SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to _________________
Commission File Number 1-10879
AMPHENOL CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 22-2785165
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
358 Hall Avenue, Wallingford, Connecticut 06492
203-265-8900
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
Indicate by check mark whether the Registrant (1) has filed reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
___ ___
As of October 1, 1996, the total number of shares outstanding of Class A
Common Stock was 46,241,853. There are no shares outstanding of Class B Common
Stock.
<PAGE>
AMPHENOL CORPORATION
Index to Quarterly Report
on Form 10-Q
Page
____
Part I Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet
September 30, 1996 and December 31, 1995 3
Condensed Consolidated Statement of Income
Three and nine months ended September 30, 1996 and 1995 5
Condensed Consolidated Statement of Cash Flow
Nine months ended September 30, 1996 and 1995 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 8
Part II Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote
of Security-Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
A S S E T S
Current Assets:
Cash and short-term cash investments......... $ 2,941 $ 12,028
Accounts receivable, less allowance
for doubtful accounts of $1,657
and $1,758, respectively................... 71,668 67,419
Inventories.................................. 151,901 134,753
Prepaid expenses and other assets............ 11,364 11,516
-------- --------
Total current assets........................... 237,874 225,716
-------- --------
Land and depreciable assets, less
accumulated depreciation of
$159,142 and $150,560, respectively.......... 100,949 94,659
Deferred debt issuance costs................... 3,888 4,332
Excess of cost over fair value of net
assets acquired.............................. 347,661 342,624
Other assets................................... 19,269 22,593
-------- --------
$709,641 $689,924
________ ________
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................. $ 46,288 $ 51,684
Accrued interest.............................. 8,128 2,701
Other accrued expenses........................ 38,418 47,348
Current portion of long-term debt............. 5,842 2,670
-------- --------
Total current liabilities....................... 98,676 104,403
-------- --------
Long-term debt.................................. 200,544 195,195
Accrued pension and post employment
benefit obligations........................... 19,128 27,486
Deferred taxes and other liabilities............ 18,968 18,755
Shareholders' Equity:
Common stock.................................. 47 47
Additional paid-in capital.................... 265,347 265,193
Accumulated earnings.......................... 135,101 84,056
Cumulative valuation adjustments.............. (6,487) (5,211)
Treasury stock, at cost....................... (21,683) -
-------- --------
Total shareholders' equity...................... 372,325 344,085
-------- --------
$709,641 $689,924
________ ________
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(dollars in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales....................................... $184,876 $189,012 $578,619 $594,571
Costs and expenses:
Cost of sales, excluding depreciation
and amortization............................. 117,136 120,409 367,942 386,656
Depreciation and amortization expense......... 7,134 6,905 21,463 21,024
Selling, general and administrative expense... 27,107 27,762 85,359 86,315
-------- -------- -------- --------
Operating income................................ 33,499 33,936 103,855 100,576
Interest expense................................ (6,097) (6,342) (18,240) (19,565)
Other expense, net.............................. (989) (777) (2,616) (3,717)
-------- -------- -------- --------
Income before income taxes...................... 26,413 26,817 82,999 77,294
Provision for income taxes...................... 9,716 10,727 31,954 30,918
-------- -------- -------- --------
Net income...................................... $ 16,697 $ 16,090 $ 51,045 $ 46,376
________ ________ ________ ________
Net income per common and common
equivalent share.............................. $.36 $.34 $1.08 $.98
____ ____ _____ ____
Average common and common
equivalent shares outstanding................. 46,853,784 47,308,919 47,166,444 47,299,907
__________ __________ __________ __________
<FN>
See accompanying notes to condensed
consolidated financial statements.
</TABLE>
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
(dollars in thousands)
Nine Months Ended
September 30,
---------------------
1996 1995
-------- --------
Net income....................................... $ 51,045 $ 46,376
Adjustments for cash from operations:
Depreciation and amortization.................. 21,463 21,024
Amortization of deferred debt issuance costs... 518 487
Net change in non-cash components of
working capital............................... (27,118) (7,563)
-------- --------
Cash provided from operations.................... 45,908 60,324
-------- --------
Cash flow from investing activities:
Capital additions, net......................... (16,177) (15,597)
Cost of acquisition............................ (21,280) -
Other.......................................... - (1,030)
-------- --------
Cash flow used by investing activities........... (37,457) (16,627)
-------- --------
Cash flow from financing activities:
Net change in borrowings under revolving
credit facilities.......................... 5,812 640
Treasury stock purchases....................... (21,350) -
Net change in receivables sold................. (2,000) -
Decrease in long-term debt..................... - (45,368)
-------- --------
Cash flow used by financing activities........... (17,538) (44,728)
-------- --------
Net change in cash and short-term
cash investments............................... (9,087) (1,031)
Cash and short-term cash investments
balance, beginning of period................... 12,028 4,582
-------- --------
Cash and short-term cash investments
balance, end of period......................... $ 2,941 $ 3,551
________ ________
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 1 - Principles of Consolidation and Interim Financial Statements
- ---------------------------------------------------------------------
The condensed consolidated balance sheet as of September 30, 1996 and
December 31, 1995 and the related condensed consolidated statements of income
for the three and nine months ended September 30, 1996 and 1995 and of cash
flow for the nine months ended September 30, 1996 and 1995 include the accounts
of the Company and its subsidiaries. The interim financial statements included
herein are unaudited. In the opinion of management all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
interim financial statements have been included. The results of operations for
the three and nine months ended September 30, 1996 are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the financial statements and
notes included in the 1995 Annual Report to Shareholders of Amphenol
Corporation.
Note 2 - Inventories
- --------------------
Inventories consist of:
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
Raw materials and supplies......... $ 21,919 $ 21,094
Work in process.................... 92,276 79,971
Finished goods..................... 37,706 33,688
-------- --------
$151,901 $134,753
________ ________
Note 3 - Commitments and Contingencies
- --------------------------------------
In the course of pursuing its normal business activities, the Company is
involved in various legal proceedings and claims. Management does not expect
that amounts, if any, which may be required to be paid by reason of such
proceedings or claims will have a material effect on the Company's financial
position or results of operations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(dollars in thousands, except per share data)
Results of Operations
- ---------------------
Quarter and nine months ended September 30, 1996 compared to the quarter and
- ----------------------------------------------------------------------------
nine months ended September 30, 1995
- ------------------------------------
Net sales in the third quarter of 1996 decreased approximately 2% from the
comparable 1995 quarter to $184,876. For the nine months ended September 30,
1996, net sales decreased approximately 3% to $578,619. The decrease in sales
for both the quarter and nine month period is primarily attributable to lower
sales of coaxial cable products substantially offset by increased sales of
interconnect products particularly in the aerospace, automotive safety and
communications markets. Currency translation and the relatively stronger U.S.
dollar had the effect of decreasing sales by approximately $2.9 million in the
third quarter and approximately $8.6 million in the nine month period 1996 when
compared to exchange rates for the comparable 1995 periods.
The gross profit margin as a percentage of net sales (including depreciation
in cost of sales) was 34% for both the 1996 third quarter and nine month period
compared to 34% and 33% for the 1995 third quarter and nine month period,
respectively. The increase in the gross profit margin in the nine month period
is generally attributable to increased sales of higher margin application
specific interconnect products and continuing programs of cost control.
Selling, general and administrative expenses as a percentage of net sales
remained relatively constant at approximately 15% for the quarter and nine
months ended September 30, 1996 compared to the 1995 periods.
Interest expense for the third quarter and nine months decreased to $6,097
and $18,240 in 1996 from $6,342 and $19,565 in 1995, respectively. The
reduction in both periods is primarily attributable to decreased debt levels.
Other expense for the third quarter and nine months was $989 and $2,616 in
1996 compared to $777 and $3,717 in 1995, respectively. The decrease in the
1996 nine month amount relates to an increase in interest income on higher
levels of short-term cash investments in 1996 and the absence in the 1996
periods of certain nonrecurring expenses in 1995 including expenses associated
with the 1995 secondary stock offering.
The provision for income taxes for the nine months ended September 30, 1996
was $31,954 compared to $30,918 in 1995. The 1996 estimated effective tax rate
of approximately 38.5% reflects federal, state and foreign taxes.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities was $45,908 in the nine months ended
September 30, 1996 compared to $60,324 in the 1995 period. The decrease in
cash flow relates primarily to a net increase in non-cash components of working
capital offset in part by an increase in net income.
On July 15, 1996, the Company's Board of Directors authorized an open market
stock repurchase program of up to two million shares of its common stock during
the period ending December 31, 1997. As of September 30, 1996, the Company
repurchased 1,098,200 shares under the program.
The Company's primary ongoing cash requirements will be for debt service,
capital expenditures and product development activities. The Company's debt
service requirements consist primarily of interest on Senior Notes due 2001 and
Senior Subordinated Notes due 2002. The Company has not paid, and does not
have any present intention to commence payment of, cash dividends on its Common
Stock. The Company expects that ongoing requirements for debt service, capital
expenditures and product development activities will be funded by
internally-generated cash flow and availability under the Company's $150
million Revolving Credit facility.
<PAGE>
Environmental Matters
- ---------------------
The Company is subject to various environmental laws, regulations and
proceedings regarding discharge of pollutants and the handling and disposal of
solid and hazardous wastes. In conjunction with the acquisition of Amphenol
from Allied Corporation in 1987, Allied agreed to provide substantial
indemnification for potential environmental liabilities identified within a
period of seven years following the acquisition that arose out of events,
conditions or circumstances that occurred or existed at the time of or prior to
the acquisition to the extent that such liability exceeds $13.0 million. In
such event, Allied is obligated to pay 80% of the excess over $13.0 million and
100% of the excess over $30.0 million. The Company has been named as a
defendant in various legal actions and as a potentially responsible party in
relation to several environmental clean-up sites in which the associated costs
are subject to the Allied indemnification agreement. The Company believes that
it has provided adequate reserves for unindemnified costs that may be incurred
with respect to known environmental liabilities. Management does not believe
that the costs associated with resolution of these matters, net of
indemnification from Allied, will have a material adverse effect on the
Company's financial position.
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Reference is made to the Company's 1995 Form 10-K with respect to
certain pending legal proceedings.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
Item 5. OTHER INFORMATION
On September 27, 1996 the Company completed its acquisition of
The Sine Companies, Inc. The acquisition has been accounted for
under the purchase method of accounting.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports filed on Form 8-K - There were no reports on Form 8-K
filed for or during the three months ended September 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMPHENOL CORPORATION
DATE: November 14, 1996 /s/Edward G. Jepsen
------------------- ---------------------------
Edward G. Jepsen
Executive Vice President and
Chief Financial Officer
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<NAME> AMPHENOL CORPORATION
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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