A World of Innovation Financial Highlights
Total Page：16
File Type：pdf, Size：1020Kb
ANNUAL REPORT 2009 A WORLD OF INNOVATION FINANCIAL HIGHLIGHTS ($ in thousands, except per share data) Operations 2009 2008 Change Net revenue $ 2,581,841 $ 3,328,347 (22.4)% Income (loss) before income taxes (318,888) 338,648 N/M Net (loss) income (321,287) 215,437 N/M Net (loss) income as a percent of net revenue (12.4)% 6.5% Return on invested capital (12.4)% 7.4% Per Share Earnings (loss) per share: Basic $ (1.84) $ 1.19 N/M Diluted (1.84) 1.19 N/M Dividends per share 0.61 0.45 35.6% Book value (Basic average common shares) 11.81 14.83 (20.4)% Average common shares: Basic 174,598 180,474 Diluted 174,598 181,395 Number of registered stockholders at June 30: Common Stock 2,381 2,460 Class A Common Stock 8,302 7,527 Financial Position Total assets $ 2,942,157 $ 3,599,537 (18.3)% Working capital 733,421 1,133,522 (35.3)% Total debt 254,651 213,020 19.5% Backlog 253,029 436,487 (42.0)% Stockholders’ equity 2,062,564 2,676,846 (22.9)% Total debt as a percent of stockholders’ equity 12.3% 8.0% Number of employees at June 30 25,240 32,160 (21.5)% Current ratio 2.0/1 2.7/1 Molex Incorporated is a 71-year-old manufacturer of electronic components, including electrical and fi ber optic interconnection products and systems, switches, integrated products and application tooling. The company operates 43 manufacturing locations in 18 countries and employs over 25,000 people. Molex serves original equipment manufacturers in industries that include automotive, business equipment, computer, computer peripherals, consumer products, industrial equipment, premise wiring and telecommunications. We off er more than 100,000 products to our customers, primarily through direct salespeople and authorized distributors. N/M – not meaningful DEAR SHAREHOLDERS In fiscal 2009, Molex moved steadily forward in an environment of global economic challenge. As we accelerated our cost reduction initiatives, we continued our investments to develop a world of innovation— understanding where the world is going and creating technology that helps our customers get there first. DRAMATIC DOWNTURN, RAPID RESPONSE As you all know, fiscal 2009 was even more challenging than the previous year for Molex and a large majority of companies worldwide. A look at our financial highlights (opposite page) shows how Molex was impacted: revenue down by 22 percent year over year. REVENUE SG&A CAPITAL EXPENDITURES ($ in millions) ($ in millions) ($ in millions) $665 $3,328 $658 $3,266 $607 $297 $2,861 $587 $576 $277 $2,582 $2,554 $231 $235 $178 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 The good news is, we took quick and decisive action to mitigate the effects without compromising our ability to grow and lead in the future. As the global economy further deteriorated during the first quarter of our fiscal year, we moved to reduce headcount, lower employee benefits costs and adjust employee work schedules in key plants to reflect the dramatic decline in orders. We accelerated reductions in capital spending and selling, general and administrative (SG&A) costs, cutting the latter by $78 million year over year. We further streamlined our structure in fiscal 2009 by consolidating the five Molex product divisions into three, creating significant new efficiencies. With fewer redundancies and improved processes, this division structure contributed significantly to our ability to respond to rapid change in the global marketplace. The overall result of our efforts is a significantly lower break- even point—a benefit in tough times that becomes a real competitive advantage once the global economy rebounds. Another positive: Our bookings have steadily recovered since our low point at mid-year. After an almost 50 percent drop between September and December, 2008, we have seen incoming orders increase, month by month, to the point where bookings in the fourth quarter were up 21 percent from the March quarter. CONTINUED INNOVATION EXCELLENCE AND LEADERSHIP As we aggressively cut costs, we continued to focus on product innovation. In fiscal 2009, we released more than 190 innovative new products while maintaining appropriate investments in research and development for the future. Using proprietary Molex technology, we launched a new Solid State Lighting (SSL) business unit and introduced a new series of Molex SSL products that represent a fully integrated solution to advance LED technology applications. Called the Transcend™ Lighting Series, the new Molex line features small, interchangeable modules designed to address key barriers to wider LED technology adoption, supporting precise heat and current management and superior illumination. Also in fiscal 2009, we introduced S’NEXT, interconnect products for the next generation of high-definition audio/video technology. During the year, other new Molex products supported advances in network analytics/diagnostics for factory automation, proximity sensors for automotive safety, and rooftop photovoltaic panel systems. INVESTING TO DRIVE FUTURE GROWTH We continued to lay the groundwork for future Molex growth with two niche acquisitions in fiscal 2009. In the first transaction, our Micro Products Division acquired Fujigami Micro, which strengthens our capabilities with its leadership in the development of custom electro-mechanical components of the smallest size. Markets include hard disc drive components, semiconductor leadframes and other electronic components. The second acquisition completed during the year was our purchase of key assets of the Motorola Antenna/EMC Measurement Lab in Aalborg, Denmark. This acquisition brings industry-leading RF antenna research and EMC testing capabilities to further advance Molex antenna technologies for wireless applications. The Aalborg facility supports the continued expansion of Molex’s antenna business, which represents a significant growth opportunity as wireless technologies become the standard in an increasing number of customer applications. MEETING THE CHALLENGES AHEAD: FISCAL 2010 PRIORITIES Our first priority for fiscal 2010 is to complete the restructuring program that began in June 2007 and was significantly increased in early 2009 as a result of the sudden economic downturn. We will meet our commitment to finish implementation of the program by the end of fiscal 2010. We have completed the announcement of all major actions and are now highly focused on executing the remaining restructuring projects on time to achieve the expected cost benefits. We have announced the complete closure of 14 facilities—two in the United States, eight in Europe and four in Asia, including two in Japan. In addition, we have plans to relocate a significant level of production from high-cost countries to low-cost regions for additional cost savings and to centralize production for more efficient operations. Also as part of the restructuring program, we are well along in planned capital expenditure, SG&A and headcount reductions. In total, we expect to incur restructuring charges of $245 million to achieve an annual run rate cost reduction of $200 million. With the closing of 14 plants across our global footprint, we are moving capacity and tooling to a smaller number of larger, fully integrated facilities—we’re reducing bricks and mortar, but we’re not compromising our capacity to grow with the return of robust demand in our markets. Our new plant in Chengdu, China, is an excellent example of this strategy. It’s the largest manufacturing facility Molex has ever built, and its location in western China positions us for profitable long-term growth in Asia. Our balance sheet is still very strong. In the current credit environment, we will continue to maintain that strength—and with the revolving credit facility we put in place during the past fiscal year, we have an even stronger platform to leverage for future acquisitions and other growth opportunities. A BRIGHT LONG-TERM FUTURE The electronics market is going to grow. Electronic technology is central to virtually every major sector in the global economy, and even in the current environment, it’s advancing at an amazing pace. Devices are becoming more and more complex at the same time they become smaller and smaller. Analog is transitioning to digital. Communications are becoming more mobile every day, and data is increasingly accessible from anywhere. Sustainability is no longer an option—it’s mandatory, in products and systems, as well as in the materials—and processes—used to make them. All of these market forces play right into Molex strengths and strategies. We intend to grow by taking share in existing markets while continuously developing new ones. We are pursuing traditional organic growth with an emphasis on building relationships with a larger number of smaller companies, in addition to large global accounts. There’s strong growth potential with these smaller companies, and the expanded customer relationships mean a more stable revenue base. At the same time, we will continue to increase our focus on markets where we have a small share with a lot of opportunity to grow, such as military, medical and industrial; build our technology leadership with internally financed new initiatives such as the SSL series and S’NEXT; and grow through acquisition where we can acquire new technologies or market access. REVENUE BY MARKET Fiscal 2009 3% Medical/Other 14% Automotive Telecommunications 26% 15% Industrial Data Products 21% Consumer 21% Though it is difficult to forecast when the global economy will recover, Molex traditionally does well coming out of economic downturns. We have always moved aggressively to improve operations while leveraging our financial strength to invest in new technologies and long-term growth. We have always focused beyond today’s technologies—our work is to help our customers create the future. These are exactly the things we are doing now. We are leaner and more aligned globally than we have ever been.