A M P H E N O L C O R P O R A T I O N 2 0 0 4 A N N U A L R E P O R T  Notes to Consolidated Financial Statements  (dollars in thousands, except per share data)  Note 1-Summary of Significant Accounting Policies  Operations Amphenol Corporation ("Amphenol" or the "Company") is in two business segments which consist of manufacturing and  selling interconnect products and assemblies, and manufacturing and selling cable products. The Company sells its products to  customer locations worldwide.  Use of Estimates  The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the  United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and  liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported  amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation  The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions  have been eliminated in consolidation. Cash and Short-Term Cash Investments  Cash and short-term cash investments consist of cash and liquid investments with an original maturity of less than three  months. The carrying amount approximates fair value of those instruments. Sale of Receivables 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 2007. Under the terms  of the agreement, new receivables are added to the pool as collections reduce previously sold accounts receivable. The aggregate  value of receivables transferred to the pool for the year 2004, 2003 and 2002 were $606,136, $538,093, and $541,834, respectively.  At December 31, 2004 and 2003, $32,992 and $24,568, respectively, of accounts receivable were transferred to the subsidiary, but  not purchased by the financial institution and are therefore included in the accounts receivable balance in the accompanying  Consolidated Balance Sheets. Due to the short-term nature of the accounts receivable, the fair value approximates the carrying value.  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 Consolidated Statements of Income. The agreement contains certain  covenants and provides for various events of termination. At December 31, 2004 and 2003, approximately $80,000 and $73,800,  respectively, of receivables were sold under the agreement and are therefore not reflected in the accounts receivable balance in the  accompanying Consolidated Balance Sheets. Reclassifications  In 2004, the Company reclassified certain amounts in its 2003 and 2002 Consolidated Statements of Cash Flow from  financing activities to operating activities as a result of a determination that they had not been reported in accordance with Statement  of Financial Accounting Standard No. 95 “Statement of Cash Flows”. The amounts reclassified of $10.6 and ($11.0) million in  2003 and 2002, respectively, reflect a change in classification of the net change in the accounts receivables sold under the  Company’s accounts receivable securitization agreement. As a result of these reclassifications, there was no impact on the  Company’s net change in cash and short-term cash investments in 2003 and 2002.  40 