Amphenol |
| News Release |
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World Headquarters
358 Hall Avenue
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 RECORD THIRD QUARTER RESULTS
REPORTED BY AMPHENOL CORPORATION
Wallingford, Connecticut. October 18, 2006. Amphenol Corporation (NYSE-APH) reported today that third quarter 2006 diluted earnings per share increased 28% to a record $.73 compared to $.57 per share for the comparable 2005 period. Such per share amount for 2006 includes the effect of a $6 million or $.04 per share one-time charge relating to previously announced flood damage at the Company’s Sidney, New York facility and the benefit of $.03 per share relating to the cumulative effect of a reduction in the Company’s effective tax rate from 33% to 32%. Excluding the one-time flood related charge, diluted earnings per share for the third quarter 2006 was $.77. EPS for the third quarter of 2006 was also reduced by approximately $2.8 million ($.02 per share) relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma third quarter 2005 EPS after option expense is $.56. Sales for the third quarter 2006 increased 42% to a record $636,418,000 compared to $446,995,000 for the 2005 period. Currency translation had the effect of increasing sales by approximately $8.4 million in the third quarter 2006 compared to the 2005 period.
For the nine months ended September 30, 2006, diluted earnings per share, including flood-related charges, was $1.93 compared to $1.67 per share for the 2005 period. Excluding flood-related charges earnings per share was $2.09. EPS for the nine months ended September 30, 2006 was also reduced by approximately $6.7 million ($.05 per share) relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma EPS for the nine months ended September 30, 2005 after option expense is $1.63. Sales for the nine months ended September 30, 2006 were $1,812,007,000 compared to $1,300,032,000 for the 2005 period. Currency translation had the effect of increasing sales by approximately $.4 million for the nine month 2006 period when compared to the 2005 period.
As previously announced, 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 and third quarter of 2006 the Company recorded charges of
$15 million or $.11 per share and $6 million or $.04 per share, respectively, for recovery and clean up expenses and property related damage, net of expected insurance recoveries. The Sidney facility had limited manufacturing and sales activity for the period from June 28 to July 14. Production activity increased during the third quarter with the plant substantially back to full production during the month of September. As a result, sales in the second and third quarter were reduced by approximately $10 and $15 million, respectively.
Amphenol Chairman and CEO, Martin H. Loeffler, stated: “We are extremely pleased to close a record third quarter with sales of $636 million and earnings per share before flood related losses of $.77. Sales increased 42% over last year (14% excluding the TCS acquisition), and were up 5% sequentially, an exceptional accomplishment in what is normally a seasonally softer quarter. This performance was led by particular strength in the communications related markets which had strong sequential growth, and more than absorbed the flood-related sales loss in the quarter in the military and aerospace market; a testament to the strength and balance of the business. TCS continued to perform as the market leader in high-speed, high-density printed circuit board interconnect solutions, increasing third quarter sales 15%, sequentially to $126 million and improving operating margin. The combination of strong top line growth focused on value added interconnect solutions 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 third quarter, before flood related charges, was 18%, up from 17.8% in the second quarter, with sequential improvement in both the cable and interconnect segments of our business. I am very pleased that we have been able to achieve this strong profitability in a difficult cost environment. Furthermore, net income, that is income after interest expense and taxes, exceeded 10% of sales, another indication of the Company’s excellent profitability. Cash flow from operations for the quarter was strong at $71 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. 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, we expect a strong finish to the year and are raising guidance for the fourth quarter to revenues in the range of $640 million to $650 million and EPS in the range of $.80 and $.82, respectively. EPS guidance for the fourth quarter of 2006 includes approximately $3.1 million ($.02 per share) relating to stock option expense as a result of the adoption of SFAS 123R. Pro forma fourth quarter 2005 EPS after option expense is $.60. We are very excited about the future and confident in the ability of our excellent organization to meet the challenges presented and to take advantage of the many opportunities in front of us.”
The Company will host a conference call to discuss its third quarter results at 1:00 PM (ET) October 18, 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, October 20, 2006. The replay numbers are as follows: toll free dial-in number is 888-566-0513 and International dial-in number is 203-369-3063.
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.
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AMPHENOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except per share data)
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| Three months ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Net Sales |
| $ | 636,418 |
| $ | 446,995 |
| $ | 1,812,007 |
| $ | 1,300,032 |
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Costs and Expenses: |
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Cost of sales, excluding depreciation and amortization |
| 418,123 |
| 285,420 |
| 1,188,080 |
| 831,266 |
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Depreciation and amortization expense |
| 18,249 |
| 13,064 |
| 54,729 |
| 36,577 |
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Selling, general and administrative expense |
| 85,742 |
| 62,422 |
| 248,493 |
| 182,721 |
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Casualty loss related to flood |
| 5,747 |
| — |
| 20,747 |
| — |
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Operating income |
| 108,557 |
| 86,089 |
| 299,958 |
| 249,468 |
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Interest expense |
| (9,308 | ) | (5,548 | ) | (29,494 | ) | (16,726 | ) | ||||
Other expenses, net |
| (3,590 | ) | (2,624 | ) | (9,708 | ) | (5,686 | ) | ||||
Refinancing costs |
| — |
| (2,398 | ) | — |
| (2,398 | ) | ||||
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Income before income taxes |
| 95,659 |
| 75,519 |
| 260,756 |
| 224,658 |
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Provision for income taxes |
| (28,960 | ) | (23,430 | ) | (83,442 | ) | (74,137 | ) | ||||
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Net income |
| $ | 66,699 |
| $ | 52,089 |
| $ | 177,314 |
| $ | 150,521 |
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Net income per common share - Basic |
| $ | 0.75 |
| $ | 0.59 |
| $ | 1.98 |
| $ | 1.70 |
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Average shares outstanding - Basic |
| 89,422,279 |
| 88,775,405 |
| 89,471,232 |
| 88,387,769 |
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Net income per common share - Diluted (1) (2) |
| $ | 0.73 |
| $ | 0.57 |
| $ | 1.93 |
| $ | 1.67 |
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Average shares outstanding - Diluted |
| 91,669,784 |
| 90,697,815 |
| 91,647,344 |
| 90,294,496 |
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(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 nine months ended September 30, 2006, diluted earnings per share excluding the $2.8 million and $6.7 million, respectively, of stock based compensation expense, and the $5.7 million and $20.7 million, respectively, of flood-related casualty loss, is $0.79 and $2.14, respectively. For the three and nine months ended September 30, 2005, diluted earnings per share, including pro forma stock based compensation expense of $2 million and $5.4 million, is $0.56 and $1.63, respectively.
(2) - Excluding the effect of the flood-related casualty loss, the diluted earnings per share for the three and nine months ended September 30, 2006, was $0.77 and $2.09 respectively.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
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| September 30, |
| Dec. 31, |
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| 2006 |
| 2005 |
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| (Unaudited) |
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ASSETS |
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Current Assets: |
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Cash and short-term cash investments |
| $ | 62,763 |
| $ | 38,669 |
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Accounts receivable, less allowance for doubtful accounts of $13,105 and $11,162, respectively |
| 369,580 |
| 302,867 |
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Inventories |
| 384,253 |
| 325,865 |
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Prepaid expenses and other assets |
| 66,340 |
| 42,413 |
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Total current assets |
| 882,936 |
| 709,814 |
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Land and depreciable assets, less accumulated depreciation of $391,836 and $352,408, respectively |
| 260,732 |
| 253,889 |
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Deferred debt issuance costs |
| 2,864 |
| 2,351 |
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Goodwill |
| 910,569 |
| 886,720 |
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Other assets |
| 64,534 |
| 79,766 |
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| $ | 2,121,635 |
| $ | 1,932,540 |
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LIABILITIES & SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable |
| $ | 243,850 |
| $ | 177,266 |
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Accrued interest |
| 4,190 |
| 4,998 |
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Accrued salaries, wages and employee benefits |
| 50,454 |
| 42,705 |
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Other accrued expenses |
| 127,214 |
| 93,202 |
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Dividends payable |
| 2,678 |
| 2,729 |
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Current portion of long-term debt |
| 3,842 |
| 15,030 |
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Total current liabilities |
| 432,228 |
| 335,930 |
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Long-term debt |
| 684,681 |
| 765,970 |
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Accrued pension and post employment benefit obligations |
| 108,414 |
| 108,816 |
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Other liabilities |
| 32,495 |
| 32,589 |
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Shareholders’ Equity: |
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Common stock |
| 87 |
| 89 |
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Additional paid-in deficit |
| (137,019 | ) | (164,082 | ) | ||
Accumulated earnings |
| 1,066,838 |
| 985,317 |
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Accumulated other comprehensive loss |
| (66,089 | ) | (77,742 | ) | ||
Treasury stock, at cost (1) |
| — |
| (54,347 | ) | ||
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Total shareholders’ equity |
| 863,817 |
| 689,235 |
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| $ | 2,121,635 |
| $ | 1,932,540 |
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(1) All of the Company’s treasury stock was retired during the third quarter of 2006.
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(dollars in thousands)
|
| Nine months ended |
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| September 30, |
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| 2006 |
| 2005 |
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Net income |
| $ | 177,314 |
| $ | 150,521 |
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Adjustments for cash from operations: |
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Depreciation and amortization |
| 54,729 |
| 36,577 |
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Amortization of deferred debt issue costs |
| 396 |
| 856 |
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Stock-based compensation. |
| 6,773 |
| — |
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Non-cash expenses related to flood |
| 6,045 |
| — |
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Non-cash expense related to write-off of deferred debt issue costs |
| — |
| 5,666 |
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Loss on disposal of fixed assets |
| 472 |
| — |
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Net change in non-cash components of working capital |
| (38,213 | ) | (36,556 | ) | ||
Other long term assets and liabilities |
| 6,473 |
| (2,244 | ) | ||
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Cash provided by operations |
| 213,989 |
| 154,820 |
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Cash flow from investing activities: |
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Capital additions, net |
| (57,523 | ) | (41,335 | ) | ||
Proceeds from disposal of fixed assets |
| 4,326 |
| — |
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Investments in acquisitions |
| (18,803 | ) | (104,779 | ) | ||
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Cash flow used by investing activities |
| (72,000 | ) | (146,114 | ) | ||
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Cash flow from financing activities: |
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Net change in borrowings under revolving credit facilities |
| (68,008 | ) | 403,722 |
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Decrease in borrowings under Bank Agreement |
| (26,154 | ) | (413,000 | ) | ||
Payments of fees and expenses related to refinancing |
| (882 | ) | (1,942 | ) | ||
Purchase of treasury stock |
| (33,442 | ) | (8,704 | ) | ||
Proceeds from exercise of stock options |
| 13,239 |
| 24,455 |
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Excess tax benefits from stock-based payment arrangements |
| 5,397 |
| — |
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Dividend payments |
| (8,045 | ) | (5,348 | ) | ||
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Cash flow used by financing activities |
| (117,895 | ) | (817 | ) | ||
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Net change in cash and short-term cash investments |
| 24,094 |
| 7,889 |
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Cash and short-term cash investments balance, beginning of period |
| 38,669 |
| 30,172 |
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Cash and short-term cash investments balance, end of period |
| $ | 62,763 |
| $ | 38,061 |
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Net cash paid during the year for: |
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Interest |
| 29,906 |
| 13,938 |
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Taxes |
| 65,381 |
| 62,196 |
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AMPHENOL CORPORATION
SEGMENT INFORMATION
(dollars in thousands)
(Unaudited)
|
| Three months ended |
| Nine months ended |
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| September 30, |
| September 30, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Trade Sales: |
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Interconnect Products |
| $ | 566,522 |
| $ | 391,915 |
| $ | 1,616,710 |
| $ | 1,142,233 |
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Cable Products |
| 69,896 |
| 55,080 |
| 195,297 |
| 157,799 |
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Consolidated |
| $ | 636,418 |
| $ | 446,995 |
| $ | 1,812,007 |
| $ | 1,300,032 |
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Operating income: |
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Interconnect Products |
| $ | 115,734 |
| $ | 85,279 |
| $ | 324,163 |
| $ | 246,397 |
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Cable Products |
| 8,652 |
| 6,438 |
| 22,736 |
| 19,657 |
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Stock-based compensation expense |
| (2,810 | ) | — |
| (6,732 | ) | — |
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Other operating expenses |
| (7,272 | ) | (5,628 | ) | (19,462 | ) | (16,586 | ) | ||||
Casualty loss related to flood |
| (5,747 | ) | — |
| (20,747 | ) | — |
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Consolidated |
| $ | 108,557 |
| $ | 86,089 |
| $ | 299,958 |
| $ | 249,468 |
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ROS%: |
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Interconnect Products |
| 20.4 | % | 21.8 | % | 20.1 | % | 21.6 | % | ||||
Cable Products |
| 12.4 | % | 11.7 | % | 11.6 | % | 12.5 | % | ||||
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Consolidated excluding flood-related charges |
| 18.0 | % | 19.3 | % | 17.7 | % | 19.2 | % | ||||
Consolidated |
| 17.1 | % | 19.3 | % | 16.6 | % | 19.2 | % | ||||
