What changed in this filing

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Item 1. Financial Statements

2021-04-30 compared with 2020-10-23 · 219 added, 336 removed, 383 unchanged (59% of the section changed)

3 unchanged sentences

(dollars in millions)

September 30,

Current Assets:

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Three Months Ended

Nine Months Ended

September 30,

Cost of sales

Acquisition-related expenses

Selling, general and administrative expenses

1 unchanged sentence

Interest expense

Loss on early extinguishment of debt

Other income, net

Other (expense) income, net

Income before income taxes

10 unchanged sentences

(dollars in millions)

Three Months Ended September 30,

Nine Months Ended September 30,

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

Three Months Ended

Total other comprehensive (loss) income, 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 ($ 5.0 ) for 2020, and ($ 1.2 ) and ($ 3.6 ) for 2019, respectively

Total other comprehensive income (loss), net of tax

Unrealized gain on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.6 ) and ($ 1.7 ), respectively

Total other comprehensive (loss) income, net of tax

Total comprehensive income

5 unchanged sentences

(dollars in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash from operating activities:

2 unchanged sentences

Stock-based compensation expense

Loss on early extinguishment of debt

Deferred income tax benefit

Deferred income tax provision

Net change in components of working capital

9 unchanged sentences

Cash from financing activities:

Proceeds from issuance of senior notes

Proceeds from issuance of senior notes and other long-term debt

Repayments of senior notes and other long-term debt

1 unchanged sentence

Repayments under credit facilities

(Repayments) borrowings under commercial paper programs, net

Borrowings (repayments) under commercial paper programs, net

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

2 unchanged sentences

Dividend payments

Net cash used in financing activities

Net cash provided by 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 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”).

The Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, and each of 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, 2021 and 2020, 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 nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three months ended March 31, 2021 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, 2020 (the “2020 Annual Report”).

Certain reclassifications of prior period amounts have been made to conform to the current period presentation, which had no impact on our condensed consolidated results of operations, financial position or cash flows.

Such reclassifications included combining the “Net change in accrued pension and postretirement benefits” with the “Net change in other long-term assets and liabilities” line item, within “Net cash provided by operating activities” in the Condensed Consolidated Statements of Cash Flow.

On January 27, 2021, the Company announced that its Board of Directors approved a two -for-one split of the Company’s Common Stock.

The stock split was effected in the form of a stock dividend paid to shareholders of record as of the close of business on February 16, 2021.

The additional shares were distributed on March 4, 2021, and the Company’s Common Stock began trading on a split-adjusted basis on March 5, 2021.

As a result of the stock split, shareholders received one additional share of Amphenol Common Stock, $ 0.001 par value, for each share held as of the record date.

There was no change in the number of authorized common shares of the Company as a result of the stock split.

All current and prior year data presented in the accompanying Condensed Consolidated Financial Statements and notes thereto in this Form 10-Q, including but not limited to, number of shares, share and per share activity, stock-based compensation data including stock options and restricted share units and related per share data, basic and diluted earnings per share, and dividends per share amounts, have been adjusted to reflect the effect of the stock split.

As a result of the stock split, certain prior period amounts have been reclassified to conform to the current period presentation in the Condensed Consolidated Financial Statements and accompanying notes herein.

The impact to the Condensed Consolidated Balance Sheets, as well as the rollforward of consolidated changes in equity included in Note 7 herein, was an increase of $ 0.3 to Common Stock, with an offsetting decrease in Additional paid-in capital, which has been retroactively adjusted for all periods presented.

Note 2—New Accounting Pronouncements

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, 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 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.

Prior periods presented herein remain in accordance with then effective accounting standards.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which added, amended and removed certain disclosure requirements related to fair value measurements.

Among other changes, this standard required certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements.

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 may be adopted on its effective date.

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

The Company adopted ASU 2018-13 effective January 1, 2020, which did not have a material impact on our consolidated financial statements.

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.

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

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

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 (the “SOFR”) as its preferred benchmark alternative to U.S.

dollar LIBOR.

Recently Adopted Accounting Standards and Final SEC Rules

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplified income tax accounting in various areas.

The Company has evaluated and adopted ASU 2019-12 on January 1, 2021, which did not have a material impact on our consolidated financial statements.

In May 2020, the Securities and Exchange Commission (the “SEC”) issued a new 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 was effective for fiscal

years beginning after December 31, 2020, with early application permitted.

The Company evaluated and adopted this SEC final rule on January 1, 2021, which did not have a material impact on our condensed consolidated financial statements.

Its impact on any future SEC filings will be dependent on the size of future business combinations.

Recently Issued Accounting Standards and Final SEC Rules Not Yet Adopted

The United Kingdom’s Financial Conduct Authority (the “FCA”), 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.

In December 2020, the ICE Benchmark Administration published a consultation on its intention to extend the publication of certain U.S.

dollar LIBOR (“USD LIBOR”) rates until June 30, 2023.

Subsequently in March 2021, the FCA announced some USD LIBOR tenors (overnight, 1-month, 3-month, 6-month and 12-month) will continue to be published until June 30, 2023.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, identified the Secured Overnight Financing Rate (the “SOFR”) as its preferred benchmark alternative to USD LIBOR.

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

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Treasury-backed repurchase transacti ons.

In March 2020, in response to this transition, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financing Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S.

In March 2020, in response to this transition, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued by reference rate reform, and addresses operational issues likely to arise in modifying contracts to replace discontinued reference rates with new rates.

ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022.

The Company is evaluating the potential impact of the replacement of LIBOR, which ultimately may or may not be the SOFR, from both a risk management and financial reporting perspective, as well as the guidance under ASU 2020-04.

Our current portfolio of debt and financial instruments currently tied to LIBOR consists primarily of our Commercial Paper Programs and Revolving Credit Facility, both of which are discussed in more detail in Note 4 herein.

In January 2021, the FASB also issued ASU 2021-01 Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”), which permits entities to elect certain optional expedients and exceptions when accounting for derivatives and certain hedging relationships affected by changes in interest rates and the transition.

The Company is evaluating the potential impact of the replacement of LIBOR from both a risk management and financial reporting perspective.

Our current portfolio of debt and financial instruments tied to LIBOR consists primarily of our Revolving Credit Facility (as defined below), which had no outstanding borrowings as of March 31, 2021.

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

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 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.

In November 2020, the SEC issued a new rule that modernizes and simplifies various aspects and financial disclosure requirements in Regulation S-K, specifically related to Item 301 “Selected Financial Data” , Item 302 “Supplementary Financial Information” and Item 303 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”).

The intent of this new rule is to (i) eliminate duplicative disclosures, (ii) enhance and promote more principles-based MD&A disclosures with the objective of making them more meaningful for investors, all while (iii) simplifying the compliance requirements and efforts for registrants, by providing them with the flexibility to present management’s perspective on the registrant’s financial condition and results of operations.

While most of the changes involve reducing or eliminating previously required information and disclosures, the rule does expand the disclosure requirements surrounding certain aspects of the various items in Regulation S-K discussed above.

The final rule was published in the Federal Register on January 11, 2021, is effective thirty days after its publication date, or February 10, 2021, and registrants are required to comply with this final rule in the registrant’s first fiscal year ending on or after the date that is 210 days after the publication date (August 9, 2021).

The Company has evaluated this SEC final rule, and we plan to incorporate the requirements and amendments of this SEC rule, in its entirety, as part of our Form 10-K for the year ending December 31, 2021.

The application of this new SEC rule is not expected to have a material impact on our future SEC filings.

Note 3—Inventories

Inventories consist of:

September 30,

Raw materials and supplies

2 unchanged sentences

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

September 30, 2020

March 31, 2021

December 31, 2020

2 unchanged sentences

Euro Commercial Paper Program

2.20 % Senior Notes due April 2020

3.125 % Senior Notes due September 2021

6 unchanged sentences

2.800 % Senior Notes due February 2030

Notes payable to foreign banks and other debt

Less unamortized deferred debt issuance costs

2 unchanged sentences

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 has a $ 2,500.0 unsecured credit facility (the “Revolving Credit Facility”), which matures January 2024 and 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 September 30, 2020 and December 31, 2019, there were no outstanding borrowings under the Revolving Credit Facility.

At March 31, 2021 and December 31, 2020, 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).

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

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

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

At March 31, 2021, 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 (the “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 may issue 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 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.

As of March 31, 2021, the amount of USCP Notes outstanding was $ 811.0 , with a weighted average interest rate of 0.20 % .

On April 7, 2021, a combination of borrowings under the U.S.

Commercial Paper Program and cash and cash equivalents on hand were used to fund the previously announced acquisition of MTS Systems Corporation (“MTS”).

Refer to Note 16 herein for further discussion of the acquisition of MTS.

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

Commercial Paper Program, the “Commercial Paper Programs”) pursuant to which the Euro Issuer may issue short-term unsecured commercial paper notes (the “ECP Notes” and, together with the USCP Notes, “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States.

The maturities of the ECP Notes will vary, but may not exceed 183 days from the date of issue.

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

The maturities of the ECP Notes will

vary, but may not exceed 183 days from the date of issue.

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

The ECP Notes may be issued in Euros, Sterling, U.S.

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 (the “BOE Facility”).

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

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

As of March 31, 2021, there were no ECP Notes outstanding.

In addition, until March 22, 2021, the Company was able to issue ECP Notes through the Bank of England’s COVID Corporate Financing Facility (the “BOE Facility”).

There were no outstanding borrowings at March 31, 2021 under the BOE Facility, which expired on March 22, 2021.

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

In conjunction with the Revolving Credit Facility, the authorization from the Company’s Board of Directors limits the maximum aggregate principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper, euro-commercial paper or similar programs at any time to $ 2,500.0 .

In addition, the maximum aggregate principal amount outstanding of USCP Notes at any time is $ 2,500.0 .

The maximum aggregate principal amount outstanding of ECP Notes at any time is $ 2,000.0 .

In conjunction with the Revolving Credit Facility, the authorization from the Company’s Board of Directors limits the maximum principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $ 2,500.0 in the aggregate.

In addition, the maximum aggregate principal amount outstanding of USCP Notes and ECP Notes at any time is $ 2,500.0 and $ 2,000.0 , respectively.

The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Company’s Revolving Credit Facility are available to repay Commercial Paper, if necessary.

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

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 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).

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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”).

The 2029 Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.

Interest on the 2029 Senior Notes is payable semiannually on June 1 and December 1 of each year, commencing on June 1, 2019.

Prior to March 1, 2029, the Company may, at its option, redeem some or all of the 2029 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 March 1, 2029, the Company may, at its option, redeem some or all of the 2029 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.

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 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 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”).

The 2030 Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.

Interest on the 2030 Senior Notes is payable semiannually on February 15 and August 15 of each year, commencing on February 15, 2020.

Prior to November 15, 2029, the Company may, at its option, redeem some or all of the 2030 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 November 15, 2029, the Company may, at its option, redeem some or all of the 2030 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.

In September 2019, the Company used the net proceeds from the 2030 Senior Notes to fund the cash consideration payable in the Tender Offers, with the remaining net proceeds being used for general corporate purposes, including to partially reduce outstanding borrowings related to the U.S.

Commercial Paper Program.

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

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Senior Notes is payable semiannually.

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

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

The remaining principal amounts outstanding associated with the Company’s 3.125 % Senior Notes due in September 2021 and 4.00 % Senior Notes due in February 2022 are each 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, 2021.

Senior Notes contain certain financial and non-financial covenants.

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

At March 31, 2021, the Company was in compliance with the financial covenants under its U.S.

Senior Notes.

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.

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 the “ 0.750 % Euro Senior Notes”, collectively with the 2.000 % Euro Senior Notes due October 2028, the “Euro Notes”, and the Euro Notes collectively with the U.S.

Senior Notes, the “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.

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.

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.

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).

The Company used a portion of the net proceeds from the 2028 Euro Notes to repay a portion of the outstanding amounts under its Commercial Paper Programs, with the remainder of the net proceeds being used for general corporate purposes.

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

The Company’s 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 each series of Euro Notes is payable annually.

The Company may, at its option, redeem some or all of any series of Euro 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, but not including, the date of redemption, and, with certain exceptions, a make-whole premium.

The fair value of each series of 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 Euro Notes contain certain financial and non-financial covenants.

At September 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.

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.

At March 31, 2021, the Company was in compliance with the financial covenants under its Euro Notes .

Note 5—Fair Value Measurements

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Level 3 Significant inputs to the valuation model are unobservable.

The Company believes that the assets or liabilities subject to such standards with fair value disclosure requirements are primarily debt instruments, pension plan assets, short-term investments, derivative instruments and contingent consideration payments.

Each of these assets and liabilities is discussed below, with the exception of debt instruments and pension plan assets, which are covered in Note 4 and Note 10, respectively, herein, in addition to the notes to the consolidated financial statements within the Company’s most recent 2019 Annual Report.

The Company believes that the assets or liabilities currently subject to such standards with fair value disclosure requirements are primarily debt instruments, pension plan assets, short-term investments, and derivative instruments.

Each of these assets and liabilities is discussed below, with the exception of debt instruments and pension plan assets, which are covered in Note 4 and Note 10, respectively, herein, in addition to the Notes to Consolidated Financial Statements in the 2020 Annual Report.

Substantially all of the Company’s short-term investments consist of certificates of deposit with original maturities of twelve months or less and as such, are considered as Level 1 in the fair value hierarchy as they are traded in active markets for identical assets.

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bank accounts, approximate their fair value.

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 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:

The Company’s derivative instruments primarily consist of 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.

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 as of March 31, 2021 and December 31, 2020 are as follows:

Fair Value Measurements

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Assets (Level 1)

September 30, 2020:

March 31, 2021:

Short-term investments

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Forward contracts

Contingent consideration

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 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.

As of March 31, 2021, the fair value of such forward contracts in the table above consisted of (i) two outstanding foreign exchange forward contracts accounted for as cash flow hedges, with each expiring in 2021, (ii) various outstanding foreign exchange forward contracts accounted for as net investment hedges and (iii) various outstanding foreign exchange forward contracts that are not designated as hedging instruments.

The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts and the amounts reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss), included in Cost of sales in the accompanying Condensed Consolidated Statements of Income during the three months ended March 31, 2021 and 2020, were not material.

The fair values of the Company’s 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 September 30,

Nine Months Ended September 30,

Three Months Ended

Provision for income taxes

Effective tax rate

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.

For the three months ended March 31, 2021 and 2020, stock option exercise activity had the impact of lowering our Provision for income taxes by $ 2.6 and $ 5.0 , respectively, and lowering our effective tax rate by 60 basis points and 170 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 three months ended March 31, 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 690 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.

As part of this change, the Tax Act, among other changes, provides for a transition tax on the accumulated unremitted foreign earnings and profits of the Company’s foreign subsidiaries (“Transition Tax”) and a reduction of the U.S.

federal corporate income tax rate from 35 % to 21 % .

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

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.

As part of this change, the Tax Act, among other changes, provides for a transition tax (“Transition Tax”) related to the deemed repatriation of the accumulated unremitted earnings and profits of the Company’s foreign subsidiaries.

The Company plans to pay its fourth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2021, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, 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, 2021 and December 31, 2020.

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 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 .

As of March 31, 2021, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 170.2 .

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 September 30, 2020 is as follows:

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of June 30, 2020

Other comprehensive income (loss)

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 September 30, 2020

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

A rollforward of consolidated changes in equity for the three months ended March 31, 2021 is as follows:

Amphenol Corporation Shareholders

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Balance as of December 31, 2020

Cumulative effect of adoption of credit loss standard (ASU 2016-13)

Other comprehensive income (loss)

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Stock-based compensation expense

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

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of June 30, 2019

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 September 30, 2019

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

Balance as of March 31, 2021

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

Amphenol Corporation Shareholders

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Balance as of December 31, 2019

Cumulative effect of adoption of credit loss standard (ASU 2016-13)

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

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Stock-based compensation expense

Balance as of September 30, 2019

Balance as of March 31, 2020

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 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;

During the three months ended March 31, 2021, the Company repurchased 2.4 million shares of its Common Stock for $ 152.8 under the 2018 Stock Repurchase Program.

Of the total repurchases during the first three months of 2021, 0.3 million shares, or $ 19.8 , have been retained in Treasury stock at time of repurchase;

the remaining 2.1 million shares, or $ 133.0 , 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.

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 nine months ended September 30, 2020 and 2019:

Three Months Ended September 30,

Nine Months Ended September 30,

During the three months ended March 31, 2020, the Company repurchased 5.4 million shares of its Common Stock for $ 257.2 under the 2018 Stock Repurchase Program.

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

In April 2021, the Company repurchased 0.8 million additional shares of its Common Stock for $ 51.0 , which completed the 2018 Stock Repurchase Program.

On April 27, 2021, the Company’s Board of Directors authorized a new 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 27, 2024 (the “2021 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act.

As of April 27, 2021, the Company has no t repurchased any shares of its Common Stock under the 2021 Stock Repurchase Program.

The price and timing of any future purchases under the 2021 Stock Repurchase Program will depend on a number of factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Company’s common stock.

Contingent upon declaration by the Company’s 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, 2021 and 2020:

Three Months Ended March 31,

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.

On October 20, 2020, the Company’s Board of Directors approved an increase to its quarterly dividend rate from $ 0.125 per share to $ 0.145 per share effective with dividends declared in the fourth quarter of 2020 and contingent upon declaration by the Company’s Board of Directors.

Note 8—Stock-Based Compensation

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.

For the three months ended March 31, 2021 and 2020, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 19.1 and $ 15.4 , respectively.

In addition, for the three months ended March 31, 2021 and 2020, the Company recognized aggregate income tax benefits of $ 4.5 and $ 6.8 , respectively, in 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, 2021 and 2020 include excess tax benefits of $ 2.6 and $ 5.0 , 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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A committee of the Company’s Board of Directors has been authorized to grant stock options pursuant to 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 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.

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 60,000,000 shares (as approved by the Company’s Board of Directors).

As of March 31, 2021, there were 10,101,120 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 2017 Employee Option Plan and the 2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant and are generally exercisable over a period of ten years from the date of grant.

In 2004, the Company adopted the 2004 Stock Option Plan for Directors of Amphenol Corporation (the “2004 Directors Option Plan”).

The 2004 Directors Option Plan is administered by the Company’s Board of Directors.

The 2004 Directors Option Plan expired in May 2014, except that its terms continue with respect to any outstanding options granted thereunder.

Options were last granted under the 2004 Directors Option Plan in May 2011.

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 nine months ended September 30, 2020 was as follows:

Stock option activity for the three months ended March 31, 2021 was as follows:

Exercise Price

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Options outstanding at March 31, 2021

Options granted

Options exercised

( 2,425,365 )

Options forfeited

Options outstanding at June 30, 2020

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:

Vested and non-vested options expected to vest at March 31, 2021

Exercisable options at March 31, 2021

A summary of the status of the Company’s non-vested options as of March 31, 2021 and changes during the three months then ended is as follows:

Fair Value at

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Non-vested options at March 31, 2021

Options granted

Options vested

( 6,149,060 )

Options forfeited

Non-vested options at June 30, 2020

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:

During the three months ended March 31, 2021 and 2020, the following activity occurred under the Company’s option plans:

Three Months Ended

Nine Months Ended

September 30,

Total intrinsic value of stock options exercised

Total fair value of stock options vested

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.

As of March 31, 2021, the total compensation cost related to non-vested options not yet recognized was approximately $ 165.2 with a weighted average expected amortization period of 3.25 years.

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

The grant-date fair value of each share grant is determined based on the closing share price of the Company’s Common Stock on the date of the grant.

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

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

As of March 31, 2021, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 163,342 .

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 nine months ended September 30, 2020 was as follows:

Restricted share activity for the three months ended March 31, 2021 was as follows:

Weighted Average

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Restricted shares outstanding at March 31, 2021

Shares vested and issued

Restricted shares granted

Restricted shares outstanding at June 30, 2020

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).

As of March 31, 2021, 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).

Note 9—Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amphenol Corporation by the weighted average number of common shares outstanding.

Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted average number of common shares and dilutive common shares 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 nine months ended September 30, 2020 and 2019 is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

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

A reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding, along with the earnings per share (basic and diluted) for the three months ended March 31, 2021 and 2020 is as follows:

Three Months Ended March 31,

(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 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.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 0.1 million and 6.2 million for the three months ended March 31, 2021 and 2020, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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Plans’ benefits are generally based on years of service and compensation and are generally noncontributory.

employees not covered by the U.S.

Plans are covered by defined contribution plans.

The majority of U.S.

employees are not covered by the U.S.

Plans and are covered by defined contribution plans.

Certain foreign subsidiaries have defined benefit plans covering their employees (the “Foreign Plans” and, together with the U.S.

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 nine months ended September 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 months ended March 31, 2021 and 2020:

Pension Benefits

Three Months Ended September 30:

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net actuarial losses

Net pension expense

Nine Months Ended September 30:

Three Months Ended March 31:

Interest cost

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Net pension expense

Based on the Company’s current investment strategy for its U.S.

Plans, the Company’s expected long-term rate of return assumption to determine net periodic pension expense for 2021 is 6.0 % .

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

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

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

During the three months ended March 31, 2021 and 2020, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 4.4 and $ 3.4 , respectively.

Note 11—Acquisitions

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.

2021 Acquisitions

During the first three months of 2021, the Company completed four acquisitions for approximately $ 185.6 , net of cash acquired.

Three of the acquisitions have been included in the Interconnect Products and Assemblies segment, while one acquisition has been included in the Cable Products and Solutions segment.

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.

The operating results of the 2021 acquisitions have been included in the Condensed Consolidated Statements of Income since their respective dates of acquisition.

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.

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.

On April 7, 2021, the Company completed the previously announced acquisition of MTS Systems Corporation (“MTS”).

Refer to Note 16 herein for further details related to the MTS acquisition, as well as the planned divestiture of the MTS Test & Simulation business.

2020 Acquisitions

During the year ended December 31, 2020, the Company completed two acquisitions, which are included in the Interconnect Products and Assemblies segment, for approximately $ 50.4 , net of cash acquired.

While the Company has completed the acquisition accounting for one of the acquisitions in 2020, the Company is in the process of completing the analyses of the fair value of the assets acquired and liabilities assumed for the other 2020 acquisition.

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

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, 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 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.

Note 12—Goodwill and Other Intangible Assets

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Foreign currency translation

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

Goodwill at March 31, 2021

Other than goodwill noted above, the Company’s intangible assets as of March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021

December 31, 2020

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Trade names (indefinite-lived)

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.

The increase in the gross carrying amount of intangible assets in the first quarter of 2021 was driven by certain customer relationships recognized as a result of the acquisition accounting associated with our first quarter 2021 acquisitions.

Amortization expense for the three months ended March 31, 2021 and 2020 was approximately $ 12.3 and

$ 12.9 , respectively.

As of March 31, 2021, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2021 is approximately $ 37.0 and for each of the next five fiscal years is approximately $ 42.0 in 2022, $ 39.3 in 2023, $ 33.6 in 2024, $ 24.2 in 2025 and $ 23.1 in 2026.

Note 13—Reportable Business Segments

1 unchanged sentence

(i) Interconnect Products and Assemblies and (ii) Cable Products and Solutions.

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.

The Company organizes its reportable business segments based upon similar economic characteristics and business groupings of products, services, and customers, and do not include any aggregated operating segments.

These reportable business segments are determined based upon how the Company operates its businesses, assesses operating performance, makes resource allocation decisions, and communicates results, outlook and strategy to our Board of Directors and shareholders.

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.

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.

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

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 Consolidated Financial Statements in the 2020 Annual Report.

The Company evaluates the performance of the segments 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, 2021 and 2020 are as follows:

Interconnect Products

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Total Consolidated

Three Months Ended September 30:

Segment operating income

Nine Months Ended September 30:

Three Months Ended March 31:

Segment operating income

1 unchanged sentence

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

Three Months Ended September 30,

Nine Months Ended September 30,

A reconciliation of segment operating income to consolidated income before income taxes for the three months ended March 31, 2021 and 2020 is summarized as follows:

Three Months Ended March 31,

Segment operating income

Stock-based compensation expense

Acquisition-related expenses

Other operating expenses

Interest expense

Loss on early extinguishment of debt

Other income, net

Other (expense) income, net

Income before income taxes

2 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 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.

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 September 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 September 30, 2020 and December 31, 2019.

For the three months ended March 31, 2021 and 2020, 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 related to our contracts with customers recorded in the Company’s Condensed Consolidated Balance Sheets were not significant as of March 31, 2021 and December 31, 2020.

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, 2021 and December 31, 2020.

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 September 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 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.

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, 2021 and December 31, 2020, and related warranty expense for the three months ended March 31, 2021 and 2020, 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 nine months ended September 30, 2020 and 2019:

The following table shows 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, 2021 and 2020:

Interconnect Products

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Business Segments

Three Months Ended September 30:

Net sales by:

Sales channel:

End customers and contract manufacturers

Distributors and resellers

United States

Other foreign locations

Nine Months Ended September 30:

Three Months Ended March 31,

Net sales by:

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Department of Defense, Office of the Inspector General, requesting documents pertaining to certain products manufactured by the Company’s Military and Aerospace Group that are purchased or used by the U.S.

The Company is cooperating with the request.

This matter is ongoing and the Company is cooperating with the request.

The Company is currently unable to estimate the timing or outcome of the matter.

Certain operations of the Company are subject to environmental laws and regulations which govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes.

From December 2019 through October 2020, the Company has been named as one of several defendants in four separate lawsuits filed in the State of Indiana .

The lawsuits relate to a manufacturing site in Franklin, Indiana (the “Site”) where the Company has been conducting an environmental clean-up effort under the direction of the United States Environmental Protection Agency (the “EPA”).

The Site was shut down in 1983, more than three years before the Company acquired the Site as part of a larger acquisition that led to the establishment of the Company’s business in 1987 (the “Acquisition”).

In connection with the Acquisition, the Company agreed, and has continued, to work closely with the EPA regarding the ongoing clean-up effort at the Site, subject to an indemnity from the seller (the “Seller”).

In 1989, the Company sold the property where the Site is located.

The lawsuits collectively seek, among other things, compensation for personal injuries and for past, present and future medical expenses, compensation for loss of property values near the Site and costs related to medical monitoring for individuals living close to the Site, in each case arising from alleged exposure to hazardous chemicals.

The Company denies any wrongdoing and is defending each of the above described lawsuits.

All the costs incurred relating to these lawsuits are reimbursed by the Seller based on the Seller’s indemnification obligations entered into in connection with the Acquisition (the “1987 Indemnification Agreement”).

In addition, the environmental investigation, remediation and monitoring activities undertaken by the Company relating to the Site are reimbursed under the 1987 Indemnification Agreement.

As a result, the Company does not believe that the costs associated with these lawsuits or the resolution of the related environmental matters will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

In March 2021, a non-material customer of the Company filed a formal request for arbitration against the Company relating to a product sold to such customer which the customer alleges did not meet the agreed upon product specification.

The customer is pursuing breach of warranty claims against the Company, among other assertions, and is seeking damages relating to its estimated costs of replacing the product.

While the customer has claimed damages of approximately € 80 , the arbitrator will have discretion to determine the actual amount of damages as well as the apportionment of responsibility between the parties.

The Company has denied that its product caused the damages, that its product did not meet the agreed upon specifications and that the claimed damages are appropriate, and is vigorously defending itself in the arbitration.

Certain operations of the Company are subject to environmental laws and regulations that govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes.

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

Note 16—Subsequent Events

Acquisition of MTS Systems Corporation

On December 9, 2020 , Amphenol announced that the Company entered into a definitive agreement under which Amphenol would acquire MTS Systems Corporation (Nasdaq:

MTSC) (“MTS”) for $ 58.50 per share in cash.

In the first quarter of 2021, the acquisition of MTS was approved by MTS’s shareholders.

MTS is a leading global supplier of precision sensors, advanced test systems and motion simulators.

MTS was historically organized into two business segments:

Sensors (“MTS Sensors”) and Test & Simulation (“MTS T&S”).

The MTS Sensors segment represents a highly complementary offering of high-technology, harsh environment sensors sold into diverse end markets and applications.

The MTS Sensors business will further expand the Company’s range of sensor and sensor-based products across a wide array of industries and will be reported as part of our continuing operations and within our Interconnect Products and Assemblies segment.

On January 19, 2021, the Company entered into an agreement to sell the MTS T&S business to Illinois Tool Works Inc.

(“ITW”) (NYSE:

Further details related to the planned divestiture of the MTS T&S business are included below.

On April 7, 2021 , the Company completed its acquisition of MTS for a purchase price of approximately $ 1,300 , net of cash acquired and including the repayment of certain outstanding debt and liabilities at closing.

In addition to the purchase price, the Company also assumed MTS’s then outstanding senior notes due August 15, 2027, which the Company repaid and settled shortly after the closing, including accrued interest, for approximately $ 355 .

The MTS acquisition was funded through a combination of borrowings under the U.S.

Commercial Paper Program, as discussed in Note 4 herein, and cash and cash equivalents on hand.

The Company is in the early stages of preparing its acquisition accounting related to MTS, which is currently incomplete due to the proximity of the acquisition’s closing date to the date of this quarterly report.

The Company has begun its preliminary analysis associated with allocating the purchase price to the related tangible and identifiable intangible assets acquired and liabilities assumed, based upon their estimated fair values.

Anticipated Divestiture of MTS T&S Business

On January 19, 2021, the Company entered into an agreement to sell the MTS T&S business to ITW.

The agreed-upon sale price is approximately $ 750 , subject to certain post-closing adjustments and excluding transaction-related expenses, and the closing is subject to the receipt of all required regulatory approvals and the satisfaction of other customary closing conditions.

Since the MTS T&S business was (i) part of the recent MTS acquisition and (ii) has never been nor will ever be considered part of our continuing operations, the Company expects to report the operating results and related cash flows of the MTS T&S business as a discontinued operation, effective as of the MTS acquisition date.

Accordingly, the Company will not assign the MTS T&S business to either of our two reportable business segments due to its anticipated sale later in 2021.

The MTS T&S business will meet the “held for sale” accounting criteria and the respective assets and liabilities will be classified as such and measured at fair value less costs to sell as of the date of the MTS acquisition.

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