What changed in this filing

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Item 1. Financial Statements

2023-10-27 compared with 2023-07-28 · 172 added, 133 removed, 542 unchanged (36% of the section changed)

3 unchanged sentences

(dollars in millions)

September 30,

Current Assets:

35 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of sales

18 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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

10 unchanged sentences

(dollars in millions)

Six Months Ended June 30,

Nine Months Ended

September 30,

Cash from operating activities:

21 unchanged sentences

Payment of costs related to debt financing

Payment of deferred purchase price related to acquisitions

Purchase of treasury stock

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

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 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”).

The Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, the related Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022, and the related Condensed Consolidated Statements of Cash Flow for the nine months ended September 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 and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year.

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

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

7 unchanged sentences

Inventories consist of:

September 30,

Raw materials and supplies

2 unchanged sentences

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

June 30, 2023

September 30, 2023

December 31, 2022

19 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, there were no outstanding borrowings under the Revolving Credit Facility.

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

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

Term Loan Credit Facility

1 unchanged sentence

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

The 2022 Term Loan may be repaid at

any time without premium or penalty, and, once repaid, cannot be reborrowed.

When drawn upon, the proceeds from the 2022 Term Loan are expected to be used for general corporate purposes.

The 2022 Term Loan may be repaid at any time without premium or penalty, and, once repaid, cannot be reborrowed.

If 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 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.

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

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

Commercial Paper Programs

8 unchanged sentences

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.

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

Commercial Paper Program.

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 borrowed under the U.S.

Commercial Paper Program throughout much of the first nine months of 2023, the proceeds of which were used for general corporate purposes.

During the third quarter of 2023, the Company repaid all of its USCP Notes then outstanding, and, as of September 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.

8 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, there were no ECP Notes outstanding.

As of September 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 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.

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

22 unchanged sentences

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

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

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

Note 5—Fair Value Measurements

20 unchanged sentences

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

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

Fair Value Measurements

3 unchanged sentences

Assets (Level 1)

June 30, 2023:

September 30, 2023:

Short-term investments

10 unchanged sentences

dollar equivalent of the net investments in certain foreign subsidiaries.

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.

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

As of September 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 nine months ended September 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.

3 unchanged sentences

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 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.

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

Nine Months Ended

September 30,

Provision for income taxes

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.

For the three and nine months ended September 30, 2023, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 38.3 and $ 67.3 , respectively, and decreasing our effective tax rate by approximately 600 basis points and 380 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income.

In addition, for the three and nine months ended September 30, 2023, acquisition-related expenses had the effect of increasing our effective tax rate by approximately 20 basis points and 10 basis points, respectively, while for the nine months ended September 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 10 basis points.

For the three and nine months ended September 30, 2022, stock option exercise activity had the impact of decreasing our Provision for income taxes by $ 10.6 and $ 21.9 , respectively, and decreasing our effective tax rate by approximately 160 basis points and 120 basis points, respectively, while acquisition-related expenses had the effect of increasing our effective tax rate by approximately 20 basis points and 10 basis points, respectively.

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

1 unchanged sentence

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 current and long-term portions of the Transition Tax are recorded in Accrued income taxes and Other long-term liabilities, respectively, on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.

The Company operates in the U.S.

3 unchanged sentences

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

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

As of September 30, 2023, the amount of unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $ 198.0 .

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

Based on information currently available, management anticipates that over the next twelve-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $ 21.7 .

Based on information currently available, management anticipates that over the next 12-month period, audit activity could be completed and statutes of limitations may close relating to existing unrecognized tax benefits of approximately $ 21.8 .

Inflation Reduction Act of 2022

1 unchanged sentence

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 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.

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 nine months ended September 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.

Note 7—Stockholders’ Equity and Noncontrolling Interests

2 unchanged sentences

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

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

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

Stockholders’ equity attributable to Amphenol Corporation

4 unchanged sentences

Interests (1)

Balance as of March 31, 2023

Balance as of June 30, 2023

Other comprehensive income (loss)

Acquisitions resulting in noncontrolling interests

Distributions to shareholders of noncontrolling interests

4 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2023

Balance as of September 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:

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

Stockholders’ equity attributable to Amphenol Corporation

13 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2023

Balance as of September 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:

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

Stockholders’ equity attributable to Amphenol Corporation

4 unchanged sentences

Interests (1)

Balance as of March 31, 2022

Balance as of June 30, 2022

Other comprehensive income (loss)

5 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2022

Balance as of September 30, 2022

(1) Excludes redeemable noncontrolling interest.

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

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

Stockholders’ equity attributable to Amphenol Corporation

13 unchanged sentences

Stock-based compensation expense

Balance as of June 30, 2022

Balance as of September 30, 2022

(1) Excludes redeemable noncontrolling interest.

1 unchanged sentence

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

During the three and six months ended June 30, 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.

During the three and nine months ended September 30, 2023, the Company repurchased 1.7 million and 5.8 million shares of its Common Stock for $ 149.3 and $ 469.8 , respectively, under the 2021 Stock Repurchase Program.

Of the total repurchases made during the first nine months of 2023, 4.1 million shares, or $ 320.5 , were retired by the Company, with the remainder of the repurchased shares retained in Treasury stock at the time of repurchase.

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

Of the total repurchases made during the first nine months of 2022, 7.0 million shares, or $ 519.3 , were retired by the Company, with the remainder of the repurchased shares retained in Treasury stock at the time of repurchase.

From October 1, 2023 to October 24, 2023, the Company repurchased 0.4 million additional shares of its Common Stock for $ 33.5 , and, as of October 25, 2023, the Company has remaining authorization to purchase up to $ 308.3 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 during the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Dividends declared

Dividends paid (including those declared in the prior year)

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, and on October 24, 2023, the Board approved an additional increase to the Company’s quarterly dividend rate from $ 0.21 per share to $ 0.22 per share, effective with dividends declared in the fourth quarter of 2023, contingent upon declaration by the Board.

Note 8—Stock-Based Compensation

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.

For the three months ended September 30, 2023 and 2022, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 26.9 and $ 23.6 , respectively.

In addition, for the three months ended September 30, 2023 and 2022, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 41.0 and $ 12.9 , 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, 2023 and 2022 include excess tax benefits of $ 38.3 and $ 10.6 , respectively, from option exercises.

For the nine months ended September 30, 2023 and 2022, the Company’s Income before income taxes was reduced for stock-based compensation expense of $ 72.4 and $ 64.2 , respectively.

In addition, for the nine months ended September 30, 2023 and 2022, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $ 74.5 and $ 28.3 , 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, 2023 and 2022 include excess tax benefits of $ 67.3 and $ 21.9 , respectively, from option exercises.

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

6 unchanged sentences

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

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

As of September 30, 2023, there were 31,234,953 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 and six months ended June 30, 2023 was as follows:

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

Exercise Price

12 unchanged sentences

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:

Options granted

Options exercised

( 4,007,400 )

Options forfeited

Options outstanding at September 30, 2023

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

Exercisable options at September 30, 2023

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

Fair Value at

9 unchanged sentences

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:

Options granted

Options vested

Options forfeited

Non-vested options at September 30, 2023

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total intrinsic value of stock options exercised

Total fair value of stock options vested

As of June 30, 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.

As of September 30, 2023, the total compensation cost related to non-vested options not yet recognized was approximately $ 273.0 with a weighted average expected amortization period of 3.54 years.

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

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.

8 unchanged sentences

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.

As of September 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).

As of September 30, 2023, the total compensation cost related to non-vested shares of phantom stock not yet recognized was approximately $ 0.9 (with a weighted average expected amortization period of 0.62 years).

Note 9—Earnings Per Share

1 unchanged sentence

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

The following is a reconciliation of the basic weighted average common shares outs tanding to diluted weighted average common shares outstanding, which were used to calculate the earnings per share (basic and diluted) for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

Nine Months Ended

September 30,

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

5 unchanged sentences

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 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.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 8.1 million and 12.5 million for the three months ended September 30, 2023 and 2022, respectively.

Excluded from the computations above were anti-dilutive common shares (primarily related to outstanding stock options) of 8.1 million and 8.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Note 10—Benefit Plans and Other Postretirement Benefits

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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 and six months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Six Months Ended June 30,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Interest cost

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

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

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

defined contribution plans of approximately $ 18.4 and $ 13.8 , respectively.

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2023 Acquisitions

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.

During the nine months ended September 30, 2023, the Company completed six acquisitions for approximately $ 292.6 , net of cash acquired.

Four of the acquisitions have been included in the Harsh Environment Solutions segment, one acquisition has been included in the Interconnect and Sensor Systems segment, and one acquisition, which closed in the second quarter of 2023, has been included in the Communications Solutions segment.

The acquisition that closed in the first quarter of 2023 was funded through a combination of borrowings under the Euro Commercial Paper Program and cash on hand, while the other acquisitions were each funded using either cash on hand or a combination of cash on hand and borrowings under the U.S.

Commercial Paper Program.

The acquisition that closed 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 nine months ended September 30, 2023, which has been recorded separately in the Company’s Condensed Consolidated Statements of Income.

The Company is in 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 September 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.

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

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Acquisition-related Expenses

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.

During the three months ended September 30, 2023, the Company incurred $ 9.0 ($ 8.4 after-tax) of acquisition-related expenses, comprised of external transaction costs related to acquisitions.

During the nine months ended September 30, 2023, the Company incurred $ 18.4 ($ 16.2 after-tax) of acquisition-related expenses, comprised of external transaction costs incurred in the second and third quarters of 2023, as well as the amortization related to the value associated with acquired backlog resulting from the acquisition that closed in the first quarter of 2023.

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.

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

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Foreign currency translation

Goodwill at June 30, 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

Goodwill at September 30, 2023

The increase in goodwill during the first nine months of 2023 was primarily driven by goodwill recognized from acquisitions that closed during the period, partially offset by foreign currency translation.

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

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

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

In the third quarter of 2023, 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, 2023, 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, 2023.

The Company has no t recognized any goodwill impairment in 2023, 2022 or 2021 in connection with our annual impairment assessments.

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

September 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 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.

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

Amortization expense for the three months ended September 30, 2023 and 2022 was approximately $ 18.1 and $ 21.9 , respectively.

Amortization expense for the nine months ended September 30, 2023 and 2022 was approximately $ 59.4 and $ 56.7 , respectively.

Amortization expense for the nine months ended September 30, 2023 includes $ 5.4 related to the amortization of acquired backlog resulting from the acquisition that closed in the first quarter of 2023.

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

As of September 30, 2023, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2023 is approximately $ 23.9 (which includes the estimated amortization of acquired backlog resulting from an acquisition that closed late in the third quarter of 2023) and for each of the next five fiscal years is approximately $ 70.2 in 2024, $ 60.8 in 2025, $ 59.2 in 2026, $ 52.5 in 2027 and $ 45.2 in 2028.

The Company assesses and reviews its identifiable intangible assets, subject to amortization, for potential impairment whenever events or changes in circumstances indicate the intangible asset’s carrying amount may not be recoverable.

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 2023, the Company performed its annual assessment of these identifiable indefinite-lived intangible assets.

Based on its 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 the Company’s intangible assets in 2023, 2022 or 2021 as a result of such reviews.

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 and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended June 30,

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

Three Months Ended September 30,

Harsh Environment Solutions

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Consolidated Net sales

Six Months Ended June 30,

Nine Months Ended September 30,

Harsh Environment Solutions

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

Three Months Ended September 30,

Nine Months Ended September 30,

Segment operating income:

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Income before income taxes

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,

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

Three Months Ended September 30,

Nine Months Ended September 30,

Harsh Environment Solutions

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

For the three and six months ended June 30, 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 June 30, 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 June 30, 2023 and December 31, 2022.

For the three and nine months ended September 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 September 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 June 30, 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 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.

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 September 30, 2023 and December 31, 2022, and related warranty expense for the three and nine months ended September 30, 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 six months ended June 30, 2023 and 2022:

Communications

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Business Segments

Three Months Ended June 30,

Three Months Ended September 30,

Net sales by:

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Business Segments

Six Months Ended June 30,

Nine Months Ended September 30,

Net sales by:

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

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

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

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.

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

Department of Defense, Office of the Inspector General (the “OIG”).

In 2022, after multiple document productions by the Company, the OIG alleged that the Company likely violated various provisions of federal law, including violations under the civil False Claims Act.

The alleged violations related to various Company actions and inactions through 2017 related to the several “stop shipment” orders regarding certain military connector products that were received by the Company in March 2016 and lifted by the U.S.

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

The Company is currently 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.

On August 3, 2023, the Company reached an agreement with the U.S.

government related to this investigation.

Under the terms of the settlement agreement, the Company did not admit to any liability, but agreed to pay the U.S.

government a settlement amount of $ 18.0 , which the Company had accrued prior to 2023 and which the Company paid in full during the third quarter of 2023.

The settlement ends the government's investigation and releases the Company from further liability for the issues under investigation.

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.

In the second and third quarters of 2023, the Company entered into settlement agreements resolving two of the four cases.

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

7 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements