Kenan Besirevic, Will Smith, Mason Thames 11/14 Dr. Yakhou
Financial Repor!ng Problems at Molex, Inc.
Molex designed, manufactured, and distributed electronic connectors that were used by
a wide range of industries. Molex was struggling in the area of financial performance in the
years of 2002 and 2003 due to a downturn in the economy. To make ma/er worse, in July of
2004 Molex corporate execu!ves discovered a problem with inventory that had a1ected results
for a couple years. The problem consisted of Molex’s sales of inventory to its subsidiary and
keeping that pro+t on its books thus increasing the companies reported sales, revenues, etc.
Dealing between a parent and its subsidiary should be excluded when the company computes
its consolidated financial statements. However, Molex did not make that exclusion which
