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Molex Reports Fourth Quarter and Full Fiscal Year Results Provides Outlook for First Quarter of Fiscal Year 2010.

LISLE, Ill. -- Molex Incorporated (NASDAQ: MOLX and MOLXA), a global electronic components company, today reported results for its 2009 fourth fiscal quarter and its full fiscal year 2009, both ended June 30, 2009.

2009 Fourth Fiscal Quarter Results

Revenue for the quarter ended June 30, 2009 of $570.6 million was at the higher end of the range estimated in the release dated April 21, 2009 and increased 12.9% from the March 2009 quarter. Revenue decreased 34.6% from the prior year June quarter and fell 31.4% in local currencies as currency translation decreased revenue by $27.9 million.

Gross profit margin was 24.1%, compared with 18.5% in the March 2009 quarter, and 31.0% in the prior year June quarter. The increase in gross profit margin from the March quarter reflects the higher revenue level and cost savings from the previously announced restructuring program. The decline in gross profit margin from the prior year June quarter reflected lower absorption of manufacturing overhead resulting from significantly lower production volume.

SG&A expense declined $2.4 million from the March quarter and $34.4 million from last year's June quarter, due to the cost reduction actions and additional savings from the restructuring program. Research and development expense was $39.6 million, compared with $34.9 million in the March 2009 quarter. The increase in research and development expense underscores the Company's commitment to new product development and supports the goal of remaining a technology leader in the industry. During fiscal 2009 the Company released 194 new products.

Net loss was $219.7 million or $1.27 per share for the quarter. Included in the quarter results was a pretax restructuring charge of $28.0 million ($21.1 million after-tax or $0.12 per share), relating to the restructuring program. We also recorded pretax intangible asset impairments and other charges of $17.6 million ($11.1 million after-tax or $0.07 per share) and a pretax and after-tax goodwill impairment charge of $171.0 million ($0.99 per share) for our Automation & Electrical business unit of our Custom & Electrical segment due to the impact of the recent downturn in the industrial market. The June quarter compares with net income of $52.6 million, or $0.29 per share in the prior year June quarter that included a pretax restructuring charge of $15.0 million, or approximately $0.06 per share after-tax. The effective tax rate for the quarter was (2.1%) due primarily to the impairment of goodwill which does not result in a tax benefit, additional tax contingency reserves and recording valuation allowances for certain jurisdictions with losses that may not generate realizable tax benefits.

Excluding the restructuring and impairment charges, the Company generated a non-GAAP pretax profit of $1.3 million for the June quarter. A complete reconciliation of this non-GAAP measure can be found on page 5.

Orders for the June quarter were $576 million, an improvement of 21% from the March 2009 quarter, but down 33% compared with the prior year June quarter. The Company's order backlog at June 30, 2009 was $253 million, compared with $436 million at June 30, 2008 and $251 million at March 31, 2009. The book-to-bill ratio was 1.01.

Capital expenditures for the June 2009 quarter were $50.3 million, compared with $31.1 million in the March 2009 quarter and $71.2 million in the prior year June quarter. Capital spending during the June quarter was primarily for equipment and production tooling related to new product development but included $14.4 million related to the restructuring program.

Cash flow from operations was $58.3 million for the June quarter and $369.9 million for the fiscal year ended June 30, 2009. Cash and marketable securities were $467.9 million at June 30, 2009, a decline of $38.0 million from March 31, 2009, though $31.1 million of cash was used to repay debt during the June 2009 quarter.

Molex Chief Executive Officer, Martin P. Slark, commented on the quarter, "We are encouraged by the improvement in business levels, especially in the month of June when both revenue and orders reached their high for the quarter. It appears that inventory reductions in our industry's supply chain are substantially complete, which should result in further improvements in our business levels during the September quarter. In addition, we have been aggressive in our response to the business environment, including reducing our headcount by 24% over the last three quarters and controlling capital expenditures for the year to the lowest level since 2003. As a result, we generated significant operating leverage during the quarter as demonstrated by the 560 basis point sequential improvement in gross profit margin."

Restructuring Update

The pretax restructuring charge of $28.0 million recorded in the June quarter was primarily related to severance costs for previously announced actions in Europe and Asia as well as an early retirement plan in Japan that was announced in April.

The cumulative pretax restructuring charges expected to be incurred through the end of fiscal year 2010 remains in a range of $240 to $250 million. Cumulative restructuring charges were $198 million through June 30, 2009, with the remainder to be recognized in fiscal 2010. The expected annual cost savings from the restructuring program remains in a range of $190 to $210 million.

Full Year Results

Revenue for the full fiscal year ended June 30, 2009 was $2.6 billion, a decline of 22.4% compared with the prior fiscal year. During the fiscal year, currency translation increased revenue by $5.2 million. Net loss of $321.3 million, or $1.84 per share included a pretax restructuring charge of $131.3 million ($99.0 million after-tax or $0.57 per share), pretax intangible asset impairments and other charges of $20.2 million ($12.8 million after-tax or $0.7 per share), and a pretax and after-tax goodwill impairment charge of $264.1 million ($1.51 per share). The effective tax rate for the full year was (0.8%), due primarily to the impairment of goodwill which does not result in a tax benefit and recording valuation allowances for certain jurisdictions with losses that may not generate realizable tax benefits.

Capital expenditures for fiscal 2009 were $177.9 million or 6.9% of revenue, and included expenditures related to the restructuring program. This compares with $234.6 million or 7.0% of revenue for the prior fiscal year. Capital expenditures for fiscal 2009 were significantly reduced to match demand and to maximize cash flow in this difficult economy.

Outlook

The improved order rate during the June quarter and through July suggests that both revenue and orders for the September quarter should be above the June quarter level. However, as future visibility remains limited, the Company considers it prudent to provide a relatively wide range for its outlook, and estimates revenue in a range of $590 to $630 million for the September quarter. At this level of revenue, the Company expects earnings per share in a range of $0.00 to $0.06, assuming an effective tax rate of 34%. Included in these estimates is a pretax restructuring charge of approximately $10 million or $0.04 per share after-tax. Due to the limited visibility caused by current economic conditions, the Company will not provide full year guidance at this time.

Earnings Webcast and August 5(th) Analysts Meeting Information

A webcast will be held at 10:00am central on Wednesday, August 5th at the start of the Molex Analysts Meeting to be held at Molex Incorporated in Lisle, Illinois. Internet users will be able to access the webcast live and in replay (audio and slides) for the portion of the meeting between 10:00-11:45am central in the "Investors" section of the Company's website at www.molex.com.

Other Investor Events

September 10, 2009 - 2009 Citi Technology Conference in New York, NY

September 14, 2009 - Deutsche Bank Technology Conference in San Francisco, CA

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," 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; the challenges attendant to plant closings and restructurings, including the difficulty of predicting plant closing and relocation costs, 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.

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, 2008 and disclosed in the Form 10-Q for the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009 which are 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 71-year-old global manufacturer of electronic, electrical and fiber optic interconnection systems. Based in Lisle, Illinois, USA, the Company operates 43 manufacturing locations in 18 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.
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Non-GAAP pretax profit is a non-GAAP financial measure. We refer to Non-GAAP pretax profit to describe earnings excluding the items referenced above. We believe that Non-GAAP pretax profit provides useful information to investors because it provides information about the estimated financial performance of Molex's ongoing business. Non-GAAP pretax profit is used by management in its financial and operational decision-making and evaluation of overall operating performance and segment level core operating performance. Non-GAAP pretax profit may be different from similar measures used by other companies.
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Publication:Business Wire
Article Type:Financial report
Geographic Code:1U3IL
Date:Aug 4, 2009
Words:1890
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