What changed in this filing

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Item 1. Financial Statements

2023-07-28 compared with 2023-04-28 · 199 added, 117 removed, 476 unchanged (40% of the section changed)

40 unchanged sentences

Three Months Ended

Six Months Ended

Cost of sales

3 unchanged sentences

Interest expense

Gain on bargain purchase acquisition

Other income (expense), net

12 unchanged sentences

Three Months Ended

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

Six Months Ended

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

Foreign currency translation adjustments

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

Pension and postretirement benefit plan adjustment, net of tax of ($ 0.2 ) and ($ 0.4 ) for 2023, and ($ 1.1 ) and ($ 2.2 ) for 2022, respectively

Total other comprehensive (loss) income, net of tax

Total comprehensive income

5 unchanged sentences

(dollars in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash from operating activities:

2 unchanged sentences

Stock-based compensation expense

Deferred income tax provision

Deferred income tax (benefit) provision

Gain on bargain purchase acquisition

Net change in components of working capital

12 unchanged sentences

Proceeds from short-term borrowings

Repayments of short-term borrowings

(Repayments) borrowings under commercial paper programs, net

6 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents balance, beginning of period

7 unchanged sentences

Note 1—Basis of Presentation and Principles of Consolidation

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”).

The Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, and the related Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 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.

1 unchanged sentence

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

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

The results of operations for the three and six months ended June 30, 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”).

6 unchanged sentences

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.

ASU 2021-08 did not have a material impact on our acquisitions during the first six months 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.

11 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

19 unchanged sentences

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

At March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the Revolving Credit Facility.

As of June 30, 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).

1 unchanged sentence

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

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

On June 30, 2023, the Company was in compliance with the financial covenants under the Revolving Credit Facility .

Term Loan Credit Facility

5 unchanged sentences

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 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 carrying value of any borrowings under the 2022 Term Loan would approximate their 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 June 30, 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 March 31, 2023, the Company was in compliance with the financial covenants under the 2022 Term Loan.

On June 30, 2023, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Commercial Paper Programs

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The USCP Notes are sold under customary terms in the commercial paper market and may be issued at par or a discount therefrom, and bear varying interest rates on a fixed or floating basis.

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

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

The Company utilizes borrowings under the U.S.

Commercial Paper Program for general corporate purposes, which, in recent years, have included fully or partially funding acquisitions, as well as repaying certain outstanding senior notes .

Commercial Paper Program for general corporate purposes, which, in recent years, has included fully or partially funding acquisitions, as well as repaying certain outstanding senior notes.

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

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 %.

During the second quarter of 2023, the Company repaid all of its USCP Notes then outstanding, and, therefore, as of June 30, 2023, there were no USCP Notes outstanding.

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S.

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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.

As of June 30, 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 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.

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

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.

Any outstanding 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, primarily due to its market interest rates, and is classified as Level 2 in the fair value hierarchy (Note 5).

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

On June 30, 2023, the Company was in compliance with all requirements under its Senior Notes .

Note 5—Fair Value Measurements

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

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

The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of June 30, 2023 and December 31, 2022 are as follows:

Fair Value Measurements

3 unchanged sentences

Assets (Level 1)

March 31, 2023:

June 30, 2023:

Short-term investments

10 unchanged sentences

dollar equivalent of the net investments in certain foreign subsidiaries.

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.

As of June 30, 2023, the Company had no outstanding foreign exchange forward contracts accounted for as either net investment hedges or cash flow hedges .

As of June 30, 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 and six months ended June 30, 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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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 March 31, 2023 and December 31, 2022.

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

As such, the redemption value is classified as Level 3 in the fair value hierarchy and is recorded as Redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.

Refer to Note 7 herein for a rollforward of the Redeemable noncontrolling interest for the three and six months ended June 30, 2023 and 2022, as well as Note 1 of the Notes to Consolidated Financial Statements in the 2022 Annual Report for further discussion regarding the Company’s redeemable noncontrolling interest.

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

1 unchanged sentence

Three Months Ended

Six Months Ended

Provision for income taxes

Effective tax rate

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.

For the three months ended June 30, 2023 and 2022, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 11.9 and $ 7.5 , respectively, and decreasing our effective tax rate by approximately 200 basis points and 120 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

For the six months ended June 30, 2023 and 2022, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 29.0 and $ 11.3 , respectively, and decreasing our effective tax rate by approximately 250 basis points and 100 basis points, respectively.

For the three and six months ended June 30, 2023, the gain associated with the bargain purchase acquisition that closed in the second quarter, as discussed in Note 11 herein, had the effect of decreasing our effective tax rate by approximately 20 basis points and 10 basis points, respectively, while acquisition-related expenses had the effect of increasing our effective tax rate by approximately 10 basis points for both periods.

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 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 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 March 31, 2023 and December 31, 2022.

The Company paid 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 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 .

As of June 30, 2023, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 194.1 .

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

3 unchanged sentences

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 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.

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 and six months ended June 30, 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.

3 unchanged sentences

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

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

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the three months ended June 30, 2023 is as follows:

Stockholders’ equity attributable to Amphenol Corporation

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Interests (1)

Balance as of March 31, 2023

Other comprehensive income (loss)

Distributions to shareholders of noncontrolling interests

Purchase of treasury stock

Retirement of treasury stock

Stock options exercised

Dividends declared ($ 0.21 per common share)

Stock-based compensation expense

Balance as of June 30, 2023

(1) Excludes redeemable noncontrolling interest.

A rollforward of consolidated changes in equity and redeemable noncontrolling interest for the six months ended June 30, 2023 is as follows:

Stockholders’ equity attributable to Amphenol Corporation

Treasury Stock

Comprehensive

(in millions)

Interests (1)

Balance as of December 31, 2022

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interests

Acquisitions resulting in noncontrolling interest

Distributions to shareholders of noncontrolling interests

4 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2023

(1) Excludes redeemable noncontrolling interest.

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

Stockholders’ equity attributable to Amphenol Corporation

Treasury Stock

Comprehensive

(in millions)

Interests (1)

Balance as of March 31, 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 June 30, 2022

(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:

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

Stockholders’ equity attributable to Amphenol Corporation

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Stock-based compensation expense

Balance as of March 31, 2022

Balance as of June 30, 2022

(1) Excludes redeemable noncontrolling interest.

Stock Repurchase Programs

Stock Repurchase Program

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

During the three months ended March 31, 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.

During the three and six months ended June 30, 2023, the Company repurchased 2.0 million and 4.1 million shares of its Common Stock for $ 153.6 and $ 320.5 , respectively, under the 2021 Stock Repurchase Program.

All of the repurchased shares during the first six months of 2023 have been retired by the Company.

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

Of the total repurchases made during the first six months of 2022, 5.0 million shares, or $ 368.9 , were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

From July 1, 2023 to July 25, 2023, the Company repurchased 0.5 million additional shares of its Common Stock for $ 39.4 , and, as of July 26, 2023, the Company has remaining authorization to purchase up to $ 451.8 of its Common Stock under the 2021 Stock Repurchase Program.

The price and timing of any future purchases will depend on a number of factors, such as levels of cash generation from operations, the volume of stock options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Common Stock.

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

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

Three Months Ended March 31,

The following table summarizes the dividends declared and paid during the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Six Months Ended June 30,

Dividends declared

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Note 8—Stock-Based Compensation

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.

For the three months ended June 30, 2023 and 2022, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 23.8 and $ 20.9 , respectively.

In addition, for the three months ended June 30, 2023 and 2022, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 14.2 and $ 9.6 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the three months ended June 30, 2023 and 2022 include excess tax benefits of $ 11.9 and $ 7.5 , respectively, from option exercises.

For the six months ended June 30, 2023 and 2022, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 45.5 and $ 40.6 , respectively.

In addition, for the six months ended June 30, 2023 and 2022, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 33.5 and $ 15.4 , respectively, in Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

These aggregate income tax benefits during the six months ended June 30, 2023 and 2022 include excess tax benefits of $ 29.0 and $ 11.3 , respectively, from option exercises.

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

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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 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.

As of June 30, 2023, there were 31,193,052 shares of Common Stock available for the granting of additional stock options under the 2017 Option Plan.

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

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

No additional stock

options will be granted under the 2009 Employee Option Plan.

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

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

Stock option activity for the three and six months ended June 30, 2023 was as follows:

Exercise Price

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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:

Options granted

Options exercised

( 2,678,572 )

Options forfeited

Options outstanding at June 30, 2023

Vested and non-vested options expected to vest at June 30, 2023

Exercisable options at June 30, 2023

A summary of the status of the Company’s non-vested options as of June 30, 2023 and changes during the three and six months then ended is as follows:

Fair Value at

4 unchanged sentences

Non-vested options at March 31, 2023

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

Options granted

Options vested

( 9,421,232 )

Options forfeited

Non-vested options at June 30, 2023

During the three and six months ended June 30, 2023 and 2022, the following activity occurred under the Company’s option plans:

Three Months Ended

Six Months Ended

Total intrinsic value of stock options exercised

Total fair value of stock options vested

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.

As of June 30, 2023, the total compensation cost related to non-vested options not yet recognized was approximately $ 296.0 with a weighted average expected amortization period of 3.73 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.

The grant-date fair value of each share grant is determined based on the closing share price of the Company’s Common Stock on the date of the grant.

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

The fair value is then

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

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

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

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

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 months ended March 31, 2023 was as follows:

Weighted Average

Fair Value at

Term (in years)

Restricted shares outstanding at January 1, 2023

Restricted shares granted

Restricted shares outstanding at March 31, 2023

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).

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

On May 17, 2023, 21,312 shares of restricted stock previously granted to non-employee directors vested in accordance with their terms.

As of June 30, 2023, no additional shares of restricted stock are outstanding under the 2012 Directors Restricted Stock Plan and, given that the 2012 Directors Restricted Stock Plan expired on May 22, 2022, no additional shares of restricted stock will be granted thereunder.

Phantom Stock

On June 5, 2023, the Company granted 2,375 shares of phantom stock to each then-current non-employee director ( 19,000 shares in the aggregate), which will vest and, pursuant to the election of the non-employee director, is expected to convert into unrestricted shares of the Company’s Common Stock on the earlier of May 19, 2024 or the day immediately prior to the date of the 2024 annual meeting of the Company’s stockholders.

As of June 30, 2023, the total compensation cost related to non-vested shares of phantom stock not yet recognized was approximately $ 1.3 (with a weighted average expected amortization period of 0.87 years).

Note 9—Earnings Per Share

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

The following is a reconciliation of the basic weighted average common shares outs tanding to diluted weighted average common shares outstanding, which were used to calculate the earnings per share (basic and diluted) for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

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

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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.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 10.0 million and 11.1 million for the three months ended June 30, 2023 and 2022, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 8.8 million and 7.6 million for the six months ended June 30, 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 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 that 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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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,

The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Six Months Ended June 30,

Interest cost

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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.

During the six months ended June 30, 2023 and 2022, the Company provided matching contributions to the U.S.

defined contribution plans of approximately $ 13.1 and $ 9.6 , respectively.

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2023 Acquisitions

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 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.

During the six months ended June 30, 2023, the Company completed two acquisitions for approximately $ 113.2 , net of cash acquired.

One acquisition, which closed in the first quarter of 2023 and was funded through a combination of borrowings under the Euro Commercial Paper Program and cash on hand, was included in the Harsh Environment Solutions segment, while the other acquisition, which closed in the second quarter of 2023, was included in the Communications Solutions segment.

The Company’s acquisition in the second quarter of 2023 represented a bargain purchase, where the estimated fair value of assets acquired, net of liabilities assumed, exceeded the purchase price.

The Company recognized a non-cash gain of $ 5.4 on the bargain purchase acquisition during the three and six months ended June 30, 2023, which has been recorded separately in the Company’s Condensed Consolidated Statements of Income.

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

Since the current purchase price allocations are based on initial, preliminary assessments made by management as of June 30, 2023, the acquisition accounting is subject to final adjustments, and it is possible that the final assessments of values may differ from our initial preliminary assessments.

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 allocations related to

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

2022 Acquisitions

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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 Company completed the acquisition accounting, including the analyses of the fair value of the assets acquired and liabilities assumed, for one of the 2022 acquisitions, for which the final assessment of values did not differ materially from their previous preliminary assessment.

The Company is in the process of completing its analysis of the allocation of the fair value of the assets acquired and liabilities assumed for the other acquisition .

While the purchase price allocation and acquisition accounting for the acquisition is subject to final adjustment, the Company anticipates that the final assessment of values will not differ materially from the preliminary assessment.

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.

Pro forma financial information, as well as further details regarding the purchase price allocations 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 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.

During the three months ended June 30, 2023, the Company incurred $ 4.0 ($ 3.8 after-tax) of acquisition-related expenses, comprised of external transaction costs related to acquisitions.

During the six months ended June 30, 2023, the Company incurred $ 9.4 ($ 7.8 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, as well as the external transaction costs incurred in the second quarter.

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

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Foreign currency translation

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

Goodwill at June 30, 2023

The increase in goodwill during the first six months of 2023 was primarily driven by goodwill recognized from one acquisition that closed during the first quarter, and to a lesser extent, foreign currency translation.

Other than goodwill noted above, the Company’s intangible assets as of June 30, 2023 and December 31, 2022 were as follows:

June 30, 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 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.

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

Amortization expense for the three months ended June 30, 2023 and 2022 was approximately $ 18.1 and $ 16.8 , respectively.

Amortization expense for the six months ended June 30, 2023 and 2022 was approximately $ 41.2 and $ 34.8 , respectively.

Amortization expense for the six months ended June 30, 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 June 30, 2023, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2023 is approximately $ 36.0 and for each of the next five fiscal years is approximately $ 66.6 in 2024, $ 57.1 in 2025, $ 55.5 in 2026, $ 48.8 in 2027 and $ 41.5 in 2028.

Note 13—Reportable Business Segments

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

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

The Company also incurs

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

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

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

Three Months Ended March 31,

Net sales by segment for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended June 30,

Harsh Environment Solutions

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Consolidated Net sales

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

Three Months Ended March 31,

Six Months Ended June 30,

Harsh Environment Solutions

Communications Solutions

Interconnect and Sensor Systems

Consolidated Net sales

Segment operating income and the reconciliation of segment operating income to consolidated income before income taxes for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Segment operating income:

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Interest expense

Gain on bargain purchase acquisition

Other income (expense), net

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,

Depreciation and amortization expense by segment for the three and six months ended June 30, 2023 and 2022 is as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Harsh Environment Solutions

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

For the three 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.

Since we typically invoice our customers at the same time that we satisfy our performance obligations, contract assets and contract liabilities related to our contracts with customers recorded in the Condensed Consolidated Balance Sheets were not material as of March 31, 2023 and December 31, 2022.

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.

For the three and six months ended June 30, 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 June 30, 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 March 31, 2023.

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.

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 June 30, 2023 and December 31, 2022, and related warranty expense for the three and six months ended June 30, 2023 and 2022, have not been and were not material in the accompanying Condensed Consolidated Financial Statements.

Disaggregation of Net Sales

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

The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three and six months ended June 30, 2023 and 2022:

Communications

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Business Segments

Three Months Ended March 31,

Three Months Ended June 30,

Net sales by:

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Other foreign locations

Communications

Interconnect and

Total Reportable

Sensor Systems

Business Segments

Six Months Ended June 30,

Net sales by:

Sales channel:

End customers and contract manufacturers

Distributors and resellers

United States

Other foreign locations

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

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

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

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

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

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

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

government on this ongoing matter, 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.

The Company is currently in active discussions with the U.S.

government to settle this matter, but there is no assurance that a settlement will be reached, or that any settlement will be on terms favorable to the Company.

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

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In 1989, the Company sold the property where the Site is located.

The Company settled with one group of plaintiffs during the second quarter of 2023, and the Company is currently in active discussions to settle with two additional groups of plaintiffs, which, if successful, would resolve two of the four cases.

There is no assurance that any additional settlements will be reached.

The lawsuits collectively seek, among other things, compensation for personal injuries and for past, present and future medical expenses, compensation for loss of property values near the Site and costs related to medical monitoring for individuals living close to the Site, in each case arising from alleged exposure to hazardous chemicals.

The Company denies any wrongdoing and is defending each of the above described lawsuits.

The Company denies any wrongdoing and is defending each of the remaining above described lawsuits.

All the costs incurred relating to these lawsuits have been reimbursed by the Seller based on the Seller’s indemnification obligations entered into in connection with the Acquisition (the “1987 Indemnification Agreement”).

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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