What changed in this filing

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Item 1. Financial Statements

2024-01-26 compared with 2023-07-28 · 137 added, 220 removed, 342 unchanged (51% of the section changed)

3 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions, except per share data)

7 unchanged sentences

Interest expense

Other income (expense), net

Other expense, net

Income from continuing operations before income taxes

Income tax expense

Income tax (expense) benefit

Income from continuing operations

Income from discontinued operations, net of income taxes

Loss from discontinued operations, net of income taxes

Basic earnings per share:

Income from continuing operations

Income from discontinued operations

Loss from discontinued operations

Diluted earnings per share:

Income from continuing operations

Income from discontinued operations

Loss from discontinued operations

Weighted-average number of shares outstanding:

3 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

Other comprehensive income (loss):

Other comprehensive income:

Currency translation

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

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

Other comprehensive income (loss)

Gains on cash flow hedges, net of income taxes

Other comprehensive income

Comprehensive income

comprehensive (income) loss attributable to noncontrolling interests

comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to TE Connectivity Ltd.

12 unchanged sentences

Deferred income taxes

Liabilities, redeemable noncontrolling interests, and shareholders' equity

Liabilities, redeemable noncontrolling interests, and equity

Current liabilities:

10 unchanged sentences

Redeemable noncontrolling interests

TE Connectivity Ltd.

shareholders' equity:

Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued , and 330,830,781 shares authorized and issued , respectively

Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued

Accumulated earnings

Treasury shares, at cost, 13,050,787 and 10,487,742 shares, respectively

Accumulated other comprehensive loss

Total shareholders' equity

Total liabilities, redeemable noncontrolling interests, and shareholders' equity

Accumulated other comprehensive income (loss)

Total TE Connectivity Ltd.

shareholders' equity

Noncontrolling interests

Total liabilities, redeemable noncontrolling interests, and equity

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Quarter Ended June 30, 2023

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at March 31, 2023

Other comprehensive loss

Share-based compensation expense

Exercise of share options

Restricted share award vestings and other activity

Repurchase of common shares

Balance at June 30, 2023

For the Nine Months Ended June 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended December 29, 2023

TE Connectivity

Common Shares

2 unchanged sentences

Shareholders'

Income (Loss)

(in millions)

5 unchanged sentences

Repurchase of common shares

Cancellation of treasury shares

Balance at June 30, 2023

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED) (Continued)

For the Quarter Ended June 24, 2022

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at March 25, 2022

Other comprehensive loss

Share-based compensation expense

Exercise of share options

Restricted share award vestings and other activity

Repurchase of common shares

Cancellation of treasury shares

Balance at June 24, 2022

For the Nine Months Ended June 24, 2022

Balance at December 29, 2023

For the Quarter Ended December 30, 2022

TE Connectivity

Common Shares

4 unchanged sentences

Balance at September 30, 2022

Other comprehensive loss

Other comprehensive income

Share-based compensation expense

2 unchanged sentences

Repurchase of common shares

Cancellation of treasury shares

Balance at June 24, 2022

Balance at December 30, 2022

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Quarters Ended

(in millions)

Cash flows from operating activities:

Income from discontinued operations, net of income taxes

Loss from discontinued operations, net of income taxes

Income from continuing operations

5 unchanged sentences

Share-based compensation expense

Impairment of held for sale businesses

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

8 unchanged sentences

Acquisition of businesses, net of cash acquired

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

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

Net cash used in investing activities

Cash flows from financing activities:

Net increase (decrease) in commercial paper

Proceeds from issuance of debt

Net decrease in commercial paper

Repayment of debt

4 unchanged sentences

Effect of currency translation on cash

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

Net decrease in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Basis of Presentation

Basis of Presentation and Accounting Policies

The unaudited Condensed Consolidated Financial Statements of TE Connectivity Ltd.

6 unchanged sentences

Unless otherwise indicated, references in the Condensed Consolidated Financial Statements to fiscal 2024 and fiscal 2023 are to our fiscal years ending September 27, 2024 and ended September 29, 2023, respectively.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for our fiscal 2025 Annual Report and subsequent interim periods;

however, early adoption is permitted.

The amendments should be applied retrospectively to all periods presented in the financial statements.

We are currently assessing the impact that adoption will have on our Condensed Consolidated Financial Statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740)—Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures through improvements to disclosures related primarily to the rate reconciliation and income taxes paid information.

The amendments are effective for us in fiscal 2026;

however, early adoption is permitted.

We are currently assessing the impact that adoption will have on our Condensed Consolidated Financial Statements.

Recently Adopted Accounting Pronouncement

In September 2022, the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50)—Disclosure of Supplier Finance Program Obligations , 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.

We adopted this update in the first quarter of fiscal 2024.

Adoption did not have a material impact on our Condensed Consolidated Financial Statements.

See Note 9 for additional information regarding our supply chain finance program.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restructuring and Other Charges, Net

1 unchanged sentence

Quarters Ended

Nine Months Ended

(in millions)

Restructuring charges, net

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

Loss on divestiture and impairment of held for sale business

Other charges, net

1 unchanged sentence

Restructuring Charges, Net

Net restructuring and related charges by segment were as follows:

Net restructuring and charges by segment were as follows:

Quarters Ended

Nine Months Ended

(in millions)

3 unchanged sentences

Restructuring charges, net

charges included in cost of sales (1)

Restructuring and related charges, net

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

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Activity in our restructuring reserves was as follows:

3 unchanged sentences

Employee severance

Facility and other exit costs

Property, plant, and equipment

Fiscal 2023 Actions:

5 unchanged sentences

Facility and other exit costs

Property, plant, and equipment

Total Activity

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fiscal 2024 Actions

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

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)

Transportation Solutions

Industrial Solutions

Communications Solutions

During fiscal 2024, we initiated a restructuring program to optimize our manufacturing footprint and improve the cost structure of the organization, primarily in the Industrial Solutions and Transportation Solutions segments.

During the quarter ended December 29, 2023, we recorded restructuring charges of $ 5 million in connection with this program.

We expect to complete all restructuring actions commenced during the quarter ended December 29, 2023 by the end of fiscal 2025, and we expect additional charges related to actions commenced during the quarter ended December 29, 2023 will be insignificant.

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 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.

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

In connection with this program, during the quarters ended December 29, 2023 and December 30, 2022, we recorded net restructuring credits of $ 3 million and charges of $ 105 million, respectively.

We expect to complete all restructuring actions commenced during fiscal 2023 by the end of fiscal 2025, and to incur additional charges of approximately $ 24 million related primarily to employee severance and facility exit costs.

TE CONNECTIVITY LTD.

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 June 30, 2023:

The following table summarizes expected, incurred, and remaining charges for the fiscal 2023 program by segment as of December 29, 2023:

(in millions)

3 unchanged sentences

Pre-Fiscal 2023 Actions

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

During the quarters ended December 29, 2023 and December 30, 2022, we recorded net restructuring charges of $ 7 million and credits of $ 1 million, respectively, related to pre-fiscal 2023 actions.

We expect that any additional charges related to restructuring actions commenced prior to fiscal 2023 will be insignificant.

6 unchanged sentences

Restructuring reserves

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 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 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.

During the quarter ended December 29, 2023, we sold one business for net cash proceeds of $ 38 million.

In connection with the divestiture, we recorded a pre-tax loss on sale of $ 11 million.

The business sold was reported in our Transportation Solutions segment.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the quarter ended December 29, 2023, we acquired approximately 98.7 % of the 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 purchase price of CHF 302 million (equivalent to $ 349 million), net of cash acquired.

As a result of the transaction, we recognized a noncontrolling interest with a fair value of $ 5 million as of the acquisition date.

Due to the timing of the transaction, which was reported as part of our Industrial Solutions segment, we preliminarily allocated the purchase price to goodwill and identifiable intangible assets.

Our valuation of identifiable intangible assets, assets acquired, and liabilities assumed is currently in process;

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

The amount of these potential adjustments could be significant.

We intend to initiate a squeeze-out procedure and delist the remaining Schaffner shares from SIX Swiss Exchange during fiscal 2024.

We acquired one business for a cash purchase price of $ 109 million, net of cash acquired, during the quarter ended December 30, 2022.

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

Inventories consisted of the following:

10 unchanged sentences

Currency translation and other

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.

December 29, 2023 (1)

(1) At December 29, 2023 and September 29, 2023, 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 quarter ended December 29, 2023, we recognized goodwill in the Industrial Solutions segment in connection with an acquisition.

See Note 3 for additional information regarding acquisitions.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangible Assets, Net

Intangible assets consisted of the following:

June 30, 2023

December 29, 2023

September 29, 2023

2 unchanged sentences

Intellectual property

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

Intangible asset amortization expense was $ 42 million and $ 46 million for the quarters ended December 29, 2023 and December 30, 2022, respectively.

At December 29, 2023, the aggregate amortization expense on intangible assets is expected to be as follows:

(in millions)

Remainder of fiscal 2024

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.

The notes are TEGSA’s unsecured senior obligations and rank equally in right of payment with all existing and any future senior indebtedness of TEGSA and senior to any subordinated indebtedness that TEGSA may incur.

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

During the nine months ended June 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 %.

As of December 29, 2023, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, had $ 261 million of commercial paper outstanding at a weighted-average interest rate of 5.50 %.

TEGSA had $ 330 million of commercial paper outstanding at a weighted-average interest rate of 5.50 % at September 29, 2023.

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 fair value of our debt, based on indicative valuations, was approximately $ 4,103 million and $ 3,974 million at December 29, 2023 and September 29, 2023, respectively.

The components of lease cost were as follows:

Quarters Ended

Nine Months Ended

(in millions)

5 unchanged sentences

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

Nine Months Ended

Quarters 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 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.

As of December 29, 2023, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 17 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 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 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;

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

At December 29, 2023, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 196 million, including letters of credit of $ 22 million associated with our divestiture of the Subsea Communications business.

In addition, as of December 29, 2023, we had $ 26 million of performance guarantees associated with the 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.

Supply Chain Finance Program

We have an agreement with a financial institution that allows participating suppliers the ability to finance payment obligations.

The financial institution has separate arrangements with the suppliers and provides them with the option to request early payment for invoices.

We do not determine the terms or conditions of the arrangement between the financial institution and suppliers.

Our obligation to suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangement and we are not required to post collateral with the financial institution.

The outstanding payment obligations under our supply chain finance program, which are included in accounts payable on our Condensed Consolidated Balance Sheets, were $ 122 million and $ 109 million at December 29, 2023 and September 29, 2023, respectively.

Financial Instruments

Foreign Currency Exchange Rate Risk

We may utilize cross-currency swap contracts to reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans.

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.

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

Quarter Ended

Nine Months Ended

(in millions)

Losses recorded in other comprehensive income (loss)

Gains excluded from the hedging relationship (1)

(1) Gains excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses generated as a result of re-measuring certain intercompany loans to the U.S.

As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges.

The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on intercompany and other cash transactions.

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

Hedge of Net Investment

We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies.

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

The aggregate notional value of these hedges was $ 2,792 million and $ 1,709 million at December 29, 2023 and September 29, 2023, 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 $ 3,815 million and $ 1,873 million at June 30, 2023 and September 30, 2022, respectively.

The aggregate notional value of the contracts under this program was $ 3,599 million and $ 3,806 million at December 29, 2023 and September 29, 2023, respectively.

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

13 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

Foreign currency exchange gains (losses) on intercompany loans and external borrowings (1)

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

Foreign currency exchange losses on intercompany loans and external borrowings (1)

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), and offset by changes attributable to the translation of the net investment.

Interest Rate Risk Management

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.

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

Quarter Ended

Nine Months Ended

(in millions)

Gains recorded in other comprehensive income (loss)

Commodity Hedges

1 unchanged sentence

The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in prices of commodities used in production.

These contracts had an aggregate notional value of $ 485 million and $ 566 million at

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

These contracts had an aggregate notional value of $ 431 million and $ 459 million at December 29, 2023 and September 29, 2023, respectively, and were designated as cash flow hedges.

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

4 unchanged sentences

Other liabilities

The impacts of these commodity swap contracts were as follows:

The impacts of our commodity swap contracts were as follows:

Quarters Ended

Nine Months Ended

(in millions)

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

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

Gains recorded in other comprehensive income (loss)

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 Condensed Consolidated Statement of Operations within the next twelve months.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Retirement Plans

The net periodic pension benefit cost (credit) for all non-U.S.

The net periodic pension benefit cost for all non-U.S.

defined benefit pension plans was as follows:

8 unchanged sentences

Amortization of prior service credit

Net periodic pension benefit cost (credit)

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Nine Months Ended

(in millions)

Operating expense:

Other (income) expense:

Interest cost

Expected returns on plan assets

Amortization of net actuarial loss

Amortization of prior service credit

Net periodic pension benefit cost (credit)

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

Net periodic pension benefit cost

During the quarter ended December 29, 2023, we contributed $ 12 million to our non-U.S.

pension plans.

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.

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 nine months ended June 24, 2022.

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 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.

We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Condensed Consolidated Balance Sheet as of June 30, 2023.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We recorded an income tax benefit of $ 1,105 million and expense of $ 87 million for the quarters ended December 29, 2023 and December 30, 2022, respectively.

The income tax benefit for the quarter ended December 29, 2023 included an $ 874 million net income tax benefit associated with a ten-year tax credit obtained by a Swiss subsidiary and a $ 262 million income tax benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland.

In addition, the income tax benefit for the quarter ended December 29, 2023 included a $ 118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of $ 4 million recorded in selling, general, and administrative expenses for other non-income taxes.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of December 29, 2023, approximately $ 30 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

Earnings Per Share

1 unchanged sentence

Quarters Ended

Nine Months Ended

(in millions)

Dilutive impact of share-based compensation arrangements

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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:

Quarters Ended

Nine Months Ended

(in millions)

Antidilutive share options

Shareholders’ Equity

Common Shares

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

In March 2023, our shareholders approved the cancellation of approximately eight and a half million shares purchased under our share repurchase program during the period beginning September 25, 2021 and ending September 30, 2022.

The capital reduction by cancellation of these shares, which was subject to filing with the commercial register in Switzerland, approval by our board of directors, and other requirements, became effective in March 2023.

We paid cash dividends to shareholders as follows:

Quarters Ended

Nine Months Ended

Dividends paid per common share

In March 2023, our shareholders approved a dividend payment to shareholders of $ 2.36 per share, payable in four equal quarterly installments of $ 0.59 per share beginning in the third quarter of fiscal 2023 and ending in the second quarter of fiscal 2024.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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.

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

At December 29, 2023 and September 29, 2023, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 183 million and $ 368 million, respectively.

Share Repurchase Program

During the quarter ended December 29, 2023, our board of directors authorized an increase of $ 1.5 billion in our share repurchase program.

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

Nine Months Ended

Quarters Ended

(in millions)

1 unchanged sentence

Repurchase value

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

At December 29, 2023, we had $ 1.8 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

Nine Months Ended

(in millions)

Share-based compensation expense

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.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of December 29, 2023, there was $ 211 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.9 years.

During the quarter ended December 29, 2023, we granted the following share-based awards as part of our annual incentive plan grant:

3 unchanged sentences

Performance share awards

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.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of December 29, 2023, we had six million shares available for issuance under the TE Connectivity Ltd.

2007 Stock and Incentive Plan, amended and restated as of December 12, 2023.

Share-Based Compensation Assumptions

4 unchanged sentences

Expected life of options (in years)

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Segment and Geographic Data

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 reporting segments:

Transportation Solutions, Industrial Solutions, and Communications Solutions.

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, $ 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

Nine Months Ended

(in millions)

15 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

Asia–Pacific:

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions

1 unchanged sentence

Communications Solutions

Total Asia–Pacific

Europe/Middle East/Africa (“EMEA”):

Asia–Pacific:

Transportation Solutions

1 unchanged sentence

Communications Solutions

Total Asia–Pacific

Transportation Solutions

4 unchanged sentences

Operating income by segment was as follows:

Quarters 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