<PAGE>
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, 1999
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 |_| No |X|
As of July 1, 1999, the total number of shares outstanding of Class A Common
Stock was 17,864,636. 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 Sheets
June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income
Three and six months ended June 30, 1999 and 1998 5
Condensed Consolidated Statement of Changes
in Shareholders' Deficit
Six months ended June 30, 1999 6
Condensed Consolidated Statement of Changes
in Shareholders' Deficit
Six months ended June 30, 1998 7
Condensed Consolidated Statements of Cash Flow
Six months ended June 30, 1999 and 1998 8
Notes to Condensed Consolidated Financial
Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 15
Part II Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of Matters to a Vote
of Security-Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 20
<PAGE>
Part I. Financial Information
Item 1. FINANCIAL STATEMENTS
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
A S S E T S
Current Assets:
Cash and short-term cash investments.......... $ 7,861 $ 3,095
Accounts receivable, less allowance
for doubtful accounts of $2,178
and $1,832, respectively.................... 100,440 83,065
Inventories................................... 188,502 184,424
Prepaid expenses and other assets............. 20,366 17,089
-------- --------
Total current assets............................ 317,169 287,673
-------- --------
Land and depreciable assets, less
accumulated depreciation of
$192,840 and $190,047, respectively........... 121,761 126,779
Deferred debt issuance costs.................... 15,402 16,783
Excess of cost over fair value of net
assets acquired............................... 363,146 360,265
Other assets.................................... 11,577 15,901
-------- --------
$829,055 $807,401
-------- --------
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable.............................. $ 73,886 $ 67,885
Accrued interest.............................. 10,313 11,306
Other accrued expenses........................ 51,820 43,319
Current portion of long-term debt............. 1,654 1,655
-------- --------
Total current liabilities....................... 137,673 124,165
-------- --------
Long-term debt.................................. 945,464 952,469
Deferred taxes and other liabilities............ 26,278 23,024
Shareholders' Deficit:
Common stock.................................. 18 18
Additional paid-in deficit.................... (499,838) (499,928)
Accumulated earnings.......................... 233,563 214,861
Accumulated other comprehensive loss.......... (14,103) (7,208)
-------- --------
Total shareholders' deficit..................... (280,360) (292,257)
-------- --------
$829,055 $807,401
-------- --------
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales....................................... $247,438 $227,942 $484,602 $456,483
Costs and expenses:
Cost of sales, excluding depreciation
and amortization............................. 162,198 147,824 319,487 296,893
Depreciation and amortization expense......... 7,064 5,832 13,949 11,237
Selling, general and administrative expense... 35,797 32,297 70,059 64,981
Amortization of goodwill...................... 3,082 2,830 6,160 5,658
-------- -------- -------- --------
Operating income................................ 39,297 39,159 74,947 77,714
Interest expense................................ (19,860) (19,990) (39,672) (40,292)
Other expenses, net............................. (1,355) (903) (2,588) (1,982)
-------- -------- -------- --------
Income before income taxes...................... 18,082 18,266 32,687 35,440
Provision for income taxes...................... 7,619 7,911 13,985 15,412
-------- -------- -------- --------
Net income...................................... $ 10,463 $ 10,355 $ 18,702 $ 20,028
-------- -------- -------- --------
Net income per common share..................... $.59 $.59 $1.05 $1.14
---- ---- ----- -----
Average common shares outstanding............... 17,863,516 17,537,425 17,862,932 17,535,622
---------- ---------- ---------- ----------
Net income per common share - assuming dilution. $.58 $.58 $1.04 $1.12
---- ---- ----- -----
Average common shares outstanding
assuming dilution............................. 18,093,336 17,938,514 18,062,502 17,940,106
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' DEFICIT
for the six months ended June 30, 1999
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Comprehensive Accumulated Comprehensive Shareholders'
Stock Deficit Income Earnings Loss Deficit
------ ------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance
at December 31, 1998........... $18 ($499,928) $214,861 ($7,208) ($292,257)
Comprehensive income:
Net income..................... [$18,702] 18,702 18,702
-------
Other comprehensive loss,
net of tax:
Foreign currency translation
adjustment................. (6,895) (6,895) (6,895)
-------
Comprehensive income............. [$11,807]
=======
Other adjustments................ 90 90
-------- -------- -------- -------- --------
Ending balance at June 30, 1999.. $18 ($499,838) $233,563 ($14,103) ($280,360)
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' DEFICIT
for the six months ended June 30, 1998
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Comprehensive Accumulated Comprehensive Shareholders'
Stock Deficit Income Earnings Loss Deficit
------ ------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance
at December 31, 1997........... $18 ($511,582) $178,351 ($9,912) ($343,125)
Comprehensive income:
Net income..................... [$20,028] 20,028 20,028
-------
Other comprehensive loss,
net of tax:
Foreign currency translation
adjustment................. (832) (832) (832)
-------
Comprehensive income............. [$19,196]
=======
Other adjustments................ 115 115
-------- -------- -------- -------- ---------
Ending balance at June 30, 1998.. $18 ($511,467) $198,379 ($10,744) ($323,814)
======== ======== ======== ======== =========
</TABLE>
See accompanying notes to condensed
consolidated financial statements.
<PAGE>
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Net income....................................... $ 18,702 $20,028
Adjustments for cash from operations:
Depreciation and amortization................... 20,109 16,895
Amortization of deferred debt issuance costs.... 1,381 1,372
Net change in non-cash components of
working capital............................... (16,441) (18,325)
------- -------
Cash flow provided by operations................. 23,751 19,970
------- -------
Cash flow from investing activities:
Capital additions, net......................... (11,593) (14,417)
Investments in acquisitions.................... (1,416) (12,067)
------- -------
Cash flow used by investing activities........... (13,009) (26,484)
------- -------
Cash flow from financing activities:
Net change in borrowings under revolving
credit facilities............................ (5,976) 9,724
Decrease in borrowings under New Credit Facility - (5,000)
------- -------
Cash flow (used by) provided by
financing activities........................... (5,976) 4,724
------- -------
Net change in cash and short-term
cash investments............................... 4,766 (1,790)
Cash and short-term cash investments
balance, beginning of period................... 3,095 4,713
------- -------
Cash and short-term cash investments
balance, end of period......................... $ 7,861 $ 2,923
======= =======
Cash paid during the period for:
Interest....................................... $39,332 $38,030
Income taxes paid, net of refunds.............. 8,511 12,814
</TABLE>
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 sheets as of June 30, 1999 and December
31, 1998, and the related condensed consolidated statements of income for the
three and six months ended June 30, 1999 and 1998 and of changes in
shareholders' deficit and of cash flow for the six months ended June 30, 1999
and 1998 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, 1999 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 Company's 1998 Annual Report on Form 10-K.
Note 2 - Inventories
- --------------------
Inventories consist of:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- ------------
(Unaudited)
<S> <C> <C>
Raw materials and supplies......... $ 27,385 $ 24,806
Work in process.................... 117,909 114,035
Finished goods..................... 43,208 45,583
-------- --------
$188,502 $184,424
-------- --------
</TABLE>
Note 3 - Reportable Business Segments (Unaudited)
- -------------------------------------------------
The Company has two reportable business segments: interconnect products and
assemblies and cable products. The interconnect products and assemblies segment
produces connectors and connector assemblies primarily for the communications,
aerospace, industrial and automotive markets. The cable products segment
produces coaxial and flat ribbon cable primarily for communication markets,
including cable television. The Company evaluates the performance of business
units on, among other things, profit or loss from operations before interest
expense, goodwill and other intangible amortization expense, headquarters'
expense allocations, income taxes and nonrecurring gains and losses. The
Company's reportable segments are an aggregation of business units that have
similar production processes and products. The segment results for the six
<PAGE>
months ended June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Interconnect
products Cable
and assemblies products Total
---------------- ---------------- ----------------
1999 1998 1999 1998 1999 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net sales
- external........ $366,937 $358,593 $117,665 $97,890 $484,602 $456,483
- intersegment.... 323 202 4,491 3,660 4,814 3,862
Segment operating
income............ 61,960 72,696 23,309 14,190 85,269 86,886
</TABLE>
Reconciliation of segment operating income to consolidated income before taxes
for the six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Segment operating income....... $ 85,269 $ 86,886
Amortization of goodwill....... (6,160) (5,658)
Interest expense............... (39,672) (40,292)
Other net expenses............. (6,750) (5,496)
-------- --------
Consolidated income before
income taxes................. $ 32,687 $ 35,440
-------- --------
</TABLE>
Note 4 - 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
condition or results of operations.
Subsequent to the acquisition of Amphenol from Allied Signal Corporation
("Allied") in 1987, Amphenol and Allied have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Allied is currently obligated to pay 80% of the costs up to $30,000 and 100% of
the costs in excess of $30,000. Management does not believe that the costs
associated with resolution of these or any other environmental matters will have
a material adverse effect on the Company's financial condition or results of
operations.
<PAGE>
A subsidiary of the Company has an agreement with a financial institution
whereby the subsidiary can sell an undivided interest of up to $60,000 in a
designated pool of qualified accounts receivable. The agreement expires in 2004.
Under the terms of the agreement, new receivables are added to the pool as
collections reduce previously sold accounts receivable. The Company services,
administers and collects the receivables on behalf of the purchaser. Fees
payable to the purchaser under this agreement are equivalent to rates afforded
high quality commercial paper issuers plus certain administrative expenses and
are included in other expenses, net, in the accompanying Consolidated Statements
of Income. The agreement contains certain covenants and provides for various
events of termination. In certain circumstances the Company is contingently
liable for the collection of the receivables sold; management believes that its
allowance for doubtful accounts is adequate to absorb the expense of any such
liability. At June 30, 1999 and December 31, 1998, approximately $60,000 in
receivables were sold under the agreement and are therefore not reflected in the
accounts receivable balance in the accompanying Condensed Consolidated Balance
Sheets at those dates.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollars in thousands, except per share data)
Results of Operations
- ---------------------
Quarter and six months ended June 30, 1999 compared to the quarter and six
- --------------------------------------------------------------------------
months ended June 30, 1998
- --------------------------
Net sales for the second quarter of 1999 increased 9% to $247,438 compared to
$227,942 for the second quarter of 1998. Net sales for the six months ended June
30, 1999 were $484,602 compared to $456,483 for the comparable 1998 period. The
increase in sales for the second quarter and six month 1999 periods is primarily
attributable to increased sales of products and interconnect systems for
wireless and broadband communication applications offset in part by a decline in
interconnect products for aerospace applications. Currency translation had the
effect of reducing sales in the second quarter 1999 by approximately $1.3
million and had no significant effect in the six month period 1999 when compared
to exchange rates for the comparable 1998 periods.
The gross profit margin as a percentage of net sales (including depreciation
in cost of sales) was 31% for the three and six months ended June 30, 1999
compared to 33% for the 1998 periods. The decrease in the gross profit margin is
generally attributable to changes in product mix.
Selling, general and administrative expenses as a percentage of net sales
remained relatively constant at approximately 14% for the second quarter and six
months ended June 30, 1999 and 1998, respectively.
Interest expense for the second quarter and six months decreased to $19,860
and $39,672 in 1999 from $19,990 and $40,292 in 1998, respectively. The decrease
in both periods is primarily attributable to lower interest rates on the
Company's term loan facility for the six months ended June 30, 1999 compared to
the 1998 period.
The provision for income taxes for the second quarter and six months was
$7,619 and $13,985 in 1999 compared to $7,911 and $15,412 in 1998, respectively.
The 1999 estimated effective tax rate of approximately 43% reflects federal,
state and foreign taxes.
Liquidity and Capital Resources
- -------------------------------
Cash provided by operating activities was $23,751 in the six months ended
June 30, 1999 compared to $19,970 in the 1998 period. The increase in cash flow
relates primarily to an increase in net income adjusted for depreciation and
amortization charges and a net decrease in non-cash components of working
capital.
In 1999, cash from operating activities was used to fund capital expenditures
of $11,593 and acquisitions of $1,416, and to repay indebtedness of $5,976. In
1998, cash from operating activities and borrowings under the credit facility
were used to fund capital expenditures of $14,417 and acquisitions of $12,067.
<PAGE>
In conjunction with a Merger and Recapitalization in 1997, the Company
entered into a $900 million Bank Agreement with a syndicate of financial
institutions, comprised of a $150 million revolving credit facility that expires
in the year 2004 and a $750 million term loan facility. The term loan facility
includes a $350 million Tranche A maturing over a 7 year period ending 2004, and
a $375 million Tranche B with required amortization in 2005 and 2006. The credit
agreement is secured by pledges of 100% of the capital stock of the Company's
direct domestic subsidiaries and 65% of the capital stock of direct material
foreign subsidiaries, and the agreement requires the maintenance of certain
interest coverage and leverage ratios, and includes limitations with respect to,
among other things, indebtedness, and restricted payments, including dividends
on the Company's common stock. At June 30, 1999 there were $680 million of
borrowings outstanding under the term loan facility. Availability under the
revolving credit facility at June 30, 1999 was $126,130, after reduction of
$7,670 for outstanding letters of credit.
In July 1997, the Company entered into interest rate protection agreements
that effectively fixed the Company's interest cost on $450 million of borrowings
under the Bank Agreement to the extent that LIBOR interest rates remain below 7%
for $300 million of borrowings and below 8% for $150 million of borrowings.
The Company's EBITDA as defined in the Bank Agreement was $97.6 million and
$96.0 million for the six months ended June 30, 1999 and 1998, respectively.
EBITDA is not a defined term under Generally Accepted Accounting Principles
(GAAP) and is not an alternative to operating income or cash flow from
operations as determined under GAAP. The Company believes that EBITDA provides
additional information for determining its ability to meet future debt service
requirements; however, EBITDA does not reflect cash available to fund debt
requirements.
The Company's primary ongoing cash reqirements will be for debt service,
capital expenditures and product development activities. The Company's debt
service requirements consist primarily of principal and interest on bank
borrowings and interest on Senior Subordinated Notes due 2007. 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
revolving credit facility. The Company may also use cash to fund part or all of
the cost of future acquisitions.
Environmental Matters
- ---------------------
Subsequent to the acquisition of Amphenol from Allied Signal Corporation in
1987, Amphenol and Allied have been named jointly and severally liable as
potentially responsible parties in relation to several environmental cleanup
sites. Amphenol and Allied have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these sites is apportioned between Amphenol and
Allied based on an agreement entered into in connection with the acquisition.
For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Allied is currently obligated to pay 80% of the costs up to $30,000 and 100% of
the costs in excess of $30,000. Management does not believe that the costs
associated with resolution of these or any other environmental matters will have
a material adverse effect on the Company's financial condition or results of
operations.
<PAGE>
Recent Accounting Change
- ------------------------
In June 1998 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (FAS 133), "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that an entity
recognize all derivatives as either assets or liabilities in the Statement of
Financial Position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gains and losses)
depends on the intended use of the derivative and its resulting designation. The
Company is in the process of evaluating the effect this new standard will have
on the Company's financial statements. The Company is required to adopt FAS 133,
as amended by FAS 137, beginning January 1, 2001.
Information Systems and the Year 2000
- -------------------------------------
The Year 2000 issue is primarily the result of computer programs using a two
digit format, as opposed to four digits, to indicate the year. Such computer
systems will be unable to interpret dates beyond the year 1999, which could
cause a system failure or other computer errors, leading to a disruption in the
operation of such systems. In 1996, the Company began a systematic review of all
of its business information systems to ensure that the systems now in use
worldwide will be Year 2000 compliant before the turn of the century. The
Company has established a Year 2000 Program Management Group to provide overall
guidance and direction for this compliance mission. Communications were
initiated to all of the Company's business units focusing on the critical nature
of this project and the Program Management Group has continually monitored the
progress and status of each business unit. The Program Management Group has
focused its efforts on four main areas: (1) information systems software and
hardware; (2) non-information technology systems; (3) facilities equipment; and
(4) customer and vendor relationships. The Company expects its Year 2000
conversion project to be completed on a timely basis so as to not significantly
impact business operations.
Based on the assessment efforts to date, the Company does not believe that
the Year 2000 issue will have a material adverse effect on its financial
condition or results of operations. The Company operates a number of business
units worldwide and has a large supplier base and believes that this will
mitigate any adverse impact. The Company's beliefs and expectations, however,
are based on certain assumptions and expectations that ultimately may prove to
be inaccurate. Potential sources of risk include: (a) the inability of principal
suppliers to be Year 2000 ready, which could result in delays in product
deliveries from such suppliers, (b) disruption of the product distribution
channel, including ports and transportation vendors and (c) the general
breakdown of necessary infrastructure such as electricity supply. The Company is
developing contingency plans to reduce the impact of transactions with
non-compliant suppliers and other parties. Although there can be no assurance
that multiple business disruptions caused by technology failures can be
adequately anticipated, the Company is identifying various alternatives to
minimize the potential risk to its business operations.
<PAGE>
The Company estimates the cost for its Year 2000 compliance efforts to be
approximately $3.0 million, including the cost of new systems and system
upgrades some of which will be capitalized. The cost is being funded through
operating cash flows. The Company's aggregate cost estimate does not include
time and costs that may be incurred by the Company as a result of the failure of
any third parties, including suppliers, to become Year 2000 ready or costs to
implement any contingency plans. Such costs are not anticipated to have a
material impact on the Company's financial position, results of operations or
cash flows.
Euro Currency Conversion
- ------------------------
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency (Euro). The transition period for the
introduction of the Euro is between January 1, 1999 and January 1, 2002. The
Company is addressing issues associated with the Euro conversion and although
the Company cannot predict the overall impact of the Euro conversion at this
time, the Company does not expect that the Euro conversion will have a material
adverse effect on its financial condition or results of operations.
Safe Harbor Statement
- ---------------------
Statements in this report that are not strictly historical are
"forward-looking" statements which should be considered as subject to the many
uncertainties that exist in the Company's operations and business environment.
These uncertainties which include, among other things, economic and currency
conditions, market demand and pricing and competitive and cost factors are set
forth in the Company's 1998 Annual Report on Form 10-K.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company's assessment of its
sensitivity to market risk since its presentation set forth, in Item 7A.
"Quantitative and Qualitative Disclosures About Market Risk," in its 1998
Annual Report on Form 10-K filed with the SEC.
<PAGE>
PART II
Other Information
Item 1. LEGAL PROCEEDINGS
Reference is made to the Company's 1998 Annual Report on Form 10-K, (the
"10-K").
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Annual Meeting of Stockholders was held on Wednesday, May 26, 1999.
(b) Not applicable.
(c) The following matters were submitted to and approved by the stockholders:
(i) The election of two directors, G. Robert Durham and George R. Roberts for
a three year term expiring in the year 2002. For G. Robert Durham, the votes
were cast as follows: For - 14,814,663, Against - 0; Authority Withheld -
20,419. For George R. Roberts, the votes were cast as follows: For - 14,776,163,
Against - 0; Authority Withheld - 58,919.
(ii) Ratification of Deloitte & Touche LLP as independent accountants of the
Company. The votes were cast as follows: For - 14,824,996, Against - 9,751;
Abstentions - 335.
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
2.1 Agreement and Plan of Merger dated as of January 23, 1997 between NXS
Acquisition Corp. and Amphenol Corporation (incorporated by reference to
Current Report on Form 8-K dated January 23, 1997).**
2.2 Amendment, dated as of April 9, 1997, to the Agreement and Plan of Merger
between NXS Acquisition Corp. and Amphenol Corporation, dated as of
January 23, 1997 (incorporated by reference to the Registration Statement
on Form S-4 (registration No. 333-25195) filed on April 15, 1997).**
* Filed herewith
** Previously filed
<PAGE>
3.1 Certificate of Merger, dated May 19, 1997 (including Restated Certificate
of Incorporation of Amphenol Corporation)(filed as Exhibit 3.1 to the
June 30, 1997 10-Q).**
3.2 By-Laws of the Company as of May 19, 1997 - NXS Acquisition Corp. By-Laws
(filed as Exhibit 3.2 to the June 30, 1997 10-Q).**
4.1 Indenture between Amphenol Corporation and IBJ Schroeder Bank and Trust
Company, as Trustee, dated as of May 19, 1997, relating to Senior
Subordinated Notes due 2007 (filed as Exhibit 4.1 to the June 30, 1997
10-Q).**
10.1 Amended and Restated Receivables Purchase Agreement dated as of May 19,
1997 among Amphenol Funding Corp., the Company, Pooled Accounts
Receivable Capital Corporation and Nesbitt Burns Securities, Inc., as
Agent (filed as Exhibit 10.1 to the June 30, 1997 10-Q).**
10.2 Amended and Restated Purchase and Sale Agreement dated as of May 19, 1997
among the Originators named therein, Amphenol Funding Corp. and the
Company (filed as Exhibit 10.2 to the June 30, 1997 10-Q).**
10.3 Credit Agreement dated as of May 19, 1997 among the Company, Amphenol
Holding UK, Limited, Amphenol Commercial and Industrial UK, Limited, the
Lenders listed therein, The Chase Manhattan Bank, as Syndication Agent,
the Bank of New York, as Documentation Agent and Bankers Trust Company,
as Administrative Agent and Collateral Agent (filed as Exhibit 10.3 to
the June 30, 1997 10-Q).**
10.4 1997 Amphenol Incentive Plan (filed as Exhibit 10.13 to the 1996 10-K).**
10.5 1998 Amphenol Incentive Plan (filed as Exhibit 10.5 to the December 31,
1997 10-K).**
10.6 1999 Amphenol Incentive Plan (filed as Exhibit 10.6 to the December 31,
1998 10-K).**
10.7 Pension Plan for Employees of Amphenol Corporation as amended and
restated effective December 31, 1997 (filed as Exhibit 10.7 to the
December 31, 1998 10-K).**
10.8 First amendment to the Pension Plan for Employees of Amphenl Corporation
dated October 1, 1998 (filed as Exhibit 10.8 to the December 31, 1998
10-K).**
10.9 Second amendment to the Pension Plan for Employees of Amphenol
Corporation dated February 4, 1999 (filed as Exhibit 10.9 to the December
31, 1998 10-K).**
10.10 Amphenol Corporation Supplemental Employee Retirement Plan formally
adopted effective January 25, 1996 (filed as Exhibit 10.18 to the 1996
10-K).**
10.11 LPL Technologies Inc. and Affiliated Companies Employee Savings/401(k)
Plan, dated and adopted January 23, 1990 (filed as Exhibit 10.19 to the
1991 Registration Statement).**
* Filed herewith
** Previously filed
<PAGE>
10.12 Management Agreement between the Company and Dr. Martin H. Loeffler,
dated July 28, 1987 (filed as Exhibit 10.7 to the 1987 Registration
Statement).**
10.13 Amphenol Corporation Directors' Deferred Compensation Plan (filed as
Exhibit 10.11 to the December 31, 1997 10-K).**
10.14 Agreement and Plan of Merger among Amphenol Acquisition Corporation,
Allied Corporation and the Company, dated April 1, 1987, and the
Amendment thereto dated as of May 15, 1987 (filed as Exhibit 2 to the
1987 Registration Statement).**
10.15 Settlement Agreement among Allied Signal Inc., the Company and LPL
Investment Group, Inc. dated November 28, 1988 (filed as Exhibit 10.20 to
the 1991 Registration Statement).**
10.16 Registration Rights Agreement dated as of May 19, 1997, among NXS
Acquisition Corp., KKR 1996 Fund L.P., NXS Associates L.P., KKR Partners
II, L.P. and NXS I, L.L.C. (filed as Exhibit 99.5 to Schedule 13D,
Amendment No. 1, relating to the beneficial ownership of shares of the
Company's Common Stock by NXS I, L.L.C., KKR 1996 Fund, L.P., KKR
Associates (1996) L.P., KKR 1996 GP LLC, KKR Partners II, L.P., KKR
Associates L.P., NXS Associates L.P., KKR Associates (NXS) L.P., and
KKR-NXS L.L.C. dated May 27, 1997).**
10.17 Management Stockholders' Agreement entered into as of May 19, 1997
between the Company and Martin H. Loeffler (filed as Exhibit 10.13 to the
June 30, 1997 10-Q).**
10.18 Management Stockholders' Agreement entered into as of May 19, 1997
between the Company and Edward G. Jepsen (filed as Exhibit 10.14 to the
June 30, 1997 10-Q).**
10.19 Management Stockholders' Agreement entered into as of May 19, 1997
between the Company and Timothy F. Cohane (filed as Exhibit 10.15 to the
June 30, 1997 10-Q).**
10.20 1997 Option Plan for Key Employees of Amphenol and Subsidiaries (filed as
Exhibit 10.16 to the June 30, 1997 10-Q).**
10.21 Amended 1997 Option Plan fr Key Employees of Amphenol and Subsidiaries
(filed as Exhibit 10.19 to the June 30, 1998 10-Q).**
10.22 Non-Qualified Stock Option Agreement between the Company and Martin H.
Loeffler dated as of May 19, 1997 (filed as Exhibit 10.17 to the June 30,
1997 10-Q).**
10.23 Non-Qualified Stock Option Agreement between the Company and Edward G.
Jepsen dated as of May 19, 1997 (filed as Exhibit 10.18 to the June 30,
1997 10-Q).**
* Filed herewith
** Previously filed
<PAGE>
10.24 Non-Qualified Stock Option Agreement between the Company and Timothy F.
Cohane dated as of May 19, 1997 (filed as Exhibit 10.19 to the June 30,
1997 10-Q).**
10.25 First Amendment to Amended and Restated Receivables Purchase Agreement
dated as of September 26, 1997 (filed as Exhibit 10.20 to the September
30, 1997 10-Q).**
10.26 Canadian Purchase and Sale Agreement dated as of September 26, 1997 among
Amphenol Canada Corp., Amphenol Funding Corp. and Amphenol Corporation,
individually and as the initial servicer (filed as Exhibit 10.21 to the
September 30, 1997 10-Q).**
10.27 Amended and Restated Credit Agreement dated as of October 3, 1997 among
the Company, Amphenol Holding UK, Limited, Amphenol Commercial and
Industrial UK, Limited, the Lenders listed therein, The Chase Manhattan
Bank, as Syndication Agent, the Bank of New York, as Documentation Agent
and Bankers Trust Company, as Administrative Agent and Collateral Agent
(filed as Exhibit 10.22 to the September 30, 1997 10-Q).**
10.28 First Amendment dated as of May 1, 1998 to the Amended and Restated
Credit Agreement dated as of October 3, 1997 among the Company, Amphenol
Holding UK, Limited, Amphenol Commercial and Industrial UK, Limited, the
Lenders listed therein, The Chase Manhattan Bank, as Syndication Agent,
the Bank of New York, as Documentation Agent and Bankers Trust Company,
as Administrative Agent and Collateral Agent (filed as Exhibit 10.25 to
the March 31, 1998 10-Q).**
10.29 Amended 1997 Option Plan for Key Employees of Amphenol and Subsidiaries
(as amended April 21, 1999).*
27 Financial Data Schedule.*
(b) Reports filed on Form 8-K
There were no reports on Form 8-K filed for or during the second
quarter ended June 30, 1999.
* Filed herewith
** Previously filed
<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, 1999 /s/ Edward G. Jepsen
--------------- ---------------------------
Edward G. Jepsen
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 10.29
THE AMENDED 1997 OPTION PLAN
FOR KEY EMPLOYEES OF
AMPHENOL AND SUBSIDIARIES
1. Purpose of Plan
The 1997 Option Plan for Key Employees of Amphenol and Subsidiaries (the
"Plan") is designed:
(a) to promote the long term financial interests and growth of Amphenol
Corporation (the "Corporation") and its subsidiaries by attracting and retaining
management personnel with the training, experience and ability to enable them to
make a substantial contribution to the success of the Corporation's business;
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and
(c) to further the alignment of interests of participants with those of
the stockholders of the Corporation through opportunities for increased stock,
or stock-based, ownership in the Corporation.
2. Definitions
As used in the Plan, the following words shall have the following
meanings:
(a) "Board of Directors" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee of the Board of
Directors.
(d) "Common Stock" or "Share" means Series A Common Stock of the
Corporation which may be authorized but unissued, or issued and reacquired.
(e) "Employee" means a person, including an officer, in the regular
full-time employment of the Corporation or one of its Subsidiaries who, in the
opinion of the Committee, is, or is expected to be, primarily responsible for
the management, growth or protection of some part or all of the business of the
Corporation.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(g) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.
<PAGE>
2
(h) "Management Stockholders' Agreement" means an agreement between the
Corporation and a Participant that sets forth the terms and conditions and
limitations applicable to any Shares purchased pursuant to Options granted under
this Plan.
(i) "Option Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a grant of Options pursuant to the Plan.
(j) "Option" means an option to purchase shares of the Common Stock which
will not be an "incentive stock option" (within the meaning of Section 422 of
the Code).
(k) "Participant" means an Employee, or other person having a unique
relationship with the Corporation or one of its Subsidiaries, to whom one or
more grants of Options have been made and such grants have not all been
forfeited or terminated under the Plan; provided, however, that a non-employee
director of the Corporation or one of its Subsidiaries may not be a Participant.
(1) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Corporation if each of the corporations, or
group of commonly controlled corporations, other than the last corporation in
the unbroken chain then owns stock possessing 50 % or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
3. Administration of Plan
(a) The Plan shall be administered by the Committee. None of the members
of the Committee shall be eligible to be selected for Option grants or to
purchase Shares under the Plan, or have been so eligible for selection within
one year prior thereto; provided, however, that the members of the Committee
shall qualify to administer the Plan for purposes of Rule 16b-3 (and any other
applicable rule) promulgated under Section 16(b) of the Exchange Act to the
extent that the Corporation is subject to such rule. The Committee may adopt its
own rules of procedure, and action of a majority of the members of the Committee
taken at a meeting, or action taken without a meeting by unanimous written
consent, shall constitute action by the Committee. The Committee shall have the
power and authority to administer, construe and interpret the Plan, to make
rules for carrying it out and to make changes in such rules. Any such
interpretations, rules and administration shall be consistent with the basic
purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and make Option grants to Participants who are subject
to Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the
<PAGE>
3
Corporation shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Participants, the Corporation and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Option grants,
and all members of the Committee shall be fully protected by the Corporation
with respect to any such action, determination or interpretation.
4. Eligibility
The Committee may from time to time make Option grants under the Plan to
such Employees, or other persons having a unique relationship with Corporation
or any of its Subsidiaries, and in such form and having such terms, conditions
and limitations as the Committee may determine. No Option grants may be made
under this Plan to non-employee directors of Corporation or any of its
Subsidiaries. Options may be granted singly, in combination or in tandem. The
terms, conditions and limitations of each Option grant under the Plan shall be
set forth in an Option Agreement, in a form approved by the Committee,
consistent, however, with the terms of the Plan and the Management Stockholders'
Agreement.
5. Grants
From time to time, the Committee, in its sole discretion, will determine
the forms and amounts of Options to be granted to Participants. At the time of
an Option grant, the Committee shall determine, and shall include in the Option
Agreement or other Plan rules, the option exercise period, the option price, and
such other conditions or restrictions on the grant or exercise of the Option as
the Committee deems appropriate. In addition to other restrictions contained in
the Plan, an Option granted under this Paragraph 5, (i) may not be exercised
more than 10 years after the date it is granted and (ii) may not have an option
exercise price less than 50% of the Fair Market Value of Common Stock on the
date the Option is granted. Payment of the option price shall be made in cash or
in shares of Common Stock, or a combination thereof, in accordance with the
terms of the Plan, the Option Agreement and of any applicable guidelines of the
Committee in effect at the time.
Options may be granted prior to the effective date of the Plan (as
determined pursuant to Paragraph 13 herein); provided, however, that no Option
shall be Exercisable prior to the date of the approval of the Plan by the
stockholders of the Corporation.
6. Limitations and Conditions
(a) The number of Shares available under this Plan shall be 1,750,000
shares of the authorized Common Stock as of the effective date of the Plan. The
number of Shares subject to Options under this Plan to any one Participant shall
not be more than 500,000 Shares. Unless restricted by applicable law, Shares
related to Options that are forfeited, terminated, cancelled or expire
unexercised, shall immediately become available to be subject to Option grants.
<PAGE>
4
(b) No Options shall be granted under the Plan beyond ten years after the
effective date of the Plan, but the terms of Options granted on or before the
expiration of the Plan may extend beyond such expiration. At the time an Option
is granted or amended or the terms or conditions of an Option are changed, the
Committee may provide for limitations or conditions on such grant or purchase
consistent with the terms of the Management Stockholders' Agreement.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Other than as specifically provided for in the Management
Stockholder's Agreement or an Option Agreement or with regard to the death of a
Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the Participant.
(e) Participants shall not be, and shall not have any of the rights or
privileges of, stockholders of the Corporation in respect of any Shares
purchasable in connection with any Option grant unless and until certificates
representing any such Shares have been issued by the Corporation to such
Participants.
(f) No election as to benefits or exercise of Options may be made during a
Participant's lifetime by anyone other than the Participant except by a legal
representative appointed for or by the Participant.
(g) Absent express provisions to the contrary, any grant of Options under
this Plan shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind now
or subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement income Security Act of 1974, as
amended.
(h) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or any of
its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. Transfers and Leaves of Absence
For purposes of the Plan, unless the Committee determines otherwise: (a) a
transfer of a Participant's employment without an intervening period of
separation among the Corporation and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.
<PAGE>
5
8. Adjustments
In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Option grants and exercise prices related to outstanding
Option grants and make such other revisions to outstanding Option grants as it
deems are equitably required.
9. Merger, Consolidation, Exchange,
Acquisition, Liquidation or Dissolution
1n its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Option, the Committee may
provide that such Option cannot be exercised after the merger or consolidation
of the Corporation into another corporation, the exchange of all or
substantially all of the assets of the Corporation for the securities of another
corporation, the acquisition by another corporation of 80% or more of the
Corporation's then outstanding shares of voting stock or the recapitalization,
reclassification, liquidation or dissolution of the Corporation (a
"Transaction"), and if the Committee so provides, it shall, on such terms and
conditions as it deems appropriate, also provide, either by the terms of such
Option or by a resolution adopted prior to the occurrence of such Transaction,
that, for some reasonable period of time prior to such Transaction, such Option
shall be exercisable as to all shares subject thereto, notwithstanding anything
to the contrary herein (but subject to the provisions of Paragraph 6(b)) and
that, upon the occurrence of such event, such Option shall terminate and be of
no further force or effect; provided, however, that the Committee may also
provide, in its absolute discretion, that even if the Option shall remain
exercisable after any such event, from and after such event, any such Option
shall be exercisable only for the kind and amount of securities and/or other
property, or the cash equivalent thereof, receivable as a result of such event
by the holder of a number of shares of stock for which such Option could have
been exercised immediately prior to such event.
10. Amendment and Termination
The Committee shall have the authority to make such amendments to any
terms and conditions applicable to outstanding Option grants as are consistent
with this Plan provided that except for adjustments under Paragraph 8 or 9
hereof, no such action shall modify such Option grant in a manner adverse to the
Participant without the Participant's consent except as such modification is
provided for or contemplated in the terms of the Option grant.
The Board of Directors may amend, suspend or terminate the Plan except
that no such action, other than an action under Paragraph 8 or 9 hereof, may be
taken which would, without shareholder approval, increase the aggregate number
of Shares subject to Options under the Plan, decrease the exercise price of
outstanding Options, change the requirements relating to the Committee or extend
the term of the Plan.
<PAGE>
6
11. Foreign Options and Rights
The Committee may grant Options to Employees who are subject to the laws
of nations other than the United States, which Option grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with foreign laws.
12. Withholding Taxes
The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
that the Participant pay to the Corporation such amount as may be requested by
the Corporation for the purpose of satisfying any liability for such withholding
taxes. Any Option Agreement may provide that the Participant may elect, in
accordance with any conditions set forth in such Option Agreement, to pay a
portion or all of such withholding taxes in shares of Common Stock.
13. Effective Date and Termination Dates
The Plan shall be effective on and as of the date of its approval by the
stockholders of the Corporation and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 10.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000820313
<NAME> AMPHENOL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 7,861
<SECURITIES> 0
<RECEIVABLES> 102,618
<ALLOWANCES> (2,178)
<INVENTORY> 188,502
<CURRENT-ASSETS> 317,169
<PP&E> 314,601
<DEPRECIATION> (192,840)
<TOTAL-ASSETS> 829,055
<CURRENT-LIABILITIES> 137,673
<BONDS> 0
0
0
<COMMON> 18
<OTHER-SE> (280,378)
<TOTAL-LIABILITY-AND-EQUITY> 829,055
<SALES> 484,602
<TOTAL-REVENUES> 484,602
<CGS> 319,487
<TOTAL-COSTS> 319,487
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> (39,672)
<INCOME-PRETAX> 32,687
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