10-QPeriod: Q2 FY2001

AMPHENOL CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 14, 2001For Securities:APH

Summary

Amphenol Corporation's Q2 2001 filing indicates a notable decrease in net sales, primarily driven by a decline in coaxial cable sales for broadband communication systems and lower interconnect sales to telecom and datacom markets. While revenue was down year-over-year for both the quarter and the first six months, the company managed to improve its gross profit margin due to favorable product mix and cost control initiatives. Operating income saw a slight increase for the six-month period, despite lower sales, demonstrating improved operational efficiency. The company's financial position remains robust, with a strong focus on managing debt. Despite a decrease in cash from operations, Amphenol utilized its revolving credit facilities and existing cash to fund capital expenditures and acquisitions. The company has a significant debt load, but has hedged a substantial portion of its borrowings through interest swap agreements. Amphenol continues its strategy of no dividend payouts, prioritizing debt service, capital expenditures, and potential future acquisitions.

Key Highlights

  • 1Net sales decreased by 18% for the second quarter and 7% for the six-month period ended June 30, 2001, compared to the prior year, largely due to lower coaxial cable and telecom/datacom interconnect sales.
  • 2Gross profit margin improved to 34% for both the second quarter and six months of 2001, up from 32% in the prior year, attributed to favorable product mix and cost control.
  • 3Operating income for the six months ended June 30, 2001, slightly increased to $113.1 million from $110.1 million in the prior year, despite lower sales.
  • 4Cash flow from operations decreased in the first six months of 2001 to $45.0 million from $66.3 million in the prior year, primarily due to changes in working capital.
  • 5The company actively managed its debt, utilizing revolving credit facilities and reducing overall borrowings, while approximately $450 million in borrowings were hedged through interest swap agreements.
  • 6Amphenol made significant investments in acquisitions ($29.8 million in H1 2001) and capital expenditures ($22.5 million in H1 2001).
  • 7The company continues to have no intention of paying cash dividends on its common stock.

Frequently Asked Questions

The decrease in sales was primarily driven by a decline in coaxial cable sales for broadband communication systems and lower interconnect sales to the telecom and datacom markets. These decreases were partially offset by increased sales of interconnect products for aerospace and industrial applications.

Despite lower sales, Amphenol demonstrated improved profitability through a higher gross profit margin, which increased to 34% due to a favorable change in product mix and effective cost control measures. This contributed to a slight increase in operating income for the six-month period.

Amphenol has a significant debt structure, including a Term Loan and a revolving credit facility. The company actively manages its debt through repayment and has hedged a substantial portion of its borrowings via interest swap agreements. Cash flow from operations, alongside the revolving credit facility, is intended to fund ongoing operations, capital expenditures, and potential acquisitions. The company has not paid dividends and prioritizes debt service and investment in growth.

Amphenol, along with Allied Signal (now Honeywell), is jointly and severally liable as a potentially responsible party for several environmental cleanup sites. An agreement with Allied allocates costs, with Allied covering 80% of costs up to $30 million and 100% above that threshold for certain sites. As of June 30, 2001, approximately $21.7 million in costs had been incurred. Management does not believe these environmental matters will have a material adverse effect on the company's financial condition or results.