Hello and welcome to the Fourth Quarter Earning Conference Call for Amphenol Corporation. Following today's presentation, there will be a formal question-and-answer session. Until then all lines will remain in listen-only-mode. At the request of the company this 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, Mr. Craig Lampo. Sir you may now begin.

Thank you. Good afternoon, everyone. My name is Craig Lampo and I am Amphenol’s CFO. I am here together with Adam Norwitt, our CEO. We would like to welcome everyone to our fourth quarter conference call. Q4 and full year 2016 results were released this morning and I will provide some financial commentary on the quarter and full year and Adam will give an overview of the business, current trends and then we’ll have Q&A. We may refer in this call to certain non-GAAP financial measures and may make certain forward-looking statements. Please refer to the relevant disclosures in our press release for further information. The company closed the fourth quarter with sales of $1.651 billion and diluted EPS of $0.75 meeting the high end of the company's guidance and achieving new records of performance in both sales and EPS. Sales were up 15% in U.S. dollars and 17% in local currencies compared to the fourth quarter of 2015. From an organic standpoint and excluding both acquisitions and currency, sales in the fourth quarter increased 4%. Sequentially sales were up 1% in U.S. dollars and organically and 2% in local currency. Breaking down sales into our two segments, our cable business, which comprised 6% of our sales was up 18% from the fourth quarter last year with organic growth as well as the impact of acquisitions. The interconnect business which comprise 94% of our sales was up 15% from last year with organic growth as well as the impact of FCI as well as other acquisitions. For the full year 2016 sales were record $6.286 billion, up 13% in U.S. dollars, 14% in local currency and 2% organically compared to 2016. Adam will comment further on trends by market in a few minutes. Operating income was $339 million for the…

Well, thank you very much, Craig. And I would like to add my welcome to all of you on the phone and particularly like to wish you all a Happy New Year. As Craig mentioned, I am going to highlight some of our achievements in the fourth quarter, as well as for the full year 2016 and most importantly I’ll walk you through the progress across our various served markets. Then finally I will take a few moments to comment on our outlook for the first quarter and full year 2017 and as Craig mentioned we will have time for questions at the end. Our results in the fourth quarter were stronger than we had expected, as Craig mentioned we exceeded the high end of our guidance in sales and earnings and we reached new records in sales, EPS and operating margins. Our sales in the quarter grew 15% in U.S. dollars and 17% in local currencies and that reached a new record in the quarter of $1.651 billion. Craig alluded to the orders which were very robust nearly $1.669 billion and that was a book-to-bill of 1.01 to 1. In particularly we’re very pleased with the profitability in the quarter and that new high of 20.5% certainly represents a great achievement for the company. Cash flow is very strong in the quarter, $349 million and I think all of these results really confirm the company’s financial strength. I can just say as we end the fourth quarter how proud I am of our team. Our results in the quarter once again reflect the true value of both the discipline and the agility of this entrepreneurial Amphenol organization. Who has continued to perform very well despite the many dynamics in the worldwide economy and all while driving outstanding operating performance…

Thank you. The question-and-answer period will now begin. As per the company's request please limit yourself to one question and one follow up. Our first question would come from Amit Daryanani from RBC Capital Markets. Your line is now open.

Hey thanks. I have a question and a follow up, I guess first off congrats on a really good year again to you guys. Adam, when I look at the full year guide you’re looking at about 2% organic growth, could you just help me understand because all the end markets you went through I think the worst you talked about was a flat assumption for the most were up low to high single-digits. Just help me what's the context for the 2% organic growth when it would appear that a lot of your peers a lot of the semiconductor guys as a somewhat more positive end demand trends. One of the subtractions that you see that we should be cognizant about.

Well thank you very much Amit. Look, I think I went through the various markets and you mentioned it right away that we do expect mobile to be flat. And I think we have a few other markets where I mentioned single-digit or low single-digit growth. And at the end of the day the guidance that we have given represents our outlooks sitting here today in the third or fourth week of January looking out over what we expect for the year. I think it is still a market that remains uncertain, so we remain very poise to capitalize on any opportunities that may come our way. And so, again as we sit here and look out over the next 12 months, for us we think this is a very prudent guidance and appropriate guidance given the markets that we see. But we’ll remain very capable and eager to capitalize on any other opportunities.

Fair enough. And if I could just follow-up, on the EPS guidance I appreciate the FX discussion you guys had on revenues. Could you just help me think about how much is FX and commodity headwind for you guys in the March and 2017 guidance that’s embedded in the numbers you outlined today?

Sure, from an FX perspective we see certainly we talked about that in my prepared remarks in regards to the ‘17 guidance that there is certainly was some strengthening of the dollar that had some impact of offsetting the positive impact of acquisitions and more specifically they impact of the dollar strengthening in ‘17 versus the average ‘16 rate was roughly 2% I would say, which reflect -- which is reflected in the kind of our current guidance. So that really is the FX impact on the full year and it’s not so much different for the first quarter. In regards to commodities, we certainly as we have kind of talked about this before there certainly has been recent increases of some sizes in certain commodities in particular copper, it’s difficult to say what the impact will be in the future. But as we have said before the ultimate impact really depends on the balance of the input cost and the pricing environment and that balance tends to kind of somewhat depend on demand levels. So I think there is certainly some risk by the additional inflationary pressures could provide some pressure from a commodity perspective, but I think our strong entrepreneurial management team will keep a close eye on all these input cost and do their best to balancing capitalize on any opportunities and minimize any cost increases and whatever to maximize the profitability of the company.

Thank you. Our next question would come from Matt Sheerin from Stifel. Your line is now open.

Yes thanks, good afternoon guys. Just a question regarding FCI as you pointed out Adam more creative than you thoughts did a great job of integrating that. So it sounds like in terms of incremental cost savings that’s kind of played out, but as you look at cross selling opportunities particularly in your the datacom market, industrial and then also through distribution, where are we there in terms of opportunities for incremental growth?

Yes well thank you very much, Matt. You’re absolutely correct, we are very happy with the performance improvements of FCI and whether those are cost savings or pricing discipline whatever it is, as you know to us profit is price minus cost and I think the team has really embraced that very comprehensive approach to profit improvement without just saying well we’re going to improve one light item here or there. They really did embrace the Amphenol approach to it which is look everything is up for grab here and let’s just make the bottom-line perform better and a lot of credit to the FCI management team. The people who were there before and who are there still today, in terms of the cross selling, I’ll tell you when I look at the markets where FCI has a significant presence and I look at our overall performance, this year even from an organic perspective take a market like a IT datacom, where we obviously had very, very strong performance here in the fourth quarter, 27% organic growth, with 11% organic growth on a full year basis. I can tell you that I would take some portion of that some impact of that has come from the fact that together with FCI we have today really the broadest offering into that market, the leading technology, the best footprint to support customers wherever they maybe in the world and without being able to pinpoint what a number would be I can tell you that they have had already a positive impact really in that important market, which was for them really a very significant market. And the same when I look at our performance in a wireless infrastructure up 10% organically in the quarter, up 9% for the full year, certainly a…

Okay great. And just as a follow-up just quickly regarding the guidance on mobility to be flat for the year, but down 20% sequentially implies that you're going to be down year-over-year to start the year. So are you expecting it to be more backend loaded where you've got some visibility perhaps into new program ramps in the back half?

Yes I think your math is correct. I think we do expect in the first quarter to be down a bit year-over-year and that would imply that later in the year we would be up. And as always we forecast on the basis of what we see today, this is a market that is one of the least visible markets and in fact as the single least visible markets that we have to give guidance on. You will remember that I'm not very good at giving guidance in this market two years ago I guided it flat and we were up 13% and last year I guided flat and we were down 15%. I am hopeful that I will be closer to the former than the latter this year, but right now what we see is that it will be flat. The 20% or so down that we see here in the first quarter is actually a little bit less than it was down last year. You'll remember that in Q1 of last year we were down something around 32%, 33% from the fourth quarter of 2015. Now obviously we're down from a lower level because we were down quite significantly on a year-over-year basis so that doesn't -- shouldn't surprise anybody. But it is very normal in that market that you have year-end where there is a little bit stronger second half that is little bit stronger and that's what happened this year. If we look at our second half performance in 2016 we were still up in kind of the mid-teens compared to the first half. But that compares to a prior year where we were up by a more significant amount. And I think our guidance right now would imply that our second half would be up a bit more compared to our first half than we saw here in 2016.

Thank you. Our next question will come from Shawn Harrison from Longbow Research. Your line is now open.

Hi, afternoon.

Good afternoon, Shawn.

Just the mobile networks business, kind of I think it beat almost every quarter your expectations as 2016 progressed. Maybe if you could just talk about regionally where the upside came from exiting the year and maybe why you can't see growth again in 2017?

No, I think you're correct. Forget us in the first quarter we would beat, but I think we basically beat throughout the course of the year. And no doubt about it as we look at the full year and our performance we did not anticipate to perform at the levels that we did here for the full year. If we just look at the quarter and for the year from a regional perspective, we did grow in the quarter organically in every region, but I would tell you that our strongest performance in the fourth quarter was in Europe. We had really excellent performance and that was both with OEMs as well as with operators. So interconnect products as antennas that we sell in the mobile networks market. And we feel really good about that, it's not necessarily the most robust spending environment in Europe. And I think our team did a great job. On a full year basis again Europe was the leader in our overall performance growing quite robustly on an organic basis. So I think that was really excellent really opportunity that we were able to capitalize upon to grow, which we didn't necessarily coming into the year. I think as we sit here today we can only look at the spending outlook of our customers. And all what we have heard from either from reading that publically or from otherwise interacting with the customers is that it looks to be a relatively muted spending environment this year. There is not big new systems being built 5G is probably still a little bit on the horizon. And so that’s where we stand today. All that things said, just like I said with mobile device this is a market where sometimes that figure can get turned on when…

And if I may one real quick follow-up to Adam, $1 billion buyback I think is largest you’ve ever announced and typically you run through the entire authorization is that the expectation with this buyback over the next few years?

Sure, so actually just to correct you the largest buyback or at least roughly equals the buyback we did in 2011 where we bought roughly a billion over 2011 and 2012. And this certainly represents actually much smaller as a percentage of free cash flow than it did at that point. This does represent roughly 50% of our free cash flow return to shareholders including our dividend programs so this would be consistent with our capital deployment strategy where the other half of our free cash flow will be allocated towards M&A over the longer term. We certainly continue to have a thoughtful and balanced approach to that where we certainly look towards spending our free cash flow towards acquisition since we think that provides ultimately the best return of capital. But certainly our dividend program and stock buyback program are two important levers to our capital deployment strategy and we think that this share repurchase program really is going to be a great program to continue to have that balanced approach going forward and support that.

I would just maybe add one thing Shawn I mean you asked does it get satisfied in two years, it’s a two year plan, you know that we always keep flexibility and last year we made the biggest acquisition in our history and that was $1.2 billion that we spent on that acquisition. We have not announced another biggest acquisition in our history here. We will always prioritize acquisitions as the best use of capital for the company at the same time the company generates a lot of cash. So sitting here today it’s a two year plan and we typically when we announced the length of a plan we would anticipate to use that plan, but it all depends ultimately on whether there is other attractive acquisition opportunities, which we would clearly prioritize.

Thank you. Our next question will come from Craig Hettenbach from Morgan Stanley. Your line is now open.

Yes, thank you. I'm just following up on the comments on industrial was it a bit better than expected in Q4? We’ve seen a few signs out there in terms of maybe a little bit of inflection understanding there is a number of sub-segments there any light you’d shed on that in terms of kind of how you’re feeling about that some of the broad based industrial businesses?

Yeah I think look industrial has -- fortunately for us industrial is a very diversified market and you mentioned it there’s a lot of different segments of industrial and I think industrial have been in the last year real tail of two cities for us at least. Where you have certain areas and oil and gas has been one that everybody has talked about we have talked about it, it hasn’t been great this year. Luckily it’s less impactable than it was in prior year, but does that reach an refection because of the price of oil or does it reach an inflection simply because it’s fallen quite a bit maybe some combination of the two. I think you’ve got other areas that over the course of the year have been maybe a little more challenged in places like alternative energy various [indiscernible] regions around the world and conversely we’ve had some areas that have done really well we’ve mentioned before like the battery and HEV market the real hybrid bus and truck areas. We talked about our strength in medical and we actually had very good performances here in heavy equipment, factory automation and thankfully we are very, very diversified across that industrial market. Now as it relates to an inflection or a potential inflection in industrial there has been a lot talk about infrastructure, and will there be kind of an infrastructure at least investments that will be made in our country and we are certainly big proponents of that if it would come. We have not guided in our guidance here towards any political changes, let’s say that because I think it still early days and whether or not the fiscal policies of this country and the others are going to change. They may impact change, but…

Okay. And then just as a follow-up on the sensor market understanding it’s a relatively newer market for you, but just kind of as you look at the M&A potential landscape and then just look from an organic development perspective how things are going out with sensors?

We are really excited about sensors, we just finished our third year owning a sensor company it was just three years ago last December that we acquired the GE Advanced Sensors business. I’ll tell you that the team is doing really well on two fronts not just the GE team that joined us but also the cast CASCO and then most recently SGX. Number one, the operating performance of those companies has really done fabulously and I would tell you that they have met the challenge let’s say of the peer pressure that exist within Amphenol to not perform below the company average and that’s been a really great success for that team. But in addition I think they have done a great job of driving stronger performance in their own business while also capitalizing on the collaborative technology efforts that exist within Amphenol. Our sensor business had a good year last year, it performed I think very well, we grew in the market organically and otherwise and I think that we will continue to pursue opportunity to grow both organically as well as through acquisition. I think the fact that we’ve made three acquisitions in three years is not too bad, but we are certainly thirsty for more growth opportunities both inorganic and organic in the future.

Thank you. Our next question will come from Sherri Scribner from Deutsche Bank. Your line is now open.

Hi, thanks gentlemen. If you look at the stock market and Amphenol's performance since November both have done very well. And there seems to be an expectation based on infrastructure spending a lower corporate tax rate sort of a general positive environment for businesses that things are going to get better. I wanted to see if you could give us some sense of what you're hearing from your customers. We have sort of guidance that you've given us, but are your customers feeling better about spending. And then along with that, can you maybe give us some sense of the implications of the border tax adjustment that the new government has been talking about? Thanks.

Sure well happy new year and thank you very much Sherri. Look I've talked to a lot of customers since November 8th or 9th whenever it all came out. And I can tell you that customers are very curious. They are thinking a lot about this, but nobody really knows ultimately what new fiscal or other policies are going to come about whether those are tax or trade or infrastructure spending or regulatory reductions. I mean look, I think you -- there will be change, and I think some of that change will be positive for business and some of that change maybe negative for business. And the question is only how do you as a company react and manage through that change. And there I believe we are really well positioned, because regardless of what new policies may come. The agility that is really just second nature and integral to Amphenol is something that in times of change creates great value. So if you have border adjusted taxes or if you have tariffs or whatever I mean we have a footprint that is extremely flexible that is aligned to where our customers want to be. And something that we will manage through whether it's good or bad. I think a lot of customers I will tell you have asked me personally, hey what if we had to make this and that in a different geography? And the answer that I'm always able to give them in a very clear way is look we have a footprint regardless that is very strong in all geographies. And we continue to be a significant manufacturer in the United States for example and we have outstanding people and outstanding organizations here. And so if somebody in the end wants to make consumer products in the U.S. for whatever reason, then we'll be right there next to them to support them. And in many ways in some of our markets our competitors aren't necessarily the traditional U.S. companies that you all follow in such an instance I would think we would have an advantage over some of those companies. And that's in particular true in things like consumer devices whatever they maybe. But look, we're not going to try to sit here and guess what policies are. We'll stay well with rest of them and we'll be able to react in pivot if necessarily on a very, very rapid basis to either capitalize upon or deal with whatever policies may come our way.

Thank you.

Thanks, Sherri.

Thank you. Our next question will come from Wamsi Mohan from Bank of America Merrill Lynch. Your line is now open.

Yes thank you. Adam in your press release in your guidance section you note the dynamics, uncertainty around the dynamics related to potential government policy changes as part of the reason for maybe somewhat cautionary conservative guidance. But could you elaborate maybe what would be some of the policy changes that you see as most material for Amphenol or maybe help us think through how you're handicapping this risk? And I have a follow-up.

Yes I mean I think I just talked a little bit about this Wamsi. And I wouldn't sort of rank or handicap specific policies that have been talked about. I think nobody knows what policies are ultimately going to be reflected. And I would just reiterate that regardless of what policies come our way we're going to be well poised to deal with them. And there is lots of categories of these policies whether that's tax or trade or infrastructure or other fiscal measures. And whatever it is we'll very adeptly deal with them and we'll applaud those that are really favorable for us and for our customers. I mean look ultimately we're a global company. We may be headquartered here in Cloudy Walling for today. But I can tell you that we are a global company. We support customers on a global basis, we manufacture on a global basis and our people work on a global basis. At the same time we're very local company. And so in many ways when we support a local market we do that in a very local fashion. And so I think that whatever happens in any geography, everybody is talking about this geography where we're sitting today. But who knows whether there won’t be changes in other geographies that ultimately impact us and other global companies. And so it’s hard to just pin down the ones that maybe in the paper today without reflecting on what maybe other countries may do, what other policies may come in tandem with us to make that handicapping. I think that is a tough handicapping to do, the best we will do and the best we can do is to just stay very, very well addressed of it and to remain as agile as we have even been before to deal with whatever comes our way.

And Adam just a follow-up on that, I mean you think that the agility that you have like tremendously displayed here over a very long period of time, if there was incremental production that most of the U.S. do feel that Amphenol can maintain that agility particularly some of that agility pertains to labor flexibility in some of the other geographies?

So look, let me give you a near-term example of this Wamsi. I mean you know and we have talked about the DLA issue that we had. As part of that DLA issue that required a very rapid resourcing of certain components in this country and we did that extraordinarily, our team did that with a number of products that you can’t imagine I mean the number of different individual part numbers and the number of different qualifications that were required and all of that the flexibility in the manufacturing locations, our team went through that with such flying colors and I think you see that reflected in the fact that even with that significant issue, we are able to grow our military business 4% organically this year. And I think that’s just a snapshot of how we deal when there are changes that come. And so we have an outstanding footprint of extraordinarily capable people in the United States period and to the extent that there are policies that either incent us or force us to move production to wherever in the world, I can just tell you that this team is going to do a great job to handle that.

Thank you. Our next question would come from Jim Suva from Citi. Your line is now open.

Thank you very much. You talked a lot about the upward onward march connectors nearly being connected in electronification and everything. But the guidance generally flattish sales doesn’t really connects with that, no plan intended and if you look back historically you haven’t had such a modest growth basically for years and years and last year you have some acquisitions that kind of came in mid-year which should help. So is it conservatism or that’s what you’re getting from customers or I am just trying to bridge the comments with the actual guidance? Thank you.

Sure, well thanks very much Jim. I mean look our guidance this year from an organic perspective is actually a little bit higher than our organic guidance was last year. So I think from that perspective I would just point that out, it’s true we had the benefits of the FCI acquisition in particular we made a few other acquisitions during the course of the year that weren’t envisioned in our original guidance last year. But I think it is too early to say that the economy on a broad basis is in a full recovery, and I think I went through each of that markets, I highlighted in particular our mobile devices market where we think it’s a little too early to see growth, the same with mobile networks where at this point we think it’s an uncertain spending environment. But I would just say that thank goodness for the diversification of the company and the fact that we have that diverse balance in the company can also have once in a while an impact. We have some markets that are growing very fabulously, if those markets were 100% of our sales, obviously you would have higher organic growth, but than you would have a volatility on the year-end that we don’t think would be appropriate for the company or for our investors. The way we create our forecast is the same way that we always have, which is we take a real bottoms up approach to looking at what our operations tell us and the operations are telling us numbers that they get from their customers and then we of course will apply some judgment here at headquarters. And I don’t think this process has changed at all, except that I would take from last year to this year we have slightly higher outlook for organic growth and we don’t the impact of the large FCI acquisition. But I would not say that this is a market shift in our outlook long-term for the business in fact we see it today still a very, very favorable long-term opportunity for Amphenol. As you say the kind of ongoing upward march and the proliferation of electronics across really all aspects of the industry, we see that as continuing over the long-term. And we think our company remains very poised to capitalize on that long-term trend.

Thank you very much.

Thanks Tim.

Thank you. Our next question will come from Steven Fox from Cross Research. Your line is now open.

Thanks, I was going to stay away from the economic policy questions and I just couple of product questions if I could. So first of all you mentioned in your prepared remarks Adam antenna is going into your auto market. I was just curious if you could just provide a little bit of color around that and what trends you're benefiting from and how you're differentiating yourself? And then just as a follow-up if you could give us a little bit more sense in Europe as to whether you're doing better on the connector side or -- rather the antenna side or the connector side in terms of your revenues most recently? Thanks.

And sorry on the Europe, do you mean in automotive or do you mean?

Sorry in mobile network, you mentioned…

Mobile network. That's I assumed you meant mobile network. Well look, just with respect to automotive I did mentioned I mean today still interconnect products are biggest portion of our sales in the automotive market and that's a broad array of interconnect products not just discrete connectors, but real value add interconnect systems. And that’s something that we've been focused on for a very long time. In addition we've build now a very robust business in automotive sensors. And we've been focused on expanding our antenna capabilities from where originally came which is the device as well as the mobile infrastructure and expanding that core technology into automotive where we see a real expansion and a proliferation of connectivity in the cars. And some of that connectivity is with connectors and some of that connectivity is through the air with antennas. And I think our team has just done a really outstanding job here in positioning ourselves. We have a number of new design wins, some of which are already going into production and others of which will come, will roll on over the coming quarters and years. We have really established ourselves or let me say beginning to establish ourselves as a player in an area where we really weren't in the past, which is automotive antennas. And I think when you couple our deep-deep expertise in radio frequency what we call RF technology together with a broader antenna -- a broader automotive presence than we've ever had before, that's a really good recipe to find a new lever for growth over the long-term. Now we also know that automotive cycles aren't just every few months or every few quarters it's really every few years. And so it does take time to get the wins and then to have those wins ultimately roll on into a mass production. But I'm hopeful that we'll start to see some of the benefit of that in the near-term. And I think we have even a little bit of benefit of that in our outlook for 2017. As it relates to our mobile network sales in particular in Europe as you mentioned. I'd say it was actually kind of balanced in the quarter between our progress with OEMs, which is more interconnect products and our progress with service providers, which is tends to be a bit more antenna. And I'd say a bit more because we are selling in addition interconnect products and other accessories directly to operators. But there is a more significance of antenna sales to operators. So I wouldn’t say it was really out of balance probably relatively balanced, which drove that good performance in Europe.

Great, that's very helpful. Good luck going forward.

Thanks very much Steve.

Thank you. Our next question will come from Mark Delaney from Goldman Sachs. Your line is now open.

Yes, good afternoon and thanks very much for taking the question. First question is a follow-up on mobile devices. You mentioned some of the reasons it was down in the fourth quarter, but can you talk if at all end market related to unit sales or was there anything driven in terms of your market share or pricing that caused the decline? And then as you think about mobile devices in 2017 you alluded some opportunities in the second half of the year, could you just elaborate on the types of products be it antennas or connectors and what sort of end devices you think drive that pickup in the second half of '17?

Yes sure, well thanks very much Mark. I think with respect to 2016 I highlighted that we saw in the year probably the most significant reductions in demand came on tablet computers. And I will tell you that that came sort of over the course of the year. We actually had a pretty good first quarter in tablets. But over the course of the year those sales dropped off a fair bit. And I don't think that's highly inconsistent with overall tablet units. I mean maybe some of the tablet units even had a little bit lower content, we talked about that a number of years ago where sometimes there’s a little bit of mix shift the types of functionalities in the tablets whether those are full sort of mobile network tablets or whether they are Wi-Fi based. So I’d say that the vast majority of the impact in particular on tablets, which was the bigger impact for us was really related to units and I think there is next year because Q1 this year had a little bit more strength in tablets, there’s a little bit of a carryover impact into 2017 on the tablets. So we would expect tablets to still be a little bit drag on performance going into 2017. I think conversely I mentioned we’ve had good performance and we continue to have good performance in wearables where there’s just a lot of new devices there and some of those devices are just really innovative and challenging and as you know we’ve always talked about the fact that when the hardware gets challenging that’s where we get to add more value into our customers and where we’re able to bring our innovation capabilities to our customers to enable them to fit more into that more challenging…

That’s very helpful I appreciate all the color. A follow-up question on margins, I think the incremental margin guidance implied in the 2017 outlook is towards the low end of the historical 20% to 30% drop through rate on EBITDA margins, I think maybe there’s some mixed benefits as maybe U.S. in mobile on a percentage of revenue next year, but you did talk about some of the FX headwinds and maybe some metal headwinds. So what would it take to do more toward the midpoint or higher end of the historical drop through levels on EBIT margins for 2017?

So actually I think that 2017 I'm not sure what math you’re doing, but certainly 2017 is benefiting significantly from second half positive performance from FCI coming up to our average company operating margin levels. And that’s going to bring into 2017, which is going to bring our overall year-over-year margins higher. But if you look at our base business that would also be converting at roughly our normal long-term rate, with long-term conversion targets around 25% as we’ve said in the past and actually our drop through is roughly that that amount on kind of that base business. So I think we actually we feel we’re converting pretty well going into 2017 and we’re continuing to execute well. We had a great year in 2016. Throughout the year we increased our margins from I think Q1 to Q4 by something like 190 basis points and part a lot of that was FCI, creating step functions in their profitability, but some of that also was our base business and I think 2017 we still feel pretty good about. So anyways so I think that 2017 is going to be another good year from a profitability wise and we don’t really see so much of a significant impact at least at this point from commodities.

Thank you. Our next question would come from William Stein from SunTrust. Your line is now open.

Great, thanks for taking my question. Adam regarding the recent acquisition, I think you noted that it affords you new relationships directly with the airlines themselves the carriers and I am hoping you can describe the benefit that you expect that to deliver to the business, does it mean faster revenue growth or more revenue stability or maybe some other financial benefit to the company. And maybe compare it specifically to what you’ve learned by having that sort of exposure in the infrastructure market where you don’t just sell to the infrastructure equipment OEMs, but you also as you have noted many times in the past, you sell directly to the telco carriers?

So thank you very much. Well, you correctly point out that I did allude to the fact that in addition to the Phitek’s relationship with equipment makers and aeroplane builders they have really also direct relationship with airlines. And it’s interesting in a few respect, I mean the reason they have that relationship is there are some airlines in the world who have actually decided that for them to be competitive, they want to create proprietary experiences, let’s call it for their customers. And I think some of those big airlines around the world are well known, who have sort of unique experience that they offer to their passenger customers. And part of that experience can be ultimately the way that the customer interacts electronically with the plane. So whether that’s the shape or configuration of the connectors or what functionality may very well be embedded in those connectors, if they just buy an off the shelf system an interface that supplied by a jet maker, well than all their competitors have equal access to that. And so I think there are a number of airlines who are moving in that direction. The most natural place to move in that direction is an in-flight entertainment or things like Wi-Fi connectivity, but who knows whether they won’t in the end move more extensively in that direction. And when we think about the trajectory that we have seen in other markets towards service providers ultimately taking more charge of the customer experience and there by interfacing more with companies like us who help them to enable that customer experience. We have seen really quite some transformation, we saw that probably earliest in the mobile networks market like you alluded to, we have also more recently seen that in the IT datacom market…

Great, thank you.

Thanks Will.

Thank you. Our last question would come from Wamsi Mohan from Bank of America/Merrill Lynch. Your line is now open.

Hi, yes thanks for taking my follow-up. Adam now that you have lapped in year for FCI, how do you feel about another significantly large acquisition and if you could put that in the context of an environment where interest rates might rise and there might be disallowance of interest deductibility for taxes, would you pace for appetite for M&A any differently? Thank you.

Sure thanks Wamsi. Look I mean we have just lapped our year with FCI. I will tell you exactly what I said a year ago when we acquired FCI, which is our criteria for acquisitions has always started number one with the people. We look for outstanding people who can really thrive in Amphenol's unique entrepreneurial environment and I can just tell you with FCI we check that box 100 times over. The second thing we look for is technology and real leading technology that can help enable our customers’ products to work better. And then finally we look for market position that is complimentary. And I think in that case FCI ticked all of those boxes. A criteria that we have never talked about is size. And I think that the fact is FCI was the biggest one in our history we did also this year some smaller acquisition. So does FCI indicate that we change our approach to size, it doesn't because we have not changed our approach to size. If a significant acquisition came along, was available or otherwise was attractive we would not shy away from doing that. Now as it relates to the various fiscal policies or otherwise that you alluded to. I mean look, we'll react if those fiscal policies changed. Obviously if money gets more expensive for whatever reason either because of the face value of that money is more expensive or the net in your pocket value of that money is more expensive because of deductibility we’ll react to that. But I think you also know if you follow our acquisition program over many, many years. We have always followed a very reasonable approach to valuations. We have not chased valuations because money is cheap nor have we run away from them when money is more expansive. We pay fair value for great companies and ultimately create a strong return on those chariest investments for us for the company and for the shareholders. And so I think that we're not just watching ticks up and ticks down in interest rate as we think about what the right price for acquisitions is going forward. And so look, whatever may come may come we continue to believe there is a lot of great companies that are out there. We have a very robust pipeline and to the extent that we're able to bring some of those in to the Amphenol family, we'll do so on fair terms as we always have.

Thanks, Adam.

Very good. Well I think that was our last question and once again like to express our appreciation for all of your time here today. Wish you again a happy new year and look forward to seeing everybody or hearing from everybody at least just in about three months. Take care and have a great continuation.

Thank you.

Thank you for attending today’s conference. To access the replay of today's conference call please dial 1203-369-3132 for toll or 1800-677-5817 for toll free and use the passcode 7183. Thank you and have a nice day.