What changed in this filing

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Item 9A. Controls and Procedures

2023-11-13 compared with 2022-11-15 · 202 added, 243 removed, 1429 unchanged (24% of the section changed)

13 unchanged sentences

OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

In the quarter ended September 29, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K, except the following:

● In the quarter ended September 29, 2023, Terrence R.

Curtin , Chief Executive Officer and Executive Director , adopted a plan for the sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) .

Curtin’s plan was adopted August 17, 2023 and expires December 29, 2023 , and provides for the potential sale of up to (i) 50% of the net common shares that vest in December 2023 pursuant to the performance stock unit award granted to Mr.

Curtin in November 2020, with such sale to occur no earlier than December 18, 2023 and (ii) potential sale of the remaining net common shares that vest in December 2023 pursuant to the performance stock unit award granted to Mr.

Curtin in November 2020, with such sale to occur no earlier than December 19, 2023 .

● In the quarter ended September 29, 2023, Aaron K.

Stucki , President, Communications Solutions , adopted a plan for the sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5 - 1(c).

Stucki’s plan was adopted August 22, 2023 and expires January 31, 2025 , and provides for the potential exercise and related sale of (i) stock options representing up to 5,000 common shares, with such sale to occur no earlier than November 21, 2023, (ii) stock options representing up to 8,750 common shares, with such sale to occur no earlier than November 21, 2023, and (iii) stock options representing up to 5,000 common shares, with such sale to occur no earlier than November 21, 2023 .

The trading plans described above were entered into during an open insider trading window and were in compliance with our insider trading policies and procedures.

Actual sale transactions will be disclosed publicly in filings with the SEC in accordance with applicable securities laws, rules, and regulations.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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Current Report on Form 8-K

March 20, 2023

Organizational Regulations of TE Connectivity Ltd., as amended and restated

Current Report on Form 8-K

March 6, 2015

December 12, 2022

Description of Registrant’s Securities

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

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

Indenture among Tyco Electronics Group S.A., as issuer, Tyco Electronics Ltd., as guarantor, 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

December 14, 2007

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

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

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

December 14, 2007

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

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

Tenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated July 31, 2014

Current Report on Form 8-K

July 31, 2014

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

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 January 28, 2016

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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

Eighteenth 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 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

Nineteenth 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 13, 2023

Current Report on Form 8-K

February 13, 2023

Amended and Restated Five-Year Senior Credit Agreement, dated as of November 14, 2018, 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

Current Report on Form 8-K

November 14, 2018

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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

Annual Report on Form 10-K for the fiscal year ended September 30, 2022

November 15, 2022

TE Connectivity Ltd.

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November 9, 2021

Incorporated by Reference Herein

Date Filed with the SEC

Form of Option Award Terms and Conditions

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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

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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

Annual Report on Form 10-K for the fiscal year ended September 30, 2022

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

Annual Report on Form 10-K for the fiscal year ended September 30, 2022

November 15, 2022

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

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

Annual Report on Form 10-K for the fiscal year ended September 30, 2022

November 15, 2022

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

6 unchanged sentences

November 13, 2018

Incorporated by Reference Herein

Date Filed with the SEC

Tyco Electronics Ltd.

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TE Connectivity Supplemental Savings and Retirement Plan (amended and restated as of January 1, 2022)

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

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Curtin and Tyco Electronics Corporation dated December 15, 2015

Current Report on Form 8-K

December 16, 2015

Employment Agreement between Steven T.

Merkt and Tyco Electronics Corporation dated December 15, 2015

Current Report on Form 8-K

December 16, 2015

Employment Agreement between Heath A.

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Jenkins and Tyco Electronics Corporation dated December 15, 2015

Employment Agreement between Shad Kroeger and TE Connectivity Corporation dated February 23, 2018

Quarterly Report on Form 10-Q for the quarterly period ended December 25, 2020

January 28, 2021

Employment Agreement between Shad Kroeger and TE Connectivity Corporation dated February 23, 2018

Employment Agreement between Aaron Stucki and TE Connectivity Corporation dated October 1, 2020

Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2022

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Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Incorporated by Reference Herein

Date Filed with the SEC

Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

TE Connectivity Ltd.

Incentive-Based Compensation Recovery Policy

Inline XBRL Instance Document (2)

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Inline XBRL Taxonomy Extension Calculation Linkbase Document

Incorporated by Reference Herein

Date Filed with the SEC

Inline XBRL Taxonomy Extension Definition Linkbase Document

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provided, however, that we may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished.

(2) Submitted electronically with this report in accordance with the provisions of Regulation S-T

(2) The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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November 13, 2023

Jean-Pierre Clamadieu

November 13, 2023

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November 13, 2023

Syaru Shirley Lin

November 13, 2023

Syaru Shirley Lin

November 13, 2023

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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 Statements of Operations for the Fiscal Years Ended September 29, 2023, September 30, 2022, and September 24, 2021

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 29, 2023, September 30, 2022, and September 24, 2021

Consolidated Balance Sheets as of September 29, 2023 and September 30, 2022

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

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 29, 2023, September 30, 2022, and September 24, 2021

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 29, 2023, September 30, 2022, and September 24, 2021

Notes to Consolidated Financial Statements

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realize a portion of its deferred tax assets, and therefore, a valuation allowance of $7.4 billion has been recorded to offset the Company’s gross deferred tax assets as of September 29, 2023 of $10.2 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.

We identified the realizability of certain 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.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the appropriateness of qualifying tax planning strategies and the reasonableness of management’s estimates of taxable income prior to expiration.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination that it is more likely than not that sufficient taxable income will be generated in the future to realize deferred tax assets included the following, among others:

Our audit procedures related to the determination that it is more likely than not that sufficient taxable income will be generated in the future to realize certain deferred tax assets included the following, among others:

• We tested the effectiveness of controls over management’s estimates of the realization of the deferred tax assets, including those over the estimates of taxable income, the approval of tax planning strategies and the determination of whether it is more likely than not that the deferred tax assets will be realized prior to expiration.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 29, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the fiscal year ended September 30, 2022, of the Company and our report dated November 15, 2022 expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended September 29, 2023, of the Company and our report dated November 13, 2023 expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Restructuring and other charges, net

Impairment of goodwill

Operating income

4 unchanged sentences

Income tax expense

Income (loss) from continuing operations

Income from continuing operations

Income from discontinued operations, net of income taxes

Net income (loss)

Basic earnings (loss) per share:

Income (loss) from continuing operations

Basic earnings per share:

Income from continuing operations

Income from discontinued operations

Net income (loss)

Diluted earnings (loss) per share:

Income (loss) from continuing operations

Diluted earnings per share:

Income from continuing operations

Income from discontinued operations

Net income (loss)

Weighted-average number of shares outstanding:

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TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended September 29, 2023, September 30, 2022, and September 24, 2021

(in millions)

Net income (loss)

Other comprehensive income (loss):

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Other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income

comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to TE Connectivity Ltd.

Comprehensive income attributable to TE Connectivity Ltd.

See Notes to Consolidated Financial Statements.

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Balance at fiscal year end 2021

Other comprehensive income

Other comprehensive loss

Share-based compensation expense

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Balance at fiscal year end 2022

Other comprehensive loss

Other comprehensive income

Share-based compensation expense

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Cash flows from operating activities:

Net income (loss)

Income from discontinued operations, net of income taxes

Income (loss) from continuing operations

Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:

Impairment of goodwill

Income from continuing operations

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:

Depreciation and amortization

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Share-based compensation expense

Impairment of held for sale businesses

Changes in assets and liabilities, net of the effects of acquisitions and divestitures:

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Accrued and other current liabilities

Net cash provided by continuing operating activities

Net cash provided by discontinued operating activities

Net cash provided by operating activities

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Acquisition of businesses, net of cash acquired

Proceeds from divestiture of businesses, net of cash retained by businesses sold

Net cash used in investing activities

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Payment of common share dividends to shareholders

Net cash used in continuing financing activities

Net cash used in discontinued financing activities

Net cash used in financing activities

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

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.

Fiscal 2023, 2022, and 2021 ended on September 29, 2023, September 30, 2022, and September 24, 2021, respectively.

Fiscal 2023 and 2021 were each 52 weeks in length.

Fiscal 2022 was 53 weeks in length.

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

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

Revenue is measured as the amount of consideration that we

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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.

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

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See Note 20 for net sales disaggregated by industry end market and geographic region which is summarized by segment and that we consider meaningful to depict the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors.

We generally warrant that our products will conform to our, or mutually agreed to, specifications and that our products will be free from material defects in materials and workmanship for a limited time.

We limit our warranty to the replacement or repair of defective parts, or a refund or credit of the price of the defective product.

We do not account for these warranties as separate performance obligations.

Our standard terms of sale generally warrant that our products will conform to our, or mutually agreed to, specifications and that our products will be free from material defects in materials and workmanship for a limited time.

In certain instances, we may sell products to customers under terms other than our standard terms.

We do not account for warranties as separate performance obligations.

Amounts accrued for warranty claims were $ 25 million at both fiscal year end 2023 and 2022.

Although products are generally sold at fixed prices, certain distributors and customers receive incentives or awards, such as sales rebates, return allowances, scrap allowances, and other rights, which are accounted for as variable consideration.

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Intangible assets with determinable lives primarily include intellectual property, consisting of patents, trademarks, and unpatented technology, and customer relationships.

Recoverability estimates range from 1 to 50 years and costs are generally amortized on a straight-line basis.

Evaluations of the remaining useful lives of determinable-lived intangible assets are performed on a periodic basis and when events and circumstances warrant.

Recoverability estimates range from 1 to 50 years and costs are generally

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

amortized on a straight-line basis.

Evaluations of the remaining useful lives of determinable-lived intangible assets are performed on a periodic basis and when events and circumstances warrant.

At fiscal year end 2023, we had five reporting units, all of which contained goodwill.

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Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt, and derivative financial instruments.

We account for derivative financial instrument contracts on the Consolidated Balance Sheets at fair value.

For instruments not designated as hedges under ASC 815, Derivatives and Hedging , the changes in the instruments’ fair value are

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

recognized currently in earnings.

We account for derivative financial instrument contracts on the Consolidated Balance Sheets at fair value.

For instruments not designated as hedges under ASC 815, Derivatives and Hedging , the changes in the instruments’ fair value are recognized currently in earnings.

For instruments designated as cash flow hedges, the effective portion of changes in the fair value of a derivative is recorded in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings.

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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.

Recently Issued Accounting Pronouncement

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2022-04 to enhance transparency and introduce new disclosures related to an entity’s use of supplier finance programs in connection with the purchase of goods and services.

The ASU requires us, as a buyer in a supplier finance program, to disclose the key terms of the program, the amount of obligations outstanding, the balance sheet presentation of such amounts, and a rollforward of the obligation activity during the annual period.

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.

We do not expect adoption to have a material impact on our Consolidated Financial Statements.

Restructuring and Other Charges, Net

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Restructuring and other charges, net

Restructuring Charges, Net

Net restructuring and related charges by segment were as follows:

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Facility and other exit costs

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

Property, plant, and equipment

Fiscal 2022 Actions:

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Employee severance

Facility and other exit costs

Property, plant, and equipment

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Facility and other exit costs

Property, plant, and equipment

Total fiscal 2023 activity

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Facility and other exit costs

Property, plant, and equipment

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

Fiscal 2021 Actions:

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Fiscal 2023 Actions

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.

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

In connection with this program, during fiscal 2023, we recorded restructuring charges of $ 247 million.

We expect to complete all restructuring actions commenced during fiscal 2023 by the end of fiscal 2026 and to incur additional charges of approximately $ 33 million related primarily to employee severance and facility exit costs.

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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 2022 and 2021, we recorded net restructuring charges of $ 2 million and $ 195 million, respectively.

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 2023 and 2022, we recorded net restructuring charges of $ 12 million and restructuring and related charges of $ 161 million, respectively.

We expect additional charges related to fiscal 2022 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)

Transportation Solutions

Industrial Solutions

Communications Solutions

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.

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 2023, 2022, and 2021, we recorded net restructuring credits of $ 5 million, charges of $ 2 million, and charges of $ 195 million, respectively.

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We expect that any additional charges related to restructuring actions commenced prior to fiscal 2021 will be insignificant.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Total Restructuring Reserves

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Restructuring reserves

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During fiscal 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 $ 9 million.

The businesses sold were reported in our Industrial Solutions segment.

Additionally, during fiscal 2023, we recorded a pre-tax impairment charge of $ 68 million in connection with a held for sale business in our Transportation Solutions segment.

We sold two businesses for net cash proceeds of $ 16 million and recognized a net pre-tax gain on sales of $ 10 million during fiscal 2022.

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

Additionally, during fiscal 2022, we recorded pre-tax impairment charges of $ 14 million in connection with held for sale businesses in our Industrial Solutions segment.

During fiscal 2021, we sold two businesses which were reported in our Industrial Solutions segment.

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 $ 21 million.

During fiscal 2023, we acquired one business for a cash purchase price of $ 110 million, net of cash acquired.

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

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

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.

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

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

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.

During fiscal 2022, we finalized the purchase price allocation of certain fiscal 2021 acquisitions, 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.

In connection with our acquisition of approximately 72 % of the outstanding shares of First Sensor, we and First Sensor entered into a Domination and Profit and Loss Transfer Agreement (“DPLTA”) which became effective in fiscal 2020.

Under the terms of the DPLTA, First Sensor minority shareholders can elect either (1) to remain First Sensor minority shareholders and receive recurring annual compensation of € 0.56 per First Sensor share or (2) to put their First Sensor shares in exchange for compensation of € 33.27 per First Sensor share.

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

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.

Pending Acquisition

In August 2023, we entered into a definitive agreement under which we agreed to launch a public tender offer to acquire all outstanding shares of Schaffner Holding AG (“Schaffner”), a leader in electromagnetic solutions based in Switzerland, for CHF 505.00 per share in cash for a fair value of approximately CHF 320 million (equivalent to approximately $ 350 million).

The tender offer commenced in September 2023.

As of November 10, 2023, the completion of the initial offer period, the offer has been accepted for approximately 89 % of Schaffner’s outstanding shares.

The offer is subject to customary closing conditions, including regulatory approvals, and is expected to be settled in the first quarter of fiscal 2024.

Inventories consisted of the following:

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Balance at fiscal year end 2021 (1)

Purchase price adjustments

Currency translation and other

Balance at fiscal year end 2022 (1)

Purchase price adjustments

Currency translation and other

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We completed our annual goodwill impairment test in the fourth quarter of fiscal 2023 and determined that no impairment existed.

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.

This valuation was based on a discounted cash flows analysis incorporating our estimate of future operating performance, which we consider to be a level 3 unobservable input in the fair value hierarchy, and was corroborated using a market approach valuation.

The goodwill impairment test indicated that the carrying value of the reporting unit exceeded its fair value by $ 900 million.

As a result, we recorded a partial impairment

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.

Intangible Assets, Net

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Lease liability

Share repurchase program payable

Deferred revenue

Share repurchase program payable

Interest payable

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Principal debt:

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

3.50 % senior notes due 2022

Commercial paper, at a weighted-average interest rate of 5.50 % and 3.45 %, respectively

1.10 % euro-denominated senior notes due 2023

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3.70 % senior notes due 2026

3.125 % senior notes due 2027

0.00 % euro-denominated senior notes due 2029

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Unamortized discounts, premiums, and debt issuance costs, net

Effects of fair value hedge-designated interest rate swap contracts

During fiscal 2023, Tyco Electronics Group S.A.

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

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.

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.

At fiscal year end 2023, principal payments required for debt are as follows:

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Weighted-average discount rate

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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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.

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2023, the maturities of operating lease liabilities were as follows:

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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 the resulting investigations by the agencies remain ongoing.

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

We have also been contacted by the U.S.

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Environmental Matters

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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.

In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

unidentified tax liabilities and legal fees related to periods prior to disposition.

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

At 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.

At fiscal year end 2023, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 198 million, including letters of credit of $ 29 million associated with our divesture of the Subsea Communications business.

In addition, at fiscal year end 2023, we had $ 27 million of performance guarantees associated with that divestiture.

We contractually agreed to continue to honor letters of credit and performance guarantees related to the business’ projects that existed as of the date of sale;

however, based on historical experience, we do not anticipate having to perform on these guarantees.

Financial Instruments and Fair Value Measurements

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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, 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 were required to provide cash collateral.

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

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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

(in millions)

Other liabilities

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:

As of fiscal year end 2022, all such cross-currency swap contracts had been terminated or matured and were settled;

additionally, all related collateral positions were settled.

During fiscal 2023, we did not enter into any cross-currency swap contracts and there were no amounts outstanding.

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

(in millions)

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

Losses recorded in other comprehensive income (loss)

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

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We are not required to provide collateral for these contracts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

These cross-currency swap contracts were recorded on the Consolidated Balance Sheets as follows:

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Other liabilities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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Gains (losses) on cross-currency swap contracts designated as hedges of net investment (1)

(1) Recorded as currency translation, a component of accumulated other comprehensive income (loss).

(1) Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes attributable to the translation of the net investment.

Interest Rate and Investment Risk Management

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To manage the interest rate exposure, we use interest rate swap contracts to convert a portion of fixed rate debt into variable rate debt.

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.

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

(in millions)

Prepaid expenses and other current assets

Accrued and other current liabilities

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

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

During fiscal 2022, we terminated forward starting interest rate swap contracts as a result of the issuance of our 2.50 % senior notes due in 2032.

During fiscal 2023, we did not enter into any forward starting interest rate swap contracts and there were no amounts outstanding.

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

(in millions)

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

Gains recorded in other comprehensive income (loss)

We also utilize investment swap contracts to manage earnings exposure on certain nonqualified deferred compensation liabilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The impacts of these commodity swap contracts were as follows:

The impacts of our commodity swap contracts were as follows:

(in millions)

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

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

Gains (losses) 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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Rates of compensation increases

(1) During fiscal 2021, we recognized a settlement charge of $ 28 million , which was recorded in net other income (expense) on the Consolidated Statement of Operations, in connection with the transfer of certain U.S.

pension plan liabilities to an insurance company through the purchase of a group annuity contract.

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Interest cost

Actuarial (gains) losses

Actuarial gains

Benefits and administrative expenses paid

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Amortization of net actuarial loss (1)

Current year prior service cost recorded in accumulated other comprehensive income (loss)

Amortization of prior service (credit) cost (1)

Current year prior service credit (cost) recorded in accumulated other comprehensive income (loss)

Amortization of prior service credit (1)

(1) Includes amounts reflected as settlement and curtailment losses (gains) in the above net periodic pension benefit cost (credit) table.

As part of our continued effort to manage 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 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 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.

defined benefit pension plans as compared to fiscal 2020.

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

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Based on the funded status of the plans as of fiscal year end 2023, our target asset allocation is 67 % return-seeking and 33 % liability-hedging.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Target weighted-average asset allocation and weighted-average asset allocation for non-U.S.

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Equity securities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our common shares are not a direct investment of our pension funds;

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Fair value of plan assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We value our pension assets based on the fair value hierarchy of ASC 820, Fair Value Measurements and Disclosures .

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Fixed income:

Government and corporate bonds (2)

Commingled fixed income funds (2)

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Fair value of plan assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal Year End 2022

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Fixed income:

Government and corporate bonds (2)

Commingled fixed income funds (2)

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Fair value is calculated as the closing price of the underlying investments, an observable market condition, divided by the number of shares of the fund outstanding.

(2) Government and corporate bonds are marked to fair value based on quoted market prices or market approach valuation models using observable market data such as quotes, spreads, and data points for yield curves.

(2) Commingled fixed income funds are pooled investments in multiple fixed income-type securities.

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(4) Items to reconcile to fair value of plan assets include certain investments containing no significant redemption restrictions that were measured at net asset value (“NAV”) using the NAV practical expedient available in ASC 820 and amounts receivable or payable for unsettled transactions and cash balances, both of which are considered to be carried at book value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Defined Contribution Retirement Plans

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In addition to providing pension and 401(k) benefits, we also provide certain health care coverage continuation for qualifying retirees from the date of retirement to age 65 or lifetime, as applicable.

The accumulated postretirement benefit obligation was $ 13 million and $ 16 million at fiscal year end 2022 and 2021, respectively, and the underfunded status of the postretirement benefit plans was included primarily in long-term pension and postretirement liabilities on the Consolidated Balance Sheets.

The accumulated postretirement benefit obligation was $ 11 million and $ 13 million at fiscal year end 2023 and 2022, respectively, and the underfunded status of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

postretirement benefit plans was included primarily in long-term pension and postretirement liabilities on the Consolidated Balance Sheets.

Activity during fiscal 2023, 2022, and 2021 was not significant.

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Income from continuing operations before income taxes

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The reconciliation between U.S.

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Legal entity restructurings and intercompany transactions

Divestitures and goodwill impairments

Excess tax benefits from share-based payments

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(2) Excludes items which are separately presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The income tax expense for fiscal 2023 included a $ 49 million income tax benefit related to a decrease in the valuation allowance for certain U.S.

tax loss and credit carryforwards.

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.

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In addition, the income tax expense for fiscal 2021 included a $ 29 million income tax benefit related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets and $ 23 million of income tax expense associated with the tax impacts of an intercompany transaction.

The income tax expense for fiscal 2020 included $ 355 million of income tax expense related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”) and an income tax benefit of $ 31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement.

See “Swiss Tax Reform” and “Tax Sharing Agreement” below for additional information.

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 would 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred Tax Assets and Liabilities

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Deferred revenue

Unrecognized income tax benefits

Lease liabilities

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Net deferred tax assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our tax loss and credit carryforwards (tax effected) at fiscal year end 2023 were as follows:

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The valuation allowance for deferred tax assets of $ 7,416 million and $ 7,112 million at fiscal year end 2023 and 2022, 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

$ 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.

During fiscal 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.

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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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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Uncertain Tax Positions

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As of fiscal year end 2023 and 2022, we had $ 65 million and $ 54 million, respectively, of accrued interest and penalties related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes.

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.

During fiscal 2023, 2022, and 2021, we recognized income tax expense of $ 11 million, $ 3 million, and $ 12 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 .

Various state and local income tax returns are currently in the process of examination or administrative appeal.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

subsidiaries file income tax returns in the countries in which they have operations.

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subsidiary income tax returns are currently in the process of examination by taxing authorities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of fiscal year end 2023, under applicable statutes, the following tax years remained subject to examination in the major tax jurisdictions indicated:

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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 Consolidated Balance Sheet as of fiscal year end 2023.

Other Income Tax Matters

Swiss Tax Reform

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.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Tax Sharing Agreement

Upon our separation from Tyco International plc in fiscal 2007, we entered into a Tax Sharing Agreement with Tyco International plc (now part of Johnson Controls International plc) and Covidien plc (now part of Medtronic plc) under which we shared certain income tax liabilities for periods prior to and including June 29, 2007.

Pursuant to the Tax Sharing Agreement, we entered into certain guarantee commitments and indemnifications.

In fiscal 2020, we, Johnson Controls International plc, and Medtronic plc entered into an agreement to terminate the Tax Sharing Agreement.

We believe that substantially all income tax matters that may be subject to the Tax Sharing Agreement have been settled with tax authorities and we do not expect any remaining tax matters to have a material effect on our results of operations, financial position, or cash flows.

Accordingly, during fiscal 2020, we recognized an income tax benefit of $ 31 million and net other income of $ 8 million representing settlement of the remaining shared pre-separation income tax matters and indemnification balances.

Earnings (Loss) Per Share

The weighted-average number of shares outstanding used in the computations of basic and diluted earnings (loss) per share were as follows:

Earnings Per Share

The weighted-average number of shares outstanding used in the computations of basic and diluted earnings per share were as follows:

(in millions)

Dilutive impact of share-based compensation arrangements

For fiscal 2020, there were two million nonvested share awards and options outstanding with underlying exercise prices less than the average market prices of our common shares;

however, these were excluded from the calculation of diluted loss per share as inclusion would be antidilutive as a result of our loss during the period.

The following share options were not included in the computation of diluted earnings (loss) per share because the instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion would be antidilutive:

The following share options were not included in the computation of diluted earnings per share because the instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion would be antidilutive:

(in millions)

Antidilutive share options

Shareholders’ Equity

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Shareholders’ Equity and Redeemable Noncontrolling Interest

Common Shares

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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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As part of the Swiss corporate law reform, effective as of January 1, 2023, the concept of a capital band was introduced.

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.

In March 2023, our shareholders approved, for a period of one year ending March 15, 2024, our board of directors’ authorization to issue additional new shares to a maximum of 120 % and/or reduce shares to a minimum of 80 % of the existing share capital, subject to certain conditions specified in our articles of association.

Common Shares Held in Treasury

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Shares held both directly by us and by our subsidiary are presented as treasury shares on the Consolidated Balance Sheets.

In fiscal 2022, 2021, and 2020, our shareholders approved the cancellation of 5 million, 3 million, and 12 million shares, respectively, purchased under our share repurchase program.

These capital reductions by cancellation of shares were subject to a notice period and filing with the commercial register in Switzerland.

In fiscal 2023, 2022, and 2021, our shareholders approved the cancellation of eight and a half million, five million, and three million shares, respectively, purchased under our share repurchase program.

These capital reductions by cancellation of shares were subject to a notice period, filing with the commercial register in Switzerland, and other requirements.

Contributed Surplus

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Share Repurchase Program

In both fiscal 2022 and 2021, our board of directors authorized increases of $ 1.5 billion in our share repurchase program.

In fiscal 2022, our board of directors authorized increases of $ 1.5 billion in our share repurchase program.

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

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Repurchase value

At fiscal year end 2022, we had $ 1.7 billion of availability remaining under our share repurchase authorization.

At fiscal year end 2023, we had $ 735 million of availability remaining under our share repurchase authorization.

Redeemable Noncontrolling Interest

We own 72 % of our First Sensor AG (“First Sensor”) subsidiary.

The noncontrolling interest holders can elect either (1) to remain First Sensor shareholders and receive recurring annual compensation of € 0.56 per First Sensor share or (2) to put their First Sensor shares in exchange for compensation of € 33.27 per First Sensor share.

As the exercise of the put right by First Sensor noncontrolling interest shareholders is not within our control, our First Sensor noncontrolling interest balance is recorded as redeemable noncontrolling interest outside of equity on the Consolidated Balance Sheets as of fiscal year end 2023 and 2022.

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Other comprehensive income (loss), net of tax:

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

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 before reclassifications

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Balance at fiscal year end 2022

Other comprehensive income, net of tax:

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

Income tax expense

Other comprehensive income, net of tax

other comprehensive income attributable to noncontrolling interests

Balance at fiscal year end 2023

(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 .

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Segment and Geographic Data

We operate through three reportable segments:

Effective for fiscal 2023, we realigned certain product lines from the Industrial Solutions segment to the Communications Solutions segment.

We continue to operate through three reportable segments:

Transportation Solutions, Industrial Solutions, and Communications Solutions.

See Note 1 for a description of the segments in which we operate.

The following segment information reflects our current segment reporting structure.

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

As a result of the realignment, $ 30 million of net sales and $ 13 million of operating income for fiscal 2022 were reflected in the Communications Solutions segment.

Segment performance is evaluated based on net sales and operating income.

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(in millions)

Asia–Pacific:

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions

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Communications Solutions

Total Asia–Pacific

Europe/Middle East/Africa (“EMEA”):

Asia–Pacific:

Transportation Solutions

1 unchanged sentence

Communications Solutions

Total Asia–Pacific

Transportation Solutions

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Operating income (loss) by segment was as follows:

Operating income by segment was as follows:

(in millions)

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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