PART II Current assets: Cash and cash equivalents Marketable securities Accounts receivable, less allowances of $39,970 and $42,297, respectively Inventories Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Goodwill Non-current deferred income taxes Other assets Total assets Current liabilities: Current portion of long-term debt and short-term borrowings Accounts payable Accrued expenses: Accrual for unauthorized activities in Japan Income taxes payable Other Total current liabilities Other non-current liabilities Accrued pension and postretirement benefits Long-term debt Total liabilities Commitments and contingencies Stockholders’ equity: Common stock Additional paid-in capital Retained earnings Treasury stock Accumulated other comprehensive income Total stockholders’ equity Total liabilities and stockholders’ equity Condensed Consolidated Financial Statements. Net revenue Cost of sales Gross profit Selling, general and administrative Unauthorized activities in Japan Total operating expenses Income from operations Interest (expense) income, net Other income Total other income (expense), net Income before income taxes Income taxes Net income Earnings per share: Basic Diluted Dividends declared per share Average common shares outstanding: Basic Diluted Condensed Consolidated Financial Statements. Operating activities: Net income Add non-cash items included in net income: Depreciation and amortization Share-based compensation Other non-cash items Changes in assets and liabilities: Accounts receivable Inventories Accounts payable Other current assets and liabilities Other assets and liabilities Cash provided from operating activities Investing activities: Capital expenditures Acquisitions Proceeds from sales of property, plant and equipment Proceeds from sales or maturities of marketable securities Purchases of marketable securities Other investing activities Cash used for investing activities Financing activities: Proceeds from revolving credit facility Payments on revolving credit facility Proceeds from short-term loans and current portion of long-term debt Payments on short-term loans and current portion of long-term debt Proceeds from issuance of long-term debt Payments of long-term debt Cash dividends paid Exercise of stock options Other financing activities Cash used for financing activities Effect of exchange rate changes on cash Net increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Condensed Consolidated Financial Statements. Molex Incorporated (together with its subsidiaries, except where the context otherwise requires, “we,” “us,” and “our”) manufactures electronic components, including electrical and fiber optic interconnection products and systems, switches and integrated products in 2012 As previously reported in our Annual Report on Form 10-K for the year ended June 30, activities. Balance at June 30, 2011 Cash payments Non-cash related costs Balance at September 30, 2011 Cash payments Non-cash related costs Balance at December 31, 2011 Cash payments Non-cash related costs Balance at March 31, 2012 During the second quarter of fiscal Net income Basic average common shares outstanding Effect of dilutive stock options Diluted weighted average common shares outstanding Earnings per share: Basic Diluted Net income Translation adjustments Pension liability remeasurement Unrealized investment gain (loss) Total comprehensive income Raw materials Work in process Finished goods Total inventories Service cost Interest cost Expected return on plan assets Amortization of prior service cost Recognized actuarial losses Amortization of transition obligation Benefit cost Service cost Interest cost Amortization of prior service cost Recognized actuarial losses Benefit cost Long-term debt: Private Placement U.S. Credit Facility Unsecured bonds and term loans Other debt Total long-term debt Less current portion of long-term debt: Unsecured bonds and term loans Other debt Long-term debt, less current portion Short-term borrowings Overdraft loan Other short-term borrowings Total short-term borrowings Total debt Year one Year two Year three Year four Year five Thereafter Total long-term debt obligations The effective tax rate was The effective tax rate for the The following table summarizes our financial assets and liabilities as of Available for sale and trading securities Derivative financial instruments, net 2012 less Unrealized gain (loss) recognized in AOCI Gain reclassified into earnings months our business could be materially and adversely affected. 2012, one plaintiff withdrew his claims against Molex. On The liquidator alleged that Molex acted as de facto manager of MAS and mismanaged MAS. Although the liabilities are currently estimated at settlement. The Custom & Electrical segment designs and manufactures integrated and customizable electronic components For the three months ended: March 31, 2012: Revenues from external customers Income (loss) from operations Depreciation & amortization Capital expenditures March 31, 2011: Revenues from external customers Income (loss) from operations Depreciation & amortization Capital expenditures For the nine months ended: March 31, 2012: Revenues from external customers Income (loss) from operations Depreciation & amortization Capital expenditures March 31, 2011: Revenues from external customers Income (loss) from operations Depreciation & amortization Capital expenditures For the three and nine months ended March 31, 2013, operating results for Corporate & Other include a net loss of March 31, 2012 June 30, 2011 Segment assets Other current assets Other non-current assets Consolidated total assets Our core business is the manufacture and sale of The Custom & Electrical segment designs and manufactures integrated and customizable electronic components across all industries that provide original, differentiated solutions to customer requirements. It also leverages expertise in the use of signal, power and interface technology in industrial automation and other harsh environment applications. fiscal 2013. activities. See Note Net revenue Cost of sales Gross profit Selling, general & administrative Unauthorized activities in Japan Income from operations Other income (expense), net Income before income taxes Income taxes Net income Net revenue Cost of sales Gross profit Selling, general & administrative Unauthorized activities in Japan Income from operations Other (expense) income, net Income before income taxes Income taxes Net income Telecommunications Infotech Consumer Industrial Automotive desktop computers. efficiency, and due to higher automobile production, particularly in North America. Americas Asia Pacific Europe Total Net revenue for prior year period Components of net revenue change: Organic net revenue change Currency translation Acquisitions Total change in net revenue from prior year period Net revenue for current year period Organic net revenue change as a percentage of net revenue for prior year period mobile devices market and continued growth in the 2012. Americas Asia Pacific Europe Corporate & other Net change Americas Asia Pacific Europe Total Gross profit Gross margin commodity hedging. Copper (price per pound) Gold (price per troy ounce) Price erosion Currency translation Currency transaction prior periods to provide more accurate trend information. Selling, general and administrative Unauthorized activities in Japan Selling, general and administrative as a percentage of revenue periods, primarily due to the increase in net revenue and investments in research and development to support new product introductions. We also increased investments in business development to drive future growth. Selling, general and administrative expenses losses as net interest expense and investment income principally offset. Foreign currency losses during the 2013 2012 period primarily due to new product introductions in the mobile devices market earlier in fiscal 2013. The following table sets forth information on net revenue by segment as of the three months ended March 31 (in thousands): Connector Custom & Electrical Corporate & Other Total Connector Custom & Electrical Corporate & Other Total Net revenue for prior year period Components of net revenue change: Organic net revenue change Currency translation Total change in net revenue from prior year period Net revenue for current year period Organic net revenue change as a percentage of net revenue for prior year period 2013 Income from operations Operating margin third quarter of fiscal 2011. Net revenue for prior year period Components of net revenue change: Organic net revenue change Currency translation Acquisitions Total change in net revenue from prior year period Net revenue for current year period Organic net revenue change as a percentage of net revenue for prior year period 2012. Income from operations Operating margin fixed costs from lower demand. Because organic net revenue growth calculations may vary among other companies, organic net revenue growth amounts presented may not be comparable with similar measures of other companies. As of 2012 Cash provided from operating activities Cash used for investing activities Cash used for financing activities Effect of exchange rate changes on cash Net increase in cash and cash equivalents Condensed Consolidated Financial Statements. Capital expenditures net proceeds on debt partially offset by an increase in dividends paid. fiscal year. 2012 2012 year period. 2013 January 1 – January 31 Common Stock Class A Common Stock February 1 – February 29 Common Stock Class A Common Stock March 1 – March 31 Common Stock Class A Common Stock Total Number Description Date: /S/ DAVID D. JOHNSONxý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 20122013¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 36-2369491 xþ No ¨oxþ No ¨oLarge accelerated filer xþAccelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ xþ19, 2012,18, 2013, the following numbers of shares of the Company’s common stock were outstanding:Common Stock95,560,076Class A Common Stock80,704,172Class B Common Stock94,255Molex IncorporatedPART I – FINANCIAL INFORMATIONCommon Stock 95,560,076 Class A Common Stock 82,043,788 Class B Common Stock 94,255 Page PART I — FINANCIAL INFORMATION 3 4 5 6 Management’s Discussion and Analysis of Financial Condition and Results of Operations 15 Quantitative and Qualitative Disclosures About Market Risk 27 Controls and Procedures 28 –— OTHER INFORMATIONItem 1.Legal Proceedings29 29 Item 6.Exhibits30 31 Section 302 Certification of Chief Executive Officer Mar. 31,
2012 June 30,
2011 (Unaudited) ASSETS $ 608,809 $ 532,599 13,654 13,947 724,141 811,449 546,909 535,953 125,807 129,158 39,454 32,239 2,058,774 2,055,345 1,126,467 1,168,448 161,143 149,452 41,434 38,178 175,795 186,429 $ 3,563,613 $ 3,597,852 LIABILITIES AND STOCKHOLDERS’ EQUITY $ 100,976 $ 119,764 314,999 359,812 177,338 182,460 49,737 2,383 210,115 217,628 853,165 882,047 20,870 23,879 91,284 100,866 155,128 222,794 1,120,447 1,229,586 11,351 11,285 703,781 674,494 2,511,045 2,408,083 (1,112,567 ) (1,106,039 ) 329,556 380,443 2,443,166 2,368,266 $ 3,563,613 $ 3,597,852 March 31,
2013 June 30,
2012 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 702,786 $ 637,417 Marketable securities 10,145 14,830 Accounts receivable, less allowances of $38,530 and $37,876, respectively 657,447 751,279 Inventories 544,633 531,825 Income taxes receivable 18,628 — Deferred income taxes 38,601 110,789 Other current assets 30,015 33,098 Total current assets 2,002,255 2,079,238 Property, plant and equipment, net 1,135,637 1,150,549 Goodwill 191,551 160,986 Non-current deferred income taxes 49,095 50,038 Other assets 183,288 170,692 Total assets $ 3,561,826 $ 3,611,503 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of short-term borrowings and long-term debt $ 88,725 $ 104,933 Accounts payable 301,536 355,491 Accrued expenses: Accrued liability for unauthorized activities in Japan — 184,177 Income taxes payable — 35,360 Other 225,592 212,035 Total current liabilities 615,853 891,996 Other non-current liabilities 17,381 18,174 Accrued pension and other postretirement benefits 92,020 115,176 Long-term debt 315,000 150,032 Total liabilities 1,040,254 1,175,378 Commitments and contingencies Stockholders’ equity: Common stock 11,434 11,361 Paid-in capital 742,008 711,394 Retained earnings 2,609,443 2,539,931 Treasury stock (1,119,249 ) (1,112,956 ) Accumulated other comprehensive income 277,936 286,395 Total stockholders’ equity 2,521,572 2,436,125 Total liabilities and stockholders’ equity $ 3,561,826 $ 3,611,503 notesNotes to condensed consolidated financial statements. Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 837,080 $ 874,531 $ 2,630,663 $ 2,673,668 581,904 613,917 1,819,822 1,866,933 255,176 260,614 810,841 806,735 163,853 159,448 496,151 475,548 2,521 2,855 8,166 11,110 166,374 162,303 504,317 486,658 88,802 98,311 306,524 320,077 (1,212 ) (1,726 ) (4,697 ) (4,849 ) 1,561 1,325 3,319 5,766 349 (401 ) (1,378 ) 917 89,151 97,910 305,146 320,994 24,268 29,765 95,730 99,462 $ 64,883 $ 68,145 $ 209,416 $ 221,532 $ 0.37 $ 0.39 $ 1.19 $ 1.27 $ 0.36 $ 0.39 $ 1.18 $ 1.26 $ 0.2000 $ 0.1750 $ 0.6000 $ 0.5025 176,164 174,957 175,830 174,666 178,134 176,449 177,152 175,678 Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Net revenue $ 852,858 $ 837,080 $ 2,737,514 $ 2,630,663 Cost of sales 604,326 581,904 1,931,395 1,819,822 Gross profit 248,532 255,176 806,119 810,841 Selling, general and administrative 167,384 163,853 511,533 496,151 Unauthorized activities in Japan 21,210 2,521 25,398 8,166 Total operating expenses 188,594 166,374 536,931 504,317 Income from operations 59,938 88,802 269,188 306,524 Interest (expense) income, net (1,582 ) (1,212 ) (3,525 ) (4,697 ) Other income (expense) 265 1,561 (1,690 ) 3,319 Total other (expense) income, net (1,317 ) 349 (5,215 ) (1,378 ) Income before income taxes 58,621 89,151 263,973 305,146 Income taxes 13,854 24,268 77,498 95,730 Net income $ 44,767 $ 64,883 $ 186,475 $ 209,416 Earnings per share: Basic $ 0.25 $ 0.37 $ 1.05 $ 1.19 Diluted $ 0.25 $ 0.36 $ 1.04 $ 1.18 Dividends declared per share $ 0.2200 $ 0.2000 $ 0.6600 $ 0.6000 Average common shares outstanding: Basic 177,527 176,164 177,102 175,830 Diluted 179,652 178,134 179,031 177,152 notesNotes to condensed consolidated financial statements. Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Net income $ 44,767 $ 64,883 $ 186,475 $ 209,416 Foreign currency translation adjustments (37,220 ) 18,577 (15,510 ) (46,982 ) Postretirement medical benefits, net of tax (2,565 ) — 6,380 — Unrealized (loss) gain on derivative instruments, net of tax (710 ) 1,339 707 (1,642 ) Unrealized investment gain (loss), net of tax 543 88 (36 ) (2,263 ) Other comprehensive (loss) income (39,952 ) 20,004 (8,459 ) (50,887 ) Total comprehensive income $ 4,815 $ 84,887 $ 178,016 $ 158,529 Nine Months Ended
March 31, 2012 2011 $ 209,416 $ 221,532 179,664 181,716 17,248 17,009 8,914 17,719 71,833 (2,143 ) (20,896 ) (43,112 ) (38,382 ) (63,725 ) (4,747 ) 3,903 7,328 (5,968 ) 430,378 326,931 (149,427 ) (196,915 ) (24,000 ) (18,847 ) 3,373 1,460 8,348 5,568 (8,881 ) (6,062 ) 11,000 (196 ) (159,587 ) (214,992 ) 75,000 85,000 (255,000 ) (20,000 ) — 28,856 (53,615 ) (31,843 ) 150,000 — (479 ) (47,908 ) (105,375 ) (83,766 ) 6,867 5,935 (3,199 ) (2,990 ) (185,801 ) (66,716 ) (8,780 ) 26,221 76,210 71,444 532,599 376,352 $ 608,809 $ 447,796 Nine Months Ended March 31, 2013 2012 Operating activities: Net income $ 186,475 $ 209,416 Add non-cash items included in net income: Depreciation and amortization 176,445 179,664 Share-based compensation 22,045 17,248 Other non-cash items 1,356 8,914 Changes in assets and liabilities: Accounts receivable 80,152 71,833 Inventories (23,751 ) (20,896 ) Accounts payable (41,703 ) (38,382 ) Other current assets and liabilities 21,633 (4,747 ) Unauthorized activities in Japan (165,813 ) — Other assets and liabilities (22,349 ) 7,328 Cash provided from operating activities 234,490 430,378 Investing activities: Capital expenditures (203,985 ) (149,427 ) Acquisitions (55,299 ) (24,000 ) Proceeds from sales of property, plant and equipment 15,189 3,373 Proceeds from sales or maturities of marketable securities 12,722 8,348 Purchases of marketable securities (7,959 ) (8,881 ) Insurance proceeds and other investing activities 9,962 11,000 Cash used for investing activities (229,370 ) (159,587 ) Financing activities: Proceeds from revolving credit facility, short-term loans and debt 441,401 75,000 Payments on revolving credit facility, short-term loans and debt (277,434 ) (308,615 ) Net proceeds from issuance of long-term debt — 149,521 Cash dividends paid (116,706 ) (105,375 ) Exercise of stock options 9,894 6,867 Other financing activities (3,233 ) (3,199 ) Cash provided by (used for) financing activities 53,922 (185,801 ) Effect of exchange rate changes on cash 6,327 (8,780 ) Net increase in cash and cash equivalents 65,369 76,210 Cash and cash equivalents, beginning of period 637,417 532,599 Cash and cash equivalents, end of period $ 702,786 $ 608,809 notesNotes to condensed consolidated financial statements.(Unaudited). Basis of Presentation 1.Basis of Presentation4041 manufacturing locations in 1615 countries.20122013 are not necessarily an indication of the results that may be expected for the year ending June 30, 2012.2013. The Condensed Consolidated Balance Sheet as of June 30, 20112012 was derived from our audited consolidated financial statements for the year ended June 30, 2011.2012. These financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2011.retiree health care benefit obligations,other post retirement benefits, stock options, accrual for unauthorized activities in Japan, allowances for accounts receivable and inventory and impairment reviews for goodwill, intangible and other long-lived assets. Estimates are revised periodically. Actual results could differ from these estimates.2.Unauthorized Activities in Japan2011,2010, we investigated unauthorized activities at Molex Japan Co., Ltd. Based on the results of the completed investigation, we recorded an accrued liability of $165.8$165.8 million for accounting purposes for the effect of unauthorized activities pending the resolution of the legal proceedingsactivities. As reported in Note 14.We believe these12, the litigation settled on February 15, 2013. Pursuant to the settlement, Molex paid Mizuho Bank (Mizuho) ¥17.0 billion ($182.8 million) and Mizuho agreed to dismiss the district court proceedings, release restrictions held since 2010 on Molex cash accounts of approximately $4.5 million and release Molex from any future claims relating to the unauthorized activitiesloans and related losses occurred from at least as early as 1988 through 2010. Theprovisional attachments.$177.3$158.1 million as of March 31, 2012,, including $11.5$7.7 million in cumulative foreign currency translation, which was recorded as a component of other comprehensive income. Toincome, net of tax. We recognized a net loss of $21.2 million ($13.5 million after-tax) during the extent we prevail inthird quarter of fiscal 2013, representing amounts related to the settlement not havingpreviously accrued and recognition of investment assets worth approximately $4.2 million related to pay all or any portion of the unauthorized loans ($165.8 million), we would recognize a gain. In addition, we have a contingent liability of $49.5 million for other loan-related expenses, interest expense and delay damages on the outstanding unauthorized loans.Molex Japan for the three and nine months ended March 31, 20122013 represent the net loss on the settlement and 2011 represent investigative and legal fees.3.Restructuring Costs and Asset ImpairmentsOn June 30, 2010 we completed a multi-year restructuring plan designed to reduce costs and to improve return on invested capital in connection with a new global organization that was effective July 1, 2007. A majority of the plan related to facilities located in North America, Europe and Japan and, in general, the movement of manufacturing activities from these plants to lower-cost facilities.Changes in the restructuring accrual balance are summarized as follows (in thousands): $ 14,049 (752 ) (569 ) $ 12,728 (806 ) (353 ) $ 11,569 (585 ) 95 $ 11,079 4.Acquisitions2012,2013, we completed an asset purchase ofacquired Affinity Medical Technologies, LLC, a specialty wire and cablemedical electronics company, for $24.0$12.3 million.$31.6 million. The purchase price allocation for this acquisition is preliminary and subject to revision as more detailed analysis is completed and additional information about the fair value of assets and liabilities becomes available.thirdsecond quarter of fiscal 2011,2012, we completed an asset acquisitionpurchase of an active opticalTemp-Flex Cable, Inc., a specialty wire and cable businesscompany, for $24.6$24.0 million and have recorded goodwill of $14.6 million. The purchase price includes contingent consideration up to $5.8$12.3 million payable through fiscal 2013 upon the seller meeting certain criteria.. The purchase price allocation for this acquisition is complete.5.Earnings Per Share Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 64,883 $ 68,145 $ 209,416 $ 221,532 176,164 174,957 175,830 174,666 1,970 1,492 1,322 1,012 178,134 176,449 177,152 175,678 $ 0.37 $ 0.39 $ 1.19 $ 1.27 $ 0.36 $ 0.39 $ 1.18 $ 1.26 Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Net income $ 44,767 $ 64,883 $ 186,475 $ 209,416 Basic average common shares outstanding 177,527 176,164 177,102 175,830 Effect of dilutive stock options 2,125 1,970 1,929 1,322 Diluted weighted average common shares outstanding 179,652 178,134 179,031 177,152 Earnings per share: Basic $ 0.25 $ 0.37 $ 1.05 $ 1.19 Diluted $ 0.25 $ 0.36 $ 1.04 $ 1.18 2.43.6 million and 5.23.2 million for the three and nine months ended March 31, 2012,2013, respectively, compared with 3.32.4 million and 6.65.2 million for the same prior year periods.6.Comprehensive IncomeTotal comprehensive income is summarized as follows (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 64,883 $ 68,145 $ 209,416 $ 221,532 17,643 32,710 (48,632 ) 118,721 — — — 11,824 2,361 (3,058 ) (2,255 ) (2,268 ) $ 84,887 $ 97,797 $ 158,529 $ 349,809 7.Inventories Mar. 31,
2012 June 30,
2011 $ 91,996 $ 91,362 149,216 143,888 305,697 300,703 $ 546,909 $ 535,953 8.Pensions and Other Postretirement Benefits March 31,
2013 June 30,
2012Raw materials $ 84,617 $ 84,536 Work in process 160,646 145,610 Finished goods 299,370 301,679 Total inventories $ 544,633 $ 531,825 Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 1,381 $ 451 $ 4,143 $ 3,099 2,123 487 6,369 2,941 (2,166 ) (472 ) (6,498 ) (2,756 ) 65 13 195 79 290 893 870 2,679 10 9 30 27 $ 1,703 $ 1,381 $ 5,109 $ 6,069 Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Service cost $ 1,627 $ 1,381 $ 4,881 $ 4,143 Interest cost 2,060 2,123 6,180 6,369 Expected return on plan assets (2,272 ) (2,166 ) (6,816 ) (6,498 ) Amortization of prior service cost 65 65 195 195 Recognized actuarial losses 681 290 2,043 870 Amortization of transition obligation 10 10 30 30 Other income (59 ) — (177 ) — Benefit cost $ 2,112 $ 1,703 $ 6,336 $ 5,109 Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 274 $ 342 $ 822 $ 1,026 586 617 1,758 1,851 (516 ) (516 ) (1,548 ) (1,548 ) 82 333 246 999 $ 426 $ 776 $ 1,278 $ 2,328 9.Debt Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Service cost $ 39 $ 274 $ 397 $ 822 Interest cost 140 586 822 1,758 Amortization of prior service cost (2,572 ) (516 ) (3,604 ) (1,548 ) Recognized actuarial (gains) losses (65 ) 82 (423 ) 246 Benefit cost $ (2,458 ) $ 426 $ (2,808 ) $ 1,278 Average
Interest Rate Maturity March 31,
2012 June 30,
2011 2.91 – 4.28 % 2016 – 2021 $ 150,000 $ — 1.74 % 2016 5,000 185,000 1.31-1.65 % 2012 – 2013 36,144 89,342 Varies 2012 – 2013 1,193 1,528 192,337 275,870 1.31-1.65 % 36,144 52,156 Varies 1,065 920 155,128 222,794 1.98 % 2012 60,320 62,060 Varies 3,447 4,628 63,767 66,688 $ 256,104 $ 342,558 On Average
Interest
Rate Calendar
Year
Maturity March 31,
2013 June 30,
2012Long-term debt: Private Placement 3.59 % 2016 – 2021 $ 150,000 $ 150,000 U.S. Credit Facility 1.70 % 2016 165,000 — Unsecured bonds and term loans N/A 2013 — 37,556 Other debt Varies 2013 – 2014 617 1,091 Total long-term debt 315,617 188,647 Less current portion of long-term debt: Unsecured bonds and term loans N/A — 37,556 Other debt Varies 617 1,059 Long-term debt, less current portion 315,000 150,032 Short-term borrowings: Overdraft loans 0.68 % 2013 84,655 62,645 Other short-term borrowings Varies 3,453 3,673 Total short-term borrowings 88,108 66,318 Total debt $ 403,725 $ 254,965 18, 2011, we issued senior notes pursuant to a Note Purchase Agreement (the Agreement) totaling $150.0$150.0 million through an unregistered, private placement of debt (the Private Placement). The Private Placement consists of three $50.0$50.0 million series notes: Series A with an interest rate of 2.91% matures onin August 18, 2016; Series B with an interest rate of 3.59% matures onin August 18, 2018; and Series C with an interest rate of 4.28% matures onin August 18, 2021. The Note Purchase Agreement contains customary covenants regarding liens, debt, substantial asset sales and mergers. The Note Purchase Agreement also requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage and interest rate coverage. As of March 31, 2012,2013, we were in compliance with these covenants and the balance of the senior notes was $150.0 million.$150.0 million.$195.0$195.0 million unsecured, three-year revolving credit facility in the United States (the U.S. Credit Facility), amended in January 2010, September 2010, and March 2011 and December 2012, that was initially scheduled to mature in June 2012 (the U.S. Credit Facility).2012. In connection with the September 2010 amendment, we increased the credit line on the U.S. Credit Facility to $270.0 million.$270.0 million. In March 2011, we further amended the U.S. Credit Facility to increase the credit line to $350.0$350.0 million and extend the term to March 2016. Borrowings under the U.S. Credit Facility bear interest at a fluctuating interest rate (based on London InterBankInterbank Offered Rate) plus an applicable percentage based on our consolidated leverage. The applicable percentage was 150 basis points as of March 31, 2012.2013. The agreement governing the U.S. Credit Facility contains customary covenants regarding liens, debt, substantial asset sales and mergers, dividends and investments. The U.S. Credit Facility also requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage and fixed charge coverage. As of March 31, 2012,2013, we were in compliance with these covenants and had outstanding borrowings of $5.0 million.In March 2012, Molex Japan renewed a ¥5.0 billion overdraft loan, with a six month term and an interest rate of approximately 1.98% At March 31, 2012, the balance of the overdraft loan, which requires full repayment by the end of the term if not renewed, approximated $60.3 million.In March 2010, Molex Japan entered into a ¥3.0 billion syndicated term loan for three years, with interest rates equivalent to the six month Tokyo InterBank Offered Rate plus 75 basis points and scheduled principal payments of ¥0.5 billion every six months. At March 31, 2012, the balance of the syndicated term loan approximated $12.0 million, which is classified as current.In September 2009, Molex Japan issued unsecured bonds totaling ¥10.0 billion with a term of three years, an interest rate of approximately 1.65% and scheduled principal payments of ¥1.6 billion every six months. At March 31, 2012, the outstanding balance of the unsecured bonds approximated $24.1 million, which is classified as current.Certain assets, including equipment, secure a portion of our long-term debt. 20122013 (in thousands): $ 37,209 128 — — 55,000 100,000 $ 192,337 Year one $ 617 Year two — Year three 165,000 Year four 50,000 Year five — Thereafter 100,000 Total long-term debt obligations $ 315,617 $421.6$290.1 million at March 31, 2012,2013, including $345.0$185.0 million available on the U.S. Credit Facility. The lines of credit expire between 20122013 and 2021.2016. 10.Income Taxes27.2% and 30.4% for the three months ended March 31, 2011.. During the three months ended March 31, 2012, we recorded a one-time charge of $1.6$1.6 million for the cumulative effect of a reduction in future tax benefits from deferred tax assets in Shanghai due to a decrease in the Shanghai corporate tax rate. We also recorded a one-time benefit of $4.6$4.6 million from releasing valuation allowances no longer required on net operating losses recorded in certain foreign jurisdictions.We have substantially completed allThe examinations of U.S. federal income tax mattersreturns for tax years through 2007.2007, 2008 and 2009 were completed during fiscal 2012. The tax years 2008 and after2010 through 2012 remain open to examination by all major taxing jurisdictions to which we are subject.2012,2013, there were no material interest or penalty amounts to accrue.11.Fair Value Measurements2012,2013, which are measured at fair value on a recurring basis (in thousands): Total
Measured
at Fair
Value Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) $ 26,366 $ 26,366 $ — $ — 7,480 — 7,480 — Total
Measured
at Fair
Value Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)Available-for-sale and trading securities $ 26,000 $ 26,000 $ — $ — Derivative financial instruments, net 2,256 — 2,256 — marketable and available for saleavailable-for-sale securities based on quoted market prices (Level 1). We generally use derivatives for hedging purposes pursuant to ASC 815-10, which are valued based on Level 2 inputs in the ASC 820 fair value hierarchy. The fair value of our derivative financial instruments is determined by a mark-to-market valuation based on forward curves using observable market prices.12.Derivative Instruments and Hedging Activities (forward contracts) to offset the impact of exchange rate volatility on certain assets and liabilities, including intercompany receivables and payables denominated in non-functional currencies. These forward contracts have not been designated as hedges, and the gains or losses on these forward contracts, along with the offsetting losses or gains due to the fluctuation of exchange rates on the underlying foreign currency denominated assets and liabilities, are recognized in other income (expense). income. The notional amounts of the forward contracts were $222.3$269.9 million and $175.6$223.3 million at March 31, 20122013 and June 30, 2011,2012, respectively, with corresponding fair values of a $0.2$0.2 million asset at March 31, 20122013 and a $2.7$2.6 million asset at June 30, 2011.We use derivativesform of call options to hedgeChinese renminbi versus the variability of gold and copper costs.U.S. dollar. These derivative instruments are designated as cash flow hedges and hedge approximately 60%target up to 70% of our planned gold and copper purchases.projected U.S. dollar denominated third party sales from a subsidiary based in China. Gains and losses of the effective hedges are recorded as a component of accumulated other comprehensive income (AOCI) and reclassified to cost of sales during the period the third party sales occur. The notional amount of the forward contracts was $15.0 million at March 31, 2013, with an immaterial corresponding fair value at March 31, 2013. These forward contracts have maturities of 12 months or less.$7.5$2.1 million and $7.8$4.4 million at March 31, 20122013 and June 30, 2011,2012, respectively. These call options have maturities of 12 months or less.20122013 and 2011,2012, the impact to accumulated other comprehensive incomeAOCI and earnings from cash flow hedges before taxes follows (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $2,060 $ (2,105 ) $ (2,527 ) $ 1,968 699 2,233 6,108 4,237 Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Unrealized gain (loss) recognized in AOCI $ 361 1,560 $ 6,539 (9,504 ) Realized (loss) gain reclassified into earnings (1,468 ) 500 (5,509 ) 6,978 2012, $2.62013, $3.5 million is expected to be reclassified from AOCI to cost of sales within the next 12 months.13.New Accounting PronouncementsSeptember 2011,March 2013, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No. 2013-05, Foreign Currency Matters (Topic 830). This ASU updates accounting guidance related to foreign currency matters and resolves the diversity in practice about what guidance applies to the release of cumulative translation adjustment into net income. The new guidance is effective for us beginning July 1, 2013, with early adoption permitted. The new guidance is not expected to have a material impact on our consolidated financial statements.goodwillintangible assets for impairment. ThisThe guidance will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwillthe indefinite-lived intangible asset might be impaired and whether it is necessary to perform the two-step goodwillquantitative impairment test as required under current accounting standards. Thisguidance. The new guidance is effective for us beginning July 1, 2012,2013, with early adoption permitted. ThisThe new guidance willis not expected to have a material impact on our consolidated financial statements.Accounting Standards Update (ASU)ASU No. 2011-05, Comprehensive Income (Topic 220). This newThe guidance requires the components of net income and other comprehensive income to be either presented in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. This newThe guidance eliminates the current option to report other comprehensive income and its components in the statement of stockholders’ equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for us forWe adopted ASU 2011-05 in the first quarter ended September 30, 2012of fiscal 2013 and will amend our presentation of the componentspresent a separate statement of comprehensive income.14.Contingenciesin this note.below. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially adversely impactaffect our financial position, or overall trends in operations, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or other events could occur. If one or more unfavorable final outcomesoutcome were to occur, then there exists the possibility of a material adverse impact.€24.0€24.0 million ($32.0 million) ($30.7 million). Molex International initiated liquidation of MAS, and pursuant to a court proceeding, a liquidator was appointed in November 2010. One of the liquidator’s responsibilities is to assess and respond to the lawsuits involving MAS. In June 2011, the former employees of MAS noticed Molex Incorporated (Molex) as a defendant to the Toulouse Labor Court proceedings. In their court submission, the former employees claim that Molex was a co-employer of the former employees and€2.0€2.0 million ($2.7 million) ($2.6 million).in 2012 for each plaintiff as follows:plaintiff. On June 25, July 9, September 24, October 8 and December 17.April 5, 2012,March 7, 2013, the Toulouse Labor Court held a hearing forheard arguments regarding whether it has jurisdiction over Molex with respect to three of the otherexecutive section plaintiffs and has set June 17, 2013 to issue its decision. On April 3, 2013, the Toulouse Appellate Court heard arguments as to whether the Toulouse Labor Court has jurisdiction over Molex with respect to the remaining executive section plaintiff and is expected to issue its decision on May 16, 2013.section, andsection. Molex intends to appeal this decision to the parties presented their arguments regarding whetherFrench Supreme Court (Court of Cassation).court has jurisdiction over Molex. The court adjourned the hearing to consider the question of jurisdiction over Molex and will issue the results of its consideration on June 28, 2012. In addition, the liquidator has filed an action against Molex in the Commercial Court of Paris claiming itMolex is responsible for the liabilities of MAS that remain as a result of the liquidation.holdsheld the unauthorized loans, filed a complaint in Tokyo District Court requesting the court to find Molex Japan liable for the payment of the outstanding unauthorized loans and to enter a judgment for such payment. Mizuho is claiming paymentIn November 2012, court-supervised settlement discussions commenced and on February 15, 2013, the parties settled the litigation. The principle balance of outstanding principal borrowings of ¥3the unauthorized loans was ¥15.0 billion ($36.2 million), ¥5 billion ($60.3 million), ¥5 billion ($60.3 million) ($158.1 million) and ¥2 billion ($24.1 million),the contingent liability for other loan-related expenses, of approximately ¥106 million ($1.3 million) and interest expenses and delay damages ofwas approximately ¥4.0¥6.0 billion ($48.3 million) ($64.2 million) as of March 31, 2012. On October 13, 2010,the settlement date. Pursuant to the settlement agreement, Molex Japan filed a written answer requesting the courtagreed to pay Mizuho ¥17.0 billion ($182.8 million) and Mizuho agreed to dismiss the complaintdistrict court proceedings, release restrictions held since 2010 on Molex cash accounts of approximately $4.5 million and subsequently both parties have submitted additional briefs and witness statementsrelease Molex from any future claims related to the court. The court has scheduled two hearing dates, May 9 and May 16, 2012, for witness examinations. We intend to vigorously contest the enforceability of the outstanding unauthorized loans and any attempt by the lender to obtain payment.provisional attachments. See Note 2 for accounting treatment of the accrual for unauthorized activities in Japan.(the SEC) has(SEC) informed us that the SEC hasthey issued a formal order of private investigation in connection with the unauthorized activities in Molex Japan. We are fully cooperating with the SEC’s investigation.15.Segments and Related InformationOursegments consist of thesegments: Connector and Custom & Electrical segments:Electrical. The reportable segments represent an aggregation of three operating segments.and commercial markets.market. It also designs and manufactures products that withstand environments such as heat, cold, dust, dirt, liquid and vibration for automotive and other transportation applications. including connectors, across all industries that provide original, differentiated solutions to customer requirements. It also leverages expertise in the use of signal, power and interface technology in industrial automation and other harsh environment applications. Connector Custom &
Electrical Corporate
& Other Total $ 583,364 $ 253,629 $ 87 $ 837,080 76,268 39,741 (27,207 ) 88,802 47,838 6,696 3,955 58,489 43,638 4,876 5,858 54,372 $ 628,367 $ 245,434 $ 730 $ 874,531 86,989 36,399 (25,077 ) 98,311 49,967 6,927 4,017 60,911 56,208 4,613 3,367 64,188 $ 1,865,029 $ 765,136 $ 498 $ 2,630,663 259,882 129,245 (82,603 ) 306,524 147,247 20,575 11,842 179,664 122,013 16,025 11,389 149,427 $ 1,954,733 $ 717,511 $ 1,424 $ 2,673,668 291,551 110,969 (82,443 ) 320,077 148,172 21,337 12,207 181,716 173,193 13,393 10,329 196,915 Connector Custom &
Electrical Corporate
& Other Total For the three months ended: March 31, 2013: Revenues from external customers $ 600,150 $ 252,459 $ 249 $ 852,858 Income (loss) from operations 81,478 30,724 (52,264 ) 59,938 Depreciation & amortization 47,775 7,796 3,472 59,043 Capital expenditures 43,144 10,313 2,487 55,944 March 31, 2012: Revenues from external customers $ 583,364 $ 253,629 $ 87 $ 837,080 Income (loss) from operations 76,268 39,741 (27,207 ) 88,802 Depreciation & amortization 47,838 6,696 3,955 58,489 Capital expenditures 43,638 4,876 5,858 54,372 For the nine months ended: March 31, 2013: Revenues from external customers $ 1,971,436 $ 765,156 $ 922 $ 2,737,514 Income (loss) from operations 293,610 103,396 (127,818 ) 269,188 Depreciation & amortization 142,140 22,565 11,740 176,445 Capital expenditures 158,321 32,859 12,805 203,985 March 31, 2012: Revenues from external customers $ 1,865,029 $ 765,136 $ 498 $ 2,630,663 Income (loss) from operations 259,882 129,245 (82,603 ) 306,524 Depreciation & amortization 147,247 20,575 11,842 179,664 Capital expenditures 122,013 16,025 11,389 149,427 investigative and legal costs related to the unauthorized activities in Japan and the assets of certain plants that are not specific to a particular segment. Connector Custom &
Electrical Corporate
& Other Total $ 1,797,481 $ 483,656 $ 116,380 $ 2,397,517 1,913,675 503,443 98,732 2,515,850 Connector Custom &
Electrical Corporate
& Other Total March 31, 2013 $ 1,745,528 $ 497,575 $ 94,614 $ 2,337,717 June 30, 2012 1,846,636 479,318 107,699 2,433,653 Mar. 31,
2012 June 30,
2011 $ 2,397,517 $ 2,515,850 787,724 707,943 378,372 374,059 $ 3,563,613 $ 3,597,852 March 31,
2013 June 30,
2012Segment assets $ 2,337,717 $ 2,433,653 Other current assets 800,175 796,134 Other non-current assets 423,934 381,716 Consolidated total assets $ 3,561,826 $ 3,611,503 “us” and“us,” “our” and other similar terms in this Quarterly Report on Form 10-Q refer to Molex Incorporated and its subsidiaries.2011.2012. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described below under the heading “Cautionary Statement Regarding Forward-Looking Information.”Overviewelectromechanicalelectronic components. Our products are used by a large number of leading original equipment manufacturers (OEMs) throughout the world. We design, manufacture and sell more than 100,000 different products including terminals, connectors, planar cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical and electronic switches in 4041 manufacturing locations in 1615 countries. We also provide manufacturing services to integrate specific components into a customer’s product.manufacturesdesigns and sellsmanufactures products for high-speed, high-density, high signal-integrity applications for the telecommunications, infotech and mobile devices markets as well as fine-pitch, low-profile connectors for the consumer and commercial markets.market. It also designs and manufactures products that withstand environments such as heat, cold, dust, dirt, liquid and vibration for automotive and other transportation applications.decreasedincreased1.9% and 4.1% during the three and nine months ended March 31, 20122013, respectively, compared with the prior year periods primarily due to sloweran increase in customer demand caused by uncertainties in the global economy, particularlymobile devices and automotive markets, partially offset by lower demand in the consumer markets. Decreases inmarket. During the nine months ended March 31, 2013, increased customer demand for certain mobile products in the telecommunications markets also contributedmobile devices market resulted in sales to a consumer electronics company, directly and indirectly, that exceeded 10% of net revenue. Due to decreased demand from this customer in the third quarter, no single customer exceeded 10% of net revenue decrease. Despite the lower net revenue, gross margins improved during the three months ended March 31, 2013. Gross margin decreased during the three and nine months ended March 31, 20122013 compared towith the prior year periods primarily due to a favorablechanges in the mix of product sales and rigorous control over costs. We increased pricesstart-up costs related to new product introductions. Selling, general and administrative expenses were higher during thethree and nine months ended March 31, 20122013 compared with the prior year periods to partially offset rising material costs, which also contributedsupport the increase in net revenue and investments in research and development related to new product introductions. Selling, general and administrative expenses decreased as a percentage of net revenue during the improved gross marginsnine months ended March 31, 2013 compared with the prior year period. Despite the gross margin improvements and specific cost control efforts,higher net revenue, income from operations decreased during the three and nine months ended March 31, 2012 based on the lower net revenue2013 compared with the prior year periods.The marketsperiods primarily due to the settlement of litigation related to unauthorized activities in which we compete are highly competitive. Our financial results may be influenced byJapan in the following factors: our ability to successfully execute our business strategy; competition for customers; raw material prices; product and price competition; economic conditions in various geographic regions; foreign currency exchange rates; interest rates; changes in technology; fluctuations in customer demand; patent and intellectual property issues; availabilitythird quarter of credit and general market liquidity; natural disasters; litigation results; investigations and legal proceedings and regulatory developments. Our ability to execute our business strategy successfully will require that we meet a number of challenges, including our ability to accurately forecast sales demand and calibrate manufacturing to such demand, manage volatile raw material costs, develop, manufacture and successfully market new and enhanced products and product lines, control operating costs and attract, motivate and retain key personnelto manage our operational, financial and management information systems. Our sales are also dependent on end markets impacted by consumer, industrial and infrastructure spending, and our operating results can be adversely affected by reduced demand in those end markets.2011,2010, we investigated unauthorized activities at Molex Japan Co., Ltd. Based on the results of the completed investigation, we recorded an accrued liability of $165.8$165.8 million for accounting purposes for the effect of unauthorized activities pendingactivities.resolutionunauthorized loans, filed a complaint in Tokyo District Court requesting the court find Molex Japan liable for payment of the outstanding unauthorized loans and to enter a judgment for such payment. In November 2012, court-supervised settlement discussions commenced and on February 15, 2013, the parties settled the litigation. Pursuant to the settlement agreement, Molex agreed to pay Mizuho ¥17.0 billion ($182.8 million) and Mizuho agreed to dismiss the district court proceedings, release restrictions held since 2010 on Molex cash accounts of approximately $4.5 millionreported insee Note 1412 of the Notes to the Condensed Consolidated Financial Statements.We believe these unauthorized activities and related losses occurred from at least as early as 1988 through 2010. The$177.3$158.1 million as of March 31, 2012,, including $11.5$7.7 million in cumulative foreign currency translation, which was recorded as a component of other comprehensive income. To the extent we prevail in not having to pay all or any portionincome, net of the unauthorized loans ($165.8 million), we would recognize a gain.tax. In addition, we have athe contingent liability of $49.5 million for other loan-related expenses, interest expenseexpenses and delay damages onwas approximately $64.2 million as of the outstandingsettlement date. We recognized a net loss of $21.2 million ($13.5 million after-tax) during the third quarter of fiscal 2013, representing amounts related to the settlement not previously accrued and recognition of investment assets worth approximately $4.2 million related to the unauthorized loans.Molex Japan for the three and nine months ended March 31, 20122013 represent the net loss on the settlement and 2011 represent investigative and legal fees.20112012 filed with the Securities and Exchange Commission, which is incorporated by reference in this Form 10-Q. 2012 Percentage
of Revenue 2011 Percentage
of Revenue $ 837,080 100.0 % $ 874,531 100.0 % 581,904 69.5 % 613,917 70.2 % 255,176 30.5 % 260,614 29.8 % 163,853 19.6 % 159,448 18.2 % 2,521 0.3 % 2,855 0.4 % 88,802 10.6 % 98,311 11.2 % 349 0.1 % (401 ) — % 89,151 10.7 % 97,910 11.2 % 24,268 2.9 % 29,765 3.4 % $ 64,883 7.8 % $ 68,145 7.8 % 2013 Percentage
of Revenue 2012 Percentage
of RevenueNet revenue $ 852,858 100.0 % $ 837,080 100.0 % Cost of sales 604,326 70.9 % 581,904 69.5 % Gross profit 248,532 29.1 % 255,176 30.5 % Selling, general & administrative 167,384 19.6 % 163,853 19.6 % Unauthorized activities in Japan 21,210 2.5 % 2,521 0.3 % Income from operations 59,938 7.0 % 88,802 10.6 % Other (expense) income, net (1,317 ) (0.1 %) 349 0.1 % Income before income taxes 58,621 6.9 % 89,151 10.7 % Income taxes 13,854 1.7 % 24,268 2.9 % Net income $ 44,767 5.2 % $ 64,883 7.8 % 2012 Percentage
of Revenue 2011 Percentage
of Revenue $ 2,630,663 100.0 % $ 2,673,668 100.0 % 1,819,822 69.2 % 1,866,933 69.8 % 810,841 30.8 % 806,735 30.2 % 496,151 18.9 % 475,548 17.8 % 8,166 0.2 % 11,110 0.4 % 306,524 11.7 % 320,077 12.0 % (1,378 ) (0.1 %) 917 — % 305,146 11.6 % 320,994 12.0 % 95,730 3.6 % 99,462 3.7 % $ 209,416 8.0 % $ 221,532 8.3 % 2013 Percentage
of Revenue 2012 Percentage
of RevenueNet revenue $ 2,737,514 100.0 % $ 2,630,663 100.0 % Cost of sales 1,931,395 70.6 % 1,819,822 69.2 % Gross profit 806,119 29.4 % 810,841 30.8 % Selling, general & administrative 511,533 18.7 % 496,151 18.9 % Unauthorized activities in Japan 25,398 0.9 % 8,166 0.2 % Income from operations 269,188 9.8 % 306,524 11.7 % Other (expense) income, net (5,215 ) (0.2 %) (1,378 ) (0.1 %) Income before income taxes 263,973 9.6 % 305,146 11.6 % Income taxes 77,498 2.8 % 95,730 3.6 % Net income $ 186,475 6.8 % $ 209,416 8.0 % We sell our products in five primary markets. Our connectors, interconnecting devices and assemblies are used principally in the telecommunications, infotech, consumer, industrial and automotive markets. including notebook computers, computer peripheral equipment,including: servers and storage devices; networking products; mobile products such as smartphonesmobile phones, tablets and tablets, digital electronicsnotebook computers; home entertainment products such as camerastelevisions and flat panel display televisions,gaming systems; automobile engine control unitsinfotainment and adaptive braking systems,safety systems; and factory roboticsautomation and diagnostic equipment.Net revenue during Our connector business in mobile products has expanded over the past several years and now represents a significant portion of our net revenue. In the third quarter of fiscal 2012 declined as global economic uncertainty affected end demand, particularly2013, we introduced a new primary market called mobile devices to segregate these mobile products. Previously, mobile phones were included in the telecommunications market while tablets and notebook computers were included in the infotech market. We now report our net revenue in six primary markets: telecommunications, infotech, mobile devices, consumer, industrial and automotive. Net revenue for the telecommunications and infotech markets has been revised to provide accurate comparisons with prior periods.our customers managed inventory lower.reduced demand for new products introduced earlier in fiscal 2013 in the mobile devices market. Net revenue increased 1.9% compared with the third quarter of fiscal 2012 (comparable quarter), primarily due to increased demand from the new programs in the mobile devices market and continued growth in the automotive market, partially offset by foreign currency translation and lower demand in the consumer and industrial markets. The increase (decrease) in net revenue from each market during the thirdsequential quarter of fiscal 2012 compared with the third quarter of fiscal 2011 (comparable quarter) and the secondcomparable quarter of fiscal 2012 (sequential quarter) follows: Comparable
Quarter Sequential
Quarter (13 )% (17 )% 4 3 (10 ) (8 ) (7 ) 7 5 12 Sequential
Quarter Comparable
QuarterTelecommunications (7 )% (9 )% Infotech (6 ) (10 ) Mobile devices (37 ) 35 Consumer (17 ) (19 ) Industrial 6 (5 ) Automotive 10 13 againstversus both the sequential and comparable quarterquarters primarily due to decreases in demand for certain mobile products, partially offset by increasedlower demand for networking products. Telecommunicationsagainst the sequential quarter due to weaker demand for mobile products and infrastructure spending.Infotech market net revenue increased against the comparable quarter primarily due to increased content and demand for tablet devices and servers, partially offset by slower demand for notebook computers. Infotech market net revenue increased againstversus the sequential quarter primarily due to increased content andlower customer demand for tablet devices, partially offset by slowerdesktop computers. Net revenue decreased versus the comparable quarter due to relatively high levels of inventory in the distribution channel in the prior year period and lower customer demand for servers.againstversus both the sequential and comparable quarters due to lower customer demand, primarily for televisions, cameras, gaming systems and home appliances, and unfavorable foreign currency translation. Consumer net revenue also decreased versus the sequential quarter due to the seasonality of customer production.economic uncertainty and lower demand in home entertainment and gaming equipment. Consumer market net revenue decreased against the sequential quarter due to lower sales in home entertainment products and seasonal lower demand.Industrial market net revenue decreased against the comparable quarter due to softening demand for semiconductor and production equipment from our customers’ decreased production, companies’ reluctance to invest in automation projects or deferral of projects in the current economic environment and relatively high levels of inventory in the distribution channel. Industrial market net revenue increased against the sequential quarter as demand increased for industrial distribution and transportation production equipment.againstversus both the comparablesequential and sequentialcomparable quarters due to higher global automobile production, particularly in North America and Japan, and increasing electronic content in automobiles, such as navigationalinfotainment and entertainmentsafety systems mobile communication and products to improve fuel efficiency.net revenuesales by geographic region: Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 28 % 25 % 25 % 24 % 57 60 61 62 15 15 14 14 100 % 100 % 100 % 100 % Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Americas 31 % 28 % 27 % 25 % Asia Pacific 55 57 61 61 Europe 14 15 12 14 Total 100 % 100 % 100 % 100 % Three Months
Ended
Mar. 31, 2012 Nine Months
Ended
Mar. 31, 2012 $ 874,531 $ 2,673,668 (44,555 ) (125,099 ) 4,231 72,358 2,873 9,736 (37,451 ) (43,005 ) $ 837,080 $ 2,630,663 (5.1 )% (4.7 )% Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Net revenue for prior year period $ 837,080 $ 2,630,663 Components of net revenue change: Organic net revenue change 15,612 128,419 Currency translation (9,517 ) (42,467 ) Acquisitions 9,683 20,899 Total change in net revenue from prior year period 15,778 106,851 Net revenue for current year period $ 852,858 $ 2,737,514 Organic net revenue change as a percentage of net revenue for prior year period 1.9 % 4.9 % decreasedincreased during the three and nine months ended March 31, 20122013 compared with the prior year periods as customer demand slowed in the consumer marketsprimarily due to uncertainties about endincreased customer demand. Decreases in demand for certain mobile productsphones and tablets in the telecommunications markets also contributed toorganic net revenue decrease.automotive market. We completed an asset acquisition of a specialty wire and cable companyacquired Affinity Medical Technologies, LLC during the second quarter of 2012fiscal 2013 and completed an asset acquisitionpurchase of an active optical cable businessTemp-Flex Cable, Inc. during the thirdsecond quarter of fiscal 2011.increaseddecreased net revenue approximately $4.2$9.5 million for the three months ended March 31, 2012,2013 compared with the prior year period primarily due to a strongerweaker Japanese yen against the U.S. dollar, partially offset by a weaker euro against the U.S. dollar, compared to the prior year period.dollar. Foreign currency translation increaseddecreased net revenue approximately $72.4$42.5 million for the nine months ended March 31, 2012,2013 compared with the prior year period primarily due to a strongerweaker euro and Japanese yen against the U.S. dollar compared with the prior year period.dollar. The following tables show the effect on the change in geographic net revenue from foreign currency translations to the U.S. dollar (in thousands): Three Months Ended March 31, 2012 Nine Months Ended March 31, 2012 Local
Currency Currency
Translation Net
Change Local
Currency Currency
Translation Net
Change $ 14,079 $ (84 ) $ 13,995 $ 28,200 $ 333 $ 28,533 (50,141 ) 8,472 (41,669 ) (115,010 ) 59,891 (55,119 ) (7,089 ) (4,157 ) (11,246 ) (29,237 ) 12,134 (17,103 ) 1,469 — 1,469 684 — 684 $ (41,682 ) $ 4,231 $ (37,451 ) $ (115,363 ) $ 72,358 $ (43,005 ) Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Local
Currency Currency
Translation Net
Change Local
Currency Currency
Translation Net
ChangeAmericas $ 30,065 $ 2 $ 30,067 $ 71,849 $ (77 ) $ 71,772 Asia Pacific (1,887 ) (10,432 ) (12,319 ) 88,012 (20,457 ) 67,555 Europe (4,678 ) 913 (3,765 ) (12,495 ) (21,933 ) (34,428 ) Corporate & Other 1,795 — 1,795 1,952 — 1,952 Net change $ 25,295 $ (9,517 ) $ 15,778 $ 149,318 $ (42,467 ) $ 106,851 Three Months Ended
Mar. 31, 2012 Nine Months Ended
Mar. 31, 2012 6.4 % 4.4 % (9.6 ) (7.0 ) (5.3 ) (7.7 ) (4.8 )% (4.3 )% Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Americas 12.8 % 10.7 % Asia Pacific (0.4 ) 5.5 Europe (3.8 ) (3.5 ) Total 3.0 % 5.7 % Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Gross profit $ 248,532 $ 255,176 $ 806,119 $ 810,841 Gross margin 29.1 % 30.5 % 29.4 % 30.8 % (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 255,176 $ 260,614 $ 810,841 $ 806,735 30.5 % 29.8 % 30.8 % 30.2 % The decrease2013gross profit for the three months ended March 31, 2012 was primarilynet revenue due to lower net revenue. Despitechanges in the lower net revenue, gross margin improvedmix of product sales, start-up costs related to new product introductions during the threeperiod and price erosion. Gross profit during the nine months ended March 31, 20122013 also decreased compared with the prior year period due to a favorable mixincreased costs of product sales and rigorous control over costs. Gross profit and gross margin for the nine months ended March 31, 2012 also improved due to price increases to partially offset rising material costs. The increases in gross margin were partially offset by the impact of price erosion and material price increases.WeNet of scrap recovery, we purchased approximately 15.012.7 million pounds of copper and approximately 77,10067,900 troy ounces of gold during the first three quarters of fiscal 2012.nine months ended March 31, 2013. The following table showssets forth the average prices related to our purchases of copper and gold forwe purchased in the three and nine months ended March 31 (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 3.79 $ 4.38 $ 3.78 $ 3.77 1,691.00 1,388.00 1,693.00 1,321.00 Generally, we are able to pass through to our customers only a small portion of changes in the cost of copper and gold. However, we Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Copper (price per pound) $ 3.60 $ 3.79 $ 3.57 $ 3.78 Gold (price per troy ounce) 1,634.00 1,691.00 1,671.00 �� 1,693.00 $0.7$0.5 million and $6.1$7.0 million for the three and nine months ended March 31, 2012 respectively, and reduced cost of sales by $2.2 million and $4.2 million for, respectively. three and nine months ended March 31, 2011, respectively.The effect of certain significant impacts on gross profit compared with the prior year periods was as follows for the Three Months
Ended
Mar. 31, 2012 Nine Months
Ended
Mar. 31, 2012 $ (25,254 ) $ (77,731 ) 2,497 25,037 (6,742 ) (33,012 ) Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Price erosion $ (12,058 ) $ (33,629 ) Currency translation (1,009 ) (9,243 ) Currency transaction 5,468 10,761 is measured asmeasures the reduction in prices of our products year over year.year, which reduces our gross profit. The largest impact from price erosion is in our Connector segment. A significant portion of our price erosion occurred in mobile phone connector products, which are part of the mobile devices market. During the three months ended March 31, 2013, we enhanced our telecommunications market. Theprice erosion calculation through the use of pricing software to eliminate the impact of customer mix changes. The new calculation results in lower price erosion is generally offset through cost reduction,and provides a more accurate reflection of prices eroding over prior periods. We recalculated price management, and increaseserosion in demand for new products.increasedecrease in gross profit due to currency translation during the three months ended March 31, 20122013 was primarily due to a strongerweaker Japanese yen against the U.S. dollar, partially offset by a weakerstronger euro against the U.S. dollar compared with the prior year period. The increasedecrease in gross profit due to currency translation during the nine months ended March 31, 20122013 was primarily due to a strongerweaker Japanese yen and euro against the U.S. dollar, compared with the prior year period. that we manufacture in Japan and Europe are sold in other regions of the world at selling prices primarily denominated in or closely linked to the U.S. dollar. As a result, changes in foreign currency exchange rates may affect our cost of sales reported in U.S. dollars without a corresponding effect on net revenue. The decreaseincrease in gross profit due to currency transactions during the three months ended March 31, 2013 compared with the prior year period was primarily due to a strongerweaker Japanese yen. The increase in gross profit due to currency transactions during the nine months ended March 31, 2013 compared with the prior year period was primarily due to a weaker Japanese yen and a generally weaker euro against the U.S. dollar duringdollar. Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Selling, general and administrative $ 167,384 $ 163,853 $ 511,533 $ 496,151 Unauthorized activities in Japan 21,210 2,521 25,398 8,166 Selling, general and administrative as a percentage of net revenue 19.6 % 19.6 % 18.7 % 18.9 % 2012,2013, respectively, compared with the prior year periods.Operating ExpensesOperating expenses were as follows as of March 31 (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 163,853 $ 159,448 $ 496,151 $ 475,548 2,521 2,855 8,166 11,110 19.6 % 18.2 % 18.9 % 17.8 % increased $4.4for the $20.6$8.6 million for the three and nine months ended March 31, 2012,2013, compared with the prior year periods. The increase in selling, general and administrative expenses for the three months ended March 31, 2012 compared to the prior year period is primarily due to investments in research and development to penetrate new markets, acquire new customers and drive future growth. The increase in selling, general and administrative expenses for the nine months ended March 31, 2012 is primarily due to foreign currency translation. The impact of foreign currency translation increased selling, general and administrative expenses approximately $11.6 million for the nine months ended March 31, 2012, versus the prior year period. Excluding the impact of foreign currency translation, selling, general and administrative expenses increased $9.0 million for the nine months ended March 31, 2012 compared with the prior year period primarily due to investments in research and development to penetrate new markets, acquire new customers and drive future growth.expense,expenses, were approximately$46.2 million, or 5.4% of net revenue and $140.4 million, or 5.1% of net revenue, for the three and nine months ended March 31, 2013, compared with $45.7 million, or 5.5% of net revenue and $134.4 million, or 5.1% of net revenue, for the three and nine months ended March 31, 2012, respectively, compared with $43.6 million, or 5.0% of net revenue and $126.3 million, or 4.7% of net revenue, for the comparable prior year periods.UnauthorizedMolex Japan, forwe recognized a net loss of $21.2 million ($13.5 million after-tax) during the three and nine months ended March 31, 2012 representthird quarter of fiscal 2013, which included related investigative and legal fees. See Note 2 of the Notes to the Condensed Consolidated Financial Statements. (Expense) (expense) consists primarily of net interest expense, investment income and currency transaction exchange gains or losses. We recorded net expense of $1.3 million and $5.2 million for the three and nine months ended March 31, 2013, respectively, compared with other income of $0.3$0.3 million and othernet expense of $1.4$1.4 million for the three and nine months ended March 31, 2012 respectively, compared with other expense of $0.4 million and other income of $0.9 million for the three and nine months ended March 31, 2011,, respectively. Fluctuations in other (expense) income (expense) are primarily due to changes in foreign currency gains and losses.27.2%23.6% for the three months ended March 31, 2013. During the three months ended March 31, 2013, we recorded income tax expense of $13.9 million which was net of a $3.1 million benefit predominantly from the retroactive reinstatement of the U.S. research and development credit by the American Taxpayer Relief Act of 2012. Excluding the impact of the settlement of unauthorized activities in Japan, the effective tax rate was 26.6% for the three months ended March 31, 2012. During2013. The effective tax rate for the threenine months ended March 31, 2012, we recorded income tax expense of $24.3 million. During the three months ended March 31, 2012, we recorded a one-time charge of $1.6 million for the cumulative effect of a reduction in future tax benefits from deferred tax assets in Shanghai due to a decrease in the Shanghai corporate tax rate. We also recorded a one-time benefit of $4.6 million from releasing valuation allowances no longer required on net operating losses recorded in certain foreign jurisdictions.30.4%27.2% for the three months ended March 31, 2011.BacklogOur order backlog on March 31, 2012 was approximately $376.9 million compared with order backlog of $346.3 million at December 31, 2011 and $425.4 million at March 31, 2011. Orders for. During the three months ended March 31, 2012, were $872.6we recorded a one-time charge of $1.6 million for the cumulative effect of a reduction in future tax benefits from deferred tax assets in Shanghai due to a decrease in the Shanghai corporate tax rate. We also recorded a one-time benefit of $4.6 million from releasing valuation allowances no longer required on net operating losses recorded in certain foreign jurisdictions.$815.3order backlog of $404.0 million at December 31, 2012 and $376.9 million at March 31, 2012. Orders for the three months ended March 31, 2013 were $909.2 million compared with $919.7 million and $880.3$872.6 million for the three months ended December 31, 20112012 and March 31, 2011,2012, respectively. Orders increased $57.3 million over the sequential quarter and exceeded net revenue duringfor the three months ended March 31, 2012. The increase2013 primarily due to larger than expected net revenue declines in demand indicates stabilizing business conditions as ordersthe consumer and mobile devices markets. Orders for the three months ended March 31, 2012 were comparable to2013 improved compared with the prior year period.Segments 2012 Percentage
of Revenue 2011 Percentage
of Revenue $ 583,364 69.7 % $ 628,367 71.9 % 253,629 30.3 245,434 28.0 87 — 730 0.1 $ 837,080 100.0 % $ 874,531 100.0 % 2013 Percentage
of Revenue 2012 Percentage
of RevenueConnector $ 600,150 70.4 % $ 583,364 69.7 % Custom & Electrical 252,459 29.6 253,629 30.3 Corporate & Other 249 — 87 — Total $ 852,858 100.0 % $ 837,080 100.0 % 2012 Percentage
of Revenue 2011 Percentage
of Revenue $ 1,865,029 70.9 % $ 1,954,733 73.1 % 765,136 29.1 717,511 26.8 498 — 1,424 0.1 $ 2,630,663 100.0 % $ 2,673,668 100.0 % 2013 Percentage
of Revenue 2012 Percentage
of RevenueConnector $ 1,971,436 72.0 % $ 1,865,029 70.9 % Custom & Electrical 765,156 28.0 765,136 29.1 Corporate & Other 922 — 498 — Total $ 2,737,514 100.0 % $ 2,630,663 100.0 % Three Months
Ended
Mar. 31, 2012 Nine Months
Ended
Mar. 31, 2012 $ 628,367 $ 1,954,733 (50,688 ) (151,324 ) 5,685 61,620 (45,003 ) (89,704 ) $ 583,364 $ 1,865,029 (8.1 )% (7.7 )% Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Net revenue for prior year period $ 583,364 $ 1,865,029 Components of net revenue change: Organic net revenue change 26,243 136,909 Currency translation (9,457 ) (30,502 ) Total change in net revenue from prior year period 16,786 106,407 Net revenue for current year period $ 600,150 $ 1,971,436 Organic net revenue change as a percentage of net revenue for prior year period 4.5 % 7.3 % telecommunication,telecommunications, infotech, mobile devices, consumer and automotive markets. Organic net revenue and segment net revenue decreasedincreased during the three and nine months ended March 31, 20122013 compared with the prior year periods. The decrease wasperiods primarily due to slower customerincreased demand particularlyfor new product introductions for certain mobile phones and tablets in the telecommunicationsmobile devices market and continued growth in the automotive market, partially offset by lower demand in the consumer markets. Pricemarket. The increase in organic net revenue was partially offset by price erosion, which is generally higher in the Connector segment compared with our other segment, also negatively impacted organic net revenue and segment net revenue. The decrease was partially offset by foreignCustom & Electrical segment. Foreign currency translation which favorably impacteddecreased net revenue by $5.7$9.5 million and $61.6$30.5 million for the three and nine months ended March 31, 2012, respectively.marginsmargin for the Connector segment for the periods indicated (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 76,268 $ 86,989 $ 259,882 $ 291,551 13.1 % 13.8 % 13.9 % 14.9 % Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Income from operations $ 81,478 $ 76,268 $ 293,610 $ 259,882 Operating margin 13.6 % 13.1 % 14.9 % 13.9 % declinedand operating margin increased for the three and nine months ended March 31, 20122013 compared with the prior year periods primarily due to lowerhigher net revenue increased selling, general and administrative expenses and higher gold and resin costs. Weabsorption from increased prices to partially offset rising material costs and minimize the decline in gross profit and gross margin. Lower production levels due to decreasing customer demand also led to lower absorption of our fixed costs.production. Selling, general and administrative expenses for the three and nine months ended March 31, 2012 increased primarily2013 were reduced by $9.9 million due to investmentsproperty insurance proceeds for damages from the earthquake and tsunami that occurred in research and development to penetrate new markets, acquire customers and drive future growth and foreign currency translation. Foreign currency translation increased selling, general and administrative expenses primarily due to a stronger Japanese yen against other currenciesJapan during the three and nine months ended March 31, 2012, compared with the prior year periods. Three Months
Ended
Mar. 31, 2012 Nine Months
Ended
Mar. 31, 2012 $ 245,434 $ 717,511 6,788 27,144 (1,466 ) 10,745 2,873 9,736 8,195 47,625 $ 253,629 $ 765,136 2.8 % 3.8 % Three Months Ended Nine Months Ended March 31, 2013 March 31, 2013 Net revenue for prior year period $ 253,629 $ 765,136 Components of net revenue change: Organic net revenue change (10,793 ) (8,898 ) Currency translation (60 ) (11,981 ) Acquisitions 9,683 20,899 Total change in net revenue from prior year period (1,170 ) 20 Net revenue for current year period $ 252,459 $ 765,156 Organic net revenue change as a percentage of net revenue for prior year period (4.3 )% (1.2 )% increased indecreased for the three and nine months ended March 31, 20122013 compared with the prior year periods primarily due to increasedlower customer demand for production equipment in the industrial market and lower customer demand for networking devices in the infotech market. Foreign currency translation decreased net revenue $1.5$0.1 million and $12.0 million for the three and nine months ended March 31, 2012,2013, respectively, primarily due to a weaker euro against the U.S. dollar compared towith the prior year period. Foreign currency translation increased net revenue $10.7 million for the nine months ended March 31, 2012, primarily due to a generally weaker U.S. dollar compared to the prior year period.periods. We completed an asset acquisition of a specialty wire and cable companyacquired Affinity Medical Technologies, LLC during the second quarter of fiscal 20122013 and completed an asset acquisitionpurchase of an active optical cable businessTemp-Flex Cable, Inc. during the thirdsecond quarter of fiscal 2011.marginsmargin for the Custom & Electrical segment for the periods indicated (in thousands): Three Months Ended
March 31, Nine Months Ended
March 31, 2012 2011 2012 2011 $ 39,741 $ 36,399 $ 129,245 $ 110,969 15.7 % 14.8 % 16.9 % 15.5 % Three Months Ended Nine Months Ended March 31, March 31, 2013 2012 2013 2012 Income from operations $ 30,724 $ 39,741 $ 103,396 $ 129,245 Operating margin 12.2 % 15.7 % 13.5 % 16.9 % increasedand operating margin decreased for the three and nine months ended March 31, 20122013 compared with the prior year periods due to increased net revenue and efforts to control costs. Gross margin increased primarily due to favorablelower gross margin caused by an unfavorable mix of product sales and higher absorption. Selling, general and administrative expenses as a percentlower absorption of net revenue for the three and nine months ended March 31, 2012 improved over the same prior year periods, due primarily to increased net revenue and specific cost containment actions.U.S. GAAP reported net revenue growth (the most directly comparable GAAP financial measure) to organic net revenue growth.assince it is an important measure of the underlying results of our operations. It excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition activity. Management uses organic net revenue growth together with GAAP measures, such as net revenue growth and operating income, in its decision making processes related to the operations of our reporting segments and our overall company.$622.5$712.9 million and $546.5$652.2 million at March 31, 20122013 and June 30, 2011,2012, respectively. Cash, cash equivalents and marketable securities as of March 31, 20122013 included $593.0$670.7 million held in non-U.S. accounts, including $199.0$273.4 million in countries where we may experience administrative delays in withdrawing and transferring cash to U.S. accounts. Transferring cash, cash equivalents or marketable securities to U.S. accounts from non-U.S. accounts could subject us to additional U.S. repatriation income tax. The primary source of our cash flow is cash generated by operations. Principal uses of cash are capital expenditures, dividend payments and business investments. Our long-term financing strategy is to primarily rely on internal sources of funds for investing in property, plant, equipment and acquisitions.On 18, 2011, we issued senior notes pursuant to a Note Purchase Agreement (the Agreement) totaling $150.0$150.0 million through a private placement of debt (the Private Placement). The Private Placement consists of three $50.0$50.0 million series notes: Series A with an interest rate of 2.91% matures onin August 18, 2016; Series B with an interest rate of 3.59% matures onin August 18, 2018; and Series C with an interest rate of 4.28% matures onin August 18, 2021. The Note Purchase Agreement requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage and interest rate coverage. As of March 31, 2012,2013, we were in compliance with these covenants.$195.0$195.0 million unsecured, three-year revolving credit facility in the United States amended in January 2010, September 2010 and March 2011, that was initially scheduled to mature in June 2012 (the U.S. Credit Facility). In connection with the September 2010 amendment, we increased the credit line on the U.S. Credit Facility to $270.0 million. In March 2011, we further, subsequently amended the U.S. Credit Facility to increase the credit line to $350.0$350.0 million and extend the term to March 2016.$256.1$403.7 million and $342.6$255.0 million at March 31, 20122013 and June 30, 2011,2012, respectively. We had available lines of credit totaling $421.6$290.1 million at March 31, 2012,2013, including $345.0$185.0 million available on the U.S. Credit Facility. The U.S. Credit Facility requires us to maintain financial covenants pertaining to, among other things, our consolidated leverage and fixed charge coverage. As of March 31, 2012, we were in compliance with these covenants. Additionally, we have three unsecured borrowing agreements in Japan with an outstanding balance of ¥8.0 billion ($96.4 million) as of March 31, 2012, and weighted average fixed interest rates of 1.81%. See Note 97 of the Notes to the Condensed Consolidated Financial Statements.Our cashbalance increased $76.2$65.4 million during the nine months ended March 31, 2012.2013. Our primary source of cash was operating cash flows of $430.4$234.5 million, the majority of which is generated outside the United States. We used cash during the period to fund capital expenditures of $149.4 million and pay dividends of $105.4 million. The translation of our cash to U.S. dollars decreasedincreased our cash balanceand cash equivalents by $8.8$6.3 million compared with the balance as of June 30, 2011. Nine Months Ended
March 31, 2012 2011 $ 430,378 $ 326,931 (159,587 ) (214,992 ) (185,801 ) (66,716 ) (8,780 ) 26,221 $ 76,210 $ 71,444 Nine Months Ended March 31, 2013 2012 Cash provided from operating activities $ 234,490 $ 430,378 Cash used for investing activities (229,370 ) (159,587 ) Cash provided by (used for) financing activities 53,922 (185,801 ) Effect of exchange rate changes on cash 6,327 (8,780 ) Net increase in cash and cash equivalents $ 65,369 $ 76,210 increased by $103.4decreased$195.9 million from the prior year period due mainly to a $112.9lower net income and payment of $182.8 million decreaserelated to the settlement of litigation of unauthorized activities in working capital needs in the current year period compared with the prior year. Working capital needs decreasedJapan during the nine months ended March 31, 2012 compared withthird quarter of fiscal 2013. See Note 2 of the prior year period as we collected outstanding receivable balances and maintained inventory levels after increasing inventory in the prior year dueNotes to customer demand and the conversion from air shipment to sea shipment. Working capital is defined as current assets minus current liabilities.decreased by $55.4increased$69.8 million from the prior year period due mainly to a $47.5$54.6 million decreaseincrease in capital expenditures and $11.0a $31.3 million of proceeds from the sale of an investmentincrease in acquisitions during the three months ended March 31, 2012. Capital expenditures were $149.4 million for the nine months ended March 31, 2012,2013, partially offset by $9.9 million of property insurance proceeds for damages from the earthquake and tsunami that occurred in Japan during the third quarter of fiscal 2011. Capital expenditures were $204.0 million for the nine months ended March 31, 2013, compared with $196.9$149.4 million in the prior year period.used forprovided from financing activities increased $119.1 to $53.9 million during the nine months ended March 31, 2012,2013, compared with cash used for financing activities of $185.8 million in the prior year period primarily due to the increased quarterly cash dividend and net payments on debt.Our quarterly cash dividend was $0.20 per share in fiscal 2012, an increase of 14.3% from the previous cash dividend of $0.175 per share in the prior fiscal year.$150.0$150.0 million on in August 18, 2011. Proceeds2011 and proceeds were used to pay down a portion of the U.S. Credit Facility.Facility in fiscal 2012. Net paymentsborrowings on the revolving U.S. Credit Facility were $165.0 million for the nine months ended March 31, 2013, compared with net payments of $180.0 million for the nine months ended March 31, 2012 compared with net borrowings.$65.0 million10.0% from the previous cash dividend of $0.20 per share in the prior year period. In addition, net payments on short-term loans were $53.6 million for the nine months ended March 31, 2012, compared with net payments of $3.0 million in the prior year period. To the extent we are required to pay all or any portion of the unauthorized loans in Japan our cash requirements may also be impacted.(the Commission) for the year ended June 30, 2011.2012. In addition, we have obligations under open purchase orders and the long-term liabilities reflected in our consolidated balance sheet, whichretiree health care benefit obligations.other postretirement benefits obligations and debt. Since June 30, 2011,2012, there have been no material changes in our contractual obligations and commercial commitments arising outside of the ordinary course of business other than the Private Placement. The Private Placement consists of three $50.0 million series notes: Series A that matures on August 18, 2016; Series B that matures on August 18, 2018; and Series C that matures on August 18, 2021.business. See Note 97 of the Notes to the Condensed Consolidated Financial Statements.“assume, “assume,” “potential,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. We describe our respective risks, uncertainties, and assumptions that could affect the outcome or results of operations in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended 20112012 (Form 10-K). You should carefully consider the risks described in our Form 10-K. Such risks are not the only ones we are facing;facing our company; additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. If any of the risks occur, our business, financial condition or operating results could be materially adversely affected.forecastforecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding growth strategies, industry trends, global economic conditions, success of customers, cost of raw materials, value of inventory, availability of credit,foreign currency exchange rates, labor costs, protection of intellectual property, cost reduction initiatives, unauthorized activities in Japan, acquisition synergies, manufacturing strategies, product development introduction and sales, regulatory changes, income tax fluctuations, competitive strengths, natural disasters, unauthorized access to data, government investigations and outcomes of legal proceedings. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this quarterly report, whether as a result of new information, future events, changes in assumptions or otherwise.and the development of natural hedges and the use of foreign exchange contracts to protect or preserve the value of cash flows. See Note 1210 of the Notes to the Condensed Consolidated Financial Statements for discussion of foreign exchange contracts in use at March 31, 20122013 and June 30, 2011.1210 of the Notes to the Condensed Consolidated Financial Statements for discussion of derivative instruments in use at March 31, 20122013 and June 30, 2011.the non-North Americannon-U.S. operations is impacted by fluctuations in foreign currency exchange rates. Consolidated net revenue and income from operations waswere impacted by the translation of our international financialincreaseddecreased net revenue of $72.4 million and increased income from operations of $13.5$42.5 million and $0.7 million, respectively, for the nine months ended March 31, 2012,2013, compared with the estimated results for the comparable period in the prior year.$13.7$10.1 million of marketable securities at March 31, 20122013 are principally invested in time deposits.$5.0$165.0 million outstanding on our $350.0$350.0 million U.S. Credit Facility with an interest rate of approximately 1.74%1.70% at March 31, 2012.customers or products fluctuates over time, but our broad base of customersproducts in several markets generally mitigates the concentration risk relating to any one customer or product.SEC’sthe Securities and Exchange Commission’s rules and forms, and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.2012,2013, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.decision-makingdecision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by intentionally falsified documentation, by collusion of two or more individuals within Molex or third parties, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.1412 of the Notes to the Condensed Consolidated Financial Statements, which is hereby incorporated by reference.20122013 were as follows (in thousands, except price per share data): Total Number
of Shares
Purchased Average Price
Paid per Share Total Number
of Shares
Purchased as
Part of Publicly
Announced Plan — $ — — 1 $ 20.91 — — $ — — 104 $ 22.30 — — $ — — 4 $ 22.85 — 109 $ 22.31 — Total Number
of Shares
Purchased Average Price
Paid per Share Total Number
of Shares
Purchased as
Part of Publicly
Announced PlanJanuary 1 - January 31 Common Stock — $ — — Class A Common Stock 56 $ 22.33 — February 1 - February 28 Common Stock — $ — — Class A Common Stock 73 $ 22.77 — March 1 - March 31 Common Stock — $ — — Class A Common Stock — $ — — Total 129 $ 22.58 — 10.1 RetirementAmended and Waiver and ReleaseRestated Credit Agreement between James E. Fleischhacker anddated as of April 23, 2013 among Molex Incorporated, dated February 22, 2012. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 27, 2012. (File No. 000-07491)the Lenders named therein, JPMorgan Chase Bank, as Administrative Agent, Standard Chartered Bank, as Syndication Agent and The Northern Trust Company as Documentation Agent. 10.2 Consulting Agreement between James E. Fleischhacker and Molex Incorporated dated February 22, 2012. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on February 27, 2012. (File No. 000-07491) 31 Rule 13a-14(a)/15d-14(a) Certifications 31.1 Section 302 certification by Chief Executive Officer 31.2 Section 302 certification by Chief Financial Officer 32 Section 1350 Certifications 32.1 Section 906 certification by Chief Executive Officer 32.2 Section 906 certification by Chief Financial Officer 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document MOLEX INCORPORATED (Registrant) April 26, 201225, 2013 David D. Johnson Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)