Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollars in millions, except per share data)

The following discussion and analysis of the results of operations for the three years ended December 31, 2016, 2015 and 2014 has been derived from and should be read in conjunction with the Consolidated Financial Statements included in Part II, Item 8, herein. The Consolidated Financial Statements have been prepared in U.S. dollars, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The following discussion and analysis also includes references to certain non-GAAP financial measures, which are defined in the “Non-GAAP Financial Measures” section below, including “Constant Currency Net Sales Growth” and “Organic Net Sales Growth”. For purposes of the following discussion, the terms “constant currencies” and “organically” have the same meanings as these aforementioned non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” within this Item 7 for more information, including our reasons for including non-GAAP financial measures and material limitations with respect to the usefulness of the measures.

In addition to historical information, the following discussion and analysis also contains certain forward-looking statements that are subject to risks and uncertainties, including but not limited to the risk factors described in Item 1A herein, as well as the risks and uncertainties that exist with the use of forward-looking statements as described in the “Cautionary Note Regarding Forward-Looking Statements” section included herein at the beginning of this Annual Report on Form 10-K.

Overview

General

The Company is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. The Company operates through two reporting segments: (i) Interconnect Products and Assemblies and (ii) Cable Products and Solutions. In 2016, approximately 72% of the Company’s sales were outside the U.S. The primary end markets for our products are:

	·		information technology and communication devices and systems for the converging technologies of voice, video and data communications;

	·		a broad range of industrial applications and traditional and hybrid-electric automotive applications; and

	·		commercial aerospace and military applications.

The Company’s products are used in a wide variety of applications by numerous customers. The Company competes primarily on the basis of technology innovation, product quality, price, customer service and delivery time. There has been a trend on the part of original equipment manufacturer (“OEM”) customers to consolidate their lists of qualified suppliers to companies that have the ability to meet certain quality, delivery and other standards while maintaining competitive prices. The Company has focused its global resources to position itself to compete effectively in this environment. The Company believes that its global presence is an important competitive advantage as it allows the Company to provide quality products on a timely and worldwide basis to its multinational customers.

Strategy

The Company’s strategy is to provide its customers with comprehensive design capabilities, a broad selection of products and a high level of service on a worldwide basis while maintaining continuing programs of productivity improvement and cost control. The Company focuses its research and development efforts through close collaboration with its OEM customers to develop highly-engineered products that meet customer needs and have the potential for broad market applications and significant sales within a one- to three-year period. The Company is also focused on controlling costs. The Company does this by investing in modern manufacturing technologies, controlling purchasing processes and expanding into lower cost areas.

The Company’s strategic objective is to further enhance its position in its served markets by pursuing the following success factors:

	·		Pursue broad diversification;

	·		Develop performance-enhancing interconnect solutions;

	·		Expand global presence;

	·		Control costs;

	·		Pursue strategic acquisitions and investments; and

	·		Foster collaborative, entrepreneurial management.

In 2016, the Company reported net sales, operating income and net income attributable to Amphenol Corporation of $6,286.4, $1,205.2 and $822.9, respectively, up 13%, 9% and 8%, respectively, from 2015. Adjusted Operating Income and Adjusted Net Income attributable to Amphenol, as defined in the “Non-GAAP Financial Measures” section below and as reconciled in Part II, Item 6 and Item 7 herein, increased by 12% and 11%, respectively. Sales and profitability trends are discussed in detail in “Results of Operations” below. In addition, a strength of the Company has been its ability to consistently generate cash from operations. The Company uses cash generated from operations to fund capital expenditures and acquisitions, repurchase shares of its common stock, pay dividends and reduce indebtedness. In 2016, the Company generated operating cash flow of $1,077.6.

Results of Operations

The following table sets forth the components of net income attributable to Amphenol Corporation as a percentage of net sales for the years indicated.

		Year Ended December 31,
		2016			2015			2014
Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		67.5			68.1			68.3
Acquisition-related expenses		0.6			0.1			0.2
Selling, general and administrative expenses		12.7			12.0			12.1
Operating income		19.2			19.8			19.4
Interest expense		(1.1)			(1.2)			(1.5)
Other income, net		0.1			0.3			0.3
Income before income taxes		18.2			18.9			18.2
Provision for income taxes		(4.9)			(5.0)			(4.8)
Net income		13.3			13.9			13.4
Net income attributable to noncontrolling interests		(0.2)			(0.2)			(0.1)
Net income attributable to Amphenol Corporation		13.1	%		13.7	%		13.3	%

2016 Compared to 2015

Net sales were $6,286.4 for the year ended December 31, 2016 compared to $5,568.7 for the year ended December 31, 2015, an increase of 13% in U.S. dollars, 14% in constant currencies and 2% organically (excluding both currency and acquisition impacts) over the prior year. Net sales in the Interconnect Products and Assemblies segment (approximately 94% of net sales) increased 13% in U.S. dollars, 14% in constant currencies and 2% organically in 2016, compared to 2015. The sales growth was driven primarily by growth in the information technology and data communications, industrial, automotive, mobile networks and military markets, with contributions from both the Company’s acquisitions as well as organic strength, partially offset by a decline in sales in the mobile devices market and a slight decline in the commercial aerospace market. Net sales to the information technology and data communications market increased (approximately $404.0), reflecting the benefits of FCI and other acquisitions as well as growth in products for data centers, including server, networking and storage-related applications. Net sales to the industrial market increased (approximately $183.9) reflecting the benefit of acquisitions including FCI as well as sales strength in hybrid bus and truck, factory automation and heavy equipment, which was partially offset by sales declines in products sold into oil and gas exploration and alternative energy applications. Net sales to the automotive market increased (approximately $118.3), driven by both an expansion of our products across a diversified range of vehicles and new onboard electronics as well as contributions from acquisitions. Net sales to the mobile networks market increased (approximately $114.9), primarily due to contributions from acquisitions including FCI as well as increased sales to

mobile network service providers and OEMs. Net sales to the military market increased (approximately $24.0), driven primarily by increased sales into avionics packaging and military airframe applications. Net sales to the mobile devices market decreased (approximately $158.8) primarily due to declining sales of products incorporated into tablets, smartphones and production-related products, partially offset by growth in sales of products incorporated into new wearable technologies. Net sales to the commercial aerospace market slightly decreased (approximately $2.5) due to decreases in commercial helicopter and business jet demand which offset the growth associated with new airplane platforms. Net sales in the Cable Products and Solutions segment (approximately 6% of net sales), which is primarily in the broadband communications market, increased 10% in U.S. dollars, 12% in constant currencies and 9% organically in 2016, compared to 2015, primarily due to the sales increase in the broadband communications market and contributions from an acquisition made during the third quarter of 2016.

The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S. GAAP financial measures, by segment and consolidated, for the years ended December 31, 2016 and 2015:

								Percentage Growth (relative to prior year)
								Net sales			Foreign			Constant						Organic
								growth in			currency			Currency Net			Acquisition			Net Sales
								U.S. Dollars (1)			impact (2)			Sales Growth (3)			impact (4)			Growth (3)
		2016			2015			(GAAP)			(non-GAAP)			(non-GAAP)			(non-GAAP)			(non-GAAP)
Net sales:
Interconnect Products and Assemblies		$	5,922.3		$	5,239.1		13	%		(1)	%		14	%		12	%		2	%
Cable Products and Solutions			364.1			329.6		10	%		(2)	%		12	%		3	%		9	%
Consolidated		$	6,286.4		$	5,568.7		13	%		(1)	%		14	%		12	%		2	%

	(1)		Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 11 of the accompanying financial statements.

	(2)		Foreign currency translation impact, a non-GAAP measure, represents the impact on net sales resulting from foreign currency exchange rate changes in the current year period(s) compared to the prior year. Such amount is calculated by translating current year net sales at average foreign currency exchange rates for the respective prior year.

	(3)		Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the "Non-GAAP Financial Measures" section.

	(4)		Acquisition impact, a non-GAAP measure, represents the impact on net sales resulting from acquisitions closed during the years presented, which were not included in the Company’s results as of the comparable prior year and which do not reflect the underlying growth of the Company on a comparative basis.

Geographically, net sales in the U.S. in 2016 increased approximately 3% ($1,740.7 in 2016 versus $1,696.3 in 2015) compared to 2015. International sales in 2016 increased approximately 17% in U.S. dollars ($4,545.7 in 2016 versus $3,872.4 in 2015), 19% in constant currencies and 5% organically, compared to 2015 with strength in both Asia and Europe. The comparatively stronger U.S. dollar in 2016 had the effect of decreasing net sales by approximately $61.3 when compared to foreign currency translation rates in 2015.

Gross profit margin as a percentage of net sales was 32.5% in 2016 compared to 31.9% in 2015. The increase in gross profit margin as a percentage of sales relates primarily to higher gross profit margins in the Interconnect Products and Assemblies segment reflecting the benefit of higher volumes and cost reduction actions as well as the impact of the FCI acquisition, which had higher gross margins than the average of the Company.

Selling, general and administrative expenses were $798.2 or 12.7% of net sales for 2016, compared to $669.1 or 12.0% of net sales for 2015. The increase is driven primarily by the impact of the FCI acquisition, which has higher selling, general and administrative expenses as a percentage of net sales than the average of the Company. Administrative expenses increased approximately $41.2 in 2016 primarily related to the impact of the FCI acquisition and increases in the amortization of acquisition-related identified intangible assets and stock-based compensation expense and represented approximately 4.9% of net sales in 2016 and 4.8% of net sales in 2015. Research and development expenses increased approximately $41.4 in 2016 primarily related to the impact of the FCI acquisition and represented approximately 2.6% of net sales in 2016 and 2.2% of net sales in 2015. Selling and marketing expenses increased approximately $46.5 in 2016 primarily related to the impact of the FCI acquisition and an increase in sales volume and represented approximately 5.1% of net sales in 2016 and 5.0% of net sales in 2015.

Operating income was $1,205.2 or 19.2% of net sales in 2016, compared to $1,104.7 or 19.8% of net sales in 2015. Operating income for 2016 includes $36.6 of acquisition-related expenses, which included external transaction costs, amortization related to the value associated with acquired backlog and post-closing restructuring charges related to the FCI acquisition, as well as transaction costs associated with other acquisitions. Operating income for 2015 includes $5.7

of acquisition-related expenses, which included professional and transaction-related fees and other external expenses related to acquisitions closed and announced in 2015. These acquisition-related expenses are separately presented in the Consolidated Statements of Income. For the years ended December 31, 2016 and 2015, these expenses had an impact on net income of $33.1, or $0.11 per share, and $5.7, or $0.02 per share, respectively. Excluding the effect of these acquisition-related expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $1,241.8 or 19.8% of net sales in 2016 and $1,110.4 or 19.9% in 2015. The decrease in Adjusted Operating Margin for 2016 compared to 2015, relates to the decrease in operating margin for the Interconnect Products and Assemblies segment. Operating income for the Interconnect Products and Assemblies segment in 2016 was $1,280.3 or 21.6% of net sales, compared to $1,158.3 or 22.1% of net sales in 2015. The slight decrease in operating income margin is driven by the impact of the FCI acquisition, which had a lower operating margin than the average of the Interconnect Products and Assemblies segment for the full year period. In addition, the operating income for the Cable Products and Solutions segment in 2016 was $52.8 or 14.5% of net sales, compared to $40.3 or 12.2% of net sales in 2015. The increase in operating income margin for the Cable Products and Solutions segment in 2016 compared to 2015 was primarily as a result of strong operating execution on additional volume, along with the benefit from the favorable impact from commodities.

The table below reconciles Adjusted Operating Income and Adjusted Operating Margin to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2016 and 2015:

		2016						2015
		Operating			Operating			Operating			Operating
		income			margin			income			margin
Reported (GAAP)		$	1,205.2		19.2	%		$	1,104.7		19.8	%
Acquisition-related expenses			36.6		0.6	%			5.7		0.1	%
Adjusted (non-GAAP)		$	1,241.8		19.8	%		$	1,110.4		19.9	%

Interest expense was $72.6 in 2016 compared to $68.3 in 2015. The increase is primarily attributable to the impact of higher average debt levels in 2016 which primarily resulted from the Company’s dividend and stock buyback programs.

Other income, net, decreased to $8.5 in 2016 compared to $16.4 in 2015, primarily related to lower interest income on lower cash equivalents and short-term investments, which resulted from the funding of the acquisition of FCI in January 2016 with cash, cash equivalents and short-term investments held outside of the United States.

The provision for income taxes was at an effective rate of 27.0% in 2016 and 26.6% in 2015. The effective tax rate for 2016 and 2015 included the effect of acquisition-related expenses incurred during each year, which had the impact of increasing the effective tax rate by 50 basis points and 10 basis points, respectively. For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s effective tax rate for these years, refer to Note 4 of the Notes to the Consolidated Financial Statements.

2015 Compared to 2014

Net sales were $5,568.7 for the year ended December 31, 2015 compared to $5,345.5 for the year ended December 31, 2014, an increase of 4% in U.S. dollars, 8% in constant currencies and 3% organically (excluding both currency and acquisition impacts) over the prior year. Net sales in the Interconnect Products and Assemblies segment (approximately 94% of net sales) increased 5% in U.S. dollars, 8% in constant currencies and 3% organically in 2015, compared to 2014. The sales growth was driven by increases in the automotive, mobile devices, industrial and information technology and data communications equipment markets, with contributions from both organic growth and the Company’s acquisition program; partially offset by decreases in sales in the mobile networks, commercial aerospace and military markets. Net sales to the automotive market increased (approximately $190.9), driven both by acquisitions and an expansion of our products across a diversified range of vehicles and onboard electronics. Net sales to the mobile devices market increased (approximately $116.5) primarily due to growth in next generation laptops, mobile device accessories and production-related products. Net sales to the industrial market increased (approximately $43.0) reflecting the benefit of acquisitions as well as growth in industrial battery and hybrid vehicle applications and in alternative energy applications, offset by significant declines in products sold into oil and gas exploration. Net sales to the information technology and data communications market increased (approximately $17.6), primarily due to the growth in products for server, web and data center applications, partially offset by declines in storage-related

applications. Net sales to the mobile networks market decreased (approximately $101.7), primarily due to a decrease in worldwide mobile network build-outs. Net sales to the commercial aerospace market decreased (approximately $21.5), primarily due to decreases in commercial helicopter and business jet demand. Net sales to the military market decreased slightly (approximately $3.8). Net sales in the Cable Products and Solutions segment (approximately 6% of net sales), which is primarily in the broadband communications market, decreased 7% in U.S. dollars and 2% in both constant currencies and organically in 2015, compared to 2014 primarily due to a slowdown in spending by cable operators and the effect of ongoing operator consolidations in the broadband market.

The table below reconciles Constant Currency Net Sales Growth and Organic Net Sales Growth to the most directly comparable U.S. GAAP financial measures, by segment and consolidated, for the years ended December 31, 2015 and 2014:

								Percentage Growth (relative to prior year)
								Net sales			Foreign			Constant						Organic
								growth in			currency			Currency Net			Acquisition			Net Sales
								U.S. Dollars (1)			impact (2)			Sales Growth (3)			impact (4)			Growth (3)
		2015			2014			(GAAP)			(non-GAAP)			(non-GAAP)			(non-GAAP)			(non-GAAP)
Net sales:
Interconnect Products and Assemblies		$	5,239.1		$	4,992.6		5	%		(3)	%		8	%		5	%		3	%
Cable Products and Solutions			329.6			352.9		(7)	%		(5)	%		(2)	%		0	%		(2)	%
Consolidated		$	5,568.7		$	5,345.5		4	%		(4)	%		8	%		5	%		3	%

	(1)		Net sales growth in U.S. dollars is calculated based on Net sales as reported in the Consolidated Statements of Income and Note 11 of the accompanying financial statements.

	(2)		Foreign currency translation impact, a non-GAAP measure, represents the impact on net sales resulting from foreign currency exchange rate changes in the current year period(s) compared to the prior year. Such amount is calculated by translating current year net sales at average foreign currency exchange rates for the respective prior year.

	(3)		Constant Currency Net Sales Growth and Organic Net Sales Growth are non-GAAP financial measures as defined in the "Non-GAAP Financial Measures" section.

	(4)		Acquisition impact, a non-GAAP measure, represents the impact on net sales resulting from acquisitions closed during the years presented, which were not included in the Company’s results as of the comparable prior year and which do not reflect the underlying growth of the Company on a comparative basis.

Geographically, net sales in the U.S. in 2015 increased approximately 1% ($1,696.3 in 2015 versus $1,673.5 in 2014) compared to 2014. International sales for 2015 increased approximately 5% in U.S. dollars and approximately 10% in constant currencies ($3,872.4 in 2015 versus $3,672.0 in 2014) compared to 2014 with strength in both Asia and Europe. The comparatively stronger U.S. dollar in 2015 had the effect of decreasing net sales by approximately $190.3 when compared to foreign currency translation rates in 2014.

Gross profit margin as a percentage of net sales was 31.9% in 2015 compared to 31.7% in 2014. The increase in gross profit margin as a percentage of net sales relates primarily to higher gross profit margins in the Interconnect Products and Assemblies segment reflecting the benefit of higher volumes and cost reduction actions.

Selling, general and administrative expenses were $669.1 or 12.0% of net sales for 2015, compared to $645.1 or 12.1% of net sales for 2014. Administrative expenses increased approximately $9.6 in 2015 primarily related to increases in the amortization of acquisition-related identified intangible assets and stock-based compensation expense and represented approximately 4.8% of net sales in both 2015 and 2014. Research and development expenses increased approximately $9.9 in 2015 reflecting an overall increase in expenses for new product development and represented approximately 2.2% of net sales in 2015 and 2.1% of net sales in 2014. Selling and marketing expenses increased approximately $4.5 in 2015 primarily related to the increase in sales volume and represented approximately 5.0% of net sales in 2015 and 5.1% of net sales in 2014.

Operating income was $1,104.7 or 19.8% of net sales in 2015, compared to $1,034.6 or 19.4% of net sales in 2014. Operating income for 2015 includes $5.7 of acquisition-related expenses (separately presented in the Consolidated Statements of Income) related to professional fees and other external expenses for acquisitions that were closed and announced in 2015. Operating income for 2014 includes $14.1 of acquisition-related expenses, which included professional and transaction-related fees and other external expenses related to acquisitions closed in 2014, as well as the amortization of the value associated with acquired backlog related to acquisitions that closed in 2013 and 2014. For the years ended December 31, 2015 and 2014, these expenses had an impact on net income of $5.7, or $0.02 per share, and $10.2, or $0.04 per share, respectively. Excluding the effect of these expenses, Adjusted Operating Income and Adjusted Operating Margin, as defined in the “Non-GAAP Financial Measures” section below, were $1,110.4 or 19.9% of net sales in 2015 and $1,048.7 or 19.6% of net sales in 2014. The increase in Adjusted Operating

Margin in 2015 compared to 2014 relates to the increase in operating margin for the Interconnect Products and Assemblies segment. Operating income for the Interconnect Products and Assemblies segment for 2015 was $1,158.3 or 22.1% of net sales, compared to $1,088.0 or 21.8% of net sales in 2014. This increase in operating income margin is driven primarily by the positive impact of higher gross profit margins as well as a reduction of selling, general and administrative expenses as a percentage of net sales, as described above. In addition, the operating income for the Cable Products and Solutions segment for 2015 was $40.3 or 12.2% of net sales, compared to $43.7 or 12.4% of net sales for 2014. The decrease in operating income margin for the Cable Products and Solutions segment for 2015 compared to 2014 was primarily as a result of lower volumes.

The table below reconciles Adjusted Operating Income and Adjusted Operating Margin to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2015 and 2014:

		2015						2014
		Operating			Operating			Operating			Operating
		income			margin			income			margin
Reported (GAAP)		$	1,104.7		19.8	%		$	1,034.6		19.4	%
Acquisition-related expenses			5.7		0.1	%			14.1		0.2	%
Adjusted (non-GAAP)		$	1,110.4		19.9	%		$	1,048.7		19.6	%

Interest expense was $68.3 for 2015 compared to $80.4 for 2014. The decrease is primarily attributable to the benefit of lower average borrowing rates resulting from the commercial paper program that was initiated in late 2014, and a senior note issuance in the third quarter of 2014 which replaced a higher rate note maturity. This benefit more than offset the impact of higher average debt levels which resulted from the Company’s stock buyback program as well as acquisition activity.

Other income, net, decreased to $16.4 in 2015 compared to $18.3 in 2014, primarily related to lower interest income on cash, cash equivalents and short-term investments.

The provision for income taxes was at an effective rate of 26.6% in 2015 and 26.5% in 2014. The effective tax rate for 2015 included the effect of acquisition-related expenses incurred during each year, which had the impact of increasing the effective tax rate by 10 basis points. Acquisition-related expenses incurred during 2014 did not have an impact on the effective tax rate for that year. For additional details related to the reconciliation between the U.S. statutory federal tax rate and the Company’s effective tax rate for these years, refer to Note 4 of the Notes to the Consolidated Financial Statements.

Liquidity and Capital Resources

At December 31, 2016 and 2015, the Company had cash, cash equivalents and short-term investments of $1,173.2 and $1,760.4, respectively. On January 8, 2016, the Company used approximately $1,178.6 of its cash, cash equivalents and short-term investments, net of cash acquired, to fund the FCI acquisition. The vast majority of the Company’s cash, cash equivalents and short-term investments on hand as of December 31, 2016 was located outside of the U.S. The Company does not currently intend to repatriate any of its cash, cash equivalents and short-term investments, but rather to permanently reinvest such funds outside the U.S. However, any repatriation of funds would result in the need to accrue and pay income taxes.

Cash Flow Summary

The following table summarizes the Company’s cash flows from operating, investing and financing activities for the years ended December 31, 2016, 2015 and 2014, as reflected in the Consolidated Statements of Cash Flow:

		2016			2015			2014
Net cash provided by operating activities		$	1,077.6		$	1,030.5		$	880.9
Net cash used in investing activities			(1,612.7)			(27.3)			(781.9)
Net cash (used in) provided by financing activities			(133.5)			(180.1)			14.1
Effect of exchange rate changes on cash and cash equivalents			(34.0)			(54.8)			(31.0)
Net change in cash and cash equivalents		$	(702.6)		$	768.3		$	82.1

Operating Activities

The ability to generate cash from operating activities has been one of the Company’s fundamental financial strengths. Cash flow provided by operating activities was $1,077.6 for 2016 compared to $1,030.5 for 2015. The increase in cash flow provided by operating activities for 2016 compared to 2015 is primarily related to an increase in net income, higher non-cash charges resulting from the increase in depreciation and amortization related to the FCI acquisition, and a higher decrease in the net components of working capital, which were partially offset by a higher usage of cash related to the change in long-term assets and liabilities. Cash flow provided by operating activities was $1,030.5 for 2015 compared to $880.9 for 2014. The increase in cash flow provided by operating activities for 2015 compared to 2014 is primarily due to an increase in net income and an overall decrease in the net components of working capital, compared to the increase in net working capital in 2014.

In 2016, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow decreased $51.2, excluding the impact of acquisitions and foreign currency translation, due primarily to increases in accrued income taxes, other accrued liabilities, and accounts payable of $91.7, $61.9, and $47.8, respectively, and a decrease in other current assets of $29.9, partially offset by increases in accounts receivable and inventories of $165.9 and $14.2, respectively. In 2015, the components of working capital as presented on the accompanying Consolidated Statements of Cash Flow decreased $46.9, excluding the impact of acquisitions and foreign currency translation, due primarily to decreases in other current assets of $47.7 and increases in accrued liabilities of $44.2, offset by increases in accounts receivable and inventory of $22.3 and $5.2, respectively, and decreases in accounts payable of $17.5. In 2014, the components of working capital increased $18.9, excluding the impact of acquisitions and foreign currency translation, due primarily to increases in accounts receivable, inventory, and other current assets of $111.5, $51.6 and $10.0, respectively, offset by increases in accounts payable and accrued liabilities of $66.8 and $87.3, respectively.

The following describes the significant changes in the amounts as presented on the accompanying Consolidated Balance Sheets at December 31, 2016 compared to December 31, 2015. Accounts receivable increased $244.7 to $1,349.3 primarily due to the impact of the FCI and other 2016 acquisitions as well as an increase in sales volume, partially offset by the effect of translation from exchange rate changes at December 31, 2016 compared to December 31, 2015 (“Translation”). Days sales outstanding at December 31, 2016 and 2015 were 73 and 71, respectively. Inventories increased $77.1 to $928.9, primarily due to the impact of the FCI and other 2016 acquisitions, partially offset by Translation. Inventory days at December 31, 2016 and 2015 were 76 and 79, respectively. Land and depreciable assets, net, increased $101.9 to $711.4, primarily due to the impact of the FCI and other 2016 acquisitions, as well as capital expenditures of $190.8, partially offset by depreciation of $157.8, disposals and Translation. Goodwill increased $985.9 to $3,678.8 primarily as a result of goodwill recognized during the year related to four acquisitions in the Interconnect Products and Assemblies segment, including FCI, and one acquisition in the Cable Products and Solutions segment, partially offset by Translation. Intangibles, net and other long-term assets increased $211.3 to $517.3 primarily as a result of the identifiable intangible assets of $263.0 recognized related to the FCI and other 2016 acquisitions, partially offset by amortization of $54.6 and Translation. Accounts payable increased $90.4 to $678.2, primarily as a result of the impact of the FCI and other 2016 acquisitions, partially offset by Translation. Payable days at December 31, 2016 and 2015 were 55 and 54, respectively. Total accrued expenses increased $161.5 to $581.8, primarily as a result of the impact of the FCI and other 2016 acquisitions. Accrued pension and postretirement benefit obligations increased $25.9 to $288.4 primarily as a result of the impact of the FCI acquisition. Other long-term liabilities increased $120.6 to $216.5 primarily as a result of the impact of the FCI and other 2016 acquisitions, specifically related to an increase in contingent tax liabilities and deferred tax liabilities.

In 2016, the Company made aggregate cash contributions to its defined benefit pension plans of approximately $26.2, the majority of which was to its U.S. defined benefit pension plans. The timing and amount of cash contributions in subsequent years will depend on a number of factors, including the investment performance of the plan assets.

Investing Activities

Cash flows from investing activities consist primarily of cash flows associated with capital expenditures (purchases of land and depreciable assets), proceeds from disposals of land and depreciable assets, net sales and maturities (purchases) of short-term investments, and acquisitions.

Net cash used in investing activities was $1,612.7 in 2016, compared to $27.3 in 2015 and $781.9 in 2014. In 2016, cash used in investing activities was driven primarily by the use of $1,305.1 in cash to fund acquisitions during the year, most significantly the acquisition of FCI for $1,178.6, capital expenditures (net of disposals) of $183.7 and net purchases of short-term investments of $123.9. In 2015, cash used in investing activities was driven primarily by the use of $199.8 in cash to fund acquisitions during the year and capital expenditures (net of disposals) of $163.4, partially offset by net sales and maturities of short-term investments of $335.9. In 2014, cash used in investing activities was driven primarily by the use of $518.2 in cash to fund acquisitions during the year, capital expenditures (net of disposals) of $203.5 and net purchases of short-term investments of $60.2.

Financing Activities

Cash flows from financing activities consist primarily of cash flows associated with borrowings and repayments of the Company’s credit facilities and other long-debt, repurchases of common stock, proceeds from the exercise of stock options including the related excess tax benefits, dividend payments and distributions to noncontrolling interests.

Net cash used in financing activities was $133.5 in 2016, compared to $180.1 in 2015. In 2016, cash used in financing activities was driven primarily by repurchases of the Company’s common stock of $325.8, dividend payments of $172.7, payments to shareholders of noncontrolling interests of $6.8 and payments of costs related to the refinancing of our revolving credit facility of $3.0, partially offset by cash proceeds from the exercise of stock options including the related excess tax benefits of $191.6 and increased net borrowings of $183.2. In 2015, cash used in financing activities of $180.1 was driven primarily by repurchases of the Company’s common stock of $248.9, dividend payments of $159.3 and payments to shareholders of noncontrolling interests of $6.1, partially offset by increased net borrowings of $153.6 and cash proceeds from the exercise of stock options including the related excess tax benefits of $80.6. In 2014, cash provided by financing activities of $14.1 was driven primarily by increased net borrowings of $540.0 and cash proceeds from the exercise of stock options including the related excess tax benefits of $130.1, partially offset by repurchases of the Company’s common stock of $539.4, dividend payments of $101.9, payments of costs related to debt financing of $11.1 and payments to shareholders of noncontrolling interests of $3.6.

The Company has significant flexibility to meet its financial commitments. The Company uses debt financing to lower the overall cost of capital and increase return on stockholders’ equity. The Company has been, and continues to be, able to borrow funds at reasonable interest rates. The Company’s debt financing includes the use of the commercial paper program, the revolving credit facility and senior notes as part of its overall cash management strategy.

On March 1, 2016, the Company replaced its $1,500.0 unsecured credit facility with a new $2,000.0 unsecured credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility, which matures March 2021, increases the aggregate commitments by $500.0 and gives the Company the ability to borrow at a spread over LIBOR. The Company intends to utilize the Revolving Credit Facility for general corporate purposes. At December 31, 2016, there were no borrowings under the Revolving Credit Facility. The Revolving Credit Facility requires payment of certain annual agency and commitment fees and requires that the Company satisfy certain financial covenants. At December 31, 2016, the Company was in compliance with the financial covenants under the Revolving Credit Facility.

In September 2014, the Company entered into a commercial paper program (“Commercial Paper Program”) pursuant to which the Company issues short-term unsecured commercial paper notes in one or more private placements. Amounts available under the Commercial Paper Program are borrowed, repaid and re-borrowed from time to time. The Commercial Paper Program is rated A-2 by Standard & Poor’s and P-2 by Moody’s and is backstopped by the Revolving Credit Facility. Effective April 1, 2016, the maximum aggregate principal amount of the commercial paper notes that may be outstanding at any time under the Commercial Paper Program was increased by $500.0 from $1,500.0 to $2,000.0. The amount of commercial paper notes outstanding as of December 31, 2016 was $1,018.9. Additionally, in 2014, the Company issued three separate unsecured senior notes with an aggregate $1,500.0 principal amount, the proceeds of which were used to repay the $600.0 4.75% notes which matured during the year and borrowings under the Company’s revolving credit facilities. Fees and expenses related to the issuance of the Revolving Credit Facility in 2016 was $3.0. The fees and expenses related to the issuance of the commercial paper and senior notes in 2014 was $11.1. Such issuance fees and expenses are amortized to interest expense over the respective terms of the debt. The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of commercial paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future.

As of December 31, 2016, the Company has outstanding senior notes (the “Senior Notes”) as follows:

Principal			Interest
Amount			Rate		Maturity
$	375.0		1.55	%	September 2017
	750.0		2.55	%	January 2019
	375.0		3.125	%	September 2021
	500.0		4.00	%	February 2022

The Senior Notes are unsecured and rank equally in right of payment with the Company’s other unsecured senior indebtedness. Interest on each series of the Senior Notes is payable semiannually. The Company may, at its option, redeem some or all of any series of Senior 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 the date of maturity, a make-whole premium. The 1.55% Senior Notes are due in September 2017 and are therefore recorded, net of the related unamortized discount and debt issuance costs, within Current portion of long-term debt in the accompanying Consolidated Balance Sheets as of December 31, 2016.

Refer to Note 2 of the Notes to the Consolidated Financial Statements for further information related to the Company’s debt.

In January 2013, the Board of Directors authorized a stock repurchase program under which the Company could repurchase up to 20 million shares of its Common Stock during the two-year period ending January 31, 2015 (the “2013 Stock Repurchase Program”). During the year ended December 31, 2014, the Company repurchased 11.4 million shares of its common stock for $539.4. These treasury shares have been retired by the Company and common stock and retained earnings were reduced accordingly. At December 31, 2014, the Company had repurchased all of the shares authorized under the 2013 Stock Repurchase Program.

In January 2015, the Board of Directors authorized a stock repurchase program under which the Company could repurchase up to 10 million shares of its Common Stock during the two-year period ended January 20, 2017 (the “2015 Stock Repurchase Program”). During the years ended December 31, 2016 and 2015, the Company repurchased 5.5 million and 4.5 million shares of its common stock for $325.8 and $248.9, respectively. These treasury shares have been retired by the Company and common stock and retained earnings were reduced accordingly. At December 31, 2016, the Company had repurchased all of the shares authorized under the 2015 Stock Repurchase Program.

On January 24, 2017, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may 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”). As of February 10, 2017, the Company repurchased approximately 3.2 million shares of its common stock for $213.9 under the 2017 Stock Repurchase Program. The price and timing of any future purchases under the 2017 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 Common Stock. In the third quarter of 2015, the Board of Directors approved an increase in the quarterly dividend rate from $0.125 to $0.14 per share effective with dividends declared in the third quarter of 2015, and in October 2016, approved a further increase in the quarterly dividend rate from $0.14 to $0.16 per share effective with dividends declared in the fourth quarter of 2016. Total dividends declared during 2016, 2015 and 2014 were $178.8, $163.7 and $140.6, respectively. Total dividends paid in 2016, 2015 and 2014 were $172.7, $159.3 and $101.9, respectively, including those declared in the prior year and paid in the current year. The Company’s debt service requirements consist primarily of principal and interest on the Senior Notes, the Revolving Credit Facility, and the Commercial Paper Program.

Liquidity and Cash Requirements

The Company’s primary sources of liquidity are internally generated cash flow, the Commercial Paper Program, the Revolving Credit Facility, and its cash, cash equivalents and short-term investments on hand. The Company believes that its cash, cash equivalents and short-term investment position on hand, ability to generate future cash flow from

operations, availability under its credit facilities, and access to capital markets provide adequate liquidity to meet its obligations for the next twelve months, including the repayment of its 1.55% Senior Notes due in September 2017.

The Company’s primary ongoing cash requirements will be for operating and capital expenditures, product development activities, repurchase of its common stock, funding of pension obligations, dividends and debt service. The Company may also use cash to fund all or part of the cost of acquisitions, as it did with the 2016 acquisition of FCI. The Company expects that capital expenditures in 2017 will be in a range of approximately $200.0 to $240.0.

FCI Acquisition

On January 8, 2016, pursuant to a Purchase Agreement dated July 17, 2015 and as amended on December 31, 2015, the Company acquired all of the share capital of FCI for an aggregate purchase price of approximately $1,178.6, net of cash acquired, which was funded by cash, cash equivalents and short-term investments on hand that were held outside of the United States.

Refer to Note 9 of the Notes to the Consolidated Financial Statements for further discussion of the FCI acquisition.

Environmental Matters

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

Inflation and Costs

The cost of the Company’s products is influenced by the cost of a wide variety of raw materials. The Company strives to offset the impact of increases in the cost of raw materials, labor and services through price increases, productivity improvements and cost saving programs. However, in certain markets, particularly in communications related markets, implementing price increases can be difficult and there is no guarantee that the Company will be successful.

Foreign Exchange

The Company conducts business in many international currencies through its worldwide operations, and as a result is subject to foreign exchange exposure due to changes in exchange rates of the various currencies including possible currency devaluations. Changes in exchange rates can positively or negatively affect the Company’s sales, gross margins and equity. The Company attempts to minimize currency exposure risk in a number of ways including producing its products in the same country or region in which the products are sold, thereby generating revenues and incurring expenses in the same currency, cost reduction and pricing actions, and working capital management. However, there can be no assurance that these actions will be fully effective in managing currency risk, especially in the event of a significant and sudden decline in the value of any of the international currencies of the Company’s worldwide operations. For further discussion of foreign exchange exposures, risks and uncertainties, refer to the risk factor titled “The Company’s results may be negatively affected by foreign currency exchange rates” in Part I, Item 1A herein.

Non-GAAP Financial Measures

In addition to assessing the Company’s financial condition, results of operations, liquidity and cash flows in accordance with U.S. GAAP, management utilizes certain non-GAAP financial measures defined below as part of its internal reviews for purposes of monitoring, evaluating and forecasting the Company’s financial performance, communicating operating results to the Company's Board of Directors and assessing related employee compensation measures. Management believes that these non-GAAP financial measures may be helpful to investors in assessing the Company’s overall financial performance, trends and year-over-year comparative results, in addition to the reasons noted below. Non-GAAP financial measures exclude income and expenses that are not directly related to the Company's operating performance during the years presented. Items excluded from non-GAAP financial measures in any period may consist of, without limitation, acquisition-related expenses, certain discrete tax items and refinancing-related costs

that may arise during such periods. The non-GAAP financial information contained herein is included for supplemental purposes only and should not be considered in isolation, as a substitute for or superior to the related U.S. GAAP financial measures. In addition, these non-GAAP financial measures are not necessarily the same or comparable to similar measures presented by other companies, as such measures may be calculated differently or may exclude different items.

The non-GAAP financial measures defined below should be read in conjunction with the Company’s financial statements presented in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures for the years ended December 31, 2016, 2015 and 2014 are included in “Results of Operations”:

	·		Adjusted Operating Income is defined as Operating income, as reported in the Consolidated Statements of Income, excluding income and expenses that are not directly related to the Company's operating performance during the years presented.

	·		Adjusted Operating Margin is defined as Adjusted Operating Income (as defined above) expressed as a percentage of Net sales (as reported in the Consolidated Statements of Income).

	·		Constant Currency Net Sales Growth is defined as the year-over-year percentage change in net sales growth, excluding the impact of changes in foreign currency exchange rates. Our results are subject to volatility related to foreign currency translation fluctuations. As such, management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Organic Net Sales Growth (defined below) and Constant Currency Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends.

	·		Organic Net Sales Growth is defined as the year-over-year percentage change in net sales growth resulting from operating volume and pricing changes, and excludes the impact of 1) changes in foreign currency exchange rates, which directly impact the Company’s operating results and are outside the control of the Company and 2) acquisitions closed during the years presented, which were not included in the Company’s results as of the comparable prior years and which do not reflect the underlying growth of the Company on a comparative basis. Management evaluates the Company’s sales performance based on actual sales growth in U.S. dollars, as well as Constant Currency Net Sales Growth (defined above) and Organic Net Sales Growth, and believes that such information is useful to investors to assess the underlying sales trends.

In addition, the following two non-GAAP financial measures, defined below, are reconciled to the most directly comparable U.S. GAAP financial measures in Part II, Item 6 herein, for each of the years presented therein.

	·		Adjusted Net Income attributable to Amphenol is defined as Net Income attributable to Amphenol Corporation, as reported in the Consolidated Statements of Income, excluding income and expenses and their related tax effects, that are not directly related to the Company's operating performance during the years presented.

	·		Adjusted Diluted EPS is defined as diluted earnings per share (as reported in accordance with GAAP), excluding income and expenses and their related tax effects, that are not directly related to the Company's operating performance during the years presented. Adjusted Diluted EPS is calculated as Adjusted Net Income attributable to Amphenol, as defined above, divided by the weighted average outstanding diluted shares as reported in the Company’s Consolidated Statements of Income.

Recent Accounting Pronouncements

Refer to Note 1 of the Notes to the Company’s Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

Pensions

The Company and certain of its subsidiaries in the United States have defined benefit pension plans (“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 also have defined benefit plans covering their employees (the “International Plans”). The pension expense for the U.S. Plans and the International Plans (together, the “Plans”) approximated $24.2, $31.0 and $22.4 in 2016, 2015 and 2014, respectively, and is calculated based upon a number of actuarial assumptions established on January 1 of the applicable year, including a weighted average discount rate, mortality projections, rate of increase of future compensation levels, and an expected long-term rate of return on the respective Plans’ assets.

The discount rate used by the Company for valuing pension liabilities is based on a review of high quality corporate bond yields with maturities approximating the remaining life of the projected benefit obligations. The weighted average discount rate for the U.S. Plans on this basis was 3.93% and 4.11% at December 31, 2016 and 2015, respectively. The decrease in the discount rate for the U.S. Plans resulted in an increase in the benefit obligation of approximately $10.7 at December 31, 2016. The weighted average discount rate for the International Plans was 2.28% and 3.14% at December 31, 2016 and 2015, respectively. The decrease in the discount rate for the International Plans did not have a material impact on the benefit obligation at December 31, 2016. At December 31, 2015, the Company elected to further refine its approach for calculating its service and interest costs beginning in 2016 by applying a split discount rate approach under which specific spot rates along the selected yield curve are applied to the relevant projected cash flows as the Company believes this method more precisely measures its obligations. The mortality assumptions used by the Company reflect commonly used mortality tables and improvement scales for each plan and increased life expectancies for plan participants.

In developing the expected long-term rate of return assumption for the U.S. Plans, the Company evaluated input from its external actuaries and investment consultants as well as consideration of long-term inflation assumptions. Projected returns by such consultants are based on broad equity and bond indices. The Company also considered its historical twenty-year compounded return of approximately 8.5%, which has been in excess of these broad equity and bond benchmark indices. The expected long-term rate of return on the U.S. Plans’ assets is based on an asset allocation assumption of approximately 60% with equity managers (with an expected long-term rate of return of approximately 8.5%) and 40% with fixed income managers (with an expected long-term rate of return of approximately 6.0%). The Company believes that the long-term asset allocation on average will approximate 60% with equity managers and 40% with fixed income managers. The Company regularly reviews the actual asset allocation and periodically rebalances investments to its targeted allocation when considered appropriate. Based on this methodology, the Company’s expected long-term rate of return assumption to determine the net periodic benefit cost of the U.S. Plans for the years ended December 31, 2016 and 2015 was 7.75% and 8.00%, respectively. The Company's expected weighted average long-term rate of return assumption to determine the net periodic benefit cost of the International Plans for the years ended December 31, 2016 and 2015 was 4.29% and 5.47%, respectively.

The Company made cash contributions to the Plans of $26.2, $24.1 and $23.8 in 2016, 2015 and 2014, respectively. The total liability for accrued pension and postretirement benefit obligations under the Company’s pension and postretirement benefit plans increased in 2016 to $290.9 ($4.0 of which is included in other accrued expenses primarily representing required contributions to be made during 2017 for unfunded foreign plans) from $266.0 in 2015 primarily due to a decrease in the discount rate. The Company estimates that, based on current actuarial calculations, it will make aggregate cash contributions to the Plans in 2017 of approximately $25.0, the majority of which will be to the U.S. Plans. The timing and amount of cash contributions in subsequent years will depend on a number of factors including the investment performance of the Plans’ assets.

The Company offers various defined contribution plans for certain U.S. and foreign employees. Participation in these plans is based on certain eligibility requirements. The Company matches the majority of employee contributions to the U.S. defined contribution plans with cash contributions up to a maximum of 5% of eligible compensation. The Company provided matching contributions to its U.S. defined contribution plans of approximately $5.0, $4.2 and $3.8 in 2016, 2015 and 2014, respectively.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are adjusted as new information becomes available. The Company’s critical accounting policies and estimates are set forth below. The significant accounting policies are more fully described in Note 1 of the Notes to the Company’s Consolidated Financial Statements.

Revenue Recognition - The Company’s primary source of revenues is from product sales to its customers. Revenue from sales of the Company’s products is recognized at the time the goods are delivered, title passes and the risks and rewards of ownership pass to the customer, provided the earning process is complete and revenue is measurable. Such recognition generally occurs when the products reach the shipping point, the sales price is fixed and determinable, and collection is reasonably assured. Delivery is determined by the Company’s shipping terms, which are primarily freight on board shipping point. Revenue is recorded at the net amount to be received after deductions for estimated discounts, allowances and returns. These estimates and reserves are determined and adjusted as needed based upon historical experience, contract terms and other related factors. The shipping costs for the majority of the Company’s sales are paid directly by the Company’s customers. In the broadband communications market (approximately 6% of net sales in 2016), the Company pays for shipping costs to the majority of its customers. Shipping costs are also paid by the Company for certain customers in the Interconnect Products and Assemblies segment. Amounts billed to customers related to shipping costs are immaterial and are included in net sales. Shipping costs incurred to transport products to the customer which are not reimbursed are included in Selling, general and administrative expenses.

Inventories - Inventories are stated at the lower of standard cost, which approximates average cost, or market. Provisions for slow-moving and obsolete inventory are made based on historical experience and product demand. Should future product demand change, existing inventory could become slow-moving or obsolete, and provisions would be increased accordingly.

Depreciable Assets - Property, plant and equipment are carried at cost less accumulated depreciation. The appropriateness and the recoverability of the carrying value of such assets are periodically reviewed taking into consideration current and expected business conditions. The Company has not recorded any significant impairments.

Goodwill - The Company performs its evaluation for the impairment of goodwill for the Company’s two reporting units on an annual basis 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 2015, the Company changed its annual assessment date for goodwill impairment to be as of July 1, rather than June 30, which had no impact on the outcome of the assessment.

In 2016, the Company utilized the option to first assess qualitative factors to determine whether it was necessary to perform the two-step 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 carrying value is less than its fair value. As of July 1, 2016, the Company determined that it was more likely than not that the fair value of its reporting units was greater than their carrying amounts.

In 2015, the Company exercised its option to bypass the qualitative assessment and performed the first step of the two-step quantitative goodwill impairment assessment for each reportable business segment. As part of the quantitative assessment, the Company estimated the fair value of each of its reportable business segments using a market approach. The Company believed this approach provided the best indicator of fair value, by utilizing market prices and other relevant metrics for comparable publicly traded companies with similar operating and investment characteristics and recent transactions of similar businesses within the industry. Significant estimates and assumptions were used in the Company’s goodwill impairment assessment including revenue and profitability projections, determination of appropriate publicly traded market comparison companies, and comparable revenue and earnings multiples derived from

comparable publicly traded companies and from recent acquisitions within our industry. As part of our quantitative approach, the Company evaluated whether it was reasonably likely that changes to management’s estimates and assumptions would have a material impact on the results of the goodwill impairment assessment. As of July 1, 2015, we determined that the fair value of each of the Company’s reportable business segments was substantially in excess of their respective carrying amounts, and therefore, no goodwill impairment resulted from the assessment.

The Company has not recognized any goodwill impairment in 2016, 2015 or 2014 in connection with its annual impairment assessment.

Acquisitions - The Company accounts for acquisitions using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. The purchase price of acquisitions is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on estimated fair values, and any excess purchase price over the identifiable assets acquired and liabilities assumed is recorded as goodwill. Any subsequent adjustments to the purchase price allocation prior to the completion of the measurement period will be reflected as an adjustment to goodwill in the period in which the adjustments are identified. The Company may use independent valuation specialists to assist in determining the estimated fair values of assets acquired and liabilities assumed, which could require certain significant management assumptions and estimates.

Defined Benefit Plan Obligation - The defined benefit plan obligation is based on significant assumptions such as mortality rates, discount rates and plan asset rates of return as determined by the Company in consultation with the respective benefit plan actuaries and investment advisors. Refer to Note 7 of the Notes to the Consolidated Financial Statements.

Income Taxes - Deferred income taxes are provided for revenue and expenses which are recognized in different periods for income tax and financial statement reporting purposes. At December 31, 2016, the cumulative amount of undistributed earnings of foreign affiliated companies was approximately $4,182.5. Deferred income taxes are not provided on undistributed earnings of foreign affiliated companies as it is the Company’s intention to reinvest these earnings permanently outside the U.S. It is not practicable to estimate the amount of tax that might be payable if undistributed earnings were to be repatriated as there is a significant amount of uncertainty with respect to the tax impact of the remittance of these earnings due to the fact that dividends received from numerous foreign subsidiaries may generate additional foreign tax credits, which could ultimately reduce the U.S. tax cost of the dividend. These uncertainties are further complicated by the significant number of foreign tax jurisdictions and entities involved. Deferred tax assets are regularly assessed for recoverability based on both historical and anticipated earnings levels and a valuation allowance is recorded when it is more likely than not that these amounts will not be recovered. The tax effects of an uncertain tax position taken or expected to be taken in income tax returns are recognized only if it is “more likely than not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company includes estimated interest and penalties related to unrecognized tax benefits in the provision for income taxes.

Disclosures about contractual obligations and commitments

The following table summarizes the Company’s known obligations to make future payments pursuant to certain contracts as of December 31, 2016, as well as an estimate of the timing in which such obligations are expected to be satisfied.

		Payment Due By Period
Contractual Obligations					Less than			1-3			3-5			More than
(dollars in millions)		Total			1 year			years			years			5 years
Debt (1)		$	3,023.0		$	375.7		$	750.1		$	1,396.9		$	500.3
Interest related to senior notes			224.3			56.7			84.2			63.4			20.0
Operating leases			129.2			42.4			53.9			20.5			12.4
Purchase obligations (2)			255.5			219.9			35.0			0.6			—
Accrued pension and postretirement benefit obligations (3)			59.7			7.9			12.0			12.2			27.6
Total (4)		$	3,691.7		$	702.6		$	935.2		$	1,493.6		$	560.3

	(1)		The Company has excluded expected interest payments on the Revolving Credit Facility and Commercial Paper Program from the above table, as this calculation is largely dependent on average debt levels the Company expects to have during each of the years presented. The actual interest payments made related to the Company’s Revolving Credit Facility and Commercial Paper Program, combined, in 2016 were $10.1. Expected debt levels, and therefore expected interest payments, are difficult to predict, as they are significantly impacted by such items as future acquisitions, repurchases of treasury stock, dividend payments as well as payments or additional borrowings made to reduce or increase the underlying revolver balance.

	(2)		Purchase obligations relate primarily to open purchase orders for goods and services, including raw materials and components to be used in production.

	(3)		Included in this table are estimated benefit payments expected to be made under the Company’s underfunded pension and postretirement benefit plans. The Company also maintains several funded pension and postretirement benefit plans, the most significant of which covers its U.S. employees. Over the past several years, there has been no minimum requirement for Company contributions to the U.S. Plans due to prior contributions made in excess of minimum requirements and as a result, there was no anticipated minimum required contribution included in the table above related to the U.S. Plans for 2017. However, the Company did make a voluntary contribution to the U.S. Plans of approximately $15.0 in 2016 and anticipates making a similar voluntary contribution in 2017. It is not possible to reasonably estimate expected required contributions in the above table after 2017 since several assumptions are required to calculate minimum required contributions, such as the discount rate and expected returns on pension assets.

	(4)		As of December 31, 2016, the Company has recorded liabilities of approximately $138.7 related to unrecognized tax benefits. These liabilities have been excluded from the above table due to the high degree of uncertainty regarding the timing of potential future cash flows; it is difficult to make a reasonably reliable estimate of the amount and period in which all of these liabilities might be paid.