What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-08 compared with 2022-02-09 · 320 added, 385 removed, 1044 unchanged (40% of the section changed)

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Interest expense

Loss on early extinguishment of debt

Other (expense) income, net

Other income (expense), net

Income from continuing operations before income taxes

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Foreign currency translation adjustments

Unrealized gain (loss) on hedging activities

Unrealized loss on hedging activities

Pension and postretirement benefit plan adjustment

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Redeemable noncontrolling interest

Class A Common Stock, $ 0.001 par value;

2,000.0 shares authorized, 600.7 shares issued and 599.1 shares outstanding at December 31, 2021;

1,000.0 shares authorized, 600.7 shares issued and 598.7 shares outstanding at December 31, 2020

Class A Common Stock, $ 0.001 par value, 2,000.0 shares authorized;

596.0 shares issued and 594.8 shares outstanding at December 31, 2022;

600.7 shares issued and 599.1 shares outstanding at December 31, 2021

Additional paid-in capital

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

Stockholders’ equity attributable to Amphenol Corporation

Treasury Stock

Comprehensive

Noncontrolling

Interests (1)

Balance as of January 1, 2020

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

Other comprehensive income (loss)

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Balance as of December 31, 2020

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

Other comprehensive income (loss)

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Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interests

Purchase of noncontrolling interest

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Net income from continuing operations

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

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

Depreciation and amortization

Stock-based compensation expense

Loss on early extinguishment of debt

Deferred income tax (benefit) provision

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Proceeds from disposals of property, plant and equipment

Purchases of short-term investments

Sales and maturities of short-term investments

Purchases of investments

Sales and maturities of investments

Acquisitions, net of cash acquired

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Repayments under credit facilities

Borrowings (repayments) under commercial paper programs, net

Proceeds from short-term borrowings

Repayments of short-term borrowings

(Repayments) borrowings under commercial paper programs, net

Payment of costs related to debt financing

Payment of premiums and fees related to early extinguishment of debt

Payment of acquisition-related contingent consideration

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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

Cash and cash equivalents balance, beginning of year

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The Company sells its products to customers worldwide.

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

● Interconnect Products and Assemblies – The Interconnect Products and Assemblies segment primarily designed, manufactured and marketed a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a broad range of applications in a diverse set of end markets.

● Cable Products and Solutions – The Cable Products and Solutions segment primarily designed, manufactured and marketed cable, value-add products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

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

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

This new alignment replaces our historic reportable business segments.

The Company is in the process of completing the update of its internal reporting to accommodate this new reporting segment structure.

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.

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.

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.

Throughout this Annual Report on Form 10-K (the “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.

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

Prior to 2022 and through December 31, 2021, the Company operated through two reportable business segments:

• Interconnect Products and Assemblies – The Interconnect Products and Assemblies segment primarily designed, manufactured and marketed a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a wide range of applications in a diverse set of end markets.

• Cable Products and Solutions – The Cable Products and Solutions segment primarily designed, manufactured and marketed cable, value-add products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP” or “GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company’s management evaluates these significant estimates and assumptions that affect the consolidated financial statements and related disclosures.

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Similarly, the results of companies divested are included in the Consolidated Financial Statements during the period of Amphenol’s ownership through the date of the divestiture.

Change in Presentation

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

Specifically, in 2021,

the Company reclassified certain benefit costs that were previously recorded within “Other accrued expenses” to “Accrued salaries, wages and employee benefits” on the accompanying Consolidated Balance Sheets, which reclassifications were also reflected for the prior year in order to conform with the current year presentation.

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 the accompanying Consolidated Financial Statements and notes thereto, including but not limited to, number of shares and per share information, stock-based compensation data including stock options and restricted shares and related per share data, basic and diluted earnings per share, and dividends per share amounts, have been adjusted to reflect the effect of the stock split.

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

The impact to the Consolidated Balance Sheets and Consolidated Statements of Changes in Equity herein was an increase of $ 0.3 to Common Stock, with an offsetting decrease in Additional paid-in capital, which has been retroactively adjusted for all periods presented.

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

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

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and liquid investments with an original maturity of less than three months.

The carrying amounts approximate fair values of those instruments, the majority of which are in non-U.S.

bank accounts.

Short-term Investments

Short-term investments consist primarily of certificates of deposit with original maturities of twelve months or less.

Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less.

The carrying amounts approximate fair values of those instruments, the vast majority of which are in non-U.S.

bank accounts.

Short-term and Long-term Investments

Short-term investments consist primarily of certificates of deposit with original or remaining maturities of twelve months or less.

Long-term investments consist primarily of certificates of deposit with original and remaining maturities of more than twelve months.

The carrying amounts of these short-term and long-term investments approximate their respective fair values, the vast majority of which are in non-U.S.

bank accounts.

Short-term investments are presented separately as its own line item on the Consolidated Balance Sheets.

Long-term investments are recorded in Other long-term assets on the Consolidated Balance Sheets.

Accounts Receivable

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Leasehold building improvements are amortized over the shorter of the remaining lease term or estimated useful life of such improvements.

The Company periodically

reviews fixed asset lives.

The Company periodically reviews fixed asset lives.

Depreciation expense is included in both Cost of sales and Selling, general and administrative expenses in the Consolidated Statements of Income, dependent upon the specific categorization and use of the underlying asset being depreciated.

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Certain real estate leases also include executory costs such as common area maintenance (non-lease component), as well as property insurance and property taxes (non-components).

As a practical expedient permitted under Accounting Standards Update No.

2016-02, Leases (Topic 842) , we elected to account for the lease and non-lease components as a single lease component for our real estate leases.

We account for the lease and non-lease components as a single lease component for our real estate leases.

Lease payments, which may include lease components, non-lease components and non-components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts based on a rate or index (fixed in substance) as stipulated in the lease contract.

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Goodwill represents the excess purchase cost over the fair value of net assets acquired in business combinations.

The Company performs its evaluation for the impairment of goodwill for the Company’s two reporting units on an annual basis as of each July 1 or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired.

As a result of the aforementioned new reporting segment structure that went in effect on January 1, 2022, the Company utilized the relative fair value allocation approach to reallocate the historical goodwill associated with the previous Interconnect Products and Assemblies segment, while the historical goodwill associated with the previous Cable Products and Solutions segment has been allocated in full to the newly formed Communications Solutions segment.

The Company concluded that there were no events or changes in circumstances, immediately prior to the reporting unit change, that would indicate that either of the Company’s legacy reporting unit’s carrying amount may be impaired.

Therefore, no goodwill impairment assessment was deemed necessary related to the legacy reporting units prior to the change.

The Company continues to perform its evaluation for the impairment of goodwill associated with the Company’s reporting units on an annual basis as of each July 1, or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired.

The Company reviews its reporting unit structure each year, or more frequently based on changes in our organization.

Through December 31, 2021, we continued to define our reporting units as the two reportable business segments “Interconnect Products and Assemblies” and “Cable Products and Solutions”.

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

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

In conjunction with the new reporting segment structure, we determined that the Company’s reporting units are the three new reportable business segments.

Prior to the segment structure change and through December 31, 2021, the Company then defined its reporting units as the two reportable business segments “Interconnect Products and Assemblies” and “Cable Products and Solutions”.

In 2022, the annual goodwill impairment assessment was performed on the Company’s three reporting units, while in 2021 and 2020, the Company performed its annual assessment on the historic two reporting units that were then in effect.

In the third quarter of 2022 and 2021, as part of our annual evaluations, the Company utilized the option to first assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment assessment.

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

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

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

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

In 2020, when testing for goodwill impairment, the Company performed a quantitative goodwill impairment assessment for each reporting unit.

As part of the quantitative assessment, the Company estimated the fair value of each of its reporting units using a market approach.

The Company believes the market-based guideline public company method provides the best indicator of fair value, by utilizing market prices and other relevant metrics for comparable publicly traded companies with similar operating and investment characteristics, as well as recent transactions of similar businesses within the industry.

Significant judgments, estimates and assumptions were used in the Company’s goodwill impairment assessment, including historical profitability data, the determination and selection of appropriate publicly traded market comparison companies, and the calculation of comparable earnings-based and other multiples derived from comparable publicly traded companies and from recent transactions within the industry.

As there are inherent uncertainties and management’s judgment related to impairment analyses, the Company evaluated whether there were reasonably likely changes to management’s estimates and assumptions that would have a material impact on the results of the goodwill impairment assessment.

As of July 1, 2020, the Company determined that the fair value of each of the Company’s reporting units was substantially in excess of their respective carrying amounts, and therefore, no goodwill impairment resulted from the assessment.

As of July 1, 2022 and 2021, the Company determined that it was more likely than not that the fair value of each of its reporting units exceeded its respective carrying amount and, therefore, a quantitative assessment was not required.

As a result, no goodwill impairment resulted from the assessment as of July 1, 2022 and 2021.

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

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

Intangible Assets

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The Company reports a component of an entity or group of components of an entity as a discontinued operation and held for sale upon acquisition, if the Company has (i) executed a plan to sell the business as of the acquisition date or (ii) has begun to formulate a plan to sell the business and either currently meets or expects to meet the held for sale criteria within three months.

An entity meets the held for sale criteria when (i) management, having the authority to approve the action, commits to a plan to sell the discontinued operation, the plan of which is unlikely to have any significant changes or to be withdrawn, (ii) the completed sale is probable within one year and (iii) an active program to locate a buyer has been initiated with the operation actively marketed for sale at a price that is reasonable in relation to its current fair value and for immediate sale in its present condition.

An entity meets the held for sale criteria when (a) management, having the authority to approve the action, commits to a plan to sell the discontinued operation, the plan of which is unlikely to have any significant changes or to be withdrawn, (b) the completed sale is probable within one year, and (c) an active program to locate a buyer has been initiated with the operation actively marketed for sale at a price that is reasonable in relation to its current fair value and for immediate sale in its present condition.

The assets acquired and liabilities assumed from an entity that qualifies for held for sale accounting are measured and recorded at fair value less costs to sell, and are recorded as current assets held for sale and current liabilities held for sale when the planned sale is expected to close within one year.

The Company separately accounts for the operating results and related cash flows associated with discontinued operations until such operations are divested;

Company separately accounts for the operating results and related cash flows associated with discontinued operations until such operations are divested;

such discontinued operations are reported separately from the operating results and related cash flows associated with continuing operations in the accompanying Consolidated Financial Statements.

For the year ended December 31, 2021, the comprehensive income associated with discontinued operations was not material and has not been separately presented in the Consolidated Statements of Comprehensive Income .

F or further information related to the Company’s discontinued operations, refer to Note 12 herein.

For further information related to the Company’s discontinued operations, refer to Note 11 herein.

Revenue Recognition

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Based on the respective contract terms, most of our contracts’ revenues are recognized either (i) upon shipment based on free on board (“FOB”) shipping point or (ii) when the product arrives at its destination.

For the years ended December 31, 2021, 2020 and 2019, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date,

in the event of customer termination.

For the years ended December 31, 2022, 2021 and 2020, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.

For the contracts recognized over time, we typically record revenue using the input method, based on the materials and labor costs incurred to date relative to the contract’s total estimated costs.

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Nearly all of our performance obligations are fulfilled within one year .

Since our performance obligations are part of contracts that generally have original durations of one year or less, we have not disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of December 31, 2021 and 2020.

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

disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of December 31, 2022 and 2021.

Sales to Distributors and Resellers

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Shipping and handling costs are generally charged to and paid by the majority of our customers as part of the contract.

For a nominal portion of our customer contracts, primarily for certain customers in the broadband communications market (a market primarily in the Cable Products and Solutions segment), such costs are not separately charged to the customers.

For a nominal portion of our customer contracts, primarily for certain customers in the broadband communications market (a market primarily in the Communications Solutions segment), such costs are not separately charged to the customers.

Shipping and handling costs are included in Cost of sales in the accompanying Consolidated Statements of Income.

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Capitalized contract costs to obtain a contract or to fulfill a contract that are not accounted for under other existing accounting standards are recorded as either other current or long-term assets on the accompanying Consolidated Balance Sheets, depending on the timing of when the Company expects to recognize the expense, and are generally amortized consistent with the timing of when transfer of control of the related goods occurs.

Such capitalized contract costs were not material as of December 31, 2021 and 2020, and the related amortization expense was not material for the years ended December 31, 2021, 2020 and 2019.

Such capitalized contract costs were

not material as of December 31, 2022 and 2021, and the related amortization expense was not material for the years ended December 31, 2022, 2021 and 2020.

Retirement Pension Plans

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The tax effects of an uncertain tax position taken or expected to be taken in income tax returns are recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date.

The tax benefits recognized in the financial statements from such a position are measured based on

the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The Company includes estimated interest and penalties related to unrecognized tax benefits in the provision for income taxes.

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Assets and liabilities of such subsidiaries have been translated into U.S.

dollars at current exchange rates and related revenues and expenses have been translated at weighted average exchange rates.

current exchange rates and related revenues and expenses have been translated at weighted average exchange rates.

The aggregate effect of translation adjustments is included as a component of Accumulated other comprehensive income (loss) within equity.

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Costs incurred in connection with the development of new products and applications are expensed as incurred.

Research and development expenses for the creation of new and improved products and processes were $ 317.7 , $ 260.7 , and $ 234.2 , for the years 2021, 2020 and 2019, respectively, and are included in Selling, general and administrative expenses.

Research and development expenses for the creation of new and improved products and processes were $ 323.6 , $ 317.7 , and $ 260.7 , for the years 2022, 2021 and 2020, respectively, and are included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Income.

Environmental Obligations

The Company recognizes the potential cost for environmental remediation activities when site assessments are made, remediation efforts are probable and related amounts can be reasonably estimated.

potential insurance reimbursements are not recorded.

The Company assesses its environmental liabilities as necessary and appropriate through regular reviews of contractual commitments, site assessments, feasibility studies and formal remedial design and action plans.

Net Income per Common Share

Basic income per common share is based on the net income attributable to Amphenol Corporation for the year divided by the weighted average number of common shares outstanding.

Diluted income per common share assumes the exercise of outstanding dilutive stock options using the treasury stock method.

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

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

Diluted earnings per common share assumes the exercise of outstanding dilutive stock options using the treasury stock method.

Refer to Note 8 of the Notes to Consolidated Financial Statements for a reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding, used in the calculation of earnings per share (basic and diluted) from continuing operations, discontinued operations and for total Amphenol Corporation.

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

Redeemable Noncontrolling Interest (i.e.

Temporary Equity)

Redeemable Noncontrolling Interest

The Company reports noncontrolling interests in the mezzanine (“temporary equity”) section, between liabilities and equity, of the Consolidated Balance Sheets, to the extent that such noncontrolling interests have redemption features, such as a put option, that is redeemable at a fixed or determinable price on a fixed or determinable date at the option of the holder, or upon the occurrence of an event that is not solely within the control of the Company.

The carrying amount of the redeemable noncontrolling interest, initially valued at fair value as part of acquisition accounting, is adjusted each reporting period to equal the greater of the (i) redemption value and (ii) carrying value of the noncontrolling interest, adjusted each reporting period for income or loss attributable to the noncontrolling interest and any distributions made to date.

The redemption value is generally calculated based on a multiple of earnings, which, for the redeemable NCI currently outstanding, approximates fair value.

Any measurement adjustments, if applicable, to the redeemable noncontrolling interest are recognized in Additional paid-in capital in the Consolidated Balance Sheets.

Due to its redeemable features that are outside the control of the Company, the redeemable noncontrolling interest typically is and will continue to be reported in the mezzanine (temporary equity) section, between liabilities and equity, in the Consolidated Balance Sheets for as long as the put option is exercisable by the option holder.

Due to its redeemable features that are outside the control of the Company, the redeemable noncontrolling interest is and will continue to be reported in the mezzanine section in the Consolidated Balance Sheets for as long as the put option is exercisable by the option holder.

The carrying amount of the redeemable noncontrolling interest, initially valued at fair value as part of acquisition accounting, is adjusted each reporting period to equal the greater of the (i) redemption value or (ii) carrying value of the noncontrolling interest, adjusted each reporting period for income or loss attributable to the noncontrolling interest and any distributions made to date.

The redemption value is generally calculated based on a multiple of earnings.

Any measurement adjustments, if applicable, to the redeemable noncontrolling interest are

recognized in Additional paid-in capital in the Consolidated Balance Sheets.

Refer to Note 5 herein for further details related to the redeemable noncontrolling interest.

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Such cash flow hedges include foreign exchange forward contracts to hedge exposure to foreign currency exchange rate fluctuations for certain transactions denominated in foreign currencies.

As of December 31, 2021 and 2020, the aggregate notional value of our outstanding cash flow hedge contracts was approximately $ 20 and $ 94 , respectively.

As of December 31, 2022 and 2021, the aggregate notional value of our outstanding cash flow hedge contracts was approximately nil and $ 20 , respectively.

Gains and losses on derivatives designated as cash flow hedges resulting from changes in fair value are recorded in Accumulated other comprehensive income (loss), and subsequently reflected in Cost of sales in the Consolidated Statements of Income in a manner that matches the timing of the actual income or expense of such instruments with that of the hedged transaction.

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Recent Accounting Pronouncements

Recently Adopted Accounting Standards and SEC Final Rules

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

2019-12, Income Taxes (Topic 740):

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

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

The adoption of ASU 2019-12 did not have a material impact on our consolidated financial statements.

In May 2020, the Securities and Exchange Commission (the “SEC”) issued a new rule regarding the financial statement requirements for acquisitions and dispositions of a business, which included, among other things, amending (i) certain criteria in the significance tests for acquired or to-be-acquired businesses, (ii) related pro forma financial information requirements, including its form and content, and (iii) related disclosure requirements, including the number of acquiree financial statement periods required to be presented in SEC filings.

The final rule was effective for fiscal years beginning after December 31, 2020, with early application permitted.

The Company evaluated this SEC final rule, which we adopted on January 1, 2021.

To date, the final rule has not had a material impact on our consolidated financial statements.

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

In November 2020, the SEC issued Final Rule Release No.

33-10890 Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information that modernizes and simplifies various aspects and financial disclosure requirements in Regulation S-K, specifically related to Item 301 “Selected Financial Data” , Item 302 “Supplementary Financial Information” and Item 303 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”).

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

As a result of the Company’s adoption of this final rule, the previously required disclosure under Item 6.

Selected Financial Data has been removed from this Annual Report on Form 10-K (“Annual Report”).

In addition, as there have not been any material retrospective changes to the Consolidated Statements of Income for any of the quarters in the previous two years, the selected quarterly financial data disclosure has also been removed from the accompanying Notes to Consolidated Financial Statements.

While most of the changes reduced or removed previously required information and disclosures, the final rule did expand the disclosure requirements surrounding certain aspects of MD&A under Regulation S-K.

The final rule was published in the Federal Register on January 11, 2021, became effective on February 10, 2021, and registrants are required to comply with this final rule in the registrant’s first fiscal year ending on or after August 9, 2021.

The Company evaluated this SEC final rule, which was adopted and whose requirements and amendments were incorporated, in its entirety, within this Annual Report.

The application of this SEC final rule did not have a material impact on this current SEC filing nor is it expected to have a material impact on future SEC filings.

Other Recently Issued Accounting Standards Not Yet Adopted

In October 2021, the FASB issued ASU No.

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805):

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

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

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

The intent of ASU 2021-08 is to address diversity in practice and improve comparability for both the recognition and measurement of acquired revenue contracts by providing (i) guidance on how to determine whether a contract

liability is recognized by the acquirer in a business combination and (ii) specific guidance on how to recognize and measure contract assets and contract liabilities from revenue contracts in a business combination.

The intent of ASU 2021-08 is to address diversity in practice and improve comparability for both the recognition and measurement of acquired revenue contracts

by providing (i) guidance on how to determine whether a contract liability is recognized by the acquirer in a business combination and (ii) specific guidance on how to recognize and measure contract assets and contract liabilities from revenue contracts in a business combination.

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

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

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

The Company has completed its evaluation of ASU 2021-08, which we adopted on January 1, 2023, and its impact on our financial condition, results of operations or cash flows will be dependent upon the nature of any future business combinations.

The United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), previously 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.

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Treasury-backed repurchase transactions.

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

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

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

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

Scope , which permits entities to elect certain optional expedients and exceptions when accounting for derivatives and certain hedging relationships affected by changes in interest rates and the transition.

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.

In response, the FASB has since issued various guidance to help facilitate the transition away from LIBOR, including, among other things, 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.

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

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

In September 2022, the FASB issued ASU No.

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

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

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

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

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

The Company has completed its evaluation of ASU 2022-04, which is not expected to have a material impact on our consolidated financial statements upon its adoption in the first quarter of 2023.

Note 2—Inventories

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November 2026

Commercial Paper Program (less unamortized discount of nil and nil at December 31, 2021 and 2020, respectively)

Commercial Paper Program (less unamortized discount of $ 1.0 and nil at December 31, 2022 and 2021, respectively)

November 2026

Euro Commercial Paper Program (plus unamortized premium of nil and nil at December 31, 2021 and 2020, respectively)

Euro Commercial Paper Program

November 2026

3.125 % Senior Notes (less unamortized discount of nil at December 31, 2020

September 2021

4.00 % Senior Notes (less unamortized discount of $ 0.1 at December 31, 2020

February 2022

Term Loan Credit Facility

3.20 % Senior Notes (less unamortized discount of $ 0.1 and $ 0.1 at December 31, 2022 and 2021, respectively)

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February 2030

2.200 % Senior Notes (less unamortized discount of $ 2.7 at December 31, 2021

2.200 % Senior Notes (less unamortized discount of $ 2.4 and $ 2.7 at December 31, 2022 and 2021, respectively)

September 2031

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

Due to the significant volatility in the credit and capital markets resulting from the outbreak of the COVID-19 pandemic, the Company borrowed approximately $ 1,255.6 under the Revolving Credit Facility in the first quarter of 2020, at a weighted average interest rate of 1.82 % .

The outstanding borrowings as of March 31, 2020 included € 200.0 ($ 217.4 at date of issuance) of euro-denominated borrowings, with the remainder of the outstanding borrowings denominated in U.S.

The borrowings under the Revolving Credit Facility during the first quarter of 2020 were used in part to repay outstanding balances under the U.S.

Commercial Paper Program and the Euro Commercial Paper Program (each as defined below).

During the second quarter of 2020, the Company repaid all of the outstanding borrowings under the Revolving Credit Facility using cash and cash equivalents on hand as well as the net proceeds from the 2026 Euro Notes (defined below).

At December 31, 2021 and 2020, 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 carrying value of any borrowings under the Revolving Credit Facility would approximate their fair value due primarily to their market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 5).

Any outstanding borrowings under the Revolving Credit Facility are classified as long-term

debt in the accompanying Consolidated Balance Sheets.

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

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

Term Loan Credit Facility

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

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

The 2022 Term Loan may be repaid at any time without premium or penalty, and, once 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.

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

As of 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.

Commercial Paper Programs

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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 Systems Corporation (“MTS”).

In 2021, 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 (the “2021 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 (the “2022 Senior Notes”) due February 1, 2022, of which $ 295.0 aggregate principal amount was outstanding.

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

At December 31, 2020, there were no USCP Notes outstanding under the U.S.

Commercial Paper Program.

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 3.125 % Senior Notes (the “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 4.00 % Senior Notes (the “2022 Senior Notes”) due February 1, 2022, of which $ 295.0 aggregate principal amount was then outstanding.

As of December 31, 2022, the amount of USCP Notes outstanding 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.

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dollars or other currencies.

In addition, effective April 14, 2020 through March 22, 2021, a subsidiary of the Company was able to issue ECP Notes through the Bank of England’s COVID Corporate Financing Facility (the “BOE Facility”).

The BOE Facility expired on March 22, 2021, although the Company did not borrow under the BOE Facility.

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

At December 31, 2021 and 2020, there were no ECP Notes outstanding under the Euro Commercial Paper Program.

As of December 31, 2022 and 2021, there were no ECP Notes outstanding under the Euro Commercial Paper Program.

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.

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

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

corporate purposes.

The Commercial Paper is classified as long-term debt in the accompanying Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Company’s Revolving Credit Facility.

The Commercial Paper is actively traded and is therefore classified as Level 1 in the fair value hierarchy (Note 5).

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

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

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

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

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

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

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If redeemed on or after June 15, 2031, the Company may, at its option, redeem some or all of the 2031 Senior Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The Company used the

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

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 at 99.829 % of face value (the “2025 Senior Notes”).

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

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

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

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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.

On January 9, 2019, the Company issued $ 500.0 principal amount of unsecured 4.350 % Senior Notes due June 1, 2029 at 99.904 % of face value (the “2029 Senior Notes”).

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

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

Prior to March 1, 2029, the Company may, at its option, redeem some or all of the 2029 Senior Notes at any time by paying the redemption price (which includes a make-whole premium), plus accrued and unpaid interest, if any, to the date of redemption.

If redeemed on or after March 1, 2029, the Company may, at its option, redeem some or all of the 2029 Senior Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption.

In January 2019, the Company used the net proceeds from the 2029 Senior Notes, along with proceeds from borrowings under the U.S.

Commercial Paper Program, to repay the $ 750.0 outstanding principal amount of unsecured 2.55 % Senior Notes due in January 2019.

On September 4, 2019, the Company commenced tender offers (the “Tender Offers”) to purchase for cash any and all of the Company’s then outstanding (i) $ 375.0 principal amount of the 2021 Senior Notes and (ii) $ 500.0 principal amount of the 2022 Senior Notes.

On September 11, 2019, as a result of the Tender Offers, the Company accepted for payment $ 147.3 aggregate principal amount of the 2021 Senior Notes and $ 205.0 aggregate principal amount of the 2022 Senior Notes for 101.9 % and 104.5 % of par value, respectively (collectively, the “Tendered Notes”), plus accrued and unpaid interest to, but not including, the settlement date of the Tender Offers.

The total consideration for the Tendered Notes was $ 368.8 , which in addition to the Tendered Notes, included $ 13.4 of premiums and fees paid related to the early extinguishment of debt and $ 3.1 of accrued interest.

For the year ended December 31, 2019, the Company recorded a loss on early debt extinguishment of $ 14.3 ($ 12.5 after-tax, or $ 0.02 per diluted share) within Loss on early extinguishment of debt on the accompanying Consolidated Statements of Income.

This charge was primarily comprised of the premiums and fees incurred related to the Tendered Notes, along with the non-cash charge associated with the write-off of the remaining unamortized deferred debt issuance costs associated with the Tendered Notes.

On September 10, 2019, the Company issued $ 900.0 principal amount of unsecured 2.800 % Senior Notes due February 15, 2030 at 99.920 % of face value (the “2030 Senior Notes”).

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

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

Prior to November 15, 2029, the Company may, at its option, redeem some or all of the 2030 Senior Notes at any time by paying the redemption price (which includes a make-whole premium), plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If redeemed on or after November 15, 2029, the Company may, at its option, redeem some or all of the 2030 Senior Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

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

Commercial Paper Program.

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

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

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

Interest on each series of U.S.

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Euro Senior Notes

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

The 2026 Euro Notes are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness, and are fully and unconditionally guaranteed on a senior unsecured basis by the Company.

Interest on the 2026 Euro Notes is payable annually on May 4 of each year, commencing on May 4, 2021.

Prior to February 4, 2026, the Company may, at its option, redeem some or all of the 2026 Euro Notes at any time by paying the redemption price (which includes a make-whole premium), plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If redeemed on or after February 4, 2026, the Company may, at its option, redeem some or all of the 2026 Euro Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The Company used the net proceeds from the 2026 Euro Notes to repay amounts outstanding under the 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 at 99.498 % of face value (the “2028 Euro Notes” or the “ 2.000 % Euro Senior Notes”, collectively with the 2026 Euro Notes, the “Euro Notes”, and collectively with the U.S.

Senior Notes and 2026 Euro Notes, the “Senior Notes”).

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 at 99.563 % of face value (the “2026 Euro Notes” or the “ 0.750 % Euro Senior Notes”), the net proceeds of which were used to repay amounts outstanding under the then existing revolving credit facility.

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 at 99.498 % of face value (the “2028 Euro Notes” or the “ 2.000 % Euro Senior 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.

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 Company.

Interest on the 2028 Euro Notes is payable annually on October 8 of each year, commencing on October 8, 2019.

Prior to July 8, 2028, the Company may, at its option, redeem some or all of the 2028 Euro Notes at any time by paying the redemption price (which includes a make-whole premium), plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If redeemed on or after July 8, 2028, the Company may, at its option, redeem some or all of the 2028 Euro Notes at any time by paying the redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The 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.

Interest on the 2026 Euro Notes and 2028 Euro Notes is payable annually on May 4 and October 8 of each year, respectively.

The Company may, at its option, redeem some or all of either series of Euro Notes at any time, subject to certain terms and conditions, which include paying 100 % of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, and, with certain exceptions, a make-whole premium.

The fair value of each series of Senior Notes is based on recent bid prices in an active market and is therefore classified as Level 1 in the fair value hierarchy (Note 5).

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The maturity of the Company’s debt (exclusive of unamortized deferred debt issuance costs as of December 31, 2022) over each of the next five years ending December 31 and thereafter, is as follows:

At December 31, 2021, the Company had approximately $ 53.8 of uncommitted standby letter of credit facilities, of which $ 32.9 were issued.

As of December 31, 2022, the Company had approximately $ 55.3 of uncommitted standby letter of credit facilities, of which $ 38.4 were issued.

Note 5—Fair Value Measurements

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Level 3 Significant inputs to the valuation model are unobservable.

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

Each of these assets and liabilities is discussed below, with the exception of debt instruments and pension plan assets, which are covered in Note 4 and Note 9, respectively, herein, as well as the fair value of assets acquired and liabilities assumed as part of acquisition accounting, which is covered in Note 11 herein.

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

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

bank accounts, approximate their fair value.

The Company’s assets and liabilities currently subject to such standards with fair value disclosure requirements are primarily (i) debt instruments, (ii) pension plan assets, and (iii) assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting, which are discussed in Note 4, Note 9 and Note 11, respectively, herein, along with short- and long-term investments and derivative instruments, discussed below.

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

The vast majority of long-term investments have original maturities of two years .

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

bank accounts, approximate their respective fair values.

The Company’s derivative instruments primarily consist of foreign exchange forward contracts, which are valued using bank quotations based on market observable inputs such as forward and spot rates and are therefore classified as Level 2 in the fair value hierarchy.

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

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

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

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Short-term investments

Long-term investments

Forward contracts

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Forward contracts

Redeemable noncontrolling interest

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

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dollar equivalent of the net investments in certain foreign subsidiaries.

As of December 31, 2021, the fair value of such foreign exchange forward contracts in the table above consisted primarily of (i) one outstanding foreign exchange forward contract accounted for as a cash flow hedge, expiring in September 2022, (ii) various outstanding foreign exchange forward contracts accounted for as net investment hedges and (iii) various outstanding foreign exchange forward contracts that are not designated as hedging instruments.

As of December 31, 2022, the fair value of such foreign exchange forward contracts in the table above consisted primarily of (i) one outstanding foreign exchange forward contract accounted for as a net investment hedge and (ii) various outstanding foreign exchange forward contracts that are not designated as hedging instruments.

As of December 31, 2022, the Company had no outstanding foreign exchange forward contracts accounted for as cash flow hedges.

As of December 31, 2022 and 2021, the fair values of the Company’s forward contracts are recorded within Prepaid expenses and other current assets, Other long-term assets, Other accrued expenses and Other long-term liabilities in the accompanying Consolidated Balance Sheets, depending on their value and remaining contractual period.

For further discussion on the Company’s derivative financial instruments and related policies, refer to Note 1 herein.

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

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

The redeemable noncontrolling interest as of December 31, 2021 was entirely related to an acquisition that closed in December 2021, and based on the terms of the agreement, will remain in temporary equity until the put option is either exercised and the entire redeemable noncontrolling interest is fully settled or the put option expires.

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

As such, the redemption value is classified as Level 3 in the fair value hierarchy as included in the table above.

Since the initial measurement of the redeemable noncontrolling interest was recorded in December 2021, there were no material redemption value adjustments to the initial redemption value recorded as of December 31, 2021.

Refer to Note 1 herein for further discussion of redeemable noncontrolling interests.

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

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

At each reporting period in 2021, the Company reassessed the fair value of these assets held for sale and liabilities held for sale and noted that the carrying value of the disposal group did not exceed its fair value less costs to sell.

At December 31, 2021, there were no assets held for sale no r liabilities held for sale on the Consolidated Balance Sheets, as a result of the sale of the Divested MTS business in December 2021, as discussed in further detail in Note 12 herein.

With the exception of the fair value of the assets acquired and liabilities assumed in connection with acquisition accounting as well as the assets held for sale and liabilities held for sale discussed above, the Company does not have any other significant financial or non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

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

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

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

A rollforward of the Redeemable noncontrolling interest for the years ended December 31, 2022 and 2021 is included in the accompanying Consolidated Statements of Changes in Equity.

With the exception of the fair value of the assets acquired and liabilities assumed in connection with acquisition accounting, the Company does not have any other significant financial or non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

For further discussion and related policies regarding the Company’s short- and long-term investments, derivative financial instruments, and redeemable noncontrolling interest, refer to Note 1 herein.

Note 6—Income Taxes

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Total provision for income taxes

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

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

As a result, in 2017, the Company recorded a transition tax (“Transition Tax”) related to the deemed repatriation of the accumulated unremitted earnings and profits of the Company’s foreign subsidiaries.

In the second quarter of 2021, the Company paid the fourth annual installment of the Transition Tax, net of applicable tax credits and deductions.

In the second quarter of 2022, the Company paid its fifth annual installment of the Transition Tax, net of applicable tax credits and deductions.

The Company will pay the balance of the Transition Tax, net of applicable tax credits and deductions, over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.

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state tax credits.

The valuation allowance for deferred tax assets increased by $ 4.8 and $ 4.9 in 2021 and 2020, respectively, which was primarily driven by U.S.

state and foreign net operating loss carryforwards in both years.

The valuation allowance for deferred tax assets decreased by $ 2.7 in 2022, which was primarily driven by foreign currency exchange.

The valuation allowance for deferred tax assets increased by $ 4.8 in 2021, which was primarily driven by U.S.

state and foreign net operating loss carryforwards.

Differences between the U.S.

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statutory federal tax rate

State and local taxes

State and local taxes, net

Foreign earnings and dividends taxed at different rates

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The Company includes estimated interest and penalties related to unrecognized tax benefits in the provision for income taxes.

During the years ended December 31, 2021, 2020 and 2019, the provision for income taxes included a net (benefit) expense of ($ 4.6 ), $ 2.8 and $ 4.4 , respectively, in estimated interest and penalties.

During the years ended December 31, 2022, 2021 and 2020, the provision for income taxes included a net expense (benefit) of $ 0.8 , ($ 4.6 ) and $ 2.8 , respectively, in estimated interest and penalties.

As of December 31, 2022, 2021 and 2020, the liability for unrecognized tax benefits included $ 35.8 , $ 34.5 and $ 39.2 , respectively, for tax-related interest and penalties.

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Based on information currently available, management anticipates that over the next twelve-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $ 18.5 .

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.

Note 7—Equity

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As of December 31, 2022, there were 36,808,063 shares of Common Stock available for the granting of additional stock options under the 2017 Option Plan.

Prior to the approval of the 2017 Employee Option Plan, the Company issued stock options under the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, and its amendment (the “2009 Employee Option Plan”).

Prior to the approval

of the 2017 Employee Option Plan, the Company issued stock options under the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, and its amendment (the “2009 Employee Option Plan”).

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

Options granted under the 2017 Option

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

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

Stock option activity for 2020, 2021 and 2022 was as follows:

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

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

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

model inputs.

Expected share price volatility is calculated based on the historical volatility of the Common Stock and implied volatility derived from related exchange traded options.

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The risk-free interest rate is based on U.S.

zero-coupon issuances with a remaining term equal to the expected life assumed at the date of grant.

Treasury zero-coupon issuances with a remaining term equal to the expected life assumed at the date of grant.

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

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As of December 31, 2022, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.5 (with a weighted average expected amortization period of 0.37 years).

On January 27, 2021, the Company announced that its 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, whereas stockholders received one additional share of Common Stock for each share held as of the record date.

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.

Consistent with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, all current and prior year data presented in the accompanying Consolidated Financial Statements and notes thereto, including but not limited to, number of shares and per share information, stock-based compensation data including stock options and restricted shares and related per share data, basic and diluted earnings per share, and dividends per share amounts, reflect the effect of the stock split.

Authorized Shares for Issuance:

On May 19, 2021, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation, which increased the total number of shares of Common Stock that the Company is authorized to issue to 2 billion shares, an increase of 1 billion shares from the amount previously authorized.

While the stock split did not change the number of authorized common shares of the Company, on May 19, 2021, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation, which increased the total number of shares of Common Stock that the Company is authorized to issue to 2 billion shares, an increase of 1 billion shares from the amount previously authorized.

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

Stock Repurchase Programs:

On April 24, 2018, the 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”).

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 year ended December 31, 2022, the Company repurchased 9.9 million shares of its Common Stock for $ 730.5 under the 2021 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.

During the years ended December 31, 2020 and 2019, the Company repurchased 12.0 million and 13.1 million shares of its Common Stock for $ 641.3 and $ 601.7 , respectively, under the 2018 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.

During the year ended December 31, 2021, the Company repurchased 6.2 million shares of its Common Stock for $ 457.9 under the 2021 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 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.

On April 24, 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $ 2,000.0 of Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act.

During the 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 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 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 summarizes the quarterly declared dividends per share for each of the three years ended December 31, 2022, 2021 and 2020:

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There were no reclassifications associated with our net investment hedges from Accumulated other comprehensive income (loss) to earnings during the years presented in the table above.

The amount included in Accumulated other comprehensive loss as of December 31, 2021 associated with our cash flow hedges is expected to be reclassified into earnings within the next twelve months.

The amounts reclassified from Accumulated other comprehensive income (loss) to earnings, related to pension and other postretirement benefit plans in the table above, are reported within Other (expense) income, net in the Consolidated Statements of Income, the vast majority of which is related to the amortization of actuarial losses associated with our defined benefit plans.

While there were no outstanding cash flow hedges as of December 31, 2022, any amounts included in Accumulated other comprehensive loss associated with cash flow hedges are generally reclassified into earnings within the following twelve months.

The amounts reclassified from Accumulated other comprehensive income (loss) to earnings, related to pension and other postretirement benefit plans in the table above, are reported within Other income (expense), net in the Consolidated Statements of Income, the vast majority of which is related to the amortization of actuarial losses associated with our defined benefit plans.

The amortization of actuarial losses is included in the computation of net pension expense discussed in more detail within Note 9 herein.

Note 8—Earnings Per Share

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

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

A reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding, along with the earnings per share (basic and diluted) for the years ended December 31, 2021, 2020 and 2019 is as follows (note - per share amounts may not add due to rounding) :

The following is a reconciliation of net income from continuing operations, discontinued operations and for total Amphenol Corporation, as well as a reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding, which were used to calculate the earnings per share (basic and diluted) for the years ended December 31, 2022, 2021 and 2020 (note that per share amounts may not add due to rounding) :

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

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Net income attributable to Amphenol Corporation — Diluted

As discussed in further detail in Note 1 herein, all current and prior year data presented in the table above, including the number of shares and per share information , have been adjusted to reflect the effect of the stock split that went into effect in March 2021.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 9.0 million, 3.5 million and 9.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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Plans and are instead covered by various defined contribution plans.

The Company also has an unfunded Supplemental Employee Retirement Plan (“SERP”), which provides for the payment of the portion of annual pension which cannot be paid from the retirement plan as a result of regulatory limitations on average compensation for purposes of the benefit computation.

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

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Plan amendments

Actuarial (gain) loss

Actuarial gain

Foreign exchange translation

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Fair value of plan assets at end of year

Over (under) funded status at end of year

(Under) over funded status at end of year

Amounts recognized on the balance sheet as of December 31:

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Accrued pension and postretirement benefit obligations

Over (under) funded status at end of year

(Under) over funded status at end of year

Accumulated other comprehensive loss, net

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Rate of compensation increase

The projected benefit obligations decreased in 2022 primarily due to actuarial gains, resulting from the impact of higher discount rates on our projected benefit obligation, along with foreign exchange translation and benefits paid during the year.

The projected benefit obligation decreased in 2021 primarily due to both actuarial gains, resulting from the impact of higher discount rates on our projected benefit obligation, and benefits paid during the year.

The projected benefit obligations increased in 2020 primarily due to actuarial losses, resulting from the impact of lower discount rates on our projected benefit obligation.

The accumulated benefit obligation for the Company’s defined benefit pension plans was $ 560.1 and $ 753.7 at December 31, 2022 and 2021, respectively.

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The pension expense for the Plans is calculated based upon a number of actuarial assumptions established on January 1 of the applicable year, including mortality projections as well as a weighted average discount rate, rate of increase in future compensation levels and an expected long-term rate of return on the respective Plans’ assets which are detailed in the table above.

The Company records service costs in the same line item as the respective employee compensation costs and within operating income, while all other pension-related costs including interest cost, expected return on plan assets, amortization of prior service cost and amortization of net actuarial losses are reported separately within Other (expense) income, net in the Consolidated Statements of Income.

The Company records service costs in the same line item as the respective employee compensation costs and within operating income, while all non-service costs are reported separately within Other income (expense), net in the Consolidated Statements of Income.

The discount rate used by the Company for valuing pension liabilities is based on a review of high quality corporate bond yields with maturities approximating the remaining life of the projected benefit obligations.

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Plans, this has resulted in assets exceeding benefit obligations.

As a result, in an effort to reduce the funding status volatility of the Plans, the Company has shifted the target asset allocations for the U.S.

Plans from 60 % equities and 40 % fixed income at the end of 2020 to 25 % equities and 75 % fixed income at the end of 2021.

In an effort to reduce the funding status volatility of the Plans, the target asset allocations for the U.S.

Plans were 25 % equities and 75 % fixed income as of December 31, 2022 and 2021.

The Company expects to maintain these target asset allocations for the U.S.

Plans for 2023.

Short-term strategic ranges for investments will continue to be established within these new long-term target percentages.

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The Plans may indirectly hold the Company’s securities as a result of external investment management in certain commingled funds.

Such holdings would not be material relative to the

Plans’ total assets.

Such holdings would not be material relative to the Plans’ total assets.

The Company’s Foreign Plans primarily invest in equity and debt securities and insurance contracts, as determined by each Plans’ Trustees or investment managers.

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fixed income securities — long term

fixed income securities — high yield

International fixed income securities — other

Insurance contracts

Real estate funds

Cash and cash equivalents

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Certain fixed income securities held within commingled funds are valued based on the fair value of the underlying net assets of the funds, as determined by the custodian of the funds.

The Level 2 pension plan assets are primarily comprised of pooled funds valued using published prices based off of observable market data.

The Level 2 pension plan assets are comprised primarily of pooled funds valued using published prices based off of observable market data.

The Level 3 pension plan assets as of December 31, 2022 and 2021 included in the table above consist primarily of contracts with insurance companies related to certain foreign plans.

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Our valuation of Level 3 assets is based on insurance company or third-party actuarial valuations, representing an estimation of the surrender or market values of the insurance contract between the Company and the insurance companies.

In prior years, our Level 3 pension plan assets also included certain investments in commingled real estate funds which were valued based on unobservable market price inputs.

The following table sets forth a summary of changes of the fair value of the Level 3 pension plan assets for the years ended December 31, 2022 and 2021:

Balance on January 1

Unrealized (losses) gains, net

Unrealized losses, net

Purchases, sales and settlements, net

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

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

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

Benefit payments related to the Plans above, including those amounts to be paid out of Company assets and reflecting future expected service as appropriate, are expected to be as follows:

The obligation related to the SERP is included in the accompanying Consolidated Balance Sheets and in the tables above.

Certain foreign subsidiaries of the Company offer certain benefits under local statutory plans which are excluded from the tables above.

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The Company’s share of the cost of such plans for most participants is fixed, and any increase in the cost of such plans will be the responsibility of the retirees.

Company funds the benefit costs for such plans on a pay-as-you-go basis.

The Company funds the benefit costs for such plans on a pay-as-you-go basis.

As of December 31, 2022 and 2021, t he total liability associated with postretirement benefit obligations was approximately $ 4.3 and $ 6.0 , respectively, the majority of which is included in Accrued pension and postretirement benefit obligations on the accompanying Consolidated Balance Sheets.

The weighted average discount rate used to determine the projected benefit obligation as of December 31, 2022 and 2021 was 5.22 % and 2.75 % , respectively.

Net postretirement benefit expense on the accompanying Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 were nil , $ 0.2 and $ 0.3 , respectively.

Net postretirement benefit expense on the accompanying Consolidated Statements of Income was not material for each of the years ended December 31, 2022, 2021 and 2020.

Since the Company’s obligation for postretirement medical plans is fixed and since the benefit obligation and the net postretirement benefit expense are not material in relation to the Company’s financial condition or results of operations, the Company believes any change in medical costs from that estimated will not have a significant impact on the Company.

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defined contribution plans of approximately $ 18.0 , $ 16.2 and $ 13.3 in 2022, 2021 and 2020, respectively.

Effective January 1, 2023, the Company increased its matching of employee contributions to the U.S.

defined contribution plans to a maximum of 7 % of eligible compensation.

Note 10—Leases

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The following summarizes the operating lease-related account balances on our Consolidated Balance Sheets, as of December 31, 2022 and 2021:

As of December 31 :

Operating lease right-of-use assets (included in Other long-term assets)

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2022 Acquisitions

During the year ended December 31, 2021, the Company completed seven acquisitions for $ 2,225.4 , net of cash acquired, while also completing the divestiture of the Divested MTS business, as discussed below and in Note 12 herein.

Six of the acquisitions were included in the Interconnect Products and Assemblies segment, while one acquisition was included in the Cable Products and Solutions segment.

The Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed.

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

During the year ended December 31, 2022, the Company completed two acquisitions for approximately $ 288.2 , net of cash acquired.

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

Commercial Paper Program and cash on hand.

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

While the current purchase price allocation is based on preliminary assessments made by management as of December 31, 2022, the Company is in the process of completing its analyses of the allocation of the fair value of the assets acquired and liabilities assumed.

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

The operating results of the 2022 acquisitions have been included in the Consolidated Statements of Income for the year ended December 31, 2022, since their respective dates of acquisition.

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

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

2021 Acquisitions

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

The Company completed the acquisition accounting, including the analyses of the fair value of the assets acquired and liabilities assumed, for all of its 2021 acquisitions, and each of the final assessment of values did not differ materially from their previous preliminary assessments.

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

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

Acquisition of MTS Systems Corporation

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

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:

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.

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

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

Commercial Paper Program, as discussed in Note 4 herein, 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.

Commercial Paper Program and cash on hand.

At closing, the Company paid approximately $ 1,300 , net of cash acquired, for 100 % of the common stock of MTS, including certain liabilities settled at closing, which was reflected within Net cash used in investing activities from continuing operations in the 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.

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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.

Refer to Note 12 herein for further details related to the Company’s discontinued operations and the completed divestiture of the Divested MTS business.

The Company is in the process of completing the acquisition accounting related to the MTS Sensors business, specifically the allocation of the purchase price attributable to the MTS Sensors business to the tangible and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values.

The preliminary purchase price allocation for the MTS Sensors business is being performed separately from the Divested MTS business, the latter of which was accounted for as discontinued operations and whose assets acquired, including associated goodwill, and liabilities assumed were reported as current assets held for sale and liabilities held for sale in the Company’s balance sheet.

Refer to “ Presentation and Sale of the Divested MTS Business ” section below for further details related to the Company’s discontinued operations and the completed divestiture of the Divested MTS business.

The purchase price allocation for the MTS Sensors business was performed separately from the Divested MTS business, the latter of which was accounted for as discontinued operations and whose assets acquired, including associated goodwill, and liabilities assumed were reported as current assets held for sale and current liabilities held for sale on the Company’s balance sheet.

As a result of the sale of the Divested MTS business on December 1, 2021, the Company completed the acquisition accounting associated with the Divested MTS business and the associated current assets held for sale and current liabilities held for sale are no longer reported on the Company’s Consolidated Balance Sheets as of December 31, 2021.

While the Company is in the process of completing its analyses of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as part of acquisition accounting, the MTS acquisition resulted in the recognition of $ 741.1 of goodwill, $ 54.0 of indefinite-lived tradename intangible assets and $ 178.2 of definite-lived intangible assets, each associated with the MTS Sensors business.

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

In 2022, the Company completed its analysis of the purchase price allocation of the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed, as part of the acquisition accounting associated with the MTS Sensors business.

The final assessment of values for the MTS Sensors business did not differ materially from previous preliminary assessments.

The MTS acquisition resulted in the recognition of $ 738.7 of goodwill, $ 54.0 of indefinite-lived tradename intangible assets and $ 178.2 of definite-lived intangible assets, each associated with the MTS Sensors business.

The definite-lived intangible assets are comprised of customer relationships, proprietary technology, and backlog of $ 122.9 , $ 39.1 and $ 16.2 , respectively, and are amortized based upon the underlying pattern of economic benefit with weighted average useful lives of 11 years , 15 years and 0.25 years, respectively.

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

Since the current purchase price allocation is based on preliminary assessments made by management as of December 31, 2021, the acquisition accounting is subject to final adjustment and it is possible that the final assessment of values may differ from this preliminary assessment.

The operating results for the MTS Sensors business have been included within continuing operations in the Consolidated Statements of Income since the acquisition date, while the operating results for the Divested MTS business have been classified and reported as discontinued operations as discussed further in Note 12 herein.

The operating results for the MTS Sensors business have been included within continuing operations in the Consolidated Statements of Income since the acquisition date of April 7, 2021, while the operating results for the Divested MTS business were classified and reported as discontinued operations as discussed further below.

Presentation and Sale of the Divested MTS Business

On January 19, 2021 and prior to the closing of the MTS acquisition, the Company entered into a definitive agreement to sell the Divested MTS business to ITW.

As a result of the a greement to sell the Divested MTS business to ITW, 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 therefore, the Company did not assign the Divested MTS business to any of its three reportable business segments.

Accordingly, since the Divested MTS business has never been nor was expected to ever be considered part of our continuing operations, the Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations in the accompanying Consolidated Statements of Income and Consolidated Statements of Cash Flow, respectively, as of the MTS acquisition date through December 1, 2021, the date of the sale of the Divested MTS business.

For the year ended December 31, 2021, the comprehensive income associated with discontinued operations was not material and was not presented separately in the Consolidated Statements of Comprehensive Income.

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

In 2021, the assets and liabilities associated with the Divested MTS business were presented as current assets held for sale and current liabilities held for sale, respectively, on the Company’s balance sheet throughout the period in which Amphenol owned the business.

As discussed above, the purchase price allocation associated with the Divested MTS business was performed separately from the MTS Sensors business, as the Divested MTS business met the “held for sale” accounting criteria.

Such assets acquired and liabilities assumed were recorded as current assets held for sale and current liabilities held for sale, as separate single line items on the Company’s balance sheet as of the MTS acquisition date through December 1, 2021, the date of the sale of the Divested MTS business.

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

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

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

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

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

At December 31, 2021, there were no assets held for sale no r liabilities held for sale on the Consolidated Balance Sheets, as a result of the sale of the Divested MTS business in December 2021.

In addition, there were no material adjustments to previously reported balances associated with the assets held for sale and liabilities held for sale.

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

Acquisition of Halo Technology Limited

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

The sellers retained a less than 3 % noncontrolling interest in Halo, which includes redeemable features that are outside the control of the

Company and therefore, has been classified as temporary equity on the Consolidated Balance Sheet as of December 31, 2021, as discussed in more detail in Notes 1 and 5 herein.

The sellers retained a noncontrolling interest of less than 3 % in Halo, which includes redeemable features that are outside the control of the Company and therefore, has been classified as temporary equity on the Consolidated Balance Sheets as of December 31, 2022 and 2021, as discussed in more detail in Notes 1 and 5 herein.

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

The Company completed the acquisition accounting related to the Halo acquisition, specifically associated with the purchase price allocation of the fair value of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interest assumed.

The final assessment of values for the Halo acquisition did not differ materially from previous preliminary assessments.

As of December 31, 2022, the Halo acquisition resulted in the recognition of $ 522.1 of goodwill, $ 29.0 of indefinite-lived tradename intangible assets and $ 168.0 of definite-lived intangible assets.

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

Since the current purchase price allocation is based on an initial preliminary assessment made by management as of December 31, 2021, the acquisition accounting for Halo is subject to final adjustment and it is possible that the final assessment of values may differ from our initial preliminary assessment.

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

The acquisition of Halo, which is reported within our Interconnect Products and Assemblies segment, was not material to the Company’s financial results.

2020 Acquisitions

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

The Company completed the acquisition accounting, including the analyses of the fair value of the assets acquired and liabilities assumed, for both 2020 acquisitions, and the final assessments of values did not differ materially from the preliminary assessments.

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

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

2020 Acquisitions

During the year ended December 31, 2019, the Company completed nine acquisitions for $ 937.4 , net of cash acquired.

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

The 2019 acquisitions resulted in the recognition, in 2019, of $ 784.6 of goodwill and $ 111.8 of definite-lived intangible assets, primarily related to customer relationships and proprietary technology, with the remainder of the purchase price being allocated to other identifiable assets acquired and liabilities and noncontrolling interests assumed.

These definite-lived intangible assets are being amortized based upon the underlying pattern of economic benefit, with the vast majority having useful lives ranging from 5 to 10 years .

The excess purchase price over the fair value of the underlying net assets acquired was allocated to goodwill, which primarily represents the value of the assembled workforce along with other intangible assets acquired that do not qualify for separate recognition.

Approximately $ 455 of the goodwill recognized from acquisitions in 2019 will be deductible for tax purposes.

The Company completed the acquisition accounting, including its analyses of the fair value of the assets acquired and liabilities assumed, for all 2019 acquisitions, and the final assessments of values did not differ materially from the preliminary assessments.

The operating results of the 2019 acquisitions have been included in the Consolidated Statements of Income, since their respective dates of acquisition.

During the year ended December 31, 2020, the Company completed two acquisitions for $ 50.4 , net of cash acquired.

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

In January 2019, the Company acquired SSI Controls Technologies (“SSI”), the sensor manufacturing division of SSI Technologies, Inc., for approximately $ 400 , net of cash acquired, plus a performance-related contingent payment.

SSI, which is headquartered in the United States (Wisconsin), is a leading designer and manufacturer of sensors and sensing solutions for the global automotive and industrial markets.

The SSI acquisition was not material to the Company.

The contingent consideration payment was based on certain 2019 revenue and profitability levels of SSI.

The Company determined the fair value of this liability using Level 3 unobservable inputs, such as probability weighted payout projections, and is classified as Level 3 in the fair value hierarchy (Note 5).

The calculation of the contingent consideration was finalized in the first quarter of 2020 as $ 75.0 , based on actual financial data used for inputs, and was paid in the second quarter of 2020.

Acquisition-related Expenses

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.

In 2022, the Company incurred $ 21.5 ($ 18.4 after-tax) of acquisition-related expenses, comprised primarily of the amortization of $ 12.0 related to the value associated with acquired backlog resulting from the acquisitions that closed in 2022, along with external transaction costs.

purchase accounting costs related to the Halo acquisition in the fourth quarter of 2021.

In 2020, the Company incurred approximately $ 11.5 ($ 10.7 after-tax) of acquisition-related expenses, comprised primarily of external transaction costs related to acquisitions that were announced or closed.

In 2019, the Company incurred approximately $ 25.4 ($ 21.0 after-tax) of acquisition-related expenses, comprised primarily of the amortization of $ 15.7 related to the value associated with acquired backlog (of which $ 12.5 related to the acquisition of SSI), with the remainder representing external transaction costs.

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

Note 12—Discontinued Operations

Presentation and Sale of the Divested MTS Business

On January 19, 2021 and prior to the closing of the MTS acquisition, the Company entered into a definitive agreement to sell the Divested MTS business to ITW.

As a result of the a greement 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.

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

As discussed in Note 11 herein, the purchase price allocation associated with the Divested MTS business was performed separately from the MTS Sensors business, as the Divested MTS business met the “held for sale” accounting criteria.

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

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

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

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

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

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

At December 31, 2021, there were no assets held for sale no r liabilities held for sale on the Consolidated Balance Sheets, as a result of the sale of the Divested MTS business in December 2021.

In addition, there were no material adjustments to previously reported balances associated with the assets held for sale and liabilities held for sale.

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

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

Note 12—Goodwill and Other Intangible Assets

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

Communications

Goodwill at December 31, 2020

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Goodwill at December 31, 2022

The increase in goodwill during 2021 was primarily driven by the acquisition of MTS and Halo, along with the other acquisitions that closed during the year, as described in Note 11 herein.

The increase in goodwill during 2022 was primarily driven by goodwill recognized from the acquisitions that closed in 2022, partially offset by foreign currency translation.

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

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

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Trade names (indefinite-lived)

The increase in the gross carrying amount of intangible assets in 2021 was driven by certain customer relationships recognized resulting from acquisition accounting associated with our 2021 acquisitions, as well as certain proprietary technology and indefinite-lived trade names associated with both the MTS and Halo acquisitions.

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

Amortization expense for the years ended December 31, 2022, 2021 and 2020 was approximately $ 81.0 , $ 86.4 and $ 49.6 , respectively.

Amortization expense in 2021 includes $ 16.2 and $ 9.0 related to the amortization of acquired backlog resulting from the MTS and Halo acquisitions, respectively, while amortization expense in 2019 included $ 15.7 related to the amortization of acquired backlog, primarily from the SSI acquisition.

Amortization expense in 2022 includes $ 12.0 related to the amortization of acquired backlog from the 2022 acquisitions, while amortization expense in 2021 included $ 16.2 and $ 9.0 related to the amortization of acquired backlog resulting from the MTS and Halo acquisitions, respectively.

As of December 31, 2022, amortization expense relating to the Company’s current intangible assets estimated for each of the next five fiscal years is approximately $ 69.1 in 2023, $ 63.8 in 2024, $ 54.5 in 2025, $ 52.8 in 2026, and $ 46.0 in 2027.

Note 13—Reportable Business Segments and International Operations

Through December 31, 2021, the Company had two reportable business segments:

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

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

These reportable business segments were determined based upon how the Company operated its businesses, assessed operating performance, made resource allocation decisions, and communicated results,

outlook and strategy to the Board and stockholders.

The Interconnect Products and Assemblies segment primarily designed, manufactured and marketed a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a broad range of applications in a diverse set of end markets.

The Cable Products and Solutions segment primarily designed, manufactured and marketed cable, value-add products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets.

The accounting policies of the segments were the same as those for the Company as a whole, as described in Note 1 herein.

The Company evaluated the performance of the segments and allocated resources to them based on, among other things, profit or loss from operations before interest, headquarters’ expense allocations, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses.

The Company also provided general corporate services to its reportable business segments, which continued to be reported as “Corporate/Other”, a non-reportable business segment.

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 .

Refer to Note 16 herein for further details related to the Company’s change in its reportable business segments.

The segment results and segment assets the years ended December 31, 2021, 2020 and 2019 were as follows:

Interconnect Products

Cable Products

and Assemblies

and Solutions

Corporate / Other (1)

Total Consolidated

Depreciation and amortization

Capital expenditures

Segment operating income

Segment assets (excluding goodwill)

(1) Corporate / Other is not a reportable business segment, but has been included above for purposes of reconciling between segment data and total consolidated data.

The reconciliation of segment operating income and segment assets (excluding goodwill) to consolidated results is included in the tables below.

A reconciliation of segment operating income to consolidated income from continuing operations before income taxes is summarized as follows:

For the Years Ended December 31,

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

In conjunction with the new alignment of our business, the Company appointed three new segment managers to lead their

respective reportable business segments, each reporting directly to the Chief Executive Officer.

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

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

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

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

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

The Company has recast all relevant prior year period segment information in order to enable year-over-year segment comparisons in this Annual Report.

The accounting policies of the segments are the same as those for the Company as a whole, as described in Note 1 herein.

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

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

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

Net sales by segment for the years ended December 31, 2022, 2021 and 2020 are as follows:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Consolidated Net sales

Segment operating income and the reconciliation of segment operating income to consolidated income from continuing operations before income taxes for the years ended December 31, 2022, 2021 and 2020 are as follows:

Segment operating income:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Total segment operating income

Corporate / Other:

Stock-based compensation expense

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Interest expense

Loss on early extinguishment of debt

Other (expense) income, net

Other income (expense), net

Income from continuing operations before income taxes

Reconciliation of segment assets to consolidated total assets:

Segment assets, excluding goodwill

Consolidated total assets

Other assets in both years were comprised primarily of corporate-held cash and cash equivalents on hand, along with other corporate identifiable assets.

Depreciation and amortization expense by segment for the years ended December 31, 2022, 2021 and 2020 is as follows:

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Corporate / Other

Net sales by geographic area for the years ended December 31, 2022, 2021 and 2020 and long-lived assets by geographic area as of December 31 were as follows:

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Disaggregation of Net Sales

The following table shows our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the years ended December 31, 2021, 2020 and 2019:

Interconnect Products

Cable Products

Total Reportable

and Assemblies

and Solutions

Business Segments

Net sales by:

Sales channel:

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the years ended December 31, 2022, 2021 and 2020:

Net sales by sales channel :

End customers and contract manufacturers :

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Distributors and resellers :

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Total Net sales

Net sales by geography :

United States :

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Other foreign locations :

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Total Net sales

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

No single customer accounted for 10% or more of the Company’s net sales for the year ended December 31, 2021.

During the year ended December 31, 2020, aggregate sales to the Company’s largest customer accounted for approximately 11 % of the Company’s net sales.

No single customer accounted for 10% or more of the Company’s net sales for the year ended December 31, 2019.

No single customer accounted for 10% or more of the Company’s net sales during either of the years ended December 31, 2022 and 2021.

During the year ended December 31, 2020, aggregate sales to the Company’s largest customer accounted for approximately 11 % of the Company’s net sales, nearly all of the sales of which were reported within our Communications Solutions segment.

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

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

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

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

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

This matter is ongoing and the Company continues to cooperate with the OIG on its requests.

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

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

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

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

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

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

government on this ongoing matter.

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

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

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

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

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

While the customer has claimed damages of approximately € 90 , the arbitrator will have discretion to determine the actual amount of damages as well as the apportionment of responsibility between the parties.

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

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

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At December 31, 2022, the Company had purchase commitments of $ 835.7 in 2023, $ 38.0 in 2024 and 2025, combined, and $ 5.0 beyond 2025.

Note 16—Subsequent Events

New Reportable Business Segments

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

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

This new alignment replaces our historic reportable business segments.

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

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

This new 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 segment structure reflects the manner in which the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, regularly assesses information for decision-making purposes, including the allocation of resources, effective January 1, 2022.

In conjunction with the new alignment of our business, the Company appointed three new segment managers to lead their respective reportable business segments, each reporting directly to the Company’s Chief Executive Officer.

The Company’s three new reportable business segments have been identified as:

The Company is in the process of completing the update of its internal reporting to accommodate this new reporting segment structure.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data