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Amphenol Corp. Reports Operating Results (10-Q)

August 06, 2010 | About:
10qk

10qk

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Amphenol Corp. (APH) filed Quarterly Report for the period ended 2010-06-30.

Amphenol Corp. has a market cap of $7.85 billion; its shares were traded at around $45.24 with a P/E ratio of 20.4 and P/S ratio of 2.8. The dividend yield of Amphenol Corp. stocks is 0.1%. Amphenol Corp. had an annual average earning growth of 11.3% over the past 10 years.APH is in the portfolios of Steve Mandel of Lone Pine Capital, Columbia Wanger of Columbia Wanger Asset Management, Columbia Wanger of Columbia Wanger Asset Management, Westport Asset Management, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Steve Mandel of Lone Pine Capital, Jim Simons of Renaissance Technologies LLC, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Net sales were $884.8 and $1,655.8 in the second quarter and first six months of 2010 compared to $685.2 and $1,345.2 for the same periods in 2009, an increase of 29% and 23% in U.S. dollars and 30% and 22% in local currencies, respectively. Sales of interconnect products and assemblies (approximately 92% of sales) increased 31% in U.S. dollars and 32% in local currencies in the second quarter of 2010 compared to the same period in 2009 ($817.1 in 2010 versus $621.4 in 2009) and 24% both in U.S. dollars and local currencies in the first six months of 2010 compared to the same period in 2009 ($1,520.7 in 2010 versus $1,223.4 in 2009). Sales for the second quarter and first six months of 2010 increased significantly in the telecommunications and data communications, industrial, automotive and wireless communications markets, and increased moderately in the aerospace market, as a result of a broad strengthening from a product, customer and geographic perspective. In the first six months of 2009, sales levels were negatively impacted by weak end market demand, which resulted from the global economic crisis. Sales increases during 2010 occurred in all major geographic regions. Sales of cable products (approximately 8% of sales) increased 6% in U.S dollars and 3% in local currencies in the second quarter of 2010 compared to the same period in 2009 ($67.7 in 2010 versus $63.7 in 2009) and 11% in U.S. dollars and 7% in local currencies in the first six months of 2010 compared to the same period in 2009 ($135.0 in 2010 versus $121.8 in 2009). This increase is primarily attributable to an increase in spending in international broadband markets compared to 2009, which had experienced a slowdown in spending in cable markets resulting from weak economic conditions.

Geographically, sales in the United States in the second quarter and six months of 2010 increased approximately 23% and 21%, respectively, compared to the same periods in 2009 ($308.8 and $581.7 in 2010 versus $251.6 and $481.8 in 2009). International sales for the second quarter and first six months of 2010 increased approximately 33% and 24% in U.S. dollars, respectively, and 34% and 23% in local currencies, respectively, compared to the same periods in 2009 ($576.0 and $1,074.1in 2010 versus $433.5 and $863.4 in 2009). The comparatively stronger U.S. dollar for the second quarter had the effect of decreasing sales by approximately $3.4 compared to foreign currency translation rates for the same period in 2009, and the comparatively weaker U.S. dollar for the first six months of 2010 had the effect of increasing net sales by approximately $12.0 compared to foreign currency translation rates for the same period in 2009.

Selling, general and administrative expenses increased to $113.7 and $217.8, or 12.8% and 13.2% of net sales for the second quarter and first six months of 2010, respectively, compared to $98.7 and $194.4 for the same periods in 2009, which represented 14.4% of net sales for both periods. The increase in expense in the second quarter and first six months of 2010 is primarily attributable to increases in selling expense resulting from higher sales volume and increased research and development spending relating to new product development. Selling, general and administrative expenses includes stock-based compensation expense of $6.2 and $11.6 for the second quarter and first six months of 2010, respectively, compared to $5.2 and $10.0 for the same periods in 2009.

Cash flow provided by operating activities was $135.9 in the first six months of 2010. In the 2010 period, cash flow provided by operating activities was reduced by $82.0 related to the effect of adoption of ASU 2009-16. Cash flow provided by operating activities excluding the effect of adoption was $217.9 compared to $284.6 in the same 2009 period. Excluding the effect of adoption, the decrease in cash flow provided by operating activities is related to an increase in components of working capital offset by an increase in net income and an increase in non-cash expenses including depreciation and stock-based compensation. The components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $78.6 in the first six months of 2010 due primarily to an increase of $122.0 in accounts receivable and increases of $45.4 and $8.0 in inventory and other current assets, respectively, which were partially offset by increases in accounts payable and accrued liabilities of $89.8 and $8.5, respectively. The components of working capital decreased $76.1 in the first six months of 2009 due primarily to decreases of $95.8 and $83.0 in accounts receivable and inventory, respectively, which were partially offset by decreases in accounts payable and accrued liabilities of $72.3 and $31.2, respectively.

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at June 30, 2010. Accounts receivable increased $196.0 to $645.6, resulting from the inclusion of $82.0 of receivables previously sold under the Companys Receivables Securitization Facility in accordance with the adoption of ASU 2009-16 and also reflecting higher sales levels, partially offset by translation resulting from the comparatively stronger U.S. dollar at June 30, 2010 compared to December 31, 2009 (Translation). Days sales outstanding was approximately 66 days at June 30, 2010 compared to 64 days at December 31, 2009. Inventories increased $36.8 to $498.6, primarily due to the impact of higher sales activity, partially offset by Translation. Inventory days decreased from 80 at December 31, 2009 to 75 at June 30, 2010. Other current assets increased $52.4 to $176.9, primarily due to higher short-term investment purchases during the period. Land and depreciable assets, net, decreased $7.7 to $325.2 primarily due to the impact of Translation as well as reflecting capital expenditures of $43.9 offset by depreciation of $42.4. Goodwill increased $13.7 to $1,382.4, primarily as a result of an acquisition in the Interconnect Products and Assemblies segment made during the period, partially offset by the impact of Translation. Accounts payable increased $85.5 to $377.6, primarily as a result of an increase in purchasing activity during the period related to second quarter sales levels. Total accrued expenses increased $8.3 to $218.9, primarily due to an increase for additional cash purchase consideration associated with an acquisition completed in 2010.

For the first six months of 2010, cash flow provided by operating activities of $135.9, net borrowings of $28.8 and proceeds from the exercise of stock options including tax benefits from stock-based payment arrangements of $8.7 were used to purchase short-term investments of $44.6, to fund capital expenditures and acquisition-related payments of $43.1 and $13.6, respectively, and to fund dividend payments and payments to shareholders of noncontrolling interests of $5.2 and $2.4, respectively, which resulted in an increase in cash and cash equivalents of $52.1. For the first six months of 2009, cash provided by operating activities of $284.6, net borrowings from the Revolving Credit Facility of $35.3 and proceeds from the exercise of stock options including tax benefits from stock-based payment arrangements of $3.7 were used to fund acquisition-related payments of $271.6, capital expenditures of $30.8, dividend payments of $7.7, purchases of short-term investments of $0.6, which resulted in an increase in cash on hand of $5.8.

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