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 June 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 July 1, 1996, the total number of shares outstanding of Class A Common
Stock was 47,334,052. 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
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statement of Income
Three and six months ended June 30, 1996 and 1995 5
Condensed Consolidated Statement of Cash Flow
Six months ended June 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)
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
A S S E T S
Current Assets:
Cash and short-term cash investments......... $ 20,936 $ 12,028
Accounts receivable, less allowance
for doubtful accounts of $2,007
and $1,758, respectively................... 77,690 67,419
Inventories.................................. 142,006 134,753
Prepaid expenses and other assets............ 12,756 11,516
-------- --------
Total current assets........................... 253,388 225,716
-------- --------
Land and depreciable assets, less
accumulated depreciation of
$155,293 and $150,560, respectively.......... 97,980 94,659
Deferred debt issuance costs................... 4,042 4,332
Excess of cost over fair value of net
assets acquired.............................. 337,199 342,624
Other assets................................... 19,773 22,593
-------- --------
$712,382 $689,924
________ ________
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................. $ 48,564 $ 51,684
Accrued interest.............................. 2,402 2,701
Other accrued expenses........................ 40,004 47,348
Current portion of long-term debt............. 6,019 2,670
-------- --------
Total current liabilities....................... 96,989 104,403
-------- --------
Long-term debt.................................. 195,641 195,195
Accrued pension and post employment
benefit obligations........................... 23,584 27,486
Deferred taxes and other liabilities............ 19,077 18,755
Shareholders' Equity:
Common stock.................................. 47 47
Additional paid-in capital.................... 265,247 265,193
Accumulated earnings.......................... 118,404 84,056
Cumulative valuation adjustments.............. (6,607) (5,211)
-------- --------
Total shareholders' equity...................... 377,091 344,085
-------- --------
$712,382 $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 Six months ended
June 30, June 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales....................................... $198,921 $207,584 $393,743 $405,559
Costs and expenses:
Cost of sales, excluding depreciation
and amortization............................. 126,878 136,141 250,806 266,247
Depreciation and amortization expense......... 7,143 7,147 14,329 14,119
Selling, general and administrative expense... 29,553 29,893 58,252 58,553
-------- -------- -------- --------
Operating income................................ 35,347 34,403 70,356 66,640
Interest expense................................ (6,091) (6,513) (12,143) (13,223)
Other expense, net.............................. (903) (1,115) (1,627) (2,940)
-------- -------- -------- --------
Income before income taxes...................... 28,353 26,775 56,586 50,477
Provision for income taxes...................... 10,945 10,710 22,238 20,191
-------- -------- -------- --------
Net income...................................... $ 17,408 $ 16,065 $ 34,348 $ 30,286
________ ________ ________ ________
Net income per common and common
equivalent share.............................. $.37 $.34 $.73 $.64
____ ____ ____ ____
Average common and common
equivalent shares outstanding................. 47,328,447 47,299,950 47,324,492 47,295,326
__________ __________ __________ __________
<FN>
See accompanying notes to condensed
consolidated financial statements.
</TABLE>
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
(dollars in thousands)
Six Months Ended
June 30,
---------------------
1996 1995
-------- --------
Net income....................................... $ 34,348 $ 30,286
Adjustments for cash from operations:
Depreciation and amortization.................. 14,329 14,119
Amortization of deferred debt issuance costs... 346 325
Net change in non-cash components of
working capital............................... (31,497) (11,788)
-------- --------
Cash provided from operations.................... 17,526 32,942
-------- --------
Cash flow from investing activities:
Capital additions, net......................... (10,636) (12,528)
Reduction in acquisition related
environmental reserves..................... - (797)
-------- --------
Cash flow used by investing activities........... (10,636) (13,325)
-------- --------
Cash flow from financing activities:
Net change in borrowings under revolving
credit facilities.......................... 2,018 27,713
Decrease in long-term debt..................... - (45,368)
-------- --------
Cash flow from (used by) financing activities.... 2,018 (17,655)
-------- --------
Net change in cash and short-term
cash investments............................... 8,908 1,962
Cash and short-term cash investments
balance, beginning of period................... 12,028 4,582
-------- --------
Cash and short-term cash investments
balance, end of period......................... $ 20,936 $ 6,544
________ ________
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 June 30, 1996 and December
31, 1995 and the related condensed consolidated statements of income for the
three and six months ended June 30, 1996 and 1995 and of cash flow for the six
months ended June 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 six months ended June 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:
June 30, December 31,
1996 1995
--------- ------------
(Unaudited)
Raw materials and supplies......... $ 22,054 $ 21,094
Work in process.................... 86,086 79,971
Finished goods..................... 33,866 33,688
-------- --------
$142,006 $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 six months ended June 30, 1996 compared to the quarter and six
- --------------------------------------------------------------------------
months ended June 30, 1995
- --------------------------
Net sales in the second quarter of 1996 decreased approximately 4% from the
comparable 1995 quarter to $198,921. For the six months ended June 30, 1996,
net sales decreased approximately 3% to $393,743. The decrease in sales for
both the quarter and six 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 $5.4 million in the
second quarter and approximately $5.7 million in the six 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 the 1996 second quarter and six month period
compared to 32% for the 1995 second quarter and six month period, respectively.
The increase in the gross profit margin in both the 1996 quarter and six 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
increased approximately .5% for the 1996 second quarter and six month periods
compared to the 1995 periods primarily as a result of increased selling
expenses.
Interest expense for the second quarter and six months decreased to $6,091
and $12,143 in 1996 from $6,513 and $13,223 in 1995, respectively. The
reduction in both periods is primarily attributable to decreased debt levels.
Other expense for the second quarter and six months was $903 and $1,627 in
1996 compared to $1,115 and $2,940 in 1995, respectively. The decrease in 1996
relates to an increase of 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 such as expenses associated with the 1995 secondary stock
offering.
The provision for income taxes for the six months ended June 30, 1996 was
$22,238 compared to $20,191 in 1995. The 1996 estimated effective tax rate of
approximately 39% reflects federal, state and foreign taxes.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities was $17,526 in the six months ended
June 30, 1996 compared to $32,942 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. The timing and price of any repurchases
under the program will depend on market conditions.
The Company's primary ongoing cash requirements will be for debt service,
capital expenditures, product development activities and purchase of common
stock under the program described above. 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, product development activities and stock repurchases 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
At the Company's 1996 Annual Meeting of Shareholder's held on May
23, 1996, amendments to the Stock Option Plan were approved. Of the
47,321,051 shares eligible to vote, 34,568,216 shares voted in favor
of the proposed amendments and 286,643 shares were voted against the
proposed amendments. Also approved at the 1996 Annual Meeting was a
new Long-Term Incentive Stock Plan of the Company. Of the 47,321,051
shares eligible to vote, 34,488,956 shares were voted in favor of the
plan and 348,931 shares were voted against the plan.
Item 5. OTHER INFORMATION
On May 23, 1996, the Company announced at its Annual Meeting the
promotion of Martin H. Loeffler to Chief Executive Officer in
addition to his current responsibilities as President.
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 June 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: August 13, 1996 /s/Edward G. Jepsen
----------------- ---------------------------
Edward G. Jepsen
Executive Vice President and
Chief Financial Officer
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