What changed in this filing

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Item 1. Business

2021-02-10 compared with 2020-02-12 · 78 added, 24 removed, 239 unchanged (30% of the section changed)

8 unchanged sentences

Interconnect products include connectors, which when attached to an electrical, electronic or fiber optic cable, a printed circuit board or other device, facilitate transmission of power or signals.

Value-add systems generally consist of a system of cable, flexible circuits or printed circuit boards and connectors for linking electronic equipment.

Value-add systems generally consist of a system of cable, flexible circuits or printed circuit boards and connectors, antennas or sensors for linking electronic equipment.

The Cable Products and Solutions segment primarily designs, manufactures and markets cable, value-add products and components for use primarily in the broadband communications and information technology markets as well as certain applications in other markets.

20 unchanged sentences

● other connectors

Sensors and Sensor-based Products:

● gas and moisture

● temperature

Value-Add Products:

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● production-related products

● sensors and sensor-based products

● coaxial cable

6 unchanged sentences

● fiber optic components

Information regarding the Company’s operations and assets by reporting segment, as well as the Company’s net sales and long-lived assets by geographic area, appears in Note 13 of the Notes to the Consolidated Financial Statements.

Coronavirus (“COVID-19”) Pandemic

The COVID-19 pandemic has affected our manufacturing facilities throughout the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.

Throughout most of 2020, particularly during the first half of the year, the COVID-19 pandemic has caused widespread disruptions to our Company, which have included and may continue to include, depending on the specific location, government regulations that limit our ability to operate certain of our facilities at full capacity and to adjust certain costs, travel restrictions, “work-from-home” orders, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers.

During the fourth quarter of 2020 and into 2021, in several regions around the world, including the United States and Europe, there has been a resurgence in COVID-19 cases.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, future government regulations and actions in response to the crisis, the timing, availability and effectiveness of vaccines, some of which have recently been approved and distributed for use, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

In addition, the COVID-19 pandemic could impact the health of our management team and other employees.

Given these uncertainties, we expect the pandemic to continue to have an impact on our operations, financial condition, liquidity and results of operations through at least the first half of 2021 and it could, potentially, extend for the full year and beyond .

For a discussion of certain risks related to the COVID-19 pandemic, refer to the risk factor titled “We face significant risks related to adverse public health developments, including epidemics and pandemics such as the COVID-19 pandemic” in Part I, Item 1A.

Risk Factors herein.

For a discussion of the financial impact of the COVID-19 pandemic on our operations, financial condition, liquidity and results of operations, refer to Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .

The Company’s overall strategy is to provide its customers with comprehensive design capabilities, a broad selection of products and a high level of service on a worldwide basis while maintaining continuing programs of productivity improvement and cost control.

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Controlling costs is part of a mindset.

It is having the discipline to invest in programs that have a good return, maintaining a cost structure as flexible as possible to respond to changes in the marketplace, dealing with suppliers and vendors in a fair but prudent way to ensure a reasonable cost for materials and services and creating a mindset where managers manage the Company’s assets as if they were their own.

reasonable cost for materials and services and creating a mindset where managers manage the Company’s assets as if they were their own.

● Pursue strategic acquisitions and investments - The Company believes that the industry in which it operates is highly fragmented and continues to provide significant opportunities for strategic acquisitions.

Accordingly, we continue to pursue acquisitions of high-growth potential companies with strong management teams that complement our existing business while further expanding our product lines, technological capabilities and geographic presence.

Accordingly, we continue to pursue acquisitions of high potential companies with strong management teams that complement our existing business while further expanding our product lines, technological capabilities and geographic presence.

Furthermore, we seek to enhance the performance of acquired companies by leveraging Amphenol’s position with customers across our diverse end markets, our leading technologies and our access to low-cost manufacturing around the world.

In 2019, the Company invested approximately $937 million to fund nine acquisitions, while in 2018, the Company invested approximately $159 million to fund three acquisitions.

In 2020, the Company invested approximately $50 million to fund two acquisitions and announced a definitive agreement to acquire MTS for $1.7 billion, while in 2019, the Company invested approximately $937 million to fund nine acquisitions.

Our acquisitions in 2020 and 2019 have strengthened our customer base and product offerings in many of our end markets.

8 unchanged sentences

Sales into the automotive market represented approximately 17% of the Company’s net sales in 2020 with sales into the following primary end applications:

● electric vehicles

● engine management and control

● exhaust monitoring and cleaning

● hybrid and electric vehicles

● hybrid vehicles

● infotainment and communications

3 unchanged sentences

● telematics systems

● transmission systems

Broadband Communications - Amphenol is a world leader in broadband communication products for cable, satellite and telco video and data networks, with industry-leading engineering, design and manufacturing expertise.

24 unchanged sentences

● batteries and hybrid drive systems

● entertainment

● factory and machine tool automation

6 unchanged sentences

● power distribution

● public safety

● rail mass transit

62 unchanged sentences

The Company’s products are also sold to electronic manufacturing services (“EMS”) companies, to original design manufacturers (“ODMs”) and to service providers, including telecommunications network service providers and web service providers.

No single customer accounted for 10% or more of the Company’s net sales for the years ended December 31, 2019 and 2017.

During the year ended December 31, 2020, aggregate sales to Apple Inc., including sales of products to EMS companies that the Company believes are manufacturing products on Apple’s behalf, accounted for approximately 11% of our net sales.

No single customer accounted for 10% or more of the Company’s net sales for the year ended December 31, 2019.

The Company sells its products through its own global sales force, independent representatives and a global network of electronics distributors.

The Company’s sales to distributors represented approximately 15% of the Company’s net sales in 2019.

The Company’s sales to distributors represented approximately 16% and 15% of the Company’s net sales in 2020 and 2019, respectively.

In addition to product design teams and collaborative initiatives with customers, the Company uses key account managers to manage customer relationships on a global basis such that it can bring to bear its total resources to meet the worldwide needs of its multinational customers.

Manufacturing

The Company is a global manufacturer employing advanced manufacturing processes including molding, stamping, plating, turning, CNC machining, extruding, die casting and assembly operations and proprietary process technology for specialty and coaxial cable production and sensor fabrication.

The Company is a global manufacturer employing advanced manufacturing processes including molding, stamping, plating, turning, computer numerical control (“CNC”) machining, extruding, die casting and assembly operations and proprietary process technology for specialty and coaxial cable production, antenna and sensor fabrication.

Outsourcing of certain manufacturing processes is used when cost-effective.

Substantially all of the Company’s manufacturing facilities are certified to the ISO9000 series of quality standards, and many of the Company’s manufacturing facilities are certified to other quality standards, including QS9000, ISO14000 and TS16949.

Substantially all of the Company’s manufacturing facilities are certified under the requirements of the International Organization for Standardization (the “ISO”), specifically to the ISO 9000 series of quality standards, and many of the Company’s manufacturing facilities are certified to other quality standards, including QS 9000, ISO 14000 and TS 16949.

The Company’s manufacturing facilities are generally vertically-integrated operations from the initial design stage through final design and manufacturing.

The Company has an established manufacturing presence in more than 30 countries.

The Company has an established manufacturing presence in approximately 40 countries.

Our global coverage positions us near many of our customers’ locations and allows us to assist them in consolidating their supply base and lowering their production and logistics costs.

In addition, the Company generally relies on local general management in every region, which we believe creates a strong degree of organizational stability and deeper understanding of local markets.

We believe our balanced geographic distribution lowers our exposure to any particular geography.

We believe our balanced geographic distribution lowers our exposure to particular geographies.

The Company designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa.

The Company believes that its global presence is an important competitive advantage, as it allows the Company to provide quality products on a timely and worldwide basis to its multinational customers.

The Company employs a global manufacturing strategy to ensure proximity and good service to customers, while also lowering production and logistics costs.

The Company employs a global manufacturing strategy to ensure proximity and outstanding service to customers, while also lowering production and logistics costs.

The Company’s strategy is to maintain strong cost controls in its manufacturing and assembly operations.

The Company is continually evaluating and adjusting its expense levels and workforce to reflect current business conditions and maximize the return on capital investments.

The Company sources its products on a worldwide basis.

The Company sources

its products on a worldwide basis.

To better serve certain high-volume customers, the Company has established certain facilities near these major customers.

10 unchanged sentences

Patents and other proprietary rights are important to our business.

We own a large portfolio of patents that principally relate to electrical, optical, electronic, antenna and sensor products.

We own a large portfolio of patents that principally relate to mechanical, electrical, optical and electronic features of connector, antenna and sensor products.

We also own a portfolio of trademarks and are a licensee of various patents and trademarks.

Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent

protection is obtained.

Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained.

Trademark rights may potentially extend for longer periods of time and are dependent upon the laws of various jurisdictions and the use of the trademarks.

11 unchanged sentences

The Company does not anticipate any difficulties in obtaining raw materials or components necessary for production.

Information regarding our purchasing obligations related to commitments to purchase certain goods and services is disclosed in Note 14 of the Notes to the Consolidated Financial Statements.

Information regarding our obligations related to commitments to purchase certain goods and services is disclosed in Note 14 of the Notes to Consolidated Financial Statements.

For a discussion of certain risks related to raw materials and components, refer to the risk factor titled “The Company has at times experienced difficulties in obtaining a consistent supply of materials at stable pricing levels” in Part I, Item 1A.

2 unchanged sentences

The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time.

Primary competitors within the Interconnect Products and Assemblies segment include Carlisle, Commscope, Delphi, Esterline, Foxconn, Hirose, Huber & Suhner, ICT Luxshare, JAE, Jonhon, JST, Molex, Radiall, Rosenberger, Sensata, TE Connectivity, Yazaki and 3M, among others.

Primary competitors within the Interconnect Products and Assemblies segment include Aptiv, Carlisle, Commscope, Eaton, Foxconn, Hirose, Huber & Suhner, ICT Luxshare, JAE, Jonhon, JST, Molex, Radiall, Rosenberger, Sensata, TE Connectivity, Yazaki and 3M, among others.

Primary competitors within the Cable Products and Solutions segment include Belden and Commscope, among others.

2 unchanged sentences

Risk Factors herein.

Backlog and Seasonality

The Company estimates that its backlog of unfilled firm orders as of December 31, 2020 was approximately $2.380 billion compared with backlog of approximately $1.978 billion as of December 31, 2019.

4 unchanged sentences

Therefore, backlog may not be indicative of future demand.

As of December 31, 2019, the Company had approximately 74,000 employees worldwide.

The Company believes that it has a good relationship with its unionized and non-unionized employees.

Generally, the Company does not experience significant seasonality in its business, although historically, the strongest quarters have typically been the last two quarters of our fiscal year .

The ongoing COVID-19 pandemic could result in temporary changes to the seasonality of our business.

Risk Factors herein.

Human Capital Management and Our Culture

The Company’s success is based on the capability, adaptability and accountability of our people around the world.

One of the key components of our business strategy is the fostering of a collaborative and entrepreneurial management culture.

Each of our general managers operates in a flat organizational structure and is incented to grow and develop their business, with the support of the resources of the larger organization.

We believe this structure, with approximately 120 general managers running unique businesses, creates an environment and culture where each of our employees has a more direct link to the success of their individual businesses and a more personal connection to the employees they oversee and the communities in which they operate.

As of December 31, 2020, the Company had approximately 80,000 employees worldwide, with the majority of our people based in the Asia-Pacific region.

The Company believes that it has a good relationship with both its unionized and non-unionized employees.

Governance and Culture - Our Board of Directors (the “Board”) is actively involved in overseeing the Company’s employee-related strategies and practices as well as the Company’s culture.

This oversight is conducted both directly and through certain of the Board’s committees.

At each of its regularly scheduled quarterly meetings, the Board reviews changes in key personnel and, at least annually, meets with management to discuss various human resources related topics, including talent development, succession planning, compensation and culture.

We believe the Company’s culture has been a critical component of the Company’s success and reinforcing that culture is a key responsibility of our executive management.

Diversity and Inclusion - Our business spans the globe and the employees in our facilities reflect the diversity of our geographic footprint.

The Company generally relies on local general management in every region, which we believe creates a strong degree of organizational stability and a deep commitment to our people and the local community.

At Amphenol, we aim to create an inclusive working environment where all employees are respected and treated equally.

This message is emphasized from the top of our organization down to each of our employees.

A key hallmark of our structure is our entrepreneurial culture that creates clear accountability for each of our general managers, who are our key business leaders.

Our core management team is comprised of these general managers, as well as their controllers and our

executive team.

Women represented 29% of this core management group at the end of 2020.

Of our total employees worldwide, we are proud that approximately half are women.

Health, Safety and Well-being - The safety and well-being of our employees is critical to our successful operation.

Our health and safety activities are overseen by our corporate environmental, health, safety and sustainability leadership team but are managed by our local teams, who coordinate on-site safety programs, resources, reporting and training in our facilities.

We believe that this model of coaching and tracking at the corporate level, but administering at the facility level, has allowed us to provide training and supervision that better fits the local needs of each of our workforces.

During the COVID-19 pandemic, we have taken additional actions to protect the physical and mental health and well-being of our employees throughout the world, including in particular those employees who work in our factories.

We have also encouraged employees to work from home when possible and appropriate and have taken an integrated approach to helping our employees optimally manage their work and personal responsibilities.

Community and Social Impact - Amphenol recognizes that we have a responsibility to be a positive influence in the communities in which we operate around the world.

Most of our community outreach is organized by our local management teams, which helps ensure that our efforts are working in support of the local communities in which our employees live and work.

Our local teams are actively supporting their communities in a variety of ways including:

school supply drives, local blood drives, mentoring of at-risk students, community clean-up events, local tree planting, holiday-giving events and food delivery services to immobile individuals.

To support our communities during the COVID-19 pandemic, we leveraged our global supply chain to procure face masks, sanitizer, thermometers and other critical supplies, which our teams donated to local hospitals, clinics, at risk individuals, our employees and their families.

Environmental Matters

1 unchanged sentence

The Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations and that the costs of continuing compliance will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

For more information on certain environmental matters, refer to Note 14 of the Notes to Consolidated Financial Statements.

For a discussion of certain risks related to environmental matters, refer to the risk factor titled “The Company is subject to environmental laws and regulations that could adversely affect its business” in Part I, Item 1A.

1 unchanged sentence

Available Information

The Company’s annual report on Form 10-K and all of the Company’s other filings with the U.S.

Securities and Exchange Commission (“SEC”), such as quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, are available to view, free of charge, on the Company’s website, www.amphenol.com, as soon as reasonably practicable after they are filed electronically with, or furnished to, the SEC.

Securities and Exchange Commission (“SEC”) maintains a website that contains reports, proxy and information statements and other information regarding issuers, including Amphenol, that file with the SEC.

Any such documents that the Company files with the SEC can be obtained by the public on the SEC’s website at http://www.sec.gov.

The Company’s annual report on Form 10-K and all of the Company’s other filings with the SEC, such as quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are also available to view, free of charge, on the Company’s website, www.amphenol.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

Copies are also available without charge, from Amphenol Corporation, Investor Relations, 358 Hall Avenue, Wallingford, CT 06492.

The information on our website is not incorporated by reference in this Annual Report on Form 10-K.

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-K

Item 1. Business