SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________to _________________ Commission File Number 1-10879 AMPHENOL CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 22-2785165 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 358 Hall Avenue, Wallingford, Connecticut 06492 203-265-8900 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Indicate by check mark whether the Registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ As of April 1, 1996, the total number of shares outstanding of Class A Common Stock was 47,321,051. There are no shares outstanding of Class B Common Stock.
AMPHENOL CORPORATION Index to Quarterly Report on Form 10-Q Page ____ Part I Financial Information Item 1. Financial Statements: Condensed Consolidated Balance Sheet March 31, 1996 and December 31, 1995 3 Condensed Consolidated Statement of Income Three months ended March 31, 1996 and 1995 5 Condensed Consolidated Statement of Cash Flow Three months ended March 31, 1996 and 1995 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II Other Information Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security-Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11
Part I. Financial Information Item 1. Financial Statements AMPHENOL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (dollars in thousands) March 31, December 31, 1996 1995 ------------ ------------ (Unaudited) A S S E T S Current Assets: Cash and short-term cash investments......... $ 28,259 $ 12,028 Accounts receivable, less allowance for doubtful accounts of $1,989 and $1,758, respectively................... 78,221 67,419 Inventories.................................. 142,936 134,753 Prepaid expenses and other assets............ 14,098 11,516 -------- -------- Total current assets........................... 263,514 225,716 -------- -------- Land and depreciable assets, less accumulated depreciation of $152,172 and $150,560, respectively.......... 97,562 94,659 Deferred debt issuance costs................... 4,215 4,332 Excess of cost over fair value of net assets acquired.............................. 339,893 342,624 Other assets................................... 21,776 22,593 -------- -------- $726,960 $689,924 ________ ________ See accompanying notes to condensed consolidated financial statements.
AMPHENOL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (dollars in thousands) March 31, December 31, 1996 1995 ----------- ------------ (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable.............................. $ 52,663 $ 51,684 Accrued interest.............................. 8,372 2,701 Other accrued expenses........................ 57,027 47,348 Current portion of long-term debt............. 6,437 2,670 -------- -------- Total current liabilities....................... 124,499 104,403 -------- -------- Long-term debt.................................. 195,923 195,195 Accrued pension and post employment benefit obligations........................... 25,375 27,486 Deferred taxes and other liabilities............ 20,207 18,755 Shareholders' Equity: Common stock.................................. 47 47 Additional paid-in capital.................... 265,202 265,193 Accumulated earnings.......................... 100,996 84,056 Cumulative valuation adjustment............... (5,289) (5,211) -------- -------- Total shareholders' equity...................... 360,956 344,085 -------- -------- $726,960 $689,924 ________ ________ See accompanying notes to condensed consolidated financial statements.
AMPHENOL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) (dollars in thousands, except per share data) Three months ended March 31, ---------------------- 1996 1995 -------- -------- Net sales....................................... $194,822 $197,975 Costs and expenses: Cost of sales, excluding depreciation and amortization............................. 123,928 130,106 Depreciation and amortization expense......... 7,186 6,972 Selling, general and administrative expense... 28,699 28,660 -------- -------- Operating income................................ 35,009 32,237 Interest expense................................ (6,052) (6,710) Other expense, net.............................. (724) (1,825) -------- -------- Income before income taxes...................... 28,233 23,702 Provision for income taxes...................... 11,293 9,481 -------- -------- Net income...................................... $ 16,940 $ 14,221 ________ ________ Net income per common and common equivalent share.............................. $.36 $.30 ____ ____ Average common and common equivalent shares outstanding................. 47,320,536 47,290,651 __________ __________ See accompanying notes to condensed consolidated financial statements.
AMPHENOL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited) (dollars in thousands) Three Months Ended March 31, ---------------------- 1996 1995 -------- -------- Net income....................................... $16,940 $14,221 Adjustments for cash from operations: Depreciation and amortization.................. 7,186 6,972 Amortization of deferred debt issuance costs... 174 162 Net change in non-cash components of working capital............................... (4,098) 7,056 ------- ------- Cash provided from operations.................... 19,392 28,411 ------- ------- Cash flow from investing activities: Capital additions, net......................... (5,499) (4,225) Reduction in acquisition related environmental reserves..................... - (402) ------- ------- Cash flow used by investing activities........... (5,499) (4,627) ------- ------- Cash flow from financing activities: Net change in borrowings under revolving credit facilities.......................... 2,338 21,726 Decrease in long-term debt..................... - (45,368) ------- ------- Cash flow from (used by) financing activities.... 2,338 (23,642) ------- ------- Net change in cash and short-term cash investments............................... 16,231 142 Cash and short-term cash investments balance, beginning of period................... 12,028 4,582 ------- ------- Cash and short-term cash investments balance, end of period......................... $28,259 $ 4,724 _______ _______ See accompanying notes to condensed consolidated financial statements.
AMPHENOL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data) Note 1 - Principles of Consolidation and Interim Financial Statements - --------------------------------------------------------------------- The condensed consolidated balance sheet as of March 31, 1996 and December 31, 1995, and the related condensed consolidated statements of income and of cash flow for the three months ended March 31, 1996 and 1995 include the accounts of the Company and its subsidiaries. The interim financial statements included herein are unaudited. In the opinion of management all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such interim financial statements have been included. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes included in the 1995 Annual Report to Shareholders of Amphenol Corporation. Note 2 - Inventories - -------------------- Inventories consist of: March 31, December 31, 1996 1995 --------- ------------ (Unaudited) Raw materials and supplies......... $ 22,063 $ 21,094 Work in process.................... 80,266 79,971 Finished goods..................... 40,607 33,688 -------- -------- $142,936 $134,753 ________ ________ Note 3 - Commitments and Contingencies - -------------------------------------- In the course of pursuing its normal business activities, the Company is involved in various legal proceedings and claims. Management does not expect that amounts, if any, which may be required to be paid by reason of such proceedings or claims will have a material effect on the Company's financial position or results of operations.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (dollars in thousands, except per share data) Results of Operations - --------------------- Three months ended March 31, 1996 compared to three months ended March 31, 1995 - ------------------------------------------------------------------------------- Net sales decreased approximately 2% to $194,822 in the first quarter of 1996 compared to sales of $197,975 for the same period in 1995. The decrease is primarily attributable to lower sales of coaxial cable products substantially offset by increased sales of interconnect products particularly in the aerospace, automotive safety and communications markets. Currency translation did not have a significant effect on sales in the first quarter 1996 when compared to exchange rates for the 1995 period. The gross profit margin as a percentage of net sales (including depreciation in cost of sales) increased to 34% for the three months ended March 31, 1996 compared to 32% for the three months ended March 31, 1995. The increase is generally attributable to increased margins of interconnect products as a result of higher sales volume, particularly of application specific products, and continuing programs of cost control. Selling, general and administrative expenses as a percentage of net sales remained relatively constant at approximately 15% for the three months ended March 31, 1996 compared to the 1995 period. Interest expense for the first quarter of 1996 was $6,052 compared to $6,710 for the first quarter of 1995. This reduction is primarily attributable to decreased debt levels. Other expense for the three months ended March 31, 1996 was $724 compared to $1,825 in 1995. The decrease in 1996 relates to the absence in the 1996 period of certain nonrecurring expenses in 1995 such as expenses associated with the 1995 secondary stock offering. The provision for income taxes for the three months ended March 31, 1996 was $11,293 compared to $9,481 in 1995. The 1996 estimated effective tax rate of approximately 40% reflects federal, state and foreign taxes. Liquidity and Capital Resources - ------------------------------- Cash provided by operating activities was $19,392 in the quarter ended March 31, 1996 compared to $28,411 in the 1995 period. The decrease in cash flow relates primarily to a net increase in non-cash components of working capital offset in part by an increase in net income. The Company's primary ongoing cash requirements will be for debt service, capital expenditures and product development activities. The Company's debt service requirements consist primarily of interest on Senior Notes due 2001 and Senior Subordinated Notes due 2002. The Company has not paid, and does not have any present intention to commence payment of, cash dividends on its Common Stock. The Company expects that ongoing requirements for debt service, capital expenditures and product development activities will be funded by internally-generated cash flow.
Environmental Matters - --------------------- The Company is subject to various environmental laws, regulations and proceedings regarding discharge of pollutants and the handling and disposal of solid and hazardous wastes. In conjunction with the acquisition of Amphenol from Allied Corporation in 1987, Allied agreed to provide substantial indemnification for potential environmental liabilities identified within a period of seven years following the acquisition that arose out of events, conditions or circumstances that occurred or existed at the time of or prior to the acquisition to the extent that such liability exceeds $13.0 million. In such event, Allied is obligated to pay 80% of the excess over $13.0 million and 100% of the excess over $30.0 million. The Company has been named as a defendant in various legal actions or as a potentially responsible party in relation to several environmental clean-up sites which the associated costs are subject to the Allied indemnification agreement. The Company believes that it has provided adequate reserves for unidemnified costs that may be incurred with respect to known environmental liabilities. There are no amounts currently owed the Company by Allied under the indemnification agreement. Management does not believe that the costs associated with the resolution of these matters, net of indemnification from Allied, will have a material adverse effect on the Company's financial position.
PART II OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Reference is made to the Company's 1995 Form 10-K with respect to certain pending legal proceedings. Item 2. CHANGES IN SECURITIES None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS None Item 5. OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports filed on Form 8-K - There were no reports on Form 8-K filed for or during the three months ended March 31, 1996.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMPHENOL CORPORATION DATE: May 14, 1996 /s/Edward G. Jepsen ---------------- --------------------------- Edward G. Jepsen Executive Vice President and Chief Financial Officer