What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-04-30 · 310 added, 151 removed, 451 unchanged (51% of the section changed)

9 unchanged sentences

Prepaid expenses and other current assets

Current assets held for sale

Total current assets

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Current portion of long-term debt

Current liabilities held for sale

Total current liabilities

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Three Months Ended

Six Months Ended

Cost of sales

Acquisition-related expenses

Selling, general and administrative expenses

1 unchanged sentence

Interest expense

Other (expense) income, net

Income before income taxes

Other income (expense), net

Income from continuing operations before income taxes

Provision for income taxes

Net income attributable to noncontrolling interests

Net income from continuing operations

Net income from continuing operations attributable to noncontrolling interests

Net income from continuing operations attributable to Amphenol Corporation

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($ 0.3 )

Net income attributable to Amphenol Corporation

Net income per common share — Basic

Net income per common share attributable to Amphenol Corporation — Basic:

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Basic

Weighted average common shares outstanding — Basic

Net income per common share — Diluted

Net income per common share attributable to Amphenol Corporation — Diluted:

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Diluted

Weighted average common shares outstanding — Diluted

Per share amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements .

3 unchanged sentences

Three Months Ended

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

Six Months Ended

Net income from continuing operations

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes

Net income before allocation to noncontrolling interests

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

Foreign currency translation adjustments

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

Unrealized gain (loss) on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.6 ) and ($ 3.3 ) for 2021, and ($ 1.7 ) and ($ 3.3 ) for 2020, respectively

Total other comprehensive income (loss), net of tax

Total comprehensive income

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(dollars in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash from operating activities:

Adjustments to reconcile net income to cash provided by operating activities:

Net income from continuing operations

Adjustments to reconcile net income from continuing operations to cash provided by operating activities from continuing operations:

Depreciation and amortization

3 unchanged sentences

Net change in other long-term assets and liabilities

Net cash provided by operating activities from continuing operations

Net cash used in operating activities from discontinued operations

Net cash provided by operating activities

5 unchanged sentences

Acquisitions, net of cash acquired

Net cash used in investing activities from continuing operations

Net cash used in investing activities from discontinued operations

Net cash used in investing activities

6 unchanged sentences

Payment of costs related to debt financing

Payment of acquisition-related contingent consideration

Proceeds from exercise of stock options

Payment of deferred purchase price related to acquisitions

Distributions to and purchases of noncontrolling interests

1 unchanged sentence

Dividend payments

Net cash provided by financing activities

Net cash provided by (used in) financing activities from continuing operations

Net cash provided by financing activities from discontinued operations

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents balance, beginning of period

Cash and cash equivalents balance, end of period

Cash and cash equivalents included in Current assets held for sale, end of period

Cash and cash equivalents balance of continuing operations, end of period

Cash paid for:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in millions, except share and per share data)

(amounts in millions, except share and per share data , unless otherwise noted )

Note 1—Basis of Presentation and Principles of Consolidation

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”).

The Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020, and the related Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 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 months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 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”).

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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.

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 and per share information, stock-based compensation data including stock options and restricted shares 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.

While the stock split did not change the number of authorized common shares of the Company, in May 2021, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of Common Stock, which amendment was filed and became effective on May 21, 2021.

Refer to Note 7 herein for further details related to the increase in the number of shares of Common Stock authorized for issuance as a result of this amendment.

Discontinued Operations

The Company reports an operation’s assets and liabilities separately as “held for sale” when (1) management, having the authority to approve the action, commits to a plan to sell the discontinued operation, the plan of which is unlikely to have any significant changes or to be withdrawn, (2) the completed sale is probable within one year and (3) an active program to locate a buyer has been initiated with the operation actively marketed for sale at a price that is reasonable in relation to its current fair value and for immediate sale in its present condition.

In December 2020, the Company signed a definitive agreement to acquire MTS Systems Corporation (Nasdaq:

MTSC) (“MTS”) as more fully

discussed in Note 11 herein.

On January 19, 2021, the Company entered into a definitive agreement to sell the MTS Test & Simulation (“MTS T&S”) business to Illinois Tool Works Inc.

The Company closed on the acquisition of MTS on April 7, 2021.

The Company expects to close on the sale of the MTS T&S business as soon as all required regulatory approvals have been received and other customary closing conditions have been satisfied, which the Company expects to be within the one-year period outlined above.

The Company concluded that the MTS T&S business met the “held for sale” criteria upon the closing of the MTS acquisition and, as such, the assets and liabilities are presented as held for sale and classified as current as of June 30, 2021 in the Condensed Consolidated Balance Sheets and accompanying Notes herein.

The financial results and cash flows associated with the MTS T&S business are also accounted for as discontinued operations in the accompanying Condensed Consolidated Statements of Income and Statements of Cash Flow, respectively, for all current year periods presented.

The comprehensive income associated with discontinued operations is not material and has not been separately presented in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021.

Refer to Note 11 herein for further information related to the acquisition of MTS, along with Note 12 herein for further discussion of the Company’s discontinued operations associated with the MTS T&S business including the Company’s planned divestiture thereof.

Note 2—New Accounting Pronouncements

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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.

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, to date, has not had 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 and/or divestitures.

Recently Issued Accounting Standards and Final SEC Rules Not Yet Adopted

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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.

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.

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 June 30, 2021.

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

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

March 31, 2021

June 30, 2021

December 31, 2020

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

At March 31, 2021 and December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

At June 30, 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).

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

At March 31, 2021, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

At June 30, 2021, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Commercial Paper Programs

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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.

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

T he maximum aggregate principal amount outstanding of USCP Notes at any time is $ 2,500.0 .

As of June 30, 2021, the amount of USCP Notes outstanding was $ 1,401.0 , with a weighted average interest rate of 0.21 % .

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”).

Commercial Paper Program and cash and cash equivalents on hand were used to fund the acquisition of MTS.

Refer to Note 11 herein for further discussion of the acquisition of MTS.

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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 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.

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.

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

As of June 30, 2021, there were no ECP Notes outstanding.

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 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.

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

At June 30, 2021, the Company was in compliance with the financial covenants under its U.S.

Senior Notes.

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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.

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, but not including, the date of redemption.

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, but not including, 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.

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

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

At June 30, 2021, the Company was in compliance with the financial covenants under its Euro Notes .

Note 5—Fair Value Measurements

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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:

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of June 30, 2021 and December 31, 2020 are as follows:

Fair Value Measurements

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Assets (Level 1)

March 31, 2021:

June 30, 2021:

Short-term investments

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Forward contracts

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.

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.

As of June 30, 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 and six months ended June 30, 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.

As further discussed in Note 12 herein, the MTS T&S business met the held for sale criteria upon the acquisition of MTS on April 7, 2021.

As a result, the disposal group was measured at fair value less costs to sell, which is considered a Level 3 fair value measurement based on the transaction’s expected consideration.

The Company reassessed the fair value of these assets held for sale and liabilities held for sale as of June 30, 2021 and noted that the carrying value of the disposal group did not exceed its fair value less costs to sell.

With the exception of the fair value of the assets acquired and liabilities assumed in connection with acquisition accounting as well as the assets held for sale and liabilities held for sale discussed above, 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.

Note 6—Income Taxes

Three Months Ended

Six Months Ended

Provision for income taxes

Effective tax rate

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.

For the three months ended June 30, 2021 and 2020, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 19.3 and $ 12.4 , respectively, and decreasing our effective tax rate by 430 basis points and 380 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

For the six months ended June 30, 2021 and 2020, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 22.0 and $ 17.4 , respectively, and decreasing our effective tax rate by 250 basis points and 280 basis points, respectively.

For the three and six months ended June 30, 2021, acquisition-related expenses had the effect of increasing the effective tax rate by approximately 60

basis points and 30 basis points, respectively, and a discrete tax benefit of $ 14.9 related to the settlement of uncertain tax positions in certain non-U.S.

jurisdictions had the effect of decreasing the effective tax rate by 330 basis points and 170 basis points, respectively.

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

jurisdiction and the resulting adjustments to deferred taxes, which had the impact of decreasing our Provision for income taxes and effective tax rate by $ 19.9 and 320 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 (“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 paid 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 June 30, 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 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 .

As of June 30, 2021, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 157.1 .

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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Note 7—Shareholders’ Equity and Noncontrolling Interests

Net income attributable to noncontrolling interests is classified below net income.

Net income from continuing operations attributable to noncontrolling interests is classified below net income from continuing operations.

Earnings per share is determined after the impact of the noncontrolling interests’ share in net income of the Company.

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

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

A rollforward of consolidated changes in equity for the three months ended June 30, 2021 is as follows:

Amphenol Corporation Shareholders

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Paid-In Capital

Balance as of March 31, 2021

Other comprehensive income (loss)

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.145 per common share)

Stock-based compensation expense

Balance as of June 30, 2021

A rollforward of consolidated changes in equity for the six months ended June 30, 2021 is as follows:

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of December 31, 2020

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Stock-based compensation expense

Balance as of June 30, 2021

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

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of March 31, 2020

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

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 ($ 0.125 per common share)

Stock-based compensation expense

Balance as of June 30, 2020

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

Amphenol Corporation Shareholders

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Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

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Stock-based compensation expense

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 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;

Balance as of June 30, 2020

Authorized Shares for Issuance

On May 19, 2021, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation, which increased the total number of shares of Class A Common Stock, $ 0.001 par value (“Common Stock”) that the Company is authorized to issue to 2,000,000,000 shares, an increase of 1,000,000,000 shares from the amount previously authorized.

The amendment was filed and became effective on May 21, 2021.

Stock Repurchase Programs

On April 24, 2018, the Company’s Board of Directors authorized a stock repurchase program under which the Company could 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 and six months ended June 30, 2021, the Company repurchased 0.8 million and 3.1 million shares of its Common Stock for $ 51.0 and $ 203.8 , respectively, under the 2018 Stock Repurchase Program.

As a result of these purchases, the Company completed all purchases authorized under the 2018 Stock Repurchase Program and, therefore, the 2018 Stock Repurchase Program has terminated.

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

the remaining 2.8 million shares, or $ 184.0 , have been retired by the Company.

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.

The Company did no t repurchase any of its Common Stock during the three months ended June 30, 2020.

During the six months ended June 30, 2020, the Company repurchased 5.4 million shares of its Common Stock for $ 257.2 under the 2018 Stock Repurchase Program.

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

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.

During the three months ended June 30, 2021, the Company repurchased 1.7 million shares of its Common Stock for $ 116.3 under the 2021 Stock Repurchase Program.

All of the shares repurchased under the 2021 Stock Repurchase Program during the second quarter of 2021 have been or will be retired by the Company.

From July 1, 2021 to July 27, 2021, the Company repurchased 0.7 million additional shares of its Common Stock for $ 48.8 under the 2021 Stock Repurchase Program, and has remaining authorization to purchase up to $ 1,834.9 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,

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

The following table summarizes the dividends declared and paid for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

Dividends declared

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Note 8—Stock-Based Compensation

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.

For the three months ended June 30, 2021 and 2020, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 20.0 and $ 16.6 , respectively.

In addition, for the three months ended June 30, 2021 and 2020, the Company recognized aggregate income tax benefits of $ 21.8 and $ 14.3 , 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 June 30, 2021 and 2020 include excess tax benefits of $ 19.3 and $ 12.4 , respectively, from option exercises.

For the six months ended June 30, 2021 and 2020, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 39.0 and $ 32.0 , respectively.

In addition, for the six months ended June 30, 2021 and 2020, the Company recognized aggregate income tax benefits of $ 26.4 and $ 21.1 , 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 six months ended June 30, 2021 and 2020 include excess tax benefits of $ 22.0 and $ 17.4 , 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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Stock Options

In May 2017, the Company adopted the 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2017 Employee Option Plan”).

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 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”).

In May 2017, the Company adopted the 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2017 Employee Option Plan”), which provided for the issuance of 60,000,000 shares.

In March 2021, the Company’s Board of Directors authorized and approved the Amended and Restated 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “Amended 2017 Employee Option Plan” and, together with the 2017 Employee Option Plan, the “2017 Option Plan”), which among other things, increased the number of shares reserved for issuance under the plan by 40,000,000 shares.

The Amended 2017 Employee Option Plan was approved by the Company’s shareholders and became effective on May 19, 2021.

As of June 30, 2021, there were 42,932,620 shares of Common Stock available for the granting of additional stock options under the Amended 2017 Employee Option Plan.

Prior to the approval of the 2017 Employee Option Plan, the Company issued stock options under the 2009 Stock

Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, and its amendment (the “2009 Employee Option Plan”).

No additional stock options will be granted under the 2009 Employee Option Plan.

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.

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

Options granted under the 2017 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.

Stock option activity for the three and six months ended June 30, 2021 was as follows:

Exercise Price

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Options outstanding at March 31, 2021

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:

Options granted

Options exercised

( 2,882,332 )

Options forfeited

Options outstanding at June 30, 2021

Vested and non-vested options expected to vest at June 30, 2021

Exercisable options at June 30, 2021

A summary of the status of the Company’s non-vested options as of June 30, 2021 and changes during the three and six months then ended is as follows:

Fair Value at

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Non-vested options at March 31, 2021

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

Options granted

Options vested

( 12,345,300 )

Options forfeited

Non-vested options at June 30, 2021

During the three and six months ended June 30, 2021 and 2020, the following activity occurred under the Company’s option plans:

Three Months Ended

Six Months Ended

Total intrinsic value of stock options exercised

Total fair value of stock options vested

As of March 31, 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.

As of June 30, 2021, the total compensation cost related to non-vested options not yet recognized was approximately $ 234.3 with a weighted average expected amortization period of 3.72 years.

The grant-date fair value of each option grant under the 2009 Employee Option Plan and the 2017 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.

The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period.

The fair value is then

amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period.

Use of a valuation model for option grants requires management to make certain assumptions with respect to selected model inputs.

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

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

As of June 30, 2021, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 143,196 .

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

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

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

Restricted share activity for the three and six months ended June 30, 2021 was as follows:

Weighted Average

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Restricted shares outstanding at March 31, 2021

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).

Shares vested and issued

Restricted shares granted

Restricted shares outstanding at June 30, 2021

As of June 30, 2021, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 1.1 (with a weighted average expected amortization period of 0.88 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 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,

Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted average number of outstanding common shares, including 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 and six months ended June 30, 2021 and 2020 is as follows (note - per share amounts may not add due to rounding) :

Three Months Ended June 30,

Six Months Ended June 30,

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

Net income attributable to Amphenol Corporation shareholders:

Basic weighted average common shares outstanding

Net income from continuing operations attributable to Amphenol Corporation

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($ 0.3 )

Net income attributable to Amphenol Corporation

Weighted average common shares outstanding — Basic

Effect of dilutive stock options

Diluted weighted average common shares outstanding

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 0.1 million and 6.2 million for the three months ended March 31, 2021 and 2020, respectively.

Weighted average common shares outstanding — Diluted

Net income per common share attributable to Amphenol Corporation — Basic:

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Basic

Net income per common share attributable to Amphenol Corporation — Diluted:

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Diluted

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 3.8 million and 27.3 million for the three months ended June 30, 2021 and 2020, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 2.2 million and 15.7 million for the six months ended June 30, 2021 and 2020, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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Plans, the “Plans”).

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three months ended March 31, 2021 and 2020:

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three and six months ended June 30, 2021 and 2020:

Pension Benefits

Three Months Ended March 31:

Three Months Ended June 30:

Interest cost

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Net pension expense

Six Months Ended June 30:

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net actuarial losses

Net pension expense

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

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

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

During the six months ended June 30, 2021 and 2020, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 8.4 and $ 6.7 , respectively.

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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.

During the first six months of 2021, the Company completed six acquisitions for approximately $ 1,531.0 , net of cash acquired.

Five 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.

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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.

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.

Pro forma financial information, as well as further details regarding the purchase price allocation 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.

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.

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 further expands the Company’s range of sensor and sensor-based products across a wide array of industries and is reported as part of our continuing operations and within

our Interconnect Products and Assemblies segment.

On January 19, 2021 and prior to the closing of the MTS acquisition, the Company entered into a definitive agreement to sell the MTS T&S business to Illinois Tool Works Inc.

(“ITW”) (NYSE:

Refer to Note 12 herein for further details related to the planned divestiture of the MTS T&S business.

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.

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.

In addition to the purchase price, the Company also assumed MTS’s then-outstanding $ 350.0 principal amount of senior notes due August 15, 2027, which the Company repaid and settled shortly after the closing for approximately $ 387.3 , which included accrued interest and a make-whole premium incurred as a result of the early extinguishment of the senior notes.

The Company has begun the acquisition accounting related to MTS, specifically the allocation of the MTS purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed of MTS based upon their estimated fair values.

This preliminary purchase price allocation is being performed separately for the MTS Sensors business and the MTS T&S business, the latter of which is being accounted for as discontinued operations and whose assets acquired, including associated goodwill, and liabilities assumed are reported as current assets held for sale and liabilities held for sale on the accompanying Condensed Consolidated Balance Sheets.

While the Company is in the process of completing its analyses of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, as of June 30, 2021, the MTS acquisition resulted in the recognition of $ 740.3 of goodwill, $ 54.0 of indefinite-lived tradename intangible assets and $ 183.4 of definite-lived intangible assets, each associated with the MTS Sensors business.

The definite-lived intangible assets are comprised of customer relationships, proprietary technology, and backlog of $ 128.1 , $ 39.1 and $ 16.2 , respectively, and are amortized based upon the underlying pattern of economic benefit with weighted-average useful lives of 11 years , 15 years and 0.25 years, respectively.

Other than these intangible assets, the remainder of the purchase price has been allocated to other identifiable assets acquired and liabilities assumed.

As part of acquisition accounting, the Company also recorded $ 61.0 of deferred tax liabilities associated with certain basis differences, which the Company anticipates recovery for tax purposes by the end of 2021.

The excess purchase price over the fair value of the underlying assets acquired (net of liabilities assumed) was allocated to goodwill, which primarily represents the value of assembled workforce and the anticipated cost savings and efficiencies associated with the integration of MTS, along with other intangible assets acquired that do not qualify for separate recognition.

The Company does no t expect any of the recognized goodwill associated with the acquisition of MTS to be deductible for tax purposes.

Since the current purchase price allocation is based on preliminary assessments made by management as of June 30, 2021, the acquisition accounting for MTS is subject to final adjustment and it is possible that the final assessment of values may differ from this preliminary assessment.

With the exception of the MTS T&S business, which has been classified and reported as discontinued operations as discussed further in Note 12 herein, the operating results for MTS have been included within continuing operations in the Condensed Consolidated Statements of Income since the acquisition date.

2020 Acquisitions

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

Acquisition-related Expenses

During the three and six months ended June 30, 2021, the Company incurred $ 55.4 ($ 44.6 after-tax) of acquisition-related expenses, primarily comprised of transaction, severance, restructuring and certain non-cash costs related to the MTS acquisition.

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

Note 12—Discontinued Operations

Planned Divestiture of MTS T&S Business

On January 19, 2021 and prior to the closing of the MTS acquisition, the Company entered into a definitive 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 any outstanding net debt assumed by Amphenol related to the MTS T&S business.

The Company expects to close on the sale of the MTS T&S business upon the receipt of all required regulatory approvals and the satisfaction of other customary closing conditions, which is expected to be within one year of the date of the acquisition of MTS.

Since the MTS T&S business, which was part of the recent MTS acquisition, has never been nor is expected to ever be considered part of our continuing operations, the Company classifies and reports the financial results and related cash flows of the MTS T&S business as discontinued operations, effective as of the MTS acquisition date, in the accompanying Condensed Consolidated Financial Statements.

The Company will continue to report the MTS T&S business as a discontinued operation until the business is sold to ITW as currently anticipated.

As discussed in Note 11 herein, the purchase price allocation associated with the MTS T&S business is being performed separately from the MTS Sensors business, as the MTS T&S business meets the “held for sale” accounting criteria.

These assets acquired and liabilities assumed resulting from the MTS T&S purchase price allocation are measured and recorded at fair value less costs to sell as of the date of the MTS acquisition;

such accounts are included in Current assets held for sale and Current liabilities held for sale, respectively, in the Condensed Consolidated Balance Sheets, each presented as separate single line items in the Condensed Consolidated Balance Sheets as of June 30, 2021.

The Company expects to close on the sale of the MTS T&S business within one year of the date of the acquisition of MTS, and as such, these associated assets held for sale and liabilities held for sale have been classified as current as of June 30, 2021.

The Company also ceased recording depreciation and amortization on the held for sale assets as of the MTS acquisition date.

The Company did not assign the MTS T&S business to either of our two reportable business segments due to its planned sale.

Amphenol will not have any continuing involvement with the MTS T&S business after the date of its divestiture.

Note 13—Goodwill and Other Intangible Assets

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Foreign currency translation

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

Goodwill at June 30, 2021

The increase in goodwill during the first six months of 2021 was primarily driven by the acquisition of MTS, along with the other acquisitions that closed during the period, as described in Note 11 herein.

Other than goodwill noted above, the Company’s intangible assets as of June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

December 31, 2020

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Trade names (indefinite-lived)

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.

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

Amortization expense for the three months ended June 30, 2021 and 2020 was approximately $ 32.6 and $ 12.5 , respectively.

Amortization expense for the six months ended June 30, 2021 and 2020 was approximately $ 44.9 and $ 25.4 , respectively.

Amortization expense for the three and six months ended June 30, 2021 includes $ 16.2 related to the amortization of acquired backlog resulting from the MTS acquisition.

As of June 30, 2021, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2021 is approximately $ 32.1 and for each of the next five fiscal years is approximately $ 57.5 in 2022, $ 54.7 in 2023, $ 48.9 in 2024, $ 39.5 in 2025 and $ 37.8 in 2026.

Note 14—Reportable Business Segments

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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:

The segment results for the three and six months ended June 30, 2021 and 2020 are as follows:

Interconnect Products

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Total Consolidated

Three Months Ended March 31:

Three Months Ended June 30:

Segment operating income

Six Months Ended June 30:

Segment operating income

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

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

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

Three Months Ended March 31,

A reconciliation of segment operating income to consolidated income from continuing operations before income taxes for the three and six months ended June 30, 2021 and 2020 is summarized as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Segment operating income

Stock-based compensation expense

Acquisition-related expenses

Other operating expenses

Interest expense

Other (expense) income, net

Income before income taxes

Other income (expense), net

Income from continuing operations before income taxes

Note 15—Revenue Recognition

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

For the three 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.

For the three and six months ended June 30, 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.

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

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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 March 31, 2021.

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.

Since our performance obligations are part of contracts that generally have original durations of one year or less, we have not

disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of June 30, 2021.

While the Company typically offers standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of June 30, 2021 and December 31, 2020, and related warranty expense for the three and six months ended June 30, 2021 and 2020, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

Disaggregation of Net Sales

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:

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three and six months ended June 30, 2021 and 2020:

Interconnect Products

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Business Segments

Three Months Ended March 31,

Three Months Ended June 30,

Net sales by:

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Other foreign locations

Six Months Ended June 30,

Net sales by:

Sales channel:

End customers and contract manufacturers

Distributors and resellers

United States

Other foreign locations

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

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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.

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 that 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.

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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.

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