AMPHENOL CORP /DE/ - Quarter Report: 2011 June (Form 10-Q)

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UNITED STATES

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, 2011

 

OR

 

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 1-10879

 

 

AMPHENOL CORPORATION

 

 

358 Hall Avenue

Wallingford, Connecticut 06492

203-265-8900

 

 

Indicate by check mark whether the registrant: (1) has filed all 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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

 

As of July 31, 2011, the total number of shares outstanding of Class A Common Stock was 169,918,065.

 

 

Table of Contents

 

Amphenol Corporation

 

Index to Quarterly Report

on Form 10-Q

 

			Page
Part I	Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010 (Unaudited)		3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2011 and 2010 (Unaudited)		4
	Condensed Consolidated Statements of Cash Flow for the Six Months Ended June 30, 2011 and 2010 (Unaudited)		5
	Notes to Condensed Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
Item 4.	Controls and Procedures		18
Part II	Other Information
Item 1.	Legal Proceedings		18
Item 1A.	Risk Factors		18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults Upon Senior Securities		19
Item 4.	Removed and Reserved		19
Item 5.	Other Information		19
Item 6.	Exhibits		20
Signature			23

 

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands)

 

		June 30, 2011			December 31, 2010
Assets
Current Assets:
Cash and cash equivalents		$	611,208		$	525,888
Short-term investments		85,347			98,341
Total cash, cash equivalents and short-term investments		696,555			624,229
Accounts receivable, less allowance for doubtful accounts of $13,188 and $14,946, respectively		793,418			718,545
Inventories		642,273			549,169
Other current assets		114,434			100,187
Total current assets		2,246,680			1,992,130
Land and depreciable assets, less accumulated depreciation of $668,621 and $611,008, respectively		379,731			366,996
Goodwill		1,576,987			1,533,299
Other long-term assets		119,337			123,432
		$	4,322,735		$	4,015,857
Liabilities & Equity
Current Liabilities:
Accounts payable		$	426,184		$	384,963
Accrued salaries, wages and employee benefits		74,463			75,183
Accrued income taxes		69,581			65,311
Accrued acquisition-related obligations (Note 15)		—			39,615
Other accrued expenses		77,822			89,566
Short-term debt		328			352
Total current liabilities		648,378			654,990
Long-term debt		1,157,589			799,640
Accrued pension and post-employment benefit obligations		171,613			176,636
Other long-term liabilities		35,751			41,876
Equity:
Common stock		170			176
Additional paid-in capital		168,661			144,855
Accumulated earnings		2,170,142			2,260,581
Accumulated other comprehensive loss		(42,521		)	(84,757		)
Total shareholders’ equity attributable to Amphenol Corporation		2,296,452			2,320,855
Noncontrolling interests		12,952			21,860
Total equity		2,309,404			2,342,715
		$	4,322,735		$	4,015,857

 

See accompanying notes to condensed consolidated financial statements.

 

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AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(dollars in thousands, except per share data)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2011			2010			2011			2010
Net sales		$	1,017,738		$	884,798		$	1,958,323		$	1,655,752
Cost of sales		696,516			595,499			1,332,977			1,117,261
Gross profit		321,222			289,299			625,346			538,491
Change in contingent acquisition related obligations (Note 15)		(17,813		)	—			(17,813		)	—
Selling, general and administrative expense		124,161			113,674			242,200			217,822
Operating income		214,874			175,625			400,959			320,669
Interest expense		(11,371		)	(9,968		)	(21,387		)	(19,981		)
Other income (expenses), net		2,130			764			3,834			1,223
Income before income taxes		205,633			166,421			383,406			301,911
Provision for income taxes		(56,739		)	(35,412		)	(105,627		)	(70,764		)
Net income		148,894			131,009			277,779			231,147
Less: Net income attributable to noncontrolling interests		(1,143		)	(1,338		)	(2,070		)	(3,123		)
Net income attributable to Amphenol Corporation		$	147,751		$	129,671		$	275,709		$	228,024
Net income per common share -Basic		$	0.86		$	0.75		$	1.59		$	1.32
Weighted average common shares outstanding-Basic		171,194,474			173,519,882			173,170,408			173,393,698
Net income per common share -Diluted		$	0.85		$	0.74		$	1.57		$	1.30
Weighted average common shares outstanding-Diluted		173,592,458			175,885,465			175,707,345			175,731,091
Dividends declared per common share		$	0.015		$	0.015		$	0.030		$	0.030

 

See accompanying notes to condensed consolidated financial statements.

 

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AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(dollars in thousands)

 

		Six Months Ended June 30,
		2011			2010
Cash flow from operating activities:
Net income		$	277,779		$	231,147
Adjustments for cash from operating activities:
Depreciation and amortization		57,208			49,493
Net change in receivables sold under Receivables Securitization Facility		—			(82,000		)
Stock-based compensation expense		13,381			11,615
Change in contingent acquisition related obligations (Note 15)		(17,813		)	—
Excess tax benefits from stock-based compensation payment arrangements		(5,493		)	(1,333		)
Net change in components of working capital		(115,869		)	(77,315		)
Net change in other long-term assets and liabilities		3,154			4,264
Cash flow provided by operating activities		212,347			135,871
Cash flow from investing activities:
Additions to property, plant and equipment		(45,780		)	(43,086		)
Purchases of short-term investments		(69,330		)	(87,050		)
Sales and maturities of short-term investments		82,324			42,459
Acquisitions, net of cash acquired		(51,889		)	(13,624		)
Cash flow used in investing activities		(84,675		)	(101,301		)
Cash flow from financing activities:
Borrowings under credit facilities		489,200			102,582
Repayments under credit facilities		(136,821		)	(73,800		)
Payments of fees and expenses related to debt financing		(2,105		)	—
Proceeds from exercise of stock options		21,451			7,397
Excess tax benefits from stock-based compensation payment arrangements		5,493			1,333
Payment of contingent acquisition related obligations		(40,000		)	—
Payments to shareholders of noncontrolling interests		(27,122		)	(2,421		)
Purchase and retirement of treasury stock		(360,998		)	—
Dividend payments		(5,241		)	(5,197		)
Cash flow (used in) provided by financing activities		(56,143		)	29,894
Effect of exchange rate changes on cash and cash equivalents		13,791			(12,400		)
Net change in cash and cash equivalents		85,320			52,064
Cash and cash equivalents balance, beginning of period		525,888			384,613
Cash and cash equivalents balance, end of period		$	611,208		$	436,677
Cash paid during the year for:
Interest		$	20,527		$	20,100
Income taxes		83,496			69,080

 

See accompanying notes to condensed consolidated financial statements.

 

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AMPHENOL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollars in thousands, except per share data)

 

Note 1—Basis of Presentation and Principles of Consolidation

 

The condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010, the related condensed consolidated statements of income for the three and six months ended June 30, 2011 and 2010 and the condensed consolidated statements of cash flow for the six months ended June 30, 2011 and 2010 include the accounts of Amphenol Corporation and its subsidiaries (the “Company”).  All material intercompany balances and transactions have been eliminated in consolidation. The financial statements included herein are unaudited. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation in conformity with accounting principles generally accepted in the United States of America have been included.  The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results to be expected for the full year.  These financial statements and the related notes should be read in conjunction with the financial statements and notes included in the Company’s 2010 Annual Report on Form 10-K.

 

Note 2—New Accounting Pronouncements

 

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011 and will be applied retrospectively.  The Company has not yet determined which presentation will be adopted.

 

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 improves comparability of fair value measurements presented and disclosed in financial statements prepared with U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. ASU 2011-04 also provides guidance on measuring the fair value of financial instruments managed within a portfolio, and application of premiums and discounts in a fair value measurement. In addition, ASU 2011-04 requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this guidance are to be applied prospectively, and are effective for interim and annual periods beginning after December 15, 2011. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

 

Note 3—Reclassifications

 

In 2011, the Company changed the presentation of the Condensed Consolidated Statements of Cash Flow to present purchases and sales/maturities of short-term investments on a gross basis, which had been presented on a net basis for the six months ended June 30, 2010.  As a result, amounts in the accompanying Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2010 have been reclassified to conform to the current year presentation.

 

Note 4—Inventories

 

Inventories consist of:

 

		June 30,  2011			December 31, 2010
Raw materials and supplies		$	206,306		$	162,439
Work in process		259,335			231,719
Finished goods		176,632			155,011
		$	642,273		$	549,169

 

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Note 5—Reportable Business Segments

 

The Company has two reportable business segments: (i) Interconnect Products and Assemblies and (ii) 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 produces coaxial and flat ribbon cable and related products primarily for the communications markets, including cable television. The accounting policies of the segments are the same as those for the Company as a whole. The Company evaluates the performance of its business segments on, among other things, profit or loss from operations before interest, income taxes and stock-based compensation expense as well as other costs such as headquarters expense allocations, amortization related to certain intangible assets and nonrecurring gains and losses.

 

The segment results for the three months ended June 30, 2011 and 2010 are as follows:

 

		Interconnect Products and Assemblies						Cable Products						Total
		2011			2010			2011			2010			2011			2010
Net sales
-external		$	943,752		$	817,146		$	73,986		$	67,652		$	1,017,738		$	884,798
-inter-segment		1,612			839			5,901			4,747			7,513			5,586
Segment operating income		203,380			181,820			9,500			9,120			212,880			190,940

 

The segment results for the six months ended June 30, 2011 and 2010 are as follows:

 

		Interconnect Products and Assemblies						Cable Products						Total
		2011			2010			2011			2010			2011			2010
Net sales
-external		$	1,821,268		$	1,520,744		$	137,055		$	135,008		$	1,958,323		$	1,655,752
-inter-segment		2,325			1,490			10,760			9,703			13,085			11,193
Segment operating income		397,492			330,482			16,959			19,163			414,451			349,645

 

A reconciliation of segment operating income to consolidated income before income taxes for the three and six months ended June 30, 2011 and 2010 is summarized as follows:

 

		Three months ended June 30,						Six months ended June 30,
		2011			2010			2011			2010
Segment operating income		$	212,880		$	190,940		$	414,451		$	349,645
Interest expense		(11,371		)	(9,968		)	(21,387		)	(19,981		)
Interest income		2,311			1,117			4,129			1,919
Stock-based compensation expense		(7,061		)	(6,172		)	(13,381		)	(11,615		)
Change in contingent acquisition related obligations		17,813			—			17,813			—
Other costs, net		(8,939		)	(9,496		)	(18,219		)	(18,057		)
Income before income taxes		$	205,633		$	166,421		$	383,406		$	301,911

 

Note 6—Comprehensive Income

 

Total comprehensive income for the three and six months ended June 30, 2011 and 2010 is summarized as follows:

 

		Three months ended June 30,						Six months ended June 30,
		2011			2010			2011			2010
Net income		$	148,894		$	131,009		$	277,779		$	231,147
Currency translation adjustments		18,701			(35,715		)	42,196			(38,593		)
Revaluation of interest rate derivatives		—			1,061			—			2,073
Defined benefit plan liability adjustment, net of tax		—			92			222			1,059
Total comprehensive income		$	167,595		$	96,447		$	320,197		$	195,686

 

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Note 7—Changes in Equity and Noncontrolling Interests

 

Net income attributable to noncontrolling interests is classified below net income (earnings per share is determined after the impact of the noncontrolling interests’ share in net income of the Company).  In addition, the liability related to noncontrolling interests is presented as a separate caption within equity.

 

A reconciliation of consolidated changes in equity for the six months ended June 30, 2011 is as follows:

 

		Amphenol Corporation Shareholders
													Accum. Other
		Shares					Additional Paid-			Accumulated			Comprehensive			Treasury			Noncontrolling			Total
		(in millions)		Amount			In Capital			Earnings			Loss			Stock			Interests			Equity
Balance as of December 31, 2010		176		$	176		$	144,855		$	2,260,581		$	(84,757	)	$	—		$	21,860		$	2,342,715
Net income										275,709									2,070			277,779
Translation adjustments													42,014						182			42,196
Defined benefit plan liability adjustment, net of tax													222									222
Payments to shareholders of non-controlling interests																			(2,268		)	(2,268		)
Purchase of non-controlling interests							(15,962		)										(8,892		)	(24,854		)
Purchase of treasury stock																(360,998		)				(360,998		)
Retirement of treasury stock		(6	)	(6		)				(360,992		)				360,998						—
Stock options exercised, including tax benefit							26,387															26,387
Dividends declared										(5,156		)										(5,156		)
Stock-based compensation expense							13,381															13,381
Balance as of June 30, 2011		170		$	170		$	168,661		$	2,170,142		$	(42,521	)	$	—		$	12,952		$	2,309,404

 

A reconciliation of consolidated changes in equity for the six months ended June 30, 2010 is as follows:

 

		Amphenol Corporation Shareholders
													Accum. Other
		Shares					Additional Paid-			Accumulated			Comprehensive			Noncontrolling			Total
		(in millions)		Amount			In Capital			Earnings			Loss			Interests			Equity
Balance as of December 31, 2009		173		$	174		$	71,368		$	1,774,625		$	(100,090	)	$	16,741		$	1,762,818
Net income										228,024						3,123			231,147
Noncontrolling interest acquired																10,286			10,286
Translation adjustments													(38,719		)	126			(38,593		)
Revaluation of interest rate derivatives													2,073						2,073
Defined benefit plan liability adjustment, net of tax													1,059						1,059
Payments to shareholders of non-controlling interests																(2,421		)	(2,421		)
Stock options exercised, including tax benefit		1					8,236												8,236
Dividends declared										(5,204		)							(5,204		)
Stock-based compensation expense							11,615												11,615
Balance as of June 30, 2010		174		$	174		$	91,219		$	1,997,445		$	(135,677	)	$	27,855		$	1,981,016

 

Note 8—Earnings Per Share

 

Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amphenol Corporation by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted-average number of common shares and dilutive common shares issuable upon the exercise of outstanding stock options. A reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three and six months ended June 30, 2011 and 2010 is as follows (dollars in thousands, except per share amounts):

 

		Three months ended June 30,						Six months ended June 30,
		2011			2010			2011			2010
Net income attributable to Amphenol Corporation shareholders		$	147,751		$	129,671		$	275,709		$	228,024
Basic weighted average common shares outstanding		171,194,474			173,519,882			173,170,408			173,393,698
Effect of dilutive stock options		2,397,984			2,365,583			2,536,937			2,337,393
Diluted weighted average common shares outstanding		173,592,458			175,885,465			175,707,345			175,731,091
Earnings per share attributable to Amphenol Corporation shareholders:
Basic		$	0.86		$	0.75		$	1.59		$	1.32
Diluted		$	0.85		$	0.74		$	1.57		$	1.30

 

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Excluded from the computations above were anti-dilutive common shares of 2,969,325 and 2,944,650 for the three months ended June 30, 2011 and 2010, respectively, and 2,434,686 and 3,080,457 for the six months ended June 30, 2011 and 2010, respectively.

 

Note 9—Commitments and Contingencies

 

The Company and its subsidiaries have been named as defendants in several legal actions in which various amounts are claimed arising from normal business activities.  Although the amount of any ultimate liability with respect to such matters cannot be precisely determined, in the opinion of management, such matters are not expected to have a material effect on the Company’s financial condition or results of operations.

 

Certain operations of the Company are subject to environmental laws and regulations which govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations and that the costs of continuing compliance will not have a material effect on the Company’s financial condition or results of operations.

 

Subsequent to the acquisition of Amphenol from Allied Signal Corporation (“Allied Signal”) in 1987 (Allied Signal merged with Honeywell International Inc. in December 1999 (“Honeywell”)), the Company and Honeywell were named jointly and severally liable as potentially responsible parties in connection with several environmental cleanup sites. The Company and Honeywell jointly consented to perform certain investigations and remediation and monitoring activities at two sites, the “Route 8” landfill and the “Richardson Hill Road” landfill, and they were jointly ordered to perform work at another site, the “Sidney” landfill. All of the costs incurred relating to these three sites are currently reimbursed by Honeywell based on an agreement (the “Honeywell Agreement”) entered into in connection with the acquisition in 1987. 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 consolidated financial condition or results of operations. The environmental investigation, remediation and monitoring activities identified by the Company, including those referred to above, are covered under the Honeywell Agreement.

 

Note 10—Stock-Based Compensation

 

In May 2009, the Company adopted the 2009 Stock Purchase and Option Plan (the “2009 Option Plan”) for Key Employees of the Company and its subsidiaries.  The Company currently also maintains the 2000 Stock Purchase and Option Plan (the “2000 Option Plan”).  The 2009 Option Plan authorizes the granting of additional stock options by a committee of the Company’s Board of Directors, although no additional options can be granted under the 2000 Option Plan. As of June 30, 2011, there were 7,624,150 shares of common stock available for the granting of additional stock options under the 2009 Option Plan. Options granted under the 2000 Option Plan and the 2009 Option Plan vest ratably over a period of five years and are exercisable over a period of ten years from the date of grant.

 

In 2004, the Company adopted the 2004 Stock Option Plan for Directors of Amphenol Corporation (the “Directors Option Plan”). The Directors Option Plan is administered by the Company’s Board of Directors.  As of June 30, 2011, the maximum number of shares of common stock available for the granting of additional stock options under the Directors Option Plan was 80,000.  Options granted under the Directors Option Plan vest ratably over a period of three years and are exercisable over a period of ten years from the date of grant.

 

The grant-date fair value of each option grant under the 2000 Option Plan, the 2009 Option Plan and the Directors Option Plan is estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected share price volatility was calculated based on the historical volatility of the stock of the Company and implied volatility derived from related exchange traded options. The average expected life was based on the contractual term of the option and expected employee exercise and historical post-vesting employment termination experience. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The expected annual dividend per share is based on the Company’s dividend rate.

 

Stock-based compensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates.  Changes in estimated forfeitures are recognized in the period of change and impact the amount of expense to be recognized in future periods.  For the three months ended June 30, 2011, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $7,061 and $5,116, respectively, and these reductions were $13,381 and $9,611, respectively, for the six months ended June 30, 2011.  For the three months ended June 30, 2010, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $6,172 and $4,857, respectively, and these reductions were $11,615 and $8,897, respectively, for the six

 

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months ended June 30, 2010. The expense incurred for stock-based compensation is included in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Income.

 

Stock option activity for the three and six months ended June 30, 2011 was as follows:

 

		Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2010		12,706,324		$	33.93		7.18		$	239,534
Options granted		35,000		53.41
Options exercised		(576,454	)	20.68
Options forfeited		(38,300	)	37.49
Options outstanding at March 31, 2011		12,126,570		34.54			7.08		$	240,698
Options granted		2,506,350		53.48
Options exercised		(303,328	)	31.42
Options forfeited		(82,300	)	38.10
Options outstanding at June 30, 2011		14,247,292		$	37.92		7.38		$	228,952
Vested and non-vested options expected to vest at June 30, 2011		13,152,814		$	37.42		7.27		$	218,000
Exercisable options at June 30, 2011		6,528,916		$	31.42		5.90		$	147,365

 

A summary of the status of the Company’s non-vested options as of June 30, 2011 and changes during the three and six months then ended is as follows:

 

		Options		Weighted Average Fair Value at Grant Date
Non-vested options at December 31, 2010		7,623,976		$	12.78
Options granted		35,000		16.98
Options forfeited		(38,300	)	12.63
Non-vested options at March 31, 2011		7,620,676		$	12.80
Options granted		2,506,350		14.15
Options vested		(2,326,350	)	12.23
Options forfeited		(82,300	)	12.82
Non-vested options at June 30, 2011		7,718,376		$	13.41

 

During the three and six months ended June 30, 2011 and 2010, the following activity occurred under the Company’s option plans:

 

		Three months ended June 30,						Six months ended June 30,
		2011			2010			2011			2010
Total intrinsic value of stock options exercised		$	6,739		$	5,914		$	26,402		$	9,699
Total fair value of stock options vested		28,446			23,665			28,446			23,667

 

On June 30, 2011, the total compensation cost related to non-vested options not yet recognized is approximately $88,665 with a weighted average expected amortization period of 3.66 years.

 

Note 11—Shareholders’ Equity

 

In January 2011, the Company announced that its Board of Directors authorized a stock repurchase program under which the Company may repurchase up to 20,000,000 shares of its common stock during the three year period ending January 31, 2014 (the “Program”). During the six months ended June 30, 2011, the Company repurchased approximately 6,600,000 shares of its common stock for approximately $361,000.  During the second quarter of 2011, these treasury shares were retired by the Company and accumulated earnings were reduced by the respective repurchase amounts.

 

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