UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2023 OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-10879

AMPHENOL CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	22-2785165
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

358 Hall Avenue

Wallingford, Connecticut 06492

(Address of principal executive offices) (Zip Code)

203-265-8900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	APH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ⌧  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ⌧  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒	Accelerated Filer ☐
Non-accelerated Filer ☐	Smaller Reporting Company ☐
	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of April 25, 2023, the total number of shares outstanding of the Registrant’s Class A Common Stock was 595,319,046.

Amphenol Corporation

Index to Quarterly Report

on Form 10-Q

		Page
Part I	Financial Information
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	2
	Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	3
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	4
	Condensed Consolidated Statements of Cash Flow for the Three Months Ended March 31, 2023 and 2022	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
Part II	Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signature		41

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)

	March 31,		December 31,
	2023		2022
ASSETS
Current Assets:
Cash and cash equivalents	$	1,391.1	$	1,373.1
Short-term investments		107.6		61.1
Total cash, cash equivalents and short-term investments		1,498.7		1,434.2
Accounts receivable, less allowance for doubtful accounts of $62.9 and $63.9, respectively		2,411.9		2,631.3
Inventories		2,105.1		2,093.6
Prepaid expenses and other current assets		378.3		320.0
Total current assets		6,394.0		6,479.1
Property, plant and equipment, less accumulated depreciation of $2,098.2 and $2,019.3, respectively		1,243.5		1,204.3
Goodwill		6,539.6		6,446.1
Other intangible assets, net		743.2		734.1
Other long-term assets		461.2		462.6
Total Assets	$	15,381.5	$	15,326.2
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current Liabilities:
Accounts payable	$	1,182.1	$	1,309.1
Accrued salaries, wages and employee benefits		305.8		416.7
Accrued income taxes		144.6		169.5
Accrued dividends		125.0		124.9
Other accrued expenses		665.8		653.2
Current portion of long-term debt		2.9		2.7
Total current liabilities		2,426.2		2,676.1
Long-term debt, less current portion		4,561.0		4,575.0
Accrued pension and postretirement benefit obligations		131.5		127.9
Deferred income taxes		412.1		409.8
Other long-term liabilities		464.2		443.3
Total Liabilities		7,995.0		8,232.1
Redeemable noncontrolling interest		20.9		20.6
Equity:
Common stock		0.6		0.6
Additional paid-in capital		2,748.5		2,650.4
Retained earnings		5,121.3		4,979.4
Treasury stock, at cost		(69.7)		(79.8)
Accumulated other comprehensive loss		(492.6)		(535.0)
Total stockholders’ equity attributable to Amphenol Corporation		7,308.1		7,015.6
Noncontrolling interests		57.5		57.9
Total Equity		7,365.6		7,073.5
Total Liabilities, Redeemable Noncontrolling Interest and Equity	$	15,381.5	$	15,326.2

See accompanying notes to condensed consolidated financial statements.

2

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

	Three Months Ended
	March 31,
	2023		2022
Net sales	$	2,974.0	$	2,951.9
Cost of sales		2,030.6		2,025.3
Gross profit		943.4		926.6
Acquisition-related expenses		5.4		—
Selling, general and administrative expenses		346.3		336.8
Operating income		591.7		589.8
Interest expense		(35.9)		(28.1)
Other income (expense), net		4.1		1.7
Income before income taxes		559.9		563.4
Provision for income taxes		(117.2)		(134.2)
Net income		442.7		429.2
Less: Net income attributable to noncontrolling interests		(3.5)		(3.5)
Net income attributable to Amphenol Corporation	$	439.2	$	425.7
Net income attributable to Amphenol Corporation per common share — Basic	$	0.74	$	0.71
Weighted average common shares outstanding — Basic		595.1		598.3
Net income attributable to Amphenol Corporation per common share — Diluted	$	0.71	$	0.68
Weighted average common shares outstanding — Diluted		619.9		625.6

See accompanying notes to condensed consolidated financial statements.

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AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(dollars in millions)

	Three Months Ended
	March 31,
	2023		2022
Net income	$	442.7	$	429.2
Total other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		42.5		(20.9)
Unrealized gain on hedging activities		—		0.6
Pension and postretirement benefit plan adjustment, net of tax of ($0.2) and ($1.1), respectively		0.7		3.3
Total other comprehensive income (loss), net of tax		43.2		(17.0)
Total comprehensive income		485.9		412.2
Less: Comprehensive income attributable to noncontrolling interests		(4.3)		(3.5)
Comprehensive income attributable to Amphenol Corporation	$	481.6	$	408.7

See accompanying notes to condensed consolidated financial statements.

4

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(dollars in millions)

	Three Months Ended March 31,
	2023		2022
Cash from operating activities:
Net income	$	442.7	$	429.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		96.3		91.1
Stock-based compensation expense		21.7		19.7
Deferred income tax provision		0.1		13.4
Net change in components of working capital		(23.8)		(182.9)
Net change in other long-term assets and liabilities		(4.6)		(19.7)
Net cash provided by operating activities		532.4		350.8
Cash from investing activities:
Capital expenditures		(97.7)		(78.1)
Proceeds from disposals of property, plant and equipment		0.8		1.8
Purchases of investments		(56.7)		(100.3)
Sales and maturities of investments		10.0		35.8
Acquisitions, net of cash acquired		(113.2)		—
Other, net		0.2		(3.3)
Net cash used in investing activities		(256.6)		(144.1)
Cash from financing activities:
Proceeds from issuance of senior notes and other long-term debt		350.2		0.2
Repayments of senior notes and other long-term debt		(3.1)		(2.5)
Proceeds from short-term borrowings		—		20.1
(Repayments) borrowings under commercial paper programs, net		(387.5)		138.4
Payment of costs related to debt financing		(2.3)		—
Purchase of treasury stock		(166.9)		(204.0)
Proceeds from exercise of stock options		74.3		20.0
Distributions to and purchases of noncontrolling interests		(5.2)		(3.6)
Dividend payments		(124.9)		(119.8)
Net cash used in financing activities		(265.4)		(151.2)
Effect of exchange rate changes on cash and cash equivalents		7.6		(5.1)
Net increase in cash and cash equivalents		18.0		50.4
Cash and cash equivalents balance, beginning of period		1,373.1		1,197.1
Cash and cash equivalents balance, end of period	$	1,391.1	$	1,247.5
Cash paid for:
Interest	$	34.9	$	27.6
Income taxes, net		116.1		93.8

See accompanying notes to condensed consolidated financial statements.

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AMPHENOL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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”). All material intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included herein are unaudited. 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. 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”).

Note 2—New Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which amends ASC 805 by requiring acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The intent of ASU 2021-08 is to address diversity in practice and improve comparability for both the recognition and measurement of acquired revenue contracts by providing (i) guidance on how to determine whether a contract liability is recognized by the acquirer in a business combination and (ii) specific guidance on how to recognize and measure contract assets and contract liabilities from revenue contracts in a business combination. ASU 2021-08 and its amendments were effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022, and the amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company completed its evaluation of ASU 2021-08, which we adopted on January 1, 2023. ASU 2021-08 did not have a material impact on our acquisition during the first quarter of 2023, and its impact on our financial condition, results of operations or cash flows going forward will be dependent upon the nature of any future business combinations.

In September 2022, the FASB issued ASU No. 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”), which amends ASC 405 by requiring entities to provide more detailed disclosures regarding supplier finance programs used in connection with the purchase of goods and services. The intent of ASU 2022-04 is to enhance transparency of these programs by requiring entities to disclose (i) the key terms of the program(s), including the payment terms and assets pledged as security or other forms of guarantees, (ii) the amount of obligations outstanding at the end of the reporting period and a description of where those obligations are presented on the balance sheet, and (iii) annual rollforward information of the activity of such obligations during the reporting period. ASU 2022-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022, with the exception of the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. Disclosure requirements under ASU 2022-04 must be applied retrospectively covering each period for which a balance sheet is presented, with the exception of the rollforward information which shall be applied prospectively. The Company completed its evaluation of ASU 2022-04, which did not have a material impact on our condensed consolidated financial statements and disclosures.

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Note 3—Inventories

Inventories consist of:

	March 31,		December 31,
	2023		2022
Raw materials and supplies	$	976.0	$	929.9
Work in process		574.3		556.0
Finished goods		554.8		607.7
	$	2,105.1	$	2,093.6

Note 4—Debt

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

	March 31, 2023				December 31, 2022
	Carrying		Approximate		Carrying		Approximate
	Amount		Fair Value		Amount		Fair Value
Revolving Credit Facility	$	—	$	—	$	—	$	—
U.S. Commercial Paper Program		245.1		245.1		632.8		632.8
Euro Commercial Paper Program		—		—		—		—
Term Loan Credit Facility		—		—		—		—
3.20% Senior Notes due April 2024		349.9		342.8		349.9		342.7
2.050% Senior Notes due March 2025		399.7		380.3		399.7		376.3
4.750% Senior Notes due March 2026		348.8		350.2		—		—
0.750% Euro Senior Notes due May 2026		543.7		501.6		533.4		491.7
2.000% Euro Senior Notes due October 2028		543.4		505.6		533.2		491.5
4.350% Senior Notes due June 2029		499.7		496.4		499.7		477.7
2.800% Senior Notes due February 2030		899.5		802.3		899.5		769.2
2.200% Senior Notes due September 2031		747.7		616.5		747.6		596.2
Other debt		12.4		12.4		6.9		6.9
Less: unamortized deferred debt issuance costs		(26.0)		—		(25.0)		—
Total debt		4,563.9		4,253.2		4,577.7		4,185.0
Less: current portion		2.9		2.9		2.7		2.7
Total long-term debt	$	4,561.0	$	4,250.3	$	4,575.0	$	4,182.3

Revolving Credit Facility

The Company has an amended and restated $2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures in November 2026 and gives the Company the ability to borrow, in various currencies, at a spread that varies, based on the Company’s debt rating, over certain currency-specific benchmark rates, which benchmark rates in the case of U.S. dollar borrowings are either the base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”). 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. The carrying value of any borrowings under the Revolving Credit Facility would approximate their fair value primarily due to their market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 5). Any outstanding borrowings under the Revolving Credit Facility are classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants. On March 31, 2023, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

Term Loan Credit Facility

On April 19, 2022, the Company entered into a two-year, $750.0 unsecured delayed draw term loan credit agreement (the “2022 Term Loan”), which is scheduled to mature on April 19, 2024. The 2022 Term Loan was undrawn at closing and may be drawn on up to five occasions over the life of the facility. The 2022 Term Loan may be repaid at

7

any time without premium or penalty, and, once repaid, cannot be reborrowed. When drawn upon, the proceeds from the 2022 Term Loan are expected to be used for general corporate purposes. Interest rates under the 2022 Term Loan are based on a spread over either the base rate or the adjusted term SOFR, which spread varies based on the Company’s debt rating. The carrying value of any borrowings under the 2022 Term Loan would approximate its fair value primarily due to its market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 5). As of March 31, 2023, the Company had not yet drawn upon the 2022 Term Loan, and as such, there were no outstanding borrowings under the 2022 Term Loan. The 2022 Term Loan requires payment of certain commitment fees and requires that the Company satisfy certain financial covenants, which financial covenants are the same as those under the Revolving Credit Facility. On March 31, 2023, the Company was in compliance with the financial covenants under the 2022 Term Loan.

Commercial Paper Programs

The Company has a commercial paper program (the “U.S. Commercial Paper Program”) pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes” or “U.S. Commercial Paper”) in one or more private placements in the United States. The maturities of the USCP Notes vary, but may not exceed 397 days from the date of issue. 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. 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. 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%.

The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S. Commercial Paper Program, the “Commercial Paper Programs”), pursuant to which the Euro Issuer may issue short-term unsecured commercial paper notes (the “ECP Notes” and, together with the USCP Notes, the “Commercial Paper”), which are guaranteed by the Company and are to be issued outside of the United States.  The maturities of the ECP Notes will vary, but may not exceed 183 days from the date of issue.  The ECP Notes are sold under customary terms in the commercial paper market and may be issued at par or a discount therefrom or a premium thereto and bear varying interest rates on a fixed or floating basis. The ECP Notes may be issued in Euros, Sterling, U.S. dollars or other currencies.  The maximum aggregate principal amount outstanding of ECP Notes at any time is $2,000.0. The Company utilizes borrowings under the Euro Commercial Paper Program for general corporate purposes, which may include, for example, fully or partially funding acquisitions. In the first quarter of 2023, the Company used borrowings under its Euro Commercial Paper Program, along with cash on hand, to fund an acquisition, as discussed in Note 11 herein. These borrowings under the Euro Commercial Paper Program were repaid in their entirety by the end of the first quarter of 2023. As of March 31, 2023 and December 31, 2022, there were no ECP Notes outstanding.

Amounts available under the Commercial Paper Programs may be borrowed, repaid and re-borrowed from time to time. In conjunction with the Revolving Credit Facility, as of March 31, 2023, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $2,500.0 in the aggregate. The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and, based on the Board’s authorization described above, are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Company’s Revolving Credit Facility are available to repay Commercial Paper, if necessary. The Commercial Paper is classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Company’s Revolving Credit Facility. The carrying value of Commercial Paper approximates its fair value, primarily due to its market interest rates and is classified as Level 2 in the fair value hierarchy (Note 5). 

8

U.S. Senior Notes

On March 30, 2023, the Company issued $350.0 principal amount of unsecured 4.750% Senior Notes due March 30, 2026 at 99.658% of face value (the “2026 Senior Notes”). The 2026 Senior Notes are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness. Interest on the 2026 Senior Notes is payable semiannually on March 30 and September 30 of each year, commencing on September 30, 2023. The Company may redeem, from time to time at its option, some or all of the 2026 Senior Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, plus a make-whole premium. The Company used the net proceeds from the 2026 Senior Notes primarily to repay certain outstanding borrowings under the U.S. Commercial Paper Program.

All of the Company’s outstanding senior notes in the United States (the “U.S. Senior Notes”) are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness. Interest on each series of U.S. Senior Notes is payable semiannually. The Company may, at its option, redeem some or all of any series of U.S. Senior Notes at any time, subject to certain terms and conditions, which include paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of redemption, and, with certain exceptions, a make-whole premium.

Euro Senior Notes

The Euro Issuer has two outstanding unsecured senior notes issued in Europe (collectively, the “Euro Notes” and, together with the U.S. Senior Notes, the “Senior Notes”), each of which were issued with a principal amount of €500.0. The 0.750% Euro Senior Notes, which were issued in May 2020 at 99.563% of face value, mature on May 4, 2026, while the 2.000% Euro Senior Notes, which were issued in October 2018 at 99.498% of face value, mature on October 8, 2028. The Euro Notes are unsecured and rank equally in right of payment with the Company’s and the Euro Issuer’s other unsecured senior indebtedness, and are fully and unconditionally guaranteed on a senior unsecured basis by the Company. Interest on each series of Euro Notes is payable annually. The Company may, at its option, redeem some or all of either series of Euro Notes at any time, subject to certain terms and conditions, which include paying 100% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, and, with certain exceptions, a make-whole premium.

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

Note 5—Fair Value Measurements

Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. These requirements establish market or observable inputs as the preferred source of values. Assumptions based on hypothetical transactions are used in the absence of market inputs. The Company does not have any non-financial instruments accounted for at fair value on a recurring basis.

The valuation techniques required are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1           Quoted prices for identical instruments in active markets.

Level 2           Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3           Significant inputs to the valuation model are unobservable.

9

The Company believes that the assets or liabilities currently subject to such standards with fair value disclosure requirements are primarily (i) debt instruments, (ii) pension plan assets, (iii) short- and long-term investments, (iv) derivative instruments and (v) assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting. Each of these assets and liabilities is discussed below, with the exception of debt instruments, pension plan assets, and the fair value of assets acquired and liabilities and noncontrolling interests assumed as part of acquisition accounting, which are discussed in Note 4, Note 10 and Note 11, respectively, herein, in addition to the Notes to Consolidated Financial Statements in the 2022 Annual Report. Substantially all of the Company’s short- and long-term investments consist of certificates of deposit, which are considered as Level 2 in the fair value hierarchy. Long-term investments, the vast majority of which have original maturities of two years, are recorded in Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. The carrying amounts of these short- and long-term instruments, the vast majority of which are in non-U.S. bank accounts, approximate their respective fair values. The Company’s derivative instruments primarily consist of foreign exchange forward contracts, which are valued using bank quotations based on market observable inputs such as forward and spot rates and are therefore classified as Level 2 in the fair value hierarchy. The impact of the credit risk related to these derivative financial assets is immaterial.

The Company reviews the fair value hierarchy classifications on a quarterly basis and determines the appropriate classification of such assets and liabilities subject to the fair value hierarchy standards based on, among other things, the ability to observe valuation inputs. The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards as of March 31, 2023 and December 31, 2022 are as follows:

	Fair Value Measurements
			Quoted Prices in		Significant		Significant
			Active Markets		Observable		Unobservable
			for Identical		Inputs		Inputs
	Total		Assets (Level 1)		(Level 2)		(Level 3)
March 31, 2023:
Short-term investments	$	107.6	$	—	$	107.6	$	—
Long-term investments		51.4		—		51.4		—
Forward contracts		1.3		—		1.3		—
Redeemable noncontrolling interest		(20.9)		—		—		(20.9)
Total	$	139.4	$	—	$	160.3	$	(20.9)
December 31, 2022:
Short-term investments	$	61.1	$	—	$	61.1	$	—
Long-term investments		50.8		—		50.8		—
Forward contracts		1.5		—		1.5		—
Redeemable noncontrolling interest		(20.6)		—		—		(20.6)
Total	$	92.8	$	—	$	113.4	$	(20.6)

The Company utilizes foreign exchange forward contracts, hedging instruments accounted for as cash flow hedges, in the management of foreign currency exposures. In addition, the Company also enters into foreign exchange forward contracts, accounted for as net investment hedges, to hedge our exposure to variability in the U.S. 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. 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.

10

Certain acquisitions may result in noncontrolling interest holders who, in certain cases, are entitled to a put option, giving them the ability to put some or all of their redeemable interest in the shares of the acquiree to the Company. Specifically, if exercised by the noncontrolling interest holder, Amphenol would be required to purchase some or all of the option holder’s redeemable interest, at a redemption price during specified time period(s) stipulated in the respective acquisition agreement. The redeemable noncontrolling interest, related to an acquisition that closed in December of 2021, will remain in temporary equity until the put option is either fully exercised or expires. The redemption value of the redeemable noncontrolling interest is generally calculated using Level 3 unobservable inputs based on a multiple of earnings, which, for the redeemable noncontrolling interest currently outstanding, approximates fair value. As such, the redemption value is classified as Level 3 in the fair value hierarchy, and is recorded as Redeemable noncontrolling interest on the Condensed Consolidated Balance Sheets as of 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.

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.

Note 6—Income Taxes

	Three Months Ended
	March 31,
	2023			2022
Provision for income taxes	$	(117.2)		$	(134.2)
Effective tax rate		20.9	%		23.8	%

For the three months ended March 31, 2023 and 2022, stock option exercise activity had the impact of decreasing our Provision for income taxes by $17.1 and $3.8, respectively, and decreasing our effective tax rate by approximately 310 basis points and 70 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income. The acquisition-related expenses incurred during the first quarter of 2023 had an immaterial effect on our effective tax rate.

The United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”) in December 2017. As a result, in 2017, the Company recorded a transition tax (“Transition Tax”) related to the deemed repatriation of the accumulated unremitted earnings and profits of the Company’s foreign subsidiaries. The Company 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 operates in the U.S. and numerous foreign taxable jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2017 and after. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. 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. 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 $17.3.

11

Inflation Reduction Act of 2022

On August 16, 2022, the President of the United States signed into law the Inflation Reduction Act of 2022 (the “IRA”), a tax and spending package that introduces several tax-related provisions, including a 15% corporate alternative minimum tax (“CAMT”) on certain large corporations and a 1% excise tax on certain corporate stock repurchases. Companies will be required to reassess their valuation allowances for certain affected deferred tax assets in the period of enactment but will not need to remeasure deferred tax balances for the related tax accounting implications of the CAMT. The IRA provisions, which became effective for Amphenol beginning on January 1, 2023, did not have a material impact on the Company during the three months ended March 31, 2023. While the full impact of these provisions in the future depends on several factors, including interpretive regulatory guidance which has not yet been released, the Company does not currently believe that the provisions of the IRA, including several other non-tax related provisions, will have a material impact on our financial condition, results of operations, liquidity and cash flows.

Note 7—Stockholders’ Equity and Noncontrolling Interests

Net income attributable to noncontrolling interests is classified below net income. Earnings per share is determined after the impact of the noncontrolling interests’ share in net income of the Company. In addition, the equity attributable to noncontrolling interests is presented as a separate caption within equity.

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

	Stockholders’ equity attributable to Amphenol Corporation
											Accumulated						Redeemable
	Common Stock			Treasury Stock			Additional				Other		Non-				Non-
	Shares			Shares			Paid-In		Retained		Comprehensive		controlling		Total		controlling
	(in millions)	Amount		(in millions)	Amount		Capital		Earnings		Loss		Interests(1)		Equity		Interest
Balance as of December 31, 2022	596.0	$	0.6	(1.2)	$	(79.8)	$	2,650.4	$	4,979.4	$	(535.0)	$	57.9	$	7,073.5	$	20.6
Net income										439.2				3.2		442.4		0.3
Other comprehensive income (loss)												42.4		0.8		43.2		—
Acquisitions resulting in noncontrolling interests														0.8		0.8
Distributions to shareholders of noncontrolling interests														(5.2)		(5.2)
Purchase of treasury stock				(2.1)		(166.9)										(166.9)
Retirement of treasury stock	(2.1)		—	2.1		166.9				(166.9)						—
Stock options exercised	2.4		—	0.2		10.1		76.4		(5.4)						81.1
Dividends declared ($0.21 per common share)										(125.0)						(125.0)
Stock-based compensation expense								21.7								21.7
Balance as of March 31, 2023	596.3	$	0.6	(1.0)	$	(69.7)	$	2,748.5	$	5,121.3	$	(492.6)	$	57.5	$	7,365.6	$	20.9

(1) Excludes redeemable noncontrolling interest.

12

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

	Stockholders’ equity attributable to Amphenol Corporation
											Accumulated						Redeemable
	Common Stock			Treasury Stock			Additional				Other		Non-				Non-
	Shares			Shares			Paid-In		Retained		Comprehensive		controlling		Total		controlling
	(in millions)	Amount		(in millions)	Amount		Capital		Earnings		Loss		Interests(1)		Equity		Interest
Balance as of December 31, 2021	600.7	$	0.6	(1.6)	$	(100.0)	$	2,409.0	$	4,278.9	$	(286.5)	$	58.1	$	6,360.1	$	19.0
Net income										425.7				3.0		428.7		0.5
Other comprehensive income (loss)												(17.0)		—		(17.0)		—
Purchase of noncontrolling interest								(0.4)						(0.1)		(0.5)
Distributions to shareholders of noncontrolling interests														(3.1)