds from revolving credit facility
    
    
    
    
    
    
    44,000Proceeds from issuance of long-term debt
    
    
    
    
    
    
    131,045Payments of long-term debt
    
    
    (1,231
    )
    
    
    (26,146
    )Cash dividends paid
    
    
    (13,804
    )
    
    
    (13,774
    )Exercise of stock options
    
    
    871
    
    
    
    7,362Purchase of treasury stock
    
    
    (60,546
    )
    
    
    (5,017
    )Other financing activities
    
    
    (1,571
    )
    
    
    517Cash provided by (used for) financing activities
    
    
    (76,281
    )
    
    
    137,987Effect of exchange rate changes on cash
    
    
    7,815
    
    
    
    (226
    )Net increase in cash and cash equivalents
    
    
    17,020
    
    
    
    1,506Cash and cash equivalents, beginning of period
    
    
    378,361
    
    
    
    332,815Cash and cash equivalents, end of period
    
    $
    395,381
    
    
    $
    334,321
  5




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##### 



Molex Incorporated
 
 Notes to Condensed Consolidated Financial Statements
  1. Basis of Presentation
    2. Restructuring Charges
   Trans-
    
    
    Custom &
    
    
    CorporateConnector
    
    
    portation
    
    
    Electrical
    
    
    and Other
    
    
    TotalCumulative costs at June 30, 2007
    
    $
    3,492
    
    
    $
    5,914
    
    
    $
    12,206
    
    
    $
    15,257
    
    
    $
    36,869Net restructuring expense during
the current quarter
    
    
    500
    
    
    
    528
    
    
    
    426
    
    
    
    1,175
    
    
    
    2,629Cumulative costs at Sept. 30, 2007
    
    $
    3,992
    
    
    $
    6,442
    
    
    $
    12,632
    
    
    $
    16,432
    
    
    $
    39,498
 6




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##### 



Balance at June 30, 2007
    
    $
    32,165Cash payments
    
    
    (8,059
    )Charges to expense
    
    
    3,295Non-cash related costs
    
    
    (323
    )Balance at September 30, 2007
    
    $
    27,078
  3. Acquisition
  4. Earnings Per Share
  Three Months EndedSeptember 30,2007
    
    
    2006Basic average common shares outstanding
    
    
    183,290
    
    
    
    183,763Effect of dilutive stock options
    
    
    986
    
    
    
    2,229Diluted average common shares outstanding
    
    
    184,276
    
    
    
    185,992
 5. Comprehensive Income
  Three Months EndedSeptember 30,2007
    
    
    2006Net income
    
    $
    53,304
    
    
    $
    76,501Translation adjustments
    
    
    41,495
    
    
    
    (5,228
    )Unrealized investment gain
    
    
    2,496
    
    
    
    4,143Total comprehensive income
    
    $
    97,295
    
    
    $
    75,416
 7




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##### 



6. Inventories
  Sept. 30,
    
    
    June 30,2007
    
    
    2007Raw materials
    
    $
    85,053
    
    
    $
    85,320Work in process
    
    
    107,719
    
    
    
    107,394Finished goods
    
    
    203,321
    
    
    
    199,966Total inventories
    
    $
    396,093
    
    
    $
    392,680
 7. Pensions and Other Postretirement Benefits
  Three Months EndedSeptember 30,2007
    
    
    2006Service cost
    
    $
    2,246
    
    
    $
    1,971Interest cost
    
    
    1,928
    
    
    
    1,558Expected return on plan assets
    
    
    (2,172
    )
    
    
    (1,606
    )Amortization of prior service cost
    
    
    53
    
    
    
    57Recognized actuarial losses
    
    
    85
    
    
    
    45Amortization of transition obligation
    
    
    10
    
    
    
    10Benefit cost
    
    $
    2,150
    
    
    $
    2,035
  Three Months EndedSeptember 30,2007
    
    
    2006Service cost
    
    $
    759
    
    
    $
    572Interest cost
    
    
    807
    
    
    
    645Amortization of prior service cost
    
    
    (173
    )
    
    
    (166
    )Recognized actuarial losses
    
    
    327
    
    
    
    270Benefit cost
    
    $
    1,720
    
    
    $
    1,321
 8. Long-Term Debt
  9. Income Taxes
 .
  8




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##### 



10. New Accounting Pronouncements
  11. Segments and Related Information
  
    
    The Connector segment designs, manufactures and sells products for high-speed,
high-density, high signal-integrity applications as well as fine-pitch, low-profile
connectors for the consumer and commercial markets.
    
    The Transportation segment designs, manufactures and sells products that
withstand environments such as heat, cold, dust, dirt, liquid and vibration for
automotive and other transportation applications.
    
    The Custom & Electrical segment designs, manufactures and sells 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.
  Trans-
    
    Custom &
    
    CorporateConnector
    
    portation
    
    Electrical
    
    & Other
    
    TotalFor the three months ended September 30, 2007:Revenues from external customers
    
    $
    452,254
    
    
    $
    120,053
    
    
    $
    218,203
    
    
    $
    2,100
    
    
    $
    792,610Income (loss) from operations
    
    
    75,344
    
    
    
    4,403
    
    
    
    17,058
    
    
    
    (23,919
    )
    
    
    72,886Depreciation & amortization
    
    
    38,192
    
    
    
    9,941
    
    
    
    8,943
    
    
    
    3,897
    
    
    
    60,973Capital expenditures
    
    
    29,076
    
    
    
    9,517
    
    
    
    3,187
    
    
    
    7,364
    
    
    
    49,144For the three months ended September 30, 2006:Revenues from external customers
    
    $
    496,012
    
    
    $
    105,269
    
    
    $
    222,113
    
    
    $
    6,151
    
    
    $
    829,545Income (loss) from operations
    
    
    109,358
    
    
    
    123
    
    
    
    19,747
    
    
    
    (26,120
    )
    
    
    103,108Depreciation & amortization
    
    
    34,484
    
    
    
    9,856
    
    
    
    9,611
    
    
    
    4,171
    
    
    
    58,122Capital expenditures
    
    
    43,317
    
    
    
    15,889
    
    
    
    11,517
    
    
    
    4,843
    
    
    
    75,566
  9




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##### 



Trans-
    
    Custom &
    
    CorporateConnector
    
    portation
    
    Electrical
    
    & Other
    
    TotalSeptember 30, 2007
    
    $
    1,223,292
    
    
    $
    382,102
    
    
    $
    495,141
    
    
    $
    123,414
    
    
    $
    2,223,949June 30, 2007
    
    
    1,167,163
    
    
    
    407,034
    
    
    
    454,730
    
    
    
    170,788
    
    
    
    2,199,715
  Sept. 30,
    
    
    June 30,2007
    
    
    2007Segment net assets
    
    $
    2,223,949
    
    
    $
    2,199,715Other current assets
    
    
    504,773
    
    
    
    512,481Non current assets
    
    
    657,322
    
    
    
    603,912Consolidated total assets
    
    $
    3,386,044
    
    
    $
    3,316,108
  10




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##### 



Molex Incorporated
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Overview
   
    
    The Connector segment manufactures and sells products for high-speed,
high-density, high signal-integrity applications as well as fine-pitch, low-profile
connectors for the consumer and commercial markets.
    
    The Transportation segment manufactures and sells products
that withstand
environments such as heat, cold, dust, dirt, liquid and vibration for automotive
and other transportation applications.
    
    The Custom & Electrical segment manufactures and sells 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.
   11




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##### 



Critical Accounting Policies and Estimates
   Income Taxes
  12




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##### 



Results of Operations
  Percentage
    
    
    
    
    
    
    Percentage2007
    
    
    of Revenue
    
    
    2006
    
    
    of RevenueNet revenue
    
    $
    792,610
    
    
    
    100.0
    %
    
    $
    829,545
    
    
    
    100.0
    %Cost of sales
    
    
    556,460
    
    
    
    70.2
    %
    
    
    560,136
    
    
    
    67.5
    %Gross profit
    
    
    236,150
    
    
    
    29.8
    %
    
    
    269,409
    
    
    
    32.5
    %Selling, general & administrative
    
    
    160,635
    
    
    
    20.3
    %
    
    
    166,301
    
    
    
    20.1
    %Restructuring costs and asset impairments
    
    
    2,629
    
    
    
    0.3
    %
    
    
    
    
    
    
    Income from operations
    
    
    72,886
    
    
    
    9.2
    %
    
    
    103,108
    
    
    
    12.4
    %Other income, net
    
    
    3,262
    
    
    
    0.4
    %
    
    
    3,897
    
    
    
    0.5
    %Income before income taxes
    
    
    76,148
    
    
    
    9.6
    %
    
    
    107,005
    
    
    
    12.9
    %Income taxes
    
    
    22,844
    
    
    
    2.9
    %
    
    
    30,504
    
    
    
    3.7
    %Net income
    
    $
    53,304
    
    
    
    6.7
    %
    
    $
    76,501
    
    
    
    9.2
    %
 Net Revenue
  Comparable
    
    SequentialQuarter
    
    QuarterConsumer
    
    
    (6.5
    )%
    
    
    7.7
    %Telecommunications
    
    
    (15.7
    )
    
    
    3.5Automotive
    
    
    9.9
    
    
    
    (4.8
    )Data
    
    
    (7.9
    )
    
    
    5.7Industrial
    
    
    3.2
    
    
    
    (10.3
    )
  13




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##### 



Three Months EndedSeptember 30,2007
    
    2006Americas
    
    
    29
    %
    
    
    28
    %Northern Asia
    
    
    14
    
    
    
    15Southeast Asia and Australia
    
    
    38
    
    
    
    39Europe
    
    
    19
    
    
    
    18Total
    
    
    100
    %
    
    
    100
    %
  Three Months Ended September 30, 2007Local
    
    
    Currency
    
    
    NetCurrency
    
    
    Translation
    
    
    ChangeAmericas
    
    $
    1,011
    
    
    $
    477
    
    
    $
    1,488Northern Asia
    
    
    (7,377
    )
    
    
    (3,549
    )
    
    
    (10,926
    )Southeast Asia and Australia
    
    
    (34,164
    )
    
    
    8,863
    
    
    
    (25,301
    )Europe
    
    
    (9,110
    )
    
    
    10,062
    
    
    
    952Corporate & other
    
    
    (3,148
    )
    
    
    
    
    
    
    (3,148
    )Net change
    
    $
    (52,788
    )
    
    $
    15,853
    
    
    $
    (36,935
    )
  Three MonthsEndedSept. 30, 2007Americas
    
    
    0.4
    %Northern Asia
    
    
    (6.1
    )Southern Asia and Australia
    
    
    (10.5
    )Europe
    
    
    (5.9
    )Total
    
    
    (6.4
    )
  Percentage
    
    
    
    
    
    
    Percentage2007
    
    
    of Revenue
    
    
    2006
    
    
    of RevenueConnector
    
    $
    452,254
    
    
    
    57.1
    %
    
    $
    496,012
    
    
    
    59.8
    %Transportation
    
    
    120,053
    
    
    
    15.1
    
    
    
    105,269
    
    
    
    12.7
    %Custom & Electrical
    
    
    218,203
    
    
    
    27.5
    
    
    
    222,113
    
    
    
    26.8
    %Corporate & other
    
    
    2,100
    
    
    
    0.3
    
    
    
    6,151
    
    
    
    0.7
    %Total
    
    $
    792,610
    
    
    
    100.0
    %
    
    $
    829,545
    
    
    
    100.0
    %
 Gross Profit
  2007
    
    2006Gross profit
    
    $
    236,150
    
    
    $
    269,409Gross margin
    
    
    29.8
    %
    
    
    32.5
    %
 14




---



##### 



2007Price erosion
    
    $
    (37,205
    )Currency translation
    
    
    4,859Currency transaction
    
    
    7,007
   Operating Expenses
  2007
    
    2006Selling, general and administrative
    
    $
    160,635
    
    
    $
    166,301Selling, general and administrative as a percentage of revenue
    
    
    20.3
    %
    
    
    20.1
    %Restructuring costs and asset impairments
    
    $
    2,629
    
    
    $
    
    15




---



##### 



Effective Tax Rate
 .
 Backlog
  Segments
 Connector
  Three MonthsEndedSept. 30, 2007Change in net revenue due to:Total net revenue growth (decline)
    
    $
    (43,759
    )Currency translation
    
    
    (6,713
    )Organic net revenue growth (decline)
    
    $
    (50,472
    )Organic net revenue growth (decline) percentage
    
    
    (10.2
    )%
    Three Months EndedSeptember 30,2007
    
    2006Income from operations
    
    $
    75,344
    
    
    $
    109,358Operating margin
    
    
    16.5
    %
    
    
    21.8
    %
  16




---



##### 



Transportation
  Three MonthsEndedSept. 30, 2007Change in net revenue due to:Total net revenue growth
    
    $
    14,784Currency translation
    
    
    (2,997
    )Organic net revenue growth
    
    $
    11,787Organic net revenue growth percentage
    
    
    11.2
    %
   Three Months EndedSeptember 30,2007
    
    2006Income from operations
    
    $
    4,403
    
    
    $
    123Operating margin
    
    
    3.6
    %
    
    
    0.1
    %
  Custom & Electrical
  Three MonthsEndedSept. 30, 2007Change in net revenue due to:Total net revenue growth (decline)
    
    $
    (3,910
    )Currency translation
    
    
    (6,419
    )Organic net revenue growth (decline)
    
    $
    (10,329
    )Organic net revenue growth (decline) percentage
    
    
    (4.7
    )%
  17




---



##### 



Three Months EndedSeptember 30,2007
    
    2006Income from operations
    
    $
    17,058
    
    
    $
    19,747Operating margin
    
    
    7.8
    %
    
    
    8.8
    %
  Non-GAAP Financial Measures
   Financial Condition and Liquidity
  18




---



##### 



Cash Flows
  Three Months EndedSeptember 30,2007
    
    
    2006Cash provided from operating activities
    
    $
    145,101
    
    
    $
    36,768Cash used for investing activities
    
    
    (59,615
    )
    
    
    (173,023
    )Cash (used for) provided by financing activities
    
    
    (76,281
    )
    
    
    137,987Effect of exchange rate changes on cash
    
    
    7,815
    
    
    
    (226
    )Net increase in cash
    
    $
    17,020
    
    
    $
    1,506
 Operating Activities
  Investing Activities
  Financing Activities
   Contractual Obligations and Commercial Commitments
  19




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Cautionary Statement Regarding Forward-Looking Information
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
     20




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##### 



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Internal Control Over Financial Reporting
  
 PART II
 
 Item 1. Legal Proceedings
  21




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##### 



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Numberof SharesTotal Number
    
    
    
    
    
    
    Purchased asof Shares
    
    
    Average Price
    
    
    Part of PubliclyPurchased
    
    
    Paid per Share
    
    
    Announced PlanJuly 1  July 31Common Stock
    
    
    
    
    
    $
    
    
    
    
    Class A Common Stock
    
    
    23
    
    
    $
    27.02
    
    
    
    August 1  August 31Common Stock
    
    
    300
    
    
    $
    25.77
    
    
    
    300Class A Common Stock
    
    
    812
    
    
    $
    23.81
    
    
    
    775September 1  September 30Common Stock
    
    
    200
    
    
    $
    26.28
    
    
    
    200Class A Common Stock
    
    
    1,167
    
    
    $
    25.00
    
    
    
    1,165Total
    
    
    2,502
    
    
    $
    24.83
    
    
    
    2,440
  22




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Item 6. Exhibits
 Number
    
    Description31
    
    Rule 13a-14(a)/15d-14(a) Certifications31.1 Section 302 certification by Chief Executive Officer31.2 Section 302 certification by Chief Financial Officer32
    
    Section 1350 Certifications32.1 Section 906 certification by Chief Executive Officer32.2 Section 906 certification by Chief Financial Officer
 23




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##### 



SIGNATURES
  MOLEX INCORPORATED(Registrant)Date: November 2, 2007
    
    
    
    /s/ DAVID D. JOHNSONDavid D. JohnsonExecutive Vice President, Treasurer andChief Financial Officer(Principal Financial Officer)
 24