TE Connectivity Annual Report 2021

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FY2021 Annual Report · TE Connectivity

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TE CONNECTIVITY
2021 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
Pfingstweidstrasse 11
8005 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 24, 2021 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.

BOARD OF DIRECTORS

Thomas J. Lynch
Non-Executive Chairman
TE Connectivity Ltd.

Dr. William A. Jeffrey
Retired Chief Executive Officer,
SRI International

Dr. Pierre R. Brondeau*
Chairman,
FMC Corporation

Terrence R. Curtin
Director and
Chief Executive Officer,
TE Connectivity Ltd.

Heath A. Mitts
Director and Executive Vice
President, Chief Financial Officer
TE Connectivity Ltd.

Yong Nam
Former Chief Executive Officer,
LG Electronics Inc.

Carol A. “John” Davidson
Retired Senior Vice President,
Controller and Chief Accounting
Officer,
Tyco International Ltd.

Lynn A. Dugle
Former CEO and President,
Engility Holdings, Inc.

Daniel J. Phelan
Retired Chief of Staff,
GlaxoSmithKline plc

Abhijit Y. Talwalkar
Former President and
Chief Executive Officer,
LSI Corporation

Mark C. Trudeau
President and
Chief Executive Officer,
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

Terrence R. Curtin
Chief Executive Officer
and Director

Claudia Anderson
Vice President,
Chief Continuous
Improvement Officer

Davy Brown
Vice President and
Chief Technology Officer,
Industrial Solutions

Joel Dubs
Senior Vice President,
Operations

Joseph F. Eckroth, Jr.
Senior Vice President,
Chief Information Officer

Jean-Jacques Fotzeu
Senior Vice President,
Treasurer

John S. Jenkins, Jr.
Executive Vice President,
General Counsel

Arvind Kaushal
Senior Vice President,
Chief Strategy Officer

Shad W. Kroeger
President,
Industrial Solutions

Karen Leggio
Senior Vice President,
General Manager, Channel

Jimmy McDonald
Vice President,
Chief Supply Chain Officer

Steven T. Merkt
President,
Transportation Solutions

Heath A. Mitts
Executive Vice President,
Chief Financial Officer and
Director

Timothy J. Murphy
Senior Vice President,
Chief Human Resources Officer

Robert J. Ott
Senior Vice President,
Corporate Controller

Jeanne Quirk
Senior Vice President,
Mergers and Acquisitions

Eric J. Resch
Senior Vice President,
Chief Tax Officer

Aaron K. Stucki
President, Communications
Solutions

TE CONNECTIVITY LTD.
ANNUAL REPORT
TABLE OF CONTENTS

Business

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

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

101

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 24, 2021 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 2021, 2020, and 2019 were
each 52 weeks in length and ended on September 24, 2021, September 25, 2020, and September 27, 2019, respectively. For
fiscal years in which there are 53 weeks, the fourth fiscal quarter 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. COVID-19 has surfaced in nearly all regions around the world and
resulted in business slowdowns or shutdowns and travel restrictions in affected areas. The pandemic had a significant,
negative impact on our sales and operating results during fiscal 2020 and continued to negatively affect certain of our
businesses in fiscal 2021. 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 24, 2021 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. Prior to the COVID-19 pandemic, our three segments served a combined market of approximately $190 billion.
Although COVID-19 negatively affected our markets in fiscal 2020, certain of our markets experienced recovery in fiscal
2021. We expect this recovery will continue and our three segments will once again serve a combined market of
approximately $190 billion in future periods.

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

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal
2021 2020 2019
56 % 58 %
31
13
100 % 100 % 100 %

60 %
26
14

30
12

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,
heat shrink tubing, and application tooling. The Transportation Solutions segment’s products, which must withstand harsh
conditions, are used in the following end markets:

• Automotive (71% 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 (16% 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, interventional medical components, heat shrink tubing, relays, and wire and cable. The Industrial Solutions
segment’s products are used in the following end markets:

•

Industrial equipment (36% of segment’s net sales)—Our products are used in factory and warehouse automation
and process control systems such as industrial controls, robotics, human machine interface, industrial
communication, and power distribution. Our building automation and smart city infrastructure 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.

• Aerospace, defense, oil, and gas (27% 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.

• Energy (19% of segment’s net sales)—Our products are used by electric power utilities, OEMs, and engineering
procurement construction companies serving the electrical power grid and renewables industries. They include a
wide range of insulation, protection, and connection solutions for electrical power generation, transmission,
distribution, and industrial markets.

• Medical (18% 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.

The Industrial Solutions segment competes primarily against Amphenol, Hubbell, Carlisle Companies, 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 (57% 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 (43% 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 2021, 2020, or 2019.

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:

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

Fiscal
2021 2020 2019
37 % 35 % 36 %
35
36
30
27
100 % 100 % 100 %

33
31

(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 2021, 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, including the impacts of

the COVID-19 pandemic. Backlog by reportable segment was as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal Year End
2020
2021

(in millions)
$ 3,014 $ 1,819
1,260
439
$ 5,841 $ 3,518

1,851
976

We expect that the majority of our backlog at fiscal year end 2021 will be filled during fiscal 2022. 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. However, as a result of increased costs, certain of our businesses implemented price increases
in fiscal 2021.

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. As markets
recover from the COVID-19 pandemic, increases in consumer demand have led to shortages and price increases in some of
our input materials.

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 2021, we employed approximately 89,000
people worldwide, including contract employees. Approximately 37,000 were in the EMEA region, 24,000 were in the Asia–
Pacific region, and 28,000 were in the Americas region. Of our total employees, approximately 56,000 were employed in
manufacturing. Our strong employee base, along with their commitment to uncompromising values, provides the foundation
of our company’s success.

Our core values—integrity, accountability, teamwork, and innovation—govern us. They guide our decisions and our
actions, both individually and as an organization. Additionally, our employees are responsible for upholding our purpose—to
create a safer, sustainable, productive, and connected future. We track and report internally on key talent metrics including
workforce demographics, critical role pipeline data, diversity data, and engagement and inclusion indices. We aspire to have
more than 26% women in leadership roles by fiscal 2025 and are committed to increasing the total number of women across
all levels of the organization. Additionally, as part of its charter, the management development and compensation committee
of our board of directors oversees our policies and practices related to the management of human capital resources including
talent management, culture, diversity, and inclusion.

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 drive our business outcomes globally, we believe we must build
a workforce and supplier network that represents our global markets and the customers we serve. We are also committed to a
work environment where all employees are engaged, feel differences are valued and mutually-respected, and believe that all
opinions count. Our people reflect our customers and markets. Our employees are in over 50 countries representing
approximately 120 nationalities, and our total employee population is over 40% women. Our employee resource groups
(“ERGs”) are company-sponsored, voluntary, employee-led groups that focus on diverse talent segments or shared
experiences of employees. These groups apply those perspectives to create value for our company as a whole. The ERGs
provide a space where employees can foster connections and develop in a supportive environment. As of fiscal year end
2021, we had eight ERGs—ALIGN (lesbian, gay, bisexual, transgender, and queer/questioning employees and their allies),
Women in Networking, TE Young Professionals, African Heritage, Asian Heritage, Latin Heritage, THRIVE (employees and
their allies with mixed mental, emotional, and physical abilities), and TE Veterans. Our ERGs have a total of over 6,000
members.

During fiscal 2021, we conducted our second consecutive employee engagement survey which was a fully digital,

enterprise-wide survey available in 15 languages and focused on measuring engagement, inclusion, and leadership
effectiveness. We had a participation rate of over 80% in fiscal 2021. Both our participation rate and engagement score
improved in fiscal 2021 while our inclusion score remained consistent with fiscal 2020. Fiscal 2021 was the first year
leadership effectiveness was measured as part of this survey. Additionally, our survey results for fiscal 2021 were favorable
when compared to Glint Inc.’s external global manufacturing benchmark. By fiscal 2025, we aspire to be in the top tier of
this benchmark on engagement and inclusion.

We continue to emphasize employee development and training to support engagement and retention. 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. Strategy,
execution, and talent (“SET”) leadership expectations, which focus on how we drive strategy, effectively execute, and build
talent, have been rolled out to all employees and are embedded in all of our leadership programs. We integrate these
behavioral expectations into the way we assess and select talent, manage performance, and develop and reward our people.

We are committed to identifying and developing our next generation of 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, as well as the diversity of our talent. We are focused on
both the recruitment of diverse candidates and the development of our diverse employees to provide the opportunity to
advance their careers and move into leadership positions within the company. 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. Also, our board of directors reviews and assesses management development plans for senior executives and the
succession plans relating to those positions.

We are committed to the safety, health, human rights, and well-being of our employees. We continuously evaluate
opportunities to raise safety and health standards through our environmental, health, and safety team. Compliance audits and
internal processes are in place to stay ahead of workplace hazards, and we aim to reduce our Occupational Safety and Health
Administration (“OSHA”) total recordable incident rate—a rate equivalent to the number of incidents per 100 employees or
200,000 work hours—to 0.12 by fiscal 2025. During the COVID-19 pandemic, we have taken additional actions to protect
the physical and mental health and well-being of our global employees. We have utilized our workplace flexibility
guidelines, promoted our Wellbeing Connection program and health care benefits to support the needs of all employees, and
instituted additional safety measures at all factories and sites. In fiscal 2021, we implemented a human rights policy for the
organization outlining our commitment to operating with respect for human rights.

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 over 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 24, 2021 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.

See Note 13 to the Consolidated Financial Statements for additional information regarding trade compliance matters.

Also, see “Part I. Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended September 24, 2021
filed with the SEC for discussion of the risks and uncertainties associated with trade regulations.

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 Administrative Measures for the Restriction of Hazardous
Substances in Electrical and Electronic Products, 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 2021, we concluded that we would incur investigation and remediation
costs at these sites in the reasonably possible range of $18 million to $47 million, and we accrued $21 million as the probable
loss, which was the best estimate within this range. We do not anticipate any material capital expenditures during fiscal 2022
for environmental control facilities or other costs of compliance with laws or regulations relating to greenhouse gas
emissions.

Sustainability

We look to build on our strong foundation of environmental sustainability in our operations. Our environmental

sustainability strategy guides how we balance investor and customer expectations and drive improved environmental
sustainability.

Our sustainability initiatives in our operations began more than 10 years ago. From fiscal 2010 to 2020, we achieved
more than a 25% reduction in absolute energy usage, absolute greenhouse gas emissions (Scopes 1 and 2), and absolute water
usage. Over the last few years, we have recycled approximately 80% of the waste materials from our operations. We have
challenged ourselves to find new ways to continue to drive sustainability improvements. In fiscal 2021, we:

•

established a new goal to further reduce our greenhouse gas emissions from our operations by more than 40%,
on an absolute basis, by fiscal 2030 and made measurable progress towards this goal;

improved our energy efficiency through energy efficient solutions such as implementing operating standards
and advancing our equipment infrastructure (for example, LED lighting, compressor controls, and HVAC); and

reported our Scope 3 emissions to CDP for the first time.

While sustainability is embedded in our operations, we are exploring opportunities with our direct suppliers and

logistics service providers to strengthen the environmental sustainability of our supply chain. The majority of our greenhouse
gas emissions are from the goods and services we use in our operations. In addition to improving the sustainability of our
operations and working with our suppliers to reduce their greenhouse gas emissions, we help our customers produce smaller,
lighter, and more energy-efficient products, reducing the environmental impact of the products our customers make through
the life of their products. With every product that comes out of our facilities, we support a safer, sustainable, productive, and
connected future.

Additional information regarding our sustainability initiatives and progress is available in our annual Corporate

Responsibility Report and Task Force on Climate-Related Financial Disclosures (“TCFD”) Report located on our website at
www.te.com under the heading “Corporate Responsibility.” The contents of our Corporate Responsibility Report and TCFD
Report are not incorporated by reference in this Annual Report on Form 10-K.

Available Information

All periodic and current reports, registration filings, and other filings that we are required to file with the United
States Securities and Exchange Commission, 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 3, 2021, there

were 17,583 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 2016 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.

2016

2017

Fiscal Year End
2019
2018

2020

2021

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

$ 100.00 $ 131.73 $ 141.92 $ 152.90 $ 160.65 $ 246.37
225.71

139.85

118.61

100.00

145.06

164.64

100.00

128.95

143.39

138.06

144.71

210.09

(1)

$100 invested on September 30, 2016 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 24, 2021:

Period
June 26–July 23, 2021
July 24–August 27, 2021
August 28–September 24, 2021

Total

Maximum
Approximate
Dollar Value
of Shares that May
Total Number Average Price Publicly Announced Yet Be Purchased

Total Number of
Shares Purchased
as Part of

of Shares
Purchased(1)

611,573 $
682,093
893,254
2,186,920 $

Paid Per
Share(1)
136.20
148.58
145.27
143.76

Plans or
Programs(2)

Under the Plans
or Programs(2)

611,200 $ 1,820,911,579
1,720,315,363
677,000
892,000
1,590,735,387
2,180,200

(1)

These columns include the following transactions which occurred during the quarter ended September 24, 2021:

(i)

(ii)

the acquisition of 6,720 common shares from individuals in order to satisfy tax withholding requirements in
connection with the vesting of restricted share awards issued under equity compensation plans; and

open market purchases totaling 2,180,200 common shares, summarized on a trade-date basis, in conjunction with
the share repurchase program announced in September 2007.

(2)

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.

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 24, 2021 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 2021 compared to fiscal 2020 is presented

below. Discussion of our financial condition and results of operations for fiscal 2020 compared to fiscal 2019 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 25, 2020.

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 2021 Performance

• Our fiscal 2021 net sales increased 22.6% from fiscal 2020 levels due to sales increases in the Transportation
Solutions and Communications Solutions segments, and, to a lesser degree, the Industrial Solutions segment.
On an organic basis, our net sales increased 18.2% in fiscal 2021 as compared to fiscal 2020. In fiscal 2020, our
net sales included significant, unfavorable impacts from the COVID-19 pandemic.

• Our net sales by segment were as follows:

• Transportation Solutions—Our net sales increased 31.1% with sales increases in all end markets.

•

Industrial Solutions—Our net sales increased 3.5% primarily as a result of sales increases in the
industrial equipment end market, partially offset by declines in the aerospace, defense, oil, and gas end
market.

• Communications Solutions—Our net sales increased 30.4% due to sales increases in both the

appliances and the data and devices end markets.

• During fiscal 2021, our shareholders approved a dividend payment to shareholders of $2.00 per share, payable
in four equal quarterly installments of $0.50 beginning in the third quarter of fiscal 2021 and ending in the
second quarter of fiscal 2022.

• Net cash provided by continuing operating activities was $2,676 million in fiscal 2021.

COVID-19 Pandemic

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

The COVID-19 pandemic has impacted and continues to impact our business operations globally, causing 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. In addition, the pandemic had far-reaching
impacts on many additional aspects of our operations, both directly and indirectly, including with respect to its impacts on
customer behaviors, business and manufacturing operations, inventory, our employees, and the market generally. We
assessed the impact of the COVID-19 pandemic and adjusted our operations and businesses, a number of which are operating
as essential businesses, and will continue to do so if necessary. Throughout our operations, we implemented 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.

The extent to which the pandemic will continue to impact our business and the markets we serve will depend on

future developments which may include the further spread of the virus, variant strains of the virus, and the resumption of high
levels of infections and hospitalizations as well as the success of public health advancements, including vaccine production
and distribution. Although we do not expect the COVID-19 pandemic to have a significant impact on our sales and operating
results in the near term, it may have a negative impact on our financial condition and results of operations in future periods.

In response to the pandemic and resulting economic environment, 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,
capital expenditures, and travel. 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 24, 2021 filed with the SEC.

Outlook

In the first quarter of fiscal 2022, we expect our net sales to be approximately $3.7 billion as compared to $3.5

billion in the first quarter of fiscal 2021. This increase is the result of sales growth in the Industrial Solutions and
Communications Solutions segments, partially offset by sales declines in the Transportation Solution segment. Additional
information regarding expectations for our reportable segments is as follows:

• Transportation Solutions—We expect our net sales to decrease in the automotive end market as a result of
declines in global automotive production. We expect content growth to partially offset the impact of the
production decline. We expect our net sales to increase in the commercial transportation and sensors end
markets.

•

Industrial Solutions—We expect our net sales increase to be driven by growth in the industrial equipment end
market and, to a lesser degree, the medical and energy end markets.

• Communications Solutions—We expect our net sales to increase in both the data and devices and the appliances

end markets.

We expect diluted earnings per share from continuing operations to be approximately $1.50 per share in the first quarter of
fiscal 2022. This outlook reflects the negative impact of foreign currency exchange rates on net sales of approximately $19
million in the first quarter of fiscal 2022 as compared to the same period of fiscal 2021.

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, including any continued impacts from the COVID-19

pandemic, and its potential effects on our customers and the end markets we serve. 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 2021, we acquired four businesses for a combined cash purchase price of $422 million, net of cash

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

We acquired five businesses, including First Sensor AG (“First Sensor”), for a combined cash purchase price of

$336 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.

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

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

2021

2020

($ in millions)
$ 8,974 60 % $ 6,845 56 %

3,844
2,105
$ 14,923

3,713
26
14
1,614
100 % $ 12,172

31
13
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 2021 versus Fiscal 2020

Net Sales
Growth

Organic Net Sales
Growth
($ in millions)

Acquisitions

Translation (Divestitures)

$ 2,129 31.1 % $ 1,739 25.1 % $

131
3.5
491 30.4

1.3
441 27.2

$ 2,751 22.6 % $ 2,229 18.2 % $

301 $
93
50
444 $

89
(11)
—
78

Net sales increased $2,751 million, or 22.6%, in fiscal 2021 as compared to fiscal 2020. The increase in net sales

resulted primarily from organic net sales growth of 18.2% and the positive impact of foreign currency translation of 3.6% due
to the strengthening of certain foreign currencies. The significant, unfavorable impacts from the COVID-19 pandemic were
included in our net sales in fiscal 2020.

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

Net Sales by Geographic Region. Our business operates in three geographic regions—EMEA, Asia–Pacific, 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 2021. The percentage of
net sales in fiscal 2021 by major currencies invoiced was as follows:

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

Percentage

39 %
32
17
5
7
100 %

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

EMEA
Asia–Pacific
Americas
Total

Fiscal

2021

2020

($ in millions)
$ 5,471 37 % $ 4,220 35 %

5,374
4,078

36
27

4,246
3,706

35
30

$ 14,923 100 % $ 12,172 100 %

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

EMEA
Asia–Pacific
Americas
Total

Cost of Sales and Gross Margin

Change in Net Sales for Fiscal 2021 versus Fiscal 2020

Net Sales
Growth

Organic Net Sales
Growth
($ in millions)

Acquisitions

Translation (Divestitures)

$ 1,251 29.6 % $ 902 21.1 % $

1,128 26.6
372 10.0

924 21.6
403 10.9

$ 2,751 22.6 % $ 2,229 18.2 % $

278 $
214
(48)
444 $

71
(10)
17
78

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

2021

$ 10,036

2020
($ in millions)
$ 8,437

Change

$ 1,599

67.3 % 69.3 %

$ 4,887

$ 3,735

$ 1,152

32.7 % 30.7 %

In fiscal 2021, gross margin increased $1,152 million as compared to fiscal 2020 primarily as a result of higher

volume and, to a lesser degree, improved manufacturing productivity and the positive impact of foreign currency translation.

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. As markets recover from the COVID-19 pandemic, increases in consumer
demand have led to shortages and price increases in some of our input materials. In fiscal 2021, we purchased approximately
200 million pounds of copper, 122,000 troy ounces of gold, 2.7 million troy ounces of silver, and 15,000 troy ounces of
palladium. The following table presents the average prices incurred related to copper, gold, silver, and palladium:

Measure

2021

2020

Fiscal

Copper
Gold
Silver
Palladium

Lb. $ 3.19 $ 2.78
1,395
16.21
2,047

1,690
21.63
2,276

Troy oz.
Troy oz.
Troy oz.

In fiscal 2022, we expect to purchase approximately 215 million pounds of copper, 135,000 troy ounces of gold, 2.9

million troy ounces of silver, and 15,000 troy ounces of palladium.

Operating Expenses

The following table presents operating expense information:

Fiscal

Selling, general, and administrative expenses

$ 1,512

2021

2020
($ in millions)
$ 1,392

Change

$ 120

As a percentage of net sales

10.1 %

11.4 %

Restructuring and other charges, net
Impairment of goodwill

$ 233
—

257
900

$ (24)
(900)

Selling, General, and Administrative Expenses. In fiscal 2021, selling, general, and administrative expenses

increased $120 million as compared to fiscal 2020 due primarily to higher incentive compensation costs due to improved
operational performance, increased selling expenses to support higher sales levels, and the negative impact of foreign
currency translation, partially offset by savings attributable to cost control measures and restructuring actions and gains on
the sale of real estate.

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 2021 and 2020, we initiated restructuring programs across all segments to optimize our manufacturing
footprint and improve the cost structure of the organization. These actions were due in part to the COVID-19 pandemic. We
incurred net restructuring charges of $208 million and $257 million in fiscal 2021 and 2020, respectively. Annualized cost
savings related to actions initiated in fiscal 2021 are expected to be approximately $80 million and are expected to be realized
by the end of fiscal 2023. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative
expenses. For fiscal 2022, we expect total restructuring charges to be approximately $150 million and total spending, which
will be funded with cash from operations, to be approximately $200 million.

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

charges.

Impairment of Goodwill. During fiscal 2020, we recorded a goodwill impairment charge of $900 million 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 and our annual goodwill impairment test.

Operating Income

The following table presents operating income and operating margin information:

Operating income

Operating margin

Fiscal

2021

2020 Change

$ 2,434

($ in millions)
$ 537

$ 1,897

16.3 % 4.4 %

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
Impairment of goodwill

Total

Fiscal

2021

2020

(in millions)

31 $

3
34
233
—

4
40
257
900
$ 267 $ 1,197

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

Non - Operating Items

The following table presents select non - operating information:

Fiscal

2021

Change

2020
($ in millions)

Other income (expense), net

$ (17)

$ (37)

Income tax expense
Effective tax rate

123
5.2 % 149.4 %

783

(660)

Other Income (Expense). See Note 15 to the Consolidated Financial Statements for information regarding net other

income (expense) associated with our retirement plans, including a $28 million charge related to the transfer of certain U.S.
pension plan liabilities to an insurance company through the purchase of a group annuity contract in fiscal 2021.

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

expense and the effective tax rate, including valuation allowance adjustments in fiscal 2021 and 2020 and the Switzerland
Federal Act on Tax Reform and AHV Financing in fiscal 2020.

The valuation allowance for deferred tax assets was $2,729 million and $4,429 million at fiscal year end 2021 and

2020, 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 2021, certain subsidiaries had approximately $32 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.

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

2021

2020

($ in millions)
$ 6,379 71 % $ 4,903 72 %

1,467
1,128

16
13

1,051
891

15
13

$ 8,974 100 % $ 6,845 100 %

(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:

Automotive
Commercial transportation
Sensors
Total

Change in Net Sales for Fiscal 2021 versus Fiscal 2020

Net Sales
Growth

Organic Net Sales
Growth
($ in millions)

Translation Acquisition

$ 1,476 30.1 % $ 1,243 25.0 % $

416 39.6
237 26.6

377 35.2
119 13.4

$ 2,129 31.1 % $ 1,739 25.1 % $

233 $
39
29
301 $

—
—
89
89

Net sales in the Transportation Solutions segment increased $2,129 million, or 31.1%, in fiscal 2021 from fiscal
2020 primarily as a result of organic net sales growth of 25.1% and the positive impact of foreign currency translation of
4.4%. In fiscal 2020, our net sales included significant, unfavorable impacts from the COVID-19 pandemic. Our organic net
sales by industry end market were as follows:

• Automotive—Our organic net sales increased 25.0% in fiscal 2021 with increases of 28.2% in the Americas

region, 24.3% in the EMEA region, and 24.2% in the Asia–Pacific region. Our organic net sales growth across
all regions was attributable primarily to increases in global automotive production and content gains.

• Commercial transportation—Our organic net sales increased 35.2% in fiscal 2021 with growth across all

regions resulting from market growth and content gains.

•

Sensors—Our organic net sales increased 13.4% in fiscal 2021 as a result of strength 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

2021

2020 Change

$ 1,526

($ in millions)
$ (93)

$ 1,619

17.0 % (1.4)%

Operating income (loss) in the Transportation Solutions segment increased $1,619 million in fiscal 2021 as
compared to fiscal 2020. Excluding the items below, operating income increased in fiscal 2021 primarily as a result of higher
volume and, to a lesser degree, improved manufacturing productivity.

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

Total

Industrial Solutions

Fiscal

2021

2020

(in millions)

15 $

3
18
135
—

4
32
113
900
$ 153 $ 1,045

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):

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

Fiscal

2021

2020

$ 1,397

($ in millions)
36 % $ 1,098

30 %

1,035 27
19
18

738
674
$ 3,844

1,201 32
19
19
100 %

717
697
100 % $ 3,713

(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:

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

Change in Net Sales for Fiscal 2021 versus Fiscal 2020

Net Sales
Growth (Decline)

Organic Net Sales
Growth (Decline)

Acquisition

Translation (Divestitures)

($ in millions)

$ 299 27.2 % $ 253 22.7 % $

(166)
21
(23)
$ 131

(13.8)
30
2.9
(3.3)
(25)
3.5 % $ 49

(209) (17.4)
4.1
(3.6)
1.3 % $

46 $
25
20
2
93 $

—
18
(29)
—
(11)

In the Industrial Solutions segment, net sales increased $131 million, or 3.5%, in fiscal 2021 from fiscal 2020 due

primarily to the positive impact of foreign currency translation of 2.5% and organic net sales growth of 1.3%. In fiscal 2020,
our net sales included significant, unfavorable impacts from the COVID-19 pandemic. Our organic net sales by industry end
market were as follows:

•

Industrial equipment—Our organic net sales increased 22.7% in fiscal 2021 with growth in all regions due
primarily to strength in factory automation and controls applications.

• Aerospace, defense, oil, and gas—Our organic net sales decreased 17.4% in fiscal 2021 primarily as a result of

declines in the commercial aerospace market.

• Energy—Our organic net sales increased 4.1% in fiscal 2021 primarily as a result of strength in renewable

energy applications.

• Medical—Our organic net sales decreased 3.6% in fiscal 2021 due to delays in elective procedures during the
first half of fiscal 2021, partially offset by sales increases resulting from market strength in interventional
medical applications in the second half of fiscal 2021.

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

margin information:

Fiscal

Operating income

Operating margin

Change

2021

$ 469

2020
($ in millions)
$ 412

12.2 % 11.1 %

$ 57

Operating income in the Industrial Solutions segment increased $57 million in fiscal 2021 from fiscal 2020.

Excluding the items below, operating income increased in fiscal 2021 primarily as a result of improved manufacturing
productivity.

Acquisition and integration costs
Restructuring and other charges, net

Total

Communications Solutions

Fiscal

2021

2020

(in millions)
8
15 $
73
102
88 $ 110

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

2021

2020

$ 1,198
907

($ in millions)
57 % $ 973
641
43

60 %
40

$ 2,105 100 % $ 1,614 100 %

(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 2021 versus Fiscal 2020

Net Sales
Growth

Organic Net Sales
Growth
($ in millions)

Translation

$ 225 23.1 % $ 199 20.5 % $

266
$ 491

41.5
242
30.4 % $ 441

37.2
27.2 % $

26
24
50

Net sales in the Communications Solutions segment increased $491 million, or 30.4%, in fiscal 2021 as compared to

fiscal 2020 due primarily to organic net sales growth of 27.2%. In fiscal 2020, our net sales included unfavorable impacts
from the COVID-19 pandemic. Our organic net sales by industry end market were as follows:

• Data and devices—Our organic net sales increased 20.5% in fiscal 2021 as a result of market strength across all

regions as well as content growth and market share gains in high-speed cloud applications.

• Appliances—Our organic net sales increased 37.2% in fiscal 2021 with growth in all regions attributable

primarily to increased demand and market share gains.

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

operating margin information:

Fiscal

Operating income

Operating margin

2021

Change

2020
($ in millions)
$ 218

$ 439

$ 221

20.9 % 13.5 %

In the Communications Solutions segment, operating income increased $221 million in fiscal 2021 as compared to
fiscal 2020. Excluding the items below, operating income increased due to higher volume and, to a lesser degree, improved
manufacturing productivity.

Acquisition and integration costs
Restructuring and other charges, net

Total

Liquidity and Capital Resources

Fiscal

2021

2020

(in millions)
1 $
25
26 $

—
42
42

Our ability to fund our future capital needs will be affected by our ongoing ability to generate cash from operations

and may be affected by our access to capital markets, money markets, or other sources of funding, as well as the capacity and
terms of our financing arrangements. We believe that cash generated from operations and, to the extent necessary, these other
sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future. 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 any developments related to the COVID-19 pandemic. 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 24, 2021 filed with the SEC. We believe
that we have sufficient financial resources and liquidity which will enable us to meet our ongoing working capital and other
cash flow needs. Subsequent to fiscal year end 2021, Tyco Electronics Group S.A. (“TEGSA”) called for the early
redemption of all of its outstanding 3.50% senior notes due in February 2022, representing $500 million aggregate principal
amount. The redemption, which was funded with cash from operations, was completed in November 2021.

As of fiscal year end 2021, 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
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 2021, we had approximately $4.9 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 $0.7 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 increased $685 million to $2,676 million in fiscal 2021 as

compared to $1,991 million in fiscal 2020. The increase resulted primarily from higher pre-tax income, partially offset by
higher working capital levels to support increased sales and higher tax payments. The amount of income taxes paid, net of
refunds, during fiscal 2021 and 2020 was $371 million and $257 million, respectively.

Pension contributions were $61 million and $47 million in fiscal 2021 and 2020, respectively. We expect pension

contributions to be $50 million in fiscal 2022, 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 $690 million and $560 million in fiscal 2021 and 2020, respectively. We expect fiscal

2022 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 2021, we acquired four businesses for a combined cash purchase price of $422 million, net of cash
acquired. We acquired five businesses, including First Sensor, for a combined cash purchase price of $336 million, net of
cash acquired, during fiscal 2020. See Note 5 to the Consolidated Financial Statements for additional information regarding
acquisitions.

Cash Flows from Financing Activities and Capitalization

Total debt at fiscal year end 2021 and 2020 was $4,092 million and $4,146 million, respectively. See Note 11 to the

Consolidated Financial Statements for additional information regarding debt.

During fiscal 2021, TEGSA, our wholly-owned subsidiary, issued €550 million aggregate principal amount of

0.00% senior notes due in February 2029. 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 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.
The Credit Facility was amended in June 2021 primarily to extend the maturity date from November 2023 to June 2026. The
amended Credit Facility contains customary provisions for the replacement of London Interbank Offered Rate (“LIBOR”)
with successor rates and amends certain representations, warranties, and covenants applicable to us and TEGSA as obligors
under the credit agreement. TEGSA had no borrowings under the Credit Facility at fiscal year end 2021 or 2020.

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

or, upon a phase-out of LIBOR, an alternative benchmark rate, (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, or an alternative
benchmark rate, plus 1%, (3) an alternative currency daily rate, or (4) an alternative currency term rate, plus, in each case, an
applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA. TEGSA is required to pay an annual
facility fee. Based on the applicable credit ratings of TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’
commitments under the Credit Facility.

The 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 2021, 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 had no borrowings under the commercial paper
program at fiscal year end 2021 or 2020.

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 $647 million and $625 million in fiscal 2021 and 2020,

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

In March 2021, our shareholders approved a dividend payment to shareholders of $2.00 per share, payable in four
equal quarterly installments of $0.50 per share beginning in the third quarter of fiscal 2021 and ending in the second quarter
of fiscal 2022.

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 2021, our board of directors authorized an increase of $1.5 billion in our share repurchase program. We
repurchased approximately 7 million of our common shares for $904 million and approximately 6 million of our common
shares for $505 million under the share repurchase program during fiscal 2021 and 2020, respectively. At fiscal year end
2021, we had $1.6 billion of availability remaining under our share repurchase authorization.

Summarized Guarantor Financial Information

As discussed above, our senior notes, commercial paper, and Credit Facility are issued by TEGSA and are fully and
unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity 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
2020
2021

(in millions)

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

Total current liabilities
Total noncurrent liabilities(2)

452 $

$
1,829

134
3,282

1,144
12,443

1,237
23,549

(1)

(2)

Includes $1,810 million and $3,275 million as of fiscal year end 2021 and 2020, respectively, of
intercompany loans receivable from non-guarantor subsidiaries.

Includes $8,832 million and $20,016 million as of fiscal year end 2021and 2020, respectively,
of intercompany loans payable to non-guarantor subsidiaries.

Statement of Operations Data:

Loss from continuing operations
Net loss

Off-Balance Sheet Arrangements

Fiscal

2021

2020

(in millions)

(485) $
(479)

(206)
(202)

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 2022
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

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 2021, we had outstanding letters of credit, letters of guarantee, and surety bonds of $135 million,

excluding those related to our Subsea Communications (“SubCom”) business which are discussed below.

During fiscal 2019, we sold our SubCom business. In connection with the sale, we contractually agreed to continue
to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed as of the date of
sale. These performance guarantees and letters of credit had a combined value of approximately $119 million as of fiscal year
end 2021 and are expected to expire at various dates through fiscal 2025. During fiscal 2021, we amended our agreement
with SubCom and removed a requirement to issue new performance guarantees for certain projects entered into by the
SubCom business following the sale. As of fiscal year end 2021, 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.

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

payment obligations under non - cancelable leases, and other material obligations at fiscal year end 2021:

Commitments and Contingencies

Total

2022

2023 2024 2025 2026 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)

(in millions)
$ 4,119 $ 503 $ 651 $ 353 $ 646 $ 352 $ 1,614
408
60
3
$ 6,408 $ 1,746 $ 852 $ 510 $ 769 $ 446 $ 2,085

84
118
1,041

758
468
1,063

60
63
—

72
83
2

80
104
17

54
40
—

(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 2021 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 $359 million and related accrued interest and penalties of
$53 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 $50 million to pension plans in fiscal 2022, 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.

Legal Proceedings

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

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

Trade Compliance Matters

We are investigating our past compliance with relevant U.S. trade controls and have made voluntary disclosures of

apparent trade controls violations to the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the
U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). We are cooperating with the BIS and DDTC on
these matters, and both our internal assessment and the resulting investigations by the agencies remain ongoing. We are
unable to predict the timing and final outcome of the agencies’ investigations. An unfavorable outcome may include fines or
penalties imposed in response to our disclosures, but we are not yet able to reasonably estimate the extent of any such fines or
penalties. While we have reserved for potential fines and penalties relating to these matters based on our current
understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such
investigations and related fines and penalties may differ from amounts currently reserved.

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.

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.

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 2021, 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 more frequently if events or changes in circumstances indicate that the asset
may be impaired. In assessing a potential impairment, 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 a guideline analysis (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 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 2021 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 enacted 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 2021, a 25-basis-point decrease in the discount rate would have increased the present value of
our pension obligations by $127 million; a 25-basis-point increase would have decreased the present value of our pension
obligations by $119 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 2021 pension expense by $13 million.

At fiscal year end 2021, 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 2021, our target asset allocation is 67% return-seeking and 33% liability-
hedging.

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

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 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 24, 2021 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 impacted 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;

risks associated with compliance with applicable antitrust or competition laws or applicable trade 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, increase global cash taxes, 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 2021 market rates would have changed the unrealized
value of our contracts by $240 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 2020 market rates would have changed the
unrealized value of our contracts by $265 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 balance at fiscal year end 2020, 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 fiscal 2020. There was no floating rate debt outstanding at fiscal year end 2021.

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 2021 and 2020, we had forward starting interest rate swap contracts
which had an aggregate notional value of $450 million 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 2021, our commodity hedges, which related to expected purchases of
gold, silver, copper, and palladium, were in a net gain position of $1 million and had a notional value of $512 million. At
fiscal year end 2020, our commodity hedges, which related to expected purchases of gold, silver, copper, and palladium, were
in a net gain position of $41 million and had a notional value of $312 million. A 10% appreciation or depreciation of
commodity prices from the fiscal year end 2021 prices would have changed the unrealized value of our forward contracts by
$51 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.

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 24, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of September 24, 2021.

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 24, 2021.

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 24, 2021, which is included in this Annual Report.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 24, 2021, 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.

(This page has been left blank intentionally.)

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 24, 2021, September 25, 2020, and
September 27, 2019

Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended September 24, 2021,
September 25, 2020, and September 27, 2019

Consolidated Balance Sheets as of September 24, 2021 and September 25, 2020

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 24, 2021, September 25,
2020, and September 27, 2019

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 24, 2021, September 25, 2020, and
September 27, 2019

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 24, 2021 and September 25, 2020, 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 24, 2021, 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 24, 2021 and September 25, 2020, and the results of its operations and its cash flows for each of
the three years in the period ended September 24, 2021, 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 24, 2021, 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 9, 2021, 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 Financial

Accounting Standards Board 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 an event or other change in

reporting unit structure 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 $5.6 billion as of
September 24, 2021, of which $0.3 billion was allocated to the Sensors reporting unit within the Transportation Solutions
reportable segment. The fair value of this reporting unit exceeded its carrying amount, therefore, no 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 partial impairment charge recorded in the prior
fiscal year and future revenue growth rates were based on an expectation of an increase in net sales in a product portfolio
with limited available third-party industry reports. 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 discount rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenue and operating margin (the “forecasts”), and the

selection of discount rates 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
discount rates.

• 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.

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

methodology and (2) discount rates by:

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

accuracy of the calculations.

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

management.

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

Critical Audit Matter Description

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 $2.7 billion has been recorded to offset the
Company’s gross deferred tax assets as of September 24, 2021 of $5.3 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

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.

• 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 and other 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 9, 2021

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 24, 2021, 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 24, 2021, 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 24, 2021, of the Company and our
report dated November 9, 2021 expressed an unqualified opinion on those financial statements.

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 9, 2021

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

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 (expense), 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

Fiscal
2021
2019
2020
(in millions, except per share data)
$ 14,923 $ 12,172 $ 13,448
9,054
4,394
1,490
644
27
255
—
1,978
19
(68)
2
1,931
15
1,946
(102)
1,844

10,036
4,887
1,512
677
31
233
—
2,434
17
(56)
(17)
2,378
(123)
2,255
6
2,261 $

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

6.83 $
0.02
6.85

(0.78) $
0.05
(0.73)

5.76
(0.30)
5.46

6.77 $
0.02
6.79

(0.78) $
0.05
(0.73)

5.72
(0.30)
5.42

330
333

332
332

338
340

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

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.

2021

Fiscal
2020
(in millions)

2019

2,261 $

(241) $

1,844

144

(11)

(48)

138
(3)
279
2,540
(2)
2,538 $

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

(195)
46
(197)
1,647
—
1,647

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS

As of September 24, 2021 and September 25, 2020

Assets
Current assets:

Cash and cash equivalents
Accounts receivable, net of allowance for doubtful accounts of $41 and $29, 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, 336,099,881 shares authorized and issued, and
338,953,381 shares authorized and issued, respectively
Accumulated earnings
Treasury shares, at cost, 9,060,919 and 8,295,878 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

2021

2020

(in millions, except
share data)

1,203 $
2,928
2,511
621
7,263
3,778
5,590
1,549
2,499
783
21,462 $

945
2,377
1,950
512
5,784
3,650
5,224
1,593
2,178
813
19,242

503 $

1,911
2,242
4,656
3,589
1,139
181
302
847
10,714

694
1,276
1,720
3,690
3,452
1,336
143
252
874
9,747

114

112

148
11,709
(1,055)
(168)
10,634
21,462 $

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

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

Accumulated
Other

Total

Common Shares Treasury Shares Contributed Accumulated Comprehensive Shareholders'
Shares Amount Shares Amount Surplus

Income (Loss) Equity

Earnings

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
Net income
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 2021

357 $
—
—
—
—
—
—

—
—
(6)
351 $
—
—
—
—
—

—
—
(12)
339 $
—
—
—
—
—

157
—
—
—
—
—
—

—
—
(3)
154
—
—
—
—
—

—
—
(5)
149
—
—
—
—
—

(12) $ (1,134) $
—
—
—
—
—
1

—
—
—
—
—
85

1
(12)
6

154
(1,014)
572

(16) $ (1,337) $
—
—
—
—
1

—
—
—
—
55

143
(505)
975

1
(6)
12
(8) $ (669) $
—
—
—
—
2

—
—
—
—
167

—
—
(3)
336 $

—
—
(1)
148

89
(904)
262

1
(7)
3
(9) $ (1,055) $

(in millions)
— $
—
—
—
75
—
—

(75)
—

— $
—
—
74
—
—

(74)
—
—
— $
—
—
94
—
—

(94)
—
—
— $

12,114 $
(443)
1,844
—
—
(613)
—

(77)
—
(569)
12,256 $
(241)
—
—
(634)
—

(63)
—
(970)
10,348 $
2,261
—
—
(656)
—

17
—
(261)
11,709 $

(306) $
—
—
(197)
—
—
—

—
—

(503) $
—
58
—
—
—

—
—
—
(445) $
—
277
—
—
—

—
—
—
(168) $

10,831
(443)
1,844
(197)
75
(613)
85

2
(1,014)
—
10,570
(241)
58
74
(634)
55

6
(505)
—
9,383
2,261
277
94
(656)
167

12
(904)
—
10,634

See Notes to Consolidated Financial Statements.

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

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 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 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.

2021

Fiscal
2020
(in millions)

2019

2,261
(6)
2,255

(241)
(18)
(259)

1,844
102
1,946

—
769
(354)
120
46
94
(61)

(518)
(556)
(19)
560
173
106
61
2,676
—
2,676

(690)
86
(423)
—
(10)
(1,037)
—
(1,037)

—
661
(708)
167
(831)
(647)
—
(28)
(1,386)
—
(1,386)
5
258
945
1,203

58
371

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

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 industrial equipment; aerospace, defense, oil,
and gas; energy; and medical 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
control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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. 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2021, 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 2021, 2020, and 2019 were $612
million, $539 million, and $572 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.

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 2021, 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-
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).

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

• 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.

Leases

Beginning in fiscal 2020, we account for leases in accordance with the provisions of ASC 842, 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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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
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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Restructuring and Other Charges, Net

Net restructuring and other charges consisted of the following:

Restructuring charges, net
Impairment of held for sale businesses and loss on
divestitures
Other charges, net

Restructuring and other charges, net

Net restructuring charges by segment were as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Restructuring charges, net

2021

Fiscal
2020
(in millions)
$ 208 $ 257 $ 255

2019

21
4

—
—
$ 233 $ 257 $ 255

—
—

2019

2021

Fiscal
2020
(in millions)
$ 135 $ 113 $ 144
63
48
$ 208 $ 257 $ 255

102
42

50
23

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

152
2
—
154

104
15
—
119

31
—
31

—
—
—
—
304

180
8
—
188

72
2
—
74

21
2
—
23
285

1
—
—
1

4
1
—
5

—
1
—
1
7

—
—
—
—

$ 199
4
9
212

(17) $
—
—
(17)

(26) $
(2)
—
(28)

180
8
—
188

72
2
74

5
11
7
23

—
1
1

—
—
—
—

(8)
—
(8)

(84)
(4)
—
(88)

(33)
(3)
(36)

—
—
(9)
(9)

—
—
(7)
(7)

—
—
—

(4) $
—
—
(4)

3
—
—
3

—
—
—

21
2
—
23
285

—
1
—
1
$ 237

—
—
—
—

$ 214
8
28
250

(1)
—
(3)
(4)
(29) $

(20)
(3)
—
(23)
(175) $

—
—
3
3
(13) $

—
—
—
—
(1) $

—
—
—
—

(35) $
—
—
(35)

—
—
(28)
(28)

188
1
—
189

73
2
—
75
264

7
11
7
25

(20)
—
—
(20)

(107)
(11)
—
(118)

—
—
(7)
(7)

—
6
2
8
$ 283

(6)
—
—
(6)
(26) $

(46)
(7)
—
(53)
(206) $

—
—
(2)
(2)
(37) $

— $ 252 $
—
—
—

2
3
257

(3) $
—
—
(3)

(55) $
(1)
—
(56)

163
4
—
167
167 $ 277 $

9
8
3
20

(12)
(2)
(5)
(19)
(22) $

(82)
(8)
—
(90)
(146) $

(3) $
—
(3)
(6)

—
—
2
2
(4) $

(3) $
—
—
(3)

(5)
—
—
(5)
(8) $

188
1
—
189

73
2
—
75
264

Fiscal 2021 Activity:

Fiscal 2021 Actions:

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

Total
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

Total

Pre-Fiscal 2019 Actions:
Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Total fiscal 2021 activity

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

Pre-Fiscal 2019 Actions:
Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Total fiscal 2020 activity

Fiscal 2019 Activity:

Fiscal 2019 Actions:

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

Total

Pre-Fiscal 2019 Actions:
Employee severance
Facility and other exit costs
Property, plant, and equipment

Total

Total fiscal 2019 activity

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fiscal 2021 Actions

During fiscal 2021, we initiated a restructuring program across all segments to optimize our manufacturing footprint

and improve the cost structure of the organization. In connection with this program, during fiscal 2021, we recorded net
restructuring charges of $195 million. We expect to complete all restructuring actions commenced during fiscal 2021 by the
end of fiscal 2023 and to incur additional charges of approximately $16 million related primarily to employee severance and
facility exit costs.

The following table summarizes expected, incurred, and remaining charges for the fiscal 2021 program by segment:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

Fiscal 2020 Actions

Cumulative Remaining
Charges Expected

Total
Expected
Charges Incurred Charges
(in millions)

$ 131 $

53
27

$ 211 $

122 $
49
24
195 $

9
4
3
16

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
2021 and 2020, we recorded restructuring charges of $23 million and $250 million, respectively. We expect to complete all
restructuring actions commenced during fiscal 2020 by the end of fiscal 2023 and to incur additional charges of
approximately $15 million related primarily to employee severance and facility exit 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

Cumulative Remaining
Charges Expected

Total
Expected
Charges Incurred Charges
(in millions)

$ 139 $
108
41

$ 288 $

132 $
104
37
273 $

7
4
4
15

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 2021, 2020, and 2019, we recorded net
restructuring credits of $7 million, charges of $5 million, and charges of $254 million, respectively. We anticipate that any
additional charges will be insignificant for restructuring actions commenced during fiscal 2019.

Pre-Fiscal 2019 Actions

During fiscal 2021, 2020, and 2019, we recorded net restructuring credits of $3 million, charges of $2 million, and

charges of $1 million, respectively, related to pre-fiscal 2019 actions. We anticipate that any additional charges will be
insignificant for restructuring actions commenced prior to fiscal 2019.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Total Restructuring Reserves

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

Accrued and other current liabilities
Other liabilities

Restructuring reserves

4. Discontinued Operations

Fiscal Year End
2020
2021

(in millions)
236 $
68
304 $

229
56
285

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.

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

credit related to the SubCom business’ projects that existed as of the date of sale. These performance guarantees and letters of
credit had a combined value of approximately $119 million as of fiscal year end 2021 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. During fiscal 2021, we amended our agreement with SubCom and removed
a requirement to issue new performance guarantees for certain projects entered into by the SubCom business following the
sale. As of fiscal year end 2021, 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 loss from discontinued operations, net of income taxes,

for the SubCom business and prior divestitures for fiscal 2019; activity in fiscal 2021 and 2020 was not material:

Net sales
Cost of sales
Selling, general, and administrative expenses
Research, development, and engineering expenses
Restructuring and other charges, net
Pre-tax loss from discontinued operations
Pre-tax loss on sale of discontinued operations
Income tax benefit

Loss from discontinued operations, net of income taxes

Fiscal
2019
(in millions)
41
(50)
(11)
(3)
(3)
(26)
(86)
10
(102)

5. Acquisitions

During fiscal 2021, we acquired four businesses for a combined cash purchase price of $422 million, net of cash

acquired. The acquisitions were reported as part of our Industrial Solutions segment from the date of acquisition. Due to the
timing of two transactions that closed in the quarter ended September 24, 2021, we have preliminarily allocated the purchase
price of those acquisitions to goodwill and identifiable intangibles assets. Our valuation of identifiable intangible assets,

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

assets acquired, and liabilities assumed is currently in process; therefore, the current allocation is subject to adjustment upon
finalization of those valuations. The amount of these potential adjustments could be significant.

We acquired five businesses, including First Sensor AG (“First Sensor”), for a combined cash purchase price of

$336 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.

In connection with our acquisition of approximately 72% of the outstanding shares of First Sensor, we and First
Sensor entered into a Domination and Profit and Loss Transfer Agreement (“DPLTA”) which became effective in fiscal
2020. Under the terms of the DPLTA, 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. Our First Sensor noncontrolling interest balance, which was originally recorded at a fair
value of €96 million (equivalent to $107 million) at the acquisition date, is recorded as redeemable noncontrolling interest
outside of equity on the Consolidated Balance Sheets as of fiscal year end 2021 and 2020 as the exercise of the put right by
First Sensor minority shareholders is not within our control.

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.

6. Inventories

Inventories consisted of the following:

Raw materials
Work in progress
Finished goods
Inventories

7. Property, Plant, and Equipment, Net

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

Property, plant, and equipment, gross:

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

Accumulated depreciation

Property, plant, and equipment, net

Fiscal Year End
2020
2021

(in millions)
320 $
991
1,200

251
851
848
$ 2,511 $ 1,950

Fiscal Year End
2020
2021

(in millions)

128 $

147
1,442
7,849
516
9,954
(6,304)
$ 3,778 $ 3,650

1,469
8,308
614
10,519
(6,741)

Depreciation expense was $576 million, $529 million, and $510 million in fiscal 2021, 2020, and 2019, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 2019(1)

Impairment of goodwill
Acquisitions
Currency translation and other
Balance at fiscal year end 2020(2)

Acquisitions
Currency translation and other
Balance at fiscal year end 2021(2)

(in millions)

2,124 $ 3,039 $
(900)
276
27
1,527
—
22

—
18
53
3,110
307
29

1,549 $ 3,446 $

—
—
10
587
—
8

577 $ 5,740
(900)
294
90
5,224
307
59
595 $ 5,590

(1)

(2)

At fiscal year end 2019, 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 2021 and 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 2021 and 2020, we recognized goodwill of $307 million and $294 million, respectively, in connection

with new acquisitions. See Note 5 for additional information regarding acquisitions.

We completed our annual goodwill impairment test in the fourth quarter of fiscal 2021 and determined that no

impairment existed.

During the quarter ended March 27, 2020, as a result of current and projected declines in sales and profitability of

the Sensors reporting unit of the Transportation Solutions segment, due in part to the impact of the COVID-19 pandemic and
projected reductions in global automotive production as of March 2020, we determined that an indicator of impairment had
occurred and goodwill impairment testing of this reporting unit was required. 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. No additional impairment was identified during our annual
goodwill impairment test in the fourth quarter of fiscal 2020.

9. Intangible Assets, Net

Intangible assets consisted of the following:

Fiscal Year End

2021

2020

Gross

Net

Gross

Net

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

$ 1,766 $
1,262
19

$ 3,047 $

(660) $ 1,106 $ 1,648 $
430
(832)
13
(6)
(1,498) $ 1,549 $ 2,892 $

1,225
19

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

Customer relationships
Intellectual property
Other

Total

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible asset amortization expense was $193 million, $182 million, and $180 million for fiscal 2021, 2020, and

2019, respectively. At fiscal year end 2021, the aggregate amortization expense on intangible assets is expected to be as
follows:

Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Thereafter
Total

10. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following:

(in millions)
200
$
199
166
151
145
688
1,549

Fiscal Year End
2020
2021

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

Accrued and other current liabilities

(in millions)
690 $
327
236
146
118
73
51
28
573

460
317
229
113
116
—
47
30
408
$ 2,242 $ 1,720

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Debt

Debt was as follows:

Fiscal Year End
2020
2021

(in millions)

Principal debt:

4.875% senior notes due 2021
Euro-denominated fixed-to-floating rate senior notes due 2021(1)
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
0.00% euro-denominated senior notes due 2029
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

— $
—
500
644
350
644
350
400
644
477
110
4,119
(29)
2

250
407
500
639
350
639
350
400
—
477
149
4,161
(23)
8
$ 4,092 $ 4,146

(1)

The euro-denominated fixed-to-floating rate senior notes due 2021 bore interest at a rate of
0% until June 2020 and then 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 2021, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued €550 million

aggregate principal amount of 0.00% senior notes due in February 2029. 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 total commitments of $1.5

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

or, upon a phase-out of LIBOR, an alternative benchmark rate, (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, or an alternative
benchmark rate, plus 1%, (3) an alternative currency daily rate, or (4) an alternative currency term rate, plus, in each case, an
applicable margin based upon the senior, unsecured, long - term debt rating of TEGSA. TEGSA is required to pay an annual
facility fee. Based on the applicable credit ratings of TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’
commitments under the Credit Facility.

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

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 2021, principal payments required for debt are as follows:

Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Thereafter
Total

(in millions)
503
$
651
353
646
352
1,614
4,119

The fair value of our debt, based on indicative valuations, was approximately $4,465 million and $4,550 million at

fiscal year end 2021 and 2020, respectively.

12. Leases

The components of lease cost were as follows:

Operating lease cost
Variable lease cost
Total lease cost

Fiscal

2021

2020

(in millions)
120 $
49
169 $

108
49
157

Amounts recognized on the Consolidated Balance Sheets were as follows:

Operating lease ROU assets:

Other assets

Operating lease liabilities:

Accrued and other current liabilities
Other liabilities

Total operating lease liabilities

Fiscal Year End
2020

2021

($ in millions)

$ 444 $ 453

$ 118 $ 116
347
$ 452 $ 463

334

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

5.2
1.2 %

5.8
1.6 %

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2021

2020

(in millions)

123 $

108

ROU assets, including modifications and extensions, obtained in exchange for operating
lease liabilities

123

(1)

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

At fiscal year end 2021, the maturities of operating lease liabilities were as follows:

Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Thereafter

Total lease payments

Less: interest
Present value of lease liabilities

ASC 840 Comparative Disclosures

(in millions)
$

118
104
83
63
40
60
468
(16)
452

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 for fiscal 2019.

13. Commitments and Contingencies

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.

Trade Compliance Matters

We are investigating our past compliance with relevant U.S. trade controls and have made voluntary disclosures of

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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
2021, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of
$18 million to $47 million, and we accrued $21 million as the probable loss, which was the best estimate within this range.
We believe that any potential payment of such estimated amounts will not have a material adverse effect on our results of
operations, financial position, or cash flows.

Guarantees

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 2021, we had outstanding letters of credit, letters of guarantee, and surety bonds of $135 million,

excluding those related to our SubCom business which are discussed in Note 4.

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 at fiscal year end 2021 and 2020. 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 in fiscal 2022, 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
2020
2021

(in millions)
— $
20

1
9

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At fiscal year end 2021 and 2020, 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)

2021

Fiscal
2020
(in millions)

2019

(6) $
(6)

28 $
(48)

53
66

(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 $3,798 million and $3,511 million at
fiscal year end 2021 and 2020, 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 $1,430 million and $1,664 million at fiscal year end 2021 and 2020,
respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 1.85% per
annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2025, we will pay the notional
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
2020
2021

(in millions)
3 $
18
13
18

1
3
6
16

2021

Fiscal
2020
(in millions)

2019

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)

(12) $

(172) $

162

(22)

(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. The aggregate notional value of our forward starting interest rate swap

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

contracts, which are designated as cash flow hedges, was $450 million at fiscal year end 2021 and 2020. These forward
starting interest rate swap contracts were recorded on the Consolidated Balance Sheets as follows:

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

Fiscal Year End
2020
2021

(in millions)
7 $
38
—

—
—
64

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

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

33 $

(30) $

(34)

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

2021

Fiscal
2020
(in millions)

2019

compensation liabilities.

Commodity Hedges

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

The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in prices of
commodities used in production. These contracts had an aggregate notional value of $512 million and $312 million at fiscal
year end 2021 and 2020, respectively, and were designated as cash flow hedges. These commodity 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 these commodity swap contracts were as follows:

Fiscal Year End
2020
2021

(in millions)
23 $
—
18
4

41
3
2
1

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

2021

Fiscal
2020
(in millions)

2019

58 $

60 $

(18)

We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with

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 2021 and 2020.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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
2020

2021

2019

2021

($ in millions)

U.S. Plans
Fiscal
2020

2019

$ 48

$ 52

$ 12

30
(57)
32
(6)
(2)
$ 45

25
(61)
41
(6)
—
$ 51

42
(64)
24
(7)
(1)
41

30
(52)
9
—
28
$ 27

36
(59)
9
—
—
(4)

46
(58)
17
—
—
18

1.13 % 1.01 % 1.94 % 2.57 % 3.14 % 4.35 %
3.65 % 4.07 % 4.65 % 5.60 % 6.50 % 6.57 %
— %
2.50 % 2.53 % 2.57 %

— %

Operating expense:
Service cost

Other (income) expense:

Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Amortization of prior service credit
Settlement and curtailment losses (gains)

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
Settlements and curtailments
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
Settlements
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

2021

2020

2021

2020

($ in millions)

$ 2,519
48
30
6
(85)
(67)
63
6
2,520

1,537
81
43
(85)
(52)
54
4
1,582
$ (938)

$ 2,483
52
25
(44)
(88)
(27)
111
7
2,519

1,489
39
43
(88)
(4)
52
6
1,537
$ (982)

$ 1,219
12
30
(46)
(80)
(183)
—
—
952

968
110
18
(80)
(183)
—
—
833
$ (119)

102
(30)
(1,010)
$ (938)

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

—
(4)
(115)
$ (119)

$ 1,195
10
36
65
(87)
—
—
—
1,219

937
114
4
(87)
—
—
—
968
(251)

—
(5)
(246)
(251)

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

$ (547)
26
$ (521)

$ (597)
37
$ (560)

$ (151)
(1)
$ (152)

(291)
(2)
(293)

1.37 %
2.53 %

1.13 %
2.50 %

2.84 %
— %

2.57 %
— %

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(1)
Current year prior service cost recorded in accumulated other
comprehensive income (loss)
Amortization of prior service (credit) cost(1)

Non-U.S. Plans
Fiscal

U.S. Plans
Fiscal

2021

2020

2021

2020

(in millions)

16 $
34

18 $
41

103 $
37

(10)
9

(1)
(10)
39 $

—
(6)
53 $

—
1
141 $

—
—
(1)

(1)

Includes amounts reflected as settlement and curtailment losses (gains) in the above net periodic pension benefit cost (credit)
table.

As part of our continued effort to manage U.S. pension plan obligations, during the quarter ended September 24,

2021, we transferred approximately $190 million of U.S. pension plan liabilities to an insurance company through the
purchase of a group annuity contract funded by a transfer of plan assets totaling approximately $180 million. As a result of
this transaction, we recognized a settlement charge of $28 million, which was recorded in net other income (expense) on the
Consolidated Statement of Operations.

In fiscal 2021, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were
primarily the result of favorable asset performance and higher discount rates for our non-U.S. and U.S. defined benefit
pension plans as compared to fiscal 2020. 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 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 2021, 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 2021, 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

2021

2020

Target

2021

2020

34 %
49
17
100 %

35 %
48
17
100 %

25 %
55
20

67 %
33
—

100 % 100 %

51 %
49
—
100 %

45 %
55
—
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 $5 million to our non-U.S. and U.S. pension plans, respectively, in fiscal
2022. We may also make voluntary contributions at our discretion.

At fiscal year end 2021, benefit payments, which reflect future expected service, as appropriate, are expected to be

paid as follows:

Fiscal 2022
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027-2031

Non-U.S. Plans U.S. Plans
(in millions)
90 $

100
112
93
98
549

63
60
60
60
61
287

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

2021

2020

2021

2020

(in millions)

$ 2,410 $ 2,394 $

952 $ 1,219

1,027
75

1,166
128

1,324
338

1,458
356

918
798

1,219
968

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 and corporate bonds(2)
Commingled fixed income funds(3)

Other(4)
Subtotal
Items to reconcile to fair value of plan assets(5)

Fair value of plan assets

Equity:

Commingled equity funds(1)

Fixed income:

Government and corporate bonds(2)
Commingled fixed income funds(3)

Other(4)
Subtotal
Items to reconcile to fair value of plan assets(5)

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 2021

(in millions)

$ — $

220 $ — $

220 $ — $ 280 $ — $ 280

—
—
—

—
—
—
$ — $ 1,505 $ —

6
1,101
178

—
—
—
1,505 $ — $ 695 $ —

—
392
23

—
—
—

77
$ 1,582

Fiscal Year End 2020

Non-U.S. Plans

Level 1 Level 2 Level 3 Total

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

(in millions)

$ — $ 357 $ — $

357 $ — $ 447 $ — $ 447

—
—
—

—
—
141
$ — $ 1,383 $ 141

493
366
167

493
366
308

—
—
—
1,524 $ — $ 967 $ —

—
494
26

—
—
—

13
$ 1,537

—
392
23
695
138
$ 833

—
494
26
967
1
$ 968

(1)

(2)

(3)

(4)

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 and 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 fixed income funds are pooled investments in multiple fixed income-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).

(5)

Items to reconcile to fair value of plan assets include certain investments containing no significant redemption restrictions that
were measured at net asset value (“NAV”) using the NAV practical expedient available in ASC 820 and amounts receivable or
payable for unsettled transactions and cash balances, both of which are considered to be carried at book value.

Fiscal 2021 and 2020 changes in Level 3 assets in non-U.S. plans were primarily the result of investment sales and

net investment losses, respectively.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, $60 million, and $63 million for fiscal 2021, 2020, and 2019, 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 2021 and 2020,
total deferred compensation liabilities were $263 million and $218 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 $16 million and $17 million at fiscal year end 2021 and 2020, 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 2021, 2020, and 2019 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)

2021

Fiscal
2020
(in millions)

2019

3 $
12
462
477

9 $ (28)
2
229
203

(23)
262
248

(24)
(15)
(315)
(354)

(25)
(8)
(185)
(218)
$ 123 $ 783 $ (15)

(16)
(10)
561
535

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 $ 2,378 $

2021

2019

Fiscal
2020
(in millions)
$ (336) $ (1,053) $ (216)
2,147
1,577
524 $ 1,931

2,714

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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):

$ 499 $ 110 $ 406

2021

Fiscal
2020
(in millions)

2019

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
Excess tax benefits from share-based payments
Other

Income tax expense (benefit)

(2)
12
(13)
(71)
37
(353)
—
(21)
35

(5)
15
(22)
(166)
(61)
(163)
—
(8)
(11)
$ 123 $ 783 $ (15)

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

(1)

(2)

The U.S. federal statutory rate was 21% for fiscal 2021, 2020, and 2019.

Excludes items which are separately presented.

The income tax expense for fiscal 2021 included a $353 million income tax benefit related to changes in valuation
allowances, of which $327 million related to the net reduction in valuation allowances associated primarily with certain tax
planning actions, as well as improved current and expected future operating profit and taxable income. In addition, the
income tax expense for fiscal 2021 included a $29 million income tax benefit related to an Internal Revenue Service
approved change in the tax method of depreciating or amortizing certain assets and $23 million of income tax expense
associated with the tax impacts of an intercompany transaction.

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 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. 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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
2020
2021

(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

313 $

3,836
46
535
177
7
310
4
94
9
5,331
(2,729)
2,602

248
5,338
45
572
223
4
180
3
106
11
6,730
(4,429)
2,301

(97)
(92)
(95)
(284)

(108)
(93)
(65)
(266)

Net deferred tax assets

$ 2,318 $ 2,035

Our tax loss and credit carryforwards (tax effected) at fiscal year end 2021 were as follows:

Expiration Period
Fiscal 2027
Through Through

Fiscal 2026 Fiscal 2041 Expiration Total

(in millions)

U.S. Federal:

Net operating loss carryforwards
Tax credit carryforwards

40 $
54

383 $
112

56 $ 479
166
—

U.S. State:

Net operating loss carryforwards
Tax credit carryforwards

Non-U.S.:

Net operating loss carryforwards
Capital loss carryforwards

Total tax loss and credit carryforwards

61
15

16
—

4
7

81
22

1,600
3

157
3,043
45
—
327 $ 2,114 $ 1,395 $ 3,836

1,286
42

The valuation allowance for deferred tax assets of $2,729 million and $4,429 million at fiscal year end 2021 and
2020, 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 2021, the valuation allowance decreased primarily
as a result of a $1,295 million (tax effected) recovery of prior years’ net write-downs of investments in subsidiaries in certain
jurisdictions, with a corresponding decrease to tax loss and credit carryforwards. In addition, as discussed above, a $327
million net reduction in valuation allowances was associated primarily with certain tax planning actions, as well as improved

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

current and expected future operating profit and taxable income. 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 2021, certain subsidiaries had
approximately $32 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 2021, we had approximately $4.9 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 $0.7 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

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
Current year acquisitions
Settlements
Reductions due to lapse of applicable statute of limitations

Balance at end of fiscal year

2021

2019

Fiscal
2020
(in millions)
$ 414 $ 542 $ 566
13
(101)
98
—
(2)
(32)
$ 359 $ 414 $ 542

29
(87)
39
—
(12)
(97)

14
(77)
50
4
(9)
(37)

The total amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and the

effective tax rate were $378 million, $393 million, and $397 million at fiscal year end 2021, 2020, and 2019, respectively.

We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit).

As of fiscal year end 2021 and 2020, we had $53 million and $42 million, respectively, of accrued interest and penalties
related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes. During fiscal 2021,
2020, and 2019, we recognized income tax expense of $12 million, benefits of $1 million, and benefits of $14 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

As of fiscal year end 2021, 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
2016 through 2021
2011 through 2021
2017 through 2021
2018 through 2021
2013 through 2021
2015 through 2021
2016 through 2021
2016 through 2021
2015 through 2021
2016 through 2021
2016 through 2021
2016 through 2021
2016 through 2021
2017 through 2021
2016 through 2021
2019 through 2021
2019 through 2021
2018 through 2021

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.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that
approximately $100 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 2021.

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 eliminated certain preferential tax items and implemented 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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

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

2021

2019

Fiscal
2020
(in millions)
332
—
332

330
3
333

338
2
340

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

2021

Fiscal
2020
(in millions)

2019

—

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.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Common Shares Held in Treasury

At fiscal year end 2021, approximately 9 million common shares were held in treasury, of which 4 million were

owned by one of our subsidiaries. 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. Shares held both directly by us and by our subsidiary are presented
as treasury shares on the Consolidated Balance Sheets.

In fiscal 2021, 2020, and 2019, our shareholders approved the cancellation of 3 million, 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.

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 2021

and 2020, Swiss Contributed Surplus was CHF 4,902 million and CHF 5,513 million, respectively (equivalent to $3,905
million and $4,561 million, respectively).

Dividends

We paid cash dividends to shareholders of $1.96, $1.88, and $1.80 per share in fiscal 2021, 2020, and 2019,

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 2018

Annual Payment Per Share
$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

March 2021

$2.00, payable in four quarterly installments of $0.50

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
Third quarter of fiscal 2021
Fourth quarter of fiscal 2021
First quarter of fiscal 2022
Second quarter of fiscal 2022

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to
shareholders’ equity. At fiscal year end 2021 and 2020, the unpaid portion of the dividends recorded in accrued and other
current liabilities on the Consolidated Balance Sheets totaled $327 million and $317 million, respectively.

Share Repurchase Program

In both fiscal 2021 and 2019, 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

2021

2019

Fiscal
2020
(in millions)
6

12
$ 904 $ 505 $ 1,014

At fiscal year end 2021, we had $1.6 billion of availability remaining under our share repurchase authorization.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 2018

Other comprehensive income (loss), net of tax:

236 $

(452) $

(90) $

(306)

(in millions)

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

Other comprehensive income (loss), net of tax:

Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Income tax (expense) benefit

Other comprehensive income (loss), net of tax

Less: other comprehensive income attributable to noncontrolling
interests

Balance at fiscal year end 2021

(115)

(2)

(295)

(375)

67
—
(48)
188

(11)

—
—
(11)

(5)
172

144

—
—
144

34
66
(195)
(647)

15
(4)
46
(44)

44
(18)
34

—
(613)

120

62
(44)
138

(13)
(5)
40

—
(4)

(92)
5
(3)

116
62
(197)
(503)

31
(23)
63

(5)
(445)

348

(30)
(39)
279

(2)
314 $

—
(475) $

—
(7) $

(2)
(168)

(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.

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 2021, the 2007 Plan provided for a maximum of 70 million shares to be issued as
Awards, subject to adjustment as provided under the terms of the plan. A total of 12 million shares remained available for
issuance under the 2007 Plan as of fiscal year end 2021.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2021

Fiscal
2020
(in millions)

2019

94 $

74 $

We recognized a related tax benefit associated with our share - based compensation arrangements of $19 million, $15

million, and $16 million in fiscal 2021, 2020, and 2019, 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 of our board of directors.

Restricted share award activity was as follows:

Nonvested at fiscal year end 2020

Granted
Vested
Forfeited

Nonvested at fiscal year end 2021

Weighted-Average
Grant-Date
Fair Value

Shares
1,419,427 $
589,312
(518,894)
(173,200)
1,316,645 $

86.15
112.54
82.09
91.85
96.03

The weighted - average grant - date fair value of restricted share awards granted during fiscal 2021, 2020, and 2019

was $112.54, $92.94, and $77.77, respectively.

The total fair value of restricted share awards that vested during fiscal 2021, 2020, and 2019 was $43 million, $44

million, and $48 million, respectively.

As of fiscal year end 2021, there was $68 million of unrecognized compensation expense related to nonvested

restricted share awards, which is expected to be recognized over a weighted - average period of 1.7 years.

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 of our board of directors.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Performance share award activity was as follows:

Outstanding at fiscal year end 2020

Granted
Vested
Forfeited

Outstanding at fiscal year end 2021

Weighted-Average
Grant-Date
Fair Value

Shares
514,245 $
185,259
(99,024)
(74,409)
526,071 $

87.30
105.86
93.36
92.75
88.99

The weighted-average grant-date fair value of performance share awards granted during fiscal 2021, 2020, and 2019

was $105.86, $83.30, and $71.38, respectively.

The total fair value of performance share awards that vested during fiscal 2021, 2020, and 2019 was $10 million,

$20 million, and $30 million, respectively.

As of fiscal year end 2021, there was $21 million of unrecognized compensation expense related to nonvested

performance share awards, which is expected to be recognized over a weighted-average period of 1.4 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 2020

Granted
Exercised
Forfeited

Outstanding at fiscal year end 2021
Vested and expected to vest at fiscal year end 2021
Exercisable at fiscal year end 2021

6,657,716 $
1,330,050
(2,397,357)
(241,465)
5,348,944 $
5,157,695 $
2,181,837 $

77.73
106.52
69.29
92.44
88.00
87.63
77.38

7.0 $
7.0 $
5.4 $

300
291
145

The weighted - average exercise price of share option awards granted during fiscal 2021, 2020, and 2019 was

$106.52, $93.39, and $76.91, respectively.

The total intrinsic value of options exercised during fiscal 2021, 2020, and 2019 was $49 million, $39 million, and

$58 million, respectively. We received cash related to the exercise of options of $167 million, $55 million, and $85 million in
fiscal 2021, 2020, and 2019, respectively.

As of fiscal year end 2021, there was $32 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 1.6
years.

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2021
$ 22.21

Fiscal
2020
$ 15.49

2019
$ 13.40

28 %
0.5 %

21 %
1.7 %

20 %
3.0 %

$ 1.92
5.4

$ 1.84
5.1

$ 1.76
5.2

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:

2021

Fiscal
2020
(in millions)

2019

Transportation Solutions:

Automotive
Commercial transportation
Sensors

Total Transportation Solutions

Industrial Solutions:

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

Total Industrial Solutions

Communications Solutions:

Data and devices
Appliances

Total Communications Solutions

Total

(1)

$ 6,379 $ 4,903 $ 5,686
1,221
914
7,821

1,467
1,128
8,974

1,051
891
6,845

1,397
1,035
738
674
3,844

1,098
1,201
717
697
3,713

1,242
1,306
699
707
3,954

1,198
907
2,105

993
680
1,673
$ 14,923 $ 12,172 $ 13,448

973
641
1,614

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

Net sales by geographic region and segment were as follows:

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions
Industrial Solutions
Communications Solutions

Total EMEA

Asia–Pacific:

Transportation Solutions
Industrial Solutions
Communications Solutions
Total Asia–Pacific

Americas:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total Americas

Total

2021

Fiscal
2020
(in millions)

2019

$ 3,570 $ 2,625 $ 3,099
1,466
1,359
258
236
4,823
4,220

1,586
315
5,471

3,466
703
1,205
5,374

2,662
604
980
4,246

2,812
625
964
4,401

1,938
1,555
585
4,078

1,910
1,863
451
4,224
$ 14,923 $ 12,172 $ 13,448

1,558
1,750
398
3,706

TE CONNECTIVITY LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Operating income (loss) by segment was as follows:

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

2021

2019

Fiscal
2020
(in millions)
$ 1,526 $ (93) $ 1,226
543
209
$ 2,434 $ 537 $ 1,978

469
439

412
218

No single customer accounted for a significant amount of our net sales in fiscal 2021, 2020, or 2019.

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
2020

2019

2021

Capital Expenditures
Fiscal
2020

2019

2021

Transportation Solutions
Industrial Solutions
Communications Solutions

Total

(in millions)
$ 512 $ 463 $ 442 $ 487 $ 365 $ 530
145
74
$ 769 $ 711 $ 690 $ 690 $ 560 $ 749

184
64

139
56

181
67

189
68

121
82

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

2021

2019

Segment Assets
Fiscal Year End
2020
(in millions)
$ 5,791 $ 4,973 $ 4,781
2,100
2,117
849
887
7,730
7,977
1,457
1,398
10,566
9,808
$ 21,462 $ 19,242 $ 19,694

2,275
1,151
9,217
1,824
10,421

(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:

Net Sales(1)
Fiscal
2020

2021

Property, Plant, and
Equipment, Net
Fiscal Year End
2020

2019

2021

2019
(in millions)

EMEA:

Switzerland
Germany
Other EMEA

Total EMEA

Asia–Pacific:
China
Other Asia–Pacific

Total Asia–Pacific

Americas:
U.S.
Other Americas

Total Americas

Total

(1)

$ 3,616 $ 2,878 $ 3,251 $

41 $

79 $

417
1,438
5,471

343
999
4,220

404
1,168
4,823

599
937
1,577

559
871
1,509

92
443
851
1,386

3,297
2,077
5,374

2,459
1,787
4,246

2,443
1,958
4,401

755
377
1,132

659
418
1,077

642
449
1,091

3,615
463
4,078

991
106
1,097
$ 14,923 $ 12,172 $ 13,448 $ 3,778 $ 3,650 $ 3,574

3,794
430
4,224

3,348
358
3,706

963
101
1,064

960
109
1,069

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

22. Subsequent Event

Subsequent to fiscal year end 2021, TEGSA called for the early redemption of all of its outstanding 3.50% senior

notes due in February 2022, representing $500 million aggregate principal amount. The notes were redeemed on
November 3, 2021.

TE CONNECTIVITY LTD.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

Fiscal Years Ended September 24, 2021, September 25, 2020, and September 27, 2019

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 2021:

Allowance for doubtful accounts receivable
Valuation allowance on deferred tax assets

29 $

4,429

15 $
31

Fiscal 2020:

Allowance for doubtful accounts receivable
Valuation allowance on deferred tax assets

25 $

4,970

10 $
493

1 $
—

(1,731)

(4) $

(1) $
—

(1,034)

(5) $

41
2,729

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

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 24, 2021, and the consolidated statement of
operations, consolidated statement of comprehensive income (loss), consolidated statement of shareholders’ equity,
consolidated statement of cash flows and notes to the consolidated financial statements 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 24, 2021 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 an event or
other change in reporting unit structure 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 $5.6 billion as of September 24,
2021, of which $0.3 billion was allocated to the Sensors
reporting unit within the Transportation Solutions
reportable segment. The fair value of this reporting unit
exceeded its carrying amount, therefore, no 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 partial impairment charge recorded in the
prior fiscal year and future revenue growth rates were based
on an expectation of an increase in net sales in a product
portfolio with limited available third-party industry reports.
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 discount rates.

Our audit procedures related to the forecasts of future
revenue and operating margin (the “forecasts”), and the
selection of discount rates 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 discount rates.

• 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.

• With the assistance of our fair value specialists, we
evaluated the reasonableness of the (1) valuation
methodology and (2) discount rates by:
– Testing the source information underlying the
determination of the discount rates and the
mathematical accuracy of the calculations.
– Developing a range of independent estimates and
comparing those to the discount rates selected by
management.

Key Audit Matter (KAM):

How the scope of our audit responded to the key audit
matter:

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 $2.7 billion has been recorded to offset the
Company’s gross deferred tax assets as of September 24,
2021 of $5.3 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.

• 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 and other 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 9, 2021

TE CONNECTIVITY LTD.

INDEX TO SWISS STATUTORY FINANCIAL STATEMENTS

Statements of Operations for the Fiscal Years Ended September 24, 2021 and September 25, 2020

Balance Sheets as of September 24, 2021 and September 25, 2020

Notes to Swiss Statutory Financial Statements

Proposed Appropriation of Available Earnings

Report of the Statutory Auditor

Page

TE CONNECTIVITY LTD.

SWISS STATUTORY FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS

Fiscal Years Ended September 24, 2021 and September 25, 2020

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 loss on foreign currency transactions
Expenses for services provided by subsidiaries
Pre-separation tax settlement expense (Note 3)
Intercompany interest expense

Total expenses

Other Income
Gain on sale of subsidiary (Note 8)
Net Income

Fiscal 2021

Fiscal 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

750 CHF 692
6
698

7
757

410 CHF 378
11
11
389
421

12
4
6
11
14
64
—
66
177

11
3
5
10
13
58
—
60
160

7
2
7
13
12
45
3
82
171

6
2
7
13
11
43
3
79
164

—

—
580 CHF 538

22
273 CHF 247

See Notes to Swiss Statutory Financial Statements.

TE CONNECTIVITY LTD.

SWISS STATUTORY FINANCIAL STATEMENTS

BALANCE SHEETS

As of September 24, 2021 and September 25, 2020

Fiscal Year End 2021

Fiscal Year End 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions, except share data)

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, 336,099,881 shares authorized and
issued, and 338,953,381 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

238 CHF

220 $
—
4
224
10,426

—
4
242
9,633
9,875 CHF 10,650 $

34
36 CHF
46
50
3
3
83
89
9,633
10,426
9,722 CHF 10,509

1 CHF
74
4,463
79
327
4,944
—
4,944

1 $
68
4,127
73
304
4,573
868
5,441

2 CHF
51
3,629
7
317
4,006
—
4,006

2
47
3,371
6
310
3,736
842
4,578

148

192

149

193

3,905

4,902

4,561

5,513

(346)
1,549
(709)
346
4,931
9,875 CHF 10,650 $

(320)
715
(649)
320
5,209

(395)
(407)
432
1,230
(256)
(262)
395
407
5,716
5,931
9,722 CHF 10,509

See 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 24, 2021 and September 25, 2020. 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 24, 2021.

The accompanying statements of operations reflect the results of operations for the fiscal years ended September 24,

2021 and September 25, 2020 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 2021 and 2020 were each 52
weeks in length and ended on September 24, 2021 and September 25, 2020, respectively. For fiscal years in which there are
53 weeks, the fourth fiscal quarter includes 14 weeks, with the next such occurrence taking place in fiscal 2022.

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 2021
and 2020, exchange rates were CHF 0.9248:$1 and CHF 0.9290:$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 0.9097:$1 and CHF 0.9609:$1 for fiscal 2021 and 2020, 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 2021 and 2020, 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

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 are partially settled. At fiscal year end 2021 and 2020, the U.S. dollar loan receivable, which approximates the
borrowings, was included in the net Cash Pool asset on our balance sheets.

At fiscal year end 2021 and 2020, we had the following loans to subsidiaries on our balance sheets:

Cash Pool asset

Fiscal Year End 2021

Fiscal Year End 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

189 CHF 175 $

50 CHF

As of fiscal year end 2021 and 2020, we had the following loans from subsidiaries on our balance sheets:

Revolving loan
CHF-denominated borrowings

Loans from subsidiaries

Fiscal Year End 2021

Fiscal Year End 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

4,118 CHF 3,808 $

345

319

4,463 CHF 4,127 $

3,303 CHF 3,069
302
3,629 CHF 3,371

326

We have fully and unconditionally guaranteed the debt of a subsidiary, Tyco Electronics Group S.A., totaling CHF

3,783 million (equivalent to $4,092 million) and CHF 3,816 million (equivalent to $4,108 million) at fiscal year end 2021
and 2020, respectively. As of fiscal year end 2021, 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, we recorded expense of CHF 3 million (equivalent to $3 million) related to the Tax Sharing

Agreement 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.

Performance Guarantees

From time to time, we provide performance guarantees and surety bonds in favor of our subsidiaries. At fiscal year

end 2021 and 2020, these performance guarantees were as follows:

Performance Guarantees

Fiscal Year End 2021

Fiscal Year End 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

126 CHF 116 $

110 CHF 102

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 2021 and 2020 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)
(355) CHF

CHF 200 CHF 49 CHF 6,107 CHF

—
—
(7)

—
—

—
—
—

—
—

(594)
—
—

—
—

—
—
—

(40)
—

CHF 193 CHF 49 CHF 5,513 CHF

(395) CHF

—
—
(1)

—
—

—
—
—

—
—

(611)
—
—

—
—

—
—
—

75
—

CHF 192 CHF 49 CHF 4,902 CHF

(320) CHF

1,151 CHF (973) CHF 355 CHF 6,534
(594)
(256)
—

—
(256)
973

—
—
(966)

—
—
—

—
—

40
—

—
-
247
247
432 CHF (256) CHF 395 CHF 5,931
(611)
(649)
—

—
(649)
256

—
—
(255)

—
—
—

—
—
538
538
715 CHF (649) CHF 320 CHF 5,209

—
—

(75)
—

Fiscal year end 2019
Dividends
Repurchase of common shares
Cancellation of treasury shares
Transfer of reserves for treasury
shares and other
Net income
Fiscal year end 2020
Dividends
Repurchase of common shares
Cancellation of treasury shares
Transfer of reserves for treasury
shares
Net income
Fiscal year end 2021

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

The following table presents activity related to our equity accounts during fiscal 2021 and 2020 in U.S. dollars.

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

154 $
—
—
(5)

—
—
149 $
—
—
(1)

—
—
148 $

38 $
—
—
—

—
—
38 $
—
—
—

—
—
38 $

5,195 $
(634)
—
—

—
—
4,561 $
(656)
—
—

—
—
3,905 $

Authorized Share Capital

(in USD millions)
(362) $
—
—
—

1,927 $
—
—
(970)

(45)
—
(407) $
—
—
—

61
—
(346) $

—
273
1,230 $
—
—
(261)

—
580
1,549 $

(975) $
—
(262)
975

—
—
(262) $
—
(709)
262

—
—
(709) $

362 $
—
—
—

45
—
407 $
—
—
—

(61)
—
346 $

6,339
(634)
(262)
—

—
273
5,716
(656)
(709)
—

—
580
4,931

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 2021, 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 2021, no
conditional shares had been issued.

Own Shares Held in Treasury and Treasury Shares Held by a Subsidiary

During fiscal 2021 and 2020, 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 2019
Repurchases under share repurchase program
Other additions(1)
Reissuances
Shareholder approved cancellations
Common shares held as of fiscal year end 2020
Repurchases under share repurchase program
Other additions(1)
Reissuances
Shareholder approved cancellations
Common shares held as of fiscal year end 2021

12 $
3
—
—
(12)
3 $
5
—
—
(3)
5 $

975 CHF
262
—
—
(975)
262 CHF
709

—
—

(262)
709 CHF

(in millions)
973
256
—
—
(973)
256
649
—
—
(256)
649

4 $
3
—
(2)
—

5 $
2
—
(3)
—
4 $

362 CHF
244
29
(228)
—
407 CHF
195
21
(277)

—

346 CHF

355
236
28
(224)
—
395
175
19
(269)
—
320

(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 2021 and 2020, our shareholders approved the cancellation of 3 million and 12 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.

During fiscal 2021, our board of directors authorized an increase of $1.5 billion in our share repurchase program. At
fiscal year end 2021, we had CHF 1.5 billion (equivalent to $1.6 billion) of availability remaining under our share repurchase
authorization. Purchases made both by us and 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 2021 and 2020, reserves from capital contributions were as follows:

Reserves from capital contributions

General Reserve from Earnings

Fiscal Year End 2021

Fiscal Year End 2020

U.S. dollars Swiss francs U.S. dollars Swiss francs
(in millions)

3,905 CHF 4,902 $

4,561 CHF 5,513

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 $1.96 and $1.88 per share in fiscal 2021 and 2020, 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 2019

March 2020

March 2021

Annual Payment Per Share
$1.84, payable in four quarterly installments
of $0.46

$1.92, payable in four quarterly installments
of $0.48

$2.00, payable in four quarterly installments
of $0.50

Payment Timing

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
Third quarter of fiscal 2021
Fourth quarter of fiscal 2021
First quarter of fiscal 2022
Second quarter of fiscal 2022

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.

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 2021 and 2020 by each

member of our board of directors serving on our board at fiscal year end 2021. The share ownership of Mr. Curtin, our Chief
Executive Officer, and Mr. Mitts, our Executive Vice President and Chief Financial Officer, both of whom are members of

the board of directors, is set forth in Executive Management.

Board of Directors:
Pierre R. Brondeau

Carol A. ("John") Davidson

Lynn A. Dugle

William A. Jeffrey

Thomas J. Lynch(3)

Yong Nam

Daniel J. Phelan

Abhijit Y. Talwalkar

Mark C. Trudeau

Dawn C. Willoughby

Laura H. Wright

Years

2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020

Shares
Held

Options

Held

Exercise Price(1)

Fiscal Years
of Expiration

RSUs
Held

PSUs
Held(2)

38,032
36,694
13,202
11,864
2,280
942
19,331
17,993
161,602
191,302
18,912
17,668
34,150
32,313
8,696
7,358
9,602
8,264
2,280
942
13,554
12,216

—
—
—
—
—
—
—
—
43,700
479,650 $65.95-$93.36

—
—
—
—
—
—
—
—
$93.36

—
—
—
—
—
—
—
—
—

—
—

—
—
—
—
—
—
—
—
—

—
—

—
—
—
—
—
—
—
—
2028
2026-2028
—
—
—
—
—
—
—
—
—

—
—

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—

—
—

—
—
—
—
—
—
—
—
—
8,809
—
—
—
—
—
—
—
—
—

—
—

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 24, 2021 and September 25, 2020, 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. PSU awards were last
granted to Mr. Lynch on November 13, 2017 when he was serving as an executive officer of the Company.

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 24, 2021 include 15,000 shares held in a charitable trust and 38,425 shares held in a grantor retained annuity trust.
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.

(1)

(2)

(3)

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 2021 and 2020 by each

member of our executive management serving in such position as of fiscal year end 2021.

Executive Management:
Terrence R. Curtin(4)

John S. Jenkins, Jr.

Shad W. Kroeger

Steven T. Merkt

Heath A. Mitts(5)

Timothy J. Murphy

Aaron K. Stucki(6)

Shares
Years Held

Options

Held

Exercise Price(1)

Fiscal Years
RSUs
of Expiration Held(2)

PSUs
Held(3)

2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021

94,969
94,969
16,872
29,254
11,499
9,541
40,129
34,520
28,163
23,990
14,741
18,141
11,920

1,237,700 $66.74-$105.86
$51.61-$93.63
1,273,750
162,075 $76.66-$105.86
251,800
$65.95-$93.63
221,550 $51.61-$105.86
181,750
$51.61-$93.63
245,275 $76.66-$105.86
376,150
$65.95-$93.63
306,150 $76.66-$105.86
$66.74-$93.63
312,250
191,500 $34.05-$105.86
165,700
$34.05-$93.63
91,300 $66.74-$105.86

2027-2031
2024-2030
2028-2031
2026-2030
2024-2031
2024-2030
2028-2031
2026-2030
2028-2031
2027-2030
2023-2031
2023-2030
2027-2031

—
—
2,143
4,351
—
—
—
—
—
—
—
—
4,454

144,132
132,940
27,191
25,853
24,377
21,943
40,829
40,662
45,818
42,600
16,791
16,090
11,242

(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 24, 2021 and September 25, 2020, 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 9, 2020, November 11, 2019, and November 12, 2018.

Mr. Curtin is a member of the board of directors and chief executive officer. Shares held include 40,000 shares held in a family
trust.

Mr. Mitts is a member of the board of directors and executive vice president and chief financial officer.

Mr. Stucki became a member of executive management effective 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.

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 2021.

Name and Address of Beneficial Owner
The Vanguard Group(1)
100 Vanguard Blvd.
Malvern, PA 19355

Dodge & Cox(2)

555 California Street, 40th Floor
San Francisco, CA 94104

Capital World Investors(3)

333 South Hope Street, 55th Floor
Los Angeles, CA 90071

Number of
Shares

Percentage
of Class

25,101,453

7.6 %

23,312,540

7.0 %

18,398,480

5.6 %

(1)

(2)

(3)

This information is based on a Schedule 13G/A filed with the SEC on February 10, 2021 by The Vanguard Group, which
reported sole voting power, sole dispositive power, and shared dispositive power as follows: sole voting power—0, shared voting
power—499,240, sole dispositive power—23,709,318, and shared dispositive power—1,392,135.

This information is based on a Schedule 13G/A filed with the SEC on February 11, 2021 by Dodge & Cox, which reported sole
voting power and sole dispositive power as follows: sole voting power—22,350,940 and sole dispositive power—23,312,540.

This information is based on a Schedule 13G filed with the SEC on February 16, 2021 by Capital World Investors, which
reported sole voting power and sole dispositive power as follows: sole voting power—18,355,858 and sole dispositive power—
18,398,480.

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 2021:

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)
$
$
EUR
HKD
$
$
CHF
USD
KRW

1
—
79
7,877
—
1,101
—
8
6,812
JPY 17,300
237

SGD

Purpose(2)
F
M
M
S
F
F
S
M
M
M
S

(1)

(2)

The subsidiary labeled as “direct” is 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.

During fiscal 2020, we sold a direct investment to another wholly-owned indirect subsidiary, recording a gain of

CHF 22 million (equivalent to $23 million).

During fiscal 2021 and 2020, subsidiaries distributed CHF 692 million (equivalent to $750 million) and CHF 378

million (equivalent to $410 million), respectively, to us. The distributions are included in income from distributions made by

TE CONNECTIVITY LTD.
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS

subsidiaries in our statements of operations.

9. Subsequent Events

We have evaluated subsequent events through November 9, 2021, 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 715 million as included in our balance sheet as of September 24, 2021.

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 24, 2021, 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 24, 2021 comply with Swiss law and the Company’s
articles of association.

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 9, 2021

100

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

102

104

106

101

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 2021 consisted of Terrence Curtin, Chief Executive Officer; John Jenkins, Jr., Executive Vice President and General
Counsel; Shadrak Kroeger, President, Industrial Solutions; Heath Mitts, Executive Vice President and Chief Financial
Officer; Steven Merkt, President, Transportation Solutions; Timothy Murphy, Senior Vice President and Chief Human
Resource Officer; Aaron Stucki, President, Communications Solutions and Kevin Rock, former President, Industrial
Solutions. Thomas Lynch, former Executive Chairman, who during fiscal 2021 and 2020 continued to receive dividend
equivalent units on equity awards granted to him as a member of Executive Management, is included in this report. Joan
Wainwright, our former President, Channel and Customer Experience is included in this report for fiscal 2020. 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.

The following sets forth, for the fiscal years ended September 24, 2021 and September 25, 2020, 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 2022 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 2021 and 2020 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

102

compensation for their services as directors. Messrs. Curtin and Mitts are employees of the Company and do not receive any
additional compensation for their service on the board.

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 2021

and 2020.

Table 1

Name

Pierre R. Brondeau

Carol A. (John) Davidson

Lynn A. Dugle (5)

William A. Jeffrey

David M. Kerko (6)

Thomas J. Lynch

Yong Nam

Daniel J. Phelan

Paula A. Sneed (7)
Abhijit Y. Talwalkar

Mark C. Trudeau

Dawn C. Willoughby (5)

Laura H. Wright

Fees Earned
or Paid in
Cash
($) (1)
$145,000
$145,000
$115,000
$108,750
$100,000
$58,333
$100,000
$100,000
$41,667
$100,000
$260,000
$260,000
$90,000
$90,000
$98,333
$110,000
$37,500
$101,667
$90,000
$90,000
$90,000
$90,000
$52,500
$100,000
$106,250

Stock Awards
($) (2)
$188,960
$186,136
$188,960
$186,136
$188,960
$84,906
$188,960
$186,136
$188,960
$186,136
$188,960
$186,136
$188,960
$186,136
$188,960
$186,136
$93,068
$188,960
$186,136
$188,960
$186,136
$188,960
$84,906
$188,960
$186,136

Fiscal Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2020
2021
2020
2021
2020
2021
2020
2021
2020

Dividend
Equivalent Units
and Other
Compensation
($)(3)

$—
$—
$—
$—
$10,000
$—
$—
$—
$—
$—
$10,000
$10,000
$—
$—
$10,000
$8,000
$7,500
$—
$10,000
$150
$—
$10,000
$10,000
$—
$10,000

Total
($)(4)
$333,960
$331,136
$303,960
$294,886
$298,960
$143,239
$288,960
$286,136
$230,627
$286,136
$458,960
$456,136
$278,960
$276,136
$297,293
$304,136
$138,068
$290,627
$286,136
$279,110
$276,136
$288,960
$147,406
$288,960
$302,386

(1)

(2)

The amounts shown represent the amount of cash compensation earned in fiscal 2021 and 2020 for Board and committee
services. We pay additional annual cash retainers to our Non-Executive Chairman, Lead Independent Director, Chairperson of
each of our committees of the Board, members of the audit committee and our science advisory board member.

The amounts shown represent the amount of equity compensation granted in fiscal 2021 and 2020 for Board services. On
November 9, 2020, each non-employee director received a grant of 1,785 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 ($103.62 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 2021, was calculated by using the closing price of TE Connectivity Ltd. common shares on the date of grant ($105.86

103

per share). For fiscal 2020, each non-employee director received a grant of common shares. For fiscal 2020, Mr. Lynch received
shares relating to a performance stock award (“PSU”) that vested on December 9, 2020. That equity award was 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. For fiscal 2021 and 2020, Mr. Lynch received dividend equivalent units (“DEUs”) on PSU awards
granted to him while serving as a member of Executive Management; the value of the DEUs is not included in this Table 1 but is
included in Table 2 below.

The Company has not made any loans or extended credit to any current or former member of the Board of Directors.

On March 11, 2020, Mses. Dugle and Willoughby were elected to our Board of Directors. Cash and equity compensation for
Mses. Dugle and Willoughby was pro-rated for their service during fiscal 2020.

Mr. Kerko resigned from the Board of Directors effective February 16, 2021; cash compensation for Mr. Kerko was pro-rated for
his service during fiscal 2021

Ms. Sneed retired from the board effective March 11, 2020. Cash and equity compensation for Ms. Sneed was pro-rated for her
service during fiscal 2020.

(3)

(4)

(5)

(6)

(7)

Compensation of Executive Management

The following table presents information concerning Executive Management’s fiscal 2021 and 2020 compensation.

Table 2

Name and Principal
Position
Terrence R. Curtin
Chief Executive Officer
All Other Executive
Management (1) (2)

Year

Salary
($)(3)

Bonus
($)

Stock
Awards
($)(4)

Option
Awards
($)(5)

Change in
Pension
Value and
Nonqualified
Deferred
Compen -
sation
Earnings
($)(7)

Non - Equity
Incentive
Plan
Compen -
sation)
($)(6

All Other
Compen -
sation
($)(8)

Total
($)(9)

2021
2020
2021
2020

$1,200,000
$1,200,000
$3,471,682
$3,535,501

$—
$—
$—
$—

$5,006,119
$4,226,458
$5,821,242
$4,313,534

$5,208,994
$4,378,192
$6,057,150
$4,469,760

$2,903,400
$343,800
$5,178,322
$1,129,981

$—
$—
$—
$85,651

$397,343
$420,775
$1,499,617
$698,543

$14,715,856
$10,569,225
$22,028,013
$14,232,970

For fiscal 2021, the Executive Management team for Swiss reporting purposes includes Mr. Jenkins, Mr. Kroeger, Mr. Merkt,
Mr. Mitts, Mr. Murphy, Mr. Stucki, and Mr. Rock until his retirement as a member of Executive Management. Mr. Lynch is also
included as he continues to receive compensation for fiscal 2020 for DEUs on equity awards.

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 until her retirement as a member of Executive Management. Mr. Lynch
is also included as he continues to receive compensation for fiscal 2020 for DEUs on equity awards.

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 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 restricted share awards (“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.

(1)

(2)

(3)

(4)

(5)

(6)

104

(7)

(8)

Represents the aggregate change in actuarial present value of the accumulated benefits in fiscal 2021 and 2020 under the frozen
pension plan. For fiscal 2021, the change in pension value is a decrease from fiscal 2020. Rather than report a negative value, a
change of $0 is reported.

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.

All Other Compensation

Dollar
Value of
Dividends
not
factored
into
Grant
Date Fair
Value
($)(b)
$298,253
$271,746
$366,082
$431,959

Employee
Stock
Purchase
Plan
(“ESPP”)
Company
Match
($)(d)

$—
$—
$4,875
$1,950

Company
Contributions
to DC plans
($)(c)

$99,090
$106,776
$223,093
$263,368

Total All Other
Compen -
sation
($)
$397,343
$420,775
$1,499,617
$698,543

Name
Terrence R. Curtin

All Other Executive
Management

Year

Perquisites
($)(a)

2021
2020
2021
2020

$—
$42,253
$905,567
$1,266

(a)

Perquisites consist of the following:

For fiscal 2020, 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 All Other Executive Management include various assignment allowances, miscellaneous fees and expenses,
personal tax preparation assistance, international tax payments and U.S. tax gross-up payments, in each case pertaining to an
expatriate assignment for one executive in fiscal 2021 and trailing assignment expenses for one executive in 2020. 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 swiss francs to US dollars: $1.08—$1.28: CHF 1 in fiscal 2021 and euros to U.S. dollars:
$1.07—$1.19: EUR 1 in fiscal 2020.

(b)

(c)

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

2021
2020
2021
2020

Company Matching
Contribution
(Qualified Plan)

Company
Contribution
(Non - Qualified Plan)

$17,993
$17,100
$66,438
$77,670

$81,097
$89,676
$156,655
$185,698

(d)

The Company made matching contributions under the TE Connectivity employee stock purchase plan for two executives for
fiscal 2021 and one executive for fiscal 2020.

105

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 24, 2021.

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 24, 2021 complies with Swiss
law and articles 14 – 16 of the Ordinance.

/s/ Dominik Voegtli
Licensed audit expert

Deloitte AG

/s/ Matthias Gschwend
Licensed audit expert
Auditor in charge

Zurich, December 14, 2021