Amphenol Corp. (APH) filed Quarterly Report for the period ended 2009-09-30.
Amphenol Corporation is one of the world's largest designers manufacturers and marketers of electrical electronic and fiber optic connectors interconnect systems and coaxial and flat-ribbon cable. The primary end markets for the company's products are communication systems for the converging technologies of voice video and data communications commercial and military aerospace electronics applications and industrial factory automation equipment and automotive and mass transportation applications. Amphenol Corp. has a market cap of $7.08 billion; its shares were traded at around $41.28 with a P/E ratio of 22.43 and P/S ratio of 2.19. The dividend yield of Amphenol Corp. stocks is 0.15%. Amphenol Corp. had an annual average earning growth of 21.9% over the past 5 years.
Highlight of Business Operations:
Net sales were $716.6 and $2,061.8 in the third quarter and first nine months of 2009 compared to $863.7 and $2,481.2 for the same periods in 2008, a decrease of 17% for both periods in U.S. dollars and 16% and 15% in local currencies, respectively. Sales of interconnect products and assemblies (approximately 90% of sales) decreased 18% in U.S. dollars and 17% in local currencies in the third quarter of 2009 compared to 2008 ($648.0 in 2009 versus $786.2 in 2008) and decreased 17% in U.S. dollars and 15% in local currencies in the first nine months of 2009 compared to 2008 ($1,871.4 in 2009 versus $2,258.0 in 2008). Sales for the third quarter and first nine months of 2009 decreased significantly in the automotive, telecommunications and data communications, wireless communications and industrial markets as a result of a weak end market demand resulting from the global economic crisis. Sales for the third quarter and first nine months of 2009 in the aerospace market decreased primarily due to lower demand in the commercial aircraft market and to a lesser extent the defense market, partially offset by the impact of acquisitions. Sales decreases occurred in all major geographic regions. Sales of cable products (approximately 10% of sales) decreased 12% in U.S dollars and 9% in local currencies in the third quarter of 2009 compared to 2008 ($68.5 in 2009 versus $77.5 in 2008) and decreased 15% in U.S. dollars and 10% in local currencies in the first nine months of 2009 compared to 2008 ($190.3 in 2009 versus $223.3 in 2008). This decrease is primarily attributable to a slowdown in spending in international broadband and cable television markets resulting from current weak economic conditions.
Geographically, sales in the United States in the third quarter and nine months of 2009 decreased approximately 14% and 17%, respectively, compared to the same periods in 2008 ($253.2 and $735.0 in 2009 versus $294.5 and $886.2 in 2008). International sales for the third quarter and first nine months of 2009 decreased approximately 19% and 17% in U.S. dollars, respectively, ($463.3 and $1,326.7 in 2009 versus $569.2 and $1,595.0 in 2008) and decreased approximately 17% and 13% in local currencies, respectively, compared to the same periods in 2008. The comparatively stronger U.S. dollar for the third quarter and first nine months of 2009 had the effect of decreasing net sales by approximately $9.9 and $55.9, respectively, compared to foreign currency translation rates for the same periods in 2008.
Selling, general and administrative expenses decreased to $100.1 and $294.5, or 14.0% and 14.3% of net sales for the third quarter and first nine months of 2009, respectively, compared to $109.9 and $318.9 for the same periods in 2008, which represented approximately 12.7% and 12.9% of net sales for the respective periods. The decrease in expense in the third quarter and first nine months of 2009 is primarily attributable to significantly lower sales volume and the positive effect of cost reduction actions. Selling, general and administrative expenses includes stock-based compensation expense of $5.2 and $15.3 for the third quarter and nine months ended September 30, 2009, respectively, compared to $4.6 and $11.8 for the respective periods in 2008.
Cash provided by operations was $430.6 in the first nine months of 2009 compared to $310.7 in the same 2008 period. The increase in cash flow is related primarily to a decrease in components of working capital and an increase in non-cash expenses including depreciation and stock-based compensation, which more than offset a reduction in net income and $9.0 of lower receivables sold under the Company’s receivable securitization program. The components of working capital decreased $108.9 in the first nine months of 2009 due primarily to decreases of $86.0 and $81.4 in accounts receivable and inventory, respectively, which were partially offset by decreases in accounts payable and accrued liabilities of $39.8 and $20.4, respectively. The components of working capital increased $91.4 in the first nine months of 2008 due primarily to increases of $74.9 in accounts receivable and increases of $60.1 and $30.4 in inventory and other current assets, respectively, which were offset by increases in accounts payable and accrued liabilities of $45.3 and $28.7, respectively.
Accounts receivable decreased $50.5 to $465.5, primarily reflecting the impact of lower sales levels and a reduction in days sales outstanding, partially offset by the impact of acquisitions of $16.9 and to a lesser extent an increase due to translation resulting from the comparatively weaker U.S. dollar at September 30, 2009 compared to December 31, 2008 (“Translation”). Days sales outstanding was 67 days at September 30, 2009 compared to 72 days at December 31, 2008. Inventories decreased $56.5 to $456.0, primarily due to an improvement in inventory days achieved through adjustments to production activity in response to lower demand levels offset by the impact of acquisitions of $18.3 and Translation. Inventory days, excluding the impact of acquisitions, decreased from 88 at December 31, 2008 to 83 at September 30, 2009. Other current assets increased $16.3 to $108.7, primarily due to higher short-term investment purchases during the year. Land and depreciable assets, net, decreased $1.6 to $342.9 reflecting capital expenditures of $46.5, fixed assets from acquisitions of $9.5 and the impact of Translation of $6.9, offset by depreciation of $62.9 and disposals of $1.6. Goodwill increased $132.8 to $1,365.1, primarily as a result of two acquisitions in the Interconnect Products and Assemblies segment made during the period and to a lesser extent by the impact of Translation. Other long-term assets increased $13.6 to $95.1 primarily due to an increase in identifiable intangible assets resulting from acquisitions made in the first quarter of 2009 partially offset by a decrease in long-term deferred tax assets. Accounts payable decreased $22.9 to $283.1, primarily as a result of a decrease in purchasing activity during the period related to lower 2009 sales levels offset by the impact of acquisitions of $10.4 and Translation. Total accrued expenses decreased $114.7 to $213.8, primarily due to payments and adjustments made related to accrued acquisition-related obligations of $92.7 as well as a decrease in accrued income taxes, employee benefits and Translation of $15.7.
For the first nine months of 2009, cash from operations of $430.6, net borrowings from the Revolving Credit Facility of $6.1 and proceeds from the exercise of stock options including tax benefits from stock-based payment arrangements of $5.4 were used to fund acquisition-related payments of $272.7, capital expenditures of $45.6, purchases of short-term investments of $14.1, dividend payments of $7.7, payments to noncontrolling interests of $5.3 and an increase in cash on hand of $92.6. For the first nine months of 2008, cash from operations of $310.7, net borrowings from the Revolving Credit Facility of $46.1 and proceeds from the exercise of stock options including excess tax benefits from stock-based payment arrangements of $48.2 were used to fund purchases of treasury stock of $143.7, acquisition related payments of $100.4, capital expenditures of $83.0, purchases of short-term investments of $14.0, dividend payments of $10.6 and an increase in cash on hand of $47.1.
APH is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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