10q10k10q10k.net

What changed in Amphenol's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Amphenol's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+365 added−390 removedSource: 10-K (2024-02-07) vs 10-K (2023-02-08)

Top changes in Amphenol's 2023 10-K

365 paragraphs added · 390 removed · 306 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+1 added−23 removed55 unchanged
Biggest changeAll businesses previously reported in the Cable Products and Solutions segment have been aligned with our newly formed Communications Solutions segment. ​ 2 Table of Contents A description of each of our newly formed reportable business segments is as follows: ​ ● Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products. ​ ● Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas. ​ ● Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems. ​ The following table provides a summary of the end markets that we service and our key products within each of the three reportable business segments: ​ Reporting Segment Harsh Environment Solutions Communications Solutions Interconnect and Sensor Systems ​ ​ ​ ​ ​ ​ ​ % of 2022 Net Sales: 25% 45% 30% ​ ​ ​ ​ ​ ​ ​ End Markets ​ ● Automotive ● Commercial Aerospace ● Industrial ● Information Technology and Data Communications ● Military ● Mobile Networks ​ ● Automotive ● Broadband Communications ● Commercial Aerospace ● Industrial ● Information Technology and Data Communications ● Military ● Mobile Devices ● Mobile Networks ​ ● Automotive ● Commercial Aerospace ● Industrial ● Information Technology and Data Communications ● Military ● Mobile Networks ​ ​ ​ ​ ​ ​ ​ Key Products ​ Connectors and Connector Systems: ● harsh environment data, power, fiber optic and radio frequency interconnect products ​ Value-Add Products: ● backplane interconnect systems ● cable assemblies and harnesses ● cable management products ​ Other: ● flexible and rigid printed circuit boards ​ Connectors and Connector Systems: ● fiber optic interconnect products ● high-speed interconnect products ● radio frequency interconnect products ​ Value-Add Products: ● cable assemblies and harnesses ​ Antennas: ● consumer device antennas ● network infrastructure antennas ​ Cable: ● coaxial, power and specialty cable ​ Other: ● hinges and other mechanical products ● production-related products ​ Connectors and Connector Systems: ● busbars and power distribution systems ● power interconnect products ​ Value-Add Products: ● backplane interconnect systems ● cable assemblies and harnesses ​ Sensors and Sensor-based Products: ● force ● gas and moisture ● level ● position ● pressure ● temperature ● vibration ​ In conjunction with the new alignment of our business, the Company appointed three new segment managers to lead their respective reportable business segments, each reporting directly to the Company’s Chief Executive Officer.
Biggest changeAll segment information throughout this Annual Report is presented under our three reportable segments . ​ 2 Table of Contents A description of each of our reportable business segments is as follows: ​ ● Harsh Environment Solutions – the Harsh Environment Solutions segment designs, manufactures and markets a broad range of ruggedized interconnect products, including connectors and interconnect systems, printed circuits and printed circuit assemblies and other products. ​ ● Communications Solutions – the Communications Solutions segment designs, manufactures and markets a broad range of connector and interconnect systems, including high speed, radio frequency, power, fiber optic and other products, together with antennas. ​ ● Interconnect and Sensor Systems – the Interconnect and Sensor Systems segment designs, manufactures and markets a broad range of sensors, sensor-based systems, connectors and value-add interconnect systems. ​ The following table provides a summary of the end markets that we service and our key products within each of the three reportable business segments: ​ Reporting Segment Harsh Environment Solutions Communications Solutions Interconnect and Sensor Systems ​ ​ ​ ​ ​ ​ ​ % of 2023 Net Sales: 28% 39% 33% ​ ​ ​ ​ ​ ​ ​ End Markets ​ ● Automotive ● Commercial Aerospace ● Defense ● Industrial ● Information Technology and Data Communications ● Mobile Networks ​ ● Automotive ● Broadband Communications ● Commercial Aerospace ● Defense ● Industrial ● Information Technology and Data Communications ● Mobile Devices ● Mobile Networks ​ ● Automotive ● Commercial Aerospace ● Defense ● Industrial ● Information Technology and Data Communications ● Mobile Networks ​ ​ ​ ​ ​ ​ ​ Key Products ​ Connectors and Connector Systems: ● harsh environment data, power, fiber optic and radio frequency interconnect products ​ Value-Add Products: ● backplane interconnect systems ● cable assemblies and harnesses ● cable management products ​ Cable: ● coaxial cable ​ Other: ● flexible and rigid printed circuit boards ​ Connectors and Connector Systems: ● fiber optic interconnect products ● high-speed interconnect products ● radio frequency interconnect products ​ Value-Add Products: ● cable assemblies and harnesses ​ Antennas: ● consumer device antennas ● network infrastructure antennas ​ Cable: ● coaxial, power and specialty cable ​ Other: ● hinges and other mechanical products ● production-related products ​ Connectors and Connector Systems: ● busbars and power distribution systems ● power interconnect products ​ Value-Add Products: ● backplane interconnect systems ● cable assemblies and harnesses ​ Sensors and Sensor-based Products: ● force ● gas and moisture ● level ● position ● pressure ● temperature ● vibration ​ For further details related to the Company’s reportable business segments, information regarding the Company’s operations and results by reportable segment, as well as the Company’s net sales and long-lived assets by geographic area, refer to Note 13 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference. ​ ​ 3 Table of Contents Our Strategy ​ The Company’s overall strategy is to provide our customers with comprehensive design capabilities, a broad selection of products and a high level of quality and service on a worldwide basis, while maintaining continuing programs of productivity improvement and cost control.
The SASB standard and GRI and TCFD frameworks encourage companies to disclose climate-related topics that are important to certain interested stakeholders, even if not material for purposes of the U.S. securities laws. Furthermore, the materiality standards under these frameworks are different from the materiality standard under the U.S. securities laws.
The SASB standards and GRI and TCFD frameworks encourage companies to disclose climate-related topics that are important to certain interested stakeholders, even if not material for purposes of the U.S. securities laws. Furthermore, the materiality standards under these frameworks are different from the materiality standard under the U.S. securities laws.
The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time. Primary competitors include Aptiv, Belden, Carlisle, Commscope, Eaton, Foxconn, Glenair, HARTING, Hirose, HUBER+SUHNER, ICT Luxshare, JAE, Jonhon, JST, Molex, Phoenix Contact, Radiall, Rosenberger, Sensata, TE Connectivity, Yazaki and 3M, among others.
The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time. Primary competitors include Aptiv, Belden, Commscope, Eaton, Foxconn, Glenair, HARTING, Hirose, HUBER+SUHNER, ICT Luxshare, JAE, Jonhon, JST, Molex, Phoenix Contact, Radiall, Rosenberger, Sensata, TE Connectivity, Yazaki and 3M, among others.
Outsourcing of certain manufacturing processes is used when cost-effective. Substantially all of the Company’s manufacturing facilities operate under certification to management system standards of globally recognized, industry certification organizations. Our facilities are primarily certified to quality management systems, primarily ISO9001, but also may include ISO13485, AS9100, and IATF16949.
Outsourcing of certain manufacturing processes is used when cost-effective. Substantially all of the Company’s manufacturing facilities operate under certification to management system standards of globally recognized, industry certification organizations. Many of our facilities are certified to quality management systems, primarily ISO9001, but also may include ISO13485, AS9100, and IATF16949.
In addition, the Company competes with a large number of smaller companies who compete in specific geographies, markets or products. For a discussion of certain risks related to competition, refer to the risk factor titled “ The Company encounters competition in substantially all areas of our business ” in Part I, Item 1A.
In addition, the Company competes with a large number of smaller companies who compete in specific geographies, markets or products. For a discussion of certain risks related to competition, refer to the risk factor titled “ The Company encounters competition in all areas of our business ” in Part I, Item 1A.
For a discussion of certain risks related to the availability of and dependence on raw materials and components, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of most of the Company’s raw materials and components is increasing ” in Part I, Item 1A.
For a discussion of certain risks related to the availability of and dependence on raw materials and components, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of certain of the Company’s raw materials and components is increasing ” in Part I, Item 1A.
In addition to product design teams and collaborative initiatives with customers, the Company uses key account managers to manage certain customer relationships on a global basis so that it can bring to bear its total resources to meet the worldwide needs of its multinational customers. ​ Manufacturing ​ The Company is a global manufacturer employing advanced manufacturing processes including molding, stamping, plating, turning, computer numerical control (“CNC”) machining, 3D printing, extruding, die casting, certain other manufacturing, automation and assembly operations and proprietary process technology for connectors, specialty and coaxial cable production, antenna and sensor fabrication.
In addition to product design teams and collaborative initiatives with customers, the Company uses key account managers to manage certain customer relationships on a global basis so that it can bring to bear its total resources to meet the worldwide needs of its multinational customers. ​ Manufacturing ​ The Company is a global manufacturer employing advanced manufacturing processes including molding, stamping, plating, turning, computer numerical control (CNC) machining, 3D printing, extruding, die casting, certain other manufacturing, automation and assembly operations and proprietary process technology for connectors, specialty and coaxial cable production, antenna and sensor fabrication.
Sales into the industrial market represented approximately 25% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ● agriculture equipment ● marine ● alternative and traditional energy generation ​ ● medical equipment ● batteries and hybrid drive systems ​ ● oil and gas ● entertainment ​ ● power distribution ● factory and machine tool automation ​ ● public safety ● heavy equipment ​ ● rail mass transit ● instrumentation ​ ● semiconductor manufacturing equipment ● internet of things ​ ● smart manufacturing ● LED lighting ​ ● transportation ​ Information Technology and Data Communications - Amphenol is a global provider of interconnect solutions to designers, manufacturers and operators of internet-enabling systems.
Sales into the industrial market represented approximately 25% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ● agriculture equipment ● marine ● alternative and traditional energy generation ​ ● medical equipment ● batteries and hybrid drive systems ​ ● oil and gas ● entertainment ​ ● power distribution ● factory and machine tool automation ​ ● public safety ● heavy equipment ​ ● rail mass transit ● instrumentation ​ ● semiconductor manufacturing equipment ● internet of things ​ ● smart manufacturing ● LED lighting ​ ● transportation ​ Information Technology and Data Communications - Amphenol is a global provider of interconnect solutions to designers, manufacturers and operators of internet-enabling systems.
Our acquisitions in 2022 and 2021 have strengthened our customer base and product offerings in many of our end markets and have brought a number of high-performing new management teams into the Company. ​ ● Foster collaborative, entrepreneurial management - Amphenol’s management system is designed to provide clear income statement and balance sheet responsibility in a flat organizational structure.
Our acquisitions in 2023 and 2022 have strengthened our customer base and product offerings in many of our end markets and have brought a number of high-performing new management teams into the Company. ​ ● Foster collaborative, entrepreneurial management - Amphenol’s management system is designed to provide clear income statement and balance sheet responsibility in a flat organizational structure.
The Company believes that it has a good relationship with both its unionized and non-unionized employees. ​ Governance and Culture – Our Board is actively involved in overseeing the Company’s employee-related strategies and practices as well as the Company’s culture and ESG initiatives. This oversight is conducted both directly and through certain of the Board’s committees.
The Company believes that it has a good relationship with both its unionized and non-unionized employees. ​ Governance and Culture – Our Board of Directors (the “Board”) is actively involved in overseeing the Company’s employee-related strategies and practices as well as the Company’s culture and ESG initiatives. This oversight is conducted both directly and through certain of the Board’s committees.
The issuances of such licenses, in particular within the military market, are subject to complex laws and regulations that could change frequently and with limited notice, depending on the jurisdiction, geopolitical events or other factors. The Company has systems in place to apply for licenses and to maintain compliance with any such regulations.
The issuances of such licenses, in particular within the defense market, are subject to complex laws and regulations that could change frequently and with limited notice, depending on the jurisdiction, geopolitical events or other factors. The Company has systems in place to apply for licenses and to maintain compliance with any such regulations.
Risk Factors within the risk factors titled “ The Company may be negatively impacted by extreme weather conditions and natural catastrophic events, including those caused or intensified by climate change and global warming ,” “ The Company is subject to, and may continue to be subject to, incremental costs, risks and regulations associated with efforts to combat the negative effects of climate change ,” and “ Increasing scrutiny and expectations regarding ESG matters could result in additional costs or risks or otherwise adversely impact our business ”.
Risk Factors within the risk factors titled “ The 10 Table of Contents Company may be negatively impacted by extreme weather conditions and natural catastrophic events, including those caused or intensified by climate change and global warming ,” “ The Company is subject to, and may continue to be subject to, incremental costs, risks and regulations associated with efforts to combat the negative effects of climate change ,” and “ Increasing scrutiny and expectations regarding ESG matters could result in additional costs or risks or otherwise adversely impact our business ”.
The Company estimates, based on recent reports of industry analysts, that worldwide sales of interconnect and sensor-related products were approximately $235 billion in 2022. ​ Certain predecessor businesses of the Company were founded in 1932, and the Company was incorporated under the laws of the State of Delaware in 1986.
The Company estimates, based on recent reports of industry analysts, that worldwide sales of interconnect and sensor-related products were approximately $235 billion in 2023. ​ Certain predecessor businesses of the Company were founded in 1932, and the Company was incorporated under the laws of the State of Delaware in 1986.
No single customer accounted for 10% or more of the Company’s net sales during either of the years ended December 31, 2022 and 2021. ​ The Company sells its products through its own global sales force, independent representatives and a global network of electronics distributors.
No single customer accounted for 10% or more of the Company’s net sales during the years ended December 31, 2023, 2022 and 2021. ​ The Company sells its products through its own global sales force, independent representatives and a global network of electronics distributors.
Risk Factors herein. ​ 10 Table of Contents Government Regulation ​ As a global company, we are subject to various laws and regulations applicable to parties doing business with the U.S. and other governments, including laws and regulations governing reporting obligations, interactions with government officials, performance of government contracts, the use and treatment of government furnished property and the nature of materials used in our products.
Risk Factors herein. ​ Government Regulation ​ As a global company, we are subject to various laws and regulations applicable to parties doing business with the U.S. and other governments, including laws and regulations governing reporting obligations, interactions with government officials, performance of government contracts, the use and treatment of government furnished property and the nature of materials used in our products.
While we consider our patents and trademarks to be valuable assets, we do not believe that our competitive position or our operations are dependent upon or would be materially impacted by the loss of any single patent or group of related patents, or by a third party’s successful enforcement of its patents against us or any of our products.
While we consider our patents and trademarks to be valuable assets, we do not believe that our competitive position or our operations are dependent upon or would be materially impacted by the loss of any single patent or group of related patents, or by a third party’s successful enforcement of its 8 Table of Contents patents against us or any of our products.
Our 2021 Sustainability Report is available on our website at https://amphenol.com/sustainability . The items discussed in our 2021 Sustainability Report have not required material capital expenditures or operating expenses, nor caused significant operational challenges or risks to the Company’s business or results of operations beyond those items disclosed in Item 1A.
Our 2022 Sustainability Report is available on our website at https://amphenol.com/sustainability . The items discussed in our 2022 Sustainability Report have not required material capital expenditures or operating expenses, nor caused material operational challenges or risks to the Company’s business or results of operations beyond those items disclosed in Item 1A.
We believe this structure, with approximately 130 general managers running unique, independent businesses, creates an environment and culture where each of our general managers has a more direct link to the success of their individual businesses and a more personal connection to the employees they oversee and the communities in which they operate. ​ As of December 31, 2022, the Company had approximately 91,000 employees worldwide, of which approximately 11,000 were located in the United States.
We believe this structure, with approximately 130 general managers running unique, independent businesses, creates an environment and culture where each of our general managers has a more direct link to the success of their individual businesses and a more personal connection to the employees they oversee and the communities in which they operate. ​ As of December 31, 2023, the Company had approximately 95,000 employees worldwide, of which approximately 11,000 were located in the United States.
Sales into the broadband communications market represented approximately 5% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ● cable, satellite & telecommunications networks ● network switching equipment ● customer premises equipment ​ ● satellite interface devices ● high-speed internet hardware ​ ● set-top boxes ​ Commercial Aerospace - Amphenol is a leading provider of high-performance interconnect systems and components to the commercial aerospace market.
Sales into the broadband communications market represented approximately 4% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ● cable, satellite & telecommunications networks ● network switching equipment ● customer premises equipment ​ ● satellite interface devices ● high-speed internet hardware ​ ● set-top boxes ​ Commercial Aerospace - Amphenol is a leading provider of high-performance interconnect systems and components to the commercial aerospace market.
Sales into the mobile networks market represented approximately 5% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● antenna systems ● mobile switches ● base stations ​ ● radio links ● core network controllers ​ ● small cells ● distributed antenna systems (DAS) ​ ​ ​ Customers and Geographies ​ The Company manufactures and sells a broad portfolio of products on a global basis to customers in a wide variety of industries.
Sales into the mobile networks market represented approximately 4% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● antenna systems ● mobile switches ● base stations ​ ● radio links ● core network controllers ​ ● small cells ● distributed antenna systems (DAS) ​ ​ ​ Customers and Geographies ​ The Company manufactures and sells a broad portfolio of products on a global basis to customers in a wide variety of industries.
The Sustainability Report is designed to inform and engage the Company’s broad range of ESG stakeholders, such as employees, suppliers, customers, governments, community members and investors, among others.
The Sustainability Report is designed to inform and engage the Company’s broad range of stakeholders, such as employees, suppliers, customers, community members and investors, among others.
Each general manager is incented to grow and develop their business and to think entrepreneurially in providing innovative, timely and cost-effective solutions to customer needs.
Each general manager is enabled and incented to grow and develop their business and to think entrepreneurially in providing innovative, timely and cost-effective solutions to meet customer needs.
Significant elements of the Company’s business, such as sales to the communications-related markets (including wireless communications, information technology and data communications and broadband communications) and sales to distributors, generally have short lead times. Therefore, backlog may not be indicative of future demand.
A significant portion of the Company’s business, such as sales to the communications-related markets (including wireless communications, information technology and data communications and broadband communications) and sales to distributors, generally have short lead times. Therefore, backlog may not be indicative of future demand.
For a discussion of certain risks related to environmental matters, refer to the risk factor titled “ The Company is subject to environmental laws and regulations that could adversely affect our business ” in Part I, Item 1A.
For a discussion of certain risks related to environmental matters, refer to 9 Table of Contents the risk factor titled “ The Company is subject to environmental laws and regulations that could adversely affect our business ” in Part I, Item 1A.
Our 2021 Sustainability Report was prepared with reference to the Global Reporting Initiative (“GRI”) Standards framework and topics identified as material under the Sustainability Accounting Standards Board (“SASB”) standards and outlines board and executive-level oversight of climate-related risks and opportunities identified in the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations.
Our 2022 Sustainability Report was prepared with reference to the Global Reporting Initiative (“GRI”) Standards framework and topics identified under the Sustainability Accounting Standards Board (“SASB”) standards and outlines board and executive-level oversight of climate-related risks and opportunities identified in the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations.
At the end of 2022, our research, development and engineering efforts, which relate to the creation of new and improved products and processes, were supported by approximately 3,700 of our employees and were performed primarily by individual operating units focused on specific markets and product technologies. ​ Intellectual Property ​ We own a significant portfolio of patents that principally relate to mechanical, electrical, radio frequency, optical and electronic features of connector, antenna and sensor products.
At the end of 2023, our research, development and engineering efforts, which relate to the creation of new and improved products and processes, were supported by approximately 4,000 of our employees and were performed primarily by individual operating units focused on specific markets and product technologies. ​ Intellectual Property ​ We own a significant portfolio of patents that principally relate to mechanical, electrical, radio frequency, optical and electronic features of connector, antenna and sensor products.
Most of our community outreach is organized by our local management teams, which helps ensure that our efforts are working in support of the local communities in which our employees live and work.
Most of our community outreach is organized by our local management teams, which helps ensure that our efforts are working in support of the local communities in which our 11 Table of Contents employees live and work.
Risk Factors herein. Information regarding our obligations related to commitments to purchase certain goods and services is disclosed in Note 14 of the Notes to Consolidated Financial Statements. ​ 9 Table of Contents Competition ​ The Company encounters competition in substantially all areas of its business.
Risk Factors herein. Information regarding our obligations related to commitments to purchase certain goods and services is disclosed in Note 14 of the Notes to Consolidated Financial Statements. ​ Competition ​ The Company encounters competition in all areas of its business.
The Company generally focuses its research and 8 Table of Contents development efforts primarily on those product areas that it believes have the potential for broad market applications and significant sales within a one- to three-year period.
The Company generally focuses its research and development efforts primarily on those product areas that it believes have the potential for broad market applications and significant sales within a one- to three-year period.
Sales into the automotive market represented approximately 21% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ​ ● antennas ● lighting ● charging stations ​ ● passenger connectivity ● electric vehicles ​ ● power management ● engine management and control ​ ● safety and security systems ● exhaust monitoring and cleaning ​ ● sensing systems ● hybrid vehicles ​ ● telematics systems ● infotainment and communications ​ ● transmission systems ​ 5 Table of Contents Broadband Communications - Amphenol is a world leader in broadband communication products for cable, satellite and telecommunications-based video and data networks, with industry-leading engineering, design and manufacturing expertise.
Sales into the automotive market represented approximately 23% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ​ ● antennas ● lighting ● charging stations ​ ● passenger connectivity ● climate control ​ ● power management ● electric vehicles ​ ● safety and security systems ● engine management and control ​ ● sensing systems ● exhaust monitoring and cleaning ​ ● telematics systems ● hybrid vehicles ​ ● transmission systems ● infotainment and communications ​ ​ ​ Broadband Communications - Amphenol is a world leader in broadband communication products for cable, satellite and telecommunications-based video and data networks, with industry-leading engineering, design and manufacturing expertise.
Risk Factors herein. ​ Backlog and Seasonality ​ The Company estimates that its backlog of unfilled firm orders as of December 31, 2022 was approximately $4.1 billion compared with backlog of approximately $3.8 billion as of December 31, 2021. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions.
Risk Factors herein. ​ Backlog and Seasonality ​ The Company estimates that its backlog of unfilled firm orders as of December 31, 2023 was approximately $4.0 billion compared with backlog of approximately $4.1 billion as of December 31, 2022. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions.
The Company’s sales to distributors represented approximately 18% and 17% of the Company’s net sales in 2022 and 2021, respectively.
The Company’s sales to distributors represented approximately 17% and 18% of the Company’s net sales in 2023 and 2022, respectively.
Sales into the mobile devices market represented approximately 11% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● consumer electronics ● production-related products ● mobile and smart phones, including accessories ​ ● wearable and hearable devices ● mobile computing devices, including laptops, tablets and e-readers ​ ​ ​ Mobile Networks - Amphenol is a leading global interconnect solutions provider to the mobile networks market and offers a wide product portfolio, including antennas, connectors and interconnect systems.
Sales into the mobile devices market represented approximately 10% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● consumer electronics ● production-related products ● mobile and smart phones, including accessories ​ ● wearable and hearable devices ● mobile computing devices, including laptops, tablets and e-readers ​ ​ ​ 6 Table of Contents ​ Mobile Networks - Amphenol is a leading global interconnect solutions provider to the mobile networks market and offers a wide product portfolio, including antennas, connectors and interconnect systems.
Information included in our 2021 Sustainability Report is not incorporated by reference in, and does not form part of, this Annual Report.
Information included in our 2022 Sustainability Report and our website is not incorporated by reference in, and does not form part of, this Annual Report.
With our industry-leading high-speed, power and active and passive fiber optic interconnect technologies, together with superior simulation and testing capability and cost effectiveness, Amphenol is a market leader in interconnect development for the information technology (“IT”) and datacom market.
With our industry-leading high-speed, power and active and passive fiber optic interconnect technologies, together with superior simulation and testing capability and cost effectiveness, Amphenol is a market leader in interconnect development for the information technology and data communications (“IT datacom”) market.
As the Company’s global customers have grown their international operations to access developing world markets and lower manufacturing costs, the Company is continuing to expand and shift its international footprint in order to provide real-time capabilities to these customers.
As the Company’s global customers have grown their international operations to access developing world markets and lower manufacturing costs, the Company is continuing to expand and shift its international footprint in order to provide real-time capabilities to these customers. The majority of the Company’s international operations have broad capabilities, including new product development.
A key hallmark of our structure is our entrepreneurial culture that creates clear accountability for each of our general managers, who are our key business leaders. Our core management team is comprised of these general managers and their controllers, as well as our executive management team. Women represented 27% of this core management team at the end of 2022.
A key hallmark of our structure is our entrepreneurial culture that creates clear accountability for each of our general managers, who are our key business leaders. Our core management team is comprised of these general managers and their controllers, as well as our group general managers and executive management team.
Sales into the commercial aerospace market represented approximately 3% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ​ ● aircraft and airframe power distribution ● in-flight entertainment ● avionics ​ ● in-flight internet connectivity ● controls and instrumentation ​ ● lighting and control systems ● engines ​ ● wire bundling and cable management ​ Industrial - Amphenol is a technology leader in the design, manufacture and supply of high-performance interconnect systems, sensors and antennas for a broad range of industrial applications.
Sales into the commercial aerospace market represented approximately 4% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ​ ● aircraft and airframe power distribution ● in-flight entertainment ● avionics ​ ● in-flight internet connectivity ● controls and instrumentation ​ ● lighting and control systems ● engines ​ ● wire bundling and cable management ​ Defense - Amphenol is a world leader in the design, manufacture and supply of high-performance interconnect systems for harsh environment aerospace and defense applications.
Of our total employees worldwide, approximately half are women. ​ Health, Safety and Well-being – We believe that the protection of our employees is a moral obligation. In addition, the safety and well-being of our employees is critical to the successful operation of our business.
Women represented 26% of this core management team at the end of 2023. Of our total employees worldwide, approximately half are women. ​ Health, Safety and Well-being – We believe that the protection of our employees is a moral obligation. In addition, the safety and well-being of our employees is critical to the successful operation of our business.
Separately, we are required to comply with certain U.S. and non-U.S. economic sanctions and trade embargoes. ​ For a discussion of certain risks related to government regulation, including export and import controls and sanctions, refer to the risk factors titled “ The Company must comply with complex U.S. governmental export and import controls as well as economic sanctions and trade embargoes ,” “ Our business and financial results may be adversely affected by government contracting risks ,” and “ Our international operations require us to comply with anti-corruption laws and regulations of the U.S. government and various foreign jurisdictions, and our business reputation and financial results may be impaired by improper conduct by any of our employees, customers, suppliers, distributors or any other business partners ,” in Part I, Item 1A.
Separately, we are required to comply with certain U.S. and non-U.S. economic sanctions and trade embargoes, as well as the terms of any preferential duty and/or tariff programs in which we participate. ​ For a discussion of certain risks related to government regulation, including export and import controls and sanctions, refer to the risk factors titled “ The Company is exposed to political, economic, military and other risks related to operating in countries outside the United States, and changes in general economic conditions, geopolitical conditions, U.S. trade policies and other factors beyond the Company’s control may adversely impact its business and operating results ,” “ The Company must comply with complex U.S. governmental export and import controls as well as economic sanctions and trade embargoes ,” “ Our business and financial results may be adversely affected by government contracting risks ,” and “ Our international operations require us to comply with anti-corruption laws and regulations of the U.S. government and various foreign jurisdictions, and our business reputation and financial results may be impaired by improper conduct by any of our employees, customers, suppliers, distributors or any other business partners ,” in Part I, Item 1A.
This mindset was particularly important in 2021 and 2022, as supply chain challenges and inflationary pressures accelerated. ​ ● Pursue strategic acquisitions and investments - The Company believes that the industry in which it operates is highly fragmented and continues to provide significant opportunities for strategic acquisitions.
This mindset was particularly important in recent years, as supply chain challenges arose, followed by inflationary pressures and logistical challenges that persisted into 2023. ​ ● Pursue strategic acquisitions and investments - The Company believes that the industry in which it operates is highly fragmented and continues to provide significant opportunities for strategic acquisitions.
The Company seeks to position its manufacturing and assembly facilities in order to serve local markets while coordinating, as appropriate, product design and manufacturing responsibility with the Company’s other operations around the world.
To better serve certain high-volume customers, the Company has established certain facilities near these major customers. The Company seeks to position its manufacturing and assembly facilities in order to serve local markets while coordinating, as appropriate, product design and manufacturing responsibility with the Company’s other operations around the world.
This has been evident throughout the COVID-19 pandemic, as we were generally able to support our customers even if pandemic-related restrictions and other challenges were present in a particular geography.
This was evident in recent years, as we were generally able to support our customers even if pandemic-related restrictions and other challenges were present in a particular geography.
In addition, approximately half of our facilities are also certified to environmental or occupational health and safety management systems, including ISO14001 and ISO45001. ​ The Company’s manufacturing facilities are generally vertically integrated operations from the initial design stage through final design and manufacturing. The Company designs, manufactures and assembles its products at facilities in approximately 40 countries around the world.
In addition, approximately half of our facilities are also certified to environmental or occupational health and safety management systems, including ISO14001 and ISO45001. ​ 7 Table of Contents The Company’s manufacturing facilities are generally vertically integrated operations from the initial design stage through final design and manufacturing.
One of the key components of our business strategy is the fostering of a collaborative and entrepreneurial management culture. Each of our general managers operates in a flat organizational structure and is incented to grow and develop their business, with the support of the resources of the larger organization.
Each of our general managers operates in a flat organizational structure and is enabled and incented to grow and develop their business, with the support of the resources of the larger organization.
The majority of the Company’s international operations have broad capabilities, including new product development. 4 Table of Contents The Company is also able to take advantage of the lower manufacturing costs in some regions, and has established low-cost manufacturing and assembly facilities around the world. ​ ● Control costs - The Company recognizes the importance in today’s global marketplace of maintaining a competitive cost structure.
The Company is also able to take advantage of the lower manufacturing costs in some regions, and has established low-cost manufacturing and assembly facilities around the world. ​ ● Control costs - The Company recognizes the importance in today’s global marketplace of maintaining a competitive cost structure.
Whether through minimizing our and our partners’ environmental footprint, following humane labor practices, supporting the development and diversity of our global team, ensuring the strength and integrity of our supply chain or giving back to our communities, we have always believed that it is not just good stewardship, but good business to focus on the long-term sustainability of Amphenol.
Whether through reducing our and our partners’ environmental footprint, following humane labor practices, supporting the development and diversity of our global team, ensuring the strength and integrity of our supply chain or giving back to our communities, we have always believed that it is not just good stewardship, but good business to focus on the long-term sustainability of Amphenol . ​ Sustainability Report ​ The Company publishes an annual sustainability report (“Sustainability Report”) to highlight our goals and areas of progress and success in sustainability matters, including climate-related topics.
Risk Factors herein. ​ Environmental, Social and Corporate Governance ​ At Amphenol, we believe that making sustainable business choices, building strong relationships with our stakeholders and engaging in good corporate governance create long-term value for our Company.
We believe that long-term value for our Company is created through making sustainable business choices, building strong relationships with our stakeholders and engaging in good corporate governance.
We seek to enhance the performance of acquired companies by leveraging Amphenol’s position with customers across our diverse end markets, our leading technologies and our access to low-cost manufacturing around the world.
We seek to enhance the performance of acquired companies by leveraging Amphenol’s position with customers across our diverse end markets, our leading technologies and our access to low-cost manufacturing around the world. In 2023, the Company invested approximately $970 million to fund 10 acquisitions, while in 2022, the Company invested approximately $288 million to fund two acquisitions.
Our 2022 Sustainability Report is expected to be released during the second quarter of 2023. 11 Table of Contents ​ Human Capital Management and Our Culture ​ The Company’s success is closely tied to the capability, adaptability and accountability of our diverse, global organization.
Our 2023 Sustainability Report is expected to be released during the second quarter of 2024. ​ Human Capital Management and Our Culture ​ The Company’s success is closely tied to the capability, adaptability and accountability of our diverse, global organization. One of the key components of our business strategy is the fostering of a collaborative and entrepreneurial management culture.
Our local teams are actively supporting their communities in a variety of ways including: school supply drives, local blood drives, mentoring of at-risk students, community clean-up events, local tree planting, holiday-giving events and food delivery services.
Our local teams are actively supporting their communities in a variety of ways including: school supply drives, local blood drives, mentoring of at-risk students, community clean-up events, local tree planting, holiday-giving events and food delivery services. ​ Available Information ​ The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, including Amphenol, that file with the SEC.
Whether industry standard or application-specific designs are required, Amphenol provides customers with products that enable performance at the leading edge of next-generation, high-speed, power and fiber optic technologies.
Our products enable a broad array of IT datacom systems and applications, including a growing range of systems to power artificial intelligence and machine learning. Whether industry standard or application-specific designs are required, Amphenol provides customers with products that enable performance at the leading edge of next-generation, high-speed, power and fiber optic technologies.
This strategy has been, and continues to be, critical to the Company’s ability to mitigate supply chain constraints and a higher inflationary environment, such as those experienced in 2021 and 2022. The Company sources its products on a worldwide basis. To better serve certain high-volume customers, the Company has established certain facilities near these major customers.
This strategy has been, and continues to be, critical to the Company’s ability to mitigate supply chain constraints, such as those experienced in recent years, and the higher inflationary environment, which began in 2022 and persisted into 2023. The Company sources its products on a worldwide basis.
Our global coverage positions us near many of our customers’ locations and allows us to assist them in consolidating their supply base and lowering their production and logistics costs.
The Company designs, manufactures and assembles its products at facilities in approximately 40 countries around the world. Our global coverage positions us near many of our customers’ locations and allows us to assist them in consolidating their supply base and lowering their production and logistics costs.
Amphenol provides an unparalleled product breadth, from military specification connectors to customized high-speed board level interconnects; from flexible to rigid printed circuit boards; from backplane systems to completely integrated assemblies; and from sensors to sensor-based systems. Amphenol is a technology leader, participating in major programs from the earliest inception across each phase of the production cycle.
Amphenol provides an unparalleled product breadth, from aerospace and defense specification connectors to customized high-speed board level interconnects; from flexible to rigid printed circuit boards; from backplane systems to completely integrated assemblies; and from sensors to sensor-based systems.
The alignment of the Company’s businesses into three newly formed divisions , which represent the newly formed reportable segments effective January 1, 2022, reinforces this culture and clear accountability, and enhances the scalability of the Company’s entrepreneurial organization. ​ Markets ​ The Company sells products to customers in a diversified set of end markets.
The alignment of the Company’s businesses into three divisions (representing the Company’s 4 Table of Contents reportable business segments) , each led by a segment manager reporting directly to the Chief Executive Officer, reinforces this culture and clear accountability, and enhances the scalability of the Company’s entrepreneurial organization. ​ Markets ​ The Company sells products to customers in a diversified set of end markets.
By working with customers to develop new products and technologies, the Company is able to identify and act on trends and leverage knowledge about next-generation technology across our 7 Table of Contents portfolio of products.
By working with customers to develop new products and technologies, the Company is able to identify and act on trends and leverage knowledge about next-generation technology across our portfolio of products. In addition, the Company has concentrated its efforts on service, procurement and manufacturing improvements designed to increase product quality and performance and lower product lead-time and cost.
Risk Factors herein. ​ The Company’s products are sold to thousands of original equipment manufacturers (“OEMs”) in numerous countries throughout the world. The Company’s products are also sold to electronic manufacturing services (“EMS”) companies, to original design manufacturers (“ODMs”) and to service providers, including telecommunications network service providers and web service providers.
The Company’s products are also sold to electronic manufacturing services (EMS) companies, to original design manufacturers (or ODMs) and to service providers, including telecommunications network service providers and web service providers.
Risk Factors herein. ​ Environmental Matt ers ​ Certain operations of the Company are subject to environmental laws and regulations that govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes.
Generally, the Company does not experience significant seasonality in its business, although historically, the strongest quarters have typically been the last two quarters of our fiscal year . ​ Environmental Matt ers ​ Certain operations of the Company are subject to environmental laws and regulations that govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes.
Sales into the IT and datacom market represented approximately 21% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● cloud computing and data centers ● servers ● gaming systems ​ ● storage systems ● internet appliances ​ ● transmission ● networking equipment ​ ● web service providers 6 Table of Contents ​ Military - Amphenol is a world leader in the design, manufacture and supply of high-performance interconnect systems for harsh environment military applications.
Sales into the IT datacom market represented approximately 19% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ​ ​ ​ ​ ​ ● cloud computing and data centers ​ ● servers ● gaming systems ​ ● storage systems ● internet appliances ​ ● transmission ● networking equipment ​ ● web service providers ​ Mobile Devices - Amphenol designs and manufactures an extensive range of interconnect products, antennas and electromechanical components found in a wide array of mobile computing devices.
Throughout Amphenol, we have a shared commitment to create innovative products and enable technologies that improve the lives of people around the world, to support the well-being of our employees and communities and to sustain the health of our planet. ​ Sustainability Report ​ The Company publishes an annual sustainability report (“Sustainability Report”) to highlight our goals and areas of progress and success in sustainability matters, including climate-related topics.
Risk Factors herein. ​ Environmental, Social and Corporate Governance ​ We have a shared commitment to create innovative products and enable technologies that improve the lives of people around the world, to support the well-being of our employees and communities and to sustain the health of our planet.
Sales into the military market represented approximately 9% of the Company’s net sales in 2022, with sales into the following primary end applications: ​ ● airframe ​ ● naval ● avionics ​ ● ordnance and missile systems ● communications ​ ● radar systems ● engines ​ ● rotorcraft ● ground vehicles and tanks ​ ● satellite and space programs ● homeland security ​ ● unmanned aerial vehicles ​ Mobile Devices - Amphenol designs and manufactures an extensive range of interconnect products, antennas and electromechanical components found in a wide array of mobile computing devices.
Amphenol is a technology leader, participating in major programs from the earliest inception across each phase of the production cycle. 5 Table of Contents Sales into the defense market represented approximately 11% of the Company’s net sales in 2023, with sales into the following primary end applications: ​ ● airframe ​ ● naval ● avionics ​ ● ordnance and missile systems ● communications ​ ● radar systems ● engines ​ ● rotorcraft ● ground vehicles and tanks ​ ● satellite and space programs ● homeland security ​ ● unmanned aerial vehicles ​ Industrial - Amphenol is a technology leader in the design, manufacture and supply of high-performance interconnect systems, sensors and antennas for a broad range of industrial applications.
This new alignment, which replaced our historical reportable business segments, reinforces the Company’s entrepreneurial culture and the clear accountability of each of our business unit general managers, while enhancing the scalability of Amphenol’s business for the future. All businesses previously reported in the Interconnect Products and Assemblies segment have been aligned with one of the three newly formed segments.
The Company aligns its businesses into three reportable business segments: (i) Harsh Environment Solutions , (ii) Communications Solutions and (iii) Interconnect and Sensor Systems . This alignment reinforces the Company’s entrepreneurial culture and the clear accountability of each of our business unit general managers, while enhancing the scalability of Amphenol’s business for the future.
Given this environment, the Company may experience supply shortages for discrete raw materials or components in the future, which could be further exacerbated by increased commodity prices and additional inflation.
While the Company does not currently anticipate significant, broad-based difficulties in obtaining raw materials or components necessary for production, inflationary pressures and logistical challenges may impact the cost and availability of certain raw materials and components used by the Company and result in supply shortages for discrete raw materials or components, which could be further exacerbated by increased commodity prices and additional inflation.
In addition, the Company has concentrated its efforts on service, procurement and manufacturing improvements designed to increase product quality and performance and lower product lead-time and cost. For a discussion of certain risks related to the Company’s sales, refer to the subsection titled “Risks Related to our End Markets” included in Part I, Item 1A.
For a discussion of certain risks related to the Company’s sales, refer to the subsection titled “Risks Related to our End Markets” included in Part I, Item 1A. Risk Factors herein. ​ The Company’s products are sold to thousands of original equipment manufacturers (or OEMs) in numerous countries throughout the world.
Removed
Effective January 1, 2022, the Company aligned its businesses into three newly formed reportable business segments: (i) Harsh Environment Solutions , (ii) Communications Solutions and (iii) Interconnect and Sensor Systems .
Added
The Company has three segment managers who lead their respective reportable business segments, each reporting directly to the Company’s Chief Executive Officer.
Removed
T he Company began reporting under its new reportable segments in connection with its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 and for each quarterly period thereafter.
Removed
Throughout this Annual Report, the Company is reporting under the new reportable segments structure, which includes the recasting of relevant segment information for the years ended December 31, 2021 and 2020, in order to enable year-over-year segment comparisons. ​ For further details related to the Company’s reportable business segments, information regarding the Company’s operations and results by reportable segment, as well as the Company’s net sales and long-lived assets by geographic area, refer to Note 13 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference. ​ 3 Table of Contents Reportable Business Segments prior to 2022 ​ Through December 31, 2021, the Company operated through two reporting segments: (i) Interconnect Products and Assemblies and (ii) Cable Products and Solutions.
Removed
The Interconnect Products and Assemblies segment primarily designed, manufactured and marketed a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a wide range of applications in a diverse set of end markets.
Removed
Interconnect products included connectors which, when attached to an electrical, electronic or fiber optic cable, a printed circuit board or other device, facilitate transmission of power or signals. Value-add systems generally consisted of a system of cable, flexible circuits or printed circuit boards and connectors, antennas or sensors for linking electronic equipment.
Removed
The Cable Products and Solutions segment primarily designed, manufactured and marketed cable, value-add products and components for use primarily in the broadband communications and information technology markets, as well as certain applications in other markets. ​ COVID-19 Pandemic ​ Since early 2020, the COVID-19 pandemic has disrupted our offices and manufacturing facilities around the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.
Removed
These disruptions have included, and may continue to include, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course, travel restrictions, supplier constraints, supply chain interruptions, logistics challenges and limitations, labor disruptions and reduced demand from certain customers.
Removed
During much of 2022, COVID-19 outbreaks in China resulted in local or regional government-imposed lockdowns and restrictions, which impacted the ability of several of our operations and manufacturing facilities to operate in the ordinary course.
Removed
As of December 31, 2022, there continue to be isolated COVID-19 outbreaks in certain regions of the world, particularly in China, but these outbreaks have not had a significant impact on our operations.
Removed
The extent to which the COVID-19 pandemic will continue to impact our business, operations, financial condition, liquidity and results of operations in 2023 and beyond remains uncertain and unpredictable.
Removed
For a discussion of certain risks related to the COVID-19 pandemic, refer to the risk factor titled “ We may be negatively impacted by adverse public health developments, including epidemics and pandemics, such as the COVID-19 pandemic ” in Part I, Item 1A. Risk Factors herein.
Removed
For a discussion of the financial impact of the COVID-19 pandemic on our business, operations, financial condition, liquidity and results of operations, refer to Part II, Item 7.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations . ​ Our Strategy ​ The Company’s overall strategy is to provide our customers with comprehensive design capabilities, a broad selection of products and a high level of quality and service on a worldwide basis, while maintaining continuing programs of productivity improvement and cost control.
Removed
In 2022, the Company invested approximately $288 million to fund two acquisitions, while in 2021, the Company invested approximately $1.5 billion (net of the proceeds received from the divestiture of MTS Systems Corporation’s (“MTS”) Test & Simulation business in December 2021) to fund seven acquisitions, including the acquisitions of MTS’s Sensors business in April 2021 and Halo Technology Limited (“Halo”) in December 2021.

… 9 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+25 added−9 removed55 unchanged
Biggest changeThe cost and availability of raw materials may fluctuate significantly due to external factors including, but not limited to, product scarcity, disruptions caused by climate change and adverse weather conditions, commodity market fluctuations, currency fluctuations, governmental policies and regulations such as trade tariffs and import restrictions, as well as pandemics and epidemics (such as, but not limited to, the COVID-19 pandemic), which may, in turn, negatively impact our results of operations and financial condition. ​ Cybersecurity incidents affecting our information technology systems could disrupt business operations or cause the release of highly sensitive confidential information, resulting in adverse impacts to our reputation and operating results and potentially leading to litigation and/or governmental investigations and fines. ​ Cybersecurity threats and techniques used to disrupt operations and gain unauthorized access to our information technology systems, including, but not limited to, malware, phishing, credential harvesting, ransomware and other increasingly sophisticated attacks, continue to expand and evolve globally, making it difficult to detect and prevent such threats from impacting the Company.
Biggest changeThe cost and availability of raw materials may fluctuate significantly due to external factors including, but not limited to, product scarcity, war or other armed conflict, logistical challenges, disruptions caused by climate change and adverse weather conditions, commodity market fluctuations, currency fluctuations, governmental policies and regulations such as trade tariffs and import restrictions, as well as pandemics and epidemics (as was the case with the COVID-19 pandemic), which may, in turn, negatively impact our results of operations and financial condition. ​ Cybersecurity incidents affecting our information technology systems could disrupt business operations or cause the release of highly sensitive confidential or personal information, resulting in adverse impacts to our reputation and operating results and potentially leading to litigation and/or governmental investigations, fines and other penalties. ​ We rely on our information technology systems for critical operations and face numerous and evolving cybersecurity threats and techniques used to disrupt operations and gain unauthorized access to these systems.
Globally, there continues to be an increased volume of cyber threats, ransomware attempts and social engineering attacks such as phishing and impersonation, and attackers increasingly use tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
Globally, there continues to be an increased volume of cyber threats, ransomware attempts and social engineering attacks, such as phishing and impersonation, and attackers increasingly use tools and techniques that are designed to circumvent controls, avoid detection, and remove or obfuscate forensic evidence.
The U.S. laws and regulations to which we are subject include, but are not limited to, Export Administration Regulations, the Federal Acquisition Regulation, the False Claims Act, International Traffic in Arms Regulations, regulations from the Bureau of Alcohol, Tobacco and Firearms and the FCPA.
The U.S. laws and regulations to which we are subject include, but are not limited to, the Export Administration Regulations, the Federal Acquisition Regulation, the False Claims Act, International Traffic in Arms Regulations, regulations from the Bureau of Alcohol, Tobacco and Firearms and the FCPA.
Furthermore, we cannot provide assurance that impairment charges in the future will not be required if the expected cash flow estimates as projected by management do not occur, especially if an economic recession occurs and continues for a lengthy period or becomes severe, or if acquisitions and investments made by the Company fail to achieve expected returns. ​ RISKS RELATED TO OUR LIQUIDITY AND CAPITAL RESOURCES ​ The Company’s credit agreements and senior notes contain certain requirements, which if breached, could have a material adverse effect on the Company. ​ The second amended and restated credit agreement that governs our $2.5 billion unsecured credit facility (the “Revolving Credit Facility”), which also backstops the Company’s U.S. commercial paper program (“U.S.
Furthermore, we cannot provide assurance that impairment charges in the future will not be required if the expected cash flow estimates as projected by management do not occur, especially if an economic recession occurs and continues for a lengthy period or becomes more severe, or if acquisitions and investments made by the Company fail to achieve expected returns. ​ RISKS RELATED TO OUR LIQUIDITY AND CAPITAL RESOURCES ​ The Company’s credit agreements and senior notes contain certain requirements, which if breached, could have a material adverse effect on the Company. ​ The second amended and restated credit agreement that governs our $2.5 billion unsecured credit facility (the “Revolving Credit Facility”), which also backstops the Company’s U.S. commercial paper program (“U.S.
In such case, the trading price of the Company’s Common Stock and debt securities could decline and investors may lose all or part of their investment. ​ RISKS RELATED TO OUR GLOBAL OPERATIONS ​ The Company is exposed to political, economic, military and other risks related to operating in countries outside the United States, and changes in general economic conditions, geopolitical conditions, U.S. trade policies and other factors beyond the Company’s control may adversely impact our business and operating results. ​ The Company’s operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions.
In such case, the trading price of the Company’s Common Stock and debt securities could decline and investors may lose all or part of their investment. ​ RISKS RELATED TO OUR GLOBAL OPERATIONS ​ The Company is exposed to political, economic, military and other risks related to operating in countries outside the United States, and changes in general economic conditions, geopolitical conditions, U.S. trade policies and other factors beyond the Company’s control may adversely impact its business and operating results. ​ The Company’s operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions.
As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries. ​ ​ 13 Table of Contents In addition to the risks noted above, a number of other legal, economic and geopolitical factors both in the United States and abroad could have a material adverse effect on the Company’s business, operations, financial condition, liquidity and/or results of operations, such as: ​ ● a global or regional economic slowdown or recession in any of the Company’s end markets (or a prolonging or intensification of such a slowdown or recession), which could negatively affect the financial condition of our customers and result in reduced demand; ● postponement of customer spending, in response to tighter credit, inflationary pressures, financial market volatility and other global economic factors; ● effects of significant changes in economic, monetary and/or fiscal policies in the United States and/or abroad, including interest rate changes by the U.S.
As a result of these dynamics, we cannot predict the 12 Table of Contents impact to our business of any future changes to the U.S.’s or other countries’ trading relationships or the impact of new laws or regulations adopted by the U.S. or other countries. ​ In addition to the risks noted above, a number of other legal, economic and geopolitical factors both in the United States and abroad could have a material adverse effect on the Company’s business, operations, financial condition, liquidity and/or results of operations, such as: ​ ● a global or regional economic slowdown or recession in any of the Company’s end markets (or a prolonging or intensification of such a slowdown or recession), which could negatively affect the financial condition of our customers and result in reduced demand; ● postponement of customer spending, in response to tighter credit, inflationary pressures, financial market volatility and other global economic factors; ● effects of significant changes in economic, monetary and/or fiscal policies in the United States and/or abroad, including interest rate changes by the U.S.
While the impact of such attacks has not been material, future cybersecurity incidents could lead to unauthorized access to and potentially impair the Company’s information technology systems, products, customers, suppliers and third-party service providers. Cybersecurity incidents could potentially result in the disruption of our business operations and/or misappropriation, destruction or corruption of critical data and confidential or proprietary information.
While the impact of such attacks has not been material, future cybersecurity incidents could lead to unauthorized access to and potentially impair the Company’s information technology systems, products, customers, suppliers and third-party service providers. Cybersecurity incidents could potentially result in the disruption of our business operations and/or misappropriation, destruction or corruption of critical data and confidential, personal, or proprietary information.
In addition, our business could also be adversely impacted by the ongoing increases in labor costs, including wages and benefits. ​ RISKS RELATED TO OUR END MARKETS ​ The Company encounters competition in substantially all areas of our business. ​ The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time.
In addition, our business could also be adversely impacted by the ongoing increases in labor costs, including wages and benefits. ​ RISKS RELATED TO OUR END MARKETS ​ The Company encounters competition in all areas of our business. ​ The Company competes primarily on the basis of technology innovation, product quality and performance, price, customer service and delivery time.
We are subject to a wide range of similar laws and regulations in other countries throughout the world. Failure, or the perceived failure, to comply with applicable requirements also could harm our reputation and our ability to compete for future government contracts or sell commercial equivalent products.
Moreover, we are subject to a wide range of similar laws and regulations in other countries throughout the world. Failure, or the perceived failure, to comply with applicable requirements also could harm our reputation and our ability to compete for future government contracts or sell commercial equivalent products.
In addition, any actual or alleged violations could disrupt our operations, cause reputational harm, involve significant management distraction and result in a material adverse effect on our competitive position, results of operations, cash flows or financial condition. ​ 16 Table of Contents The Company’s results can be positively or negatively affected by changes in foreign currency exchange rates. ​ The Company conducts business in many foreign currencies through its worldwide operations, and as a result is subject to foreign exchange exposure due to changes in exchange rates of the various currencies, including possible foreign currency restrictions and/or devaluations.
In addition, any actual or alleged violations could disrupt our operations, cause reputational harm, involve significant management distraction and result in a material adverse effect on our competitive position, results of operations, cash flows or financial condition. ​ The Company’s results can be positively or negatively affected by changes in foreign currency exchange rates. ​ The Company conducts business in many foreign currencies through its worldwide operations, and as a result, is subject to foreign exchange exposure due to changes in exchange rates of the various currencies, including possible foreign currency restrictions and/or devaluations.
There can be no assurance that the Company will be able to compete successfully against existing or new competition, and the inability to do so may result in price reductions, reduced margins, or loss of market share, any of which could have an adverse effect on the Company’s business, financial condition and results of operations. ​ The Company is dependent on end market dynamics to sell its products, particularly in the communications, automotive and military end markets. ​ The Company is dependent on end market dynamics to sell its products, and our operating results could be adversely affected by cyclical and reduced demand in any of these markets.
There can be no assurance that the Company will be able to compete successfully against existing or new competition, and the inability to do so may result in price reductions, reduced margins, or loss of market share, any of which could have an adverse effect on the Company’s business, financial condition and results of operations. ​ The Company is dependent on end market dynamics to sell its products, particularly in the communications, automotive and defense end markets. ​ The Company is dependent on end market dynamics to sell its products, and its operating results could be adversely affected by cyclical and reduced demand in any of these markets.
Our failure to comply with these local environmental laws and regulations could result in fines or other 21 Table of Contents punitive damages and/or modifications to our production processes as well as subject us to reputational harm, any of which could adversely impact our financial position, results of operations, or cash flows. ​ The Company is subject to, and may continue to be subject to, incremental costs, risks and regulations associated with efforts to combat the negative effects of climate change. ​ There is increased public awareness regarding climate change.
Our failure to comply with these local environmental laws and regulations could result in fines or other punitive damages and/or modifications to our production processes as well as subject us to reputational harm, any of which could adversely impact our financial position, results of operations, or cash flows . ​ The Company is subject to, and may continue to be subject to, incremental costs, risks and regulations associated with efforts to combat the negative effects of climate change. ​ There is increased public awareness regarding climate change.
As a result of the above activities, we are exposed to the risk of violating U.S. and foreign anti-corruption laws. ​ There can be no assurance that our policies and procedures designed for complying with applicable U.S. and international laws and regulations will be effective in preventing our directors, officers, employees, subcontractors and agents from taking actions that violate these legal requirements.
As a result of the above activities, we are exposed to the risk of violating U.S. and foreign anti-corruption laws. ​ 15 Table of Contents There can be no assurance that our policies and procedures designed for complying with applicable U.S. and international laws and regulations will be effective in preventing our directors, officers, employees, subcontractors and agents from taking actions that violate these legal requirements.
Any of these outcomes could have a material adverse effect on our business, operations, financial condition, liquidity, and results of operations. ​ In addition, U.S. government contracts are subject to modification, curtailment or termination by the U.S. government without prior written notice, either for convenience or for default as a result of our failure to perform under the applicable contract.
Any of these outcomes could have a material adverse effect on our business, operations, financial condition, liquidity, and results of operations. ​ 18 Table of Contents In addition, U.S. government contracts are subject to modification, curtailment or termination by the U.S. government without prior written notice, either for convenience or for default as a result of our failure to perform under the applicable contract.
Upon the occurrence of an event of default under the Revolving Credit Facility or the 2022 Term Loan, the lenders could terminate all commitments to extend further credit and elect to declare amounts outstanding thereunder to be immediately due and payable which could result in the acceleration of certain of the Company’s other indebtedness and the Company not having sufficient assets to repay the Revolving Credit Facility, the 2022 Term Loan and such other indebtedness.
Upon the occurrence of an event of default under the Revolving Credit Facility or the Term Loan, the lenders could terminate all commitments to extend further credit and elect to declare amounts outstanding thereunder to be immediately due and payable, which could result in the acceleration of certain of the Company’s other indebtedness and the Company not having sufficient assets to repay indebtedness under the Revolving Credit Facility, the Term Loan and such other debt instruments.
Any current or future substantial liabilities or regulatory actions could have a material adverse effect on our business, financial condition, cash flows and reputation. ​ The Company is subject to environmental laws and regulations that could adversely affect our business. ​ The Company operates in both the United States and various foreign jurisdictions, and we must comply with locally enacted laws and regulations addressing health, safety and environmental matters in such jurisdictions in which we manufacture and/or sell our products.
Any current or future substantial liabilities or regulatory actions could have a material adverse effect on our business, financial condition, cash flows and reputation. ​ The Company is subject to environmental laws and regulations that could adversely affect our business. ​ The Company operates in both the United States and various foreign jurisdictions, and we must comply with locally enacted laws and regulations addressing health, safety and environmental matters in such jurisdictions in which we 20 Table of Contents manufacture and/or sell our products.
Federal Reserve or other international central banking systems, foreign currency fluctuations, significant income tax changes and inflationary pressures; ● intergovernmental conflicts or actions, including, but not limited to, armed conflict, trade wars, cyberattacks and acts of terrorism or war, including the continuing military conflict between Russia and Ukraine and escalating tensions in bordering countries within the Eurozone; ● employment regulations and local labor conditions, including increases in employment costs, particularly in low-cost regions in which the Company currently operates; ● industrial policies in various countries that favor domestic industries over multinationals or that restrict foreign companies altogether; ● difficulties protecting intellectual property; ● longer payment cycles; ● changes in exchange control regulations, including any government actions that prohibit, limit or increase the cost of paying a dividend or otherwise moving cash between the Company’s subsidiaries located in different countries; ● credit risks and other challenges in collecting accounts receivable; and ● changes in assumptions, such as discount rates, along with lower than expected investment returns and performance related to the Company’s benefit plans. ​ We may be negatively impacted by adverse public health developments, including epidemics and pandemics, such as the COVID-19 pandemic. ​ Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, operations, financial condition, liquidity and results of operations.
Federal Reserve or other international central banking systems, foreign currency fluctuations, significant income tax changes and inflationary pressures; ● intergovernmental and other conflicts or actions, including, but not limited to, armed conflict, such as the ongoing military conflicts between Ukraine and Russia as well as Israel and Hamas, trade wars, cyberattacks and acts of terrorism or war; ● employment regulations and local labor conditions, including increases in employment costs, particularly in low-cost regions in which the Company currently operates; ● industrial policies in various countries that favor domestic industries over multinationals or that restrict foreign companies altogether; ● difficulties protecting intellectual property; ● longer payment cycles; ● changes in exchange control regulations, including any government actions that prohibit, limit or increase the cost of paying a dividend or otherwise moving cash between the Company’s subsidiaries located in different countries; ● credit risks and other challenges in collecting accounts receivable; and ● changes in assumptions, such as discount rates, along with lower than expected investment returns and performance related to the Company’s benefit plans. ​ We may be negatively impacted by adverse public health developments, including epidemics and pandemics. ​ Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, operations, financial condition, liquidity and results of operations.
The Company may not be able to pass along increased raw material or component prices to its customers, and may not be able to procure and obtain sufficient quantities of raw materials and components at acceptable prices from our suppliers.
Moreover, the Company may not be able to pass along any increased raw material or component prices to its customers and may not be able to procure and obtain sufficient quantities of raw materials and components timely and at acceptable prices from our suppliers.
Despite our efforts, these protections may be limited and, from time to time, we encounter difficulties in protecting our intellectual property rights, particularly in certain countries 20 Table of Contents outside the U.S. We cannot provide assurance that the patents that we hold or may obtain will provide meaningful protection against our competitors.
Despite our efforts, these protections may be limited and, from time to time, we encounter difficulties in protecting our intellectual property rights, particularly in certain countries outside the U.S. We cannot provide assurance that the patents that we hold or may obtain will provide meaningful protection against our competitors.
These events could cause some of the Company’s operations to suffer from supply chain disruptions and potential delays in fulfilling customer orders or order cancellations altogether, lost business and sales, changing costs or availability of insurance, and/or property damage or harm to our people, each and all of which could have an adverse effect on our business, operations, financial condition and results of operations. ​ Increasing scrutiny and expectations regarding ESG matters could result in additional costs or risks or otherwise adversely impact our business. ​ Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices.
These events could cause some of the Company’s operations to suffer from supply chain disruptions and potential delays in fulfilling customer orders or order cancellations altogether, lost business and sales, increased costs, energy and water scarcity, changing costs or availability of insurance, and/or property damage or harm to our people, each and all of which could have an adverse effect on our business, operations, financial condition and results of operations. ​ Increasing scrutiny and expectations regarding ESG matters could result in additional costs or risks or otherwise adversely impact our business. ​ Companies across industries continue to face increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices.
While the Company is compliant with all such requirements as of December 31, 2022, there can be no assurance that the Company will remain in compliance with such requirements. 18 Table of Contents The Company relies on the global capital markets, and an inability to access those markets on favorable terms could adversely affect the Company’s results. ​ The Company has used the global capital markets to invest in its business and make strategic acquisitions.
While the Company is compliant with all such requirements as of December 31, 2023, there can be no assurance that the Company will remain in compliance with such requirements. ​ The Company relies on the global capital markets, and an inability to access those markets on favorable terms could adversely affect the Company’s results. ​ The Company has used the global capital markets to raise capital to invest in its business and make strategic acquisitions.
Furthermore, the U.S. government periodically audits our governmental contract costs, 19 Table of Contents which could result in fines, penalties or adjustment of costs and prices under the contracts.
Furthermore, the U.S. government periodically audits our governmental contract costs, which could result in fines, penalties or adjustment of costs and prices under the contracts.
Periodic downturns in any of our customers’ end markets can significantly reduce demand for certain of our products, which could have a material adverse effect on the Company’s business, financial condition and results of operations. ​ 17 Table of Contents RISKS RELATED TO ACQUISITIONS ​ The Company has at times experienced difficulties and unanticipated expenses in connection with purchasing and integrating newly acquired businesses. ​ The Company has completed a number of acquisitions in recent years, including two in 2022.
Periodic downturns in any of our customers’ end markets can significantly reduce demand for certain of our products, which could have a material adverse effect on the Company’s business, financial condition and results of operations. ​ RISKS RELATED TO ACQUISITIONS ​ The Company has at times experienced difficulties and unanticipated expenses in connection with purchasing and integrating newly acquired businesses. ​ The Company has completed numerous acquisitions in recent years, including 10 in 2023.
To the extent we pursue indemnification claims against the seller(s) of any acquired business, such seller(s) may successfully contest such claims and/or may not have the financial capacity to compensate us for such claims or such claims may otherwise be difficult or impractical to enforce.
To the extent we pursue indemnification claims against such seller(s) or insurers, such seller(s) or insurers may successfully contest such claims and/or may not have the financial capacity to compensate us for such claims, or such claims may otherwise be difficult or impractical to enforce.
These disruptions have included, and may continue to include, government regulations that inhibit our ability to operate certain of our facilities in the ordinary course, travel restrictions, supplier constraints, supply chain interruptions, logistics challenges and limitations, labor disruptions and reduced demand from certain customers.
These disruptions included government regulations that inhibited our ability to operate certain of our facilities in the ordinary course, travel restrictions, supplier constraints, supply chain interruptions, logistics challenges and limitations, labor disruptions and reduced demand from certain customers.
Market conditions could make it more difficult to access capital to finance capital investments, acquisitions and other initiatives including dividends and share repurchases, which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.
If general economic and capital market conditions deteriorate significantly, it could become more difficult to access capital to finance capital investments, acquisitions and other initiatives including dividends and share repurchases, which could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.
We cannot predict or guarantee whether and to what extent anticipated cost savings, benefits, margin improvements and growth prospects will be achieved from recent or future acquisitions. ​ The Company may in the future incur goodwill and other intangible asset impairment charges. ​ On December 31, 2022, the total assets of the Company were $15.3 billion, which included $6.4 billion of goodwill (the excess of fair value of consideration paid over the fair value of net identifiable assets of businesses acquired) and $734.1 million of other intangible assets, net.
We cannot predict or guarantee whether and to what extent anticipated cost savings, benefits, margin improvements and growth prospects will be achieved from recent or future acquisitions. ​ The Company may in the future incur goodwill and other intangible asset impairment charges. ​ On December 31, 2023, the total assets of the Company were $16.5 billion, which included $7.1 billion of goodwill (the excess of fair value of consideration paid over the fair value of net identifiable assets of businesses acquired) and $834.8 million of other intangible assets, net.
During 2022, non-U.S. markets constituted approximately 67% of the Company’s net sales, with China constituting approximately 26% of the Company’s net sales. The Company employs nearly 90% of its workforce outside the United States.
During 2023, non-U.S. markets constituted approximately 65% of the Company’s net sales, with China constituting approximately 23% of the Company’s net sales. The Company employs nearly 90% of its workforce outside the United States.
In certain limited cases, the Company has pursued indemnification claims against seller(s) of an acquired business for pre-acquisition liabilities, breaches of representations, warranties or covenants or for other reasons provided for in the relevant acquisition agreement.
In certain limited cases, the Company has pursued indemnification claims against seller(s) of an acquired business or sought recovery under third party insurance policies for pre-acquisition liabilities, breaches of representations, warranties or covenants or for other reasons provided for in the relevant acquisition agreement or insurance policy.
Unresolved Staff Comments ​ None. ​ 22 Table of Contents
Unresolved Staff Comments ​ None. ​ 21 Table of Contents ​
Such unpredictable weather conditions and natural disasters including, but not limited to, earthquakes, fires, floods, hurricanes, tornadoes , and stronger and longer-lasting weather patterns, and their consequences and effects have, in the past, temporarily disrupted our business operations both in the United States and abroad.
Such unpredictable weather conditions and natural disasters including, but not limited to, severe storms, earthquakes, fires, droughts, floods, hurricanes, tornadoes , and stronger and longer-lasting weather patterns, including heat waves and freezes and ambient temperature or precipitation changes, and their consequences and effects have, in the past, temporarily disrupted our business operations both in the United States and abroad.
Since early 2020, the COVID-19 pandemic has disrupted our offices and manufacturing facilities around the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.
Beginning in early 2020 and continuing through 2022, the COVID-19 pandemic disrupted our offices and manufacturing facilities around the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.
As a result of the need to comply with these laws and regulations, we are subject to increased risks of governmental investigations, civil fraud actions, criminal prosecutions, whistleblower lawsuits and other enforcement actions. For example, in August 2018, we received a subpoena from the U.S.
As a result of the need to comply with these laws and regulations, we are subject to increased risks of governmental investigations, civil fraud actions, criminal prosecutions, whistleblower lawsuits and other enforcement actions.
Approximately 42% of the Company’s 2022 net sales came from sales to the communications industry.
Approximately 37% of the Company’s 2023 net sales came from sales to the communications industry.
There can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our business, operations, financial condition, liquidity and results of operations in the future. ​ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of most of the Company’s raw materials and components is increasing. ​ The Company uses basic materials like aluminum, steel, copper, titanium, metal alloys, gold, silver, palladium and plastic resins in its manufacturing processes as well as a variety of components and relies on third-party suppliers to secure these materials and components.
Future disruptions from similar harmful public health developments could have a material adverse impact on our business, operations, financial condition, liquidity and results of operations. ​ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of certain of the Company’s raw materials and components is increasing. ​ The Company uses basic materials like aluminum, steel, copper, titanium, metal alloys, gold, silver, palladium and plastic resins in its manufacturing processes as well as a variety of components and relies on third-party suppliers to secure these materials and components.
Department of Commerce, which imposes additional restrictions on sales to such customers. Further, in 2022, the U.S. Commerce Department’s Bureau of Industry Security released new export control regulations that restrict the provision to China of certain technology, software, manufacturing equipment and commodities that are used to make certain advanced computing integrated circuits (“ICs”) and supercomputers.
Commerce Department’s Bureau of Industry Security released new export control regulations that restrict the provision to China of certain technology, software, manufacturing equipment and commodities that are used to make certain advanced computing integrated circuits (“ICs”) and supercomputers.
Approximately 9% of the Company’s net sales came from sales to the military end market. Accordingly, the Company’s sales are affected by changes in the defense budgets of the U.S. and foreign governments, which are subject to political and budgetary fluctuations and constraints.
Accordingly, the Company’s sales are affected by changes in the defense budgets of the U.S. and 16 Table of Contents foreign governments, which are subject to political and budgetary fluctuations and constraints.
Despite providing training to employees as well as implementing preventative security measures to prevent, detect, address and mitigate these threats, our or key third-party information technology systems and infrastructure are still susceptible to disruptions from cybersecurity incidents, ransomware attacks, security breaches, computer viruses, security vulnerabilities or “bugs” in software or hardware, outages, systems failures, natural disasters, adverse public health developments, or other catastrophic events, any of which could include reputational damage, loss of our intellectual property, release of highly sensitive confidential information, the inability to access critical data and other operational disruption, litigation with third parties and/or governmental investigations and fines, among other things, which could have a material adverse effect on our business, financial condition and results of operations. ​ We and our business partners maintain significant amounts of data electronically in locations around the world.
Our and key third-party information technology systems and infrastructure are susceptible to disruptions from cybersecurity incidents, ransomware attacks, security breaches, computer viruses, security vulnerabilities or “bugs” in software or hardware, outages, systems failures, natural disasters, adverse public health developments, or other catastrophic events, any of which could result in reputational damage that may cause the loss of existing or future customers, the loss of our intellectual property, the release of highly sensitive confidential or personal information, the inability to access critical data and other operational disruptions, litigation with third parties (including class actions) and/or governmental investigations and fines, among other things, which could have a material adverse effect on our business, financial condition and results of operations.
These laws and regulations are complex, may change frequently and with limited notice, have generally become more stringent over time and have intensified under recent U.S. administrations, especially in light of recent tensions with China. For example, in 2019, the U.S. government added certain of the Company’s customers based in China to the “Entity List” maintained by the U.S.
These laws and regulations are complex, may change frequently and with limited notice, have generally become more stringent over time and have intensified under recent U.S. administrations, especially in light of ongoing tensions between the U.S. and China.
In addition, there may be additional mandatory climate-related reporting obligations, and potentially GHG emissions reduction requirements, which would likely result in increased corporate- and operational general and administrative efforts and associated costs and expenses. ​ Any future regulatory changes in any of the countries in which we operate could result in transition risks to the Company, including, but not limited to: (i) the nature and timing of any requirement to lower GHG emissions and adopt more energy-efficient energy use, which could result in changes or disruptions to the way the Company operates, (ii) financial risks where the compliance with such regulations requires unforeseen capital expenditures and becomes costly or financially burdensome, (iii) legal risks associated with the failure to adapt to or comply with future climate change-related regulations, (iv) risks of climate litigation associated with our disclosures and/or operations; (v) risks associated with the implementation of any new technologies required to comply with such regulations, which could impede our ability to innovate new products, meet customer and market demand or compete on pricing and quality in the market, and/or (vi) reputational risks associated with our customers’ and investors’ perceptions of the Company and their preferences for maintaining relationships with companies with lower emissions, all of which could harm our reputation in the marketplace. ​ ​ Item 1B.
For example, on October 7, 2023, the governor of California signed and enacted into law two climate-related disclosure bills ( SB-253, Climate Corporate Data Accountability Act and SB-261, Greenhouse Gases: Climate-Related Financial Risk ), which will require compliance as early as 2026. ​ Any future regulatory changes in any of the jurisdictions in which we operate could result in transition risks to the Company, including, but not limited to: (i) the nature and timing of any requirement to lower GHG emissions and adopt more energy-efficient energy use, which could result in changes or disruptions to the way the Company operates, (ii) financial risks where the compliance with such regulations requires unforeseen capital expenditures and becomes costly or financially burdensome, (iii) legal risks associated with the failure to adapt to or comply with future climate change-related regulations, (iv) risks of climate litigation associated with our disclosures and/or operations; (v) risks associated with the implementation of any new technologies required to comply with such regulations, which could impede our ability to develop new products, meet customer and market demand or compete on pricing and quality in the market, and/or (vi) reputational risks associated with our customers’ and investors’ perceptions of the Company and their preferences for maintaining relationships with companies with lower emissions, all of which could harm our reputation in the marketplace. ​ Item 1B.
The impact of these provisions, which became effective for Amphenol beginning on January 1, 2023, is dependent on several factors, including interpretive regulatory guidance, which has not yet been released. ​ Any future changes in tax laws, regulations, accounting standards for income taxes and/or other tax guidance, including related interpretations associated with the IRA or otherwise, could materially impact the Company’s current and non-current tax liabilities, along with deferred tax assets and liabilities, and consequently, our financial condition, results of operations or cash flows. ​ We may experience difficulties in enforcing our intellectual property rights, which could result in loss of market share, and we may be subject to claims of infringement of the intellectual property rights of others. ​ We rely on patent and trade secret laws, copyright, trademark, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights.
When and how this framework is adopted or enacted by the various countries in which we do business will increase tax complexity and may increase uncertainty and adversely affect our provision for income taxes in the U.S. and non-U.S. jurisdictions. ​ Any future changes in tax laws, regulations, accounting standards for income taxes and/or other tax guidance, including related interpretations associated with the IRA or otherwise, could materially impact the Company’s current and non-current tax liabilities, along with deferred tax assets and liabilities, and consequently, our financial condition, results of operations or cash flows. ​ We may experience difficulties in enforcing our intellectual property rights, which could result in loss of market share, and we may be subject to claims of infringement of the intellectual property rights of others. ​ We rely on patent and trade secret laws, copyright, trademark, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights.
Any compromise of the data could substantially disrupt our operations, impact future business opportunities, harm our customers, employees and other business partners, damage our reputation, violate applicable laws, regulations, policies and contractual obligations and subject us to potentially significant costs and liabilities, including litigation or other enforcement actions. ​ 15 Table of Contents The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent imposition of new and changing requirements, privacy laws and regulations around the world, for example, in the European Union, People’s Republic of China, and the state of California, which impose significant obligations for companies on how they collect, store, protect, process and transfer personal data and can impose significant fines for non-compliance.
Any compromise of the data could substantially disrupt our operations, impact future business opportunities, harm our customers, employees and other business partners, damage our reputation, violate applicable laws, regulations, policies and contractual obligations and subject us to potentially significant costs and liabilities, including litigation or other enforcement actions. ​ The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent imposition of new and changing requirements.
Cybersecurity events could also result in the loss of or inability to access confidential information and critical business, financial or other data, and/or cause the release of highly sensitive confidential information. Cybersecurity incidents could also result from unauthorized parties gaining access to our systems or information through fraudulent or other means of deceiving our employees, suppliers or third-party service providers.
Cybersecurity incidents could also result from unauthorized parties gaining access to our systems or information through fraudulent or other means of deceiving our employees, suppliers or third-party service providers.
This data relates to all aspects of our business, including financial information and current and future products under development, and also contains certain customer, supplier, partner and employee data, such as sensitive personal data.
This data relates to all aspects of our business, including financial information and current and future products under development, and also contains certain customer, supplier, partner and employee data, such as personal information. There is a risk of intrusion, cyberattacks or tampering that could compromise the integrity and privacy of this data or make the data inaccessible to us.
Approximately 21% of the Company’s net sales came from the automotive industry. The automotive industry has historically experienced significant downturns during periods of deteriorating global or regional economic or credit conditions. The communications and automotive end markets are also dominated by large customers that regularly exert price pressures on their suppliers, including the Company.
The communications and automotive end markets are also dominated by large customers that regularly exert price pressures on their suppliers, including the Company. Approximately 11% of the Company’s net sales came from sales to the defense end market.
Other countries where we operate or sell our products have changed, and may continue to change, their own policies on trade as well as business and foreign investment in their respective countries. Additionally, it is possible that U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations.
Other countries where we operate or sell our products have changed, and may continue to change, their own policies on trade as well as business and foreign investment in their respective countries.
The potential for fines and other related costs in the event of a breach of or non-compliance with any existing and forthcoming information security or privacy laws and requirements may have an adverse effect on our financial results. ​ The Company may be negatively impacted by extreme weather conditions and natural catastrophic events, including those caused or intensified by climate change and global warming. ​ From time to time, extreme weather conditions and natural disasters have negatively impacted, and may continue to negatively impact, portions of our operations, as well as the operations of our suppliers, vendors, customers and distributors.
Cybersecurity herein. ​ The Company may be negatively impacted by extreme weather conditions and natural catastrophic events, including those caused or intensified by climate change and global warming. ​ From time to time, extreme weather conditions and natural disasters have negatively impacted, and may continue to negatively impact, portions of our operations, as well as the operations of our suppliers, vendors, customers and distributors.
The Company also has similar financial and other covenants associated with its two-year, $750.0 million unsecured delayed draw term loan credit agreement (the “2022 Term Loan”) entered into in April 2022.
The Company also has similar financial and other covenants associated with its two-year, $750.0 million unsecured delayed draw term loan credit agreement (the “Term Loan”) entered into in April 2022. In addition, the ability to meet the financial covenants can be affected by events beyond the Company’s control, and the Company cannot provide assurance that it will meet those tests.
Delays in obtaining supplies may result from a number of factors affecting our suppliers, and any delay could impair our ability to deliver products to our customers.
In limited instances, we depend on a single source of supply or participate in commodity markets that may be served by a limited number of suppliers. Delays in obtaining supplies may result from a number of factors affecting our suppliers, and any delay could impair our 13 Table of Contents ability to deliver products to our customers.
The Company monitors its mix of fixed-rate and variable-rate debt, as well as its mix of short-term and long-term debt. As of December 31, 2022, approximately $640 million, or 14%, of the Company’s outstanding borrowings were subject to floating interest rates, primarily from borrowings under the U.S. Commercial Paper Program.
The Company monitors its mix of fixed-rate and variable-rate debt, as well as its mix of short-term and long-term debt. As of December 31, 2023, less than 1% of the Company’s outstanding borrowings were subject to floating interest rates. ​ As a result of increases in the federal funds rate by the U.S.
In addition, the COVID-19 pandemic has increased cybersecurity risk as a result of global remote working dynamics that may continue into the future and present additional risk that threat actors will engage in social engineering (for example, phishing) and exploit vulnerabilities in corporate and non-corporate networks.
As a result, we may be unable to detect, investigate, remediate, or recover from future attacks or incidents, or avoid a material adverse impact to our business. ​ In addition, global remote working dynamics continue to present additional risk that threat actors will engage in social engineering (for example, phishing) and exploit vulnerabilities in corporate and non-corporate networks.
Commercial Paper Program, and no outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan and Euro Commercial Paper Program. ​ In addition to these credit agreements, the Company’s various senior notes also impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.
However, the Company borrowed under the U.S. 17 Table of Contents Commercial Paper Program throughout much of 2023, and the Company may make additional borrowings under any of its debt instruments from time to time. ​ In addition to these credit agreements, the Company’s various senior notes also impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.
Ransomware attacks have become easier to execute, and with the rise of ransomware as a service, it has become an increasingly popular business model to lease or sell ransomware variants to anyone willing to pay the fee. ​ The Company has been and expects to continue to be a target of various cybersecurity attacks, including, but not limited to, ransomware attacks.
Ransomware attacks have become easier to execute, and with the rise of ransomware as a service, it has become an increasingly popular business model to lease or sell ransomware variants to anyone willing to pay the fee. ​ There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully complied with or effective in protecting our information technology systems.
Commercial Paper Program (as well as its Revolving Credit Facility and 2022 Term Loan, to the extent either are drawn upon in the future) to continue to increase in the first quarter of 2023 and potentially beyond, which is expected to result in increased interest expense in 2023 as compared to 2022 .
Commercial Paper Program (as well as our Revolving Credit Facility and Term Loan, to the extent either are drawn upon in the future) have increased substantially over this same period, a trend that could continue into 2024 and potentially beyond.
If general economic and capital market conditions deteriorate significantly, it could impact the Company’s ability to access the capital markets. The capital and credit markets have experienced significant volatility in the past.
The capital and credit markets have experienced significant volatility in the past.
In addition, the ability to meet the financial covenants can be affected by events beyond the Company’s control, and the Company cannot provide assurance that it will meet those tests. A breach of any of these covenants could result in a default under the Revolving Credit Facility and the 2022 Term Loan.
A breach of any of these covenants could result in a default under the Revolving Credit Facility and the Term Loan.
While the Company does not currently anticipate significant, broad-based difficulties in obtaining raw materials or components necessary for production, in 2021 and 2022, there were supply chain and logistical challenges that impacted the global economy, including our Company, and caused and continue to cause supply constraints and commodity price increases on certain raw materials and components used by the Company.
While the Company does not currently anticipate significant, broad-based difficulties in obtaining raw materials or components necessary for production, inflationary pressures and logistical challenges may impact the cost and availability of certain raw materials and components used by the Company and result in supply shortages for discrete raw materials or components, which could be further exacerbated by increased commodity prices and additional inflation.
As of December 31, 2022, the Company had approximately $632.8 million of outstanding borrowings under the U.S.
As of December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility, Term Loan, U.S. Commercial Paper Program and Euro Commercial Paper Program.
As a result of recent increases in the federal funds rate by the U.S. Federal Reserve, t he floating interest rates related to our U.S. Commercial Paper Program increased substantially over the course of 2022, a trend that could continue throughout 2023. C onsequently, the Company currently expects the floating interest rates related to its U.S.
Federal Reserve beginning in early 2022 and through the middle of 2023, t he floating interest rates related to our U.S.
Removed
During much of 2022, COVID-19 outbreaks in China resulted in local or regional government-imposed lockdowns and restrictions, which impacted the ability of several of our operations and manufacturing facilities to operate in the ordinary course. As of December 31, 2022, there continue to be isolated COVID-19 outbreaks in certain regions of the world, particularly in China.
Added
For example, we have manufacturing facilities in certain jurisdictions that are authorized to operate under preferential duty and/or tariff programs that provide for reduced tariffs and/or eased import and export regulations and are subject to compliance with the terms of such programs, which have become stricter.
Removed
In addition, recent inflationary pressures have been exacerbated by decreased availability of, and increased prices for, freight and logistics, including air, sea and ground freight.
Added
Failure to comply with the terms of such programs could increase our manufacturing costs and adversely affect our business, operating results and financial condition. Additionally, it is possible that U.S. policy changes and uncertainty about such changes could increase market volatility and currency exchange rate fluctuations.
Removed
Accordingly, any future delays, disruptions, and supply and pricing risks could affect our ability to meet customer demand for our products or our profitability from selling those products, which could have an adverse effect on our business, results of operations and financial condition. 14 Table of Contents In limited instances, we depend on a single source of supply or participate in commodity markets that may be served by a limited number of suppliers.
Added
These threats may arise from diverse threat actors such as state-sponsored organizations and opportunistic hackers and hacktivists, as well as through diverse attack vectors, including, but not limited to, malware, social engineering/phishing, credential harvesting, ransomware, malfeasance by insiders, human or technological error and other increasingly sophisticated attacks.
Removed
We maintain systems and processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion, cyberattacks or tampering that could compromise the integrity and privacy of this data or make the data inaccessible to us. In addition, in certain cases, in order to conduct business, we outsource to third-party business partners.
Added
Cyberattacks continue to expand and evolve, making it difficult to detect and prevent such threats from impacting the Company.
Removed
We generally obtain assurances from those parties that they have systems and processes in place to protect our data, and where applicable, that they will take steps to protect our data; nonetheless, those partners may also be subject to data intrusion or a cyberattack.
Added
In addition, the rise of artificial intelligence and machine learning has led to more sophisticated and deceptive attacks. Attackers can manipulate systems in new ways and more easily perform functions at scale.
Removed
Department of Defense, Office of the Inspector General, 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. government.
Added
The Company and third-party providers upon whom we may rely for certain information technology services have been, and expect to continue to be, a target of various cybersecurity attacks, including, but not limited to, ransomware attacks.
Removed
In connection with this investigation, during the third quarter of 2022, in a meeting with representatives of the U.S. government, it was alleged that the Company likely violated various provisions of federal law, including violations under the civil False Claims Act, as discussed more fully in Note 14 of the Notes to Consolidated Financial Statements.
Added
Cybersecurity events could also result in the loss of or inability to access confidential information and critical business, financial or other data, and/or cause the release of highly sensitive confidential or personal information.
Removed
For example, as disclosed in Note 14 of the Notes to Consolidated Financial Statements, the Company was named as one of several defendants in four separate lawsuits filed in the State of Indiana relating to a manufacturing site in Franklin, Indiana where the Company has been conducting an environmental clean-up effort under the direction of the United States Environmental Protection Agency.
Added
Finally, we cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. ​ We and our business partners maintain significant amounts of data electronically in locations around the world.
Removed
All the costs incurred by the Company relating to these lawsuits as well as all costs associated with the clean-up effort at the manufacturing site have been reimbursed by the former owner pursuant to an indemnification agreement entered into in connection with the acquisition of the manufacturing site as part of a larger acquisition that led to the establishment of the Company’s business in 1987.
Added
In addition, in certain cases, in order to conduct business, we outsource to 14 Table of Contents third-party business partners. Those partners may also be subject to data intrusion or a cyberattack.
Added
Privacy laws and regulations around the world including, for example, in the European Union (“EU”), People’s Republic of China, the state of California, and several other U.S. states, impose significant obligations for companies on how they collect, store, protect, process and transfer personal information and can impose significant fines for non-compliance.
Added
In addition, in March 2022, the U.S. enacted the Strengthening American Cybersecurity Act, which imposes cyber incident and ransomware attack response protocols for businesses operating in numerous core industry sectors of the U.S. economy.
Added
The potential for fines, penalties, and other related costs in the event of a breach of or non-compliance with any existing and forthcoming information security or privacy laws and requirements may have an adverse effect on our financial results. For further discussion of the Company’s risk management, strategy, and governance around cybersecurity, refer to Part I, Item 1C.

… 13 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changeThe square footage by segment related to our manufacturing facilities was approximately 7.0 million square feet, 10.0 million square feet and 7.0 million square feet for the Harsh Environment Solutions segment, Communications Solutions segment, and Interconnect and Sensor Systems segment, respectively. ​ The Company believes that its facilities are suitable and adequate for its business and are being appropriately utilized for their intended purposes.
Biggest changeThe square footage by segment related to our manufacturing facilities was approximately 7 million square feet, 11 million square feet and 9 million square feet for the Harsh Environment Solutions segment, Communications Solutions segment and Interconnect and Sensor Systems segment, respectively. ​ The Company believes that its facilities are suitable and adequate for its business and are being appropriately utilized for their intended purposes.
The Company considers the present level of fixed assets along with planned capital expenditures as suitable and adequate for operations in the current business environment. At December 31, 2022, the Company operated approximately 240 manufacturing facilities with approximately 24.0 million square feet, of which approximately 17.0 million square feet were leased.
The Company considers the present level of fixed assets along with planned capital expenditures as suitable and adequate for operations in the current business environment. At December 31, 2023, the Company operated approximately 280 manufacturing facilities with approximately 27 million square feet, of which approximately 19 million square feet were leased.
Manufacturing facilities located in the U.S. had approximately 4.0 million square feet, of which approximately 2.0 million square feet were leased. Manufacturing facilities located outside the U.S. had approximately 20.0 million square feet, of which approximately 15.0 million square feet were leased.
Manufacturing facilities located in the U.S. had approximately 5 million square feet, of which approximately 2 million square feet were leased. Manufacturing facilities located outside the U.S. had approximately 22 million square feet, of which approximately 17 million square feet were leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−0 removed1 unchanged
Biggest changeThe comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance. ​ ​ Dividends ​ Contingent upon declaration by the Company’s Board of Directors (the “Board”), the Company pays a quarterly dividend on shares of its Common Stock. ​ 24 Table of Contents The following table sets forth the dividends declared per common share for each quarter of 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 First Quarter ​ $ 0.20 ​ $ 0.145 Second Quarter ​ 0.20 ​ 0.145 Third Quarter ​ 0.20 ​ 0.145 Fourth Quarter ​ 0.21 ​ 0.20 Total ​ $ 0.81 ​ $ 0.635 ​ Dividends declared and paid for the years ended December 31, 2022 and 2021 (in millions) were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 Dividends declared ​ $ 482.6 ​ $ 379.7 Dividends paid (including those declared in the prior year) ​ 477.4 ​ 346.7 ​ Amphenol has a history of paying quarterly cash dividends.
Biggest changeDividends ​ Contingent upon declaration by the Company’s Board of Directors (the “Board”), the Company pays a quarterly dividend on shares of its Common Stock. ​ 24 Table of Contents The following table sets forth the dividends declared per common share for each quarter of 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 First Quarter ​ $ 0.21 ​ $ 0.20 Second Quarter ​ 0.21 ​ 0.20 Third Quarter ​ 0.21 ​ 0.20 Fourth Quarter ​ 0.22 ​ 0.21 Total ​ $ 0.85 ​ $ 0.81 ​ Dividends declared and paid for the years ended December 31, 2023 and 2022 (in millions) were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 Dividends declared ​ $ 507.4 ​ $ 482.6 Dividends paid (including those declared in the prior year) ​ 500.6 ​ 477.4 ​ Amphenol has a history of paying quarterly cash dividends.
The Company believes that there are a significant number of beneficial owners of its Common Stock. ​ Stock Performance Graph ​ The following graph compares the cumulative total shareholder return of Amphenol over a period of five years ending December 31, 2022 with the performance of the Standard & Poor’s 500 (“S&P 500”) Stock Index and the Dow Jones U.S.
The Company believes that there are a significant number of beneficial owners of its Common Stock. ​ Stock Performance Graph ​ The following graph compares the cumulative total shareholder return of Amphenol over a period of five years ending December 31, 2023 with the performance of the Standard & Poor’s 500 (“S&P 500”) Stock Index and the Dow Jones U.S.
Electrical Components & Equipment Index. This graph assumes that $100 was invested in our Common Stock and each index on December 31, 2017, reflects reinvested dividends, and is weighted on a market capitalization basis as of the beginning of each year. Each reported data point below represents the last trading day of each calendar year.
Electrical Components & Equipment Index. This graph assumes that $100 was invested in our Common Stock and each index on December 31, 2018, reflects reinvested dividends, and is weighted on a market capitalization basis as of the beginning of each year. Each reported data point below represents the last trading day of each calendar year.
As of January 31, 2023, there were 32 holders of record of the Company’s Common Stock. A significant number of outstanding shares of Common Stock are registered in the name of only one holder, which is a nominee of The Depository Trust Company, a securities depository for banks and brokerage firms.
As of January 31, 2024, there were 31 holders of record of the Company’s Common Stock. A significant number of outstanding shares of Common Stock are registered in the name of only one holder, which is a nominee of The Depository Trust Company, a securities depository for banks and brokerage firms.
While the Company currently expects a cash dividend to be paid in the future, future dividend payments remain within the discretion of the Board and are dependent on our financial results, liquidity, capital requirements, financial condition, compliance with financial covenants and requirements, and other factors considered relevant by the Board. ​ Repurchase of Equity Securities ​ On April 27, 2021, the Board authorized a stock repurchase program under which the Company may purchase up to $2.0 billion of 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”).
While the Company currently expects a cash dividend to be paid in the future, future dividend payments remain within the discretion of the Board and are dependent on our financial results, liquidity, capital requirements, financial condition, compliance with financial covenants and requirements, and other factors considered relevant by the Board. ​ Repurchase of Equity Securities ​ On April 27, 2021, the Board authorized a stock repurchase program under which the Company may purchase up to $2.0 billion of the Company’s Common Stock during the three-year period ending April 27, 2024 (the “2021 Stock Repurchase Program”).
During the three months and year ended December 31, 2022, the Company repurchased 2.3 million and 9.9 million shares of its Common Stock for $170.4 million and $730.5 million, respectively, under the 2021 Stock Repurchase Program.
During the three months and year ended December 31, 2023, the Company repurchased 1.3 million and 7.2 million shares of its Common Stock for $115.3 million and $585.1 million, respectively, under the 2021 Stock Repurchase Program.
Of the total repurchases made in 2022 under the 2021 Stock Repurchase Program, 9.3 million shares, or $689.7 million, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.
Of the total repurchases made in 2023, 5.5 million shares, or $435.8 million, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.
From January 1, 2023 through January 31, 2023, the Company repurchased 0.6 million additional shares of its Common Stock for $48.8 million, and, as of February 1, 2023, the Company has remaining authorization to purchase up to $762.8 million of its Common Stock under the 2021 Stock Repurchase Program .
From January 1, 2024 through January 31, 2024, the Company did not repurchase any additional shares of its Common Stock, and, as of February 1, 2024, the Company has remaining authorization to purchase up to $226.5 million 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. ​ The Company’s stock repurchases during the three months and year ended December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions, except price per share) ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Dollar Value ​ ​ ​ Total Number ​ Average ​ Purchased as Part of ​ of Shares that May Yet be ​ ​ ​ of Shares ​ Price Paid ​ Publicly Announced ​ Purchased Under the ​ Period ​ Purchased per Share Plans or Programs Plans or Programs ​ First Quarter – 2022 ​ 2,627,497 ​ $ 77.62 ​ 2,627,497 ​ $ 1,338.1 ​ Second Quarter – 2022 ​ 2,662,651 ​ ​ 69.85 ​ 2,662,651 ​ ​ 1,152.2 ​ Third Quarter – 2022 ​ 2,355,646 ​ ​ 72.21 ​ 2,355,646 ​ ​ 982.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fourth Quarter – 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 to October 31, 2022 738,500 ​ 70.08 738,500 ​ 930.3 ​ November 1 to November 30, 2022 810,218 ​ 77.74 810,218 ​ 867.3 ​ December 1 to December 31, 2022 711,424 ​ 78.30 711,424 $ 811.6 ​ ​ ​ 2,260,142 ​ ​ 75.41 ​ 2,260,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total – 2022 9,905,936 ​ $ 73.74 9,905,936 ​ ​ ​ ​ ​ Item 6. [Reserved] ​ 25 Table of Contents
The timing and amount of any future purchases will depend on a number of factors, such as the 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. ​ The Company’s stock repurchases during the three months and year ended December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in millions, except price per share) ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Dollar Value ​ ​ ​ Total Number ​ Average ​ Purchased as Part of ​ of Shares that May Yet be ​ ​ ​ of Shares ​ Price Paid ​ Publicly Announced ​ Purchased Under the ​ Period ​ Purchased per Share Plans or Programs Plans or Programs ​ First Quarter – 2023 ​ 2,117,279 ​ $ 78.83 ​ 2,117,279 ​ $ 644.7 ​ Second Quarter – 2023 ​ 1,982,956 ​ ​ 77.44 ​ 1,982,956 ​ ​ 491.1 ​ Third Quarter – 2023 ​ 1,734,259 ​ ​ 86.11 ​ 1,734,259 ​ ​ 341.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fourth Quarter – 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1 to October 31, 2023 534,200 ​ 82.15 534,200 ​ 297.9 ​ November 1 to November 30, 2023 599,079 ​ 86.38 599,079 ​ 246.2 ​ December 1 to December 31, 2023 214,300 ​ 91.75 214,300 $ 226.5 ​ ​ ​ 1,347,579 ​ ​ 85.56 ​ 1,347,579 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total – 2023 7,182,073 ​ $ 81.47 7,182,073 ​ ​ ​ ​ ​ Item 6. [Reserved] ​ ​ 25 Table of Contents
Added
The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data ​ 50 ​ ​ Report of Independent Registered Public Accounting Firm ​ 50 ​ ​ Consolidated Statements of Income ​ 52 ​ ​ Consolidated Statements of Comprehensive Income ​ 53 ​ ​ Consolidated Balance Sheets ​ 54 ​ ​ Consolidated Statements of Changes in Equity ​ 55 ​ ​ Consolidated Statements of Cash Flow ​ 56 ​ ​ Notes to Consolidated Financial Statements ​ 57 ​
Biggest changeFinancial Statements and Supplementary Data ​ 48 ​ ​ Report of Independent Registered Public Accounting Firm ​ 48 ​ ​ Consolidated Statements of Income ​ 50 ​ ​ Consolidated Statements of Comprehensive Income ​ 51 ​ ​ Consolidated Balance Sheets ​ 52 ​ ​ Consolidated Statements of Changes in Equity ​ 53 ​ ​ Consolidated Statements of Cash Flow ​ 54 ​ ​ Notes to Consolidated Financial Statements ​ 55 ​
Item 6. [Reserved] ​ 25 ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 26 ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 48 ​ Item 8.
Item 6. [Reserved] ​ 25 ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 26 ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 46 ​ Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

156 edited+30 added−51 removed87 unchanged
Biggest changeThe Company has reviewed and assessed the provisions of the IRA, including several other non-tax related provisions, and the Company does not currently believe that the IRA will have a material impact on its financial condition, results of operations, liquidity and cash flows. 28 Table of Contents Results of Operations ​ The following table sets forth the components of net income attributable to Amphenol Corporation as a percentage of net sales for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 ​ 2021 ​ 2020 ​ Net sales 100.0 % ​ 100.0 % ​ 100.0 % ​ Cost of sales 68.1 ​ ​ 68.7 ​ ​ 69.0 ​ ​ Acquisition-related expenses 0.2 ​ ​ 0.6 ​ ​ 0.1 ​ ​ Selling, general and administrative expenses 11.3 ​ ​ 11.3 ​ ​ 11.8 ​ ​ Operating income 20.5 ​ ​ 19.4 ​ ​ 19.1 ​ ​ Interest expense (1.0) ​ ​ (1.1) ​ ​ (1.3) ​ ​ Other income (expense), net 0.1 ​ ​ — ​ ​ — ​ ​ Income from continuing operations before income taxes 19.5 ​ ​ 18.3 ​ ​ 17.8 ​ ​ Provision for income taxes (4.4) ​ ​ (3.8) ​ ​ (3.7) ​ ​ Net income from continuing operations 15.2 ​ ​ 14.5 ​ ​ 14.1 ​ ​ Net income from continuing operations attributable to noncontrolling interests ​ (0.1) ​ ​ (0.1) ​ ​ (0.1) ​ ​ Net income from continuing operations attributable to Amphenol Corporation ​ 15.1 ​ ​ 14.4 ​ ​ 14.0 ​ ​ Income from discontinued operations attributable to Amphenol Corporation — ​ ​ 0.2 ​ ​ — ​ ​ Net income attributable to Amphenol Corporation 15.1 % ​ 14.6 % ​ 14.0 % ​ Note: Percentages in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding. ​ 2022 Compared to 2021 ​ Net sales were $12,623.0 for the year ended December 31, 2022 compared to $10,876.3 for the year ended December 31, 2021, which represented an increase of 16% in U.S. dollars, 19% in constant currencies and 15% organically (excluding both currency and acquisition impacts) over the prior year.
Biggest changeHowever, the Company will continue to evaluate the potential impact of Pillar Two on the Company and its future results, as additional countries adopt legislation and issue individual guidance on their enacted legislation. ​ 28 Table of Contents Results of Operations ​ The following table sets forth the components of net income attributable to Amphenol Corporation as a percentage of net sales for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 67.5 ​ 68.1 ​ 68.7 ​ Acquisition-related expenses 0.3 ​ 0.2 ​ 0.6 ​ Selling, general and administrative expenses 11.9 ​ 11.3 ​ 11.3 ​ Operating income 20.4 ​ 20.5 ​ 19.4 ​ Interest expense (1.1) ​ (1.0) ​ (1.1) ​ Gain on bargain purchase acquisition ​ — ​ — ​ — ​ Other income (expense), net 0.2 ​ 0.1 ​ — ​ Income from continuing operations before income taxes 19.6 ​ 19.5 ​ 18.3 ​ Provision for income taxes (4.1) ​ (4.4) ​ (3.8) ​ Net income from continuing operations 15.5 ​ 15.2 ​ 14.5 ​ Net income from continuing operations attributable to noncontrolling interests ​ (0.1) ​ (0.1) ​ (0.1) ​ Net income from continuing operations attributable to Amphenol Corporation ​ 15.4 ​ 15.1 ​ 14.4 ​ Income from discontinued operations attributable to Amphenol Corporation — ​ — ​ 0.2 ​ Net income attributable to Amphenol Corporation 15.4 % 15.1 % 14.6 % Note: Percentages in this table were calculated using actual, unrounded results; therefore, the sum of the components may not add due to rounding. ​ 2023 Compared to 2022 ​ Net sales were $12,554.7 for the year ended December 31, 2023 compared to $12,623.0 for the year ended December 31, 2022, which represented a decrease of 1% in U.S. dollars and 3% organically (excluding both currency and acquisition impacts), while flat in constant currencies compared to the prior year.
(2) Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 13 of the Notes to Consolidated Financial Statements. While the term “net sales growth in U.S. dollars” is not considered a U.S.
(2) Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 13 of the Notes to Consolidated Financial Statements. While the term “net sales growth in U.S. dollars” is not considered a U.S.
GAAP financial measure, for purposes of this table, we derive the reported (GAAP) measure based on GAAP results, which serves as the basis for the reconciliation to its comparable non-GAAP financial measures.
GAAP financial measure, for purposes of this table, we derive the reported (GAAP) measure based on GAAP results, which serves as the basis for the reconciliation to its comparable non-GAAP financial measures.
(3) Foreign currency translation impact, a non-GAAP measure, represents the percentage impact on net sales resulting from foreign currency exchange rate changes in the current reporting year compared to the prior reporting year.
(3) Foreign currency translation impact, a non-GAAP measure, represents the percentage impact on net sales resulting from foreign currency exchange rate changes in the current reporting year compared to the prior reporting year.
Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year net sales, taken as a percentage of the prior year’s net sales.
Such amount is calculated by subtracting current year net sales translated at average foreign currency exchange rates for the prior year from current year net sales, taken as a percentage of the prior year’s net sales.
(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.
(4) Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section of this Item 7.
(5) Acquisition impact, a non-GAAP measure, represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year and/or prior comparable year presented. Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis.
(5) Acquisition impact, a non-GAAP measure, represents the percentage impact on net sales resulting from acquisitions that have not been included in the Company’s consolidated results for the full current year and/or prior comparable year presented. Such net sales related to these acquisitions do not reflect the underlying growth of the Company on a comparative basis.
These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.
These items had the aggregate effect of decreasing the effective tax rate and increasing earnings per share by the amounts noted in the table below.
GAAP financial measures, for purposes of this table, we derive the reported (GAAP) measures based on GAAP results, which serve as the basis for the reconciliation to their comparable non-GAAP financial measures.
GAAP financial measures, for purposes of this table, we derive the reported (GAAP) measures based on GAAP results, which serve as the basis for the reconciliation to their comparable non-GAAP financial measures.
In 2022, net cash used in investing activities from continuing operations was driven primarily by capital expenditures (net of disposals) of $378.2, the use of $288.2 to fund acquisitions, net purchases of long-term investments of $56.0, and net purchases of short-term investments of $25.2.
In 2022, net cash used in investing activities from continuing operations was primarily driven by capital expenditures (net of disposals) of $378.2, the use of $288.2 to fund acquisitions, net purchases of long-term investments of $56.0, and net purchases of short-term investments of $25.2.
In 2022, net cash used in financing activities from continuing operations was driven primarily by (i) repurchases of the Company’s Common Stock of $730.5, (ii) dividend payments of $477.4, (iii) net repayments of $159.3, primarily under the U.S.
In 2022, net cash used in financing activities from continuing operations was primarily driven by (i) repurchases of the Company’s Common Stock of $730.5, (ii) dividend payments of $477.4, (iii) net repayments of $159.3, primarily under the U.S.
The non-GAAP financial information contained herein is included for supplemental purposes only and should not be considered in isolation, as a substitute for or superior to the related U.S. GAAP financial measures.
The non-GAAP financial information contained herein is included for supplemental purposes only and should not be considered in isolation or as a substitute for or superior to the related U.S. GAAP financial measures.
As such, management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Organic Net Sales Growth (defined below) and Constant Currency Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends. ​ ● Free Cash Flow is defined as (i) Net cash provided by operating activities from continuing operations (“Operating Cash Flow” - as reported in accordance with U.S.
As such, management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Organic Net Sales Growth (as defined below) and Constant Currency Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends. ​ ● Free Cash Flow is defined as (i) Net cash provided by operating activities from continuing operations (“Operating Cash Flow” - as reported in accordance with U.S.
From time to time, the Company may encounter difficulties in obtaining certain raw materials or components necessary for production due to supply chain constraints and logistical challenges, which may include regulatory restrictions and also negatively impact the pricing of materials and components sourced or used by the Company.
From time to time, the Company may encounter difficulties in obtaining certain raw materials or components necessary for production due to supply chain constraints and logistical challenges, which may include regulatory restrictions. These difficulties may also negatively impact the pricing of materials and components sourced or used by the Company.
For a discussion of certain risks related to inflation and costs, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of most of the Company’s raw materials and components is increasing ” in Part I, Item 1A.
For a discussion of certain risks related to inflation and costs, refer to the risk factor titled “ The Company and certain of its suppliers and customers have experienced difficulties obtaining certain raw materials and components, and the cost of certain of the Company’s raw materials and components is increasing ” in Part I, Item 1A.
In addition, the Euro Issuer also has €500.0 (approximately $574.6 at date of issuance) principal amount of unsecured 2.000% Senior Notes due October 8, 2028 (the “2028 Euro Notes”, together with the 2026 Euro Notes, the “Euro Notes”, and collectively with the 2026 Euro Notes and the U.S.
In addition, the Euro Issuer also has €500.0 (approximately $574.6 at date of issuance) principal amount of unsecured 2.000% Senior Notes due October 8, 2028 (the “2028 Euro Notes”, together with the 2026 Euro Notes, the “Euro Notes”, and the Euro Notes, together with the U.S.
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. ​ The Company’s Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.
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. ​ The Senior Notes impose certain obligations on the Company and prohibit various actions by the Company unless it satisfies certain financial requirements.
In 2021, net cash used in financing activities from continuing operations was driven primarily by (i) debt repayments of $912.6, primarily related to the repayment of the assumed then-outstanding MTS senior notes in the second quarter of 2021 as well as the redemption of the 3.125% Senior Notes (the “2021 Senior Notes”) in the third quarter of 2021 and the redemption of the 4.00% Senior Notes (the “2022 Senior Notes”) in the fourth quarter of 2021, (ii) repurchases of the Company’s Common Stock of $661.7, (iii) dividend payments of $346.7, (iv) a cash transfer of $28.7 made by the Company’s continuing operations to its discontinued operations in order to fund the September 2021 payment of contingent consideration assumed as part of the MTS acquisition, (v) distributions to and purchases of noncontrolling interests of $18.9, (vi) payments of $9.3 related to debt financing costs associated with the Company’s $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”), and (vii) payments of $4.1 associated with the deferred purchase price related to acquisitions, partially offset by (a) net borrowings of $796.3 primarily under the U.S.
In 2021, net cash used in financing activities from continuing operations was primarily driven by (i) debt repayments of $912.6, primarily related to the repayment of the assumed then-outstanding MTS senior notes in the second quarter of 2021 as well as the redemption of the 3.125% Senior Notes (the “2021 Senior Notes”) in the third quarter of 2021 and the redemption of the 4.00% Senior Notes (the “2022 Senior Notes”) in the fourth quarter of 2021, (ii) repurchases of the Company’s Common Stock of $661.7, (iii) dividend payments of $346.7, (iv) a cash transfer of $28.7 made by the Company’s continuing operations to its discontinued operations in order to fund the September 2021 payment of contingent consideration assumed as part of the MTS acquisition, (v) distributions to and purchases of noncontrolling interests of $18.9, 38 Table of Contents (vi) payments of $9.3 related to debt financing costs associated with the Company’s $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031 (the “2031 Senior Notes”), and (vii) payments of $4.1 associated with the deferred purchase price related to acquisitions, partially offset by (a) net borrowings of $796.3 primarily under the U.S.
Excluding the effect of the items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,864.7 and $3.00, respectively, for 2022, compared to $1,548.4 and $2.48, respectively, for 2021. 31 Table of Contents The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.
Excluding the effect of the items discussed above, Adjusted Net Income from continuing operations attributable to Amphenol Corporation and Adjusted Diluted EPS, non-GAAP financial measures as defined in the “Non-GAAP Financial Measures” section below within this Item 7, were $1,864.7 and $3.00, respectively, for 2022, compared to $1,548.4 and $2.48, respectively, for 2021. ​ 34 Table of Contents The following table reconciles Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income from continuing operations attributable to Amphenol Corporation, Adjusted Effective Tax Rate and Adjusted Diluted EPS (all on a continuing operations basis only, each as defined in the “Non-GAAP Financial Measures” section below) to the most directly comparable U.S.
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 Consolidated Balance Sheets were not material as of December 31, 2022 and 2021. ​ Standard product warranty coverage, which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, is typically offered, while extended or separately priced warranty coverage is typically not offered.
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 Consolidated Balance Sheets were not material as of December 31, 2023 and 2022. ​ Standard product warranty coverage, which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment, is typically offered, while extended or separately priced warranty coverage is typically not offered.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ (amounts in millions, except share and per share data, unless otherwise noted) ​ The following discussion and analysis of the financial condition and results of operations for the years ended December 31, 2022, 2021 and 2020 has been derived from and should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”).
Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ (amounts in millions, except share and per share data, unless otherwise noted) ​ The following discussion and analysis of the financial condition and results of operations for the years ended December 31, 2023, 2022 and 2021 has been derived from and should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included in Part II, Item 8, herein for Amphenol Corporation (together with its subsidiaries, “Amphenol,” the “Company,” “we,” “our,” or “us”).
For the years ended December 31, 2022, 2021 and 2020, less than 5% of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.
For the years ended December 31, 2023, 2022 and 2021, less than 5% of our net sales were recognized over time, where the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination.
Expected debt levels, and therefore expected interest payments, are difficult to predict, as they are significantly impacted by items such as future acquisitions, repurchases of Common Stock and dividend payments, as well as payments or additional borrowings made to reduce or increase the underlying revolver balance. ​ (2) The Company’s operating lease payments included in this table reflect the future minimum undiscounted fixed lease payments, which serve as the basis for calculating the Company’s operating lease liabilities as of December 31, 2022.
Expected debt levels, and therefore expected interest payments, are difficult to predict, as they are significantly impacted by items such as future acquisitions, repurchases of Common Stock and dividend payments, as well as payments or additional borrowings made to reduce or increase the underlying revolver balance. ​ (2) The Company’s operating lease payments included in this table reflect the future minimum undiscounted fixed lease payments, which serve as the basis for calculating the Company’s operating lease liabilities as of December 31, 2023.
Management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Constant Currency Net Sales Growth (defined above) and Organic Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends. ​ Recent Accounting Pronouncements ​ Refer to Note 1 of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements, including those adopted by the Company. ​ ​ Critical Accounting Estimates ​ The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Constant Currency Net Sales Growth (as defined above) and Organic Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends. ​ Recent Accounting Pronouncements ​ Refer to Note 1 of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements, including those adopted by the Company. ​ ​ 44 Table of Contents Critical Accounting Estimates ​ The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Commercial Paper Program, the Euro Commercial Paper Program, the Revolving Credit Facility, and the 2022 Term Loan (all of which are defined and discussed in more detail below within this Item 7).
Commercial Paper Program, the Euro Commercial Paper Program, the Revolving Credit Facility, and the Term Loan (all of which are defined and discussed in more detail below within this Item 7).
It is difficult to make a reasonably reliable estimate of the amount and period in which all of these liabilities might be paid. ​ Repatriation of Foreign Earnings and Related Income Taxes ​ The Company has previously indicated an intention to repatriate most of its pre-2022 accumulated earnings and has accrued the foreign and U.S. state and local taxes, if applicable, on those earnings, as appropriate.
It is difficult to make a reasonably reliable estimate of the amount and period in which all of these liabilities might be paid. ​ Repatriation of Foreign Earnings and Related Income Taxes ​ The Company has previously indicated an intention to repatriate most of its pre-2023 accumulated earnings and has accrued the foreign and U.S. state and local taxes, if applicable, on those earnings, as appropriate.
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.
The 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.
Adjusted Diluted EPS is calculated as Adjusted Net Income from continuing operations attributable to Amphenol Corporation, as defined below, divided by the weighted average outstanding diluted shares as reported in the Consolidated Statements of Income. ​ ● Adjusted Effective Tax Rate is defined as Provision for income taxes, as reported in the Consolidated Statements of Income, expressed as a percentage of Income from continuing operations before income taxes, as reported in the Consolidated Statements of Income, each excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented. ​ ● Adjusted Net Income from continuing operations attributable to Amphenol Corporation is defined as Net income from continuing operations attributable to Amphenol Corporation, as reported in the Consolidated Statements of Income, excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented. ​ 45 Table of Contents ● Adjusted Operating Income is defined as Operating income, as reported in the Consolidated Statements of Income, excluding income and expenses that are not directly related to the Company’s operating performance during the years presented. ​ ● Adjusted Operating Margin is defined as Adjusted Operating Income (as defined above) expressed as a percentage of Net sales (as reported in the Consolidated Statements of Income). ​ ● Constant Currency Net Sales Growth is defined as the year-over-year percentage change in net sales growth, excluding the impact of changes in foreign currency exchange rates.
Adjusted Diluted EPS is calculated as Adjusted Net Income from continuing operations attributable to Amphenol Corporation, as defined below, divided by the weighted average outstanding diluted shares as reported in the Consolidated Statements of Income. ​ ● Adjusted Effective Tax Rate is defined as Provision for income taxes, as reported in the Consolidated Statements of Income, expressed as a percentage of Income from continuing operations before income taxes, as reported in the Consolidated Statements of Income, each excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented. ​ ● Adjusted Net Income from continuing operations attributable to Amphenol Corporation is defined as Net income from continuing operations attributable to Amphenol Corporation, as reported in the Consolidated Statements of Income, excluding income and expenses and their specific tax effects that are not directly related to the Company’s operating performance during the years presented. ​ ● Adjusted Operating Income is defined as Operating income, as reported in the Consolidated Statements of Income, excluding income and expenses that are not directly related to the Company’s operating performance during the years presented. ​ ● Adjusted Operating Margin is defined as Adjusted Operating Income (as defined above) expressed as a percentage of Net sales (as reported in the Consolidated Statements of Income). ​ ● Constant Currency Net Sales Growth is defined as the year-over-year percentage change in net sales growth, excluding the impact of changes in foreign currency exchange rates.
Provision for income taxes in 2021 included (i) excess tax benefits of $63.4 from stock option exercises and (ii) a discrete tax benefit of $14.9 related to the settlement of uncertain tax positions in certain non-U.S. jurisdictions, all of which was partially offset by the tax effects related to acquisition-related expenses during the year.
Provision for income taxes in 2021 included (i) excess tax benefits of $63.4 from stock option exercises and (ii) a discrete tax benefit of $14.9 related to the settlement of uncertain tax positions in certain non-U.S. jurisdictions, all of which were partially offset by the tax effects related to acquisition-related expenses during the year.
Over the past several years, there has been no minimum requirement for Company contributions to our defined benefit pension plans in the United States (“U.S. Plans”) due to prior contributions made in excess of minimum requirements, and as a result, there was no anticipated minimum required contribution included in the table above related to the U.S. Plans for 2023.
Over the past several years, there has been no minimum requirement for Company contributions to our defined benefit pension plans in the United States (“U.S. Plans”) due to prior contributions made in excess of minimum requirements, and as a result, there was no anticipated minimum required contribution included in the table above related to the U.S. Plans for 2024.
In conjunction with the Revolving Credit Facility, as of December 31, 2022, the authorization from the Company’s Board of Directors (the “Board”) limits the maximum principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper or similar programs, along with outstanding amounts under the Revolving Credit Facility, at any time to $2,500.0 in the aggregate .
In conjunction with the Revolving Credit Facility, as of December 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 primary end markets for our products are: ​ ● information technology and communication devices and systems for the converging technologies of voice, video and data communications; ​ ● a broad range of industrial applications and traditional, hybrid and electric automotive applications; and ​ ● military and commercial aerospace applications. ​ The Company’s products are used in a wide variety of applications by a broad array of customers around the world.
The primary end markets for our products are: ​ ● information technology and communication devices and systems for the converging technologies of voice, video and data communications; ​ ● a broad range of industrial applications and traditional, hybrid and electric automotive applications; and ​ ● defense and commercial aerospace applications. ​ The Company’s products are used in a wide variety of applications by a broad array of customers around the world.
GAAP financial measures for the years ended December 31, 2022, 2021 and 2020 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 7: ​ ● Adjusted Diluted EPS is defined as diluted earnings per share from continuing operations (as reported in accordance with U.S.
GAAP financial measures for the years ended December 31, 2023, 2022 and 2021 are included in “Results of Operations” and “Liquidity and Capital Resources” within this Item 7: ​ ● Adjusted Diluted EPS is defined as diluted earnings per share from continuing operations (as reported in accordance with U.S.
On December 31, 2022, the Company was in compliance with the financial covenants under the 2022 Term Loan. ​ The Company has a commercial paper program pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes”) in one or more private placements in the United States (the “U.S. Commercial Paper Program”).
On December 31, 2023, the Company was in compliance with the financial covenants under the Term Loan. ​ The Company has a commercial paper program pursuant to which the Company may issue short-term unsecured commercial paper notes (the “USCP Notes”) in one or more private placements in the United States (the “U.S. Commercial Paper Program”).
In 2022, the Company’s net income from continuing operations attributable to Amphenol Corporation was impacted by (a) excess tax benefits of $56.0 related to stock-based compensation resulting from stock option exercises, partially offset by (b) acquisition-related expenses of $21.5 ($18.4 after-tax) comprised primarily of the amortization related to the value associated with acquired backlog resulting from two acquisitions that closed in 2022, 27 Table of Contents along with external transaction costs .
In 2022, the Company’s net income from continuing operations attributable to Amphenol Corporation was impacted by (a) excess tax benefits of $56.0 related to stock-based compensation resulting from stock option exercises, partially offset by (b) acquisition-related expenses of $21.5 ($18.4 after-tax) comprised primarily of the amortization related to the value associated with acquired backlog resulting from two acquisitions that closed in 2022, along with external transaction costs.
It is not possible to reasonably estimate expected required contributions in the above table after 2023 since several assumptions are required to calculate minimum required contributions, such as the discount rate and expected returns on pension assets. ​ (5) As a result of the enactment of the U.S.
It is not possible to reasonably estimate expected required contributions in the above table after 2024, since several assumptions are required to calculate minimum required contributions, such as the discount rate and expected returns on pension assets. ​ (5) As a result of the enactment of the U.S.
The Company may utilize the Revolving Credit Facility for general corporate purposes. As of December 31, 2022 and 2021, there were no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.
The Company may utilize the Revolving Credit Facility for general corporate purposes. As of December 31, 2023 and 2022, there were no outstanding borrowings under the Revolving Credit Facility. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.
Selling and marketing expenses increased $98.1 in 2022 compared to 2021, and represented approximately 4.1% of net sales in 2022 and 3.8% of net sales in 2021. ​ ​ 30 Table of Contents Operating income was $2,585.8, or 20.5% of net sales in 2022, compared to $2,105.1, or 19.4% of net sales in 2021.
Selling and marketing expenses increased $98.1 in 2022 compared to 2021, and represented approximately 4.1% of net sales in 2022 and 3.8% of net sales in 2021. ​ 33 Table of Contents Operating income was $2,585.8, or 20.5% of net sales, in 2022, compared to $2,105.1, or 19.4% of net sales, in 2021.
Net sales to the military market increased (approximately $47.9), driven by strength in space-related applications, unmanned aerial vehicles, ground vehicles, and avionics, as well as contributions from acquisitions. Net sales to the mobile networks market increased (approximately $46.4), driven by a continued recovery in demand from mobile networks equipment manufacturers and mobile operators, along with contributions from acquisitions.
Net sales to the defense market increased approximately $47.9, driven by strength in space-related applications, unmanned aerial vehicles, ground vehicles, and avionics, as well as contributions from acquisitions. Net sales to the mobile networks market increased approximately $46.4, driven by continued recovery in demand from mobile networks equipment manufacturers and mobile operators, along with contributions from acquisitions.
During the year ended December 31, 2021, the Company repurchased 3.1 million shares of its Common Stock for $203.8 under the 2018 Stock Repurchase 41 Table of Contents Program. As a result of these purchases, the Company completed all purchases authorized under the 2018 Stock Repurchase Program, and, therefore, the 2018 Stock Repurchase Program was terminated.
During the year ended December 31, 2021, the Company repurchased 3.1 million shares of its Common Stock for $203.8 under the 2018 Stock Repurchase Program. As a result of these purchases, the Company completed all purchases authorized under the 2018 Stock Repurchase Program, and, therefore, the 2018 Stock Repurchase Program was terminated.
The increase in interest expense was driven by the rising interest rate environment and its impact on the balance outstanding under the Company’s U.S. Commercial Paper Program.
The increase in interest expense was driven by the higher interest rate environment and its impact on the balance outstanding under the Company’s U.S. Commercial Paper Program.
Treasury Department has issued final interpretive guidance relating to certain provisions of the Tax Act and proposed additional guidance related to the same provisions. The Company will account for the impact of additional guidance in the period in which any new guidance is released, if appropriate. 47 Table of Contents ​
Treasury Department has issued final interpretive guidance relating to certain provisions of the Tax Act and proposed additional guidance related to the same provisions. The Company will account for the impact of additional guidance in the period in which any new guidance is released, if appropriate. ​
Operating income in 2021 included acquisition-related expenses of $70.4, comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the acquisition of MTS in the second quarter of 2021, along with external transaction costs and certain non-cash purchase accounting costs related to the acquisition of Halo in the fourth quarter of 2021.
Operating income in 2021 included acquisition-related expenses of $70.4, comprised primarily of transaction, severance, restructuring and certain non-cash purchase accounting costs related to the acquisition of MTS in the second quarter of 2021, along with external transaction costs and certain non-cash purchase accounting costs related to the acquisition of Halo Technology Limited (“Halo”) in the fourth quarter of 2021.
Risk Factors herein. ​ 44 Table of Contents Foreign Currency Exchange Rates ​ The Company conducts business in many foreign currencies through its worldwide operations, and as a result is subject to foreign exchange exposure due to changes in exchange rates of the various currencies, including possible currency devaluations.
Risk Factors herein. ​ Foreign Currency Exchange Rates ​ The Company conducts business in many foreign currencies through its worldwide operations, and as a result, is subject to foreign exchange exposure due to changes in exchange rates of the various currencies, including possible currency devaluations.
The sales growth in 2022 was driven by strong organic growth across several end markets, in particular the information technology and data communications, broadband communications and automotive markets, and moderate organic growth in the mobile devices, industrial and mobile networks markets, along with contributions from the Company’s acquisition program. ​ Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) increased 17% in U.S. dollars, 23% in constant currencies and 18% organically, in 2022, compared to 2021.
The sales growth in 2022 was driven by strong organic growth across several end markets, in particular the IT datacom, broadband communications and automotive markets, and moderate organic growth in the mobile devices, industrial and mobile networks markets, along with contributions from the Company’s acquisition program. ​ Net sales in the Interconnect and Sensor Systems segment (approximately 30% of net sales) increased 17% in U.S. dollars, 23% in constant currencies and 18% organically, in 2022, compared to 2021.
For more information on certain environmental matters, refer to Note 14 of the Notes to Consolidated Financial Statements. ​ Inflation and Costs ​ The cost of the Company’s products is influenced by the cost of a wide variety of raw materials.
For more information on certain environmental matters, refer to Note 14 of the Notes to Consolidated Financial Statements. ​ 42 Table of Contents Inflation and Costs ​ The cost of the Company’s products is influenced by the cost of a wide variety of raw materials.
Of the total repurchases made in 2022 under the 2021 Stock Repurchase Program, 9.3 million shares, or $689.7, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.
Of the total repurchases made in 2022, 9.3 million shares, or $689.7, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.
In 2020, the Euro Issuer issued €500.0 (approximately $545.4 at date of issuance) principal amount of unsecured 0.750% Senior Notes due May 4, 2026 (the “2026 Euro Notes”), the net proceeds of which were used to repay amounts outstanding under the then existing revolving credit facility.
The Euro Issuer has €500.0 (approximately $545.4 at date of issuance) principal amount of unsecured 0.750% Senior Notes due May 4, 2026 (the “2026 Euro Notes”), the net proceeds of which were used to repay amounts outstanding under the then existing revolving credit facility.
The associated tax payments are due as the repatriations are made. The Company intends to indefinitely reinvest the remaining pre-2022 foreign earnings.
The associated tax payments are due as the repatriations are made. The Company intends to indefinitely reinvest the remaining pre-2023 foreign earnings.
The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of Commercial Paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future. ​ 40 Table of Contents As of December 31, 2022, the Company has outstanding senior notes (the “Senior Notes”) as follows: ​ ​ ​ ​ ​ ​ ​ Principal Interest ​ Amount Rate ​ Maturity $ 350.0 3.20 % April 2024 ​ 400.0 2.050 % March 2025 ​ 500.0 4.350 % June 2029 ​ 900.0 2.80 % February 2030 ​ 750.0 ​ 2.200 % September 2031 ​ ​ ​ ​ ​ ​ € 500.0 ​ 0.750 % May 2026 (Euro Notes) ​ 500.0 2.00 % October 2028 (Euro Notes) ​ On September 14, 2021, the Company issued the 2031 Senior Notes.
The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of Commercial Paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future. ​ As of December 31, 2023, the Company has outstanding senior notes (the “Senior Notes”) as follows: ​ ​ ​ ​ ​ ​ ​ Principal Interest ​ Amount Rate ​ Maturity $ 350.0 3.20 % April 2024 ​ 400.0 2.050 % March 2025 ​ 350.0 ​ 4.750 % March 2026 ​ 500.0 4.350 % June 2029 ​ 900.0 2.80 % February 2030 ​ 750.0 ​ 2.200 % September 2031 ​ ​ ​ ​ ​ ​ € 500.0 ​ 0.750 % May 2026 (Euro Notes) ​ 500.0 2.00 % October 2028 (Euro Notes) ​ On March 30, 2023, the Company issued the 2026 Senior Notes.
In addition, the Company paid its fifth annual installment of the Transition Tax, net of applicable tax credits and deductions, in the second quarter of 2022, and will pay the balance of the Transition Tax, net of applicable tax credits and deductions, in annual installments over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.
In addition, 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, in annual installments over the remainder of the eight-year period ending 2025, as permitted under the Tax Act.
As of December 31, 2022, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,100 related to certain geographies, as it is the Company’s intention to permanently reinvest such earnings outside the United States.
As of December 31, 2023, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,350 related to certain geographies, as it is the Company’s intention to permanently reinvest such earnings outside the United States.
For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s effective tax rate for these years, refer to Note 6 of the Notes to Consolidated Financial Statements. ​ Net income from continuing operations attributable to Amphenol Corporation and Net income from continuing operations per common share attributable to Amphenol Corporation-Diluted (“Diluted EPS”) were $1,902.3 and $3.06, respectively, for 2022, compared to $1,569.4 and $2.51, respectively, for 2021.
For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s effective tax rate for these years, refer to Note 6 of the Notes to Consolidated Financial Statements. ​ Net income from continuing operations attributable to Amphenol Corporation and Diluted EPS were $1,902.3 and $3.06, respectively, for 2022, compared to $1,569.4 and $2.51, respectively, for 2021.
The Company did not make any voluntary contributions to its U.S. Plans in 2022 and 2021.
The Company did not make any voluntary contributions to its U.S. Plans in 2023 and 2022.
The amount of USCP Notes outstanding as of December 31, 2022 was $632.8, with a weighted average interest rate of 4.69% As of December 31, 2021, the amount of USCP Notes outstanding was $795.2, with a weighted average interest rate of 0.29%. ​ The Company and one of its wholly owned European subsidiaries (the “Euro Issuer”) also have a commercial paper program (the “Euro Commercial Paper Program” and, together with the U.S.
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.
Net sales to the information technology and data communications market increased (approximately $414.6), as we continue to benefit from our strong technology solutions and leading position across a broad array of applications as customers continue to support higher demand for increased bandwidth and cloud storage, along with contributions from acquisitions.
Net sales to the IT datacom market increased approximately $414.6, as we continue to benefit from our strong technology solutions and leading position across a broad array of applications as customers continue to support higher demand for increased bandwidth and cloud storage, along with contributions from acquisitions.
GAAP financial measures, by segment, geography and consolidated, for the year ended December 31, 2021 compared to the year ended December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Growth (relative to prior year) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ Foreign ​ Constant ​ ​ ​ Organic ​ ​ ​ ​ ​ growth in ​ currency ​ Currency Net ​ Acquisition ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
GAAP financial measures, by segment, geography and consolidated, for the year ended December 31, 2023 compared to the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Growth (relative to prior year) (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ Foreign ​ Constant ​ ​ ​ Organic ​ ​ ​ ​ ​ growth in ​ currency ​ Currency Net ​ Acquisition ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
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. ​ In April 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act.
The timing and amount of any future purchases will depend on a number of factors, such as the 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. ​ In April 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”).
On December 31, 2022, the Company was in compliance with all requirements under its Senior Notes.
On December 31, 2023, the Company was in compliance with all requirements under its Senior Notes.
The Company’s debt service requirements consist primarily of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and the 2022 Term Loan (all as defined below). As of December 31, 2022, outstanding borrowings under the U.S.
The Company’s debt service requirements primarily consist of principal and interest on the Company’s Senior Notes, and to the extent of any amounts outstanding, the Revolving Credit Facility, Commercial Paper Programs and the Term Loan (all as defined below). As of December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility, Term Loan, U.S.
Selling, general and administrative expenses as a percentage of net sales in 2022 remained flat as the leverage on the higher sales volumes during the year was offset by the MTS Sensors business, acquired in early 2021, having higher selling, general and administrative expenses as a percentage of net sales compared to the average of the Company.
Selling, general and administrative expenses as a percentage of net sales in 2022 remained flat as the leverage on the higher sales volumes during the year was offset by the Sensors business (“MTS Sensors”) of MTS Systems Corporation (“MTS”), acquired in early 2021, having higher selling, general and administrative expenses as a percentage of net sales compared to the Company average.
F or further details related to the Company’s change in its reportable business segments effective January 1, 2022, refer to Note 13 of the Notes to Consolidated Financial Statements herein. ​ Strategy ​ The Company’s strategy is to provide our customers with comprehensive design capabilities, a broad selection of products and a high level of quality and service on a worldwide basis, while maintaining continuing programs of productivity improvement and cost control.
F or further details related to the Company’s reportable business segments, refer to Note 13 of the Notes to Consolidated Financial Statements herein. ​ Strategy ​ The Company’s strategy is to provide our customers with comprehensive design capabilities, a broad selection of products and a high level of quality and service on a worldwide basis, while maintaining continuing programs of productivity improvement and cost control.
Commercial Paper Program and Euro Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels during each of the years presented. The actual interest payments made related to the Company’s Revolving Credit Facility, 2022 Term Loan and both Commercial Paper Programs combined, in 2022, were approximately $21.1.
Commercial Paper Program and Euro Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels during each of the years presented. The actual interest payments made related to the Company’s Revolving Credit Facility, Term Loan and both Commercial Paper Programs combined, in 2023, were approximately $17.5.
During the years ended December 31, 2022 and 2021, the Company repurchased 9.9 million and 6.2 million shares of its Common Stock for $730.5 and $457.9, respectively, under the 2021 Stock Repurchase Program.
During the years ended December 31, 2023, 2022 and 2021, the Company repurchased 7.2 million, 9.9 million and 6.2 million shares of its Common Stock for $585.1, $730.5 and $457.9, respectively, under the 2021 Stock Repurchase Program.
Items excluded in the presentation of such non-GAAP financial measures in any period may consist of, without limitation, acquisition-related expenses, refinancing-related costs, and certain discrete tax items including but not limited to (i) the excess tax benefits related to stock-based compensation and (ii) the impact of significant changes in tax law.
Items excluded in the presentation of such non-GAAP financial measures in any period may consist of, without limitation, acquisition-related expenses, refinancing-related costs, gains associated with bargain purchase acquisitions, and certain discrete tax items including, but not limited to, (i) the excess tax benefits related to stock-based compensation and (ii) the impact of significant changes in tax law.
The following table is on a continuing operations basis only and excludes any cash flows related to discontinued operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Operating Cash Flow (GAAP) $ 2,174.6 $ 1,523.9 $ 1,592.0 Capital expenditures (GAAP) ​ (383.8) ​ (360.4) ​ (276.8) Proceeds from disposals of property, plant and equipment (GAAP) ​ 5.6 ​ 3.7 ​ 12.7 Free Cash Flow (non-GAAP) ​ $ 1,796.4 ​ $ 1,167.2 ​ $ 1,327.9 ​ Investing Activities ​ Cash flows from investing activities consist primarily of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment , net purchases (sales and maturities) of short- and long-term investments, and acquisitions. ​ Net cash used in investing activities from continuing operations was $731.1 in 2022, compared to $2,604.4 in 2021 and $333.5 in 2020.
The following table is on a continuing operations basis only and excludes any cash flows related to discontinued operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Operating Cash Flow (GAAP) $ 2,528.7 $ 2,174.6 $ 1,523.9 Capital expenditures (GAAP) ​ (372.8) ​ (383.8) ​ (360.4) Proceeds from disposals of property, plant and equipment (GAAP) ​ 4.0 ​ 5.6 ​ 3.7 Free Cash Flow (non-GAAP) ​ $ 2,159.9 ​ $ 1,796.4 ​ $ 1,167.2 ​ Investing Activities ​ Cash flows from investing activities primarily consist of cash flows associated with capital expenditures, proceeds from disposals of property, plant and equipment , net purchases (sales and maturities) of short- and long-term investments, and acquisitions. ​ Net cash used in investing activities from continuing operations was $1,393.7 in 2023, compared to $731.1 in 2022 and $2,604.4 in 2021.
The following table summ arizes the declared quarterly dividends per share for each of the three years ended December 31, 2022, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 First Quarter ​ $ 0.20 ​ $ 0.145 ​ $ 0.125 Second Quarter ​ ​ 0.20 ​ ​ 0.145 ​ ​ 0.125 Third Quarter ​ ​ 0.20 ​ ​ 0.145 ​ ​ 0.125 Fourth Quarter ​ ​ 0.21 ​ ​ 0.20 ​ ​ 0.145 Total ​ $ 0.81 ​ $ 0.635 ​ $ 0.52 ​ The following table summarizes the dividends declared and paid for the years ended December 31, 2022, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 Dividends declared ​ $ 482.6 ​ $ 379.7 ​ $ 310.0 Dividends paid (including those declared in the prior year) ​ 477.4 ​ 346.7 ​ 297.6 ​ Pensions ​ The Company and certain of its subsidiaries in the United States have defined benefit pension plans (“U.S.
The following table summ arizes the declared quarterly dividends per share for each of the three years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 First Quarter ​ $ 0.21 ​ $ 0.20 ​ $ 0.145 Second Quarter ​ ​ 0.21 ​ ​ 0.20 ​ ​ 0.145 Third Quarter ​ ​ 0.21 ​ ​ 0.20 ​ ​ 0.145 Fourth Quarter ​ ​ 0.22 ​ ​ 0.21 ​ ​ 0.20 Total ​ $ 0.85 ​ $ 0.81 ​ $ 0.635 ​ The following table summarizes the dividends declared and paid for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 Dividends declared ​ $ 507.4 ​ $ 482.6 ​ $ 379.7 Dividends paid (including those declared in the prior year) ​ 500.6 ​ 477.4 ​ 346.7 ​ Pensions ​ The Company and certain of its subsidiaries in the United States have defined benefit pension plans (“U.S.
The Company intends to distribute certain 2022 foreign earnings and, as of December 31, 2022, has accrued foreign and U.S. state and local taxes, where applicable, on those foreign earnings that we intend to repatriate, and intends to indefinitely reinvest the remaining 2022 foreign earnings.
The Company intends to distribute certain 2023 foreign earnings and, as of December 31, 2023, has accrued foreign and U.S. state and local taxes, where applicable, on those foreign earnings that it intends to repatriate, and intends to indefinitely reinvest the remaining 2023 foreign earnings.
On October 26, 2021, the Board approved an increase to the Company’s quarterly dividend rate from $0.145 per share to $0.20 per share, effective with dividends declared in the fourth quarter of 2021, and on October 25, 2022, approved an additional increase to the Company’s quarterly dividend rate from $0.20 per share to $0.21 per share, effective with dividends declared in the fourth quarter of 2022, contingent upon declaration by the Board.
On October 25, 2022, the Board approved an increase to the Company’s quarterly dividend rate from $0.20 per share to $0.21 per share, effective with dividends declared in the fourth quarter of 2022, 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.
The sales growth in 2022 was driven primarily by strong organic growth in the automotive, industrial, information technology and data communications, military and commercial aerospace markets, along with contributions from the Company’s acquisition program, partially offset by a moderate decline in the mobile networks market. ​ The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S.
The sales growth in 2022 was primarily driven by strong organic growth in the automotive, industrial, IT datacom, defense and commercial aerospace markets, along with contributions from the Company’s acquisition program, partially offset by a moderate decline in the mobile networks market. ​ The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S.
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. ​ The Euro Issuer has two outstanding unsecured senior notes issued in Europe.
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. ​ The Euro Issuer has two outstanding unsecured senior notes issued in Europe.
The Company believes that these sources of liquidity, along with access to capital markets, provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations. ​ Cash Requirements from Known Contractual and Other Obligations ​ The Company’s primary ongoing cash requirements will be for operating and working capital needs, capital expenditures, product development activities, repurchases of our Common Stock, dividends, debt service, payments associated with the one-time tax on the deemed repatriation of all of the Company’s pre-2018 accumulated unremitted earnings and profits of foreign subsidiaries (“Transition Tax”), which is payable in annual installments until 2025, taxes due upon the repatriation of foreign earnings (which will be payable upon the repatriation of such earnings) , funding of pension obligations, and other contractual obligations and commitments (refer to the table below for the Company’s material cash requirements from known contractual and other obligations).
The Company believes that these sources of liquidity, along with access to capital markets (which the Company accessed in March 2023 in connection with the issuance of the 2026 Senior Notes, as defined and discussed in more detail below within this Item 7), provide adequate liquidity to meet both its short-term (next 12 months) and reasonably foreseeable long-term requirements and obligations. ​ Cash Requirements from Known Contractual and Other Obligations ​ The Company’s primary ongoing cash requirements will be for operating and working capital needs, capital expenditures, product development activities, repurchases of our Common Stock, dividends, debt service, payments associated with the one-time tax on the deemed repatriation of all of the Company’s pre-2018 accumulated unremitted earnings and profits of foreign subsidiaries (“Transition Tax”), which is payable in annual installments until 2025, taxes due upon the repatriation of foreign earnings (which will be payable upon the repatriation of such earnings) , funding of pension obligations, and other contractual obligations and commitments (refer to the table below for the Company’s material cash requirements from known contractual and other obligations).
The sales growth in 2022 was driven by strong organic growth in the industrial, automotive and commercial aerospace markets, and moderate organic growth in the military, mobile networks and information technology and data communications markets, along with contributions from the Company’s acquisition program. 29 Table of Contents ​ Net sales in the Communications Solutions segment (approximately 45% of net sales) increased 17% in U.S. dollars, 19% in constant currencies and 13% organically, in 2022, compared to 2021.
The sales growth in 2022 was driven by strong organic growth in the industrial, automotive and commercial aerospace markets, and moderate organic 32 Table of Contents growth in the defense, mobile networks and IT datacom markets, along with contributions from the Company’s acquisition program. ​ Net sales in the Communications Solutions segment (approximately 45% of net sales) increased 17% in U.S. dollars, 19% in constant currencies and 13% organically, in 2022, compared to 2021.
The fifth installment of the Transition Tax was paid in the second quarter of 2022. ​ (6) As of December 31, 2022, the Company has recorded net liabilities of approximately $193.5 related to unrecognized tax benefits. These liabilities have been excluded from the above table due to the high degree of uncertainty regarding the timing of potential future cash flows.
The sixth installment of the Transition Tax was paid in the second quarter of 2023. ​ (6) As of December 31, 2023, the Company has recorded net liabilities of approximately $207.7 related to unrecognized tax benefits. These liabilities have been excluded from the above table due to the high degree of uncertainty regarding the timing of potential future cash flows.
Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 24.3% and 24.5% for 2021 and 2020, 34 Table of Contents respectively, as reconciled in the table below to the comparable effective tax rate based on GAAP results.
Excluding the effect of these items, the Adjusted Effective Tax Rate, a non-GAAP financial measure as defined in the “Non-GAAP Financial Measures” section below within this Item 7, was 24.0% and 24.5% for 2023 and 2022, respectively, as reconciled in the table below to the comparable effective tax rate based on GAAP results.
The Company’s debt financing includes the use of Commercial Paper Programs, the Revolving Credit Facility, the 2022 Term Loan, and senior notes as part of its overall cash management strategy. ​ On November 30, 2021, the Company amended and restated its $2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).
The Company’s debt financing includes the use of Commercial Paper Programs, the Revolving Credit Facility, the Term Loan, and senior notes as part of its overall cash management strategy. ​ The Company has an amended and restated $2,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”).
Commercial Paper Program, the majority of the proceeds of which were used to fund acquisitions, including MTS, and to redeem the 2021 Senior Notes and the 2022 Senior Notes, (b) net cash proceeds of $752.1, primarily related to the September 2021 issuance of the 2031 Senior Notes, and (c) cash proceeds of $288.5 from the exercise of stock options.
Commercial Paper Program, the majority of the proceeds of which were used to fund acquisitions, including MTS, and to redeem the 2021 Senior Notes and the 2022 Senior Notes, (b) net cash proceeds of $752.1, primarily related to the September 2021 issuance of the 2031 Senior Notes, and (c) cash proceeds of $288.5 from the exercise of stock options. ​ The Company has significant flexibility to meet its financial commitments.
As of December 31, 2022, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,100 related to certain geographies, as it is the Company’s intention to permanently reinvest such earnings outside the United States.
As of December 31, 2023, the Company has not provided for deferred income taxes on undistributed foreign earnings of approximately $1,350 related to certain geographies, as it is the 45 Table of Contents Company’s intention to permanently reinvest such earnings outside the United States.
The reconciliations of these non-GAAP financial measures to the most directly comparable U.S.
The reconciliations of these non-GAAP financial measures to the 43 Table of Contents most directly comparable U.S.
It is impracticable to calculate the amount of taxes that would be payable if these undistributed foreign earnings were to be repatriated. ​ Cash Flow Summary ​ The following table summarizes the Company’s cash flows from operating, investing and financing activities for the years ended December 31, 2022, 2021 and 2020, as reflected in the Consolidated Statements of Cash Flow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Net cash provided by operating activities from continuing operations ​ $ 2,174.6 ​ $ 1,523.9 ​ $ 1,592.0 Net cash used in investing activities from continuing operations ​ (731.1) ​ (2,604.4) ​ (333.5) Net cash used in financing activities from continuing operations ​ (1,196.7) ​ (145.1) ​ (516.6) Net cash change from discontinued operations ​ ​ — ​ ​ 733.0 ​ ​ — Effect of exchange rate changes on cash and cash equivalents ​ (70.8) ​ (12.3) ​ 68.9 Net increase (decrease) in cash and cash equivalents ​ $ 176.0 ​ $ (504.9) ​ $ 810.8 Note: Net cash change from discontinued operations in the table above includes the proceeds from the sale of the Divested MTS business during the year ended December 31, 2021, as discussed in further detail later within this Item 7. ​ Operating Activities ​ The ability to generate cash from operating activities is one of the Company’s fundamental financial strengths.
It is impracticable to calculate the amount of taxes that would be payable if these undistributed foreign earnings were to be repatriated. ​ 36 Table of Contents Cash Flow Summary ​ The following table summarizes the Company’s cash flows from operating, investing and financing activities for the years ended December 31, 2023, 2022 and 2021, as reflected in the Consolidated Statements of Cash Flow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Net cash provided by operating activities from continuing operations ​ $ 2,528.7 ​ $ 2,174.6 ​ $ 1,523.9 Net cash used in investing activities from continuing operations ​ (1,393.7) ​ (731.1) ​ (2,604.4) Net cash used in financing activities from continuing operations ​ (1,012.4) ​ (1,196.7) ​ (145.1) Net cash change from discontinued operations ​ ​ — ​ ​ — ​ ​ 733.0 Effect of exchange rate changes on cash and cash equivalents ​ (20.7) ​ (70.8) ​ (12.3) Net increase (decrease) in cash and cash equivalents ​ $ 101.9 ​ $ 176.0 ​ $ (504.9) Note: Net cash change from discontinued operations in the table above, during the year ended December 31, 2021, includes the proceeds from the sale of the Divested MTS business, as defined and discussed in further detail in Note 11 of the Notes to Consolidated Financial Statements. ​ Operating Activities ​ The ability to generate cash from operating activities is one of the Company’s fundamental financial strengths.

… 157 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+2 added−1 removed10 unchanged
Biggest changeCommercial Paper Program, were subject to floating interest rates; the Company’s weighted average floating rate on borrowings under the U.S. Commercial Paper Program as of December 31, 2021 was 0.29%. As of December 31, 2022 and 2021, there were no outstanding borrowings under the Revolving Credit Facility, 2022 Term Loan, and Euro Commercial Paper Program.
Biggest changeAs of December 31, 2022, there were no outstanding borrowings under the Revolving Credit Facility, Term Loan and Euro Commercial Paper Program, while approximately $640, or 14% of the Company’s outstan ding borrowings in 2022, primarily under the U.S. Commercial Paper Program, were subject to floating interest rates. The Company’s weighted average floating rate on borrowings under the U.S.
However, there can be no assurance that any or all such actions taken by the Company will be fully effective in successfully managing currency risk, including in the event of a significant and sudden decline in the value of any of the foreign currencies of the Company’s worldwide operations. ​ One of the Company ’s wholly owned European subsidiaries (the “Euro Issuer”) has two outstanding unsecured senior notes issued in Europe (collectively, the “Euro Notes”), each of which were issued with a principal amount of €500.0.
However, there can be no assurance that any or all such actions taken by the Company will be fully effective in successfully managing currency risk, including in the event of a significant and sudden decline in the value of any of the foreign currencies of the Company’s worldwide operations. ​ One of the Company ’s wholly owned European subsidiaries (the “Euro Issuer”) has two outstanding unsecured senior notes issued in Europe (collectively, the “Euro Notes”), each of which was issued with a principal amount of €500.0.
The Company manages its exposure to interest rate risk through a mix of fixed and variable rate debt. The Company currently has various fixed rate senior notes outstanding, in both the United States and Europe, with various maturity dates, the most recent of which was issued in 2021.
The Company manages its exposure to interest rate risk through a mix of fixed and variable rate debt. The Company currently has various fixed rate senior notes outstanding, in both the United States and Europe, with various maturity dates, the most recent of which was issued in 2023.
A 10% change in the interest rate at December 31, 2022 and 2021 under our Revolving Credit Facility, 2022 Term Loan or Commercial Paper Programs would not have a material effect on interest expense.
A 10% change in the interest rate at December 31, 2023 and 2022 under our Revolving Credit Facility, Term Loan or Commercial Paper Programs would not have a material effect on interest expense.
As of December 31, 2022, the fair value of such foreign exchange forward contracts was not material. A 10% change in foreign currency exchange rates would not have a material effect on the value of the hedges as of December 31, 2022 and 2021.
As of December 31, 2023, the fair value of such foreign exchange forward contracts was not material. A 10% change in foreign currency exchange rates would not have a material effect on the value of the hedges as of December 31, 2023 and 2022.
The Company does not engage in purchasing forward contracts for trading or speculative purposes, and our derivative financial instruments are with large financial institutions with strong credit ratings. As of December 31, 2022, the Company does not have any significant concentration of exposure with any one counterparty.
The Company does 46 Table of Contents not engage in purchasing forward contracts for trading or speculative purposes, and our derivative financial instruments are with large financial institutions with strong credit ratings. As of December 31, 2023, the Company does not have any significant concentration of exposure with any one counterparty.
Similarly, any borrowings under the two-year, $750.0 unsecured delayed draw term loan credit agreement (the “2022 48 Table of Contents Term Loan”) entered into by the Company in April of 2022, bear interest at rates that fluctuate with a spread that varies, based on the Company’s debt rating, over either the base rate or the adjusted term SOFR.
Similarly, any borrowings under the two-year, $750.0 delayed draw Term Loan entered into by the Company in April of 2022, bear interest at rates that fluctuate with a spread that varies, based on the Company’s debt rating, over either the base rate or the adjusted term SOFR. Any borrowings under the Commercial Paper Programs are subject to floating interest rates.
Although the Company does not expect changes in interest rates to have a material effect on income or cash flows in 2023, primarily due to our current expected limited reliance on borrowings tied to floating rates of interest, there can be no assurance that interest rates will not change significantly from current levels. ​ 49 Table of Contents
Although the Company does not expect changes in interest rates to have a material effect on income or cash flows in 2024, there can be no assurance that interest rates will not change significantly from current levels. ​ 47 Table of Contents
In September 2021, the Company issued $750.0 principal amount of unsecured 2.200% Senior Notes due September 15, 2031, the net proceeds of which were used to repay certain outstanding borrowings under the U.S.
In March 2023, the Company issued $350.0 principal amount of 4.750% 2026 Senior Notes, the net proceeds of which were used to repay certain outstanding borrowings under the U.S.
As a result of recent increases in the federal funds rate by the U.S. Federal Reserve, the floating interest rates related to our U.S. Commercial Paper Program increased substantially over the course of 2022, a trend that could continue throughout 2023. Consequently, the Company currently expects the floating interest rates related to its U.S.
Commercial Paper Program as of December 31, 2022 was 4.69%. ​ As a result of increases in the federal funds rate by the U.S. Federal Reserve beginning in early 2022 and through the middle of 2023, the floating interest rates related to our U.S.
Any borrowings under the Commercial Paper Programs are subject to floating interest rates. Therefore, when the Company borrows under these debt instruments, the Company is exposed to market risk related to changes in interest rates. As of December 31, 2022, approximately $640, or 14%, of the Company’s outstan ding borrowings, primarily under the U.S.
Therefore, when the Company borrows under these debt instruments, the Company is exposed to market risk related to changes in interest rates. As of December 31, 2023, the Company had no borrowings outstanding under the Revolving Credit Facility, Term Loan, U.S. Commercial Paper Program and Euro Commercial Paper Pro gram. However , the Company borrowed under the U.S.
Commercial Paper Program (as well as its Revolving Credit Facility and 2022 Term Loan, to the extent either are drawn upon in the future) to continue to increase in the first quarter of 2023 and potentially beyond, which is expected to result in increased interest expense in 2023 as compared to 2022.
Commercial Paper Program (as well as our Revolving Credit Facility and Term Loan, to the extent either are drawn upon in the future) have increased substantially over this same period, a trend that could continue into 2024 and potentially beyond.
Removed
Commercial Paper Program, were subject to floating interest rates; the Company’s weighted average floating rate on borrowings under the U.S. Commercial Paper Program as of December 31, 2022 was 4.69%. As of December 31, 2021, approximately $804, or 17%, of the Company’s outstan ding borrowings, primarily under the U.S.
Added
Commercial Paper Program throughout much of 2023, the proceeds of which were used for general corporate purposes, and the Company may make additional borrowings under any of its debt instruments from time to time. As of December 31, 2023 , less than 1% of the Company’s outstanding borrowings were subject to floating interest rates.
Added
To the extent that interest rates related to this floating rate debt increase further and the Company borrows under any of these floating interest rate instruments in the future, interest expense and interest payments would increase.

Other APH 10-K year-over-year comparisons