Amphenol | News Release |
P. O. Box 5030
Wallingford, CT 06492-7530
Telephone (203) 265-8900
FOR IMMEDIATE RELEASE
For Further Information:
Diana G. Reardon
Senior Vice President and
Chief Financial Officer
203/265-8630
www.amphenol.com
2006 SECOND QUARTER RECORD RESULTS
Wallingford, Connecticut. July 19, 2006. Amphenol Corporation (NYSE-APH) reported today that second quarter 2006 diluted earnings per share, before flood-related charges, increased 19% to a record $.69 compared to $.58 per share for the comparable 2005 period. Such per share amount for 2006 excludes the effect of a $15 million one-time charge relating to previously announced flood damage at the Company’s Sidney, New York facility. Including such charge, diluted earnings per share for the second quarter 2006 was $.58. EPS for the second quarter of 2006 was also reduced by approximately $2.1 million ($.02 per share) relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma second quarter 2005 EPS after option expense is $.56. Sales for the second quarter 2006 increased 37% to a record $606,598,000 compared to $443,642,000 for the 2005 period. Currency translation had the effect of increasing sales by approximately $2.1 million in the second quarter 2006 compared to the 2005 period.
For the six months ended June 30, 2006, diluted earnings per share, before flood-related charges, was $1.32 compared to $1.09 per share for the 2005 period. Including flood-related charges earnings per share was $1.21. EPS for the six months ended June 30, 2006 was also reduced by approximately $3.9 million ($.03 per share) relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma EPS for the six months ended June 30, 2005 after option expense is $1.06. Sales for the six months ended June 30, 2006 were $1,175,589,000 compared to $853,037,000 for the 2005 period. Currency translation had the effect of decreasing sales by approximately $8.1 million for the six month 2006 period when compared to the 2005 period.
As previously announced this month, the Company incurred damage at its Sidney, New York manufacturing facility as a result of severe and sudden flooding in New York State during the period June 28 through July 1, 2006. In the second quarter the Company has recorded a charge of $15 million or $.11 per share for property related damage net of expected insurance recoveries. This charge includes the Company’s best estimate of the loss related to inventory and machinery and equipment. In the third quarter, the Company expects to record an additional charge of
approximately $5 million or $.04 per share for one-time expenses relating to cleanup and repair efforts, net of insurance recoveries. In addition, the Sidney facility had limited manufacturing and sales activity for the period from June 28 to July 14. This reduced sales by approximately $10 million in the second quarter and is expected to reduce sales by approximately $15 million in the third quarter. The Sidney plant management and employees have made and continue to make heroic efforts in getting the plant back into production and meeting customer needs; the plant is expected to be substantially back to full production next month.
Amphenol Chairman and CEO, Martin H. Loeffler, stated: “We are extremely pleased to close a record second quarter with sales of $607 million and earnings per share before flood-related charges of $.69. Sales increased 37% over last year and 12% excluding the TCS acquisition. This strong performance was broad based, with particular strength in the wireless handset and broadband communications network markets. The accomplishment of these results in spite of the unexpected flood-related sales loss at the end of the quarter in the military and aerospace market is a testament to the strength and balance of the business. TCS continues to perform better than expected, increasing sales to $110 million and improving operating margin to 13%, contributing approximately $.07 to earnings per share in the quarter. The combination of strong top line growth focused on value added connector products and the timely implementation of cost reduction and other profit improvement actions contributed significantly in the quarter and provide a solid base for future performance.”
“In addition to excellent overall top line growth, profitability and cash flow continued to be strong. The operating income margin in the second quarter, before flood related charges, was 17.8%. Excluding the impact of the TCS acquisition and the impact of stock option expense resulting from the implementation of SFAS 123R on January 1, 2006, operating income margin was 19.2%; compared to last year’s second quarter of 19.4%. I am very pleased that we have been able to achieve this strong profitability in a difficult cost environment. Furthermore, net income before flood-related charges, that is income after interest expense and taxes, was 10% of sales, another indication of the Company’s excellent profitability. Cash flow from operations for the quarter reached a record $87 million.”
“It was another strong quarter and we look to the future with great enthusiasm. We have an outstanding management team, excellent technological capabilities, leading positions in diversified markets, and an increasing presence with the major companies in these markets. With the addition of TCS we are the world’s third largest interconnect company with an expanded platform for creating value. Assuming a continuation of the current economic climate and relatively stable currency exchange rates, and excluding the flood-related charges of $.15 per share, we are raising our guidance for the full year 2006 to achieve revenues and EPS in the range of $2,375 million to $2,405 million and $2.75 to $2.83, respectively. After flood-related charges, EPS is expected to be in the range of $2.60 to $2.68. This compares to the Company’s previous guidance of revenues and EPS in the range of $2,300 million to $2,345 million and $2.64 to $2.72, respectively. For the third quarter of 2006 we expect revenues and EPS in the range of $595 million to $605 million and $.69 to $.72, respectively, before flood-related charges of $5 million or $.04 per share. EPS guidance for the year and third quarter of 2006 includes approximately $9.4 million ($.07 per share) and $2.7 million ($.02 per share), respectively, relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma 2005 EPS after option expense is $2.23 and $.56, for the full year and third quarter, respectively. We are very excited about the future and confident in the ability of our excellent organization to meet all challenges presented and to take advantage of the many opportunities in front of us.”
The Company will host a conference call to discuss its second quarter results at 1:00 PM (ET) July 19, 2006. The toll free dial-in number to participate in this call is 888-395-9624; International dial-in number 517-623-4547; Passcode: Reardon. There will be a replay available until 5:00 PM (ET) on Friday, July 21, 2006. The replay numbers are as follows: toll free dial-in number is 800-839-8796 and International dial-in number is 402-998-0578.
A live broadcast as well as a replay will also be available on the Internet at http://www.amphenol.com/index.cfm/fuseaction/financial.webcasts.
Amphenol Corporation is one of the world’s leading producers of electronic and fiber optic connectors, cable and interconnect systems. Amphenol products are engineered and manufactured in the Americas, Europe and Asia and sold by a worldwide sales and marketing organization. Amphenol has a diversified presence as a leader in high growth segments of the interconnect market including: Military, Commercial Aerospace, Automotive, Broadband Communication, Industrial, Information Technology and Data Communications Equipment, Mobile Devices and Wireless Infrastructure.
Statements in this press release which are other than historical facts are intended to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. While the Company believes such statements are reasonable, the actual results and effects could differ materially from those currently anticipated. Please refer to Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2005, for some factors that could cause the actual results to differ from estimates. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise.
AMPHENOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except per share data)
|
| Three months ended |
| Six Months Ended |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net Sales |
| $ | 606,598 |
| $ | 443,642 |
| $ | 1,175,589 |
| $ | 853,037 |
|
Costs and Expenses: |
|
|
|
|
|
|
|
|
| ||||
Cost of sales, excluding depreciation and amortization |
| 396,934 |
| 282,421 |
| 769,957 |
| 545,846 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization expense |
| 18,704 |
| 12,699 |
| 36,480 |
| 23,513 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expense |
| 82,950 |
| 62,476 |
| 162,751 |
| 120,299 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Casualty loss related to flood |
| 15,000 |
| — |
| 15,000 |
| — |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
| 93,010 |
| 86,046 |
| 191,401 |
| 163,379 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
| (10,002 | ) | (5,775 | ) | (20,186 | ) | (11,178 | ) | ||||
Other expenses, net |
| (3,394 | ) | (1,398 | ) | (6,118 | ) | (3,062 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 79,614 |
| 78,873 |
| 165,097 |
| 149,139 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Provision for income taxes |
| (26,273 | ) | (26,817 | ) | (54,482 | ) | (50,707 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 53,341 |
| $ | 52,056 |
| $ | 110,615 |
| $ | 98,432 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per common share - Basic |
| $ | 0.60 |
| $ | 0.59 |
| $ | 1.24 |
| $ | 1.12 |
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|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding - Basic |
| 89,544,531 |
| 88,362,802 |
| 89,496,115 |
| 88,190,725 |
| ||||
|
|
|
|
|
|
|
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Net income per common share - Diluted (1) (2) |
| $ | 0.58 |
| $ | 0.58 |
| $ | 1.21 |
| $ | 1.09 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding - Diluted |
| 91,740,798 |
| 90,272,291 |
| 91,635,938 |
| 90,089,494 |
| ||||
(1) - Effective January 1, 2006 the Company implemented SFAS 123R and began expensing stock based compensation. Such expense was previously disclosed in the Company’s financial statement footnotes, but was not included as an expense in the Company’s income statement. For the three and six months ended June 30, 2006, diluted earnings per share excluding the $2.1 million and $3.9 million, respectively, of stock based compensation expense, and the $15 million flood-related casualty loss, is $0.71 and $1.35, respectively. For the three and six months ended June 30, 2005, diluted earnings per share, including pro forma stock based compensation expense of $1.9 million and $3.4 million, is $0.56 and $1.06, respectively.
(2) - Excluding the effect of the flood-related casualty loss, the diluted earnings per share for the three and six months ended June 30, 2006, was $0.69 and $1.32 respectively.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
|
| June 30, |
| Dec. 31, |
| ||
|
| 2006 |
| 2005 |
| ||
|
| (Unaudited) |
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| ||
ASSETS |
|
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| ||
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| ||
Current Assets: |
|
|
|
|
| ||
Cash and short-term cash investments |
| $ | 45,920 |
| $ | 38,669 |
|
Accounts receivable, less allowance for doubtful accounts of $11,828 and $11,162, respectively |
| 336,866 |
| 302,867 |
| ||
Inventories |
| 366,378 |
| 325,865 |
| ||
Prepaid expenses and other assets |
| 60,335 |
| 42,413 |
| ||
|
|
|
|
|
| ||
Total current assets |
| 809,499 |
| 709,814 |
| ||
|
|
|
|
|
| ||
Land and depreciable assets, less accumulated depreciation of $390,885 and $352,408, respectively |
| 257,630 |
| 253,889 |
| ||
Deferred debt issuance costs |
| 2,104 |
| 2,351 |
| ||
Goodwill |
| 910,247 |
| 886,720 |
| ||
Other assets |
| 72,056 |
| 79,766 |
| ||
|
|
|
|
|
| ||
|
| $ | 2,051,536 |
| $ | 1,932,540 |
|
|
|
|
|
|
| ||
LIABILITIES & SHAREHOLDERS’ EQUITY |
|
|
|
|
| ||
|
|
|
|
|
| ||
Current Liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 215,118 |
| $ | 177,266 |
|
Accrued interest |
| 4,147 |
| 4,998 |
| ||
Accrued salaries, wages and employee benefits |
| 47,641 |
| 42,705 |
| ||
Other accrued expenses |
| 115,244 |
| 93,202 |
| ||
Dividends payable |
| 2,742 |
| 2,729 |
| ||
Current portion of long-term debt |
| 10,933 |
| 15,030 |
| ||
|
|
|
|
|
| ||
Total current liabilities |
| 395,825 |
| 335,930 |
| ||
|
|
|
|
|
| ||
Long-term debt |
| 695,871 |
| 765,970 |
| ||
Accrued pension and post employment benefit obligations |
| 120,254 |
| 108,816 |
| ||
Other liabilities |
| 30,216 |
| 32,589 |
| ||
|
|
|
|
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| ||
Shareholders’ Equity: |
|
|
|
|
| ||
Common stock |
| 89 |
| 89 |
| ||
Additional paid-in deficit |
| (145,973 | ) | (164,082 | ) | ||
Accumulated earnings |
| 1,090,555 |
| 985,317 |
| ||
Accumulated other comprehensive loss |
| (60,738 | ) | (77,742 | ) | ||
Treasury stock, at cost |
| (74,563 | ) | (54,347 | ) | ||
|
|
|
|
|
| ||
Total shareholders’ equity |
| 809,370 |
| 689,235 |
| ||
|
|
|
|
|
| ||
|
| $ | 2,051,536 |
| $ | 1,932,540 |
|
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in thousands)
|
| Six months ended |
| ||||
|
| 2006 |
| 2005 |
| ||
|
|
|
|
|
| ||
Net income |
| $ | 110,615 |
| $ | 98,432 |
|
Adjustments for cash from operations: |
|
|
|
|
| ||
Depreciation and amortization |
| 36,480 |
| 23,513 |
| ||
Amortization of deferred debt issue costs |
| 262 |
| 729 |
| ||
Stock-based compensation |
| 3,987 |
| — |
| ||
Casualty loss related to flood |
| 15,000 |
| — |
| ||
Net change in non-cash components of working capital |
| (37,152 | ) | (41,234 | ) | ||
Other long term assets and liabilities |
| 13,783 |
| 6,257 |
| ||
|
|
|
|
|
| ||
Cash provided by operations |
| 142,975 |
| 87,697 |
| ||
|
|
|
|
|
| ||
Cash flow from investing activities: |
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|
|
|
| ||
Capital additions, net |
| (33,931 | ) | (27,913 | ) | ||
Proceeds from disposal of fixed assets |
| 1,844 |
| — |
| ||
Investments in acquisitions |
| (14,848 | ) | (100,178 | ) | ||
|
|
|
|
|
| ||
Cash flow used by investing activities |
| (46,935 | ) | (128,091 | ) | ||
|
|
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Cash flow from financing activities: |
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|
|
|
| ||
Net change in borrowings under revolving credit facilities |
| (76,157 | ) | 28,007 |
| ||
Decrease in borrowings under Bank Agreement |
| — |
| (2,000 | ) | ||
Purchase of treasury stock |
| (20,216 | ) | (4,723 | ) | ||
Proceeds from exercise of stock options |
| 9,763 |
| 17,043 |
| ||
Excess tax benefits from stock-based payment arrangements |
| 3,185 |
| — |
| ||
Dividend payments |
| (5,364 | ) | (2,643 | ) | ||
|
|
|
|
|
| ||
Cash flow provided by (used by) financing activities |
| (88,789 | ) | 35,684 |
| ||
|
|
|
|
|
| ||
Net change in cash and short-term cash investments |
| 7,251 |
| (4,710 | ) | ||
Cash and short-term cash investments balance, beginning of period |
| 38,669 |
| 30,172 |
| ||
|
|
|
|
|
| ||
Cash and short-term cash investments balance, end of period |
| $ | 45,920 |
| $ | 25,462 |
|
|
|
|
|
|
| ||
Net cash paid during the year for: |
|
|
|
|
| ||
Interest |
| 20,774 |
| 10,611 |
| ||
Taxes |
| 46,700 |
| 48,384 |
| ||
AMPHENOL CORPORATION
SEGMENT INFORMATION
(dollars in thousands)
(Unaudited)
|
| Three months ended |
| Six months ended |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
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|
|
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Trade Sales: |
|
|
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|
|
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| ||||
Interconnect Products |
| $ | 541,132 |
| $ | 389,163 |
| $ | 1,050,190 |
| $ | 750,318 |
|
Cable Products |
| 65,466 |
| 54,479 |
| 125,399 |
| 102,719 |
| ||||
Consolidated |
| $ | 606,598 |
| $ | 443,642 |
| $ | 1,175,589 |
| $ | 853,037 |
|
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|
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| ||||
Operating income: |
|
|
|
|
|
|
|
|
| ||||
Interconnect Products |
| $ | 108,559 |
| $ | 85,327 |
| $ | 208,428 |
| $ | 161,118 |
|
Cable Products |
| 7,793 |
| 7,044 |
| 14,084 |
| 13,219 |
| ||||
Corporate |
| (8,342 | ) | (6,325 | ) | (16,111 | ) | (10,958 | ) | ||||
Casualty loss related to flood |
| (15,000 | ) | — |
| (15,000 | ) | — |
| ||||
Consolidated |
| $ | 93,010 |
| $ | 86,046 |
| $ | 191,401 |
| $ | 163,379 |
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ROS%: |
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Interconnect Products |
| 20.1 | % | 21.9 | % | 19.8 | % | 21.5 | % | ||||
Cable Products |
| 11.9 | % | 12.9 | % | 11.2 | % | 12.9 | % | ||||
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Consolidated excluding flood-related charges |
| 17.8 | % | 19.4 | % | 17.6 | % | 19.2 | % | ||||
Consolidated |
| 15.3 | % | 19.4 | % | 16.3 | % | 19.2 | % | ||||
