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Amphenol Corp. Reports Operating Results (10-Q)

November 05, 2010 | About:

10qk

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Amphenol Corp. (APH) filed Quarterly Report for the period ended 2010-09-30.

Amphenol Corp. has a market cap of $9.03 billion; its shares were traded at around $52.95 with a P/E ratio of 20.8 and P/S ratio of 3.2. 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, Westport Asset Management, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Steve Mandel of Lone Pine Capital, Jim Simons of Renaissance Technologies LLC, Manning & Napier Advisors, Inc, Bruce Kovner of Caxton Associates, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
This is the annual revenues and earnings per share of APH over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of APH.


Highlight of Business Operations:

Net sales were $948.5 and $2,604.2 in the third quarter and first nine months of 2010 compared to $716.6 and $2,061.8 for the same periods in 2009, an increase of 32% and 26% in U.S. dollars and 33% and 26% in local currencies, respectively. Sales of interconnect products and assemblies (approximately 93% of sales) increased 36% in U.S. dollars and 37% in local currencies in the third quarter of 2010 compared to the same period in 2009 ($881.3 in 2010 versus $648.0 in 2009) and 28% both in U.S. dollars and local currencies in the first nine months of 2010 compared to the same period in 2009 ($2,402.1 in 2010 versus $1,871.4 in 2009). Sales for the third quarter and first nine months of 2010 increased significantly in all of the Company’s markets primarily as a result of a broad strengthening from a product, customer and geographic perspective and to a lesser extent from acquisitions. In the first nine 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 7% of sales) decreased 2% in U.S dollars and 3% in local currencies in the third quarter of 2010 compared to the same period in 2009 ($67.1 in 2010 versus $68.5 in 2009) and increased 6% in U.S. dollars and 3% in local currencies in the first nine months of 2010 compared to the same period in 2009 ($202.1 in 2010 versus $190.3 in 2009). The decrease in the third quarter of 2010 compared to the same period in 2009 is primarily due to lower spending in North American broadband markets while the increase in the first nine months of 2010 compared to the same period in 2009 is primarily attributable to an increase in spending in international broadband markets compared to 2009, which had experienced a slowdown in spending resulting from weak economic conditions.

Geographically, sales in the United States in the third quarter and nine months of 2010 increased approximately 38% and 27%, respectively, compared to the same periods in 2009 ($350.6 and $932.3 in 2010 versus $253.2 and $735.0 in 2009). International sales for the third quarter and first nine months of 2010 increased approximately 29% and 26% in U.S. dollars, respectively, and 30% and 26% in local currencies, respectively, compared to the same periods in 2009 ($597.9 and $1,672.0 in 2010 versus $463.3 and $1,326.7 in 2009). The comparatively stronger U.S. dollar for the third quarter had the effect of decreasing sales by approximately $6.7 compared to foreign currency translation rates for the same period in 2009, and the comparatively weaker U.S. dollar for the first nine months of 2010 had the effect of increasing net sales by approximately $5.3 compared to foreign currency translation rates for the same period in 2009.

Selling, general and administrative expenses increased to $120.6 and $338.4, or 12.7% and 13.0% of net sales for the third quarter and first nine months of 2010, respectively, compared to $100.1 and $294.5 for the same periods in 2009, which represented 14.0% and 14.3% of net sales for the respective periods. The increase in expense in the third quarter and first nine 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 $7.0 and $18.6 for the third quarter and first nine months of 2010, respectively, compared to $5.2 and $15.3 for the same periods in 2009.

Cash flow provided by operating activities was $264.2 in the first nine 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 of ASU 2009-16 was $346.2 compared to $430.6 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 $113.5 in the first nine months of 2010 due primarily to an increase of $172.4 in accounts receivable and increases of $56.5 and $11.3 in inventory and other current assets, respectively, which were partially offset by increases in accounts payable and accrued liabilities of $90.9 and $35.8, respectively. 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 following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at September 30, 2010. Accounts receivable increased $277.9 to $727.5, resulting from the inclusion of $82.0 of receivables previously sold under the Company’s Receivables Securitization Facility in accordance with the adoption of ASU 2009-16 and also reflecting higher sales levels, the impact of acquisitions of $21.6 and translation resulting from the comparatively weaker U.S. dollar at September 30, 2010 compared to December 31, 2009 (“Translation”). Days sales outstanding was approximately 67 days at September 30, 2010 compared to 64 days at December 31, 2009. Inventories increased $78.0 to $539.7, primarily due to the impact of higher sales activity, the impact of acquisitions of $19.9 and Translation. Inventory days decreased from 80 at December 31, 2009 to 76 at September 30, 2010. Other current assets increased $16.0 to $102.7, primarily due to higher foreign tax receivables and an increase in deferred tax assets during the period. Land and depreciable assets, net, increased $19.4 to $352.3 primarily due to capital expenditures of $72.3 and the impact of acquisitions of $13.0 offset by depreciation of $64.5. Goodwill increased $159.2 to $1,527.8, primarily as a result of two acquisitions in the Interconnect Products and Assemblies segment made during the period. Other long-term assets increased $33.7 to $131.0, primarily due to an

For the first nine months of 2010, cash flow provided by operating activities of $264.2, net borrowings of $149.8 and proceeds from the exercise of stock options including tax benefits from stock-based payment arrangements of $24.9 were used to fund acquisition-related payments and capital expenditures of $164.9 and $72.3, respectively, to purchase short-term investments of $69.1, to fund payments to shareholders of noncontrolling interests and dividend payments of $22.6 and $7.8, respectively, and to fund fees and expenses in connection with refinancing the Company’s senior credit facility of $6.9, which resulted in an increase in cash and cash equivalents of $95.9. For the first nine months of 2009, cash provided by operating activities 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 shareholders of noncontrolling interests of $5.3, which resulted in an increase in cash on hand of $92.6.

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