What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-07-24 compared with 2020-04-24 · 214 added, 112 removed, 477 unchanged (41% of the section changed)

37 unchanged sentences

Three Months Ended

Six Months Ended

Cost of sales

16 unchanged sentences

(dollars in millions)

Three Months Ended March 31,

Total other comprehensive (loss) income, net of tax:

Three Months Ended June 30,

Six Months Ended June 30,

Total other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

Unrealized gain (loss) on cash flow hedges

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.7 ) and ($ 1.2 ), respectively

Total other comprehensive (loss) income, net of tax

Unrealized (loss) gain on cash flow hedges

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.7 ) and ($ 3.3 ) for 2020, and ($ 1.2 ) and ($ 2.4 ) for 2019, respectively

Total other comprehensive income (loss), net of tax

Total comprehensive income

5 unchanged sentences

(dollars in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash from operating activities:

20 unchanged sentences

Payment of costs related to debt financing

Payment of acquisition-related contingent consideration

Proceeds from exercise of stock options

2 unchanged sentences

Dividend payments

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

9 unchanged sentences

Note 1—Basis of Presentation and Principles of Consolidation

The condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, and the related condensed consolidated statements of income, condensed consolidated statements of comprehensive income, and condensed consolidated statements of cash flow for the three months ended March 31, 2020 and 2019 include the accounts of Amphenol Corporation and its subsidiaries (“Amphenol,” the “Company,” “we,” “our,” or “us”).

The condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, the related condensed consolidated statements of income and condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2020 and 2019, and the related condensed consolidated statements of cash flow for the six months ended June 30, 2020 and 2019 include the accounts of Amphenol Corporation and its subsidiaries (“Amphenol,” the “Company,” “we,” “our,” or “us”).

All material intercompany balances and transactions have been eliminated in consolidation.

1 unchanged sentence

In the opinion of management, the condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments considered necessary for a fair presentation of the results, in conformity with accounting principles generally accepted in the United States of America.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year.

These condensed consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Annual Report”).

16 unchanged sentences

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies income tax accounting in various areas including, but not limited to, the accounting for hybrid tax regimes, tax implications related to business combinations, and interim period accounting for enacted changes in tax law, along with some codification improvements.

for enacted changes in tax law, along with some codification improvements.

ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

changes in the standard require retrospective or modified retrospective adoption, while other changes must be adopted prospectively.

Certain changes in the standard require retrospective or modified retrospective adoption, while other changes must be adopted prospectively.

The Company is currently evaluating ASU 2019-12 and its impact on our consolidated financial statements.

11 unchanged sentences

We do not currently believe that this transition will have a material impact on our financial condition, results of operations or cash flows.

On May 20, 2020, the Securities and Exchange Commission (“SEC”) issued a final rule regarding the financial statement requirements for acquisitions and dispositions of a business, which included, among other things, amending (i) certain criteria in the significance tests for acquired or to be acquired businesses, (ii) related pro forma financial information requirements including its form and content, and (iii) related disclosure requirements, including the number of acquiree financial statement periods required to be presented in SEC filings.

The final rule is effective for fiscal years beginning after December 31, 2020, with early application permitted.

The Company is currently evaluating this SEC final rule and its impact on our SEC filings.

Note 3—Inventories

4 unchanged sentences

The Company’s debt (net of any unamortized discount) consists of the following:

March 31, 2020

June 30, 2020

December 31, 2019

7 unchanged sentences

2.050 % Senior Notes due March 2025

0.750 % Euro Senior Notes due May 2026

2.000 % Euro Senior Notes due October 2028

1 unchanged sentence

2.800 % Senior Notes due February 2030

Uncommitted line of credit

Notes payable to foreign banks and other debt

8 unchanged sentences

The outstanding borrowings at March 31, 2020 included € 200.0 ($ 217.4 at date of issuance) of euro-denominated borrowings, with the remainder of the outstanding borrowings denominated in U.S.

The borrowings under the Revolving Credit Facility at March 31, 2020 were used in part to repay the entire outstanding balance under the U.S.

Commercial Paper Program (as defined below) and partially repay balances maturing under the Euro Commercial Paper Program (as defined below) through March 31, 2020.

All additional borrowings under the Revolving Credit Facility will be used to repay remaining balances under the Euro Commercial Paper Program as they mature and for general corporate purposes.

At December 31, 2019, there were no outstanding borrowings under the Revolving Credit Facility.

The carrying value of borrowings under the Revolving Credit Facility approximate their fair value due primarily to their market interest rates and are classified as Level 2 in the fair value hierarchy (Note 5).

The borrowings under the Revolving Credit Facility during the first quarter of 2020 were used in part to repay outstanding balances under the U.S.

Commercial Paper Program and the Euro Commercial Paper Program (each as defined below).

During the second quarter of 2020, the Company repaid all of the outstanding borrowings under the Revolving Credit Facility using cash and cash equivalents on hand as well as the net proceeds from the 2026 Euro Notes (defined below).

At June 30, 2020 and December 31, 2019, there were no outstanding borrowings under the Revolving Credit Facility.

The carrying value of any borrowings under the Revolving Credit Facility would approximate their fair value due primarily to their market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 5).

The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.

At March 31, 2020, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Outstanding borrowings under the Revolving Credit Facility are classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020.

At June 30, 2020, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Any outstanding borrowings under the Revolving Credit Facility are classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets.

Commercial Paper Programs

4 unchanged sentences

The USCP Notes are sold under customary terms in the commercial paper market and may be issued at par or a discount therefrom, and bear varying interest rates on a fixed or floating basis.

As of March 31, 2020, there were no USCP Notes outstanding.

There were no USCP Notes outstanding as of June 30, 2020.

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also has a euro-commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S.

4 unchanged sentences

dollars or other currencies.

As of March 31, 2020, the amount of ECP Notes outstanding was € 125.0 (approximately $ 137.9 ), with an average interest rate of ( 0.16 )% .

In addition, effective April 14, 2020, a subsidiary of the Company is able to issue ECP Notes through the Bank of England’s COVID Corporate Financing Facility (“BOE Facility”).

The BOE Facility will be available for at least twelve months from its inception.

The Company repaid all of its outstanding ECP Notes in the second quarter of 2020, including under the BOE Facility, and as such, there were no ECP Notes outstanding as of June 30, 2020.

Amounts available under the Commercial Paper Programs may be borrowed, repaid and re-borrowed from time to time.

4 unchanged sentences

Net proceeds of the issuances of Commercial Paper are expected to be used for general corporate purposes.

The Commercial Paper is classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Company’s Revolving Credit Facility.

Any outstanding Commercial Paper is classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Company’s Revolving Credit Facility.

The Commercial Paper is actively traded and is therefore classified as Level 1 in the fair value hierarchy (Note 5).

The carrying value of Commercial Paper borrowings approximates their fair value.

On February 20, 2020, the Company issued $ 400.0 principal amount of unsecured 2.050 % Senior Notes due March 1, 2025 at 99.829 % of face value (the “2025 Senior Notes”).

The 2025 Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.

Interest on the 2025 Senior Notes is payable semiannually on March 1 and September 1 of each year, commencing on September 1, 2020.

Prior to February 1, 2025, the Company may, at its option, redeem some or all of the 2025 Senior Notes at any time by paying the redemption price (which may include a make-whole premium), plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If redeemed on or after February 1, 2025, the Company may, at its option, redeem some or all of the 2025 Senior Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

On April 1, 2020, the Company used the net proceeds from the 2025 Senior Notes to repay the $ 400.0 2.20 % Senior Notes due April 1, 2020 upon maturity.

On January 9, 2019, the Company issued $ 500.0 principal amount of unsecured 4.350 % Senior Notes due June 1, 2029 at 99.904 % of face value (the “2029 Senior Notes”).

6 unchanged sentences

On September 4, 2019, the Company commenced tender offers (“Tender Offers”) to purchase for cash any and all of the Company’s outstanding (i) $ 375.0 principal amount of its 3.125 % Senior Notes due September 2021 (“2021 Senior Notes”) and (ii) $ 500.0 principal amount of its 4.00 % Senior Notes due February 2022 (“2022 Senior Notes”).

On September 11, 2019, as a result of the Tender Offers, the Company accepted for payment $ 147.3 aggregate principal amount of the 2021 Senior Notes and $ 205.0 aggregate principal amount of the 2022 Senior Notes for 101.9 % and 104.5 % of par value, respectively (collectively, the “Tendered Notes”), plus accrued and unpaid interest to, but not including, the settlement date of the Tender Offers.

September 11, 2019, as a result of the Tender Offers, the Company accepted for payment $ 147.3 aggregate principal amount of the 2021 Senior Notes and $ 205.0 aggregate principal amount of the 2022 Senior Notes for 101.9 % and 104.5 % of par value, respectively (collectively, the “Tendered Notes”), plus accrued and unpaid interest to, but not including, the settlement date of the Tender Offers.

The total consideration for the Tendered Notes was $ 368.8 , which in addition to the Tendered Notes, included $ 13.4 of premiums and fees paid related to the early extinguishment of debt and $ 3.1 of accrued interest.

1 unchanged sentence

This charge was primarily comprised of the premiums and fees incurred related to the Tendered Notes, along with the non-cash charge associated with the write-off of the remaining unamortized deferred debt issuance costs associated with the Tendered Notes.

The remaining principal amounts associated with the 2021 Senior Notes and 2022 Senior Notes, which were not redeemed as a result of the Tender Offers, remain outstanding as of March 31, 2020, as noted in the table above.

The remaining principal amounts associated with the 2021 Senior Notes and 2022 Senior Notes, which were not redeemed as a result of the Tender Offers, remain outstanding as of June 30, 2020, as noted in the table above.

On September 10, 2019, the Company issued $ 900.0 principal amount of unsecured 2.800 % Senior Notes due February 15, 2030 at 99.920 % of face value (the “2030 Senior Notes”).

5 unchanged sentences

Commercial Paper Program.

On February 20, 2020, the Company issued $ 400.0 principal amount of unsecured 2.050 % Senior Notes due March 1, 2025 at 99.829 % of face value (the “2025 Senior Notes”).

The 2025 Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.

Interest on the 2025 Senior Notes is payable semiannually on March 1 and September 1 of each year, commencing on September 1, 2020.

On April 1, 2020, the Company used the net proceeds from the 2025 Senior Notes to repay the $ 400.0 2.20 % Senior Notes due April 1, 2020 upon maturity.

All of the Company’s outstanding senior notes in the United States (“U.S.

6 unchanged sentences

Senior Notes is based on recent bid prices in an active market and is therefore classified as Level 1 in the fair value hierarchy (Note 5).

T he Company’s 2.20 % Senior Notes were due in April 2020 and are therefore recorded, net of the related unamortized discount and debt issuance costs, within Current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020.

Senior Notes contain certain financial and non-financial covenants.

At March 31, 2020, the Company was in compliance with the financial covenants under its U.S.

At June 30, 2020, the Company was in compliance with the financial covenants under its U.S.

Senior Notes.

Euro Senior Notes

On October 8, 2018, the Euro Issuer issued € 500.0 (approximately $ 574.6 at date of issuance) principal amount of unsecured 2.000 % Senior Notes due October 8, 2028 at 99.498 % of face value (the “2028 Euro Notes” or “ 2.000 % Euro Senior Notes”, and collectively with the U.S.

Senior Notes, “Senior Notes”).

On May 4, 2020, the Euro Issuer issued € 500.0 (approximately $ 545.4 at date of issuance) principal amount of unsecured 0.750 % Senior Notes due May 4, 2026 at 99.563 % of face value (the “2026 Euro Notes” or “ 0.750 % Euro Senior Notes”).

The 2026 Euro Notes are unsecured and rank equally in right of payment with the Euro Issuer’s other unsecured senior indebtedness, and are fully and unconditionally guaranteed on a senior unsecured basis by the Company.

Interest on the 2026 Euro Notes is payable annually on May 4 of each year, commencing on May 4, 2021.

Prior to February 4, 2026, the Company may, at its option, redeem some or all of the 2026 Euro Notes at any time by paying the redemption price (which may include a make-whole premium), plus accrued and unpaid interest, if any, to the date of redemption.

If redeemed on or after February 4, 2026, the Company may, at its option, redeem some or all of the 2026 Euro Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The fair value of the 2026 Euro Notes is based on recent bid prices in an active market and is therefore classified as Level 1 in the fair value hierarchy (Note 5).

The Company used the net proceeds from the 2026 Euro Notes to repay amounts outstanding under its Revolving Credit Facility.

Senior Notes and 2026 Euro Notes, “Senior Notes”).

The 2028 Euro Notes are unsecured and rank equally in right of payment with the Euro Issuer’s other unsecured senior indebtedness, and are fully and unconditionally guaranteed on a senior unsecured

basis by the Company.

Interest on the 2028 Euro Notes is payable annually on October 8 of each year, commencing on October 8, 2019.

4 unchanged sentences

The Euro Notes contain certain financial and non-financial covenants.

At March 31, 2020, the Company was in compliance with the financial covenants under its 2028 Euro Notes.

At June 30, 2020, the Company was in compliance with the financial covenants under its Euro Notes.

Other Line of Credit Facilities

On March 20, 2020, the Company, through one of its wholly owned foreign subsidiaries, borrowed $ 100.0 (the maximum borrowing capacity) on an uncommitted line of credit, at a variable LIBOR-based interest rate, initially set at 1.92 % .

This line of credit, which is guaranteed by the Company and carries an interest rate of LIBOR plus 80 basis points, expires on December 19, 2020 and as such, is recorded in Current portion of long-term debt on the Condensed Consolidated Balance Sheet as of March 31, 2020.

Borrowings under this line of credit arrangement are used for general corporate purposes.

The carrying value of these borrowings approximate their fair value due primarily to their market interest rates and are classified as Level 2 in the fair value hierarchy (Note 5).

This line of credit, which is guaranteed by the Company and carries an interest rate of LIBOR plus 80 basis points, expires on December 19, 2020.

Borrowings under this line of credit arrangement were used for general corporate purposes.

The carrying value of this borrowing approximated its fair value due primarily to its market interest rates and was classified as Level 2 in the fair value hierarchy (Note 5).

Prior to maturity, on May 5, 2020, the Company repaid, in full, the outstanding borrowing on this uncommitted line of credit, using cash and cash equivalents on hand.

Note 5—Fair Value Measurements

17 unchanged sentences

The Company’s derivative instruments represent foreign exchange forward contracts, which are valued using bank quotations based on market observable inputs such as forward and spot rates and are therefore classified as Level 2 in the fair value hierarchy.

The contingent consideration payment (related to the acquisition of SSI Controls Technologies in January 2019) was valued using Level 3 unobservable inputs, such as probability weighted payout projections, within the fair value hierarchy.

The calculation of the contingent consideration was finalized in the first quarter of 2020 based on actual financial data used for inputs, and is payable in the second quarter of 2020.

The contingent consideration payment (related to the acquisition of SSI Controls Technologies in January 2019) was valued using Level 3 unobservable inputs, such as probability weighted payout

projections, within the fair value hierarchy.

The calculation of the contingent consideration was finalized in the first quarter of 2020 based on actual financial data used for inputs, and the consideration was paid in June of 2020.

The impact of the credit risk related to these financial assets is immaterial.

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards at March 31, 2020 and December 31, 2019 are as follows:

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards at June 30, 2020 and December 31, 2019 are as follows:

Fair Value Measurements

3 unchanged sentences

Assets (Level 1)

March 31, 2020:

June 30, 2020:

Short-term investments

Forward contracts

Contingent consideration

December 31, 2019:

3 unchanged sentences

With the exception of the fair value of the assets acquired and liabilities assumed in connection with acquisition accounting, the Company does not have any other significant financial or non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts and the amount reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss) in the accompanying Condensed Consolidated Statements of Income during the three months ended March 31, 2020 and 2019 were not material.

The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts and the amount reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss) in the accompanying Condensed Consolidated Statements of Income during the three and six months ended June 30, 2020 and 2019 were not material.

The fair values of the forward contracts are recorded within Prepaid expenses and other current assets, Other long-term assets, Other accrued expenses and Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets, depending on their value and remaining contractual period.

Note 6—Income Taxes

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Provision for income taxes

Effective tax rate

For the three months ended March 31, 2020, the effective tax rate includes a discrete tax benefit related to the settlements of refund claims in certain non-U.S.

For the three months ended June 30, 2020 and 2019, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 12.4 and $ 12.9 , respectively, and lowering our effective tax rate by 380 basis points and 350 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

For the six months ended June 30, 2020 and 2019, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 17.4 and $ 19.7 , respectively, and lowering our effective tax rate by 280 basis points and 270 basis points, respectively.

For the six months ended June 30, 2020, the effective tax rate also includes a discrete tax benefit related to the settlements of refund claims in certain non-U.S.

jurisdictions and the resulting adjustments to deferred taxes, which had the impact of lowering our Provision for income taxes and effective tax rate by $ 19.9 and 320 basis points, respectively.

For the three months ended March 31, 2020 and 2019, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 5.0 and $ 6.8 , respectively, and lowering our effective tax rate by 170 basis points and 190 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

On December 22, 2017, the United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”), marking a change from a worldwide tax system to a modified territorial tax system in the United States.

3 unchanged sentences

The Company will pay the third annual installment of the Transition Tax, net of applicable tax credits and deductions, in the third quarter of 2020, and will pay the balance of the Transition Tax over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.

The current and long-term portions of the Transition Tax are recorded in Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019.

The current and long-term portions of the Transition Tax are recorded in

Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.

The Company operates in the U.S.

3 unchanged sentences

The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable.

As of March 31, 2020, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 158.6 .

As of June 30, 2020, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 153.0 .

Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations.

4 unchanged sentences

In addition, the equity attributable to noncontrolling interests is presented as a separate caption within equity.

A rollforward of consolidated changes in equity for the three months ended March 31, 2020 is as follows:

A rollforward of consolidated changes in equity for the three months ended June 30, 2020 is as follows:

Amphenol Corporation Shareholders

5 unchanged sentences

Paid-In Capital

Balance as of March 31, 2020

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.25 per common share)

Stock-based compensation expense

Balance as of June 30, 2020

A rollforward of consolidated changes in equity for the six months ended June 30, 2020 is as follows:

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of December 31, 2019

1 unchanged sentence

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

5 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2020

A rollforward of consolidated changes in equity for the three months ended June 30, 2019 is as follows:

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of March 31, 2019

A rollforward of consolidated changes in equity for the three months ended March 31, 2019 is as follows:

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.23 per common share)

Stock-based compensation expense

Balance as of June 30, 2019

A rollforward of consolidated changes in equity for the six months ended June 30, 2019 is as follows:

Amphenol Corporation Shareholders

7 unchanged sentences

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

Distributions to shareholders of noncontrolling interests

4 unchanged sentences

Stock-based compensation expense

Balance as of March 31, 2019

Balance as of June 30, 2019

On April 24, 2018, the Company’s Board of Directors authorized a stock repurchase program under which the Company may purchase up to $ 2,000.0 of the Company’s Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

During the three months ended March 31, 2020 and 2019, the Company repurchased 2.7 million and 1.8 million shares of its Common Stock for $ 257.2 and $ 160.0 , respectively, under the 2018 Stock Repurchase Program.

All of the repurchases during the first three months of 2020 have been retired by the Company.

Of the total repurchases during the first three months of 2019, 1.0 million shares, or $ 87.6 , were retained in Treasury stock at time of repurchase;

The Company did no t repurchase any of its Common Stock during the three months ended June 30, 2020, while during the three months ended June 30, 2019, the Company repurchased 2.6 million shares of its Common Stock for $ 248.7 under the 2018 Stock Repurchase Program.

During the six months ended June 30, 2020 and 2019, the Company repurchased 2.7 million and 4.4 million shares of its Common Stock for $ 257.2 and $ 408.7 , respectively, under the 2018 Stock Repurchase Program.

All of the repurchased shares during the first six months of 2020 have been retired by the Company.

Of the total repurchases during the first six months of 2019, 1.0 million shares, or $ 87.6 , were retained in Treasury stock at time of repurchase;

the remaining 3.4 million shares, or $ 321.1 , were retired by the Company.

The Company has no t repurchased any additional shares of its Common Stock from April 1, 2020 to April 21, 2020, and has remaining authorization to purchase up to $ 587.9 of its Common Stock under the 2018 Stock Repurchase Program.

The price and timing of any future purchases under the 2018 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price.

The Company has no t repurchased any additional shares of its Common Stock from July 1, 2020 to July 21, 2020, and has remaining authorization to purchase up to $ 587.9 of its Common Stock under the 2018 Stock Repurchase Program.

The price and timing of any future purchases under the 2018 Stock Repurchase Program will depend on a number of factors such as levels of cash generation from operations, the level of uncertainty relating to the COVID-19 pandemic, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price.

Contingent upon declaration by the Board of Directors, the Company generally pays a quarterly dividend on shares of its Common Stock.

The following table summarizes the dividends declared and paid for the three months ended March 31, 2020 and 2019:

Three Months Ended March 31,

The following table summarizes the dividends declared and paid for the three and six months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Six Months Ended June 30,

Dividends declared

2 unchanged sentences

Note 8—Stock-Based Compensation

For the three months ended March 31, 2020 and 2019, the Company’s income before income taxes was reduced for stock-based compensation expense of $ 15.4 and $ 14.4 , respectively.

In addition, for the three months ended March 31, 2020 and 2019, the Company recognized aggregate income tax benefits of $ 6.8 and $ 8.6 , respectively, in the provision for income taxes in the accompanying Condensed Consolidated Statements of Income associated with stock-based compensation.

These aggregate income tax benefits during the three months ended March 31, 2020 and 2019 include excess tax benefits of $ 5.0 and $ 6.8 , respectively, from option exercises.

For the three months ended June 30, 2020 and 2019, the Company’s income before income taxes was reduced for stock-based compensation expense of $ 16.6 and $ 15.4 , respectively.

In addition, for the three months ended June 30, 2020 and 2019, the Company recognized aggregate income tax benefits of $ 14.3 and $ 14.9 , respectively, in the provision for income taxes in the accompanying Condensed Consolidated Statements of Income associated with stock-

based compensation.

These aggregate income tax benefits during the three months ended June 30, 2020 and 2019 include excess tax benefits of $ 12.4 and $ 12.9 , respectively, from option exercises.

For the six months ended June 30, 2020 and 2019, the Company’s income before income taxes was reduced for stock-based compensation expense of $ 32.0 and $ 29.8 , respectively.

In addition, for the six months ended June 30, 2020 and 2019, the Company recognized aggregate income tax benefits of $ 21.1 and $ 23.5 , respectively, in the provision for income taxes in the accompanying Condensed Consolidated Statements of Income associated with stock-based compensation.

These aggregate income tax benefits during the six months ended June 30, 2020 and 2019 include excess tax benefits of $ 17.4 and $ 19.7 , respectively, from option exercises.

The impact associated with recognizing excess tax benefits from option exercises in the provision for income taxes on our consolidated financial statements could result in significant fluctuations in our effective tax rate in the future, since the provision for income taxes will be impacted by the timing and intrinsic value of future stock-based compensation award exercises.

5 unchanged sentences

A committee of the Company’s Board of Directors has been authorized to grant stock options pursuant to the 2017 Employee Option Plan.

The number of shares of the Company’s Class A Common Stock (“Common Stock”) reserved for issuance under the 2017 Employee Option Plan is 30,000,000 shares.

As of March 31, 2020, there were 11,052,360 shares of Common Stock available for the granting of additional stock options under the 2017 Employee Option Plan.

At the time of its adoption, the number of shares of the Company’s Class A Common Stock (“Common Stock”) reserved for issuance under the 2017 Employee Option Plan was 30,000,000 shares.

As of June 30, 2020, there were 4,980,980 shares of Common Stock available for the granting of additional stock options under the 2017 Employee Option Plan.

The Company also continues to maintain the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, as amended (the “2009 Employee Option Plan”).

6 unchanged sentences

Options granted under the 2004 Directors Option Plan are fully vested and are generally exercisable over a period of ten years from the date of grant.

Stock option activity for the three months ended March 31, 2020 was as follows:

Stock option activity for the three and six months ended June 30, 2020 was as follows:

Exercise Price

6 unchanged sentences

Options outstanding at March 31, 2020

Vested and non-vested options expected to vest at March 31, 2020

Exercisable options at March 31, 2020

A summary of the status of the Company’s non-vested options as of March 31, 2020 and changes during the three months then ended is as follows:

Options granted

Options exercised

( 2,425,365 )

Options forfeited

Options outstanding at June 30, 2020

Vested and non-vested options expected to vest at June 30, 2020

Exercisable options at June 30, 2020

A summary of the status of the Company’s non-vested options as of June 30, 2020 and changes during the three and six months then ended is as follows:

Fair Value at

4 unchanged sentences

Non-vested options at March 31, 2020

During the three months ended March 31, 2020 and 2019, the following activity occurred under the Company’s option plans:

Options granted

Options vested

( 6,149,060 )

Options forfeited

Non-vested options at June 30, 2020

During the three and six months ended June 30, 2020 and 2019, the following activity occurred under the Company’s option plans:

Three Months Ended

Six Months Ended

Total intrinsic value of stock options exercised

Total fair value of stock options vested

As of March 31, 2020, the total compensation cost related to non-vested options not yet recognized was approximately $ 137.6 with a weighted average expected amortization period of 3.19 years.

As of June 30, 2020, the total compensation cost related to non-vested options not yet recognized was approximately $ 211.3 with a weighted average expected amortization period of 3.78 years.

The grant-date fair value of each option grant under the 2009 Employee Option Plan, the 2017 Employee Option Plan and the 2004 Directors Option Plan is estimated using the Black-Scholes option pricing model.

10 unchanged sentences

The 2012 Directors Restricted Stock Plan is administered by the Company’s Board of Directors.

As of March 31, 2020, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 94,846 .

Restricted shares granted under the 2012 Directors Restricted Stock Plan generally vest on the

first anniversary of the grant date.

As of June 30, 2020, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 82,428 .

Restricted shares granted under the 2012 Directors Restricted Stock Plan generally vest on the first anniversary of the grant date.

Grants under the 2012 Directors Restricted Stock Plan entitle the holder to receive shares of the Company’s Common Stock without payment.

Restricted share activity for the three months ended March 31, 2020 was as follows:

Restricted share activity for the three and six months ended June 30, 2020 was as follows:

Weighted Average

4 unchanged sentences

Restricted shares outstanding at March 31, 2020

As of March 31, 2020, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.2 (with a weighted average expected amortization period of 0.13 years).

Shares vested and issued

Restricted shares granted

Restricted shares outstanding at June 30, 2020

As of June 30, 2020, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 1.0 (with a weighted average expected amortization period of 0.88 years).

Note 9—Earnings Per Share

1 unchanged sentence

Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted average number of common shares and dilutive common shares outstanding, which relates to stock options.

A reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three months ended March 31, 2020 and 2019 is as follows:

Three Months Ended March 31,

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, 2020 and 2019 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(dollars and shares in millions, except per share data)

4 unchanged sentences

Earnings per share attributable to Amphenol Corporation shareholders:

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 3.1 million and 6.3 million for the three months ended March 31, 2020 and 2019, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 13.7 million and 7.7 million for the three months ended June 30, 2020 and 2019, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 7.8 million and 7.1 million for the six months ended June 30, 2020 and 2019, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

7 unchanged sentences

Plans, the “Plans”).

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three months ended March 31, 2020 and 2019:

The following is a summary, based on the most recent

actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three and six months ended June 30, 2020 and 2019:

Pension Benefits

Three Months Ended March 31:

Three Months Ended June 30:

Interest cost

3 unchanged sentences

Net pension expense

Six Months Ended June 30:

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net actuarial losses

Net pension expense

There is no current requirement for cash contributions to any of the U.S.

3 unchanged sentences

The current investment policy includes a strategy intended to maintain an adequate level of diversification, subject to normal portfolio risks.

As a result of the general market downturn in the first quarter of 2020 resulting from the COVID-19 pandemic, as of March 31, 2020, the fair value of the Plans’ assets has declined.

While the Company continues to monitor the performance of its pension plan assets, the declines as of March 31, 2020 have not materially impacted the Company’s financial position or liquidity.

To the extent that there is further material deterioration in plan assets, the Company’s pension plans may require additional contributions and/or may negatively impact future pension expense.

As a result of the general market downturn and volatility in the first quarter of 2020 resulting from the COVID-19 pandemic, the fair value of the Plans’ assets declined during that period.

Since then, as of June 30, 2020, the fair value of the Plans’ assets have partially recovered.

While the Company continues to monitor the performance of its pension plan assets, the volatility of the markets continues as of June 30, 2020, which to date, has not materially impacted the Company’s financial position or liquidity.

To the extent that there is any future deterioration in plan assets, the Company’s pension plans may require additional contributions and/or may negatively impact future pension expense.

The Company offers various defined contribution plans for certain U.S.

3 unchanged sentences

defined contribution plans up to a maximum of 6 % of eligible compensation.

During the three months ended March 31, 2020 and 2019, the Company provided matching contributions to the U.S.

During the six months ended June 30, 2020 and 2019, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 6.7 and $ 7.2 , respectively.

Note 11—Acquisitions

During the first three months of 2020, the Company completed one acquisition, which is included in the Interconnect Products and Assemblies segment, for approximately $ 16.5 , net of cash acquired.

During the first six months of 2020, the Company completed one acquisition, which is included in the Interconnect Products and Assemblies segment, for approximately $ 16.5 , net of cash acquired.

The Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed.

5 unchanged sentences

The Company anticipates that the final assessments of values will not differ materially from the preliminary assessments.

Pro forma financial information related to these acquisitions has not been presented, since these acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.

While the acquisition was not material to the Company, our January 2019 acquisition of SSI Controls Technologies (“SSI”), the sensor manufacturing division of SSI Technologies, Inc., for approximately $ 397 , net of cash acquired, included a performance-related contingent payment.

The contingent consideration payment is based on certain 2019 revenue and profitability levels of SSI.

Pro forma financial information related to these acquisitions has not been presented, since these acquisitions were not material, either individually or in the aggregate, to the Company’s

financial results.

In January 2019, the Company acquired SSI Controls Technologies (“SSI”), the sensor manufacturing division of SSI Technologies, Inc., for approximately $ 400 , net of cash acquired, plus a performance-related contingent payment.

The SSI acquisition was not material to the Company.

The contingent consideration payment was based on certain 2019 revenue and profitability levels of SSI.

The Company determined the fair value of this liability using Level 3 unobservable inputs, such as probability weighted payout projections, and is classified as Level 3 in the fair value hierarchy (Note 5).

The calculation of the contingent consideration was finalized in the first quarter of 2020 as $ 75.0 , based on actual financial data used for inputs.

The consideration is payable in the second quarter of 2020 and is recorded in Other accrued expenses on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019.

During the three months ended March 31, 2019, the Company incurred approximately $ 16.5 ($ 13.2 after-tax) of acquisition-related expenses, primarily comprised of the amortization of $ 12.5 related to the value associated with acquired backlog (related to the SSI acquisition), with the remainder representing external transaction costs.

The calculation of the contingent consideration was finalized in the first quarter of 2020 as $ 75.0 , based on actual financial data used for inputs, and was paid in the second quarter of 2020.

The contingent consideration was recorded in Other accrued expenses on the accompanying Condensed Consolidated Balance Sheets as of December 31, 2019.

During the three months ended June 30, 2019, the Company incurred approximately $ 8.9 ($ 7.8 after-tax) of acquisition-related expenses, primarily related to external transaction costs, as well as $ 3.2 related to the value associated with acquired backlog related to an acquisition that closed in the second quarter.

During the six months ended June 30, 2019, the Company incurred approximately $ 25.4 ($ 21.0 after-tax) of acquisition-related expenses primarily related to the amortization of $ 15.7 related to the value associated with acquired backlog (of which $ 12.5 related to the SSI acquisition), with the remainder representing external transaction costs.

Such acquisition-related expenses are separately presented in the accompanying Condensed Consolidated Statements of Income.

4 unchanged sentences

Foreign currency translation

Goodwill at March 31, 2020

Other than goodwill noted above, the Company’s intangible assets as of March 31, 2020 and December 31, 2019 were as follows:

March 31, 2020

Goodwill at June 30, 2020

Other than goodwill noted above, the Company’s intangible assets as of June 30, 2020 and December 31, 2019 were as follows:

June 30, 2020

December 31, 2019

4 unchanged sentences

Trade names (indefinite-lived)

The amortization expense for the three months ended March 31, 2020 and 2019 was approximately $ 12.9 and $ 24.8 , respectively.

Amortization expense during the three months ended March 31, 2019 included $ 12.5 related to the amortization of acquired backlog, resulting from the SSI acquisition in the first quarter of 2019.

As of March 31, 2020, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2020 is approximately $ 36.5 and for each of the next five fiscal years is approximately $ 44.5 in 2021, $ 37.3 in 2022, $ 34.5 in 2023, $ 29.0 in 2024 and $ 20.2 in 2025.

Amortization expense for the three months ended June 30, 2020 and 2019 was approximately $ 12.5 and $ 15.6 , respectively.

Amortization expense for the six months ended June 30, 2020 and 2019 was approximately $ 25.4 and $ 40.4 , respectively.

Amortization expense during the three and six months ended June 30, 2019 included $ 3.2 and $ 15.7 , respectively, related to the amortization of acquired backlog, primarily related to the SSI acquisition.

As of June 30, 2020, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2020 is approximately $ 23.9 and for each of the next five fiscal years is approximately $ 44.7 in 2021, $ 37.4 in 2022, $ 34.6 in 2023, $ 29.0 in 2024 and $ 20.2 in 2025.

Note 13—Reportable Business Segments

2 unchanged sentences

The Company organizes its reportable business segments based upon similar economic characteristics and business groupings of products, services and customers.

These reportable business segments are determined based upon how the Company reviews its businesses, assesses operating performance and makes investing and resource allocation decisions.

These reportable business segments are

determined based upon how the Company reviews its businesses, assesses operating performance and makes investing and resource allocation decisions and do not include any aggregated operating segments.

The Interconnect Products and Assemblies segment primarily designs, manufactures and markets a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a broad range of applications in a diverse set of end markets.

2 unchanged sentences

The Company evaluates the performance of business units and allocates resources to them based on, among other things, profit or loss from operations before interest, headquarters’ expense allocations, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses.

The segment results for the three months ended March 31, 2020 and 2019 are as follows:

The segment results for the three and six months ended June 30, 2020 and 2019 are as follows:

Interconnect Products

4 unchanged sentences

Total Consolidated

Three Months Ended March 31:

Three Months Ended June 30:

Segment operating income

Six Months Ended June 30:

Segment operating income

(1) Corporate / Other is not a reportable business segment;

the reconciliation of segment operating income to consolidated results is included in the table below.

A reconciliation of segment operating income to consolidated income before income taxes for the three months ended March 31, 2020 and 2019 is summarized as follows:

Three Months Ended March 31,

A reconciliation of segment operating income to consolidated income before income taxes for the three and six months ended June 30, 2020 and 2019 is summarized as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Segment operating income

8 unchanged sentences

With limited exceptions, the Company recognizes revenue at the point in time when we ship or deliver the product from our manufacturing facility to our customer, when our customer accepts and has legal title of the goods, and where the Company has a present right to payment for such goods.

For the three months ended March 31, 2020 and 2019, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.

Since we typically invoice our customers at the same time that we satisfy our performance obligations, contract assets and contract liabilities recorded in the Company’s Condensed Consolidated Balance Sheets were not significant as of March 31, 2020 and December 31, 2019.

These amounts are recorded in the accompanying Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Other accrued expenses as of March 31, 2020 and December 31, 2019.

For the three and six months ended June 30, 2020 and 2019, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.

These amounts are recorded in the accompanying Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Other accrued expenses as of June 30, 2020 and December 31, 2019.

The Company receives customer orders negotiated with multiple delivery dates that may extend across more than one reporting period until the contract is fulfilled, the end of the order period is reached, or a pre-determined maximum order value has been reached.

Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions.

It is generally expected that a substantial portion of our remaining performance obligations will be fulfilled within three months , and nearly all of our performance obligations are part of contracts that have original durations of one year or less.

Since our performance obligations are generally fulfilled within one year , we have not disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of March 31, 2020.

While the Company typically offers standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of March 31, 2020 and December 31, 2019, and related warranty expense for the three

months ended March 31, 2020 and 2019, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

Since our performance obligations are part of contracts that generally have original durations of one year or less, we have not disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of June 30, 2020.

While the Company typically offers standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of June 30, 2020 and December 31, 2019, and related warranty expense for the three and six months ended June 30, 2020 and 2019, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

Disaggregation of Net Sales

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three months ended March 31, 2020 and 2019:

Interconnect Products

4 unchanged sentences

Business Segments

Three Months Ended March 31,

Three Months Ended June 30:

Net sales by:

4 unchanged sentences

Other foreign locations

Six Months Ended June 30:

Net sales by:

Sales channel:

End customers and contract manufacturers

Distributors and resellers

United States

Other foreign locations

Net sales by geographic area are based on the customer location to which the product is shipped.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements