Molex Ends Year, Wields Axe
LISLE, Ill. -- Molex Incorporated (NASDAQ:MOLX)(NASDAQ:MOLXA), a global electronics components company, today announced it intends to record a pretax charge, in its fiscal fourth quarter ending June 30, 2003, of approximately $38 to $40 million, primarily related to the restructuring of its operations for the telecom infrastructure market.
As a result of continuing weak demand in the telecom infrastructure market, the Company will downsize two facilities in the United States, and write-off manufacturing assets as well as licenses and investments, all of which are dedicated to certain of its fiber optic components, primarily for the telecom industry. The Company will also close two smaller facilities located in the European Region that also supply products for the telecom infrastructure market. As part of these actions, the Company will reduce headcount by approximately 550 full and part time employees. The approximate amount of the pretax charge for all actions mentioned above is $38 to $40 million. Of this amount, approximately $19 million relates to facility and manufacturing assets, $6 million to licenses and investments, and $14 million to staffing reductions. The amount of the net after tax charge for all actions is estimated to be approximately $28 to $30 million.
Joe King, Vice-Chairman and Chief Executive Officer, said, "It is clear that the high end segment of the telecom market, especially in applications using optical products, will remain at disappointing levels longer that we had anticipated. The actions announced today are a necessary step to further adjust our cost structure and manufacturing presence, and support our initiatives and help us in our overall efforts to get back to our traditional profit goal."
Comments on 2003 Fourth Quarter and Fiscal Year
The Company now expects that revenues for the fourth quarter ending June 30, 2003, will be at the higher end of its previous guidance range of $450 to $460 million. Earnings per share after the charge are expected to be approximately $0.01 for the quarter ending June 30, 2003. Prior to the charge, earnings per share are now expected to be $0.15 to $0.16 as compared to the previous guidance of $0.14. The increase is primarily due to the elimination of previously planned bonus payments for employees at the corporate office, as well as at most operations. These actions are being taken in response to the charge mentioned in this release, as well as results that are below our budget for the fiscal year.
Based on these results for the June quarter, the Company now expects revenues of $1,825 to $1,830 billion for the full fiscal year ending June 30, 2003, and earnings per share after the charge of approximately $0.44. Earnings per share prior to the charge are expected to be $0.58 to $0.59 for the full fiscal year.