What changed in this filing

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Item 1. Financial Statements

2025-01-24 compared with 2024-07-29 · 198 added, 234 removed, 327 unchanged (57% of the section changed)

FINANCIAL STATEMENTS

TE CONNECTIVITY LTD.

TE CONNECTIVITY PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarters Ended

Nine Months Ended

(in millions, except per share data)

11 unchanged sentences

Income from continuing operations

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

Loss from discontinued operations, net of income taxes

Basic earnings per share:

Income from continuing operations

Income (loss) from discontinued operations

Diluted earnings per share:

Income from continuing operations

Income (loss) from discontinued operations

Weighted-average number of shares outstanding:

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

TE CONNECTIVITY PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Quarters Ended

Nine Months Ended

(in millions)

6 unchanged sentences

comprehensive (income) loss attributable to noncontrolling interests

Comprehensive income attributable to TE Connectivity Ltd.

Comprehensive income attributable to TE Connectivity plc

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

TE CONNECTIVITY PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

23 unchanged sentences

Shareholders' equity:

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

Preferred shares, $ 1.00 par value, 2 shares authorized, none outstanding as of December 27, 2024

Ordinary class A shares, € 1.00 par value, 25,000 shares authorized, none outstanding as of December 27, 2024

Ordinary shares, $ 0.01 par value, 1,500,000,000 shares authorized, 300,840,538 shares issued and common shares, CHF 0.57 par value, 316,574,781 shares authorized and issued , respectively

Accumulated earnings

Treasury shares, at cost, 12,129,385 and 10,487,742 shares, respectively

Accumulated other comprehensive loss

Ordinary shares and common shares held in treasury, at cost, 2,074,979 and 16,656,681 shares, respectively

Accumulated other comprehensive income (loss)

Total shareholders' equity

1 unchanged sentence

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended June 28, 2024

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at March 29, 2024

Other comprehensive loss

Share-based compensation expense

Exercise of share options

Restricted share award vestings and other activity

Repurchase of common shares

Purchase of noncontrolling interests

Balance at June 28, 2024

For the Nine Months Ended June 28, 2024

Common Shares

Treasury Shares

TE CONNECTIVITY PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Quarter Ended December 27, 2024

Ordinary Shares

Held in Treasury

Comprehensive

Shareholders'

Income (Loss)

(in millions)

Balance at September 27, 2024

Noncontrolling interests associated with acquisition

Other comprehensive income

Share-based compensation expense

Exercise of share options

Restricted share award vestings and other activity

Repurchase of common shares

Change in place of incorporation

Cancellation of treasury shares

Purchase of noncontrolling interests

Balance at June 28, 2024

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED) (Continued)

For the Quarter Ended June 30, 2023

Common Shares

Treasury Shares

Comprehensive

Shareholders'

(in millions)

Balance at March 31, 2023

Other comprehensive loss

2 unchanged sentences

Restricted share award vestings and other activity

Repurchase of common shares

Balance at June 30, 2023

For the Nine Months Ended June 30, 2023

Repurchase of ordinary shares

Balance at December 27, 2024

For the Quarter Ended December 29, 2023

Common Shares

Treasury Shares

Common Shares

Held in Treasury

Comprehensive

Shareholders'

Income (Loss)

(in millions)

5 unchanged sentences

Repurchase of common shares

Cancellation of treasury shares

Balance at June 30, 2023

Balance at December 29, 2023

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

TE CONNECTIVITY PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

Quarters Ended

(in millions)

Cash flows from operating activities:

(Income) loss 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 decrease in commercial paper

Proceeds from issuance of debt

Net increase (decrease) in commercial paper

Repayment of debt

Proceeds from exercise of share options

Repurchase of common shares

Payment of common share dividends to shareholders

Repurchase of ordinary/common shares

Payment of ordinary/common share dividends to shareholders

Net cash used in financing activities

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

1 unchanged sentence

See Notes to Condensed Consolidated Financial Statements.

TE CONNECTIVITY LTD.

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Basis of Presentation and Accounting Policies

The unaudited Condensed Consolidated Financial Statements of TE Connectivity Ltd.

(“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S.

Basis of Presentation

The unaudited Condensed Consolidated Financial Statements of TE Connectivity plc (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S.

(“GAAP”) and the instructions to Form 10-Q under the Securities Exchange Act of 1934.

5 unchanged sentences

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.

The merger was approved by shareholders at a special general meeting in June 2024 and is subject to certain closing conditions.

We expect to implement the change on or about September 30, 2024.

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 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.

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.

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 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.

The merger between TE Connectivity Ltd., our former parent entity, and TE Connectivity plc, its wholly-owned subsidiary, was completed on September 30, 2024.

TE Connectivity plc, a public limited company incorporated under Irish law, was the surviving entity and, as a result, our jurisdiction of incorporation changed from Switzerland to Ireland.

Shareholders received one ordinary share of TE Connectivity plc for each common share of TE Connectivity Ltd.

held immediately prior to the merger and change in place of incorporation.

Effective for fiscal 2025, we are organized under the laws of Ireland.

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

New Segment Structure

Effective for fiscal 2025, we reorganized our management and segments to align the organization around our fiscal 2025 strategy.

Our businesses in the former Communications Solutions segment have been moved into the Industrial Solutions segment.

Also, the appliances and industrial equipment businesses have been combined to form the automation and connected living business.

In addition, we realigned certain product lines and businesses from the Industrial Solutions and former Communications Solutions segments to the Transportation Solutions segment.

The following represents the new segment structure:

● Transportation Solutions —This segment contains our automotive, commercial transportation, and sensors businesses.

● Industrial Solutions —This segment contains our aerospace, defense, and marine;

digital data networks (historically referred to as data and devices);

and automation and connected living businesses.

TE CONNECTIVITY PLC

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

(Gain) loss on divestitures and impairment of held for sale businesses, net

Loss on divestiture

Costs related to change in place of incorporation

Other charges, net

Other charges (credits), net

Restructuring and other charges, net

2 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

1 unchanged sentence

Industrial Solutions

Communications Solutions

Restructuring charges, net

4 unchanged sentences

Employee severance

Property, plant, and equipment

Fiscal 2024 Actions:

Employee severance

Facility and other exit costs

Property, plant, and equipment

4 unchanged sentences

Total Activity

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fiscal 2025 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 nine months ended June 28, 2024, we recorded restructuring charges of $ 24 million in connection with this program.

We expect to complete all restructuring actions commenced during the nine months ended June 28, 2024 by the end of fiscal 2025 and anticipate that additional charges related to actions commenced during the nine months ended June 28, 2024 will be insignificant.

During fiscal 2025, we initiated a restructuring program associated with footprint consolidation and cost structure improvements in both of our segments.

During the quarter ended December 27, 2024, we recorded restructuring charges of $ 30 million in connection with this program.

We expect to complete all restructuring actions commenced during the quarter ended December 27, 2024 by the end of fiscal 2032 and to incur additional charges of approximately $ 10 million related primarily to facility exit costs in the Industrial Solutions segment.

Fiscal 2024 Actions

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

In connection with this program, during the nine months ended June 28, 2024 and June 30, 2023, we recorded net restructuring charges of $ 7 million and $ 200 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 $ 10 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 28, 2024:

(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.

In connection with this program, during the quarters ended December 27, 2024 and December 29, 2023, we recorded net restructuring charges of $ 4 million and $ 5 million, respectively.

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

Pre-Fiscal 2024 Actions

During the nine months ended June 28, 2024 and June 30, 2023, we recorded net restructuring charges of $ 26 million and $ 8 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.

During the quarters ended December 27, 2024 and December 29, 2023, we recorded net restructuring charges of $ 9 million and $ 4 million, respectively, related to pre-fiscal 2024 actions.

We expect to incur additional charges of approximately $ 10 million in connection with the restructuring actions commenced prior to fiscal 2024.

Total Restructuring Reserves

5 unchanged sentences

Restructuring reserves

During the nine months ended June 28, 2024, we sold one business for net cash proceeds of $ 59 million.

In connection with the divestiture, we recorded a pre-tax gain on sale of $ 10 million in the nine months ended June 28, 2024.

Additionally, during the nine months ended June 30, 2023, we recorded a pre-tax impairment charge of $ 60 million when the business was reclassified to held for sale.

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 in the quarter ended December 29, 2023.

The business sold was reported in our Transportation Solutions segment.

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 both reported in our Industrial Solutions segment.

Change in Place of Incorporation

During the nine months ended June 28, 2024, we incurred costs of $ 11 million related to our change in place of incorporation from Switzerland to Ireland.

During the quarter ended December 27, 2024, we incurred costs of $ 10 million related to our change in place of incorporation from Switzerland to Ireland.

See Note 1 for additional information regarding the change.

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 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.

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;

During the quarter ended December 27, 2024, we acquired two businesses for a combined cash purchase price of $ 325 million, net of cash acquired.

The acquired businesses have been 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

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

During the quarter ended June 28, 2024, we completed a squeeze-out of the remaining minority shareholders for $ 5 million and the Schaffner shares were delisted from the SIX Swiss Exchange.

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

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

During the quarter ended December 29, 2023, we acquired approximately 98.7 % of the outstanding shares of Schaffner Holding AG, 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.

The acquired business has been reported as part of our Industrial Solutions segment from the date of acquisition.

Inventories consisted of the following:

6 unchanged sentences

Transportation

Communications

(in millions)

September 27, 2024 (2)

Currency translation and other

June 28, 2024 (1)

(1) At June 28, 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 nine months ended June 28, 2024, we recognized goodwill in the Industrial Solutions segment in connection with an acquisition.

Currency translation

December 27, 2024 (2)

(1) In connection with the reorganization of our segments, goodwill was reallocated to reporting units using a relative fair value approach.

See Note 1 for additional information regarding our new segment structure.

(2) At December 27, 2024 and September 27, 2024, accumulated impairment losses for the Transportation Solutions and Industrial Solutions segments were $ 3,091 million and $ 1,158 million, respectively.

During the quarter ended December 27, 2024, we recognized goodwill in the Industrial Solutions segment in connection with recent acquisitions.

See Note 3 for additional information regarding acquisitions.

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangible Assets, Net

Intangible assets consisted of the following:

June 28, 2024

December 27, 2024

September 27, 2024

2 unchanged sentences

Intellectual property

Intangible asset amortization expense was $ 41 million and $ 46 million for the quarters ended June 28, 2024 and June 30, 2023, respectively, and $ 126 million and $ 141 million for the nine months ended June 28, 2024 and June 30, 2023, respectively.

At June 28, 2024, the aggregate amortization expense on intangible assets is expected to be as follows:

Intangible asset amortization expense was $ 39 million and $ 42 million for the quarters ended December 27, 2024 and December 29, 2023, respectively.

At December 27, 2024, the aggregate amortization expense on intangible assets is expected to be as follows:

(in millions)

Remainder of fiscal 2025

As of June 28, 2024, Tyco Electronics Group S.A.

As of December 27, 2024, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, had $ 345 million of commercial paper outstanding at a weighted-average interest rate of 4.50 %.

TEGSA had $ 255 million of commercial paper outstanding at a weighted-average interest rate of 4.95 % at September 27, 2024.

During the nine months ended June 28, 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 Credit Facility at June 28, 2024 or the Replaced Credit Facility at 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 $ 4,079 million and $ 3,974 million at June 28, 2024 and September 29, 2023, respectively.

Payment obligations under TEGSA’s senior notes, commercial paper, and five-year unsecured senior revolving credit facility are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.

The fair value of our debt, based on indicative valuations, was approximately $ 4,126 million and $ 4,190 million at December 27, 2024 and September 27, 2024, respectively.

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The components of lease cost were as follows:

Quarters Ended

Nine Months Ended

(in millions)

3 unchanged sentences

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

Nine Months Ended

Quarters Ended

(in millions)

10 unchanged sentences

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

Department of Commerce’s Bureau of Industry and Security (“BIS”) and the U.S.

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

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.

Department of Justice concerning aspects of these matters.

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

We are cooperating with the DDTC in its ongoing investigation.

We are unable to predict the timing and final outcome of the agency’s investigation.

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

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.

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

Environmental Matters

We are involved in various stages of investigation and cleanup related to environmental remediation matters at a number of sites.

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 28, 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 $ 21 million as the probable loss, which was the best estimate within this range.

The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.

As of December 27, 2024, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $ 18 million to $ 43 million, and we accrued $ 21 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.

1 unchanged sentence

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 28, 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 185 million, including letters of credit of $ 22 million associated with our divestiture of the Subsea Communications business.

In addition, as of June 28, 2024, we had $ 24 million of performance guarantees associated with the divestiture.

At December 27, 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $ 185 million, including letters of credit of $ 22 million associated with our divestiture of the Subsea Communications business.

In addition, as of December 27, 2024, we had $ 23 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 $ 106 million and $ 109 million at June 28, 2024 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 $ 126 million and $ 105 million at December 27, 2024 and September 27, 2024, respectively.

Financial Instruments

2 unchanged sentences

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.

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 $ 1,556 million and $ 1,709 million at June 28, 2024 and September 29, 2023, respectively.

The aggregate notional value of these hedges was $ 2,324 million and $ 2,417 million at December 27, 2024 and September 27, 2024, 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 $ 4,316 million and $ 3,806 million at June 28, 2024 and September 29, 2023, respectively.

The aggregate notional value of the contracts under this program was $ 6,138 million and $ 5,367 million at December 27, 2024 and September 27, 2024, respectively.

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

dollars at a weighted-average rate of 2.0 % per annum and pay no interest.

Upon the maturity of these contracts at various dates through fiscal 2028, we will pay the notional value of the contracts in the designated foreign currency and receive U.S.

Upon the maturity of these contracts at various dates through fiscal

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2029, we will pay the notional value of the contracts in the designated foreign currency and receive U.S.

dollars from our counterparties.

8 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

5 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 $ 459 million at both June 28, 2024 and September 29, 2023 and were designated as cash flow hedges.

These contracts had an aggregate notional value of $ 481 million and $ 488 million at December 27, 2024 and September 27, 2024, respectively, and were designated as cash flow hedges.

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

6 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

1 unchanged sentence

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

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

12 unchanged sentences

Net periodic pension benefit cost

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

During the nine months ended June 28, 2024, we contributed $ 33 million and $ 20 million to our non-U.S.

During the quarter ended December 27, 2024, we contributed $ 12 million and $ 5 million to our non-U.S.

pension plans, respectively.

We recorded income tax expense of $ 181 million and $ 96 million for the quarters ended June 28, 2024 and June 30, 2023, respectively.

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

We recorded an income tax benefit of $ 778 million and expense of $ 283 million for the nine months ended June 28, 2024 and June 30, 2023, respectively.

The income tax benefit for the nine months ended June 28, 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 nine months ended June 28, 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.

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

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of June 28, 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.

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 28, 2024.

We recorded income tax expense of $ 178 million and an income tax benefit of $ 1,105 million for the quarters ended December 27, 2024 and December 29, 2023, respectively.

The income tax expense for the quarter ended December 27, 2024 included $ 13 million of income tax expense related to the revaluation of deferred tax assets as a result of a decrease in the corporate tax rate in a non-U.S.

jurisdiction.

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.

The Organisation for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax.

More than 30 countries have thus far enacted global minimum tax legislation.

Ireland has implemented elements of the OECD’s global minimum tax rules effective for us beginning in fiscal 2025.

The global minimum tax is a significant structural change to the international taxation framework.

We anticipate further legislative activity and administrative guidance throughout fiscal 2025.

The legislation did not have a material impact on our cash taxes and income tax expense in the quarter ended December 27, 2024.

We continue to monitor evolving tax legislation in the jurisdictions in which we operate.

See Note 17 for information regarding the impact of guidance issued by the OECD in January 2025 on the ten-year tax credit obtained by a Swiss subsidiary in fiscal 2024.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of December 27, 2024, approximately $ 20 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Earnings Per Share

1 unchanged sentence

Quarters Ended

Nine Months Ended

(in millions)

Dilutive impact of share-based compensation arrangements

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)

1 unchanged sentence

Shareholders’ Equity

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.

Ordinary Shares

Effective for fiscal 2025, we are organized under the laws of Ireland.

The rights of holders of our shares are governed by Irish law and our Irish articles of association.

The par value of our ordinary shares is stated in U.S.

As discussed in Note 1, pursuant to the terms of a merger agreement between TE Connectivity Ltd.

and TE Connectivity plc, shareholders received one ordinary share in the share capital of TE Connectivity plc for each common share of TE Connectivity Ltd.

held immediately prior to the merger and change in place of incorporation.

Our articles of association authorize our board of directors to allot and issue shares up to the maximum of our authorized but unissued share capital for a period of five years from September 30, 2024.

This authorization will need to be renewed by ordinary resolution upon its expiration and at periodic intervals thereafter.

The authorized but unissued share capital may be increased or reduced by way of an ordinary resolution of shareholders.

The shares comprising the authorized share capital may be divided into shares of such par value as the resolution shall prescribe.

Ordinary Shares Held in Treasury

All treasury shares were cancelled at the beginning of fiscal 2025 in connection with our change in place of incorporation.

See Note 1 for additional information regarding our change in place of incorporation.

Authorized Share Capital

In connection with our merger and change in place of incorporation, we converted 25,000 ordinary shares to ordinary class A shares and issued certain preferred shares to facilitate the merger.

The ordinary class A shares and preferred

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

shares were re-acquired and cancelled following the merger.

No preferred shares and no ordinary class A shares were outstanding at December 27, 2024.

Our authorized share capital consisted of 1,500,000,000 ordinary shares with a par value of $ 0.01 per share, two preferred shares with a par value of $ 1.00 per share, and 25,000 ordinary class A shares with a par value of € 1.00 per share as of December 27, 2024.

The authorized share capital includes 25,000 ordinary class A shares with a par value of € 1.00 per share in order to satisfy statutory requirements for the incorporation of all Irish public limited companies.

Contributed Surplus

As a result of cumulative equity transactions, including dividend activity and treasury share cancellations, our contributed surplus balance was reduced to zero with residual activity recorded against accumulated earnings as reflected on the Condensed Consolidated Statement of Shareholders’ Equity.

To the extent that the contributed surplus balance continues to be zero, the impact of future transactions that normally would have been recorded as a reduction of contributed surplus will be recorded in accumulated earnings.

We paid cash dividends to shareholders as follows:

Quarters Ended

Nine 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 June 28, 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 $ 594 million and $ 368 million, respectively.

Dividends paid per ordinary/common share

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

At December 27, 2024 and September 27, 2024, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $ 194 million and $ 390 million, respectively.

We expect future dividends to be made from accumulated earnings as defined under accounting principles generally accepted in Ireland (“Irish GAAP”).

Share Repurchase Program

During the nine months ended June 28, 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:

Nine Months Ended

During the quarter ended December 27, 2024, our board of directors authorized an increase of $ 2.5 billion in our share repurchase program.

Ordinary/common shares repurchased under the share repurchase program were as follows:

Quarters Ended

(in millions)

Number of common shares repurchased

Number of ordinary/common shares repurchased

Repurchase value

At June 28, 2024, we had $ 1.0 billion of availability remaining under our share repurchase authorization.

At December 27, 2024, we had $ 2.4 billion of availability remaining under our share repurchase authorization.

TE CONNECTIVITY PLC

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

Nine Months Ended

(in millions)

Share-based compensation expense

As of June 28, 2024, there was $ 160 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.7 years.

As of December 27, 2024, there was $ 213 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 2.1 years.

During the quarter ended December 27, 2024, we granted the following share-based awards as part of our annual incentive plan grant:

3 unchanged sentences

Performance share awards

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 June 28, 2024, we had 20 million shares available for issuance under the 2024 Plan.

As of December 27, 2024, we had 18 million shares available for issuance under the TE Connectivity plc 2024 Stock and Incentive Plan, amended and restated as of September 30, 2024.

Share-Based Compensation Assumptions

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Segment and Geographic Data

Effective for fiscal 2025, we reorganized our management and segments to align the organization around our fiscal 2025 strategy.

See Note 1 for additional information regarding our new segment structure.

The following segment information reflects the new segment reporting structure.

Prior period segment results have been recast to conform to the new segment structure.

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Quarters Ended

Nine Months Ended

(in millions)

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Industrial Solutions:

Industrial equipment

Automation and connected living

Aerospace, defense, and marine

Digital data networks

Total Industrial Solutions

Communications Solutions:

Data and devices

Total Communications Solutions

(1) Intersegment sales were not material.

2 unchanged sentences

Quarters Ended

Nine Months Ended

(in millions)

2 unchanged sentences

Industrial Solutions

Communications Solutions

Asia–Pacific:

1 unchanged sentence

Industrial Solutions

Communications Solutions

Total Asia–Pacific

1 unchanged sentence

Industrial Solutions

Communications Solutions

Total Americas

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

TE CONNECTIVITY PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Operating income by segment was as follows:

Quarters Ended

Nine Months Ended

(in millions)

1 unchanged sentence

Industrial Solutions

Communications Solutions

Segment assets and a reconciliation of segment assets to total assets were as follows:

Segment Assets

September 27,

(in millions)

Transportation Solutions

Industrial Solutions

Total segment assets (1)

Other current assets

Other non-current assets

(1) Segment assets are composed of accounts receivable, inventories, and net property, plant, and equipment.

Subsequent Event

In January 2025, the OECD released new guidance for the 15% global minimum corporate tax.

We expect this guidance to impact the realizability of certain net deferred tax assets associated with a ten-year tax credit obtained by a Swiss subsidiary in fiscal 2024.

We are reviewing the new guidance and related interpretations and, while our assessment is not complete, it is probable that we will need to reduce those net deferred tax assets by approximately $ 600 million during the quarter ending March 28, 2025.

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