2005 - Molex

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TABLE OF CONTENTS Page Part I Item 1. Business .................................................................................................................................................. 3 Item 2. Properties..............................................................................................................................................12 Item 3. Legal Proceedings................................................................................................................................12 Item 4. Submission of Matters to a Vote of Security Holders ..................................................................13 Part II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities........................................................................13 Item 6. Selected Financial Data ......................................................................................................................15 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.........................................................................................................................16 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....................................................33 Item 8. Financial Statements and Supplementary Data..............................................................................35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................................................................................................ 66 Item 9A. Controls and Procedures....................................................................................................................66 Item 9B. Other Information ..............................................................................................................................68 Part III Item 10. Directors and Executive Officers of the Registrant......................................................................68 Item 11. Executive Compensation...................................................................................................................68 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............................................................................................................. 68 Item 13. Certain Relationships and Related Transactions............................................................................68 Item 14. Principal Accountant Fees and Services..........................................................................................68 Part IV Item 15. Exhibits and Financial Statement Schedules ..................................................................................69 Schedule II - Valuation and Qualifying Accounts .........................................................................70 Index to Exhibits.................................................................................................................................71 Signatures..............................................................................................................................................73 Molex Web Site Molex Incorporated makes available through its Web site at www.molex.com its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Information relating to corporate governance at Molex, including its Code of Conduct, information concerning executive officers, directors and Board committees (including committee charters), and transactions in Molex securities by directors and officers, is available on or through the Company’s Web site at www.molex.com under the “Investors” caption. Molex is not including the information on its Web site as a part of, or incorporating it by reference into, this annual report on Form 10-K. 2
Item 1. Business 3 PART I Molex was incorporated in the state of Delaware in 1972 and originated from an enterprise established in 1938. As used herein the terms “Molex” or “Company” include Molex Incorporated and its subsidiaries. Molex is the world’s second-largest manufacturer of electronic connectors in terms of revenue. Net revenue was $2.55 billion for the fiscal year ended June 30, 2005. The Company operated 58 manufacturing plants, located in 19 countries on five continents, and employed 27,525 people worldwide as of June 30, 2005. Molex’s core business is the manufacture and sale of electromechanical components. Molex’s products are used by a large number of leading original equipment manufacturers (OEMs) throughout the world. The Company designs, manufactures and sells more than 100,000 products, including terminals, connectors, planar cables, cable assemblies, interconnection systems, backplanes, integrated products, and mechanical and electronic switches. Molex also provides manufacturing services to integrate specific components into a customer’s product. The Connector Industry The global connector industry is highly competitive and fragmented and is estimated to represent approximately $33.7 billion in revenue for the year ended June 30, 2005. The industry has grown at a compounded annual rate of 5-6% over the past 24 years and is expected to grow at a rate of 6-7% in calendar year 2005. Molex currently believes that its market share is approximately 8% of the worldwide market for electronic connectors. The connector industry is characterized by rapid advances in technology and new product development. These advances have been substantially driven by the increased functionality of applications in which our products are used. Although many of the products in the connector market are mature products, some with 25-30 year life spans, there is also a constant demand for new product solutions. Industry trends of particular relevance for the Company include: • Globalization. Synergistic opportunities exist for the industry to design, manufacture and sell electronic products in different countries around the world in an efficient and seamless process. For example, electronic products may be designed in Japan, manufactured in China, and sold in the United States. • Convergence of markets. Traditionally separate markets such as consumer electronics, data products and telecommunications are converging, resulting in single devices offering broad-based functionality. • Increasing electronics content. Consumer demand for advanced product features, convenience and connectivity is driving connector growth at rates faster than the growth rates of the underlying electronics markets. • Product size reduction. High-density, micro-miniature technologies are expanding to many markets leading to smaller devices and greater mobility. • Consolidating supply base. Generally, global OEMs are consolidating their supply chain by selecting global companies possessing broad product lines for the majority of their connector requirements. • Price erosion. As unit volumes grow, production experience is accumulated and costs decrease, and as a result, prices decline.
Page 3 and 4: Molex 2005 Annual Report T O O U R
Page 5 and 6: Sales by Industry 27% Telecommunica
Page 7 and 8: these reasons, over the past few ye
Page 9 and 10: 29 Development Groups Design Center
Page 11 and 12: that keep pace with the ongoing mig
Page 13 and 14: Sales by Region Americas 27.5% Far
Page 15 and 16: L E A D E R S H I P R O U N D T A B
Page 17 and 18: Molex Molex 2005 2005 Annual Annual
Page 19 and 20: Molex 2005 Annual Report L E A D E
Page 27: Fred A. Krehbiel (4)* is Co-Chairma
Page 30 and 31: Molex 2005 Annual Report T R A N S
Page 44 and 45: Markets and Products below: The app
Page 46 and 47: The Company believes that its succe
Page 48 and 49: the technology industry to help dri
Page 50 and 51: Many of Molex’s worldwide manufac
Page 52 and 53: Item 2. Properties Molex owns and l
Page 54 and 55: The following table contains inform
Page 56 and 57: Item 7. Management’s Discussion a
Page 58 and 59: The Company anticipates that its gr
Page 60 and 61: Pension Plans The costs and obligat
Page 62 and 63: Results of Operations Year Ended Ju
Page 64 and 65: opportunities with its Molex counte
Page 66 and 67: Goodwill and Other Asset Impairment
Page 68 and 69: Far East South Region - Singapore,
Page 70 and 71: Financing Activities Cash was used
Page 72 and 73: existing and future competitors, wh
Page 74 and 75: offsets, as compared with offsets t
Page 76 and 77: Molex Incorporated Consolidated Bal
Page 78 and 79: Molex Incorporated Consolidated Sta
Page 80 and 81: 1. Organization and Basis of Presen
Page 82 and 83: Revenue Recognition Revenue is real
Page 84 and 85: fiscal 2005 or 2006. The Company di
Page 86 and 87: Year ended June 30, 2005 The aggreg
Page 88 and 89: Year ended June 30, 2003 As a resul
Page 90 and 91: sold into the structured cabling ma
Page 92 and 93:
The components of net deferred tax
Page 94 and 95:
Benefit Obligations and Plan Assets
Page 96 and 97:
The following provides a reconcilia
Page 98 and 99:
certain events. Upon such conversio
Page 100 and 101:
The option price per share for cert
Page 102 and 103:
Corporate and Other assets include
Page 104 and 105:
REPORT OF INDEPENDENT REGISTERED PU
Page 106 and 107:
Item 9. Changes in and Disagreement
Page 108 and 109:
absolute assurance that misstatemen
Page 110 and 111:
Molex Incorporated Schedule II - Va
Page 112 and 113:
10.14 Molex Cash Merit Bonus Plan (
Page 114 and 115:
74 Exhibit 31.1 CERTIFICATION PURSU
Page 116:
CERTIFICATION PURSUANT TO 18 U.S.C.
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2005 - Molex

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