What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-28 compared with 2025-01-24 · 163 added, 86 removed, 253 unchanged (50% of the section changed)

8 unchanged sentences

TE Connectivity plc (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) is a global industrial technology leader creating a safer, sustainable, productive, and connected future.

Our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, renewable energy, automated factories, data centers, medical technology, and more.

Our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers, medical technology, and more.

Change in Place of Incorporation

During the first quarter of fiscal 2025, our jurisdiction of incorporation changed from Switzerland to Ireland.

At the beginning of fiscal 2025, our jurisdiction of incorporation changed from Switzerland to Ireland.

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

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Summary of Performance

● Our net sales in the first quarter of fiscal 2025 were consistent with sales levels in the first quarter of fiscal 2024 as sales growth in the Industrial Solutions segment was offset by sales declines in the Transportation Solutions segment.

Also, on an organic basis, our net sales were flat in the first quarter of fiscal 2025 as compared to the same period of fiscal 2024.

● Our net sales increased 4.4% and 2.3% in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due to sales growth in the Industrial Solutions segment, partially offset by sales declines in the Transportation Solutions segment.

Also, on an organic basis, our net sales increased 5.3% and 2.7% in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

● Our net sales by segment were as follows:

● Transportation Solutions —Our net sales decreased 6.3% in the first quarter of fiscal 2025 as a result of sales declines in all end markets.

● Industrial Solutions —Our net sales increased 10.8% in the first quarter of fiscal 2025 primarily as a result of sales growth in the digital data networks and the aerospace, defense, and marine end markets, partially offset by sales declines in the medical end market.

● Net cash provided by operating activities was $878 million in the first quarter of fiscal 2025.

In the second quarter of fiscal 2025, we expect our net sales to be approximately $3.95 billion, as compared to $3.97 billion in the second quarter of fiscal 2024.

Sales declines in the Transportation Solutions segment are expected to be largely offset by sales growth in the Industrial Solutions segment.

In the second quarter of fiscal 2025, we expect diluted loss per share from continuing operations to be approximately $0.05 per share, which includes an approximate $1.87 per share impact associated with the tax matter discussed below.

This outlook reflects the negative impact of foreign currency exchange rates on net sales and earnings per share of approximately $112 million and $0.01 per share, respectively, in the second quarter of fiscal 2025 as compared to the same period of fiscal 2024.

● Transportation Solutions —Our net sales decreased 3.9% and 5.1% in the second quarter and first six months of fiscal 2025, respectively, as a result of sales declines in all end markets.

● Industrial Solutions —Our net sales increased 17.2% and 14.1% in the second quarter and first six months of fiscal 2025, respectively, primarily as a result of sales growth in the digital data networks, energy, and aerospace, defense, and marine end markets, partially offset by sales declines in the medical end market.

● In March 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on June 10, 2025, to shareholders of record on May 21, 2025.

● Net cash provided by operating activities was $1,531 million in the first six months of fiscal 2025.

In the third quarter of fiscal 2025, we expect our net sales to be approximately $4.3 billion, as compared to $4.0 billion in the third quarter of fiscal 2024.

We expect sales growth in the Industrial Solutions segment, which will benefit from the recently completed acquisition of Richards Manufacturing Co.

(“Richards Manufacturing”), to be partially offset by sales declines in the Transportation Solutions segment.

In the third quarter of fiscal 2025, we expect diluted earnings per share from continuing operations to be approximately $2.02 per share.

This outlook includes the impact of currently enacted tariffs which we expect to largely mitigate through pricing actions and sourcing changes.

Also, this outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels.

In January 2025, the Organisation for Economic Co-operation and Development released new guidance for the 15% global minimum corporate tax.

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 certain net deferred tax assets associated with a ten-year tax credit obtained by a Swiss subsidiary by approximately $600 million during the second quarter of fiscal 2025.

See Note 17 to the Condensed Consolidated Financial Statements for additional information regarding the new guidance.

During the first quarter of fiscal 2025, we acquired two businesses for a combined cash purchase price of $325 million, net of cash acquired.

During the first six months of fiscal 2025, we acquired two businesses for a combined cash purchase price of $321 million, net of cash acquired.

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

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

On April 1, 2025, we acquired Richards Manufacturing, a U.S.-based producer of overhead and underground electrical and gas distribution products, for cash of approximately $2.3 billion, net of cash acquired.

The transaction is subject to post-closing adjustments.

The acquired business will be reported as part of our Energy business within our Industrial Solutions segment from the date of acquisition.

See Note 17 to the Condensed Consolidated Financial Statements for additional information.

Results of Operations

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Quarters Ended

Six Months Ended

($ in millions)

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The following table provides an analysis of the change in our net sales by segment:

Change in Net Sales for the Quarter Ended December 27, 2024

versus Net Sales for the Quarter Ended December 29, 2023

Change in Net Sales for the Quarter Ended March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

Organic Net Sales

Growth (Decline)

(Divestiture)

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Industrial Solutions

Net sales were flat in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024 as the net positive impact of 0.6% from acquisitions and a divestiture was largely offset by the negative impact of foreign currency translation of 0.5% due to the weakening of certain foreign currencies.

Price erosion adversely affected organic net sales by $12 million in the first quarter of fiscal 2025.

Net sales increased $176 million, or 4.4%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 due to organic net sales growth of 5.3% and the positive impact of 1.1% from acquisitions, partially offset by the negative impact of foreign currency translation of 2.0% due to the weakening of certain foreign currencies.

Price erosion adversely affected organic net sales by $8 million in the second quarter of fiscal 2025.

In the first six months of fiscal 2025, net sales increased $181 million, or 2.3%, as compared to the first six months of fiscal 2024 due to organic net sales growth of 2.7% and the net positive impact of 0.9% from acquisitions and a divestiture, partially offset by the negative impact of foreign currency translation of 1.3% due to the weakening of certain foreign currencies.

Price erosion adversely affected organic net sales by $20 million in the first six months of fiscal 2025.

See further discussion of net sales below under “Segment Results.”

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Approximately 60% of our net sales were invoiced in currencies other than the U.S.

dollar in the first quarter of fiscal 2025.

dollar in the first six months of fiscal 2025.

The following table presents our net sales and the percentage of total net sales by geographic region (1) :

Quarters Ended

Six Months Ended

($ in millions)

1 unchanged sentence

The following table provides an analysis of the change in our net sales by geographic region:

Change in Net Sales for the Quarter Ended December 27, 2024

versus Net Sales for the Quarter Ended December 29, 2023

Change in Net Sales for the Quarter Ended March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

Organic Net Sales

Growth (Decline)

(Divestiture)

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Quarters Ended

Six Months Ended

($ in millions)

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As a percentage of net sales

Gross margin increased $36 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024 due primarily to higher volume partially offset by price erosion.

Gross margin increased $96 million and $132 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due primarily to higher volume.

We use a wide variety of raw materials in the manufacture of our products.

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Quarters Ended

Six Months Ended

We expect to purchase approximately 185 million pounds of copper, 105,000 troy ounces of gold, 1.8 million troy ounces of silver, and 12,000 troy ounces of palladium in fiscal 2025.

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Quarters Ended

Six Months Ended

($ in millions)

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Restructuring and other charges, net

Selling, General, and Administrative Expenses.

Selling, general, and administrative expenses increased $10 million and $13 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024 due primarily to increased selling expenses to support higher sales levels, partially offset by the release of reserves associated with trade compliance matters.

For additional information regarding trade compliance matters, see Note 9 to the Condensed Consolidated Financial Statements.

Restructuring and Other Charges, Net.

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

We incurred net restructuring charges of $43 million during the first quarter of fiscal 2025.

Annualized cost savings related to the fiscal 2025 actions commenced during the first quarter of fiscal 2025 are expected to be approximately $35 million and are expected to be fully realized by the end of fiscal 2026.

We incurred net restructuring charges of $87 million during the first six months of fiscal 2025, of which $77 million related to the fiscal 2025 restructuring program.

Annualized cost savings related to the fiscal 2025 actions commenced during the first six months of fiscal 2025 are expected to be approximately $70 million and are expected to be fully realized by the end of fiscal 2026.

Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses.

For fiscal 2025, we expect total restructuring charges to be approximately $100 million and total cash spend, which will be funded with cash from operations, to be approximately $200 million.

During the first quarter of fiscal 2025, we incurred costs of $10 million related to our change in place of incorporation from Switzerland to Ireland.

During the first six months of fiscal 2025 and 2024, we incurred costs of $11 million and $8 million, respectively, related to our change in place of incorporation from Switzerland to Ireland.

See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the change.

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Quarters Ended

Six Months Ended

($ in millions)

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Quarters Ended

Six Months Ended

(in millions)

Acquisition-related charges:

Acquisition and integration costs

Charges associated with the amortization of acquisition-related fair value adjustments

Restructuring and other charges, net

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Quarters Ended

Six Months Ended

($ in millions)

Interest expense

Income tax expense (benefit)

Effective tax rate

Interest Expense.

Interest expense decreased $17 million in the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 primarily as a result of our cross-currency swap program that hedges our net investment in certain foreign operations, partially offset by a higher average cost of debt due to rising interest rates.

The aggregate notional value of the cross-currency swap contracts was $5,886 million at March 28, 2025.

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.

See Note 10 to the Condensed Consolidated Financial Statements for additional information regarding our cross-currency swap program.

Income Taxes.

See Notes 12 and 17 to the Condensed Consolidated Financial Statements for discussion of income taxes.

See Note 12 to the Condensed Consolidated Financial Statements for discussion of income taxes.

Segment Results

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Quarters Ended

Six Months Ended

($ in millions)

2 unchanged sentences

The following table provides an analysis of the change in the Transportation Solutions segment’s net sales by industry end market:

Change in Net Sales for the Quarter Ended December 27, 2024

versus Net Sales for the Quarter Ended December 29, 2023

Change in Net Sales for the Quarter Ended March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

Organic Net Sales

Growth (Decline)

($ in millions)

Commercial transportation

Net sales in the Transportation Solutions segment decreased $150 million, or 6.3%, in the first quarter of fiscal 2025 from the first quarter of fiscal 2024 due primarily to organic net sales declines of 5.2%.

Net sales in the Transportation Solutions segment decreased $93 million, or 3.9%, in the second quarter of fiscal 2025 from the second quarter of fiscal 2024 due to the negative impact of foreign currency translation of 2.4% and organic net sales declines of 1.5%.

Our organic net sales by industry end market were as follows:

● Automotive— Our organic net sales decreased 3.0% in the first quarter of fiscal 2025 as a result of declines of 17.2% in the EMEA region and 8.0% in the Americas region, partially offset by growth of 9.2% in the Asia–Pacific region.

In the EMEA and Americas regions, our organic net sales were impacted by declines in vehicle production and a shift in platform mix consistent with consumer demand .

● Automotive— Our organic net sales were flat in the second quarter of fiscal 2025 as growth of 15.9% in the Asia–Pacific region was offset by declines of 11.9% in the EMEA region and 8.2% in the Americas region.

Our organic net sales growth in the Asia–Pacific region was due to increased content per vehicle as well as vehicle production growth.

● Commercial transportation— Our organic net sales decreased 11.6% in the first quarter of fiscal 2025 due primarily to declines in the EMEA and Americas regions.

● Sensors— Our organic net sales decreased 12.6% in the first quarter of fiscal 2025 as a result of market weakness in both industrial and transportation applications .

In the EMEA and Americas regions, our organic net sales were impacted by declines in vehicle production and a shift in platform mix consistent with consumer demand.

● Commercial transportation— Our organic net sales decreased 5.1% in the second quarter of fiscal 2025 due to declines in the EMEA and Americas regions, partially offset by growth in the Asia–Pacific region.

● Sensors— Our organic net sales decreased 9.6% in the second quarter of fiscal 2025 as a result of market weakness in both transportation and industrial applications.

In the first six months of fiscal 2025, net sales in the Transportation Solutions segment decreased $243 million, or 5.1%, from the first six months of fiscal 2024 due primarily to organic net sales declines of 3.4% and the negative impact of foreign currency translation of 1.4%.

Our organic net sales by industry end market were as follows:

● Automotive —Our organic net sales decreased 1.3% in the first six months of fiscal 2025 as a result of declines of 14.4% in the EMEA region and 8.1% in the Americas region, partially offset by growth of 12.3% in the Asia–Pacific region.

In the EMEA and Americas regions, our organic net sales were impacted by declines in vehicle production and a shift in platform mix consistent with consumer demand.

Our organic net sales growth in the Asia–Pacific region resulted from increased content per vehicle as well as vehicle production growth.

● Commercial transportation —Our organic net sales decreased 8.3% in the first six months of fiscal 2025 primarily as a result of declines in the EMEA and Americas regions.

● Sensors —Our organic net sales decreased 11.1% in the first six months of fiscal 2025 due to market weakness in both transportation and industrial applications.

Operating Income.

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Quarters Ended

Six Months Ended

($ in millions)

1 unchanged sentence

Operating margin

Operating income in the Transportation Solutions segment decreased $41 million in the first quarter of fiscal 2025 as compared to the same period of fiscal 2024.

Excluding the items below, operating income decreased in the first quarter of fiscal 2025 primarily as a result of lower volume and price erosion, partially offset by improved manufacturing productivity.

Operating income in the Transportation Solutions segment decreased $32 million and $73 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

Excluding the items below, operating income decreased in the second quarter and first six months of fiscal 2025 primarily as a result of lower volume and price erosion, partially offset by improved manufacturing productivity.

Quarters Ended

Six Months Ended

(in millions)

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Quarters Ended

Six Months Ended

($ in millions)

4 unchanged sentences

The following table provides an analysis of the change in the Industrial Solutions segment’s net sales by industry end market:

Change in Net Sales for the Quarter Ended December 27, 2024

versus Net Sales for the Quarter Ended December 29, 2023

Change in Net Sales for the Quarter Ended March 28, 2025

Change in Net Sales for the Six Months Ended March 28, 2025

versus Net Sales for the Quarter Ended March 29, 2024

versus Net Sales for the Six Months Ended March 29, 2024

Organic Net Sales

Growth (Decline)

($ in millions)

2 unchanged sentences

Digital data networks

In the Industrial Solutions segment, net sales increased $155 million, or 10.8%, in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024 due primarily to organic net sales growth of 8.6% and the positive impact of 2.6% from acquisitions.

In the Industrial Solutions segment, net sales increased $269 million, or 17.2%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 due primarily to organic net sales growth of 15.7%.

Our organic net sales by industry end market were as follows:

● Automation and connected living— Our organic net sales decreased 4.5% in the first quarter of fiscal 2025 due to continued weakness in factory automation applications, partially offset by strength in the appliances market .

● Aerospace, defense, and marine— Our organic net sales increased 15.4% in the first quarter of fiscal 2025 as a result of growth in all markets.

● Digital data networks —Our organic net sales increased 48.0% in the first quarter of fiscal 2025 primarily as a result of growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 6.8% in the first quarter of fiscal 2025 as a result of growth across all regions and strength in renewable energy applications.

● Medical— Our organic net sales decreased 24.5% in the first quarter of fiscal 2025 due primarily to reduced demand resulting from inventory corrections in the supply chain.

● Automation and connected living— Our organic net sales increased 1.5% in the second quarter of fiscal 2025 due to strength in the appliances market, partially offset by continued weakness in factory automation applications.

● Aerospace, defense, and marine— Our organic net sales increased 10.8% in the second quarter of fiscal 2025 primarily as a result of growth in the defense and the commercial aerospace markets.

● Digital data networks —Our organic net sales increased 78.0% in the second quarter of fiscal 2025 due primarily to growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 7.6% in the second quarter of fiscal 2025 primarily as a result of growth in the Americas region with strength in renewable energy applications.

● Medical— Our organic net sales decreased 13.7% in the second quarter of fiscal 2025 due primarily to reduced demand resulting from inventory corrections in the supply chain.

Net sales in the Industrial Solutions segment increased $424 million, or 14.1%, in the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 due primarily to organic net sales growth of 12.3% and, to a lesser degree, the positive impact of 2.9% from acquisitions.

Our organic net sales by industry end market were as follows:

● Automation and connected living— Our organic net sales decreased 1.4% in the first six months of fiscal 2025 as a result of continued weakness in factory automation applications, partially offset by strength in the appliances market.

● Aerospace, defense, and marine— Our organic net sales increased 12.9% in the first six months of fiscal 2025 primarily as a result of growth in the defense and the commercial aerospace markets.

● Digital data networks —Our organic net sales increased 62.8% in the first six months of fiscal 2025 due primarily to growth in artificial intelligence and cloud applications.

● Energy— Our organic net sales increased 7.2% in the first six months of fiscal 2025 due to growth across all regions and strength in renewable energy applications.

● Medical— Our organic net sales decreased 19.0% in the first six months of fiscal 2025 primarily as a result of reduced demand resulting from inventory corrections in the supply chain.

Operating Income.

1 unchanged sentence

Quarters Ended

Six Months Ended

($ in millions)

1 unchanged sentence

Operating margin

Operating income in the Industrial Solutions segment increased $33 million in the first quarter of fiscal 2025 as compared to the same period of fiscal 2024.

Excluding the items below, operating income increased in the first quarter of fiscal 2025 primarily as a result of higher volume.

Operating income in the Industrial Solutions segment increased $88 million and $121 million in the second quarter and first six months of fiscal 2025, respectively, as compared to the same periods of fiscal 2024.

Excluding the items below, operating income increased in the second quarter and first six months of fiscal 2025 primarily as a result of higher volume.

Quarters Ended

Six Months Ended

(in millions)

Acquisition-related charges:

Acquisition and integration costs

Charges associated with the amortization of acquisition-related fair value adjustments

Restructuring and other charges, net

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Our ability to fund our future capital needs will be affected by our ongoing ability to generate cash from operations and may be affected by our access to capital markets, money markets, or other sources of funding, as well as the capacity and terms of our financing arrangements.

We believe that cash generated from operations and, to the extent necessary, these other sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the payment of €550 million of 0.00% euro-denominated senior notes due in February 2025.

We may use excess cash to purchase a portion of our ordinary shares pursuant to our authorized share repurchase program, to acquire product lines, to pay dividends on our ordinary shares, or to reduce our outstanding debt.

On April 1, 2025, we acquired Richards Manufacturing for cash of approximately $2.3 billion, net of cash acquired.

In anticipation of the acquisition, we entered into a 364-day senior credit agreement ("364-Day Credit Facility") and issued commercial paper during the second quarter of fiscal 2025.

See additional information regarding debt and the acquisition of Richards Manufacturing in Notes 7 and 17, respectively, to the Condensed Consolidated Financial Statements.

We believe that cash generated from operations and other sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the payment of commercial paper as it matures, as well as the payments of $500 million of 4.50% senior notes and $350 million of 3.70% senior notes, both due in February 2026.

We may use excess cash to purchase a portion of our ordinary shares pursuant to our authorized share repurchase program, to acquire businesses or product lines, to pay dividends on our ordinary shares, or to reduce our outstanding debt.

We may also use excess cash and other funding to make strategic acquisitions.

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Cash Flows from Operating Activities

In the first quarter of fiscal 2025, net cash provided by operating activities increased $159 million to $878 million from $719 million in the first quarter of fiscal 2024.

The increase resulted primarily from the impact of changes in working capital levels.

The amount of income taxes paid, net of refunds, during the first quarters of fiscal 2025 and 2024 was $49 million and $100 million, respectively.

In the first six months of fiscal 2025, net cash provided by operating activities increased $102 million to $1,531 million from $1,429 million in the first six months of fiscal 2024.

The increase resulted primarily from higher pre-tax income and a reduction in income tax payments.

The amount of income taxes paid, net of refunds, during the first six months of fiscal 2025 and 2024 was $164 million and $238 million, respectively.

Cash Flows from Investing Activities

Capital expenditures were $205 million and $151 million in the first quarters of fiscal 2025 and 2024, respectively.

Capital expenditures were $435 million and $318 million in the first six months of fiscal 2025 and 2024, respectively.

We expect fiscal 2025 capital spending levels to be approximately 5% of net sales.

We believe our capital funding levels are adequate to support new programs, and we continue to invest in our manufacturing infrastructure to further enhance productivity and manufacturing capabilities.

During the first quarter of fiscal 2025, we acquired two businesses for a combined cash purchase price of $325 million, net of cash acquired.

We acquired one business for a cash purchase price of $349 million, net of cash acquired,

during the first quarter of fiscal 2024.

During the first six months of fiscal 2025, we acquired two businesses for a combined cash purchase price of $321 million, net of cash acquired.

We acquired one business for a cash purchase price of $339 million, net of cash acquired, during the first six months of fiscal 2024.

See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

During the first quarter of fiscal 2024, we received net cash proceeds of $38 million related to the sale of one business.

During the first six months of fiscal 2024, we received net cash proceeds of $38 million related to the sale of one business.

See Note 2 to the Condensed Consolidated Financial Statements for additional information.

Cash Flows from Financing Activities and Capitalization

Total debt at December 27, 2024 and September 27, 2024 was $4,205 million and $4,203 million, respectively.

Total debt at March 28, 2025 and September 27, 2024 was $5,614 million and $4,203 million, respectively.

See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding debt.

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%.

During the second quarter of fiscal 2025, Tyco Electronics Group S.A.

(“TEGSA”), our wholly-owned subsidiary, issued €750 million aggregate principal amount of 3.25% senior notes due in January 2033.

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.

As of March 28, 2025, TEGSA had $1.5 billion of commercial paper outstanding at a weighted-average interest rate of 4.64%.

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

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of April 2029 and aggregate commitments of $1.5 billion.

TEGSA had no borrowings under the Credit Facility at December 27, 2024 or September 27, 2024.

The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) for the then most recently concluded period of four consecutive fiscal quarters exceeds 3.75 to 1.0, an Event of Default (as defined in the Credit Facility) is triggered.

The Credit Facility and our other debt agreements contain other customary covenants.

In March 2025, TEGSA entered into a 364-Day Credit Facility with total commitments of $1.5 billion.

This increases the size of our commercial paper program as the 364-Day Credit Facility, in addition to the five-year unsecured senior revolving credit facility (“Five-Year Credit Facility”), backs borrowings made under our commercial paper program.

TEGSA had no borrowings under the 364-Day Credit Facility at March 28, 2025.

Borrowings under the 364-Day Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (a) the term secured overnight financing rate (“Term SOFR”) (as defined in the 364-Day 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%, 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 3.0 to 9.0 basis points of the lenders' commitments under the 364-Day Credit Facility.

TEGSA has a Five-Year Credit Facility with a maturity date of April 2029 and aggregate commitments of $1.5 billion.

TEGSA had no borrowings under the Five-Year Credit Facility at March 28, 2025 or September 27, 2024.

The 364-Day Credit Facility and the Five-Year Credit Facility (together, the “Credit Facilities”) contain financial ratio covenants providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facilities) for the then most recently concluded period of four consecutive fiscal quarters exceeds 3.75 to 1.0, an Event of Default (as defined in the Credit Facilities) is triggered.

The Credit Facilities and our other debt agreements contain other customary covenants.

None of our covenants are presently considered restrictive to our operations.

As of December 27, 2024, we were in compliance with all of our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable future.

In addition to the Credit Facility, TEGSA is the borrower under our senior notes and commercial paper.

Payment obligations under TEGSA’s senior notes, commercial paper, and 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.

Payments of ordinary/common share dividends to shareholders were $189 million and $183 million in the first quarters of fiscal 2025 and 2024, respectively.

During the first quarter of fiscal 2025, our board of directors authorized an increase of $2.5 billion in our share repurchase program.

We repurchased approximately two million of our ordinary shares for $310 million and approximately three million of our common shares for $420 million under the share repurchase program during the first quarters of fiscal 2025 and 2024, respectively.

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

As of March 28, 2025, we were in compliance with all of our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable future.

In addition to the Credit Facilities, TEGSA is the borrower under our senior notes and commercial paper.

Payment obligations under TEGSA’s senior notes, commercial paper, and Credit Facilities are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.

Payments of ordinary/common share dividends to shareholders were $382 million and $365 million in the first six months of fiscal 2025 and 2024, respectively.

In March 2025, our board of directors declared a regular quarterly dividend of $0.71 per ordinary share, payable on June 10, 2025, to shareholders of record on May 21, 2025.

During the first six months of fiscal 2025, our board of directors authorized an increase of $2.5 billion in our share repurchase program.

We repurchased approximately four million of our ordinary shares for $615 million and approximately six million of our common shares for $826 million under the share repurchase program during the first six months of fiscal 2025 and 2024, respectively.

At March 28, 2025, we had $2.1 billion of availability remaining under our share repurchase authorization.

Summarized Guarantor Financial Information

As discussed above, our senior notes, commercial paper, and Credit Facility are issued by TEGSA and are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.

As discussed above, our senior notes, commercial paper, and Credit Facilities are issued by TEGSA and are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.

In addition to being the issuer of our debt securities, TEGSA owns, directly or indirectly, all of our operating subsidiaries.

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Total noncurrent liabilities (2)

(1) Includes $2,596 million and $2,368 million as of December 27, 2024 and September 27, 2024, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

(2) Includes $4,144 million and $7,309 million as of December 27, 2024 and September 27, 2024, respectively, of intercompany loans payable to non-guarantor subsidiaries.

(1) Includes $3,410 million and $2,368 million as of March 28, 2025 and September 27, 2024, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

(2) Includes $7,633 million and $7,309 million as of March 28, 2025 and September 27, 2024, respectively, of intercompany loans payable to non-guarantor subsidiaries.

Six Months Ended

Fiscal Year Ended

September 27,

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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 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;

At March 28, 2025, we had outstanding letters of credit, letters of guarantee, and surety bonds of $191 million, including letters of credit of $22 million associated with the divestiture of our former Subsea Communications business.

We contractually agreed to continue to honor letters of credit 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.

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Legal Proceedings

environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax.

In the normal course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax.

Although it is not feasible to predict the outcome of these proceedings, based upon our experience, current information, and applicable law, we do not expect that the outcome of these proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows.

Trade Compliance Matters

We have been investigating our past compliance with relevant U.S.

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

As previously disclosed, we had been investigating our past compliance with relevant U.S.

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

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

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 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.

During the second quarter of fiscal 2025, DDTC closed its investigations regarding these matters without fine, penalty, or further action, and we released amounts previously reserved for potential fines and penalties relating to these matters.

Critical Accounting Policies and Estimates

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Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and the Consolidated Financial Statements and accompanying notes contained in our Annual Report on Form 10-K for the fiscal year ended September 27, 2024.

There were no significant changes to this information during the first quarter of fiscal 2025.

There were no significant changes to this information during the first six months of fiscal 2025.

Accounting Pronouncement

See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding a recently issued accounting pronouncement.

Non-GAAP Financial Measure

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Management uses this measure to monitor and evaluate performance.

Also, management uses this measure together with GAAP financial measures in its decision-making processes related to the operations of our reportable segments and our overall company.

Also, management uses this measure together with

GAAP financial measures in its decision-making processes related to the operations of our reportable segments and our overall company.

It is also a significant component in our incentive compensation plans.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis