What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-11-15 compared with 2021-11-09 · 212 added, 243 removed, 1460 unchanged (24% of the section changed)

74 unchanged sentences

Financial Statements.

See “Part II.

Financial Statements and Supplementary Data”

Financial Statement Schedule.

See “Part II.

Financial Statements and Supplementary Data”

Exhibit Index:

Incorporated by Reference Herein

Date Filed with the SEC

Stock Purchase Agreement, dated as of September 16, 2018, by and between Tyco Electronics Group S.A.

9 unchanged sentences

Indenture among Tyco Electronics Group S.A., Tyco Electronics Ltd.

and Deutsche Bank Trust Company Americas, as trustee, dated as of September 25, 2007

and Deutsche Bank Trust Company Americas, as trustee, dated September 25, 2007

Annual Report on Form 10-K for the fiscal year ended September 28, 2007

1 unchanged sentence

Third Supplemental Indenture among Tyco Electronics Group S.A., Tyco Electronics Ltd.

and Deutsche Bank Trust Company Americas, as trustee, dated as of September 25, 2007

and Deutsche Bank Trust Company Americas, as trustee, dated September 25, 2007

Annual Report on Form 10-K for the fiscal year ended September 28, 2007

1 unchanged sentence

Tenth Supplemental Indenture among Tyco Electronics Group S.A., TE Connectivity Ltd.

and Deutsche Bank Trust Company Americas, as trustee, dated as of July 31, 2014

and Deutsche Bank Trust Company Americas, as trustee, dated July 31, 2014

Current Report on Form 8-K

1 unchanged sentence

Twelfth Supplemental Indenture among Tyco Electronics Group S.A., TE Connectivity Ltd.

and Deutsche Bank Trust Company Americas, as trustee, dated as of February 27, 2015

and Deutsche Bank Trust Company Americas, as trustee, dated February 27, 2015

Current Report on Form 8-K

February 27, 2015

Thirteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of January 28, 2016

Thirteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated January 28, 2016

Current Report on Form 8-K

January 28, 2016

Fourteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated as of August 3, 2017

Fourteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated August 3, 2017

Current Report on Form 8-K

August 3, 2017

Incorporated by Reference Herein

Sixteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 14, 2020

1 unchanged sentence

February 14, 2020

Incorporated by Reference Herein

Date Filed with the SEC

Seventeenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 16, 2021

1 unchanged sentence

February 16, 2021

Eighteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsch Bank Trust Company Americas, as trustee, dated February 4, 2022

Current Report on Form 8-K

February 4, 2022

Amended and Restated Five-Year Senior Credit Agreement dated as of November 14, 2018 among Tyco Electronics Group S.A., as borrower, TE Connectivity Ltd., as guarantor, the lenders party thereto and Bank of America, N.A., as administrative agent

3 unchanged sentences

Current Report on Form 8-K

Second Amendment to Amended and Restated Credit Agreement, dated as of October 14, 2022, by and among Tyco Electronics Group S.A., as borrower, TE Connectivity Ltd., as parent guarantor, the lenders party thereto and Bank of America, N.A., as administrative agent

TE Connectivity Ltd.

Annual Incentive Plan (as amended and restated)

Annual Report on Form 10-K for the fiscal year ended September 24, 2021

November 9, 2021

TE Connectivity Ltd.

2007 Stock and Incentive Plan (amended and restated as of September 17, 2020)

Annual Report on Form 10-K for the fiscal year ended September 24, 2021

November 9, 2021

TE Connectivity Ltd.

Employee Stock Purchase Plan (amended and restated as of September 22, 2021)

Annual Report on Form 10-K for the fiscal year ended September 24, 2021

November 9, 2021

Form of Option Award Terms and Conditions

7 unchanged sentences

November 12, 2019

Incorporated by Reference Herein

Date Filed with the SEC

Form of Option Award Terms and Conditions for Option Grants beginning in November 2020

1 unchanged sentence

January 28, 2021

Form of Restricted Stock Unit Award Terms and Conditions for RSU Grants Beginning in November 2017

Annual Report on Form 10-K for the fiscal year ended September 29, 2017

November 14, 2017

Incorporated by Reference Herein

Form of Option Award Terms and Conditions for Option Grants beginning in November 2021

Form of Restricted Stock Unit Award Terms and Conditions for RSU Grants Beginning in November 2019

4 unchanged sentences

January 28, 2021

Form of Performance Stock Unit Award Terms and Conditions for Performance Cycles Starting in and After Fiscal Year 2018

Annual Report on Form 10-K for the fiscal year ended September 29, 2017

November 14, 2017

Form of Restricted Stock Unit Award Terms and Conditions for RSU Grants Beginning in November 2021

Form of Performance Stock Unit Award Terms and Conditions for Performance Cycles Starting in and After Fiscal Year 2019

4 unchanged sentences

January 28, 2021

Form of Performance Stock Unit Award Terms and Conditions for Performance Cycles Starting in and After Fiscal Year 2022

TE Connectivity Change in Control Severance Plan for Certain U.S.

11 unchanged sentences

TE Connectivity Supplemental Savings and Retirement Plan (amended and restated as of January 1, 2021)

Annual Report on Form 10-K for the fiscal year ended September 24, 2021

November 9, 2021

TE Connectivity Ltd.

2 unchanged sentences

March 14, 2018

Incorporated by Reference Herein

Date Filed with the SEC

Form of Indemnification Agreement

13 unchanged sentences

December 16, 2015

Incorporated by Reference Herein

Employment Agreement between Heath A.

23 unchanged sentences

Inline XBRL Taxonomy Extension Calculation Linkbase Document (3)

Incorporated by Reference Herein

Date Filed with the SEC

Inline XBRL Taxonomy Extension Definition Linkbase Document (3)

36 unchanged sentences

November 15, 2022

November 9, 2021

Syaru Shirley Lin

November 15, 2022

8 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

Reports of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Statements of Operations for the Fiscal Years Ended S eptember 30, 2022, September 24, 2021, a nd September 25, 2020

Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended S eptember 30, 2022, September 24, 2021, a nd September 25, 2020

Consolidated Balance Sheets as of September 3 0 , 2022 and September 24, 2021

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended S eptember 30, 2022, September 24, 2021, a nd September 25, 2020

Consolidated Statements of Cash Flows for the Fiscal Years Ended S eptember 30, 2022, September 24, 2021, a nd September 25, 2020

Notes to Consolidated Financial Statements

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 15, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, effective September 28, 2019, the Company adopted Financial Accounting Standards Board Accounting Standards Update 2016-02 which codified Accounting Standards Codification 842, Leases , using the modified retrospective approach.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill —Sensors Reporting Unit within the Transportation Solutions Reportable Segment — Refer to Notes 2 and 8 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves comparing the carrying amount of each reporting unit to its fair value on the first day of the fourth fiscal quarter or whenever the Company believes an event or other change in reporting unit structure requiring a more frequent assessment has occurred.

The Company uses the income approach based on the present value of future cash flows to estimate fair value.

The income approach is supported by guideline analyses (a market approach).

These approaches incorporate several assumptions including future growth rates, discount rates, and market activity in assessing fair value and are reporting unit specific.

The goodwill balance was $5.6 billion as of September 24, 2021, of which $0.3 billion was allocated to the Sensors reporting unit within the Transportation Solutions reportable segment.

The fair value of this reporting unit exceeded its carrying amount, therefore, no impairment was recognized.

We identified goodwill for the Sensors reporting unit as a critical audit matter because of the significant judgments made by management to estimate its fair value, especially considering the partial impairment charge recorded in the prior fiscal year and future revenue growth rates were based on an expectation of an increase in net sales in a product portfolio with limited available third-party industry reports.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenue and operating margin and the selection of discount rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenue and operating margin (the “forecasts”), and the selection of discount rates for the Sensors reporting unit included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value, such as controls related to forecasts and management’s selection of discount rates.

• We evaluated management’s ability to accurately forecast future revenue and operating margin by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

– Historical operating results of the reporting unit.

– Historical operating results of the Company’s other reporting units.

– Internal communications to management and the board of directors.

– External communications made by management to analysts and investors.

– Third-party industry reports for similar products.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rates by:

– Testing the source information underlying the determination of the discount rates and the mathematical accuracy of the calculations.

– Developing a range of independent estimates and comparing those to the discount rates selected by management.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Taxes — Realizability of Deferred Tax Assets — Refer to Notes 2 and 15 to the financial statements

4 unchanged sentences

Sources of taxable income include future reversals of deferred tax assets and liabilities, expected future taxable income, taxable income in prior carryback years if permitted under the tax law, and tax planning strategies.

Management has determined that it is more likely than not that sufficient taxable income will be generated in the future to realize a portion of its deferred tax assets, and therefore, a valuation allowance of $2.7 billion has been recorded to offset the Company’s gross deferred tax assets as of September 24, 2021 of $5.3 billion.

Management has determined that it is more likely than not that sufficient taxable income will be generated in the future to

realize a portion of its deferred tax assets, and therefore, a valuation allowance of $7.1 billion has been recorded to offset the Company’s gross deferred tax assets as of September 30, 2022 of $9.8 billion.

We identified the realizability of deferred tax assets as a critical audit matter because of the Company’s tax structure and the significant judgments and estimates made by management to determine that sufficient taxable income will be generated in the future prior to expiration to realize a portion of its deferred tax assets.

11 unchanged sentences

• We evaluated whether the taxable income in prior carryback years was of the appropriate character and available under the tax law.

• With the assistance of our income tax and other specialists, we evaluated (1) the appropriateness of qualifying tax planning strategies, including that they were prudent, feasible and would more likely than not result in the realization of deferred tax assets and (2) management’s assessment that sufficient taxable income will be generated in the future to realize a portion of the deferred tax assets prior to expiration.

• With the assistance of our income tax specialists, we evaluated (1) the appropriateness of qualifying tax planning strategies, including that they were prudent, feasible and would more likely than not result in the realization of deferred tax assets and (2) management’s assessment that sufficient taxable income will be generated in the future to realize a portion of the deferred tax assets prior to expiration.

/s/ Deloitte & Touche LLP

43 unchanged sentences

Income from continuing operations before income taxes

Income tax (expense) benefit

Income tax expense

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of income taxes

Income from discontinued operations, net of income taxes

Net income (loss)

1 unchanged sentence

Income (loss) from continuing operations

Income (loss) from discontinued operations

Income from discontinued operations

Net income (loss)

1 unchanged sentence

Income (loss) from continuing operations

Income (loss) from discontinued operations

Income from discontinued operations

Net income (loss)

12 unchanged sentences

Comprehensive income (loss)

comprehensive income attributable to noncontrolling interests

comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to TE Connectivity Ltd.

44 unchanged sentences

Balance at fiscal year end 2019

Adoption of ASU No.

Other comprehensive loss

Other comprehensive income

Share-based compensation expense

11 unchanged sentences

Balance at fiscal year end 2021

Other comprehensive income

Other comprehensive loss

Share-based compensation expense

11 unchanged sentences

Net income (loss)

(Income) loss from discontinued operations, net of income taxes

Income from discontinued operations, net of income taxes

Income (loss) from continuing operations

12 unchanged sentences

Net cash provided by continuing operating activities

Net cash provided by (used in) discontinued operating activities

Net cash provided by discontinued operating activities

Net cash provided by operating activities

3 unchanged sentences

Acquisition of businesses, net of cash acquired

Proceeds from divestiture of discontinued operation, net of cash retained by sold operation

Net cash used in continuing investing activities

Net cash used in discontinued investing activities

Net cash used in investing activities

Cash flows from financing activities:

Net decrease in commercial paper

Net increase (decrease) in commercial paper

Proceeds from issuance of debt

3 unchanged sentences

Payment of common share dividends to shareholders

Transfers (to) from discontinued operations

Net cash used in continuing financing activities

Net cash provided by (used in) discontinued financing activities

Net cash used in discontinued financing activities

Net cash used in financing activities

Effect of currency translation on cash

Net increase in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of fiscal year

18 unchanged sentences

Our products are used in the industrial equipment;

aerospace, defense, oil, and gas;

aerospace, defense, and marine;

and medical markets.

4 unchanged sentences

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

Fiscal 2021, 2020, and 2019 were each 52 weeks in length and ended on September 24, 2021, September 25, 2020, and September 27, 2019, respectively.

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

Fiscal 2022 was 53 weeks in length and ended on September 30, 2022;

fiscal 2021 and 2020 were each 52 weeks in length and ended on September 24, 2021 and September 25, 2020, respectively.

For fiscal years in which there are 53 weeks, the fourth fiscal quarter includes 14 weeks.

Summary of Significant Accounting Policies

8 unchanged sentences

generally this occurs with the transfer of control.

We transfer control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the

We transfer control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the product, and we have a right to payment for such product.

Revenue is measured as the amount of consideration that we

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

product, and we have a right to payment for such product.

Revenue is measured as the amount of consideration that we expect to receive in exchange for those products and excludes taxes assessed by governmental authorities and collected from customers concurrent with the sale of products.

expect to receive in exchange for those products and excludes taxes assessed by governmental authorities and collected from customers concurrent with the sale of products.

Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.

62 unchanged sentences

Changes in the fair value of instruments designated as fair value hedges affect the carrying value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being recognized currently in earnings.

We determine the fair value of our financial instruments by using methods and assumptions that are based on market conditions and risks existing at each balance sheet date.

We determine the fair value of our financial instruments using methods and assumptions that are based on market conditions and risks existing at each balance sheet date.

Standard market conventions are used to determine the fair value of financial instruments, including derivatives.

1 unchanged sentence

Our derivative financial instruments present certain market and counterparty risks.

Concentration of counterparty risk is mitigated, however, by our use of financial institutions worldwide, substantially all of which have long-term Standard & Poor’s, Moody’s, and/or Fitch credit ratings of A/A2 or higher.

Concentration of counterparty risk is mitigated, however, by our use of financial institutions worldwide, substantially all of which have long-term S&P, Moody’s, and/or Fitch credit ratings of A/A2 or higher.

In addition, we utilize only conventional derivative financial instruments.

1 unchanged sentence

With respect to counterparty net asset positions recognized at fiscal year end 2022, we have assessed the likelihood of counterparty default as remote.

We currently provide guarantees from a wholly-owned subsidiary to the counterparties to our commodity swap derivatives and exchange cash collateral with the counterparties to certain of our cross-currency swap contracts.

We currently provide guarantees from a wholly-owned subsidiary to the counterparties to our commodity swap derivatives and, prior to maturity, exchanged cash collateral with the counterparties to certain of our cross-currency swap contracts.

The likelihood of performance on the guarantees has been assessed as remote.

24 unchanged sentences

The projected benefit obligation represents the actuarial present value of benefits projected to be paid upon retirement factoring in estimated future compensation levels.

The fair value of plan assets represents the current market value of cumulative company and participant contributions made to irrevocable trust funds, held for the sole benefit of participants, which are invested by the trustee of the funds.

The benefits under our defined benefit pension plans are based on various factors, such as years of service and compensation.

1 unchanged sentence

The measurement of benefit obligations and net periodic benefit cost is based on estimates and assumptions determined by our management.

These valuations reflect the terms of the plans and use participant-specific information such as compensation, age, and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates, and mortality rates.

These valuations reflect the terms of the plans and use participant-specific information such as compensation, age, and years of service, as well as certain assumptions, including estimates of discount rates, expected returns on plan assets, rates of compensation increases, interest crediting rates, and mortality rates.

Share-Based Compensation

8 unchanged sentences

Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding adjusted for the potentially dilutive impact of share-based compensation arrangements.

Beginning in fiscal 2020, we account for leases in accordance with the provisions of ASC 842, Leases .

We account for leases in accordance with of ASC 842, Leases .

We have facility, land, vehicle, and equipment leases that expire at various dates.

5 unchanged sentences

Lease right-of-use (“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.

Lease ROU assets represent our right to use the underlying assets for the lease term and lease liabilities represent the obligation to make lease payments arising from the leases.

We do not recognize ROU assets or lease liabilities that arise from short-term leases.

4 unchanged sentences

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.

These costs, and any other variable rental costs, are excluded from our ROU assets and lease liabilities and are expensed as incurred.

Some of our leases may include options to either renew or early terminate the lease.

24 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Recently Issued Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update No.

2022-04 to enhance transparency and introduce new disclosures related to a buyer’s use of supplier finance programs.

This update is effective for us in the first quarter of fiscal 2024.

We are currently assessing the impact of adopting the update, but do not expect adoption to have a material impact on our Consolidated Financial Statements.

Restructuring and Other Charges, Net

2 unchanged sentences

Restructuring charges, net

Impairment of held for sale businesses and loss on divestitures

Impairment of held for sale businesses and loss on divestitures, net

Other charges, net

Restructuring and other charges, net

Net restructuring charges by segment were as follows:

Net restructuring and related charges by segment were as follows:

(in millions)

3 unchanged sentences

Restructuring charges, net

charges included in cost of sales (1)

Restructuring and related charges, net

(1) Charges included in cost of sales were attributable to inventory-related charges within the Industrial Solutions segment.

TE CONNECTIVITY LTD.

6 unchanged sentences

Facility and other exit costs

Property, plant, and equipment

Property, plant, and equipment and other non-cash charges

Fiscal 2021 Actions:

5 unchanged sentences

Facility and other exit costs

Property, plant, and equipment

Pre-Fiscal 2020 Actions:

1 unchanged sentence

Facility and other exit costs

Property, plant, and equipment

Total fiscal 2022 activity

26 unchanged sentences

Fiscal 2022 Actions

During fiscal 2021, we initiated a restructuring program across all segments to optimize our manufacturing footprint and improve the cost structure of the organization.

In connection with this program, during fiscal 2021, we recorded net restructuring charges of $ 195 million.

During fiscal 2022, we initiated a restructuring program associated with footprint consolidation and cost structure improvements across all segments.

In connection with this program, during fiscal 2022, we recorded restructuring and related charges of $ 161 million.

We expect to complete all restructuring actions commenced during fiscal 2022 by the end of fiscal 2024 and to incur additional charges of approximately $ 24 million related primarily to employee severance and facility exit costs.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2021 program by segment:

The following table summarizes expected, incurred, and remaining charges for the fiscal 2022 program by segment as of fiscal year end 2022:

(in millions)

3 unchanged sentences

Fiscal 2021 Actions

During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural improvements, due in part to the COVID-19 pandemic, across all segments.

In connection with this program, during fiscal 2021 and 2020, we recorded restructuring charges of $ 23 million and $ 250 million, respectively.

We expect to complete all restructuring actions commenced during fiscal 2020 by the end of fiscal 2023 and to incur additional charges of approximately $ 15 million related primarily to employee severance and facility exit costs.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2020 program by segment:

During fiscal 2021, we initiated a restructuring program across all segments to optimize our manufacturing footprint and improve the cost structure of the organization.

In connection with this program, during fiscal 2022 and 2021, we recorded net restructuring charges of $ 2 million and $ 195 million, respectively.

We expect additional charges related to fiscal 2021 actions to be insignificant.

The following table summarizes charges incurred for the fiscal 2021 program by segment as of fiscal year end 2022:

(in millions)

3 unchanged sentences

Fiscal 2020 Actions

During fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural improvements impacting all segments.

During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural improvements, due in part to the COVID-19 pandemic, across all segments.

In connection with this program, during fiscal 2022, 2021, and 2020, we recorded net restructuring credits of $ 18 million, charges of $ 23 million, and charges of $ 250 million, respectively.

We anticipate that any additional charges will be insignificant for restructuring actions commenced during fiscal 2019.

We expect that any additional charges related to fiscal 2020 actions will be insignificant.

Pre-Fiscal 2020 Actions

During fiscal 2021, 2020, and 2019, we recorded net restructuring credits of $ 3 million, charges of $ 2 million, and charges of $ 1 million, respectively, related to pre-fiscal 2019 actions.

We anticipate that any additional charges will be insignificant for restructuring actions commenced prior to fiscal 2019.

During fiscal 2022, 2021, and 2020, we recorded net restructuring charges of $ 8 million, credits of $ 10 million, and charges of $ 7 million, respectively, related to pre-fiscal 2020 actions.

We expect that any additional charges related to restructuring actions commenced prior to fiscal 2020 will be insignificant.

TE CONNECTIVITY LTD.

7 unchanged sentences

Restructuring reserves

Discontinued Operations

In fiscal 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 the guarantee liabilities discussed below.

The sale of the SubCom business, which was previously included in our Communications Solutions segment, represented our exit from the telecommunications market and was significant to our sales and profitability, both to the Communications Solutions segment and to the consolidated company.

We concluded that the divestiture was a strategic shift that had a major effect on our operations and financial results.

As a result, the SubCom business met the held for sale and discontinued operations criteria and has been reported as such in all periods presented on our Consolidated Financial Statements.

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 performance guarantees and letters of credit had a combined value of approximately $ 119 million as of fiscal year end 2021 and are expected to expire at various dates through fiscal 2025.

At the time of sale, we determined that the fair value of these guarantees was $ 12 million, which we recognized by a charge to pre-tax loss on sale.

During fiscal 2021, we amended our agreement with SubCom and removed a requirement to issue new performance guarantees for certain projects entered into by the SubCom business following the sale.

As of fiscal year end 2021, 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 SubCom business and prior divestitures for fiscal 2019;

activity in fiscal 2021 and 2020 was not material:

(in millions)

Cost of sales

Selling, general, and administrative expenses

Research, development, and engineering expenses

Restructuring and other charges, net

Pre-tax loss from discontinued operations

Pre-tax loss on sale of discontinued operations

Income tax benefit

Loss from discontinued operations, net of income taxes

During fiscal 2021, we acquired four businesses for a combined cash purchase price of $ 422 million, net of cash acquired.

During fiscal 2022, we acquired three businesses for a combined cash purchase price of $ 245 million, net of cash acquired.

The acquisitions were reported as part of our Communications Solutions segment from the date of acquisition.

We acquired four businesses for a combined cash purchase price of $ 422 million, net of cash acquired, during fiscal 2021.

The acquisitions were reported as part of our Industrial Solutions segment from the date of acquisition.

Due to the timing of two transactions that closed in the quarter ended September 24, 2021, we have preliminarily allocated the purchase price of those acquisitions to goodwill and identifiable intangibles assets.

Our valuation of identifiable intangible assets,

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

assets acquired, and liabilities assumed is currently in process;

therefore, the current allocation is subject to adjustment upon finalization of those valuations.

The amount of these potential adjustments could be significant.

We acquired five businesses, including First Sensor AG (“First Sensor”), for a combined cash purchase price of $ 336 million, net of cash acquired, during fiscal 2020.

In fiscal 2021, due to the timing of two transactions that closed in the fourth quarter, we preliminarily allocated the purchase price of those acquisitions to goodwill and identifiable intangibles assets.

During fiscal 2022, we finalized the purchase price allocation, which included the recognition of $ 25 million of cash acquired, and the associated goodwill was reduced.

See Note 7 for additional information.

During fiscal 2020, we acquired five businesses, including First Sensor AG (“First Sensor”), for a combined cash purchase price of $ 336 million, net of cash acquired.

The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments from the date of acquisition.

2 unchanged sentences

The ultimate amount and timing of any future cash payments related to the DPLTA is uncertain.

Our First Sensor noncontrolling interest balance, which was originally recorded at a fair value of € 96 million (equivalent to $ 107 million) at the acquisition date, is recorded as redeemable noncontrolling interest outside of equity on the Consolidated Balance Sheets as of fiscal year end 2021 and 2020 as the exercise of the put right by First Sensor minority shareholders is not within our control.

During fiscal 2019, we acquired three businesses for a combined cash purchase price of $ 296 million, net of cash acquired.

The acquisitions were reported as part of our Transportation Solutions segment from the date of acquisition.

Our First Sensor noncontrolling interest balance, which was originally recorded at a fair value of € 96 million at the acquisition date (equivalent to $ 107 million), is recorded as redeemable noncontrolling interest outside of equity on the Consolidated Balance Sheets as of fiscal year end 2022 and 2021 as the exercise of the put right by First Sensor minority shareholders is not within our control.

Inventories consisted of the following:

4 unchanged sentences

Finished goods

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Property, Plant, and Equipment, Net

10 unchanged sentences

Depreciation expense was $ 593 million, $ 576 million, and $ 529 million in fiscal 2022, 2021, and 2020, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The changes in the carrying amount of goodwill by segment were as follows:

3 unchanged sentences

Balance at fiscal year end 2020 (1)

Impairment of goodwill

Currency translation and other

Balance at fiscal year end 2021 (1)

Purchase price adjustments

Currency translation and other

Balance at fiscal year end 2022 (1)

(1) At fiscal year end 2019, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $ 2,191 million, $ 669 million, and $ 489 million, respectively.

(1) At fiscal year end 2022, 2021, and 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 fiscal 2022 and 2021, we recognized goodwill of $ 141 million and $ 307 million, respectively, in connection with new acquisitions.

Also during fiscal 2022, we recognized purchase price adjustments in connection with prior year acquisitions, including two acquisitions that closed late in the fourth quarter of fiscal 2021.

See Note 4 for additional information regarding acquisitions.

We completed our annual goodwill impairment test in the fourth quarter of fiscal 2022 and determined that no impairment existed.

During the quarter ended March 27, 2020, as a result of current and projected declines in sales and profitability of the Sensors reporting unit of the Transportation Solutions segment, due in part to the impact of the COVID-19 pandemic and projected reductions in global automotive production as of March 2020, we determined that an indicator of impairment had occurred and goodwill impairment testing of this reporting unit was required.

During the second quarter of fiscal 2020, as a result of current and projected declines in sales and profitability of the Sensors reporting unit of the Transportation Solutions segment, due in part to the impact of the COVID-19 pandemic and projected reductions in global automotive production as of March 2020, we determined that an indicator of impairment had occurred and goodwill impairment testing of this reporting unit was required.

We determined the fair value of the Sensors reporting unit to be $ 1.0 billion as of March 27, 2020.

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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.

As a result, we recorded a partial impairment

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

charge of $ 900 million in the quarter ended March 27, 2020.

No additional impairment was identified during our annual goodwill impairment test in the fourth quarter of fiscal 2020.

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Intangible assets consisted of the following:

Fiscal Year End

(in millions)

1 unchanged sentence

Intellectual property

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible asset amortization expense was $ 192 million, $ 193 million, and $ 182 million for fiscal 2022, 2021, and 2020, respectively.

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Principal debt:

4.875 % senior notes due 2021

Euro-denominated fixed-to-floating rate senior notes due 2021 (1)

Commercial paper, at a weighted-average interest rate of 3.45 % at fiscal year end 2022

3.50 % senior notes due 2022

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0.00 % euro-denominated senior notes due 2029

2.50 % senior notes due in 2032

7.125 % senior notes due 2037

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Effects of fair value hedge-designated interest rate swap contracts

(1) The euro-denominated fixed-to-floating rate senior notes due 2021 bore interest at a rate of 0 % until June 2020 and then at a rate of three-month Euro Interbank Offered Rate (“EURIBOR”) plus 0.30 % , with the minimum interest rate of 0 % , per year until maturity.

During fiscal 2022, Tyco Electronics Group S.A.

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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.

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with total commitments of $ 1.5 billion.

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of June 2026 and total commitments of $ 1.5 billion.

The Credit Facility contains provisions that allow for incremental commitments of up to $ 500 million, an option to temporarily increase the financial ratio covenant following a qualified acquisition, and borrowings in designated currencies.

The Credit Facility was amended in June 2021 primarily to extend the maturity date from November 2023 to June 2026.

The amended Credit Facility contains customary provisions for the replacement of London Interbank Offered Rate (“LIBOR”) with successor rates and amends certain representations, warranties, and covenants applicable to us and TEGSA as obligors under the credit agreement.

TEGSA had no borrowings under the Credit Facility at fiscal year end 2022 or 2021.

Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) LIBOR or, upon a phase-out of LIBOR, an alternative benchmark rate , (2) an alternate base rate equal to the highest of (i) Bank of America , N.A.’s base rate, (ii) the federal funds effective rate plus 1 / 2 of 1%, and (iii) one-month LIBOR, or an alternative benchmark rate, plus 1 %, (3) an alternative currency daily rate , or (4) an alternative currency term rate , plus, in each case, an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA.

Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) the term secured overnight financing rate (“Term SOFR”) (as defined in the Credit Facility), (2) an alternate base rate equal to the highest of (i) Bank of America , N.A.’s base rate, (ii) the federal funds effective rate plus 1 / 2 of 1%, and (iii) the Term SOFR for a one-month interest period plus 1 %, (3) an alternative currency daily rate , or (4) an alternative currency term rate , plus, in each case, an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA.

TEGSA is required to pay an annual facility fee.

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The Credit Facility and our other debt agreements contain other customary covenants.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Periodically, TEGSA issues commercial paper to U.S.

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Borrowings under the commercial paper program are backed by the Credit Facility.

TEGSA had no borrowings under the commercial paper program at fiscal year end 2021 or 2020.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

TEGSA’s payment obligations under its senior notes, commercial paper, and Credit Facility are fully and unconditionally guaranteed on an unsecured basis by its parent, TE Connectivity Ltd.

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Payments for operating leases (1)

ROU assets, including modifications and extensions, obtained in exchange for operating lease liabilities

ROU assets, including modifications of existing leases, obtained in exchange for operating lease liabilities

(1) These payments are included in cash flows from continuing operating activities, primarily in changes in accrued and other current liabilities.

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Present value of lease liabilities

ASC 840 Comparative Disclosures

Prior to fiscal 2020, we accounted for our leases in accordance with ASC 840, Leases .

Under ASC 840, rental expense for operating leases was $ 162 million for fiscal 2019.

Commitments and Contingencies

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Trade Compliance Matters

We are investigating our past compliance with relevant U.S.

We have been investigating our past compliance with relevant U.S.

trade controls and have made voluntary disclosures of apparent trade controls violations to the U.S.

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State Department’s Directorate of Defense Trade Controls (“DDTC”).

We are cooperating with the BIS and DDTC on these matters, and both our internal assessment and the resulting investigations by the agencies remain ongoing.

We are cooperating with the BIS and DDTC on these matters, and the resulting investigations by the agencies remain ongoing.

We have also been contacted by the U.S.

Department of Justice concerning aspects of these matters.

We are unable to predict the timing and final outcome of the agencies’ investigations.

An unfavorable outcome may include fines or penalties imposed in response to our disclosures, but we are not yet able to reasonably estimate the extent of any such fines or penalties.

While we have reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such investigations and related fines and penalties may differ from amounts currently reserved.

Although we have reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such investigations and related fines and penalties may differ from amounts currently reserved.

TE CONNECTIVITY LTD.

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We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows.

At fiscal year end 2021, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 135 million, excluding those related to our SubCom business which are discussed in Note 4.

At fiscal year end 2022, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 127 million, excluding those related to our former Subsea Communications (“SubCom”) business which are discussed below.

During fiscal 2019, we sold our SubCom business.

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 performance guarantees and letters of credit had a combined value of approximately $ 115 million as of fiscal year end 2022 and are expected to expire at various dates through fiscal 2027.

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.

Financial Instruments and Fair Value Measurements

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We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with the cash flow hedge-designated instruments addressing foreign exchange risks will be reclassified into the Consolidated Statement of Operations within the next twelve months .

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 at fiscal year end 2021 and 2020.

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.

During fiscal 2015, we entered into cross-currency swap contracts, which were designated as cash flow hedges, 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 at fiscal year end 2021.

During fiscal 2022, certain contracts were terminated and the remaining contracts matured.

Under the terms of the contracts that matured in fiscal 2022, we made interest payments in euros at 3.50 % per annum and received interest in U.S.

dollars at a weighted-average rate of 5.26 % per annum.

Upon maturity in fiscal 2022, we will pay the notional value of the contracts in euros and receive U.S.

Upon maturity, we paid the notional value of the remaining contracts in euros and received 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 Consolidated Balance Sheets as follows:

In connection with the cross-currency swap contracts, both counterparties to each contract were required to provide cash collateral.

As of fiscal year end 2022, all collateral positions related to these cross-currency swap contracts were settled.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2021, these cross-currency swap contracts were recorded on the Consolidated Balance Sheet as follows;

there were no such balances at fiscal year end 2022:

Fiscal Year End

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Other liabilities

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2021 and 2020, 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 Consolidated Balance Sheets.

At fiscal year end 2021, collateral received from or paid to our counterparties approximated the net derivative position.

Collateral was recorded in accrued and other current liabilities when the contracts were in a net asset position, or prepaid expenses and other current assets when the contracts were in a net liability position on the Consolidated Balance Sheets.

The impacts of these cross-currency swap contracts were as follows:

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Gains (losses) excluded from the hedging relationship (1)

Gains reclassified from other comprehensive income (loss) into selling, general, and administrative expenses

(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.

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Other liabilities

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The impacts of our hedge of net investment programs were as follows:

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We may use forward starting interest rate swap contracts to manage interest rate exposure in periods prior to the anticipated issuance of fixed rate debt.

The aggregate notional value of our forward starting interest rate swap

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

contracts, which are designated as cash flow hedges, was $ 450 million at fiscal year end 2021 and 2020.

These forward starting interest rate swap contracts were recorded on the Consolidated Balance Sheets as follows:

During fiscal 2022, we terminated forward starting interest rate swap contracts with an aggregate notional value of $ 450 million as a result of the issuance of our 2.50 % senior notes due in 2032.

At fiscal year end 2021, these forward starting interest rate swap contracts were recorded on the Consolidated Balance Sheet as follows;

there were no such balances at fiscal year end 2022:

Fiscal Year End

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Accrued and other current liabilities

Other liabilities

The impacts of these forward starting interest rate swap contracts were as follows:

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Other liabilities

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The impacts of these commodity swap contracts were as follows:

(in millions)

Gains recorded in other comprehensive income (loss)

Gains (losses) reclassified from accumulated other comprehensive income (loss) into cost of sales

Gains (losses) recorded in other comprehensive income (loss)

Gains reclassified from accumulated other comprehensive income (loss) into cost of sales

We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with commodity hedges will be reclassified into the Consolidated Statement of Operations within the next twelve months .

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Financial instruments recorded at fair value on a recurring basis, which consist of marketable securities and derivative instruments not discussed above, were immaterial at fiscal year end 2022 and 2021.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Retirement Plans

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Interest cost

Expected return on plan assets

Expected returns on plan assets

Amortization of net actuarial loss

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Discount rate

Expected return on plan assets

Rate of compensation increase

Expected returns on plan assets

Rates of compensation increases

TE CONNECTIVITY LTD.

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Fair value of plan assets at beginning of fiscal year

Actual return on plan assets

Actual returns on plan assets

Employer contributions

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Discount rate

Rate of compensation increase

Rates of compensation increases

TE CONNECTIVITY LTD.

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As part of our continued effort to manage U.S.

pension plan obligations, during the quarter ended September 24, 2021, we transferred approximately $ 190 million of U.S.

pension plan obligations, during fiscal 2021, we transferred approximately $ 190 million of U.S.

pension plan liabilities to an insurance company through the purchase of a group annuity contract funded by a transfer of plan assets totaling approximately $ 180 million.

As a result of this transaction, we recognized a settlement charge of $ 28 million , which was recorded in net other income (expense) on the Consolidated Statement of Operations.

In fiscal 2021, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were primarily the result of favorable asset performance and higher discount rates for our non-U.S.

In fiscal 2022 , unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were primarily the result of higher discount rates, partially offset by unfavorable asset performance, for our non-U.S.

defined benefit pension plans as compared to fiscal 2021 .

In fiscal 2020, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were primarily the result of favorable asset performance for our U.S.

defined benefit pension plans, partially offset by lower U.S.

discount rates and unfavorable asset performance for our non-U.S.

defined benefit pension plans as compared to fiscal 2020.

In determining the expected return on plan assets, we consider the relative weighting of plan assets by class and individual asset class performance expectations.

In determining the expected returns on plan assets, we consider the relative weighting of plan assets by class and individual asset class performance expectations.

The investment strategies for non-U.S.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal 2021 and 2020 changes in Level 3 assets in non-U.S.

plans were primarily the result of investment sales and net investment losses, respectively.

Defined Contribution Retirement Plans

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Activity during fiscal 2022, 2021, and 2020 was not significant.

Income Tax Expense (Benefit)

Significant components of the income tax expense (benefit) were as follows:

Income Tax Expense

Significant components of the income tax expense were as follows:

(in millions)

1 unchanged sentence

Deferred income tax expense (benefit):

Income tax expense (benefit)

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Income tax expense

components of income from continuing operations before income taxes were as follows:

1 unchanged sentence

Income from continuing operations before income taxes

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The reconciliation between U.S.

federal income taxes at the statutory rate and income tax expense (benefit) was as follows:

federal income taxes at the statutory rate and income tax expense was as follows:

(in millions)

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federal income tax expense at the statutory rate (1)

Adjustments to reconcile to the income tax expense (benefit):

Adjustments to reconcile to the income tax expense:

state income tax benefit, net

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Valuation allowance

Legal entity restructurings and intercompany transactions

Divestitures and goodwill impairments

Excess tax benefits from share-based payments

Income tax expense (benefit)

Income tax expense

federal statutory rate was 21 % for fiscal 2022, 2021, and 2020.

(2) Excludes items which are separately presented.

The income tax expense for fiscal 2022 included a $ 124 million income tax benefit related to the tax impacts of certain intercompany transactions, a $ 64 million income tax benefit related primarily to a lapse of a statute of limitation, and a $ 51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current and expected future operating profit and taxable income.

In addition, the income tax expense for fiscal 2022 included $ 27 million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted in the canton of Schaffhausen and $ 12 million of income tax expense related to an income tax audit of an acquired entity.

As we are entitled to indemnification of pre-acquisition period tax obligations under the terms of the purchase agreement, we recorded an associated indemnification receivable and other income of $ 11 million during fiscal 2022.

The income tax expense for fiscal 2021 included a $ 353 million income tax benefit related to changes in valuation allowances, of which $ 327 million related to the net reduction in valuation allowances associated primarily with certain tax planning actions as well as improved current and expected future operating profit and taxable income.

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In addition, the income tax expense for fiscal 2020 included $ 226 million of income tax expense related to increases to the valuation allowance for certain deferred tax assets, related primarily to the COVID-19 pandemic.

As a result of the pandemic and its negative impact on our current and expected operating profit and taxable income, we believed it was more likely than not that a portion of our deferred tax assets will not be realized.

The pre-tax goodwill impairment charge of $ 900 million recorded during fiscal 2020 resulted in a tax benefit of $ 4 million as the associated goodwill was primarily not deductible for income tax purposes.

See Note 7 for additional information regarding the impairment of goodwill.

The income tax benefit for fiscal 2019 included a $ 216 million income tax benefit related to the tax impacts of certain measures of Swiss Tax Reform, a $ 90 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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

restructurings and intercompany transactions.

See “Swiss Tax Reform” below for additional information regarding Swiss Tax Reform.

Deferred Tax Assets and Liabilities

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Property, plant, and equipment

Write-down of investments in subsidiaries

Lease ROU assets

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Net operating loss carryforwards

Tax credit carryforwards

Capital loss carryforwards

Total tax loss and credit carryforwards

The valuation allowance for deferred tax assets of $ 2,729 million and $ 4,429 million at fiscal year end 2021 and 2020, respectively, related principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss,

The valuation allowance for deferred tax assets of $ 7,112 million and $ 2,729 million at fiscal year end 2022 and 2021, respectively, related principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions.

During fiscal 2022, the valuation allowance increased primarily as a result of

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

capital loss, and credit carryforwards in various jurisdictions.

During fiscal 2021, the valuation allowance decreased primarily as a result of a $ 1,295 million (tax effected) recovery of prior years’ net write-downs of investments in subsidiaries in certain jurisdictions, with a corresponding decrease to tax loss and credit carryforwards.

In addition, as discussed above, a $ 327 million net reduction in valuation allowances was associated primarily with certain tax planning actions, as well as improved current and expected future operating profit and taxable income.

$ 4,464 million (tax effected) net write-downs of investments in subsidiaries in certain jurisdictions, with a corresponding increase to tax loss and credit carryforwards.

We believe that we will generate sufficient future taxable income to realize the income tax benefits related to the remaining net deferred tax assets on the Consolidated Balance Sheet.

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As of fiscal year end 2022, we had approximately $ 7.0 billion of cash, cash equivalents, and intercompany deposits, principally in our subsidiaries, that we have the ability to distribute to TEGSA, our Luxembourg subsidiary, which is the obligor of substantially all of our debt, and to TE Connectivity Ltd., our Swiss parent company, but we consider to be permanently reinvested.

We estimate that up to $ 0.7 billion of tax expense would be recognized on the Consolidated Financial Statements if our intention to permanently reinvest these amounts were to change.

We estimate that an immaterial amount of tax expense would be recognized on the Consolidated Financial Statements if our intention to permanently reinvest these amounts were to change.

Our current plans do not demonstrate a need to repatriate cash, cash equivalents, and intercompany deposits that are designated as permanently reinvested in order to fund our operations, including investing and financing activities.

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Balance at beginning of fiscal year

Additions related to prior years tax positions

Reductions related to prior years tax positions

Additions related to current year tax positions

Additions for tax positions related to prior years

Reductions for tax positions related to prior years

Additions for tax positions related to the current year

Current year acquisitions

Reductions due to lapse of applicable statute of limitations

Reductions due to lapse of applicable statutes of limitations

Balance at end of fiscal year

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As of fiscal year end 2022 and 2021, we had $ 54 million and $ 53 million, respectively, of accrued interest and penalties related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes.

During fiscal 2021, 2020, and 2019, we recognized income tax expense of $ 12 million, benefits of $ 1 million, and benefits of $ 14 million, respectively, related to interest and penalties on the Consolidated Statements of Operations.

During fiscal 2022, 2021, and 2020, we recognized income tax expense of $ 3 million, expense of $ 12 million, and benefits of $ 1 million, respectively, related to interest and penalties on the Consolidated Statements of Operations.

We file income tax returns on a unitary, consolidated, or stand-alone basis in multiple state and local jurisdictions, which generally have statutes of limitations ranging from 3 to 4 years .

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2017 through 2022

2020 through 2022

United Kingdom

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Swiss Tax Reform

Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing in September 2018, and it was approved by public vote on May 19, 2019.

In September 2018, Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing, which was approved by public vote in May 2019.

Swiss Tax Reform eliminated certain preferential tax items and implemented new tax rates at both the federal and cantonal levels.

On May 24, 2019, the federal tax authority issued guidance abolishing certain interest deductions effective January 1, 2020.

As a result, during fiscal 2019, we recorded a $ 216 million income tax benefit related primarily to the reduction to the valuation allowance for deferred tax assets.

Based on our forecast of taxable income and the abolishment of certain interest deductions, 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.

The federal provisions of Swiss Tax Reform were enacted into law in fiscal 2019 and became effective in January 2020.

Additionally, in fiscal 2019, the federal tax authority issued guidance abolishing certain interest deductions which became effective in January 2020.

In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates.

Consequently, during fiscal 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates.

During fiscal 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

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The rights of holders of our shares are governed by Swiss law, our Swiss articles of association, and our Swiss organizational regulations.

Accordingly, the par value of our common shares is stated in Swiss francs (“CHF”).

We continue to use the U.S.

dollar, however, as our reporting currency on the Consolidated Financial Statements.

The par value of our common shares is stated in Swiss francs (“CHF”);

however, we use the U.S.

dollar as our reporting currency on the Consolidated Financial Statements.

Subject to certain conditions specified in our articles of association, we are authorized to increase our conditional share capital by issuing new shares in aggregate not exceeding 50 % of our authorized shares.

Until recently, Swiss law provided for the option to create authorized share capital that could be issued by the board of directors, but this authorization was limited to authorized share capital up to 50 % of the existing registered shares with the authorization valid for a maximum of two years .

Such authorization period under our articles of association ended on March 11, 2022.

As part of the Swiss corporate law reform, effective as of January 1, 2023, the concept of authorized share capital will be replaced by a capital

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 the articles of association, in aggregate not exceeding 50 % of the amount of our authorized shares.

Under a capital band, the articles of association may authorize the board of directors for a maximum period of five years to increase the ordinary share capital registered in the commercial register to a maximum of 150 % and/or reduce it to a minimum of 50 % of the share capital existing at the time of the introduction of the capital band.

Our articles of association do not currently provide for a capital band.

Common Shares Held in Treasury

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Amounts reclassified from accumulated other comprehensive income (loss)

Income tax (expense) benefit

Income tax expense

Other comprehensive income (loss), net of tax

other comprehensive income attributable to noncontrolling interests

Balance at fiscal year end 2020

Other comprehensive income (loss), net of tax:

Other comprehensive income (loss) before reclassifications

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

Income tax expense

Income tax (expense) benefit

Other comprehensive income (loss), net of tax

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Other comprehensive income (loss), net of tax:

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

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Other comprehensive income (loss), net of tax

other comprehensive income attributable to noncontrolling interests

other comprehensive loss attributable to noncontrolling interests

Balance at fiscal year end 2022

(1) Includes hedges of net investment foreign currency exchange gains or losses which offset foreign currency exchange losses or gains attributable to the translation of the net investments .

(2) Represents net foreign currency translation adjustments reclassified as a result of the sale of the SubCom business.

This net loss is included in income (loss) from discontinued operations on the Consolidated Statement of Operations.

See Note 4 for additional information regarding the divestiture of SubCom .

Our equity compensation plans, of which the TE Connectivity Ltd.

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Outstanding at fiscal year end 2021

( 2,397,357 )

Outstanding at fiscal year end 2022

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Industrial equipment

Aerospace, defense, oil, and gas

Aerospace, defense, and marine

Total Industrial Solutions

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(in millions)

Europe/Middle East/Africa (“EMEA”):

Asia–Pacific:

Transportation Solutions

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Communications Solutions

Asia–Pacific:

Total Asia–Pacific

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions

1 unchanged sentence

Communications Solutions

Total Asia–Pacific

Transportation Solutions

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Net sales to external customers are attributed to individual countries based on the legal entity that records the sale.

Subsequent Event

Subsequent to fiscal year end 2021, TEGSA called for the early redemption of all of its outstanding 3.50 % senior notes due in February 2022, representing $ 500 million aggregate principal amount.

The notes were redeemed on November 3, 2021.

TE CONNECTIVITY LTD.

11 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 9A. Controls and Procedures