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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 JUNE 30, 2002
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
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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 July 31, 2002, the total number of shares outstanding of Class A
Common Stock was 42,514,169.
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AMPHENOL CORPORATION
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
PAGE
--------
Part I Financial Information....................................... 3
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet June 30, 2002 and
December 31, 2001......................................... 3
Condensed Consolidated Statement of Income three and six
months ended June 30, 2002 and 2001....................... 4
Condensed Consolidated Statement of Changes in Shareholders'
Equity six months ended June 30, 2002..................... 5
Condensed Consolidated Statement of Changes in Shareholders'
Equity six months ended June 30, 2001..................... 6
Condensed Consolidated Statement of Cash Flow six months
ended June 30, 2002 and 2001.............................. 7
Notes to Condensed Consolidated Financial Statements........ 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 11
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 13
Part II Other Information........................................... 14
Item 1. Legal Proceedings........................................... 14
Item 2. Changes in Securities....................................... 14
Item 3. Defaults upon Senior Securities............................. 14
Item 4. Submission of Matters to a Vote of Security-Holders......... 14
Item 5. Other Information........................................... 14
Item 6. Exhibits and Reports on Form 8-K............................ 14
Signatures............................................................... 18
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED)
ASSETS
Current Assets:
Cash and short-term cash investments...................... $ 19,238 $ 27,975
Accounts receivable, less allowance for doubtful accounts
of $6,696 and $5,191, respectively...................... 132,980 113,370
Inventories............................................... 206,224 208,316
Prepaid expenses and other assets......................... 17,904 20,596
---------- ----------
Total current assets........................................ 376,346 370,257
---------- ----------
Land and depreciable assets, less accumulated depreciation
of $274,417 and $251,201, respectively.................... 165,774 164,887
Deferred debt issuance costs................................ 5,091 5,795
Excess of cost over fair value of net assets acquired....... 470,262 460,442
Other assets................................................ 20,486 25,362
---------- ----------
$1,037,959 $1,026,743
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.......................................... $ 85,564 $ 80,501
Accrued interest.......................................... 8,615 8,499
Accrued salaries, wages and employee benefits............. 28,766 24,700
Other accrued expenses.................................... 35,366 29,995
Current portion of long-term debt......................... 83,475 59,705
---------- ----------
Total current liabilities................................... 241,786 203,400
---------- ----------
Long-term debt.............................................. 585,860 660,614
Deferred taxes and other liabilities........................ 51,837 58,796
Shareholders' Equity:
Common Stock.............................................. 43 42
Additional paid-in deficit................................ (275,641) (280,224)
Accumulated earnings...................................... 479,292 442,096
Accumulated other comprehensive loss...................... (45,218) (57,981)
---------- ----------
Total shareholders' equity.............................. 158,476 103,933
---------- ----------
$1,037,959 $1,026,743
========== ==========
See accompanying notes to condensed consolidated financial statements.
3
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- -------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net sales.................................... $ 270,865 $ 274,146 $ 526,841 $ 590,818
Costs and expenses:
Cost of sales, excluding depreciation and
amortization............................. 178,485 172,171 349,220 371,672
Depreciation and amortization expense...... 8,542 8,014 16,940 16,165
Selling, general and administrative
expense.................................. 38,806 38,814 75,376 82,802
Amortization of goodwill................... -- 3,526 -- 7,040
---------- ---------- ---------- ----------
Operating income............................. 45,032 51,621 85,305 113,139
Interest expense............................. (12,858) (14,109) (25,696) (28,319)
Other expenses, net.......................... (1,635) (1,248) (2,821) (3,186)
---------- ---------- ---------- ----------
Income before income taxes................... 30,539 36,264 56,788 81,634
Provision for income taxes................... (10,536) (13,728) (19,592) (30,593)
---------- ---------- ---------- ----------
Net income................................... $ 20,003 $ 22,536 $ 37,196 $ 51,041
========== ========== ========== ==========
Net income per common share--Basic........... $ .47 $ .54 $ .88 $ 1.22
========== ========== ========== ==========
Average common shares outstanding--Basic... 42,394,252 41,688,814 42,348,057 41,687,867
========== ========== ========== ==========
Net income per common share--Diluted......... $ .46 $ .53 $ .86 $ 1.19
========== ========== ========== ==========
Average common shares
outstanding--Diluted..................... 43,454,235 42,788,939 43,448,329 42,755,047
========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements.
4
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN COMPREHENSIVE ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
STOCK DEFICIT INCOME EARNINGS LOSS EQUITY
-------- ---------- ------------- ----------- ------------- -------------
Beginning balance at
December 31, 2001........... $ 42 $(280,224) $442,096 $(57,981) $103,933
Comprehensive income:
Net income.................. $[37,196] 37,196 37,196
--------
Other comprehensive income,
net of tax:
Translation adjustments... 8,233 8,233 8,233
Revaluation of interest
rate derivatives........ 4,530 4,530 4,530
--------
Other comprehensive income.. $ 12,763
--------
Comprehensive income.......... $[49,959]
========
Exercise of stock options,
including tax benefit....... 1 4,522 4,523
Other adjustments............. 61 61
---- --------- -------- -------- --------
Ending balance at June 30,
2002........................ $ 43 $(275,641) $479,292 $(45,218) $158,476
==== ========= ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
5
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
(DOLLARS IN THOUSANDS)
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN COMPREHENSIVE ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
STOCK DEFICIT INCOME EARNINGS LOSS EQUITY
-------- ---------- ------------- ----------- ------------- -------------
Beginning balance at
December 31, 2000.... $42 $(305,464) $358,386 $(23,730) $ 29,234
Comprehensive income:
Net income........... $[51,041] 51,041 51,041
--------
Other comprehensive
loss, net of tax:
Translation
adjustments...... (10,497) (10,497) (10,497)
Revaluation of
interest rate
derivatives...... (5,251) (5,251) (5,251)
--------
Other comprehensive
loss............... (15,748)
--------
Comprehensive income... $[35,293]
========
Other adjustments...... 120 120
--- --------- -------- -------- --------
Ending balance at
June 30, 2001........ $42 $(305,344) $409,427 $(39,478) $ 64,647
=== ========= ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
6
AMPHENOL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
-------------------
2002 2001
-------- --------
Net income.................................................. $37,196 $51,041
Adjustments for cash from operations:
Depreciation and amortization............................. 16,940 16,165
Amortization of goodwill.................................. -- 7,040
Amortization of deferred debt issuance costs.............. 704 1,115
Net change in non-cash components of working capital...... 18,983 (30,338)
------- -------
Cash flow provided by operations............................ 73,823 45,023
------- -------
Cash flow from investing activities:
Capital additions, net.................................... (7,948) (22,501)
Investments in acquisitions............................... (11,939) (29,773)
------- -------
Cash flow used by investing activities...................... (19,887) (52,274)
------- -------
Cash flow from financing activities:
Net change in borrowings under revolving credit
facilities.............................................. 2,873 53,501
Decrease in borrowings under Bank Agreement............... (58,205) (30,000)
Net change in receivables sold............................ (10,300) (23,700)
Proceeds from exercise of stock options................... 2,959 --
------- -------
Cash used by financing activities........................... (62,673) (199)
------- -------
Net change in cash and short-term cash investments.......... (8,737) (7,450)
Cash and short-term cash investments balance, beginning of
period.................................................... 27,975 24,585
------- -------
Cash and short-term cash investments balance, end of
period.................................................... $19,238 $17,135
======= =======
Cash paid during the period for:
Interest.................................................. $27,109 $29,233
Income taxes paid, net of refunds......................... 13,590 40,972
See accompanying notes to condensed consolidated financial statements.
7
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 June 30, 2002 and
December 31, 2001, and the related condensed consolidated statements of income
for the three and six months ended June 30, 2002 and 2001 and of changes in
shareholders' equity and of cash flow for the six months ended June 30, 2002 and
2001 include the accounts of Amphenol Corporation (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 and six
months ended June 30, 2002 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 Company's
2001 Annual Report on Form 10-K.
NOTE 2--INVENTORIES
Inventories consist of:
JUNE 30, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED)
Raw materials and supplies........................... $ 40,786 $ 35,808
Work in process...................................... 109,429 119,627
Finished goods....................................... 56,009 52,881
-------- --------
$206,224 $208,316
======== ========
NOTE 3--REPORTABLE BUSINESS SEGMENTS (UNAUDITED)
The Company has two reportable business segments: interconnect products and
assemblies and cable products. The interconnect products and assemblies segment
produces connectors and connector assemblies primarily for the communications,
aerospace, industrial and automotive markets. The cable products segment
primarily produces coaxial and flat ribbon cable mainly for communication
markets, including cable television. The Company evaluates the performance of
business units on, among other things, profit or loss from operations before
interest expense, amortization expense, headquarters' expense allocations,
income taxes and nonrecurring gains and losses. The Company's reportable
segments are an aggregation of business units that have similar production
processes and products. The segment results for the three months ended June 30,
2002 and 2001 are as follows:
INTERCONNECT PRODUCTS
AND ASSEMBLIES CABLE PRODUCTS TOTAL
--------------------- ------------------- -------------------
2002 2001 2002 2001 2002 2001
--------- --------- -------- -------- -------- --------
Net sales
-external...................... $225,756 $225,640 $45,109 $48,506 $270,865 $274,146
-intersegment.................. 478 137 1,907 1,597 2,385 1,734
Segment operating income......... 38,088 47,838 7,840 9,945 45,928 57,783
8
AMPHENOL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (CONTINUED)
NOTE 3--REPORTABLE BUSINESS SEGMENTS (UNAUDITED) (CONTINUED)
The segment results for the six months ended June 30, 2002 and 2001 are as
follows:
INTERCONNECT PRODUCTS
AND ASSEMBLIES CABLE PRODUCTS TOTAL
--------------------- ------------------- -------------------
2002 2001 2002 2001 2002 2001
--------- --------- -------- -------- -------- --------
Net sales
-external..................... $436,089 $473,667 $90,752 $117,151 $526,841 $590,818
-intersegment................. 740 873 4,162 4,869 4,902 5,742
Segment operating income........ 71,580 100,530 15,999 25,237 87,579 125,767
Reconciliation of segment operating income to consolidated income before
taxes for the second quarter and six months ended June 30, 2002 and 2001:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Segment operating income............................... $45,928 $57,783 $87,579 $125,767
Amortization of goodwill............................... -- (3,526) -- (7,040)
Interest expense....................................... (12,858) (14,109) (25,696) (28,319)
Other net expenses..................................... (2,531) (3,884) (5,095) (8,774)
------- ------- ------- --------
Consolidated income before income taxes................ $30,539 $36,264 $56,788 $ 81,634
======= ======= ======= ========
NOTE 4--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.
Subsequent to the acquisition of Amphenol from Allied Signal Corporation in
1987 (Allied Signal merged with Honeywell International Inc. in December 1999
("Honeywell")), Amphenol and Honeywell have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Honeywell have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these three sites is apportioned between Amphenol and
Honeywell based on an agreement entered into in connection with the acquisition
in 1987. For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Honeywell is currently obligated to pay 80% of the costs up to $30,000 and 100%
of the costs in excess of $30,000. At June 30, 2002, approximately $27,600 of
costs have been incurred applicable to this agreement. Honeywell representatives
work closely with the Company in addressing the most significant environmental
liabilities. Management does not believe that the costs associated with
resolution of these or any other environmental matters will have a material
adverse effect on the Company's financial condition or results of operations.
A subsidiary of the Company has an agreement with a financial institution
whereby the subsidiary can sell an undivided interest of up to $85,000 in a
designated pool of qualified accounts receivable. The agreement expires in
May 2004 with respect to $60,000 of accounts receivable and expires in
July 2003 with respect to an additional $25,000 of accounts receivable. Under
the terms of the
9
AMPHENOL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (CONTINUED)
NOTE 4--COMMITMENTS AND CONTINGENCIES (CONTINUED)
agreement, new receivables are added to the pool as collections reduce
previously sold accounts receivable. The Company services, administers and
collects the receivables on behalf of the purchaser. Program fees payable to the
purchaser under this agreement are equivalent to rates afforded high quality
commercial paper issuers plus certain administrative expenses and are included
in other expenses, net, in the accompanying Condensed Consolidated Statement of
Income. The agreement contains certain covenants and provides for various events
of termination. In certain circumstances the Company is contingently liable for
the collection of the receivables sold; management believes that its allowance
for doubtful accounts is adequate to absorb the expense of any such liability.
At June 30, 2002 and December 31, 2001, approximately $63,900 and $74,200,
respectively, of receivables were sold under the agreement and are therefore not
reflected in the accounts receivable balance in the accompanying Condensed
Consolidated Balance Sheet.
NOTE 5--NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2002, the Company adopted Financial Accounting Standard
("FAS") No. 142, "Goodwill and Other Intangible Assets". The standard changes
the accounting for goodwill and intangible assets with an indefinite life
whereby such assets will no longer be amortized; however, the standard does
require evaluation for impairment and a corresponding write down, if
appropriate. FAS No. 142 requires an initial evaluation of impairment upon
adoption. Such evaluation was performed as of January 1, 2002 resulting in the
conclusion that there was no impairment in the value of the Company's goodwill
and other intangible assets.
Pro forma information as if goodwill had not been amortized in the second
quarter and six months of 2001 is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2001 2001
------------------ ----------------
Net income as reported...................................... $22,536 $51,041
Add back: goodwill amortization............................. 3,526 7,040
------- -------
Adjusted net income......................................... $26,062 $58,081
======= =======
Net income per common share--Basic:
Net income as reported...................................... $ 0.54 $ 1.22
Goodwill amortization....................................... 0.09 .17
------- -------
Adjusted net income per share............................... $ 0.63 $ 1.39
======= =======
Net income per common share--Diluted:
Net income as reported...................................... $ 0.53 $ 1.19
Goodwill amortization....................................... 0.08 .17
------- -------
Adjusted net income per share............................... $ 0.61 $ 1.36
======= =======
Effective January 1, 2002, the Company adopted FAS No. 143, "Accounting for
Asset Retirement Obligations" and FAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". FAS No. 143 addresses the recognition and
remeasurement of obligations associated with the retirement of tangible
long-lived assets. FAS No. 144 addresses accounting and reporting for the
impairment or disposal of long-lived assets, including discontinued operations.
There was no effect to the Company's financial statements as a result of such
adoption.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ITEM 2. RESULTS OF OPERATIONS
QUARTER AND SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE QUARTER AND SIX
MONTHS ENDED JUNE 30, 2001
Net sales for the second quarter of 2002 decreased approximately 1% to
$270,865 compared to sales of $274,146 for the same period in 2001. Net sales
for the six months of 2002 decreased approximately 11% to $526,841 compared to
sales of $590,818 for the same period in 2001. The decrease in sales for the
second quarter and six months of 2002 is primarily attributable to decreased
sales of interconnect and cable products for communications markets, and to a
lesser extent decreased sales of interconnect products for industrial
applications. Such decreases were partially offset by increased sales of
interconnect products for aerospace and defense applications. Currency
translation had the effect of increasing sales by approximately $3.3 million in
the second quarter of 2002 and of reducing sales by approximately $2.0 million
for the six month 2002 period when compared to exchange rates for the comparable
2001 periods.
The gross profit margin as a percentage of net sales (including depreciation
in cost of sales) was 31% for the second quarter and six months of 2002 compared
to 34% for the same periods in 2001. The decrease in gross profit margin is
generally attributable to the adverse effects of lower sales volume and a
difficult pricing environment, particularly in the communications markets,
partially offset by cost reduction activities.
Selling, general and administrative expenses as a percentage of net sales
remained relatively constant at approximately 14% for the second quarter and six
months 2002 and 2001.
Goodwill amortization expense was nil in both the second quarter and six
months 2002, as a result of adopting FAS No. 142; whereas goodwill amortization
was $3,526 and $7,040 in the second quarter and six months of 2001,
respectively.
Interest expense for the second quarter and six months of 2002 decreased to
$12,858 and $25,696 compared to $14,109 and $28,319 for the 2001 periods,
respectively. The decrease in both periods is attributable to lower average debt
levels and lower interest rates.
The provision for income taxes for the six months of 2002 was at an
effective rate of 35% compared to 37% in the 2001 period. For the six months of
2001, the effective tax rate, excluding non-deductible goodwill amortization,
was 35%.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities was $73,823 in the six months of 2002
compared to $45,023 in the 2001 period. The increase in cash flow relates
primarily to a net decrease in non-cash components of working capital offset in
part by a decrease in net income.
For the six months of 2002, cash from operating activities was used to repay
$55,332 in bank debt, and to fund capital expenditures of $7,948 and
acquisitions of $11,939. In addition, cash from operating activities was used to
fund a reduction in sales of receivables of $10,300. In the 2001 period, cash
from operating activities and borrowings under the revolving credit facility
were used to fund capital expenditures of $22,501, acquisitions of $29,773, to
repay $30,000 of bank debt and fund a reduction in sales of receivables of
$23,700.
The Company has a bank loan agreement (Bank Agreement) which includes a Term
Loan, encompassing a Tranche A and B, and a $150 million revolving credit
facility. At June 30, 2002 the
11
Tranche A had a balance of $184.5 million and matures over the period 2002 to
2004, and the Tranche B had a balance of $284.5 million and matures over the
period 2005 and 2006. The revolving credit facility expires in 2004;
availability under the facility at June 30, 2002 was $116.8 million, after
reduction of $7.2 million for outstanding letters of credit. The Bank Agreement
is secured by a first priority pledge of 100% of the capital stock of the
Company's direct domestic subsidiaries and 65% of the capital stock of the
direct material foreign subsidiaries, as defined in the Bank Agreement. The Bank
Agreement also requires that the Company satisfy certain financial covenants
including interest coverage and leverage ratio tests, and includes limitations
with respect to, among other things, indebtedness and restricted payments,
including dividends on the Company's common stock.
The Company has entered into an interest swap agreement that effectively
fixes the Company's interest cost on $300,000 of borrowings under the Bank
Agreement. This agreement expires in October 2002.
The Company's EBITDA, as defined in the Bank Agreement was $102.7 million
and $144.8 million for the six months ended June 30, 2002 and 2001,
respectively. EBITDA is not a defined term under Generally Accepted Accounting
Principles (GAAP) and is not an alternative to operating income or cash flow
from operations as determined under GAAP. The Company believes that EBITDA
provides additional information for determining its ability to meet future debt
service requirements; however, EBITDA does not reflect cash available to fund
cash requirements.
The Company's primary ongoing cash requirements will be for operating and
capital expenditures, product development activities and debt service. The
Company's debt service requirements consist primarily of principal and interest
on bank borrowings and interest on its 9 7/8% Senior Subordinated Notes due
2007.
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 operating and capital expenditures, product
development activities and debt service will be funded by internally-generated
cash flow and availability under the Company's revolving credit facility. The
Company may also use cash to fund part or all of the cost of future
acquisitions.
ENVIRONMENTAL MATTERS
Subsequent to the acquisition of Amphenol from Allied Signal Corporation in
1987 (Allied Signal merged with Honeywell International Inc. in December 1999
("Honeywell")), Amphenol and Honeywell have been named jointly and severally
liable as potentially responsible parties in relation to several environmental
cleanup sites. Amphenol and Honeywell have jointly consented to perform certain
investigations and remedial and monitoring activities at two sites and they have
been jointly ordered to perform work at another site. The responsibility for
costs incurred relating to these three sites is apportioned between Amphenol and
Honeywell based on an agreement entered into in connection with the acquisition
in 1987. For sites covered by this agreement, to the extent that conditions or
circumstances occurred or existed at the time of or prior to the acquisition,
Honeywell is currently obligated to pay 80% of the costs up to $30 million and
100% of the costs in excess of $30 million. At June 30, 2002, approximately
$27.6 million of costs have been incurred applicable to this agreement.
Honeywell representatives work closely with the Company in addressing the most
significant environmental liabilities. Management does not believe that the
costs associated with resolution of these or any other environmental matters
will have a material adverse effect on the Company's financial condition or
results of operations.
EURO CURRENCY CONVERSION
On January 1, 1999, certain member countries of the European Union
established fixed conversion rates between their existing currencies and the
European Union's common currency (the "euro"). The
12
transition period for the introduction of the euro began on January 1, 1999.
Beginning January 1, 2002, the participating countries issued new
euro-denominated bills and coins for use in cash transactions. The Company
believes that the use of the euro will not have a significant impact on the
manner in which it conducts its business. Accordingly, conversion to the euro is
not expected to have a material effect on the Company's consolidated financial
position, consolidated results of operations, or liquidity.
SAFE HARBOR STATEMENT
Statements in this report that are not historical are "forward-looking"
statements which should be considered as subject to the many uncertainties that
exist in the Company's operations and business environment. These uncertainties
which include, among other things, economic and currency conditions, market
demand and pricing and competitive and cost factors are set forth in the
Company's 2001 Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company's assessment of its
sensitivity to market risk since its presentation set forth, in Item 7A.
"Quantitative and Qualitative Disclosures About Market Risk," in its 2001 Annual
Report on Form 10-K.
13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's 2001 Annual Report on Form 10-K (the
"10-K").
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The Annual Meeting of Stockholders was held on Wednesday, May 22, 2002.
(b) Not applicable.
(c) The following matters were submitted to and approved by the stockholders
at the Annual Meeting of Stockholders:
(i) The election of three directors, Scott C. Nuttall, George R. Roberts
and Dean H. Secord for a three year term expiring in the year 2005.
For Scott C. Nuttall, the votes were cast as follows:
For--39,771,336, Against--455,290; Abstentions--0. For George R.
Roberts, the votes were cast as follows: For--39,173,838,
Against--1,052,788; Abstentions--0. For Dean H. Secord, the votes
were cast as follows: For--39,943,273, Against--283,353;
Abstentions--0.
(ii) Ratification of Deloitte & Touche LLP as independent accountants of
the Company. The votes were cast as follows: For--39,828,134,
Against--395,649; Abstentions--2,843.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
2.1 Agreement and Plan of Merger dated as of January 23, 1997
between NXS Acquisition Corp. and Amphenol Corporation
(incorporated by reference to Current Report on Form 8-K
dated January 23, 1997).**
2.2 Amendment, dated as of April 9, 1997, to the Agreement and
Plan of Merger between NXS Acquisition Corp. and Amphenol
Corporation, dated as of January 23, 1997 (incorporated by
reference to the Registration Statement on Form S-4
(registration No. 333-25195) filed on April 15, 1997).**
3.1 Certificate of Merger, dated May 19, 1997 (including
Restated Certificate of Incorporation of Amphenol
Corporation)(filed as Exhibit 3.1 to the June 30, 1997
10-Q).**
3.2 By-Laws of the Company as of May 19, 1997 -- NXS Acquisition
Corp. By- Laws (filed as Exhibit 3.2 to the June 30, 1997
10-Q).**
14
3.3 Amended and Restated Certificate of Incorporation, dated
April 24, 2000 (filed as Exhibit 3.1 to the April 28, 2000
Form 8-K).**
4.1 Indenture between Amphenol Corporation and IBJ Schroeder
Bank and Trust Company, as Trustee, dated as of May 19,
1997, relating to Senior Subordinated Notes due 2007 (filed
as Exhibit 4.1 to the June 30, 1997 10-Q).**
10.1 Amended and Restated Receivables Purchase Agreement dated as
of May 19, 1997 among Amphenol Funding Corp., the Company,
Pooled Accounts Receivable Capital Corporation and Nesbitt
Burns Securities, Inc., as Agent (filed as Exhibit 10.1 to
the June 30, 1997 10-Q).**
10.2 Amended and Restated Purchase and Sale Agreement dated as of
May 19, 1997 among the Originators named therein, Amphenol
Funding Corp. and the Company (filed as Exhibit 10.2 to the
June 30, 1997 10-Q).**
10.3 Credit Agreement dated as of May 19, 1997 among the Company,
Amphenol Holding UK, Limited, Amphenol Commercial and
Industrial UK, Limited, the Lenders listed therein, The
Chase Manhattan Bank, as Syndication Agent, the Bank of New
York, as Documentation Agent and Bankers Trust Company, as
Administrative Agent and Collateral Agent (filed as Exhibit
10.3 to the June 30, 1997 10-Q).**
10.4 2000 Amphenol Incentive Plan (filed as Exhibit 10.6 to the
December 31, 1999 10-K).**
10.5 2001 Amphenol Incentive Plan (filed as Exhibit 10.5 to the
December 31, 2001 10-K).**
10.6 2002 Amphenol Incentive Plan (filed as Exhibit 10.6 to the
December 31, 2001 10-K).**
10.7 Pension Plan for Employees of Amphenol Corporation as
amended and restated effective January 1, 2002 (filed as
Exhibit 10.7 to the December 31, 2001 10-K).**
10.8 Amphenol Corporation Supplemental Employee Retirement Plan
formally adopted effective January 25, 1996 (filed as
Exhibit 10.18 to the 1996 10-K).**
10.9 LPL Technologies Inc. and Affiliated Companies Employee
Savings/401(k) Plan, dated and adopted January 23, 1990
(filed as Exhibit 10.19 to the 1991 Registration
Statement).**
10.10 Management Agreement between the Company and Dr. Martin H.
Loeffler, dated July 28, 1987 (filed as Exhibit 10.7 to the
1987 Registration Statement).**
10.11 Amphenol Corporation Directors' Deferred Compensation Plan
(filed as Exhibit 10.11 to the December 31, 1997 10-K).**
10.12 Agreement and Plan of Merger among Amphenol Acquisition
Corporation, Allied Corporation and the Company, dated April
1, 1987, and the Amendment thereto dated as of May 15, 1987
(filed as Exhibit 2 to the 1987 Registration Statement).**
10.13 Settlement Agreement among Allied Signal Inc., the Company
and LPL Investment Group, Inc. dated November 28, 1988
(filed as Exhibit 10.20 to the 1991 Registration
Statement).**
10.14 Registration Rights Agreement dated as of May 19, 1997,
among NXS Acquisition Corp., KKR 1996 Fund L.P., NXS
Associates L.P., KKR Partners II, L.P. and NXS I, L.L.C.
(filed as Exhibit 99.5 to Schedule 13D, Amendment No. 1,
relating to the beneficial ownership of shares of the
Company's Common Stock by NXS I, L.L.C., KKR 1996 Fund,
L.P., KKR Associates (1996) L.P., KKR 1996 GP LLC, KKR
Partners II, L.P., KKR Associates L.P., NXS Associates L.P.,
KKR Associates (NXS) L.P., and KKR-NXS L.L.C. dated May 27,
1997).**
10.15 Management Stockholders' Agreement entered into as of May
19, 1997 between the Company and Martin H. Loeffler (filed
as Exhibit 10.13 to the June 30, 1997 10-Q).**
10.16 Management Stockholders' Agreement entered into as of May
19, 1997 between the Company and Edward G. Jepsen (filed as
Exhibit 10.14 to the June 30, 1997 10-Q).**
15
10.17 Management Stockholders' Agreement entered into as of May
19, 1997 between the Company and Timothy F. Cohane (filed as
Exhibit 10.15 to the June 30, 1997 10-Q).**
10.18 1997 Option Plan for Key Employees of Amphenol and
Subsidiaries (filed as Exhibit 10.16 to the June 30, 1997
10-Q).**
10.19 Amended 1997 Option Plan for Key Employees of Amphenol and
Subsidiaries (filed as Exhibit 10.19 to the June 30, 1998
10-Q).**
10.20 Non-Qualified Stock Option Agreement between the Company and
Martin H. Loeffler dated as of May 19, 1997 (filed as
Exhibit 10.17 to the June 30, 1997 10-Q).**
10.21 Non-Qualified Stock Option Agreement between the Company and
Edward G. Jepsen dated as of May 19, 1997 (filed as Exhibit
10.18 to the June 30, 1997 10-Q).**
10.22 Non-Qualified Stock Option Agreement between the Company and
Timothy F. Cohane dated as of May 19, 1997 (filed as Exhibit
10.19 to the June 30, 1997 10-Q).**
10.23 First Amendment to Amended and Restated Receivables Purchase
Agreement dated as of September 26, 1997 (filed as Exhibit
10.20 to the September 30, 1997 10-Q).**
10.24 Second Amendment to Amended and Restated Receivables
Purchase Agreement dated as of June 30, 2000 (filed as
Exhibit 10.27 to the June 30, 2000 10-Q).**
10.25 Third Amendment to Amended and Restated Receivables Purchase
Agreement dated as of June 28, 2001 (filed as Exhibit 10.27
to the September 30, 2001 10Q).**
10.26 Fourth Amendment to Amended and Restated Receivables
Purchase Agreement dated as of September 30, 2001 (filed as
Exhibit 10.28 to the September 30, 2001 10Q).**
10.27 Canadian Purchase and Sale Agreement dated as of September
26, 1997 among Amphenol Canada Corp., Amphenol Funding Corp.
and Amphenol Corporation, individually and as the initial
servicer (filed as Exhibit 10.21 to the September 30, 1997
10-Q).**
10.28 Amended and Restated Credit Agreement dated as of October 3,
1997 among the Company, Amphenol Holding UK, Limited,
Amphenol Commercial and Industrial UK, Limited, the Lenders
listed therein, The Chase Manhattan Bank, as Syndication
Agent, the Bank of New York, as Documentation Agent and
Bankers Trust Company, as Administrative Agent and
Collateral Agent (filed as Exhibit 10.22 to the September
30, 1997 10-Q).**
10.29 First Amendment dated as of May 1, 1998 to the Amended and
Restated Credit Agreement dated as of October 3, 1997 among
the Company, Amphenol Holding UK, Limited, Amphenol
Commercial and Industrial UK, Limited, the Lenders listed
therein, The Chase Manhattan Bank, as Syndication Agent, the
Bank of New York, as Documentation Agent and Bankers Trust
Company, as Administrative Agent and Collateral Agent (filed
as Exhibit 10.25 to the March 31, 1998 10-Q).**
10.30 2000 Stock Purchase and Option Plan for Key Employees of
Amphenol and Subsidiaries (filed as Exhibit 10.30 to the
June 30, 2001 10Q).**
10.31 Management Stockholders' Agreement entered into as of June
6, 2000 between the Company and Martin H. Loeffler (filed as
Exhibit 10.31 to the December 31, 2001 10-K).**
10.32 Management Stockholders' Agreement entered into as of June
6, 2000 between the Company and Edward G. Jepsen (filed as
Exhibit 10.32 to the December 31, 2001 10-K).**
10.33 Management Stockholders' Agreement entered into as of June
6, 2000 between the Company and Timothy F. Cohane (filed as
Exhibit 10.33 to the December 31, 2001 10-K).**
10.34 Non-Qualified Stock Option Agreement between the Company and
Martin H. Loeffler dated as of June 6, 2000 (filed as
Exhibit 10.34 to the December 31, 2001 10-K).**
16
10.35 Non-Qualified Stock Option Agreement between the Company and
Edward G. Jepsen dated as of June 6, 2000 (filed as Exhibit
10.35 to the December 31, 2001 10-K).**
10.36 Non-Qualified Stock Option Agreement between the Company and
Timothy F. Cohane dated as of June 6, 2000 (filed as Exhibit
10.36 to the December 31, 2001 10-K).**
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
- ------------------------
* Filed herewith
** Previously filed
(b) Reports filed on Form 8-K
There were no reports on Form 8-K filed for or during the second quarter
ended June 30, 2002.
17
SIGNATURE
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
By: /s/ EDWARD G. JEPSEN
-----------------------------------------
Edward G. Jepsen
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
DATE: August 14, 2002
18