Item 1 - Business
General Development of the Business
Molex Incorporated originated from an enterprise established in 1938. It was incorporated in 1972 in the state of Delaware. As used herein the term "Molex" or "Company" includes Molex Incorporated and its United States and international subsidiaries.
General Description of the Business
Molex is a leading manufacturer of electronic, electrical and fiber optic interconnection products and systems; switches; value-added assemblies; and application tooling. The Company operates 50 plants in 21 countries and employs 14,700 people worldwide. In fiscal 1999, products manufactured and sold outside the U.S. generated 66% of sales.
Molex serves original equipment manufacturers in industries that include automotive, computer, computer peripheral, business equipment, telecommunications, consumer products and premise wiring. The Company offers more than 100,000 products to customers primarily through direct sales people and authorized distributors. The worldwide market for electronic connectors, cable assemblies and backplanes was estimated at $27.1 billion. With a 6.3% market share, Molex is the second-largest connector manufacturer in the world in what is a fragmented but highly competitive industry.
Molex conducts business in one industry segment: the manufacture and sale of electrical components. The Company designs, manufactures, and distributes electrical and electronic devices such as terminals, connectors, planer cables, cable assemblies, interconnection systems, fiber optic interconnection systems, backplanes and mechanical and electronic switches. Crimping machines and terminal inserting equipment (known as "application tooling") are offered on a lease or purchase basis to the Company's customers for the purpose of applying the Company's components to the customers' products. Net revenue from application tooling constitutes approximately 1% of the Company's net revenues. Molex products are designed for use in a broad range of electrical and electronic applications as set forth below:
Percentage of Fiscal 1999 Market Net Revenue Products
Computer/business equipment/ 56% Computers, peripheral telecommunications equipment, calculators, copiers, pagers and dictation equipment
Consumer Products 19% Televisions, stereo high fidelity systems, compact disc players, video tape recorders, camcorders, electronic games, microwave ovens, refrigerators, freezers, dishwashers, disposals and air conditioners
Automotive 15% Automobiles, trucks, recreational vehicles and farm equipment
Other 10% Electronic medical equipment, vending machines, security equipment and modular office furniture and premise wiring
The Company sells its products primarily to original equipment manufacturers and their subcontractors and suppliers. The Company's customers include various multinational companies, including Apple, AT&T, Canon, Compaq, Delco, Ford, Hewlett Packard, IBM, JVC, Matsushita, Motorola, Philips, Sony, Thomson, Toshiba, and Xerox, many of which Molex serves on a global basis. Net revenues contributed by different industry groups fluctuate due to various factors including model changes, new technology, introduction of new products and composition of customers. No customer accounted for 10% or more of net revenues in fiscal years 1999, 1998 or 1997. While its customers generally make purchasing decisions on a decentralized basis, Molex believes that, due to its financial strength and product development capabilities, it has and will continue to benefit from the trend of many of its customers toward the use of fewer vendors. In the United States and Canada, the Company sells its products primarily through direct sales engineers and industrial distributors. Internationally, Molex sells primarily through its own sales organizations in Japan, Hong Kong, Singapore, Taiwan, Republic of Korea, Malaysia, Thailand, China, Australia, England, Italy, Ireland, France, Spain, Germany, the Netherlands, Switzerland, Poland, Sweden, Norway, Denmark, South Africa, India, Canada, Mexico and Brazil.
Outside of the United States and Canada, Molex also sells its products through manufacturers' representative organizations, some of which act as distributors, purchasing from the Company for resale. The manufacturers' representative organizations are granted exclusive territories and are compensated on a commission basis. These relationships are terminable by either party on short notice. All sales orders received are subject to approval by the Company.
The Company promotes its products through leading trade magazines, direct mailings, catalogs and other promotional literature. Molex is a frequent participant in trade shows and also conducts educational seminars for its customers and its manufacturers' representative organizations.
There was no significant change in the Company's suppliers, products, markets or methods of distribution during the last fiscal year.
Molex generally seeks to locate manufacturing facilities to serve local customers and currently has 50 manufacturing facilities in 21 countries on six continents.
The principal raw materials and component parts Molex purchases for the manufacture of its products include brass, copper, aluminum, steel, tin, nickel, gold, silver, nylon and other molding materials, and nuts, bolts, screws and rivets. Virtually all materials and components used in the Company's products are available from several sources. Although the availability of such materials has generally been adequate, no assurance can be given that additional cost increases or material shortages or allocations imposed by its suppliers in the future will not have a materially adverse effect on the operations of the Company.
Competition
The business in which the Company is engaged is highly competitive. Most of the Company's competitors offer products in some but not all of the industries served by the Company. Molex believes that the ability to meet customer delivery requirements and maintenance of product quality and reliability are competitive factors that are as important as product pricing. Some of the Company's competitors have been established longer and have substantially larger manufacturing, sales, research and financial resources.
Patents/Trademarks
As of June 30, 1999, the Company owned 702 United States patents and had 273 patent applications on file with the United States Patent Office. The Company also has 2,184 corresponding patents issued and 3,225 applied for in other countries as of June 30, 1999. No assurance can be given that any patents will be issued on pending or future applications. As the Company develops products for new markets and uses, it normally seeks available patent protection. The Company believes that its patents are of importance but does not consider itself materially dependent upon any single patent or group of related patents.
Backlog
The backlog of unfilled orders at June 30, 1999 was approximately $243.4 million; this compares to $231.0 million at June 30, 1998. Substantially all of these orders are scheduled for delivery within twelve months. The Company's experience is that orders are normally delivered within ninety days from acceptance.
Research and Development
Molex incurred total research and development costs of $105.9 million in 1999, $93.9 million in 1998, and $89.5 million in 1997. The Company incurred costs relating to obtaining patents of $5.2 million in 1999, $5.4 million in 1998, and $5.6 million in 1997 which are included in total research and development costs. The Company's policy is to charge these costs to operations as incurred.
The Company introduced many new products during the year; however, in the aggregate, these products did not require a material investment of assets.
Compliance
The Company believes it is in full compliance with federal, state and local regulations pertaining to environmental protection. The Company does not anticipate that the costs of compliance with such regulations will have a material effect on its capital expenditures, earnings or competitive position.
Employees
As of June 30, 1999, the Company employed 14,700 people worldwide. The Company believes its relations with its employees are favorable.
International Operations
The Company is engaged in material operations in foreign countries. Net revenue derived from international operations for the fiscal year ended June 30, 1999 was approximately 66% of consolidated net revenue.
The Company believes the international net revenue and earnings will continue to be significant. The analysis of the Company's operations by geographical area appears in footnote 9 on page 49 of the 1999 Annual Report to Shareholders and is incorporated herein by reference.
Item 2
Item 2 - Properties Molex owns and leases manufacturing, warehousing and office space in several locations around the world. The total square footage of these facilities is presented below:
Owned Leased Total 3,303,151 1,912,428 5,215,579
The leases are of varying terms with expirations ranging from fiscal 1999 through fiscal 2025. The leases in aggregate are not considered material to the financial position of the Company.
The Company's buildings, machinery and equipment have been well maintained and are adequate for its current needs.
A listing of principal manufacturing facilities is presented below:
Australia Ireland Republic of Korea Melton, Victoria Millstreet Town Ansan City (2) Shannon Brazil Singapore Manaus Italy Jurong Town Sao Paulo Padova South Africa Canada Japan Midrand Scarborough, Ontario Kagoshima Okayama Taiwan China (P.R.C.) Shioya Taipei Dongguan Shizuoka Shanghai Yamato Thailand Bangkok England Malaysia Southhampton Perai, Penang United States Auburn Hills, Michigan (2) Mexico Maumelle, Arkansas (2) France Guadalajara Manchester, New Hampshire Chateau Gontier Magdalena Orange, California Nogales (2) Pinellas Park, Florida Germany St. Petersburg, Florida Biberach Poland Downers Grove, Illinois Ettlingen Starogard Lisle, Illinois Naperville, Illinois (2) India Puerto Rico Mooresville, Indiana Bangalore Ponce Lincoln, Nebraska (3) Gandhinagar
Item 3
Item 3 - Legal Proceedings
None deemed material to the Company's financial position or consolidated results of operations.
Item 4
Item 4 - Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5
Item 5 - Market for the Registrant's Common Equity and Related Stockholder Matters
	Molex is traded on the National Market System of the NASDAQ in the United States and on the London Stock Exchange. The information set forth under the caption "Fiscal 1999, 1998, and 1997 by Quarter (Unaudited)" on page 50 of the 1999 Annual Report to Shareholders is incorporated herein by reference.
	The following table presents quarterly dividends per common share for the last two fiscal years. The fiscal 1998 dividends per share have been restated for the 25% stock dividend issued in November, 1997.
Class A Common Stock Common Stock
Fiscal 1999 Fiscal 1998 Fiscal 1999 Fiscal 1998 Quarter Ended - September 30, 0.0150 0.0120 0.0150 0.0120 December 31, 0.0150 0.0150 0.0150 0.0150 March 31, 0.0150 0.0150 0.0150 0.0150 June 30, 0.0150 0.0150 0.0150 0.0150 Total 0.0600 0.0570 0.0600 0.0570
Cash dividends on Common Shares have been paid every year since 1977.
A description of the Company's Common Stock appears in footnote 3 on page 44 of the 1999 Annual Report to Shareholders and is incorporated herein by reference.
On June 16, 1999, The Company acquired Cardell Corporation, an automotive terminal and connector manufacturer. In connection with this acquisition, the former shareholders of Cardell received 2.3 million shares of Molex Common Stock (MOLX), approximate market value $69.4 million, which were exempt from registration under Section 4(2) of the Securities Act of 1933.
Item 6
Item 6 - Selected Financial Data
The information set forth under the caption "Ten Year Financial Highlight Summary" (only the five years in the period ended June 30, 1999) on page 31 of the 1999 Annual Report to Shareholders is incorporated herein by reference.
Item 7
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The information set forth under the caption "Management's Discussion of Financial Condition and Results of Operations" on pages 32 through 36 of the 1999 Annual Report to Shareholders is incorporated herein by reference.
Item 7A
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
The information set forth under the caption "Quantitative and Qualitative Disclosures About Market Risk" on page 36 of the 1999 Annual Report to Shareholders is incorporated herein by reference.
Item 8
Item 8 - Financial Statements and Supplementary Data
The following consolidated financial statements of the Company set forth on pages 38 through 49 of the 1999 Annual Report to Shareholders and the independent auditors' report set forth on page 37 of the 1999 Annual Report to Shareholders are incorporated herein by reference:
Independent Auditors' Report
Consolidated Balance Sheets - June 30, 1999 and 1998
Consolidated Statements of Income for the years ended June 30, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Equity for the years ended June 30, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended June 30, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
The supplementary data regarding quarterly results of operations, set forth under the caption "Fiscal 1999, 1998, and 1997 by Quarter (Unaudited)" on page 50 of the 1999 Annual Report to Shareholders, is incorporated herein by reference.
The statement of changes in shares outstanding appears on Page 19 of this Form 10-K.
Item 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10
Item 10 - Directors and Executive Officers of the Registrant
The information under the caption "Election of Directors" in the Company's Proxy Statement for the annual meeting of Stockholders to be held on October 22, 1999 (the "Company's 1999 Proxy Statement") is incorporated herein by reference. The information called for by Item 401 of Regulation S-K relating to the Executive Officers is furnished below.
Executive Officers of the Registrant
The following information relates to the executive officers of the Registrant who serve at the discretion of the Board of Directors and are customarily elected for one-year terms at the Regular Meeting of the Board of Directors held immediately following the Annual Stockholders' Meeting. All of the executive officers named hold positions as officers and/or directors of one or more subsidiaries of the Registrant. For purposes of this disclosure, only the principal positions are set forth. Year Employed Positions Held with Registrant by Name During the Last Five Years (a) Age Registrant Frederick A. Krehbiel(b) Co-Chairman and Co-Chief 58 1965(c) Executive Officer (1999-); Chairman (1993-1999) and Chief Executive Officer (1988-1999).
John H. Krehbiel, Jr.(b) Co-Chairman and Co-Chief 62 1959(c) Executive Officer (1999-); President (1975-1999) and Chief Operating Officer (1996-1999).
J. Joseph King President and Chief Operating 55 1975 Officer (1999-); Executive Vice President (1996-1999); Group Vice President-International Operations (1988-1996).
Martin P. Slark Executive Vice President (1999-); 44 1976 Corporate Vice President (1990-1999) and President, Americas (1996-1999); President, U.S. (1994-1996).
Raymond C. Wieser Senior Vice President (1999-); 60 1965(c) Senior Vice President, Americas (1996-1999); Corporate Vice President and President, Commercial Division-U.S. Operations (1994-1996).
Year Employed Positions Held with Registrant by Name During the Last Five Years (a) Age Registrant
Robert B. Mahoney Corporate Vice President, 46 1995 Treasurer and Chief Financial Officer (1996-); Vice President (1994-1995) and Corporate Controller (1990-1995) of National Semiconductor Corporation.
Ronald L. Schubel Corporate Vice President (1982-) 56 1981 and President, Americas (1999-); President, Far East South (1994-1998); President, Commercial Division-U.S. Operations (1982-1994).
Werner W. Fichtner Corporate Vice President 56 1981 (1987-) and President, Europe (1981-).
Goro Tokuyama Corporate Vice President 65 1985 (1990-)and President, Far East North (1988-), and President of Molex Japan Co., Ltd. (1985-).
James E. Fleischhacker Corporate Vice President 55 1984 (1994-) and President, Far East South (1998-); President, DataComm Division-Americas (1989-1998).
Kathi M. Regas Corporate Vice President (1994-); 43 1985 Director, Human Resources U.S. Operations (1989-1995).
Louis A. Hecht Corporate Secretary (1977-) and 55 1974 General Counsel (1975-). __________________________________________________________________________ (a) All positions are with Registrant unless otherwise stated. (b) John H. Krehbiel, Jr. and Frederick A. Krehbiel (the "Krehbiel Family") are brothers. The members of the Krehbiel Family may be considered to be "control persons" of the Registrant. The other officers listed above have no relationship, family or otherwise, to the Krehbiel family, Registrant or each other. (c) Includes period employed by Registrant's predecessor.
Item 11
Item 11 - Executive Compensation
The information under the caption "Executive Compensation" in the Company's 1999 Proxy Statement is incorporated herein by reference.
Item 12
Item 12 - Security Ownership of Certain Beneficial Owners and Management
The information under the caption "Security Ownership of Management and of Certain Beneficial Owners" in the Company's 1999 Proxy Statement is incorporated herein by reference.
Item 13
Item 13 - Certain Relationships and Related Transactions
The information under the captions "Election of Directors," "Indebtedness of Management" and "Security Ownership of Management and of Certain Beneficial Owners" in the Company's 1999 Proxy Statement is herein incorporated by reference.
PART IV
Item 14
Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements contained in the Company's 1999 Annual Report to Shareholders have been incorporated by reference in Item 8.
Page(s) in Annual Report Item to Shareholders
Independent Auditors' Report 37
Consolidated Balance Sheets - June 30, 1999 and 1998 38-39
Consolidated Statements of Income - for the years ended June 30, 1999, 1998 and 1997 40
Consolidated Statements of Shareholders' Equity - for the years ended June 30, 1999, 1998 and 1997 41
Consolidated Statements of Cash Flows - for the years ended June 30, 1999, 1998 and 1997 42
Notes to Consolidated Financial Statements 43-49
Fiscal 1999, 1998 and 1997 by Quarter (Unaudited) 50
(a) 2. Financial Statement Schedule Page in the Form 10-K
Independent Auditors' Report 16
Statement of Changes in Shares Outstanding for the years ended June 30, 1999, 1998 and 1997 17
Schedule II - Valuation and Qualifying Accounts 18
All other schedules are omitted because they are inapplicable, not required under the instructions, or the information is included in the consolidated financial statements or notes thereto.
Separate financial statements for the Company's unconsolidated affiliated companies, accounted for by the equity method, have been omitted because they do not constitute significant subsidiaries.
(a) 3. Exhibits
The exhibits listed on the accompanying Index to Exhibits are filed or incorporated herein as part of this Report.
(b) Reports on Form 8-K
Molex filed no reports on Form 8-K with the Securities and Exchange Commission during the last quarter of the fiscal year ended June 30, 1999.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Molex Incorporated Lisle, Illinois
We have audited the consolidated financial statements of Molex Incorporated and its subsidiaries as of June 30, 1999 and 1998, and for each of the three years in the period ended June 30, 1999, and have issued our report thereon dated July 28, 1999; such financial statements and report are included in your 1999 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the statements of changes in shares outstanding and the financial statement schedule of Molex Incorporated and its subsdidiaries, listed in Item 14(a)2. These statements of changes in shares outstanding and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such statements of changes in shares outstanding and financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/S/DELOITTE & TOUCHE LLP
Chicago, Illinois July 28, 1999
MOLEX INCORPORATED EXHIBIT INDEX Exhibit Number Exhibit 3 3.1 Certificate of Incorporation 			(as amended)(incorporated by reference to 1998 			Form 10-K, Exhibit 3.1)
			3.2 By-Laws (as amended)
4 Instruments defining rights of 			security holders including 			indentures. See Exhibit 3.1
10 Material Contracts 			10.1 The Molex Deferred Compensation 				Plan (incorporated by reference 				to 1984 Form 10-K, Exhibit 10.6)
			10.2 	The 1990 Molex Incorporated 				 Executive Stock Bonus Plan 				 (as amended)(incorporated by reference 				to 1998 Form 10-K, Exhibit 10.2)
			10.3	 The 1990 Molex Incorporated 				Stock Option Plan (as amended) (incorporated by reference 				to 1998 Form 10-K, Exhibit 10.3)
			10.4 	The 1991 Molex Incorporated Incentive 				Stock Option Plan (as amended)
10.5 The 1998 Molex Incorporated 				Stock Option Plan
13 Molex Incorporated Annual report to 			Shareholders for the year ended 			June 30, 1999. (Such Report, except 			to the extent incorporated herein by 			reference, is being furnished for the 			information of the Securities and 			Exchange Commission only and is not 			to be deemed filed as a part of this 			annual report on Form 10-K)
Exhibit Number Exhibit
22 Subsidiaries of registrant
24 Independent Auditors' Consent
27 Financial Data Schedule
(All other exhibits are either inapplicable or not required)
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report to be signed on its behalf by the undersigned, there unto duly authorized.
MOLEX INCORPORATED ------------------------- (Company)
September 22, 1999 /S/ ROBERT B. MAHONEY By: Robert B. Mahoney Corporate Vice President, Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
September 22, 1999 /S/ F. A. KREHBIEL F. A. Krehbiel Co-Chairman of the Board and Co-Chief Executive Officer
September 22, 1999 /S/ J. H. KREHBIEL, JR. J. H. Krehbiel, Jr. Co-Chairman of the Board and Co-Chief Executive Officer
September 22, 1999 /S/ J. JOSEPH KING J. Joseph King President and Chief Operating Officer Director
September 22, 1999 /S/ ROBERT B. MAHONEY Robert B. Mahoney Corporate Vice President, Treasurer and Chief Financial Officer
September 22, 1999 /S/ F. L. KREHBIEL F. L. Krehbiel Director
September 22, 1999 /S/ MICHAEL J. BIRCK Michael J. Birck Director
September 22, 1999 /S/ DOUGLAS K. CARNAHAN Douglas K. Carnahan Director
September 22, 1999 /S/ EDGAR D. JANNOTTA Edgar D. Jannotta Director
September 22, 1999 /S/ DONALD G. LUBIN Donald G. Lubin Director
September 22, 1999 /S/ MASAHISA NAITOH Masahisa Naitoh Director
September 22, 1999 /S/ DR. ROBERT J. POTTER Dr. Robert J. Potter Director