01—Abstract
Summary
Summary of the 10-K filed February 23, 2010. Cited figures are marked; the original filing is the authoritative source.
Amphenol Corporation's 2009 10-K report details a challenging year marked by a 13% decline in net sales to $2.82 billiona, reflecting the global economic downturn's impact across its key end markets, particularly communications and industrial.
Despite the sales contraction, the company demonstrated resilience by maintaining a strong operating income margin of 17.3% and generating substantial operating cash flow of $582.3 millionb. Amphenol continued its strategic focus on cost control and operational efficiency, while also actively pursuing acquisitions, investing approximately $280 million in 2009 to enhance its product offerings in strategic growth areas. The company's diversified business, with significant revenue from Information Technology & Communications (61%), Industrial/Automotive (16%), and Commercial Aerospace & Military (23%), provided some stability.
While facing market headwinds, Amphenol's commitment to innovation and its global manufacturing footprint position it to capitalize on future market recoveries and technological advancements. The company ended the year with a solid liquidity position and managed its debt effectively, including issuing $600 millionc in Senior Notes.
02—Key points
Key Highlights
- Net sales decreased by 13% to $2.82 billion in 2009, primarily due to the global economic downturn impacting key end markets.
- Operating income and net income attributable to Amphenol Corporation decreased by 23% and 24% respectively compared to 2008.
- The company generated strong operating cash flow of $582.3 million in 2009.
- Information Technology & Communications remains the largest segment, accounting for 61% of net sales, followed by Commercial Aerospace & Military (23%) and Industrial/Automotive (16%).
- Amphenol invested approximately $280 million in acquisitions during 2009, focusing on high-growth segments and complementary capabilities.
- The company maintained a strong global manufacturing presence, with 64% of sales generated outside the U.S., and a significant portion of its workforce (approximately 77%) located in lower-cost regions.
- Goodwill represented a substantial portion of the balance sheet ($1.37 billion), largely stemming from the company's acquisition strategy.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Amphenol Corp kept $0.11.
- Revenue$2.82B100.0%
- Cost of revenue−$1.93B68.6%
- Gross profit$886.6M31.4%
- Operating costs−$397.6M14.1%
- Operating income$488.9M17.3%
- Interest, other & tax−$171.1M6.1%
- Net income$317.8M11.3%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 23, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $2.82B$3.24B | −12.9% |
| Cost of Revenue | $1.93B$2.19B | −11.6% |
| Gross Profit | $886.55M$1.05B | −15.5% |
| R&D Expenses | $63.98M$68.06M | −6.0% |
| SG&A Expenses | $397.64M$416.91M | −4.6% |
| Operating Income | $488.91M$632.24M | −22.7% |
| Interest Expense | $36.59M$39.63M | −7.7% |
| Net Income | $317.83M$419.15M | −24.2% |
| EPS (Basic) | $0.23$0.30 | −22.6% |
| EPS (Diluted) | $0.23$0.29 | −21.8% |
| Shares Outstanding (Basic) | 1.37B1.41B | −2.3% |
| Shares Outstanding (Diluted) | 1.39B1.43B | −2.7% |
05—Questions
Frequently Asked Questions
How did the global economic downturn in 2009 affect Amphenol's financial performance?
The global economic downturn significantly impacted Amphenol's financial performance in 2009. Net sales decreased by 13% to $2.82 billion, with declines observed across all major end markets, including industrial, telecommunications, data communications, automotive, and aerospace. Operating income and net income also saw substantial reductions compared to 2008.
What is Amphenol's strategy for growth, especially in a challenging economic environment?
Amphenol's strategy involves a dual focus on operational efficiency and strategic growth. The company emphasizes cost control, productivity improvements, and leveraging its global manufacturing footprint. Simultaneously, it continues to pursue strategic acquisitions in high-growth segments and areas with complementary capabilities, investing $280 million in 2009 for this purpose. The company also focuses on developing highly-engineered, application-specific products through close customer collaboration.
How diversified is Amphenol's business across different industries and geographies?
Amphenol has a diversified business model. In 2009, its sales were distributed across Information Technology & Communications (61%), Commercial Aerospace & Military (23%), and Industrial/Automotive (16%). Geographically, the company generated 64% of its sales outside the United States, with significant operations in Asia, Europe, and other international locations, underscoring its global reach.
What is the significance of goodwill on Amphenol's balance sheet?
Goodwill represents a significant portion of Amphenol's assets, totaling $1.37 billion as of December 31, 2009. This substantial amount of goodwill is a direct result of the company's long-standing strategy of consolidating the highly fragmented interconnect industry through numerous acquisitions. While it reflects past growth and integration, it also represents a potential area for future impairment charges if the acquired businesses do not perform as expected.
06—Continue