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Amphenol Corporation 10-Q Summary

Business Context and Reporting Period

This is a Quarterly Report on Form 10-Q for Amphenol Corporation for the period ended June 30, 2007. The Company is a large accelerated filer incorporated in Delaware. It operates two primary segments: Interconnect Products and Assemblies (connectors for communications, military, aerospace, industrial, and automotive markets) and Cable Products (coaxial and flat ribbon cable for communications markets). As of July 31, 2007, there were 178,744,713 shares of Class A Common Stock outstanding.

Key Financial Metrics

(All figures in thousands, except per share data)

Margins (Six Months 2007): Gross Margin was 32.6%; Operating Margin was approximately 19.1%.

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 13.5% year-over-year for the six months ended June 30, 2007 ($1.34B vs. $1.18B). This was driven by a 14.6% increase in the Interconnect segment and a 8.8% increase in the Cable segment.
• Profitability: Net income rose 46.2% to $161.7 million for the six-month period, compared to $110.6 million in 2006. This significant increase is partly due to the absence of a $15.0 million casualty loss related to a flood at the Sidney, NY facility that impacted the second quarter of 2006.
• Segment Performance: Interconnect operating income increased 24.3% to $259.1 million; Cable operating income increased 19.7% to $16.9 million.
• Working Capital: Accounts receivable increased by $44.0 million and inventory by $9.4 million, primarily due to higher sales volume and currency translation effects.

Guidance, Outlook, and Risks

Management Commentary: Management attributes sales growth to new application-specific solutions, increased worldwide presence, and price increases in the cable segment. Operating margins improved due to operating leverage, cost control, and a favorable product mix. The effective tax rate decreased to 30.1% for the six months ended June 30, 2007, from 33% in the prior year, due to increased income in lower-tax jurisdictions.

Liquidity and Capital Resources: The Company maintains a $1.0 billion revolving credit facility with $310.1 million available at June 30, 2007. The Company is in compliance with all financial covenants (Interest Coverage: 13.62X; Leverage: 1.32X). Credit ratings are BBB- (S&P) and Ba1 (Moody's).

Risks and Contingencies:

• Environmental: The Company is involved in environmental cleanup of sites from a 1987 acquisition. Costs are reimbursed 100% by Honeywell under an existing agreement; management does not expect a material adverse effect.
• Pension: The Pension Protection Act of 2006 may require increased funding. The Company plans a voluntary contribution of approximately $20 million in September 2007.
• Market Risk: Exposure to foreign currency exchange rates and interest rate fluctuations. Interest rate swaps are in place to fix rates on $650 million of debt.

Investor Verification Checklist

• Stock Split Impact: Verify that share counts and per-share data reflect the 2-for-1 stock split effective March 30, 2007.
• Acquisition Adjustments: Review Note 11 regarding the $20.1 million increase in goodwill due to performance-based cash consideration for prior acquisitions.
• Receivables Securitization: Confirm that approximately $85 million of receivables are sold under the New Agreement and excluded from the balance sheet.
• Pension Funding: Monitor the impact of the Pension Protection Act on future cash contributions beyond the planned $20 million.
• Debt Covenants: Verify continued compliance with the 3.0X interest coverage and 3.25X leverage ratios under the revolving credit facility.