What changed in this filing

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Item 1. Financial Statements

2020-10-23 compared with 2020-07-24 · 180 added, 152 removed, 539 unchanged (38% of the section changed)

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(dollars in millions)

September 30,

Current Assets:

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

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Interest expense

Loss on early extinguishment of debt

Other income, net

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(dollars in millions)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

Foreign currency translation adjustments

Unrealized (loss) gain on cash flow hedges

Unrealized gain (loss) on cash flow hedges

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.7 ) and ($ 5.0 ) for 2020, and ($ 1.2 ) and ($ 3.6 ) for 2019, respectively

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(dollars in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash from operating activities:

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Stock-based compensation expense

Deferred income tax provision (benefit)

Loss on early extinguishment of debt

Deferred income tax benefit

Net change in components of working capital

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Payment of costs related to debt financing

Payment of premiums and fees related to early extinguishment of debt

Payment of acquisition-related contingent consideration

Payment of deferred purchase price related to an acquisition

Proceeds from exercise of stock options

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Note 1—Basis of Presentation and Principles of Consolidation

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”).

The condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, the related condensed consolidated statements of income for the three and nine months ended September 30, 2020 and 2019, the related condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2020 and 2019, and the related condensed consolidated statements of cash flow for the nine months ended September 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.

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

The results of operations for the three and nine months ended September 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”).

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In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduced an approach to estimate credit losses on certain types of financial instruments, including trade receivables, based on expected losses, as well as modified the impairment model for available-for-sale debt securities.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduced an approach to estimate credit losses on certain types of financial instruments, including trade receivables, based on expected losses, and modified the impairment model for available-for-sale debt securities.

ASU 2016-13, which is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, required companies to make a cumulative-effect adjustment to retained earnings as of January 1, 2020.

The Company adopted ASU 2016-13 effective January 1, 2020, which resulted in the Company recording a cumulative adjustment to reduce beginning retained earnings by $ 3.8 , arising from the estimated credit losses associated with the Company’s accounts receivable balance as of the date of adoption.

The Company adopted ASU 2016-13 effective January 1, 2020, which resulted in the Company recording a cumulative adjustment that reduced beginning retained earnings by $ 3.8 , arising from the estimated credit losses associated with the Company’s accounts receivable balance as of the date of adoption.

The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position and its consolidated financial statements.

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ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard can be adopted on its effective date.

Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard may be adopted on its effective date.

In addition, certain changes in the standard require retrospective adoption, while other changes must be adopted prospectively.

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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.

The Company has evaluated ASU 2019-12, which is not expected to have a material impact on our consolidated financial statements.

The United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (“LIBOR”), announced in July 2017 its intent to phase out the use of LIBOR by the end of 2021.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred benchmark alternative to U.S.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, identified the Secured Overnight Financing Rate (the “SOFR”) as its preferred benchmark alternative to U.S.

dollar LIBOR.

SOFR represents a measure of the cost of borrowing cash overnight, collateralized by U.S.

The SOFR represents a measure of the cost of borrowing cash overnight, collateralized by U.S.

Treasury securities, and is calculated based on directly observable U.S.

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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.

In May 2020, the Securities and Exchange Commission (the “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.

The Company has evaluated this SEC final rule, and its impact on any future SEC filings will be dependent on the size of future business combinations.

In August 2020, the SEC issued a final rule that modernizes the disclosure requirements in Regulation S-K, Item 101 “Description of Business” , Item 103 “Legal Proceedings” and Item 105 “Risk Factors” .

The intent of this final rule was to improve the readability of disclosures, reduce repetition, and eliminate immaterial information, thereby simplifying compliance for registrants and making disclosures more meaningful for investors.

While most of the changes involved reducing or eliminating previously required disclosures, the final rule expanded the disclosure requirements related to human capital and more specifically, any human capital measures or objectives that management focuses on in managing the business.

The final rule will be effective thirty days after its date of publication in the Federal Register.

The Company has evaluated this SEC final rule, and we do not expect it will have a material impact on our SEC filings.

Note 3—Inventories

Inventories consist of:

September 30,

Raw materials and supplies

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

June 30, 2020

September 30, 2020

December 31, 2019

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Revolving Credit Facility

On January 15, 2019, the Company amended its $ 2,000.0 unsecured credit facility with a $ 2,500.0 unsecured credit facility (“Revolving Credit Facility”).

On January 15, 2019, the Company amended its $ 2,000.0 unsecured credit facility with a $ 2,500.0 unsecured credit facility (the “Revolving Credit Facility”).

The Revolving Credit Facility, which matures January 2024, gives the Company the ability to borrow, in various currencies, at a spread over LIBOR.

The Company may utilize the Revolving Credit Facility for general corporate purposes.

At March 31, 2020, there were outstanding borrowings of $ 1,255.6 under the Revolving Credit Facility, at a weighted average interest rate of 1.82 % .

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 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.

At September 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 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.

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

Commercial Paper Programs

The Company has a commercial paper program pursuant to which the Company issues short-term unsecured commercial paper notes (“U.S.

Commercial Paper” or “USCP Notes”) in one or more private placements in the United States (the “U.S.

The Company has a commercial paper program pursuant to which the Company issues short-term unsecured commercial paper notes (the “USCP Notes”) in one or more private placements in the United States (the “U.S.

Commercial Paper Program”).

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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.

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

There were no USCP Notes outstanding as of September 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.

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dollars or other currencies.

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.

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 (the “BOE Facility”).

The BOE Facility will be available until March 22, 2021.

As of September 30, 2020, there were no ECP Notes outstanding.

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

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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 April 1, 2020, the Company used the net proceeds from the 2025 Senior Notes to repay the $ 400.0 principal amount of unsecured 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”).

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In January 2019, the Company used the net proceeds from the 2029 Senior Notes, along with proceeds from borrowings under the U.S.

Commercial Paper Program, to repay the $ 750.0 of 2.55 % Senior Notes due in January 2019.

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”).

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.

Commercial Paper Program, to repay the $ 750.0 principal amount of unsecured 2.55 % Senior Notes due in January 2019.

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

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.

For the year ended December 31, 2019, the Company recorded a loss on early debt extinguishment of $ 14.3 ($ 12.5 after-tax, or $ 0.04 per diluted share).

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 June 30, 2020, as noted in the table above.

For the three and nine months ended September 30, 2019, the Company recorded a loss on early debt extinguishment of $ 14.3 ($ 12.5 after-tax, or $ 0.04 per diluted share) within Loss on early extinguishment of debt on the accompanying Condensed Consolidated Statements of Income.

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 September 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”).

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Commercial Paper Program.

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

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

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

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Senior Notes is payable semiannually.

The Company may, at its option, redeem some or all of any series of U.S.

The Company may, at its option, redeem some or all of any series of the U.S.

Senior Notes at any time subject to certain terms and conditions, which include paying 100 % of the principal amount, plus accrued and unpaid interest, if any, to the date of redemption, and, with certain exceptions, a make-whole premium.

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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).

The Company’s 2021 Senior Notes are due in September 2021 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 September 30, 2020.

Senior Notes contain certain financial and non-financial covenants.

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

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

Senior Notes.

Euro 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.

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

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”, collectively with the 2026 Euro Notes, “Euro Notes”, and collectively with the U.S.

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 the “ 2.000 % Euro Senior Notes”, collectively with the 2026 Euro Notes, the “Euro Notes”, and collectively with the U.S.

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.

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.

Prior to July 8, 2028, the Company may, at its option, redeem some or all of the 2028 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 July 8, 2028, the Company may, at its option, redeem some or all of the 2028 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.

If redeemed on or after July 8, 2028, the Company may, at its option, redeem some or all of the 2028 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 2028 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).

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

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

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

Other Line of Credit Facilities

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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 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 June 30, 2020 and December 31, 2019 are as follows:

The contingent consideration payment (related to the acquisition of SSI in January 2019, described further in Note 11 herein) 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 2020.

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 September 30, 2020 and December 31, 2019 are as follows:

Fair Value Measurements

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Assets (Level 1)

June 30, 2020:

September 30, 2020:

Short-term investments

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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 and six months ended June 30, 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 nine months ended September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Provision for income taxes

Effective tax rate

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.

For the three months ended September 30, 2020 and 2019, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 10.7 and $ 1.6 , respectively, and lowering our effective tax rate by 240 basis points and 40 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 nine months ended September 30, 2020 and 2019, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 28.1 and $ 21.3 , respectively, and lowering our effective tax rate by 260 basis points and 190 basis points, respectively.

For the nine months ended September 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 190 basis points, respectively.

During the three and nine months ended September 30, 2019, the loss on early extinguishment of debt also had the effect of increasing the effective tax rate by approximately 40 basis points and 10 basis points, respectively.

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.

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The Company finalized its accounting of the Tax Act in the fourth quarter of 2018.

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 June 30, 2020 and December 31, 2019.

The Company paid 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 September 30, 2020 and December 31, 2019.

The Company operates in the U.S.

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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 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 .

As of September 30, 2020, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 157.8 .

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.

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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 June 30, 2020 is as follows:

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

Amphenol Corporation Shareholders

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Paid-In Capital

Balance as of March 31, 2020

Balance as of June 30, 2020

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Distributions to shareholders of noncontrolling interests

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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:

Balance as of September 30, 2020

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

Amphenol Corporation Shareholders

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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:

Balance as of September 30, 2020

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

Amphenol Corporation Shareholders

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Paid-In Capital

Balance as of March 31, 2019

Balance as of June 30, 2019

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

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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:

Balance as of September 30, 2019

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

Amphenol Corporation Shareholders

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Stock-based compensation expense

Balance as of June 30, 2019

Balance as of September 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”).

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;

During the three months ended September 30, 2020, the Company repurchased 1.9 million shares of its Common Stock for $ 201.9 , while during the three months ended September 30, 2019, the Company repurchased 1.7 million shares of its Common Stock for $ 150.0 , all under the 2018 Stock Repurchase Program.

During the nine months ended September 30, 2020 and 2019, the Company repurchased 4.6 million and 6.1 million shares of its Common Stock for $ 459.2 and $ 558.7 , respectively, under the 2018 Stock Repurchase Program.

Of the total repurchases during the first nine months of 2020, 1.0 million shares, or $ 110.3 , have been retained in Treasury stock at time of repurchase;

the remaining 3.6 million shares, or $ 348.9 , have been retired by the Company.

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

the remaining 5.1 million shares, or $ 471.1 , were retired by the Company.

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.

From October 1, 2020 through October 20, 2020, the Company repurchased approximately 0.1 million additional shares of its Common Stock for $ 6.0 , leaving $ 379.9 available to purchase 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 and six months ended June 30, 2020 and 2019:

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Dividends declared

Dividends paid (including those declared in the prior year)

On July 23, 2019, the Company’s Board of Directors approved an increase to its quarterly dividend rate from $ 0.23 to $ 0.25 per share effective with dividends declared in the third quarter of 2019, and then on October 20, 2020, approved a further increase to its quarterly dividend rate to $ 0.29 per share effective with dividends declared in the fourth quarter of 2020.

Note 8—Stock-Based Compensation

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.

For the three months ended September 30, 2020 and 2019, the Company’s income before income taxes was reduced for stock-based compensation expense of $ 19.0 and $ 16.6 , respectively.

In addition, for the three months ended September 30, 2020 and 2019, the Company recognized aggregate income tax benefits of $ 12.7 and $ 3.6 , 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 September 30, 2020 and 2019 include excess tax benefits of $ 10.7 and $ 1.6 , respectively, from option exercises.

For the nine months ended September 30, 2020 and 2019, the Company’s income before income taxes was reduced for stock-based compensation expense of $ 51.0 and $ 46.4 , respectively.

In addition, for the nine months ended September 30, 2020 and 2019, the Company recognized aggregate income tax benefits of $ 33.8 and $ 27.1 , 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 nine months ended September 30, 2020 and 2019 include excess tax benefits of $ 28.1 and $ 21.3 , 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.

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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.

As of September 30, 2020, there were 5,022,770 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”).

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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 and six months ended June 30, 2020 was as follows:

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

Exercise Price

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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:

Options granted

Options exercised

( 1,979,478 )

Options forfeited

Options outstanding at September 30, 2020

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

Exercisable options at September 30, 2020

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

Fair Value at

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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:

Options granted

Options vested

Options forfeited

Non-vested options at September 30, 2020

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total intrinsic value of stock options exercised

Total fair value of stock options vested

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.

As of September 30, 2020, the total compensation cost related to non-vested options not yet recognized was approximately $ 194.3 with a weighted average expected amortization period of 3.59 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.

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

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

As of September 30, 2020, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 81,671 .

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 and six months ended June 30, 2020 was as follows:

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

Weighted Average

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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).

Restricted shares granted

Restricted shares outstanding at September 30, 2020

As of September 30, 2020, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.8 (with a weighted average expected amortization period of 0.63 years).

Note 9—Earnings Per Share

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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 and six months ended June 30, 2020 and 2019 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

A reconciliation of the basic weighted average common shares outstanding to diluted

weighted average common shares outstanding for the three and nine months ended September 30, 2020 and 2019 is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

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

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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 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.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 4.6 million and 12.2 million for the three months ended September 30, 2020 and 2019, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 6.1 million and 8.6 million for the nine months ended September 30, 2020 and 2019, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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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 and six months ended June 30, 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 nine months ended September 30, 2020 and 2019:

Pension Benefits

Three Months Ended June 30:

Three Months Ended September 30:

Interest cost

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Net pension expense

Six Months Ended June 30:

Nine Months Ended September 30:

Interest cost

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Plans, and the Company plans to evaluate annually, based on actuarial calculations and the investment performance of the Plans’ assets, the timing and amount of cash contributions in the future.

The primary investment objective of the Plans is to build and ensure an adequate pool of assets to support the benefit obligations to participants, retirees and beneficiaries.

To meet this objective, the Plans seek to earn a rate of return on assets greater than the liability discount rate, with a prudent level of risk and diversification.

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 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.

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

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

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

defined contribution plans of approximately $ 10.0 and $ 9.8 , respectively.

Note 11—Acquisitions

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.

During the first nine months of 2020, the Company completed two acquisitions, which are included in the Interconnect Products and Assemblies segment, for approximately $ 50.3 , 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.

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

Pro forma financial information related to this acquisition has not been presented, since the acquisition was not material to the Company’s financial results.

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.

During 2019, the Company completed nine acquisitions for $ 937.4 , net of cash acquired.

All but one of the acquisitions were included in the Interconnect Products and Assemblies segment.

For those 2019 acquisitions whose acquisition accounting has not yet been completed, the Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed.

We have not yet completed the acquisition accounting for one of the acquisitions in 2019, and the Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed.

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.

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.

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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.

During the nine months ended September 30, 2019, the Company incurred approximately $ 25.4 ($ 21.0 after-tax) of acquisition-related expenses, primarily comprised of the amortization of $ 15.7 related to the value associated with the 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.

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Foreign currency translation

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

Goodwill at September 30, 2020

The Company performs its annual evaluation for the impairment of goodwill for the Company’s reporting units as of each July 1 or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired.

The Company reviews its reporting unit structure each year as part of the annual goodwill impairment assessment and continues to define its reporting units as the two reportable business segments “Interconnect Products and Assemblies” and “Cable Products and Solutions”, as the components of these reportable business segments have similar economic characteristics.

In the third quarter of 2020 when testing for goodwill impairment, the Company performed a quantitative goodwill impairment assessment for each reporting unit.

As part of the quantitative assessment, the Company estimated the fair value of each of its reporting units using a market approach.

The Company believes the market-based guideline public company method provides the best indicator of fair value, by utilizing market prices and other relevant metrics for comparable publicly-traded companies with similar operating and investment characteristics, as well as recent transactions of similar businesses within the industry.

Significant estimates and assumptions were used in the Company’s goodwill impairment assessment,

including both historical and projected revenue and profitability data, the determination and selection of appropriate publicly-traded market comparison companies, and the calculation of comparable earnings-based and other multiples derived from comparable publicly traded companies and from recent transactions within the indu stry.

As part of our quantitative approach, the Company evaluated whether there were reasonably likely changes to management’s estimates and assumptions that would have a material impact on the results of the goodwill impairment assessment.

As of July 1, 2020, the Company determined that the fair value of each of the Company’s reporting units was substantially in excess of their respective carrying amounts, and therefore, no goodwill impairment resulted from the assessment.

The Company has no t recognized any goodwill impairment in 2020, 2019 or 2018 in connection with our annual impairment assessments.

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

September 30, 2020

December 31, 2019

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Trade names (indefinite-lived)

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.

Amortization expense for the three months ended September 30, 2020 and 2019 was approximately $ 12.3 and $ 13.6 , respectively.

Amortization expense for the nine months ended September 30, 2020 and 2019 was approximately $ 37.6 and $ 54.0 , respectively.

Amortization expense during the nine months ended September 30, 2019 included $ 15.7 related to the amortization of acquired backlog, primarily related to the SSI acquisition.

As of September 30, 2020, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2020 is approximately $ 12.0 and for each of the next five fiscal years is approximately $ 45.7 in 2021, $ 38.2 in 2022, $ 35.4 in 2023, $ 29.8 in 2024 and $ 20.5 in 2025.

The Company reviews its identifiable intangible assets subject to amortization whenever events or changes in circumstances indicate the intangible assets’ carrying amount may not be recoverable, while any indefinite-lived intangible assets that are not subject to amortization, which are comprised of certain trade names, are reviewed at least annually for impairment.

In the third quarter of 2020, the Company performed its annual assessment of these identifiable indefinite-lived intangible assets.

Based on our assessment, the Company determined that it was more likely than not that the fair value of the indefinite-lived intangible assets exceeded their respective carrying amounts.

There has been no intangible asset impairment in 2020, 2019 or 2018 as a result of such reviews.

Note 13—Reportable Business Segments

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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 and do not include any aggregated operating segments.

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.

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The accounting policies of the segments are the same as those for the Company as a whole and are described herein and in Note 1 of the notes to the consolidated financial statements in the Company’s 2019 Annual Report.

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 and six months ended June 30, 2020 and 2019 are as follows:

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 and nine months ended September 30, 2020 and 2019 are as follows:

Interconnect Products

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Total Consolidated

Three Months Ended June 30:

Three Months Ended September 30:

Segment operating income

Six Months Ended June 30:

Nine Months Ended September 30:

Segment operating income

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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 and six months ended June 30, 2020 and 2019 is summarized as follows:

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Segment operating income

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Interest expense

Loss on early extinguishment of debt

Other income, net

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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 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.

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 June 30, 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 June 30, 2020 and December 31, 2019.

For the three and nine months ended September 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 September 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.

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 fulfilled within one year .

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.

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 September 30, 2020 and December 31, 2019, and related warranty expense for the three and nine months ended September 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 and six months ended June 30, 2020 and 2019:

Interconnect Products

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Business Segments

Three Months Ended June 30:

Three Months Ended September 30:

Net sales by:

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Other foreign locations

Six Months Ended June 30:

Nine Months Ended September 30:

Net sales by:

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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