What changed in this filing

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Item 1. Financial Statements

2023-07-28 compared with 2023-04-28 · 98 added, 93 removed, 464 unchanged (29% of the section changed)

3 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions, except per share data)

11 unchanged sentences

Income from continuing operations

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

Income from discontinued operations, net of income taxes

Basic earnings per share:

Income from continuing operations

Income (loss) from discontinued operations

Income from discontinued operations

Diluted earnings per share:

Income from continuing operations

Income (loss) from discontinued operations

Income from discontinued operations

Weighted-average number of shares outstanding:

3 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

Other comprehensive income:

Other comprehensive income (loss):

Currency translation

Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes

Gains on cash flow hedges, net of income taxes

Other comprehensive income

Gains (losses) on cash flow hedges, net of income taxes

Other comprehensive income (loss)

Comprehensive income

37 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Quarter Ended March 31, 2023

For the Quarter Ended June 30, 2023

Common Shares

3 unchanged sentences

(in millions)

Balance at December 30, 2022

Other comprehensive income

Balance at March 31, 2023

Other comprehensive loss

Share-based compensation expense

2 unchanged sentences

Repurchase of common shares

Cancellation of treasury shares

Balance at March 31, 2023

For the Six Months Ended March 31, 2023

Balance at June 30, 2023

For the Nine Months Ended June 30, 2023

Common Shares

10 unchanged sentences

Cancellation of treasury shares

Balance at March 31, 2023

Balance at June 30, 2023

TE CONNECTIVITY LTD.

1 unchanged sentence

(UNAUDITED) (Continued)

For the Quarter Ended March 25, 2022

For the Quarter Ended June 24, 2022

Common Shares

3 unchanged sentences

(in millions)

Balance at December 24, 2021

Other comprehensive income

Balance at March 25, 2022

Other comprehensive loss

Share-based compensation expense

2 unchanged sentences

Repurchase of common shares

Balance at March 25, 2022

For the Six Months Ended March 25, 2022

Cancellation of treasury shares

Balance at June 24, 2022

For the Nine Months Ended June 24, 2022

Common Shares

4 unchanged sentences

Balance at September 24, 2021

Other comprehensive income

Other comprehensive loss

Share-based compensation expense

2 unchanged sentences

Repurchase of common shares

Balance at March 25, 2022

Cancellation of treasury shares

Balance at June 24, 2022

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(in millions)

Cash flows from operating activities:

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

Income from discontinued operations, net of income taxes

Income from continuing operations

19 unchanged sentences

Cash flows from financing activities:

Net decrease in commercial paper

Net increase (decrease) in commercial paper

Proceeds from issuance of debt

5 unchanged sentences

Effect of currency translation on cash

Net decrease 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 period

15 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

Restructuring charges, net

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

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

Other charges, net

3 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

18 unchanged sentences

Facility and other exit costs

Property, plant, and equipment

Pre-Fiscal 2022 Actions:

1 unchanged sentence

Facility and other exit costs

Property, plant, and equipment

Total Activity

1 unchanged sentence

During fiscal 2023, we initiated a restructuring program associated with cost structure improvements across all segments.

During the six months ended March 31, 2023, we recorded restructuring charges of $ 161 million in connection with this program.

We expect to complete all restructuring actions commenced during the six months ended March 31, 2023 by the end of fiscal 2025 and to incur additional charges of approximately $ 19 million related to employee severance, facility exit costs, and accelerated depreciation on property, plant, and equipment.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2023 program by segment as of March 31, 2023:

During the nine months ended June 30, 2023, we recorded restructuring charges of $ 200 million in connection with this program.

We expect to complete all restructuring actions commenced during the nine months ended June 30, 2023 by the end of fiscal 2025 and to incur additional charges of approximately $ 18 million related primarily to employee severance and facility exit costs.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2023 program by segment as of June 30, 2023:

(in millions)

4 unchanged sentences

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 the six months ended March 31, 2023 and March 25, 2022, we recorded net restructuring and related charges of $ 5 million and $ 53 million, respectively.

In connection with this program, during the nine months ended June 30, 2023 and June 24, 2022, we recorded net restructuring and related charges of $ 8 million and $ 84 million, respectively.

We expect to complete all restructuring actions commenced during fiscal 2022 by the end of fiscal 2024 and to incur additional charges of approximately $ 10 million related primarily to employee severance and facility exit costs.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes expected, incurred, and remaining charges for the fiscal 2022 program by segment as of March 31, 2023:

The following table summarizes expected, incurred, and remaining charges for the fiscal 2022 program by segment as of June 30, 2023:

(in millions)

3 unchanged sentences

Pre-Fiscal 2022 Actions

During the six months ended March 25, 2022, we recorded net restructuring charges of $ 2 million related to pre-fiscal 2022 actions.

During the nine months ended June 24, 2022, we recorded net restructuring charges of $ 1 million related to pre-fiscal 2022 actions.

We expect that any additional charges related to restructuring actions commenced prior to fiscal 2022 will be insignificant.

6 unchanged sentences

Restructuring reserves

During the six months ended March 31, 2023, we sold two businesses for net cash proceeds of $ 51 million.

In connection with the divestitures, we recorded pre-tax impairment charges and a net pre-tax gain on sales, which totaled to a net charge of $ 2 million.

The businesses sold were both reported in our Industrial Solutions segment.

Additionally, during the six months ended March 31, 2023, we recorded a pre-tax impairment charge of $ 60 million in connection with a held for sale business in the Transportation Solutions segment.

During the six months ended March 25, 2022, we sold two businesses for net cash proceeds of $ 16 million and recognized a net pre-tax gain of $ 10 million on the transactions.

During the nine months ended June 30, 2023, we sold three businesses for net cash proceeds of $ 48 million.

In connection with the divestitures, we recorded pre-tax impairment charges and a net pre-tax loss on sales, which totaled to a net charge of $ 12 million.

The businesses sold were reported in our Industrial Solutions segment.

Additionally, during the nine months ended June 30, 2023, we recorded a pre-tax impairment charge of $ 60 million in connection with a held for sale business in the Transportation Solutions segment.

During the nine months ended June 24, 2022, we sold two businesses for net cash proceeds of $ 16 million and recognized a net pre-tax gain of $ 10 million on the transactions.

The businesses sold were reported in our Transportation Solutions and Industrial Solutions segments.

During the six months ended March 31, 2023, we acquired one business for a cash purchase price of $ 108 million, net of cash acquired.

During the nine months ended June 30, 2023, we acquired one business for a cash purchase price of $ 108 million, net of cash acquired.

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

We acquired one business for a cash purchase price of $ 127 million, net of cash acquired, during the six months ended March 25, 2022.

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

Also during the six months ended March 25, 2022, we finalized the purchase price allocation of certain fiscal 2021 acquisitions, which included the recognition of $ 25 million of cash acquired.

We acquired two businesses for a combined cash purchase price of $ 141 million, net of cash acquired, during the nine months ended June 24, 2022.

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

Also during the nine months ended June 24, 2022, we finalized the purchase price allocation of certain fiscal 2021 acquisitions, which included the recognition of $ 25 million of cash acquired.

TE CONNECTIVITY LTD.

12 unchanged sentences

Currency translation and other

March 31, 2023 (1)

(1) At March 31, 2023 and September 30, 2022, 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 six months ended March 31, 2023, we recognized goodwill in the Industrial Solutions segment in connection with a recent acquisition.

June 30, 2023 (1)

(1) At June 30, 2023 and September 30, 2022, 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 30, 2023, we recognized goodwill in the Industrial Solutions segment in connection with a recent acquisition.

See Note 3 for additional information regarding acquisitions.

1 unchanged sentence

Intangible assets consisted of the following:

March 31, 2023

June 30, 2023

September 30, 2022

2 unchanged sentences

Intellectual property

Intangible asset amortization expense was $ 49 million for both the quarters ended March 31, 2023 and March 25, 2022, and $ 95 million and $ 97 million for the six months ended March 31, 2023 and March 25, 2022, respectively.

Intangible asset amortization expense was $ 46 million and $ 48 million for the quarters ended June 30, 2023 and June 24, 2022, respectively, and $ 141 million and $ 145 million for the nine months ended June 30, 2023 and June 24, 2022, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At March 31, 2023, the aggregate amortization expense on intangible assets is expected to be as follows:

At June 30, 2023, the aggregate amortization expense on intangible assets is expected to be as follows:

(in millions)

Remainder of fiscal 2023

During the quarter ended March 31, 2023, Tyco Electronics Group S.A.

During the nine months ended June 30, 2023, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, issued $ 500 million aggregate principal amount of 4.50 % senior notes due in February 2026.

1 unchanged sentence

The notes are fully and unconditionally guaranteed as to payment on an unsecured basis by TE Connectivity Ltd.

During the quarter ended March 31, 2023, TEGSA repaid, at maturity, € 550 million of 1.10 % senior notes due in March 2023.

As of March 31, 2023, TEGSA had $ 285 million of commercial paper outstanding at a weighted-average interest rate of 5.5 %.

During the nine months ended June 30, 2023, TEGSA repaid, at maturity, € 550 million of 1.10 % senior notes due in March 2023.

As of June 30, 2023, TEGSA had $ 288 million of commercial paper outstanding at a weighted-average interest rate of 5.3 %.

TEGSA had $ 370 million of commercial paper outstanding at a weighted-average interest rate of 3.45 % at September 30, 2022.

The fair value of our debt, based on indicative valuations, was approximately $ 3,966 million and $ 3,990 million at March 31, 2023 and September 30, 2022, respectively.

The fair value of our debt, based on indicative valuations, was approximately $ 4,017 million and $ 3,990 million at June 30, 2023 and September 30, 2022, respectively.

The components of lease cost were as follows:

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

5 unchanged sentences

Cash flow information, including significant non-cash transactions, related to leases was as follows:

Six Months Ended

Nine Months Ended

(in millions)

21 unchanged sentences

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 March 31, 2023, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 17 million to $ 45 million, and we accrued $ 20 million as the probable loss, which was the best estimate within this range.

As of June 30, 2023, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 16 million to $ 44 million, and we accrued $ 20 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.

3 unchanged sentences

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

At March 31, 2023, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 171 million, excluding those related to our former Subsea Communications (“SubCom”) business which are discussed below.

At June 30, 2023, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 174 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 $ 58 million as of March 31, 2023 and are expected to expire at various dates through fiscal 2027.

These performance guarantees and letters of credit had a combined value of approximately $ 58 million as of June 30, 2023 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;

7 unchanged sentences

Quarter Ended

Six Months Ended

Nine Months Ended

(in millions)

4 unchanged sentences

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 $ 3,210 million and $ 1,658 million at March 31, 2023 and September 30, 2022, respectively.

The aggregate notional value of these hedges was $ 2,108 million and $ 1,658 million at June 30, 2023 and September 30, 2022, respectively.

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 $ 3,782 million and $ 1,873 million at March 31, 2023 and September 30, 2022, respectively.

The aggregate notional value of the contracts under this program was $ 3,815 million and $ 1,873 million at June 30, 2023 and September 30, 2022, respectively.

Under the terms of these contracts, we receive interest in U.S.

13 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

7 unchanged sentences

Quarter Ended

Six Months Ended

Nine Months Ended

(in millions)

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2023 and September 30, 2022, respectively, and were designated as cash flow hedges.

June 30, 2023 and September 30, 2022, respectively, and were designated as cash flow hedges.

These commodity swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows:

6 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

Gains recorded in other comprehensive income (loss)

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

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

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Six Months Ended

Nine Months Ended

(in millions)

6 unchanged sentences

Net periodic pension benefit cost (credit)

During the six months ended March 31, 2023, we contributed $ 21 million to our non-U.S.

During the nine months ended June 30, 2023, we contributed $ 58 million to our non-U.S.

pension plans.

We recorded income tax expense of $ 100 million and $ 136 million for the quarters ended March 31, 2023 and March 25, 2022, respectively.

The income tax expense for the quarter ended March 25, 2022 included $ 27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen on December 27, 2021 and a $ 19 million income tax benefit related to the tax impacts of an intercompany transaction.

We recorded income tax expense of $ 187 million and $ 246 million for the six months ended March 31, 2023 and March 25, 2022, respectively.

The income tax expense for the six months ended March 25, 2022 included a $ 36 million income tax benefit related to the tax impacts of the intercompany transaction discussed above and $ 27 million of income tax expense related to the write-down of certain deferred tax assets to the lower tax rate enacted in the canton of Schaffhausen.

In addition, the income tax expense for the six months ended March 25, 2022 included $ 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 the six months ended March 25, 2022.

During the quarter ended March 31, 2023, we completed tax returns for certain non-U.S.

We recorded income tax expense of $ 96 million and $ 116 million for the quarters ended June 30, 2023 and June 24, 2022, respectively.

The income tax expense for the quarter ended June 30, 2023 included a $ 19 million net income tax benefit related to a recent divestiture.

The income tax expense for the quarter ended June 24, 2022 included a $ 21 million income tax benefit related to the tax impacts of an intercompany transaction.

We recorded income tax expense of $ 283 million and $ 362 million for the nine months ended June 30, 2023 and June 24, 2022, respectively.

The income tax expense for the nine months ended June 30, 2023 included a $ 19 million net income tax benefit related to a recent divestiture.

The income tax expense for the nine months ended June 24, 2022 included a $ 57 million income tax benefit related to the tax impacts of the intercompany transaction discussed above and $ 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.

In addition, the income tax expense for the nine months ended June 24, 2022 included $ 12 million of income tax expense related to an income tax audit of an acquired entity.

During the nine months ended June 30, 2023, we completed tax returns for certain non-U.S.

entities which resulted in the recognition of additional deferred tax assets for tax loss carryforwards of $ 313 million.

As we do not expect these subsidiaries to generate sufficient future taxable income to realize the deferred tax assets, we recognized a corresponding increase to the valuation allowance.

Accordingly, there was no impact to the Condensed Consolidated Statement of Operations for the quarter ended March 31, 2023 or Condensed Consolidated Balance Sheet as of March 31, 2023.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of March 31, 2023, approximately $ 20 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 March 31, 2023.

Accordingly, there was no impact to the Condensed Consolidated Statement of Operations for the nine months ended June 30, 2023 or Condensed Consolidated Balance Sheet as of June 30, 2023.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of June 30, 2023, approximately $ 20 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

TE CONNECTIVITY LTD.

3 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

2 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

8 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

Dividends paid per common share

3 unchanged sentences

Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to shareholders’ equity.

At March 31, 2023 and September 30, 2022, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 744 million and $ 356 million, respectively.

At June 30, 2023 and September 30, 2022, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 555 million and $ 356 million, respectively.

Share Repurchase Program

Common shares repurchased under the share repurchase program were as follows:

Six Months Ended

Nine Months Ended

(in millions)

1 unchanged sentence

Repurchase value

At March 31, 2023, we had $ 1.2 billion of availability remaining under our share repurchase authorization.

At June 30, 2023, we had $ 1.1 billion of availability remaining under our share repurchase authorization.

Share-based compensation expense, which was included in selling, general, and administrative expenses on the Condensed Consolidated Statements of Operations, was as follows:

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

Share-based compensation expense

As of March 31, 2023, there was $ 179 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.7 years.

As of June 30, 2023, there was $ 162 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.6 years.

During the quarter ended December 30, 2022, we granted the following share-based awards as part of our annual incentive plan grant:

3 unchanged sentences

Performance share awards

As of March 31, 2023, we had eight million shares available for issuance under the TE Connectivity Ltd.

As of June 30, 2023, we had eight million shares available for issuance under the TE Connectivity Ltd.

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

13 unchanged sentences

Prior period segment results have been restated to conform to the current segment reporting structure.

As a result of the realignment, $ 14 million of net sales and $ 6 million of operating income for the first six months of fiscal 2022 were reflected in the Communications Solutions segment.

As a result of the realignment, $ 22 million of net sales and $ 10 million of operating income for the first nine months of fiscal 2022 were reflected in the Communications Solutions segment.

Net sales by segment (1) and industry end market (2) were as follows:

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

15 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

15 unchanged sentences

Quarters Ended

Six Months Ended

Nine Months Ended

(in millions)

3 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-Q

Item 1. Financial Statements