Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 24, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | AMPHENOL CORP /DE/ | |
Entity Central Index Key | 820,313 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 301,327,138 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 998.3 | $ 1,719.1 |
Short-term investments | 21.5 | 34.6 |
Total cash, cash equivalents and short-term investments | 1,019.8 | 1,753.7 |
Accounts receivable, less allowance for doubtful accounts of $27.5 and $23.0, respectively | 1,737.6 | 1,598.6 |
Inventories | 1,245.5 | 1,106.9 |
Other current assets | 278.6 | 196.8 |
Total current assets | 4,281.5 | 4,656 |
Property, plant and equipment, less accumulated depreciation of $1,285.6 and $1,200.1, respectively | 886.4 | 816.8 |
Goodwill | 4,113.7 | 4,042.6 |
Intangibles, net and other long-term assets | 461 | 488.5 |
Total assets | 9,742.6 | 10,003.9 |
Current Liabilities: | ||
Accounts payable | 1,014 | 875.6 |
Accrued salaries, wages and employee benefits | 161.1 | 151.6 |
Accrued income taxes | 184.8 | 154.2 |
Accrued dividends | 69.3 | 58.1 |
Other accrued expenses | 323.8 | 338.8 |
Current portion of long-term debt | 790.2 | 1.1 |
Total current liabilities | 2,543.2 | 1,579.4 |
Total long-term debt | 2,468.3 | 3,541.5 |
Accrued pension and postretirement benefit obligations | 171 | 272 |
Deferred income taxes | 203.1 | 241.2 |
Other long-term liabilities | 303.7 | 326.4 |
Equity: | ||
Common stock | 0.3 | 0.3 |
Additional paid-in capital | 1,410.1 | 1,249 |
Retained earnings | 2,935.8 | 2,941.5 |
Accumulated other comprehensive loss | (337.3) | (201) |
Total shareholders' equity attributable to Amphenol Corporation | 4,008.9 | 3,989.8 |
Noncontrolling interests | 44.4 | 53.6 |
Total equity | 4,053.3 | 4,043.4 |
Total liabilities and equity | $ 9,742.6 | $ 10,003.9 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts | $ 27.5 | $ 23 |
Accumulated depreciation | $ 1,285.6 | $ 1,200.1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Net sales | $ 2,129 | $ 1,840.8 | $ 5,977.3 | $ 5,067.4 |
Cost of sales | 1,440.8 | 1,234.7 | 4,037.4 | 3,392.8 |
Gross profit | 688.2 | 606.1 | 1,939.9 | 1,674.6 |
Acquisition-related expenses | 4 | |||
Selling, general and administrative expenses | 244 | 228.2 | 710.6 | 642.4 |
Operating income | 444.2 | 377.9 | 1,229.3 | 1,028.2 |
Interest expense | (24.8) | (24.6) | (75.3) | (67.3) |
Other income, net | 0.2 | 5.1 | 2.5 | 12.9 |
Income before income taxes | 419.6 | 358.4 | 1,156.5 | 973.8 |
Provision for income taxes | (100) | (78.1) | (280.8) | (212.7) |
Net income | 319.6 | 280.3 | 875.7 | 761.1 |
Less: Net income attributable to noncontrolling interests | (3) | (2.8) | (8.8) | (7.2) |
Net income attributable to Amphenol Corporation | $ 316.6 | $ 277.5 | $ 866.9 | $ 753.9 |
Net income per common share — Basic (in dollars per share) | $ 1.05 | $ 0.91 | $ 2.87 | $ 2.47 |
Weighted average common shares outstanding — Basic (in shares) | 300.5 | 305 | 301.7 | 305.8 |
Net income per common share — Diluted (in dollars per share) | $ 1.01 | $ 0.88 | $ 2.76 | $ 2.39 |
Weighted average common shares outstanding — Diluted (in shares) | 312.4 | 315.7 | 313.6 | 316.1 |
Dividends declared per share (in dollars per share) | $ 0.23 | $ 0.19 | $ 0.65 | $ 0.51 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 319.6 | $ 280.3 | $ 875.7 | $ 761.1 |
Total other comprehensive (loss) income, net of tax | ||||
Foreign currency translation adjustments | (54.6) | 52.1 | (154.2) | 172.4 |
Unrealized (loss) gain on cash flow hedges | (0.7) | (0.6) | 0.3 | |
Defined benefit plan adjustment, net of tax of ($1.6) and ($4.7) for 2018 and ($2.2) and ($6.7) for 2017, respectively | 5 | 4.2 | 14.9 | 12.5 |
Total other comprehensive (loss) income, net of tax | (50.3) | 55.7 | (139) | 184.9 |
Total comprehensive income | 269.3 | 336 | 736.7 | 946 |
Less: Comprehensive income attributable to noncontrolling interests | (1.4) | (3.6) | (6.1) | (9.3) |
Comprehensive income attributable to Amphenol Corporation | $ 267.9 | $ 332.4 | $ 730.6 | $ 936.7 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Defined benefit plan adjustment, tax | $ (1.6) | $ (2.2) | $ (4.7) | $ (6.7) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash from operating activities: | ||
Net income | $ 875.7 | $ 761.1 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 194.5 | 168.5 |
Stock-based compensation expense | 40.4 | 37.1 |
Deferred income tax benefit | (41.5) | (0.6) |
Net change in components of working capital | (246.4) | (252.8) |
Net change in accrued pension and postretirement benefits | (77) | (0.7) |
Net change in other long-term assets and liabilities | (11.2) | 3.8 |
Net cash provided by operating activities | 734.5 | 716.4 |
Cash from investing activities: | ||
Capital expenditures | (208.2) | (155.8) |
Proceeds from disposals of property, plant and equipment | 3.8 | 2 |
Purchases of short-term investments | (35.3) | (36.1) |
Sales and maturities of short-term investments | 48.3 | 140.4 |
Acquisitions, net of cash acquired | (158.9) | (243.5) |
Net cash used in investing activities | (350.3) | (293) |
Cash from financing activities: | ||
Proceeds from issuance of senior notes, net | 749.3 | |
Repayments of long-term debt | (8.7) | (375) |
(Repayments) borrowings under commercial paper programs, net | (300.1) | 173.6 |
Payment of costs related to debt financing | (0.3) | (5.2) |
Proceeds from exercise of stock options | 123 | 134.4 |
Distributions to and purchases of noncontrolling interests | (17.9) | (22.1) |
Purchase and retirement of treasury stock | (680.2) | (555.6) |
Dividend payments | (184.4) | (147.1) |
Net cash used in financing activities | (1,068.6) | (47.7) |
Effect of exchange rate changes on cash and cash equivalents | (36.4) | 41.9 |
Net change in cash and cash equivalents | (720.8) | 417.6 |
Cash and cash equivalents balance, beginning of period | 1,719.1 | 1,034.6 |
Cash and cash equivalents balance, end of period | 998.3 | 1,452.2 |
Cash paid for: | ||
Interest | 79.5 | 78 |
Income taxes | $ 307.7 | $ 244.1 |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 9 Months Ended |
Sep. 30, 2018 | |
Basis of Presentation and Principles of Consolidation | |
Basis of Presentation and Principles of Consolidation | AMPHENOL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (amounts in millions, except share and per share data) Note 1—Basis of Presentation and Principles of Consolidation The condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017, the related condensed consolidated statements of income and condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2018 and 2017, and the related condensed consolidated statements of cash flow for the nine months ended September 30, 2018 and 2017 include the accounts of Amphenol Corporation and its subsidiaries ( “Amphenol”, the “Company”, “we”, “our”, or “us” ). All material intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements included herein are unaudited. In the opinion of management, 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, 2018 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, 2017 (the “2017 Annual Report”). Deferred income tax benefit and Net change in accrued pension and postretirement benefits have been presented as separate line items within cash from operating activities for the prior period in the Company’s Condensed Consolidated Statements of Cash Flow, in order to conform to the current period presentation, which had no impact on our consolidated results of operations, financial position or cash flows. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | Note 2—New Accounting Pronouncements Recently Adopted Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”, and collectively with its related subsequent amendments, “Topic 606”). Topic 606 supersedes previous revenue recognition guidance and requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. The Company adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Under this transition method, the Company’s results in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018 are presented under Topic 606, while the comparative results for the three and nine months ended September 30, 2017 were not retrospectively adjusted, as such results were recognized in accordance with the revenue recognition policy discussed under Summary of Significant Accounting Policies in Note 1 of the Company’s 2017 Annual Report. The vast majority of our sales continue to be recognized when products are shipped from our facilities or delivered to our customers, depending on the respective contractual terms. For a nominal portion of our contracts where the accounting did change, the adoption of Topic 606 resulted in an increase to the opening balance of retained earnings of approximately $3.2 as of January 1, 2018. This impact was primarily due to the acceleration of net sales and associated net income related to certain uncompleted contracts for the manufacture of goods with no alternative use and for which we have an enforceable right to payment, including a reasonable profit margin, from the customer for performance completed to date. For these contracts, we now recognize revenue over time as control of the goods transfers, rather than when the goods are delivered, and title, risk and reward of ownership are passed to the customer, as under previous guidance. The adoption of Topic 606 did not have a material impact on our condensed consolidated financial statements as of the adoption date and as of and for the three and nine months ended September 30, 2018. Refer to Note 3 herein for further discussion regarding revenue recognition and related policies. Other Recently Adopted Accounting Standards In March 2017, the FASB issued ASU 2017‑07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017‑07”), requiring employers to provide more details about the components of costs related to retirement benefits. Specifically, ASU 2017‑07 requires employers to report the service costs for providing pensions to employees in the same line item as other employee compensation costs, while requiring other pension-related costs, such as interest costs, amortization of pension-related costs from prior periods, and the gains or losses on plan assets, to be reported separately and outside of the subtotal of operating income. ASU 2017‑07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company adopted ASU 2017‑07 in the first quarter of 2018, which did not have a material impact on our consolidated financial statements. In May 2017, the FASB issued ASU 2017‑09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017‑09”), which provides guidance to determine which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting in Topic 718. ASU 2017‑09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and requires prospective application to changes in terms or conditions of awards occurring on or after the adoption date. The Company adopted ASU 2017‑09 in the first quarter of 2018, which did not have any impact on our consolidated financial statements. In March 2018, the FASB issued ASU 2018‑05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”) , which addresses the application of U.S. GAAP when preparing the initial accounting for the income tax effects of a change in tax laws or rates. SEC Staff Accounting Bulletin No. 118 (“SAB 118”) was issued in December 2017 to provide immediate accounting guidance resulting from the enactment of the Tax Cuts and Jobs Act (“Tax Act”) on December 22, 2017. ASU 2018-05 codifies the guidance of SAB 118 within FASB ASC Topic 740, Income Taxes (“ASC 740”), including guidance allowing for the recognition of provisional amounts in situations where the related accounting is not complete and reasonable estimates can be made at the time that financial statements are issued covering the reporting period that includes the enactment date of the Tax Act, as well as allowing for a measurement period of up to one year from the enactment date to finalize the accounting related to the Tax Act. Previously, ASC 740 did not directly address incomplete accounting for the effects of a change in tax laws or rates. The Company followed the guidance under SAB 118 in the fourth quarter of 2017 when the provisional income tax charge (“Tax Act Charge”) associated with the Tax Act was estimated and recorded. Refer to Note 14 herein for further details regarding the Tax Act. Accounting Standards Issued But Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016‑02”), which amends, among other things, the existing guidance by requiring lessees to recognize lease assets (right-of-use) and liabilities (for reasonably certain lease payments) arising from operating leases on the balance sheet. For leases with a term of twelve months or less, ASU 2016‑02 permits an entity to make an accounting policy election to not recognize a right-of-use asset nor lease liability, but rather to recognize such leases as lease expense, generally on a straight-line basis over the lease term. Codification Improvements to Topic 842, Leases , which clarified various aspects of the guidance under ASU 2016-02. ASU 2016‑02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective approach, which required prior periods to be presented under this new standard. However, in July 2018, the FASB issued ASU 2018-11 Leases (Topic 842): Targeted Improvements , which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. The Company has implemented a new lease management system that will facilitate the adoption of this new standard and ensure all requirements are met for both reporting and disclosure purposes, while we continue to review and implement the necessary changes to our existing policies, processes and controls to ensure compliance. While the Company continues to evaluate the impact that ASU 2016-02 will have on our consolidated financial statements and related disclosures, the actual impact of the standard will be dependent upon the Company’s lease portfolio at adoption. ASU 2016-02 also provides various optional practical expedients in transition, which we continue to evaluate. The Company will adopt ASU 2016-02 in the first quarter of 2019 using the modified retrospective transition approach allowed under ASU 2018-11, and will recognize the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings as of January 1, 2019. Upon adoption, we will recognize a right-of-use asset and a corresponding lease liability for our operating lease commitments on our balance sheet, and will also provide new disclosures about our leasing activities. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which amends the standard on comprehensive income by providing an option for an entity to reclassify stranded tax effects of the Tax Act from accumulated other comprehensive income directly to retained earnings. The stranded tax effects result from the remeasurement of net deferred tax positions that were originally recorded in comprehensive income but whose remeasurement was reflected in the income statement in 2017. ASU 2018-02 only applies to the effects of the Tax Act and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. ASU 2018-02 may be applied either at the beginning of the period of adoption or on a retrospective basis to any period in which the impacts of the Tax Act are recognized. The comparative prior periods will not be restated and will continue to be reported under the accounting standards in effect for those periods. The adoption of ASU 2018-02 will result in the reclassification of the stranded tax effects of the Tax Act from Accumulated other comprehensive loss to Retained earnings on the consolidated balance sheet. The Company plans to early adopt ASU 2018-02 in the fourth quarter of 2018, as of October 1, 2018, which will not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which adds, amends and removes certain disclosure requirements related to fair value measurements. Among other changes, this standard requires certain additional disclosure surrounding Level 3 assets, including changes in unrealized gains or losses in other comprehensive income and certain inputs in those measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain amended or eliminated disclosures in this standard may be adopted early, while certain additional disclosure requirements in this standard can be adopted on its effective date. In addition, certain changes in the standard require retrospective adoption, while other changes must be adopted prospectively. The Company is currently evaluating ASU 2018-13 and its impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), which amends the current annual disclosure requirements related to defined benefit pension and other postretirement plans by adding new requirements, removing certain requirements and providing clarification on existing requirements. ASU 2018-14 does not amend the interim disclosure requirements of existing guidance and is effective for fiscal years ending after December 31, 2020, with early adoption permitted and must be applied on a retrospective basis. The Company is currently evaluating ASU 2018-14 and its impact on our consolidated financial statements. The Securities and Exchange Commission has also recently issued several final rules, including but not limited to SEC Final Rule Release No. 33-10532 Disclosure Update and Simplification (“Final Rule”), which amends certain redundant, duplicative, outdated, superseded or overlapping disclosure requirements. This Final Rule is intended to facilitate disclosure information provided to investors and simplify compliance without significantly impacting the mix of information provided to investors. The amendments also expand the disclosure requirements regarding the analysis of stockholders' equity for interim financial statements, in which entities will be required to present a reconciliation for each period for which a statement of comprehensive income is required to be filed. While we have not yet adopted the Final Rule which is effective on November 5, 2018, we do not anticipate any material impact to our consolidated financial statements and related disclosures upon adoption. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition | |
Revenue Recognition | Note 3—Revenue Recognition Prior to the adoption of Topic 606, the Company’s revenue recognition policy was in accordance with ASC Topic 605, Revenue Recognition . Effective January 1, 2018, the Company adopted Topic 606 using the modified retrospective transition method, resulting in accounting policy changes surrounding revenue recognition which replaced certain related policies discussed under Critical Accounting Policies and Estimates (in Item 7) and Summary of Significant Accounting Policies (in Note 1) of the Company’s 2017 Annual Report. The adoption of Topic 606 did not have a material impact on the Company’s condensed consolidated financial statements. The following is a summary of the Company’s revenue recognition and related accounting policies and disclosures resulting from the adoption of Topic 606. Revenues consist of product sales to either end customers and their appointed contract manufacturers (including original equipment manufacturers) or to distributors, and the vast majority of our sales are recognized at a point-in-time under the core principle of recognizing revenue when control transfers to the customer. Revenues are derived from contracts with customers, which in most cases are customer purchase orders that may be governed by master sales agreements. For each contract, the promise to transfer the control of the products, each of which is individually distinct, is considered to be the identified performance obligation. As part of the consideration promised in each contract, the Company evaluates the customer’s credit risk. Our contracts do not have any significant financing components, as payment terms are generally due net 30 to 120 days after delivery. Although products are almost always sold at fixed prices, in determining the transaction price, we evaluate whether the price is subject to refund (due to returns) or adjustment (due to volume discounts, rebates, or price concessions) to determine the net consideration we expect to be entitled to. We allocate the transaction price to each distinct product based on its relative standalone selling price. With limited exceptions, the Company recognizes revenue at the point in time when we ship or deliver the product from our manufacturing facility to our customer, when our customer accepts and has legal title of the goods, and the Company has a present right to payment for such goods. Based on the respective contract terms, most of our contracts’ revenues are recognized either (i) upon shipment based on free on board (“FOB”) shipping point, (ii) when the product arrives at its destination or (iii) when the product is pulled from consignment inventory. Less than 5% of our net sales are recognized over time, as the associated contracts relate to the sale of goods with no alternative use as they are only sold to a single customer and whose underlying contract terms provide the Company with an enforceable right to payment, including a reasonable profit margin, for performance completed to date, in the event of customer termination. For the contracts recognized over time, we typically record revenue using the input method, based on the materials and labor costs incurred to date relative to the contract’s total estimated costs. This method reasonably depicts when and as control of the goods transfers to the customer, since it measures our progress in producing the goods, which is generally commensurate with this transfer of control. Since we typically invoice our customers at the same time that we satisfy our performance obligations, we do not have significant contract assets or contract liabilities related to our contracts with customers recorded in the Condensed Consolidated Balance Sheets. The Company receives customer orders negotiated with multiple delivery dates that may extend across more than one reporting period until the contract is fulfilled, the end of the order period is reached, or a pre-determined maximum order value has been reached. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions, and it is generally expected that a substantial portion of our remaining performance obligations will be fulfilled within three months. Nearly all of our performance obligations are fulfilled within one year. Since our performance obligations are part of contracts that generally have original durations of one year or less, we have elected not to disclose the aggregate amount of transaction prices associated with unsatisfied or partially unsatisfied performance obligations as of September 30, 2018. Sales to Distributors and Resellers Sales to certain distributors and resellers are made under terms allowing certain price adjustments and limited rights of return of the Company’s products held in their inventory or upon sale to their end customers. The Company maintains a reserve for unprocessed and estimated future price adjustment claims and returns as a refund liability. The reserve is recorded as a reduction to revenue in the same period that the related revenue is recorded and is calculated based on an analysis of historical claims and returns over a period of time to appropriately account for current pricing and business trends. Similarly, sales returns and allowances are recorded based on historical return rates, as a reduction to revenue with a corresponding reduction to cost of sales for the estimated cost of inventory that is expected to be returned. These reserves were not significant upon the adoption of Topic 606 nor were they significant in the Condensed Consolidated Balance Sheet as of September 30, 2018. Warranty Standard product warranty coverage which provides assurance that our products will conform to the contractually agreed-upon specifications for a limited period from the date of shipment is typically offered, while extended or separately-priced warranty coverage is typically not offered. The warranty claim is generally limited to a credit equal to the purchase price or a promise to repair or replace the product for a specified period of time at no additional charge. We estimate our warranty liability based on historical experience, product history, and current trends, and record warranty expense in cost of sales in the Condensed Consolidated Statements of Income. Warranty liabilities and related warranty expense have not been and were not significant in the accompanying Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2018. Shipping and Handling Costs The Company accounts for shipping and handling activities related to contracts with customers as a cost to fulfill our promise to transfer control of the related product, including any such costs incurred after the customer has obtained control of the goods. Shipping and handling costs are generally charged to and paid by the majority of our customers as part of the contract. For a nominal portion of our customer contracts, primarily for certain customers in the broadband communications market (a market primarily in the Cable Products and Solutions segment), such costs are not separately charged to the customers. Shipping and handling costs are included in Cost of sales in the accompanying Condensed Consolidated Statements of Income. Contract Assets and Contract Liabilities The Company records contract assets or contract liabilities depending on the timing of revenue recognition, billings and cash collections on a contract-by-contract basis. Contract assets represent unbilled receivables, which generally arise when revenue recognized over time exceed amounts billed to customers. Contract liabilities represent billings or advanced consideration received from customers in excess of revenue recognized to date. As the Company’s performance obligations are typically less than one year, these amounts are generally recorded as current in the accompanying Condensed Consolidated Balance Sheets within Other current assets or Other accrued expenses as of September 30, 2018. Contract assets and contract liabilities recorded in the Company’s Condensed Consolidated Balance Sheets were not significant both at the date of adoption and as of September 30, 2018. Contract Costs The Company’s policy is to capitalize any incremental costs incurred to obtain a customer contract, only to the extent that such costs are explicitly chargeable to the customer and the benefit associated with the costs is expected to be longer than one year. Otherwise, such costs are expensed as incurred and recorded within Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income. Incremental costs to fulfill customer orders, which are mostly comprised of pre-production and set-up costs, are generally capitalized to the extent such costs are contractually guaranteed to be reimbursed by the customer. Otherwise, such costs are expensed as incurred. Capitalized contract costs to obtain a contract or to fulfill a contract that are not accounted for under other existing accounting standards are recorded as either other current or long-term assets on the accompanying Condensed Consolidated Balance Sheets, depending on the timing of when the Company expects to recognize the expense, and are generally amortized consistent with the timing of when transfer of control of the related goods occurs. Such capitalized contract costs were not significant both at the date of adoption and as of September 30, 2018, and the related amortization expense was not significant for the three and nine months ended September 30, 2018. Disaggregation of Net Sales The following tables show our net sales disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors for the three and nine months ended September 30, 2018: Three months ended September 30, 2018 Interconnect Cable Products and Products and Total Reportable Assemblies Solutions Business Segments Net sales by: Sales channel: End customers and contract manufacturers $ 1,725.9 $ 89.0 $ 1,814.9 Distributors and resellers 293.4 20.7 314.1 $ 2,019.3 $ 109.7 $ 2,129.0 Geography: United States $ 517.9 $ 54.1 $ 572.0 China 696.9 1.4 698.3 Other foreign locations 804.5 54.2 858.7 $ 2,019.3 $ 109.7 $ 2,129.0 Nine months ended September 30, 2018 Interconnect Cable Products and Products and Total Reportable Assemblies Solutions Business Segments Net sales by: Sales channel: End customers and contract manufacturers $ 4,828.9 $ 242.8 $ 5,071.7 Distributors and resellers 830.6 75.0 905.6 $ 5,659.5 $ 317.8 $ 5,977.3 Geography: United States $ 1,519.5 $ 155.8 $ 1,675.3 China 1,760.0 3.3 1,763.3 Other foreign locations 2,380.0 158.7 2,538.7 $ 5,659.5 $ 317.8 $ 5,977.3 Net sales by geographic area are based on the customer location to which the product is shipped. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Inventories | Note 4—Inventories Inventories consist of: September 30, December 31, 2018 2017 Raw materials and supplies $ 437.2 $ 386.2 Work in process 377.7 358.0 Finished goods 430.6 362.7 $ 1,245.5 $ 1,106.9 |
Reportable Business Segments
Reportable Business Segments | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Business Segments | |
Reportable Business Segments | Note 5—Reportable Business Segments The Company has two reportable business segments: (i) Interconnect Products and Assemblies and (ii) Cable Products and Solutions. The Company organizes its reportable business segments based upon similar economic characteristics and business groupings of products, services and customers. These reportable business segments are determined based upon how the Company reviews its businesses, assesses operating performance and makes investing and resource allocation decisions. The Interconnect Product and Assemblies segment primarily designs, manufactures and markets a broad range of connector and connector systems, value-add products and other products, including antennas and sensors, used in a broad range of applications in a diverse set of end markets. The Cable Products and Solutions segment primarily designs, manufactures and markets cable, value-add products and components for use primarily in the broadband communications and information technology markets as well as certain applications in other markets. The accounting policies of the segments are the same as those for the Company as a whole and are described herein and in Note 1 of the notes to the consolidated financial statements in the Company’s 2017 Annual Report. The Company evaluates the performance of business units on, among other things, profit or loss from operations before interest, 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 and nine months ended September 30, 2018 and 2017 are as follows: Interconnect Products Cable Products Total Reportable and Assemblies and Solutions Business Segments Three Months Ended September 30: 2018 2017 2018 2017 2018 2017 Net sales: External $ 2,019.3 $ 1,731.5 $ 109.7 $ 109.3 $ 2,129.0 $ 1,840.8 Intersegment 3.8 2.7 8.1 10.9 11.9 13.6 Segment operating income 458.1 388.3 14.4 14.3 472.5 402.6 Nine Months Ended September 30: Net sales: External $ 5,659.5 $ 4,754.3 $ 317.8 $ 313.1 $ 5,977.3 $ 5,067.4 Intersegment 9.6 6.9 25.1 31.5 34.7 38.4 Segment operating income 1,268.9 1,060.8 40.4 44.0 1,309.3 1,104.8 A reconciliation of segment operating income to consolidated income before income taxes for the three and nine months ended September 30, 2018 and 2017 is summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Segment operating income $ 472.5 $ 402.6 $ 1,309.3 $ 1,104.8 Interest expense (24.8) (24.6) (75.3) (67.3) Other income, net 0.2 5.1 2.5 12.9 Stock-based compensation expense (14.4) (12.6) (40.4) (37.1) Acquisition-related expenses — — — (4.0) Other operating expenses (13.9) (12.1) (39.6) (35.5) Income before income taxes $ 419.6 $ 358.4 $ 1,156.5 $ 973.8 |
Shareholders' Equity and Noncon
Shareholders' Equity and Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' Equity and Noncontrolling Interests | |
Shareholders' Equity and Noncontrolling Interests | Note 6—Shareholders’ Equity and Noncontrolling Interests Net income attributable to noncontrolling interests is classified below net income. Earnings per share is determined after the impact of the noncontrolling interests’ share in net income of the Company. In addition, the equity attributable to noncontrolling interests is presented as a separate caption within equity. A rollforward of consolidated changes in equity for the nine months ended September 30, 2018 is as follows: Amphenol Corporation Shareholders Accumulated Common Stock Other Shares Additional Retained Comprehensive Treasury Noncontrolling Total (in millions) Amount Paid-In Capital Earnings Loss Stock Interests Equity Balance as of December 31, 2017 305.7 $ 0.3 $ 1,249.0 $ 2,941.5 $ (201.0) $ — $ 53.6 $ 4,043.4 Cumulative effect of adoption of revenue recognition standard (Note 2) 3.2 3.2 Net income 866.9 8.8 875.7 Other comprehensive loss (136.3) (2.7) (139.0) Acquisitions resulting in noncontrolling interest 0.3 0.3 Purchase of noncontrolling interest (2.3) (5.4) (7.7) Distributions to shareholders of noncontrolling interests (10.2) (10.2) Purchase of treasury stock (680.2) (680.2) Retirement of treasury stock (7.7) (680.2) 680.2 — Stock options exercised 3.3 123.0 123.0 Dividends declared (195.6) (195.6) Stock-based compensation expense 40.4 40.4 Balance as of September 30, 2018 301.3 $ 0.3 $ 1,410.1 $ 2,935.8 $ (337.3) $ — $ 44.4 $ 4,053.3 A rollforward of consolidated changes in equity for the nine months ended September 30, 2017 is as follows: Amphenol Corporation Shareholders Accumulated Common Stock Other Shares Additional Retained Comprehensive Treasury Noncontrolling Total (in millions) Amount Paid-In Capital Earnings Loss Stock Interests Equity Balance as of December 31, 2016 308.3 $ 0.3 $ 1,020.9 $ 3,122.7 $ (469.0) $ — $ 48.2 $ 3,723.1 Net income 753.9 7.2 761.1 Other comprehensive income 182.8 2.1 184.9 Acquisitions resulting in noncontrolling interest 1.2 1.2 Purchase of noncontrolling interest (5.5) (9.5) (15.0) Distributions to shareholders of noncontrolling interests (7.1) (7.1) Purchase of treasury stock (555.6) (555.6) Retirement of treasury stock (7.7) (555.6) 555.6 — Stock options exercised 4.4 135.3 135.3 Dividends declared (155.7) (155.7) Stock-based compensation expense 37.1 37.1 Balance as of September 30, 2017 305.0 $ 0.3 $ 1,187.8 $ 3,165.3 $ (286.2) $ — $ 42.1 $ 4,109.3 On January 24, 2017, the Company’s Board of Directors authorized a stock repurchase program under which the Company could purchase up to $1,000.0 of the Company’s Common Stock during the two-year period ending January 24, 2019 in accordance with the requirements of Rule 10b-18 of the Exchange Act (the “2017 Stock Repurchase Program”). During the three months ended March 31, 2018, the Company repurchased 4.2 million shares of its common stock for $382.0 under the 2017 Stock Repurchase Program, bringing total repurchases under this program to approximately 12.6 million shares or $1,000.0, thus completing the 2017 Stock Repurchase Program . On April 24, 2018, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may purchase up to $2,000.0 of the Company’s Common Stock during the three-year period ending April 24, 2021 in accordance with the requirements of Rule 10b-18 of the Exchange Act (the “2018 Stock Repurchase Program”). During the three and nine months ended September 30, 2018, the Company repurchased 0.4 million and 3.5 million shares of its common stock for $34.8 and $298.2, respectively, under the 2018 Stock Repurchase Program. These treasury shares have been retired by the Company, accordingly common stock and retained earnings were reduced. The Company has not repurchased any additional shares of its common stock through October 24, 2018, and has remaining authorization to purchase up to approximately $1,701.8 of its common stock under the 2018 Stock Repurchase Program. The price and timing of any future purchases under the 2018 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, dividends, economic and market conditions and stock price. Contingent upon declaration by the Board of Directors, the Company generally pays a quarterly dividend on shares of its Common Stock. The following table summarizes the declared quarterly dividends per share as well as the dividends declared and paid for the three and nine months ended September 30, 2018 and 2017: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Dividends declared per share $ 0.23 $ 0.19 $ 0.65 $ 0.51 Dividends declared $ 69.3 $ 57.9 $ 195.6 $ 155.7 Dividends paid (including those declared in the prior year) 69.0 48.8 184.4 147.1 On April 24, 2018, the Company’s Board of Directors approved an increase to its quarterly dividend rate from $0.19 to $0.23 per share effective with dividends declared in the second quarter of 2018. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share | |
Earnings Per Share | Note 7—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 dilutive common shares outstanding, which relates to 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, 2018 and 2017 is as follows: Three Months Ended September 30, Nine Months Ended September 30, (dollars and shares in millions, except per share data) 2018 2017 2018 2017 Net income attributable to Amphenol Corporation shareholders $ 316.6 $ 277.5 $ 866.9 $ 753.9 Basic weighted average common shares outstanding 300.5 305.0 301.7 305.8 Effect of dilutive stock options 11.9 10.7 11.9 10.3 Diluted weighted average common shares outstanding 312.4 315.7 313.6 316.1 Earnings per share attributable to Amphenol Corporation shareholders: Basic $ 1.05 $ 0.91 $ 2.87 $ 2.47 Diluted $ 1.01 $ 0.88 $ 2.76 $ 2.39 Excluded from the computations above were anti-dilutive common shares of 6.1 million and 5.3 million for the three months ended September 30, 2018 and 2017, respectively, and 2.5 million and 2.1 million for the nine months ended September 30, 2018 and 2017, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 8—Commitments and Contingencies The Company has been named as a defendant in several legal actions arising from normal business activities. The Company records a loss contingency liability when a loss is considered probable and the amount can be reasonably estimated. Although the potential liability with respect to certain of such legal actions cannot be reasonably estimated, none of such matters is expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The Company’s legal costs associated with defending itself are recorded to expense as incurred. The Company has also received a subpoena from the Department of Defense, Office of the Inspector General, requesting documents pertaining to certain products manufactured by the Company’s Military and Aerospace Group that are purchased or used by the U.S. government. The Company is cooperating with the request. The inquiry is in the early stages and the Company is unable to estimate the timing or outcome of the matter. 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 adverse effect on the Company’s financial condition, results of operations or cash flows. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 9—Stock-Based Compensation For the three months ended September 30, 2018 and 2017, the Company’s income before income taxes was reduced for stock-based compensation expense of $14.4 and $12.6, respectively. In addition, for the three months ended September 30, 2018 and 2017, the Company recognized aggregate income tax benefits associated with stock-based compensation of $8.9 and $19.5, respectively, in the provision for income taxes in the accompanying Condensed Consolidated Statements of Income, which include the excess tax benefits from option exercises of $7.0 and $16.6, respectively. For the nine months ended September 30, 2018 and 2017, the Company’s income before income taxes was reduced for stock-based compensation expense of $40.4 and $37.1, respectively. In addition, for the nine months ended September 30, 2018 and 2017, the Company recognized aggregate income tax benefits associated with stock-based compensation of $19.7 and $54.7, respectively, which include the excess tax benefits from option exercises of $14.1 and $45.8, respectively. T he impact associated with recognizing excess tax benefits from option exercises in the provision for income taxes on our consolidated financial statements could result in significant fluctuations in our effective tax rate in the future, since the provision for income taxes will be impacted by the timing and intrinsic value of future stock-based compensation award exercises. 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. The expense incurred for stock-based compensation plans is included in Selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income. Stock Options In May 2017, the Company adopted the 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2017 Employee Option Plan”). A committee of the Company’s Board of Directors has been authorized to grant stock options pursuant to the 2017 Employee Option Plan. The number of shares of the Company’s Class A Common Stock (“Common Stock”) reserved for issuance under the 2017 Employee Option Plan is 30,000,000 shares. As of September 30, 2018, there were 17,002,620 shares of Common Stock available for the granting of additional stock options under the 2017 Employee Option Plan. The Company also continues to maintain the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, as amended (the “2009 Employee Option Plan”). No additional stock options will be granted under the 2009 Employee Option Plan. The 2000 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, as amended, expired in May 2011 and all options granted thereunder have been either exercised or forfeited. Options granted under the 2017 Employee Option Plan and the 2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant and are generally exercisable over a period of ten years from the date of grant. 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. The 2004 Directors Option Plan expired in May 2014, except that its terms continue with respect to outstanding options granted thereunder. Options were last granted under the 2004 Directors Option Plan in May 2011. Options granted under the 2004 Directors Option Plan are fully vested and are generally exercisable over a period of ten years from the date of grant. Stock option activity for the three and nine months ended September 30, 2018 was as follows: Weighted Average Aggregate Weighted Remaining Intrinsic Average Contractual Value Options Exercise Price Term (in years) (in millions) Options outstanding at January 1, 2018 33,222,364 $ 52.27 7.05 $ 1,180.3 Options granted — Options exercised (602,549) Options forfeited (32,240) Options outstanding at March 31, 2018 32,587,575 52.58 6.84 1,093.2 Options granted 6,111,100 Options exercised (740,046) Options forfeited (116,740) Options outstanding at June 30, 2018 37,841,889 58.50 7.15 1,089.4 Options granted 91,000 Options exercised (1,952,700) Options forfeited (226,020) Options outstanding at September 30, 2018 35,754,169 $ 59.68 7.05 $ 1,227.9 Vested and non-vested options expected to vest at September 30, 2018 33,489,508 $ 58.93 6.97 $ 1,175.0 Exercisable options at September 30, 2018 16,426,149 $ 46.22 5.55 $ 785.2 A summary of the status of the Company’s non-vested options as of September 30, 2018 and changes during the three and nine months then ended is as follows: Weighted Average Fair Value at Options Grant Date Non-vested options at January 1, 2018 19,600,440 $ 8.29 Options granted — — Options vested (67,400) 8.13 Options forfeited (32,240) 8.56 Non-vested options at March 31, 2018 19,500,800 8.29 Options granted 6,111,100 12.82 Options vested (5,923,180) 8.35 Options forfeited (116,740) 8.18 Non-vested options at June 30, 2018 19,571,980 9.69 Options granted 91,000 12.82 Options vested (108,940) 8.40 Options forfeited (226,020) 9.48 Non-vested options at September 30, 2018 19,328,020 $ 9.71 During the three and nine months ended September 30, 2018 and 2017, the following activity occurred under the Company’s option plans: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Total intrinsic value of stock options exercised $ 111.8 $ 77.0 $ 181.1 $ 191.1 Total fair value of stock options vested 0.9 0.7 50.9 46.2 As of September 30, 2018, the total compensation cost related to non-vested options not yet recognized was approximately $152.8 with a weighted average expected amortization period of 3.57 years. The grant-date fair value of each option grant under the 2009 Employee Option Plan, the 2017 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 share grant is determined based on the closing share price of the Company’s Common Stock on the date of the grant. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. 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 Common Stock and implied volatility derived from related exchange traded options. The average expected life is 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 issuances 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. Restricted Shares In 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “2012 Directors Restricted Stock Plan”). The 2012 Directors Restricted Stock Plan is administered by the Company’s Board of Directors. As of September 30, 2018, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 109,695. 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. Restricted share activity for the three and nine months ended September 30, 2018 was as follows: Weighted Average Remaining Restricted Fair Value at Amortization Shares Grant Date Term (in years) Restricted shares outstanding at January 1, 2018 12,905 $ 73.25 0.37 Restricted shares granted — — Restricted shares outstanding at March 31, 2018 12,905 73.25 0.13 Shares vested and issued (13,046) 73.35 Restricted shares granted 14,469 87.93 Restricted shares outstanding at June 30, 2018 14,328 87.98 0.88 Restricted shares granted — — Restricted shares outstanding at September 30, 2018 14,328 $ 87.98 0.63 As of September 30, 2018, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $0.8 with a weighted average expected amortization period of 0.63 years. |
Benefit Plans and Other Postret
Benefit Plans and Other Postretirement Benefits | 9 Months Ended |
Sep. 30, 2018 | |
Benefit Plans and Other Postretirement Benefits | |
Benefit Plans and Other Postretirement Benefits | Note 10—Benefit Plans and Other Postretirement Benefits The Company and certain of its domestic subsidiaries have defined benefit pension plans (the “U.S. Plans”), which cover certain U.S. employees and which represent the majority of the plan 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, 2018 and 2017: Other Postretirement Pension Benefits Benefits Three Months Ended September 30: 2018 2017 2018 2017 Service cost $ 1.8 $ 2.5 $ — $ — Interest cost 4.9 5.0 0.1 0.1 Expected return on plan assets (9.6) (7.8) — — Amortization of prior service cost 0.6 0.7 — — Amortization of net actuarial losses 5.8 5.8 0.1 0.2 Net pension expense $ 3.5 $ 6.2 $ 0.2 $ 0.3 Nine Months Ended September 30: Service cost $ 5.6 $ 7.3 $ — $ — Interest cost 14.7 14.9 0.3 0.3 Expected return on plan assets (28.9) (23.2) — — Amortization of prior service cost 1.8 2.1 — — Amortization of net actuarial losses 17.5 17.2 0.3 0.5 Net pension expense $ 10.7 $ 18.3 $ 0.6 $ 0.8 As a result of the adoption of ASU 2017‑07, the Company records service costs in the same line item as the respective employee compensation costs and within operating income, while all other pension-related costs including interest cost, expected return on plan assets, amortization of prior service cost and amortization of net actuarial losses are reported separately within Other income, net in the Condensed Consolidated Statements of Income. In January 2018, the Company made a voluntary cash contribution of approximately $81.0 to fully fund the U.S. Plans, and estimates that, based on current actuarial calculations, cash contributions to the Plans will aggregate approximately $90.0 in 2018. The timing and amount of cash contributions in subsequent years will depend on a number of factors, including the investment performance of the Plans’ assets. This voluntary cash contribution made in the first quarter of 2018 is reflected as cash used in operating activities within Net change in accrued pension and postretirement benefits in the Condensed Consolidated Statements of Cash Flow. 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 the U.S. defined contribution plans with cash contributions up to a maximum of 5% of eligible compensation. During the nine months ended September 30, 2018 and 2017, the Company provided matching contributions to the U.S. defined contribution plans of approximately $6.2 and $5.0, respectively. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Acquisitions | |
Acquisitions | Note 11—Acquisitions In the past twelve months, the Company has completed several acquisitions, including three acquisitions which closed in the first nine months of 2018, all in the Interconnect Products and Assemblies segment. The Company is in the process of completing its analyses of the fair value of the assets acquired and liabilities assumed. The Company anticipates that the final assessments of values will not differ materially from the preliminary assessments. These acquisitions were not material to the Company either individually or in the aggregate. During the nine months ended September 30, 2017, the Company incurred approximately $4.0 ($3.7 after-tax) of acquisition-related expenses related to external transaction costs. Such acquisition-related expenses are separately presented in the accompanying Condensed Consolidated Statements of Income. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 12—Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill by segment were as follows: Interconnect Cable Products and Products and Assemblies Solutions Total Goodwill at December 31, 2017 $ 3,896.1 $ 146.5 $ 4,042.6 Acquisition-related 126.5 — 126.5 Foreign currency translation (55.4) — (55.4) Goodwill at September 30, 2018 $ 3,967.2 $ 146.5 $ 4,113.7 The Company performs its annual evaluation for the impairment of goodwill for the Company’s reporting units as of each July 1 or more frequently if an event occurs or circumstances change that would indicate that a reporting unit’s carrying amount may be impaired. The Company has defined its reporting units as the two reportable business segments “Interconnect Products and Assemblies” and “Cable Products and Solutions”, as the components of these reportable business segments have similar economic characteristics. In 2018, as part of our annual evaluation, the Company utilized the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment assessment. As part of this assessment, the Company reviews qualitative factors which include, but are not limited to, economic, market and industry conditions, as well as the financial performance of each reporting unit. In accordance with applicable guidance, an entity is not required to calculate the fair value of a reporting unit if, after assessing these qualitative factors, the Company determines that it is more likely than not that its reporting unit’s fair value is greater than its carrying amount. During the third quarter, the Company determined that it was more likely than not that the fair value of its reporting units exceeded their respective carrying amounts and therefore, a quantitative assessment was not required. There has been no goodwill impairment in 2018, 2017 or 2016 in connection with our impairment tests. Other than goodwill noted above, the Company’s intangible assets as of September 30, 2018 and December 31, 2017 were as follows: September 30, 2018 December 31, 2017 Weighted Gross Net Gross Net Average Carrying Accumulated Carrying Carrying Accumulated Carrying Life (years) Amount Amortization Amount Amount Amortization Amount Customer relationships 10 $ 400.2 $ 226.2 $ 174.0 $ 398.1 $ 199.8 $ 198.3 Proprietary technology 11 107.5 58.1 49.4 107.5 50.7 56.8 Backlog and other 2 34.0 33.7 0.3 34.0 33.6 0.4 Total intangible assets (definite-lived) 10 541.7 318.0 223.7 539.6 284.1 255.5 Trade names (indefinite-lived) 186.1 — 186.1 186.1 — 186.1 $ 727.8 $ 318.0 $ 409.8 $ 725.7 $ 284.1 $ 441.6 Intangible assets are included in Intangibles, net and other long-term assets in the accompanying Condensed Consolidated Balance Sheets. The amortization expense for the three months ended September 30, 2018 and 2017 was approximately $11.6 and $12.3, respectively. The amortization expense for the nine months ended September 30, 2018 and 2017 was approximately $35.4 and $36.4, respectively. As of September 30, 2018, amortization expense relating to the Company’s current intangible assets estimated for the remainder of 2018 is approximately $11.5 and for each of the next five fiscal years is approximately $42.7 in 2019, $37.1 in 2020, $32.4 in 2021, $24.9 in 2022 and $22.2 in 2023. The Company reviews its identifiable intangible assets subject to amortization whenever events or changes in circumstances indicate the carrying amount may not be recoverable, while any indefinite-lived intangible assets that are not subject to amortization are reviewed at least annually for impairment. In the third quarter of 2018, the Company performed its annual assessment of these identifiable indefinite-lived intangible assets. Based on our qualitative assessment, the Company determined that it was more likely than not that the fair value of the indefinite-lived intangible assets exceeded their respective carrying amounts. There has been no impairment in 2018, 2017 or 2016 as a result of such reviews. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt | |
Debt | Note 13—Debt The Company’s debt (net of any unamortized discount) consists of the following: September 30, 2018 December 31, 2017 Carrying Approximate Carrying Approximate Amount Fair Value Amount Fair Value Revolving Credit Facility $ — $ — $ — $ — U.S. Commercial Paper Program 337.9 337.9 1,175.4 1,175.4 Euro Commercial Paper Program 512.9 512.9 — — 2.55% Senior Notes due January 2019 749.9 749.5 749.8 752.8 2.20% Senior Notes due April 2020 399.8 393.6 399.8 398.0 3.125% Senior Notes due September 2021 374.9 371.4 374.8 381.2 4.00% Senior Notes due February 2022 499.6 506.9 499.5 522.5 3.20% Senior Notes due April 2024 349.7 335.7 349.6 351.9 Notes payable to foreign banks and other debt 43.6 43.6 6.6 6.6 Less unamortized deferred debt issuance costs (9.8) — (12.9) — Total debt 3,258.5 3,251.5 3,542.6 3,588.4 Less current portion 790.2 789.8 1.1 1.1 Total long-term debt $ 2,468.3 $ 2,461.7 $ 3,541.5 $ 3,587.3 Revolving Credit Facility The Company has a $2,000.0 unsecured credit facility (the “Revolving Credit Facility”), which matures March 2021 and gives the Company the ability to borrow at a spread over LIBOR. The Company may utilize the Revolving Credit Facility for general corporate purposes. At September 30, 2018, there were no borrowings under the Revolving Credit Facility. The carrying value of any borrowings under the Revolving Credit Facility would approximate their fair value due primarily to their market interest rates and would be classified as Level 2 in the fair value hierarchy (Note 15). 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, 2018, the Company was in compliance with the financial covenants under the Revolving Credit Facility. Commercial Paper Programs The Company has a commercial paper program pursuant to which the Company issues short-term unsecured commercial paper notes (“U.S. Commercial Paper” or “USCP Notes”) in one or more private placements in the United States (the “U.S. Commercial Paper Program”). The maturities of the USCP Notes vary, but may not exceed 397 days from the date of issue. The USCP Notes are sold under customary terms in the commercial paper market and may be issued at a discount from par, or, alternatively, may be sold at par, and bear varying interest rates on a fixed or floating basis. The average interest rate on the U.S. Commercial Paper as of September 30, 2018 was 2.36%. On July 10, 2018, the Amounts available under the Commercial Paper Programs may be borrowed, repaid and re-borrowed from time to time. The Company’s Board of Directors’ authorization for the ECP Notes currently limits the maximum aggregate principal amount outstanding of USCP Notes, ECP Notes, and any other commercial paper, euro-commercial paper or similar programs at any time to $2,000.0. The Commercial Paper Programs are rated A-2 by Standard & Poor’s and P-2 by Moody’s and are currently backstopped by the Revolving Credit Facility, as amounts undrawn under the Company’s existing Revolving Credit Facility are available to repay Commercial Paper, if necessary. Net proceeds of the issuances of the Commercial Paper are expected to be used for general corporate purposes. The Commercial Paper is classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets since the Company has the intent and ability to refinance the Commercial Paper on a long-term basis using the Revolving Credit Facility. The Commercial Paper is actively traded and is therefore classified as Level 1 in the fair value hierarchy (Note 15). The carrying value of Commercial Paper borrowings approximates their fair value. U.S. Senior Notes All of the Company’s outstanding senior notes in the United States (“U.S. Senior Notes”), listed in the table above, are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness. Interest on each series of U.S. Senior Notes is payable semiannually. The Company may, at its option, redeem some or all of any series of U.S. Senior Notes at any time subject to certain terms and conditions, which include paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase and, with certain exceptions, a make-whole premium. The fair value of each series of U.S. Senior Notes is based on recent bid prices in an active market and is therefore classified as Level 1 in the fair value hierarchy (Note 15). The 2.55% Senior Notes are due in January 2019 and are therefore recorded, net of the related unamortized discount and debt issuance costs, within Current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2018. The U.S. Senior Notes contain certain financial and non-financial covenants. At September 30, 2018, the Company was in compliance with the financial covenants under its U.S. Senior Notes. During the first nine months of 2017, the Company issued two senior notes, aggregating $750.0 principal amount of unsecured notes, and incurred approximately $5.2 of costs related to the issuances of these senior notes, which costs are amortized to interest expense over the respective terms of the debt. In September 2017, the Company used the net proceeds from these senior notes to repay all of its outstanding $375.0 principal amount of 1.55% Senior Notes that were due September 15, 2017, with the remainder of the net proceeds being used for general corporate purposes. The cash flow impact associated with both the issuances of these senior notes and the repayment of the 1.55% Senior Notes during the first nine months of 2017 is reflected within cash flows from financing activities within the accompanying Condensed Consolidated Statements of Cash Flow. Euro Senior Notes On October 8, 2018, the Euro Issuer issued €500.0 (approximately $574.6) principal amount of unsecured 2.000% Senior Notes due October 8, 2028 at 99.498% of face value (the “2028 Euro Notes”). The 2028 Euro Notes are unsecured and rank equally in right of payment with the Euro Issuer’s other unsecured senior indebtedness, and are guaranteed on a senior unsecured basis by the Company. Interest on the 2028 Euro Notes is payable annually on October 8 of each year, commencing on October 8, 2019. The Company may, at its option, redeem some or all of the 2028 Euro Notes at any time by paying 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of repurchase, and if redeemed prior to July 8, 2028, a make-whole premium. The Company used a portion of the net proceeds from the 2028 Euro Notes to repay a portion of the outstanding amounts under its Commercial Paper Programs, with the remainder of the net proceeds being used for general corporate purposes. The 2028 Euro Notes contain certain financial and non-financial covenants . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | Note 14—Income Taxes Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Provision for income taxes $ (100.0) $ (78.1) $ (280.8) $ (212.7) Effective tax rate % % % % For the three months ended September 30, 2018 and 2017, stock option exercise activity had the impact of lowering our Provision for income taxes by approximately $7.0 and $16.6, respectively, and lowering our effective tax rate by approximately 170 basis points and 470 basis points, respectively, due to the recognition of excess tax benefits within Provision for income taxes in the accompanying Condensed Consolidated Statements of Income. For the nine months ended September 30, 2018 and 2017, stock option exercise activity had the impact of lowering our Provision for income taxes by approximately $14.1 and $45.8, respectively, and lowering our effective tax rate by approximately 120 basis points and 470 basis points, respectively. On December 22, 2017, the United States federal government enacted the Tax Cuts and Jobs Act (“Tax Act”), marking a change from a worldwide tax system to a modified territorial tax system in the United States. As part of this change, the Tax Act, among other changes, provides for a transition tax on the accumulated unremitted foreign earnings and profits of the Company’s foreign subsidiaries (“Transition Tax”) and a reduction of the U.S. federal corporate income tax rate from 35% to 21%. In the fourth quarter of 2017, the Company recorded an income tax charge of $398.5 (“Tax Act Charge”) that was comprised of (i) the Transition Tax of $259.4, (ii) a charge of $176.6 related to changes in the Company’s permanent reinvestment assertion with regards to prior accumulated unremitted earnings from certain foreign subsidiaries, partially offset by (iii) a tax benefit of $37.5 associated with the remeasurement of the Company’s U.S. net deferred tax liabilities due to the U.S. federal corporate tax rate reduction. These three components were provisional amounts recorded in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”) (now codified in ASU 2018-05), which addresses the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. Due to the timing of the Tax Act’s enactment and the complexity of its provisions, the Company has not completed its accounting for the impact of the Tax Act. The Company continues to analyze guidance and technical interpretations of the provisions of the Tax Act, as well as refine, analyze and update the underlying data, computations and assumptions used to prepare these provisional amounts. The Company did not make any adjustments to the Tax Act Charge in the first nine months of 2018. In accordance with ASU 2018-05, the Company will complete its accounting for the income tax effects of the Tax Act within the one-year measurement period in 2018 once the Company has obtained, prepared and fully analyzed all the necessary information related to all three components of the Tax Act Charge recorded in the fourth quarter of 2017. The Company will pay the Transition Tax, net of applicable tax credits and deductions, in annual installments until 2025, as permitted under the Tax Act. The Company paid its first annual installment of the Transition Tax of approximately $18.0 in the second quarter of 2018. The Company operates in the U.S. and numerous foreign taxable jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2013 and after. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of September 30, 2018, the amount of the liability for unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $125.9, 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 $15.5 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 15—Fair Value Measurements Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. These requirements establish market or observable inputs as the preferred source of values. Assumptions based on hypothetical transactions are used in the absence of market inputs. The Company does not have any non-financial instruments accounted for at fair value on a recurring basis. The valuation techniques required are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 Quoted prices for identical instruments in active markets. Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Significant inputs to the valuation model are unobservable. The Company believes that the assets or liabilities subject to such standards with fair value disclosure requirements are short-term investments and derivative instruments. Substantially all of the Company’s short-term investments consist of certificates of deposit with original maturities of twelve months or less and as such, are considered as Level 1 in the fair value hierarchy as they are traded in active markets for identical assets. The carrying amounts of these instruments, the majority of which are in non-U.S. bank accounts, approximate their fair value. The Company’s derivative instruments represent foreign exchange rate 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, 2018 and December 31, 2017 are as follows: Fair Value Measurements Quoted Prices in Significant Significant Active Markets Observable Unobservable for Identical Inputs Inputs Total Assets (Level 1) (Level 2) (Level 3) September 30, 2018: Short-term investments $ 21.5 $ 21.5 $ — $ — Forward contracts 2.5 — 2.5 — Total $ 24.0 $ 21.5 $ 2.5 $ — December 31, 2017: Short-term investments $ 34.6 $ 34.6 $ — $ — Forward contracts 2.3 — 2.3 — Total $ 36.9 $ 34.6 $ 2.3 $ — 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. The amounts recognized in Accumulated other comprehensive income (loss) associated with foreign exchange rate forward contracts and the amount reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss) in the accompanying Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2018 and 2017 were not material. The fair values of the forward contracts are recorded within Other current assets, Intangibles, net and other long-term assets, Other accrued expenses or Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets, depending on their value and remaining contractual period. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition | |
Schedule of disaggregation of net sales | Three months ended September 30, 2018 Interconnect Cable Products and Products and Total Reportable Assemblies Solutions Business Segments Net sales by: Sales channel: End customers and contract manufacturers $ 1,725.9 $ 89.0 $ 1,814.9 Distributors and resellers 293.4 20.7 314.1 $ 2,019.3 $ 109.7 $ 2,129.0 Geography: United States $ 517.9 $ 54.1 $ 572.0 China 696.9 1.4 698.3 Other foreign locations 804.5 54.2 858.7 $ 2,019.3 $ 109.7 $ 2,129.0 Nine months ended September 30, 2018 Interconnect Cable Products and Products and Total Reportable Assemblies Solutions Business Segments Net sales by: Sales channel: End customers and contract manufacturers $ 4,828.9 $ 242.8 $ 5,071.7 Distributors and resellers 830.6 75.0 905.6 $ 5,659.5 $ 317.8 $ 5,977.3 Geography: United States $ 1,519.5 $ 155.8 $ 1,675.3 China 1,760.0 3.3 1,763.3 Other foreign locations 2,380.0 158.7 2,538.7 $ 5,659.5 $ 317.8 $ 5,977.3 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories | |
Schedule of Inventories | September 30, December 31, 2018 2017 Raw materials and supplies $ 437.2 $ 386.2 Work in process 377.7 358.0 Finished goods 430.6 362.7 $ 1,245.5 $ 1,106.9 |
Reportable Business Segments (T
Reportable Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Business Segments | |
Schedule of segment reporting information by segment | Interconnect Products Cable Products Total Reportable and Assemblies and Solutions Business Segments Three Months Ended September 30: 2018 2017 2018 2017 2018 2017 Net sales: External $ 2,019.3 $ 1,731.5 $ 109.7 $ 109.3 $ 2,129.0 $ 1,840.8 Intersegment 3.8 2.7 8.1 10.9 11.9 13.6 Segment operating income 458.1 388.3 14.4 14.3 472.5 402.6 Nine Months Ended September 30: Net sales: External $ 5,659.5 $ 4,754.3 $ 317.8 $ 313.1 $ 5,977.3 $ 5,067.4 Intersegment 9.6 6.9 25.1 31.5 34.7 38.4 Segment operating income 1,268.9 1,060.8 40.4 44.0 1,309.3 1,104.8 |
Schedule of the reconciliation of segment operating income to consolidated income before income taxes | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Segment operating income $ 472.5 $ 402.6 $ 1,309.3 $ 1,104.8 Interest expense (24.8) (24.6) (75.3) (67.3) Other income, net 0.2 5.1 2.5 12.9 Stock-based compensation expense (14.4) (12.6) (40.4) (37.1) Acquisition-related expenses — — — (4.0) Other operating expenses (13.9) (12.1) (39.6) (35.5) Income before income taxes $ 419.6 $ 358.4 $ 1,156.5 $ 973.8 |
Shareholders' Equity and Nonc_2
Shareholders' Equity and Noncontrolling Interests (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' Equity and Noncontrolling Interests | |
Rollforward of consolidated changes in equity | A rollforward of consolidated changes in equity for the nine months ended September 30, 2018 is as follows: Amphenol Corporation Shareholders Accumulated Common Stock Other Shares Additional Retained Comprehensive Treasury Noncontrolling Total (in millions) Amount Paid-In Capital Earnings Loss Stock Interests Equity Balance as of December 31, 2017 305.7 $ 0.3 $ 1,249.0 $ 2,941.5 $ (201.0) $ — $ 53.6 $ 4,043.4 Cumulative effect of adoption of revenue recognition standard (Note 2) 3.2 3.2 Net income 866.9 8.8 875.7 Other comprehensive loss (136.3) (2.7) (139.0) Acquisitions resulting in noncontrolling interest 0.3 0.3 Purchase of noncontrolling interest (2.3) (5.4) (7.7) Distributions to shareholders of noncontrolling interests (10.2) (10.2) Purchase of treasury stock (680.2) (680.2) Retirement of treasury stock (7.7) (680.2) 680.2 — Stock options exercised 3.3 123.0 123.0 Dividends declared (195.6) (195.6) Stock-based compensation expense 40.4 40.4 Balance as of September 30, 2018 301.3 $ 0.3 $ 1,410.1 $ 2,935.8 $ (337.3) $ — $ 44.4 $ 4,053.3 A rollforward of consolidated changes in equity for the nine months ended September 30, 2017 is as follows: Amphenol Corporation Shareholders Accumulated Common Stock Other Shares Additional Retained Comprehensive Treasury Noncontrolling Total (in millions) Amount Paid-In Capital Earnings Loss Stock Interests Equity Balance as of December 31, 2016 308.3 $ 0.3 $ 1,020.9 $ 3,122.7 $ (469.0) $ — $ 48.2 $ 3,723.1 Net income 753.9 7.2 761.1 Other comprehensive income 182.8 2.1 184.9 Acquisitions resulting in noncontrolling interest 1.2 1.2 Purchase of noncontrolling interest (5.5) (9.5) (15.0) Distributions to shareholders of noncontrolling interests (7.1) (7.1) Purchase of treasury stock (555.6) (555.6) Retirement of treasury stock (7.7) (555.6) 555.6 — Stock options exercised 4.4 135.3 135.3 Dividends declared (155.7) (155.7) Stock-based compensation expense 37.1 37.1 Balance as of September 30, 2017 305.0 $ 0.3 $ 1,187.8 $ 3,165.3 $ (286.2) $ — $ 42.1 $ 4,109.3 |
Schedules of dividends | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Dividends declared per share $ 0.23 $ 0.19 $ 0.65 $ 0.51 Dividends declared $ 69.3 $ 57.9 $ 195.6 $ 155.7 Dividends paid (including those declared in the prior year) 69.0 48.8 184.4 147.1 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share | |
Schedule of the reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding | Three Months Ended September 30, Nine Months Ended September 30, (dollars and shares in millions, except per share data) 2018 2017 2018 2017 Net income attributable to Amphenol Corporation shareholders $ 316.6 $ 277.5 $ 866.9 $ 753.9 Basic weighted average common shares outstanding 300.5 305.0 301.7 305.8 Effect of dilutive stock options 11.9 10.7 11.9 10.3 Diluted weighted average common shares outstanding 312.4 315.7 313.6 316.1 Earnings per share attributable to Amphenol Corporation shareholders: Basic $ 1.05 $ 0.91 $ 2.87 $ 2.47 Diluted $ 1.01 $ 0.88 $ 2.76 $ 2.39 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Schedule of stock option activity | Weighted Average Aggregate Weighted Remaining Intrinsic Average Contractual Value Options Exercise Price Term (in years) (in millions) Options outstanding at January 1, 2018 33,222,364 $ 52.27 7.05 $ 1,180.3 Options granted — Options exercised (602,549) Options forfeited (32,240) Options outstanding at March 31, 2018 32,587,575 52.58 6.84 1,093.2 Options granted 6,111,100 Options exercised (740,046) Options forfeited (116,740) Options outstanding at June 30, 2018 37,841,889 58.50 7.15 1,089.4 Options granted 91,000 Options exercised (1,952,700) Options forfeited (226,020) Options outstanding at September 30, 2018 35,754,169 $ 59.68 7.05 $ 1,227.9 Vested and non-vested options expected to vest at September 30, 2018 33,489,508 $ 58.93 6.97 $ 1,175.0 Exercisable options at September 30, 2018 16,426,149 $ 46.22 5.55 $ 785.2 |
Summary of status of non-vested options and changes during the year | Weighted Average Fair Value at Options Grant Date Non-vested options at January 1, 2018 19,600,440 $ 8.29 Options granted — — Options vested (67,400) 8.13 Options forfeited (32,240) 8.56 Non-vested options at March 31, 2018 19,500,800 8.29 Options granted 6,111,100 12.82 Options vested (5,923,180) 8.35 Options forfeited (116,740) 8.18 Non-vested options at June 30, 2018 19,571,980 9.69 Options granted 91,000 12.82 Options vested (108,940) 8.40 Options forfeited (226,020) 9.48 Non-vested options at September 30, 2018 19,328,020 $ 9.71 |
Summary of activity in the option plans | Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Total intrinsic value of stock options exercised $ 111.8 $ 77.0 $ 181.1 $ 191.1 Total fair value of stock options vested 0.9 0.7 50.9 46.2 |
Schedule of restricted share activity | Weighted Average Remaining Restricted Fair Value at Amortization Shares Grant Date Term (in years) Restricted shares outstanding at January 1, 2018 12,905 $ 73.25 0.37 Restricted shares granted — — Restricted shares outstanding at March 31, 2018 12,905 73.25 0.13 Shares vested and issued (13,046) 73.35 Restricted shares granted 14,469 87.93 Restricted shares outstanding at June 30, 2018 14,328 87.98 0.88 Restricted shares granted — — Restricted shares outstanding at September 30, 2018 14,328 $ 87.98 0.63 |
Benefit Plans and Other Postr_2
Benefit Plans and Other Postretirement Benefits (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Benefit Plans and Other Postretirement Benefits | |
Schedule of components of net pension expense | Other Postretirement Pension Benefits Benefits Three Months Ended September 30: 2018 2017 2018 2017 Service cost $ 1.8 $ 2.5 $ — $ — Interest cost 4.9 5.0 0.1 0.1 Expected return on plan assets (9.6) (7.8) — — Amortization of prior service cost 0.6 0.7 — — Amortization of net actuarial losses 5.8 5.8 0.1 0.2 Net pension expense $ 3.5 $ 6.2 $ 0.2 $ 0.3 Nine Months Ended September 30: Service cost $ 5.6 $ 7.3 $ — $ — Interest cost 14.7 14.9 0.3 0.3 Expected return on plan assets (28.9) (23.2) — — Amortization of prior service cost 1.8 2.1 — — Amortization of net actuarial losses 17.5 17.2 0.3 0.5 Net pension expense $ 10.7 $ 18.3 $ 0.6 $ 0.8 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Other Intangible Assets | |
Schedule of changes in the carrying amount of goodwill by segment | Interconnect Cable Products and Products and Assemblies Solutions Total Goodwill at December 31, 2017 $ 3,896.1 $ 146.5 $ 4,042.6 Acquisition-related 126.5 — 126.5 Foreign currency translation (55.4) — (55.4) Goodwill at September 30, 2018 $ 3,967.2 $ 146.5 $ 4,113.7 |
Summary of the Company's intangible assets | September 30, 2018 December 31, 2017 Weighted Gross Net Gross Net Average Carrying Accumulated Carrying Carrying Accumulated Carrying Life (years) Amount Amortization Amount Amount Amortization Amount Customer relationships 10 $ 400.2 $ 226.2 $ 174.0 $ 398.1 $ 199.8 $ 198.3 Proprietary technology 11 107.5 58.1 49.4 107.5 50.7 56.8 Backlog and other 2 34.0 33.7 0.3 34.0 33.6 0.4 Total intangible assets (definite-lived) 10 541.7 318.0 223.7 539.6 284.1 255.5 Trade names (indefinite-lived) 186.1 — 186.1 186.1 — 186.1 $ 727.8 $ 318.0 $ 409.8 $ 725.7 $ 284.1 $ 441.6 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt | |
Schedule of debt | September 30, 2018 December 31, 2017 Carrying Approximate Carrying Approximate Amount Fair Value Amount Fair Value Revolving Credit Facility $ — $ — $ — $ — U.S. Commercial Paper Program 337.9 337.9 1,175.4 1,175.4 Euro Commercial Paper Program 512.9 512.9 — — 2.55% Senior Notes due January 2019 749.9 749.5 749.8 752.8 2.20% Senior Notes due April 2020 399.8 393.6 399.8 398.0 3.125% Senior Notes due September 2021 374.9 371.4 374.8 381.2 4.00% Senior Notes due February 2022 499.6 506.9 499.5 522.5 3.20% Senior Notes due April 2024 349.7 335.7 349.6 351.9 Notes payable to foreign banks and other debt 43.6 43.6 6.6 6.6 Less unamortized deferred debt issuance costs (9.8) — (12.9) — Total debt 3,258.5 3,251.5 3,542.6 3,588.4 Less current portion 790.2 789.8 1.1 1.1 Total long-term debt $ 2,468.3 $ 2,461.7 $ 3,541.5 $ 3,587.3 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Schedule of provision for income taxes and effective tax rate | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Provision for income taxes $ (100.0) $ (78.1) $ (280.8) $ (212.7) Effective tax rate % % % % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair values of financial and non-financial assets and liabilities | Fair Value Measurements Quoted Prices in Significant Significant Active Markets Observable Unobservable for Identical Inputs Inputs Total Assets (Level 1) (Level 2) (Level 3) September 30, 2018: Short-term investments $ 21.5 $ 21.5 $ — $ — Forward contracts 2.5 — 2.5 — Total $ 24.0 $ 21.5 $ 2.5 $ — December 31, 2017: Short-term investments $ 34.6 $ 34.6 $ — $ — Forward contracts 2.3 — 2.3 — Total $ 36.9 $ 34.6 $ 2.3 $ — |
New Accounting Pronouncements (
New Accounting Pronouncements (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements | |||
Retained earnings | $ 2,935.8 | $ 2,941.5 | |
Impact of ASU 2014-09 | Impact of ASU 2014-09 adoption - Increase (decrease) to beginning retained earnings | |||
New Accounting Pronouncements | |||
Retained earnings | $ 3.2 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | |
Revenue recognition | ||||
Remaining performance obligation, expected timing for substantial portion of performance obligations | 3 months | |||
Remaining performance obligation, expected timing for nearly all performance obligations | 1 year | |||
Practical expedient, performance obligation | true | |||
Practical expedient, incremental cost of obtaining contract | true | |||
Net sales | $ 2,129 | $ 1,840.8 | $ 5,977.3 | $ 5,067.4 |
Minimum | ||||
Revenue recognition | ||||
Payment terms | 30 days | |||
Number of reporting periods that may be extended across for multiple delivery dates | item | 1 | |||
Maximum | ||||
Revenue recognition | ||||
Payment terms | 120 days | |||
Percentage of net sales recognized over time | 5.00% | |||
Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 2,019.3 | $ 5,659.5 | ||
Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | 109.7 | 317.8 | ||
End customers and contract manufacturers | ||||
Revenue recognition | ||||
Net sales | 1,814.9 | 5,071.7 | ||
End customers and contract manufacturers | Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 1,725.9 | 4,828.9 | ||
End customers and contract manufacturers | Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | 89 | 242.8 | ||
Distributors and resellers | ||||
Revenue recognition | ||||
Net sales | 314.1 | 905.6 | ||
Distributors and resellers | Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 293.4 | 830.6 | ||
Distributors and resellers | Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | 20.7 | 75 | ||
United States | ||||
Revenue recognition | ||||
Net sales | 572 | 1,675.3 | ||
United States | Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 517.9 | 1,519.5 | ||
United States | Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | 54.1 | 155.8 | ||
China | ||||
Revenue recognition | ||||
Net sales | 698.3 | 1,763.3 | ||
China | Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 696.9 | 1,760 | ||
China | Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | 1.4 | 3.3 | ||
Other foreign locations | ||||
Revenue recognition | ||||
Net sales | 858.7 | 2,538.7 | ||
Other foreign locations | Interconnect Products and Assemblies | ||||
Revenue recognition | ||||
Net sales | 804.5 | 2,380 | ||
Other foreign locations | Cable Products and Solutions | ||||
Revenue recognition | ||||
Net sales | $ 54.2 | $ 158.7 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Inventories | ||
Raw materials and supplies | $ 437.2 | $ 386.2 |
Work in process | 377.7 | 358 |
Finished goods | 430.6 | 362.7 |
Inventories | $ 1,245.5 | $ 1,106.9 |
Reportable Business Segments (D
Reportable Business Segments (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | |
Segment reporting information | ||||
Number of reportable business segments | segment | 2 | |||
Net sales | $ 2,129 | $ 1,840.8 | $ 5,977.3 | $ 5,067.4 |
Segment operating income | 444.2 | 377.9 | 1,229.3 | 1,028.2 |
Interconnect Products and Assemblies | ||||
Segment reporting information | ||||
Net sales | 2,019.3 | 5,659.5 | ||
Cable Products and Solutions | ||||
Segment reporting information | ||||
Net sales | 109.7 | 317.8 | ||
Operating Segment | ||||
Segment reporting information | ||||
Net sales | 2,129 | 1,840.8 | 5,977.3 | 5,067.4 |
Segment operating income | 472.5 | 402.6 | 1,309.3 | 1,104.8 |
Operating Segment | Interconnect Products and Assemblies | ||||
Segment reporting information | ||||
Net sales | 2,019.3 | 1,731.5 | 5,659.5 | 4,754.3 |
Segment operating income | 458.1 | 388.3 | 1,268.9 | 1,060.8 |
Operating Segment | Cable Products and Solutions | ||||
Segment reporting information | ||||
Net sales | 109.7 | 109.3 | 317.8 | 313.1 |
Segment operating income | 14.4 | 14.3 | 40.4 | 44 |
Inter-Segment | ||||
Segment reporting information | ||||
Net sales | 11.9 | 13.6 | 34.7 | 38.4 |
Inter-Segment | Interconnect Products and Assemblies | ||||
Segment reporting information | ||||
Net sales | 3.8 | 2.7 | 9.6 | 6.9 |
Inter-Segment | Cable Products and Solutions | ||||
Segment reporting information | ||||
Net sales | $ 8.1 | $ 10.9 | $ 25.1 | $ 31.5 |
Reportable Business Segments, R
Reportable Business Segments, Reconciliation of Segment Operating Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Reconciliation of segment operating income to consolidated income before income taxes | ||||
Segment operating income | $ 444.2 | $ 377.9 | $ 1,229.3 | $ 1,028.2 |
Interest expense | (24.8) | (24.6) | (75.3) | (67.3) |
Other income, net | 0.2 | 5.1 | 2.5 | 12.9 |
Stock-based compensation expense | (14.4) | (12.6) | (40.4) | (37.1) |
Acquisition-related expenses | (4) | |||
Other operating expenses | (13.9) | (12.1) | (39.6) | (35.5) |
Income before income taxes | 419.6 | 358.4 | 1,156.5 | 973.8 |
Operating Segment | ||||
Reconciliation of segment operating income to consolidated income before income taxes | ||||
Segment operating income | $ 472.5 | $ 402.6 | $ 1,309.3 | $ 1,104.8 |
Shareholders' Equity and Nonc_3
Shareholders' Equity and Noncontrolling Interests (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Increase (Decrease) In Shareholders' Equity | ||||
Balance at beginning of period | $ 4,043.4 | $ 3,723.1 | ||
Net income | $ 319.6 | $ 280.3 | 875.7 | 761.1 |
Other comprehensive (loss) income | (50.3) | 55.7 | (139) | 184.9 |
Acquisition resulting in noncontrolling interest | 0.3 | 1.2 | ||
Purchase of noncontrolling interest | (7.7) | (15) | ||
Distributions to shareholders of noncontrolling interests | (10.2) | (7.1) | ||
Purchase of treasury stock | (680.2) | (555.6) | ||
Stock options exercised | 123 | 135.3 | ||
Dividends declared | (69.3) | (57.9) | (195.6) | (155.7) |
Stock-based compensation expense | 40.4 | 37.1 | ||
Balance at end of period | $ 4,053.3 | $ 4,109.3 | $ 4,053.3 | $ 4,109.3 |
Common Stock | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Balance (in shares) | 305.7 | 308.3 | ||
Balance at beginning of period | $ 0.3 | $ 0.3 | ||
Retirement of treasury stock (in shares) | (7.7) | (7.7) | ||
Stock options exercised (in shares) | 3.3 | 4.4 | ||
Balance (in shares) | 301.3 | 305 | 301.3 | 305 |
Balance at end of period | $ 0.3 | $ 0.3 | $ 0.3 | $ 0.3 |
Additional Paid-In Capital | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Balance at beginning of period | 1,249 | 1,020.9 | ||
Purchase of noncontrolling interest | (2.3) | (5.5) | ||
Stock options exercised | 123 | 135.3 | ||
Stock-based compensation expense | 40.4 | 37.1 | ||
Balance at end of period | 1,410.1 | 1,187.8 | 1,410.1 | 1,187.8 |
Retained Earnings | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Balance at beginning of period | 2,941.5 | 3,122.7 | ||
Net income | 866.9 | 753.9 | ||
Retirement of treasury stock | (680.2) | (555.6) | ||
Dividends declared | (195.6) | (155.7) | ||
Balance at end of period | 2,935.8 | 3,165.3 | 2,935.8 | 3,165.3 |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Balance at beginning of period | (201) | (469) | ||
Other comprehensive (loss) income | (136.3) | 182.8 | ||
Balance at end of period | (337.3) | (286.2) | (337.3) | (286.2) |
Treasury Stock | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Purchase of treasury stock | (680.2) | (555.6) | ||
Retirement of treasury stock | 680.2 | 555.6 | ||
Noncontrolling Interests | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Balance at beginning of period | 53.6 | 48.2 | ||
Net income | 8.8 | 7.2 | ||
Other comprehensive (loss) income | (2.7) | 2.1 | ||
Acquisition resulting in noncontrolling interest | 0.3 | 1.2 | ||
Purchase of noncontrolling interest | (5.4) | (9.5) | ||
Distributions to shareholders of noncontrolling interests | (10.2) | (7.1) | ||
Balance at end of period | 44.4 | $ 42.1 | 44.4 | $ 42.1 |
Impact of ASU 2014-09 | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Cumulative effect of adoption of revenue recognition standard (Note 2) | 3.2 | 3.2 | ||
Impact of ASU 2014-09 | Retained Earnings | ||||
Increase (Decrease) In Shareholders' Equity | ||||
Cumulative effect of adoption of revenue recognition standard (Note 2) | $ 3.2 | $ 3.2 |
Shareholders' Equity and Nonc_4
Shareholders' Equity and Noncontrolling Interests, Stock Repurchase (Details) - USD ($) $ in Millions | Apr. 24, 2018 | Jan. 24, 2017 | Oct. 24, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | Mar. 31, 2018 |
2017 Stock Repurchase Program | |||||||
Shareholders' Equity | |||||||
Value of shares authorized to be repurchased | $ 1,000 | ||||||
Repurchase of stock program, period | 2 years | ||||||
Number of shares repurchased and retired | 4,200,000 | 12,600,000 | |||||
Payments for shares repurchased and retired (in dollars) | $ 382 | $ 1,000 | |||||
2018 Stock Repurchase Program | |||||||
Shareholders' Equity | |||||||
Value of shares authorized to be repurchased | $ 2,000 | ||||||
Repurchase of stock program, period | 3 years | ||||||
Number of shares repurchased and retired | 0 | 400,000 | 3,500,000 | ||||
Payments for shares repurchased and retired (in dollars) | $ 34.8 | $ 298.2 | |||||
Value of shares remaining that may be repurchased under the stock repurchase program | $ 1,701.8 |
Shareholders' Equity and Nonc_5
Shareholders' Equity and Noncontrolling Interests, Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 24, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Shareholders' Equity and Noncontrolling Interests | ||||||
Dividends declared per share (in dollars per share) | $ 0.23 | $ 0.23 | $ 0.19 | $ 0.19 | $ 0.65 | $ 0.51 |
Dividends declared | $ 69.3 | $ 57.9 | $ 195.6 | $ 155.7 | ||
Dividends paid | $ 69 | $ 48.8 | $ 184.4 | $ 147.1 |
Earnings Per Share, Reconciliat
Earnings Per Share, Reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share | ||||
Net income attributable to Amphenol Corporation shareholders | $ 316.6 | $ 277.5 | $ 866.9 | $ 753.9 |
Basic weighted average common shares outstanding (in shares) | 300.5 | 305 | 301.7 | 305.8 |
Effect of dilutive stock options (in shares) | 11.9 | 10.7 | 11.9 | 10.3 |
Diluted weighted average common shares outstanding (in shares) | 312.4 | 315.7 | 313.6 | 316.1 |
Earnings per share attributable to Amphenol Corporation shareholders: | ||||
Basic (in dollars per share) | $ 1.05 | $ 0.91 | $ 2.87 | $ 2.47 |
Diluted (in dollars per share) | $ 1.01 | $ 0.88 | $ 2.76 | $ 2.39 |
Anti-dilutive common shares | ||||
Anti-dilutive stock options, excluded from the computations of earning per share (in shares) | 6.1 | 5.3 | 2.5 | 2.1 |
Stock-Based Compensation, Stock
Stock-Based Compensation, Stock-based Comp Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock-Based Compensation | ||||
Expense incurred for stock-based compensation plans | $ 14.4 | $ 12.6 | $ 40.4 | $ 37.1 |
Recognized tax benefit related to stock-based compensation | 8.9 | 19.5 | 19.7 | 54.7 |
Excess tax benefit from option exercises | $ 7 | $ 16.6 | $ 14.1 | $ 45.8 |
Stock-Based Compensation, Sto_2
Stock-Based Compensation, Stock Option and Restricted Shares (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
2009 Employee Option Plan | ||||||||
Stock-Based Compensation | ||||||||
Number of additional stock options that will be granted (in shares) | 0 | |||||||
Options ratable vesting period | 5 years | |||||||
Options exercisable period | 10 years | |||||||
2017 Employee Option Plan | ||||||||
Stock-Based Compensation | ||||||||
Common Stock reserved for issuance | 30,000,000 | 30,000,000 | ||||||
Shares available for the granting of additional stock options | 17,002,620 | 17,002,620 | ||||||
Options ratable vesting period | 5 years | |||||||
Options exercisable period | 10 years | |||||||
2004 Directors Option Plan | ||||||||
Stock-Based Compensation | ||||||||
Options exercisable period | 10 years | |||||||
Stock Options | ||||||||
Stock option activity | ||||||||
Options outstanding at the beginning of the period (in shares) | 37,841,889 | 32,587,575 | 33,222,364 | 33,222,364 | 33,222,364 | |||
Options granted (in shares) | 91,000 | 6,111,100 | ||||||
Options exercised (in shares) | (1,952,700) | (740,046) | (602,549) | |||||
Options forfeited (in shares) | (226,020) | (116,740) | (32,240) | |||||
Options outstanding at the end of the period (in shares) | 35,754,169 | 37,841,889 | 32,587,575 | 37,841,889 | 35,754,169 | 33,222,364 | ||
Vested and non-vested options expected to vest at the end of the period (in shares) | 33,489,508 | 33,489,508 | ||||||
Exercisable at the end of the period (in shares) | 16,426,149 | 16,426,149 | ||||||
Weighted Average Exercise Price | ||||||||
Weighted average exercise price, options outstanding at the beginning of the period (in dollars per share) | $ 58.50 | $ 52.58 | $ 52.27 | $ 52.27 | $ 52.27 | |||
Weighted average exercise price, options outstanding at the end of the period (in dollars per share) | 59.68 | $ 58.50 | $ 52.58 | $ 58.50 | 59.68 | $ 52.27 | ||
Weighted average exercise price, vested and non-vested options expected to vest (in dollars per share) | 58.93 | 58.93 | ||||||
Weighted average exercise price, exercisable (in dollars per share) | $ 46.22 | $ 46.22 | ||||||
Weighted Average Remaining Contractual Term | ||||||||
Weighted average remaining contractual term of options outstanding | 6 years 10 months 2 days | 7 years 1 month 24 days | 7 years 18 days | 7 years 18 days | ||||
Weighted average remaining contractual term of options vested options and non-vested expected to vest | 6 years 11 months 19 days | |||||||
Weighted average remaining contractual term of options exercisable | 5 years 6 months 18 days | |||||||
Aggregate Intrinsic Value | ||||||||
Aggregate intrinsic value of options outstanding | $ 1,227.9 | $ 1,089.4 | $ 1,093.2 | $ 1,089.4 | $ 1,227.9 | $ 1,180.3 | ||
Aggregate intrinsic value of options, vested and non-vested options expected to vest | 1,175 | 1,175 | ||||||
Aggregate intrinsic value of options exercisable | $ 785.2 | $ 785.2 | ||||||
Status of the Company's non-vested options and changes during the year | ||||||||
Non-vested options at the beginning of the period (in shares) | 19,571,980 | 19,500,800 | 19,600,440 | 19,600,440 | 19,600,440 | |||
Options granted (in shares) | 91,000 | 6,111,100 | ||||||
Non-vested options, options vested (in shares) | (108,940) | (5,923,180) | (67,400) | |||||
Non-vested options, options forfeited (in shares) | (226,020) | (116,740) | (32,240) | |||||
Non-vested options at the end of the period (in shares) | 19,328,020 | 19,571,980 | 19,500,800 | 19,571,980 | 19,328,020 | 19,600,440 | ||
Weighted Average Fair Value at Grant Date | ||||||||
Weighted average fair value at the grant date, options outstanding at the beginning of the period (in dollars per share) | $ 9.69 | $ 8.29 | $ 8.29 | $ 8.29 | $ 8.29 | |||
Weighted average fair value at grant date, options granted (in dollars per share) | 12.82 | 12.82 | ||||||
Weighted average fair value at grant date, options vested (in dollars per share) | 8.40 | 8.35 | 8.13 | |||||
Weighted average fair value at grant date, options forfeited (in dollars per share) | 9.48 | 8.18 | 8.56 | |||||
Weighted average fair value at the grant date, options outstanding at the end of the period (in dollars per share) | $ 9.71 | $ 9.69 | $ 8.29 | $ 9.69 | $ 9.71 | $ 8.29 | ||
Fair Value at Grant Date | ||||||||
Total intrinsic value of stock options exercised (in dollars) | $ 111.8 | $ 77 | $ 181.1 | $ 191.1 | ||||
Total fair value of stock options vested (in dollars) | 0.9 | $ 0.7 | 50.9 | $ 46.2 | ||||
Total compensation cost related to non-vested options not yet recognized (in dollars) | $ 152.8 | $ 152.8 | ||||||
Weighted average expected amortization period | 3 years 6 months 26 days | |||||||
Restricted Shares | 2012 Directors Restricted Stock Plan | ||||||||
Stock-Based Compensation | ||||||||
Shares available for the granting of additional stock options | 109,695 | 109,695 | ||||||
Restricted share activity | ||||||||
Restricted shares outstanding at the beginning of the period (in shares) | 14,328 | 12,905 | 12,905 | 12,905 | 12,905 | |||
Restricted shares granted (in shares) | 14,469 | |||||||
Shares vested and issued (in shares) | (13,046) | |||||||
Restricted shares outstanding at the end of the period (in shares) | 14,328 | 14,328 | 12,905 | 14,328 | 14,328 | 12,905 | ||
Fair Value at Grant Date | ||||||||
Fair value at the grant date, restricted shares outstanding at the beginning of the period (in dollars per share) | $ 87.98 | $ 73.25 | $ 73.25 | $ 73.25 | $ 73.25 | |||
Fair value of restricted shares vested and issued (in dollar per share) | 73.35 | |||||||
Fair value of restricted shares granted (in dollars per share) | 87.93 | |||||||
Fair value at the grant date, restricted shares outstanding at the end of the period (in dollars per share) | $ 87.98 | $ 87.98 | $ 73.25 | $ 87.98 | $ 87.98 | $ 73.25 | ||
Weighted Average Remaining Amortization Term (in years) | 1 month 17 days | 10 months 17 days | 7 months 17 days | 4 months 13 days | ||||
Total compensation cost related to non-vested restricted shares not yet recognized (in dollars) | $ 0.8 | $ 0.8 | ||||||
Weighted average expected amortization period | 7 months 17 days |
Benefit Plans and Other Postr_3
Benefit Plans and Other Postretirement Benefits, Net pension expense (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pension Benefits | |||||
Defined Benefit Plan Disclosure | |||||
Estimated future employer contribution in fiscal year | $ 90 | $ 90 | |||
Components of net pension expense: | |||||
Service cost | 1.8 | $ 2.5 | 5.6 | $ 7.3 | |
Interest cost | 4.9 | 5 | 14.7 | 14.9 | |
Expected return on plan assets | (9.6) | (7.8) | (28.9) | (23.2) | |
Amortization of prior service cost | 0.6 | 0.7 | 1.8 | 2.1 | |
Amortization of net actuarial losses | 5.8 | 5.8 | 17.5 | 17.2 | |
Net pension expense | 3.5 | 6.2 | 10.7 | 18.3 | |
Pension Benefits | United States | |||||
Defined Benefit Plan Disclosure | |||||
Plan contributions by employer | $ 81 | ||||
Other Postretirement Benefits | |||||
Components of net pension expense: | |||||
Interest cost | 0.1 | 0.1 | 0.3 | 0.3 | |
Amortization of net actuarial losses | 0.1 | 0.2 | 0.3 | 0.5 | |
Net pension expense | $ 0.2 | $ 0.3 | $ 0.6 | $ 0.8 |
Benefit Plans and Other Postr_4
Benefit Plans and Other Postretirement Benefits, Defined contribution plans (Details) - United States - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Defined contribution plans | ||
Contributions to U.S. defined contribution plans by the Company, maximum percentage of eligible compensation | 5.00% | |
Matching contributions to U.S. defined contribution plans by the Company | $ 6.2 | $ 5 |
Acquisitions (Details)
Acquisitions (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2018item | Sep. 30, 2017USD ($) | |
Acquisitions | ||
Number of acquisitions | item | 3 | |
Acquisition-related expenses | $ 4 | |
Acquisition-related expenses, net of tax | $ 3.7 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill. | |
Goodwill, Beginning Balance | $ 4,042.6 |
Acquisition-related | 126.5 |
Foreign currency translation | (55.4) |
Goodwill, Ending Balance | 4,113.7 |
Interconnect Products and Assemblies | |
Goodwill. | |
Goodwill, Beginning Balance | 3,896.1 |
Acquisition-related | 126.5 |
Foreign currency translation | (55.4) |
Goodwill, Ending Balance | 3,967.2 |
Cable Products and Solutions | |
Goodwill. | |
Goodwill, Beginning Balance | 146.5 |
Goodwill, Ending Balance | $ 146.5 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, Goodwill impairment results (Details) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Goodwill and Other Intangible Assets | |||
Number of reportable business segments | segment | 2 | ||
Goodwill impairment | $ | $ 0 | $ 0 | $ 0 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, Intangible Assets (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Intangible Assets | ||
Weighted average useful lives of acquired amortizable intangible assets | 10 years | |
Gross Carrying Amount (definite-lived) | $ 541.7 | $ 539.6 |
Intangible assets, gross (excluding goodwill) | 727.8 | 725.7 |
Accumulated Amortization | 318 | 284.1 |
Net Carrying Amount, (definite-lived) | 223.7 | 255.5 |
Indefinite-lived trade name intangible asset | 186.1 | 186.1 |
Net Carrying Amount, intangible assets | $ 409.8 | 441.6 |
Customer relationships | ||
Intangible Assets | ||
Weighted average useful lives of acquired amortizable intangible assets | 10 years | |
Gross Carrying Amount (definite-lived) | $ 400.2 | 398.1 |
Accumulated Amortization | 226.2 | 199.8 |
Net Carrying Amount, (definite-lived) | $ 174 | 198.3 |
Proprietary technology | ||
Intangible Assets | ||
Weighted average useful lives of acquired amortizable intangible assets | 11 years | |
Gross Carrying Amount (definite-lived) | $ 107.5 | 107.5 |
Accumulated Amortization | 58.1 | 50.7 |
Net Carrying Amount, (definite-lived) | $ 49.4 | 56.8 |
Backlog and other | ||
Intangible Assets | ||
Weighted average useful lives of acquired amortizable intangible assets | 2 years | |
Gross Carrying Amount (definite-lived) | $ 34 | 34 |
Accumulated Amortization | 33.7 | 33.6 |
Net Carrying Amount, (definite-lived) | $ 0.3 | $ 0.4 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets, Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Other Intangible Assets | ||||
Amortization expense | $ 11.6 | $ 12.3 | $ 35.4 | $ 36.4 |
Amortization expense estimated for each of the next five fiscal years | ||||
Remainder of 2018 | 11.5 | 11.5 | ||
2,019 | 42.7 | 42.7 | ||
2,020 | 37.1 | 37.1 | ||
2,021 | 32.4 | 32.4 | ||
2,022 | 24.9 | 24.9 | ||
2,023 | $ 22.2 | $ 22.2 |
Goodwill and Other Intangible_7
Goodwill and Other Intangible Assets, Intangible asset impairment results (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Other Intangible Assets | |||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Debt, Schedule of Debt (Details
Debt, Schedule of Debt (Details) € in Millions, $ in Millions | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017 |
Debt | ||||
Less deferred debt issuance costs | $ (9.8) | $ (12.9) | ||
Total debt | 3,258.5 | 3,542.6 | ||
Less current portion | 790.2 | 1.1 | ||
Total long-term debt | 2,468.3 | 3,541.5 | ||
Total debt, Approximate Fair Value | 3,251.5 | 3,588.4 | ||
Less short-term debt, Approximate Fair Value | 789.8 | 1.1 | ||
Long-term debt, Approximate Fair Value | 2,461.7 | 3,587.3 | ||
U.S. Commercial Paper Program | ||||
Debt | ||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | 337.9 | 1,175.4 | ||
Total debt, Approximate Fair Value | 337.9 | $ 1,175.4 | ||
Euro Commercial Paper Program | ||||
Debt | ||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | € 442 | 512.9 | ||
Total debt, Approximate Fair Value | $ 512.9 | |||
2.55% Senior Notes due January 2019 | ||||
Debt | ||||
Stated interest rate (as a percent) | 2.55% | 2.55% | 2.55% | |
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 749.9 | $ 749.8 | ||
Total debt, Approximate Fair Value | $ 749.5 | $ 752.8 | ||
2.20% Senior Notes due April 2020 | ||||
Debt | ||||
Stated interest rate (as a percent) | 2.20% | 2.20% | 2.20% | |
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 399.8 | $ 399.8 | ||
Total debt, Approximate Fair Value | $ 393.6 | $ 398 | ||
3.125% Senior Notes due September 2021 | ||||
Debt | ||||
Stated interest rate (as a percent) | 3.125% | 3.125% | 3.125% | |
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 374.9 | $ 374.8 | ||
Total debt, Approximate Fair Value | $ 371.4 | $ 381.2 | ||
4.00% Senior Notes due February 2022 | ||||
Debt | ||||
Stated interest rate (as a percent) | 4.00% | 4.00% | 4.00% | |
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 499.6 | $ 499.5 | ||
Total debt, Approximate Fair Value | $ 506.9 | $ 522.5 | ||
3.20% Senior Notes due April 2024 | ||||
Debt | ||||
Stated interest rate (as a percent) | 3.20% | 3.20% | 3.20% | |
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 349.7 | $ 349.6 | ||
Total debt, Approximate Fair Value | 335.7 | 351.9 | ||
Notes payable to foreign banks and other debt | ||||
Debt | ||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | 43.6 | 6.6 | ||
Total debt, Approximate Fair Value | $ 43.6 | $ 6.6 | ||
1.55% Senior Notes due September 2017 | ||||
Debt | ||||
Stated interest rate (as a percent) | 1.55% |
Debt, Other (Details)
Debt, Other (Details) € in Millions, $ in Millions | Oct. 08, 2018EUR (€) | Jul. 10, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($)item | Oct. 08, 2018USD ($) | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Debt | |||||||||
Repayments of long-term debt | $ 8.7 | $ 375 | |||||||
The “Revolving Credit Facility” | |||||||||
Debt | |||||||||
Borrowings under the Revolving Credit Facility | $ 0 | ||||||||
Maximum borrowing capacity | 2,000 | ||||||||
Commercial Paper Programs | |||||||||
Debt | |||||||||
Maximum borrowing capacity | $ 2,000 | ||||||||
U.S. Commercial Paper Program | |||||||||
Debt | |||||||||
Maturity term | 397 days | ||||||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 337.9 | $ 1,175.4 | |||||||
Average interest rate (as a percent) | 2.36% | 2.36% | |||||||
Euro Commercial Paper Program | |||||||||
Debt | |||||||||
Maturity term | 183 days | ||||||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | € 442 | $ 512.9 | |||||||
Average interest rate (as a percent) | (0.13%) | (0.13%) | |||||||
Number of wholly-owned subsidiaries that entered into a euro-commercial paper program | item | 1 | ||||||||
U.S. Senior Notes | |||||||||
Debt | |||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||
2.20% and 3.20% Senior Notes due April, 2020 and 2024, respectively | |||||||||
Debt | |||||||||
Number of senior notes issued | item | 2 | ||||||||
Debt instrument, principal amount | $ 750 | $ 750 | |||||||
Debt issuance costs incurred | $ 5.2 | $ 5.2 | |||||||
2.20% Senior Notes due April 2020 | |||||||||
Debt | |||||||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 399.8 | $ 399.8 | |||||||
Stated interest rate (as a percent) | 2.20% | 2.20% | 2.20% | ||||||
3.20% Senior Notes due April 2024 | |||||||||
Debt | |||||||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 349.7 | $ 349.6 | |||||||
Stated interest rate (as a percent) | 3.20% | 3.20% | 3.20% | ||||||
1.55% Senior Notes due September 2017 | |||||||||
Debt | |||||||||
Stated interest rate (as a percent) | 1.55% | 1.55% | |||||||
Repayments of long-term debt | $ 375 | ||||||||
2.55% Senior Notes due January 2019 | |||||||||
Debt | |||||||||
Debt carrying amount, net of unamortized discount before deferred debt issuance costs | $ 749.9 | $ 749.8 | |||||||
Stated interest rate (as a percent) | 2.55% | 2.55% | 2.55% | ||||||
2.00% Euro Senior Notes due October 2028 | |||||||||
Debt | |||||||||
Redemption price as a percentage of principal amount | 100.00% | ||||||||
Stated interest rate (as a percent) | 2.00% | 2.00% | |||||||
Debt instrument, principal amount | € 500 | $ 574.6 | |||||||
Debt instrument, face amount (as a percent) | 99.498% | 99.498% |
Income Taxes, Provision and Eff
Income Taxes, Provision and Effective tax rate (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Taxes | ||||
Provision for income taxes | $ (100) | $ (78.1) | $ (280.8) | $ (212.7) |
Effective tax rate (as a percent) | 23.80% | 21.80% | 24.30% | 21.80% |
Excess tax benefit from option exercises | $ 7 | $ 16.6 | $ 14.1 | $ 45.8 |
Impact on provision for income taxes (in basis points) | 1.70% | 4.70% | 1.20% | 4.70% |
Income Taxes, 2017 Tax Cuts and
Income Taxes, 2017 Tax Cuts and Jobs Act (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2017 | |
Income Taxes | ||||
U.S. statutory federal tax rate (as a percent) | 21.00% | 35.00% | ||
Estimated Tax Act Charge | $ 398.5 | $ 0 | ||
Estimated Transition Tax | 259.4 | |||
Provisional charge on unremitted foreign earnings | 176.6 | |||
Income tax expense (benefit) associated with the remeasurement of net deferred tax liabilities | $ (37.5) | |||
Number of components | item | 3 | |||
Transition Tax installment paid | $ 18 |
Income Taxes, Unrecognized tax
Income Taxes, Unrecognized tax benefits (Details) $ in Millions | Sep. 30, 2018USD ($) |
Reconciliation of the gross amounts of unrecognized tax benefits including interest and penalties | |
Liability for unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate | $ 125.9 |
Unrecognized tax benefits, anticipated adjustment for changing facts and circumstances, over the next twelve month period | $ 15.5 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair value of assets and liabilities measured on recurring basis | ||
Short-term investments | $ 21.5 | $ 34.6 |
Forward contracts | 2.5 | 2.3 |
Total | 24 | 36.9 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair value of assets and liabilities measured on recurring basis | ||
Short-term investments | 21.5 | 34.6 |
Total | 21.5 | 34.6 |
Significant Observable Inputs (Level 2) | ||
Fair value of assets and liabilities measured on recurring basis | ||
Forward contracts | 2.5 | 2.3 |
Total | $ 2.5 | $ 2.3 |