One World, One Company
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MOLEX 2007 ANNUAL REPORT One world, one company CORPORATE HEADQUARTERS 2222 Wellington Court Lisle, Illinois 60532, U.S.A. Tel: 630-969-4550 www.molex.com 2007 ANNUAL REPORT FINANCIAL HIGHLIGHTS BOARD OF DIRECTORS (in thousands, except per share data) Operations 2007 2006 Change Net revenue $ 3,265,874 $ 2,861,289 14.1% Income before income taxes 338,257 327,884 3.2% Net income 240,768 236,091 2.0% Net income as a percent of net revenue 7.4% 8.3% Return on invested capital 9.0% 10.3% Per Share Earnings per share: Basic $ 1.31 $ 1.27 3.2% Diluted 1.30 1.26 3.2% Dividends per share 0.30 0.225 — Book value (Basic average common shares) 13.72 12.30 11.5 % Average common shares: Fred A. Krehbiel(4)*, age 66, John H. Krehbiel, Jr.(4)*, Michelle L. Collins (1)(3), age Fred L. Krehbiel, age 42, has Donald G. Lubin, age 73, Robert J. Potter, Ph.D. (2)*(1), age Basic 183,961 185,521 has served as a director of age 70, has served as a 47, has served as a director served as a director of Molex has served as a director 74, has served as a director of Diluted 185,565 187,416 Molex since 1972. Mr. Krehbiel director of Molex since 1966. of Molex since 2003. Ms. since 1993. Mr. Krehbiel of Molex since 1994. Mr. Molex since 1981. Dr. Potter has been Co-Chairman of the Mr. Krehbiel has been Co- Collins is a co-founder and an has been Vice President, Lubin is a partner of the law has been President and Chief Number of registered stockholders at June 30: Board since 1999. From 1988 Chairman of the Board since Advisory Board Member of Product Development and firm Sonnenschein Nath & Executive Officer of R.J. Potter Common Stock 2,160 2,660 to 1999 he served as Vice 1999. From 1999 to 2001, he Svoboda Collins LLC, a private Commercialization for the Rosenthal LLP. He has been Company, a business consulting Chairman and Chief Executive served as Co-Chief Executive equity firm. From January Global Commercial Products a partner since 1964 and was firm, since 1990. From 1987 to Class A Common Stock 8,439 6,681 Officer, and as Chairman from Officer of Molex. From 1996 1998 to December 2006, Ms. Division since July 2007. Chairman from 1990 to 1996. 1990, Dr. Potter was President 1993 to 1999. From 1999 to to 1999, he served as Chief Collins served as Managing From 2003 to 2007, he was and Chief Executive Officer Financial Position 2001 he served as Co-Chief Operating Officer, and from Director of Svoboda Collins. President, Connector Products Kasumasa Kusaka, age 59, has of Datapoint Corporation, a Executive Officer and as Chief 1975 to 1999, he served as From 1992 to December 1997, Division (Americas). From served as a director of Molex leader in network-based data Total assets $ 3,316,108 $ 2,974,420 11.5% Executive Officer from 2004 to President of Molex. Ms. Collins was a principal at 2002 to 2003, he served as since May 2007. Mr. Kusaka processing. Dr. Potter is a Working capital 1,059,876 953,421 11.2% 2005. Mr. Krehbiel is a director William Blair & Company, LLC. President, Automotive Division has been an Executive Advisor director of Cree, Inc. and Zebra of DeVry, Inc. and Tellabs, Inc. Michael J. Birck(3)(4), age 69, Ms. Collins is a director of (Americas). Since 1988, he has to Dentsu Inc., a leading Technologies Corporation. Long-term debt 127,821 7,093 1,702.1% has served as a director CDW Corporation. served in various engineering, Japanese advertising agency, Backlog 332,479 369,966 -10.1% of Molex since 1995. He is marketing and managerial since November 2006, and a Martin P. Slark(4), age 52, Stockholders’ equity 2,523,031 2,281,869 10.6% the co-founder of Tellabs, Edgar D. Jannotta(3)*(4), age positions with Molex. Special Advisor to the Japanese has served as a director of Inc., a telecommunications 76, has served as a director Ministry of Economy, Trade Molex since 2000. Mr. Slark Long-term debt as a percent equipment company. He has of Molex since 1986. Mr. David L. Landsittel(1)*(2), age and Industry since July 2006. has been Vice Chairman and of stockholders’ equity 5.1% 0.3% been Chairman of Tellabs Jannotta has been Chairman 67, has served as a director Prior to this, Mr. Kusaka held Chief Executive Officer since since 2000. He was the of William Blair & Company of Molex since 2005. Mr. various high-level positions 2005. From 2001 to 2005, Number of employees at June 30 33,200 32,400 2.5% Chief Executive Officer of LLC, an international invest- Landsittel is an independent with the government of Japan, he served as President and Current ratio 3.0/1 2.6/1 Tellabs from 2002 to 2004, ment banking firm, since consultant to accounting firms including Vice Minister for Chief Operating Officer. and Chief Executive Officer 2001. He has served in and others on auditing and International Affairs, Head From 1999 to 2001, he served and President from 1975 to numerous capacities at financial reporting matters. He of the Agency for Natural as Executive Vice President. 2000. Mr. Birck is a director of William Blair since 1965, previously served as Chairman Resources and Energy, and Mr. Slark is a director of Hub Molex Incorporated is a 68-year-old manufacturer of electronic components, including electrical and fiber optic interconnection Illinois Tool Works Inc. including Senior Director, of the Auditing Standards Director-General of the Trade Group, Inc. Senior Partner and Managing Board of the American Policy Bureau of the Ministry of products and systems, switches, integrated products and application tooling. The company operates 59 plants in 19 countries Partner. Mr. Jannotta is a Institute of Certified Public Economy, Trade and Industry. Committees and employs 33,200 people. Molex serves original equipment manufacturers in industries that include automotive, business director of Aon Corporation, Accountants. From 1963 to 1 Audit equipment, computer, computer peripheral, consumer products, industrial equipment, premise wiring and telecommunications. Bandag, Incorporated, and 1997, Mr. Landsittel served as 2 Compensation We offer more than 100,000 products to our customers, primarily through direct salespeople and authorized distributors. The Exelon Corporation. an auditor in various positions 3 Nominating and global market for electronic connectors is estimated at $43 billion.* Molex is the world’s second-largest connector company in with Arthur Andersen LLP. Corporate Governance Mr. Landsittel is a Trustee of 4 Executive what is a fragmented but highly competitive industry. Burnham Investors Trust. * Chair * Bishop & Associates Design: Froeter Design Company, Inc. Narrative:Ted Stoik, Dovetail Communications Major Photography: James Schnepf Photography Product Photography:© Bruce Rohr Photography 2007, Molex Incorporated. All rights reserved. LETTER TO SHAREHOLDERS More than ever, it is one world. Since 2000, the number of our customers functioning globally has exploded—today, more than 70 percent come to us with projects that cross two or more regions. More than ever, we are one company. We have moved from a regional structure to a global approach in product design, development and manufacturing. We also have created a unified global sales and marketing organiza- tion to present one face to the customer. We now are better able than ever to provide any Molex product to any customer, anywhere in the world—faster, more efficiently and more profitably. $240,768 $236,091 $3,265,874 $2,861,289 A YEAR OF CHANGE For Molex, fiscal 2007 was a year in which we moved $168,096 $2,554,458 $150,116 away from our traditional geographic division-based structure. It was a year $2,249,018 $1,839,761 in which we completed and integrated the largest acquisition in our history. $83,990 Unfortunately, it also was a year in which we saw record performance in the first quarter turn to disappointing results as the year progressed. 03 04 05 06 07 03 04 05 06 07 This is our most important message to you this year: We believe we NET REVENUE created a better Molex in 2007. By making the transition from a strong global IN THOUSANDS OF DOLLARS but regionally focused company to an even stronger, increasingly stream- 32.9% lined, globally aligned player, we have improved our ability to serve our global 32.6% 32.6% 8.3% 7.5% 7.4% $240,768 $236,091 customers and deliver profitable growth over the long term. 31.1% 31.1% 5.9% $3,265,874 4.6% $2,861,289 Our new structure, which was effective July 1, 2007, is more than an $168,096 $240,768 $2,554,458 $236,091 $150,116 improvement in how we are organized and operate.$2,249,018 Without compromising $3,265,874 $1,839,761 $2,861,289 $83,990 our strong culture, we have created the framework for a much more globally $168,096 $2,554,458 $150,116 03 04$2,249,018 05 06 07 03 04 05 06 07 collaborative mindset at Molex. We have a great deal of work ahead, but we are $1,839,761 excited at the possibilities this change creates for us. $83,990 03 04 05 06 07 03 04 05 06 07 NET INCOME FINANCIAL RESULTS As many of you know, we started the year with IN0324.1% THOUSANDS04 0OF5 DOLLARS06 07 03 04 05 06 07 tremendous momentum, only to see a softening in bookings and significant 23.1% 10.3% 22.6% 9.0% 32.9% price erosion as the year progressed, particularly among our larger mobile 8.1% 32.6% 32.6% 8.3% 21.1% 6.7% 7.5% 7.4% phone, consumer and datacom customers.