TE Connectivity Annual Report 2020

FY2020 Annual Report · TE Connectivity

Loading PDF…

2020 ANNUAL REPORT

WHEN
TECHNOLOGY
CONNECTS,
SO DOES HUMANITY.

CORPORATE DATA

REGISTERED & PRINCIPAL
EXECUTIVE OFFICE
TE Connectivity Ltd.
Mühlenstrasse 26
CH-8200 Schaffhausen
Switzerland
+41.0.52.633.66.61

INDEPENDENT AUDITORS
Deloitte & Touche LLP
1700 Market Street
Philadelphia, PA 19103
Deloitte AG
General Guisan-Quai 38
CH-8022 Zurich
Switzerland

STOCK EXCHANGE
The company’s common shares are traded on the New York
Stock Exchange (NYSE) under the ticker symbol TEL.

FORM 10-K
Copies of the company’s Annual Report on Form 10-K
for the fiscal year ended September 25, 2020 may be
obtained by shareholders without charge upon written
request to:
TE Connectivity Ltd.
Mühlenstrasse 26
CH-8200 Schaffhausen
Switzerland

The Annual Report on Form 10-K is also available on the
company’s website at www.te.com.

SHAREHOLDER SERVICES
Registered shareholders (shares held in your own name
with our transfer agent) with requests such as change
of address or dividend checks should contact
TE Connectivity’s transfer agent at:
Equiniti Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
866.258.4745
www.shareowneronline.com

Beneficial shareholders (shares held with a bank or broker)
should contact the bank or brokerage holding their shares
with their requests. Other shareholder inquiries may be
directed to TE Connectivity Shareholder Services at the
company’s registered and principal executive office above.

www.te.com

“TE Connectivity” and “TE Connectivity (logo)” are trademarks. This report further contains other trademarks
of ours and additional trade names and trademarks of other companies that are not owned by TE Connectivity.
We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or
sponsorship of us by such companies, or any relationship with any of these companies.

TE CONNECTIVITY LTD.
ANNUAL REPORT
TABLE OF CONTENTS

Business

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Controls and Procedures

Consolidated Financial Statements

Swiss Statutory Financial Statements

Swiss Statutory Compensation Report

Page

103

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this Annual Report that are based on our management’s beliefs and

assumptions and on information currently available to our management. Forward-looking statements include, among others,
the information concerning our possible or assumed future results of operations, business strategies, financing plans,
competitive position, potential growth opportunities, potential operating performance improvements, acquisitions,
divestitures, the effects of competition, and the effects of future legislation or regulations. Forward-looking statements
include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the
words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” and
“should,” or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from

those expressed in these forward-looking statements. Investors should not place undue reliance on any forward-looking
statements. We do not have any intention or obligation to update forward-looking statements after we file this report except
as required by law.

The risk factors described in this Annual Report and those discussed in our Annual Report on Form 10-K for the

fiscal year ended September 25, 2020 filed with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”)
could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and
uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on
our business.

“TE Connectivity” and “TE Connectivity (logo)” are trademarks. This report further contains other trademarks of ours and
additional trade names and trademarks of other companies that are not owned by TE Connectivity. We do not intend our use
or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies,
or any relationship with any of these companies.

BUSINESS

General

TE Connectivity Ltd. (“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, proven in the harshest environments, enable advancements in transportation, industrial
applications, medical technology, energy, data communications, and the home.

We became an independent, publicly traded company in 2007; however, through our predecessor companies, we

trace our foundations in the connectivity business back to 1941. We are organized under the laws of Switzerland. The rights
of holders of our shares are governed by Swiss law, our Swiss articles of association, and our Swiss organizational
regulations.

We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2020, 2019, and 2018 were
each 52 weeks in length and ended on September 25, 2020, September 27, 2019, and September 28, 2018, respectively. For
fiscal years in which there are 53 weeks, the fourth quarter reporting period includes 14 weeks, with the next such occurrence
taking place in fiscal 2022.

COVID-19 Pandemic

A novel strain of coronavirus (“COVID-19”) was first identified in China in December 2019 and subsequently

declared a pandemic by the World Health Organization. To date, COVID-19 has surfaced in nearly all regions around the
world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The COVID-19 pandemic
negatively affected our sales and operating results during fiscal 2020, and we expect that it will continue to have an impact on
our financial condition and results of operations in the near term and may have a material impact on our financial condition,
liquidity, and results of operations in future periods. See “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” for discussion regarding the impact of the COVID-19 pandemic on our financial results. Also, see
“Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 25, 2020 filed with
the SEC for discussion of the risks and uncertainties associated with the COVID-19 pandemic.

Segments

We operate through three reportable segments: Transportation Solutions, Industrial Solutions, and Communications

Solutions. Although the COVID-19 pandemic has negatively affected our markets, we expect a gradual recovery with our
three segments once again serving a combined market of approximately $190 billion.

Our net sales by segment as a percentage of our total net sales were as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

2018

Fiscal
2019
58 % 59 %
30
12
100 % 100 % 100 %

2020
56 %
31
13

28
13

Below is a description of our reportable segments and the primary products, markets, and competitors of each

segment.

Transportation Solutions

The Transportation Solutions segment is a leader in connectivity and sensor technologies. The primary products sold
by the Transportation Solutions segment include terminals and connector systems and components, sensors, relays, antennas,
application tooling, and wire and heat shrink tubing. The Transportation Solutions segment’s products, which must withstand
harsh conditions, are used in the following end markets:

• Automotive (72% of segment’s net sales)—We are one of the leading providers of advanced automobile

connectivity solutions. The automotive industry uses our products in automotive technologies for body and
chassis systems, convenience applications, driver information, infotainment solutions, miniaturization solutions,
motor and powertrain applications, and safety and security systems. Hybrid and electronic mobility solutions
include in-vehicle technologies, battery technologies, and charging solutions.

• Commercial transportation (15% of segment’s net sales)—We deliver reliable connectivity products designed to
withstand harsh environmental conditions for on- and off-highway vehicles and recreational transportation,
including heavy trucks, construction, agriculture, buses, and other vehicles.

•

Sensors (13% of segment’s net sales)—We offer a portfolio of intelligent, efficient, and high-performing sensor
solutions that are used by customers across multiple industries, including automotive, industrial equipment,
commercial transportation, medical solutions, aerospace and defense, and consumer applications.

The Transportation Solutions segment’s major competitors include Yazaki, Aptiv, Sumitomo, Sensata, Honeywell,

Molex, and Amphenol.

Industrial Solutions

The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and

signals. The primary products sold by the Industrial Solutions segment include terminals and connector systems and
components, heat shrink tubing, interventional medical components, relays, and wire and cable. The Industrial Solutions
segment’s products are used in the following end markets:

• Aerospace, defense, oil, and gas (32% of segment’s net sales)—We design, develop, and manufacture a

comprehensive portfolio of critical electronic components and systems for the harsh operating conditions of the
commercial aerospace, defense, and marine industries. Our products and systems are designed and
manufactured to operate effectively in harsh conditions ranging from the depths of the ocean to the far reaches
of space.

•

Industrial equipment (30% of segment’s net sales)—Our products are used in factory automation and process
control systems such as industrial controls, robotics, human machine interface, industrial communication, and
power distribution. Our intelligent building products are used to connect lighting and offer solutions in HVAC,
elevators/escalators, and security. Our rail products are used in high-speed trains, metros, light rail vehicles,
locomotives, and signaling switching equipment. Our products are also used by the solar industry.

• Medical (19% of segment’s net sales)—Our products are used in imaging, diagnostic, surgical, and minimally
invasive interventional applications. We specialize in the design and manufacture of advanced surgical,
imaging, and interventional device solutions. Key markets served include cardiovascular, peripheral vascular,
structural heart, endoscopy, electrophysiology, and neurovascular therapies.

• Energy (19% of segment’s net sales)—Our products are used by OEMs and utility companies in the electrical
power industry and include a wide range of solutions for the electrical power generation, transmission,
distribution, and industrial markets.

The Industrial Solutions segment competes primarily against Amphenol, Hubbell, Carlisle Companies, ABB, Integer

Holdings, Esterline, Molex, and Omron.

Communications Solutions

The Communications Solutions segment is a leading supplier of electronic components for the data and devices and

the appliances markets. The primary products sold by the Communications Solutions segment include terminals and
connector systems and components, relays, heat shrink tubing, and antennas. The Communications Solutions segment’s
products are used in the following end markets:

•

Data and devices (60% of segment’s net sales)—We deliver products and solutions that are used in a variety of
equipment architectures within the networking equipment, data center equipment, and wireless infrastructure
industries. Additionally, we deliver a range of connectivity solutions for the Internet of Things, smartphones,
tablet computers, notebooks, and virtual reality applications to help our customers meet their current challenges
and future innovations.

Appliances (40% of segment’s net sales)—We provide solutions to meet the daily demands of home appliances.
Our products are used in many household appliances, including washers, dryers, refrigerators, air conditioners,
dishwashers, cooking appliances, water heaters, air purifiers, floor care devices, and microwaves. Our
expansive range of standard products is supplemented by an array of custom-designed solutions.

The Communications Solutions segment’s major competitors include Amphenol, Molex, JST, and Korea Electric

Terminal (KET).

Customers

As an industry leader, we have established close working relationships with many of our customers. These

relationships allow us to better anticipate and respond to customer needs when designing new products and new technical
solutions. By working with our customers in developing new products and technologies, we believe we can identify and act
on trends and leverage knowledge about next-generation technology across our products.

Our approach to our customers is driven by our dedication to further develop our product families and ensure that
we are globally positioned to best provide our customers with sales and engineering support. We believe that as electronic
component technologies continue to proliferate, our broad product portfolio and engineering capability give us a potential
competitive advantage when addressing the needs of our global customers.

We manufacture and sell a broad portfolio of products to customers in various industries. Our customers include

many of the leaders in their respective industries, and our relationships with them typically date back many years. We believe
that our diversified customer base provides us an opportunity to leverage our skills and experience across markets and reduce
our exposure to individual end markets, thereby reducing the variability of our financial performance. Additionally, we
believe that the diversity of our customer base reduces the level of cyclicality in our results and distinguishes us from our
competitors.

No single customer accounted for a significant amount of our net sales in fiscal 2020, 2019, or 2018.

Sales and Distribution

We maintain a strong local presence in each of the geographic regions in which we operate. Our net sales by

geographic region(1) as a percentage of our total net sales were as follows:

Asia–Pacific
Europe/Middle East/Africa (“EMEA”)
Americas
Total

Fiscal
2020 2019 2018
33 % 34 %
36
31
100 % 100 % 100 %

35 %
35
30

38
28

(1)

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

We sell our products into approximately 140 countries primarily through direct selling efforts to manufacturers. In

fiscal 2020, our direct sales represented approximately 80% of total net sales. We also sell our products indirectly via
third-party distributors.

We maintain distribution centers around the world. Products are generally delivered to the distribution centers by

our manufacturing facilities and then subsequently delivered to the customer. In some instances, however, products are
delivered directly from our manufacturing facility to the customer. Our global coverage positions us near our customers’
locations and allows us to assist them in consolidating their supply base and lowering their production costs. We contract
with a wide range of transport providers to deliver our products globally via road, rail, sea, and air. We believe our balanced
sales distribution lowers our exposure to any particular geography and improves our financial profile.

Seasonality and Backlog

Typically, we experience a slight seasonal pattern to our business. Overall, the third and fourth fiscal quarters are

usually the strongest quarters of our fiscal year, whereas the first fiscal quarter is negatively affected by holidays and the
second fiscal quarter may be affected by adverse winter weather conditions in some of our markets.

Certain of our end markets experience some seasonality. Our sales in the automotive market are dependent upon
global automotive production, and seasonal declines in European production may negatively impact net sales in the fourth
fiscal quarter. Also, our sales in the energy market typically increase in the third and fourth fiscal quarters as customer
activity increases.

Customer orders and demand may fluctuate as a result of economic and market conditions. We have experienced,

and expect to continue to experience, fluctuations as a result of the impacts of the COVID-19 pandemic. Backlog by
reportable segment was as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal Year End
2019
2020

(in millions)
$ 1,819 $ 1,639
1,315
361
$ 3,518 $ 3,315

1,260
439

We expect that the majority of our backlog at fiscal year end 2020 will be filled during fiscal 2021. Backlog is not

necessarily indicative of future net sales as unfilled orders may be cancelled prior to shipment of goods.

Competition

The industries in which we operate are highly competitive, and we compete with thousands of companies that range
from large multinational corporations to local manufacturers. Competition is generally based on breadth of product offering,
product innovation, price, quality, delivery, and service. We have experienced, and expect to continue to experience,
downward pressure on prices.

Raw Materials

We use a wide variety of raw materials in the manufacture of our products. The principal raw materials that we use

include plastic resins for molding; precious metals such as gold and silver for plating; and other metals such as copper,
aluminum, brass, and steel for manufacturing cable, contacts, and other parts that are used for cable and component bodies
and inserts. Many of these raw materials are produced in a limited number of countries around the world or are only available
from a limited number of suppliers. The prices of these materials are driven by global supply and demand.

Intellectual Property

Patents and other proprietary rights are important to our business. We also rely upon trade secrets, manufacturing

know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive
position. We review third-party proprietary rights, including patents and patent applications, as available, in an effort to

develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing
opportunities, and monitor the intellectual property claims of others.

We own a large portfolio of patents that relate principally to electrical, optical, and electronic products. We also own

a portfolio of trademarks and are a licensee of various patents and trademarks. Patents for individual products extend for
varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where
patent protection is obtained. Trademark rights may potentially extend for longer periods of time and are dependent upon
national laws and use of the trademarks.

While we consider our patents and trademarks to be valued assets, we do not believe that our competitive position or

our operations are dependent upon or would be materially impacted by any single patent or group of related patents.

Human Capital Management

We have employees located throughout the world. As of fiscal year end 2020, we employed approximately 82,000
people worldwide, including contract employees. Approximately 22,000 were in the Asia–Pacific region, 31,000 were in the
EMEA region, and 29,000 were in the Americas region. Of our total employees, approximately 52,000 were employed in
manufacturing. Our strong employee base, along with their commitment to uncompromising values, provides the foundation
of our company’s success.

Our employees are responsible for upholding our purpose—to create a safer, sustainable, productive, and connected

future; our values—integrity, accountability, teamwork, and innovation; and our strategy, execution, and talent (“SET”)
leadership expectations. We track and report internally on key talent metrics including workforce demographics, critical role
pipeline data, diversity data, and engagement and inclusion indices.

We embrace diversity and inclusion. A truly innovative workforce needs to be diverse and leverage the skills and
perspectives of a wealth of backgrounds and experiences. To attract a global workforce, we strive to embed a culture where
employees can bring their whole selves to work. Our employee resource groups (“ERGs”) are company-sponsored groups of
employees that support and promote certain mutual objectives of both the employees and the company, including inclusion
and diversity and the professional development of employees. The ERGs provide a space where employees can foster
connections and develop in a supportive environment. As of fiscal year end 2020, we had six ERGs—ALIGN (LGBTQ),
Women in Networking, TE Young Professionals, African Heritage, TE Veterans, and Asian Heritage. We are focused on
recruitment of diverse candidates and on internal talent development of our diverse leaders so that they can advance their
careers and move into leadership positions within the company. Also, during fiscal 2020, we conducted a fully digital,
enterprise-wide engagement survey, our Every Connection Counts survey, which was available in 13 languages and focused
on measuring engagement and inclusion.

We continue to emphasize employee development and training. To empower employees to unleash their potential,

we provide a range of development programs and opportunities, skills, and resources they need to be successful. Our
LEARN@TE platform supplements our talent development strategies. It is an online portal that enables employees to access
instructor-led classroom or virtual courses and self-directed web-based courses. In fiscal 2019, we launched SET leadership
expectations to all employees which focus on how we drive strategy, effectively execute, and build talent. We believe these
behavioral expectations are integrated into the way we assess and select talent, manage performance, and develop our people.
We are committed to identifying and developing the talents of our next generation leaders. We have a robust talent and
succession planning process and have established specialized programs to support the development of our talent pipeline for
critical roles in general management, engineering, and operations. On an annual basis, we conduct an Organization and
Leadership Review process with our chief executive officer and all segment, business unit, and function leaders focusing on
our high performing and high potential talent, diverse talent, and the succession for our most critical roles.

We believe our management team has the experience necessary to effectively execute our strategy and advance our

product and technology leadership. Our chief executive officer and segment leaders average approximately 25 years of
industry experience. They are supported by an experienced and talented management team who is dedicated to maintaining
and expanding our position as a global leader in the industry. For discussion of the risks relating to the attraction and
retention of management and executive management employees, see “Part 1. Item 1A. Risk Factors” of our Annual Report on
Form 10-K for the fiscal year ended September 25, 2020 filed with the SEC.

Government Regulation and Supervision

The import and export of products are subject to regulation by the various jurisdictions where we conduct business.

A small portion of our products, including defense-related products, may require governmental import and export licenses,
whose issuance may be influenced by geopolitical and other events. We have a trade compliance organization and other
systems in place to apply for licenses and otherwise comply with such regulations. Any failure to maintain compliance with
domestic and foreign trade regulation could limit our ability to import and export raw materials and finished goods into or
from the relevant jurisdiction.

Environmental

Our operations are subject to numerous environmental, health, and safety laws and regulations, including those

regulating the discharge of materials into the environment, greenhouse gas emissions, hazardous materials in products, and
chemical usage. We are committed to complying with these laws and to the protection of our employees and the
environment. We maintain a global environmental, health, and safety program that includes appropriate policies and
standards; staff dedicated to environmental, health, and safety issues; periodic compliance auditing; training; and other
measures. We also have a program for compliance with the European Union (“EU”) Restriction of Hazardous Substances and
Waste Electrical and Electronic Equipment Directives, the China Restriction of Hazardous Substances law, the EU
Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) Regulation, and similar laws.

Compliance with these laws has increased our costs of doing business in a variety of ways and may continue to do

so in the future. For example, laws regarding product content and chemical registration require extensive and costly data
collection, management, and reporting, and laws regulating greenhouse gas emissions may increase our costs for energy and
certain materials and products. We also have projects underway at a number of current and former manufacturing sites to
investigate and remediate environmental contamination resulting from past operations. Based upon our experience, available
information, and applicable laws, as of fiscal year end 2020, we concluded that we would incur investigation and remediation
costs at these sites in the reasonably possible range of $16 million to $45 million, and we accrued $20 million as the probable
loss, which was the best estimate within this range. We do not anticipate any material capital expenditures during fiscal 2021
for environmental control facilities or other costs of compliance with laws or regulations relating to greenhouse gas
emissions.

Available Information

All periodic and current reports, registration filings, and other filings that we are required to file with the SEC,

including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange
Act”) are available free of charge through our internet website at www.te.com. Such documents are available as soon as
reasonably practicable after electronic filing or furnishing of the material with the SEC. The information on our website is not
incorporated by reference in this Annual Report on Form 10-K.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common shares are listed and traded on the NYSE under the symbol “TEL.” As of November 4, 2020, there

were 18,230 shareholders of record of our common shares.

Performance Graph

The following graph compares the cumulative total shareholder return on our common shares against the cumulative

return on the S&P 500 Index and the Dow Jones Electrical Components and Equipment Index. The graph assumes the
investment of $100 in our common shares and in each index at fiscal year end 2015 and assumes the reinvestment of all
dividends and distributions. The graph shows the cumulative total return for the last five fiscal years. The comparisons in the
graph are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common
shares.

Comparison of Cumulative Five Year Total Return
Among TE Connectivity Ltd., S&P 500 Index, and
Dow Jones Electrical Components & Equipment Index

$200

$150

$100

$50

9/25/15

9/30/16

9/29/17

9/28/18

9/27/19

9/25/20

TE Connectivity Ltd.

S&P 500 Index

Dow Jones Electrical Components & Equipment

2015

2016

Fiscal Year End
2018
2017

2019

2020

TE Connectivity Ltd.
S&P 500 Index
Dow Jones Electrical Components and Equipment
Index

$ 100.00 $ 112.75 $ 148.52 $ 160.01 $ 172.38 $ 181.13
189.01

136.17

100.00

114.80

160.55

166.53

100.00

118.71

153.08

170.22

163.89

171.79

(1)

$100 invested on September 25, 2015 in TE Connectivity Ltd.’s common shares and in indexes. Indexes calculated on month-end
basis.

Issuer Purchases of Equity Securities

The following table presents information about our purchases of our common shares during the quarter ended

September 25, 2020:

Period
June 27–July 24, 2020
July 25–August 28, 2020
August 29–September 25, 2020

Total

Maximum
Approximate
Dollar Value
of Shares that May
Total Number Average Price Publicly Announced Yet Be Purchased
Under the Plans
or Programs(2)

Total Number of
Shares Purchased
as Part of

of Shares
Purchased(1)

Plans or
Programs(2)

Paid Per
Share(1)

295 $

6,752
8,106
15,153 $

81.09
88.11
99.26
93.94

— $ 995,115,788
995,115,788
—
995,115,788
—
—

These columns represent the acquisition of common shares from individuals to satisfy tax withholding requirements in
connection with the vesting of restricted share awards issued under equity compensation plans.

Our share repurchase program authorizes us to purchase a portion of our outstanding common shares from time to time through
open market or private transactions, depending on business and market conditions. The share repurchase program does not have
an expiration date.

(1)

(2)

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data. The data presented should be read in conjunction

with our Consolidated Financial Statements and accompanying notes and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” included elsewhere in this Annual Report. Our consolidated financial
information may not be indicative of our future performance.

2020

As of or for Fiscal
2018
(in millions, except per share data)

2017

2019

2016(1)

Statement of Operations Data
Net sales
Acquisition and integration costs
Restructuring and other charges (credits), net(2)
Impairment of goodwill(3)
Other income (expense), net(4)
Income tax (expense) benefit(5)
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of income taxes(6)
Net income (loss)

$ 12,172 $ 13,448 $ 13,988 $ 12,185 $ 11,352
22
(2)
—
(677)
826
1,847
162
2,009

27
255
—
2
15
1,946
(102)
1,844

14
126
—
1
344
2,584
(19)
2,565

6
147
—
(42)
(180)
1,540
143
1,683

36
257
900
20
(783)
(259)
18
(241)

Per Share Data
Basic earnings (loss) per share:

Income (loss) from continuing operations
Net income (loss)

Diluted earnings (loss) per share:

Income (loss) from continuing operations
Net income (loss)

$ (0.78) $
(0.73)

5.76 $ 7.38 $ 4.34 $
5.46

7.33

4.74

5.72 $ 7.32 $ 4.30 $
5.42

7.27

4.70

5.05
5.49

5.01
5.44

Dividends paid per common share

$ 1.88 $

1.80 $ 1.68 $ 1.54 $

1.40

Balance Sheet Data
Total assets
Long-term liabilities
Total shareholders’ equity

$ 19,242 $ 19,694 $ 20,386 $ 19,403 $ 17,608
6,057
5,145
8,485
10,831

5,584
10,570

6,057
9,383

5,805
9,751

(1)

(2)

(3)

(4)

(5)

Fiscal 2016 was a 53-week year.

Fiscal 2016 included a pre-tax gain of $144 million on the sale of our Circuit Protection Devices business.

Fiscal 2020 included a goodwill impairment charge related to the Sensors reporting unit in our Transportation Solutions segment.
See Note 8 to the Consolidated Financial Statements for additional information regarding the impairment of goodwill.

Fiscal 2016 net other income (expense) was recorded primarily pursuant to the Tax Sharing Agreement with Tyco International
plc and Covidien plc and included $604 million of other expense related to the effective settlement of tax matters for the years
1997 through 2000 and $46 million of other expense related to a tax settlement in another tax jurisdiction.

For fiscal 2020, 2019, and 2018, see Note 16 to the Consolidated Financial Statements for additional information. Fiscal 2016
included a $1,135 million income tax benefit related to the effective settlement of tax matters for the years 1997 through 2000,
partially offset by a $91 million income tax charge related to an increase to the valuation allowance for certain U.S. deferred tax
assets. Additionally, fiscal 2016 included an $83 million net income tax benefit related to tax settlements in certain other tax
jurisdictions, partially offset by an income tax charge related to certain legal entity restructurings.

(6)

Fiscal 2019 included a pre-tax loss of $86 million on the sale of our Subsea Communications business. For additional information
regarding discontinued operations, see Note 4 to the Consolidated Financial Statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in

conjunction with our Consolidated Financial Statements and the accompanying notes included elsewhere in this Annual
Report. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs. Our
actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or
contribute to these differences include those factors discussed below and elsewhere in this Annual Report, particularly in
“Forward-Looking Information,” and in “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal
year ended September 25, 2020 filed with the SEC.

Our Consolidated Financial Statements have been prepared in U.S. dollars, in accordance with accounting principles

generally accepted in the U.S. (“GAAP”).

Discussion of our financial condition and results of operations for fiscal 2020 compared to fiscal 2019 is presented

below. Discussion of our financial condition and results of operations for fiscal 2019 compared to fiscal 2018 can be found in
“Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual
Report on Form 10-K for the fiscal year ended September 27, 2019 filed with the SEC.

The following discussion includes organic net sales growth (decline) which is a non-GAAP financial measure. See

“Non-GAAP Financial Measure” for additional information regarding this measure.

Overview

We are a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our

broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in
transportation, industrial applications, medical technology, energy, data communications, and the home.

Summary of Fiscal 2020 Performance

• Our fiscal 2020 net sales decreased 9.5% from fiscal 2019 levels due to sales declines in the Transportation

Solutions segment and, to a lesser degree, the Industrial Solutions and Communications Solutions segments. On
an organic basis, our net sales decreased 9.9% in fiscal 2020 as compared to fiscal 2019. Our net sales declines
included significant unfavorable impacts from the COVID-19 pandemic.

• Our net sales by segment were as follows:

• Transportation Solutions—Our net sales decreased 12.5% due to sales declines in the automotive end

market and, to a lesser degree, the commercial transportation and sensors end markets.

•

Industrial Solutions—Our net sales decreased 6.1% primarily as a result of sales declines in the
industrial equipment and the aerospace, defense, oil, and gas end markets.

• Communications Solutions—Our net sales decreased 3.5% due to sales declines in both the appliances

and the data and devices end markets.

• During fiscal 2020, our shareholders approved a dividend payment to shareholders of $1.92 per share, payable
in four equal quarterly installments of $0.48 beginning in the third quarter of fiscal 2020 and ending in the
second quarter of fiscal 2021.

• Net cash provided by continuing operating activities was $1,991 million in fiscal 2020.

• We acquired approximately 72% of the outstanding shares of First Sensor AG (“First Sensor”), a provider of

sensing solutions based in Germany, during fiscal 2020.

COVID-19 Pandemic and Economic Conditions

A novel strain of coronavirus (“COVID-19”) was first identified in China in December 2019 and subsequently

The COVID-19 pandemic is currently impacting, and we expect that it will continue to impact, our business
operations globally, causing potential disruption in our suppliers’ and customers’ supply chains, some of our business
locations to reduce or suspend operations, and a reduction in demand for certain products from direct customers or end
markets. While a number of our businesses are operating as essential businesses, some have had and continue to have
adjusted, reduced, or suspended operating activities at certain locations. In addition, the COVID-19 pandemic may have far-
reaching impacts on many additional aspects of our operations, directly and indirectly, including with respect to its impacts
on customer behaviors, business and manufacturing operations, inventory, our employees, and the market generally, and the
scope and nature of these impacts continue to evolve each day. We expect to continue to assess the evolving impact of the
COVID-19 pandemic and intend to adjust our operations accordingly. For example, throughout our operations, we have
enacted additional health and safety measures for the protection of our employees, including providing personal protective
equipment, enhanced cleaning and sanitizing of our facilities, and remote working arrangements.

We expect that the COVID-19 pandemic will continue to impact several of the markets we serve, in particular the
automotive and commercial aerospace markets. We expect these markets to decline in the near term relative to fiscal 2020
and they may decline in future periods. However, despite these market declines, we expect a slight increase in our total net
sales in the first quarter of fiscal 2021 as compared to the first quarter of fiscal 2020. See “Outlook” below for additional
information.

In response to the current economic environment and our sales declines relative to fiscal 2019, we have taken and

continue to focus on actions to manage costs. These include restructuring and other cost reduction initiatives, such as
reducing discretionary spending, cutting capital expenditures, reducing travel, and furloughing certain employees. We will
continue to actively monitor the situation and may take further actions that alter our business operations as may be required
by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, suppliers,
shareholders, and the communities in which we operate.

For further discussion of the risks and uncertainties associated with the COVID-19 pandemic, see “Part I. Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 25, 2020 filed with the SEC.

Outlook

In the first quarter of fiscal 2021, we expect our net sales to be approximately $3.2 billion as compared to $3.17

billion in the first quarter of fiscal 2020. This represents a slight increase resulting from sales growth in the Transportation
Solutions and Communications Solutions segments, partially offset by sales declines in the Industrial Solutions segment.
Additional information regarding expectations for our reportable segments is as follows:

• Transportation Solutions—In the automotive end market, we expect our net sales increase resulting from

content growth to be offset by sales decreases resulting from declines in global automotive production in the
first quarter of fiscal 2021 as compared to the same period of fiscal 2020. We expect global automotive
production in the first quarter of fiscal 2021 to decline compared to the first quarter of fiscal 2020, but to
increase from the fourth quarter of fiscal 2020. We expect our net sales to increase in the sensors and
commercial transportation end markets in the first quarter of fiscal 2021 over the first quarter of fiscal 2020.
Our sales in the sensors end market are expected to benefit from the acquisition of First Sensor.

•

Industrial Solutions—We expect our net sales to decline in the aerospace, defense, oil, and gas end market in
the first quarter of fiscal 2021 as compared to the same period of fiscal 2020 primarily as a result of weakness in
the commercial aerospace market. We expect the commercial aerospace market to decline over 20% in fiscal
2021 as compared to fiscal 2020.

• Communications Solutions—We expect our net sales to increase in both the data and devices and the appliances
end markets in the first quarter of fiscal 2021 as compared to the same period of fiscal 2020. We expect to
continue to benefit from cloud infrastructure spending and a recovery in the appliances market in fiscal 2021 as
compared to fiscal 2020.

We expect diluted earnings per share from continuing operations to be approximately $0.83 per share in the first quarter of
fiscal 2021. This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of
approximately $55 million and $0.04 per share, respectively, in the first quarter of fiscal 2021 as compared to the same
period of fiscal 2020.

The above outlook is based on foreign currency exchange rates and commodity prices that are consistent with

current levels.

We are monitoring the current macroeconomic environment and its potential effects on our customers and the end
markets we serve, including developments related to the COVID-19 pandemic. We have taken actions to manage costs and
will continue to closely manage our costs in line with economic conditions. Additionally, we are managing our capital
resources and monitoring capital availability to ensure that we have sufficient resources to fund future capital needs. See
further discussion in “Liquidity and Capital Resources.”

Acquisitions

During fiscal 2020, we acquired approximately 72% of the outstanding shares of First Sensor for €181 million in
cash (equivalent to $201 million using an exchange rate of $1.11 per €1.00), net of cash acquired. This business has been
reported as part of our Transportation Solutions segment from the date of acquisition.

We acquired four additional businesses for a combined cash purchase price of $135 million, net of cash acquired,

during fiscal 2020. The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments
from the date of acquisition.

During fiscal 2019, we acquired three businesses for a combined cash purchase price of $296 million, net of cash

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

See Note 5 to the Consolidated Financial Statements for additional information regarding acquisitions.

Discontinued Operations

In fiscal 2019, we sold our Subsea Communications (“SubCom”) business for net cash proceeds of $297 million and
incurred a pre-tax loss on sale of $86 million. The SubCom business met the held for sale and discontinued operations criteria
and has been reported as such in all periods presented on our Consolidated Financial Statements. Prior to reclassification to
discontinued operations, the SubCom business was included in the Communications Solutions segment.

See Note 4 to the Consolidated Financial Statements for additional information regarding discontinued operations.

Net Sales

Results of Operations

The following table presents our net sales and the percentage of total net sales by segment:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal

2020

2019

($ in millions)
$ 6,845 56 % $ 7,821 58 %

3,713
1,614
$ 12,172

3,954
31
13
1,673
100 % $ 13,448

30
12
100 %

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

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Change in Net Sales for Fiscal 2020 versus Fiscal 2019

Net Sales

Growth (Decline)

Organic Net Sales
Growth (Decline)
($ in millions)

Translation Acquisitions

$ (976) (12.5)% $ (1,066) (13.5)% $

(241)
(59)
$ (1,276)

(212)
(6.1)
(3.5)
(54)
(9.5)% $ (1,332)

(5.4)
(3.2)
(9.9)% $

(65) $
(29)
(5)
(99) $

155
—
—
155

Net sales decreased $1,276 million, or 9.5%, in fiscal 2020 as compared to fiscal 2019. The decrease in net sales
resulted from organic net sales declines of 9.9% and the negative impact of foreign currency translation of 0.8% due to the
weakening of certain foreign currencies, partially offset by sales contributions from acquisitions of 1.2%. Price erosion
adversely affected organic net sales by $173 million in fiscal 2020. In fiscal 2020, our net sales declines included significant
unfavorable impacts from the COVID-19 pandemic.

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

Net Sales by Geographic Region. Our business operates in three geographic regions—Asia–Pacific, EMEA, and

the Americas—and our results of operations are influenced by changes in foreign currency exchange rates. Increases or
decreases in the value of the U.S. dollar, compared to other currencies, will directly affect our reported results as we translate
those currencies into U.S. dollars at the end of each fiscal period. We sell our products into approximately 140 countries, and
approximately 60% of our net sales were invoiced in currencies other than the U.S. dollar in fiscal 2020. The percentage of
net sales in fiscal 2020 by major currencies invoiced was as follows:

Currencies
U.S. dollar
Euro
Chinese renminbi
Japanese yen
All others
Total

Percentage

43 %
29
15
6
7
100 %

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

Asia–Pacific
EMEA
Americas
Total

Fiscal

2020

2019

$ 4,246

($ in millions)
35 % $ 4,401

33 %

4,220 35
30

3,706

4,823 36
31

4,224

$ 12,172 100 % $ 13,448 100 %

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

Change in Net Sales for Fiscal 2020 versus Fiscal 2019

Net Sales

Growth (Decline)

Organic Net Sales
Growth (Decline)
($ in millions)

Translation Acquisitions

Asia–Pacific
EMEA
Americas
Total

Cost of Sales and Gross Margin

$ (155) (3.5)% $ (123) (2.8)% $

(603) (12.5)
(518) (12.3)

(676)
(533)
(9.5)% $ (1,332)

$ (1,276)

(14.0)
(12.6)

(9.9)% $

(32) $
(28)
(39)
(99) $

—
101
54
155

The following table presents cost of sales and gross margin information:

Fiscal

Cost of sales

As a percentage of net sales

Gross margin

As a percentage of net sales

2020

$ 8,437

2019
($ in millions)
$ 9,054

Change

$ (617)

69.3 %

67.3 %

$ 3,735

$ 4,394

$ (659)

30.7 %

32.7 %

In fiscal 2020, gross margin decreased $659 million as compared to fiscal 2019 primarily as a result of lower

volume and, to a lesser degree, price erosion and lower manufacturing productivity, partially offset by lower material costs.

We use a wide variety of raw materials in the manufacture of our products. Cost of sales and gross margin are
subject to variability in raw material prices which continue to fluctuate for many of the raw materials we use, including
copper, gold, and silver. In fiscal 2020, we purchased approximately 160 million pounds of copper, 107,000 troy ounces of
gold, and 2.2 million troy ounces of silver. The following table presents the average prices incurred related to copper, gold,
and silver:

Measure

2020

2019

Fiscal

Copper
Gold
Silver

Lb. $ 2.78 $ 2.93
1,309
16.42

1,395
16.21

Troy oz.
Troy oz.

In fiscal 2021, we expect to purchase approximately 155 million pounds of copper, 105,000 troy ounces of gold, and

2.2 million troy ounces of silver.

Operating Expenses

The following table presents operating expense information:

Fiscal

Selling, general, and administrative expenses

$ 1,392

2020

2019
($ in millions)
$ 1,490

Change

$ (98)

As a percentage of net sales

11.4 % 11.1 %

Restructuring and other charges, net
Impairment of goodwill

$ 257
900

$ 255
—

2
$
900

Selling, General, and Administrative Expenses. In fiscal 2020, selling, general, and administrative expenses
decreased $98 million as compared to fiscal 2019 due primarily to reduced selling expenses, cost control measures, and
savings attributable to restructuring actions.

Restructuring and Other Charges, Net. We are committed to continuous productivity improvements, and we

evaluate opportunities to simplify our global manufacturing footprint, migrate facilities to lower-cost regions, reduce fixed
costs, and eliminate excess capacity. These initiatives are designed to help us maintain our competitiveness in the industry,
improve our operating leverage, and position us for future growth.

During fiscal 2020 and 2019, we initiated restructuring programs associated with footprint consolidation and

structural improvements impacting all segments. The fiscal 2020 actions were due in part to the COVID-19 pandemic. We
incurred net restructuring charges of $257 million and $255 million in fiscal 2020 and 2019, respectively. Annualized cost
savings related to actions initiated in fiscal 2020 are expected to be approximately $200 million and are expected to be
realized by the end of fiscal 2022. Cost savings will be reflected primarily in cost of sales and selling, general, and
administrative expenses. For fiscal 2021, we currently expect total restructuring charges to be approximately $200 million
and total spending, which will be funded with cash from operations, to be approximately $250 million.

See Note 3 to the Consolidated Financial Statements for additional information regarding net restructuring and other

charges.

Impairment of Goodwill. As a result of current and projected declines in sales and profitability, due in part to the

impact of the COVID-19 pandemic and projected reductions in global automotive production as of March 2020, of the
Sensors reporting unit of the Transportation Solutions segment during the second quarter of fiscal 2020, we determined that
an indicator of impairment had occurred and goodwill impairment testing of this reporting unit was required.

As discussed in Note 2 to the Consolidated Financial Statements, during the second quarter of fiscal 2020, we

adopted Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment, which
simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the new
standard, goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value,
not to exceed the carrying value of goodwill. We determined the fair value of the Sensors reporting unit to be $1.0 billion as
of March 27, 2020. This valuation was based on a discounted cash flows analysis incorporating our estimate of future
operating performance, which we consider to be a level 3 unobservable input in the fair value hierarchy, and was
corroborated using a market approach valuation. The goodwill impairment test indicated that the carrying value of the
reporting unit exceeded its fair value by $900 million. As a result, we recorded a partial impairment charge of $900 million in
the second quarter of fiscal 2020. As of fiscal year end 2020, the Sensors reporting unit had a remaining goodwill allocation
of $511 million. See Note 8 to the Consolidated Financial Statements for additional information regarding the impairment of
goodwill and our annual goodwill impairment test.

Operating Income

The following table presents operating income and operating margin information:

Operating income

Operating margin

Operating income included the following:

Fiscal

2020

2019

Change

$ 537

($ in millions)
$ 1,978

$ (1,441)

4.4 %

14.7 %

Acquisition-related charges:

Acquisition and integration costs
Charges associated with the amortization of acquisition-related fair
value adjustments

Restructuring and other charges, net
Impairment of goodwill
Other items(1)
Total

Fiscal

2020

2019

(in millions)

36 $ 27

4
40
257
900
—

3
30
255
—
17
$ 1,197 $ 302

(1)

Represents the write-off of certain spare parts.

See discussion of operating income below under “Segment Results.”

Non-Operating Items

The following table presents select non-operating information:

Interest expense

Income tax expense (benefit)

Effective tax rate

Fiscal

2020

2019
($ in millions)

Change

$ (20)

783

(15)

798

149.4 % (0.8)%

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

$ (102)

$ 120

Interest Expense. Interest expense decreased $20 million during fiscal 2020 due primarily to a lower cost of debt
and our cross-currency swap program that hedges our net investment in certain foreign operations. The aggregate notional
value of the contracts under this program was $1,664 million at fiscal year end 2020. Under the terms of these contracts, we
receive interest in U.S. dollars at a weighted-average rate of 2.4% per annum and pay no interest. See Note 14 to the
Consolidated Financial Statements for additional information regarding our cross-currency swap program.

Income Taxes. See Note 16 to the Consolidated Financial Statements for discussion of items impacting income tax

expense (benefit) and the effective tax rate for fiscal 2020 and 2019, including the Switzerland Federal Act on Tax Reform
and AHV Financing (“Swiss Tax Reform”), increases to the valuation allowance for certain deferred tax assets, and the
termination of the Tax Sharing Agreement.

The valuation allowance for deferred tax assets was $4,429 million and $4,970 million at fiscal year end 2020 and

2019, respectively. See Note 16 to the Consolidated Financial Statements for further information regarding the valuation
allowance for deferred tax assets.

As of fiscal year end 2020, certain subsidiaries had approximately $29 billion of cumulative undistributed earnings

that have been retained indefinitely and reinvested in our global manufacturing operations, including working capital;
property, plant, and equipment; intangible assets; and research and development activities. See Note 16 to the Consolidated
Financial Statements for additional information regarding undistributed earnings.

Income (Loss) from Discontinued Operations, Net of Income Taxes. During fiscal 2019, we sold our SubCom

business for net cash proceeds of $297 million and incurred a pre-tax loss on sale of $86 million. The net sales of the business
were $41 million in fiscal 2019. The results for fiscal 2019 represent one month of activity. See Note 4 to the Consolidated
Financial Statements for additional information regarding discontinued operations.

Transportation Solutions

Segment Results

Net Sales. The following table presents the Transportation Solutions segment’s net sales and the percentage of total

net sales by industry end market(1):

Automotive
Commercial transportation
Sensors
Total

Fiscal

2020

2019

($ in millions)
$ 4,903 72 % $ 5,686 73 %

1,051
891

15
13

1,221
914

15
12

$ 6,845 100 % $ 7,821 100 %

(1)

Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.

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 Fiscal 2020 versus Fiscal 2019

Net Sales

Growth (Decline)

Organic Net Sales
Growth (Decline)

Translation Acquisitions

Automotive
Commercial transportation
Sensors
Total

$ (783) (13.8)% $

($ in millions)
(742) (12.9)% $
(13.9)
(176)
(148)
(2.5)
(12.5)% $ (1,066)

(14.4)
(16.3)
(13.5)% $

(170)
(23)
$ (976)

(41) $
(21)
(3)
(65) $

—
27
128
155

Net sales in the Transportation Solutions segment decreased $976 million, or 12.5%, in fiscal 2020 from fiscal 2019

as a result of organic net sales declines of 13.5% and the negative impact of foreign currency translation of 0.9%, partially
offset by sales contributions from acquisitions of 1.9%. Net sales declines in fiscal 2020 included significant unfavorable
impacts of the COVID-19 pandemic. Our organic net sales by industry end market were as follows:

• Automotive—Our organic net sales decreased 12.9% in fiscal 2020 with declines of 18.0% in the Americas
region, 16.7% in the EMEA region, and 6.4% in the Asia–Pacific region. Our overall organic net sales
decreased as a result of declines in global automotive production; however, our sales decreased at a lesser rate
than global automotive production due to content gains.

• Commercial transportation—Our organic net sales decreased 14.4% in fiscal 2020 due to market weakness in

the Americas and EMEA regions, partially offset by growth in the Asia–Pacific region.

•

Sensors—Our organic net sales decreased 16.3% in fiscal 2020 as a result of weakness across all markets.

Operating Income (Loss). The following table presents the Transportation Solutions segment’s operating income

(loss) and operating margin information:

Operating income (loss)
Operating margin

Fiscal

2020

2019

Change

$ (93)

($ in millions)
$ 1,226

$ (1,319)

(1.4)% 15.7 %

Operating income (loss) in the Transportation Solutions segment decreased $1,319 million in fiscal 2020 as

compared to fiscal 2019. The Transportation Solutions segment’s operating income (loss) included the following:

Acquisition-related charges:

Acquisition and integration costs
Charges associated with the amortization of acquisition-related fair
value adjustments

Restructuring and other charges, net
Impairment of goodwill
Other items
Total

Fiscal

2020

2019

(in millions)

28 $ 17

4
32
113
900
—

—
17
144
—
14
$ 1,045 $ 175

Excluding these items, operating income decreased in fiscal 2020 primarily as a result of lower volume and, to a lesser
degree, price erosion and lower manufacturing productivity, partially offset by lower material costs.

Industrial Solutions

Net Sales. The following table presents the Industrial Solutions segment’s net sales and the percentage of total net

sales by industry end market(1):

Aerospace, defense, oil, and gas
Industrial equipment
Medical
Energy
Total

Fiscal

2020

2019

($ in millions)
$ 1,201 32 % $ 1,306 33 %

1,098
697
717
$ 3,713

30
19
19

1,242
707
699
100 % $ 3,954

31
18
18
100 %

(1)

Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.

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

end market:

Aerospace, defense, oil, and gas
Industrial equipment
Medical
Energy
Total

Change in Net Sales for Fiscal 2020 versus Fiscal 2019

Net Sales
Growth (Decline)

Organic Net Sales
Growth (Decline)

Translation

($ in millions)

$ (105)
(144)
(10)
18
$ (241)

(8.0)% $ (100) (7.8)% $
(133)
(11.6)
(9)
(1.4)
2.6
30
(6.1)% $ (212)

(10.7)
(1.3)
4.3
(5.4)% $

(5)
(11)
(1)
(12)
(29)

In the Industrial Solutions segment, net sales decreased $241 million, or 6.1%, in fiscal 2020 from fiscal 2019 due

primarily to organic net sales declines of 5.4%. Significant unfavorable impacts of the COVID-19 pandemic were included in
our net sales declines in fiscal 2020. Our organic net sales by industry end market were as follows:

• Aerospace, defense, oil, and gas—Our organic net sales decreased 7.8% in fiscal 2020 due primarily to
weakness in the commercial aerospace market, partially offset by strength in the defense market.

•

Industrial equipment—Our organic net sales decreased 10.7% in fiscal 2020 as a result of market weakness in
industrial applications across all regions.

• Medical—Our organic net sales decreased 1.3% in fiscal 2020 due primarily to delays in elective procedures.

• Energy—Our organic net sales increased 4.3% in fiscal 2020 primarily as a result of growth in the EMEA and

Americas regions.

Operating Income. The following table presents the Industrial Solutions segment’s operating income and operating

margin information:

Operating income

Operating margin

Fiscal

2020

2019

Change

$ 412

($ in millions)
$ 543

$ (131)

11.1 % 13.7 %

Operating income in the Industrial Solutions segment decreased $131 million in fiscal 2020 from fiscal 2019. The

Industrial Solutions segment’s operating income included the following:

Acquisition-related charges:

Acquisition and integration costs
Charges associated with the amortization of acquisition-related fair
value adjustments

Restructuring and other charges, net
Other items
Total

Fiscal

2020

2019

(in millions)

8 $

—
8
102
—
$ 110 $

3
13
63
2
78

Excluding these items, operating income decreased in fiscal 2020 primarily as a result of lower volume, partially offset by
lower material costs.

Communications Solutions

Net Sales. The following table presents the Communications Solutions segment’s net sales and the percentage of

total net sales by industry end market(1):

Data and devices
Appliances
Total

Fiscal

2020

2019

$ 973
641

($ in millions)
60 % $ 993
680
40

59 %
41

$ 1,614 100 % $ 1,673 100 %

(1)

Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.

The following table provides an analysis of the change in the Communications Solutions segment’s net sales by

industry end market:

Data and devices
Appliances
Total

Change in Net Sales for Fiscal 2020 versus Fiscal 2019

Net Sales

Growth (Decline)

Organic Net Sales
Growth (Decline)

($ in millions)

Translation

$ (20) (2.0)% $ (23) (2.5)% $

(39)
$ (59)

(5.7)
(31)
(3.5)% $ (54)

(4.4)
(3.2)% $

3
(8)
(5)

Net sales in the Communications Solutions segment decreased $59 million, or 3.5%, in fiscal 2020 as compared to

fiscal 2019 due primarily to organic net sales declines of 3.2%. In fiscal 2020, our net sales declines included unfavorable
impacts of the COVID-19 pandemic. Our organic net sales by industry end market were as follows:

• Data and devices—Our organic net sales decreased 2.5% in fiscal 2020 primarily as a result of market
weakness in the Americas and EMEA regions, partially offset by increased sales to cloud infrastructure
customers.

• Appliances—Our organic net sales decreased 4.4% in fiscal 2020 due primarily to market weakness in the

EMEA and Americas regions.

Operating Income. The following table presents the Communications Solutions segment’s operating income and

operating margin information:

Fiscal

Operating income

Operating margin

2020

Change

2019
($ in millions)
$ 209

$ 218

$
13.5 % 12.5 %

In the Communications Solutions segment, operating income increased $9 million in fiscal 2020 as compared to

fiscal 2019. The Communications Solutions segment’s operating income included the following:

Restructuring and other charges, net
Other items
Total

Fiscal

2020

2019

(in millions)
42 $
—
42 $

48
1
49

Excluding these items, fiscal 2020 operating income was consistent with fiscal 2019 levels.

Liquidity and Capital Resources

Our ability to fund our future capital needs will be affected by our ability to continue to generate cash from
operations and may be affected by our ability to access the 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 payments of $250 million of 4.875% senior notes due in January 2021 and €350 million of
fixed-to-floating rate senior notes due in June 2021, and compensation payments to First Sensor minority shareholders. We
may use excess cash to purchase a portion of our common shares pursuant to our authorized share repurchase program, to
acquire strategic businesses or product lines, to pay dividends on our common shares, or to reduce our outstanding debt. The
cost or availability of future funding may be impacted by financial market conditions. We will continue to monitor financial
markets and respond as necessary to changing conditions, including future developments related to the COVID-19 pandemic.
There is uncertainty surrounding the duration and scope of the COVID-19 pandemic and it may have a material impact on
our liquidity and financial conditions. We believe that we have sufficient financial resources and liquidity which, along with
managing expenses and capital structure flexibility, will enable us to meet our ongoing working capital and other cash flow
needs during the COVID-19 pandemic and resulting period of economic uncertainty which included reduced sales and net

income levels for us in fiscal 2020 relative to fiscal 2019 and may include reduced sales and income levels in future periods.
For further information on the risks and uncertainties associated with the COVID-19 pandemic, see “Part I. Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the fiscal year ended September 25, 2020 filed with the SEC.

As of fiscal year end 2020, our cash and cash equivalents were held in subsidiaries which are located in various

countries throughout the world. Under current applicable laws, substantially all of these amounts can be repatriated to Tyco
Electronics Group S.A. (“TEGSA”), our Luxembourg subsidiary, which is the obligor of substantially all of our debt, and to
TE Connectivity Ltd., our Swiss parent company; however, the repatriation of these amounts could subject us to additional
tax expense. We provide for tax liabilities on the Consolidated Financial Statements with respect to amounts that we expect
to repatriate; however, no tax liabilities are recorded for amounts that we consider to be retained indefinitely and reinvested
in our global manufacturing operations. As of fiscal year end 2020, we had approximately $5.3 billion of cash, cash
equivalents, and intercompany deposits, principally in our subsidiaries, that we have the ability to distribute to TEGSA and
TE Connectivity Ltd. but we consider to be permanently reinvested. We estimate that up to $0.8 billion of tax expense would
be recognized on the Consolidated Financial Statements if our intention to permanently reinvest these amounts were to
change. Our current plans do not demonstrate a need to repatriate cash, cash equivalents, and intercompany deposits that are
designated as permanently reinvested in order to fund our operations, including investing and financing activities.

Cash Flows from Operating Activities

Net cash provided by continuing operating activities decreased $463 million to $1,991 million in fiscal 2020 as

compared to $2,454 million in fiscal 2019. The decrease resulted primarily from lower pre-tax income levels.

The amount of income taxes paid, net of refunds, during fiscal 2020 and 2019 was $257 million and $338 million,

respectively. We do not expect a significant change in our income tax payments as a result of Swiss Tax Reform. See Note 16
to the Consolidated Financial Statements for additional information regarding Swiss Tax Reform.

Pension contributions were $47 million and $45 million in fiscal 2020 and 2019, respectively. We expect pension

contributions to be $69 million in fiscal 2021, before consideration of any voluntary contributions. For additional information
regarding pensions, see Note 15 to the Consolidated Financial Statements.

Cash Flows from Investing Activities

Capital expenditures were $560 million and $749 million in fiscal 2020 and 2019, respectively. We expect fiscal

2021 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 fiscal 2020, we acquired five businesses, including First Sensor, for a combined cash purchase price of $336

million, net of cash acquired. During fiscal 2019, we acquired three businesses for a combined cash purchase price of $296
million, net of cash acquired. See Note 5 to the Consolidated Financial Statements for additional information regarding
acquisitions.

During fiscal 2019, we received net cash proceeds of $297 million related to the sale of our SubCom business. See

additional information in Note 4 to the Consolidated Financial Statements.

Cash Flows from Financing Activities and Capitalization

Total debt at fiscal year end 2020 and 2019 was $4,146 million and $3,965 million, respectively. See Note 11 to the

Consolidated Financial Statements for additional information regarding debt.

During fiscal 2020, TEGSA, our wholly-owned subsidiary, issued €550 million aggregate principal amount of

0.00% senior notes due in February 2025. 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.

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of

acquisition, and borrowings in designated currencies. TEGSA had no borrowings under the Credit Facility at fiscal year end
2020 or 2019.

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. None of our
covenants are presently considered restrictive to our operations. As of fiscal year end 2020, 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.

Periodically, TEGSA issues commercial paper to U.S. institutional accredited investors and qualified institutional
buyers in accordance with available exemptions from the registration requirements of the Securities Act of 1933 as part of
our ongoing effort to maintain financial flexibility and to potentially decrease the cost of borrowings. Borrowings under the
commercial paper program are backed by the Credit Facility.

TEGSA’s payment obligations under its senior notes, commercial paper, and Credit Facility are fully and

unconditionally guaranteed on an unsecured basis by its parent, TE Connectivity Ltd.

Payments of common share dividends to shareholders were $625 million and $608 million in fiscal 2020 and 2019,

respectively. See Note 18 to the Consolidated Financial Statements for additional information regarding dividends on our
common shares.

In March 2020, our shareholders approved a dividend payment to shareholders of $1.92 per share, payable in four
equal quarterly installments of $0.48 per share beginning in the third quarter of fiscal 2020 and ending in the second quarter
of fiscal 2021.

Future dividends on our common shares, if any, must be approved by our shareholders. In exercising their discretion

to recommend to the shareholders that such dividends be approved, our board of directors will consider our results of
operations, cash requirements and surplus, financial condition, statutory requirements of applicable law, contractual
restrictions, and other factors that they may deem relevant.

In fiscal 2019, our board of directors authorized an increase of $1.5 billion in our share repurchase program. We

repurchased approximately 6 million of our common shares for $505 million and approximately 12 million of our common
shares for $1,014 million under the share repurchase program during fiscal 2020 and 2019, respectively. At fiscal year end
2020, we had $1.0 billion of availability remaining under our share repurchase authorization.

Summarized Guarantor Financial Information

In March 2020, the SEC adopted amendments to the financial disclosure requirements of Regulation S-X for

subsidiary issuers and guarantors of registered debt securities and for affiliates whose securities are pledged as collateral for
registered securities. The amended disclosure requirements permit alternative disclosures of summarized financial
information for subsidiary issuers and guarantors and allow for these disclosures to be made outside the Consolidated
Financial Statements and accompanying notes. We elected to early adopt these amendments in fiscal 2020.

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

summarized financial information, excluding investments in and equity in earnings of our non-guarantor subsidiaries, for TE
Connectivity Ltd. and TEGSA on a combined basis.

Fiscal Year End
2019
2020

(in millions)

Balance Sheet Data:
Total current assets
Total noncurrent assets(1)

Total current liabilities
Total noncurrent liabilities(2)

134 $

3,282

89
2,634

1,237
23,549

1,014
19,475

(1)

(2)

Includes $3,275 million and $2,562 million as of fiscal year end 2020 and 2019, respectively, of
intercompany loans receivable from non-guarantor subsidiaries.

Includes $20,016 million and $16,033 million as of fiscal year end 2020 and 2019,
respectively, of intercompany loans payable to non-guarantor subsidiaries.

Statement of Operations Data:

Loss from continuing operations
Net loss

Commitments and Contingencies

Fiscal

2020

2019

(in millions)

(206) $
(202)

(341)
(391)

The following table provides a summary of our contractual obligations and commitments for debt, minimum lease

payment obligations under non-cancelable leases, and other obligations at fiscal year end 2020:

Total

2021

2022 2023 2024 2025 Thereafter

Payments Due by Fiscal Year

Debt(1)
Interest payments on debt(2)
Operating leases(3)
Purchase obligations(4)

Total contractual cash obligations(5)(6)(7)

(in millions)
$ 4,161 $ 693 $ 506 $ 641 $ 352 $ 641 $ 1,328
463
87
3
$ 6,122 $ 1,505 $ 700 $ 801 $ 485 $ 750 $ 1,881

72
60
1

79
75
6

103
116
593

865
485
611

60
49
—

88
98
8

(1)

(2)

(3)

(4)

(5)

(6)

Debt represents principal payments. See Note 11 to the Consolidated Financial Statements for additional information regarding
debt.

Interest payments exclude the impact of our interest rate swap and cross-currency swap contracts. Interest payments on debt are
projected for future periods using rates in effect as of fiscal year end 2020 and are subject to change in future periods.

Operating leases represents the undiscounted lease payments. See Note 12 to the Consolidated Financial Statements for
additional information regarding leases.

Purchase obligations consist primarily of commitments for purchases of goods and services.

The above table does not reflect unrecognized income tax benefits of $414 million and related accrued interest and penalties of
$42 million, the timing of which is uncertain. See Note 16 to the Consolidated Financial Statements for additional information
regarding unrecognized income tax benefits, interest, and penalties.

The above table does not reflect pension obligations to certain employees and former employees. We are obligated to make
contributions to our pension plans; however, we are unable to determine the amount of plan contributions due to the inherent
uncertainties of obligations of this type, including timing, interest rate charges, investment performance, and amounts of benefit
payments. We expect to contribute $69 million to pension plans in fiscal 2021, before consideration of any voluntary
contributions. See Note 15 to the Consolidated Financial Statements for additional information regarding these plans and our
estimates of future contributions and benefit payments.

(7)

Other long-term liabilities of $874 million are excluded from the above table as we are unable to estimate the timing of payment
for these items.

Legal Proceedings

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.

Off-Balance Sheet Arrangements

In certain instances, we have guaranteed the performance of third parties and provided financial guarantees for

uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from fiscal 2021
through the completion of such transactions. The guarantees would be triggered in the event of nonperformance, and the
potential exposure for nonperformance under the guarantees would not have a material effect on our results of operations,
financial position, or cash flows.

In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover

various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for
investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and
unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will
have a material adverse effect on our results of operations, financial position, or cash flows.

At fiscal year end 2020, we had outstanding letters of credit, letters of guarantee, and surety bonds of $249 million.

As discussed above, in fiscal 2019, we sold our SubCom business. In connection with the sale, we contractually

agreed to continue to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed
as of the date of sale. These guarantees had a combined value of approximately $600 million as of fiscal year end 2020 and
are expected to expire at various dates through fiscal 2025. Also, under the terms of the definitive agreement, we are required
to issue up to $300 million of new performance guarantees, subject to certain limitations, for projects entered into by the
SubCom business following the sale for a period of up to three years. At fiscal year end 2020, there were no such new
performance guarantees outstanding. We have contractual recourse against the SubCom business if we are required to
perform on any SubCom guarantees; however, based on historical experience, we do not anticipate having to perform. See
Note 4 to the Consolidated Financial Statements for additional information regarding the divestiture of the SubCom business.

Critical Accounting Policies and Estimates

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported amounts of revenue and expenses. Our significant accounting policies are summarized in Note 2
to the Consolidated Financial Statements. We believe the following accounting policies are the most critical as they require
significant judgments and assumptions that involve inherent risks and uncertainties. Management’s estimates are based on the
relevant information available at the end of each period.

Revenue Recognition

We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from

Contracts with Customers. Our revenues are generated principally from the sale of our products. Revenue is recognized as
performance obligations under the terms of a contract, such as a purchase order with a customer, are satisfied; generally this
occurs with the transfer of control. We transfer control and recognize revenue when we ship product to our customers, the
customers accept and have legal title for the product, and we have a right to payment for such product. Revenue is measured
as the amount of consideration that we expect to receive in exchange for those products and excludes taxes assessed by
governmental authorities and collected from customers concurrent with the sale of products. Shipping and handling costs are
treated as fulfillment costs and are included in cost of sales. Since we typically invoice our customers when we satisfy our
performance obligations, we do not have material contract assets or contract liabilities. Our credit terms are customary and do

not contain significant financing components that extend beyond one year of fulfillment of performance obligations. We
apply the practical expedient of ASC 606 with respect to financing components and do not evaluate contracts in which
payment is due within one year of satisfaction of the related performance obligation. Since our performance obligations to
deliver products are part of contracts that generally have original durations of one year or less, we have elected to use the
optional exemption to not disclose the aggregate amount of transaction prices associated with unsatisfied or partially satisfied
performance obligations as of fiscal year end 2020.

We generally warrant that our products will conform to our, or mutually agreed to, specifications and that our

products will be free from material defects in materials and workmanship for a limited time. We limit our warranty to the
replacement or repair of defective parts, or a refund or credit of the price of the defective product. We do not account for
these warranties as separate performance obligations.

Although products are generally sold at fixed prices, certain distributors and customers receive incentives or awards,

such as sales rebates, return allowances, scrap allowances, and other rights, which are accounted for as variable
consideration. We estimate these amounts in the same period revenue is recognized based on the expected value to be
provided to customers and reduce revenue accordingly. Our estimates of variable consideration and ultimate determination of
the estimated amounts to include in the transaction price are based primarily on our assessment of anticipated performance
and historical and forecasted information that is reasonably available to us.

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other,

as updated by ASU No. 2017-04, Simplifying the Test for Goodwill Impairment.

Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible
assets. Intangible assets with determinable lives primarily include intellectual property, consisting of patents, trademarks, and
unpatented technology, and customer relationships. Recoverability estimates range from 1 to 50 years and costs are generally
amortized on a straight-line basis. Evaluations of the remaining useful lives of determinable-lived intangible assets are
performed on a periodic basis and when events and circumstances warrant.

We test for goodwill impairment at the reporting unit level. A reporting unit is generally an operating segment or
one level below an operating segment (a “component”) if the component constitutes a business for which discrete financial
information is available and regularly reviewed by segment management. At fiscal year end 2020, we had five reporting
units, all of which contained goodwill. There were two reporting units in both the Transportation Solutions and Industrial
Solutions segments and one reporting unit in the Communications Solutions segment. When changes occur in the
composition of one or more reporting units, goodwill is reassigned to the reporting units affected based on their relative fair
values. We review our reporting unit structure each year as part of our annual goodwill impairment test, or more frequently
based on changes in our structure.

Goodwill impairment is evaluated by comparing the carrying value of each reporting unit to its fair value on the first

day of the fourth fiscal quarter of each year or whenever we believe a triggering event requiring a more frequent assessment
has occurred. In assessing the existence of a triggering event, management relies on several reporting unit-specific factors
including operating results, business plans, economic projections, anticipated future cash flows, transactions, and marketplace
data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors to the
impairment analysis.

When testing for goodwill impairment, we identify potential impairment by comparing the fair value of a reporting
unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment charge
will be recorded for the amount of the excess, limited to the total amount of goodwill allocated to the reporting unit.

Fair value estimates used in the goodwill impairment tests are calculated using an income approach based on the

present value of future cash flows of each reporting unit. The income approach is supported by guideline analyses (a market
approach). These approaches incorporate several assumptions including future growth rates, discount rates, income tax rates,
and market activity in assessing fair value and are reporting unit specific. Changes in economic and operating conditions
impacting these assumptions could result in goodwill impairments in future periods.

See Note 8 to the Consolidated Financial Statements for information regarding our early adoption of ASU 2017-04,
our interim goodwill impairment test, and partial impairment charge of $900 million recorded in the second quarter of fiscal

2020. We completed our annual goodwill impairment test in the fourth quarter of fiscal 2020 and determined that no
impairment existed.

Income Taxes

In determining income for financial statement purposes, we must make certain estimates and judgments. These

estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain
deferred tax assets, which arise from temporary differences between the income tax return and financial statement recognition
of revenue and expense.

In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence

including our past operating results, the existence of cumulative losses in the most recent years, and our forecast of taxable
income. In estimating future taxable income, we develop assumptions including the amount of pre-tax operating income in
various tax jurisdictions, the reversal of temporary differences, and the implementation of feasible and prudent tax planning
strategies. These assumptions require significant judgment about the forecasts of taxable income and are consistent with the
plans and estimates we are using to manage the underlying businesses.

We currently have recorded significant valuation allowances that we intend to maintain until it is more likely than

not the deferred tax assets will be realized. Our income tax expense recorded in the future will be reduced to the extent of
decreases in our valuation allowances. The realization of our remaining deferred tax assets is dependent primarily on future
taxable income in the appropriate jurisdictions. Any reduction in future taxable income including any future restructuring
activities may require that we record an additional valuation allowance against our deferred tax assets. An increase in the
valuation allowance would result in additional income tax expense in such period and could have a significant impact on our
future earnings.

Changes in tax laws and rates also could affect recorded deferred tax assets and liabilities in the future. Management

is not aware of any such changes that would have a material effect on our results of operations, financial position, or cash
flows.

The calculation of our tax liabilities includes estimates for uncertainties in the application of complex tax regulations

across multiple global jurisdictions where we conduct our operations. Under the uncertain tax position provisions of ASC
740, Income Taxes, we recognize liabilities for tax and related interest for issues in tax jurisdictions based on our estimate of
whether, and the extent to which, additional taxes and related interest will be due. These tax liabilities and related interest are
reflected net of the impact of related tax loss carryforwards, as such tax loss carryforwards will be applied against these tax
liabilities and will reduce the amount of cash tax payments due upon the eventual settlement with the tax authorities. These
estimates may change due to changing facts and circumstances. Due to the complexity of these uncertainties, the ultimate
resolution may result in a settlement that differs from our current estimate of the tax liabilities and related interest. These tax
liabilities and related interest are recorded in income taxes and accrued and other current liabilities on the Consolidated
Balance Sheets.

Pension Plans

Our defined benefit pension plan expense and obligations are developed from actuarial assumptions. The funded

status of our plans is recognized on the Consolidated Balance Sheets and is measured as the difference between the fair value
of plan assets and the projected benefit obligation at the measurement date. The projected benefit obligation represents the
actuarial present value of benefits projected to be paid upon retirement factoring in estimated future compensation levels. The
fair value of plan assets represents the current market value of cumulative company and participant contributions made to
irrevocable trust funds, held for the sole benefit of participants, which are invested by the trustee of the funds. The benefits
under our defined benefit pension plans are based on various factors, such as years of service and compensation.

Net periodic pension benefit cost is based on the utilization of the projected unit credit method of calculation and is

charged to earnings on a systematic basis over the expected average remaining service lives of current participants, or, for
inactive plans, over the remaining life expectancy of participants.

Two critical assumptions in determining pension expense and obligations are the discount rate and expected long-
term return on plan assets. We evaluate these assumptions at least annually. Other assumptions reflect demographic factors
such as retirement, mortality, and employee turnover. These assumptions are evaluated periodically and updated to reflect our
actual experience. Actual results may differ from actuarial assumptions. The discount rate represents the market rate for high-

quality fixed income investments and is used to calculate the present value of the expected future cash flows for benefit
obligations to be paid under our pension plans. A decrease in the discount rate increases the present value of pension benefit
obligations. At fiscal year end 2020, a 25-basis-point decrease in the discount rate would have increased the present value of
our pension obligations by $143 million; a 25-basis-point increase would have decreased the present value of our pension
obligations by $131 million. We consider the current and expected asset allocations of our pension plans, as well as historical
and expected long-term rates of return on those types of plan assets, in determining the expected long-term rate of return on
plan assets. A 50-basis-point decrease or increase in the expected long-term return on plan assets would have increased or
decreased, respectively, our fiscal 2020 pension expense by $12 million.

At fiscal year end 2020, the long-term target asset allocation in our U.S. plans’ master trust is 5% return-seeking

assets and 95% liability-hedging assets. Asset re-allocation to meet that target is occurring over a multi-year period based on
the funded status. We expect to reach our target allocation when the funded status of the plans exceeds 115%. Based on the
funded status of the plans as of fiscal year end 2020, our target asset allocation is 67% return-seeking and 33% liability-
hedging.

See Note 2 to the Consolidated Financial Statements for information regarding recently adopted accounting

pronouncements.

Accounting Pronouncements

Organic Net Sales Growth (Decline)

Non-GAAP Financial Measure

We present organic net sales growth (decline) as we believe it is appropriate for investors to consider this adjusted

financial measure in addition to results in accordance with GAAP. Organic net sales growth (decline) represents net sales
growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates,
and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic net sales growth (decline) is a
useful measure of our performance because it excludes items that are not completely under management’s control, such as the
impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company,
such as acquisition and divestiture activity.

Organic net sales growth (decline) provides useful information about our results and the trends of our business.
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. It is also a significant component in our incentive compensation plans. We believe that investors benefit
from having access to the same financial measures that management uses in evaluating operations. The tables presented in
“Results of Operations” and “Segment Results” provide reconciliations of organic net sales growth (decline) to net sales
growth (decline) calculated in accordance with GAAP.

Organic net sales growth (decline) is a non-GAAP financial measure and should not be considered a replacement for

results in accordance with GAAP. This non-GAAP financial measure may not be comparable to similarly-titled measures
reported by other companies. The primary limitation of this measure is that it excludes the financial impact of items that
would otherwise either increase or decrease our reported results. This limitation is best addressed by using organic net sales
growth (decline) in combination with net sales growth (decline) to better understand the amounts, character, and impact of
any increase or decrease in reported amounts.

Forward-Looking Information

Certain statements in this Annual Report are “forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are based on our management’s beliefs and assumptions and on
information currently available to our management. Forward-looking statements include, among others, the information
concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position,
potential growth opportunities, potential operating performance improvements, acquisitions, divestitures, the effects of
competition, and the effects of future legislation or regulations. Forward-looking statements include all statements that are
not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,”
“plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” and “should,” or the negative of these
terms or similar expressions.

Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from

The following and other risks, which are described in greater detail in “Part I. Item 1A. Risk Factors” of our Annual
Report on Form 10-K for the fiscal year ended September 25, 2020 filed with the SEC and elsewhere in this Annual Report,
could cause our results to differ materially from those expressed in forward- looking statements:

•

conditions in the global or regional economies and global capital markets, and cyclical industry conditions;

conditions affecting demand for products in the industries we serve, particularly the automotive industry;

risk of future goodwill impairment;

competition and pricing pressure;

• market acceptance of our new product introductions and product innovations and product life cycles;

raw material availability, quality, and cost;

fluctuations in foreign currency exchange rates and impacts of offsetting hedges;

financial condition and consolidation of customers and vendors;

reliance on third-party suppliers;

risks associated with current and future acquisitions and divestitures;

global risks of business interruptions due to natural disasters or other disasters such as the COVID-19
pandemic, which have and could continue to negatively impact our results of operations as well as customer
behaviors, business, and manufacturing operations as well as our facilities and the facilities of our suppliers, and
other aspects of our business;

global risks of political, economic, and military instability, including volatile and uncertain economic conditions
in China;

risks associated with security breaches and other disruptions to our information technology infrastructure;

risks related to compliance with current and future environmental and other laws and regulations;

our ability to protect our intellectual property rights;

risks of litigation;

our ability to operate within the limitations imposed by our debt instruments;

the possible effects on us of various non-U.S. and U.S. legislative proposals and other initiatives that, if
adopted, could materially increase our worldwide corporate effective tax rate and negatively impact our U.S.
government contracts business;

various risks associated with being a Swiss corporation;

the impact of fluctuations in the market price of our shares; and

the impact of certain provisions of our articles of association on unsolicited takeover proposals.

•

There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not

expect to have a material adverse effect on our business.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, our financial position is routinely subject to a variety of risks, including market
risks associated with interest rate and foreign currency movements on outstanding debt and non-U.S. dollar denominated
assets and liabilities and commodity price movements. We utilize established risk management policies and procedures in
executing derivative financial instrument transactions to manage a portion of these risks.

We do not execute transactions or hold derivative financial instruments for trading or speculative purposes.
Substantially all counterparties to derivative financial instruments are limited to major financial institutions with at least an
A/A2 credit rating. There is no significant concentration of exposures with any one counterparty.

Foreign Currency Exposures

As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap
contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges. The objective of
these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on
intercompany and other cash transactions. In addition, we utilize cross-currency swap contracts to hedge our net investment
in certain foreign operations. A 10% appreciation or depreciation of the underlying currency in our cross-currency swap
contracts or foreign currency forward contracts from the fiscal year end 2020 market rates would have changed the unrealized
value of our contracts by $265 million. A 10% appreciation or depreciation of the underlying currency in our cross-currency
swap contracts or foreign currency forward contracts from the fiscal year end 2019 market rates would have changed the
unrealized value of our contracts by $282 million. Such gains or losses on these contracts would generally be offset by the
losses or gains on the revaluation or settlement of the underlying transactions.

Interest Rate and Investment Exposures

We issue debt, as needed, to fund our operations and capital requirements. Such borrowings can result in interest

rate exposure. To manage the interest rate exposure, we use interest rate swap contracts to convert a portion of fixed rate debt
into variable rate debt. Based on our floating rate debt balances at fiscal year end 2020 and 2019, a 50-basis-point increase in
the levels of the U.S. dollar interest rates, with all other variables held constant, would have resulted in an immaterial
increase in interest expense in both fiscal 2020 and 2019.

We may use forward starting interest rate swap contracts to manage interest rate exposure in periods prior to the

anticipated issuance of fixed rate debt. At fiscal year end 2020 and 2019, we had forward starting interest rate swap contracts
which had an aggregate notional value of $450 million and $350 million, respectively, and were designated as cash flow
hedges.

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

liabilities.

Commodity Exposures

Our worldwide operations and product lines may expose us to risks from fluctuations in commodity prices. To limit

the effects of fluctuations in the future market price paid and related volatility in cash flows, we utilize commodity swap
contracts designated as cash flow hedges. We continually evaluate the commodity market with respect to our forecasted
usage requirements over the next eighteen months and periodically enter into commodity swap contracts to hedge a portion of
usage requirements over that period. At fiscal year end 2020, our commodity hedges, which related primarily to expected
purchases of gold, silver, and copper, were in a net gain position of $41 million and had a notional value of $312 million. At
fiscal year end 2019, our commodity hedges, which related to expected purchases of gold, silver, and copper, were in a net
gain position of $1 million and had a notional value of $316 million. A 10% appreciation or depreciation of commodity
prices from the fiscal year end 2020 prices would have changed the unrealized value of our forward contracts by $35 million.
A 10% appreciation or depreciation of commodity prices from the fiscal year end 2019 prices would have changed the
unrealized value of our forward contracts by $32 million.

See Note 14 to the Consolidated Financial Statements for additional information regarding financial instruments.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

Evaluation of Disclosure Controls and Procedures

CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the

effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of
September 25, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of September 25, 2020.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act). Management, with the participation of our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting based on the
framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded our internal control over financial reporting was
effective as of September 25, 2020.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on our

internal control over financial reporting as of September 25, 2020, which is included in this Annual Report.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 25, 2020, there were no changes in our internal control over financial reporting

that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

TE CONNECTIVITY LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Fiscal Years Ended September 25, 2020, September 27, 2019, and
September 28, 2018

Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended September 25, 2020,
September 27, 2019, and September 28, 2018

Consolidated Balance Sheets as of September 25, 2020 and September 27, 2019

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 25, 2020, September 27,
2019, and September 28, 2018

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 25, 2020, September 27, 2019,
and September 28, 2018

Notes to Consolidated Financial Statements

Schedule II—Valuation and Qualifying Accounts

Report of the Statutory Auditor on the Consolidated Financial Statements of TE Connectivity Ltd.

Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of TE Connectivity Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of TE Connectivity Ltd. and subsidiaries (the

"Company") as of September 25, 2020 and September 27, 2019, the related consolidated statements of operations,
comprehensive income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended September
25, 2020, and the related notes and the schedule listed in the Index (collectively referred to as the "financial statements"). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
September 25, 2020 and September 27, 2019, and the results of its operations and its cash flows for each of the three years in
the period ended September 25, 2020, in conformity with accounting principles generally accepted in the United States of
America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the Company's internal control over financial reporting as of September 25, 2020, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated November 10, 2020, expressed an unqualified opinion on the Company's internal
control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, effective September 28, 2019, the Company adopted FASB

Accounting Standards Update 2016-02 which codified Accounting Standards Codification 842, Leases, using the modified
retrospective approach.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an

opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial

statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.

Goodwill —Sensors Reporting Unit within the Transportation Solutions Reportable Segment — Refer to Notes 2 and 8 to
the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves comparing the carrying amount of each reporting

unit to its fair value on the first day of the fourth fiscal quarter or whenever the Company believes a triggering event
requiring a more frequent assessment has occurred. The Company uses the income approach based on the present value of
future cash flows to estimate fair value. The income approach is supported by guideline analyses (a market approach). These
approaches incorporate several assumptions including future growth rates, discount rates, and market activity in assessing fair
value and are reporting unit specific. The goodwill balance was $5.2 billion as of September 25, 2020, of which $0.5 billion
was allocated to the Sensors reporting unit within the Transportation Solutions reportable segment. As a result of current and
projected declines in sales and profitability, due in part to the impact of the COVID-19 pandemic and projected reductions in
global automotive production, the Company recorded a partial impairment charge of $900 million during the quarter ended
March 27, 2020 for the Sensors reporting unit. The fair value of this reporting unit exceeded its carrying amount as of the
annual measurement date and, therefore, no additional impairment was recognized.

We identified goodwill for the Sensors reporting unit as a critical audit matter because of the significant judgments

made by management to estimate its fair value, especially considering the reduction of future revenue growth rates and
resulting cash flows. This required a high degree of auditor judgment and an increased extent of effort, including the need to
involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s
estimates and assumptions related to forecasts of future revenue and operating margin and the selection of a discount rate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures for the $900 million impairment charge and the annual quantitative assessment related to the

forecasts of future revenue and operating margin (the “forecasts”), and the selection of a discount rate for the Sensors
reporting unit included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those

over the determination of the fair value, such as controls related to forecasts and management’s selection of the
discount rate.

• We evaluated management’s ability to accurately forecast future revenue and operating margin by comparing

actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to:

– Historical operating results of the reporting unit.

– Historical operating results of the Company’s other reporting units.

–

Internal communications to management and the board of directors.

– External communications made by management to analysts and investors.

– Third-party industry reports for similar products.

– The effects of the COVID-19 pandemic on projections.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation

methodology and (2) discount rate by:

– Testing the source information underlying the determination of the discount rate and the mathematical

accuracy of the calculation.

– Developing a range of independent estimates and comparing those to the discount rate selected by

management.

Income Taxes — Realizability of Deferred Tax Assets — Refer to Notes 2 and 16 to the financial statements

Critical Audit Matter Description

Future realization of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character
prior to expiration. Sources of taxable income include future reversals of deferred tax assets and liabilities, expected future
taxable income, taxable income in prior carryback years if permitted under the tax law, and tax planning strategies.
Management has determined that it is more likely than not that sufficient taxable income will be generated in the future to
realize a portion of its deferred tax assets, and therefore, a valuation allowance of $4.4 billion has been recorded to offset the
Company’s gross deferred tax assets as of September 25, 2020 of $6.7 billion.

We identified the realizability of deferred tax assets as a critical audit matter because of the Company’s tax structure

and the significant judgments and estimates made by management to determine that sufficient taxable income will be
generated in the future prior to expiration to realize a portion of its deferred tax assets. This required a high degree of auditor
judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit
procedures to evaluate the appropriateness of qualifying tax planning strategies and the reasonableness of management’s
estimates of taxable income prior to expiration.

How the Critical Audit Matter Was Addressed in the Audit

• We tested the effectiveness of controls over management’s estimates of the realization of the deferred tax

assets, including those over the estimates of taxable income, the approval of tax planning strategies and the
determination of whether it is more likely than not that the deferred tax assets will be realized prior to
expiration.

• We evaluated the reasonableness of management’s assessment of the significance and weighting of negative

evidence and positive evidence that is objectively verifiable.

• We evaluated management’s ability to accurately estimate taxable income by comparing actual results to

management’s historical estimates and evaluating whether there have been any changes that would impact
management’s ability to continue accurately estimating taxable income.

• We tested the reasonableness of management’s estimates of taxable income by comparing the estimates to:

– Historical taxable income.

–

Internal communications to management and the board of directors.

– Management’s history of carrying out its stated plans and its ability to carry out its plans considering

contractual commitments, available financing, or debt covenants.

• We evaluated whether the estimates of future taxable income were consistent with evidence obtained in other

areas of the audit, including the effects of the COVID-19 pandemic on projections.

• We evaluated whether the taxable income in prior carryback years was of the appropriate character and

available under the tax law.

• With the assistance of our income tax specialists, we evaluated (1) the appropriateness of qualifying tax

planning strategies, including that they were prudent, feasible and would more likely than not result in the
realization of deferred tax assets and (2) management’s assessment that sufficient taxable income will be
generated in the future to realize a portion of the deferred tax assets prior to expiration.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania
November 10, 2020

We have served as the Company’s auditor since 2007.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of TE Connectivity Ltd.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of TE Connectivity Ltd. and subsidiaries (the

“Company”) as of September 25, 2020, based on criteria established in Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 25, 2020, based on
criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the financial statements as of and for the fiscal year ended September 25, 2020, of the Company and our
report dated November 10, 2020 expressed an unqualified opinion on those financial statements and included an explanatory
paragraph regarding the Company’s adoption of FASB Accounting Standards Update 2016-02 which codified Accounting
Standards Codification 842, Leases.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and

for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania
November 10, 2020

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended September 25, 2020, September 27, 2019, and September 28, 2018

Fiscal
2020
2018
2019
(in millions, except per share data)

Net sales
Cost of sales

Gross margin

Selling, general, and administrative expenses
Research, development, and engineering expenses
Acquisition and integration costs
Restructuring and other charges, net
Impairment of goodwill
Operating income

Interest income
Interest expense
Other income, net

Income from continuing operations before income taxes

Income tax (expense) benefit

Income (loss) from continuing operations

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

Net income (loss)

Basic earnings (loss) per share:

Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)

Diluted earnings (loss) per share:

Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)

Weighted-average number of shares outstanding:

Basic
Diluted

$ 12,172 $ 13,448 $

8,437
3,735
1,392
613
36
257
900
537
15
(48)
20
524
(783)
(259)
18
(241) $

9,054
4,394
1,490
644
27
255
—
1,978
19
(68)
2
1,931
15
1,946
(102)
1,844 $

13,988
9,243
4,745
1,594
680
14
126
—
2,331
15
(107)
1
2,240
344
2,584
(19)
2,565

(0.78) $
0.05
(0.73)

5.76 $
(0.30)
5.46

7.38
(0.05)
7.33

(0.78) $
0.05
(0.73)

5.72 $
(0.30)
5.42

7.32
(0.05)
7.27

332
332

338
340

350
353

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Years Ended September 25, 2020, September 27, 2019, and September 28, 2018

Net income (loss)
Other comprehensive income (loss):

Currency translation
Adjustments to unrecognized pension and postretirement benefit costs, net of
income taxes
Gains (losses) on cash flow hedges, net of income taxes

Other comprehensive income (loss)

Comprehensive income (loss)
Less: comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to TE Connectivity Ltd.

2020

Fiscal
2019
(in millions)

2018

(241) $

1,844 $

2,565

(11)

(48)

(117)

34
40
63
(178)
(5)
(183) $

(195)
46
(197)
1,647
—
1,647 $

83
(74)
(108)
2,457
—
2,457

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS

As of September 25, 2020 and September 27, 2019

Assets
Current assets:

Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts of $29 and $25, respectively
Inventories
Prepaid expenses and other current assets

Total current assets

Property, plant, and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes
Other assets

Total assets

Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt
Accounts payable
Accrued and other current liabilities

Total current liabilities

Long-term debt
Long-term pension and postretirement liabilities
Deferred income taxes
Income taxes
Other liabilities

Total liabilities

Commitments and contingencies (Note 13)
Redeemable noncontrolling interests
Shareholders' equity:

Common shares, CHF 0.57 par value, 338,953,381 shares authorized and issued, and
350,951,381 shares authorized and issued, respectively
Accumulated earnings
Treasury shares, at cost, 8,295,878 and 15,862,337 shares, respectively
Accumulated other comprehensive loss

Total shareholders' equity
Total liabilities, redeemable noncontrolling interests, and shareholders' equity

See Notes to Consolidated Financial Statements.

Fiscal Year End

2020

2019

(in millions, except
share data)

945 $

2,377
1,950
512
5,784
3,650
5,224
1,593
2,178
813
19,242 $

927
2,320
1,836
471
5,554
3,574
5,740
1,596
2,776
454
19,694

694 $

1,276
1,720
3,690
3,452
1,336
143
252
874
9,747

570
1,357
1,613
3,540
3,395
1,367
156
239
427
9,124

112

—

149
10,348
(669)
(445)
9,383
19,242 $

154
12,256
(1,337)
(503)
10,570
19,694

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Fiscal Years Ended September 25, 2020, September 27, 2019, and September 28, 2018

Common Shares

Treasury Shares

Contributed Accumulated Comprehensive Shareholders'

Shares Amount Shares Amount Surplus

Earnings

Loss

Equity

(in millions)

Accumulated
Other

Total

Balance at fiscal year end
2017
Adoption of ASU No. 2018-02
Net income
Other comprehensive loss
Share-based compensation
expense
Dividends
Exercise of share options
Restricted share award
vestings and other activity
Repurchase of common shares
Balance at fiscal year end
2018
Adoption of ASU No. 2016-16
Net income
Other comprehensive loss
Share-based compensation
expense
Dividends
Exercise of share options
Restricted share award
vestings and other activity
Repurchase of common shares
Cancellation of treasury shares
Balance at fiscal year end
2019
Net loss
Other comprehensive income
Share-based compensation
expense
Dividends
Exercise of share options
Restricted share award
vestings and other activity
Repurchase of common shares
Cancellation of treasury shares
Balance at fiscal year end
2020

357 $
—
—
—

—
—
—

—
—

357 $
—
—
—

—
—
—

—
—
(6)

157
—
—
—

—
—
—

—
—

157
—
—
—

—
—
—

—
—
(3)

(5) $
—
—
—

(421) $
—
—
—

— $
—
—
—

10,175 $
38
2,565
—

(160) $
(38)
—
(108)

—
—
1

2
(10)

—
—
100

153
(966)

98
—
—

(98)
—

—
(610)
—

(54)
—

—
—
—

—
—

9,751
—
2,565
(108)

98
(610)
100

1
(966)

(12) $ (1,134) $
—
—
—

—
—
—

— $
—
—
—

12,114 $
(443)
1,844
—

(306) $
—
—
(197)

10,831
(443)
1,844
(197)

—
—
1

1
(12)
6

—
—
85

154
(1,014)
572

75
—
—

(75)
—
—

—
(613)
—

(77)
—
(569)

—
—
—

75
(613)
85

2
(1,014)
—

351 $
—
—

154
—
—

(16) $ (1,337) $
—
—

—
—

— $
—
—

12,256 $
(241)
—

(503) $
—
58

10,570
(241)
58

—
—
—

—
—
(12)

—
—
—

—
—
(5)

—
—
1

1
(6)
12

—
—
55

143
(505)
975

74
—
—

(74)
—
—

—
(634)
—

(63)
—
(970)

—
—
—

74
(634)
55

6
(505)
—

339 $

149

(8) $

(669) $

— $

10,348 $

(445) $

9,383

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended September 25, 2020, September 27, 2019, and September 28, 2018

Cash flows from operating activities:
Net income (loss)

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

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

Impairment of goodwill
Depreciation and amortization
Deferred income taxes
Non-cash lease cost
Provision for losses on accounts receivable and inventories
Share-based compensation expense
Other

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

Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued and other current liabilities
Income taxes
Other

Net cash provided by continuing operating activities
Net cash provided by (used in) discontinued operating activities
Net cash provided by operating activities

Cash flows from investing activities:
Capital expenditures
Proceeds from sale of property, plant, and equipment
Acquisition of businesses, net of cash acquired
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation
Other

Net cash used in continuing investing activities
Net cash used in discontinued investing activities
Net cash used in investing activities

Cash flows from financing activities:
Net increase (decrease) in commercial paper
Proceeds from issuance of debt
Repayment of debt
Proceeds from exercise of share options
Repurchase of common shares
Payment of common share dividends to shareholders
Transfers (to) from discontinued operations
Other

Net cash used in continuing financing activities
Net cash provided by (used in) discontinued financing activities
Net cash used in financing activities

Effect of currency translation on cash
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of fiscal year
Cash, cash equivalents, and restricted cash at end of fiscal year

Supplemental cash flow information:
Interest paid on debt, net
Income taxes paid, net of refunds

See Notes to Consolidated Financial Statements.

2020

Fiscal

2019

(in millions)

2018

(241)
(18)
(259)

1,844
102
1,946

2,565
19
2,584

900
711
535
108
14
74
54

(63)
(89)
51
(80)
(99)
(9)
143
1,991
1
1,992

(560)
17
(339)
—
17
(865)
—
(865)

(219)
593
(352)
55
(523)
(625)
1
(34)
(1,104)
(1)
(1,105)
(4)
18
927
945

50
257

—
690
(218)
—
43
75
51

31
64
144
(178)
(15)
(135)
(44)
2,454
(32)
2,422

(749)
43
(283)
297
2
(690)
(2)
(692)

(51)
746
(691)
85
(1,091)
(608)
(34)
(33)
(1,677)
34
(1,643)
(8)
79
848
927

75
338

—
667
(791)
—
30
95
5

(269)
(247)
(63)
201
5
54
30
2,301
150
2,451

(935)
23
(153)
—
(8)
(1,073)
(21)
(1,094)

270
119
(708)
100
(879)
(588)
129
(36)
(1,593)
(129)
(1,722)
(5)
(370)
1,218
848

127
393

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The Consolidated Financial Statements reflect the consolidated operations of TE Connectivity Ltd. and its

subsidiaries and have been prepared in United States (“U.S.”) dollars in accordance with accounting principles generally
accepted in the U.S. (“GAAP”).

Description of the Business

TE Connectivity Ltd. (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) is a

We operate through three reportable segments:

• Transportation Solutions—The Transportation Solutions segment is a leader in connectivity and sensor

technologies. Our products, which must withstand harsh conditions, are used in the automotive, commercial
transportation, and sensors markets.

•

Industrial Solutions—The Industrial Solutions segment is a leading supplier of products that connect and
distribute power, data, and signals. Our products are used in the aerospace, defense, oil, and gas; industrial
equipment; medical; and energy markets.

• Communications Solutions—The Communications Solutions segment is a leading supplier of electronic

components for the data and devices and the appliances markets.

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make

Fiscal Year

2. Summary of Significant Accounting Policies

Principles of Consolidation

We consolidate entities in which we own or control more than 50% of the voting shares or otherwise control through

similar rights. All intercompany transactions have been eliminated. The results of companies acquired or disposed of are
included on the Consolidated Financial Statements from the effective date of acquisition or up to the date of disposal.

Revenue Recognition

We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from
Contracts with Customers, which is a single, comprehensive, five-step revenue recognition model. Our revenues are
generated principally from the sale of our products. Revenue is recognized as performance obligations under the terms of a
contract, such as a purchase order with a customer, are satisfied; generally this occurs with the transfer of control. We transfer
41

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the
product, and we have a right to payment for such product. Revenue is measured as the amount of consideration that we
expect to receive in exchange for those products and excludes taxes assessed by governmental authorities and collected from
customers concurrent with the sale of products. Shipping and handling costs are treated as fulfillment costs and are included
in cost of sales. Since we typically invoice our customers when we satisfy our performance obligations, we do not have
material contract assets or contract liabilities. Our credit terms are customary and do not contain significant financing
components that extend beyond one year of fulfillment of performance obligations. We apply the practical expedient of ASC
606 with respect to financing components and do not evaluate contracts in which payment is due within one year of
satisfaction of the related performance obligation. Since our performance obligations to deliver products are part of contracts
that generally have original durations of one year or less, we have elected to use the optional exemption to not disclose the
aggregate amount of transaction prices associated with unsatisfied or partially satisfied performance obligations as of fiscal
year end 2020. See Note 21 for net sales disaggregated by industry end market and geographic region which is summarized
by segment and that we consider meaningful to depict the nature, amount, timing, and uncertainty of revenue and cash flows
affected by economic factors.

We generally warrant that our products will conform to our, or mutually agreed to, specifications and that our

Although products are generally sold at fixed prices, certain distributors and customers receive incentives or awards,

Inventories

Inventories are recorded at the lower of cost or net realizable value using the first-in, first-out cost method.

Property, Plant, and Equipment, Net

Property, plant, and equipment is recorded at cost less accumulated depreciation. Maintenance and repair

expenditures are charged to expense when incurred. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets, which are 10 to 20 years for land improvements, 5 to 40 years for buildings and
improvements, and 1 to 15 years for machinery and equipment.

We periodically evaluate, when events and circumstances warrant, the net realizable value of property, plant, and

equipment and other long-lived assets, relying on several factors including operating results, business plans, economic
projections, and anticipated future cash flows. When indicators of potential impairment are present, the carrying values of the
asset group are evaluated in relation to the operating performance and estimated future undiscounted cash flows of the
underlying asset group. Impairment of the carrying value is recognized whenever anticipated future undiscounted cash flow
estimates are less than the carrying value of the asset. Fair value estimates are based on assumptions concerning the amount
and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk.

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other,

as updated by Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

At fiscal year end 2020, we had five reporting units, all of which contained goodwill. There were two reporting units

in both the Transportation Solutions and Industrial Solutions segments and one reporting unit in the Communications
Solutions segment. When changes occur in the composition of one or more reporting units, goodwill is reassigned to the
reporting units affected based on their relative fair values.

Goodwill impairment is evaluated by comparing the carrying value of each reporting unit to its fair value on the first

Fair value estimates used in the goodwill impairment tests are calculated using an income approach based on the

Research and Development

Research and development expenditures are expensed when incurred and are included in research, development, and

engineering expenses on the Consolidated Statements of Operations. Research and development expenses include salaries,
direct costs incurred, and building and overhead expenses. The amounts expensed in fiscal 2020, 2019, and 2018 were $539
million, $572 million, and $606 million, respectively.

Income Taxes

Income taxes are computed in accordance with the provisions of ASC 740, Income Taxes. Deferred tax liabilities
and assets are recognized for the expected future tax consequences of events that have been reflected on the Consolidated
Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book and tax
bases of particular assets and liabilities and operating loss carryforwards using tax rates in effect for the years in which the
differences are expected to reverse. A valuation allowance is provided to offset deferred tax assets if, based upon the
available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The calculation of our tax liabilities includes estimates for uncertainties in the application of complex tax regulations

across multiple global jurisdictions where we conduct our operations. Under the uncertain tax position provisions of ASC
740, we recognize liabilities for tax and related interest for issues in tax jurisdictions based on our estimate of whether, and
the extent to which, additional taxes and related interest will be due. These tax liabilities and related interest are reflected net
of the impact of related tax loss carryforwards, as such tax loss carryforwards will be applied against these tax liabilities and
will reduce the amount of cash tax payments due upon the eventual settlement with the tax authorities. These estimates may
change due to changing facts and circumstances. Due to the complexity of these uncertainties, the ultimate resolution may
result in a settlement that differs from our current estimate of the tax liabilities and related interest.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Financial Instruments

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

debt, and derivative financial instruments.

We account for derivative financial instrument contracts on the Consolidated Balance Sheets at fair value. For
instruments not designated as hedges under ASC 815, Derivatives and Hedging, the changes in the instruments’ fair value are
recognized currently in earnings. For instruments designated as cash flow hedges, the effective portion of changes in the fair
value of a derivative is recorded in other comprehensive income (loss) and reclassified into earnings in the same period or
periods during which the underlying hedged item affects earnings. Amounts excluded from the hedging relationship are
recognized currently in earnings. Changes in the fair value of instruments designated as fair value hedges affect the carrying
value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being
recognized currently in earnings.

We determine the fair value of our financial instruments by using methods and assumptions that are based on market

conditions and risks existing at each balance sheet date. Standard market conventions are used to determine the fair value of
financial instruments, including derivatives.

The cash flows related to derivative financial instruments are reported in the operating activities section of the

Consolidated Statements of Cash Flows.

Our derivative financial instruments present certain market and counterparty risks. Concentration of counterparty

risk is mitigated, however, by our use of financial institutions worldwide, substantially all of which have long-term Standard
& Poor’s, Moody’s, and/or Fitch credit ratings of A/A2 or higher. In addition, we utilize only conventional derivative
financial instruments. We are exposed to potential losses if a counterparty fails to perform according to the terms of its
agreement. With respect to counterparty net asset positions recognized at fiscal year end 2020, we have assessed the
likelihood of counterparty default as remote. We currently provide guarantees from a wholly-owned subsidiary to the
counterparties to our commodity swap derivatives and exchange cash collateral with the counterparties to certain of our
cross-currency swap contracts. The likelihood of performance on the guarantees has been assessed as remote. For all other
derivative financial instruments, we are not required to provide, nor do we require counterparties to provide, collateral or
other security.

Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, specifies a fair value hierarchy based upon the observable

inputs utilized in valuation of certain assets and liabilities. Observable inputs (highest level) reflect market data obtained from
independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value
measurements are classified under the following hierarchy:

• Level 1—Quoted prices in active markets for identical assets and liabilities.

• Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for

the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets and liabilities. This includes certain pricing models, discounted cash flows methodologies,
and similar techniques that use significant unobservable inputs.

Derivative financial instruments measured at fair value on a recurring basis are generally valued using level 2 inputs.

Financial instruments other than derivative instruments include cash and cash equivalents, accounts receivable,

accounts payable, and debt. These instruments are recorded on the Consolidated Balance Sheets at book value. For cash and
cash equivalents, accounts receivable, and accounts payable, we believe book value approximates fair value due to the short-

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

term nature of these instruments. See Note 11 for disclosure of the fair value of debt. The following is a description of the
valuation methodologies used for the respective financial instruments:

• Cash and cash equivalents—Cash and cash equivalents are valued at book value, which we consider to be

equivalent to unadjusted quoted prices (level 1).

• Accounts receivable—Accounts receivable are valued based on the net value expected to be realized. The net

realizable value generally represents an observable contractual agreement (level 2).

• Accounts payable—Accounts payable are valued based on the net value expected to be paid, generally

supported by an observable contractual agreement (level 2).

• Debt—The fair value of debt, including both current and non-current maturities, is derived from quoted market

prices or other pricing determinations based on the results of market approach valuation models using
observable market data such as recently reported trades, bid and offer information, and benchmark securities
(level 2).

Pension Plans

The funded status of our defined benefit pension plans is recognized on the Consolidated Balance Sheets and is

measured as the difference between the fair value of plan assets and the projected benefit obligation at the measurement date.
The projected benefit obligation represents the actuarial present value of benefits projected to be paid upon retirement
factoring in estimated future compensation levels. The fair value of plan assets represents the current market value of
cumulative company and participant contributions made to irrevocable trust funds, held for the sole benefit of participants,
which are invested by the trustee of the funds. The benefits under our defined benefit pension plans are based on various
factors, such as years of service and compensation.

Net periodic pension benefit cost is based on the utilization of the projected unit credit method of calculation and is

charged to earnings on a systematic basis over the expected average remaining service lives of current participants, or, for
inactive plans, over the remaining life expectancy of participants.

The measurement of benefit obligations and net periodic benefit cost is based on estimates and assumptions
determined by our management. These valuations reflect the terms of the plans and use participant-specific information such
as compensation, age, and years of service, as well as certain assumptions, including estimates of discount rates, expected
return on plan assets, rate of compensation increases, interest crediting rates, and mortality rates.

Share-Based Compensation

We determine the fair value of share awards on the date of grant. Share options are valued using the

Black-Scholes-Merton valuation model; restricted share awards and performance awards are valued using our end-of-day
share price on the date of grant. The fair value is expensed ratably over the expected service period, with an allowance made
for estimated forfeitures based on historical employee activity. Estimates regarding the attainment of performance criteria are
reviewed periodically; the cumulative impact of a change in estimate regarding the attainment of performance criteria is
recorded in the period in which that change is made.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the basic weighted-average number of common

shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of
common shares outstanding adjusted for the potentially dilutive impact of share-based compensation arrangements.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Leases

We have facility, land, vehicle, and equipment leases that expire at various dates. We determine if a contract
qualifies as a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain
substantially all of the economic benefits of the identified asset and the right to direct the use of the identified asset.

Lease right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date of the lease based

on the present value of remaining lease payments over the lease term. Lease ROU assets represent our right to use the
underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.
We do not recognize ROU assets or lease liabilities that arise from short-term leases. Since our lease contracts do not contain
a readily determinable implicit rate, we determine a fully-collateralized incremental borrowing rate that reflects a similar term
to the lease and the economic environment of the applicable country or region in which the asset is leased.

We have elected to account for fixed lease and non-lease components in our real estate leases as a single lease

component; other leases generally do not contain non-lease components. The non-lease components in our real estate leases
include logistics services, warehousing, and other operational costs. Many of these costs are variable, fluctuating based on
services provided, such as pallets shipped in and out of a location or square footage of space occupied. These costs, and any
other variable rental costs, are excluded from our ROU assets and lease liabilities, and instead are expensed as incurred.
Some of our leases may include options to either renew or early terminate the lease. The exercise of these options is generally
at our sole discretion and would only occur if there is an economic, financial, or business reason to do so. Such options are
included in the lease term if we determine it is reasonably certain they will be exercised.

Currency Translation

For our non-U.S. dollar functional currency subsidiaries, assets and liabilities are translated into U.S. dollars using

fiscal year end exchange rates. Sales and expenses are translated at average monthly exchange rates. Foreign currency
translation gains and losses are included as a component of accumulated other comprehensive income (loss) within equity.
Gains and losses resulting from foreign currency transactions are included in earnings.

Restructuring Charges

Restructuring activities involve employee-related termination costs, facility exit costs, and asset impairments
resulting from reductions-in-force, migration of facilities or product lines from higher-cost to lower-cost countries, or
consolidation of facilities within countries. We recognize termination costs based on requirements established by severance
policy, government law, or previous actions. Facility exit costs generally reflect the accelerated rent expense for ROU assets,
expected lease termination costs, or costs that will continue to be incurred under the facility lease without future economic
benefit to us. Restructuring activities often result in the disposal or abandonment of assets that require an acceleration of
depreciation or impairment reflecting the excess of the assets’ carrying values over fair value.

The recognition of restructuring costs require that we make certain judgments and estimates regarding the nature,

timing, and amount of costs associated with the planned exit activity. To the extent our actual results differ from our
estimates and assumptions, we may be required to revise the estimated liabilities, requiring the recognition of additional
restructuring costs or the reduction of liabilities already recognized. At the end of each reporting period, we evaluate the
remaining accrued balances to ensure these balances are properly stated and the utilization of the reserves are for their
intended purpose in accordance with developed exit plans.

Contingent Liabilities

We record a loss contingency when the available information indicates it is probable that we have incurred a liability

and the amount of the loss is reasonably estimable. When a range of possible losses with equal likelihood exists, we record
the low end of the range. The likelihood of a loss with respect to a particular contingency is often difficult to predict, and
determining a meaningful estimate of the loss or a range of loss may not be practicable based on information available. In
addition, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

new information must continuously be evaluated to determine whether a loss is probable and a reasonable estimate of that
loss can be made. When a loss is probable but a reasonable estimate cannot be made, or when a loss is at least reasonably
possible, disclosure is provided.

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, an update to ASC

350. The update simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test.
Under the amendments in the update, goodwill impairment should be tested by comparing the fair value of a reporting unit
with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds
the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that
reporting unit. The amendments are to be applied on a prospective basis. We elected to early adopt this update and applied it
during the quarter ended March 27, 2020. See Note 8 for additional information regarding our interim and annual goodwill
impairment tests.

In February 2016, the FASB issued ASU No. 2016-02 which codified ASC 842, Leases. This guidance, as
subsequently amended, requires lessees to recognize a lease liability and a ROU asset for most leases. We adopted ASC 842,
as amended, in fiscal 2020 using the optional transition method permitted by ASU No. 2018-11, which allows for application
of the standard at the adoption date and no restatement of comparative periods. We elected to use the package of practical
expedients permitted under the transition guidance within the new standard, which among other things, allows the carry
forward of historical lease classification of existing and expired leases. In addition, we elected to use the hindsight practical
expedient in determining the lease term for existing leases. As a result of adoption, we recorded ROU assets and related lease
liabilities of approximately $520 million on the Consolidated Balance Sheet. Adoption did not have a material impact on our
results of operations or cash flows. See Note 12 for additional information regarding leases.

3. Restructuring and Other Charges, Net

Net restructuring and other charges consisted of the following:

Restructuring charges, net
Gain on divestiture
Other credits, net

Restructuring and other charges, net

Net restructuring charges by segment were as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Restructuring charges, net

2018

2020

Fiscal
2019
(in millions)
$ 257 $ 255 $ 140
(2)
(12)
$ 257 $ 255 $ 126

—
—

2020

Fiscal
2019
(in millions)

2018

$ 113 $ 144 $

42
83
15
$ 257 $ 255 $ 140

102
42

63
48

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Activity in our restructuring reserves was as follows:

Balance at
Beginning
of Fiscal
Year

Changes in Cash

Currency
Non-Cash Translation of Fiscal

Balance at
End

Charges Estimate Payments
(in millions)

Items

and Other Year

Fiscal 2020 Activity:

Fiscal 2020 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total
Fiscal 2019 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total
Fiscal 2018 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Pre-Fiscal 2018 Actions:
Employee severance
Facility and other exit costs

Total

Total fiscal 2020 activity

Fiscal 2019 Activity:

Fiscal 2019 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total
Fiscal 2018 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Pre-Fiscal 2018 Actions:
Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Total fiscal 2019 activity

Fiscal 2018 Activity:

Fiscal 2018 Actions:

Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Pre-Fiscal 2018 Actions:
Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Total fiscal 2018 activity

—
—
—
—

$ 214
8
28
250

—
—
—
—

(35) $
—
—
(35)

—
—
(28)
(28)

188
1
—
189

52
1
—
53

7
11
7
25

—
2
2
4

21
1
22
264

—
4
4
$ 283

—
—
—
—

$ 252
2
3
257

(20)
—
—
(20)

(107)
(11)
—
(118)

—
—
—
—

(32)
(3)
—
(35)

—
—
(7)
(7)

—
—
(2)
(2)

(6)
—
(6)
(26) $

(14)
(4)
(18)
(206) $

—
—
—
(37) $

(3) $
—
—
(3)

(55) $
(1)
—
(56)

(3) $
—
(3)
(6)

114
4
—
118

49
—
—
49
167

3
4
2
9

(5)
(2)
(2)
(9)

(57)
(5)
—
(62)

—
—
—
—

6
4
1
11
$ 277

(7)
—
(3)
(10)
(22) $

(25)
(3)
—
(28)
(146) $

—
—
2
2
(4) $

— $ 130 $
—
—
—

6
6
142

— $
—
—
—

(16) $
(2)
—
(18)

137
1
—
138
138 $ 164 $

12
8
2
22

(19)
—
(5)

(24)
(24) $

(79)
(8)
5
(82)
(100) $

— $
—
(6)
(6)

—
—
(2)
(2)
(8) $

1
—
—
1

4
1
—
5

—
1
—
1

—
—
—
7

(3) $
—
—
(3)

(3)
—
—
(3)

(2)
—
—
(2)
(8) $

— $
—
—
—

(2)
(1)
—
(3)
(3) $

180
8
—
188

72
2
—
74

20
1
—
21

1
1
2
285

188
1
—
189

52
1
—
53

21
1
—
22
264

114
4
—
118

49
—
—
49
167

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal 2020 Actions

During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural

improvements, due in part to the COVID-19 pandemic, across all segments. In connection with this program, during fiscal
2020, we recorded restructuring charges of $250 million. We expect to complete all restructuring actions commenced during
fiscal 2020 by the end of fiscal 2022 and to incur additional charges of approximately $45 million related to all three classes
of costs.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2020 program by segment:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal 2019 Actions

Total

Cumulative Remaining
Expected
Charges Expected
Charges Incurred Charges
(in millions)

$ 140 $
114
41

$ 295 $

115 $
99
36
250 $

25
15
5
45

During fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural
improvements impacting all segments. In connection with this program, during fiscal 2020 and 2019, we recorded net
restructuring charges of $5 million and $254 million, respectively. We expect to complete all restructuring actions
commenced during fiscal 2019 by the end of fiscal 2021. We anticipate that any additional charges will be insignificant for
restructuring actions commenced during fiscal 2019.

Fiscal 2018 Actions

During fiscal 2018, we initiated a restructuring program associated with footprint consolidation and structural

improvements primarily impacting the Industrial Solutions and Transportation Solutions segments. In connection with this
program, during fiscal 2020 and 2018, we recorded net restructuring charges of $4 million and $142 million, respectively.
We anticipate that any additional charges will be insignificant for restructuring actions commenced during fiscal 2018.

Pre-Fiscal 2018 Actions

During fiscal 2020, 2019, and 2018, we recorded net restructuring credits of $2 million, charges of $1 million, and

credits of $2 million, respectively, related to pre-fiscal 2018 actions. We anticipate that any additional charges will be
insignificant for restructuring actions commenced prior to fiscal 2018.

Total Restructuring Reserves

Restructuring reserves included on the Consolidated Balance Sheets were as follows:

Accrued and other current liabilities
Other liabilities

Restructuring reserves

Fiscal Year End
2019
2020

(in millions)
229 $
56
285 $

245
19
264

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Discontinued Operations

In fiscal 2019, we sold our Subsea Communications (“SubCom”) business for net cash proceeds of $297 million and
incurred a pre-tax loss on sale of $86 million, related primarily to the recognition of cumulative translation adjustment losses
of $67 million and the guarantee liabilities discussed below. The sale of the SubCom business, which was previously
included in our Communications Solutions segment, represented our exit from the telecommunications market and was
significant to our sales and profitability, both to the Communications Solutions segment and to the consolidated company.
We concluded that the divestiture was a strategic shift that had a major effect on our operations and financial results. As a
result, the SubCom business met the held for sale and discontinued operations criteria and has been reported as such in all
periods presented on our Consolidated Financial Statements.

Upon entering into the definitive agreement, which we consider a level 2 observable input in the fair value
hierarchy, we assessed the carrying value of the SubCom business and determined that it was in excess of its fair value. In
fiscal 2018, we recorded a pre-tax impairment charge of $19 million, which was included in income (loss) from discontinued
operations on the Consolidated Statement of Operations, to write the carrying value of the business down to its estimated fair
value less costs to sell.

In connection with the sale, we contractually agreed to continue to honor performance guarantees and letters of

credit related to the SubCom business’ projects that existed as of the date of sale. These guarantees had a combined value of
approximately $600 million as of fiscal year end 2020 and are expected to expire at various dates through fiscal 2025. At the
time of sale, we determined that the fair value of these guarantees was $12 million, which we recognized by a charge to pre-
tax loss on sale. Also, under the terms of the definitive agreement, we are required to issue up to $300 million of new
performance guarantees, subject to certain limitations, for projects entered into by the SubCom business following the sale
for a period of up to three years. At fiscal year end 2020, there were no such new performance guarantees outstanding. We
have contractual recourse against the SubCom business if we are required to perform on any SubCom guarantees; however,
based on historical experience, we do not anticipate having to perform.

The following table presents the summarized components of income (loss) from discontinued operations, net of

income taxes, for the SubCom business and prior divestitures:

Net sales
Cost of sales

Gross margin

Selling, general, and administrative expenses
Research, development, and engineering expenses
Restructuring and other charges, net

Operating loss

Non-operating expense, net
Pre-tax loss from discontinued operations
Pre-tax gain (loss) on sale of discontinued operations
Income tax benefit

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

2020

Fiscal
2019
(in millions)

2018

— $
—
—
1
—
—
(1)
(1)
(2)
4
16
18 $

41 $
50
(9)
11
3
3
(26)
—
(26)
(86)
10
(102) $

702
602
100
48
39
30 (1)
(17)
—
(17)
(2)
—
(19)

(1)

Included a $19 million impairment charge recorded in connection with the sale of our SubCom business.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Acquisitions

First Sensor AG

During fiscal 2020, we acquired approximately 72% of the outstanding shares of First Sensor AG (“First Sensor”), a
provider of sensing solutions based in Germany, for €181 million in cash (equivalent to $201 million using an exchange rate
of $1.11 per €1.00), net of cash acquired. As a result of the transaction, we recognized a noncontrolling interest with a fair
value of €96 million (equivalent to $107 million) as of the acquisition date. The fair value of the noncontrolling interest for
First Sensor common shares that were not acquired was determined using the stated price in the Domination and Profit and
Loss Transfer Agreement (“DPLTA”) which is considered to be a level 2 observable input under the fair value hierarchy. The
First Sensor business has been reported as part of our Transportation Solutions segment from the date of acquisition.

We and First Sensor entered into a DPLTA which was approved by First Sensor shareholders and became effective

in July 2020 following registration in the commercial register in Germany. Under the terms of the DPLTA, upon its
effectiveness, First Sensor minority shareholders can elect either (1) to remain First Sensor minority shareholders and receive
recurring annual compensation of €0.56 per First Sensor share or (2) to put their First Sensor shares in exchange for
compensation of €33.27 per First Sensor share. The ultimate amount and timing of any future cash payments related to the
DPLTA is uncertain. Following the registration of the DPLTA, the First Sensor noncontrolling interest balance of €96
million (equivalent to $108 million using an exchange rate of $1.13 per €1.00) was reclassified and is now presented as
redeemable noncontrolling interest outside of equity on the Consolidated Balance Sheet as the exercise of the put right by
First Sensor minority shareholders is not within our control.

Other Acquisitions

During fiscal 2020, we acquired four additional businesses for a combined cash purchase price of $135 million, net

of cash acquired. The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments
from the date of acquisition.

During fiscal 2019, we acquired three businesses for a combined cash purchase price of $296 million, net of cash

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

We acquired two businesses during fiscal 2018 for a combined cash purchase price of $153 million, net of cash
acquired. In fiscal 2019, we received $13 million as a result of a customary net working capital settlement for one of the
acquisitions. The acquisitions were reported as part of our Industrial Solutions segment from the date of acquisition.

6. Inventories

Inventories consisted of the following:

Raw materials
Work in progress
Finished goods
Inventories

Fiscal Year End
2019
2020

(in millions)
251 $
851
848

260
739
837
$ 1,950 $ 1,836

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Property, Plant, and Equipment, Net

Net property, plant, and equipment consisted of the following:

Fiscal Year End
2019
2020

(in millions)

Property, plant, and equipment, gross:

Land and improvements
Buildings and improvements
Machinery and equipment
Construction in process

Accumulated depreciation

Property, plant, and equipment, net

147 $

152
1,393
7,298
637
9,480
(5,906)
$ 3,650 $ 3,574

1,442
7,849
516
9,954
(6,304)

Depreciation expense was $529 million, $510 million, and $487 million in fiscal 2020, 2019, and 2018, respectively.

8. Goodwill

The changes in the carrying amount of goodwill by segment were as follows:

Transportation Industrial Communications
Solutions

Solutions

Total

Balance at fiscal year end 2018(1)

Acquisitions
Purchase price adjustments
Currency translation

Balance at fiscal year end 2019(1)

Impairment of goodwill
Acquisitions
Purchase price adjustments
Currency translation

Balance at fiscal year end 2020(2)

1,993 $ 3,104 $

(in millions)

167
—
(36)
2,124
(900)
276
(1)
28

—
(12)
(53)
3,039
—
18
—
53

1,527 $ 3,110 $

587 $ 5,684
167
—
(12)
—
(99)
(10)
5,740
577
(900)
—
294
—
(1)
—
10
91
587 $ 5,224

(1)

(2)

At fiscal year end 2019 and 2018, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and
Communications Solutions segments were $2,191 million, $669 million, and $489 million, respectively.

At fiscal year end 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and
Communications Solutions segments were $3,091 million, $669 million, and $489 million, respectively.

During fiscal 2020, we completed the acquisition of First Sensor and recognized goodwill of $215 million in the

Transportation Solutions segment. Further adjustments to the purchase price allocation may be needed in fiscal 2021. In
addition, during fiscal 2020 and 2019, we recognized goodwill in connection with other recent acquisitions. See Note 5 for
additional information regarding acquisitions.

We test goodwill allocated to reporting units for impairment annually during the fourth fiscal quarter, or more

frequently if events occur or circumstances exist that indicate that a reporting unit’s carrying value may exceed its fair value.
As a result of current and projected declines in sales and profitability, due in part to the impact of the COVID-19 pandemic
and projected reductions in global automotive production as of March 2020, of the Sensors reporting unit of the
Transportation Solutions segment during the quarter ended March 27, 2020, we determined that an indicator of impairment
had occurred and goodwill impairment testing of this reporting unit was required.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As discussed in Note 2, during the quarter ended March 27, 2020, we adopted ASU No. 2017-04 which simplifies

the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the new standard,
goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to
exceed the carrying value of goodwill. We determined the fair value of the Sensors reporting unit to be $1.0 billion as of
March 27, 2020. This valuation was based on a discounted cash flows analysis incorporating our estimate of future operating
performance, which we consider to be a level 3 unobservable input in the fair value hierarchy, and was corroborated using a
market approach valuation. The goodwill impairment test indicated that the carrying value of the reporting unit exceeded its
fair value by $900 million. As a result, we recorded a partial impairment charge of $900 million in the quarter ended March
27, 2020. As of fiscal year end 2020, the Sensors reporting unit had a remaining goodwill allocation of $511 million.

We completed our annual goodwill impairment test in the fourth quarter of fiscal 2020 and determined that no

impairment existed.

9. Intangible Assets, Net

Intangible assets consisted of the following:

Customer relationships
Intellectual property
Other

Total

Fiscal Year End

2020

2019

Gross

Net

Gross

Net

Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
(in millions)

$ 1,648 $
1,225
19

$ 2,892 $

(554) $ 1,094 $ 1,513 $
486
(739)
13
(6)
(1,299) $ 1,593 $ 2,806 $

1,260
33

(459) $ 1,054
526
(734)
16
(17)
(1,210) $ 1,596

Intangible asset amortization expense was $182 million, $180 million, and $180 million for fiscal 2020, 2019, and

2018, respectively. At fiscal year end 2020, the aggregate amortization expense on intangible assets is expected to be as
follows:

Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total

(in millions)
190
$
190
189
158
141
725
1,593

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following:

Fiscal Year End
2019
2020

Accrued payroll and employee benefits
Dividends payable to shareholders
Restructuring reserves
Lease liability
Income taxes payable
Deferred revenue
Interest payable
Other

Accrued and other current liabilities

11. Debt

Debt was as follows:

Principal debt:

Commercial paper, at a weighted-average interest rate of 2.20% at
fiscal year end 2019
Floating rate senior notes due 2020(1)
4.875% senior notes due 2021
Euro-denominated fixed-to-floating rate senior notes due 2021(2)
3.50% senior notes due 2022
1.10% euro-denominated senior notes due 2023
3.45% senior notes due 2024
0.00% euro-denominated senior notes due 2025
3.70% senior notes due 2026
3.125% senior notes due 2027
7.125% senior notes due 2037
Other

Unamortized discounts, premiums, and debt issuance costs, net
Effects of fair value hedge-designated interest rate swap contracts

Total debt

(in millions)
460 $
317
229
116
113
47
30
408

455
308
245
—
94
36
31
444
$ 1,720 $ 1,613

Fiscal Year End
2019
2020

(in millions)

— $
—
250
407
500
639
350
639
350
400
477
149
4,161
(23)
8

219
350
250
383
500
602
350
—
350
400
477
94
3,975
(19)
9
$ 4,146 $ 3,965

(1)

(2)

The floating rate senior notes due 2020 bore interest at a rate of three-month London
Interbank Offered Rate (“LIBOR”) plus 0.45% per year.

The euro-denominated fixed-to-floating rate senior notes due 2021 bore interest at a rate of
0% until June 2020 and then bear interest at a rate of three-month Euro Interbank Offered
Rate (“EURIBOR”) plus 0.30%, with the minimum interest rate of 0%, per year until
maturity.

During fiscal 2020, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued €550 million

aggregate principal amount of 0.00% senior notes due in February 2025. 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of

November 2023 and total commitments of $1.5 billion. The Credit Facility contains provisions that allow for incremental
commitments of up to $500 million, an option to temporarily increase the financial ratio covenant following a qualified
acquisition, and borrowings in designated currencies. TEGSA had no borrowings under the Credit Facility at fiscal year end
2020 or 2019.

Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) LIBOR

plus an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA, or (2) 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%, and (iii)
one-month LIBOR plus 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 ranging from 5.0 to 12.5 basis points based upon the amount of
the lenders’ commitments under the Credit Facility and the applicable credit ratings of TEGSA.

The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our

TEGSA’s payment obligations under its senior notes, commercial paper, and Credit Facility are fully and

unconditionally guaranteed on an unsecured basis by its parent, TE Connectivity Ltd.

At fiscal year end 2020, principal payments required for debt are as follows:

Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter
Total

(in millions)
693
$
506
641
352
641
1,328
4,161

The fair value of our debt, based on indicative valuations, was approximately $4,550 million and $4,278 million at

fiscal year end 2020 and 2019, respectively.

12. Leases

The components of lease cost were as follows:

Operating lease cost
Variable lease cost
Total lease cost

Fiscal
2020
(in millions)
$

108
49
157

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts recognized on the Consolidated Balance Sheet were as follows:

Operating lease ROU assets:

Other assets

Operating lease liabilities:

Accrued and other current liabilities
Other liabilities

Total operating lease liabilities

Weighted-average remaining lease term (in years)
Weighted-average discount rate

Fiscal Year End
2020
($ in millions)

453

116
347
463

5.8
1.6 %

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

Cash paid for amounts included in the measurement of lease liabilities:

Payments for operating leases(1)

Fiscal
2020
(in millions)

108

ROU assets obtained in exchange for new operating lease liabilities

(1)

These payments are included in cash flows from continuing operating activities, primarily in
changes in other liabilities.

At fiscal year end 2020, the maturities of operating lease liabilities were as follows:

Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Thereafter

Total lease payments

Less: interest
Present value of lease liabilities

ASC 840 Comparative Disclosures

(in millions)
$

116
98
75
60
49
87
485
(22)
463

Prior to fiscal 2020, we accounted for our leases in accordance with ASC 840, Leases. Under ASC 840, rental

expense for operating leases was $162 million and $141 million for fiscal 2019 and 2018, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the future minimum lease payments under non-cancelable operating lease obligations

as of September 27, 2019 under ASC 840:

Fiscal 2020
Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Thereafter
Total

13. Commitments and Contingencies

Legal Proceedings

(in millions)
117
$
102
81
67
55
118
540

In the normal course of business, we are subject to various legal proceedings and claims, including patent

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 fiscal year end
2020, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of
$16 million to $45 million, and we accrued $20 million as the probable loss, which was the best estimate within this range.
We believe that any potential payment of such estimated amounts will not have a material adverse effect on our results of
operations, financial position, or cash flows.

Guarantees

In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover

At fiscal year end 2020, we had outstanding letters of credit, letters of guarantee, and surety bonds of $249 million.

We sold our SubCom business during fiscal 2019. In connection with the sale, we contractually agreed to honor

certain performance guarantees and letters of credit related to the SubCom business. See Note 4 for additional information
regarding these guarantees and the divestiture of the SubCom business.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Financial Instruments and Fair Value Measurements

We use derivative and non-derivative financial instruments to manage certain exposures to foreign currency, interest

rate, investment, and commodity risks.

Foreign Currency Exchange Rate Risk

During fiscal 2015, we entered into cross-currency swap contracts to reduce our exposure to foreign currency

exchange rate risk associated with certain intercompany loans. The aggregate notional value of these contracts was €700
million and €1,000 million at fiscal year end 2020 and 2019, respectively. Certain contracts were terminated during fiscal
2020; the remaining contracts mature in fiscal 2022. Under the terms of these contracts, which have been designated as cash
flow hedges, we make interest payments in euros at 3.50% per annum and receive interest in U.S. dollars at a weighted-
average rate of 5.34% per annum. Upon maturity, we will pay the notional value of the contracts in euros and receive U.S.
dollars from our counterparties. In connection with the cross-currency swap contracts, both counterparties to each contract
are required to provide cash collateral.

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

Other assets
Other liabilities

Fiscal Year End
2019
2020

(in millions)
1 $
9

19
—

At fiscal year end 2020 and 2019, collateral received from or paid to our counterparties approximated the net
derivative position. Collateral is recorded in accrued and other current liabilities when the contracts are in a net asset position,
or prepaid expenses and other current assets when the contracts are in a net liability position on the Consolidated Balance
Sheets. The impacts of these cross-currency swap contracts were as follows:

Gains (losses) recorded in other comprehensive income (loss)
Gains (losses) excluded from the hedging relationship(1)

2020

Fiscal
2019
(in millions)

2018

28 $
(48)

53 $
66

(25)
21

(1)

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

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 $3,511 million and $3,374 million at
fiscal year end 2020 and 2019, 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 $1,664 million and $1,844 million at fiscal year end 2020 and 2019,
respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 2.4% per
annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2024, we will pay the notional

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

value of the contracts in the designated foreign currency and receive U.S. dollars from our counterparties. We are not
required to provide collateral for these contracts.

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

Prepaid expenses and other current assets
Other assets
Accrued and other current liabilities
Other liabilities

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

Fiscal Year End
2019
2020

(in millions)
1 $
3
6
16

27
46
2
1

2020

Fiscal
2019
(in millions)

2018

Foreign currency exchange gains (losses) on intercompany loans and external
borrowings(1)
Gains (losses) on cross-currency swap contracts designated as hedges of net
investment(1)

(172) $

162 $

(69)

—

(1)

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

Interest Rate and Investment Risk Management

We issue debt, as needed, to fund our operations and capital requirements. Such borrowings can result in interest

rate exposure. To manage the interest rate exposure, we use interest rate swap contracts to convert a portion of fixed rate debt
into variable rate debt. We may use forward starting interest rate swap contracts to manage interest rate exposure in periods
prior to the anticipated issuance of fixed rate debt. During fiscal 2020 and 2019, we entered into forward starting interest rate
swap contracts which had an aggregate notional value of $450 million and $350 million at fiscal year end 2020 and 2019,
respectively, and were designated as cash flow hedges. These forward starting interest rate swap contracts were recorded on
the Consolidated Balance Sheets as follows:

Other liabilities

Fiscal Year End
2019
2020

(in millions)
64 $

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

Losses recorded in other comprehensive income (loss)

(30) $

(34) $

—

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

2020

Fiscal
2019
(in millions)

2018

compensation liabilities.

Commodity Hedges

As part of managing the exposure to certain commodity price fluctuations, we utilize commodity swap contracts

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2020 and 2019, our commodity hedges had notional values of $312 million and $316 million,
respectively. We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated
with the commodity hedges will be reclassified into the Consolidated Statement of Operations within the next twelve months.

Fair Value Measurements

Financial instruments recorded at fair value on a recurring basis, which consist of marketable securities and

derivative instruments not discussed above, were immaterial at fiscal year end 2020 and 2019.

15. Retirement Plans

Defined Benefit Pension Plans

We have several contributory and noncontributory defined benefit retirement plans covering certain of our non-U.S.

and U.S. employees, designed in accordance with local customs and practice.

The net periodic pension benefit cost (credit) for all non-U.S. and U.S. defined benefit pension plans was as follows:

Non-U.S. Plans
Fiscal
2019

2020

2018

2020
($ in millions)

U.S. Plans
Fiscal
2019

2018

$ 52

$ 47

$ 46

$ 10

25
(61)
41
(6)
$ 51

42
(64)
24
(8)
$ 41

42
(69)
24
(6)
$ 37

36
(59)
9
—
$ (4)

46
(58)
17
—
18

43
(59)
22
—
20

1.01 % 1.94 % 1.87 % 3.14 % 4.35 % 3.77 %
4.07 % 4.65 % 4.92 % 6.50 % 6.57 % 6.45 %
— %
2.53 % 2.57 % 2.53 %

— %

Operating expense:
Service cost

Other (income) expense:

Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Amortization of prior service credit and other

Net periodic pension benefit cost (credit)
Weighted-average assumptions used to determine net
pension benefit cost (credit) during the fiscal year:
Discount rate
Expected return on plan assets
Rate of compensation increase

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table represents the changes in benefit obligation and plan assets and the net amount recognized on

the Consolidated Balance Sheets for all non-U.S. and U.S. defined benefit pension plans:

Change in benefit obligation:
Benefit obligation at beginning of fiscal year

Service cost
Interest cost
Actuarial (gains) losses
Benefits and administrative expenses paid
Currency translation
Other

Benefit obligation at end of fiscal year

Change in plan assets:
Fair value of plan assets at beginning of fiscal year

Actual return on plan assets
Employer contributions
Benefits and administrative expenses paid
Currency translation
Other

Fair value of plan assets at end of fiscal year

Funded status

Amounts recognized on the Consolidated Balance Sheets:
Other assets
Accrued and other current liabilities
Long-term pension and postretirement liabilities

Net amount recognized

Non-U.S. Plans
Fiscal

U.S. Plans
Fiscal

2020

2019

2020

2019

($ in millions)

$ 2,483
52
25
(44)
(88)
111
(20)
2,519

$ 2,220
47
42
347
(82)
(92)
1
2,483

$ 1,195
10
36
65
(87)
—
—
1,219

$ 1,093
13
46
125
(82)
—
—
1,195

1,489
39
43
(88)
52
2
1,537
$ (982)

1,390
186
43
(82)
(42)
(6)
1,489
$ (994)

937
114
4
(87)
—
—
968
$ (251)

120
(28)
(1,074)
$ (982)

128
(25)
(1,097)
$ (994)

—
(5)
(246)
$ (251)

917
100
2
(82)
—
—
937
(258)

—
(5)
(253)
(258)

Pre-tax amounts included in accumulated other comprehensive income
(loss) which have not yet been recognized in net periodic pension benefit
cost:
Net actuarial loss
Prior service (cost) credit

Total

Weighted-average assumptions used to determine pension benefit
obligation at fiscal year end:
Discount rate
Rate of compensation increase

$ (597)
37
$ (560)

$ (656)
43
$ (613)

$ (291)
(2)
$ (293)

(290)
(2)
(292)

1.13 %
2.50 %

1.01 %
2.53 %

2.57 %
— %

3.14 %
— %

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The pre-tax amounts recognized in accumulated other comprehensive income (loss) for all non-U.S. and U.S.

defined benefit pension plans were as follows:

Current year net actuarial gain (loss) recorded in accumulated other
comprehensive income (loss)
Amortization of net actuarial loss
Current year prior service cost recorded in accumulated other
comprehensive income (loss)
Amortization of prior service credit

Non-U.S. Plans
Fiscal

U.S. Plans
Fiscal

2020

2019

2020

2019

(in millions)

18 $
41

(204) $
24

(10) $
9

—
(6)
53 $

(8)
(7)
(195) $

—
—
(1) $

(83)
17

—
—
(66)

In fiscal 2020, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were

primarily the result of favorable asset performance for our U.S. defined benefit pension plans, partially offset by lower U.S.
discount rates and unfavorable asset performance for our non-U.S. defined benefit pension plans as compared to fiscal 2019.
In fiscal 2019, unrecognized actuarial losses recorded in accumulated other comprehensive income (loss) were primarily the
result of lower discount rates, partially offset by favorable asset performance for both non-U.S. and U.S. defined benefit
pension plans as compared to fiscal 2018.

The estimated amortization of actuarial losses from accumulated other comprehensive income (loss) into net
periodic pension benefit cost for non-U.S. and U.S. defined benefit pension plans in fiscal 2021 is expected to be $31 million
and $9 million, respectively. The estimated amortization of prior service credit from accumulated other comprehensive
income (loss) into net periodic pension benefit cost for non-U.S. defined benefit pension plans in fiscal 2021 is expected to be
$6 million.

In determining the expected return on plan assets, we consider the relative weighting of plan assets by class and

individual asset class performance expectations.

The investment strategies for non-U.S. and U.S. pension plans are governed locally. Our investment strategy for our
pension plans is to manage the plans on a going concern basis. Current investment policy is to achieve a reasonable return on
assets, subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for participants.
Projected returns are based primarily on pro forma asset allocation, expected long-term returns, and forward-looking
estimates of active portfolio and investment management.

At fiscal year end 2020, the long-term target asset allocation in our U.S. plans’ master trust is 5% return-seeking

assets and 95% liability-hedging assets. Return-seeking assets, including non-U.S. and U.S. equity securities, are assets
intended to generate returns in excess of pension liability growth. Liability-hedging assets, including government and
corporate bonds, are assets intended to have characteristics similar to pension liabilities and are used to better match asset
cash flows with expected obligation cash flows. Asset re-allocation to meet that target is occurring over a multi-year period
based on the funded status. We expect to reach our target allocation when the funded status of the plans exceeds 115%. Based
on the funded status of the plans as of fiscal year end 2020, our target asset allocation is 67% return-seeking and 33%
liability-hedging.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

were as follows:

Asset category:

Equity securities
Fixed income
Other

Total

Non-U.S. Plans

Fiscal

U.S. Plans
Fiscal

Fiscal

Year End Year End

Target

2020

2019

Target

2020

2019

27 %
54
19
100 %

25 %
55
20
100 %

26 %
53
21

67 %
33
—

100 % 100 %

45 %
55
—
100 %

41 %
59
—
100 %

Our common shares are not a direct investment of our pension funds; however, the pension funds may indirectly

include our shares. The aggregate amount of our common shares would not be considered material relative to the total
pension fund assets.

Our funding policy is to make contributions in accordance with the laws and customs of the various countries in

which we operate as well as to make discretionary voluntary contributions from time to time. We expect to make the
minimum required contributions of $45 million and $24 million to our non-U.S. and U.S. pension plans, respectively, in
fiscal 2021. We may also make voluntary contributions at our discretion.

At fiscal year end 2020, benefit payments, which reflect future expected service, as appropriate, are expected to be

paid as follows:

Fiscal 2021
Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026-2030

Non-U.S. Plans U.S. Plans
(in millions)
117 $
85
90
86
91
516

78
74
74
74
74
354

Presented below is the accumulated benefit obligation for all non-U.S. and U.S. pension plans as well as additional

information related to plans with an accumulated benefit obligation in excess of plan assets and plans with a projected benefit
obligation in excess of plan assets.

Accumulated benefit obligation
Pension plans with accumulated benefit obligations in excess of plan
assets:

Accumulated benefit obligation
Fair value of plan assets

Pension plans with projected benefit obligations in excess of plan assets:

Projected benefit obligation
Fair value of plan assets

Non-U.S. Plans
Fiscal Year End

U.S. Plans
Fiscal Year End

2020

2019

2020

2019

(in millions)
$ 2,394 $ 2,340 $ 1,219 $ 1,195

1,324
338

1,458
356

1,304
316

1,453
331

1,219
968

1,195
937

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Disclosures. Details of the fair value hierarchy are described in Note 2. The following table presents our defined benefit
pension plans’ asset categories and their associated fair value within the fair value hierarchy:

Equity:

Commingled equity funds(1)

Fixed income:

Government bonds(2)
Corporate bonds(3)
Commingled bond funds(4)

Other(5)
Subtotal
Items to reconcile to fair value of plan assets(6)

Fair value of plan assets

Equity:

Commingled equity funds(1)

Fixed income:

Government bonds(2)
Corporate bonds(3)
Commingled bond funds(4)

Other(5)
Subtotal
Items to reconcile to fair value of plan assets(6)

Fair value of plan assets

Non-U.S. Plans

Level 1 Level 2 Level 3 Total

U.S. Plans
Level 1 Level 2 Level 3 Total

Fiscal Year End 2020

(in millions)

$ — $ 357 $ — $

357 $ — $ 447 $ — $ 447

—
—
—
—

—
—
—
141
$ — $ 1,383 $ 141

347
146
366
167

347
146
366
308

—
—
—
—
1,524 $ — $ 967 $ —

—
—
494
26

—
—
—
—

13
$ 1,537

Fiscal Year End 2019

Non-U.S. Plans

Level 1 Level 2 Level 3 Total

U.S. Plans
Level 1 Level 2 Level 3 Total

(in millions)

$ — $ 339 $ — $

339 $ — $ 385 $ — $ 385

—
—
—
—

—
—
—
157
$ — $ 1,312 $ 157

315
137
359
162

315
137
359
319

—
—
—
—
1,469 $ — $ 936 $ —

—
—
540
11

—
—
—
—

20
$ 1,489

—
—
494
26
967
1
$ 968

—
—
540
11
936
1
$ 937

Commingled equity funds are pooled investments in multiple equity-type securities. Fair value is calculated as the closing price
of the underlying investments, an observable market condition, divided by the number of shares of the fund outstanding.

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

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

Commingled bond funds are pooled investments in multiple debt-type securities. Fair value is calculated as the closing price of
the underlying investments, an observable market condition, divided by the number of shares of the fund outstanding.

Other investments are composed of insurance contracts, derivatives, short-term investments, structured products such as
collateralized obligations and mortgage- and asset-backed securities, real estate investments, and hedge funds. Insurance
contracts are valued using cash surrender value, or face value of the contract if a cash surrender value is unavailable (level 2), as
these values represent the amount that the plan would receive on termination of the underlying contract. Derivatives, short-term
investments, and structured products are marked to fair value using models that are supported by observable market-based data
(level 2). Real estate investments include investments in commingled real estate funds and are valued at net asset value which is
calculated using unobservable inputs that are supported by little or no market activity (level 3). Hedge funds are valued at their
net asset value which is calculated using unobservable inputs that are supported by little or no market activity (level 3).

(1)

(2)

(3)

(4)

(5)

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(6)

Items to reconcile to fair value of plan assets include amounts receivable for securities sold, amounts payable for securities
purchased, and any cash balances, considered to be carried at book value, that are held in the plans.

Changes in Level 3 assets in non-U.S. plans were primarily the result of net investment losses in fiscal 2020 and

purchases in 2019.

Defined Contribution Retirement Plans

We maintain several defined contribution retirement plans, the most significant of which is located in the U.S. These

plans include 401(k) matching programs, as well as qualified and nonqualified profit sharing and share bonus retirement
plans. Expense for the defined contribution plans is computed as a percentage of participants’ compensation and was $60
million, $63 million, and $62 million for fiscal 2020, 2019, and 2018, respectively.

Deferred Compensation Plans

We maintain nonqualified deferred compensation plans, which permit eligible employees to defer a portion of their

compensation. A record keeping account is set up for each participant and the participant chooses from a variety of
measurement funds for the deemed investment of their accounts. The measurement funds correspond to several funds in our
401(k) plans and the account balance fluctuates with the investment returns on those funds. At fiscal year end 2020 and 2019,
total deferred compensation liabilities were $218 million and $203 million, respectively, and were recorded in other liabilities
on the Consolidated Balance Sheets. See Note 14 for additional information regarding our risk management strategy related
to deferred compensation liabilities.

Postretirement Benefit Plans

In addition to providing pension and 401(k) benefits, we also provide certain health care coverage continuation for

qualifying retirees from the date of retirement to age 65 or lifetime, as applicable. The accumulated postretirement benefit
obligation was $17 million and $18 million at fiscal year end 2020 and 2019, respectively, and the underfunded status of the
postretirement benefit plans was included primarily in long-term pension and postretirement liabilities on the Consolidated
Balance Sheets. Activity during fiscal 2020, 2019, and 2018 was not significant.

16. Income Taxes

Income Tax Expense (Benefit)

Significant components of the income tax expense (benefit) were as follows:

Current income tax expense (benefit):

U.S. Federal
U.S. State
Non-U.S.

Deferred income tax expense (benefit):

U.S. Federal
U.S. State
Non-U.S.

Income tax expense (benefit)

Fiscal

2020

2019

2018

(in millions)

9 $ (28) $

(23)
262
248

2
229
203

20
21
406
447

(16)
(10)
561
535

499
(25)
(30)
(8)
(1,260)
(185)
(791)
(218)
$ 783 $ (15) $ (344)

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The U.S. and non-U.S. components of income from continuing operations before income taxes were as follows:

U.S.
Non-U.S.

Income from continuing operations before income taxes $

2020

2018

Fiscal
2019
(in millions)
$ (1,053) $ (216) $ (245)
2,485
524 $ 1,931 $ 2,240

1,577

2,147

The reconciliation between U.S. federal income taxes at the statutory rate and income tax expense (benefit) was as

follows:

Notional U.S. federal income tax expense at the statutory
rate(1)
Adjustments to reconcile to the income tax expense (benefit):

$ 110 $ 406 $

551

Fiscal

2020

2019

2018

(in millions)

U.S. state income tax benefit, net
Tax law changes
Tax credits
Non-U.S. net earnings(2)
Change in accrued income tax liabilities
Valuation allowance
Divestitures and goodwill impairments
Legal entity restructuring and intercompany transactions
Excess tax benefits from share-based payments
Other

Income tax expense (benefit)

(26)
349
(13)
(88)
30
231
185
—
(6)
11

(7)
638
(8)
(213)
13
33
—
(1,329)
(24)
2
$ 783 $ (15) $ (344)

(5)
15
(22)
(166)
(61)
(163)
—
3
(8)
(14)

(1)

The U.S. federal statutory rate was 21% for fiscal 2020 and 2019 and 24.58% for fiscal
2018.

(2)

Excludes items which are separately presented.

The income tax expense for fiscal 2020 included $355 million of income tax expense related to the tax impacts of
certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”) and an income
tax benefit of $31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement. See “Swiss
Tax Reform” and “Tax Sharing Agreement” below for additional information. In addition, the income tax expense for fiscal
2020 included $226 million of income tax expense related to increases to the valuation allowance for certain deferred tax
assets, related primarily to the COVID-19 pandemic. As a result of the pandemic and its negative impact on our current and
expected future operating profit and taxable income, we believed it was more likely than not that a portion of our deferred tax
assets will not be realized. Depending on the duration and severity of COVID-19 disruptions to our business, additional
adjustments to our valuation allowance may be required in future periods. The pre-tax goodwill impairment charge of $900
million recorded during fiscal 2020 resulted in a tax benefit of $4 million as the associated goodwill was primarily not
deductible for income tax purposes. See Note 8 for additional information regarding the impairment of goodwill.

The income tax benefit for fiscal 2019 included a $216 million income tax benefit related to the tax impacts of

certain measures of Swiss Tax Reform, a $90 million income tax benefit related to the effective settlement of a tax audit in a
non-U.S. jurisdiction, and $15 million of income tax expense associated with the tax impacts of certain legal entity
restructurings and intercompany transactions. See “Swiss Tax Reform” below for additional information regarding Swiss Tax
Reform.

The income tax benefit for fiscal 2018 included a $1,222 million net income tax benefit associated with the tax

impacts of certain legal entity restructurings and intercompany transactions that occurred in the quarter ended September 28,

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2018. The net income tax benefit of $1,222 million related primarily to the recognition of certain non-U.S. loss carryforwards
and basis differences in subsidiaries expected to be utilized against future taxable income, partially offset by a $46 million
increase in the valuation allowance for certain U.S. federal tax credit carryforwards. The income tax benefit for fiscal 2018
also included $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act (the “Act”) and a
$61 million net income tax benefit related to the tax impacts of certain legal entity restructurings that occurred in the quarter
ended December 29, 2017. See “Tax Cuts and Jobs Act” below for additional information regarding the Act.

Deferred Tax Assets and Liabilities

Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for

financial reporting and tax purposes. The components of the net deferred income tax asset were as follows:

Fiscal Year End
2019
2020

(in millions)

Deferred tax assets:

Accrued liabilities and reserves
Tax loss and credit carryforwards
Inventories
Intangible assets
Pension and postretirement benefits
Deferred revenue
Interest
Unrecognized income tax benefits
Lease liabilities
Other

Gross deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Property, plant, and equipment
Lease ROU assets
Other

Total deferred tax liabilities

248 $

5,338
45
572
223
4
180
3
106
11
6,730
(4,429)
2,301

245
6,041
43
964
248
4
134
7
—
8
7,694
(4,970)
2,724

(108)
(93)
(65)
(266)

(57)
—
(47)
(104)

Net deferred tax assets

$ 2,035 $ 2,620

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our tax loss and credit carryforwards (tax effected) at fiscal year end 2020 were as follows:

U.S. Federal:

Net operating loss carryforwards
Tax credit carryforwards
Capital loss carryforwards

U.S. State:

Net operating loss carryforwards
Tax credit carryforwards

Non-U.S.:

Net operating loss carryforwards
Tax credit carryforwards
Capital loss carryforwards

Total tax loss and credit carryforwards

Expiration Period
Fiscal 2026
Through Through

Fiscal 2025 Fiscal 2040 Expiration Total

(in millions)

155 $
53
1

386 $
122
—

42 $ 583
175
—
1
—

65
9

35
8

—
7

100
24

2,575
1
3

4,420
177
2
—
—
33
460 $ 3,130 $ 1,748 $ 5,338

1,668
1
30

The valuation allowance for deferred tax assets of $4,429 million and $4,970 million at fiscal year end 2020 and
2019, respectively, related principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss,
capital loss, and credit carryforwards in various jurisdictions. During fiscal 2020, tax loss and credit carryforwards decreased
primarily as a result of a $818 million (tax effected) recovery of prior years’ net write-downs of investments in subsidiaries in
certain jurisdictions, offset by a corresponding decrease to the valuation allowance. We believe that we will generate
sufficient future taxable income to realize the income tax benefits related to the remaining net deferred tax assets on the
Consolidated Balance Sheet.

We have provided income taxes for earnings that are currently distributed as well as the taxes associated with

several subsidiaries’ earnings that are expected to be distributed in the future. No additional provision has been made for
Swiss or non-Swiss income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for
temporary differences related to basis differences in investments in subsidiaries, as such earnings are expected to be
permanently reinvested, the investments are essentially permanent in duration, or we have concluded that no additional tax
liability will arise as a result of the distribution of such earnings. As of fiscal year end 2020, certain subsidiaries had
approximately $29 billion of cumulative undistributed earnings that have been retained indefinitely and reinvested in our
global manufacturing operations, including working capital; property, plant, and equipment; intangible assets; and research
and development activities. A liability could arise if our intention to permanently reinvest such earnings were to change and
amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate
the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in
subsidiaries. As of fiscal year end 2020, we had approximately $5.3 billion of cash, cash equivalents, and intercompany
deposits, principally in our subsidiaries, that we have the ability to distribute to TEGSA, our Luxembourg subsidiary, which
is the obligor of substantially all of our debt, and to TE Connectivity Ltd., our Swiss parent company, but we consider to be
permanently reinvested. We estimate that up to $0.8 billion of tax expense would be recognized on the Consolidated
Financial Statements if our intention to permanently reinvest these amounts were to change. Our current plans do not
demonstrate a need to repatriate cash, cash equivalents, and intercompany deposits that are designated as permanently
reinvested in order to fund our operations, including investing and financing activities.

Uncertain Tax Positions

As of fiscal year end 2020, we had total unrecognized income tax benefits of $414 million. If recognized in future
years, $393 million of these currently unrecognized income tax benefits would reduce income tax expense and the effective
tax rate. As of fiscal year end 2019, we had total unrecognized income tax benefits of $542 million. If recognized in future

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

years, $397 million of these currently unrecognized income tax benefits would reduce income tax expense and the effective
tax rate. The following table summarizes the activity related to unrecognized income tax benefits:

Balance at beginning of fiscal year

Additions related to prior years tax positions
Reductions related to prior years tax positions
Additions related to current year tax positions
Settlements
Reductions due to lapse of applicable statute of limitations

Balance at end of fiscal year

2018

2020

Fiscal
2019
(in millions)
$ 542 $ 566 $ 501
14
(11)
105
(7)
(36)
$ 414 $ 542 $ 566

13
(101)
98
(2)
(32)

29
(87)
39
(12)
(97)

We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit).
As of fiscal year end 2020 and 2019, we had $42 million of accrued interest and penalties related to uncertain tax positions
on the Consolidated Balance Sheets, recorded primarily in income taxes. During fiscal 2020, 2019, and 2018, we recognized
income tax benefits of $1 million, benefits of $14 million, and expense of $5 million, respectively, related to interest and
penalties on the Consolidated Statements of Operations.

We file income tax returns on a unitary, consolidated, or stand-alone basis in multiple state and local jurisdictions,

which generally have statutes of limitations ranging from 3 to 4 years. Various state and local income tax returns are
currently in the process of examination or administrative appeal.

Our non-U.S. subsidiaries file income tax returns in the countries in which they have operations. Generally, these

countries have statutes of limitations ranging from 3 to 10 years. Various non-U.S. subsidiary income tax returns are
currently in the process of examination by taxing authorities.

As of fiscal year end 2020, under applicable statutes, the following tax years remained subject to examination in the

major tax jurisdictions indicated:

Jurisdiction
Brazil
China
Czech Republic
France
Germany
Hong Kong
Ireland
Italy
Japan
Luxembourg
Mexico
Singapore
South Korea
Spain
Switzerland
Thailand
United Kingdom
U.S.—federal

Open Years
2015 through 2020
2010 through 2020
2017 through 2020
2017 through 2020
2013 through 2020
2014 through 2020
2015 through 2020
2015 through 2020
2014 through 2020
2015 through 2020
2015 through 2020
2015 through 2020
2015 through 2020
2016 through 2020
2015 through 2020
2018 through 2020
2018 through 2020
2017 through 2020

In most jurisdictions, taxing authorities retain the ability to review prior tax years and to adjust any net operating

loss and tax credit carryforwards from these years that are utilized in a subsequent period.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

approximately $50 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 Consolidated Balance Sheet as of fiscal year end 2020.

Other Income Tax Matters

Swiss Tax Reform

Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing in September 2018, and it was

approved by public vote on May 19, 2019. Swiss Tax Reform eliminates certain preferential tax items and implements new
tax rates at both the federal and cantonal levels.

On May 24, 2019, the federal tax authority issued guidance abolishing certain interest deductions effective January
1, 2020. As a result, during fiscal 2019, we recorded a $216 million income tax benefit related primarily to the reduction to
the valuation allowance for deferred tax assets. Based on our forecast of taxable income and the abolishment of certain
interest deductions, we believed it was more likely than not that additional deferred tax assets for tax loss carryforwards in
Switzerland would be realized in the future. The federal provisions of Swiss Tax Reform were enacted into law in the quarter
ended September 27, 2019.

In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates.
During fiscal 2020, we recognized $355 million of income tax expense related primarily to cantonal implementation and the
resulting write-down of certain deferred tax assets to the lower tax rates.

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, which was enacted in December 2017, included numerous significant changes to

existing tax law, including a permanent reduction in the U.S. federal corporate income tax rate to 21%, effective January 1,
2018; further limitations on the deductibility of interest expense and certain executive compensation; repeal of the corporate
Alternative Minimum Tax; and imposition of a territorial tax system with a one-time repatriation tax on deemed repatriated
earnings of foreign subsidiaries. In the period of enactment, we revalued our U.S. federal deferred tax assets and liabilities at
the 21% tax rate and recorded income tax expense of $567 million primarily in connection with the write-down of our U.S.
federal deferred tax asset for net operating loss and interest carryforwards to the lower tax rate. Included in the expense of
$567 million was an income tax benefit of $34 million related to the reduction in the existing valuation allowance recorded
against certain U.S. federal tax credit carryforwards.

Tax Sharing Agreement

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

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

Tax Sharing Agreement. We believe that substantially all income tax matters that may be subject to the Tax Sharing
Agreement have been settled with tax authorities and we do not expect any remaining tax matters to have a material effect on
our results of operations, financial position, or cash flows. Accordingly, during fiscal 2020, we recognized an income tax
benefit of $31 million and net other income of $8 million representing settlement of the remaining shared pre-separation
income tax matters and indemnification balances.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Earnings (Loss) Per Share

The weighted-average number of shares outstanding used in the computations of basic and diluted earnings (loss)

per share were as follows:

Basic

Dilutive impact of share-based compensation arrangements

Diluted

2020

2018

Fiscal
2019
(in millions)
338
2
340

332
—
332

350
3
353

For fiscal 2020, there were two million nonvested share awards and options outstanding with underlying exercise

prices less than the average market prices of our common shares; however, these were excluded from the calculation of
diluted loss per share as inclusion would be antidilutive as a result of our loss during the period.

The following share options were not included in the computation of diluted earnings (loss) per share because the

instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion
would be antidilutive:

Antidilutive share options

18. Shareholders’ Equity

Common Shares

2020

Fiscal
2019
(in millions)

2018

We are organized under the laws of Switzerland. The rights of holders of our shares are governed by Swiss law, our

Swiss articles of association, and our Swiss organizational regulations. Accordingly, the par value of our common shares is
stated in Swiss francs (“CHF”). We continue to use the U.S. dollar, however, as our reporting currency on the Consolidated
Financial Statements.

Subject to certain conditions specified in our articles of association, we are authorized to increase our conditional

share capital by issuing new shares in aggregate not exceeding 50% of our authorized shares. In March 2020, our
shareholders reapproved and extended through March 11, 2022, our board of directors’ authorization to issue additional new
shares, subject to certain conditions specified in the articles of association, in aggregate not exceeding 50% of the amount of
our authorized shares.

Common Shares Held in Treasury

At fiscal year end 2020, approximately 8 million common shares were held in treasury, of which 5 million were

owned by one of our subsidiaries. At fiscal year end 2019, approximately 16 million common shares were held in treasury, of
which 4 million were owned by one of our subsidiaries. Shares held both directly by us and by our subsidiary are presented
as treasury shares on the Consolidated Balance Sheets.

In fiscal 2020 and 2019, our shareholders approved the cancellation of 12 million and 6 million shares, respectively,

purchased under our share repurchase program. These capital reductions by cancellation of shares were subject to a notice
period and filing with the commercial register in Switzerland.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 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. Contributed surplus established for Swiss tax and statutory purposes (“Swiss Contributed
Surplus”) is not impacted by our GAAP treatment.

Swiss Contributed Surplus, subject to certain conditions, is a freely distributable reserve. As of fiscal year end 2020

and 2019, Swiss Contributed Surplus was CHF 5,513 million and CHF 6,107 million, respectively (equivalent to $4,561
million and $5,195 million, respectively).

Dividends

We paid cash dividends to shareholders of $1.88, $1.80, and $1.68 per share in fiscal 2020, 2019, and 2018,

respectively.

Under Swiss law, subject to certain conditions, dividends paid from reserves from capital contributions (equivalent

to Swiss Contributed Surplus) are exempt from Swiss withholding tax. Dividends on our shares must be approved by our
shareholders.

Our shareholders approved the following dividends on our common shares:

Approval Date
March 2017

Annual Payment Per Share
$1.60, payable in four quarterly installments of $0.40

March 2018

$1.76, payable in four quarterly installments of $0.44

March 2019

$1.84, payable in four quarterly installments of $0.46

March 2020

$1.92, payable in four quarterly installments of $0.48

Payment Timing

Third quarter of fiscal 2017
Fourth quarter of fiscal 2017
First quarter of fiscal 2018
Second quarter of fiscal 2018
Third quarter of fiscal 2018
Fourth quarter of fiscal 2018
First quarter of fiscal 2019
Second quarter of fiscal 2019
Third quarter of fiscal 2019
Fourth quarter of fiscal 2019
First quarter of fiscal 2020
Second quarter of fiscal 2020
Third quarter of fiscal 2020
Fourth quarter of fiscal 2020
First quarter of fiscal 2021
Second quarter of fiscal 2021

Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to
shareholders’ equity. At fiscal year end 2020 and 2019, the unpaid portion of the dividends recorded in accrued and other
current liabilities on the Consolidated Balance Sheets totaled $317 million and $308 million, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Share Repurchase Program

In both fiscal 2019 and 2018, our board of directors authorized increases of $1.5 billion in our share repurchase

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

Number of common shares repurchased
Repurchase value

2020

2018

Fiscal
2019
(in millions)
12

10
$ 505 $ 1,014 $ 966

At fiscal year end 2020, we had $1.0 billion of availability remaining under our share repurchase authorization.

19. Accumulated Other Comprehensive Income (Loss)

The changes in each component of accumulated other comprehensive income (loss) were as follows:

Unrecognized Gains (Losses) Accumulated

Foreign
Currency
Pension and
on Cash
Translation Postretirement
Flow
Adjustments(1) Benefit Costs Hedges

Other
Comprehensive
Income (Loss)

Balance at fiscal year end 2017

Adoption of ASU No. 2018-02
Other comprehensive income (loss), net of tax:

353 $
—

(in millions)

(496) $
(39)

(17) $
1

(160)
(38)

Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Income tax (expense) benefit

Other comprehensive income (loss), net of tax

Balance at fiscal year end 2018

Other comprehensive income (loss), net of tax:

Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Income tax (expense) benefit

Other comprehensive income (loss), net of tax

Balance at fiscal year end 2019

Other comprehensive income (loss), net of tax:

Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Income tax expense

Other comprehensive income (loss), net of tax

Less: other comprehensive income attributable to noncontrolling
interests

Balance at fiscal year end 2020

(117)

—
—
(117)
236

(115)

(2)

67
—
(48)
188

(11)

—
—
(11)

(60)

(113)

40
(21)
83
(452)

(23)
9
(74)
(90)

17
(12)
(108)
(306)

(295)

(375)

34
66
(195)
(647)

15
(4)
46
(44)

44
(18)
34

(13)
(5)
40

116
62
(197)
(503)

31
(23)
63

(5)
172 $

—
(613) $

—
(4) $

(5)
(445)

(1)

(2)

Includes hedges of net investment foreign currency exchange gains or losses which offset foreign currency exchange losses or
gains attributable to the translation of the net investments.

Represents net foreign currency translation adjustments reclassified as a result of the sale of the SubCom business. This net loss
is included in income (loss) from discontinued operations on the Consolidated Statement of Operations. See Note 4 for additional
information regarding the divestiture of SubCom.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Share Plans

Our equity compensation plans, of which the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and

restated as of September 17, 2020 (the “2007 Plan”), is the primary plan, provide for the award of annual performance
bonuses and long-term performance awards, including share options; restricted, performance, and deferred share units; and
other share-based awards (collectively, “Awards”) and allow for the use of unissued shares or treasury shares to be used to
satisfy such Awards. As of fiscal year end 2020, our plans provided for a maximum of 77 million shares to be issued as
Awards, subject to adjustment as provided under the terms of the plans. A total of 15 million shares remained available for
issuance under the 2007 Plan as of fiscal year end 2020.

Share-Based Compensation Expense

Share-based compensation expense, which was included primarily in selling, general, and administrative expenses

on the Consolidated Statements of Operations, was as follows:

Share-based compensation expense

2020

Fiscal
2019
(in millions)

2018

74 $

75 $

We recognized a related tax benefit associated with our share-based compensation arrangements of $15 million, $16

million, and $20 million in fiscal 2020, 2019, and 2018, respectively.

Restricted Share Awards

Restricted share awards, which are generally in the form of restricted share units, are granted subject to certain

restrictions. Conditions of vesting are determined at the time of grant. All restrictions on an award will lapse upon death or
disability of the employee. If the employee satisfies retirement requirements, all or a portion of the award may vest,
depending on the terms and conditions of the particular grant. Recipients of restricted share units have no voting rights, but
do receive dividend equivalents. For grants that vest through passage of time, the fair value of the award at the time of the
grant is amortized to expense over the period of vesting. The fair value of restricted share awards is determined based on the
closing value of our shares on the grant date. Restricted share awards generally vest in increments over a period of four years
as determined by the management development and compensation committee.

Restricted share award activity was as follows:

Nonvested at fiscal year end 2019

Granted
Vested
Forfeited

Nonvested at fiscal year end 2020

Weighted-Average
Grant-Date
Fair Value

Shares
1,402,419 $
716,886
(574,628)
(125,250)
1,419,427 $

78.36
92.94
75.98
83.40
86.15

The weighted-average grant-date fair value of restricted share awards granted during fiscal 2020, 2019, and 2018

was $92.94, $77.77, and $93.45, respectively.

The total fair value of restricted share awards that vested during fiscal 2020, 2019, and 2018 was $44 million, $48

million, and $50 million, respectively.

As of fiscal year end 2020, there was $72 million of unrecognized compensation expense related to nonvested

restricted share awards, which is expected to be recognized over a weighted-average period of 1.8 years.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Performance Share Awards

Performance share awards, which are generally in the form of performance share units, are granted with pay-out
subject to vesting requirements and certain performance conditions that are determined at the time of grant. Based on our
performance, the pay-out of performance share units can range from 0% to 200% of the number of units originally granted.
The grant-date fair value of performance share awards is expensed over the period of performance once achievement of the
performance criteria is deemed probable. Recipients of performance share units have no voting rights but do receive dividend
equivalents. Performance share awards generally vest after a period of three years as determined by the management
development and compensation committee.

Performance share award activity was as follows:

Outstanding at fiscal year end 2019

Granted
Vested
Forfeited

Outstanding at fiscal year end 2020

Weighted-Average
Grant-Date
Fair Value

585,123 $
277,126
(343,750)
(4,254)
514,245 $

77.44
83.30
67.44
84.18
87.30

The weighted-average grant-date fair value of performance share awards granted during fiscal 2020, 2019, and 2018

was $83.30, $71.38, and $92.96, respectively.

The total fair value of performance share awards that vested during fiscal 2020, 2019, and 2018 was $20 million,

$30 million, and $19 million, respectively.

As of fiscal year end 2020, there was $15 million of unrecognized compensation expense related to nonvested

performance share awards, which is expected to be recognized over a weighted-average period of 1.1 years.

Share Options

Share options are granted to purchase our common shares at prices which are equal to or greater than the market

price of the common shares on the date the option is granted. Conditions of vesting are determined at the time of grant. All
restrictions on the award will lapse upon death or disability of the employee. If the employee satisfies retirement
requirements, all or a portion of the award may vest, depending on the terms and conditions of the particular grant. Options
generally vest and become exercisable in equal annual installments over a period of four years and expire ten years after the
date of grant.

Share option award activity was as follows:

Weighted-Average

Weighted-Average
Exercise
Price

Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic

Value

(in millions)

Outstanding at fiscal year end 2019

Granted
Exercised
Expired
Forfeited

Outstanding at fiscal year end 2020
Vested and expected to vest at fiscal year end 2020
Exercisable at fiscal year end 2020

6,344,943 $
1,543,450
(973,754)
(34,982)
(221,941)
6,657,716 $
6,316,850 $
3,243,765 $

70.72
93.39
55.42
82.91
83.25
77.73
70.66
69.46

6.9 $
6.9 $
5.5 $

117
114
84

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The weighted-average exercise price of share option awards granted during fiscal 2020, 2019, and 2018 was $93.39,

$76.91, and $93.44, respectively.

The total intrinsic value of options exercised during fiscal 2020, 2019, and 2018 was $39 million, $58 million, and
$106 million, respectively. We received cash related to the exercise of options of $55 million, $85 million, and $100 million
in fiscal 2020, 2019, and 2018, respectively.

As of fiscal year end 2020, there was $31 million of unrecognized compensation expense related to nonvested share

options granted under our share option plans, which is expected to be recognized over a weighted-average period of 1.7
years.

Share-Based Compensation Assumptions

The grant-date fair value of each share option grant was estimated using the Black-Scholes-Merton option pricing
model. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs.
We employ our historical share volatility when calculating the grant-date fair value of our share option grants using the
Black-Scholes-Merton option pricing model. Currently, we do not have exchange-traded options of sufficient duration to
employ an implied volatility assumption in the calculation and therefore rely solely on the historical volatility calculation.
The average expected life was based on the contractual term of the option and expected employee exercise and post-vesting
employment termination behavior. The risk-free interest rate was based on U.S. Treasury zero-coupon issues with a
remaining term that approximated the expected life assumed at the date of grant. The expected annual dividend per share was
based on our expected dividend rate. The recognized share-based compensation expense was net of estimated forfeitures,
which are based on voluntary termination behavior as well as an analysis of actual option forfeitures.

The weighted-average grant-date fair value of options granted and the weighted-average assumptions we used in the

Black-Scholes-Merton option pricing model were as follows:

Weighted-average grant-date fair value

Assumptions:
Expected share price volatility
Risk-free interest rate
Expected annual dividend per share
Expected life of options (in years)

21. Segment and Geographic Data

2020
$ 15.49

Fiscal
2019
$ 13.40

2018
$ 16.49

21 %
1.7 %

20 %
3.0 %

20 %
2.2 %

$ 1.84
5.1

$ 1.76
5.2

$ 1.60
5.3

We operate through three reportable segments: Transportation Solutions, Industrial Solutions, and Communications

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

Segment performance is evaluated based on net sales and operating income. Generally, we consider all expenses to
be of an operating nature and, accordingly, allocate them to each reportable segment. Costs specific to a segment are charged
to the segment. Corporate expenses, such as headquarters administrative costs, are allocated to the segments based on
segment operating income. Intersegment sales are not material. Corporate assets are allocated to the segments based on
segment assets.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Transportation Solutions:

Automotive
Commercial transportation
Sensors

Total Transportation Solutions

Industrial Solutions:

Aerospace, defense, oil, and gas
Industrial equipment
Medical(2)
Energy

Total Industrial Solutions

Communications Solutions:

Data and devices
Appliances

Total Communications Solutions

2020

Fiscal
2019
(in millions)

2018

$ 4,903 $ 5,686 $ 6,092
1,280
1,221
918
914
8,290
7,821

1,051
891
6,845

1,201
1,098
697
717
3,713

1,306
1,242
707
699
3,954

1,157
1,322
665
712
3,856

973
641
1,614

1,068
774
1,842
$ 12,172 $ 13,448 $ 13,988

993
680
1,673

Total

(1)

(2)

Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.

Effective for fiscal 2020, we are separately presenting net sales in the medical end market.
Such amounts were previously included in net sales in the industrial equipment end market.

Net sales by geographic region and segment were as follows:

2020

Fiscal
2019
(in millions)

2018

Asia–Pacific:

Transportation Solutions
Industrial Solutions
Communications Solutions
Total Asia–Pacific

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions
Industrial Solutions
Communications Solutions

Total EMEA

Americas:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total Americas

Total

$ 2,662 $ 2,812 $ 3,025
668
1,069
4,762

625
964
4,401

604
980
4,246

2,625
1,359
236
4,220

3,099
1,466
258
4,823

3,417
1,534
304
5,255

1,558
1,750
398
3,706

1,848
1,654
469
3,971
$ 12,172 $ 13,448 $ 13,988

1,910
1,863
451
4,224

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Operating income by segment was as follows:

2020

Fiscal
2019

2018

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

(in millions)
$ (93) $ 1,226 $ 1,578
465
288
$ 537 $ 1,978 $ 2,331

543
209

412
218

No single customer accounted for a significant amount of our net sales in fiscal 2020, 2019, or 2018.

As we are not organized by product or service, it is not practicable to disclose net sales by product or service.

Depreciation and amortization and capital expenditures were as follows:

Depreciation and
Amortization
Fiscal
2019

2018

2020

Capital Expenditures
Fiscal
2019

2018

2020

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

(in millions)

$ 463 $ 442 $ 416 $ 365 $ 530 $
178
73

139
56

184
64

181
67

145
74

$ 711 $ 690 $ 667 $ 560 $ 749 $

711
145
79
935

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

Transportation Solutions
Industrial Solutions
Communications Solutions
Total segment assets(1)

Other current assets
Other non-current assets

Total assets

2020

2018

Segment Assets
Fiscal Year End
2019
(in millions)
$ 4,973 $ 4,781 $ 4,707
2,049
2,100
959
849
7,715
7,730
1,981
1,398
10,690
10,566
$ 19,242 $ 19,694 $ 20,386

2,117
887
7,977
1,457
9,808

(1)

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net sales and net property, plant, and equipment by geographic region were as follows:

Asia–Pacific:
China
Other Asia–Pacific

Total Asia–Pacific

EMEA:

Switzerland
Germany
Other EMEA

Total EMEA

Americas:
U.S.
Other Americas

Total Americas

Total

(1)

Net Sales(1)
Fiscal
2019

2020

Property, Plant, and
Equipment, Net
Fiscal Year End
2019

2018

2020

2018
(in millions)

$ 2,459 $ 2,443 $ 2,739 $
1,958
4,401

2,023
4,762

1,787
4,246

659 $
418
1,077

642 $
449
1,091

627
436
1,063

2,878
343
999
4,220

3,251
404
1,168
4,823

3,478
443
1,334
5,255

79
559
871
1,509

92
443
851
1,386

94
448
829
1,371

3,348
358
3,706

964
99
1,063
$ 12,172 $ 13,448 $ 13,988 $ 3,650 $ 3,574 $ 3,497

3,583
388
3,971

3,794
430
4,224

991
106
1,097

963
101
1,064

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

22. Quarterly Financial Data (unaudited)

Summarized quarterly financial data was as follows:

First

Second

Third

Fourth

First

Second

Third

Fourth

2020

2019

Fiscal

Net sales
Gross margin
Acquisition and integration costs
Restructuring and other charges, net
Impairment of goodwill
Income (loss) from continuing
operations
Income (loss) from discontinued
operations, net of income taxes
Net income (loss)
Basic earnings (loss) per share:
Income (loss) from continuing
operations
Net income (loss)

Diluted earnings (loss) per share:
Income (loss) from continuing
operations
Net income (loss)

Quarter(1) Quarter(2) Quarter(3) Quarter Quarter(4) Quarter Quarter(5) Quarter
(in millions, except per share data)
$ 3,168 $ 3,195 $ 2,548 $ 3,261 $ 3,347 $ 3,412 $ 3,389 $ 3,300
1,052
6
71
—

1,110
9
67
—

1,114
5
75
—

1,029
12
22
900

1,030
7
24
—

1,118
7
42
—

707
8
98
—

969
9
113
—

(452)

(58)

228

383

429

758

376

3
26

(4)
(456)

17
(41)

2
230

(107)
276

10
439

(1)
757

(4)
372

$ 0.07 $ (1.35) $ (0.18) $ 0.69 $ 1.12 $ 1.27 $ 2.25 $ 1.12
1.11

(0.12)

(1.37)

0.70

1.30

0.08

0.81

2.25

$ 0.07 $ (1.35) $ (0.18) $ 0.69 $ 1.11 $ 1.26 $ 2.24 $ 1.11
1.10

(0.12)

(1.37)

1.29

0.69

0.08

2.23

0.80

(1)

Results for the quarter ended December 27, 2019 included $355 million of income tax expense related to the tax impacts of
certain measures of Swiss Tax Reform. See Note 16 for additional information regarding income taxes.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Results for the quarter ended March 27, 2020 included a pre-tax goodwill impairment charge of $900 million relating to the
Sensors reporting unit in our Transportation Solutions segment. See Note 8 for additional information regarding goodwill
impairment.

Results for the quarter ended June 26, 2020 included $170 million of income tax expense related to an increase to the valuation
allowance for certain non-U.S. deferred tax assets. See Note 16 for additional information regarding income taxes.

Results for the quarter ended December 28, 2018 included a pre-tax loss of $86 million on the sale of our SubCom business
which was reported as a discontinued operation on our Consolidated Financial Statements. See Note 4 for additional information
regarding discontinued operations.

Results for the quarter ended June 28, 2019 included a $214 million income tax benefit related to the tax impacts of certain
measures of Swiss Tax Reform and a $93 million income tax benefit related to the effective settlement of a tax audit in a non-
U.S. jurisdiction. See Note 16 for additional information regarding income taxes.

(2)

(3)

(4)

(5)

TE CONNECTIVITY LTD.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

Fiscal Years Ended September 25, 2020, September 27, 2019, and September 28, 2018

Additions

Balance at Charged to Acquisitions, Write-offs Balance at
Beginning of Costs and Divestitures,
Fiscal Year Expenses and Other Deductions Fiscal Year
(in millions)

End of

and

Description

Fiscal 2020:

Allowance for doubtful accounts receivable
Valuation allowance on deferred tax assets

25 $

4,970

10 $
493

(1) $
—

(1,034)

(5) $

29
4,429

Fiscal 2019:

Allowance for doubtful accounts receivable
Valuation allowance on deferred tax assets

22 $

9 $

2,191

3,248

— $
—

(6) $

(469)

25
4,970

Fiscal 2018:

Allowance for doubtful accounts receivable
Valuation allowance on deferred tax assets

18 $

7 $

3,627

261

(1) $
—

(1,697)

(2) $

22
2,191

Report of the Statutory Auditor on the Consolidated Financial Statements of TE Connectivity Ltd.

To the General meeting of
TE CONNECTIVITY LTD., SCHAFFHAUSEN

Report of the Statutory Auditor on the consolidated financial statements

As Statutory Auditor, we have audited the accompanying consolidated financial statements of TE Connectivity Ltd. (the
“Company”), which comprise the consolidated balance sheet as of September 25, 2020, and the consolidated statement of
operations, statement of comprehensive income, statement of shareholders’ equity, statement of cash flows and notes for the
year then ended.

Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America and the requirements of Swiss law.
This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation
and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with Swiss law, Swiss Auditing Standards and auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the
consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes
evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well
as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements for the year ended September 25, 2020 present fairly, in all material
respects, the financial position of the Company and the result of its operations and its cash flows in accordance with
accounting principles generally accepted in the United States of America, and comply with Swiss law.

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

Key Audit Matter (KAM):

How the scope of our audit responded to the key audit matter:

Goodwill —Sensors Reporting Unit within the
Transportation Solutions Reportable Segment —
Refer to Notes 2 and 8 to the financial statements

The Company’s evaluation of goodwill for
impairment involves comparing the carrying amount
of each reporting unit to its fair value on the first day
of the fourth fiscal quarter or whenever the Company
believes a triggering event requiring a more frequent
assessment has occurred. The Company uses the
income approach based on the present value of future
cash flows to estimate fair value. The income
approach is supported by guideline analyses (a
market approach). These approaches incorporate
several assumptions including future growth rates,
discount rates, and market activity in assessing fair
value and are reporting unit specific. The goodwill
balance was $5.2 billion as of September 25, 2020,
of which $0.5 billion was allocated to the Sensors
reporting unit within the Transportation Solutions
reportable segment. As a result of current and
projected declines in sales and profitability, due in
part to the impact of the COVID-19 pandemic and
projected reductions in global automotive
production, the Company recorded a partial
impairment charge of $900 million during the
quarter ended March 27, 2020 for the Sensors
reporting unit. The fair value of this reporting unit
exceeded its carrying amount as of the annual
measurement date and, therefore, no additional
impairment was recognized.

We identified goodwill for the Sensors reporting unit
as a critical audit matter because of the significant
judgments made by management to estimate its fair
value, especially considering the reduction of future
revenue growth rates and resulting cash flows. This
required a high degree of auditor judgment and an
increased extent of effort, including the need to
involve our fair value specialists, when performing
audit procedures to evaluate the reasonableness of
management’s estimates and assumptions related to
forecasts of future revenue and operating margin and

Our audit procedures for the $900 million impairment charge and
the annual quantitative assessment related to the forecasts of
future revenue and operating margin (the “forecasts”), and the
selection of a discount rate for the Sensors reporting unit included
the following, among others:
• We tested the effectiveness of controls over management’s
goodwill impairment evaluation, including those over the
determination of the fair value, such as controls related to
forecasts and management’s selection of the discount rate.
• We evaluated management’s ability to accurately forecast
future revenue and operating margin by comparing actual
results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts

by comparing the forecasts to:

– Historical operating results of the reporting unit.

– Historical operating results of the Company’s other

reporting units.

–

Internal communications to management and the
board of directors.

– External communications made by management to

analysts and investors.

– Third-party industry reports for similar products.

– The effects of the COVID-19 pandemic on

projections.

• With the assistance of our fair value specialists, we evaluated
the reasonableness of the (1) valuation methodology and (2)
discount rate by:

– Testing the source information underlying the
determination of the discount rate and the
mathematical accuracy of the calculation.

– Developing a range of independent estimates and
comparing those to the discount rate selected by

the selection of a discount rate.

management.

Income Taxes — Realizability of Deferred Tax
Assets — Refer to Notes 2 and 16 to the financial
statements

The Company recognizes deferred income taxes for
temporary differences between the amount of assets
and liabilities recognized for financial reporting and
tax purposes. A valuation allowance is provided to
offset deferred tax assets if, based upon the available
evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. Future
realization of deferred tax assets depends on the
existence of sufficient taxable income of the
appropriate character prior to expiration. Sources of
taxable income include future reversals of deferred
tax assets and liabilities, expected future taxable
income, taxable income in prior carryback years if
permitted under the tax law, and tax planning
strategies. Management has determined that it is
more likely than not that sufficient taxable income
will be generated in the future to realize a portion of
its deferred tax assets, and therefore, a valuation
allowance of $4.4 billion has been recorded to offset
the Company’s gross deferred tax assets as of
September 25, 2020 of $6.7 billion.

We identified the realizability of deferred tax assets
as a critical audit matter because of the Company’s
tax structure and the significant judgments and
estimates made by management to determine that
sufficient taxable income will be generated in the
future prior to expiration to realize a portion of its
deferred tax assets. This required a high degree of
auditor judgment and an increased extent of effort,
including the need to involve our income tax
specialists, when performing audit procedures to
evaluate the appropriateness of qualifying tax
planning strategies and the reasonableness of
management’s estimates of taxable income prior to
expiration.

Our audit procedures related to the determination that it is more
likely than not that sufficient taxable income will be generated in
the future to realize deferred tax assets included the following,
among others:
• We tested the effectiveness of controls over management’s
estimates of the realization of the deferred tax assets,
including those over the estimates of taxable income, the
approval of tax planning strategies and the determination of
whether it is more likely than not that the deferred tax assets
will be realized prior to expiration.

• We evaluated the reasonableness of management’s assessment
of the significance and weighting of negative evidence and
positive evidence that is objectively verifiable.

• We evaluated management’s ability to accurately estimate

taxable income by comparing actual results to management’s
historical estimates and evaluating whether there have been
any changes that would impact management’s ability to
continue accurately estimating taxable income.

• We tested the reasonableness of management’s estimates of

taxable income by comparing the estimates to:

– Historical taxable income.

–

Internal communications to management and the
board of directors.

– Management’s history of carrying out its stated plans
and its ability to carry out its plans considering
contractual commitments, available financing, or
debt covenants.

– We evaluated whether the estimates of future taxable
income were consistent with evidence obtained in
other areas of the audit, including the effects of the
COVID-19 pandemic on projections.
• We evaluated whether the taxable income in prior carryback
years was of the appropriate character and available under the
tax law.

• With the assistance of our income tax specialists, we

evaluated (1) the appropriateness of qualifying tax planning
strategies, including that they were prudent, feasible and
would more likely than not result in the realization of deferred
tax assets and (2) management’s assessment that sufficient
taxable income will be generated in the future to realize a
portion of the deferred tax assets prior to expiration.

Report on Other Legal Requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (“AOA”) and
independence (Article 728 Code of Obligations (“CO”) and Article 11, AOA) and that there are no circumstances
incompatible with our independence.

In accordance with Article 728a, paragraph 1, item 3, CO, and Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of the consolidated financial statements according to the
instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

Deloitte AG

/s/ Matthias Gschwend
Licensed Audit Expert
Auditor in charge

/s/ Dominik Voegtli
Licensed Audit Expert

Zurich, November 10, 2020

(This page has been left blank intentionally.)

TE CONNECTIVITY LTD.

INDEX TO SWISS STATUTORY FINANCIAL STATEMENTS

Statements of Operations for the Fiscal Years Ended September 25, 2020 and September 27, 2019

Balance Sheets as of September 25, 2020 and September 27, 2019

Notes to Swiss Statutory Financial Statements

Proposed Appropriation of Available Earnings

Report of the Statutory Auditor

Page

100

101

TE CONNECTIVITY LTD.

SWISS STATUTORY FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS

Fiscal Years Ended September 25, 2020 and September 27, 2019

Income
Income from distributions made by subsidiaries (Note 8)
Insurance premiums charged to subsidiaries

Total income

Expenses
Salary and social costs
General and administrative costs
Legal and consulting costs
Insurance premiums
Remeasurement (gain) loss on foreign currency transactions
Expenses for services provided by subsidiaries
Pre-separation tax settlement (income) expense (Note 3)
Intercompany interest expense

Total expenses, net

Other Income
Gain on sale of subsidiary (Note 8)
Net Income

Fiscal 2020

Fiscal 2019

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

410 CHF 378 $

11
421

7
2
7
13
12
45
3
82
171

11
389

6
2
7
13
11
43
3
79
164

273 CHF 247 $

1,260 CHF 1,254
12
1,266

12
1,272

6
4
7
13
(7)
42
(1)
120
184

—

—
1,088 CHF 1,082

See Notes to Swiss Statutory Financial Statements.

TE CONNECTIVITY LTD.

SWISS STATUTORY FINANCIAL STATEMENTS

BALANCE SHEETS

As of September 25, 2020 and September 27, 2019

Assets
Current assets:

Accounts receivable from subsidiaries
Loans to subsidiaries (Note 3)
Prepaid expenses and other current assets

Total current assets

Investments in subsidiaries (Notes 2 and 8)

Total assets

Liabilities and shareholders' equity
Current liabilities:
Accounts payable
Accounts payable to subsidiaries
Loans from subsidiaries (Note 3)
Accrued and other current liabilities
Approved but unpaid distributions to shareholders (Note 4)

Total current liabilities

Unrealized translation gains (Note 2)

Total liabilities

Commitments, contingencies, and guarantees (Note 3)
Shareholders' equity (Note 4):

Share capital, CHF 0.57 par value, 338,953,381 shares authorized
and issued and 350,951,381 shares authorized and issued,
respectively
Statutory reserves:

General reserve from earnings

Free reserves:

Reserves from capital contributions (Note 4)
Allocated reserves for the acquisition of treasury shares by a
subsidiary (Note 2)

Unappropriated accumulated earnings
Own shares held in treasury
Reserves for treasury shares (Note 2)

Total shareholders' equity
Total liabilities and shareholders' equity

Fiscal Year End 2020
U.S. dollars Swiss francs

Fiscal Year End 2019

U.S. dollars Swiss francs

(in millions, except share data)

36 CHF
50
3
89
9,633
9,722 CHF 10,509 $

34 $
46
3
83
10,426

49
49 CHF
—
—
4
4
53
53
9,635
10,430
9,688 CHF 10,483

2 CHF
51
3,629
7
317
4,006
—
4,006

2 $
47
3,371
6
310
3,736
842
4,578

1 CHF
60
2,959
21
308
3,349
—
3,349

1
59
2,935
21
310
3,326
623
3,949

149

193

154

200

4,561

5,513

5,195

6,107

(407)
1,230
(262)
407
5,716
9,722 CHF 10,509 $

(395)
432
(256)
395
5,931

(355)
(362)
1,151
1,927
(973)
(975)
355
362
6,339
6,534
9,688 CHF 10,483

See Notes to Swiss Statutory Financial Statements.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

1. Basis of Presentation

TE Connectivity Ltd. (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”),

incorporated in Schaffhausen, Switzerland, is the ultimate holding company of TE Connectivity Ltd. and its subsidiaries (the
“TE Group”) with a listing on the New York Stock Exchange. We employed less than 10 full time positions during the fiscal
years ended September 25, 2020 and September 27, 2019. For additional information on the TE Group, see our Annual
Report on Form 10-K filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for the fiscal year
ended September 25, 2020.

The accompanying statements of operations reflect the results of operations for the fiscal years ended September 25,

2020 and September 27, 2019 and have been prepared in accordance with the requirements of Swiss law for companies, the
Swiss Code of Obligations. The financial statements present the results of the holding company on a stand-alone basis and do
not represent the consolidated operations of the TE Group.

Fiscal Year

We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2020 and 2019 were each 52

weeks in length and ended on September 25, 2020 and September 27, 2019, respectively.

2. Summary of Significant Accounting Policies

Currency Translation

Our functional currency is the U.S. dollar. We present our financial statements in both U.S. dollars and Swiss francs
(“CHF”). Assets and liabilities in U.S. dollars are converted to Swiss francs for presentation purposes using historical foreign
exchange rates (for investments in subsidiaries, shares held in treasury, approved but unpaid distributions to shareholders
payable, and equity accounts) and current foreign exchange rates (for all other assets and liabilities; at fiscal year end 2020
and 2019, exchange rates were CHF 0.9290:$1 and CHF 0.9918:$1, respectively). Revenue and expenses, excluding income
from distributions made by a subsidiary, are translated using the average foreign exchange rates in effect for the period
presented (exchange rates were CHF 0.9609:$1 and CHF 0.9948:$1 for fiscal 2020 and 2019, respectively). Income from
distributions made by a subsidiary is translated using the exchange rate in effect on the date that each distribution was made
to us. Net unrealized foreign currency translation gains are deferred in the balance sheets, while unrealized translation losses
and realized transactional gains and losses are reflected in the statements of operations. We consider all foreign currency
transactional gains and losses associated with current assets and liabilities to be realized.

Own Shares Held in Treasury and Allocated Reserves for the Acquisition of Treasury Shares by a Subsidiary

Shares held in treasury that are directly owned by us are recorded at historical cost and presented as reductions to
equity on our balance sheets. Reserves for treasury shares reflects all treasury shares held by a subsidiary and is recorded at
historical cost.

As management deems appropriate, we can establish reserves for treasury shares by charging either accumulated
earnings or allocated reserves for the acquisition of treasury shares by a subsidiary. During fiscal 2020 and 2019, allocated
reserves for the acquisition of treasury shares by a subsidiary were charged to establish reserves. As shares acquired by a
subsidiary are re-issued for use in share-based compensation arrangements, we credit the same account impacted by initial
acquisition.

Investments in Subsidiaries and Income from Distributions Made by a Subsidiary

Investments in subsidiaries are equity interests held on a long-term basis for the purpose of our business activities.

Investments in subsidiaries are carried at a value no higher than cost less adjustments for impairment.

Salaries and Social Costs

Salaries and social costs include cash and equity compensation paid to our directors.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

Reclassifications

Certain prior year balances have been reclassified to conform to current year presentation.

3. Commitments, Contingencies, and Guarantees

Affiliated Debt and Loans Receivable

We utilize a cash pooling relationship with a wholly-owned subsidiary (the “Cash Pool”) to fund operations,

including the repurchase of common shares. The Cash Pool does not have an expiration date and accrues interest based on
LIBOR. During fiscal 2020, we received a revolving loan from a subsidiary and used the proceeds to settle our cash pool
liabilities.

In order to minimize currency exposure related to distributions to shareholders approved in Swiss francs and paid in

U.S. dollars, we also enter into arrangements with a wholly-owned subsidiary in which we borrow Swiss francs from, and
simultaneously loan U.S. dollars to the subsidiary. As distributions to shareholders are paid, both the borrowing and the loan
receivable is are partially settled. At fiscal year end 2020 and 2019, the U.S. dollar loan receivable, which approximate the
borrowings, were included in the net Cash Pool asset and net Cash Pool liability, respectively, on our balance sheets.

At fiscal year end 2020 and 2019, we had the following loans to subsidiaries on our balance sheets:

Fiscal Year End 2020

Fiscal Year End 2019

Cash Pool asset

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)
46 $

50 CHF

— CHF

—

As of fiscal year end 2020 and 2019, we had the following loans from subsidiaries on our balance sheets:

Fiscal Year End 2020

Fiscal Year End 2019

Cash Pool liability
Revolving loan
CHF-denominated borrowings

Loans from subsidiaries

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)
— $

— CHF

3,303
326

3,069
302

3,629 CHF 3,371 $

2,635 CHF 2,614
—
321
2,959 CHF 2,935

—
324

We have fully and unconditionally guaranteed the debt of a subsidiary, Tyco Electronics Group S.A., totaling CHF

3,816 million (equivalent to $4,108 million) and CHF 3,946 million (equivalent to $3,978 million) at fiscal year end 2020
and 2019, respectively. As of fiscal year end 2020, we have not been required to perform on our guarantee.

Tax Sharing Agreement

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

During fiscal 2020 and 2019, we recorded expense of CHF 3 million (equivalent to $3 million) and net income of
CHF 1 million (equivalent to $1 million), respectively, related to the TSA and tax settlements involving Tyco International,
Covidien, and us. These amounts are presented in pre-separation tax settlement (income) loss, net in our statement of
operations.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

Performance Guarantees

From time to time, we provide performance guarantees and surety bonds in favor of our subsidiaries. At fiscal year

end 2020 and 2019, these performance guarantees were as follows:

Performance Guarantees

Fiscal Year End 2020

Fiscal Year End 2019

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

110 CHF 102 $

198 CHF 197

In fiscal 2020, a guarantee totaling CHF 94 million (equivalent to $95 million) expired unused. In addition to these

amounts, all of which are quantifiable, we have issued a parent company guarantee in behalf of a U.S.-based aerospace
customer that does not have a limit. We do not anticipate having to perform under these guarantees.

We are the leader of a Swiss value-added tax (“VAT”) group (“VAT Group”). All companies in the VAT Group

maintain primary responsibility for their own VAT liabilities. However, in the event of non-compliance by any company in
the VAT Group, all companies within the VAT Group assume joint and several responsibilities for any VAT liabilities. As
VAT Group leader, we have not had to assume responsibility for any events of noncompliance by the other companies in the
VAT Group.

4. Equity

Changes in Equity Accounts

The following table presents activity related to our equity accounts during fiscal 2020 and 2019 in Swiss francs.

General
Reserve Reserves from of Treasury Unappropriated Own Shares

Allocated
Reserves for
the Acquisition

Reserves
for
Treasury
Shares

Total

Share
Shares by a
Capital Earnings Contributions Subsidiary

Capital

from

Accumulated Held in

held by a Shareholders'

Earnings

Treasury Subsidiary Equity

(in CHF millions)
(546) CHF

CHF 204 CHF 49 CHF 6,724 CHF

—
—
(4)

—
—

—
—
—

—
—

(617)
—
—

—
—

—
—
—

191
—

CHF 200 CHF 49 CHF 6,107 CHF

(355) CHF

—
—
(7)

—
—

—
—
—

—
—

(594)
—
—

—
—

—
—
—

(40)
—

CHF 193 CHF 49 CHF 5,513 CHF

(395) CHF

625 CHF (561) CHF 546 CHF 7,041
(617)
—
(973)
—
—
(557)

—
(973)
561

—
—
—

—
—

(191)
—

1
1
1,082
1,082
1,151 CHF (973) CHF 355 CHF 6,534
(594)
(256)
—

—
(256)
973

—
—
(966)

—
—
—

—
—
247
247
432 CHF (256) CHF 395 CHF 5,931

—
—

40
—

Fiscal year end 2018
Dividends
Repurchase of common shares
Cancellation of treasury shares
Transfer of reserves for treasury
shares and other
Net income
Fiscal year end 2019
Dividends
Repurchase of common shares
Cancellation of treasury shares
Transfer of reserves for treasury
shares
Net income
Fiscal year end 2020

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

The following table presents activity related to our equity accounts during fiscal 2020 and 2019 in U.S. dollars.

General
Reserve Reserves from of Treasury Unappropriated Own Shares

Share
Shares by a
Capital Earnings Contributions Subsidiary

Capital

from

Accumulated Held in

held by a Shareholders'

Earnings

Treasury Subsidiary

Equity

Reserves
for
Treasury
Shares

Total

Allocated
Reserves for
the Acquisition

157 $
—
—
(3)

—
—
154 $
—
—
(5)

—
—
149 $

38 $
—
—
—

—
—
38 $
—
—
—

—
—
38 $

5,809 $
(614)
—
—

—
—
5,195 $
(634)
—
—

—
—
4,561 $

Authorized Share Capital

(in USD millions)
(562) $
—
—
—

1,407 $
—
—
(569)

(572) $
—
(975)
572

—
—
(975) $
—
(262)
975

562 $
—
—
—

(200)
—
362 $
—
—
—

1
1,088
1,927 $
—
—
(970)

—
273
1,230 $

—
—
(262) $

45
—
407 $

6,839
(614)
(975)
—

1
1,088
6,339
(634)
(262)
—

—
273
5,716

200
—
(362) $
—
—
—

(45)
—
(407) $

In March 2020, our shareholders reapproved and extended through March 11, 2022 our board of directors’
authorization to issue additional new shares, subject to certain conditions specified in the articles of association, in aggregate
not exceeding 50% of the amount of our authorized shares. This authorization can be renewed for additional two-year periods
upon shareholder approval. As of fiscal year end 2020, no additional shares had been issued under this authorization.

Conditional Share Capital

Subject to certain conditions specified in our articles of association, we are authorized to increase our conditional

share capital by issuing new shares in aggregate not exceeding 50% of our authorized shares. As of fiscal year end 2020, no
conditional shares had been issued.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

Own Shares Held in Treasury and Treasury Shares Held by a Subsidiary

During fiscal 2020 and 2019, activity related to common shares held in treasury by us and by a subsidiary was as

follows:

Common Shares Held By Us

Common Shares Held By a Subsidiary

Total Cost

Number of
Shares

U.S
Dollars

Swiss
Francs

Number of
Shares

U.S
Dollars

Swiss
Francs

Common shares held as of fiscal year end 2018
Repurchases under share repurchase program
Other additions(1)
Reissuances
Shareholder approved cancellations
Common shares held as of fiscal year end 2019
Repurchases under share repurchase program
Other additions(1)
Reissuances
Shareholder approved cancellations
Common shares held as of fiscal year end 2020

6 $
12
—
—
(6)
12 $
3
—
—
(12)

3 $

572 CHF
975
—
—
(572)
975 CHF
262

—
—

(975)
262 CHF

(in millions)
561
973
—
—
(561)
973
256
—
—
(973)
256

6 $
—
—
(2)
—

4 $
3
—
(2)
—
5 $

562 CHF

39
29
(268)
—
362 CHF
244
29
(228)

—

407 CHF

546
39
29
(259)
—
355
236
28
(224)
—
395

(1)

Other additions include shares withheld to cover employee taxes under share-based compensation arrangements. These additions
are not part of the share repurchase program.

In fiscal 2020 and fiscal 2019, our shareholders approved the cancellation of 12 million and 6 million shares
purchased under our share repurchase program, respectively. These capital reductions by cancellation of shares were subject
to a notice period and filing with the commercial register in Switzerland.

During fiscal 2019, our board of directors authorized an increase of $1.5 billion in our share repurchase program. At

fiscal year end 2020, we had CHF 924 million (equivalent to $995 million) of availability remaining under our share
repurchase authorization. Purchases made both pursuant to the Secondary Line and by a subsidiary are subject to this
authorization.

Reserves from Capital Contributions

Reserves from capital contributions, subject to certain conditions, are freely distributable reserves. As of fiscal year

end 2020 and 2019, reserves from capital contributions were as follows:

Reserves from capital contributions

General Reserve from Earnings

Fiscal Year End 2020

Fiscal Year End 2019

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

4,561 CHF 5,513 $

5,195 CHF 6,107

To comply with the Swiss Code of Obligations, 5% of annual net income must be appropriated to our general

reserve until the general reserve, a non-distributable reserve, equals 20% of share capital. Our current appropriation of CHF
49 million (equivalent to $38 million) satisfies the requirements of the Swiss Code of Obligations with respect to the general
reserve.

Dividends

We paid cash dividends to shareholders of $1.88 and $1.80 per share in fiscal 2020 and 2019, respectively.

Under current Swiss tax law, subject to certain conditions, dividends paid from reserves from capital contributions

are exempt from Swiss withholding tax. Dividends on our shares must be approved by our shareholders.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

Our shareholders approved the following dividends on our common shares:

Approval Date
March 2018

March 2019

March 2020

Annual Payment Per Share
$1.76, payable in four quarterly installments
of $0.44

$1.84, payable in four quarterly installments
of $0.46

$1.92, payable in four quarterly installments
of $0.48

Payment Timing

Third quarter of fiscal 2018
Fourth quarter of fiscal 2018
First quarter of fiscal 2019
Second quarter of fiscal 2019
Third quarter of fiscal 2019
Fourth quarter of fiscal 2019
First quarter of fiscal 2020
Second quarter of fiscal 2020
Third quarter of fiscal 2020
Fourth quarter of fiscal 2020
First quarter of fiscal 2021
Second quarter of fiscal 2021

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

shareholders’ equity.

5. Non-Employee Director and Executive Compensation

For information regarding non-employee director and executive compensation, see our Swiss Statutory

Compensation Report.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

6. Security Ownership of Board of Directors and Executive Officers

Board of Directors

The following table sets forth the shares, options and share units held as of fiscal year end 2020 and 2019 by each

member of our board of directors serving on our board at fiscal year end 2020. The share ownership of Mr. Curtin, our Chief
Executive Officer and a member of the board of directors, is set forth in Executive Management.

Board of Directors:
Pierre R. Brondeau

Carol A. ("John") Davidson

Lynn A. Dugle(3)
William A. Jeffrey

David M. Kerko(4)

Thomas J. Lynch(5)

Yong Nam

Daniel J. Phelan

Abhijit Y. Talwalkar

Mark C. Trudeau

Dawn C. Willoughby(3)
Laura H. Wright

Years

2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2019

Shares
Held

Options

Held

Exercise Price(1)

Fiscal Years
of Expiration

RSUs
Held

PSUs
Held(2)

36,694
35,203
11,864
10,373
942
17,993
16,502
2,473
982
191,302
202,248
17,668
16,278
32,313
30,149
7,358
5,867
8,264
6,773
942
12,216
10,725

—
—
—
—
—
—
—
—
—

479,650 $65.95-$93.36
479,650 $65.95-$93.36

—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
2026-2028
2026-2028
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
8,809
40,095
—
—
—
—
—
—
—
—
—
—
—

(1)

(2)

Each option provides the right to purchase one share at the exercise price. Subject to acceleration upon certain events, the share
options are exercisable in equal installments on anniversaries of the grant dates.

The performance share unit (“PSU”) amounts in the table above assume achievement of target level of performance including
target dividend equivalent units through September 25, 2020 and September 27, 2019, respectively. Under the terms of the PSUs,
shares of stock are earned based on the company’s earnings per share growth relative to the Standard & Poor’s 500 Non-Financial
Companies Index over a three-year performance cycle, subject to various conditions, and the PSUs earn dividend equivalent units.
Subject to acceleration upon certain events, vesting of reserved PSUs occurs when the management development and
compensation committee certifies year three results following the close of the three-year performance cycle. Annual PSU awards
for the last three fiscal years were granted to Mr. Lynch on November 13, 2017 when he was serving as an executive officer of the
Company.

(3)

Ms. Dugle and Ms. Willoughby were each elected to our board of directors on March 11, 2020.

(4)

Mr. Kerko was elected to our board of directors on March 13, 2019.

Mr. Lynch served as Chief Executive Officer of the Company until March 8, 2017 and as Executive Chairman of the Company
until March 14, 2018. Since March 2018, Mr. Lynch has served as Non-Executive Chairman of the board of directors. Shares held
as of September 25, 2020 include 15,000 shares held in a charitable trust and 38,575 shares held in a grantor retained annuity trust.
Shares held as of September 27, 2019 include 15,000 shares held in a charitable trust and 10,000 shares held in a grantor retained
annuity trust.

(5)

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

Executive Management

The following table sets forth the shares, options and share units held as of fiscal year end 2020 and 2019 by each

member of our executive management serving in such position as of fiscal year end 2020.

Executive Management:
Terrence R. Curtin(4)

John S. Jenkins, Jr.

Shad W. Kroeger(5)

Steven T. Merkt

Heath A. Mitts

Timothy J. Murphy

Kevin N. Rock(6)

Shares
Held

Options

Held

Options
Exercise Price(1)

Fiscal Years
of Expiration

RSUs
Held(2)

PSUs
Held(3)

Years

2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019

94,969
84,969
29,254
28,329
9,541
6,504
34,520
32,192
23,990
13,219
18,141
12,622
90,156
68,854

1,273,750 $51.61-$93.63 2024-2030
991,650 $51.61-$93.36 2024-2029
251,800 $65.95-$93.63 2026-2030
201,400 $65.95-$93.36 2026-2029
181,750 $51.61-$93.63 2024-2030
134,750 $51.61-$93.36 2024-2029
376,150 $65.95-$93.63 2026-2030
300,600 $65.95-$93.36 2026-2029
312,250 $66.74-$93.63 2027-2030
229,950 $66.74-$93.36 2027-2029
165,700 $34.05-$93.63 2023-2030
132,950 $34.05-$93.36 2023-2029
129,700 $65.95-$93.36 2025-2028
190,500 $34.05-$93.36 2023-2028

—
—
4,351
6,454
—
—
—
—
—
20,324
—
—
13,728
24,949

132,940
139,586
25,853
29,009
21,943
17,745
40,662
45,347
42,600
44,500
16,090
17,231
6,463
15,556

(1)

(2)

(3)

(4)

(5)

(6)

Subject to acceleration upon certain events, the RSUs vest over time, are settled in shares upon vesting on a one-for-one basis, and
receive dividend equivalent units.

The PSU amounts in the table above assume achievement of target level of performance including target dividend equivalent units
through September 25, 2020 and September 27, 2019, respectively. Under the terms of the PSUs, shares of stock are earned based
on the company’s earnings per share growth relative to the Standard & Poor’s 500 Non-Financial Companies Index over a three-
year performance cycle, subject to various conditions, and the PSUs earn dividend equivalent units. Subject to acceleration upon
certain events, vesting of reserved PSUs occurs when the management development and compensation committee certifies year
three results following the close of the three-year performance cycle. Annual PSU awards for the last three fiscal years were
granted on November 13, 2017, November 12, 2018 and November 11, 2019.

Mr. Curtin is a member of the board of directors and chief executive officer.

Mr. Kroeger became a member of executive management in December 2017.

Includes 28,296 shares held in a family trust over which Mr. Rock has dispositive power. Mr. Rock ceased being a member of
executive management on October 1, 2020.

For additional information regarding share-based compensation arrangements, see the TE Group’s consolidated

financial statements and our Swiss Statutory Compensation Report.

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

7. Significant Shareholders

The following table sets forth the information indicated for persons or groups known to us to be beneficial owners of

more than 5% of our outstanding shares beneficially owned as of fiscal year end 2020.

Name and Address of Beneficial Owner
Dodge & Cox(1)

555 California Street, 40th Floor
San Francisco, CA 94104

The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19355
Harris Associates L.P.(3)

111 S. Wacker Drive, Suite 4600
Chicago, IL 60606

Number of
Shares

Percentage
of Class

33,003,938

10.0 %

25,642,233

7.6 %

19,936,650

6.0 %

(1)

(2)

(3)

This information is based on a Schedule 13G/A filed with the SEC on July 9, 2020 by Dodge & Cox, which reported sole voting
power and sole dispositive power as follows: sole voting power—31,887,277 and sole dispositive power—33.003,938.

This information is based on a Schedule 13G/A filed with the SEC on February 12, 2020 by The Vanguard Group, which
reported sole voting power, sole dispositive power and shared dispositive power as follows: sole voting power—433,273, shared
voting power—119,616, sole dispositive power—25,119,735, and shared dispositive power—522,498.

This information is based on a Schedule 13G/A filed with the SEC on February 14, 2020 by Harris Associates L.P. and its
general partner, Harris Associates Inc., which reported sole voting power and sole dispositive power as follows: sole voting
power—17,483,821 and sole dispositive power—19,936,650. As a result of advisory and other relationships with persons who
own the shares, Harris Associates L.P. may be deemed to be the beneficial owner of the shares.

8. Subsidiaries

We are the ultimate holding company of all subsidiaries of the TE Group. Our direct subsidiaries and significant
subsidiaries of the TE Group, as determined based on net sales or total assets, were as follows as of fiscal year end 2020:

Entity Name
Tyco Electronics Group S.A.
TE Connectivity Corporation
TE Connectivity Germany GmbH
TE Connectivity HK Limited.
TE Connectivity Holding International II S.a r.l.
TE Connectivity Investments Holding S.a r.l.
TE Connectivity Solutions GmbH
Tyco Electronics (Shanghai) Co., Ltd.
Tyco Electronics AMP Korea Co., Ltd.
Tyco Electronics Japan G.K.
Tyco Electronics Singapore Pte Ltd.

Jurisdiction
Luxembourg
United States
Germany
Hong Kong
Luxembourg
Luxembourg
Switzerland
China
South Korea
Japan
Singapore

Direct or Indirect
Holding(1)
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect

Nominal
Capital
(in millions)
1
$
—
$
—
EUR
6,128
HKD
—
$
1,101
$
—
CHF
CNY
—
KRW 100,000
—
237

JPY
SGD

Purpose(2)
F
M
M
S
F
F
S
M
M
M
S

All subsidiaries labeled as “direct” are wholly-owned by us. All subsidiaries labeled as “indirect” are wholly-owned indirectly by
us.

“F” denotes the primary purpose as a holding or financing company; “M” denotes the primary purpose as manufacturing and
production; “S” denotes the primary purpose as sales and distribution.

(1)

(2)

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

During fiscal 2020, we sold our investment in Tyco Electronics Holdings (Bermuda) No. 7 Limited to another
wholly-owned indirect subsidiary, recording a gain of CHF 22 million (equivalent to $23 million). Also during fiscal 2020, as
a result of a series of intercompany transactions, our indirect subsidiary Tyco Electronics Finance Alpha GmbH ceased to be
significant. Both entities have been removed from the current year table.

During fiscal 2020 and 2019, subsidiaries distributed CHF 378 million (equivalent to $410 million) and CHF 1,254
million (equivalent to $1,260 million), respectively, to us. The distributions are included in income from distributions made
by subsidiaries in our statements of operations.

9. Subsequent Events

We have evaluated subsequent events through November 10, 2020, the date the Swiss Statutory Financial

Statements were issued, and determined that no significant subsequent events have occurred through this date requiring
adjustment to the Swiss Statutory Financial Statements or disclosures.

Proposed Appropriation of Accumulated Earnings

Our board of directors will propose, in conjunction with our annual general meeting, that we carry forward

unappropriated accumulated earnings of CHF 432 million as included in our balance sheet as of September 25, 2020.

100

Report of the Statutory Auditor on the Swiss Statutory Financial Statements of
TE Connectivity Ltd.

To the General meeting of
TE CONNECTIVITY LTD., SCHAFFHAUSEN

Report of the Statutory Auditor on the financial statements

As Statutory Auditor, we have audited the accompanying financial statements of TE Connectivity Ltd. (the “Company”),
which comprise the balance sheet as of September 25, 2020, and the statement of operations and notes for the year then
ended.

Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of
Swiss law and the Company’s articles of association. This responsibility includes designing, implementing and maintaining
an internal control system relevant to the preparation of financial statements that are free from material misstatement,
whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting
policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and
the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements for the year ended September 25, 2020 comply with Swiss law and the Company’s
articles of association.

101

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. We have determined that there are no key audit matters to communicate in our report.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (“AOA”) and
independence (Article 728 Code of Obligations (“CO”), and Article 11, AOA) and that there are no circumstances
incompatible with our independence.

In accordance with Article 728a, paragraph 1, item 3, CO, and Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of financial statements according to the instructions of the
Board of Directors.

We further confirm that the proposed appropriation of accumulated earnings complies with Swiss law and the Company’s
articles of association. We recommend that the financial statements submitted to you be approved.

Deloitte AG

/s/ Matthias Gschwend
Licensed Audit Expert

Auditor in charge

/s/ Dominik Voegtli
Licensed Audit Expert

Zurich, November 10, 2020

102

TE CONNECTIVITY LTD.

INDEX TO SWISS STATUTORY COMPENSATON REPORT

General

Compensation of the Board of Directors

Compensation of Executive Management

Report of the Statutory Auditor on the Swiss Statutory Compensation Report of TE Connectivity Ltd.

Page

104

107

109

103

General

Under the Swiss ordinance against excessive pay in stock exchange listed companies (the “Minder Ordinance”) we

are required to prepare a separate Swiss Statutory Compensation Report each year that contains specific items in a
presentation format determined by these regulations. This report must be included in the materials made available to our
shareholders each year.

Our executive management (as defined under Swiss law, hereafter referred to as “Executive Management”) for

fiscal 2020 consisted of Terrence Curtin, Chief Executive Officer; John Jenkins, Jr., Executive Vice President and General
Counsel; Shadrak Kroeger, President, Industrial Solutions (formerly President, Communications Solutions during fiscal
2020); Heath Mitts, Executive Vice President and Chief Financial Officer; Steven Merkt, President, Transportation Solutions;
Timothy Murphy, Senior Vice President and Chief Human Resource Officer; Kevin Rock, former President, Industrial
Solutions; and Joan Wainwright, former President, Channel and Customer Experience. Thomas Lynch, former Executive
Chairman who during fiscal 2020 and 2019 continued to receive dividend equivalent units on equity awards granted to him as
a member of Executive Management is included in this report. Mr. Rock retired as the President, Industrial Solutions on
October 1, 2020. Ms. Wainwright retired as President, Channel and Customer Experience on December 20, 2019. Both Mr.
Rock and Ms. Wainwright ceased to be members of Executive Management on their respective retirement dates. James
O’Toole, former President, Communication Solutions, was a former member of Executive Management who continued to
receive pay as an employee during fiscal 2019 and is included in this report for fiscal 2019 but is not included for fiscal 2020.

The following sets forth, for the fiscal years ended September 25, 2020 and September 27, 2019, the compensation
of the members of the Board of Directors and Executive Management for all the functions that they have performed for TE
Connectivity Ltd. (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”). This report
contains all elements of compensation paid, granted or promised to the Board of Directors and Executive Management.

For more detailed information about compensation for our Board of Directors and Executive Management, please

review our Definitive Proxy Statement for our 2021 Annual Meeting of Shareholders. You may access this report on the
Investor Relations section of our website at http://investors.te.com/financial-reports/annual-reports/default.aspx.

Compensation of the Board of Directors

Compensation paid for fiscal 2020 and 2019 to each director who is not our salaried employee, or an employee of

our subsidiaries was based on the following fee structures:

Annual retainer
Additional annual fees:

Fee Structure

Cash
$90,000

Equity
$185,000

Non-Executive Chairman
Lead Independent Director
Audit Committee Chair
Audit Committee Member
Nominating, Governance & Compliance
Committee Chair
Management, Development &
Compensation Committee Chair
Science Advisory Board Retainer

$170,000
$40,000
$25,000
$10,000

$15,000

$20,000
$10,000

In addition to the compensation described above, our board governance principles encourage directors to attend certain

continuing education courses that are related to their duties as directors and provide that we will reimburse the costs
associated with attending one course every two years. TE Connectivity will also provide Company matching gift
contributions on behalf of certain directors under the Company’s matching gift program up to a maximum of $10,000 per
year.

Our board members also receive non-compensatory reimbursement for expenses incurred in attending board and
committee meetings or performing other services for us in their capacities as directors. Such expenses include food, lodging
and transportation. Directors who are TE Connectivity employees or employees of our subsidiaries do not receive any
compensation for their services as directors.

104

Mr. Curtin, who is a director and our Chief Executive Officer, does not receive any compensation for serving on the

Board of Directors.

Each non-employee director received the equity component of their compensation in the form of a grant of common

shares of TE Connectivity Ltd.

The following table discloses the cash and equity awards paid to each of our non-employee directors for fiscal 2020

and 2019.

Table 1

Name

Fiscal Year

Fees Earned
or Paid in
Cash
($) (1)

Stock Awards
($) (2)

Dividend
Equivalent Units
and Other
Compensation
($) (3)

Pierre R. Brondeau

Carol A. (John) Davidson

Lynn A. Dugle (4)
William A. Jeffrey

David M. Kerko

Thomas J. Lynch

Yong Nam

Daniel J. Phelan

Paula A. Sneed (5)

Abhijit Y. Talwalkar

Mark C. Trudeau

John Van Scoter (7)
Dawn C. Willoughby (4)
Laura H. Wright

2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2019
2020
2020
2019

$145,000
$145,000
$108,750
$100,000
$58,333
$100,000
$100,000
$100,000
$58,333
$260,000
$260,000
$90,000
$90,000
$110,000
$110,000
$37,500
$90,000
$90,000
$94,167
$90,000
$94,167
$37,500
$52,500
$106,250
$115,000

$186,136
$182,527
$186,136
$182,527
$84,906
$186,136
$182,527
$186,136
$109,110
$186,136
$182,527
$186,136
$182,527
$186,136
$182,527
$93,068
$182,527
$186,136
$182,527
$186,136
$182,527
$91,225
$84,906
$186,136
$182,527

$—
$—
$—
$10,000
$—
$—
$—
$—
$—
$10,000
$10,000
$—
$—
$8,000
$15,416
$7,500
$5,000
$10,000
$10,000
$—
$—
$—
$10,000
$10,000
$10,000

Total
($) (6)

$331,136
$327,527
$294,886
$292,527
$143,239
$286,136
$282,527
$286,136
$167,443
$456,136
$452,527
$276,136
$272,527
$304,136
$307,943
$138,068
$277,527
$286,136
$286,694
$276,136
$276,694
$128,725
$147,406
$302,386
$307,527

(1)

The amounts shown represent the amount of cash compensation earned in fiscal 2020 and 2019 for Board and committee services.
For fiscal 2020 and 2019, Mr. Lynch received additional fees for serving the full year as Non-Executive Chairman. Dr. Brondeau
received additional fees for his work as Lead Independent Director for fiscal 2020 and 2019. Dr. Brondeau and Mr. Phelan each
received additional fees for their role as chairs of the nominating, governance and compliance committee and the management
development and compensation committee, respectively for fiscal 2020 and 2019. Ms. Wright received additional fees for her role
as chair of the audit committee for part of fiscal 2020 and as an audit committee member for the remainder of fiscal 2020 and as
chair for all of fiscal 2019. Mr. Davidson received an additional cash retainer for serving as chair of the audit committee for part
of fiscal 2020 and as an audit committee member for the remainder of fiscal 2020 and all of fiscal 2019. Mr. Kerko received an

105

additional cash retainer for serving on the audit committee for fiscal 2020 and part of fiscal 2019. Ms. Dugle received additional
fees for serving on the audit committee for part of fiscal 2020. For fiscal 2019, Messrs. Talwalkar and Trudeau each received an
additional cash retainer for serving on the audit committee for part of the fiscal year. Dr. Jeffrey received an additional fee for his
role on the Science Advisory board for fiscal 2020 and 2019.

On November 11, 2019, Dr. Brondeau, Mr. Davidson, Dr. Jeffrey, Mr. Kerko, Mr. Lynch, Mr. Nam, Mr. Phelan, Mr. Talwalkar,
Mr. Trudeau, and Ms. Wright each received a grant of 1,988 common shares. In determining the number of common shares to be
issued, we used the average daily closing price for the 20-day period prior to the grant date ($93.05 per share), the same
methodology used to determine employee equity awards. The grant date fair value of these awards, as shown above for fiscal year
2020, was calculated by using the closing price of TE Connectivity Ltd. common shares on the date of grant ($93.63 per share).
On November 12, 2018, Dr. Brondeau, Mr. Davidson, Dr. Jeffrey, Mr. Lynch, Mr. Nam, Mr. Phelan, Ms. Sneed, Mr. Trudeau,
Mr. Talwalkar, and Ms. Wright each received a grant of 2,381 common shares. In determining the number of common shares
issued, we used the average daily closing price for the 20-day period prior to the grant date ($77.71 per share), the same
methodology used to determine employee equity awards. The grant date fair value of these awards, as shown above for fiscal
2019, was calculated by using the closing price of TE Connectivity Ltd. common shares on the date of grant ($76.66 per share).
As of September 25, 2020, Mr. Lynch held options to purchase 279,800 shares at an exercise price of $65.95, 156,150 shares at an
exercise price of $66.74, and 43,700 shares at an exercise price of $93.36. On November 13, 2017 and November 14, 2016, Mr.
Lynch was awarded performance stock units (“PSUs”) with a target vesting of 8,300 shares and 29,670 shares, respectively. PSUs
granted on November 13, 2017 vested on December 9, 2020 and Mr. Lynch received 5,306 equity shares relating to the PSU
award. PSUs granted on November 14, 2016 vested on December 11, 2019 and Mr. Lynch received 45,793 equity shares relating
to the PSU award. Delivery of vested shares occurs as soon as administratively feasible following the year 3 certification process.
The foregoing equity awards were granted to Mr. Lynch when he was serving as a member of Executive Management of the
Company.

Amounts shown represent company matching gift contributions made on behalf of certain directors under TE Connectivity’s
matching gift program, and amounts reimbursed to Mr. Phelan in fiscal 2019 for expenses incurred for a continuing education
course. For fiscal 2020 and 2019, Mr. Lynch received dividend equivalent units on PSU awards granted to him while serving as a
member of Executive Management; the value of the dividend equivalent units, $30,799 and $98,689 for fiscal 2020 and 2019,
respectively, is not included in this Table 1 but is included in Table 2 below.

On March 11, 2020, Mses. Dugle and Willoughby were elected to our Board of Directors and received a grant of 1,256 common
shares. In determining the number of common shares to be issued, we used the average daily closing price for the 20-day period
prior to the grant date ($85.97 per share). The grant date fair value of the award was calculated by using the closing price of TE
Connectivity Ltd. common shares on the date of grant ($67.60 per share). Cash compensation for Mses. Dugle and Willoughby
was pro-rated for their service during fiscal 2020.

Ms. Sneed retired from the board effective March 11, 2020. On November 11, 2019, Ms. Sneed received 994 common shares. The
number of common shares issued to Ms. Sneed was determined in the same manner applied to all grants on November 11, 2019
and reflects a pro-ration of her service during fiscal 2020. Cash compensation for Ms. Sneed was also pro-rated for her service
during fiscal 2020.

The Company has not made any loans or extended credit to any current or former member of the Board of Directors.

Mr. Van Scoter retired from the board effective March 13, 2019.

(2)

(3)

(4)

(5)

(6)

(7)

106

Compensation of Executive Management

The following table presents information concerning Executive Management’s fiscal 2020 and 2019 compensation.

Table 2

Name and Principal
Position
Terrence R. Curtin, Chief
Executive Officer
All Other Executive
Management (1) (2)

Year
2020
2019
2020
2019

Salary(3)
($)
$1,200,000
$1,186,539
$3,535,501
$3,870,754

Bonus
($)
$—
$—
$—
$—

Stock
Awards(4)
($)

$4,226,458
$3,576,189
$4,313,534
$5,372,736

Option
Awards(5)
($)
$4,378,192
$3,462,244
$4,469,760
$3,987,960

Change in
Pension
Value and
Nonqualified
Deferred
Compen-
sation
Earnings(7)
($)
$—
$—
$85,651
$69,192

Non-Equity
Incentive
Plan
Compen-
sation(6)
($)
$343,800
$579,600
$1,129,981
$1,711,885

All Other
Compen-
sation(8)
($)

$420,775
$487,264
$698,543
$1,591,762

Total(9)
($)
$10,569,225
$9,291,836
$14,232,970
$16,604,289

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

For fiscal 2020, the Executive Management team for Swiss reporting purposes includes Mr. Jenkins, Mr. Kroeger, Mr. Merkt,
Mr. Mitts, Mr. Murphy, Mr. Rock, and Ms. Wainwright. Mr. Lynch is also included as he continues to receive compensation for
fiscal 2020.

For fiscal 2019, the Executive Management team for Swiss reporting purposes includes Mr. Jenkins, Mr. Kroeger, Mr. Merkt,
Mr. Mitts, Mr. Murphy, Mr. Rock, and Ms. Wainwright. Compensation for Mr. Lynch and Mr. O’Toole were also reported as
they continued to receive compensation for fiscal 2019.

Amounts shown are not reduced to reflect Executive Management’s elections, if any, to defer receipt of salary into the
Supplemental Savings and Retirement Plan (“SSRP”), a nonqualified supplemental retirement plan for management and
executive level employees.

This amount represents the grant date fair value of restricted stock units (“RSUs”) and PSUs calculated using the provisions of
Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. The value of PSUs included in the table
assumes target performance. All dividend equivalent units earned on unvested RSUs and PSUs are reported in the All Other
Compensation column.

This amount represents the grant date fair value of stock options calculated using the provisions of ASC 718.

Represents amounts earned under the TE Connectivity Ltd. annual incentive program. Amounts shown are not reduced to reflect
Executive Management’s elections, if any, to defer receipt of awards into the SSRP.

Represents the aggregate change in actuarial present value of the accumulated benefits for three executives in fiscal 2020 and
2019 under the frozen pension plan.

See the All Other Compensation table below for a breakdown of amounts which include perquisites, matching contributions
associated with the Company’s 401(k) plan and nonqualified defined contribution plan, dividend equivalent units and other
amounts. The amounts reflected in the table for perquisites are our incremental cost. We also provide group life, health,
hospitalization and medical reimbursement plans which do not discriminate in scope, terms or operation in favor of officers and
are available to all full-time employees; the values of the benefits are not shown in the table.

(9)

The Company has not made any loans or extended credit to any current or former member of Executive Management.

107

All Other Compensation

Dollar Value of
Dividends not
factored into
Grant Date Fair
Value(b)
($)

$271,746
$259,545
$431,959
$605,658

Company
Contributions
to DC plans(c)
($)
$106,776
$201,085
$263,368
$472,810

Employee Stock
Purchase Plan
(“ESPP”)
Company
Match(d)
($)

$—
$—
$1,950
$1,950

Payment for
unused vacation/
personal time
and Settlement of
Equity Award(e)
($)
$—
$—
$—
$500,000

Total All
Other
Compen-
sation
($)
$420,775
$487,264
$698,543
$1,591,762

Name
Terrence R. Curtin.

All Other Executive
Management

Year

2020
2019
2020
2019

Perquisites(a)
($)
$42,253
$26,634
$1,266
$11,344

(a)

Perquisites consist of the following:

Amounts for Mr. Curtin in fiscal 2020 and 2019 include the incremental pre-tax cost to us of Mr. Curtin’s non-business use of
our aircraft. Mr. Curtin is permitted to use the aircraft for business and non-business purposes. Amounts for Mr. Curtin in fiscal
2019 also include a payment by the Company of a penalty assessed by the Internal Revenue Service and a gross-up amount for an
impermissible distribution from Mr. Curtin’s deferred compensation account under the SSRP due to an administrative error made
by the Company.

Amounts for All Other Executive Management include various miscellaneous fees and expenses and personal tax preparation
assistance pertaining to an expatriate assignment for one executive in fiscal 2020 and 2019. Due to the timing of payments, the
following range of exchange rates, primarily as determined by TE Connectivity finance, were used to convert amounts reported
or paid in euros to U.S. dollars: $1.07—$1.19: EUR 1 in fiscal 2020 and euros to U.S. dollars: $1.11—$1.15: EUR 1 in fiscal
2019.

The value of dividend equivalent units credited in the fiscal year to each individual’s unvested RSUs and PSUs using the closing
price on the date of the crediting. The dividend equivalent unit value associated with the PSUs reflects target performance and
will be adjusted based on certified performance results following the close of the three-year performance period.

Contributions made on behalf of Executive Management under TE Connectivity’s qualified defined contribution plan and
accruals on behalf of Executive Management under the SSRP (a nonqualified defined contribution excess plan).

Name
Terrence R. Curtin

All Other Executive Management

Year

2020
2019
2020
2019

Company Matching
Contribution
(Qualified Plan)(*)

Company
Contribution
(Non-Qualified Plan)

$17,100
$16,800
$77,670
$100,694

$89,676
$184,285
$185,698
$372,116

(*) Included in the amount above is an additional matching contribution in fiscal 2020 and 2019 for one executive as a result of a
frozen defined benefit plan.

For fiscal 2020 and 2019, the Company made matching contributions under the TE Connectivity employee stock purchase plan
for one executive.

For fiscal 2019, the amount includes cash settlement of previously issued retention equity awards to a former member of
Executive Management.

(b)

(c)

(d)

(e)

108

Report of the Statutory Auditor on the Swiss Statutory Compensation Report of
TE Connectivity Ltd.

To the General Meeting of
TE CONNECTIVITY LTD., SCHAFFHAUSEN

We have audited Tables 1 and 2 within the accompanying compensation report of TE Connectivity Ltd. for the year ended
September 25, 2020.

Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the compensation report in
accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (the
“Ordinance”). The Board of Directors is also responsible for designing the compensation system and defining individual
compensation packages.

Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying compensation report. We conducted our audit in accordance
with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the compensation report complies with Swiss law and articles
14 – 16 of the Ordinance.

An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with
regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected
depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the compensation report,
whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value
components of compensation, as well as assessing the overall presentation of the compensation report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion
In our opinion, the compensation report of TE Connectivity Ltd. for the year ended September 25, 2020 complies with Swiss
law and articles 14 – 16 of the Ordinance.

Deloitte AG

/s/ Matthias Gschwend
Licensed audit expert
Auditor in charge

/s/ Dominik Voegtli
Licensed audit expert

Zurich, December 15, 2020

109

BOARD OF DIRECTORS
BOARD OF DIRECTORS

Thomas J. Lynch
Thomas J. Lynch
Non-Executive Chairman
Non-Executive Chairman
TE Connectivity Ltd.
TE Connectivity Ltd.

Dr. William A. Jeffrey
Dr. William A. Jeffrey
Chief Executive Officer,
Chief Executive Officer,
SRI International
SRI International

Dr. Pierre R. Brondeau*
Dr. Pierre R. Brondeau*
Executive Chairman,
Executive Chairman,
FMC Corporation
FMC Corporation

David M. Kerko
Former Member and Advisor,
KKR & Co., L.P.

Terrence R. Curtin
Terrence R. Curtin
Director and
Director and
Chief Executive Officer,
Chief Executive Officer,
TE Connectivity Ltd.
TE Connectivity Ltd.

Carol A. “John” Davidson
Carol A. “John” Davidson
Retired Senior Vice President,
Retired Senior Vice President,
Controller and Chief Accounting
Controller and Chief Accounting
Officer,
Officer,
Tyco International Ltd.
Tyco International Ltd.

Lynn A. Dugle
Lynn A. Dugle
Former CEO and President,
Former CEO and President,
Engility Holdings, Inc.
Engility Holdings, Inc.

Yong Nam
Former Chief Executive Officer,
LG Electronics Inc.

Daniel J. Phelan
Daniel J. Phelan
Retired Chief of Staff,
Retired Chief of Staff,
GlaxoSmithKline plc
GlaxoSmithKline plc

Abhijit Y. Talwalkar
Abhijit Y. Talwalkar
Former President and
Former President and
Chief Executive Officer,
Chief Executive Officer,
LSI Corporation
LSI Corporation

Mark C. Trudeau
Mark C. Trudeau
President and
President and
Chief Executive Officer,
Chief Executive Officer,
Mallinckrodt plc
Mallinckrodt plc

Dawn C. Willoughby
Former Executive Vice President
and COO,
The Clorox Company

Laura H. Wright
Retired Chief Financial Officer,
Southwest Airlines Co.

*Lead Independent Director of the

TE Connectivity Ltd. Board of Directors

LEADERSHIP TEAM AND OFFICERS
LEADERSHIP TEAM AND OFFICERS

Terrence R. Curtin
Terrence R. Curtin
Chief Executive Officer
Chief Executive Officer
and Director
and Director

Kari Janavitz
Kari Janavitz
Vice President,
Vice President,
Chief Marketing Officer
Chief Marketing Officer

Heath A. Mitts
Heath A. Mitts
Executive Vice President,
Executive Vice President,
Chief Financial Officer
Chief Financial Officer

Claudia Anderson
Claudia Anderson
Vice President,
Vice President,
Chief Continuous
Chief Continuous
Improvement Officer
Improvement Officer

Mario Calastri
Senior Vice President,
Treasurer

Joel Dubs
Senior Vice President,
Operations

Joseph F. Eckroth, Jr.
Joseph F. Eckroth, Jr.
Senior Vice President,
Senior Vice President,
Chief Information Officer
Chief Information Officer

Phil Gilchrist
Phil Gilchrist
Vice President and
Vice President and
Chief Technology Officer,
Chief Technology Officer,
Communications Solutions
Communications Solutions

John S. Jenkins, Jr.
John S. Jenkins, Jr.
Executive Vice President,
Executive Vice President,
General Counsel
General Counsel

Timothy J. Murphy
Timothy J. Murphy
Senior Vice President,
Senior Vice President,
Chief Human Resources Officer
Chief Human Resources Officer

Arvind Kaushal
Senior Vice President,
Chief Strategy Officer

Robert J. Ott
Senior Vice President,
Corporate Controller

Shad W. Kroeger
President,
Industrial Solutions

Jeanne Quirk
Jeanne Quirk
Senior Vice President,
Senior Vice President,
Mergers and Acquisitions
Mergers and Acquisitions

Karen Leggio
Senior Vice President,
GM Channel

Eric J. Resch
Eric J. Resch
Senior Vice President,
Senior Vice President,
Chief Tax Officer
Chief Tax Officer

Jimmy McDonald
Jimmy McDonald
Vice President,
Vice President,
Chief Supply Chain Officer
Chief Supply Chain Officer

Aaron K. Stucki
President, Communications
Solutions

Steven T. Merkt
Steven T. Merkt
President,
President,
Transportation Solutions
Transportation Solutions