10-QPeriod: Q2 FY2002

AMPHENOL CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 14, 2002For Securities:APH

Summary

Amphenol Corporation's (APH) second quarter 2002 filing reveals a slight year-over-year revenue decline, primarily driven by weakened demand in the communications and industrial sectors, although this was partially offset by growth in aerospace and defense. Despite the revenue dip, the company is managing its expenses effectively, with SG&A as a percentage of sales remaining stable. A significant operational change is the adoption of FAS No. 142, which eliminated goodwill amortization, positively impacting reported net income compared to the prior year. The company's liquidity appears stable, with positive cash flow from operations and ample availability under its revolving credit facility. Management expects to fund ongoing operations, capital expenditures, and debt service through internal cash generation and existing credit lines.

Key Highlights

  • 1Net sales for the second quarter of 2002 decreased by 1.0% to $270.9 million compared to $274.1 million in the prior year's quarter.
  • 2For the six months ended June 30, 2002, net sales decreased by 11.0% to $526.8 million compared to $590.8 million in the prior year.
  • 3Gross profit margin decreased to 31% in Q2 2002 from 34% in Q2 2001, attributed to lower sales volume and pricing pressures, particularly in communications markets.
  • 4Adoption of FAS No. 142 eliminated goodwill amortization, a significant non-cash expense in prior periods, boosting net income and EPS.
  • 5Interest expense decreased due to lower average debt levels and reduced interest rates.
  • 6Cash flow from operations increased to $73.8 million in the first six months of 2002 from $45.0 million in the same period of 2001.
  • 7Availability under the company's $150 million revolving credit facility was $116.8 million as of June 30, 2002, indicating strong liquidity.

Frequently Asked Questions

The primary driver of the revenue decline was decreased sales of interconnect and cable products for communications markets, and to a lesser extent, decreased sales of interconnect products for industrial applications. This was partially offset by increased sales of interconnect products for aerospace and defense applications.

The adoption of FAS No. 142, which requires companies to stop amortizing goodwill, means that goodwill amortization expense was nil in the second quarter and six months of 2002. This compares to $3.5 million and $7.0 million of goodwill amortization expense in the same periods of 2001, respectively, leading to higher reported net income and earnings per share.

Amphenol Corporation maintained a strong liquidity position. Cash provided by operating activities was $73.8 million for the first six months of 2002. Additionally, the company had $116.8 million available under its $150 million revolving credit facility, indicating ample resources to meet its financial obligations.

Amphenol Corporation has not paid cash dividends on its common stock and has no present intention to commence dividend payments. The company expects to fund its ongoing requirements through internally generated cash flow and its revolving credit facility.