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2005 Third Quarter and Nine Month Results Reported By Amphenol Corporation

Posted on: Wednesday, 19 October 2005, 09:00 CDT

Amphenol Corporation (NYSE-APH) reported today that third quarter 2005 diluted earnings per share increased 21% to $.57 compared to $.47 per share for the comparable 2004 period. Such per share amount for the third quarter of 2005 includes the one-time effects of expenses relating to the early extinguishment of debt of $.02 per share and the one-time benefit of $.02 per share relating to the reduction in the Company's effective tax rate from 34% to 33% resulting from the repatriation of foreign earnings under the American Jobs Creation Act of 2004. Sales for the third quarter 2005 increased 16% to $446,995,000 compared to $384,103,000 for the 2004 period. Currency translation had the effect of increasing sales by approximately $2.2 million in the third quarter 2005 compared to the 2004 period.

For the nine months ended September 30, 2005, diluted earnings per share was $1.67 compared to $1.31 per share for the 2004 period. Sales for the nine months ended September 30, 2005 were $1,300,032,000 compared to $1,126,483,000 for the 2004 period. Currency translation had the effect of increasing sales by approximately $17.4 million for the nine month 2005 period when compared to the 2004 period.

As previously announced, in the third quarter of 2005, the Company completed a refinancing of its senior credit facilities. In conjunction therewith, the Company incurred one-time expenses for the early extinguishment of debt totaling approximately $2.4 million or $.02 per share after tax. Such one-time expenses include the write-off of unamortized deferred debt issuance costs less the gain on the termination of related interest rate swap agreements. In addition, as noted above the Company has adjusted its effective tax rate from 34% to 33% to reflect the one-time benefit of lower United States taxes on the repatriation of foreign earnings available under the provisions of the American Job Creation Act of 2004. This lowered tax expense in the third quarter by approximately $2.2 million or $.02 per share.

Amphenol Chairman and CEO, Martin H. Loeffler, stated: "I am extremely pleased with our third quarter results. Sales were up 16% compared to last year's third quarter to a record $446,995,000 and increased sequentially over the record second quarter 2005. An excellent achievement in a seasonally slower quarter. The interconnect products segment of our business, which represents 88% of our sales, was up a strong 18% over last year with excellent profitability. The growth was broad based across all of our end markets and included all major geographic regions. Growth was especially strong in the wireless, military and aerospace and automotive markets. The excellent top line results reflect our continuing development of new application specific solutions and value added products for our customers, our increased worldwide presence with the leading companies in our target markets and acquisitions. The cable products segment of our business, which is primarily for broadband cable television networks and represents 12% of our sales, was up 9% over the prior year."

"In addition to excellent overall top line growth, profitability and cash flow continued to be strong. The operating income margin increased from 18.3% a year ago to 19.3% in the third quarter of 2005. This increase was driven by the improved profitability of the interconnect product segment offset in part by lower cable product margins, which continue to be impacted by increasing material and freight related costs. Earnings per share for the quarter increased 21% over last year. Furthermore, net income, that is income after interest expense and taxes, exceeded 11% of sales, another indication of the Company's excellent profitability. Cash flow from operations was also strong at $67 million for the quarter."

"Last week the Company announced an agreement to acquire the Connection Systems division of Teradyne, Inc. (NYSE-TER). Teradyne Connection Systems (TCS), a technology leader in high-speed, high-density, printed circuit board interconnect products, is complementary and an excellent strategic fit with Amphenol. The combination of TCS and Amphenol will create the world's third largest interconnect company and a new expanded platform for creating value. We expect a closing prior to year end."

"It was a good quarter in all respects. I am very proud of our organization as we continue to execute well. We have a strong position in excellent and diversified markets and continue to increase our presence with the major companies in these markets. Assuming a continuation of the current economic climate and relatively stable currency exchange rates, we expect a strong finish to the year with fourth quarter results in the range of $460 million to $470 million and $.59 to $.61 for sales and EPS, respectively. The guidance does not include any effect that may result from the acquisition of TCS. We are very confident that we are in excellent markets with a great organization, and we are very excited about the future."

The Company will host a conference call to discuss its second quarter results at 1:00 PM (ET) October 19, 2005. 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 21, 2005. If you are unable to participate on the call the replay numbers are as follows: the toll free dial-in number is 866-375-1055 and International dial-in replay number is 203-369-0295.

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. The primary end markets for the Company's products are communication systems for the converging technologies of voice, video and data communications, industrial/automotive and military/aerospace applications.

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 1 of the Company's Form 10-K for the year ended December 31, 2004, 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 FINANCIAL SUMMARY (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ----------------------------- 2005 2004(1) 2005 2004(1) ---- ------- ---- ------- Sales $446,995,000 $384,103,000 $1,300,032,000 $1,126,483,000 Net income $ 52,089,000 $ 41,646,000 $ 150,521,000 $ 117,671,000 Earnings per share - basic $ .59 $ .47 $ 1.70 $ 1.34 Average shares outstanding - basic 88,775,405 87,961,000 88,387,769 88,037,522 Earnings per share - diluted $ .57 $ .47 $ 1.67 $ 1.31 Average shares outstanding - diluted 90,697,815 89,467,309 90,294,496 89,735,753 1. Per share and share amounts have been adjusted to reflect the Company's 2 for 1 stock split effective in March 2004.

AMPHENOL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (dollars in thousands) Sep. 30, Dec. 31, 2005 2004 ----------- ----------- (Unaudited) ASSETS Current Assets: Cash and short-term cash investments $ 38,061 $ 30,172 Accounts receivable, less allowance for doubtful accounts of $9,288 and $8,666, respectively 241,047 214,158 Inventories 270,544 247,303 Prepaid expenses and other assets 36,133 37,382 ----------- ----------- Total current assets 585,785 529,015 Land and depreciable assets, less accumulated depreciation of $347,532 and $349,255, respectively 209,988 197,753 Deferred debt issuance costs 1,871 6,451 Goodwill 643,825 545,411 Deferred taxes and other assets 31,471 28,081 ----------- ----------- $1,472,940 $1,306,711 =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 149,834 $ 134,856 Accrued interest 4,088 2,183 Accrued salaries, wages and employee benefits 37,707 38,535 Other accrued expenses 79,571 85,089 Dividends payable 2,714 - Current portion of long-term debt 15,247 16,909 ----------- ----------- Total current liabilities 289,161 277,572 Long-term debt 425,675 432,144 Accrued pension and post employment benefit obligations 92,867 102,050 Other liabilities 31,437 13,341 Shareholders' Equity: Common stock 89 88 Additional paid-in deficit (176,124) (207,504) Accumulated earnings 932,278 789,741 Accumulated other comprehensive loss (68,096) (55,078) Treasury stock, at cost (54,347) (45,643) ----------- ----------- Total shareholders' equity 633,800 481,604 ----------- ----------- $1,472,940 $1,306,711 =========== ===========

AMPHENOL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share data) Three months Nine months ended ended September 30, September 30, ----------------------- ----------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Net Sales $ 446,995 $ 384,103 $1,300,032 $1,126,483 Costs and Expenses: Cost of sales, excluding depreciation and amortization 285,420 250,417 831,266 737,678 Depreciation and amortization expense 13,064 9,736 36,577 28,902 Selling, general and administrative expense 62,422 53,647 182,721 159,263 ----------- ----------- ----------- ----------- Operating income 86,089 70,303 249,468 200,640 Interest expense (5,548) (5,597) (16,726) (17,025) Other expenses, net (2,624) (1,607) (5,686) (5,326) Refinancing costs (2,398) 0 (2,398) 0 ----------- ----------- ----------- ----------- Income before income taxes 75,519 63,099 224,658 178,289 Provision for income taxes (23,430) (21,453) (74,137) (60,618) ----------- ----------- ----------- ----------- Net income $ 52,089 $ 41,646 $ 150,521 $ 117,671 =========== =========== =========== =========== Net income per common share - Basic $ 0.59 $ 0.47 $ 1.70 $ 1.34 =========== =========== =========== =========== Average shares outstanding - Basic 88,775,405 87,961,000 88,387,769 88,037,522 =========== =========== =========== =========== Net income per common share - Diluted $ 0.57 $ 0.47 $ 1.67 $ 1.31 =========== =========== =========== =========== Average shares outstanding - Diluted 90,697,815 89,467,309 90,294,496 89,735,753 =========== =========== =========== ===========

AMPHENOL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (dollars in thousands) Nine months ended September 30, ------------------- 2005 2004 --------- --------- Net income $150,521 $117,671 Adjustments for cash from operations: Depreciation and amortization 36,577 28,902 Amortization of deferred debt issue costs 856 1,066 Non-cash expense related to write-off of deferred debt issue costs 5,666 - Net change in non-cash components of working capital (36,556) 10,223 Other long term assets and liabilities (2,244) (13,602) --------- --------- Cash provided by operations 154,820 144,260 --------- --------- Cash flow from investing activities: Capital additions, net (41,335) (29,240) Investments in acquisitions (104,779) (30,703) --------- --------- Cash flow used by investing activities (146,114) (59,943) --------- --------- Cash flow from financing activities: Net change in borrowings under revolving credit facilities 403,722 (13,865) Decrease in borrowings under Bank Agreement (413,000) (61,000) Payment of fees and expenses related to refinancing (1,942) - Purchase of treasury stock (8,704) (32,878) Proceeds from exercise of stock options including tax benefit 24,455 22,416 Dividend payments (5,348) - --------- --------- Cash flow provided by (used by) financing activities (817) (85,327) --------- --------- Net change in cash and short-term cash investments 7,889 (1,010) Cash and short-term cash investments balance, beginning of period 30,172 23,533 --------- --------- Cash and short-term cash investments balance, end of period $ 38,061 $ 22,523 ========= ========= Net cash paid during the year for: ---------------------------------- Interest 13,938 16,463 Taxes 62,196 31,627

AMPHENOL CORPORATION SEGMENT INFORMATION (In thousands) (Unaudited) Three months ended Nine months ended September 30, September 30, ------------------- ----------------------- 2005 2004 2005 2004 --------- --------- ----------- ----------- Trade Sales: Interconnect Products $391,915 $333,468 $1,142,233 $ 980,503 Cable Products 55,080 50,635 157,799 145,980 --------- --------- ----------- ----------- Consolidated $446,995 $384,103 $1,300,032 $1,126,483 ========= ========= =========== =========== Operating income: Interconnect Products $ 85,279 $ 68,157 $ 246,397 $ 197,040 Cable Products 6,438 6,801 19,657 18,139 Corporate (5,628) (4,655) (16,586) (14,539) --------- --------- ----------- ----------- Consolidated $ 86,089 $ 70,303 $ 249,468 $ 200,640 ========= ========= =========== =========== ROS%: Interconnect Products 21.8% 20.4% 21.6% 20.1% Cable Products 11.7% 13.4% 12.5% 12.4% Consolidated 19.3% 18.3% 19.2% 17.8%

Source: Business Wire

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