What changed in this filing

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Item 1. Financial Statements

2022-04-29 compared with 2021-10-29 · 280 added, 450 removed, 359 unchanged (67% of the section changed)

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(dollars in millions)

September 30,

Current Assets:

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Prepaid expenses and other current assets

Current assets held for sale

Total current assets

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Other long-term assets

LIABILITIES & EQUITY

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities:

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Current portion of long-term debt

Current liabilities held for sale

Total current liabilities

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Other long-term liabilities

Total Liabilities

Redeemable noncontrolling interest

Additional paid-in capital

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Accumulated other comprehensive loss

Total shareholders’ equity attributable to Amphenol Corporation

Total stockholders’ equity attributable to Amphenol Corporation

Noncontrolling interests

Total Liabilities, Redeemable Noncontrolling Interest and Equity

See accompanying notes to condensed consolidated financial statements.

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Three Months Ended

Nine Months Ended

September 30,

Cost of sales

Acquisition-related expenses

Selling, general and administrative expenses

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Other income (expense), net

Income from continuing operations before income taxes

Income before income taxes

Provision for income taxes

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 ($ 1.5 ) and ($ 1.8 ) for 2021, respectively

Net income attributable to noncontrolling interests

Net income attributable to Amphenol Corporation

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 attributable to Amphenol Corporation per common share — Basic

Weighted average common shares outstanding — 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

Net income attributable to Amphenol Corporation per common share — Diluted

Weighted average common shares outstanding — Diluted

Per share amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements .

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Three Months Ended

Nine Months Ended

September 30,

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 (loss) income, net of tax:

Foreign currency translation adjustments

Unrealized (loss) gain on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.6 ) and ($ 4.9 ) for 2021, and ($ 1.7 ) and ($ 5.0 ) for 2020, respectively

Unrealized gain on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.1 ) and ($ 1.6 ), respectively

Total other comprehensive (loss) income, net of tax

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(dollars in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash from operating activities:

Net income from continuing operations

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

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

Depreciation and amortization

Stock-based compensation expense

Deferred income tax provision (benefit)

Deferred income tax provision

Net change in components of working capital

Net change in other long-term assets and liabilities

Net cash provided by operating activities from continuing operations

Net cash provided by operating activities from discontinued operations

Net cash provided by operating activities

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Proceeds from disposals of property, plant and equipment

Purchases of short-term investments

Sales and maturities of short-term investments

Purchases of investments

Sales and maturities of investments

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

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Repayments of senior notes and other long-term debt

Borrowings under credit facilities

Repayments under credit facilities

Proceeds from short-term borrowings

Borrowings (repayments) under commercial paper programs, net

Payment of costs related to debt financing

Payment of acquisition-related contingent consideration

Purchase of treasury stock

Proceeds from exercise of stock options

Payment of deferred purchase price related to acquisitions

Distributions to and purchases of noncontrolling interests

Purchase of treasury stock

Dividend payments

Transfers to discontinued operations

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

Net cash used in financing activities from discontinued operations

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net 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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Note 1— Basis of Presentation and Principles of Consolidation

The Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020, and the related Condensed Consolidated Statements of Cash Flow for the nine months ended September 30, 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 March 31, 2022 and December 31, 2021, 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, 2022 and 2021, 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, 2021 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, 2022 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, 2021 (the “2021 Annual Report”).

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.

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 September 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 nine months ended September 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.

New Reportable Business Segments

Effective January 1, 2022, the Company aligned its businesses into three newly formed reportable business segments:

(i) Harsh Environment Solutions, (ii) Communications Solutions and (iii) Interconnect and Sensor Systems .

This new alignment replaces our historic reportable business segments.

The Company has begun reporting under its new reportable segments in connection with this Quarterly Report on Form 10-Q, which also includes the recasting of relevant prior year period segment information in order to enable year-over-year segment comparisons.

Refer to Note 13 herein for further details related to the Company’s change in its reportable business segments effective January 1, 2022.

We have determined that the Company’s reporting units are the three new reportable business segments.

As a result of the new reporting segment structure, the Company utilized the relative fair value allocation approach to reallocate the historical goodwill associated with the previous Interconnect Products and Assemblies segment, while the historical goodwill associated with the previous Cable Products and Solutions segment has been allocated in full to the newly formed Communications Solutions segment.

The Company will continue to perform its evaluation for the impairment of goodwill associated with its reporting units on an annual basis 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.

Refer to Note 12 herein for further details related to the carrying amount of goodwill by segment.

Note 2—New Accounting Pronouncements

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 evaluated ASU 2019-12 and adopted the standard on January 1, 2021.

The adoption of ASU 2019-12 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 this SEC final rule, which we adopted on January 1, 2021.

To date, the final rule 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

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.

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

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 Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying accounting principles generally accepted in the United States (“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.

Treasury-backed repurchase transactions.

In March 2020, in response to this transition, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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 accounting principles generally accepted in the United States (“U.S.

GAAP” or “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.

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

In January 2021, the FASB also issued ASU No.

2021-01 Reference Rate Reform (Topic 848):

Scope , 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 September 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.

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, became 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.

Effective November 30, 2021, the Revolving Credit Facility (as defined in Note 4 herein) no longer references LIBOR for interest rate determinations.

Due to our current limited reliance on borrowings tied to LIBOR, the Company currently believes that the LIBOR transition will not have a material impact on its financial condition, results of operations or cash flows.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which amends ASC 805 by requiring acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination.

Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date.

The intent of ASU 2021-08 is to address diversity in practice and improve comparability for both the recognition and measurement of acquired revenue contracts by providing (i) guidance on how to determine whether a contract liability is recognized by the acquirer in a business combination and (ii) specific guidance on how to recognize and measure contract assets and contract liabilities from revenue contracts in a business combination.

ASU 2021-08 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022, and the amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted.

The Company is currently evaluating ASU 2021-08 and its potential impact on our consolidated financial statements.

Note 3—Inventories

Inventories consist of:

September 30,

Raw materials and supplies

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

September 30, 2021

March 31, 2022

December 31, 2021

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Euro Commercial Paper Program

3.125 % Senior Notes due September 2021

4.00 % Senior Notes due February 2022

3.20 % Senior Notes due April 2024

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Revolving Credit Facility

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.

On November 30, 2021, the Company amended and restated its $ 2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).

As a result, the Revolving Credit Facility no longer references LIBOR for interest rate determinations.

The Revolving Credit Facility maintains the lenders’ aggregate commitments under the facility at $ 2,500.0 .

The Revolving Credit Facility matures in November 2026 and gives the Company the ability to borrow, in various currencies, at a spread that varies, based on the Company’s debt rating, over certain currency-specific benchmark rates, which benchmark rates in the case of U.S.

dollar borrowings are either the base rate or the adjusted term SOFR.

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

At September 30, 2021 and December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

At March 31, 2022 and December 31, 2021, 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 September 30, 2021, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

On March 31, 2022, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Term Loan Credit Facility

On April 19, 2022, the Company entered into a two-year , $ 750.0 unsecured delayed draw term loan credit agreement (the “2022 Term Loan”), which is scheduled to mature on April 19, 2024 .

The 2022 Term Loan was undrawn at closing and may be drawn on up to five occasions over the life of the facility.

The 2022 Term Loan may be repaid at any time without premium or penalty, and, once prepaid, cannot be reborrowed.

The proceeds from the 2022 Term Loan are expected to be used for general corporate purposes.

Interest rates under the 2022 Term Loan are based on a spread over either the base rate or the adjusted term SOFR, which spread varies based on the Company’s debt rating.

The carrying value of the 2022 Term Loan approximates its fair value due primarily to its market interest rates and is classified as Level 2 in the fair value hierarchy (Note 5).

The 2022 Term Loan requires payment of certain commitment fees and requires that the Company satisfy certain financial covenants, which financial covenants are the same as those under the Revolving Credit Facility.

As of April 26, 2022, there were no outstanding borrowings under the 2022 Term Loan.

Commercial Paper Programs

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”).

The Company has a commercial paper program (the “U.S.

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 maturities of the USCP Notes vary, but may not exceed 397 days from the date of issue.

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

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 acquisition of MTS.

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

In addition, in the third quarter of 2021, the Company used borrowings under the U.S.

Commercial Paper Program to redeem its unsecured 3.125 % Senior Notes due September 15, 2021, of which $ 227.7 aggregate principal amount was outstanding.

As of September 30, 2021, the amount of USCP Notes outstanding was $ 924.3 , with a weighted average interest rate of 0.19 % .

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 Company utilizes borrowings under the U.S.

Commercial Paper Program for general corporate purposes, which recently has included fully or partially funding acquisitions, as well as to repay certain outstanding senior notes .

As of March 31, 2022, the amount of USCP Notes outstanding was $ 933.5 , with a weighted average interest rate of 0.95 % .

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have 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, the “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.

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

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

As of March 31, 2022, 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.

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.

In conjunction with the Revolving Credit Facility, as of March 31, 2022, the authorization from the Company’s Board of Directors (the “Board”) 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.

The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, 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.

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).

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

The carrying value of Commercial Paper approximates its fair value, due primarily to its market interest rates and is classified as Level 2 in the fair value hierarchy (Note 5).

On September 14, 2021, the Company issued $ 750.0 principal amount of unsecured 2.200 % Senior Notes due September 15, 2031 at 99.634 % of face value (the “2031 Senior Notes”).

The 2031 Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.

The 2031 Senior Notes are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness.

Interest on the 2031 Senior Notes is payable semiannually on March 15 and September 15 of each year, commencing on March 15, 2022.

Prior to June 15, 2031, the Company may, at its option, redeem some or all of the 2031 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.

Prior to June 15, 2031, the Company may, at its option, redeem some or all of the 2031 Senior Notes at any time by paying the redemption price (which includes a make-whole premium), plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If redeemed on or after June 15, 2031, the Company may, at its option, redeem some or all of the 2031 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.

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Commercial Paper Program.

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

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

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

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

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

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

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

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

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

Interest on each series of U.S.

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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.

The fair value of each series of U.S.

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 amount outstanding associated with

the Company’s 4.00 % Senior Notes (the “2022 Senior Notes”) due in February 2022 is 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, 2021.

On October 1, 2021, the Company issued a notice of full redemption to the holders of the 2022 Senior Notes, which will be redeemed at par value on November 1, 2021.

Senior Notes contain certain financial and non-financial covenants.

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

Senior Notes.

Euro Senior Notes

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

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.

The Euro Issuer has two outstanding senior notes in Europe (collectively, the “Euro Notes” and, together with the U.S.

Senior Notes, the “Senior Notes”), each of which were issued with a principal amount of € 500.0 .

The 0.750 % Euro Senior Notes, which were issued in May 2020 at 99.563 % of face value, mature on May 4, 2026 , while the 2.000 % Euro Senior Notes , which were issued in October 2018 at 99.498 % of face value, mature on October 8, 2028 .

The Company’s Euro Notes are unsecured and rank equally in right of payment with the Company’s and 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, 2021, the Company was in compliance with the financial covenants under its Euro Notes .

The Company may, at its option, redeem some or all of either 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 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 Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.

On March 31, 2022, the Company was in compliance with all requirements under its Senior Notes .

Note 5—Fair Value Measurements

Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

between market participants.

These requirements establish market or observable inputs as the preferred source of values.

9 unchanged sentences

Level 3 Significant inputs to the valuation model are unobservable.

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.

The carrying amounts of these instruments, the majority of which are in non-U.S.

bank accounts, approximate their fair value.

Each of these assets and liabilities is discussed below, with the exception of debt instruments, pension plan assets, and the fair value of assets acquired and liabilities assumed as part of acquisition accounting, which are covered in Note 4, Note 10 and Note 11, respectively, herein, in addition to the Notes to Consolidated Financial Statements in the 2021 Annual Report.

Substantially all of the Company’s short- and long-term investments consist of certificates of deposit, which are considered as Level 2 in the fair value hierarchy.

Long-term investments, the vast majority of which have original maturities of two years , are recorded in Other long-term assets in the accompanying Condensed Consolidated Balance Sheets.

The carrying amounts of these short-term and long-term instruments, the vast majority of which are in non-U.S.

bank accounts, approximate their respective fair values.

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.

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

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

The Company reviews the fair value hierarchy classifications on a quarterly basis and determines the appropriate classification of such assets and liabilities subject to the fair value hierarchy standards based on, among other things, the ability to observe valuation inputs.

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of March 31, 2022 and December 31, 2021 are as follows:

Fair Value Measurements

3 unchanged sentences

Assets (Level 1)

September 30, 2021:

March 31, 2022:

Short-term investments

Long-term investments

Forward contracts

Redeemable noncontrolling interest

December 31, 2021:

1 unchanged sentence

Forward contracts

As of September 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 within one year , (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 nine months ended September 30, 2021 and 2020, were not material.

Redeemable noncontrolling interest

The Company utilizes foreign exchange forward contracts, hedging instruments accounted for as cash flow hedges, in the management of foreign currency exposures.

In addition, the Company also enters into foreign exchange forward

contracts, accounted for as net investment hedges, to hedge our exposure to variability in the U.S.

dollar equivalent of the net investments in certain foreign subsidiaries.

As of March 31, 2022, the fair value of such foreign exchange forward contracts in the table above consisted of (i) two outstanding foreign exchange forward contracts accounted for as cash flow hedges, each expiring within one year , (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, 2022 and 2021, 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 September 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.

Certain acquisitions may result in noncontrolling interest holders who, in certain cases, are entitled to a put option, giving them the ability to put some or all of their redeemable interest in the shares of the acquiree to the Company.

Specifically, if exercised by the noncontrolling interest holder, Amphenol would be required to purchase some or all of the option holder’s redeemable interest, at a redemption price during specified time period(s) stipulated in the respective acquisition agreement.

The redeemable noncontrolling interest as of March 31, 2022 and December 31, 2021 is related to the acquisition of Halo Technology Limited (“Halo”), which closed in December 2021, and based on the terms of the agreement, will remain in temporary equity until the put option is either exercised and the entire redeemable noncontrolling interest is fully settled or the put option expires.

The redemption value of the redeemable noncontrolling interest is generally calculated using Level 3 unobservable inputs based on a multiple of earnings, which, for the redeemable NCI currently outstanding, approximates fair value.

As such, the redemption value is classified as Level 3 in the fair value hierarchy, and is recorded as Redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three months ended March 31, 2022, as well as Note 1 of the Notes to Consolidated Financial Statements in the 2021 Annual Report for further discussion of the Company’s redeemable noncontrolling interest.

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.

Note 6—Income Taxes

Three Months Ended

Nine Months Ended

September 30,

Provision for income taxes

Effective tax rate

For the three months ended September 30, 2021 and 2020, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 12.3 and $ 10.7 , respectively, and decreasing our effective tax rate by 230 basis points and 240 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, 2021 and 2020, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 34.3 and $ 28.1 , respectively, and decreasing our effective tax rate by 240 basis points and 260 basis points, respectively.

For the nine months ended September 30, 2021, the effective tax rate includes a discrete tax benefit of $ 14.9 related to the settlement of uncertain tax positions in certain non-U.S.

jurisdictions, which had the effect of decreasing the effective tax rate by 100 basis points, as well as the impact of acquisition-related expenses, which had the effect of increasing the effective tax rate by approximately 20 basis points.

For the nine months ended September 30, 2020, the effective tax rate also included 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 190 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 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 September 30, 2021 and December 31, 2020.

For the three months ended March 31, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 3.8 and $ 2.6 , respectively, and decreasing our effective tax rate by 70 basis points and 60 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

The United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”) in December 2017.

As a result, in 2017, the Company recorded 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 fifth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2022, 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 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, 2021, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 157.0 .

As of March 31, 2022, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 183.1 .

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.

Based on information currently available, management anticipates that over the next twelve-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $ 13.1 .

Note 7—Shareholders’ Equity and Noncontrolling Interests

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

Note 7—Stockholders’ Equity and Noncontrolling Interests

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

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 September 30, 2021 is as follows:

Amphenol Corporation Shareholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of June 30, 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 September 30, 2021

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

Amphenol Corporation Shareholders

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the three months ended March 31, 2022 is as follows:

Amphenol Corporation Stockholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of December 31, 2021

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

5 unchanged sentences

Stock-based compensation expense

Balance as of September 30, 2021

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 ($ 0.125 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:

Amphenol Corporation Shareholders

Balance as of March 31, 2022

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

Amphenol Corporation Stockholders

Treasury Stock

Comprehensive

Noncontrolling

(in millions)

Paid-In Capital

Balance as of December 31, 2020

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

Other comprehensive income (loss)

7 unchanged sentences

Stock-based compensation expense

Balance as of September 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.

Balance as of March 31, 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 first nine months of 2021, the Company repurchased 3.1 million shares of its Common Stock for $ 203.8 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 nine months of 2021, 0.3 million shares, or $ 19.8 , were retained in Treasury stock at the time of repurchase;

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

During the three and nine months ended September 30, 2020, the Company repurchased 3.7 million and 9.1 million shares of its Common Stock for $ 201.9 and $ 459.2 , respectively, under the 2018 Stock Repurchase Program.

Of the total repurchases made during the first nine months of 2020, 2.0 million shares, or $ 110.3 , were retained in Treasury stock at the time of repurchase;

On April 27, 2021, the Board authorized a stock repurchase program under which the Company may purchase up to $ 2,000.0 of the Company’s Class A Common Stock (“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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

During the three months ended March 31, 2022, the Company repurchased 2.6 million shares of its Common Stock for $ 204.0 under the 2021 Stock Repurchase Program.

Of the total repurchases made during the first three months of 2022, 0.3 million shares, or $ 21.0 , were retained in Treasury stock at the time of repurchase.

The remaining 2.3 million shares, or $ 183.0 , have been retired by the Company.

From April 1, 2022 to April 26, 2022, the Company repurchased 0.7 million additional shares of its Common Stock for $ 51.0 under the 2021 Stock Repurchase Program, and, as of April 27, 2022, the Company has remaining authorization to purchase up to $ 1,287.1 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 options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Company’s Common Stock.

On April 24, 2018, the Board 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 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 made during the first three months of 2021, 0.3 million shares, or $ 19.8 , were retained in Treasury stock at the time of repurchase.

The remaining 2.1 million shares, or $ 133.0 , 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.

During the three and nine months ended September 30, 2021, the Company repurchased 2.3 million and 4.1 million shares of its Common Stock for $ 170.9 and $ 287.2 , respectively, under the 2021 Stock Repurchase Program.

All of the shares repurchased under the 2021 Stock Repurchase Program during the nine months ended September 30, 2021 have been or will be retired by the Company.

From October 1, 2021 to October 26, 2021, the Company repurchased 0.6 million additional shares of its Common Stock for $ 46.1 under the 2021 Stock Repurchase Program, and has remaining authorization to purchase up to $ 1,666.6 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 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, 2021 and 2020:

Three Months Ended September 30,

Nine Months Ended September 30,

In April of 2021, the Company repurchased the remaining value of shares of its Common Stock authorized under the 2018 Stock Repurchase Program and, therefore, the 2018 Stock Repurchase Program was terminated.

Contingent upon declaration by the Board, the Company 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, 2022 and 2021:

Three Months Ended March 31,

Dividends declared

Dividends paid (including those declared in the prior year)

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 then on October 26, 2021, approved a further increase to its quarterly dividend rate from $ 0.145 per share to $ 0.20 per share effective with dividends declared in the fourth quarter of 2021, contingent upon declaration by the Company’s Board of Directors.

On October 26, 2021, the Board approved an increase to its quarterly dividend rate from $ 0.145 per share to $ 0.20 per share, effective with dividends declared in the fourth quarter of 2021, contingent upon declaration by the Board.

Note 8—Stock-Based Compensation

For the three months ended September 30, 2021 and 2020, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 21.2 and $ 19.0 , respectively.

In addition, for the three months ended September 30, 2021 and 2020, the Company recognized aggregate income tax benefits of $ 14.0 and $ 12.7 , 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 September 30, 2021 and 2020 include excess tax benefits of $ 12.3 and $ 10.7 , respectively, from option exercises.

For the nine months ended September 30, 2021 and 2020, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 60.2 and $ 51.0 , respectively.

In addition, for the nine months ended September 30, 2021 and 2020, the Company recognized aggregate income tax benefits of $ 40.4 and $ 33.8 , 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 nine months ended September 30, 2021 and 2020 include excess tax benefits of $ 34.3 and $ 28.1 , 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.

For the three months ended March 31, 2022 and 2021, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 19.7 and $ 19.1 , respectively.

In addition, for the three months ended March 31, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 5.8 and $ 4.5 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the three months ended March 31, 2022 and 2021 include excess tax benefits of $ 3.8 and $ 2.6 , respectively, from option exercises.

since the provision for income taxes will be impacted by the timing and intrinsic value of future stock-based compensation award exercises.

Stock-based compensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates.

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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 September 30, 2021, there were 43,038,110 shares of Common Stock available for the granting of additional stock options under the Amended 2017 Employee

In March 2021, the Board 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 stockholders and became effective on May 19, 2021.

As of March 31, 2022, there were 42,881,160 shares of Common Stock available for the granting of additional stock options under the 2017 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”).

1 unchanged sentence

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 nine months ended September 30, 2021 was as follows:

Stock option activity for the three months ended March 31, 2022 was as follows:

Exercise Price

6 unchanged sentences

Options outstanding at March 31, 2022

Options granted

Options exercised

( 2,882,332 )

Options forfeited

Options outstanding at June 30, 2021

Options granted

Options exercised

( 2,494,842 )

Options forfeited

Options outstanding at September 30, 2021

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

Exercisable options at September 30, 2021

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

Vested and non-vested options expected to vest at March 31, 2022

Exercisable options at March 31, 2022

A summary of the status of the Company’s non-vested options as of March 31, 2022 and changes during the three months then ended is as follows:

Fair Value at

4 unchanged sentences

Non-vested options at March 31, 2022

Options granted

Options vested

( 12,345,300 )

Options forfeited

Non-vested options at June 30, 2021

Options granted

Options vested

Options forfeited

Non-vested options at September 30, 2021

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

During the three months ended March 31, 2022 and 2021, 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, 2021, the total compensation cost related to non-vested options not yet recognized was approximately $ 216.1 with a weighted average expected amortization period of 3.54 years.

As of March 31, 2022, the total compensation cost related to non-vested options not yet recognized was approximately $ 187.8 with a weighted average expected amortization period of 3.26 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.

7 unchanged sentences

The expected annual dividend per share is based on the Company’s dividend rate.

Restricted Shares

Restricted Stock

In 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “2012 Directors Restricted Stock Plan”).

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

As of September 30, 2021, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 141,359 .

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

The 2012 Directors Restricted Stock Plan is administered by the Board.

As of March 31, 2022, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 141,359 .

Restricted shares granted under the 2012 Directors Restricted Stock Plan vest on the earlier of the first anniversary of the date of grant or the day immediately prior to the date of the next regular annual meeting of the Company’s stockholders following such date of grant.

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, 2021 was as follows:

Restricted share activity for the three months ended March 31, 2022 was as follows:

Weighted Average

4 unchanged sentences

Restricted shares outstanding at March 31, 2022

Shares vested and issued

Restricted shares granted

Restricted shares outstanding at June 30, 2021

Restricted shares granted

Restricted shares outstanding at September 30, 2021

As of September 30, 2021, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.9 (with a weighted average expected amortization period of 0.62 years).

As of March 31, 2022, 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 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 nine months ended September 30, 2021 and 2020 is as follows (note - per share amounts may not add due to rounding) :

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, including dilutive common shares, the dilutive effect of which relates to stock options.

The following is a reconciliation of the basic weighted

average common shares outstanding to diluted weighted average common shares outstanding, which were used to calculate the earnings per share (basic and diluted) for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

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

Net income attributable to Amphenol Corporation shareholders:

Net income from continuing operations attributable to Amphenol Corporation

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($ 1.5 ) and ($ 1.8 ) for 2021, respectively

Net income attributable to Amphenol Corporation

Net income attributable to Amphenol Corporation stockholders

Weighted average common shares outstanding — Basic

1 unchanged sentence

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 7.4 million and 9.2 million for the three months ended September 30, 2021 and 2020, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 3.8 million and 12.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Net income attributable to Amphenol Corporation per common share — Basic

Net income attributable to Amphenol Corporation per common share — Diluted

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 4.1 million and 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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employees are not covered by the U.S.

Plans and are covered by defined contribution plans.

Plans and are instead covered by various 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, 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 months ended March 31, 2022 and 2021:

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

6 unchanged sentences

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

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

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

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

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

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

During the three months ended March 31, 2022 and 2021, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 5.3 and $ 4.4 , respectively.

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2021 Acquisitions

During the first nine 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.

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, 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.

During the year ended December 31, 2021, the Company completed seven acquisitions for $ 2,225.4 , net of cash acquired, while also completing the divestiture of the Divested MTS business, as discussed below and in more detail in the 2021 Annual Report.

One of the acquisitions was included in the Harsh Environment Solutions segment, three acquisitions were included in the Communications Solutions segment and three acquisitions were included in the Interconnect and Sensor Systems segment.

The Company completed the acquisition accounting, including the analyses of the fair value of the assets acquired and liabilities assumed, for four of the acquisitions, for each of which the final assessment of values did not differ materially from the preliminary assessment.

For the three remaining 2021 acquisitions, the Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed, and anticipates that the final assessments of values for these acquisitions will not differ materially from the preliminary assessments.

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

Pro forma financial information, as well as further details regarding the purchase price allocation related to these acquisitions, was not presented as these acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.

Acquisition of MTS Systems Corporation and Sale of the Divested MTS Business

On April 7, 2021 , the Company completed its acquisition of MTS Systems Corporation (Nasdaq:

MTSC) (“MTS”) for a total enterprise value of approximately $ 1,700 , net of cash acquired and including the repayment of all outstanding debt and certain liabilities.

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 is in the process of completing 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 part of acquisition accounting, the MTS acquisition resulted in the recognition of $ 720.4 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.

Commercial Paper Program and cash on hand.

At closing, the Company paid approximately $ 1,300 , net of cash acquired, for 100 % of the common stock of MTS, including certain liabilities settled at closing, which was reflected within net cash used in investing activities from continuing operations in the Consolidated Statements of Cash Flow for the year ended December 31, 2021.

In addition, the Company also assumed MTS’s then-outstanding $ 350.0 principal amount of senior notes due August 15, 2027, which were 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.

Prior to the closing of the MTS acquisition, the Company entered into a definitive agreement to sell MTS (including the MTS T&S business, but excluding the MTS Sensors business) to Illinois Tool Works Inc.

Throughout this Quarterly Report on Form 10-Q, we refer to MTS (including the MTS T&S business, but excluding the MTS Sensors business) as the “Divested MTS business”.

On December 1, 2021, the Company completed the sale of the Divested MTS business to ITW for approximately $ 750 , net of cash divested and excluding related transaction fees and expenses.

After giving effect to the sale of the Divested MTS business as well as the repayment of the aforementioned MTS senior notes as part of the MTS acquisition, the Company paid approximately $ 950 , net of cash acquired and excluding related transaction fees and expenses, for the retained MTS Sensors business.

The Divested MTS business met the “held for sale” criteria at its acquisition date and accordingly, the Company did not assign the Divested MTS business to any of its reportable business segments.

The Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations in the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flow, respectively, as of the MTS acquisition date of April 7, 2021 through December 1, 2021, the date of the sale of the Divested MTS business.

The assets acquired and liabilities assumed resulting from the purchase price allocation for the Divested MTS business were measured and recorded at fair value less costs to sell as of the date of the MTS acquisition and recorded as current assets held for sale and current liabilities held for sale, as separate single line items in the Company’s balance sheet from the MTS acquisition date through December 1, 2021, the date of the sale of the Divested MTS business.

In addition, the Company assumed a $ 28.7 contingent consideration liability in connection with the MTS acquisition, which was recognized at fair value as part of acquisition accounting.

During the third quarter of 2021, the Company made a capital contribution to the Divested MTS business, which in turn used the funding to settle the contingent consideration liability.

Upon the sale of the Divested MTS business in December 2021, the Company completed the acquisition accounting associated with the Divested MTS business, which was performed separately from the purchase price allocation of the retained MTS Sensors business.

The proceeds from the sale of the Divested MTS business were included in Net cash provided by investing activities from discontinued operations in the Consolidated Statements of Cash Flow for the year ended December 31, 2021.

The sale of the Divested MTS business did not result in any significant gain or loss recorded to discontinued operations in the Consolidated Statements of Income for the year ended December 31, 2021 .

The retained MTS Sensors business is reported within our Interconnect and Sensor Systems segment.

The Company is in the process of completing its analyses of the purchase price allocation of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, as part of the acquisition accounting associated with the MTS Sensors business.

The MTS acquisition resulted in the recognition of $ 737.8 of goodwill, $ 54.0 of indefinite-lived tradename intangible assets and $ 178.2 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 $ 122.9 , $ 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 September 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

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 , net of cash acquired.

The Company has completed the acquisition accounting, including the analyses of the fair value of the assets acquired and liabilities assumed, for both 2020 acquisitions.

The final assessments of values did not differ materially from the preliminary assessments.

As part of acquisition accounting, the Company also recorded $ 47.0 of deferred tax liabilities associated with certain basis differences, the majority of which the Company recognized for tax purposes and paid in the fourth quarter of 2021 upon the sale of the Divested MTS business.

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 the MTS Sensors business, along with other intangible assets acquired that do not qualify for separate recognition.

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

While the Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed, we do not anticipate that the final assessment of values for the MTS acquisition will differ materially from the current assessment.

Acquisition of Halo Technology Limited

On December 1, 2021 , the Company completed the acquisition of approximately 97 % of the common stock of Halo Technology Limited (“Halo”) for a purchase price of approximately $ 694 , net of cash acquired.

The sellers retained a less than 3 % noncontrolling interest in Halo, which includes redeemable features that are outside the control of the Company and therefore, has been classified as temporary equity on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, as discussed in more detail in Note 5 herein.

The acquisition was funded with cash on hand.

The Company is in the process of analyzing the allocation of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, as part of acquisition accounting.

As of March 31, 2022, the Halo acquisition resulted in the recognition of $ 530.7 of goodwill, $ 28.0 of indefinite-lived tradename intangible assets and $ 156.0 of definite-lived intangible assets.

The definite-lived intangible assets are comprised of customer relationships, proprietary technology, and backlog of $ 31.0 , $ 116.0 and $ 9.0 , respectively, and are amortized based upon the underlying pattern of economic benefit with weighted average useful lives of 10 years , 15 years and one month , respectively.

Other than these intangible assets, the remainder of the purchase price has been allocated to other identifiable assets acquired and liabilities and noncontrolling interests (including redeemable noncontrolling interests) assumed.

As part of acquisition accounting, the excess purchase price over the fair value of the underlying assets acquired (net of liabilities and noncontrolling interests 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 Halo, along with other intangible assets acquired that do not qualify for separate recognition.

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

Since the current purchase price allocation is based on a preliminary assessment made by management as of March 31, 2022, the acquisition accounting for Halo is subject to final adjustment and it is possible that the final assessment of values may differ from our preliminary assessment.

The operating results for Halo have been included in the Condensed Consolidated Statements of Income since the acquisition date.

The acquisition of Halo, which is reported within our Communications Solutions segment, was not material to the Company’s financial results.

Acquisition-related Expenses

During the nine months ended September 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 , excluding any outstanding net debt assumed by Amphenol related to the MTS T&S business and subject to post-closing adjustment.

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 September 30, 2021.

In addition, the Company assumed a $ 28.7 contingent consideration liability from the MTS acquisition, which was recognized at fair value as part of acquisition accounting and was recorded within Current liabilities held for sale in the Condensed Consolidated Balance Sheets upon acquisition.

During the third quarter of 2021, the Company made a capital contribution to its MTS T&S business (discontinued operations), which in turn used the funding to settle the contingent consideration.

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 September 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.

During 2021, the Company incurred $ 70.4 ($ 57.3 after-tax) of acquisition-related expenses, comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the MTS acquisition in the second quarter of 2021, along with external transaction costs and certain non-cash purchase accounting costs related to the Halo acquisition in the fourth quarter of 2021.

To the extent such expenses are incurred in the periods presented, such acquisition-related expenses are presented separately in the Condensed Consolidated Statements of Income.

Note 12—Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment were as follows:

Communications

Goodwill at December 31, 2021

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Foreign currency translation

Goodwill at September 30, 2021

The increase in goodwill during the first nine 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.

The Company performs its evaluation for the impairment of goodwill for the Company’s reporting units on an annual basis 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 or more frequently based on changes in our organization.

We continue to define our reporting units as the two reportable

business segments “Interconnect Products and Assemblies” and “Cable Products and Solutions”.

In the third quarter of 2021, as part of our annual evaluations, the Company utilized the option to first assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment assessment.

As part of this assessment, the Company reviews qualitative factors which include, but are not limited to, economic, market and industry conditions, as well as the financial performance of each reporting unit.

In accordance with applicable guidance, an entity is not required to calculate the fair value of a reporting unit if, after assessing these qualitative factors, the Company determines that it is more likely than not that the fair value of each of its reporting units is greater than its respective carrying amount.

As of July 1, 2021, the Company determined that it was more likely than not that the fair value of its reporting units exceeded their respective carrying amounts and therefore, a quantitative assessment was not required.

As a result, no goodwill impairment resulted from the assessment as of July 1, 2021.

The Company has no t recognized any goodwill impairment in 2021, 2020 or 2019 in connection with our annual impairment assessments.

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

September 30, 2021

Goodwill at March 31, 2022

Other than goodwill noted above, the Company’s intangible assets as of March 31, 2022 and December 31, 2021 were as follows:

March 31, 2022

December 31, 2021

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Trade names (indefinite-lived)

The increase in the gross carrying amount of intangible assets in the first nine 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 September 30, 2021 and 2020 was approximately $ 16.4 and $ 12.3 , respectively.

Amortization expense for the nine months ended September 30, 2021 and 2020 was approximately $ 61.3 and $ 37.6 , respectively.

Amortization expense for the nine months ended September 30, 2021 includes $ 16.2 related to the amortization of acquired backlog resulting from the MTS acquisition.

As of September 30, 2021, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2021 is approximately $ 15.6 and for each of the next five fiscal years is approximately $ 57.3 in 2022, $ 54.5 in 2023, $ 48.8 in 2024, $ 39.4 in 2025 and $ 37.7 in 2026.

The Company reviews its identifiable intangible assets subject to amortization whenever events or changes in circumstances indicate the intangible asset’s 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 2021, 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 impairment associated with our intangible assets in 2021, 2020 or 2019 as a result of such reviews.

Amortization expense for the three months ended March 31, 2022 and 2021 was approximately $ 18.0 and $ 12.3 , respectively.

As of March 31, 2022, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2022 is approximately $ 49.9 and for each of the next five fiscal years is approximately $ 64.6 in 2023, $ 59.0 in 2024, $ 49.7 in 2025, $ 47.9 in 2026 and $ 41.2 in 2027.

Note 13—Reportable Business Segments

The Company has two reportable business segments:

(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, 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.

New Reportable Business Segments

Effective January 1, 2022, the Company aligned its businesses into three newly formed reportable business segments:

(i) Harsh Environment Solutions , (ii) Communications Solutions and (iii) Interconnect and Sensor Systems .

This new alignment replaces our historic reportable business segments.

All businesses previously reported in the Interconnect Products and Assemblies segment have now been aligned with one of the three newly formed segments.

All businesses previously reported in the Cable Products and Solutions segment have now been aligned with our newly formed Communications Solutions segment.

This new segment structure reflects (i) the manner in which the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, regularly assesses information for decision-making purposes, including the allocation of resources, and (ii) how the Company operates its businesses, assesses performance, and communicates results and strategy, among other items, to the Company’s Board and its stockholders.

In conjunction with the new alignment of our business, the Company appointed three new segment managers (“Segment Managers”) to lead their respective reportable business segments, each reporting directly to the

Chief Executive Officer.

The Company organizes its reportable business segments based on the manner in which management evaluates the performance of the Company, combined with the nature of the individual business activities and the product-based solutions offered.

The following are the Company’s three new reportable business segments:

● Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products for use in the industrial, military, commercial aerospace, automotive, mobile networks and information technology and data communications end markets.

● Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas, for use in the information technology and data communications, mobile devices, industrial, mobile networks, broadband communications, automotive, commercial aerospace and military end markets.

● Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems used in the automotive, industrial, information technology and data communications, mobile networks, military and commercial aerospace end markets.

The Company has recast all relevant prior year period segment information in order to enable year-over-year segment comparisons in this Quarterly Report on Form 10-Q.

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 2021 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 and nine months ended September 30, 2021 and 2020 are as follows:

Interconnect Products

Cable Products

and Assemblies

and Solutions

Corporate / Other (1)

Total Consolidated

Three Months Ended September 30:

Segment operating income

Nine Months Ended September 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 from continuing operations before income taxes for the three and nine months ended September 30, 2021 and 2020 is summarized as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company evaluates the performance of the segments and allocates resources to each of them based on, among other things, profit or loss from operations before certain corporate and other related items such as interest, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses.

The Company also incurs general corporate expenses and costs which are not allocated to the reportable business segments, but have been included in “Corporate / Other” in the following tables for reconciliation purposes.

Assets are reviewed by the CODM on a consolidated basis and therefore are not presented by reportable business segment.

Net sales by segment for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended March 31:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Consolidated Net sales

Segment operating income and the reconciliation of segment operating income to consolidated income before income taxes for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Segment operating income:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Total segment operating income

Corporate / Other:

Stock-based compensation expense

Acquisition-related expenses

Other operating expenses

1 unchanged sentence

Other income (expense), net

Income from continuing operations before income taxes

Income before income taxes

Depreciation and amortization expense by segment for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Corporate / Other

Note 14—Revenue Recognition

1 unchanged sentence

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, 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 September 30, 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 September 30, 2021 and December 31, 2020.

For the three months ended March 31, 2022 and 2021, 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 Condensed Consolidated Balance Sheets were not material as of March 31, 2022 and December 31, 2021.

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, 2022 and December 31, 2021.

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.

1 unchanged sentence

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, 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 September 30, 2021 and December 31, 2020, and related warranty expense for the three and nine months ended September 30, 2021 and 2020, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

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, 2022.

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, 2022 and December 31, 2021, and related warranty expense for the three months ended March 31, 2022 and 2021, 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, 2021 and 2020:

Interconnect Products

Cable Products

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, 2022 and 2021:

Communications

Interconnect and

Total Reportable

and Assemblies

and Solutions

Sensor Systems

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:

5 unchanged sentences

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

It is impracticable to disclose net sales by product or group of products.

Note 15—Commitments and Contingencies

10 unchanged sentences

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”).

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”).

2 unchanged sentences

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.

All the costs incurred relating to these lawsuits have been 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 have been 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.

6 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements