What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2022-10-28 · 161 added, 393 removed, 432 unchanged (56% of the section changed)

3 unchanged sentences

(dollars in millions)

September 30,

Current Assets:

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Three Months Ended

Nine Months Ended

September 30,

Cost of sales

4 unchanged sentences

Other income (expense), net

Income from continuing operations before income taxes

Income before income taxes

Provision for income taxes

Net income from continuing operations

Net income from continuing operations attributable to noncontrolling interests

Net income from continuing operations attributable to Amphenol Corporation

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

Net income attributable to noncontrolling interests

Net income attributable to Amphenol Corporation

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

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Basic

Net income attributable to Amphenol Corporation per common share — Basic

Weighted average common shares outstanding — Basic

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

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Diluted

Net income attributable to Amphenol Corporation per common share — Diluted

Weighted average common shares outstanding — Diluted

Per share amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements .

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Three Months Ended

Nine Months Ended

September 30,

Net income from continuing operations

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

Net income before allocation to noncontrolling interests

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

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

Foreign currency translation adjustments

Unrealized gain (loss) on hedging activities

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

Total other comprehensive (loss) income, net of tax

Unrealized gain on hedging activities

Pension and postretirement benefit plan adjustment, net of tax of ($ 0.2 ) and ($ 1.1 ), respectively

Total other comprehensive income (loss), net of tax

Total comprehensive income

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(dollars in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash from operating activities:

Net income from continuing operations

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

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

Depreciation and amortization

3 unchanged sentences

Net change in other long-term assets and liabilities

Net cash provided by operating activities from continuing operations

Net cash provided by operating activities from discontinued operations

Net cash provided by operating activities

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Acquisitions, net of cash acquired

Net cash used in investing activities from continuing operations

Net cash used in investing activities from discontinued operations

Net cash used in investing activities

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Proceeds from short-term borrowings

Repayments of short-term borrowings

Borrowings (repayments) under commercial paper programs, net

(Repayments) borrowings under commercial paper programs, net

Payment of costs related to debt financing

Payment of deferred purchase price related to acquisitions

Purchase of treasury stock

2 unchanged sentences

Dividend payments

Transfers to discontinued operations

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

Net cash used in financing activities from discontinued operations

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents balance, beginning of period

Cash and cash equivalents balance, end of period

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

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

Cash paid for:

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Note 1—Basis of Presentation and Principles of Consolidation

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

The Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, and each of the related Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flow for the three months ended March 31, 2023 and 2022, include the accounts of Amphenol Corporation and its subsidiaries (“Amphenol,” the “Company,” “we,” “our,” or “us”).

All material intercompany balances and transactions have been eliminated in consolidation.

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

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

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year.

These condensed consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report”).

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.

As a result of this new alignment, the Company began reporting under its new reportable segments in connection with the Company’s Quarterly Report on Form 10-Q for the first quarter of 2022.

As part of this Quarterly Report on Form 10-Q, the Company has included the recasting of relevant prior year period segment information in order to enable year-over-year segment comparisons.

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

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

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

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

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

Discontinued Operations

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 (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 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 Condensed Consolidated Financial Statements.

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

Note 2—New Accounting Pronouncements

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.

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

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

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

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

financial institutions, identified the Secured Overnight Financing Rate (the “SOFR”) as its preferred benchmark alternative to USD LIBOR.

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

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

Treasury-backed repurchase transactions.

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

2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying accounting principles generally accepted in the United States (“U.S.

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

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

In January 2021, the FASB also issued ASU No.

2021-01 Reference Rate Reform (Topic 848):

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

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

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

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 requiring acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination.

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

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

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

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

ASU 2021-08 and its amendments were 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.

The Company completed its evaluation of ASU 2021-08, which we adopted on January 1, 2023.

ASU 2021-08 did not have a material impact on our acquisition during the first quarter of 2023, and its impact on our financial condition, results of operations or cash flows going forward will be dependent upon the nature of any future business combinations.

In September 2022, the FASB issued ASU No.

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

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

The Company completed its evaluation of ASU 2022-04, which did not have a material impact on our condensed consolidated financial statements and disclosures.

Note 3—Inventories

Inventories consist of:

September 30,

Raw materials and supplies

2 unchanged sentences

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

September 30, 2022

March 31, 2023

December 31, 2022

5 unchanged sentences

2.050 % Senior Notes due March 2025

4.750 % Senior Notes due March 2026

0.750 % Euro Senior Notes due May 2026

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Revolving Credit Facility

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

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

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

The Company has an amended and restated $ 2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).

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

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

dollar borrowings are either the base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”).

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

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

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

At March 31, 2023 and December 31, 2022, 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 primarily due 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 Condensed 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.

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

On March 31, 2023, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Term Loan Credit Facility

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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.

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

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

As of March 31, 2023, the Company had not yet drawn upon the 2022 Term Loan, and as such, there were no outstanding borrowings under the 2022 Term Loan.

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

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

On March 31, 2023, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Commercial Paper Programs

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

Commercial Paper Program”) pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes”) in one or more private placements in the United States.

Commercial Paper Program”) pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes” or “U.S.

Commercial Paper”) in one or more private placements in the United States.

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

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The Company utilizes borrowings under the U.S.

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

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

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

As of September 30, 2022, the amount of USCP Notes outstanding was $ 903.8 , with a weighted average interest rate of 3.40 % .

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 .

In the first quarter of 2023, the Company used net proceeds from the 2026 Senior Notes (defined below) to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

As of March 31, 2023, the amount of USCP Notes outstanding was $ 245.1 , with a weighted average interest rate of 5.29 % .

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

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

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

The Company utilizes borrowings under the Euro Commercial Paper Program for general corporate purposes, which may include, for example, fully or partially funding acquisitions.

In the first quarter of 2023, the Company used borrowings under its Euro Commercial Paper Program, along with cash on hand, to fund an acquisition, as discussed in Note 11 herein .

These borrowings under the Euro Commercial Paper Program were repaid in their entirety by the end of the first quarter of 2023.

As of March 31, 2023 and December 31, 2022, there were no ECP Notes outstanding.

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

In conjunction with the Revolving Credit Facility, as of September 30, 2022, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $ 2,500.0 in the aggregate.

In conjunction with the Revolving Credit Facility, as of March 31, 2023, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $ 2,500.0 in the aggregate.

The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Company’s Revolving Credit Facility are available to repay Commercial Paper, if necessary.

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

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

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

On March 30, 2023, the Company issued $ 350.0 principal amount of unsecured 4.750 % Senior Notes due March 30, 2026 at 99.658 % of face value (the “2026 Senior Notes”).

The 2026 Senior Notes are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness.

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

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

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

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

Interest on the 2026 Senior Notes is payable semiannually on March 30 and September 30 of each year, commencing on September 30, 2023.

The Company may redeem, from time to time at its option, some or all of the 2026 Senior Notes at a 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, plus a make-whole premium.

The Company used the net proceeds from the 2026 Senior Notes primarily to repay certain outstanding borrowings under the U.S.

Commercial Paper Program.

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Euro Senior Notes

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

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

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

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

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

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 each series of Euro Notes is payable annually.

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

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

On March 31, 2023, the Company was in compliance with all requirements under its Senior Notes .

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- and long-term investments, and derivative instruments.

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

The Company believes that the assets or liabilities currently subject to such standards with fair value disclosure requirements are primarily (i) debt instruments, (ii) pension plan assets, (iii) short- and long-term investments, (iv) derivative instruments and (v) assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting.

Each of these assets and liabilities is discussed below, with the exception of debt instruments, pension plan assets, and the fair value of assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting, which are discussed in Note 4, Note 10 and Note 11, respectively, herein, in addition to the Notes to Consolidated Financial Statements in the 2022 Annual Report.

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

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

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

The carrying amounts of these short- 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 impact of the credit risk related to these derivative 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 as of September 30, 2022 and December 31, 2021 are as follows:

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of March 31, 2023 and December 31, 2022 are as follows:

Fair Value Measurements

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Assets (Level 1)

September 30, 2022:

March 31, 2023:

Short-term investments

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Short-term investments

Long-term investments

Forward contracts

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dollar equivalent of the net investments in certain foreign subsidiaries.

As of September 30, 2022, the fair value of such foreign exchange forward contracts in the table above consisted of (i) various outstanding foreign exchange forward contracts accounted for as net investment hedges and (ii) various outstanding foreign exchange forward contracts that are not designated as hedging instruments.

The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts and the amounts reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss), included in Cost of sales in the accompanying Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2022 and 2021 were not material.

As of March 31, 2023, the Company had no outstanding foreign exchange forward contracts accounted for as either net investment hedges or cash flow hedges .

As of March 31, 2023, the fair value of such foreign exchange forward contracts in the table above consisted of various outstanding foreign exchange forward contracts that are not designated as hedging instruments.

The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange forward contracts and the amounts reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss), included in Cost of sales in the accompanying Condensed Consolidated Statements of Income during the three months ended March 31, 2023 and 2022, were not material.

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

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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 September 30, 2022 and December 31, 2021 is related to the acquisition of Halo Technology Limited (“Halo”), which closed in December 2021, and based on the terms of the agreement, will remain in temporary equity until the put option is either fully exercised or expires.

The redeemable noncontrolling interest, related to an acquisition that closed in December of 2021, 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 Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three and nine months ended September 30, 2022, as well as Note 1 of the Notes to Consolidated Financial Statements in the 2021 Annual Report for further discussion of the Company’s redeemable noncontrolling interest.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three months ended March 31, 2023 and 2022.

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.

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Three Months Ended

Nine Months Ended

September 30,

Provision for income taxes

Effective tax rate

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

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

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

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

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

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

For the three months ended March 31, 2023 and 2022, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 17.1 and $ 3.8 , respectively, and decreasing our effective tax rate by approximately 310 basis points and 70 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

The acquisition-related expenses incurred during the first quarter of 2023 had an immaterial effect on our effective tax rate.

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

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

The Company paid its fifth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2022, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.

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

The Company expects to pay its sixth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2023, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.

The Company operates in the U.S.

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

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

As of March 31, 2023, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 194.4 .

Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations.

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Inflation Reduction Act of 2022

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

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

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

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

The IRA provisions, which became effective for Amphenol beginning on January 1, 2023, did not have a material impact on the Company during the three months ended March 31, 2023.

While the full impact of these provisions in the future depends on several factors, including interpretive regulatory guidance which has not yet been released, the Company does not currently believe that the provisions of the IRA, including several other non-tax related provisions, will have a material impact on our financial condition, results of operations, liquidity and cash flows.

Note 7—Stockholders’ Equity and Noncontrolling Interests

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

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

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

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

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

Amphenol Corporation Stockholders

Treasury Stock

Comprehensive

(in millions)

Balance as of June 30, 2022

Other comprehensive income (loss)

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.20 per common share)

Stock-based compensation expense

Balance as of September 30, 2022

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

Amphenol Corporation Stockholders

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the three months ended March 31, 2023 is as follows:

Stockholders’ equity attributable to Amphenol Corporation

Treasury Stock

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(in millions)

Interests (1)

Balance as of December 31, 2022

Other comprehensive income (loss)

Purchase of noncontrolling interest

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.60 per common share)

Stock-based compensation expense

Balance as of September 30, 2022

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

Amphenol Corporation Stockholders

Treasury Stock

Comprehensive

(in millions)

Balance as of June 30, 2021

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interests

Distributions to shareholders of noncontrolling interests

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Stock-based compensation expense

Balance as of September 30, 2021

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

Amphenol Corporation Stockholders

Balance as of March 31, 2023

(1) Excludes redeemable noncontrolling interest.

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

Stockholders’ equity attributable to Amphenol Corporation

Treasury Stock

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(in millions)

Interests (1)

Balance as of December 31, 2021

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interest

Purchase of noncontrolling interest

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Stock-based compensation expense

Balance as of September 30, 2021

Balance as of March 31, 2022

(1) Excludes redeemable noncontrolling interest.

Stock Repurchase Programs

On April 27, 2021, the Board authorized a stock repurchase program under which the Company may purchase up to $ 2,000.0 of the Company’s Class A Common Stock (“Common Stock”) during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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

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

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

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

All of the shares repurchased under the 2021 Stock Repurchase Program during the nine months ended September 30, 2021 were retired by the Company.

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

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 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 nine months ended September 30, 2021, the Company repurchased 3.1 million shares of its Common Stock for $ 203.8 under the 2018 Stock Repurchase Program.

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

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

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

During the three months ended March 31, 2023, the Company repurchased 2.1 million shares of its Common Stock for $ 166.9 under the 2021 Stock Repurchase Program.

All of the repurchased shares during the first three months of 2023 were retired by the Company.

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

Of the total repurchases made during the first three months of 2022, 2.3 million shares, or $ 183.0 , were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

From April 1, 2023 to April 25, 2023, the Company repurchased 0.5 million additional shares of its Common Stock for $ 39.5 , and, as of April 26, 2023, the Company has remaining authorization to purchase up to $ 605.2 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.

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes the dividends declared and paid for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Dividends declared

Dividends paid (including those declared in the prior year)

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.

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

Note 8—Stock-Based Compensation

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

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

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

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

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

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

For the three months ended March 31, 2023 and 2022, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 21.7 and $ 19.7 , respectively.

In addition, for the three months ended March 31, 2023 and 2022, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 19.3 and $ 5.8 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the three months ended March 31, 2023 and 2022 include excess tax benefits of $ 17.1 and $ 3.8 , respectively, from option exercises.

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

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

As of September 30, 2022, there were 36,604,107 shares of Common Stock available for the granting of additional stock options under the 2017 Option Plan.

As of March 31, 2023, there were 36,836,583 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”).

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

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

Stock option activity for the three months ended March 31, 2023 was as follows:

Exercise Price

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Options exercised

Options forfeited

Options outstanding at March 31, 2022

Options granted

Options exercised

Options forfeited

Options outstanding at June 30, 2022

Options granted

Options exercised

( 2,568,529 )

Options forfeited

Options outstanding at September 30, 2022

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

Exercisable options at September 30, 2022

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

Options outstanding at March 31, 2023

Vested and non-vested options expected to vest at March 31, 2023

Exercisable options at March 31, 2023

A summary of the status of the Company’s non-vested options as of March 31, 2023 and changes during the three months then ended is as follows:

Fair Value at

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Non-vested options at March 31, 2023

Options granted

Options vested

( 10,914,950 )

Options forfeited

Non-vested options at June 30, 2022

Options granted

Options vested

Options forfeited

Non-vested options at September 30, 2022

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

During the three months ended March 31, 2023 and 2022, the following activity occurred under the Company’s option plans:

Three Months Ended

Nine Months Ended

September 30,

Total intrinsic value of stock options exercised

Total fair value of stock options vested

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

As of March 31, 2023, the total compensation cost related to non-vested options not yet recognized was approximately $ 203.4 with a weighted average expected amortization period of 3.20 years.

The grant-date fair value of each option grant under the 2009 Employee Option Plan and the 2017 Option Plan is estimated using the Black-Scholes option pricing model.

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

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

As of March 31, 2023, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 119,279 .

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

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

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

Restricted share activity for the three months ended March 31, 2023 was as follows:

Weighted Average

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Restricted shares outstanding at March 31, 2023

Shares vested and issued

Restricted shares granted

Restricted shares outstanding at June 30, 2022

Restricted shares granted

Restricted shares outstanding at September 30, 2022

As of September 30, 2022, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.9 (with a weighted average expected amortization period of 0.62 years).

As of March 31, 2023, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $ 0.2 (with a weighted average expected amortization period of 0.13 years).

Note 9—Earnings Per Share

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

Basic earnings per common 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.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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

Net income attributable to Amphenol Corporation stockholders

Net income from continuing operations attributable to Amphenol Corporation

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

Net income attributable to Amphenol Corporation

Weighted average common shares outstanding — Basic

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Weighted average common shares outstanding — Diluted

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

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Basic

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

Continuing operations

Discontinued operations, net of income taxes

Net income attributable to Amphenol Corporation — Diluted

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

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

Net income attributable to Amphenol Corporation per common share — Basic

Net income attributable to Amphenol Corporation per common share — Diluted

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 7.1 million and 4.1 million for the three months ended March 31, 2023 and 2022, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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Plans’ benefits are generally based on years of service and compensation and are generally noncontributory.

The Company has an unfunded Supplemental Employee Retirement Plan (“SERP”), a defined benefit pension plan, 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.

The majority of U.S.

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

Plans, the “Plans”).

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

Three Months Ended September 30,

Nine Months Ended September 30,

Plans and SERP, the “Plans”).

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Interest cost

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Net pension expense

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

Plans, the Company’s expected long-term rate of return assumption to determine net periodic pension expense for 2022 is 5.5 % .

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

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Participation in these plans is based on certain eligibility requirements.

The Company matches employee contributions to the U.S.

Through December 31, 2022, the Company matched employee contributions to the U.S.

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

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

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.

During the three months ended March 31, 2023 and 2022, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 7.5 and $ 5.3 , respectively.

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2023 Acquisitions

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

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

Commercial Paper Program and cash on hand.

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

During the three months ended March 31, 2023, the Company completed one acquisition for approximately $ 113.2 , net of cash acquired, which was included in the Harsh Environment Solutions segment.

The acquisition was funded through a combination of borrowings under the Euro Commercial Paper Program and cash on hand.

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

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

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

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

Since the current purchase price allocation is based on a preliminary assessment made by management as of March 31, 2023, the acquisition accounting 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 of the acquisition have been included in the Condensed Consolidated Statements of Income since the date of acquisition.

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

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 more detail in the 2021 Annual Report.

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

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

For the Halo acquisition, as discussed further below, the Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed, and anticipates that the final assessments of values for these acquisitions will not differ materially from the preliminary assessments.

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

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

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

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

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

MTS was historically organized into two business segments:

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

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

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.

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

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

Shortly after the closing, the Company repaid and settled the MTS senior notes for approximately $ 387.3 , which included accrued interest and a make-whole premium incurred as a result of the early extinguishment of the senior notes.

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

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

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

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

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

The Company accounted for the operating results and related cash flows associated with the Divested MTS business as discontinued operations in the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flow, respectively, as of the MTS acquisition date of April 7, 2021 through September 30, 2021, and ultimately, through December 1, 2021, the date of the sale of the Divested MTS business.

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

The operating results for the MTS Sensors business have been included within continuing operations in the Condensed 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 above.

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 noncontrolling interest of less than 3 % in Halo, which includes redeemable features that are outside the control of the Company and therefore, has been classified as temporary equity on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, as discussed in more detail in Note 5 herein.

The acquisition was funded with cash on hand.

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

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

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

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

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

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

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

The acquisition accounting for Halo is subject to final adjustment, and it is possible that the final assessment of values may differ from our preliminary assessment.

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

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

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

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

While the purchase price allocation and acquisition accounting for each of these acquisitions is subject to final adjustment, 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 Condensed Consolidated Statements of Income since their respective dates of acquisition.

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

Acquisition-related Expenses

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

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

During the three months ended March 31, 2023, the Company incurred $ 5.4 ($ 4.0 after-tax) of acquisition-related expenses, comprised of the amortization related to the value associated with acquired backlog resulting from the acquisition that closed in the first quarter of 2023.

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

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Foreign currency translation

Goodwill at September 30, 2022

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

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

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

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

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

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

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

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

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

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

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

September 30, 2022

Goodwill at March 31, 2023

The increase in goodwill during the first three months of 2023 was primarily driven by goodwill recognized from one acquisition that closed during the period.

Other than goodwill noted above, the Company’s intangible assets as of March 31, 2023 and December 31, 2022 were as follows:

March 31, 2023

December 31, 2022

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Trade names (indefinite-lived)

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

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

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

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

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

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

The Company reviews its identifiable intangible assets subject to amortization whenever events or changes in circumstances indicate the intangible asset’s carrying amount may not be recoverable, while any indefinite-lived intangible assets that are not subject to amortization, which are comprised of certain trade names, are reviewed at least annually for impairment.

In the third quarter of 2022, the Company performed its annual assessment of these identifiable indefinite-lived intangible assets.

Based on our assessment, the Company determined that it was more likely than not that the fair value of the indefinite-lived intangible assets exceeded their respective carrying amounts.

There has been no impairment associated with our intangible assets in 2022, 2021 or 2020 as a result of such reviews.

The increase in the gross carrying amount of intangible assets in the first three months of 2023 was primarily driven by certain customer relationships and acquired backlog recognized as a result of the acquisition accounting associated with the acquisition that closed in the first quarter of 2023.

Amortization expense for the three months ended March 31, 2023 and 2022 was approximately $ 23.2 and $ 18.0 , respectively.

Amortization expense for the three months ended March 31, 2023 includes $ 5.4 related to the amortization of acquired backlog resulting from the acquisition that closed in the first quarter of 2023.

As of March 31, 2023, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2023 is approximately $ 54.4 and for each of the next five fiscal years is approximately $ 66.7 in 2024, $ 57.3 in 2025, $ 55.7 in 2026, $ 49.0 in 2027 and $ 41.7 in 2028.

Note 13—Reportable Business Segments

New Reportable Business Segments

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

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

This new alignment replaces our historic reportable business segments.

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

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

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

The Company aligns its businesses into the following 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.

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

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

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.

The Company has three segment managers to lead their respective reportable business segments, each reporting directly to the Chief Executive Officer.

The accounting policies of the segments are the same as those for the Company as a whole and are described herein and in Note 1 of the Notes to Consolidated Financial Statements in the 2022 Annual Report.

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

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

Three Months Ended September 30,

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Consolidated Net sales

Nine Months Ended September 30,

Net sales by segment for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31,

Harsh Environment Solutions

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Consolidated Net sales

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

Three Months Ended September 30,

Nine Months Ended September 30,

Segment operating income and the reconciliation of segment operating income to consolidated income before income taxes for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31,

Segment operating income:

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Other income (expense), net

Income from continuing operations before income taxes

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

Three Months Ended September 30,

Nine Months Ended September 30,

Income before income taxes

Depreciation and amortization expense by segment for the three months ended March 31, 2023 and 2022 is as follows:

Three Months Ended March 31,

Harsh Environment Solutions

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

For the three and nine months ended September 30, 2022 and 2021, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.

Since we typically invoice our customers at the same time that we satisfy our performance obligations, contract assets and contract liabilities related to our contracts with customers recorded in the Condensed Consolidated Balance Sheets were not material as of September 30, 2022 and December 31, 2021.

These amounts are recorded in the accompanying Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Other accrued expenses as of September 30, 2022 and December 31, 2021.

For the three months ended March 31, 2023 and 2022, less than 5 % of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.

These amounts are recorded in the accompanying Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets or Other accrued expenses as of March 31, 2023 and December 31, 2022.

The Company receives customer orders negotiated with multiple delivery dates that may extend across more than one reporting period until the contract is fulfilled, the end of the order period is reached, or a pre-determined maximum order value has been reached.

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

Since our performance obligations are part of contracts that generally have original durations of one year or less, we have not disclosed the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of September 30, 2022.

While the Company typically offers standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of September 30, 2022 and December 31, 2021, and related warranty expense for the three and nine months ended September 30, 2022 and 2021, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

While the Company typically offers standard product warranty coverage that provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, the Company’s warranty liabilities as of March 31, 2023 and December 31, 2022, and related warranty expense for the three months ended March 31, 2023 and 2022, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

Disaggregation of Net Sales

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three and nine months ended September 30, 2022 and 2021:

Communications

Interconnect and

Total Reportable

Sensor Systems

Business Segments

Three Months Ended September 30,

Net sales by:

Sales channel:

End customers and contract manufacturers

Distributors and resellers

United States

Other foreign locations

The following table shows our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three months ended March 31, 2023 and 2022:

Communications

3 unchanged sentences

Business Segments

Nine Months Ended September 30,

Three Months Ended March 31,

Net sales by:

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

government on this ongoing matter.

government on this ongoing matter, including additional meetings with the U.S.

government during the first quarter of 2023.

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

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

What changed 10-Q

Item 1. Financial Statements