What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-08 compared with 2022-02-09 · 256 added, 244 removed, 395 unchanged (56% of the section changed)

1 unchanged sentence

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

The following discussion and analysis of the results of operations and financial condition for the years ended December 31, 2021, 2020 and 2019 has been derived from and should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”).

The following discussion and analysis of the financial condition and results of operations for the years ended December 31, 2022, 2021 and 2020 has been derived from and should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”).

The Consolidated Financial Statements have been prepared in U.S.

5 unchanged sentences

Refer to “Non-GAAP Financial Measures” within this Item 7 for more information, including our reasons for including non-GAAP financial measures and material limitations with respect to the usefulness of the measures.

In addition to historical information, the following discussion and analysis also contains certain forward-looking statements that are subject to risks and uncertainties, including but not limited to the risk factors described in Part I, Item 1A herein, as well as the risks and uncertainties that exist with the use of forward-looking statements as described in the “Cautionary Note Regarding Forward-Looking Statements” section included herein at the beginning of this Annual Report on Form 10-K (“Annual Report”).

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

The stock split was effected in the form of a stock dividend paid to stockholders 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, stockholders received one additional share of Common Stock for each share held as of the record date.

All current and prior year data impacted by the stock split and presented in this Item 7 and throughout this Annual Report, including number of shares and per share information, earnings per share, and dividends per share amounts, among others, have been retroactively adjusted to reflect the effect of the stock split.

Refer to Note 1 of the Notes to Consolidated Financial Statements for further information related to the stock split.

Risk Factors herein, as well as the risks and uncertainties that exist with the use of forward-looking statements as described in the “Cautionary Note Regarding Forward-Looking Statements” section included herein at the beginning of this Annual Report on Form 10-K (“Annual Report”).

Amphenol is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable.

Through December 31, 2021, the Company operated through two reporting segments:

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

In 2022, approximately 67% of the Company’s sales were outside the United States.

3 unchanged sentences

● military and commercial aerospace applications.

The Company’s products are used in a wide variety of applications by a wide array of customers around the world.

The Company’s products are used in a wide variety of applications by a broad array of customers around the world.

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

A trend among customers has been to consolidate their lists of qualified suppliers to companies that have the ability to meet certain technical, quality, delivery and other standards while maintaining competitive prices.

For many years, customers have generally been consolidating their lists of qualified suppliers to companies that have the ability to meet certain technical, quality, delivery and other standards while maintaining geographic flexibility and competitive prices.

The Company has focused its global resources to position itself to compete effectively in this environment.

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

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 o f 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.

The Company believes that its global presence is an important competitive advantage, as it allows the Company to provide quality products on a timely and worldwide basis to its multinational customers, while at the same time offering a level of resiliency and diversification against local risks and challenges that may emerge in any single geography.

Reportable Business Segments

Effective January 1, 2022, the Company aligned its businesses into the following three newly formed 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.

This new alignment replaced our historic reportable business segments.

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

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

This new alignment reinforces the Company’s entrepreneurial culture and the clear accountability of each of our business unit general managers, while enhancing the scalability of Amphenol’s business for the future.

The Company will begin reporting its new reportable segments in connection with its Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2022, including the recasting of relevant prior year period segment information for conformity of presentation.

The Company began reporting under its new reportable segments in connection with its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 and for each quarterly period thereafter.

T hroughout this Annual Report, the Company is reporting under the new reportable segments structure, which includes the recasting of relevant segment information for the years ended December 31, 2021 and 2020, in order to enable year-over-year segment comparisons .

F or further details related to the Company’s change in its reportable business segments effective January 1, 2022, refer to Note 13 of the Notes to Consolidated Financial Statements herein.

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

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

The Company focuses its research and development efforts through close collaboration with its customers to develop highly engineered products that meet customer needs and have the potential for broad market applications and significant sales within a one- to three-year period.

9 unchanged sentences

In 2022 , the Company reported net sales, operating income and net income from continuing operations attributable to Amphenol Corporation of $12,623.0, $2,585.8 and $1,902.3, respectively, representing an increase of 16%, 23% and 21%, respectively, from 2021.

In 2022, the Company’s net income from continuing operations attributable to Amphenol Corporation was impacted by (a) excess tax benefits of $56.0 related to stock-based compensation resulting from stock option exercises, partially offset by (b) acquisition-related expenses of $21.5 ($18.4 after-tax) comprised primarily of the amortization related to the value associated with acquired backlog resulting from two acquisitions that closed in 2022,

along with external transaction costs .

In 2021, the Company’s net income from continuing operations attributable to Amphenol Corporation was impacted by (a) excess tax benefits of $63.4 related to stock-based compensation resulting from stock option exercises and (b) a discrete tax benefit of $14.9 related to the settlement of uncertain tax positions in certain non-U.S.

jurisdictions, partially offset by (c) acquisition-related expenses of $70.4 ($57.3 after-tax) comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the acquisition of MTS Systems Corporation (“MTS”) in the second quarter of 2021 and external transaction costs and certain non-cash purchase accounting costs related to the acquisition of Halo Technology Limited (“Halo”) in the fourth quarter of 2021.

In 2020, the Company’s net income from continuing operations attributable to Amphenol Corporation was impacted by (a) excess tax benefits of $42.8 related to stock-based compensation resulting from stock option exercises and (b) a discrete tax benefit of $19.9 related to the settlements of refund claims in a non-U.S.

jurisdiction and the resulting adjustments to deferred taxes, partially offset by (c) acquisition-related expenses of $11.5 ($10.7 after-tax) comprised primarily of external transaction costs related to acquisitions that were announced or closed .

Excluding the effects of these items, Adjusted Operating Income and Adjusted Net Income from continuing operations attributable to Amphenol Corporation, as defined in the “Non-GAAP Financial Measures” section below and reconciled within this Part II, Item 7 , increased by 32% and 34%, respectively, in 2021 compared to 2020.

Excluding the effects of these items, Adjusted Operating Income and Adjusted Net Income from continuing operations attributable to Amphenol Corporation, each as defined in the “Non-GAAP Financial Measures” section below and reconciled within this Part II, Item 7, increased by 20% and 20%, respectively, in 2022 compared to 2021.

Sales and profitability trends are discussed in detail in “Results of Operations” below.

In addition, a strength of the Company has been its ability to consistently generate net cash provided by operating activities from continuing operations (“Operating Cash Flow”).

The Company uses Operating Cash Flow to fund capital expenditures and acquisitions, repurchase shares of its Common Stock, pay dividends and reduce indebtedness.

The Company uses Operating Cash Flow to fund capital expenditures and acquisitions, repurchase shares of the Company’s Class A Common Stock (“Common Stock”), pay dividends and reduce indebtedness.

In 2022, the Company generated Operating Cash Flow of $2,174.6 and Free Cash Flow of $1,796.4.

1 unchanged sentence

Impact of COVID-19 on our Business, Operations, Financial Condition, Liquidity and Results of Operations

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

The COVID-19 pandemic caused widespread disruptions to our Company during the first half of 2020, and to a lesser extent, those disruptions continued during the second half of 2020 and throughout all of 2021.

As of December 31, 2021, we continue to experience some disruptions, and at a minimum, particularly given the surge of cases resulting from the Omicron variant, we expect those disruptions to continue into 2022 and potentially beyond .

Since early 2020, the COVID-19 pandemic has disrupted our offices and manufacturing facilities around the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.

These disruptions have included, and may continue to include, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course, travel restrictions, supplier constraints, supply chain interruptions, logistics challenges and limitations, labor disruptions and reduced demand from certain customers.

During 2021 and into 2022, there have been resurgences in COVID-19 cases in several regions around the world, particularly related to new variant strains, including Delta and Omicron.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, the impact of the recent resurgence of the crisis due to the Omicron variant, as well as any additional future resurgences from known or new variants, future government regulations and actions in response to the crisis, the timing, availability, effectiveness and adoption rates of vaccines and treatments, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

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

Given these uncertainties, we expect the pandemic to continue to have an impact on our business, operations, financial condition, liquidity and results of operations in 2022 and potentially beyond.

T here can be no assurance that the COVID- 19 pandemic will not have a material and adverse effect on our business, operations, financial condition, liquidity and results of operations in the future.

During much of 2022, COVID-19 outbreaks in China resulted in local or regional government-imposed lockdowns and restrictions, which impacted the ability of several of our operations and manufacturing facilities to operate in the ordinary course.

As of December 31, 2022, there continue to be isolated COVID-19 outbreaks in certain regions of the world, particularly in China, but these outbreaks have not had a significant impact on our operations.

The extent to which the COVID-19 pandemic will continue to impact our business, operations, financial condition, liquidity and results of operations in 2023 and beyond remains uncertain and unpredictable.

For further discussion on the risks and uncertainties associated with the COVID-19 pandemic, refer to Part I, Item 1A.

Risk Factors .

Risk Factors herein.

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 repurchases.

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 became effective for Amphenol beginning on January 1, 2023, is dependent on several factors, including interpretive regulatory guidance, which has not yet been released.

The Company has reviewed and assessed the provisions of the IRA, including several other non-tax related provisions, and the Company does not currently believe that the IRA will have a material impact on its financial condition, results of operations, liquidity and cash flows.

Results of Operations

6 unchanged sentences

Interest expense

Loss on early extinguishment of debt

Other (expense) income, net

Other income (expense), net

Income from continuing operations before income taxes

5 unchanged sentences

Net income attributable to Amphenol Corporation

Percentages in this table were calculated using actual, unrounded results;

therefore, the sum of the components may not add due to rounding.

2022 Compared to 2021

1 unchanged sentence

dollars, 19% in constant currencies and 15% organically (excluding both currency and acquisition impacts) over the prior year.

The increase in net sales in 2021 was driven by growth in several markets in the Interconnect Products and Assemblies segment, as described below.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) increased 27% in U.S.

The increase in net sales in 2022 was driven by robust growth across all three reportable business segments, as described below.

From a market standpoint, the increase in net sales was driven by robust organic growth across most end markets, including the automotive, informational technology and data communications, industrial, broadband communications and commercial aerospace markets, moderate organic growth in the military, mobile networks and mobile devices markets, and contributions from the Company’s acquisition program.

Net sales to the automotive market increased (approximately $470.1), reflecting broad-based growth across our global automotive market, including the Company’s strength in next-generation electronics, in particular electric and hybrid drive trains, power management, infotainment communications, antenna and antenna assemblies, charging stations, and safety and security systems.

Net sales to the information technology and data communications market increased (approximately $414.6), as we continue to benefit from our strong technology solutions and leading position across a broad array of applications as customers continue to support higher demand for increased bandwidth and cloud storage, along with contributions from acquisitions.

Net sales to the industrial market increased (approximately $399.7), with broad-based growth across nearly all market segments of the global industrial market, with particular strength in e-mobility applications primarily in heavy and commercial vehicles, along with strong growth in factory automation, alternative energy, medical, and transportation applications, as well as contributions from acquisitions.

Net sales to the broadband communications market increased (approximately $241.2), driven by increased overall demand from broadband service operators related to data network upgrades and expansions, along with contributions from acquisitions.

Net sales to the commercial aerospace market increased (approximately $85.6), primarily due to the continued recovery in travel and demand for aircraft, along with contributions from acquisitions.

Net sales to the military market increased (approximately $47.9), driven by strength in space-related applications, unmanned aerial vehicles, ground vehicles, and avionics, as well as contributions from acquisitions.

Net sales to the mobile networks market increased (approximately $46.4), driven by a continued recovery in demand from mobile networks equipment manufacturers and mobile operators, along with contributions from acquisitions.

Net sales to the mobile devices market increased (approximately $41.2), driven by growth in products incorporated into smartphones and wearable devices, partially offset by moderations in sales of tablets, hearable devices and laptops.

Net sales in the Harsh Environment Solutions segment (approximately 25% of net sales) increased 13% in U.S.

dollars, 16% in constant currencies and 15% organically, in 2022, compared to 2021.

The sales growth in 2021 was driven by strong growth across nearly all end markets, including the industrial, automotive, information technology and data communications, military and mobile networks markets, along with moderate growth in the mobile devices

market and contributions from the Company’s acquisition program.

This sales growth was partially offset by a decline in the commercial aerospace market, which continued to be negatively impacted by the significant impact of the COVID-19 pandemic on travel and aircraft production.

The strong sales growth in 2021 in the Interconnect Products and Assemblies segment also reflected a recovery in certain markets from the more negative impact resulting from the COVID-19 pandemic during 2020.

Net sales to the industrial market increased (approximately $864.6), with broad-based growth across nearly all market segments of the global industrial market, with particular strength in heavy equipment, factory automation, industrial instrumentation, battery and heavy electric vehicle, alternative energy, rail mass transit, and transportation, along with contributions from acquisitions.

Net sales to the automotive market increased (approximately $683.4), reflecting the continued recovery and growth in most regions of the global automotive market, as well as the Company’s expanded position in next-generation electronics, including in particular electric and hybrid drive trains.

Net sales to the information technology and data communications market increased (approximately $482.7), driven primarily by continued strong sales growth to web service providers and broad-based market demand for server, storage and networking related products as customers worked to support higher demand for increased bandwidth.

Net sales to the military market increased (approximately $135.8), driven by strength across nearly all segments of the military market, including missile, military communications and naval and space-related applications, along with a recovery from the impact of pandemic-related production disruptions experienced during the first half of 2020, as well as contributions from acquisitions.

Net sales to the mobile networks market increased (approximately $60.5), driven by a recovery in demand from mobile networks equipment manufacturers and mobile operators, which was primarily driven by increased demand for products used in 5G network build-outs and contributions from acquisitions, offset in part by reductions of sales to certain customers in China that were added to the U.S.

Department of Commerce’s “Entity List”.

Net sales to the mobile devices market increased (approximately $45.7), driven by growth in products incorporated into laptops and wearable devices, along with production-related products, and was partially offset by moderations of sales into smartphones and tablets.

Net sales to the commercial aerospace market decreased (approximately $26.6) primarily due to the continued significant impact of the COVID-19 pandemic on travel and aircraft production.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales), which primarily serves the broadband communications market, increased 21% in U.S.

The sales growth in 2022 was driven by strong organic growth in the industrial, automotive and commercial aerospace markets, and moderate organic growth in the military, mobile networks and information technology and data communications markets, along with contributions from the Company’s acquisition program.

Net sales in the Communications Solutions segment (approximately 45% of net sales) increased 17% in U.S.

dollars, 19% in constant currencies and 13% organically, in 2022, compared to 2021.

The increase in net sales in the Cable Products and Solutions segment was primarily driven by increased market demand from broadband operators and mobile network service providers, as well as the contribution from one acquisition in this segment that closed during the first quarter of 2021.

The sales growth in 2022 was driven by strong organic growth across several end markets, in particular the information technology and data communications, broadband communications and automotive markets, and moderate organic growth in the mobile devices, industrial and mobile networks markets, along with contributions from the Company’s acquisition program.

Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) increased 17% in U.S.

dollars, 23% in constant currencies and 18% organically, in 2022, compared to 2021.

The sales growth in 2022 was driven primarily by strong organic growth in the automotive, industrial, information technology and data communications, military and commercial aerospace markets, along with contributions from the Company’s acquisition program, partially offset by a moderate decline in the mobile networks market.

The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S.

3 unchanged sentences

Net sales by:

Interconnect Products and Assemblies

Cable Products and Solutions

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Geography (6) :

8 unchanged sentences

(3) Foreign currency translation impact, a non-GAAP measure, represents the percentage impact on net sales resulting from foreign currency exchange rate changes in the current reporting year compared to the prior reporting year.

Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year reported net sales, taken as a percentage of the prior year’s net sales.

(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section.

Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year net sales, taken as a percentage of the prior year’s net sales.

(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.

(5) Acquisition impact, a non-GAAP measure, represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year and/or prior comparable year presented.

Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis.

Acquisition impact is calculated as a percentage of the respective prior year period(s) net sales.

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

The increase in foreign net sales in 2022 compared to 2021 was driven by strong growth in both Europe and Asia.

The comparatively weaker U.S.

dollar in 2021 had the effect of increasing sales by approximately $159.1, compared to 2020.

The comparatively stronger U.S.

dollar in 2022 had the effect of decreasing sales by approximately $359.8, compared to 2021.

Selling, general and administrative expenses were $1,420.9, or 11.3% of net sales for 2022, compared to $1,226.3, or 11.3% of net sales for 2021.

The decrease in selling, general and administrative expenses as a percentage of net sales in 2021 was driven primarily by higher sales during the year, relative to 2020 which was more negatively impacted by the COVID-19 pandemic, slightly offset by the impact of MTS’s Sensors business, acquired in 2021, which currently has higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.

Selling, general and administrative expenses as a percentage of net sales in 2022 remained flat as the leverage on the higher sales volumes during the year was offset by the MTS Sensors business, acquired in early 2021, having higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.

Administrative expenses increased $90.6 in 2022, and represented approximately 4.6% of net sales in 2022 and 4.5% of net sales in 2021.

2 unchanged sentences

Operating income was $2,585.8, or 20.5% of net sales in 2022, compared to $2,105.1, or 19.4% of net sales in 2021.

Operating income in 2021 included acquisition-related expenses of $70.4, 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.

Operating income in 2020 included acquisition-related expenses of $11.5, comprised primarily of external transaction costs related to acquisitions that were announced or closed.

These acquisition-related expenses in 2021 and 2020 had the effect of decreasing net income from continuing operations by $57.3, or $0.09 per share, and $10.7, or $0.02 per share, respectively.

Acquisition-related expenses are separately presented in the Consolidated Statements of Income.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $2,175.5 and 20.0% of net sales, respectively, in 2021, and $1,649.9 and 19.2% of net sales, respectively, in 2020.

The increase in Adjusted Operating Income and Adjusted Operating Margin in 2021 relative to 2020 was primarily driven by the Interconnect Products and Assemblies segment, as discussed further below.

Operating income for the Interconnect Products and Assemblies segment in 2021 was $2,296.8, or 22.0% of net sales, compared to $1,741.2, or 21.2% of net sales in 2020.

The increase in operating margin for the Interconnect Products and Assemblies segment for 2021 compared to 2020 is driven by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to 2020, partially offset by the impact of the more challenging commodity and supply chain environment experienced in 2021.

Operating income for the Cable Products and Solutions segment in 2021 was $22.8, or 5.1% of net sales, compared to $35.4, or 9.6% of net sales in 2020.

The decrease in operating margin for the Cable Products and Solutions segment in 2021 compared to 2020 is driven by the impact of the more challenging commodity, logistics and supply chain environment experienced in 2021.

Operating income in 2022 included acquisition-related expenses of $21.5, comprised primarily of the amortization related to the value associated with acquired backlog resulting from two acquisitions that closed in 2022, along with external transaction costs.

Operating income in 2021 included acquisition-related expenses of $70.4, comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the acquisition of MTS in the second quarter of 2021, along with external transaction costs and certain non-cash purchase accounting costs related to the acquisition of Halo in the fourth quarter of 2021.

The acquisition-related expenses in 2022 and 2021 had the effect of decreasing net income from continuing operations by $18.4, or $0.03 per share, and $57.3, or $0.09 per share, respectively.

Acquisition-related expenses are presented separately in the Consolidated Statements of Income.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, each as defined in the “Non-GAAP Financial Measures” section below, were $2,607.3 and 20.7% of net sales, respectively, in 2022, and $2,175.5 and 20.0% of net sales, respectively, in 2021.

The increases in Adjusted Operating Income and Adjusted Operating Margin in 2022 relative to 2021 was driven by all three segments, as described below.

Operating income for the Harsh Environment Solutions segment in 2022 was $801.6, or 25.8% of net sales, compared to $708.2, or 25.7% of net sales in 2021.

The slight increase in operating margin for the Harsh Environment Solutions segment for 2022 compared to 2021 was primarily driven by normal operating leverage on the higher sales volumes, combined with the benefit of pricing actions, which were largely offset by the impact of the more challenging cost environment experienced in 2022.

Operating income for the Communications Solutions segment in 2022 was $1,245.7, or 22.0% of net sales, compared to $1,023.3, or 21.2% of net sales in 2021.

The increase in operating margin for the Communications Solutions segment for 2022 compared to 2021 was primarily driven by normal operating leverage on the higher sales volumes, combined with the benefit of pricing actions, partially offset by the impact of the more challenging cost environment experienced in 2022.

Operating income for the Interconnect and Sensor Systems segment in 2022 was $716.5, or 18.5% of net sales, compared to $588.1, or 17.9% of net sales in 2021.

The increase in operating margin for the Interconnect and Sensor Systems segment for 2022 compared to 2021 was primarily driven by normal operating leverage on the higher sales volumes, combined with the benefit of pricing actions, partially offset by the impact of the more challenging cost environment experienced in 2022.

Interest expense was $128.4 in 2022 compared to $115.5 in 2021.

The increase in interest expense was driven by the rising interest rate environment and its impact on the balance outstanding under the Company’s U.S.

Commercial Paper Program.

Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.

Provision for income taxes was at an effective rate of 22.3% in 2022 and 20.6% in 2021.

Provision for income taxes in 2022 included excess tax benefits of $56.0 from stock option exercises, partially offset by the tax effects related to acquisition-related expenses during the year.

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

Provision for income taxes in 2021 included (i) excess tax benefits of $63.4 from stock option exercises and (ii) a discrete tax benefit of $14.9 related to the settlement of uncertain tax positions in certain non-U.S.

1 unchanged sentence

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

Provision for income taxes in 2020 included (i) excess tax benefits of $42.8 from stock option exercises and (ii) a discrete tax benefit of $19.9 related to the settlements of refund claims in a non-U.S.

jurisdiction and the resulting adjustments to deferred taxes, which were partially offset by the tax effects related to acquisition-related expenses during the year.

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 24.5% and 24.3% for 2022 and 2021, respectively, as reconciled in the table below to the comparable effective tax rate based on GAAP results.

2 unchanged sentences

Net income from continuing operations attributable to Amphenol Corporation and Net income from continuing operations per common share attributable to Amphenol Corporation-Diluted (“Diluted EPS”) were $1,902.3 and $3.06, respectively, for 2022, compared to $1,569.4 and $2.51, respectively, for 2021.

Excluding the effect of the aforementioned items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,548.4 and $2.48, respectively, for 2021, compared to $1,151.4 and $1.87, respectively, for 2020.

The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.

Excluding the effect of the items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,864.7 and $3.00, respectively, for 2022, compared to $1,548.4 and $2.48, respectively, for 2021.

The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.

GAAP financial measures for the years ended December 31, 2022 and 2021:

12 unchanged sentences

dollars, 25% in constant currencies and 18% organically (excluding both currency and acquisition impacts) over the prior year.

The increase in net sales in 2020 was driven by strong growth in several markets, which was partially offset by the sudden and severe slowdown in certain of our markets resulting from the global outbreak of the COVID-19 pandemic, which also caused production disruptions in many parts of the world during much of the first half of 2020.

Net sales in the Interconnect Products and Assemblies segment (approximately 96% of net sales) increased 5% in U.S.

The increase in net sales in 2021 was driven by robust growth across all three reportable business segments, as described below.

From a market standpoint, the increase in net sales was driven by strong organic growth across nearly all end markets, including the industrial, automotive, information technology and data communications, military and mobile networks markets, moderate growth in the mobile devices market, and contributions from the Company’s acquisition program.

This strong sales growth in 2021 also reflected a recovery in certain markets from the more negative impact resulting from the COVID-19 pandemic during 2020.

Department of Commerce’s “Entity List”.

Net sales to the commercial aerospace market decreased (approximately $26.6) primarily due to the continued significant impact of the COVID-19 pandemic on travel and aircraft production during that period.

Net sales in the Harsh Environment Solutions segment (approximately 25% of net sales) increased 20% in U.S.

dollars, 19% in constant currencies and 15% organically, in 2021, compared to 2020.

The sales growth was driven by strong growth in the industrial, information technology and data communications, and mobile devices markets, along with moderate growth in the military market, and contributions from the Company’s acquisition program.

This sales growth was partially offset by declines in the commercial aerospace, mobile networks and automotive markets, all of which were negatively impacted by the COVID-19 pandemic.

Net sales to the industrial market increased (approximately $246.4), primarily driven by strength in battery and electric vehicle, industrial instrumentation, heavy equipment, alternative energy and medical applications, along with contributions from acquisitions.

Net sales to the information technology and data communications market increased (approximately $234.0), driven primarily by strong sales growth to data center customers and market demand for storage and networking related products as customers worked to support higher demand for increased bandwidth to support work, school and entertainment activities during the pandemic, along with contributions from acquisitions.

Net sales to the mobile devices market increased (approximately $179.9), driven by strength in products incorporated into laptops, tablets, wearable devices, and accessories along with production-related products, and was partially offset by a slight moderation of sales into smartphones.

Net sales to the military market increased (approximately $32.2), driven by strength across multiple segments of the military market, offset in part by the impact of pandemic-related production disruptions experienced during the first half of the year.

Net sales to the commercial aerospace market decreased significantly (approximately $135.3) primarily due to the significant impact of the COVID-19 pandemic on travel and aircraft production.

to the mobile networks market decreased (approximately $98.5), which reflected the impact of the 2019 U.S.

Government restrictions on certain Chinese customers as well as reduced demand from both mobile networks equipment manufacturers and mobile operators, partially as a result of the negative impact of the COVID-19 pandemic, offset in part by contributions from acquisitions.

Net sales to the automotive market decreased (approximately $86.0), due to a significant reduction in demand resulting from customer factory shutdowns together with production disruptions in the first half of 2020 resulting from the COVID-19 pandemic, which was partially offset by a strong recovery of demand during the second half of the year.

Net sales in the Cable Products and Solutions segment (approximately 4% of net sales), which primarily serves the broadband communications market, decreased 4% in U.S.

The sales growth in 2021 was driven primarily by strong organic growth in the industrial, automotive, and information technology and data communications markets, moderate organic growth in the military market, and contributions from the Company’s acquisition program, all of which was partially offset by a decline in the commercial aerospace market.

Net sales in the Communications Solutions segment (approximately 45% of net sales) increased 19% in U.S.

dollars, 18% in constant currencies and 16% organically, in 2021, compared to 2020.

The decrease in net sales in the Cable Products and Solutions segment was largely driven by the negative impact of the COVID-19 pandemic primarily during the first half of 2020, as well as an overall weakness in market demand.

The sales growth in 2021 was driven by strong organic growth across several end markets, including the information technology and data communications, industrial, and automotive markets, moderate organic growth in the mobile networks, mobile devices, and military markets, and contributions from the Company’s acquisition program.

Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) increased 46% in U.S.

dollars, 43% in constant currencies and 26% organically, in 2021, compared to 2020.

The sales growth in 2021 was driven primarily by strong organic growth in the automotive, information technology and data communications, industrial and mobile networks markets, along with contributions from the Company’s acquisition program, all of which was partially offset by a decline in the commercial aerospace market in that period.

The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S.

3 unchanged sentences

Net sales by:

Interconnect Products and Assemblies

Cable Products and Solutions

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Geography (6) :

8 unchanged sentences

(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section.

(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.

Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis.

Acquisition impact is calculated as a percentage of the respective prior year period(s) net sales.

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

The increase in foreign net sales in 2020 compared to 2019 was driven primarily by strong growth in Asia.

The increase in foreign net sales in 2021 compared to 2020 was driven by strong growth in both Europe and Asia.

The comparatively weaker U.S.

dollar in 2020 had an insignificant effect on net sales compared to 2019.

dollar in 2021 had the effect of increasing sales by approximately $159.1, compared to 2020.

Selling, general and administrative expenses were $1,226.3, or 11.3% of net sales for 2021, compared to $1,014.2, or 11.8% of net sales for 2020.

The decrease in selling, general and administrative expenses as a percentage of net sales in 2021 was driven primarily by higher sales during the year, relative to 2020 which was more negatively impacted by the COVID-19 pandemic, slightly offset by the impact of the MTS Sensors business, acquired in 2021, which has higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.

Administrative expenses increased $78.6 in 2021, and represented approximately 4.5% of net sales in 2021 and 4.8% of net sales in 2020.

Research and development expenses increased $26.5 in 2020 primarily related to increases in expenses for new product development, and represented approximately 3.0% of net sales in 2020 and 2.8% of net sales in 2019.

Selling and marketing expenses decreased $11.2 in 2020 compared to 2019, and represented approximately 4.0% of net sales in 2020 and 4.3% of net sales in 2019.

Research and development expenses increased $57.0 in 2021 primarily related to increases in

expenses for new product development, and represented approximately 2.9% of net sales in 2021 and 3.0% of net sales in 2020.

Selling and marketing expenses increased $76.5 in 2021 compared to 2020, and represented approximately 3.8% of net sales in 2021 and 4.0% of net sales in 2020.

Operating income was $2,105.1, or 19.4% of net sales in 2021, compared to $1,638.4, or 19.1% of net sales in 2020.

Operating income in 2020 included acquisition-related expenses of $11.5, comprised primarily of external transaction costs related to acquisitions that were announced or closed.

Operating income in 2019 included acquisition-related expenses of $25.4, comprised of the amortization of $15.7 related to the value associated with the acquired backlog resulting from two of our 2019 acquisitions, with the remainder representing external transaction costs.

These acquisition-related expenses in 2021 and 2020 had the effect of decreasing net income from continuing operations by $57.3, or $0.09 per share, and $10.7, or $0.02 per share, respectively.

Acquisition-related expenses are separately

presented in the Consolidated Statements of Income.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $1,649.9 and 19.2% of net sales, respectively, in 2020, and $1,644.6 and 20.0% of net sales, respectively, in 2019.

Operating income for the Interconnect Products and Assemblies segment in 2020 was $1,741.2, or 21.2% of net sales, compared to $1,722.7, or 22.0% of net sales in 2019.

The decrease in operating margin for the Interconnect Products and Assemblies segment for 2020 compared to 2019 was primarily driven by the significant incremental costs incurred, primarily during the first half of 2020, related to the COVID-19 pandemic.

This decrease in the operating margin during the first half of 2020 was partly offset by strong operating leverage on higher sales volumes during the second half of 2020.

Operating income for the Cable Products and Solutions segment in 2020 was $35.4, or 9.6% of net sales, compared to $39.5, or 10.2% of net sales in 2019.

The decrease in operating margin for the Cable Products and Solutions segment in 2020 compared to 2019 was primarily driven by lower volumes as well as the negative impact of the COVID-19 pandemic, primarily during the first half of 2020.

Acquisition-related expenses are presented separately in the Consolidated Statements of Income.

Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, each as defined in the “Non-GAAP Financial Measures” section below, were $2,175.5 and 20.0% of net sales, respectively, in 2021, and $1,649.9 and 19.2% of net sales, respectively, in 2020.

The increase in Adjusted Operating Income and Adjusted Operating Margin in 2021 relative to 2020 was driven by all three segments, and in particular, by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to 2020, partially offset by the impact of the more challenging commodity and supply chain environment experienced in 2021, along with the impact of the Company’s 2021 acquisitions.

Operating income for the Harsh Environment Solutions segment in 2021 was $708.2, or 25.7% of net sales, compared to $556.8, or 24.4% of net sales in 2020.

The increase in operating margin for the Harsh Environment Solutions segment for 2021 compared to 2020 was primarily driven by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to 2020, partially offset by the impact of the more challenging commodity, logistics and supply chain environment experienced in 2021.

Operating income for the Communications Solutions segment in 2021 was $1,023.3, or 21.2% of net sales, compared to $871.2, or 21.5% of net sales in 2020.

The slight decrease in operating margin for the Communications Solutions segment for 2021 compared to 2020 was primarily driven by the impact of the more challenging commodity, logistics and supply chain environment experienced in 2021, which was largely offset by the normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to 2020.

Operating income for the Interconnect and Sensor Systems segment in 2021 was $588.1, or 17.9% of net sales, compared to $348.6, or 15.4% of net sales in 2020.

The increase in operating margin for the Interconnect and Sensor Systems segment for 2021 compared to 2020 was primarily driven by normal operating leverage on the higher sales volumes combined with the benefit of a lower cost impact resulting from the COVID-19 pandemic compared to 2020, partially offset by the impact of the more challenging commodity, logistics and supply chain environment experienced in 2021, along with the impact of the Company’s 2021 acquisitions, in particular the MTS Sensors business closed in April 2021, which operated at a lower operating margin compared to the average of the Interconnect and Sensor Systems segment.

Interest expense was $115.5 in 2021 compared to $115.4 in 2020.

Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.

Loss on early extinguishment of debt was $14.3 in 2019, which related to refinancing-related costs, specifically premiums and fees incurred associated with the early extinguishment of certain redeemed principal amounts of the 3.125% Senior Notes due September 2021 (the “2021 Senior Notes”) and 4.00% Senior Notes due February 2022 (the “2022 Senior Notes”) (collectively, the “Tendered Notes”) as a result of the tender offers in September 2019.

Refer to Note 4 of the accompanying Consolidated Financial Statements for further information related to the Tendered Notes.

Provision for income taxes was at an effective rate of 20.6% in 2021 and 20.5% in 2020.

jurisdictions, all of which was partially offset by the tax effects related to acquisition-related expenses during the year.

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

1 unchanged sentence

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

Provision for income taxes in 2019 included excess tax benefits of $38.1 from stock option exercises, which was partially offset by the tax effects related to (i) acquisition-related expenses during the year and (ii) refinancing-related costs associated with the early extinguishment of debt.

These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.

Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 24.5% for both 2020 and 2019, as reconciled in the table below to the comparable effective tax rate based on GAAP results.

respectively, as reconciled in the table below to the comparable effective tax rate based on GAAP results.

For additional details related to the reconciliation between the U.S.

1 unchanged sentence

Net income from continuing operations attributable to Amphenol Corporation and Diluted EPS were $1,569.4 and $2.51, respectively, for 2021, compared to $1,203.4 and $1.96, respectively, for 2020.

Excluding the effect of the aforementioned items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,151.4 and $1.87, respectively, for 2020, compared to $1,150.4 and $1.87, respectively, for 2019.

Excluding the effect of the items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,548.4 and $2.48, respectively, for 2021, compared to $1,151.4 and $1.87, respectively, for 2020.

The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.

GAAP financial measures for the years ended December 31, 2021 and 2020:

1 unchanged sentence

Acquisition-related expenses

Loss on early extinguishment of debt

Excess tax benefits related to stock-based compensation

8 unchanged sentences

Liquidity and Cash Requirements

At December 31, 2021 and 2020, the Company had cash, cash equivalents and short-term investments of $1,241.4 and $1,738.1, respectively, with the majority of the Company’s cash, cash equivalents and short-term investments on hand located outside of the United States.

On April 7, 2021, the Company used a combination of cash on hand and borrowings under its U.S.

Commercial Paper Program (defined below) to fund the acquisition of MTS.

In addition, on December 1, 2021, the Company used cash on hand to fund the acquisition of Halo.

The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash, cash equivalents and short-term investments on hand, the U.S.

Commercial Paper Program, the Euro Commercial Paper Program, and the Revolving Credit Facility (each as defined and discussed further below within this Item 7).

The Company believes that its cash, cash equivalents and short-term investment position on hand, ability to generate future cash from operating activities, availability under its Revolving Credit Facility, and access to capital markets (including the recent issuance of the Company’s $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”) in September 2021, along with borrowings under the U.S.

Commercial Paper Program), provide adequate liquidity to meet both its short-term (next twelve months) and reasonably foreseeable long-term requirements and obligations.

At December 31, 2022 and 2021, the Company had cash, cash equivalents and short-term investments of $1,434.2 and $1,241.4, respectively, with the vast majority of the Company’s cash, cash equivalents and short-term investments on hand located outside of the United States.

The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash, cash equivalents and short-term investments on hand, as well as availability under the U.S.

Commercial Paper Program, the Euro Commercial Paper Program, the Revolving Credit Facility, and the 2022 Term Loan (all of which are defined and discussed in more detail below within this Item 7).

The Company believes that these sources of liquidity, along with access to capital markets, provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations.

Cash Requirements from Known Contractual and Other Obligations

1 unchanged sentence

The Company may also use cash to fund all or part of the cost of future acquisitions.

The Company’s debt service requirements consist primarily of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility and the Commercial Paper Programs (all as defined below).

The Company expects that capital expenditures in 2022 will be in a range of 3% to 4% of net sales.

The Company expects that capital expenditures in 2023 will be in a range of

3% to 4% of net sales.

The Company’s debt service requirements consist primarily of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and the 2022 Term Loan (all as defined below).

As of December 31, 2022, outstanding borrowings under the U.S.

Commercial Paper Program were at a weighted average floating interest rate of 4.69%, while there were no outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan and Euro Commercial Paper Program.

As a result of recent increases in the federal funds rate by the U.S.

Federal Reserve, the floating interest rates related to our U.S.

Commercial Paper Program increased substantially over the course of 2022, a trend that could continue throughout 2023.

Consequently, the Company currently expects the floating interest rates related to its U.S.

Commercial Paper Program (as well as its Revolving Credit Facility and 2022 Term Loan, to the extent either are drawn upon in the future) to continue to increase in the first quarter of 2023 and potentially beyond, which is expected to result in increased interest expense in 2023 as compared to 2022.

Although the Company does not expect changes in interest rates to have a material effect on income or cash flows in 2023, primarily due to our current expected limited reliance on borrowings tied to floating rates of interest, there can be no assurance that interest rates will not change significantly from current levels.

The following table summarizes the Company’s material short- and long-term cash requirements from known obligations pursuant to certain contracts and commitments as of December 31, 2022, as well as an estimate of the timing in which such obligations and payments are expected to be satisfied.

7 unchanged sentences

Transition tax (5)

(1) The Company has excluded expected interest payments on the Revolving Credit Facility, U.S.

Commercial Paper Program and Euro Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels the Company expects to have during each of the years presented.

The actual interest payments made related to the Company’s Revolving Credit Facility and both Commercial Paper Programs combined, in 2021, were approximately $2.4.

(1) The Company has excluded expected interest payments on the Revolving Credit Facility, 2022 Term Loan, U.S.

Commercial Paper Program and Euro Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels during each of the years presented.

The actual interest payments made related to the Company’s Revolving Credit Facility, 2022 Term Loan and both Commercial Paper Programs combined, in 2022, were approximately $21.1.

Expected debt levels, and therefore expected interest payments, are difficult to predict, as they are significantly impacted by items such as future acquisitions, repurchases of Common Stock and dividend payments, as well as payments or additional borrowings made to reduce or increase the underlying revolver balance.

3 unchanged sentences

(3) Purchase obligations relate primarily to open purchase orders for goods and services, including but not limited to, raw materials and components to be used in production.

(4) This table includes estimated benefit payments expected to be made under the Company’s unfunded pension and postretirement benefit plans, as well as the anticipated minimum required contributions under the Company’s funded pension plans, the most significant funded plan of which covers certain of its U.S.

Over the past several years, there has been no minimum requirement for Company contributions to our defined benefit pension plans in the United States (“U.S.

12 unchanged sentences

The table above reflects the remaining amounts associated with the Transition Tax, which is net of applicable tax credits and deductions.

The fourth installment of the Transition Tax was paid in the second quarter of 2021.

The fifth installment of the Transition Tax was paid in the second quarter of 2022.

(6) As of December 31, 2022, the Company has recorded net liabilities of approximately $193.5 related to unrecognized tax benefits.

2 unchanged sentences

Repatriation of Foreign Earnings and Related Income Taxes

Following the enactment of the Tax Act in December 2017, the Company has previously indicated an intention to repatriate most of its pre-2021 accumulated earnings and has accrued the foreign and U.S.

The Company has previously indicated an intention to repatriate most of its pre-2022 accumulated earnings and has accrued the foreign and U.S.

state and local taxes, if applicable, on those earnings, as appropriate.

1 unchanged sentence

The Company intends to indefinitely reinvest the remaining pre-2022 foreign earnings.

The Company intends to distribute certain 2021 foreign earnings and has accrued foreign and U.S.

state and local taxes, where applicable, on those earnings, as of December 31, 2021, and intends to indefinitely reinvest the remaining 2021 foreign earnings.

The Company intends to evaluate certain post-2021 earnings for repatriation, and accrue for those distributions where appropriate, and to indefinitely reinvest all other foreign earnings.

The Company intends to distribute certain 2022 foreign earnings and, as of December 31, 2022, has accrued foreign and U.S.

state and local taxes, where applicable, on those foreign earnings that we intend to repatriate, and intends to indefinitely reinvest the remaining 2022 foreign earnings.

The Company intends to (i) evaluate certain

post-2022 earnings for repatriation, and will accrue for those distributions where appropriate, and (ii) indefinitely reinvest all other foreign earnings.

In addition, 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, in annual installments over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.

As of December 31, 2022, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,100 related to certain geographies, as it is the Company’s intention to permanently reinvest such earnings outside the United States.

8 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net cash change from discontinued operations in the table above includes the proceeds from the sale of the Divested MTS business during the year ended December 31, 2021, as discussed in further detail later within this Item 7.

Operating Activities

The ability to generate cash from operating activities has been one of the Company’s fundamental financial strengths.

Net cash provided by operating activities from continuing operations (“Operating Cash Flow”) was $1,523.9 in 2021, compared to $1,592.0 in 2020 and $1,502.3 in 2019.

The decrease in Operating Cash Flow in 2021 compared to 2020 is primarily due to a higher usage of cash related to the change in working capital as discussed below, partially offset by an increase in net income from continuing operations.

The increase in Operating Cash Flow in 2020 compared to 2019 was primarily due to the increase in net income from continuing operations, along with a lower usage of cash related to the change in working capital as discussed below.

The ability to generate cash from operating activities is one of the Company’s fundamental financial strengths.

Operating Cash Flow was $2,174.6 in 2022, compared to $1,523.9 in 2021 and $1,592.0 in 2020.

The increase in Operating Cash Flow in 2022 compared to 2021 was primarily due to both an increase in net income from continuing operations and a lower usage of cash related to the change in working capital as discussed below.

The decrease in Operating Cash Flow in 2021 compared to 2020 was primarily due to a higher usage of cash related to the change in working capital as discussed below, partially offset by an increase in net income from continuing operations.

In 2022, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $193.1, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in inventories of $278.5 and accounts receivable of $273.1, partially offset by increases in accrued liabilities, including income taxes, of $246.3 and accounts payable of $62.5, and a decrease in prepaid expenses and other current assets of $49.7.

In 2021, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $496.4, excluding the impact of acquisitions and foreign currency translation, primarily due to increases in accounts receivable, inventories, and prepaid expenses and other current assets of $398.4, $263.0 and $20.2, respectively, partially offset by increases in accounts payable of $131.7 and accrued liabilities, including income taxes, of $53.5.

In 2020, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $38.9, excluding the impact of acquisitions and foreign currency translation, due to increases in accounts receivable, inventories, and prepaid expenses and other current assets of $146.3, $102.0 and $88.6, respectively, partially offset by increases in accounts payable of $204.3 and accrued liabilities, including income taxes, of $93.7.

In 2019, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow increased $81.6, excluding the impact of acquisitions and foreign currency translation, primarily due to decreases in accrued liabilities, including income taxes, of $129.3 and accounts payable of $60.2, partially offset by a decrease in accounts receivable of $117.3.

The following describes the significant changes in the amounts as presented on the accompanying Consolidated Balance Sheets at December 31, 2022 compared to December 31, 2021.

Accounts receivable increased $503.2 to $2,454.8 primarily due to higher sales in the fourth quarter of 2021 relative to the fourth quarter of 2020, along with the impact of the seven acquisitions (collectively, the “2021 Acquisitions”) that closed during 2021, in particular the MTS and Halo acquisitions, all of which was partially offset by the effect of translation from exchange rate changes (“Translation”) at December 31, 2021 compared to December 31, 2020.

Accounts receivable increased $176.5 to $2,631.3 primarily due to higher sales in the fourth quarter of 2022 relative to the fourth quarter of 2021, along with the impact of the two acquisitions (collectively, the “2022 Acquisitions”) that closed during 2022, partially offset by the effect of translation from exchange rate changes (“Translation”) at December 31, 2022 compared to December 31, 2021.

Days sales outstanding at December 31, 2022 and 2021 were 73 days and 71 days, respectively.

Inventories increased $431.9 to $1,894.1, primarily due to higher sales, along with the impact of our 2021 Acquisitions, partially offset by Translation.

Inventories increased $199.5 to $2,093.6, which was primarily driven by the impact of higher sales and the 2022 Acquisitions, along with the impact of the ongoing supply chain disruptions experienced throughout 2022, partially offset by Translation.

Inventory days at December 31, 2022 and 2021 were 86 days and 80 days, respectively.

Prepaid expenses and other current assets increased $29.0 to $367.9, primarily due to increases in certain prepaid expenses and other current receivables as well as the impact of the 2021 Acquisitions.

Property, plant and equipment, net, increased $120.7 to $1,175.3, primarily due to capital expenditures of $360.4 and the impact of the 2021 Acquisitions, partially offset by depreciation of $302.9, disposals and Translation.

Goodwill increased $1,344.7 to $6,376.8, resulting from goodwill recognized related to the 2021 Acquisitions, primarily from the MTS and Halo acquisitions, partially offset by Translation.

Other intangible assets, net, increased $359.4 to $756.9 due to the recognition of certain intangible assets related to the 2021 Acquisitions, primarily from the MTS and Halo acquisitions, partially offset by amortization of $86.4 related to the Company’s intangible assets.

Other long-term assets increased $58.9 to $411.2, primarily due to increases in (i) overfunded pension plans primarily in the U.S.

and (ii) operating lease right-of-use assets resulting from both leases assumed from the 2021 Acquisitions as well as new and renewed lease agreements entered into during the year.

Accounts payable increased $191.3 to $1,312.0, primarily as a result of increased purchasing activity related to higher sales levels, along with the

impact of the 2021 Acquisitions.

Prepaid expenses and other current assets decreased $47.9 to $320.0, primarily due to decreases in certain other current receivables.

Property, plant and

equipment, net, increased $29.0 to $1,204.3, primarily due to capital expenditures of $383.8 and the impact of the 2022 Acquisitions, partially offset by depreciation of $306.1, disposals and Translation.

Goodwill increased $69.3 to $6,446.1, primarily driven by goodwill recognized resulting from the 2022 Acquisitions, partially offset by Translation.

Other intangible assets, net, decreased $22.8 to $734.1 due to the amortization of $81.0 related to the Company’s current intangible assets, partially offset by the recognition of certain intangible assets related to recent acquisitions.

Other long-term assets increased $51.4 to $462.6, primarily due to (i) the purchase of long-term certificates of deposit investments and (ii) an increase in operating lease right-of-use assets resulting from new and renewed lease agreements entered into during 2022, along with leases assumed from acquisitions, partially offset by a decrease in prepaid pension assets resulting from a decrease in the overfunded status of certain pension plans primarily in the U.S.

Accounts payable decreased $2.9 to $1,309.1, primarily due to Translation, largely offset by slightly increased purchasing activity related to higher sales levels in the fourth quarter of 2022 relative to the fourth quarter of 2021, along with the effect of the 2022 Acquisitions.

Payable days at December 31, 2022 and 2021 were 54 days and 56 days, respectively.

Total accrued expenses, including accrued income taxes, increased $177.8 to $1,131.1, primarily as a result of the MTS acquisition and the other 2021 Acquisitions, along with an increase in accrued salaries, wages and employee benefits, and other accrued expenses, partially offset by a decrease in accrued income taxes, primarily resulting from U.S.

federal tax payments.

Accrued pension and postretirement benefit obligations decreased $35.2 to $193.4, primarily due to the impact of higher discount rates used to calculate our projected benefit obligation, along with Translation.

Other long-term liabilities, including deferred tax liabilities, increased $156.6 to $862.9, primarily as a result of an increase in deferred tax liabilities resulting from the MTS and Halo acquisitions, along with an increase in long-term operating lease liabilities resulting from both leases assumed from the 2021 Acquisitions as well as new and renewed lease agreements entered into during the year.

Total accrued expenses, including accrued income taxes, increased $233.2 to $1,364.3, primarily as a result of increases in accrued income taxes, accrued salaries, wages and employee benefits and certain other accrued expenses, partially offset by Translation.

Accrued pension and postretirement benefit obligations decreased $65.5 to $127.9, primarily driven by a significant decrease in our projected benefit obligations resulting from higher interest rates, along with Translation, partially offset by negative returns on plan assets in 2022.

In 2022, 2021 and 2020, the Company made aggregate cash contributions to its defined benefit pension plans of approximately $6.3, $6.8 and $6.5, respectively.

There is no current requirement for cash contributions to any of the Company’s 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, as discussed in more detail in Note 9 of the Notes to Consolidated Financial Statements.

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, as discussed in more detail in Note 9 of the Notes to Consolidated Financial Statements.

In addition to Operating Cash Flow, the Company also considers Free Cash Flow, a non-GAAP financial measure defined in the “Non-GAAP Financial Measures” section below, as a key metric in measuring the Company’s ability to generate cash.

1 unchanged sentence

GAAP financial measure for the years ended December 31, 2022, 2021 and 2020.

The increase in Free Cash Flow in 2022 compared to 2021 was driven by the increase in Operating Cash Flow, as described above.

The decrease in Free Cash Flow in 2021 compared to 2020 was driven by the increase in capital expenditures to support our strong sales growth and, to a lesser extent, the decrease in Operating Cash Flow, as described above.

The increase in Free Cash Flow in 2020 compared to 2019 was driven by the increase in Operating Cash Flow, as described above, and, to a lesser extent, a decrease in capital expenditures.

The following table is on a continuing operations basis only and excludes any cash flows related to discontinued operations:

4 unchanged sentences

Investing Activities

Cash flows from investing activities consist primarily of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment , purchases (sales and maturities) of short-term investments, net, and acquisitions.

Cash flows from investing activities consist primarily of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment , net purchases (sales and maturities) of short- and long-term investments, and acquisitions.

Net cash used in investing activities from continuing operations was $731.1 in 2022, compared to $2,604.4 in 2021 and $333.5 in 2020.

In 2022, net cash used in investing activities from continuing operations was driven primarily by capital expenditures (net of disposals) of $378.2, the use of $288.2 to fund acquisitions, net purchases of long-term investments of $56.0, and net purchases of short-term investments of $25.2.

In 2021, net cash used in investing activities from continuing operations was driven primarily by the use of $2,225.4 to fund acquisitions, capital expenditures (net of disposals) of $356.7, and net purchases of short-term investments of $8.6.

In 2020, net cash used in investing activities from continuing operations was driven primarily by capital expenditures (net of disposals) of $264.1, the use of $50.4 to fund acquisitions, and net purchases of short-term investments of $18.4.

In 2019, net cash used in investing activities from continuing operations was driven primarily by the use of $937.4 to fund acquisitions, capital expenditures (net of disposals) of $287.6, and net purchases of short-term investments of $3.8.

Financing Activities

1 unchanged sentence

Net cash used in financing activities from continuing operations was $1,196.7 in 2022, compared to $145.1 in 2021 and $516.6 in 2020.

second quarter of 2021 as well as the redemption of the 3.125% Senior Notes in the third quarter of 2021 and the redemption of the 4.00% Senior Notes in the fourth quarter of 2021, (ii) repurchases of the Company’s Common Stock of $661.7, (iii) dividend payments of $346.7, (iv) a cash transfer of $28.7 made by the Company’s continuing operations to its discontinued operations in order to fund the September 2021 payment of contingent consideration assumed as part of the MTS acquisition, (v) distributions to and purchases of noncontrolling interests of $18.9, (vi) payments of $9.3 related to debt financing costs associated with the 2031 Senior Notes, and (vii) payments of $4.1 associated with the deferred purchase price related to acquisitions, partially offset by (a) net borrowings of $796.3 primarily under the U.S.

Commercial Paper Program, the majority of the proceeds of which were used to fund acquisitions and to redeem the 3.125% Senior Notes and the 4.00% Senior Notes, (b) net cash proceeds of $752.1, primarily related to the September 2021 issuance of the 2031 Senior Notes, and (c) cash proceeds of $288.5 from the exercise of stock options.

Senior Notes due April 2020 and other debt, (iii) net repayments of $385.8 related to the Company’s Commercial Paper Programs, (iv) dividend payments of $297.6, (v) payment of $75.0 related to acquisition-related contingent consideration, (vi) payment of $16.2 associated with the deferred purchase price related to an acquisition, (vii) distributions to and purchases of noncontrolling interests of $14.9, (vii) payments of $8.7 related to debt financing costs primarily associated with the 2025 Senior Notes and 2026 Euro Notes (each as defined below), and (viii) net repayments of $0.7 under the Company’s credit facilities, partially offset by (a) aggregate net cash proceeds of $942.3 from both the February 2020 issuance of the 2025 Senior Notes and the May 2020 issuance of the 2026 Euro Notes and (b) cash proceeds of $385.7 from the exercise of stock options.

In 2019, net cash used in financing activities from continuing operations was driven primarily by (i) the aggregate debt repayments of $1,111.5 associated with certain of the Company’s senior notes (the 2.55% U.S.

Senior Notes due January 2019 and the early extinguishment of the Tendered Notes in September 2019) and other long-term debt, (ii) repurchases of the Company’s Common Stock of $601.7, (iii) dividend payments of $279.5, (iv) net repayments of $229.0 related to the Company’s Commercial Paper Programs, (v) distributions to and purchases of noncontrolling interests of $43.3, (vi) payments of $14.9 related to debt financing costs primarily associated with the Revolving Credit Facility, the 4.350% Senior Notes due June 2029 (the “2029 Senior Notes”), and the 2.800% Senior Notes due February 2030 (the “2030 Senior Notes”), and (vii) premiums and fees paid of $13.4 related to the early extinguishment of the Tendered Notes, partially offset by (a) aggregate net cash proceeds of $1,398.8 from the issuances of the 2029 Senior Notes and the 2030 Senior Notes and (b) cash proceeds of $246.1 from the exercise of stock options.

In 2022, net cash used in financing activities from continuing operations was driven primarily by (i) repurchases of the Company’s Common Stock of $730.5, (ii) dividend payments of $477.4, (iii) net repayments of $159.3, primarily under the U.S.

Commercial Paper Program, (iv) other debt repayments of $55.2, primarily related to short-term debt, and (v) distributions to and purchases of noncontrolling interests of $9.9, partially offset by (a) cash proceeds of $185.3 from the exercise of stock options and (b) proceeds of $50.7 primarily related to short-term borrowings.

In 2021, net cash used in financing activities from continuing operations was driven primarily by (i) debt repayments of $912.6, primarily related to the repayment of the assumed then-outstanding MTS senior notes in the second quarter of 2021 as well as the redemption of the 3.125% Senior Notes (the “2021 Senior Notes”) in the third quarter of 2021 and the redemption of the 4.00% Senior Notes (the “2022 Senior Notes”) in the fourth quarter of 2021, (ii) repurchases of the Company’s Common Stock of $661.7, (iii) dividend payments of $346.7, (iv) a cash transfer of $28.7 made by the Company’s continuing operations to its discontinued operations in order to fund the September 2021 payment of contingent consideration assumed as part of the MTS acquisition, (v) distributions to and purchases of noncontrolling interests of $18.9, (vi) payments of $9.3 related to debt financing costs associated with the Company’s $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”), and (vii) payments of $4.1 associated with the deferred purchase price related to acquisitions, partially offset by (a) net borrowings of $796.3 primarily under the U.S.

Commercial Paper Program, the majority of the proceeds of which were used to fund acquisitions, including MTS, and to redeem the 2021 Senior Notes and the 2022 Senior Notes, (b) net cash proceeds of $752.1, primarily related to the September 2021 issuance of the 2031 Senior Notes, and (c) cash proceeds of $288.5 from the exercise of stock options.

In 2020, net cash used in financing activities from continuing operations was driven primarily by (i) repurchases of the Company’s Common Stock of $641.3, (ii) debt repayments of $404.4 related to the Company’s 2.20% Senior Notes due April 2020 and other debt, (iii) net repayments of $385.8 related to the Company’s Commercial Paper Programs, (iv) dividend payments of $297.6, (v) payment of $75.0 related to acquisition-related contingent consideration, (vi) payment of $16.2 associated with the deferred purchase price related to an acquisition, (vii) distributions to and purchases of noncontrolling interests of $14.9, (vii) payments of $8.7 related to debt financing costs primarily associated with its $400.0 principal amount of unsecured 2.050% Senior Notes due March 1, 2025 (the “2025 Senior Notes”) and 2026 Euro Notes (defined below), and (viii) net repayments of $0.7 under the Company’s credit facilities, partially offset by (a) aggregate net cash proceeds of $942.3 from both the February 2020 issuance of the 2025 Senior Notes and the May 2020 issuance of the 2026 Euro Notes and (b) cash proceeds of $385.7 from the exercise of stock options.

The Company has significant flexibility to meet its financial commitments.

The Company uses debt financing to lower the overall cost of capital and increase return on stockholders’ equity.

The Company’s debt financing includes the use of the Commercial Paper Programs, the Revolving Credit Facility and senior notes as part of its overall cash management strategy.

The Company’s debt financing includes the use of Commercial Paper Programs, the Revolving Credit Facility, the 2022 Term Loan, and senior notes as part of its overall cash management strategy.

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.

As a result, the Revolving Credit Facility no longer references the London Interbank Offered Rate (“LIBOR”) for interest rate determinations.

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

2 unchanged sentences

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

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

As of December 31, 2022 and 2021, there were no outstanding borrowings under the Revolving Credit Facility.

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

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

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

Although the United Kingdom's Financial Conduct Authority (the “FCA”) , which regulates LIBOR, previously announced its intent to phase out the use of LIBOR in 2023, the Company does not currently have nor does it expect to have any more reliance on borrowings or any other financial instruments tied to LIBOR.

As a result, the LIBOR transition will not have a material impact on our financial condition, results of operations or cash flows.

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 repaid, cannot be reborrowed.

When drawn upon, 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.

As of December 31, 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 December 31, 2022, the Company was in compliance with the financial covenants under the 2022 Term Loan.

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.

1 unchanged sentence

The 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 on hand were used to fund the acquisition of MTS.

The Company also used borrowings under the U.S.

Commercial Paper Program to (i) redeem, in the third quarter of 2021, its unsecured 3.125% Senior Notes due September 15, 2021, of which $227.7 aggregate principal amount was outstanding and (ii) redeem, in the fourth quarter of 2021, its unsecured 4.00% Senior Notes due February 1, 2022, of which $295.0 aggregate principal amount was outstanding .

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

In July 2018, the Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) entered into a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S.

The Company utilizes borrowings under the U.S.

Commercial Paper Program for general corporate purposes, which in recent years, have included fully or partially funding acquisitions, as well as repaying certain outstanding senior notes, such as (i) the third quarter 2021 redemption of its unsecured 2021 Senior Notes due September 15, 2021, of which $227.7 aggregate principal amount was then outstanding and (ii) the fourth quarter 2021 redemption of its unsecured 2022 Senior Notes due February 1, 2022, of which $295.0 aggregate principal amount was then outstanding .

The amount of USCP Notes outstanding as of December 31, 2022 was $632.8, with a weighted average interest rate of 4.69% 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.

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.

2 unchanged sentences

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

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

As of December 31, 2022 and 2021, there were no ECP Notes outstanding.

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

In conjunction with the Revolving Credit Facility, as of December 31, 2021, the authorization from 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 December 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.

6 unchanged sentences

October 2028 (Euro Notes)

On September 14, 2021, the Company issued the 2031 Senior Notes due September 15, 2031.

On September 14, 2021, the Company issued the 2031 Senior Notes.

The Company used the net proceeds from the 2031 Senior Notes to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

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

On April 1, 2020, the Company used the net proceeds from the 2025 Senior Notes, together with cash on hand, to repay the $400.0 outstanding 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.

4 unchanged sentences

Senior Notes at any time, subject to certain terms and conditions.

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 (the “2026 Euro Notes”).

The Company used the net proceeds from the 2026 Euro Notes to repay amounts outstanding under the then existing revolving credit facility.

In 2018, the Euro Issuer issued €500.0 (approximately $574.6 at date of issuance) principal amount of unsecured 2.000% Senior Notes due October 8, 2028 (the “2028 Euro Notes”, collectively with the 2026 Euro Notes, “Euro Notes”, and collectively with the 2026 Euro Notes and the U.S.

Senior Notes, the “Senior Notes”).

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

The 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

The Euro Issuer has two outstanding unsecured senior notes issued in Europe.

In 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 (the “2026 Euro Notes”), the net proceeds of which were used to repay amounts outstanding under the then existing revolving credit facility.

In addition, the Euro Issuer also has €500.0 (approximately $574.6 at date of issuance) principal amount of unsecured 2.000% Senior Notes due October 8, 2028 (the “2028 Euro Notes”, together with the 2026 Euro Notes, the “Euro Notes”, and collectively with the 2026 Euro Notes and the U.S.

Senior Notes, the “Senior Notes”), the net proceeds of which were used to repay a portion of the outstanding amounts under our Commercial Paper Programs, with the remainder of the net proceeds being used for general corporate purposes.

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.

The Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.

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.

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

Refer to Note 4 of the Notes to Consolidated Financial Statements for further information related to the Company’s debt.

In April 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

During the year ended December 31, 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 in 2021 under the 2018 Stock Repurchase Program, 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.

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 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 years ended December 31, 2022 and 2021, the Company repurchased 9.9 million and 6.2 million shares of its Common Stock for $730.5 and $457.9, respectively, under the 2021 Stock Repurchase Program.

Of the total repurchases made in 2020, 2.7 million shares, or $153.9, were retained in Treasury stock at the time of repurchase;

the remaining 9.3 million shares, or $487.4, were retired by the Company.

Of the total repurchases made in 2019, 2.0 million shares, or $87.6, were retained in Treasury stock at the time of repurchase;

the remaining 11.1 million shares, or $514.1, were retired by the Company.

On April 27, 2021, the Board 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.

Of the total repurchases made in 2022 under the 2021 Stock Repurchase Program, 9.3 million shares, or $689.7, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

Of the total repurchases made in 2021 under the 2021 Stock Repurchase Program, 5.8 million shares, or $424.9, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

From January 1, 2023 through January 31, 2023, the Company repurchased 0.6 million additional shares of its Common Stock for $48.8, and, as of February 1, 2023, the Company has remaining authorization to purchase up to $762.8 of its Common Stock under the 2021 Stock Repurchase Program.

The price and timing of any future purchases 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 Common Stock.

In April 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 year ended December 31, 2021, the Company repurchased 3.1 million shares of its Common Stock for $203.8 under the 2018 Stock Repurchase

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 in 2021 under the 2018 Stock Repurchase Program, 2.8 million shares, or $184.0, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

During the year ended December 31, 2020, the Company repurchased 12.0 million shares of its Common Stock for $641.3 under the 2018 Stock Repurchase Program.

Of the total repurchases made in 2021 under the 2021 Stock Repurchase Program, 0.4 million shares, or $33.0, have been retained in Treasury stock at the time of repurchase;

the remaining 5.8 million shares, or $424.9, have been or will be retired by the Company.

From January 1, 2022 through January 31, 2022, the Company repurchased 0.6 million additional shares of its Common Stock for $50.0 under the 2021 Stock Repurchase Program, and, as of February 1, 2022, has remaining authorization to purchase up to $1,492.1 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.

Of the total repurchases made in 2020, 9.3 million shares, or $487.4, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

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

On October 20, 2020, the Board 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 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.

The following table summ arizes the declared quarterly dividends per share for each of the three years ended December 31, 2022, 2021 and 2020:

6 unchanged sentences

Dividends paid (including those declared in the prior year)

LIBOR Transition

In July 2017, the United Kingdom's Financial Conduct Authority (the “FCA”) , which regulates the London Interbank Offered Rate (“LIBOR”), announced its intent to phase out the use of LIBOR by the end of 2021.

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

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

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

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

financial institutions, identified the SOFR as its preferred benchmark alternative to USD LIBOR.

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

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

Treasury-backed repurchase transactions.

In March 2020, in response to this transition, the Financial Accounting Standards Board (“FASB”) issued accounting guidance providing certain optional expedients and exceptions for applying U.S.

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

In January 2021, the FASB issued further clarifying guidance surrounding derivatives, as it relates to this transition.

Effective November 30, 2021, the Revolving Credit Facility 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.

The Company and certain of its subsidiaries in the United States have defined benefit pension plans (“U.S.

7 unchanged sentences

Plans, the “Plans”).

The total liability for accrued pension and postretirement benefit obligations associated with the Company’s underfunded pension and postretirement benefit plans decreased in 2021 to $173.9 from $211.0 in 2020, primarily due to the impact of higher discount rates on our projected benefit obligation, along with actual returns on plan assets.

The total liability for accrued pension and postretirement benefit obligations associated with the Company’s underfunded pension and postretirement benefit plans decreased in 2022 to $111.1 from $173.9 in 2021, primarily driven by a significant decrease in our projected benefit obligations resulting from higher interest rates , along with foreign currency exchange translation, partially offset by negative returns on plan assets in 2022.

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.

Refer to Note 9 of the Notes to Consolidated Financial Statements for further discussion of the Company’s benefit plans and other postretirement benefit plans.

Acquisitions and Divestitures

During 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 defined and discussed below.

All but one of the 2021 Acquisitions were included in the Interconnect Products and Assemblies segment.

The 2021 Acquisitions were not material, either individually or in the aggregate, to the Company.

During 2022, the Company completed two acquisitions (the “2022 Acquisitions”) for $288.2, net of cash acquired.

One of the 2022 Acquisitions was included in the Harsh Environment Solutions segment and the other acquisition was included in the Interconnect and Sensor Systems segment.

The 2022 Acquisitions, which were funded through a combination of borrowings under the U.S.

Commercial Paper Program and cash on hand, were not material, either individually or in the aggregate, to the Company’s financial results.

During 2021, the Company completed seven acquisitions (the “2021 Acquisitions”) for $2,225.4, net of cash acquired, while also completing the divestiture of the Divested MTS business, as defined and discussed below.

One of the 2021 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 2021 Acquisitions were not material, either individually or in the aggregate, to the Company’s financial results.

Acquisition of MTS

2 unchanged sentences

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 is reflected within Net cash used in investing activities from continuing operations in the accompanying Consolidated Statements of Cash Flow for the year ended December 31, 2021.

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 accompanying 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.

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.

The repayment of the outstanding senior notes, including the make-whole premium and excluding

interest, was reflected within Net cash used in financing activities from continuing operations in the accompanying Consolidated Statements of Cash Flow for the year ended December 31, 2021.

Prior to the acquisition, MTS was a leading global supplier of precision sensors, advanced test systems and motion simulators.

MTS was historically organized into two business segments:

The repayment of the outstanding senior notes, including the make-whole premium and excluding interest, was reflected within Net cash used in financing activities from continuing operations in the accompanying Consolidated Statements of Cash Flow for the year ended December 31, 2021.

MTS, a leading global supplier of precision sensors, advanced test systems and motion simulators, was historically organized into two business segments:

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

The MTS Sensors business provides the Company with 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.

The retained MTS Sensors business provides the Company with a highly complementary offering of high-technology, harsh environment sensors sold into diverse end markets and applications.

In the second quarter of 2021, the Company incurred $55.4 ($44.6 after-tax, or $0.07 per diluted share) of acquisition-related expenses, comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the MTS acquisition.

2 unchanged sentences

Throughout this Annual Report, we refer to MTS (including the MTS T&S business, but excluding the MTS Sensors business) as the “Divested MTS business”.

As a result of the agreement to sell the Divested MTS business to ITW, the Company concluded that the Divested MTS business met the discontinued operations reporting criteria and “held for sale” accounting criteria as of the MTS acquisition date of April 7, 2021, and consequently, the Company did not assign the Divested MTS business to either of its two reportable business segments.

Accordingly, t he Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations through the date of its sale to ITW in the accompanying Consolidated Financial Statements.

As a result of the agreement to sell the Divested MTS business to ITW, t he Divested MTS business met the discontinued operations reporting criteria and “held for sale” accounting criteria as of the MTS acquisition date of April 7, 2021, and therefore, the Company did not assign the Divested MTS business to any of its reportable business segments.

Accordingly, t he Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations in the accompanying Consolidated Financial Statements through December 1, 2021, the date of the sale of the Divested MTS business to ITW.

Income from discontinued operations attributable to Amphenol Corporation, net of income taxes, was $21.4 for the year ended December 31, 2021.

1 unchanged sentence

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.

Amphenol has no continuing involvement with the Divested MTS business now that its sale has been consummated .

Amphenol has had no continuing involvement with the Divested MTS business after the completion of the sale.

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.

2 unchanged sentences

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 Consolidated Balance Sheet as of December 31, 2021, as discussed in more detail in Notes 1 and 5 of the Notes to Consolidated Financial Statements.

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 Consolidated Balance Sheets as of December 31, 2022 and 2021, as discussed in more detail in Notes 1 and 5 of the Notes to Consolidated Financial Statements.

The acquisition was funded with cash on hand.

Halo, which is headquartered in the United States (California), is a leading provider of active and passive fiber optic interconnect components, with product offerings that are highly complementary to our existing high-speed and fiber optic interconnect solutions for the communications infrastructure markets.

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

For further discussion of the Company’s acquisitions, as well as the Company’s discontinued operations and completed divestiture of the Divested MTS business, refer to Note 11 and Note 12, respectively, of the Notes to Consolidated Financial Statements.

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

Halo is reported within our Communications Solutions segment.

Acquisition-related Expenses

In 2022, the Company incurred $21.5 ($18.4 after-tax) of acquisition-related expenses, comprised primarily of the amortization related to the value associated with acquired backlog resulting from two acquisitions that closed in 2022, along with external transaction costs.

In 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.

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

Environmental Matters

5 unchanged sentences

The Company strives to offset the impact of increases in the cost of raw materials, labor and services through price increases, productivity improvements and cost saving programs.

However, in certain markets, particularly in communications related markets, implementing price increases can be difficult and there is no guarantee that the Company will be successful.

From time to time, the Company may encounter difficulties in obtaining certain raw materials or components necessary for production due to supply chain constraints and logistical challenges, which may also negatively impact the pricing of materials and components sourced or used by the Company.

While the Company does not currently anticipate any significant, broad-based difficulties in obtaining raw materials or components necessary for production, beginning in 2021 and into 2022, there have been supply chain and logistical challenges that have impacted the global economy, including our Company, and have caused supply constraints and commodity price increases on certain raw materials and components used by the Company in production , as well as lower availability of, and increased prices for, freight and logistics, including air, sea and ground freight .

Consequently, the Company may experience supply shortages for discrete raw materials or components in the future, which could be further exacerbated by increased commodity prices and additional inflation.

For a discussion of certain risks related to inflation and costs, refer to the risk factor titled “ The Company and certain of its suppliers and customers are experiencing difficulties obtaining certain raw materials and components, and the cost of most of the Company’s raw materials and components is increasing ” in Part I, Item 1A herein.

However, in certain markets, implementing price increases can be difficult and there is no guarantee that the Company will be successful.

From time to time, the Company may encounter difficulties in obtaining certain raw materials or components necessary for production due to supply chain constraints and logistical challenges, which may include regulatory restrictions and also negatively impact the pricing of materials and components sourced or used by the Company.

While the Company does not currently anticipate significant, broad-based difficulties in obtaining raw materials or components necessary for production, in 2021 and 2022, there were supply chain and logistical challenges that impacted the global economy, including our Company, and caused and continue to cause supply constraints and commodity price increases on certain raw materials and components used by the Company in production , as well as decreased availability of, and increased prices for, freight and logistics, including air, sea and ground freight .

As of December 31, 2022, while some of the supply chain and logistical challenges have eased, inflation continues to impact the cost of certain raw materials and components used by the Company.

Given this environment, the Company may experience supply shortages for discrete raw materials or components in the future, which could be further exacerbated by increased commodity prices and additional inflation.

For a discussion of certain risks related to inflation and costs, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of most of the Company’s raw materials and components is increasing ” in Part I, Item 1A.

Risk Factors herein.

Foreign Currency Exchange Rates

1 unchanged sentence

Changes in exchange rates can positively or negatively affect the Company’s sales, operating margins and equity.

The Company attempts to minimize currency exposure risk in a number of ways including producing its products in the same country or region in which the products are sold, thereby generating revenues and incurring expenses in the same currency, cost reduction and pricing actions, working capital management and hedging contracts.

However, there can be no assurance that these actions will be fully effective in managing currency risk, including in the event of a significant and sudden decline in the value of any of the foreign currencies of the Company’s worldwide operations.

For further discussion of foreign exchange exposures, risks and uncertainties, refer to the risk factor titled “ The Company’s results have at times been negatively affected by foreign currency exchange rates ” in Part I, Item 1A herein.

The Company attempts to mitigate currency risk in a number of ways, such as locating factories in the same country or region in which products are sold, hedging contracts, cost reduction and pricing actions or working capital management.

However, there can be no assurance that any or all such actions taken by the Company will be fully effective in successfully managing currency risk, including in the event of a significant and sudden decline in the value of any of the foreign currencies of the Company’s worldwide operations.

For further discussion of foreign exchange exposures, risks and uncertainties, refer to the risk factor titled “ The Company’s results can be positively or negatively affected by changes in foreign currency exchange rates ” in Part I, Item 1A.

Risk Factors herein.

Non-GAAP Financial Measures

11 unchanged sentences

The non-GAAP financial measures defined below should be read in conjunction with the Company’s financial statements presented in accordance with U.S.

The reconciliations of these non-GAAP financial measures to the

most directly comparable U.S.

The reconciliations of these non-GAAP financial measures to the most directly comparable U.S.

GAAP financial measures for the years ended December 31, 2022, 2021 and 2020 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 7:

34 unchanged sentences

Our revenues are derived from contracts with customers, which in most cases are customer purchase orders that may be governed by master sales agreements.

For each contract, the promise to transfer the control of the products, each of which is individually distinct, is considered to be the identified performance obligation.

For each contract, the promise to transfer the control of the products, each of which is individually distinct, is considered to be the identified

performance obligation.

As part of the consideration promised in each contract, the Company evaluates the customer’s credit risk.

28 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-K

Item 7. Management’s Discussion and Analysis