What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 199 added, 141 removed, 626 unchanged (35% of the section changed)

3 unchanged sentences

(dollars in millions)

September 30,

Current Assets:

35 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

9 unchanged sentences

Net income from continuing operations attributable to Amphenol Corporation

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($ 0.3 ) for 2021

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

15 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income from continuing operations

3 unchanged sentences

Foreign currency translation adjustments

Unrealized gain on hedging activities

Unrealized gain (loss) on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 1.1 ) and ($ 3.2 ) for 2022, and ($ 1.6 ) and ($ 4.9 ) for 2021, respectively

7 unchanged sentences

(dollars in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash from operating activities:

7 unchanged sentences

Net cash provided by operating activities from continuing operations

Net cash used in operating activities from discontinued operations

Net cash provided by operating activities from discontinued operations

Net cash provided by operating activities

20 unchanged sentences

Dividend payments

Transfers to discontinued operations

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

Net cash provided by financing activities from discontinued operations

Net cash used in financing activities from discontinued operations

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents balance, beginning of period

9 unchanged sentences

Note 1—Basis of Presentation and Principles of Consolidation

The Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021, and the related Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2022 and 2021, include the accounts of Amphenol Corporation and its subsidiaries (“Amphenol,” the “Company,” “we,” “our” or “us”).

The Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022 and 2021, and the related Condensed Consolidated Statements of Cash Flow for the nine months ended September 30, 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.

1 unchanged sentence

In the opinion of management, the condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments considered necessary for a fair presentation of the results, in conformity with accounting principles generally accepted in the United States of America.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and nine months ended September 30, 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”).

9 unchanged sentences

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.

Refer to Note 12 herein for further details related to the carrying amount of goodwill by segment, as well as the results from the annual evaluation for impairment that was performed in the third quarter of 2022.

Discontinued Operations

21 unchanged sentences

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.

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

Effective November 30, 2021, the Company’s 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.

5 unchanged sentences

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.

While the Company continues to evaluate ASU 2021-08, the impact of ASU 2021-08 on our financial condition, results of operations or cash flows will be dependent upon the nature of any future business combinations.

In September 2022, the FASB issued ASU No.

2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”), which amends ASC 405 by requiring entities to provide more detailed disclosures regarding supplier finance programs used in connection with the purchase of goods and services.

The intent of ASU 2022-04 is to enhance transparency of these programs by requiring entities to disclose (i) the key terms of the program(s), including the payment terms and assets pledged as security or other forms of guarantees, (ii) the amount of obligations outstanding at the end of the reporting period and a description of where those obligations are presented on the balance sheet, and (iii) annual rollforward information of the activity of such obligations during the reporting period.

ASU 2022-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022, with the exception of the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Disclosure requirements under ASU 2022-04 must be applied retrospectively covering each period for which a balance sheet is presented, with the exception of the rollforward information which shall be applied prospectively.

The Company is currently evaluating ASU 2022-04 and its potential impact on our condensed consolidated financial statements.

Note 3—Inventories

Inventories consist of:

September 30,

Raw materials and supplies

2 unchanged sentences

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

June 30, 2022

September 30, 2022

December 31, 2021

20 unchanged sentences

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

At June 30, 2022 and December 31, 2021, there were no outstanding borrowings under the Revolving Credit Facility.

At September 30, 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).

1 unchanged sentence

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

On June 30, 2022, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

On September 30, 2022, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Term Loan Credit Facility

5 unchanged sentences

The carrying value of any borrowings under the 2022 Term Loan would approximate its fair value due primarily to its market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 5).

As of June 30, 2022, there were no outstanding borrowings under the 2022 Term Loan.

As of September 30, 2022, the Company had not yet drawn upon the 2022 Term Loan, and as such, there were no outstanding borrowings under the 2022 Term Loan.

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.

On June 30, 2022, the Company was in compliance with the financial covenants under the 2022 Term Loan.

On September 30, 2022, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Commercial Paper Programs

6 unchanged sentences

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 June 30, 2022, the amount of USCP Notes outstanding was $ 923.2 , with a weighted average interest rate of 1.98 % .

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, 2022, the amount of USCP Notes outstanding was $ 903.8 , with a weighted average interest rate of 3.40 % .

As of December 31, 2021, the amount of USCP Notes outstanding was $ 795.2 , with a weighted average interest rate of 0.29 %.

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.

5 unchanged sentences

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

As of June 30, 2022, there were no ECP Notes outstanding.

As of September 30, 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, as of June 30, 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.

In conjunction with the Revolving Credit Facility, as of September 30, 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.

14 unchanged sentences

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

Senior Notes at any time, subject to certain terms and conditions, which include paying 100 % of the

principal amount, plus accrued and unpaid interest, if any, to the date of redemption, and, with certain exceptions, a make-whole premium.

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.

Euro Senior Notes

7 unchanged sentences

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 June 30, 2022, the Company was in compliance with all requirements under its Senior Notes .

On September 30, 2022, the Company was in compliance with all requirements under its Senior Notes .

Note 5—Fair Value Measurements

20 unchanged sentences

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 June 30, 2022 and December 31, 2021 are as follows:

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of September 30, 2022 and December 31, 2021 are as follows:

Fair Value Measurements

3 unchanged sentences

Assets (Level 1)

June 30, 2022:

September 30, 2022:

Short-term investments

9 unchanged sentences

dollar equivalent of the net investments in certain foreign subsidiaries.

As of June 30, 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 and six months ended June 30, 2022 and 2021, were not material.

As of September 30, 2022, the fair value of such foreign exchange forward contracts in the table above consisted of (i) various outstanding foreign exchange forward contracts accounted for as net investment hedges and (ii) 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, 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.

1 unchanged sentence

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 June 30, 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 June 30, 2022 and December 31, 2021.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three and six months ended June 30, 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.

The redeemable noncontrolling interest as of September 30, 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 fully exercised or 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 noncontrolling interest currently outstanding, approximates fair value.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three and nine months ended September 30, 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.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Provision for income taxes

Effective tax rate

For the three months ended June 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 7.5 and $ 19.3 , respectively, and decreasing our effective tax rate by 120 basis points and 430 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

For the six months ended June 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 11.3 and $ 22.0 , respectively, and decreasing our effective tax rate by 100 basis points and 250 basis points, respectively.

For the three and six months ended June 30, 2021, acquisition-related expenses had the effect of increasing our effective tax rate by approximately 60 basis points and 30 basis points, respectively, and a discrete tax benefit of $ 14.9 related to the settlement of uncertain tax positions in certain non-U.S.

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

For the three months ended September 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 10.6 and $ 12.3 , respectively, and decreasing our effective tax rate by approximately 160 basis points and 230 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

For the three months ended September 30, 2022, acquisition-related expenses had the effect of increasing our effective tax rate by approximately 20 basis points.

For the nine months ended September 30, 2022 and 2021, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 21.9 and $ 34.3 , respectively, and decreasing our effective tax rate by approximately 120 basis points and 240 basis points, respectively.

For the nine months ended September 30, 2022, acquisition-related expenses had the effect of increasing our effective tax rate by approximately 10 basis points.

For the nine months ended September 30, 2021, the effective tax rate included 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 our effective tax rate by approximately 100 basis points, as well as the impact of acquisition-related expenses, which had the effect of increasing our effective tax rate by approximately 20 basis points.

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

1 unchanged sentence

The Company paid 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 current and long-term portions of the Transition Tax are recorded in Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021.

The Company operates in the U.S.

3 unchanged sentences

The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable.

As of June 30, 2022, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 182.9 .

As of September 30, 2022, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 183.5 .

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 $ 10.9 .

Inflation Reduction Act of 2022

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022 (the “IRA”), a tax and spending package that introduces several tax-related provisions, including a 15% corporate alternative minimum tax (“CAMT”) on certain large corporations and a 1% excise tax on certain corporate stock buybacks.

Companies will be required to reassess their valuation allowances for certain affected deferred tax assets in the period of enactment but will not need to remeasure deferred tax balances for the related tax accounting implications of the CAMT.

The impact of these provisions, which will become effective for Amphenol beginning on January 1, 2023, will depend on several factors, including interpretive regulatory guidance which has not yet been released.

The Company continues to review and assess the provisions of the IRA, including several other non-tax related provisions, and its potential impact on our financial condition, results of operations, liquidity and cash flows.

Note 7—Stockholders’ Equity and Noncontrolling Interests

2 unchanged sentences

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

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the three months ended June 30, 2022 is as follows:

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the three months ended September 30, 2022 is as follows:

Amphenol Corporation Stockholders

3 unchanged sentences

(in millions)

Balance as of March 31, 2022

Balance as of June 30, 2022

Other comprehensive income (loss)

5 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2022

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the six months ended June 30, 2022 is as follows:

Balance as of September 30, 2022

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the nine months ended September 30, 2022 is as follows:

Amphenol Corporation Stockholders

12 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2022

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

Balance as of September 30, 2022

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

Amphenol Corporation Stockholders

3 unchanged sentences

(in millions)

Balance as of March 31, 2021

Balance as of June 30, 2021

Other comprehensive income (loss)

5 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2021

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

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 Stockholders

13 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2021

Balance as of September 30, 2021

Stock Repurchase Programs

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 and six months ended June 30, 2022, the Company repurchased 2.7 million and 5.3 million shares of its Common Stock for $ 186.0 and $ 389.9 , respectively, under the 2021 Stock Repurchase Program.

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

During the three and nine months ended September 30, 2022, the Company repurchased 2.4 million and 7.6 million shares of its Common Stock for $ 170.1 and $ 560.1 , respectively, under the 2021 Stock Repurchase Program.

Of the total repurchases made during the first nine months of 2022, 0.6 million shares, or $ 40.8 , were retained in Treasury stock at the time of repurchase.

The remaining 7.0 million shares, or $ 519.3 , have been retired by the Company.

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

From July 1, 2022 to July 26, 2022, the Company repurchased 0.7 million additional shares of its Common Stock for $ 48.0 under the 2021 Stock Repurchase Program, and, as of July 27, 2022, the Company has remaining authorization to purchase up to $ 1,104.2 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 and six months ended June 30, 2021, the Company repurchased 0.8 million and 3.1 million shares of its Common Stock for $ 51.0 and $ 203.8 , respectively, under the 2018 Stock Repurchase Program.

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 were retired by the Company.

From October 1, 2022 to October 25, 2022, the Company repurchased 0.6 million additional shares of its Common Stock for $ 41.9 under the 2021 Stock Repurchase Program, and, as of October 26, 2022, the Company has remaining authorization to purchase up to $ 940.2 of its Common Stock under the 2021 Stock Repurchase Program.

On April 24, 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $ 2,000.0 of 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 nine months ended September 30, 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 was terminated.

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

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.

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 and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

The following table summarizes the dividends declared and paid for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

Dividends declared

Dividends paid (including those declared in the prior year)

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.

On October 26, 2021, the Board approved an increase to the Company’s quarterly dividend rate from $ 0.145 per share to $ 0.20 per share, effective with dividends declared in the fourth quarter of 2021, and on October 25, 2022, approved an additional increase to the Company’s quarterly dividend rate from $ 0.20 per share to $ 0.21 per share, effective with dividends declared in the fourth quarter of 2022, contingent upon declaration by the Board.

Note 8—Stock-Based Compensation

For the three months ended June 30, 2022 and 2021, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 20.9 and $ 20.0 , respectively.

In addition, for the three months ended June 30, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 9.6 and $ 21.8 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the three months ended June 30, 2022 and 2021 include excess tax benefits of $ 7.5 and $ 19.3 , respectively, from option exercises.

For the six months ended June 30, 2022 and 2021, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 40.6 and $ 39.0 , respectively.

In addition, for the six months ended June 30, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 15.4 and $ 26.4 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the six months ended June 30, 2022 and 2021 include excess tax benefits of $ 11.3 and $ 22.0 , respectively, from option exercises.

For the three months ended September 30, 2022 and 2021, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 23.6 and $ 21.2 , respectively.

In addition, for the three months ended September 30, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 12.9 and $ 14.0 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the three months ended September 30, 2022 and 2021 include excess tax benefits of $ 10.6 and $ 12.3 , respectively, from option exercises.

For the nine months ended September 30, 2022 and 2021, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $ 64.2 and $ 60.2 , respectively.

In addition, for the nine months ended September 30, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 28.3 and $ 40.4 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the nine months ended September 30, 2022 and 2021 include excess tax benefits of $ 21.9 and $ 34.3 , respectively, from option exercises.

The impact associated with recognizing excess tax benefits from option exercises in the provision for income taxes on our consolidated financial statements could result in significant fluctuations in our effective tax rate in the future, since the provision for income taxes will be impacted by the timing and intrinsic value of future stock-based compensation award exercises.

6 unchanged sentences

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

As of June 30, 2022, there were 36,674,120 shares of Common Stock available for the granting of additional stock options under the 2017 Option Plan.

As of September 30, 2022, there were 36,604,107 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”).

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

Options granted under the 2017 Option Plan and the

2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant and are generally exercisable over a period of ten years from the date of grant.

Stock option activity for the three and six months ended June 30, 2022 was as follows:

Options granted under the 2017 Option Plan and the 2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant and are generally exercisable over a period of ten years from the date of grant.

Stock option activity for the three and nine months ended September 30, 2022 was as follows:

Exercise Price

10 unchanged sentences

Options outstanding at June 30, 2022

Vested and non-vested options expected to vest at June 30, 2022

Exercisable options at June 30, 2022

A summary of the status of the Company’s non-vested options as of June 30, 2022 and changes during the three and six months then ended is as follows:

Options granted

Options exercised

( 2,058,799 )

Options forfeited

Options outstanding at September 30, 2022

Vested and non-vested options expected to vest at September 30, 2022

Exercisable options at September 30, 2022

A summary of the status of the Company’s non-vested options as of September 30, 2022 and changes during the three and nine months then ended is as follows:

Fair Value at

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Non-vested options at June 30, 2022

During the three and six months ended June 30, 2022 and 2021, the following activity occurred under the Company’s option plans:

Options granted

Options vested

Options forfeited

Non-vested options at September 30, 2022

During the three and nine months ended September 30, 2022 and 2021, the following activity occurred under the Company’s option plans:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total intrinsic value of stock options exercised

Total fair value of stock options vested

As of June 30, 2022, the total compensation cost related to non-vested options not yet recognized was approximately $ 263.3 with a weighted average expected amortization period of 3.72 years.

As of September 30, 2022, the total compensation cost related to non-vested options not yet recognized was approximately $ 243.7 with a weighted average expected amortization period of 3.54 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.

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

As of June 30, 2022, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 120,047 .

As of September 30, 2022, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 120,047 .

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 six months ended June 30, 2022 was as follows:

Restricted share activity for the three and nine months ended September 30, 2022 was as follows:

Weighted Average

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Restricted shares outstanding at June 30, 2022

As of June 30, 2022, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 1.3 (with a weighted average expected amortization period of 0.88 years).

Restricted shares granted

Restricted shares outstanding at September 30, 2022

As of September 30, 2022, 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).

Note 9—Earnings Per Share

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Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted average number of 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 outs tanding to diluted weighted average common shares outstanding, which were used to

calculate the earnings per share (basic and diluted) for the three and six months ended June 30, 2022 and 2021 (note that per share amounts may not add due to rounding) :

Three Months Ended June 30,

Six Months Ended June 30,

The following is a reconciliation of the basic weighted average common shares outs tanding to diluted weighted average common shares outstanding, which were used to calculate the earnings per share (basic and diluted) for the three and nine months ended September 30, 2022 and 2021 (note that per share amounts may not add due to rounding) :

Three Months Ended September 30,

Nine Months Ended September 30,

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

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Net income from continuing operations attributable to Amphenol Corporation

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes of ($ 0.3 ) for 2021

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

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Net income attributable to Amphenol Corporation — Diluted

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 11.1 million and 3.8 million for the three months ended June 30, 2022 and 2021, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 7.6 million and 2.2 million for the six months ended June 30, 2022 and 2021, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 12.5 million and 7.4 million for the three months ended September 30, 2022 and 2021, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 8.9 million and 3.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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Plans, the “Plans”).

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

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, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

Interest cost

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

During the six months ended June 30, 2022 and 2021, the Company provided matching contributions to the U.S.

During the nine months ended September 30, 2022 and 2021, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 13.8 and $ 12.1 , respectively.

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2022 Acquisitions

In the second quarter of 2022, the Company completed one acquisition for approximately $ 74.5 , net of cash acquired, which has been included in the Harsh Environment Solutions segment.

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

During the nine months ended September 30, 2022, the Company completed two acquisitions for approximately $ 288.2 , net of cash acquired.

The acquisitions were funded through a combination of borrowings under the U.S.

Commercial Paper Program and cash on hand.

One acquisition has been included in the Harsh Environment Solutions segment, and the other has been included in the Interconnect and Sensor Systems segment.

The Company has begun the process of analyzing the allocation of the fair value of the assets acquired and liabilities assumed.

Since the current purchase price allocation is based on an initial preliminary assessment made by management as of June 30, 2022, the acquisition accounting is subject to final adjustment, and it is possible that the final assessment of values may differ materially from our initial preliminary assessment.

The operating results of this acquisition has been included in the Condensed Consolidated Statements of Income since the date of acquisition.

Pro forma financial information, as well as further details regarding the purchase price allocation related to the acquisition, has not been presented, since the acquisition was not material to the Company’s financial results.

Since the current purchase price allocation for each of these acquisitions is based on a preliminary assessment made by management as of September 30, 2022, the acquisition accounting is subject to final adjustment, and it is possible that the final assessment of values may differ materially from our initial preliminary assessment.

The operating results of the 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, have not been presented, since these acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.

2021 Acquisitions

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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.

Pro forma financial information, as well as further details regarding the purchase price allocation related to these acquisitions, was not presented, since 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

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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.

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

Shortly after the closing, the Company repaid and settled the MTS senior notes 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.

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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 June 30, 2021, and ultimately, through December 1, 2021, the date of the sale of the Divested MTS business.

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

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 September 30, 2021, and ultimately, through December 1, 2021, the date of the sale of the Divested MTS business.

For the three and nine months ended September 30, 2021, the comprehensive income associated with discontinued operations was not material and was not separately presented in the Condensed Consolidated Statements of Comprehensive Income.

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.

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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 .

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.

This contingent consideration was recorded within current liabilities held for sale on the Company’s balance sheet as of the acquisition date.

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.

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

The Company has completed its analysis 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 Company completed its analysis 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 final assessment of values for the MTS acquisition did not differ materially from previous preliminary assessments.

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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 noncontrolling interest of less than 3 % 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 June 30, 2022 and December 31, 2021, as discussed in more detail in Note 5 herein.

The sellers retained a noncontrolling interest of less than 3 % 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 September 30, 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 June 30, 2022, the Halo acquisition resulted in the recognition of $ 520.8 of goodwill, $ 29.0 of indefinite-lived tradename intangible assets and $ 168.0 of definite-lived intangible assets.

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 September 30, 2022, the Halo acquisition resulted in the recognition of $ 524.6 of goodwill, $ 29.0 of indefinite-lived tradename intangible assets and $ 168.0 of definite-lived intangible assets.

The definite-lived intangible assets are comprised of customer relationships, proprietary technology, and backlog of $ 44.0 , $ 115.0 and $ 9.0 , respectively, and are amortized based upon the underlying pattern of economic benefit with weighted average useful lives of 13 years , 15 years and one month , respectively.

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

The current purchase price allocation is based on a preliminary assessment made by management as of June 30, 2022.

The current purchase price allocation is based on a preliminary assessment made by management as of September 30, 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.

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Acquisition-related Expenses

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

During both the three and nine months ended September 30, 2022, the Company incurred $ 12.0 ($ 10.5 after-tax) of acquisition-related expenses, comprised primarily of external transaction costs as well as the amortization related to the value associated with acquired backlog resulting from an acquisition that closed in 2022.

During the nine months ended September 30, 2021, the Company incurred $ 55.4 ($ 44.6 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.

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

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Foreign currency translation

Goodwill at June 30, 2022

The decrease in goodwill during the first six months of 2022 was primarily driven by foreign currency translation, partially offset by goodwill recognized from one acquisition that closed during the first six months of 2022.

Other than goodwill noted above, the Company’s intangible assets as of June 30, 2022 and December 31, 2021 were as follows:

June 30, 2022

Goodwill at September 30, 2022

The decrease in goodwill during the first nine months of 2022 was primarily driven by foreign currency translation, partially offset by goodwill recognized from two acquisitions that closed during the first nine months of 2022.

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.

The Company continues to define our reporting units as the three reportable business segments.

In the third quarter of 2022, 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, 2022, the Company determined that it was more likely than not that the fair value of each of its reporting units exceeded its respective carrying amount and, therefore, a quantitative assessment was not required.

As a result, no goodwill impairment resulted from the assessment as of July 1, 2022.

The Company has no t recognized any goodwill impairment in 2022, 2021 or 2020 in connection with our annual impairment assessments.

Other than goodwill noted above, the Company’s intangible assets as of September 30, 2022 and December 31, 2021 were as follows:

September 30, 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 six months of 2022 was primarily driven by certain customer relationships and acquired backlog recognized as a result of the acquisition accounting associated with recent acquisitions.

Amortization expense for the three months ended June 30, 2022 and 2021 was approximately $ 16.8 and $ 32.6 , respectively.

Amortization expense for the six months ended June 30, 2022 and 2021 was approximately $ 34.8 and $ 44.9 , respectively.

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

As of June 30, 2022, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2022 is approximately $ 38.4 and for each of the next five fiscal years is approximately $ 66.4 in 2023, $ 61.0 in 2024, $ 51.7 in 2025, $ 50.0 in 2026 and $ 43.3 in 2027.

The increase in the gross carrying amount of intangible assets in the first nine months of 2022 was primarily driven by certain customer relationships and acquired backlog recognized as a result of the acquisition accounting associated with recent acquisitions.

Amortization expense for the three months ended September 30, 2022 and 2021 was approximately $ 21.9 and $ 16.4 , respectively.

Amortization expense for the nine months ended September 30, 2022 and 2021 was approximately $ 56.7 and $ 61.3 , respectively.

Amortization expense for both the three and nine months ended September 30, 2022 includes $ 5.0 related to the amortization of acquired backlog resulting from an acquisition that closed in 2022.

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

As of September 30, 2022, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2022 is approximately $ 24.2 and for each of the next five fiscal years is approximately $ 68.5 in 2023, $ 63.4 in 2024, $ 54.3 in 2025, $ 52.6 in 2026 and $ 46.0 in 2027.

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 2022, 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 2022, 2021 or 2020 as a result of such reviews.

Note 13—Reportable Business Segments

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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.

In conjunction with the new alignment of our business, the Company appointed three new 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.

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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.

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 and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended June 30:

Net sales by segment for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended September 30,

Harsh Environment Solutions

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Consolidated Net sales

Six Months Ended June 30:

Nine Months Ended September 30,

Harsh Environment Solutions

2 unchanged sentences

Consolidated Net sales

Segment operating income and the reconciliation of segment operating income to consolidated income from continuing operations before income taxes for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

Segment operating income and the reconciliation of segment operating income to consolidated income from continuing operations before income taxes for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Segment operating income:

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Income from continuing operations before income taxes

Depreciation and amortization expense by segment for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

Depreciation and amortization expense by segment for the three and nine months ended September 30, 2022 and 2021 is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Harsh Environment Solutions

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

For the three and six months ended June 30, 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 June 30, 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 June 30, 2022 and December 31, 2021.

For the three and nine months ended September 30, 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.

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, 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.

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It is generally expected that a substantial portion of our remaining performance obligations will be fulfilled within three months , and nearly all of our performance obligations are fulfilled within one year .

Since our performance obligations are part of contracts that generally have original durations of one year or less, we have not disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of June 30, 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 June 30, 2022 and December 31, 2021, and related warranty expense for the three and six months ended June 30, 2022 and 2021, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

While the Company typically offers standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of September 30, 2022 and December 31, 2021, and related warranty expense for the three and nine months ended September 30, 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 six months ended June 30, 2022 and 2021:

Communications

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Business Segments

Three Months Ended June 30,

Three Months Ended September 30,

Net sales by:

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Business Segments

Six Months Ended June 30,

Nine Months Ended September 30,

Net sales by:

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In August 2018, the Company received a subpoena from the U.S.

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

Department of Defense, Office of the Inspector General (the “OIG”), requesting documents from certain of the Company’s Military and Aerospace businesses pertaining to certain products that are purchased or used by the U.S.

As of the date of this filing, the Company has responded to several production requests from the OIG, with the most recent being completed during the third quarter of 2021.

The Company continues to communicate and cooperate with the OIG on this ongoing matter.

In connection with this investigation, during the third quarter of 2022, in a meeting with representatives of the U.S.

government, it was alleged that the Company likely violated various provisions of federal law, including violations under the civil False Claims Act.

The alleged violations relate to various Company actions and inactions that occurred prior to and surrounding the several “stop shipment” orders regarding certain military connector products that were received by the Company in March 2016 and lifted by the U.S.

government for all affected products over a period from April 2016 through January 2017.

The Company is currently evaluating these allegations, and continues to communicate and cooperate with the U.S.

government on this ongoing matter.

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

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

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

During the second quarter of 2022, the Company settled this matter for an immaterial amount.

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

1 unchanged sentence

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