MOLX » Topics » Off-Balance Sheet Arrangements

These excerpts taken from the MOLX 10-K filed Aug 6, 2008.
Off-Balance Sheet Arrangements
 
An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) a retained or a contingent interest in transferred assets, (iii) any obligation under certain derivative instruments or (iv) any obligation under a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to a company, or engages in leasing, hedging, or research and development services within a company.
 
We do not have material exposure to any off-balance sheet arrangements. We do not have any unconsolidated special purpose entities.
 
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk
 
We are subject to market risk associated with changes in foreign currency exchange rates and interest rates.
 
We mitigate our foreign currency exchange rate risk principally through the establishment of local production facilities in the markets we serve. This creates a “natural hedge” since purchases and sales within a specific country are both denominated in the same currency and therefore no exposure exists to hedge with a foreign exchange forward or option contract (collectively, “foreign exchange contracts”). Natural hedges exist in most countries in which we operate, although the percentage of natural offsets, as compared with offsets that need to be hedged by foreign exchange contracts, will vary from country to country.


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We also monitor our foreign currency exposure in each country and implement strategies to respond to changing economic and political environments. Examples of these strategies include the prompt payment of intercompany balances utilizing a global netting system, the establishing of contra-currency accounts in several international subsidiaries, development of natural hedges and use of foreign exchange contracts to protect or preserve the value of cash flows. No material foreign exchange contracts were in use at June 30, 2008 and 2007.
 
We have implemented a formalized treasury risk management policy that describes the procedures and controls over derivative financial and commodity instruments. Under the policy, we do not use derivative financial or commodity instruments for speculative or trading purposes, and the use of such instruments is subject to strict approval levels by senior management. Typically, the use of derivative instruments is limited to hedging activities related to specific foreign currency cash flows and net receivable and payable balances.
 
The translation of the financial statements of the non-North American operations is impacted by fluctuations in foreign currency exchange rates. The increase in consolidated net revenue and income from operations was impacted by the translation of our international financial statements into U.S. dollars resulting in increased net revenue of $169.3 million and increased income from operations of $12.5 million for 2008, compared with the estimated results for 2007 using the average rates for 2007.
 
Our $34.3 million of marketable securities at June 30, 2008 are principally invested in time deposits.
 
Interest rate exposure is limited to our long-term debt. We do not actively manage the risk of interest rate fluctuations. However, such risk is mitigated by the relatively short-term nature of our investments (less than 12 months) and the fixed-rate nature of our long-term debt.
 
Due to the nature of our operations, we are not subject to significant concentration risks relating to customers, products or geographic locations.
 
We monitor the environmental laws and regulations in the countries in which we operate. We have implemented an environmental program to reduce the generation of potentially hazardous materials during our manufacturing process and believe we continue to meet or exceed local government regulations.


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Item 8.   Financial Statements and Supplementary Data
 
Molex Incorporated
 
Off-Balance Sheet
Arrangements



 



An off-balance sheet arrangement is any contractual arrangement
involving an unconsolidated entity under which a company has
(i) made guarantees, (ii) a retained or a contingent
interest in transferred assets, (iii) any obligation under
certain derivative instruments or (iv) any obligation under
a material variable interest in an unconsolidated entity that
provides financing, liquidity, market risk, or credit risk
support to a company, or engages in leasing, hedging, or
research and development services within a company.


 



We do not have material exposure to any off-balance sheet
arrangements. We do not have any unconsolidated special purpose
entities.


 















Item 7A.  

Quantitative
and Qualitative Disclosures About Market Risk



 



We are subject to market risk associated with changes in foreign
currency exchange rates and interest rates.


 



We mitigate our foreign currency exchange rate risk principally
through the establishment of local production facilities in the
markets we serve. This creates a “natural hedge” since
purchases and sales within a specific country are both
denominated in the same currency and therefore no exposure
exists to hedge with a foreign exchange forward or option
contract (collectively, “foreign exchange contracts”).
Natural hedges exist in most countries in which we operate,
although the percentage of natural offsets, as compared with
offsets that need to be hedged by foreign exchange contracts,
will vary from country to country.





37





Table of Contents






We also monitor our foreign currency exposure in each country
and implement strategies to respond to changing economic and
political environments. Examples of these strategies include the
prompt payment of intercompany balances utilizing a global
netting system, the establishing of contra-currency accounts in
several international subsidiaries, development of natural
hedges and use of foreign exchange contracts to protect or
preserve the value of cash flows. No material foreign exchange
contracts were in use at June 30, 2008 and 2007.


 



We have implemented a formalized treasury risk management policy
that describes the procedures and controls over derivative
financial and commodity instruments. Under the policy, we do not
use derivative financial or commodity instruments for
speculative or trading purposes, and the use of such instruments
is subject to strict approval levels by senior management.
Typically, the use of derivative instruments is limited to
hedging activities related to specific foreign currency cash
flows and net receivable and payable balances.


 



The translation of the financial statements of the non-North
American operations is impacted by fluctuations in foreign
currency exchange rates. The increase in consolidated net
revenue and income from operations was impacted by the
translation of our international financial statements into
U.S. dollars resulting in increased net revenue of
$169.3 million and increased income from operations of
$12.5 million for 2008, compared with the estimated results
for 2007 using the average rates for 2007.


 



Our $34.3 million of marketable securities at June 30,
2008 are principally invested in time deposits.


 



Interest rate exposure is limited to our long-term debt. We do
not actively manage the risk of interest rate fluctuations.
However, such risk is mitigated by the relatively short-term
nature of our investments (less than 12 months) and the
fixed-rate nature of our long-term debt.


 



Due to the nature of our operations, we are not subject to
significant concentration risks relating to customers, products
or geographic locations.


 



We monitor the environmental laws and regulations in the
countries in which we operate. We have implemented an
environmental program to reduce the generation of potentially
hazardous materials during our manufacturing process and believe
we continue to meet or exceed local government regulations.





38





 


















Item 8.  

Financial
Statements and Supplementary Data



 




Molex
Incorporated




 




This excerpt taken from the MOLX 10-K filed Aug 3, 2006.

Off-Balance Sheet Arrangements


An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) a retained or a contingent interest in transferred assets, (iii) any obligation under certain derivative instruments or (iv) any obligation under a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to a company, or engages in leasing, hedging, or research and development services within a company.


We do not have material exposure to any off-balance sheet arrangements.  We do not have any unconsolidated special purpose entities.


This excerpt taken from the MOLX 10-K filed Sep 12, 2005.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated entity under which a company has (a) made guarantees, (b) a retained or a contingent interest in transferred assets, (c) any obligation under certain derivative instruments or (d) any obligation under a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to a company, or engages in leasing, hedging, or research and development services within a company.

Molex does not have exposure to any off-balance sheet arrangements with the exception of certain operating leases. See Note 18 to the Notes to Consolidated Financial Statements for further discussion on the Company’s lease arrangements.

The Company does not have any unconsolidated special purpose entities.

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