What changed in this filing

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Item 1. Business

2020-11-10 compared with 2019-11-12 · 57 added, 22 removed, 118 unchanged (40% of the section changed)

7 unchanged sentences

We have a 52- or 53-week fiscal year that ends on the last Friday of September.

Fiscal 2019, 2018, and 2017 were 52 weeks in length and ended on September 27, 2019, September 28, 2018, and September 29, 2017, respectively.

Fiscal 2020, 2019, and 2018 were each 52 weeks in length and ended on September 25, 2020, September 27, 2019, and September 28, 2018, respectively.

For fiscal years in which there are 53 weeks, the fourth quarter reporting period includes 14 weeks, with the next such occurrence taking place in fiscal 2022.

COVID-19 Pandemic

A novel strain of coronavirus (“COVID-19”) was first identified in China in December 2019 and subsequently declared a pandemic by the World Health Organization.

To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas.

The COVID-19 pandemic negatively affected our sales and operating results during fiscal 2020, and we expect that it will continue to have an impact on our financial condition and results of operations in the near term and may have a material impact on our financial condition, liquidity, and results of operations in future periods.

See “Part II.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion regarding the impact of the COVID-19 pandemic on our financial results.

Also, see “Part I.

Risk Factors” for discussion of the risks and uncertainties associated with the COVID-19 pandemic.

We operate through three reportable segments:

Transportation Solutions, Industrial Solutions, and Communications Solutions.

We believe our segments serve a combined market of approximately $190 billion.

Although the COVID-19 pandemic has negatively affected our markets, we expect a gradual recovery with our three segments once again serving a combined market of approximately $190 billion.

Our net sales by segment as a percentage of our total net sales were as follows:

5 unchanged sentences

The Transportation Solutions segment is a leader in connectivity and sensor technologies.

The primary products sold by the Transportation Solutions segment include terminals and connector systems and components, sensors, antennas, relays, application tooling, and wire and heat shrink tubing.

The primary products sold by the Transportation Solutions segment include terminals and connector systems and components, sensors, relays, antennas, application tooling, and wire and heat shrink tubing.

The Transportation Solutions segment’s products, which must withstand harsh conditions, are used in the following end markets:

7 unchanged sentences

The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and signals.

The primary products sold by the Industrial Solutions segment include terminals and connector systems and components, heat shrink tubing, relays, and wire and cable.

The primary products sold by the Industrial Solutions segment include terminals and connector systems and components, heat shrink tubing, interventional medical components, relays, and wire and cable.

The Industrial Solutions segment’s products are used in the following end markets:

● Aerospace, defense, oil, and gas (32% of segment’s net sales)— We design, develop, and manufacture a comprehensive portfolio of critical electronic components and systems for the harsh operating conditions of the commercial aerospace, defense, and marine industries.

Our products and systems are designed and manufactured to operate effectively in harsh conditions ranging from the depths of the ocean to the far reaches of space.

● Industrial equipment (30% of segment’s net sales)— Our products are used in factory automation and process control systems such as industrial controls, robotics, human machine interface, industrial communication, and power distribution.

Our intelligent building products are used to connect lighting, HVAC, elevators/escalators, and security.

Our intelligent building products are used to connect lighting and offer solutions in HVAC, elevators/escalators, and security.

Our rail products are used in high-speed trains, metros, light rail vehicles, locomotives, and signaling switching equipment.

Our products are also used by the solar industry.

The medical industry uses our products in imaging, diagnostic, surgical, and minimally invasive interventional applications.

● Aerospace, defense, oil, and gas (33% of segment’s net sales)— We design, develop, and manufacture a comprehensive portfolio of critical electronic components and systems for the harsh operating conditions of the aerospace, defense, and marine industries.

Our products and systems are designed and manufactured to operate effectively in harsh conditions ranging from the depths of the ocean to the far reaches of space.

● Medical (19% of segment’s net sales)— Our products are used in imaging, diagnostic, surgical, and minimally invasive interventional applications.

We specialize in the design and manufacture of advanced surgical, imaging, and interventional device solutions.

Key markets served include cardiovascular, peripheral vascular, structural heart, endoscopy, electrophysiology, and neurovascular therapies.

● Energy (19% of segment’s net sales)— Our products are used by OEMs and utility companies in the electrical power industry and include a wide range of solutions for the electrical power generation, transmission, distribution, and industrial markets.

The Industrial Solutions segment competes primarily against Amphenol, Belden, Hubbell, Carlisle Companies, 3M, Integer Holdings, Esterline, Molex, and Phoenix Contact.

The Industrial Solutions segment competes primarily against Amphenol, Hubbell, Carlisle Companies, ABB, Integer Holdings, Esterline, Molex, and Omron.

Communications Solutions

33 unchanged sentences

Seasonality and Backlog

We experience a slight seasonal pattern to our business.

Overall, the third and fourth fiscal quarters are typically the strongest quarters of our fiscal year, whereas the first fiscal quarter is negatively affected by holidays and the second fiscal quarter may be affected by adverse winter weather conditions in some of our markets.

Typically, we experience a slight seasonal pattern to our business.

Overall, the third and fourth fiscal quarters are usually the strongest quarters of our fiscal year, whereas the first fiscal quarter is negatively affected by holidays and the second fiscal quarter may be affected by adverse winter weather conditions in some of our markets.

Certain of our end markets experience some seasonality.

1 unchanged sentence

Also, our sales in the energy market typically increase in the third and fourth fiscal quarters as customer activity increases.

Customer orders typically fluctuate from quarter to quarter based upon business and market conditions.

Backlog is not necessarily indicative of future net sales as unfilled orders may be cancelled prior to shipment of goods.

Customer orders and demand may fluctuate as a result of economic and market conditions.

We have experienced, and expect to continue to experience, fluctuations as a result of the impacts of the COVID-19 pandemic.

Backlog by reportable segment was as follows:

5 unchanged sentences

We expect that the majority of our backlog at fiscal year end 2020 will be filled during fiscal 2021.

Backlog is not necessarily indicative of future net sales as unfilled orders may be cancelled prior to shipment of goods.

The industries in which we operate are highly competitive, and we compete with thousands of companies that range from large multinational corporations to local manufacturers.

Competition is generally based on breadth of product offering, product innovation, price, quality, delivery, and service.

Our markets have generally been growing but with downward pressure on prices.

We have experienced, and expect to continue to experience, downward pressure on prices.

Raw Materials

8 unchanged sentences

We also rely upon trade secrets, manufacturing know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive position.

We review third-party proprietary rights, including patents and patent applications, as available, in an effort to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities, and monitor the intellectual property claims of others.

We review third-party proprietary rights, including patents and patent applications, as available, in an effort to

develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities, and monitor the intellectual property claims of others.

We own a large portfolio of patents that relate principally to electrical, optical, and electronic products.

3 unchanged sentences

While we consider our patents and trademarks to be valued assets, we do not believe that our competitive position or our operations are dependent upon or would be materially impacted by any single patent or group of related patents.

Management Team and Employees

We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership.

Our chief executive officer and segment leaders average over 25 years of industry experience.

They are supported by an experienced and talented management team who is dedicated to maintaining and expanding our position as a global leader in the industry.

Our strong employee base, along with their commitment to uncompromising values, provides the foundation of our company’s success.

We continue to emphasize employee development and training, and we embrace diversity and inclusion.

Human Capital Management

We have employees located throughout the world.

As of fiscal year end 2019, we employed approximately 78,000 people worldwide, of whom 31,000 were in the EMEA region, 22,000 were in the Asia–Pacific region, and 25,000 were in the Americas region.

As of fiscal year end 2020, we employed approximately 82,000 people worldwide, including contract employees.

Approximately 22,000 were in the Asia–Pacific region, 31,000 were in the EMEA region, and 29,000 were in the Americas region.

Of our total employees, approximately 52,000 were employed in manufacturing.

Our strong employee base, along with their commitment to uncompromising values, provides the foundation of our company’s success.

Our employees are responsible for upholding our purpose—to create a safer, sustainable, productive, and connected future;

our values—integrity, accountability, teamwork, and innovation;

and our strategy, execution, and talent (“SET”) leadership expectations.

We track and report internally on key talent metrics including workforce demographics, critical role pipeline data, diversity data, and engagement and inclusion indices.

We embrace diversity and inclusion.

A truly innovative workforce needs to be diverse and leverage the skills and perspectives of a wealth of backgrounds and experiences.

To attract a global workforce, we strive to embed a culture where employees can bring their whole selves to work.

Our employee resource groups (“ERGs”) are company-sponsored groups of employees that support and promote certain mutual objectives of both the employees and the company, including inclusion and diversity and the professional development of employees.

The ERGs provide a space where employees can foster connections and develop in a supportive environment.

As of fiscal year end 2020, we had six ERGs—ALIGN (LGBTQ), Women in Networking, TE Young Professionals, African Heritage, TE Veterans, and Asian Heritage.

We are focused on recruitment of diverse candidates and on internal talent development of our diverse leaders so that they can advance their careers and move into leadership positions within the company.

Also, during fiscal 2020, we conducted a fully digital, enterprise-wide engagement survey, our Every Connection Counts survey, which was available in 13 languages and focused on measuring engagement and inclusion.

We continue to emphasize employee development and training.

To empower employees to unleash their potential, we provide a range of development programs and opportunities, skills, and resources they need to be successful.

Our LEARN@TE platform supplements our talent development strategies.

It is an online portal that enables employees to access instructor-led classroom or virtual courses and self-directed web-based courses.

In fiscal 2019, we launched SET leadership expectations to all employees which focus on how we drive strategy, effectively execute, and build talent.

We believe these behavioral expectations are integrated into the way we assess and select talent, manage performance, and develop our people.

We are committed to identifying and developing the talents of our next generation leaders.

We have a robust talent and succession planning process and have established specialized programs to support the development of our talent pipeline for critical roles in general management, engineering, and operations.

On an annual basis, we conduct an Organization and Leadership Review process with our chief executive officer and all segment, business unit, and function leaders focusing on our high performing and high potential talent, diverse talent, and the succession for our most critical roles.

We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership.

Our chief executive officer and segment leaders average approximately 25 years of industry experience.

They are supported by an experienced and talented management team who is dedicated to maintaining and expanding our position as a global leader in the industry.

For discussion of the risks relating to the attraction and retention of management and executive management employees, see “Part 1.

Risk Factors.”

Government Regulation and Supervision

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business