What changed in this filing

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Item 1. Financial Statements

2024-04-26 compared with 2024-01-26 · 200 added, 85 removed, 394 unchanged (42% of the section changed)

3 unchanged sentences

Quarters Ended

Six Months Ended

(in millions, except per share data)

11 unchanged sentences

Income from continuing operations

Loss from discontinued operations, net of income taxes

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

Basic earnings per share:

Income from continuing operations

Loss from discontinued operations

Income (loss) from discontinued operations

Diluted earnings per share:

Income from continuing operations

Loss from discontinued operations

Income (loss) from discontinued operations

Weighted-average number of shares outstanding:

3 unchanged sentences

Quarters Ended

Six Months Ended

(in millions)

Other comprehensive income:

Other comprehensive income (loss):

Currency translation

1 unchanged sentence

Gains on cash flow hedges, net of income taxes

Other comprehensive income

Other comprehensive income (loss)

Comprehensive income

comprehensive income attributable to noncontrolling interests

comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income attributable to TE Connectivity Ltd.

27 unchanged sentences

shareholders' equity:

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

Common shares, CHF 0.57 par value, 316,574,781 shares authorized and issued , and 322,470,281 shares authorized and issued , respectively

Accumulated earnings

Treasury shares, at cost, 9,695,361 and 10,487,742 shares, respectively

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total TE Connectivity Ltd.

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended December 29, 2023

For the Quarter Ended March 29, 2024

TE Connectivity

5 unchanged sentences

(in millions)

Balance at December 29, 2023

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 March 29, 2024

For the Six Months Ended March 29, 2024

TE Connectivity

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at September 29, 2023

4 unchanged sentences

Repurchase of common shares

Cancellation of treasury shares

Balance at March 29, 2024

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED) (Continued)

For the Quarter Ended March 31, 2023

TE Connectivity

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at December 30, 2022

For the Quarter Ended December 30, 2022

Other comprehensive income

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 March 31, 2023

For the Six Months Ended March 31, 2023

TE Connectivity

10 unchanged sentences

Repurchase of common shares

Balance at December 30, 2022

Cancellation of treasury shares

Balance at March 31, 2023

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarters Ended

Six Months Ended

(in millions)

Cash flows from operating activities:

Loss from discontinued operations, net of income taxes

(Income) 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 business, net of cash retained by business sold

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

Net cash used in investing activities

1 unchanged sentence

Net decrease in commercial paper

Proceeds from issuance of debt

Repayment of debt

19 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.

Change in Place of Incorporation

In March 2024, our board of directors approved a proposed change in our jurisdiction of incorporation from Switzerland to Ireland.

In connection with the proposed change, we entered into a merger agreement with our wholly-owned subsidiary, TE Connectivity plc, a public limited company incorporated under Irish law.

Under the merger agreement, we will be merged with and into TE Connectivity plc, which will be the surviving entity.

Completion of the merger is subject to shareholder approval at a special general meeting which we expect to be held in June 2024 and certain other customary closing conditions.

If approved, we expect to implement the change in calendar year 2024 and our shareholders will receive one ordinary share of TE Connectivity plc for each common share of TE Connectivity Ltd.

held immediately prior to the merger.

Upon completion of the merger, we will be organized under the laws of Ireland.

We do not anticipate any material change in our operations or financial results as a result of the merger and change in place of incorporation.

Recently Issued Accounting Pronouncements

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

In March 2024, the U.S.

Securities and Exchange Commission (“SEC”) issued its final climate disclosure rules, The Enhancement and Standardization of Climate-Related Disclosures for Investors , which require all registrants to provide certain climate-related information in their registration statements and annual reports.

The rules require disclosure of, among other things, material climate-related risks;

activities to mitigate or adapt to such risks;

governance and oversight of such risks;

material climate targets and goals, and Scope 1 and/or Scope 2 greenhouse gas emissions, on a phased-in basis, when those emissions are material.

In addition, the final rules require certain disclosures in the notes to the financial statements, including the effects of severe weather events and other natural conditions.

The rules are effective for us on a phased-in timeline starting in fiscal 2026;

however, in April 2024, the SEC issued an order to voluntarily stay its final climate rules pending the completion of judicial review thereof by the U.S.

Court of Appeals for the Eighth Circuit.

We are currently assessing the impact of the rules on our Consolidated Financial Statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 Consolidated Financial Statements.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In November 2023, the FASB issued 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.

2 unchanged sentences

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.

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.

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

Recently Adopted Accounting Pronouncement

5 unchanged sentences

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

Six Months Ended

(in millions)

Restructuring charges, net

Loss on divestiture and impairment of held for sale business

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

Costs related to change in place of incorporation

Other charges, net

1 unchanged sentence

Restructuring Charges, Net

Net restructuring and charges by segment were as follows:

Net restructuring charges by segment were as follows:

Quarters Ended

Six Months Ended

(in millions)

3 unchanged sentences

Restructuring charges, net

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Activity in our restructuring reserves was as follows:

10 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 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.

During the six months ended March 29, 2024, we recorded restructuring charges of $ 11 million in connection with this program.

We expect to complete all restructuring actions commenced during the six months ended March 29, 2024 by the end of fiscal 2025 and anticipate that additional charges related to actions commenced during the six months ended March 29, 2024 will be insignificant.

Fiscal 2023 Actions

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.

In connection with this program, during the six months ended March 29, 2024 and March 31, 2023, we recorded net restructuring charges of $ 12 million and $ 161 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 $ 14 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 December 29, 2023:

The following table summarizes expected, incurred, and remaining charges for the fiscal 2023 program by segment as of March 29, 2024:

(in millions)

2 unchanged sentences

Communications Solutions

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Pre-Fiscal 2023 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.

During the six months ended March 29, 2024 and March 31, 2023, we recorded net restructuring charges of $ 18 million and $ 5 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 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.

During the six months ended March 29, 2024, 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 in the six months ended March 29, 2024.

Additionally, during the six months ended March 31, 2023, we recorded a pre-tax impairment charge of $ 60 million when the business was reclassified to held for sale.

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.

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

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

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

Change in Place of Incorporation

During the six months ended March 29, 2024, we incurred costs of $ 8 million related to our proposed change in place of incorporation from Switzerland to Ireland.

See Note 1 for additional information regarding the proposed change.

During the six months ended March 29, 2024, 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 294 million (equivalent to $ 339 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.

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

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

1 unchanged sentence

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.

We have initiated a squeeze-out and a delisting of remaining Schaffner shares from the SIX Swiss Exchange and anticipate that both the squeeze-out and delisting procedures will be completed during fiscal 2024.

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

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

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Inventories consisted of the following:

10 unchanged sentences

Currency translation and other

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.

March 29, 2024 (1)

(1) At March 29, 2024 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 six months ended March 29, 2024, 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:

December 29, 2023

March 29, 2024

September 29, 2023

2 unchanged sentences

Intellectual property

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:

Intangible asset amortization expense was $ 43 million and $ 49 million for the quarters ended March 29, 2024 and March 31, 2023, respectively, and $ 85 million and $ 95 million for the six months ended March 29, 2024 and March 31, 2023, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

At March 29, 2024, the aggregate amortization expense on intangible assets is expected to be as follows:

(in millions)

Remainder of fiscal 2024

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

As of March 29, 2024, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, had $ 291 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 $ 4,103 million and $ 3,974 million at December 29, 2023 and September 29, 2023, respectively.

During the quarter ended March 29, 2024, we reclassified € 550 million of 0.00 % euro-denominated senior notes due in February 2025 from long-term debt to short-term debt on the Condensed Consolidated Balance Sheet.

TEGSA entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in April 2024 with aggregate commitments of $ 1.5 billion, which refinanced and replaced in full TEGSA’s existing $ 1.5 billion five-year unsecured senior revolving credit facility (the “Replaced Credit Facility”).

The Credit Facility matures in April 2029 and permits, subject to conditions set forth therein, our contemplated merger and change in jurisdiction of incorporation.

See Note 1 for additional information regarding the merger and change in our jurisdiction of incorporation.

TEGSA had no borrowings under the Replaced Credit Facility at March 29, 2024 or September 29, 2023.

Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with respect to revolving loans denominated in U.S.

dollars, (a) the term secured overnight financing rate (“Term SOFR”) (as defined in the Credit Facility) or (b) an alternate base rate equal to the highest of (i) Bank of America , N.A.’s base rate, (ii) the federal funds effective rate plus 1 / 2 of 1%, (iii) the Term SOFR for a one-month interest period plus 1 %, and (iv) 1 %, and (2) with respect to revolving loans determined in an alternative currency, (a) an alternative currency daily rate or (b) an alternative currency term rate , as applicable, plus, in each case, an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA.

TEGSA is required to pay an annual facility fee.

Based on the applicable credit ratings of TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’ commitments under the Credit Facility.

The fair value of our debt, based on indicative valuations, was approximately $ 4,074 million and $ 3,974 million at March 29, 2024 and September 29, 2023, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The components of lease cost were as follows:

Quarters Ended

Six Months Ended

(in millions)

2 unchanged sentences

Total lease cost

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Quarters Ended

Six Months Ended

(in millions)

18 unchanged sentences

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

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Environmental Matters

1 unchanged sentence

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 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.

As of March 29, 2024, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 17 million to $ 43 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.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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

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.

At March 29, 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 180 million, including letters of credit of $ 22 million associated with our divestiture of the Subsea Communications business.

In addition, as of March 29, 2024, we had $ 25 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;

5 unchanged sentences

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.

The outstanding payment obligations under our supply chain finance program, which are included in accounts payable on our Condensed Consolidated Balance Sheets, were $ 113 million and $ 109 million at March 29, 2024 and September 29, 2023, respectively.

Financial Instruments

5 unchanged sentences

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

The aggregate notional value of these hedges was $ 2,792 million and $ 1,709 million at December 29, 2023 and September 29, 2023, respectively.

The aggregate notional value of these hedges was $ 2,723 million and $ 1,709 million at March 29, 2024 and September 29, 2023, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 $ 3,599 million and $ 3,806 million at December 29, 2023 and September 29, 2023, respectively.

The aggregate notional value of the contracts under this program was $ 3,522 million and $ 3,806 million at March 29, 2024 and September 29, 2023, respectively.

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

3 unchanged sentences

We are not required to provide collateral for these contracts.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

6 unchanged sentences

Quarters Ended

Six Months Ended

(in millions)

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

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

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)

(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.

2 unchanged sentences

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 $ 431 million and $ 459 million at December 29, 2023 and September 29, 2023, respectively, and were designated as cash flow hedges.

These contracts had an aggregate notional value of $ 422 million and $ 459 million at March 29, 2024 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

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The impacts of our commodity swap contracts were as follows:

Quarters Ended

Six Months Ended

(in millions)

2 unchanged sentences

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

11 unchanged sentences

Net periodic pension benefit cost

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

Six 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

During the six months ended March 29, 2024, we contributed $ 23 million to our non-U.S.

pension plans.

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.

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 December 29, 2023.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We recorded an income tax expense of $ 146 million and $ 100 million for the quarters ended March 29, 2024 and March 31, 2023, respectively.

We recorded an income tax benefit of $ 959 million and expense of $ 187 million for the six months ended March 29, 2024 and March 31, 2023, respectively.

The income tax benefit for the six months ended March 29, 2024 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 six months ended March 29, 2024 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 March 29, 2024, 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

Six 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

Six Months Ended

(in millions)

Antidilutive share options

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Common Shares

In March 2024, our shareholders reapproved and extended through March 13, 2025, 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 2024, our shareholders approved the cancellation of approximately six million shares purchased under our share repurchase program during the period beginning October 1, 2022 and ending September 29, 2023.

The capital reduction by cancellation of these shares, which was subject to a notice period, filing with the commercial register in Switzerland, and other requirements, became effective in March 2024.

We paid cash dividends to shareholders as follows:

Quarters Ended

Six Months Ended

Dividends paid per common share

In March 2024, our shareholders approved a dividend payment to shareholders of $ 2.60 per share, payable in four equal quarterly installments of $ 0.65 per share beginning in the third quarter of fiscal 2024 and ending in the second quarter of fiscal 2025.

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.

At March 29, 2024 and September 29, 2023, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 798 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.

During the six months ended March 29, 2024, 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:

Quarters Ended

Six Months Ended

(in millions)

1 unchanged sentence

Repurchase value

At December 29, 2023, we had $ 1.8 billion of availability remaining under our share repurchase authorization.

At March 29, 2024, we had $ 1.4 billion of availability remaining under our share repurchase authorization.

TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Quarters Ended

Six Months Ended

(in millions)

Share-based compensation expense

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.

As of March 29, 2024, there was $ 180 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.7 years.

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 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.

In March 2024, our shareholders approved the TE Connectivity Ltd.

2024 Stock and Incentive Plan (the “2024 Plan”).

The 2024 Plan replaces the TE Connectivity Ltd.

2007 Stock and Incentive Plan, amended and restated as of December 12, 2023 (the “2007 Plan”), as the source of awards granted.

No further awards will be granted under the 2007 Plan and all remaining shares available under the 2007 plan have been cancelled.

As of March 29, 2024, we had 20 million shares available for issuance under the 2024 Plan.

Share-Based Compensation Assumptions

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Quarters Ended

Six Months Ended

(in millions)

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Quarters Ended

Six Months Ended

(in millions)

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Operating income by segment was as follows:

Quarters Ended

Six 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