10-Q 1 a13-19632_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

OR

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 1-10879

 

AMPHENOL CORPORATION

 

Delaware

 

22-2785165

(State of Incorporation)

 

(IRS Employer
Identification No.)

 

358 Hall Avenue

Wallingford, Connecticut 06492

203-265-8900

 


 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

 

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

 

Large accelerated filer x

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

 

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

 

As of October 29, 2013, the total number of shares outstanding of Class A Common Stock was 158,281,072.

 

 

 



Table of Contents

 

Amphenol Corporation

Index to Quarterly Report

on Form 10-Q

 

 

 

Page

 

 

 

Part I

Financial Information

 

 

 

 

Item 1.

Financial Statements (unaudited):

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012

3

 

 

 

 

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2013 and 2012

4

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2013 and 2012

5

 

 

 

 

Condensed Consolidated Statements of Cash Flow for the Nine Months Ended September 30, 2013 and 2012

6

 

 

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

 

 

 

Item 4.

Controls and Procedures

21

 

 

 

Part II

Other Information

 

 

 

 

Item 1.

Legal Proceedings

22

 

 

 

Item 1A.

Risk Factors

22

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

22

 

 

 

Item 3.

Defaults Upon Senior Securities

22

 

 

 

Item 4.

Mine Safety Disclosures

22

 

 

 

Item 5.

Other Information

22

 

 

 

Item 6.

Exhibits

23

 

 

 

Signature

 

26

 

2



Table of Contents

 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands)

 

 

 

September 30,
2013

 

December 31,
2012

 

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

889,366

 

$

690,850

 

Short-term investments

 

394,215

 

251,653

 

Total cash, cash equivalents and short-term investments

 

1,283,581

 

942,503

 

Accounts receivable, less allowance for doubtful accounts of $12,092 and $10,372, respectively

 

926,194

 

910,711

 

Inventories

 

732,724

 

733,718

 

Other current assets

 

135,036

 

119,983

 

 

 

 

 

 

 

Total current assets

 

3,077,535

 

2,706,915

 

 

 

 

 

 

 

Land and depreciable assets, less accumulated depreciation of $781,904 and $715,895, respectively

 

441,799

 

417,436

 

Goodwill

 

1,972,428

 

1,932,740

 

Other long-term assets

 

148,919

 

158,372

 

 

 

 

 

 

 

 

 

$

5,640,681

 

$

5,215,463

 

 

 

 

 

 

 

Liabilities & Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

 

$

481,022

 

$

496,525

 

Accrued salaries, wages and employee benefits

 

90,289

 

89,142

 

Accrued income taxes

 

83,023

 

94,341

 

Accrued dividends

 

31,631

 

 

Other accrued expenses

 

122,249

 

108,213

 

Short-term debt

 

84,987

 

100,293

 

 

 

 

 

 

 

Total current liabilities

 

893,201

 

888,514

 

 

 

 

 

 

 

Long-term debt

 

1,784,539

 

1,606,204

 

Accrued pension and post-employment benefit obligations

 

250,701

 

244,571

 

Other long-term liabilities

 

45,720

 

33,992

 

Equity:

 

 

 

 

 

Common stock

 

158

 

160

 

Additional paid-in capital

 

461,936

 

336,683

 

Accumulated earnings

 

2,315,841

 

2,210,120

 

Accumulated other comprehensive loss

 

(120,686

)

(117,004

)

 

 

 

 

 

 

Total shareholders’ equity attributable to Amphenol Corporation

 

2,657,249

 

2,429,959

 

 

 

 

 

 

 

Noncontrolling interests

 

9,271

 

12,223

 

Total equity

 

2,666,520

 

2,442,182

 

 

 

 

 

 

 

 

 

$

5,640,681

 

$

5,215,463

 

 

See accompanying notes to condensed consolidated financial statements.

 

3



Table of Contents

 

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(dollars in thousands, except per share data)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net sales

 

$

1,153,062

 

$

1,103,376

 

$

3,368,934

 

$

3,146,087

 

Cost of sales

 

789,214

 

759,047

 

2,307,406

 

2,158,326

 

Gross profit

 

363,848

 

344,329

 

1,061,528

 

987,761

 

Acquisition-related expenses

 

2,537

 

 

2,537

 

 

Selling, general and administrative expense

 

136,828

 

128,659

 

403,538

 

380,636

 

Operating income

 

224,483

 

215,670

 

655,453

 

607,125

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(16,048

)

(15,166

)

(47,126

)

(44,014

)

Other income, net

 

3,625

 

2,636

 

9,443

 

7,457

 

Income before income taxes

 

212,060

 

203,140

 

617,770

 

570,568

 

Provision for income taxes

 

(50,671

)

(54,340

)

(147,900

)

(152,627

)

Net income

 

161,389

 

148,800

 

469,870

 

417,941

 

Less: Net income attributable to noncontrolling interests

 

(591

)

(1,350

)

(2,077

)

(2,986

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to Amphenol Corporation

 

$

160,798

 

$

147,450

 

$

467,793

 

$

414,955

 

 

 

 

 

 

 

 

 

 

 

Net income per common share-Basic

 

$

1.01

 

$

0.91

 

$

2.94

 

$

2.56

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding-Basic

 

158,665,520

 

161,349,493

 

159,365,640

 

161,905,598

 

 

 

 

 

 

 

 

 

 

 

Net income per common share-Diluted

 

$

0.99

 

$

0.90

 

$

2.88

 

$

2.53

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding-Diluted

 

161,792,786

 

163,780,171

 

162,477,034

 

164,333,598

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.200

 

$

0.105

 

$

0.410

 

$

0.315

 

 

See accompanying notes to condensed consolidated financial statements.

 

4



Table of Contents

 

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(dollars in thousands)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

161,389

 

$

148,800

 

$

469,870

 

$

417,941

 

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

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

30,869

 

20,998

 

(3,661

)

6,932

 

Revaluation of derivatives

 

99

 

(221

)

(17

)

235

 

Purchase of noncontrolling interest

 

288

 

 

288

 

 

Total other comprehensive income (loss), net of tax

 

31,256

 

20,777

 

(3,390

)

7,167

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

192,645

 

169,577

 

466,480

 

425,108

 

 

 

 

 

 

 

 

 

 

 

Less: Comprehensive income attributable to noncontrolling interests

 

(735

)

(1,497

)

(2,369

)

(3,073

)

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to Amphenol Corporation

 

$

191,910

 

$

168,080

 

$

464,111

 

$

422,035

 

 

See accompanying notes to condensed consolidated financial statements.

 

5



Table of Contents

 

AMPHENOL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(dollars in thousands)

 

 

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

Cash flow from operating activities:

 

 

 

 

 

Net income

 

$

469,870

 

$

417,941

 

Adjustments for cash from operating activities:

 

 

 

 

 

Depreciation and amortization

 

101,531

 

89,339

 

Stock-based compensation expense

 

26,584

 

23,167

 

Excess tax benefits from stock-based compensation payment arrangements

 

(18,853

)

(17,805

)

Net change in components of working capital

 

(24,249

)

(44,789

)

Net change in other long-term assets and liabilities

 

2,841

 

(250

)

 

 

 

 

 

 

Cash flow provided by operating activities

 

557,724

 

467,603

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

Additions to property, plant and equipment

 

(105,740

)

(96,489

)

Proceeds from disposals of fixed assets

 

2,084

 

4,174

 

Purchases of short-term investments

 

(538,152

)

(220,330

)

Sales and maturities of short-term investments

 

395,590

 

186,833

 

Acquisitions, net of cash acquired

 

(44,036

)

(179,597

)

 

 

 

 

 

 

Cash flow used in investing activities

 

(290,254

)

(305,409

)

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

Issuance of senior notes

 

 

498,730

 

Borrowings under credit facilities

 

490,800

 

606,600

 

Repayments under credit facilities

 

(327,043

)

(876,960

)

Payments of fees and expenses related to debt financing

 

(2,710

)

(4,318

)

Proceeds from exercise of stock options

 

79,587

 

73,450

 

Excess tax benefits from stock-based compensation payment arrangements

 

18,853

 

17,805

 

Payments to shareholders of non-controlling interests

 

(4,371

)

(4,713

)

Purchase and retirement of treasury stock

 

(296,975

)

(229,442

)

Dividend payments

 

(33,472

)

(36,385

)

 

 

 

 

 

 

Cash flow (used in) provided by financing activities

 

(75,331

)

44,767

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

6,377

 

3,499

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

198,516

 

210,460

 

Cash and cash equivalents balance, beginning of period

 

690,850

 

515,086

 

 

 

 

 

 

 

Cash and cash equivalents balance, end of period

 

$

889,366

 

$

725,546

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest

 

$

42,840

 

$

31,791

 

Income taxes

 

126,744

 

134,479

 

 

See accompanying notes to condensed consolidated financial statements.

 

6



Table of Contents

 

AMPHENOL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollars in thousands, except per share data)

 

Note 1—Basis of Presentation and Principles of Consolidation

 

The condensed consolidated balance sheets as of September 30, 2013 and December 31, 2012, the related condensed consolidated statements of income for the three and nine months ended September 30, 2013 and 2012, the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2013 and 2012, and the condensed consolidated statements of cash flow for the nine months ended September 30, 2013 and 2012 include the accounts of Amphenol Corporation and its subsidiaries (the “Company”).  All material intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included herein are unaudited.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation in conformity with accounting principles generally accepted in the United States of America have been included.  The results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year.  These condensed consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (the “2012 Annual Report”).

 

Note 2—New Accounting Pronouncements

 

In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”), which clarifies preexisting guidance regarding the treatment of cumulative translation adjustments when a parent sells part or all of its investment in a foreign entity. ASU 2013-05 is effective for fiscal years beginning after December 15, 2013; however, early adoption is permitted.  The Company does not expect that the adoption of this update will have a significant effect on its financial statements.

 

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). The update requires disclosure of amounts reclassified out of accumulated other comprehensive income by component.  In addition, an entity is required to present either on the face of the Consolidated Statements of Income or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. ASU 2013-02 was effective prospectively for the Company for the first quarter of 2013. The adoption of this update did not have a significant effect on the Company’s financial statements.

 

Note 3—Inventories

 

Inventories consist of:

 

 

 

September 30,
2013

 

December 31,
2012

 

Raw materials and supplies

 

$

248,406

 

$

243,127

 

Work in process

 

265,830

 

271,669

 

Finished goods

 

218,488

 

218,922

 

 

 

$

732,724

 

$

733,718

 

 

Note 4—Reportable Business Segments

 

The Company has two reportable business segments: (i) Interconnect Products and Assemblies and (ii) Cable Products. The Interconnect Products and Assemblies segment produces antennas, connectors and interconnect assemblies primarily for the communications, defense, commercial aerospace, industrial and automotive markets.  The Cable Products segment produces coaxial and flat ribbon cable and related products primarily for communication markets, including cable television. The accounting policies of the segments are the same as those for the Company as a whole. The Company evaluates the performance of business units on, among other things, profit or loss from operations before interest,

 

7



Table of Contents

 

headquarters’ expense allocations, stock-based compensation expense, income taxes, amortization related to certain intangible assets and nonrecurring gains and losses.

 

The segment results for the three months ended September 30, 2013 and 2012 are as follows:

 

 

 

Interconnect Products
and Assemblies

 

Cable
Products

 

Total

 

 

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

-external

 

$

1,063,179

 

$

1,033,309

 

$

89,883

 

$

70,067

 

$

1,153,062

 

$

1,103,376

 

-inter-segment

 

1,309

 

1,434

 

5,308

 

4,063

 

6,617

 

5,497

 

Segment operating income

 

233,435

 

224,517

 

12,389

 

8,697

 

245,824

 

233,214

 

 

The segment results for the nine months ended September 30, 2013 and 2012 are as follows:

 

 

 

Interconnect Products
and Assemblies

 

Cable
Products

 

Total

 

 

 

2013

 

2012

 

2013

 

2012

 

2013

 

2012

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

-external

 

$

3,104,856

 

$

2,926,834

 

$

264,078

 

$

219,253

 

$

3,368,934

 

$

3,146,087

 

-inter-segment

 

4,064

 

3,429

 

15,118

 

14,504

 

19,182

 

17,933

 

Segment operating income

 

676,818

 

627,962

 

36,432

 

29,831

 

713,250

 

657,793

 

 

A reconciliation of segment operating income to consolidated income before income taxes for the three and nine months ended September 30, 2013 and 2012 is summarized as follows:

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Segment operating income

 

$

245,824

 

$

233,214

 

$

713,250

 

$

657,793

 

Interest expense

 

(16,048

)

(15,166

)

(47,126

)

(44,014

)

Interest income

 

4,142

 

2,954

 

10,628

 

8,484

 

Stock-based compensation expense

 

(9,413

)

(8,066

)

(26,584

)

(23,167

)

Acquisition-related expenses

 

(2,537

)

 

(2,537

)

 

Other costs, net

 

(9,908

)

(9,796

)

(29,861

)

(28,528

)

Income before income taxes

 

$

212,060

 

$

203,140

 

$

617,770

 

$

570,568

 

 

Note 5—Changes in Equity and Noncontrolling Interests

 

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

 

A reconciliation of consolidated changes in equity for the nine months ended September 30, 2013 is as follows:

 

 

 

Amphenol Corporation Shareholders

 

 

 

Common Stock

 

 

 

 

 

Accum Other

 

 

 

 

 

 

 

 

 

Shares
(in millions)

 

Amount

 

Additional Paid
In Capital

 

Accumulated
Earnings

 

Comprehensive
Loss

 

Treasury
Stock

 

Noncontrolling
Interests

 

Total
Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2012

 

160

 

$

160

 

$

336,683

 

$

2,210,120

 

$

(117,004

)

$

 

$

12,223

 

$

2,442,182

 

Net income

 

 

 

 

 

 

 

467,793

 

 

 

 

 

2,077

 

469,870

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

(3,970

)

 

 

292

 

(3,678

)

Payments to shareholders of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,371

)

(4,371

)

Purchase of noncontrolling interest

 

 

 

 

 

662

 

 

 

288

 

 

 

(950

)

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(296,975

)

 

 

(296,975

)

Retirement of treasury stock

 

(4

)

(4

)

 

 

(296,971

)

 

 

296,975

 

 

 

 

Stock options exercised, including tax benefit

 

2

 

2

 

98,007

 

 

 

 

 

 

 

 

 

98,009

 

Dividends declared

 

 

 

 

 

 

 

(65,101

)

 

 

 

 

 

 

(65,101

)

Stock-based compensation expense

 

 

 

 

 

26,584

 

 

 

 

 

 

 

 

 

26,584

 

Balance as of September 30, 2013

 

158

 

$

158

 

$

461,936

 

$

2,315,841

 

$

(120,686

)

$

 

$

9,271

 

$

2,666,520

 

 

8



Table of Contents

 

A reconciliation of consolidated changes in equity for the nine months ended September 30, 2012 is as follows:

 

 

 

Amphenol Corporation Shareholders

 

 

 

Common Stock

 

 

 

 

 

Accum Other

 

 

 

 

 

 

 

 

 

Shares
(in millions)

 

Amount

 

Additional Paid
In Capital

 

Accumulated
Earnings

 

Comprehensive
Loss

 

Treasury
Stock

 

Noncontrolling
Interests

 

Total
Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2011

 

163

 

$

163

 

$

189,166

 

$

2,102,497

 

$

(120,057

)

$

 

$

13,017

 

$

2,184,786

 

Net income

 

 

 

 

 

 

 

414,955

 

 

 

 

 

2,986

 

417,941

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

7,080

 

 

 

87

 

7,167

 

Payments to shareholders of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,713

)

(4,713

)

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(229,442

)

 

 

(229,442

)

Retirement of treasury stock

 

(4

)

(4

)

 

 

(229,438

)

 

 

229,442

 

 

 

 

Stock options exercised, including tax benefit

 

3

 

3

 

90,214

 

 

 

 

 

 

 

 

 

90,217

 

Dividends declared

 

 

 

 

 

 

 

(50,905

)

 

 

 

 

 

 

(50,905

)

Stock-based compensation expense

 

 

 

 

 

23,167

 

 

 

 

 

 

 

 

 

23,167

 

Balance as of September 30, 2012

 

162

 

$

162

 

$

302,547

 

$

2,237,109

 

$

(112,977

)

$

 

$

11,377

 

$

2,438,218

 

 

Note 6—Earnings Per Share

 

Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amphenol Corporation by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income attributable to Amphenol Corporation by the weighted-average number of common shares and common shares issuable upon the exercise of outstanding dilutive stock options. A reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three and nine months ended September 30, 2013 and 2012 is as follows (dollars in thousands, except per share amounts):

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net income attributable to Amphenol Corporation shareholders

 

$

160,798

 

$

147,450

 

$

467,793

 

$

414,955

 

Basic weighted average common shares outstanding

 

158,665,520

 

161,349,493

 

159,365,640

 

161,905,598

 

Effect of dilutive stock options

 

3,127,266

 

2,430,678

 

3,111,394

 

2,428,000

 

Diluted weighted average common shares outstanding

 

161,792,786

 

163,780,171

 

162,477,034

 

164,333,598

 

Earnings per share attributable to Amphenol Corporation shareholders:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.01

 

$

0.91

 

$

2.94

 

$

2.56

 

Diluted

 

$

0.99

 

$

0.90

 

$

2.88

 

$

2.53

 

 

Excluded from the computations above were anti-dilutive stock options of 2,762,900 and 5,414,925 for the three months ended September 30, 2013 and 2012, respectively, and 1,609,492 and 4,345,057 for the nine months ended September 30, 2013 and 2012, respectively.

 

Note 7—Commitments and Contingencies

 

The Company has been named as defendants in several legal actions in which various amounts are claimed arising from normal business activities.  Although the amount of any ultimate liability with respect to such matters cannot be precisely determined, in the opinion of management, such matters are not expected to have a material effect on the Company’s financial condition, results of operations or cash flows.

 

Certain operations of the Company are subject to environmental laws and regulations which govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations and that the costs of continuing compliance will not have a material effect on the Company’s financial condition, results of operations or cash flows.

 

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Table of Contents

 

Subsequent to the acquisition of Amphenol from Allied Signal Corporation (“Allied Signal”) in 1987 (Allied Signal merged with Honeywell International Inc. in December 1999 (“Honeywell”)), the Company and Honeywell were named jointly and severally liable as potentially responsible parties in connection with several environmental cleanup sites. The Company and Honeywell jointly consented to perform certain investigations and remediation and monitoring activities at two sites, the “Route 8” landfill and the “Richardson Hill Road” landfill, and they were jointly ordered to perform work at another site, the “Sidney” landfill. The costs incurred relating to these three sites are currently reimbursed by Honeywell based on an agreement (the “Honeywell Agreement”) entered into in connection with the acquisition in 1987. The environmental investigation, remediation and monitoring activities identified by the Company, including those referred to above, are covered under the Honeywell Agreement.  Management does not believe that the costs associated with resolution of these or any other environmental matters will have a material effect on the Company’s consolidated financial condition, results of operations or cash flows.

 

Note 8—Stock-Based Compensation

 

In May 2009, the Company adopted the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and its Subsidiaries (the “2009 Employee Option Plan”).  The Company continues to maintain the 2000 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2000 Employee Option Plan”).  No additional stock options can be granted under the 2000 Employee Option Plan.  The 2009 Employee Option Plan authorizes the granting of additional stock options by a committee of the Company’s Board of Directors. As of September 30, 2013, there were 2,315,070 shares of common stock available for the granting of additional stock options under the 2009 Employee Option Plan. Options granted under the 2000 Employee Option Plan and the 2009 Employee Option Plan generally vest ratably over a period of five years and are generally exercisable over a period of ten years from the date of grant.

 

In 2004, the Company adopted the 2004 Stock Option Plan for Directors of Amphenol Corporation (the “2004 Directors Option Plan”).  The 2004 Directors Option Plan is administered by the Company’s Board of Directors.  As of September 30, 2013, there were 70,000 shares of common stock available for the granting of additional stock options under the 2004 Directors Option Plan, although no additional stock options are expected to be granted under this plan.  Options granted under the 2004 Directors Option Plan generally vest ratably over a period of three years and are generally exercisable over a period of ten years from the date of grant.

 

In May 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “2012 Directors Restricted Stock Plan”). The 2012 Directors Restricted Stock Plan is administered by the Company’s Board of Directors.  As of September 30, 2013, the number of restricted shares available for grants under the 2012 Directors Restricted Stock Plan was 95,131.  Restricted shares granted under the 2012 Directors Restricted Stock Plan generally vest on the first anniversary of the grant date.  Grants under the 2012 Directors Restricted Stock Plan entitle the holder to receive shares of the Company’s common stock without payment.

 

The grant-date fair value of each option grant under the 2000 Employee Option Plan, the 2009 Employee Option Plan and the 2004 Directors Option Plan is estimated using the Black-Scholes option pricing model. The grant-date fair value of each restricted share grant is determined based on the closing share price of the Company’s stock on the date of the grant. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model for option grants requires management to make certain assumptions with respect to selected model inputs. Expected share price volatility is calculated based on the historical volatility of the stock of the Company and implied volatility derived from related exchange traded options. The average expected life was based on the contractual term of the option and expected exercise and historical post-vesting termination experience. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The expected annual dividend per share is based on the Company’s dividend rate.

 

Stock-based compensation expense includes the estimated effects of forfeitures, which are adjusted over the requisite service period to the extent actual forfeitures differ or are expected to differ from such estimates.  Changes in estimated forfeitures are recognized in the period of change and impact the amount of expense to be recognized in future periods.  For the three months ended September 30, 2013, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $9,413 and $6,940, respectively, and these reductions were $26,584 and $19,432, respectively, for the nine months ended September 30, 2013.  For the three months ended September 30, 2012, the Company’s income before income taxes and net income were reduced for stock-based compensation expense by $8,066 and $5,885, respectively, and these reductions were $23,167 and $16,542, respectively, for the nine months ended September 30, 2012.  The expense incurred for stock-based compensation is included in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Income.

 

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Table of Contents

 

Stock Options

 

Stock option activity for the three and nine months ended September 30, 2013 was as follows:

 

 

 

Options

 

Weighted
Average
Exercise Price

 

Weighted Average
Remaining
Contractual Term
(in years)

 

Aggregate
Intrinsic
Value

 

Options outstanding at January 1, 2013

 

13,446,719

 

$

43.39

 

7.08

 

$

268,596

 

Options exercised

 

(1,043,444

)

31.30

 

 

 

 

 

Options forfeited

 

(58,500

)

50.58

 

 

 

 

 

Options outstanding at March 31, 2013

 

12,344,775

 

$

44.37

 

7.06

 

$

373,596

 

Options granted

 

2,742,150

 

78.00

 

 

 

 

 

Options exercised

 

(843,615

)

38.03

 

 

 

 

 

Options forfeited

 

(44,720

)

48.69

 

 

 

 

 

Options outstanding at June 30, 2013

 

14,198,590

 

$

51.23

 

7.49

 

$

379,390

 

Options granted

 

40,850

 

76.77

 

 

 

 

 

Options exercised

 

(378,310

)

39.63

 

 

 

 

 

Options forfeited

 

(26,980

)

57.17

 

 

 

 

 

Options outstanding at September 30, 2013

 

13,834,150

 

$

51.61

 

7.29

 

$

358,182

 

Vested and non-vested options expected to vest at September 30, 2013

 

12,497,070

 

$

51.02

 

7.20

 

$

330,899

 

Exercisable options at September 30, 2013

 

5,768,549

 

$

41.28

 

5.80

 

$

208,247

 

 

A summary of the status of the Company’s non-vested options as of September 30, 2013 and changes during the three and nine months then ended is as follows:

 

 

 

Options

 

Weighted
Average Fair
Value at Grant
Date

 

Non-vested options at January 1, 2013

 

7,951,177

 

$

13.36

 

Options vested

 

(8,620

)

15.62

 

Options forfeited

 

(58,500

)

13.50

 

Non-vested options at March 31, 2013

 

7,884,057

 

13.35

 

Options granted

 

2,742,150

 

17.41

 

Options vested

 

(2,526,556

)

13.32

 

Options forfeited

 

(44,720

)

13.40

 

Non-vested options at June 30, 2013

 

8,054,931

 

14.75

 

Options granted

 

40,850

 

17.97

 

Options vested

 

(3,200

)

14.97

 

Options forfeited

 

(26,980

)

14.24

 

Non-vested options at September 30, 2013

 

8,065,601

 

$

14.76

 

 

During the three and nine months ended September 30, 2013 and 2012, the following activity occurred under the Company’s stock option plans:

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Total intrinsic value of stock options exercised

 

$

16,456

 

$

36,383

 

$

91,091

 

$

77,320

 

Total fair value of stock options vested

 

49

 

41

 

33,830

 

30,922

 

 

As of September 30, 2013, the total compensation cost related to non-vested options not yet recognized is approximately $92,718 with a weighted average expected amortization period of 3.52 years.

 

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Table of Contents

 

Restricted Shares

 

Prior to the third quarter of 2013, the Company issued 17,045 restricted shares with a weighted-average fair value at grant date of $53.78 per share, all of which became fully vested in the second quarter of 2013.  Additionally, in the second quarter of 2013, the Company has issued 12,824 restricted shares with a weighted-average fair value at grant date of $78.00.  As of September 30, 2013, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $645 with a weighted average expected amortization period of 0.65 years.

 

Note 9—Shareholders’ Equity

 

In January 2013, the Company’s Board of Directors authorized a stock repurchase program under which the Company may repurchase up to 10,000,000 shares of its common stock during the two year period ending January 31, 2015 (the “2013 Stock Repurchase Program”). The price and timing of any such purchases under the 2013 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, economic and market conditions and stock price.  During the nine months ended September 30, 2013, the Company repurchased 3,956,615 shares of its common stock for $296,975.  These treasury shares have been or will be retired by the Company and common stock and accumulated earnings were reduced accordingly.

 

Contingent upon declaration by the Board of Directors, the Company generally pays a quarterly dividend on its common stock.  In July 2013, the Board of Directors approved the third quarter 2013 dividend on the Company’s common stock in the amount of $0.20 per share.  This represented an increase in the quarterly dividend rate from $0.105 to $0.20 per share effective with the third quarter 2013 dividend to be paid on or about October 2, 2013 to holders of record of the Company’s Class A Common stock as of September 11, 2013.  For the three and nine months ended September 30, 2013, the Company paid dividends in the amount of $16,716 and $33,472, respectively, and declared dividends in the amount of $31,629 and $65,101, respectively.  For the three and nine months ended September 30, 2012, the Company paid dividends in the amount of $16,885 and $36,385, respectively, and declared dividends in the amount of $16,964 and $50,905, respectively.

 

Note 10—Benefit Plans and Other Postretirement Benefits

 

Amphenol Corporation and certain of its domestic subsidiaries have defined benefit pension plans (the “U.S. Plans”), which cover its U.S. employees and which represent the majority of the assets and benefit obligations of the aggregate defined benefit plans of the Company. The U.S. Plans’ benefits are generally based on years of service and compensation and are generally noncontributory.  Certain U.S. employees not covered by the U.S. Plans are covered by defined contribution plans.  Certain foreign subsidiaries have defined benefit plans covering their employees (the “International Plans” and, together with the U.S. Plans, the “Plans”). The following is a summary, based on the most recent actuarial valuations of the Company’s net cost for pension benefits, of the Plans and other postretirement benefits for the three and nine months ended September 30, 2013 and 2012.

 

 

 

Pension Benefits

 

Other Postretirement
Benefits

 

 

 

Three months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Service cost

 

$

2,103

 

$

1,911

 

$

40

 

$

45

 

Interest cost

 

5,117

 

5,387

 

127

 

169

 

Expected return on plan assets

 

(6,071

)

(6,089

)

 

 

Amortization of transition obligation

 

(27

)

(27

)

 

16

 

Amortization of prior service cost

 

485

 

535

 

 

 

Amortization of net actuarial losses

 

5,901

 

4,484

 

193

 

242

 

Net pension expense

 

$

7,508

 

$

6,201

 

$

360

 

$

472

 

 

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Table of Contents

 

 

 

Pension Benefits

 

Other Postretirement
Benefits

 

 

 

Nine months ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Service cost

 

$

6,318

 

$

5,795

 

$

120

 

$

134

 

Interest cost

 

15,431

 

16,340

 

382

 

508

 

Expected return on plan assets

 

(18,346

)

(18,408

)

 

 

Amortization of transition obligation

 

(81

)

(81

)

 

47

 

Amortization of prior service cost

 

1,465

 

1,610

 

 

 

Amortization of net actuarial losses

 

17,703

 

13,592

 

578

 

725

 

Net pension expense

 

$

22,490

 

$

18,848

 

$

1,080

 

$

1,414

 

 

For the three and nine months ended September 30, 2013, the Company made cash contributions to the U.S. Plans of approximately $11,000 and $15,000, respectively, and estimates, based on current actuarial calculations, that it will make aggregate cash contributions to the Plans in 2013 of approximately $21,000, the majority of which will be to the U.S. Plans.  The timing and amount of cash contributions in subsequent years will depend on a number of factors, including the investment performance of the Plan assets.

 

The Company offers various defined contribution plans for certain U.S. and foreign employees. Participation in these plans is based on certain eligibility requirements. The Company matches the majority of employee contributions to U.S. defined contribution plans with cash contributions up to a maximum of 5% of eligible compensation.  During the nine months ended September 30, 2013 and 2012, the total matching contributions to these U.S. defined contribution plans were approximately $2,200 and $2,100, respectively.

 

Note 11Goodwill and Other Intangible Assets

 

As of September 30, 2013, the Company has goodwill totaling $1,972,428, of which $1,857,014 is related to the Interconnect Products and Assemblies segment with the remainder related to the Cable Products segment.  For the nine months ended September 30, 2013, goodwill increased by $39,688, primarily as a result of an acquisition in the Interconnect Products and Assemblies segment made during the second quarter of 2013.

 

The Company’s intangible assets are subject to amortization except for goodwill. A summary of the Company’s amortizable intangible assets as of September 30, 2013 and December 31, 2012 is as follows:

 

 

 

September 30, 2013

 

December 31, 2012

 

 

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Gross Carrying
Amount

 

Accumulated
Amortization

 

Customer relationships

 

$

171,400

 

$

65,600

 

$

166,800

 

$

54,000

 

Proprietary technology

 

44,200

 

21,500

 

44,200

 

18,800

 

License agreements

 

6,000

 

5,900

 

6,000

 

5,300

 

Trade names and other

 

9,400

 

7,900

 

9,400

 

7,700

 

Total

 

$

231,000

 

$

100,900

 

$

226,400

 

$

85,800

 

 

Customer relationships, proprietary technology, license agreements and trade names and other amortizable intangible assets have weighted average useful lives of approximately 10 years, 13 years, 8 years and 15 years, respectively, for an aggregate weighted average useful life of approximately 10 years.

 

Intangible assets are included in other long-term assets in the accompanying Condensed Consolidated Balance Sheets.  The amortization expense for the three months ended September 30, 2013 and 2012 was approximately $5,000 and $4,700, respectively. The amortization expense for the nine months ended September 30, 2013 and 2012 was approximately $15,000 and $13,900, respectively.  As of September 30, 2013, amortization expense estimated for each of the next five fiscal years is approximately $19,900 in 2013, $18,200 in 2014, $17,700 in 2015, $16,800 in 2016, and $16,600 in 2017.

 

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Table of Contents

 

Note 12—Debt

 

Revolving Credit Facility

 

In July 2013, the Company amended its revolving credit facility (the “Revolving Credit Facility”) to (1) reduce borrowing costs, (2) extend the maturity date to July 2018 and (3) increase aggregate commitments under the Revolving Credit Facility by $500,000, thereby increasing the Revolving Credit Facility to $1,500,000.  At September 30, 2013, borrowings and availability under the Revolving Credit Facility were $683,800 and $816,200, respectively.  The interest rate on borrowings under the Revolving Credit Facility was at a spread over LIBOR. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.  At September 30, 2013, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

 

Senior Notes

 

In November 2009, the Company issued $600,000 principal amount of unsecured 4.75% Senior Notes due November 2014 (the “4.75% Senior Notes”) at 99.813% of their face value. Net proceeds from the sale of the 4.75% Senior Notes were used to repay borrowings under the Revolving Credit Facility. Interest on the 4.75% Senior Notes is payable semi-annually on May 15 and November 15 of each year to the holders of record as of the immediately preceding May 1 and November 1. The Company may, at its option, redeem some or all of the 4.75% Senior Notes at any time by paying a make-whole premium, plus accrued and unpaid interest, if any, to the date of repurchase.  The 4.75% Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness. The fair value of the 4.75% Senior Notes at September 30, 2013 was approximately $626,220 based on recent bid prices in an active market and are therefore classified as Level 1 in the fair value hierarchy.

 

In January 2012, the Company issued $500,000 principal amount of unsecured 4.00% Senior Notes due February 2022 (the “4.00% Senior Notes”) at 99.746% of their face value.  Net proceeds from the sale of the 4.00% Senior Notes before payment of fees and expenses related to the offering in the amount of $498,730 were used to repay borrowings under the Revolving Credit Facility.  Interest on the 4.00% Senior Notes is payable semi-annually on February 1 and August 1 of each year, to the holders of record as of the immediately preceding January 15 and July 15.  The Company may, at its option, redeem some or all of the 4.00% Senior Notes at any time by paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase, plus a make-whole premium (if redeemed prior to November 1, 2021). The 4.00% Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.  The fair value of the 4.00% Senior Notes at September 30, 2013 was approximately $496,550 based on recent bid prices in an active market and are therefore classified as Level 1 in the fair value hierarchy.

 

Receivables Securitization Facility

 

A subsidiary of the Company has entered into a Receivables Securitization Facility with a financial institution whereby the subsidiary can sell an undivided interest of up to $100,000 in a designated pool of qualified accounts receivable (the “Receivables Securitization Facility”). The Company services, administers and collects the receivables on behalf of the purchaser. The Receivables Securitization Facility includes certain covenants and provides for various events of termination.   Transfers of receivables are reflected as debt issued in the Company’s Condensed Consolidated Statements of Cash Flow, and the value of the outstanding undivided interest held by investors at December 31, 2012 and September 30, 2013 is accounted for as a secured borrowing and is included in the Company’s Condensed Consolidated Balance Sheets as short-term debt.  At September 30, 2013, borrowings under the Receivables Securitization Facility were $84,500.  Fees incurred in connection with the Receivables Securitization Facility are included in interest expense.

 

In October 2013, the Company entered into a credit agreement among the Company, certain subsidiaries of the Company and a financial institution (the “Credit Agreement”).  The Credit Agreement provides for a $100,000 uncommitted and unsecured credit facility with the ability to borrow at a spread over LIBOR, which is renewable annually.   This Credit Agreement is intended to replace the Receivables Securitization Facility and as such, on September 30, 2013, the Company provided written notice to terminate the Receivables Securitization Facility effective on November 15, 2013.

 

The carrying value of borrowings under the Company’s Revolving Credit Facility and Receivables Securitization Facility approximated their fair value at September 30, 2013 due to their relative short-term maturities and market interest rates and are therefore classified as Level 2 in the fair value hierarchy.

 

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Table of Contents

 

Note 13—Fair Value Measurements

 

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

 

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

 

Level 1                    Quoted prices for identical instruments in active markets.

 

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

 

Level 3                    Significant inputs to the valuation model are unobservable.

 

The Company believes that the assets or liabilities subject to such standards with fair value disclosure requirements are derivative instruments.  The Company’s derivative instruments represent forward contracts, which are valued using bank quotations based on market observable inputs such as forward and spot rates and are therefore classified as Level 2 in the fair value hierarchy. The impact of the credit risk related to these financial assets is immaterial.  The fair values of the Company’s financial and non-financial assets and liabilities subject to such standards at September 30, 2013 and December 31, 2012 are as follows:

 

 

 

Fair Value Measurements at September 30, 2013

 

 

 

Total

 

Quoted Prices in Active
Markets for Identical

Assets (Level 1)

 

Significant
Observable Inputs
(Level 2)

 

Significant
Unobservable Inputs
(Level 3)

 

Forward contracts

 

$

(9,704

)

$

 

$

(9,704

)

$

 

Total

 

$

(9,704

)

$

 

$

(9,704

)

$

 

 

 

 

Fair Value Measurements at December 31, 2012

 

 

 

Total

 

Quoted Prices in Active
Markets for Identical

Assets (Level 1)

 

Significant
Observable Inputs
(Level 2)

 

Significant
Unobservable Inputs
(Level 3)

 

Forward contracts

 

$

(6,018

)

$

 

$

(6,018

)

$

 

Total

 

$

(6,018

)

$

 

$

(6,018

)

$

 

 

The Company does not have any significant financial or non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

 

Note 14—Derivative Instruments

 

The Company is exposed to certain risks related to its ongoing business operations.  The primary risks managed by using derivative instruments are foreign exchange rate risk and interest rate risk. Foreign exchange rate forward contracts were entered into in 2012 and 2013 to manage the currency exposures on intercompany loans used to fund acquisitions. The hedges will terminate in 2013 and 2014 upon maturity of the respective intercompany loans.

 

Derivative instruments are required to be recognized as either assets or liabilities at fair value in the Consolidated Balance Sheets. The Company designates foreign exchange rate forward contracts as cash flow hedges.

 

As of September 30, 2013 and December 31, 2012, the Company had the following derivative activity related to cash flow hedges:

 

15



Table of Contents

 

 

 

 

 

Fair Value Assets

 

 

 

Balance Sheet Location

 

September 30, 2013

 

December 31, 2012

 

Derivatives designated as cash flow hedges:

 

 

 

 

 

 

 

Forward contracts

 

Other accrued expenses

 

$

(9,704

)

$

(6,018

)

Total derivatives designated as cash flow hedging instruments

 

 

 

$

(9,704

)

$

(6,018

)

 

For the nine months ended September 30, 2013 and 2012, $(17) and $235 were recognized in accumulated other comprehensive income (loss) associated with foreign exchange rate forward contracts, respectively.  The amount reclassified from accumulated other comprehensive income (loss) to foreign exchange gain (loss) in the accompanying Condensed Consolidated Statements of Income during the nine month periods ended September 30, 2013 and 2012 was not material.

 

Note 15—Income Taxes

 

The provision for income taxes for the third quarter and the first nine months of 2013 was at an effective rate of 23.9%.  The provision for income taxes for the third quarter and the first nine months of 2012 was at an effective rate of 26.8%.  The lower effective rate in the third quarter and first nine months of 2013 included a tax benefit of $3,645, or $.02 per diluted common share, resulting primarily from the completion of prior audits.  The lower rate in the first nine months of 2013 included the third quarter tax benefit of $3,645 as well as a first quarter tax benefit of $11,300, or $.07 per diluted common share, resulting from the delay by the U.S. government in the reinstatement of certain federal income tax provisions for the year 2012 within the American Taxpayer Relief Act relating primarily to research and development credits and certain U.S. taxes on foreign income.  Such tax provisions were reinstated on January 2, 2013 with retroactive effect to 2012.  Excluding the effect of these benefits as well as the net impact of acquisition-related expenses, the effective tax rate in the third quarter and the first nine months of 2013 was 25.5% and 26.3%, respectively.

 

The Company is present in over sixty tax jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2010 and after.  The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of September 30, 2013, the amount of the liability for unrecognized tax benefits, which if recognized would impact the effective tax rate, was approximately $13,109, the majority of which is included in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.  Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and the closing of statutes of limitation. Based on information currently available, management anticipates that over the next twelve month period, audit activity could be completed and statutes of limitation may close relating to existing unrecognized tax benefits of approximately $2,221.

 

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Table of Contents

 

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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

 

Results of Operations

 

Three and nine months ended September 30, 2013 compared to the three and nine months ended September 30, 2012

 

Net sales were $1,153.1 in the third quarter of 2013 compared to $1,103.4 in the prior year quarter, an increase of 5% in U.S. dollars and 4% in local currencies. Sales were equal to the prior year organically (excluding the impact of foreign exchange and acquisitions).  Net sales for the first nine months of 2013 were $3,368.9 compared to $3,146.1 in the same period in 2012, an increase of 7% in both U.S. dollars and in local currencies and 3% organically over the prior year period.  Sales of interconnect products and assemblies (approximately 92% of sales) increased 3% in U.S. dollars and 2% in local currencies in the third quarter of 2013 compared to the same period in 2012 ($1,063.2 in 2013 versus $1,033.3 in 2012) and 6% in both U.S. dollars and in local currencies in the first nine months of 2013 compared to the same period in 2012 ($3,104.9 in 2013 versus $2,926.8 in 2012).  The sales growth was driven by increases in the commercial aerospace, automotive, industrial and information technology and data communications markets with contributions from both organic growth and the Company’s acquisition program, partially offset by a decrease in sales to the mobile device market.  Sales of cable products (approximately 8% of sales) increased 28% in U.S. dollars and 30% in local currencies in the third quarter of 2013 compared to the same period in 2012 ($89.9 in 2013 versus $70.1 in 2012) and 20% in U.S. dollars and 22% in local currencies in the first nine months of 2013 compared to the same period in 2012 ($264.1 in 2013 versus $219.3 in 2012) primarily due to a 2012 acquisition.  Cable product sales are primarily in the broadband market.

 

Geographically, sales in the United States in the third quarter and first nine months of 2013 increased approximately 3%  and 5%, respectively, compared to the same period in 2012 ($363.5 and $1,072.3 respectively, in 2013 versus $352.4 and $1,021.5, respectively, in 2012).  International sales for the third quarter and first nine months of 2013 increased approximately 5% and 8% in U.S. dollars, respectively, and 4% and 8% in local currencies, respectively, compared to the same period in 2012 ($789.6 and $2,296.7, respectively, in 2013 versus $751.0 and $2,124.6, respectively, in 2012). The comparatively weaker U.S. dollar for the third quarter and first nine months had the effect of increasing sales approximately $7.9 compared to foreign currency translation rates for the same periods in 2012.

 

The gross profit margin percentage was approximately 31.6% for the third quarter of 2013 and 31.5% for the first nine months of 2013, compared to 31.2% and 31.4% for the third quarter and first nine months of 2012, respectively.  The operating margin for the Interconnect Products and Assemblies segment increased approximately 30 basis points in both the third quarter and the first nine months of 2013 compared to the same periods in 2012, primarily reflecting the positive impact of higher volume and cost reduction actions.  The operating margins for the Cable Products segment increased approximately 140 basis points for the third quarter and increased approximately 20 basis points for the first nine months of 2013, compared to the same periods in 2012, primarily due to the positive impact of a 2012 acquisition.

 

As separately presented in the Condensed Consolidated Statements of Income, the Company incurred $2.5 of acquisition-related expenses in the third quarter and first nine months of 2013 in connection with 2013 acquisitions.  For the three and nine months ended September 30, 2013, these expenses had an impact on net income of $2.1, or $.01 per diluted common share.

 

Selling, general and administrative expenses increased to $136.8 and $403.5, or 11.9% and 12.0% of net sales the third quarter and first nine months of 2013, respectively, compared to $128.7 and $380.6, or 11.7% and 12.1% of net sales, for the same periods in 2012.  Administrative expenses were flat for the third quarter and increased approximately $6.1 for the first nine months of 2013 compared to the same periods in 2012.  The increase for the first nine months of 2013 primarily related to increases in employee related benefits, stock-based compensation expense and amortization of acquisition-related identified intangible assets and represented approximately 4.5% of sales for both the third quarter and first nine months of 2013 compared to 4.7% and 4.6% of sales for the same periods in 2012, respectively.  Research and development expenses increased approximately $3.2 and $8.2 for the third quarter and first nine months of 2013, respectively, compared to the same periods in 2012 reflecting increases in expenses for new product development and represented approximately 2.3% of sales for both the third quarter and first nine months of 2013 compared to 2.1% and 2.2% of sales for the same periods in 2012, respectively.  Selling and marketing expenses increased approximately $4.9 and $8.5 for the third quarter and first nine months of 2013, respectively, compared to the same periods in 2012 primarily related to the increase in sales volume and represented approximately 5.1% and 5.2% of sales for the third quarter and first nine months of 2013, respectively, compared to 4.9% and 5.3% of sales for the same periods in 2012, respectively.

 

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Table of Contents

 

Interest expense for the third quarter and first nine months of 2013 was $16.0 and $47.1, respectively, compared to $15.2 and $44.0 for the same periods in 2012.  The increases are primarily attributable to higher average debt levels related to the Company’s stock repurchase program.

 

Other income, net, increased to $3.6 and $9.4 for the third quarter and first nine months of 2013, respectively, compared to $2.6 and $7.5 for the same periods in 2012, primarily related to higher interest income on higher levels of cash, cash equivalents and short-term investments.

 

The provision for income taxes for the third quarter and the first nine months of 2013 was at an effective rate of 23.9%.  The provision for income taxes for the third quarter and the first nine months of 2012 was at an effective rate of 26.8%.  The lower effective rate in the third quarter and first nine months of 2013 included a tax benefit of $3.6, or $.02 per diluted common share, resulting primarily from the completion of prior audits.  The lower rate in the first nine months of 2013 included the third quarter tax benefit of $3.6 as well as a first quarter tax benefit of $11.3, or $.07 per diluted common share, resulting from the delay by the U.S. government in the reinstatement of certain federal income tax provisions for the year 2012 within the American Taxpayer Relief Act relating primarily to research and development credits and certain U.S. taxes on foreign income.  Such tax provisions were reinstated on January 2, 2013 with retroactive effect to 2012.  Excluding the effect of these benefits as well as the net impact of acquisition-related expenses, the effective tax rate in the third quarter and the first nine months of 2013 was 25.5% and 26.3%, respectively.

 

The Company is present in over sixty tax jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2010 and after.  The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit.  The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of September 30, 2013, the amount of the liability for unrecognized tax benefits, which if recognized would impact the effective tax rate, was approximately $13.1, the majority of which is included in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.  Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and the closing of statutes of limitation. Based on information currently available, management anticipates that over the next twelve month period, audit activity could be completed and statutes of limitation may close relating to existing unrecognized tax benefits of approximately $2.2.

 

Liquidity and Capital Resources

 

Cash flow provided by operating activities was $557.7 in the first nine months of 2013 compared to $467.6 in the same 2012 period.  The increase in cash flow provided by operating activities for the first nine months of 2013 compared to the same 2012 period is primarily due to an increase in net income and a lower increase in the components of working capital.  The components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $24.2 in the first nine months of 2013 due primarily to a decrease in accounts payable of $25.5, and an increase in accounts receivable and other current assets of $11.5 and $10.9, respectively, which were partially offset by an increase in accrued liabilities of $21.5.  The components of working capital as presented on the accompanying Condensed Consolidated Statements of Cash Flow increased $44.8 in the first nine months of 2012 due primarily to an increase in accounts receivable, inventory and other current assets of $119.5, $35.7 and $15.1, respectively, which were partially offset by increases in accounts payable and accrued liabilities of $86.6 and $38.9, respectively.

 

The following describes the significant changes in the amounts as presented on the accompanying Condensed Consolidated Balance Sheets at September 30, 2013 compared to December 31, 2012. Accounts receivable increased $15.5 to $926.2 primarily due to an increase in sales volumes and by the impact of acquisitions.  Days sales outstanding were approximately 72 days at September 30, 2013 and December 31, 2012.  Inventories decreased $1.0 to $732.7.  Inventory days were approximately 84 days at September 30, 2013 and 83 days at December 31, 2012.  Land and depreciable assets, net, increased $24.4 to $441.8 primarily due to net capital expenditures of $103.7 offset by depreciation of $84.1.  Goodwill increased $39.7 to $1,972.4 primarily as a result of an acquisition and translation resulting from the comparatively weaker U.S. dollar at September 30, 2013 compared to December 31, 2012 (“Translation”).  Accounts payable decreased $15.5 to $481.0, primarily as a result of a slight decrease in payable days to approximately 55 days at September 30, 2013 compared to 56 days at December 31, 2012.  Total accrued expenses increased $35.5 to $327.2, primarily due to the accrual of dividends declared in September 2013 that were paid in October 2013 and an increase in other accrued expenses offset by lower accrued income taxes.  Other long-term liabilities increased $11.7 to $45.7 primarily due to an increase in deferred tax liabilities.

 

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Table of Contents

 

For the first nine months of 2013, cash flow provided by operating activities of $557.7, net borrowings under credit facilities of $161.0 and proceeds from the exercise of stock options including tax benefits of $98.4 were used to fund purchases of treasury stock of $297.0, net purchases of short-term investments of $142.6, capital expenditures (net of disposals) of $103.7, acquisitions of $44.0, dividend payments of $33.5 and payments to shareholders of noncontrolling interests of $4.4, which resulted in an increase in cash and cash equivalents before the impact of Translation of $198.5.  For the first nine months of 2012, cash flow provided by operating activities of $467.6, proceeds from the 4.00% Senior Notes offering of $494.7 and proceeds from the exercise of stock options including tax benefits from stock-based payment arrangements of $91.3 were used to fund net repayments on credit facilities of $270.4, purchases of treasury stock of $229.4, acquisitions of $179.6, capital expenditures (net of disposals) of $92.3, dividend payments of $36.4, net purchases of short-term investments of $33.5, and payments to shareholders of noncontrolling interests of $4.7, which resulted in an increase in cash and cash equivalents of $210.5 before the impact of Translation.

 

In July 2013, the Company amended its revolving credit facility (the “Revolving Credit Facility”) to (1) reduce borrowing costs, (2) extend the maturity date to July 2018 and (3) increase aggregate commitments under the Revolving Credit Facility by $500.0, thereby increasing the Revolving Credit Facility to $1,500.0.  At September 30, 2013, borrowings and availability under the Revolving Credit Facility were $683.8 and $816.2, respectively.  The interest rate on borrowings under the Revolving Credit Facility was at a spread over LIBOR.  The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants.  At September 30, 2013, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

 

In November 2009, the Company issued $600.0 principal amount of unsecured 4.75% Senior Notes due November 2014 (the “4.75% Senior Notes”) at 99.813% of their face value. Net proceeds from the sale of the 4.75% Senior Notes were used to repay borrowings under the Company’s Revolving Credit Facility. Interest on the 4.75% Senior Notes is payable semi-annually on May 15 and November 15 of each year to the holders of record as of the immediately preceding May 1 and November 1. The Company may, at its option, redeem some or all of the 4.75% Senior Notes at any time by paying a make-whole premium, plus accrued and unpaid interest, if any, to the date of repurchase.  The 4.75% Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness. The fair value of the 4.75% Senior Notes at September 30, 2013 was approximately $626.2 based on recent bid prices.

 

In January 2012, the Company issued $500.0 principal amount of unsecured 4.00% Senior Notes due February 2022 (the “4.00% Senior Notes”) at 99.746% of their face value.  Net proceeds from the sale of the 4.00% Senior Notes before payment of fees and expenses related to the offering in the amount of $498.7 were used to repay borrowings under the Company’s Revolving Credit Facility.  Interest on the 4.00% Senior Notes is payable semi-annually on February 1 and August 1 of each year, to the holders of record as of the immediately preceding January 15 and July 15.  The Company may, at its option, redeem some or all of the 4.00% Senior Notes at any time by paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase, plus a make-whole premium (if redeemed prior to November 1, 2021). The 4.00% Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness.  The fair value of the 4.00% Senior Notes at September 30, 2013 was approximately $496.6 based on recent bid prices.

 

A subsidiary of the Company has entered into a Receivables Securitization Facility with a financial institution whereby the subsidiary can sell an undivided interest of up to $100.0 in a designated pool of qualified accounts receivable (the “Receivables Securitization Facility”). The Company services, administers and collects the receivables on behalf of the purchaser. The Receivables Securitization Facility includes certain covenants and provides for various events of termination.  Transfers of receivables are reflected as debt issued in the Company’s Condensed Consolidated Statements of Cash Flow, and the value of the outstanding undivided interest held by investors at December 31, 2012 and September 30, 2013 is accounted for as a secured borrowing and is included in the Company’s Condensed Consolidated Balance Sheets as short-term debt.  At September 30, 2013, borrowings under the Receivables Securitization Facility were $84.5. Fees incurred in connection with the Receivables Securitization Facility are included in interest expense.

 

In October 2013, the Company entered into a credit agreement among the Company, certain subsidiaries of the Company and a financial institution (the “Credit Agreement”).  The Credit Agreement provides for a $100.0 uncommitted and unsecured credit facility with the ability to borrow at a spread over LIBOR, which is renewable annually.  This credit facility is intended to replace the Receivables Securitization Facility and as such, on September 30, 2013, the Company provided written notice to terminate the Receivables Securitization Facility effective on November 15, 2013.

 

The carrying value of borrowings under the Company’s Revolving Credit Facility and Receivables Securitization Facility approximated their fair value at September 30, 2013.

 

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Table of Contents

 

The Company’s primary ongoing cash requirements will be for operating and capital expenditures, product development activities, repurchases of its common stock, funding of pension obligations, dividends and debt service.  The Company may also use cash to fund all or part of the cost of acquisitions.  The Company generally pays a quarterly dividend on its common stock.  In July 2013, the Board of Directors approved the third quarter 2013 dividend on the Company’s common stock in the amount of $0.20 per share.  This represented an increase in the quarterly dividend rate from $0.105 to $0.20 per share effective with the third quarter 2013 dividend to be paid on or about October 2, 2013 to holders of record of the Company’s Class A Common stock as of September 11, 2013.  For the three and nine months ended September 30, 2013, the Company paid dividends in the amount of $16.7 and $33.5, respectively, and declared dividends in the amount of $31.6 and $65.1, respectively.  The Company’s debt service requirements consist primarily of principal and interest on the Senior Notes, the Revolving Credit Facility and the Receivables Securitization Facility.

 

The Company’s primary sources of liquidity are internally generated cash flow, the Company’s credit facilities, and cash, cash equivalents and short-term investments.  The Company expects that ongoing cash requirements will be funded from these sources; however, the Company’s sources of liquidity could be adversely affected by, among other things, a decrease in demand for the Company’s products, a deterioration in certain of the Company’s financial ratios or a deterioration in the quality of the Company’s accounts receivables.  However, management believes that the Company’s cash, cash equivalents and short-term investment position, ability to generate strong cash flow from operations, and availability under its credit facilities will allow it to meet its obligations for the next twelve months.

 

In January 2013, the Company’s Board of Directors authorized a stock repurchase program under which the Company may repurchase up to 10 million shares of its common stock during the two year period ending January 31, 2015 (the “2013 Stock Repurchase Program”). The price and timing of any such purchases under the 2013 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, economic and market conditions and stock price.  During the nine months ended September 30, 2013, the Company repurchased 4.0 million shares of its common stock for approximately $297.0.  These treasury shares have been or will be retired by the Company and common stock and accumulated earnings were reduced accordingly.

 

For the three and nine months ended September 30, 2013, the Company made cash contributions to the U.S. defined benefit pension plans of $11.0 and $15.0, respectively and estimates that, based on current actuarial calculations, it will make aggregate cash contributions to its defined benefit pension plans in 2013 of approximately $21.0, the majority of which is to the U.S. defined benefit pension plans.  The timing and amount of cash contributions in subsequent years will depend on a number of factors, including the investment performance of the plan assets.

 

Environmental Matters

 

Certain operations of the Company are subject to environmental laws and regulations which govern the discharge of pollutants into the air and water, as well as the handling and disposal of solid and hazardous wastes. The Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations and that the costs of continuing compliance will not have a material effect on the Company’s financial condition, result of operations or cash flows.

 

Owners and occupiers of sites containing hazardous substances, as well as generators of hazardous substances, are subject to broad liability under various environmental laws and regulations, including expenditures for cleanup and monitoring costs and potential damages arising out of past disposal activities. Such liability in many cases may be imposed regardless of fault or the legality of the original disposal activity. The Company has performed remediation activities and is currently performing operations and maintenance and monitoring activities at three off-site disposal sites previously utilized by the Company’s facility in Sidney, New York, and others - the Richardson Hill Road landfill, the Route 8 landfill and the Sidney landfill.  Actions at the Richardson Hill Road and Sidney landfills were undertaken subsequent to designation as “Superfund” sites on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980. The Route 8 landfill was designated as a New York State Inactive Hazardous Waste Disposal Site, with remedial actions taken pursuant to Chapter 6, Section 375-1 of the New York Code of Rules and Regulations. In addition, the Company is currently performing monitoring activities at, and in proximity to, its manufacturing site in Sidney, New York. The Company is also engaged in remediating or monitoring environmental conditions at certain of its other manufacturing facilities and has been named as a potentially responsible party for cleanup costs at other off-site disposal sites.

 

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Table of Contents

 

Subsequent to the acquisition of Amphenol from Allied Signal Corporation (“Allied Signal”) in 1987 (Allied Signal merged with Honeywell International Inc. in December 1999 (“Honeywell”)), the Company and Honeywell were named jointly and severally liable as potentially responsible parties in connection with several environmental cleanup sites. The Company and Honeywell jointly consented to perform certain investigations and remediation and monitoring activities at the Route 8 landfill and the Richardson Hill Road landfill, and they were jointly ordered to perform work at the Sidney landfill, all as referred to above. All of the costs incurred relating to these three sites are currently reimbursed by Honeywell based on an agreement (the “Honeywell Agreement”) entered into in connection with the acquisition in 1987. The environmental investigation, remediation and monitoring activities identified by the Company, including those referred to above, are covered under the Honeywell Agreement.  Management does not believe that the costs associated with resolution of these or any other environmental matters will have a material effect on the Company’s consolidated financial condition, result of operations or cash flows.

 

Since 1987, the Company has not been identified nor has it been named as a potentially responsible party with respect to any other significant on-site or off-site hazardous waste matters. In addition, the Company believes that its manufacturing activities and disposal practices since 1987 have been in material compliance with applicable environmental laws and regulations. Nonetheless, it is possible that the Company will be named as a potentially responsible party in the future with respect to additional Superfund or other sites. Although the Company is unable to predict with any reasonable certainty the extent of its ultimate liability with respect to any pending or future environmental matters, the Company believes, based upon information currently known by management about the Company’s manufacturing activities, disposal practices and estimates of liability with respect to known environmental matters, that any such liability will not have a material effect on the Company’s consolidated financial condition, result of operations or cash flows.

 

Safe Harbor Statement

 

Statements in this Form 10-Q, which are other than historical facts, are intended to be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, the Private Securities Litigation Reform Act of 1995 and other related laws. While the Company believes such statements are reasonable, the actual results and effects could differ materially from those currently anticipated. Please refer to Part I, Item 1A of the Company’s 2012 Annual Report, for some factors that could cause the actual results to differ from estimates. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise.

 

Item 3.         Quantitative and Qualitative Disclosures About Market Risk

 

The Company, in the normal course of doing business, is exposed to the risks associated with foreign currency exchange rates and changes in interest rates.  There has been no material change in the Company’s assessment of its sensitivity to foreign currency exchange rate risk since its presentation set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in its 2012 Annual Report.  As of September 30, 2013, the Company’s average LIBOR rate was 0.18%.  A 10% change in the LIBOR interest rate at September 30, 2013 would have no material effect on interest expense. The Company does not expect changes in interest rates to have a material effect on income or cash flows in 2013, although there can be no assurances that interest rates will not significantly change.

 

Item 4.         Controls and Procedures

 

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”) as of the period covered by this report. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and such information is accumulated and communicated to management, including the Company’s principal executive and financial officers, to allow timely decisions regarding required disclosure. There has been no change in the Company’s internal controls over financial reporting during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

 

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Table of Contents

 

PART II - OTHER INFORMATION

 

Item 1.         Legal Proceedings

 

The Company and its subsidiaries have been named as defendants in several legal actions in which various amounts are claimed arising from normal business activities. Although the amount of any ultimate liability with respect to such matters cannot be precisely determined, in the opinion of management, such matters are not expected to have a material adverse effect on the Company’s financial condition or results of operations.

 

Item 1A.  Risk Factors

 

There have been no material changes to the Company’s risk factors as disclosed in Part I, Item 1A of the Company’s 2012 Annual Report.

 

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds

 

Repurchase of Equity Securities

 

In January 2013, the Company’s Board of Directors authorized a stock repurchase program under which the Company may repurchase up to 10 million shares of its common stock during the two year period ending January 31, 2015 (the “2013 Stock Repurchase Program”). The price and timing of any such purchases under the 2013 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, economic and market conditions and stock price.  During the nine months ended September 30, 2013, the Company repurchased approximately 4.0 million shares of its common stock for approximately $297.0 million.  These treasury shares have been or will be retired by the Company and common stock and accumulated earnings were reduced accordingly.

 

Period

 

Total
Number of
Shares
Purchased

 

Average Price Paid
per Share

 

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

 

Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs

 

January 1 to January 31, 2013

 

393,131

 

$

67.60

 

393,131

 

9,606,869

 

February 1 to February 29, 2013

 

769,423

 

68.99

 

769,423

 

8,837,446

 

March 1 to March 31, 2013

 

81,007

 

69.67

 

81,007

 

8,756,439

 

April 1 to April 30, 2013

 

 

 

 

8,756,439

 

May 1 to May 31, 2013

 

395,197

 

79.43

 

395,197

 

8,361,242

 

June 1 to June 30, 2013

 

827,900

 

77.81

 

827,900

 

7,533,342

 

July 1 to July 31, 2013

 

669,054

 

77.58

 

669,054

 

6,864,288

 

August 1 to August 31, 2013

 

820,903

 

77.92

 

820,903

 

6,043,385

 

September 1 to September 30, 2013

 

 

 

 

 

Total

 

3,956,615

 

$

75.06

 

3,956,615

 

6,043,385

 

 

Item 3.         Defaults Upon Senior Securities

 

None.

 

Item 4.         Mine Safety Disclosures

 

Not Applicable.

 

Item 5.         Other Information

 

None.

 

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Table of Contents

 

Item 6.         Exhibits

 

3.1

 

Amphenol Corporation, Amended and Restated By-Laws, dated May 24, 2012 (filed as Exhibit 3.1 to the June 30, 2012 10-Q).*

3.2

 

Amended and Restated Certificate of Incorporation of Amphenol Corporation, dated April 24, 2000 (filed as Exhibit 3.1 to the Form 8-K filed on April 28, 2000).*

3.3

 

Second Certificate of Amendment of Amended and Restated Certificate of Incorporation of Amphenol Corporation, dated May 23, 2007 (filed as Exhibit 3.4 to the December 31, 2007 10-K).*

3.4

 

Third Certificate of Amendment of Amended and Restated Certificate of Incorporation of Amphenol Corporation, dated May 24, 2012 (filed as Exhibit 3.2 to the June 30, 2012 10-Q).*

4.1

 

Indenture, dated as of November 5, 2009, between Amphenol Corporation and the Bank of New York Mellon, as trustee (filed as Exhibit 4.1 to the Form 8-K filed on November 5, 2009).*

4.2

 

Officers’ Certificate, dated November 5, 2009, establishing the 4.75% Senior Notes due 2014 pursuant to the Indenture (filed as Exhibit 4.2 to the Form 8-K filed on November 5, 2009).*

4.3

 

Officers’ Certificate, dated January 26, 2012, establishing the 4.00% Senior Notes due 2022 pursuant to the Indenture (filed as Exhibit 4.2 to the Form 8-K filed on January 26, 2012).*

10.1

 

Receivables Purchase Agreement dated as of July 31, 2006 among Amphenol Funding Corp., the Company, Atlantic Asset Securitization LLC and Calyon New York Branch, as Agent (filed as Exhibit 10.10 to the June 30, 2006 10-Q).*

10.2

 

Amendment to Receivables Purchase Agreement dated as of May 26, 2009 among Amphenol Funding Corp., the Company, Atlantic Asset Securitization LLC and Calyon New York Branch, as Agent (filed as Exhibit 10.2 to the June 30, 2009 10-Q).*

10.3

 

Amendment to Receivables Purchase Agreement dated February 1, 2011 among Amphenol Funding Corp., the Company, Atlantic Asset Securitization LLC and Calyon New York Branch, as Agent (filed as Exhibit 10.4 to the December 31, 2010 10-K).*

10.4

 

Amendment to Receivables Purchase Agreement dated September 9, 2011 among Amphenol Funding Corp., the Company, Atlantic Asset Securitization LLC and Calyon New York Branch, as Agent (filed as Exhibit 10.5 to the September 30, 2011 10-Q).*

10.5

 

Amendment to Receivables Purchase Agreement dated January 17, 2013 among Amphenol Funding Corp., the Company, Atlantic Asset Securitization LLC and Calyon New York Branch, as Agent (filed as Exhibit 10.5 to the December 31, 2012 10-K). *

10.6

 

Purchase and Sales Agreement dated as of July 31, 2006 among the Originators named therein, Amphenol Funding Corp. and the Company (filed as Exhibit 10.13 to the June 30, 2006 10-Q).*

10.7

 

Fourth Amended 2000 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (filed as Exhibit 10.20 to the June 30, 2007 10-Q).*

10.8

 

Form of 2000 Management Stockholders’ Agreement as of May 24, 2007 (filed as Exhibit 10.25 to the June 30, 2007 10-Q).*

10.9

 

Form of 2000 Non-Qualified Stock Option Grant Agreement Amended as of May 24, 2007 (filed as Exhibit 10.28 to the June 30, 2007 10-Q).*

10.10

 

2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (field as Exhibit 10.7 to the June 30, 2009 10-Q).*

10.11

 

Form of 2009 Non-Qualified Stock Option Grant Agreement dated as of May 20, 2009 (filed as Exhibit 10.8 to the June 30, 2009 10-Q).*

10.12

 

Form of 2009 Management Stockholders’ Agreement dated as of May 20, 2009 (filed as Exhibit 10.9 to the June 30, 2009 10-Q).*

10.13

 

The 2012 Restricted Stock Plan for Directors of Amphenol Corporation dated May 24, 2012 (filed as Exhibit 10.15 to the June 30, 2012 10-Q).*

10.14

 

2012 Restricted Stock Plan for Directors of Amphenol Corporation Restricted Share Award Agreement dated May 24, 2012 (filed as Exhibit 10.16 to the June 30, 2012 10-Q).*

10.15

 

Pension Plan for Employees of Amphenol Corporation as amended and restated effective January 1, 2011 (filed as Exhibit 10.25 to the December 31, 2010 10-K).*

10.16

 

First Amendment to Pension Plan for Employees of Amphenol Corporation as amended and restated effective January 1, 2011, dated May 23, 2012 (filed as Exhibit 10.18 to the June 30, 2012 10-Q).*

10.17

 

Second Amendment to Pension Plan for Employees of Amphenol Corporation as amended and restated effective January 1, 2011, dated August 14, 2012 (filed as Exhibit 10.19 to the September 30, 2012 10-Q).*

10.18

 

Third Amendment to Pension Plan for Employees of Amphenol Corporation as amended and restated effective January 1, 2011, dated December 19, 2012 (filed as Exhibit 10.18 to the December 31, 2012 10-K). *

10.19

 

Fourth Amendment to Pension Plan for Employees of Amphenol Corporation as amended and restated

 

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effective January 1, 2011, dated April 24, 2013. (filed as an Exhibit 10.19 to the March 31, 2013 10-Q)*

10.20

 

Amended and Restated Amphenol Corporation Supplemental Employee Retirement Plan (filed as Exhibit 10.24 to the December 31, 2008 10-K).*

10.21

 

Amphenol Corporation Directors’ Deferred Compensation Plan (filed as Exhibit 10.11 to the December 31, 1997 10-K).*

10.22

 

The 2004 Stock Option Plan for Directors of Amphenol Corporation (filed as Exhibit 10.44 to the June 30, 2004 10-Q).*

10.23

 

The Amended 2004 Stock Option Plan for Directors of Amphenol Corporation (filed as Exhibit 10.29 to the June 30, 2008 10-Q).*

10.24

 

2011 Amphenol Corporation Management Incentive Plan (filed as Exhibit 10.37 to the December 31, 2010 10-K).*

10.25

 

2012 Amphenol Corporation Management Incentive Plan (filed as Exhibit 10.22 to the December 31, 2011 10-K).*

10.26

 

2013 Amphenol Corporation Management Incentive Plan (filed as Exhibit 10.25 to the December 31, 2012 10-K).*

10.27

 

2009 Amphenol Corporation Executive Incentive Plan (filed as Exhibit 10.32 to the March 31, 2009 10-Q).*

10.28

 

Credit Agreement, dated as of August 13, 2010, among the Company, certain subsidiaries of the Company, a syndicate of financial institutions and Bank of America, N.A. acting as the administrative agent (filed as Exhibit 10.1 to the Form 8-K filed on August 18, 2010).*

10.29

 

First Amendment to Credit Agreement, dated as of June 30, 2011, among the Company, certain subsidiaries of the Company, a syndicate of financial institutions and Bank of America, N.A. acting as the administrative agent (filed as Exhibit 10.38 to the June 30, 2011 10-Q).*

10.30

 

Continuing Agreement for Standby Letters of Credit between the Company and Deutsche Bank dated March 4, 2009 (filed as Exhibit 10.36 to the March 31, 2009 10-Q).*

10.31

 

Agreement and Plan of Merger among Amphenol Acquisition Corporation, Allied Corporation and the Company, dated April 1, 1987, and the Amendment thereto dated as of May 15, 1987 (filed as Exhibit 2 to the 1987 Registration Statement).*

10.32

 

Settlement Agreement among Allied Signal Inc., the Company and LPL Investment Group, Inc. dated November 28, 1988 (filed as Exhibit 10.20 to the 1991 Registration Statement).*

10.33

 

The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective March 1, 2010 (filed as Exhibit 10.50 to the March 31, 2010 10-Q).*

10.34

 

The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective July 1, 2011 (filed as Exhibit 10.51 to the June 30, 2011 10-Q).*

10.35

 

The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective August 16, 2011 (filed as Exhibit 10.29 to the September 30, 2011 10-Q).*

10.36

 

The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective December 14, 2011 (filed as Exhibit 10.32 to the December 31, 2011 10-K).*

10.37

 

First Amendment to The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective December 14, 2011, dated March 30, 2012 (filed as Exhibit 10.36 to the June 30, 2012 10-Q).*

10.38

 

Second Amendment to The Amphenol Corporation Employee Savings/401(k) Plan Adoption Agreement as amended and restated effective December 14, 2011, dated April 10, 2012 (filed as Exhibit 10.37 to the June 30, 2012 10-Q).*

10.39

 

Restated Amphenol Corporation Supplemental Defined Contribution Plan (filed as Exhibit 10.30 to the September 30, 2011 10-Q).*

10.40

 

Amphenol Corporation Supplemental Defined Contribution Plan as amended and restated effective January 1, 2012 (filed as Exhibit 10.34 to the December 31, 2011 10-K).*

10.41

 

Second Amendment to Credit Agreement, dated as of July 1, 2013, among the Company, certain subsidiaries of the Company, a syndicate of financial institutions and JPMorgan Chase, N.A. acting as the administrative agent (filed as Exhibit 10.1 to the Form 8-K filed on July 8, 2013).*

10.42

 

Credit Agreement, dated October 7, 2013, among the Company, certain subsidiaries of the Company and Sovereign Bank, N.A. with an effective date of October 18, 2013 (filed as Exhibit 10.1 to the Form 8-K filed on October 21, 2013).*

31.1

 

Certification pursuant to Exchange Act Rules 13a-14 and 15d-14; as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **

31.2

 

Certification pursuant to Exchange Act Rules 13a-14 and 15d-14; as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **

32.1

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

 

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32.2

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101.INS

 

XBRL Instance Document.**

101.SCH

 

XBRL Taxonomy Extension Schema Document.**

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document.**

101.DEF

 

XBRL Taxonomy Extension Definition Document.**

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document.**

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document.**

 


*                           Incorporated herein by reference as stated.

**                    Filed herewith.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

AMPHENOL CORPORATION

 

 

 

 

 

By:

/s/ Diana G. Reardon

 

 

Diana G. Reardon

 

 

Authorized Signatory

 

 

and Principal Financial Officer

 

 

Date: November 1, 2013

 

 

26