Hello, and welcome to the Fourth Quarter Earnings Conference Call for Amphenol Corporation. [Operator Instructions] At the request of the company, today's conference is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to introduce today's conference host, Ms. Diana Reardon. Ma'am, you may begin.

Thank you. My name is Diana Reardon, and I'm Amphenol's CFO. I'm here together with Adam Norwitt, our CEO, and we'd like to welcome you all to our fourth quarter earnings conference call. Q4 results were released this morning. I will provide some financial commentary on the quarter, and Adam will give an overview of the business and current trends. We'll then have a question-and-answer session. The company closed the fourth quarter, achieving new records in both sales and earnings per share with sales of $1.146 billion and EPS before onetime items of $0.94, beating the high end of the company's guidance. Sales were up 21% in both U.S. dollars and local currencies compared to Q4 of 2011. From an organic standpoint, excluding both acquisitions and FX, sales in Q4 2012 were up 15% versus last year. Sequentially, sales were up 4% in U.S. dollars and 1% organically from Q3. Breaking down sales into our 2 major components, our Cable business, which comprise 7% of our sales, was up 40% from last year and 22% from last quarter, primarily as a result of the acquisition closed at the end of Q3. The Interconnect business, which comprise 93% of our sales, was up 19% from last year and 3% sequentially, and Adam will comment further on trends by market in a few moments. For the full year 2012, sales were $4.292 billion and up 9% in U.S. dollars and 5% organically over last year, a very strong performance in a challenging market. Operating income, excluding onetime items, was $223 million in Q4 2012 compared to prior year operating income of $175 million. Operating margin, excluding onetime items, was 19.5% in Q4, up 100 basis points from 18.5% in Q4 of last year and equal to the 19.5% reported in Q3 of…

Well, thank you very much, Diana. I appreciate that. And let me take this opportunity to thank you all for joining our call and to wish you a happy new year. I'm going to spend a little bit of time to highlight our fourth quarter as well as our full year 2012 achievements; I'll then discuss the trends and the progress in our served markets; and then finally, I'll make a few comments on our outlook for the first quarter and full year 2013; then we'll have some time for questions at the end. I'm very pleased to report that the company achieved a third consecutive record quarter as we reached new historical highs in orders, sales and earnings per share, exceeding the high end of the company's guidance. It is in particular very satisfying that we were able to achieve these performance records despite the ongoing uncertainties that are still existing in the global economy. Revenues in the quarter increased a very strong 21% from prior year and 4% sequentially, reaching $1.146 billion. And the company booked as well a record $1.125 billion in orders, which was a book-to-bill of 0.98:1. We also continued to focus very much on profitability. And in this quarter, we generated very strong margins, growing 1 full percentage point from prior year to 19.5%. I remain extremely proud of our Amphenol team. It is in the dynamic times like these when the true value of the discipline and the agility of our entrepreneurial organization is most clearly revealed as we have continued to capitalize on the many available opportunities for growth while also driving superior operating performance. I'm also very pleased that we were able to complete our fifth acquisition of the year in the fourth quarter. We acquired the interconnect assembly business of…

[Operator Instructions] Our first question will come from Sherri Scribner from Deutsche Bank.

I was hoping you could dig a little bit more into what's going on in the info tech market. I think you said that business was weak at the end of the quarter. Just wanted to get a sense of is that primarily on the server and storage side? Is that primarily on the telecom side? Maybe you can provide a little more detail.

Sure. Now thank you very much, Sherri, for the question. Look, the fourth quarter certainly on a year-over-year basis was strong. And the strength in the fourth quarter was in particular driven by servers and there are a lot of new-release servers where we have an expanded position on those servers with a lot of our new, high-speed products as well as especially power products where more and more, the efficiency of power in those servers becomes a real selling factor for our customers. We had anticipated, and we have heard from our customers going into the fourth quarter, that the overall spending patterns from their customers appeared to be moderating somewhat. And I think we even talked about at the last conference call that, that evolved. The markets appeared to be one where there was some macro global economic impact to that market. And I think as we go into the first quarter, we continue to see and hear from our customers that in general, the outlook from the various IT managers around the world is not really any more positive and has not turned more positive. And that's why we have given guidance going into the quarter that we would expect some degree of further moderation. But whether that is in servers or networking or transmission or whether -- or storage, that's not necessarily so clear to us sitting where we sit today. But the overall budgeting and the overall spending among the IT managers of the world appears to still be somewhat conservative. That all being said, we have done a great job this year in ensuring our position across-the-board. Because as you may know, the IT industry has one other characteristic that is relatively new this year and in the prior couple of years, which is the level of competition among the equipment makers has truly ratcheted up. Whether that is from new entrants or people who were traditionally involved in one segment now getting into other segments, there is just a real, tremendous dogfight going on in the IT industry. We don't bet on which of those dogs is going to win the fight. We have worked very hard to ensure strong position across-the-board in -- among all of the major manufacturers of IT hardware and data center hardware. And in my mind, the demand for data driven by video, driven by these mobile devices, that continues to create a tremendous level of end demand eventually that will eventually demand some of this equipment to be produced, and we have very, very strong positions across-the-board there.

That's very helpful. And I just wanted to quickly ask about the automotive segment. You had commented that you thought that segment would be weak in the fourth quarter and it was driven by Europe. But you suggested in the guidance that maybe that is getting better, and I'm just curious about that considering some of the comments we've heard about auto in the U.S. maybe being a bit softer. So I just want to get your overall thoughts.

Sure. No, no. Well, look, I mean, we should not be a bellwether for automotive. Obviously, our position on automotive, it's 11% of sales, which we're very proud of and it's a lot more than it used to be, is not necessarily reflective of the whole market for Interconnect in auto. But what we have seen very clearly, and we see that with the optimism that we have going into the first quarter, is that we've been working a lot on a lot of new electronics for cars, and those are going into cars which are being built and are -- where the build rates are going up going into the first quarter. So it's a combination of new programs that we have successfully designed into, combination of those products that we're selling into also selling well in the end market. So whether that is a broader industry trend or an Amphenol-only trend, I'm not here to say either way. But certainly, what we see from our customers and the programs that we're designed into is that there is a good expectation going into the first quarter. And it was no surprise to us that we saw in the fourth quarter some slight decline in that market given all what we have seen in Europe, which still is the majority of our sales into the automotive market.

Your next question will come from Matt Sheerin from Stifel, Nicolaus. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: A question, Adam, regarding the mobility sector, which was obviously up very strong and you guided down perhaps more than seasonal. Could you give us an idea? Sequentially, it looks like -- just sort of backing into your guidance by end market, it looks like that's going to be down 20-plus percent or so. Can you confirm that? And then also, could you give us an idea of the diversification within that business, tablets versus smartphones and customer concentration, because obviously, there's 2 very big customers doing well and the 2 ecosystems. I'm just trying to get a sense of how diversified you are within that segment.

Sure. Matt, just to take the first part of your question in terms of the sequential decline, we think it could be about twice normal. And normal, what we've seen is somewhere in the sort of 13% to 15% sequential decline. And we think because of that, that strength in the fourth quarter and what Adam described before, that it could be twice that as we go into Q1. And maybe Adam wants to talk about the rest of the question.

Yes, and I think just relative to the fourth quarter, we did see great strength there. There are a lot of new programs launching. We had good position on those new programs. And it can happen. We -- obviously, it exceeded our expectations in the fourth quarter on the volumes, and some of that volume for the fourth quarter maybe would have normally been in the first quarter. Relative to the diversification, I mean, our position is actually quite diverse there. You're correct, there's only a few players. But I would say that there's more than 2, by the way, but there's certainly not 20. And we have a good position across-the-board with these players. Our growth this year, and the fourth quarter is no different, has not been driven by phones necessarily because I have talked about in the past that we have seen more of a commoditization of those phones whereby the value in the phone becomes more the software and not the unique properties of the hardware where we can add value. Conversely, we have seen in tablets, in ultrabooks, and what I have really termed mobile computing devices a tremendous amount of hardware innovation, interconnect innovation, antenna innovation, mechanism innovation whereby our R&D teams around the world and predominantly in Asia where they are have been able to work with customers to truly enable new functionalities in those devices, which allow our customers the opportunity to sell more of them. And so the -- it is really on those mobile computing devices where we have seen more of the growth in the quarter. We continue to participate in smartphones, but that's not what's driving the growth today.

Next question is from Brian White with Topeka.

I was just curious if you could talk a little bit about the mobile device market for 2013. I just want to clarify. You said there would be no growth for that market?

No, what we -- what I said is that our growth in the 2013 would be at similar levels as it was in 2012. Apologies if that was not so clear. We grew this year by about 9%, and we would expect similar order of magnitude going into 2013.

Okay, great. And a lot of the ultrabooks seem to be coming out sometime in 2013, so maybe you benefited from some of the new programs at the end of 2012. But when do you think we'll see the big ultrabook ramp in 2013? Is it first half or more second half?

Yes, I -- honestly, I wouldn't really be able to say. I mean, there are products that seem to get released at different times. And there are products where you don't even know. Do you call it a tablet or an ultrabook as they come out? Do you call it an ultrabook when the keyboard is detachable or not? I mean, that I have a hard time. So I lump them all kind of into one group now, which is really this mobile computing devices. And at least as far as we've seen, those may get released over the course of the year. It is true that in the fourth quarter, there were a lot of them released, and there was a lot of production to support those releases. And I think that's part of what we saw in the fourth quarter in particular with a lot of those new releases. When will they get released going forward? It's hard to say. I think companies are constantly changing their schedules. The big guys are tweaking all the time. When do they release a product? Tactically, do they do it for Christmas? Do they do it for Chinese New Year? Do they do it for the summer holidays? Do they do it for back-to-school? I mean, there appears to be so many schools of thought about the appropriate timing of a release, and my sense is they are constantly experimenting with this. So for us to make a guess about when that would be, I wouldn't be well enough placed to make an accurate guess about that.

Your next question comes from Shawn Harrison with Longbow Research.

Two questions. Just first on the mobile networks business. It seems like you're maybe a little bit cautious here short term, but you had a good 2012. How do you see growth in that market, I guess, coming around for 2013 particularly given that it looks like China may start spending again on wireless infrastructure?

Yes, well, thank you very much, Shawn. I think we had a good fourth quarter in wireless infrastructure. I wouldn't say that we had necessarily a good 2012, at least my personal assessment of it. I mean, to be entirely honest, the market was slightly down in the year. That's clearly not our aspiration for that market. There's an old saying, "One swallow does not make a summer," and I think we are appropriately cautious about that market. The dynamics of that market have certainly been very challenging over really the last 7, 8 quarters as I think the economical models that the operators are facing -- when do they spend the money, how much do they spend, what do they spend it on -- they're still wrestling with that. Our -- the benefit that we got in the fourth quarter, clearly there was a comparison to a very difficult fourth quarter last year. But in addition, we have not sat on our heels during these difficult quarters in mobile infrastructure. Rather, we have gone out and relentlessly tried to get design-in positions of a lot of new technologies on new base stations in particular but also in spreading our wings with more of the operators with our antenna products. And I think we've done a great job at that. And we see that in the fourth quarter where these are -- this is really driven by a lot of these new base station platforms. We see going forward that to the extent that they sell these new, smaller call it microcells with a different architecture going up onto the tower, for example, that we will be very strongly positioned. But I think it's too early to call it a full-on recovery of mobile infrastructure. We remain very, very close to the customers, and we're really the only company in this industry who is close on both sides. I mean, we're very close with the OEMs, we're very close with the operators. And so rest assured that when those opportunities come, we will really be there to participate. But again, too early to call one strong year-over-year growth quarter a successful trend, and we remain still very, very cautious about that market but hopeful that as the year goes on, we can start to see good momentum there.

Okay. And then as a follow-up, I don't mean to nitpick on the fourth quarter, but Interconnect incremental margins were maybe a little lighter than you would typically like to see. Was that more just a function of mix? Because it looks like the guidance for '13, you're back to more of a normalized incremental EBIT margin.

Yes, look, I mean, I think that not every quarter is going to be exactly the same incremental margins as every other quarter, and so we do have this 25% conversion margin goal. But I think when we look at the margins that we've achieved, both in Q4 and both for the full year 2012, we feel really good about the margin achievement. We achieved a 24% year-over-year conversion margin in Q4, hitting 19.5% ROS and 21% for the full year 2012. As you point out, we -- in our guidance, we have what we would consider to be good conversion margins and are guiding to increased ROS. And to guiding, I think, to increased ROS, given the ROS levels that we're already at, you can see that the whole team is really committed to getting more margin expansion. I think that's really saying something given the levels of profitability that we're at. And so I think that the fact is just that we're probably not going to hit 25% incremental margins each quarter, but I also don't think that should not take anything away from the achievements that we've had from a profitability perspective.

Your next question will come from Steven Fox with Cross Research.

Two questions for me. First of all, just one clarification on the mobile networks side. Adam, for the full year, are you guys saying that you think you can grow your business in mobile networks? Or is it still too tough of a market? I'm not totally clear on that. And if you are growing, how are you doing that? And then secondly, just looking back at some of the acquisitions, maybe not the one you just announced but maybe the previous 4 or 5, is there anything you can just sort of talk around the synergies that you may have realized, either them -- the acquisitions you bought benefiting your business or vice versa, or how you've sort of gotten more out of what you invested in the companies to begin with? That'd be helpful.

Well, thank you very much, Steve. Relative to your first question on mobile networks, our guidance assumes really not very substantial growth in the mobile networks market for the full year. I think I explained the basis of that in the prior question. But we certainly will look forward to targeting any incremental opportunity to actually drive growth. Our hope and certainly a goal would be to have growth in that market. But today, we are not guiding to any of that growth. Relative to the prior acquisitions that we made, that is 5 for the year, you know very well that we have what I would call a relatively unique approach to acquisitions, which is we don't acquire companies with the hope to change them. We don't go in and change management. We don't go in and completely revamp their systems or change their sales force or any of this. Rather, what we do when we make these acquisitions, first we let them settle down because it's, always for the people, something very different to be acquired by a global company. But second and most importantly is we sit down with them and we identify where are those opportunities that we could create for you some new open doors. And I can tell you that with all of those companies that we have acquired, we've had those dialogues, we've had some success. It's not always quick. It's not something that we kind of force-feed to the organizations because we want to make sure that the transition is smooth, we want to make sure that we're not upsetting kind of something that we didn't even see within the company ahead of time. You never know how delicate the balance is of an organization of a company that's been acquired. But…

Next question will come from Mike Wood with Macquarie Capital.

We touched on most of the segments except military, commercial aero in the Q&A. And so I'm curious in terms of the pushout of the spending cut decisions how that's impacted customers' decisions. And specifically, if you can get into sort of the impact that has on programs that are unlikely to get cut where you've had heavier content on versus something that actually may get cut.

Sure. No, that's a very good question, Mike. Obviously, we watched, like everybody did, on New Year's Eve. I don't know which I was watching more, the ball to drop or the shoe to drop on Capitol Hill, but they were both equally entertaining from some perspective. Look, it wasn't great that they kicked the can here on sequestration. I think it's fine. I think there is a consensus that appears to be that this military is not just a line item on a budget, but it's jobs, it's technology. There's a lot of importance that is ascribed to that. Clearly, budgets are going to be under pressure. There's already existing budget cuts that are there. But what we have seen is there's really no change to the status quo of the uncertainty of our customers following the New Year's Eve deal that came. We'll see over the next 40 or 60 days whenever this next fiscal cliff 2 arrives what that will bring. We will be prepared if something does happen that is more negative. But today, we are not sort of assuming that the sequestration is going to happen. Relative to the programs that we're on, I've said it before that technology and electronics in military hardware is a great methodology for the military long term to create savings. And we continue to see that. I mean, we had sequential growth in military in the fourth quarter, year-over-year growth. And that growth is truly driven by new electronics applications, things like radar upgrades, things like new types of missile systems, new networks that are being put in place, UAVs. I mean, those type of "More bang for the buck" electronics continue to be very much the focus. And when we talk to our customers, which, as you can imagine, is every day, we continue to hear from them that there is a high priority put upon accelerating the pace of the technology innovation in those areas where you can deliver value to the military. And I don't think that's going to change. I think some of these long-term programs, things like the new fighter jet platforms and others, it doesn't appear that those are going to be wholesale canceled. And then it becomes a question for the military: Do we upgrade the old planes with new electronics? Or do we buy the new planes that have those new electronics in them? But either way, we are relatively agnostic to that decision because we have good content on either one of those options.

Okay. And also, your cash balance continues to grow. It may even be at record levels. But is the plan there or is the pipeline, the M&A pipeline, looking more robust? Or are you likely to then dig deeper into share repurchase if the M&A pipeline doesn't materialize?

Well, I'll make a quick comment on M&A and then Diana may want to talk a little bit about the other capital structures. We're very proud to have made 5 acquisitions this year. So -- and the pipeline, we had talked about it last year, was very strong. It worked out great for us. And not every one of those acquisitions was related to people chasing on taxes. There was not a tax increase in Israel at year end, but we still were able to make those acquisitions. Going into 2013, we still have a very robust pipeline, and it's one that we continue to put a lot of focus on in growing it and we continue to see outstanding opportunities for acquisitions. Are we going to close every year 5 acquisitions? Of course we will not. But do we have still a strong pipeline? Absolutely. And do we expect to continue that program? No question about it.

So just to, I guess, to add to what Adam said, at the end of the quarter, if we take the cash balance and the revolver availability, it's about $1.5 billion, which certainly is a substantial number. We also have, as you know, very, very, very strong operating cash flows. So we have a lot of capacity. To your point, how we deploy that capacity is certainly an important part of the strategy for the company. And I can just echo what Adam said, that the acquisition program clearly is the #1 priority for using that capacity, and he has already really said why that is. But I think in addition to that, we have over the past few years and we continue -- we'll -- I think we will continue over the next few years to deploy what we would say is a very balanced approach to using that financial capacity that we have. We certainly do think that stock buyback and the dividend program are both also good options to return value to shareholders, and I think that to have some balance between all 3 of them -- acquisitions, stock buyback and dividends -- is what works best from our perspective. As you know, we completed the repurchases under the stock buyback program that was set up in 2011 and actually purchased about 1.1 billion of stock over those 2 years. Our Board has recently authorized a new program for another 10 million shares that can potentially be purchased over the next 2 years, and I think you'll see us on a quarter-by-quarter basis, depending on what we see from an acquisition pipeline, look to deploy the same kind of balanced approach that you've seen us use in the last year.

Next question will come from Amitabh Passi from UBS.

Diana, first question for you, again not to nitpick. If I look at your margins over the last 3 quarters, gross margin's probably down 50 bps, operating margins flat. I was just wondering, is this largely a function of mix with mobile devices ramping? Is there some of the dynamic at play here of pricing? Maybe cost pressures? Just any help you can provide there in terms of what's going on in the margin lines.

Sure. I mean -- and we get this question from time to time, and I know that some folks, the way they run the business, they look at gross margin and they manage that piece, and they look at SG&A and they manage that piece. And I think as we've said before, we manage the bottom line, which is operating income, and that has proven to be a pretty good strategy for us. We've expanded margins in the year 2012. We're guiding to more margin expansion next year. I think that, that mix between what ends up in cost of sales and the gross margin line and what ends up on SG&A does vary, as you said, by market, by product. We have markets that are certainly more competitive, like the mobile device market, as an example, where gross margins are lower, but so is the SG&A level, because it's a more concentrated market and the volumes are bigger. So we really look to get that operating income margin potential out of all of our markets and all of the products that we're in and that's how we manage. I think we're achieving our goals using that method. But you may, as a result of that, see some fluctuation from time to time, and I think you have seen that during 2012 and it is largely due to the mix of the business.

Great. And Adam, just one for you on the mobile infrastructure market, and I apologize if you touched on this. I was very curious what you're seeing from a geographic basis. Maybe if you could just provide us a high-level view of Europe, North America and Asia Pac.

Sure. Thanks very much, Amitabh. No, I think that is an important question relative to the geography of mobile infra. Obviously, it's not a secret that there have been many of the next-generation build-outs that have been this year a little bit more focused in North America, and I would just tell you that the strength we saw in the fourth quarter was by and large driven by North America. It was not exclusive, but clearly North America is where we saw more strength. And I think going into this coming year, I have heard, like I'm sure you have, that there are some rumblings about some next-generation builds in China. There's also further builds that are happening in North America. I've heard a little bit less relative to Europe and what's going to be built there. But no question that these builds have to happen. When the time comes, when India eventually will fully build out a 3G network, will China build TDSCDMA or will they build LTE or TD-LTE or what the format will in the end be? Will that be China Mobile or China Unicom? And these are all questions that I think today there's not necessarily a certainty to. But wherever it comes, whether that comes in Asia, whether that comes here in North America or in Europe, we're very well poised to take advantage of it. But for now it appears that North America has been really more of a driver in the fourth quarter, and I wouldn't expect tremendous change in that geographic spread going forward.

Your next question is from Jim Suva with Citi.

First, a question for Adam and then a follow-up for Diana. Adam, on the integration, I know that you said that we don't buy companies that need to be fixed or something. But I was wondering, with these integrations, since they already have revenues of about $60 million per year, is there anything as far as like sourcing or production or lower-cost areas that you can help them with? Or is it more truly an integration into the Amphenol portfolio and sharing of ideas and global footprint? I'm just wondering on the cost side if you guys, since you're so global, have the opportunity. And then for Diana, can you just quickly clarify your EPS outlook for Q1 and for 2013? Does it include any of the stock buyback that your board recently announced? I assume the answer's no, but I don't want to be wrong on that. And any details on why the inventory for Q4 went up, yet sales for Q1 kind of should be going down?

Sure. Maybe I'll start, Jim, and then Adam can question afterwards. From an EPS guidance perspective, no, we don't forecast any stock buyback beyond what we had done in the fourth quarter of 2012. So you're correct in your assumption on the guidance. From an inventory perspective, on an as-reported basis, inventory is up about 3%, but most of the increase is related to the acquisition that we did at the very end of the quarter. And then in addition, there were some FX impact on the closing balance sheet. Without that, inventory is up maybe 1% or so. Inventory days were actually consistent with the Q3 level at about 83 days, and that's a pretty good level for us. So if we then look at the guidance for Q1, the sequential decline, pretty much all of the sequential decline in the guidance really went to the mobile device market. The rest of the business, if you would take that out, is relatively flat. The inventory that's carried in the mobile device market is actually quite low, as you would imagine. Given the short product life cycles and the real fast-changing pace of forecast in that market, inventory levels and days are quite low. And so that inventory tends to move in the quarter itself relative to sales volumes. And so hopefully, that explains why the inventory in the fourth quarter perhaps looks a little odd relative to the guidance for Q1.

Yes. And Jim, relative to the question about the integration of Tel-Ad, we -- one thing I should say about Tel-Ad is it's not a new company to Amphenol. We have known and worked with Tel-Ad for many, many, many years. In fact, they were kind of our representative for sometime from -- actually some decades in Israel. And so it's a very known commodity. So what does that mean? It means that relative to getting things done with them, we don't have to kind of dance around each other. We're old friends. We can speak openly and without any sensitivity and really attack some potential opportunities. And what those opportunities could be, I think, first and foremost, is to leverage broader technologies into this very exciting market. I mean, I think I termed Israel kind of the Silicon Valley of Europe. And the times that I have been there, it's just very true. You feel like you -- everywhere you drive, you see another potential customer, just like what happens when you drive around the San Jose and Menlo Park area. And so that's #1, will really be looking at technologies and what technologies could we offer them from various other Amphenol operations where they feel that they could get a new leg up in the local market. But that's not to say that some of the things that you mentioned -- sourcing or low-cost -- those opportunities will all be there for them. But how that will happen is maybe a little bit different than the norm. We don't have a central procurement organization. So we're not going to step in with people from here in headquarters to say, "All right, tell us how much you pay for each thing and let's go down the list." Rather, what we will do is we will open their opportunity for them to visit some of our vendors, to test them to see, is that's something that they could have some cost or technology benefit from. And it will really be from their initiative, working together collectively in the management team of the group that they're in, in Amphenol. So I think that there will certainly be opportunities on the cost side, but I would view more the opportunities from especially the technology side to drive greater growth for the company.

Next question will come from Amit Daryanani with RBC Capital.

Two questions for me, one on the mobile devices side. You're talking about business being down 26% to 30%. Could you just talk about if it's fairly broad based across all your customers that have seen a bit of a demand downtick? Or do you think it's more driven by a few customers that were aspiring to get into this market and were potentially not as successful as they thought they would be?

Yes, that was a very good question, Amit. Actually, we see it as relatively broad based. I think that we had a lot of customers who were doing certain things in the fourth quarter with new products, and it appears that their expectations for the first quarter are pretty much, I would say, almost across-the-board along the lines that we have guided here.

Got it. And then as a follow-up, if you could just maybe talk on the cash usage. If, one, Diana, you could touch on this CapEx plans for 2013, that would be helpful. And I guess, Adam, when you look at the M&A environment, and you obviously had, to your point, a really good 2012, do you think North America, especially as some of these private companies get a taste of higher taxes in 8 different directions, they may be more inclined to sell this year versus the past?

Maybe just to start with the CapEx question, we -- in 2013, we think CapEx could be somewhere in the sort of 3.5% of sales range. It's going to be a little bit higher, still within our normal range, as sort of 2% to 4%. But it will be a little bit higher in 2013 because we will be funding the majority of the construction [indiscernible] Facility up in upstate New York. So I think if you use about a 3.5% to 4% number, that should [indiscernible].

Relative to the M&A environment, Amit, I think I've said it before that a seller is a seller psychologically first, and then he or she is a seller for more sort of extraneous reasons. Then, if they are already a seller and then there is a new tax law change or some other kind of externality that comes along, that could push them over the edge. Last year, there was an expectation, I think, among many people that tax rates could have gotten even worse than they got. I mean, there was some talk that capital gains could go and essentially be equalized with ordinary income. And I would imagine that in North America in particular, there were some people who saw that and said, "Well, I was already going to sell at some point in the next couple of years. It would be wise to sell now." And I think we made a couple of North American acquisitions, and I never asked them if that was the reason they were selling, but there could have been some element of that. And I think there were other acquisitions that were announced in our industry and others. Will that make this year -- now that people have to pay essentially 23.8% on capital gains, will that make a difference going forward? It's hard to say. I think at the end of the day, what matters is, do they see for their company a prospect that is positive with Amphenol? Do they see for their family a desire to inject more liquidity into their estates? Those are the real important questions, the first of which, I think, we have done a great job -- and we've ratcheted that up this year with our 5 acquisitions -- of creating a track record and a reputation in the industry which is very, very strong where an entrepreneur can say to him or herself, hey, I can get the liquidity, but if I join with Amphenol, I can also realize some of the dreams that I and my team have had. And I think that story and the compelling nature of that story is one that will continue going forward. On the margin, will it be tipped one way or another because of tax policy? I think that's hard to say. But we feel very comfortable and optimistic about the long-term trajectory that we have on acquisitions and the continued opportunity that we have to find more companies.

Next question I have is from Wamsi Mohan with Bank of America.

It's actually Ruplu filling in for Wamsi. I just had a couple of questions. I mean, just on the M&A again, Adam, you've had a very successful program, obviously. I was just wondering if you can touch on which end markets you'd now -- going forward, which end markets do you see opportunities in.

Well, I think we made acquisitions in all but 2 or 3 of our end markets this year, and that's something that we're very proud of, actually, to have made 5 acquisitions, each one in a different end market this year. I wouldn't tell you that, that's where we started the year, and we said we planned to make in each of those end markets an acquisition. But we're -- we clearly have a very diverse portfolio of companies that we're looking at in our pipeline. Our priorities are to find companies that have unique technologies, that have a compelling reason for customers to buy those products and a complementary nature to that which we already participate in. And I would tell you that, that's across all of our markets. So I wouldn't say we're only going to do acquisitions in industrial or automotive or commercial air. I mean, we made acquisitions again in broadband, which is maybe a market that we haven't said is necessarily the highest-growth market but where we feel with that acquisition now, it's able to lever up the growth in the market. And I think in every one of our markets, there is an opportunity to add that unique, complementary technology, that strong management team from an acquisition that can create that lever-up on the growth potential for Amphenol in every one of our markets. So there's not one that I would pick.

Just on the Cable Products, it looks like you've had a pretty good sequential improvement in margins. I was wondering if you can just talk about the pricing environment. I mean, how should we think about Cable Product margins as you go through the year?

Yes, I mean, I think there hasn't been a very substantial change in the pricing environment. Diana mentioned in her remarks that part of the benefit that we saw there was from the addition of Holland, who had some higher-margin products, higher-technology products. And I think going forward, the pricing environment is going to be what it's going to be. We -- I've always said we are very disciplined on price, and we will remain very disciplined on price going forward. But our strategy is going to be to continue to try to sell higher value-added, higher-technology products that allow us to not just sort of rise and fall with the tides of the commodities on the bulk cable.

Great. And sorry, the last one for me. Just on -- looking at defense and aerospace, defense obviously, there are some possible headwinds because of budget constraints and aerospace is doing well. So overall, when you look at the mix of the business, I mean, at what -- how do you see the defense aerospace segment? Do you think it becomes a smaller part of the mix as we go through the year?

When you say defense, aerospace, you mean the combination of military and/or commercial air market?

Yes, that's correct.

Yes, I mean, I think look, those markets had actually -- if you look collectively at the 2 markets in the fourth quarter, they grew 9%, for the full year, they grew 2%, which is very much in line what I had been talking about for now a couple of years, which is that the offset to the budgetary pressures in the military is the electronics that are coming in the military and where we've seen that acceleration in the electronics, and it is the very high expectations that we would have in commercial air. And I think that showed itself very clearly here in the quarter where our military/aerospace market essentially grew at the level of the total company even though military at 13% of sales, commercial air is only 5% of sales. And thus, it is truly a good offset, more than a good offset, what commercial air was in the fourth quarter. And looking forward, I think we would expect the totality of those 2 markets to continue to show growth. Clearly, we'd expect a lot more growth in aerospace than we would expect in military but still believe that we have strong prospects in both of those -- in that collective, the military and aerospace markets together.

Last question I show is from Tony Kure with KeyBanc.

Just a couple of quick ones here, just, say, both questions and you can answer as appropriate. Any notable change in the cadence on demand out of China during the fourth quarter or thus far into the first quarter? I'm just trying to gauge if you've seen any discernible trend as it relates to the impact from any stimulus programs. And then secondarily, if you can just comment on inventory levels at the distribution channel, maybe what the sales outpace was during the quarter.

Great. Well, thank you very much, Tony. Just relative to your first question on China, I don't know that we have seen any real dramatic change in, as you termed it, the cadence in demand in that market or any real noticeable impact of stimulus or the lack thereof. Clearly, the mobile device sales that we have is almost all to China because that's where all these things are made. Where they're eventually sold to is another question. So that's not something that we necessarily have full visibility into. So if you were just going to look very strictly, when you have strong growth in mobile devices, you tend to have pretty good performance in Asia and in particular in China. And when you have then a more substantial sequential downturn, you tend to have also a more -- a strong, sequential downturn in that market. But beyond that, I wouldn't say that we've picked up any significant signals either way in the China market. Relative to the distribution channel, I think inventories are just basically stable there. We haven't seen any big changes either way. I think distribution is for us somewhere around 11%, 12% of sales now. So it's clearly not a monstrous driver for the company. But we certainly keep an eye out on distribution as a reflection of the broader economy and the broader trends. And I would just say that in the fourth quarter, it was basically stable, no move up or down in either inventory or eventual sell-through.

There are no other questions at this time.

Well, very good. And I appreciate and we appreciate very much all of your interest in the company. And we wish you an outstanding start to the new year, and we look forward to speaking with everybody again here in a short 3 months. Happy new year again, and thank you all.

Thank you.

Thank you for attending today's conference, and have a nice day.