How did the adoption of FAS No. 142 impact the financial results?

The adoption of FAS No. 142 in fiscal year 2002 eliminated the amortization of goodwill. This had a significant positive impact on reported net income and earnings per share, particularly for the nine-month period. In 2001, Amphenol recorded $10.7 million in goodwill amortization for the nine months, which was no longer expensed in 2002. This accounting change makes direct year-over-year comparisons of net income and EPS more complex without pro forma adjustments.

What is driving the sales performance difference between the third quarter and the nine-month period?

The third quarter showed year-over-year sales growth of 6% driven by increased sales in military/aerospace, industrial/automotive, and communications markets. However, the nine-month period experienced a 6% decline in net sales. This discrepancy is mainly due to a continued slowdown in the communications markets and, to a lesser extent, industrial applications impacting the longer period, while the third quarter saw a rebound in some of these areas and strength in aerospace and defense.

What is the company's financial health and liquidity situation?

Amphenol demonstrates solid operational cash flow, generating $113.0 million in the first nine months of 2002, an increase from the prior year. This cash flow has been used to reduce debt, fund capital expenditures, and support acquisitions. The company has a significant credit facility available and also has a notable amount of long-term debt, but appears to be managing its debt service effectively. The company does not currently pay cash dividends.

Are there any significant legal or environmental issues that could impact the company?

The company is involved in legal proceedings and claims, but management does not expect them to have a material effect. Amphenol is also jointly liable with Honeywell for environmental cleanup sites based on an agreement from a 1987 acquisition. While costs have been incurred, Amphenol's agreement with Honeywell shifts a significant portion of these liabilities to Honeywell. Management believes these environmental matters will not have a material adverse effect on the company's financial condition or results of operations.

APH 10-Q Quarterly Report Q3 FY2002 — Revenue, Net Income, EPS

Summary

Amphenol Corporation reported its financial results for the third quarter and the first nine months of fiscal year 2002. For the third quarter, net sales increased by 6% year-over-year, driven by growth across military/aerospace, industrial/automotive, and communications markets. However, for the nine-month period, net sales decreased by 6% compared to the prior year, primarily due to weaker performance in communications and industrial markets, partially offset by strength in aerospace and defense. Profitability saw a mixed picture. While net income for the third quarter rose to $20.7 million from $16.6 million in the prior year, the nine-month net income declined to $57.9 million from $67.7 million. A significant factor impacting the year-over-year comparisons is the adoption of FAS No. 142, which eliminated goodwill amortization in 2002. This change positively impacted reported net income and earnings per share, particularly when comparing the nine-month periods. The company continues to focus on cost reduction and managing debt levels, with a strong cash flow from operations supporting its financial activities.

Key Highlights

1Third-quarter net sales increased 6% to $268.1 million, driven by growth in military/aerospace, industrial/automotive, and communications sectors.
2Nine-month net sales decreased 6% to $795.0 million, primarily due to lower sales in communications and industrial markets.
3Net income for Q3 2002 increased to $20.7 million ($0.49/share basic, $0.48/share diluted) from $16.6 million ($0.40/share basic, $0.39/share diluted) in Q3 2001.
4Nine-month net income decreased to $57.9 million ($1.36/share basic, $1.33/share diluted) from $67.7 million ($1.62/share basic, $1.58/share diluted) in the prior year.
5Adoption of FAS No. 142 eliminated goodwill amortization in 2002, which significantly benefited reported earnings, especially for the nine-month period.
6Operating income for the nine months ended September 30, 2002, decreased to $129.5 million from $155.7 million in the prior year.
7Cash flow from operations for the nine months was strong at $113.0 million, an increase from $82.2 million in the prior year, supporting debt repayment, capital expenditures, and acquisitions.

AMPHENOL CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2002

Summary

Key Highlights

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