01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Amphenol Corporation (APH) reported strong financial performance for the fiscal year ended December 31, 2010, demonstrating significant growth across its key business segments.
Net sales reached $3.55 billiona, a substantial increase of 26% year-over-year, driven by broad-based demand in the communications, industrial, automotive, and aerospace/military markets. The company's strategic focus on product innovation, global reach, and cost control, coupled with a robust acquisition strategy, continues to yield positive results. Profitability also saw a marked improvement, with net income attributable to Amphenol Corporation rising by 56% to $496.4 million, reflecting enhanced operating leverage and effective expense management.
The company's balance sheet remains strong, with significant growth in cash and cash equivalents and a healthy working capital position. Amphenol's global manufacturing footprint, with a substantial portion of its workforce and sales located outside the U.S., positions it well to serve its international customer base and leverage cost advantages. The company's commitment to reinvesting in research and development and its active pursuit of strategic acquisitions underscore its strategy for sustained future growth and market leadership in the interconnected products and cable sectors.
02—Key points
Key Highlights
- Net sales grew by 26% to $3.55 billion in 2010, indicating strong market demand and recovery from the previous year.
- Net income attributable to Amphenol Corporation surged by 56% to $496.4 million, demonstrating improved profitability.
- The communications sector remained the largest revenue driver, accounting for approximately 60% of sales, highlighting its continued importance.
- Amphenol's global presence is significant, with 65% of sales generated internationally and over 88% of its workforce located outside the U.S.
- The company invested approximately $180 million in acquisitions during 2010, focusing on high-growth segments like military aerospace and industrial markets.
- Backlog increased to $680 million at the end of 2010, signaling continued demand into the next fiscal year.
- The company maintained a strong liquidity position, with cash, cash equivalents, and short-term investments increasing to $624.2 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Amphenol Corp kept $0.14.
- Revenue$3.55B100.0%
- Cost of revenue−$2.40B67.4%
- Gross profit$1.16B32.6%
- Operating costs−$457.9M12.9%
- Operating income$700.4M19.7%
- Interest, other & tax−$204.0M5.7%
- Net income$496.4M14.0%
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $3.55B$2.82B | +26.0% |
| Cost of Revenue | $2.40B$1.93B | +23.9% |
| Gross Profit | $1.16B$886.55M | +30.6% |
| R&D Expenses | $77.57M$63.98M | +21.2% |
| SG&A Expenses | $457.87M$397.64M | +15.1% |
| Operating Income | $700.36M$488.91M | +43.2% |
| Interest Expense | $40.74M$36.59M | +11.4% |
| Net Income | $496.40M$317.83M | +56.2% |
| EPS (Basic) | $0.36$0.23 | +54.6% |
| EPS (Diluted) | $0.35$0.23 | +54.1% |
| Shares Outstanding (Basic) | 1.39B1.37B | +1.3% |
| Shares Outstanding (Diluted) | 1.41B1.39B | +1.4% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Amphenol's revenue growth in 2010?
Amphenol's revenue growth in 2010 was driven by a broad strengthening across its major end markets, including telecommunications and data communications, wireless communications (particularly mobile devices and infrastructure), industrial applications (geophysical, energy, factory automation), military/aerospace, and automotive markets. Acquisitions also contributed to the sales increase.
How did Amphenol manage its costs and expenses in 2010?
The company focused on proactive and aggressive management of all cost elements, supported by higher volume levels. Selling, general, and administrative expenses as a percentage of net sales decreased slightly. Research and development expenditures increased to support new product development, and administrative expenses rose due to increases in stock-based compensation, amortization of intangibles, and employee incentive payments, but overall cost control measures were effective in improving operating margins.
What is Amphenol's strategy for future growth?
Amphenol's strategy involves focusing on customer needs, designing performance-enhancing interconnect solutions, maintaining a strong global presence, fostering an entrepreneurial management structure, controlling costs, and pursuing strategic acquisitions. The company aims to further consolidate the fragmented interconnect industry by acquiring businesses in high-growth segments that complement its existing capabilities.
What are the main risks facing Amphenol, as highlighted in the filing?
Key risks include dependence on the communications industry, potential changes in defense expenditures, intense competition, reliance on new product introductions for revenue growth, covenants in credit agreements, potential impact of changing interest rates and foreign currency exchange rates, risks associated with international operations (political, economic instability), and challenges in integrating acquired businesses. Volatility in raw material pricing and the ability to attract and retain key employees are also noted risks.
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