TE Connectivity plc 10-Q

ITEM 1. FINANCIAL STATEMENTS TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions, except per share data) ​ Net sales ​ $ 2,548 ​ $ 3,389 ​ $ 8,911 ​ $ 10,148 ​ Cost of sales ​ 1,841 ​ 2,279 ​ 6,145 ​ 6,806 ​ Gross margin ​ 707 ​ 1,110 ​ 2,766 ​ 3,342 ​ Selling, general, and administrative expenses ​ 321 ​ ​ 356 ​ 1,040 ​ ​ 1,118 ​ Research, development, and engineering expenses ​ 146 ​ ​ 158 ​ 465 ​ ​ 485 ​ Acquisition and integration costs ​ 8 ​ ​ 9 ​ 27 ​ ​ 21 ​ Restructuring and other charges, net ​ 98 ​ ​ 67 ​ 144 ​ ​ 184 ​ Impairment of goodwill ​ ​ — ​ ​ — ​ ​ 900 ​ ​ — ​ Operating income ​ ​ 134 ​ ​ 520 ​ ​ 190 ​ ​ 1,534 ​ Interest income ​ ​ 2 ​ ​ 4 ​ ​ 13 ​ ​ 13 ​ Interest expense ​ ( 13 ) ​ ​ ( 13 ) ​ ( 36 ) ​ ​ ( 55 ) ​ Other income, net ​ 4 ​ ​ 2 ​ 20 ​ ​ 2 ​ Income from continuing operations before income taxes ​ 127 ​ 513 ​ 187 ​ 1,494 ​ Income tax (expense) benefit ​ ( 185 ) ​ ​ 245 ​ ( 674 ) ​ ​ 76 ​ Income (loss) from continuing operations ​ ( 58 ) ​ 758 ​ ( 487 ) ​ 1,570 ​ Income (loss) from discontinued operations, net of income taxes ​ 17 ​ ​ ( 1 ) ​ 16 ​ ​ ( 98 ) ​ Net income (loss) ​ $ ( 41 ) ​ $ 757 ​ $ ( 471 ) ​ $ 1,472 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from continuing operations ​ $ ( 0.18 ) ​ $ 2.25 ​ $ ( 1.46 ) ​ $ 4.63 ​ Income (loss) from discontinued operations ​ 0.05 ​ — ​ 0.05 ​ ( 0.29 ) ​ Net income (loss) ​ ( 0.12 ) ​ 2.25 ​ ( 1.41 ) ​ 4.34 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from continuing operations ​ $ ( 0.18 ) ​ $ 2.24 ​ $ ( 1.46 ) ​ $ 4.60 ​ Income (loss) from discontinued operations ​ 0.05 ​ — ​ 0.05 ​ ( 0.29 ) ​ Net income (loss) ​ ( 0.12 ) ​ 2.23 ​ ( 1.41 ) ​ 4.32 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average number of shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 330 ​ ​ 337 ​ 333 ​ ​ 339 ​ Diluted ​ 330 ​ ​ 339 ​ 333 ​ ​ 341 ​ See Notes to Condensed Consolidated Financial Statements. ​ 1 Table of Contents TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Net income (loss) ​ $ ( 41 ) ​ $ 757 ​ $ ( 471 ) ​ $ 1,472 ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency translation ​ 21 ​ ​ ( 48 ) ​ ​ ( 43 ) ​ ​ 35 ​ Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes ​ 7 ​ ​ 7 ​ ​ 23 ​ ​ 19 ​ Gains on cash flow hedges, net of income taxes ​ 37 ​ ​ — ​ ​ 15 ​ ​ 51 ​ Other comprehensive income (loss) ​ 65 ​ ( 41 ) ​ ( 5 ) ​ 105 ​ Comprehensive income (loss) ​ ​ 24 ​ ​ 716 ​ ​ ( 476 ) ​ ​ 1,577 ​ Less: comprehensive income attributable to noncontrolling interests ​ ​ ( 3 ) ​ ​ — ​ ​ ( 1 ) ​ ​ — ​ Comprehensive income (loss) attributable to TE Connectivity Ltd. ​ $ 21 ​ $ 716 ​ $ ( 477 ) ​ $ 1,577 ​ See Notes to Condensed Consolidated Financial Statements. ​ 2 Table of Contents TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions, except share ​ ​ ​ data) ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 474 ​ $ 927 ​ Accounts receivable, net of allowance for doubtful accounts of $ 34 and $ 25 , respectively ​ 2,146 ​ 2,320 ​ Inventories ​ 2,227 ​ 1,836 ​ Prepaid expenses and other current assets ​ 472 ​ 471 ​ Total current assets ​ 5,319 ​ 5,554 ​ Property, plant, and equipment, net ​ 3,598 ​ 3,574 ​ Goodwill ​ 5,143 ​ 5,740 ​ Intangible assets, net ​ 1,612 ​ 1,596 ​ Deferred income taxes ​ 2,286 ​ 2,776 ​ Other assets ​ 882 ​ 454 ​ Total assets ​ $ 18,840 ​ $ 19,694 ​ Liabilities and equity ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Short-term debt ​ $ 691 ​ $ 570 ​ Accounts payable ​ 1,271 ​ 1,357 ​ Accrued and other current liabilities ​ 1,765 ​ 1,613 ​ Total current liabilities ​ 3,727 ​ 3,540 ​ Long-term debt ​ 3,395 ​ 3,395 ​ Long-term pension and postretirement liabilities ​ 1,366 ​ 1,367 ​ Deferred income taxes ​ 161 ​ 156 ​ Income taxes ​ 244 ​ 239 ​ Other liabilities ​ 803 ​ 427 ​ Total liabilities ​ 9,696 ​ 9,124 ​ Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ ​ Equity: ​ ​ ​ ​ ​ ​ ​ TE Connectivity Ltd. shareholders' equity: ​ ​ ​ ​ ​ ​ ​ Common shares, CHF 0.57 par value, 338,953,381 shares authorized and issued , and 350,951,381 shares authorized and issued , respectively ​ 149 ​ ​ 154 ​ Accumulated earnings ​ 10,125 ​ 12,256 ​ Treasury shares, at cost, 8,961,449 and 15,862,337 shares, respectively ​ ( 729 ) ​ ( 1,337 ) ​ Accumulated other comprehensive loss ​ ( 509 ) ​ ( 503 ) ​ Total TE Connectivity Ltd. shareholders' equity ​ ​ 9,036 ​ ​ 10,570 ​ Noncontrolling interests ​ ​ 108 ​ ​ — ​ Total equity ​ 9,144 ​ 10,570 ​ Total liabilities and equity ​ $ 18,840 ​ $ 19,694 ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ 3 Table of Contents TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Quarter Ended June 26, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ TE Connectivity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Ltd. ​ Non- ​ ​ ​ ​ ​ Common Shares ​ Treasury Shares ​ Contributed ​ Accumulated ​ Comprehensive ​ Shareholders' ​ controlling ​ Total ​ ​ Shares Amount Shares Amount Surplus Earnings Loss Equity Interests Equity ​ ​ (in millions) ​ Balance at March 27, 2020 351 ​ $ 154 ( 20 ) ​ $ ( 1,639 ) ​ $ — ​ $ 11,122 ​ $ ( 571 ) ​ $ 9,066 ​ $ 105 ​ $ 9,171 ​ Net loss — ​ — — ​ — ​ — ​ ( 41 ) ​ — ​ ( 41 ) ​ — ​ ( 41 ) ​ Other comprehensive income — ​ — — ​ — ​ — ​ — ​ 62 ​ 62 ​ 3 ​ 65 ​ Share-based compensation expense — ​ — — ​ — ​ 17 ​ — ​ — ​ 17 ​ — ​ 17 ​ Dividends — ​ — — ​ — ​ — ​ 2 ​ — ​ 2 ​ — ​ 2 ​ Exercise of share options — ​ — — ​ 2 ​ — ​ — ​ — ​ 2 ​ — ​ 2 ​ Restricted share award vestings and other activity — ​ — — ​ 15 ​ ( 17 ) ​ 12 ​ — ​ 10 ​ — ​ 10 ​ Repurchase of common shares — ​ — ( 1 ) ​ ( 82 ) ​ — ​ — ​ — ​ ( 82 ) ​ — ​ ( 82 ) ​ Cancellation of treasury shares ​ ( 12 ) ​ ( 5 ) 12 ​ 975 ​ — ​ ( 970 ) ​ — ​ — ​ — ​ — ​ Balance at June 26, 2020 ​ 339 ​ $ 149 ( 9 ) ​ $ ( 729 ) ​ $ — ​ $ 10,125 ​ $ ( 509 ) ​ $ 9,036 ​ $ 108 ​ $ 9,144 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended June 26, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ TE Connectivity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Ltd. ​ Non- ​ ​ ​ ​ ​ Common Shares ​ Treasury Shares ​ Contributed ​ Accumulated ​ Comprehensive ​ Shareholders' ​ controlling ​ Total ​ ​ Shares Amount Shares Amount Surplus Earnings Loss Equity Interests Equity ​ ​ (in millions) ​ Balance at September 27, 2019 351 ​ $ 154 ( 16 ) ​ $ ( 1,337 ) ​ $ — ​ $ 12,256 ​ $ ( 503 ) ​ $ 10,570 ​ $ — ​ $ 10,570 ​ Acquisition ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 107 ​ ​ 107 ​ Net loss — ​ — — ​ — ​ — ​ ( 471 ) ​ — ​ ( 471 ) ​ — ​ ( 471 ) ​ Other comprehensive income (loss) — ​ — — ​ — ​ — ​ — ​ ( 6 ) ​ ( 6 ) ​ 1 ​ ( 5 ) ​ Share-based compensation expense — ​ — — ​ — ​ 54 ​ — ​ — ​ 54 ​ — ​ 54 ​ Dividends ​ — ​ — — ​ — ​ — ​ ​ ( 633 ) ​ — ​ ( 633 ) ​ — ​ ( 633 ) ​ Exercise of share options — ​ — — ​ 29 ​ — ​ — ​ — ​ 29 ​ — ​ 29 ​ Restricted share award vestings and other activity — ​ — 1 ​ 109 ​ ( 54 ) ​ ( 57 ) ​ — ​ ( 2 ) ​ — ​ ( 2 ) ​ Repurchase of common shares — ​ — ( 6 ) ​ ( 505 ) ​ — ​ — ​ — ​ ( 505 ) ​ — ​ ( 505 ) ​ Cancellation of treasury shares ​ ( 12 ) ​ ( 5 ) 12 ​ 975 ​ — ​ ( 970 ) ​ — ​ — ​ — ​ — ​ Balance at June 26, 2020 ​ 339 ​ $ 149 ( 9 ) ​ $ ( 729 ) ​ $ — ​ $ 10,125 ​ $ ( 509 ) ​ $ 9,036 ​ $ 108 ​ $ 9,144 ​ ​ ​ 4 Table of Contents TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Quarter Ended June 28, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ TE Connectivity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Ltd. ​ Non- ​ ​ ​ ​ ​ Common Shares ​ Treasury Shares ​ Contributed ​ Accumulated ​ Comprehensive ​ Shareholders' ​ controlling ​ Total ​ ​ Shares Amount Shares Amount Surplus Earnings Loss Equity Interests Equity ​ ​ (in millions) ​ Balance at March 29, 2019 357 ​ $ 157 ( 20 ) ​ $ ( 1,713 ) ​ $ — ​ $ 11,710 ​ $ ( 160 ) ​ $ 9,994 ​ $ — ​ $ 9,994 ​ Net income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 757 ​ ​ — ​ ​ 757 ​ ​ — ​ ​ 757 ​ Other comprehensive loss — ​ — — ​ — ​ — ​ — ​ ( 41 ) ​ ( 41 ) ​ — ​ ( 41 ) ​ Share-based compensation expense — ​ — — ​ — ​ 18 ​ — ​ — ​ 18 ​ — ​ 18 ​ Dividends — ​ — — ​ — ​ — ​ 1 ​ — ​ 1 ​ — ​ 1 ​ Exercise of share options — ​ — — ​ 38 ​ — ​ — ​ — ​ 38 ​ — ​ 38 ​ Restricted share award vestings and other activity — ​ — — ​ 30 ​ ( 18 ) ​ ( 5 ) ​ — ​ 7 ​ — ​ 7 ​ Repurchase of common shares — ​ — ( 1 ) ​ ( 152 ) ​ — ​ — ​ — ​ ( 152 ) ​ — ​ ( 152 ) ​ Cancellation of treasury shares ​ ( 6 ) ​ ( 3 ) 6 ​ 573 ​ — ​ ( 570 ) ​ — ​ — ​ — ​ — ​ Balance at June 28, 2019 ​ 351 ​ $ 154 ( 15 ) ​ $ ( 1,224 ) ​ $ — ​ $ 11,893 ​ $ ( 201 ) ​ $ 10,622 ​ $ — ​ $ 10,622 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Nine Months Ended June 28, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ TE Connectivity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ Ltd. ​ Non- ​ ​ ​ ​ ​ Common Shares ​ Treasury Shares ​ Contributed ​ Accumulated ​ Comprehensive ​ Shareholders' ​ controlling ​ Total ​ ​ Shares Amount Shares Amount Surplus Earnings Loss Equity Interests Equity ​ ​ (in millions) ​ Balance at September 28, 2018 357 ​ $ 157 ( 12 ) ​ $ ( 1,134 ) ​ $ — ​ $ 12,114 ​ $ ( 306 ) ​ $ 10,831 ​ $ — ​ $ 10,831 ​ Adoption of ASU No. 2016-16 — ​ — — ​ — ​ — ​ ( 443 ) ​ — ​ ( 443 ) ​ — ​ ( 443 ) ​ Net income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 1,472 ​ ​ — ​ ​ 1,472 ​ ​ — ​ ​ 1,472 ​ Other comprehensive income — ​ — — ​ — ​ — ​ — ​ 105 ​ 105 ​ — ​ 105 ​ Share-based compensation expense — ​ — — ​ — ​ 57 ​ — ​ — ​ 57 ​ — ​ 57 ​ Dividends — ​ — — ​ — ​ — ​ ( 615 ) ​ — ​ ( 615 ) ​ — ​ ( 615 ) ​ Exercise of share options — ​ — — ​ 55 ​ — ​ — ​ — ​ 55 ​ — ​ 55 ​ Restricted share award vestings and other activity — ​ — 1 ​ 118 ​ ( 57 ) ​ ( 65 ) ​ — ​ ( 4 ) ​ — ​ ( 4 ) ​ Repurchase of common shares — ​ — ( 10 ) ​ ( 836 ) ​ — ​ — ​ — ​ ( 836 ) ​ — ​ ( 836 ) ​ Cancellation of treasury shares ​ ( 6 ) ​ ( 3 ) 6 ​ 573 ​ — ​ ( 570 ) ​ — ​ — ​ — ​ — ​ Balance at June 28, 2019 ​ 351 ​ $ 154 ( 15 ) ​ $ ( 1,224 ) ​ $ — ​ $ 11,893 ​ $ ( 201 ) ​ $ 10,622 ​ $ — ​ $ 10,622 ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ 5 Table of Contents TE CONNECTIVITY LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ ​ 2020 2019 ​ ​ (in millions) ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 471 ) ​ $ 1,472 ​ (Income) loss from discontinued operations, net of income taxes ​ ( 16 ) ​ 98 ​ Income (loss) from continuing operations ​ ( 487 ) ​ 1,570 ​ Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Impairment of goodwill ​ ​ 900 ​ ​ — ​ Depreciation and amortization ​ 530 ​ 515 ​ Deferred income taxes ​ 459 ​ ( 290 ) ​ Non-cash lease cost ​ ​ 79 ​ ​ — ​ Provision for losses on accounts receivable and inventories ​ 28 ​ 36 ​ Share-based compensation expense ​ 54 ​ 56 ​ Other ​ 40 ​ 26 ​ Changes in assets and liabilities, net of the effects of acquisitions and divestitures: ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ 182 ​ ( 105 ) ​ Inventories ​ ( 342 ) ​ ( 59 ) ​ Prepaid expenses and other current assets ​ 27 ​ 109 ​ Accounts payable ​ ( 81 ) ​ ( 86 ) ​ Accrued and other current liabilities ​ ( 204 ) ​ ( 147 ) ​ Income taxes ​ 20 ​ ( 63 ) ​ Other ​ 67 ​ 13 ​ Net cash provided by continuing operating activities ​ 1,272 ​ 1,575 ​ Net cash used in discontinued operating activities ​ — ​ ( 31 ) ​ Net cash provided by operating activities ​ 1,272 ​ 1,544 ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ( 439 ) ​ ( 570 ) ​ Proceeds from sale of property, plant, and equipment ​ 6 ​ 16 ​ Acquisition of businesses, net of cash acquired ​ ( 328 ) ​ ( 283 ) ​ Proceeds from divestiture of discontinued operation, net of cash retained by sold operation ​ ​ — ​ ​ 297 ​ Other ​ 13 ​ 3 ​ Net cash used in continuing investing activities ​ ​ ( 748 ) ​ ​ ( 537 ) ​ Net cash used in discontinued investing activities ​ ​ — ​ ​ ( 2 ) ​ Net cash used in investing activities ​ ( 748 ) ​ ( 539 ) ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ Net decrease in commercial paper ​ ( 219 ) ​ ( 270 ) ​ Proceeds from issuance of debt ​ 593 ​ 746 ​ Repayment of debt ​ ( 352 ) ​ ( 441 ) ​ Proceeds from exercise of share options ​ 29 ​ 55 ​ Repurchase of common shares ​ ( 523 ) ​ ( 913 ) ​ Payment of common share dividends to shareholders ​ ( 466 ) ​ ( 454 ) ​ Transfers to discontinued operations ​ ​ — ​ ​ ( 33 ) ​ Other ​ ( 32 ) ​ ( 32 ) ​ Net cash used in continuing financing activities ​ ( 970 ) ​ ( 1,342 ) ​ Net cash provided by discontinued financing activities ​ — ​ 33 ​ Net cash used in financing activities ​ ( 970 ) ​ ( 1,309 ) ​ Effect of currency translation on cash ​ ( 7 ) ​ 2 ​ Net decrease in cash, cash equivalents, and restricted cash ​ ( 453 ) ​ ( 302 ) ​ Cash, cash equivalents, and restricted cash at beginning of period ​ 927 ​ 848 ​ Cash, cash equivalents, and restricted cash at end of period ​ $ 474 ​ $ 546 ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ 6 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation and Accounting Policies Basis of Presentation The unaudited Condensed Consolidated Financial Statements of TE Connectivity Ltd. (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and the instructions to Form 10-Q under the Securities Exchange Act of 1934. In management’s opinion, the unaudited Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire fiscal year or any subsequent interim period. The year-end balance sheet data was derived from audited financial statements, but does not include all of the information and disclosures required by GAAP. These financial statements should be read in conjunction with our audited Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019. Unless otherwise indicated, references in the Condensed Consolidated Financial Statements to fiscal 2020 and fiscal 2019 are to our fiscal years ending September 25, 2020 and ended September 27, 2019, respectively. Goodwill and Other Intangible Assets We account for goodwill and other intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles–Goodwill and Other , as updated by Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment . Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible assets. Intangible assets with determinable lives primarily include intellectual property, consisting of patents, trademarks, and unpatented technology, and customer relationships. Recoverability estimates range from 1 to 50 years and costs are generally amortized on a straight-line basis. Evaluations of the remaining useful lives of determinable-lived intangible assets are performed on a periodic basis and when events and circumstances warrant. At June 26, 2020, we had five reporting units, all of which contained goodwill. There were two reporting units in both the Transportation Solutions and Industrial Solutions segments and one reporting unit in the Communications Solutions segment. When changes occur in the composition of one or more reporting units, goodwill is reassigned to the reporting units affected based on their relative fair values. Goodwill impairment is evaluated by comparing the carrying value of each reporting unit to its fair value on the first day of the fourth fiscal quarter of each year or whenever we believe a triggering event requiring a more frequent assessment has occurred. In assessing the existence of a triggering event, management relies on several reporting unit-specific factors including operating results, business plans, economic projections, anticipated future cash flows, transactions, and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors to the impairment analysis. When testing for goodwill impairment, we identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment charge will be recorded for the amount of the excess, limited to the total amount of goodwill allocated to the reporting unit. Fair value estimates used in the goodwill impairment tests are calculated using an income approach based on the present value of future cash flows of each reporting unit. The income approach has been supported by guideline analyses (a market approach). These approaches incorporate several assumptions including future growth rates, discount rates, income tax rates, and market activity in assessing fair value and are reporting unit specific. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods. 7 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Recently Adopted Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, an update to ASC 350. The update simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the amendments in the update, goodwill impairment should be tested by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are to be applied on a prospective basis. We elected to early adopt this update and applied it during the quarter ended March 27, 2020. See Note 6 for additional information regarding the interim goodwill impairment test. In February 2016, the FASB issued ASU No. 2016-02 which codified ASC 842, Leases . This guidance, as subsequently amended, requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset for most leases. We adopted ASC 842, as amended, in the quarter ended December 27, 2019 using the optional transition method permitted by ASU No. 2018-11 which allows for application of the standard at the adoption date and no restatement of comparative periods. We elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows the carry forward of historical lease classification of existing and expired leases. In addition, we elected to use the hindsight practical expedient in determining the lease term for existing leases. As a result of adoption, we recorded ROU assets and related lease liabilities of approximately $ 520 million on the Condensed Consolidated Balance Sheet. Adoption did not have a material impact on our results of operations or cash flows. See Note 9 for additional information regarding leases. 2. Restructuring and Other Charges, Net Net restructuring charges by segment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Transportation Solutions ​ $ 55 ​ $ 53 ​ $ 77 ​ $ 98 ​ Industrial Solutions ​ 40 ​ 8 ​ 56 ​ 60 ​ Communications Solutions ​ 3 ​ 6 ​ 11 ​ 26 ​ Restructuring charges, net ​ $ 98 ​ $ 67 ​ $ 144 ​ $ 184 ​ ​ 8 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Activity in our restructuring reserves was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ Balance at ​ ​ September 27, ​ ​ ​ ​ Changes in ​ Cash ​ Non-Cash ​ Translation ​ June 26, ​ ​ 2019 Charges Estimate Payments Items and Other 2020 ​ ​ (in millions) ​ Fiscal 2020 Actions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee severance ​ $ — ​ $ 120 ​ $ — ​ $ ( 10 ) ​ $ — ​ $ — ​ $ 110 ​ Property, plant, and equipment ​ ​ — ​ ​ 18 ​ ​ — ​ ​ — ​ ​ ( 18 ) ​ ​ — ​ ​ — ​ Total ​ ​ — ​ ​ 138 ​ ​ — ​ ​ ( 10 ) ​ ​ ( 18 ) ​ ​ — ​ ​ 110 ​ Fiscal 2019 Actions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee severance ​ ​ 188 ​ ​ 7 ​ ​ ( 19 ) ​ ​ ( 83 ) ​ ​ — ​ ​ 2 ​ ​ 95 ​ Facility and other exit costs ​ ​ 1 ​ ​ 9 ​ ​ — ​ ​ ( 10 ) ​ ​ — ​ ​ 2 ​ ​ 2 ​ Property, plant, and equipment ​ ​ — ​ ​ 6 ​ ​ — ​ ​ — ​ ​ ( 6 ) ​ ​ — ​ ​ — ​ Total ​ ​ 189 ​ ​ 22 ​ ​ ( 19 ) ​ ​ ( 93 ) ​ ​ ( 6 ) ​ ​ 4 ​ ​ 97 ​ Pre-Fiscal 2019 Actions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee severance ​ ​ 73 ​ ​ — ​ ​ ( 5 ) ​ ​ ( 40 ) ​ ​ — ​ ​ — ​ ​ 28 ​ Facility and other exit costs ​ ​ 2 ​ ​ 6 ​ ​ — ​ ​ ( 6 ) ​ ​ — ​ ​ — ​ ​ 2 ​ Property, plant, and equipment ​ ​ — ​ ​ 2 ​ ​ — ​ ​ — ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ Total ​ ​ 75 ​ ​ 8 ​ ​ ( 5 ) ​ ​ ( 46 ) ​ ​ ( 2 ) ​ ​ — ​ ​ 30 ​ Total Activity ​ $ 264 ​ $ 168 ​ $ ( 24 ) ​ $ ( 149 ) ​ $ ( 26 ) ​ $ 4 ​ $ 237 ​ ​ Fiscal 2020 Actions During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural improvements, due in part to the coronavirus disease COVID-19, across all segments. In connection with this program, during the nine months ended June 26, 2020, we recorded restructuring charges of $ 138 million. We expect to complete all restructuring actions commenced during the nine months ended June 26, 2020 by the end of fiscal 2022 and to incur additional charges of approximately $ 30 million related primarily to employee severance and facility exit costs in the Transportation Solutions and Industrial Solutions segments. Fiscal 2019 Actions During fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural improvements impacting all segments. In connection with this program, during the nine months ended June 26, 2020 and June 28, 2019, we recorded net restructuring charges of $ 3 million and $ 179 million, respectively. We expect to complete all restructuring actions commenced during fiscal 2019 by the end of fiscal 2021 and to incur additional charges of approximately $ 10 million related primarily to employee severance and facility exit costs in the Transportation Solutions and Industrial Solutions segments. Pre-Fiscal 2019 Actions Prior to fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural improvements primarily impacting the Industrial Solutions and Transportation Solutions segments. Also prior to fiscal 2019, we initiated a restructuring program associated with footprint consolidation related to recent acquisitions and structural improvements impacting all segments. During the nine months ended June 26, 2020 and June 28, 2019, we recorded net restructuring charges of $ 3 million and $ 5 million, respectively, related to pre-fiscal 2019 actions. We expect additional charges related to pre-fiscal 2019 actions to be insignificant. 9 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Total Restructuring Reserves Restructuring reserves included on the Condensed Consolidated Balance Sheets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions) ​ Accrued and other current liabilities ​ $ 211 ​ $ 245 ​ Other liabilities ​ 26 ​ 19 ​ Restructuring reserves ​ $ 237 ​ $ 264 ​ ​ 3. Discontinued Operations During the nine months ended June 28, 2019, we sold our Subsea Communications (“SubCom”) business for net cash proceeds of $ 297 million and incurred a pre-tax loss on sale of $ 86 million, related primarily to the recognition of cumulative translation adjustment losses of $ 67 million and certain guarantee liabilities. The SubCom business met the held for sale and discontinued operations criteria and was reported as such in all periods presented on the Condensed Consolidated Financial Statements. Prior to reclassification to discontinued operations, the SubCom business was included in the Communications Solutions segment. In connection with the sale, we contractually agreed to continue to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed as of the date of sale. These guarantees had a combined value of approximately $ 1.2 billion as of June 26, 2020 and are expected to expire at various dates through fiscal 2025. Also, under the terms of the definitive agreement, we are required to issue up to $ 300 million of new performance guarantees, subject to certain limitations, for projects entered into by the SubCom business following the sale for a period of up to three years . As of June 26, 2020, there were no such new performance guarantees outstanding. We have contractual recourse against the SubCom business if we are required to perform on any SubCom guarantees; however, based on historical experience, we do not anticipate having to perform. The following table presents the summarized components of loss from discontinued operations, net of income taxes for the nine months ended June 28, 2019: ​ ​ ​ ​ ​ ​ ​ (in millions) ​ Net sales ​ $ 41 ​ Cost of sales ​ ( 50 ) ​ Operating expenses ​ ​ ( 12 ) ​ Pre-tax loss from discontinued operations ​ ( 21 ) ​ Pre-tax loss on sale of discontinued operations ​ ( 86 ) ​ Income tax benefit ​ 9 ​ Loss from discontinued operations, net of income taxes ​ $ ( 98 ) ​ ​ ​ 4. Acquisitions First Sensor AG During the nine months ended June 26, 2020, we acquired approximately 72 % of the outstanding shares of First Sensor AG (“First Sensor”), a provider of sensing solutions based in Germany, for € 181 million in cash (equivalent to $ 201 million), net of cash acquired. As a result of the transaction, we recognized a noncontrolling interest with a fair value of € 96 million (equivalent to $ 107 million) as of the acquisition date. The fair value of the noncontrolling interest for First Sensor common shares that were not acquired was determined using the stated price in the Domination and Profit and Loss Transfer 10 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Agreement (“DPLTA”) which is considered to be a level 2 observable input under the fair value hierarchy. The First Sensor business has been reported as part of our Transportation Solutions segment from the date of acquisition. We and First Sensor entered into a DPLTA which was approved by First Sensor shareholders in May 2020 and became effective in the fourth quarter of fiscal 2020 following registration in the commercial register in Germany. Under the terms of the DPLTA, upon its effectiveness, First Sensor minority shareholders can elect either (1) to remain First Sensor minority shareholders and receive recurring annual compensation of € 0.56 per First Sensor share or (2) to put their First Sensor shares in exchange for compensation of € 33.27 per First Sensor share. The ultimate amount and timing of any future cash payments related to the DPLTA is uncertain. Following the registration of the DPLTA in July 2020, the First Sensor noncontrolling interest balance of $ 108 million was reclassified and will be presented as redeemable noncontrolling interest outside of equity on the Condensed Consolidated Balance Sheet in future periods as the exercise of the put right by First Sensor minority shareholders is not within our control. Other Acquisitions During the nine months ended June 26, 2020, we acquired three additional businesses for a combined cash purchase price of $ 124 million, net of cash acquired. The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments from the date of acquisition. 5. Inventories Inventories consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions) ​ Raw materials ​ $ 281 ​ $ 260 ​ Work in progress ​ 934 ​ 739 ​ Finished goods ​ 1,012 ​ 837 ​ Inventories ​ $ 2,227 ​ $ 1,836 ​ ​ 6. Goodwill The changes in the carrying amount of goodwill by segment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transportation Industrial Communications ​ ​ ​ ​ Solutions ​ Solutions ​ Solutions ​ Total ​ ​ ​ (in millions) ​ September 27, 2019 (1) ​ $ 2,124 ​ $ 3,039 ​ $ 577 ​ $ 5,740 ​ Impairment of goodwill ​ ​ ( 900 ) ​ ​ — ​ ​ — ​ ​ ( 900 ) ​ Acquisitions ​ ​ 273 ​ ​ 10 ​ ​ — ​ ​ 283 ​ Currency translation ​ 7 ​ 11 ​ 2 ​ 20 ​ June 26, 2020 (2) ​ $ 1,504 ​ $ 3,060 ​ $ 579 ​ $ 5,143 ​ (1) At September 27, 2019, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $ 2,191 million, $ 669 million, and $ 489 million, respectively. (2) At June 26, 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $ 3,091 million, $ 669 million, and $ 489 million, respectively. During the nine months ended June 26, 2020, we completed the acquisition of First Sensor and recognized goodwill of $ 213 million in the Transportation Solutions segment. During the quarter ended March 27, 2020, we preliminarily 11 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) allocated the purchase price of First Sensor to goodwill due to the timing of the transaction. Adjustments to the allocation were made during the quarter ended June 26, 2020 to recognize the identifiable intangible assets, assets acquired, and liabilities assumed. Further adjustments to the purchase price allocation may be needed in future periods. In addition, during the nine months ended June 26, 2020, we recognized goodwill in the Transportation Solutions and Industrial Solutions segments in connection with other recent acquisitions. See Note 4 for additional information regarding acquisitions. We test goodwill allocated to reporting units for impairment annually during the fiscal fourth quarter, or more frequently if events occur or circumstances exist that indicate that a reporting unit’s carrying value may exceed its fair value. As a result of current and projected declines in sales and profitability, due in part to the impact of COVID-19 and projected reductions in global automotive production, of the Sensors reporting unit of the Transportation Solutions segment during the quarter ended March 27, 2020, we determined that an indicator of impairment had occurred and goodwill impairment testing of this reporting unit was required. As discussed in Note 1, during the quarter ended March 27, 2020, we adopted ASU No. 2017-04 which simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the new standard, goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. We determined the fair value of the Sensors reporting unit to be $ 1.0 billion as of March 27, 2020. This valuation was based on a discounted cash flows analysis incorporating our estimate of future operating performance, which we consider to be a level 3 unobservable input in the fair value hierarchy, and was corroborated using a market approach valuation. The goodwill impairment test indicated that the carrying value of the reporting unit exceeded its fair value by $ 900 million. As a result, we recorded a partial impairment charge of $ 900 million in the quarter ended March 27, 2020. The Sensors reporting unit had a remaining goodwill allocation of $ 626 million as of March 27, 2020. There were no triggering events identified in the quarter ended June 26, 2020 and therefore no goodwill impairment testing was required. Should economic conditions deteriorate further or remain depressed for a prolonged period of time, estimates of future cash flows for each of our reporting units may be insufficient to support the carrying value and the goodwill assigned to it, requiring impairment charges, including additional impairment charges for the Sensors reporting unit. Further impairment charges, if any, may be material to our results of operations and financial position. 7. Intangible Assets, Net Intangible assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, 2020 ​ September 27, 2019 ​ ​ Gross ​ ​ Net Gross ​ ​ Net ​ ​ ​ Carrying ​ Accumulated ​ Carrying ​ Carrying ​ Accumulated ​ Carrying ​ ​ ​ Amount ​ Amortization ​ Amount ​ Amount ​ Amortization ​ Amount ​ ​ (in millions) ​ Customer relationships ​ $ 1,623 ​ $ ( 524 ) ​ $ 1,099 ​ $ 1,513 ​ $ ( 459 ) ​ $ 1,054 ​ Intellectual property ​ ​ 1,212 ​ ​ ( 714 ) ​ ​ 498 ​ ​ 1,260 ​ ​ ( 734 ) ​ ​ 526 ​ Other ​ 23 ​ ( 8 ) ​ 15 ​ 33 ​ ( 17 ) ​ 16 ​ Total ​ $ 2,858 ​ $ ( 1,246 ) ​ $ 1,612 ​ $ 2,806 ​ $ ( 1,210 ) ​ $ 1,596 ​ ​ Intangible asset amortization expense was $ 46 million and $ 45 million for the quarters ended June 26, 2020 and June 28, 2019, respectively, and $ 137 million and $ 135 million for the nine months ended June 26, 2020 and June 28, 2019, respectively. 12 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) At June 26, 2020, the aggregate amortization expense on intangible assets is expected to be as follows: ​ ​ ​ ​ ​ ​ (in millions) Remainder of fiscal 2020 ​ $ 47 ​ Fiscal 2021 ​ ​ 188 ​ Fiscal 2022 ​ 187 ​ Fiscal 2023 ​ 186 ​ Fiscal 2024 ​ 155 ​ Fiscal 2025 ​ 137 ​ Thereafter ​ 712 ​ Total ​ $ 1,612 ​ ​ 8. Debt During the quarter ended June 26, 2020, Tyco Electronics Group S.A. (“TEGSA”), our wholly -owned subsidiary, repaid, at maturity, $ 350 million of floating rate senior notes due in June 2020. During the nine months ended June 26, 2020, TEGSA issued € 550 million aggregate principal amount of 0.0 % senior notes due in February 2025. The notes are TEGSA’s unsecured senior obligations and rank equally in right of payment with all existing and any future senior indebtedness of TEGSA and senior to any subordinated indebtedness that TEGSA may incur. The notes are fully and unconditionally guaranteed as to payment on an unsecured basis by TE Connectivity Ltd. During the nine months ended June 26, 2020, we reclassified $ 250 million of 4.875 % senior notes due in January 2021 and € 350 million of fixed-to-floating rate senior notes due in June 2021 from long-term debt to short-term debt on the Condensed Consolidated Balance Sheet. As of September 27, 2019, TEGSA had $ 219 million of commercial paper outstanding at a weighted-average interest rate of 2.20 %. TEGSA had no commercial paper outstanding at June 26, 2020. The fair value of our debt, based on indicative valuations, was approximately $ 4,484 million and $ 4,278 million at June 26, 2020 and September 27, 2019, respectively. 9. Leases We have facility, land, vehicle, and equipment leases that expire at various dates. We determine if a contract qualifies as a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the identified asset and the right to direct the use of the identified asset. Lease ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of remaining lease payments over the lease term. Lease ROU assets represent our right to use the underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. We do not recognize ROU assets or lease liabilities that arise from short-term leases. Since our lease contracts do not contain a readily determinable implicit rate, we determine a fully-collateralized incremental borrowing rate that reflects a similar term to the lease and the economic environment of the applicable country or region in which the asset is leased. We have elected to account for lease and non-lease components in our real estate leases as a single lease component; other leases generally do not contain non-lease components. The non-lease components in our real estate leases include logistics services, warehousing, and other operational costs. Many of these costs are variable, fluctuating based on services provided, such as pallets shipped in and out of a location or square footage of space occupied. These costs, and any other variable rental costs, are excluded from our ROU assets and lease liabilities, and instead are expensed as incurred. Some of 13 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) our leases may include options to either renew or early terminate the lease. The exercise of these options is generally at our sole discretion and would only occur if there is an economic, financial, or business reason to do so. Such options are included in the lease term if we determine it is reasonably certain they will be exercised. The components of lease cost were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarter Ended Nine Months Ended ​ ​ ​ June 26, ​ June 26, ​ ​ ​ 2020 ​ 2020 ​ ​ (in millions) Operating lease cost ​ $ 27 ​ $ 79 ​ Variable lease cost ​ ​ 12 ​ ​ 38 ​ Total lease cost ​ $ 39 ​ $ 117 ​ ​ Amounts recognized on the Condensed Consolidated Balance Sheet were as follows: ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ ​ ​ 2020 ​ ​ ($ in millions) ​ Operating lease ROU assets: ​ ​ ​ ​ Other assets ​ $ 451 ​ Operating lease liabilities: ​ ​ ​ ​ Accrued and other current liabilities ​ $ 115 ​ Other liabilities ​ ​ 346 ​ Total operating lease liabilities ​ $ 461 ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (in years) ​ ​ 5.7 ​ Weighted-average discount rate ​ ​ 1.8 % ​ Cash flow information, including significant non-cash transactions, related to leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Nine Months Ended ​ ​ ​ June 26, ​ ​ ​ 2020 ​ ​ (in millions) Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ Payments for operating leases (1) ​ $ 78 ​ ​ ​ ​ ​ ​ ROU assets obtained in exchange for new operating lease liabilities ​ ​ 17 ​ (1) These payments are included in cash flows from continuing operating activities, primarily in changes in other liabilities. 14 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) At June 26, 2020, the maturities of operating lease liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ (in millions) Remainder of fiscal 2020 ​ $ 30 ​ Fiscal 2021 ​ 114 ​ Fiscal 2022 ​ ​ 90 ​ Fiscal 2023 ​ ​ 72 ​ Fiscal 2024 ​ ​ 57 ​ Thereafter ​ ​ 121 ​ Total lease payments ​ ​ 484 ​ Less: interest ​ ​ ( 23 ) ​ Present value of lease liabilities ​ $ 461 ​ ​ The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019 and presented in accordance with the previous lease accounting standard, presents the future minimum lease payments under non-cancelable operating lease obligations as of September 27, 2019: ​ ​ ​ ​ ​ ​ (in millions) Fiscal 2020 ​ $ 117 ​ Fiscal 2021 ​ 102 ​ Fiscal 2022 ​ 81 ​ Fiscal 2023 ​ 67 ​ Fiscal 2024 ​ 55 ​ Thereafter ​ 118 ​ Total ​ $ 540 ​ ​ ​ 10. Commitments and Contingencies Legal Proceedings In the normal course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax. Although it is not feasible to predict the outcome of these proceedings, based upon our experience, current information, and applicable law, we do not expect that the outcome of these proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows. Environmental Matters We are involved in various stages of investigation and cleanup related to environmental remediation matters at a number of sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods. As of June 26, 2020, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 14 million to $ 45 million, and we accrued $ 18 million as the probable loss, which was the best estimate within this range. We believe that any potential payment of such estimated amounts will not have a material adverse effect on our results of operations, financial position, or cash flows. Guarantees In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for 15 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows. At June 26, 2020, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 273 million. We sold our SubCom business during fiscal 2019. In connection with the sale, we contractually agreed to honor certain performance guarantees and letters of credit related to the SubCom business. See Note 3 for additional information regarding these guarantees and the divestiture of the SubCom business. 11. Financial Instruments Foreign Currency Exchange Rate Risk During fiscal 2015, we entered into cross-currency swap contracts to reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans. The aggregate notional value of these contracts was € 700 million and € 1,000 million at June 26, 2020 and September 27, 2019, respectively. Certain contracts were terminated during the nine months ended June 26, 2020; the remaining contracts mature in fiscal 2022. Under the terms of these contracts, which have been designated as cash flow hedges, we make interest payments in euros at 3.50 % per annum and receive interest in U.S. dollars at a weighted-average rate of 5.34 % per annum. Upon maturity, we will pay the notional value of the contracts in euros and receive U.S. dollars from our counterparties. In connection with the cross-currency swap contracts, both counterparties to each contract are required to provide cash collateral. These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions) ​ Other assets ​ $ 25 ​ $ 19 ​ ​ At June 26, 2020 and September 27, 2019, collateral received from or paid to our counterparties approximated the net derivative position. Collateral is recorded in accrued and other current liabilities when the contracts are in a net asset position, or prepaid expenses and other current assets when the contracts are in a net liability position on the Condensed Consolidated Balance Sheets. The impacts of these cross-currency swap contracts were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Gains recorded in other comprehensive income (loss) ​ $ — ​ $ 10 ​ $ 32 $ 42 ​ Gains (losses) excluded from the hedging relationship (1) ​ ( 14 ) ​ ( 16 ) ​ ( 19 ) ​ 22 ​ (1) Gains and losses excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses and gains generated as a result of re-measuring certain intercompany loans to the U.S. dollar. Hedge of Net Investment We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $ 3,320 million and $ 3,374 million at June 26, 2020 and September 27, 2019, respectively. 16 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) We also use a cross-currency swap program to hedge our net investment in certain foreign operations. The aggregate notional value of the contracts under this program was $ 1,776 million and $ 1,844 million at June 26, 2020 and September 27, 2019, respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 2.56 % per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2024, we will pay the notional value of the contracts in the designated foreign currency and receive U.S. dollars from our counterparties. We are not required to provide collateral for these contracts. These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions) ​ Prepaid expenses and other current assets ​ $ 16 ​ $ 27 ​ Other assets ​ 30 ​ 46 ​ Accrued and other current liabilities ​ ​ 3 ​ ​ 2 ​ Other liabilities ​ ​ 2 ​ ​ 1 ​ ​ The impacts of our hedge of net investment programs were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Foreign currency exchange gains (losses) on intercompany loans and external borrowings (1) ​ $ ( 52 ) ​ $ ( 58 ) ​ $ ( 60 ) ​ $ 54 ​ Gains (losses) on cross-currency swap contracts designated as hedges of net investment (1) ​ ( 25 ) ​ ( 20 ) ​ ( 3 ) ​ 17 ​ (1) Recorded as currency translation, a component of accumulated other comprehensive income (loss). Interest Rate Risk Management During the nine months ended June 26, 2020 and June 28, 2019, we entered into forward starting interest rate swap contracts to manage interest rate exposure prior to the anticipated issuance of fixed rate debt. These contracts had an aggregate notional value of $ 450 million and $ 350 million at June 26, 2020 and September 27, 2019, respectively, and were designated as cash flow hedges. These forward starting interest rate swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 26, ​ September 27, ​ ​ 2020 2019 ​ ​ (in millions) ​ Other liabilities ​ $ 66 ​ $ 34 ​ ​ The impacts of these forward starting interest rate swap contracts were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Losses recorded in other comprehensive income (loss) ​ $ — ​ $ ( 12 ) ​ $ ( 32 ) $ ( 18 ) ​ 17 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) ​ 12. Retirement Plans The net periodic pension benefit cost (credit) for all non-U.S. and U.S. defined benefit pension plans was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-U.S. Plans ​ U.S. Plans ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Quarters Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Operating expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 13 ​ $ 12 ​ $ 2 ​ $ 4 ​ Other (income) expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ 6 ​ 11 ​ 9 ​ 11 ​ Expected return on plan assets ​ ( 15 ) ​ ( 16 ) ​ ( 15 ) ​ ( 14 ) ​ Amortization of net actuarial loss ​ 10 ​ 6 ​ 3 ​ 4 ​ Amortization of prior service credit ​ ( 1 ) ​ ( 2 ) ​ — ​ — ​ Net periodic pension benefit cost (credit) ​ $ 13 ​ $ 11 ​ $ ( 1 ) ​ $ 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-U.S. Plans ​ U.S. Plans ​ ​ ​ For the ​ For the ​ ​ ​ Nine Months Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Operating expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost ​ $ 38 ​ $ 36 ​ $ 7 ​ $ 10 ​ Other (income) expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ 18 ​ 32 ​ 27 ​ 34 ​ Expected return on plan assets ​ ( 45 ) ​ ( 48 ) ​ ( 44 ) ​ ( 43 ) ​ Amortization of net actuarial loss ​ 30 ​ 18 ​ 7 ​ 13 ​ Amortization of prior service credit ​ ( 4 ) ​ ( 6 ) ​ — ​ — ​ Net periodic pension benefit cost (credit) ​ $ 37 ​ $ 32 ​ $ ( 3 ) ​ $ 14 ​ ​ During the nine months ended June 26, 2020, we contributed $ 29 million to our non-U.S. pension plans. 13. Income Taxes We recorded income tax expense of $ 185 million and an income tax benefit of $ 245 million for the quarters ended June 26, 2020 and June 28, 2019, respectively. The income tax expense for the quarter ended June 26, 2020 included $ 170 million of income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets. Due to the COVID-19 pandemic and its negative impact on our current and expected future operating profit and taxable income, we believe it is more likely than not that a portion of our deferred tax assets will not be realized. Depending on the duration and severity of COVID-19 disruptions to our business, additional adjustments to our valuation allowance may be required in future periods. The income tax benefit for the quarter ended June 28, 2019 included a $ 214 million income tax benefit related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”) and a $ 93 million income tax benefit related to the effective settlement of a tax audit in a non-U.S. jurisdiction. See “Swiss Tax Reform” below for additional information. We recorded income tax expense of $ 674 million and an income tax benefit of $ 76 million for the nine months ended June 26, 2020 and June 28, 2019, respectively. The income tax expense for the nine months ended June 26, 2020 included $ 355 million of income tax expense related to the tax impacts of certain measures of Swiss Tax Reform. In addition, 18 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) the income tax expense included $ 170 million of income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets, partially offset by an income tax benefit of $ 31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement. See the “Swiss Tax Reform” and “Tax Sharing Agreement” below for additional information. The pre-tax goodwill impairment charge of $ 900 million recorded during the nine months ended June 26, 2020 resulted in a tax benefit of $ 4 million as the associated goodwill was primarily not deductible for income tax purposes. See Note 6 for additional information regarding the impairment of goodwill. The income tax benefit for the nine months ended June 28, 2019 included a $ 214 million income tax benefit related to the tax impacts of certain measures of Swiss Tax Reform, a $ 93 million income tax benefit related to the effective settlement of a tax audit in a non-U.S. jurisdiction, and $ 15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions. Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that approximately $ 50 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months. We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Condensed Consolidated Balance Sheet as of June 26, 2020. Swiss Tax Reform The Federal Act on Tax Reform and AHV Financing eliminates certain preferential tax items and implements new tax rates at both the federal and cantonal levels. During the quarter ended June 28, 2019, the federal tax authority issued guidance abolishing certain interest deductions, and as a result of this measure, we recorded a $ 214 million income tax benefit related primarily to the reduction of the valuation allowance for deferred tax assets. Based on our forecast of taxable income, reflecting this measure, we believed it was more likely than not that additional deferred tax assets for tax loss carryforwards in Switzerland would be realized in the future. The federal provisions of Swiss Tax Reform were enacted into law in the quarter ended September 27, 2019. In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates. During the nine months ended June 26, 2020, we recognized $ 355 million of income tax expense related primarily to cantonal implementation and the resulting write-down of certain deferred tax assets to the lower tax rates. Tax Sharing Agreement Upon our separation from Tyco International plc in fiscal 2007, we entered into a Tax Sharing Agreement with Tyco International plc (now part of Johnson Controls International plc) and Covidien plc (now part of Medtronic plc) under which we shared certain income tax liabilities for periods prior to and including June 29, 2007. Pursuant to the Tax Sharing Agreement, we entered into certain guarantee commitments and indemnifications. In March 2020, we, Johnson Controls International plc, and Medtronic plc entered into an agreement to terminate the Tax Sharing Agreement. We believe that substantially all income tax matters that may be subject to the Tax Sharing Agreement have been settled with tax authorities and we do not expect any remaining tax matters to have a material effect on our results of operations, financial position, or cash flows. Accordingly, during the nine months ended June 26, 2020, we recognized an income tax benefit of $ 31 million and net other income of $ 8 million representing settlement of the remaining shared pre-separation income tax matters and indemnification balances . 19 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 14. Earnings (Loss) Per Share The weighted-average number of shares outstanding used in the computations of basic and diluted earnings (loss) per share were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Basic 330 ​ 337 ​ 333 ​ 339 ​ Dilutive impact of share-based compensation arrangements — ​ 2 ​ — ​ 2 ​ Diluted 330 339 ​ 333 341 ​ ​ For both the quarter and nine months ended June 26, 2020, there were one million nonvested share awards and options outstanding with underlying exercise prices less than the average market prices of our common shares; however, these were excluded from the calculation of diluted loss per share as inclusion would be antidilutive as a result of our loss during the period. The following share options were not included in the computation of diluted earnings (loss) per share because the instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion would be antidilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Antidilutive share options 4 ​ 1 ​ 3 ​ 1 ​ ​ ​ 15. Equity Common Shares In March 2020, our shareholders reapproved and extended through March 11, 2022, our board of directors’ authorization to issue additional new shares, subject to certain conditions specified in our articles of association, in aggregate not exceeding 50 % of the amount of our authorized shares. Common Shares Held in Treasury In March 2020, our shareholders approved the cancellation of approximately 12 million shares purchased under our share repurchase program during the period beginning September 29, 2018 and ending September 27, 2019. The capital reduction by cancellation of these shares was subject to a notice period and filing with the commercial register in Switzerland and became effective in May 2020. 20 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Dividends We paid cash dividends to shareholders as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ Quarters Ended ​ Nine Months Ended ​ June 26, June 28, June 26, June 28, ​ 2020 2019 2020 2019 Dividends paid per common share ​ $ 0.48 ​ $ 0.46 ​ $ 1.40 ​ $ 1.34 ​ ​ In March 2020, our shareholders approved a dividend payment to shareholders of $ 1.92 per share, payable in four equal quarterly installments of $ 0.48 per share beginning in the third quarter of fiscal 2020 and ending in the second quarter of fiscal 2021. Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to shareholders’ equity. At June 26, 2020 and September 27, 2019, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 475 million and $ 308 million, respectively. Share Repurchase Program Common shares repurchased under the share repurchase program were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ ​ ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ ​ 2020 2019 ​ ​ (in millions) ​ Number of common shares repurchased ​ 6 ​ 10 ​ Repurchase value $ 505 $ 836 ​ ​ At June 26, 2020, we had $ 1.0 billion of availability remaining under our share repurchase authorization. ​ ​ 21 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 16. Share Plans Share-based compensation expense, which was included primarily in selling, general, and administrative expenses on the Condensed Consolidated Statements of Operations, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Share-based compensation expense $ 17 $ 18 ​ $ 54 $ 56 ​ ​ As of June 26, 2020, there was $ 135 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.9 years. During the quarter ended December 27, 2019, we granted the following share-based awards as part of our annual incentive plan grant: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grant-Date ​ ​ Shares Fair Value ​ ​ (in millions) ​ ​ ​ ​ Share options ​ 1.5 ​ $ 15.52 ​ Restricted share awards ​ 0.5 ​ 93.63 ​ Performance share awards ​ 0.2 ​ ​ 93.63 ​ ​ As of June 26, 2020, we had 15 million shares available for issuance under our stock and incentive plans, of which the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and restated as of March 8, 2017, was the primary plan. Share-Based Compensation Assumptions The assumptions we used in the Black-Scholes-Merton option pricing model for the options granted as part of our annual incentive plan grant were as follows: ​ ​ ​ ​ ​ ​ Expected share price volatility ​ 21 % ​ Risk-free interest rate ​ 1.8 % ​ Expected annual dividend per share ​ $ 1.84 ​ ​ Expected life of options (in years) ​ 5.1 ​ ​ ​ ​ 22 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 17. Segment and Geographic Data Net sales by segment (1) and industry end market (2) were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Transportation Solutions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Automotive ​ $ 797 ​ $ 1,418 ​ $ 3,567 ​ $ 4,312 ​ Commercial transportation ​ 233 ​ 317 ​ 785 ​ 938 ​ Sensors ​ 225 ​ 233 ​ 628 ​ 675 ​ Total Transportation Solutions ​ ​ 1,255 ​ ​ 1,968 ​ ​ 4,980 ​ ​ 5,925 ​ Industrial Solutions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aerospace, defense, oil, and gas ​ 265 ​ 342 ​ 892 ​ 958 ​ Industrial equipment ​ ​ 265 ​ ​ 309 ​ ​ 808 ​ ​ 950 ​ Medical (3) ​ ​ 161 ​ ​ 176 ​ ​ 526 ​ ​ 520 ​ Energy ​ 174 ​ 178 ​ 528 ​ 512 ​ Total Industrial Solutions ​ ​ 865 ​ ​ 1,005 ​ ​ 2,754 ​ ​ 2,940 ​ Communications Solutions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Data and devices ​ ​ 276 ​ ​ 245 ​ ​ 713 ​ ​ 753 ​ Appliances ​ 152 ​ 171 ​ 464 ​ 530 ​ Total Communications Solutions ​ ​ 428 ​ ​ 416 ​ ​ 1,177 ​ ​ 1,283 ​ Total ​ $ 2,548 ​ $ 3,389 ​ $ 8,911 ​ $ 10,148 ​ (1) Intersegment sales were not material and were recorded at selling prices that approximated market prices. (2) Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary. (3) Effective for fiscal 2020, we are separately presenting net sales in the medical end market. Such amounts were previously included in net sales in the industrial equipment end market. 23 Table of Contents TE CONNECTIVITY LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Net sales by geographic region (1) and segment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Europe/Middle East/Africa (“EMEA”): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transportation Solutions ​ $ 410 ​ $ 785 ​ $ 1,878 ​ $ 2,365 ​ Industrial Solutions ​ 313 ​ 369 ​ 1,014 ​ 1,101 ​ Communications Solutions ​ 54 ​ 63 ​ 170 ​ 198 ​ Total EMEA ​ 777 ​ 1,217 ​ 3,062 ​ 3,664 ​ Asia–Pacific: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transportation Solutions ​ 606 ​ 705 ​ 1,979 ​ 2,143 ​ Industrial Solutions ​ 153 ​ 155 ​ 436 ​ 465 ​ Communications Solutions ​ ​ 273 ​ ​ 241 ​ ​ 721 ​ ​ 736 ​ Total Asia–Pacific ​ 1,032 ​ 1,101 ​ 3,136 ​ 3,344 ​ Americas: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Transportation Solutions ​ ​ 239 ​ ​ 478 ​ ​ 1,123 ​ ​ 1,417 ​ Industrial Solutions ​ 399 ​ 481 ​ 1,304 ​ 1,374 ​ Communications Solutions ​ ​ 101 ​ ​ 112 ​ ​ 286 ​ ​ 349 ​ Total Americas ​ 739 ​ 1,071 ​ 2,713 ​ 3,140 ​ Total ​ $ 2,548 ​ $ 3,389 ​ $ 8,911 ​ $ 10,148 ​ (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. Operating income (loss) by segment was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the ​ For the ​ ​ ​ Quarters Ended ​ Nine Months Ended ​ ​ ​ June 26, ​ June 28, ​ June 26, ​ June 28, ​ ​ 2020 2019 2020 2019 ​ ​ (in millions) ​ Transportation Solutions ​ $ ( 1 ) ​ $ 308 ​ $ ( 291 ) (1) $ 956 ​ Industrial Solutions ​ ​ 70 ​ ​ 156 ​ ​ 327 ​ ​ 393 ​ Communications Solutions ​ ​ 65 ​ ​ 56 ​ ​ 154 ​ ​ 185 ​ Total ​ $ 134 ​ $ 520 ​ $ 190 ​ $ 1,534 ​ (1) Includes goodwill impairment charge of $ 900 million. See Note 6 for additional information . ​ ​ ​ ​ 24 Table of Contents ​