01—Abstract
Summary
Summary of the 10-K filed February 23, 2009. Cited figures are marked; the original filing is the authoritative source.
Amphenol Corporation, a leading designer and manufacturer of electrical, electronic, and fiber optic connectors, reported solid performance for the fiscal year ended December 31, 2008.
The company generated net sales of $3.24 billiona and net income of $419.2 million. A significant portion of its revenue, approximately 64%, is derived from international operations, highlighting its global reach. The company's primary end markets include communication systems (62% of sales), industrial applications (19%), and commercial aerospace & military (19%), demonstrating diversification across key sectors.
Despite the challenging economic environment at the end of 2008, Amphenol demonstrated resilience with a 14%b increase in net sales compared to the previous year, driven by strong performance in its Interconnect Products and Assemblies segment, which accounts for the majority of its revenue. The company continues to execute its strategy of pursuing strategic acquisitions and maintaining cost controls, which contributed to an operating income increase of 14% year-over-year. Amphenol also generated substantial operating cash flow, enabling it to fund capital expenditures, acquisitions, and return capital to shareholders through share repurchases and dividends.
02—Key points
Key Highlights
- Net sales reached $3.24 billion for the fiscal year ended December 31, 2008.
- Net income was $419.2 million, indicating strong profitability.
- International operations are significant, accounting for 64% of total net sales.
- The Communications sector is the largest end market, representing 62% of sales.
- Net sales increased by 14% year-over-year, demonstrating growth despite economic headwinds.
- Operating cash flow was robust at $481.5 million, supporting various capital allocation strategies.
- The company's acquisition strategy continues to be a key driver for growth and market consolidation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Amphenol Corp kept $0.13.
- Revenue$3.24B100.0%
- Cost of revenue−$2.19B67.6%
- Gross profit$1.05B32.4%
- Operating costs−$416.9M12.9%
- Operating income$632.2M19.5%
- Interest, other & tax−$213.1M6.6%
- Net income$419.2M13.0%
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 23, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $3.24B$2.85B | +13.5% |
| Cost of Revenue | $2.19B$1.92B | +13.9% |
| Gross Profit | $1.05B$930.14M | +12.8% |
| R&D Expenses | $68.06M— | — |
| SG&A Expenses | $416.91M$377.28M | +10.5% |
| Operating Income | $632.24M$552.86M | +14.4% |
| Interest Expense | $39.63M$36.88M | +7.5% |
| Net Income | $419.15M$353.19M | +18.7% |
| EPS (Basic) | $0.30$0.25 | +20.7% |
| EPS (Diluted) | $0.29$0.24 | +20.6% |
| Shares Outstanding (Basic) | 1.41B1.43B | −1.6% |
| Shares Outstanding (Diluted) | 1.43B1.46B | −2.0% |
05—Questions
Frequently Asked Questions
What were Amphenol's primary revenue drivers in 2008?
Amphenol's primary revenue drivers in 2008 were its Interconnect Products and Assemblies segment, which accounted for approximately 91% of net sales. Key end markets contributing to revenue included communications systems (62% of sales), industrial applications (19%), and commercial aerospace & military (19%). The company saw increased sales in wireless communications, military/aerospace, and telecommunications/data communications markets, with a slight decline in the automotive sector due to market softness.
How did Amphenol's international operations perform in 2008?
International operations were a significant contributor to Amphenol's success in 2008, accounting for approximately 64% of net sales. International sales increased by 23% in U.S. dollars compared to 2007, indicating strong global demand for its products. The company has a widespread manufacturing and assembly presence across the Americas, Europe, Asia, Africa, and Australia.
What are the key risks facing Amphenol, as outlined in the filing?
Amphenol faces several key risks, including dependence on the communications industry, which is subject to rapid technological change and price pressure from large manufacturers. Changes in defense expenditures could impact military market sales. The company also faces intense competition across all its business areas. Furthermore, dependence on new product introductions for revenue growth and potential impacts from covenants in its credit agreements are significant considerations. Global economic slowdowns and foreign currency exchange rate fluctuations are also highlighted as risks.
How is Amphenol managing its financial condition and liquidity?
Amphenol demonstrated strong liquidity in 2008, with cash provided by operating activities totaling $481.5 million. The company utilizes its internally generated cash flow, a revolving credit facility, and sale of receivables to meet its liquidity needs. It actively manages its working capital, invests in capital expenditures, and strategically uses cash for acquisitions, share repurchases, and dividend payments. Management believes its current liquidity position is sufficient to meet its obligations for the next twelve months and the foreseeable future.
06—Continue