TE CONNECTIVITY
2024 ANNUAL REPORT
TOGETHER,
WE ENGINEER.
© 2025 TE Connectivity. All Rights Reserved.
001-AR-FY2024
“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.
CORPORATE DATA
PRINCIPAL EXECUTIVE OFFICE
TE Connectivity plc
Parkmore Business Park West
Parkmore, Ballybrit
Galway, H91VN2T, Ireland
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1700 Market Street
Philadelphia, PA 19103
Deloitte Ireland LLP
Chartered Accountants & Statutory Audit Firm
Deloitte & Touche House
29 Earlsfort Terrace, Dublin 2, D02 AY28
STOCK EXCHANGE
The company’s ordinary 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 27, 2024 may be obtained
by shareholders without charge upon written request to:
TE Connectivity plc
Parkmore Business Park West
Parkmore, Ballybrit
Galway, H91VN2T, Ireland
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:
EQ 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 principal executive office above.
www.te.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ց
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 27, 2024
or
տ
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
001-33260
(Commission File Number)
TE CONNECTIVITY PLC
(Exact name of registrant as specified in its charter)
Ireland
(Jurisdiction of Incorporation)
98-1779916
(I.R.S. Employer Identification No.)
+353 91 378 040
(Registrant’s telephone number)
Parkmore Business Park West, Parkmore, H91VN2T Ballybrit, Galway, Ireland
(Address and postal code of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Ordinary Shares, Par Value $0.01
TEL
New York Stock Exchange
0.00% Senior Notes due 2025*
TEL/25
New York Stock Exchange
0.00% Senior Notes due 2029*
TEL/29
New York Stock Exchange
*Issued by Tyco Electronics Group S.A., an indirect wholly-owned subsidiary of TE Connectivity plc
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ց No տ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes տ No ց
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ց No տ
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ց No տ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ց
Accelerated filer տ
Non-accelerated filer տ
Smaller reporting company տ
Emerging growth company տ
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. տ
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued
its audit report. ց
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. տ
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). տ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes տ No ց
The aggregate market value of the common shares of TE Connectivity Ltd., the predecessor of the registrant, held by non-affiliates was $44.5
billion as of March 29, 2024, the last business day of the registrant’s most recently completed second fiscal quarter. Directors and executive officers of the
registrant are considered affiliates for purposes of this calculation but should not necessarily be deemed affiliates for any other purpose.
The number of ordinary shares outstanding as of November 7, 2024 was 299,162,134.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement to be filed in connection with the registrant’s 2025 annual general meeting of shareholders are incorporated
by reference into Part III of this Form 10-K.
i
TE CONNECTIVITY PLC
TABLE OF CONTENTS
Page
Part I
Item 1.
Business
1
Item 1A.
Risk Factors
8
Item 1B.
Unresolved Staff Comments
21
Item 1C.
Cybersecurity
21
Item 2.
Properties
23
Item 3.
Legal Proceedings
23
Item 4.
Mine Safety Disclosures
23
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
24
Item 6.
Reserved
25
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
43
Item 8.
Financial Statements and Supplementary Data
44
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
45
Item 9A.
Controls and Procedures
45
Item 9B.
Other Information
45
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
45
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
46
Item 11.
Executive Compensation
46
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
46
Item 13.
Certain Relationships and Related Transactions, and Director Independence
47
Item 14.
Principal Accountant Fees and Services
47
Part IV
Item 15.
Exhibits and Financial Statement Schedules
48
Item 16.
Form 10-K Summary
52
Signatures
53
Index to Consolidated Financial Statements
55
ii
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 also
include statements addressing our environmental, social, governance, and sustainability plans and goals. Such statements are
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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,” “aspire,” “estimate,” “predict,” “potential,” “goal,”
“target,” “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 discussed in “Part I. Item 1A. Risk Factors” and other risks described in this Annual Report 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.
1
PART I
“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.
© 2024 TE Connectivity plc. All rights reserved.
ITEM 1. BUSINESS
General
We are a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our
broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation
transportation, renewable energy, automated factories, data centers, medical technology, and more. References in this report
to “TE Connectivity,” the “Company,” “we,” “us,” or “our” refer to TE Connectivity Ltd. before September 30, 2024 and to
TE Connectivity plc on or after September 30, 2024.
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. During fiscal 2024, we were organized under the laws of
Switzerland and the rights of holders of our shares were governed by Swiss law, our Swiss articles of association, and our
Swiss organizational regulations.
In fiscal 2024, our board of directors and shareholders approved a change in our jurisdiction of incorporation from
Switzerland to Ireland. In connection with the change, we entered into a merger agreement with our wholly-owned
subsidiary, TE Connectivity plc, a public limited company incorporated under Irish law. Under the merger agreement, we
were merged with and into TE Connectivity plc, which was the surviving entity, in order to effect our change in jurisdiction
of incorporation from Switzerland to Ireland. The merger and change in jurisdiction of incorporation were completed on
September 30, 2024. Effective for fiscal 2025, we are organized under the laws of Ireland. We do not anticipate any material
changes in our operations or financial results as a result of the merger and change in place of incorporation. See Notes 1 and
21 to the Consolidated Financial Statements for additional information regarding the change in place of incorporation.
We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2024, 2023, and 2022 ended
on September 27, 2024, September 29, 2023, and September 30, 2022, respectively. Fiscal 2024 and 2023 were each 52
weeks in length. Fiscal 2022 was 53 weeks in length. For fiscal years in which there are 53 weeks, the fourth fiscal quarter
includes 14 weeks.
Segments
During fiscal 2024, we operated through three reportable segments: Transportation Solutions, Industrial Solutions,
and Communications Solutions. We believe our three segments served a combined market of approximately $190 billion as
of fiscal year end 2024.
Our net sales by segment as a percentage of our total net sales were as follows:
Fiscal
2024 2023 2022
Transportation Solutions
60 %
60 %
56 %
Industrial Solutions
28
28
28
Communications Solutions
12
12
16
Total
100 % 100 % 100 %
Below is a description of our reportable segments and the primary products, markets, and competitors of each
segment.
2
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,
and application tooling. The Transportation Solutions segment’s products, which must withstand harsh conditions, are used in
the following end markets:
•
Automotive (75% of segment’s net sales)—We are one of the leading providers of advanced automobile
connectivity solutions. The automotive industry uses our products in automotive technologies for body and
chassis systems, convenience applications, driver information, infotainment solutions, miniaturization solutions,
motor and powertrain applications, and safety and security systems. Hybrid and electronic mobility solutions
include in-vehicle technologies, battery technologies, and charging solutions.
•
Commercial transportation (15% of segment’s net sales)—We deliver reliable connectivity products designed to
withstand harsh environmental conditions for on- and off-highway vehicles and recreational transportation,
including heavy trucks, construction, agriculture, buses, and other vehicles.
•
Sensors (10% 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, relays, heat shrink tubing, and wire and cable. The Industrial Solutions
segment’s products are used in the following end markets:
•
Industrial equipment (30% 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, and marine (30% 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 (21% 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 (19% of segment’s net sales)—Our products are used in imaging, diagnostic, surgical, and minimally
invasive interventional applications. We specialize in the design and manufacture of advanced surgical,
imaging, and interventional device solutions. Key markets served include cardiovascular, peripheral vascular,
structural heart, endoscopy, electrophysiology, and neurovascular therapies.
The Industrial Solutions segment competes primarily against Amphenol, Hubbell, Carlisle Companies, Integer
Holdings, Esterline, Molex, and Omron.
3
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, antennas, and heat shrink tubing. The Communications Solutions segment’s products are
used in the following end markets:
•
Data and devices (65% 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, virtual reality and artificial intelligence/machine learning applications to help our customers
meet their current challenges and future innovations.
•
Appliances (35% 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).
New Segment Structure Effective for Fiscal 2025
Effective for the first quarter of fiscal 2025, we will reorganize our management and segments to align the
organization around our fiscal 2025 strategy. In this Annual Report, results for fiscal 2024 and prior periods are reported on
the basis under which we managed our business in fiscal 2024 and do not reflect the fiscal 2025 segment reorganization. See
Note 21 to the Consolidated Financial Statements for additional information regarding our new segment structure.
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 2024, 2023, or 2022.
4
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:
Fiscal
2024 2023 2022
Europe/Middle East/Africa (“EMEA”)
37 %
39 %
35 %
Asia–Pacific
34
32
35
Americas
29
29
30
Total
100 % 100 % 100 %
(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 130 countries primarily through direct selling efforts to manufacturers. In
fiscal 2024, 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 supply chain
disruptions and inflationary cost pressures. Backlog by reportable segment was as follows:
Fiscal Year End
2024
2023
(in millions)
Transportation Solutions
$ 2,543 $ 2,981
Industrial Solutions
2,518 2,448
Communications Solutions
978 617
Total
$ 6,039 $ 6,046
We expect that the majority of our backlog at fiscal year end 2024 will be filled during fiscal 2025. 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 recent years.
5
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, silver, and palladium 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. In recent
years, raw material prices and availability have been affected by worldwide economic conditions, including supply chain
disruptions and inflationary cost pressures.
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 2024, we employed approximately 87,000
people worldwide, including contract employees. Approximately 35,000 were in the EMEA region, 26,000 were in the Asia–
Pacific region, and 26,000 were in the Americas region. Of our total employees, approximately 51,000 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, inclusion, 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. 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. We are committed to a work environment where all employees are
engaged, feel differences are valued and mutually-respected, and believe that all opinions count. 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. As such, our people reflect our customers and markets. Our employees are in over 50 countries
representing approximately 145 nationalities, and our total employee population is approximately 40% women. Additionally,
during fiscal 2024, we achieved our fiscal 2026 goal of having at least 30% of leadership roles filled by 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 2024, we had eight ERGs—ALIGN (lesbian, gay, bisexual, transgender, and queer employees (LGBTQ+) and
their allies), Women in Networking, TE Young Professionals, African Heritage, Asian Heritage, Latin Heritage, THRIVE
(employees with mental, emotional, and physical disabilities and their allies), and TE Veterans. Our ERGs have over 10,500
members worldwide.
6
During fiscal 2024, we conducted our fifth annual employee engagement survey, which was a fully digital,
enterprise-wide survey available in 21 languages and focused on measuring engagement, inclusion, wellbeing, and leadership
effectiveness. We had a participation rate of 87% in fiscal 2024 and year over year improvement in all four indices of
engagement, inclusion, wellbeing, and leadership effectiveness. Our engagement and inclusion scores were once again
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, well-being, and human rights of our employees. We continuously evaluate
opportunities to raise safety and health standards through our environmental, health, and safety teams. Our All in on Safety
initiative asks employees to complete training, review our safety policies, and sign a personal commitment to uphold a safe
work environment. We aspire to be an incident-free workplace and, as such, we have compliance audits and internal
processes in place to stay ahead of workplace hazards. We reduced 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 0.11 in fiscal 2024. We remain focused on the protection of global human rights and have instituted several
policies to guide us including our global human rights policy and our human trafficking and modern slavery policy. During
fiscal 2024, we created a Human Rights Steering Committee of cross-functional leaders to assess and mitigate the areas of
greatest risk for our operations and value chain, and we have developed a roadmap to strengthen our human rights approach.
We apply high standards of human rights and require that our suppliers do the same.
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.”
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 12 to the Consolidated Financial Statements for additional information regarding trade compliance matters.
Also, see “Part I. Item 1A. Risk Factors” for discussion of the risks and uncertainties associated with trade regulations.
7
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 (“GHG”) 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
(“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) Directives; the China Administrative Measures for the
Restriction of Hazardous Substances in Electrical and Electronic Products (“China RoHS”) regulation; 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 GHG 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 2024, we concluded that we would incur investigation and remediation
costs at these sites in the reasonably possible range of $17 million to $43 million, and we accrued $21 million as the probable
loss, which was the best estimate within this range. We do not anticipate any material capital expenditures during fiscal 2025
for environmental control facilities or other costs of compliance with laws or regulations relating to GHG emissions.
Sustainability
We look to build on our strong foundation of environmental sustainability in our operations. Our One Connected
World strategy guides how we balance investor and customer expectations and drive improved environmental sustainability.
Our sustainability initiatives began several years ago and have continued to evolve. From fiscal 2020 to 2024, we
achieved more than a 20% reduction in energy use intensity, more than a 20% reduction in total water withdrawal, and more
than a 70% reduction in absolute GHG emissions for Scopes 1 and 2. We have challenged ourselves to find new ways to
continue to drive sustainability improvements. We have also committed to near-term, company-wide GHG emissions
reductions in line with climate science and Science Based Targets initiative (“SBTi”) objectives. These reduction goals were
validated by SBTi and we are currently listed on their “Companies Taking Action” target dashboard which shows companies
and financial institutions that have set science-based targets, or have committed to developing such targets. Our mid-term
goals and long-term ambitions, certain of which have already been achieved, include the following:
Targeted Fiscal Year
Baseline Fiscal Year
of Achievement
70%+ reduction in absolute GHG emissions for Scopes 1 and 2
2020
2030
30% reduction in absolute GHG emissions for Scope 3
2022
2032
15% reduction in water withdrawals at target sites with extremely high and
high water stress
2021
2025
15% reduction in hazardous waste disposed
2021
2025
80% renewable electricity use in our operations
n/a
2025
We continue to assess our goals and ambitions and periodically update our environmental commitments.
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 GHG
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 GHG 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. We support a safer, sustainable, productive, and connected future through the products that come out of our
facilities.
Additional information regarding our sustainability initiatives and progress is available in our annual Corporate
Responsibility Report located on our website at www.te.com under the heading “Corporate Responsibility.” The contents of
our Corporate Responsibility Report are not incorporated by reference in this Annual Report on Form 10-K.
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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 (“SEC”), including Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (“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.
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described below,
that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our
securities. These risks are not the only ones facing us. Our business is also subject to general risks that affect many other
companies. Additional risks not currently known to us or that we currently believe are immaterial may also impair our
business operations, financial condition, and liquidity.
Risks Relating to the Macroeconomic Environment and Our Global Presence
Conditions in global or regional economies, capital and money markets, and banking systems, and cyclical
industry demand may adversely affect our results of operations, financial position, and cash flows.
Our business and operating results have been and will continue to be affected by economic conditions regionally or
globally, including new or increased tariffs and other barriers to trade, including escalation of trade tensions between the
United States (“U.S.”), China, the EU, and other countries, changes to fiscal and monetary policy, inflation, slower growth or
recession, higher interest rates, labor disruptions, the cost and availability of consumer and business credit, end demand from
consumer and industrial markets, significant bank failures, government shutdowns, and concerns as to sovereign debt levels
including credit rating downgrades and defaults on sovereign debt. Any of these economic factors could cause our customers
to experience deterioration of their businesses, cash flow, financial condition, and ability to obtain financing. As a result,
existing or potential customers may delay or cancel plans to purchase our products and may not be able to fulfill their
obligations to us in a timely fashion or in full. Further, our vendors may experience similar problems, which may impact their
ability to fulfill our orders or meet agreed service and quality levels. If regional or global economic conditions deteriorate,
our results of operations, financial position, and cash flows could be materially adversely affected. Also, deterioration in
economic conditions, expectations for future revenue, projected future cash flows, or other factors have triggered and could
trigger additional recognition of impairment charges for our goodwill or other long-lived assets. Impairment charges, if any,
may be material to our results of operations and financial position.
Foreign currency exchange rates may adversely affect our results.
Our Consolidated Financial Statements are prepared in U.S. dollars; however, a significant portion of our business is
conducted outside the U.S. Changes in the relative values of currencies may have a significant effect on our results of
operations, financial position, and cash flows.
We are exposed to the effects of changes in foreign currency exchange rates on our costs and revenue.
Approximately 60% of our net sales for fiscal 2024 were invoiced in currencies other than the U.S. dollar, and we expect
non-U.S. dollar revenue to continue to represent a significant portion of our future net sales. We have elected not to hedge
this foreign currency exposure. Therefore, when the U.S. dollar strengthens in relation to the currencies of the countries
where we sell our products, such as the euro or Asian currencies, our U.S. dollar reported revenue and income will decrease.
In recent years, the strength of the U.S. dollar has generally increased as compared to other currencies, which has had, and
may continue to have, an adverse effect on our operating results as reported in U.S. dollars.
We manage certain cash, intercompany, and other balance sheet currency exposures in part by entering into financial
derivative contracts. In addition to the risk of non-performance by the counterparty to these contracts, our efforts to manage
these risks might not be successful.
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We have suffered and could continue to suffer business interruptions, including impacts resulting from
pandemics, weather conditions, and natural catastrophic events, including those caused or intensified by climate change
and global warming, and other macroeconomic factors.
Our operations and those of our suppliers and customers, and the supply chains that support their operations, have
been and may be in the future vulnerable to interruption by natural disasters such as hurricanes, earthquakes, tsunamis,
typhoons, tornados, or floods, which may be exacerbated by the effects of climate change; other disasters such as fires,
explosions, acts of terrorism, or war, including the continuing military conflicts in certain parts of the world; disease or other
adverse health developments, including impacts resulting from the COVID-19 pandemic; or failures of management
information or other systems due to internal or external causes. These events could cause some of our operations to suffer
from supply chain disruptions and potential delays in fulfilling customer orders or order cancellations altogether, lost
business and sales, changing costs or availability of insurance, and/or property damage or harm to our people, each and all of
which could have an adverse effect on our business operations, financial condition, and results of operations. In addition,
such interruptions could result in a widespread crisis that could adversely affect the economies and financial markets of many
countries, resulting in an economic downturn that could affect demand for our end customers’ products. If a business
interruption occurs and we are unsuccessful in our continuing efforts to minimize the impact of these events, our business,
results of operations, financial position, and cash flows could be materially adversely affected.
We could be adversely affected by a decline in the market value of our pension plans’ investment portfolios or a
reduction in returns on plan assets.
Concerns about deterioration in the global economy, together with concerns about credit, inflation, or deflation, have
caused and could continue to cause significant volatility in the price of all securities, including fixed income and equity
securities, which has reduced and could further reduce the value of our pension plans’ investment portfolios. In addition, the
expected returns on plan assets may not be achieved. A decrease in the value of our pension plans’ investment portfolios or a
reduction in returns on plan assets could require us to significantly increase funding of such obligations, which would have an
adverse effect on our results of operations, financial position, and cash flows.
Disruption in credit markets and volatility in equity markets may affect our ability to access sufficient funding.
The global equity markets have been volatile and at times credit markets have been disrupted, which has reduced the
availability of investment capital and credit. Downgrades of sovereign debt credit ratings have similarly affected the
availability and cost of capital. As a result, we may be unable to access adequate funding to operate and grow our business.
Our inability to access adequate funding or to generate sufficient cash from operations may require us to reconsider certain
projects and capital expenditures. The extent of any impact will depend on several factors, including our operating cash
flows, the duration of tight credit conditions and volatile equity markets, our credit ratings and credit capacity, the cost of
financing, and other general economic and business conditions.
Global political, economic, and military instability could negatively affect sales or profitability.
Our workforce; manufacturing, research, administrative, and sales facilities; markets; customers; and suppliers are
located throughout the world. As a result, we are exposed to risks that could negatively affect sales or profitability, including:
•
changes in global trade policies, including sanctions, tariffs, trade barriers, and trade disputes;
•
regulations related to customs and import/export matters;
•
variations in lengths of payment cycles and challenges in collecting accounts receivable;
•
tax law and regulatory changes, examinations by taxing authorities, changes to the terms of income tax treaties,
and difficulties in the tax-efficient repatriation of cash generated or held in a number of jurisdictions;
•
employment regulations and local labor conditions, including increases in employment costs, particularly in
low-cost regions in which we currently operate;
•
difficulties protecting intellectual property;
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•
instability in economic or political conditions, including elections, sovereign debt levels, government
shutdowns, Eurozone uncertainty, inflation, recession, and actual or anticipated military or political conflicts,
including the continuing military conflicts in certain parts of the world; and
•
the impact of each of the foregoing on our outsourcing and procurement arrangements.
We have sizeable operations in China, including 18 principal manufacturing sites. In addition, approximately 20%
of our net sales in fiscal 2024 were made to customers in China. Economic conditions in China have been, and may continue
to be, volatile and uncertain. In addition, the legal and regulatory system in China continues to evolve and is subject to
change. There also continues to be significant uncertainty about the relationship between the U.S. and China, including with
respect to geopolitics, trade policies, treaties, government regulations, and tariffs. The current political climate has intensified
concerns about trade tensions between the U.S. and China in connection with each country’s recent or proposed tariffs on the
other country’s products. Accordingly, our operations and transactions with customers in China could be adversely affected
by changes to market conditions, changes to the regulatory environment, increased trade barriers, tariffs, or restrictions, or
interpretation of Chinese law.
In addition, any further downgrade by rating agencies of long-term U.S. sovereign debt or downgrades or defaults of
sovereign debt of other nations may negatively affect global financial markets and economic conditions, which could
negatively affect our business, financial condition, and liquidity.
U.S. federal tax laws could result in adverse consequences to U.S. persons treated as owning 10% or more of our
shares.
Although we are an Irish company, application of certain U.S. tax law ownership attribution rules may cause
non-U.S. subsidiaries to be treated as Controlled Foreign Corporations (“CFCs”) for U.S. federal income tax purposes. A
U.S. person that is treated for U.S. federal income tax purposes as owning, directly, indirectly, or constructively, 10% or
more of our shares may be required to annually report and include in its U.S. taxable income its pro rata share of certain types
of income earned by our subsidiaries that are treated as CFCs, whether or not we make any distributions to such U.S.
shareholder. A U.S. person that owns 10% or more of our shares should consult a tax adviser regarding the potential
implications. The risk of U.S. federal income tax reporting and compliance obligations with respect to our subsidiaries that
are treated as CFCs may deter our current shareholders from increasing their investment in us, and others from investing in
us, which could impact the demand for, and value of, our shares.
We are subject to, and may continue to be subject to, incremental costs, risks, and regulations associated with
efforts to combat the negative effects of climate change.
There is increased public awareness regarding climate change. This increased focus has led to international treaties
and agreements and legislative and regulatory efforts. We may also be subject to larger, global climate change initiatives,
laws, regulations, or orders, such as any laws or regulations to implement the Paris Climate Agreement, which seek to reduce
GHG emissions. In addition to government requirements, our customers are also increasingly imposing climate-related
requirements on their suppliers, including us. Any failure, or perceived failure, to comply with these requirements may result
in reduced demand for our products, reputational harm, or other adverse impacts to our business.
Any future regulations relating to GHG emissions and/or other climate change-related laws and regulations, beyond
initiatives we already have in process, could subject us to additional and/or unforeseen compliance costs and limitations,
increased energy and raw material costs, and incremental capital expenditure requirements. Also, there may be additional
mandatory climate-related reporting obligations, and potentially GHG emissions reduction requirements, which would likely
result in increased corporate and operational general and administrative efforts and associated costs and expenses.
Any future regulatory changes in any of the countries in which we operate could result in transition risks to us,
including, but not limited to: (i) the nature and timing of any requirement to lower GHG emissions and adopt more energy-
efficient energy use, which could result in changes or disruptions to the way we operate, (ii) financial risks where the
compliance with such regulations requires unforeseen capital expenditures and becomes costly or financially burdensome,
(iii) legal risks associated with the failure to adapt to or comply with future climate change-related regulations, (iv) risks of
climate litigation associated with our disclosures and/or operations; (v) risks associated with the implementation of any new
technologies required to comply with such regulations, which could impede our ability to innovate new products, meet
customer and market demand, or compete on pricing and quality in the market, and/or (vi) reputational risks associated with
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our customers’ and investors’ perceptions of us and their preferences for maintaining relationships with companies with
lower emissions, all of which could harm our reputation in the marketplace.
Increasing scrutiny and expectations regarding environmental, social, and governance (“ESG”) matters could
result in additional costs or risks or otherwise adversely impact our business.
Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and
sustainability practices. Expectations regarding voluntary and potential mandatory ESG initiatives and disclosures may result
in increased costs, changes in demand for certain products, enhanced compliance or disclosure obligations, or other adverse
impacts to our business, financial condition, or results of operations. Further, our ability to achieve our current and future
ESG goals is uncertain and remains subject to numerous risks, including evolving regulatory requirements and stakeholder
expectations, our ability to recruit, develop, and retain a diverse workforce, the availability of suppliers and other business
partners that can meet our ESG expectations, the growth of our business, cost considerations, and the development and
availability of cost-effective technologies or resources that support our goals. An inability to receive or maintain favorable
ESG ratings could negatively impact our reputation or impede our ability to compete as effectively to attract and retain
employees or customers, which may adversely impact our operations. Unfavorable ESG ratings could also lead to negative
investor sentiment towards us or our industry, which could negatively impact the price of our shares as well as our access to
and cost of capital.
Risks Relating to the Industry in Which We Operate
We are dependent on the automotive and other industries and significant periodic downturns have had material
adverse effects on our results of operations, financial position, and cash flows.
We are dependent on end market dynamics to sell our products, and our operating results could be adversely
affected by cyclical and reduced demand in these markets. Periodic downturns in our customers’ industries can significantly
reduce demand for certain of our products, which has in the past and could have in the future a material adverse effect on our
results of operations, financial position, and cash flows.
Approximately 44% of our net sales for fiscal 2024 were to customers in the automotive industry. The automotive
industry is dominated by large manufacturers that can exert significant price pressure on their suppliers. Additionally, the
automotive industry has historically experienced significant downturns during periods of deteriorating global or regional
economic or credit conditions. As a supplier of automotive electronics products, our sales of these products and our
profitability have been and could continue to be negatively affected by significant declines in global or regional economic or
credit conditions and changes in the operations, products, business models, part-sourcing requirements, financial condition,
and market share of automotive manufacturers, as well as potential consolidations among automotive manufacturers. Further,
work stoppages or slowdowns experienced by our customers in the automotive industry could result in slowdowns or
closures of assembly plants where our products are included in assembled vehicles.
During fiscal 2024, approximately 9% of our net sales were to customers in both the commercial transportation and
the industrial equipment end markets. The commercial transportation industry is impacted by the economic environment and
market conditions in the heavy truck, construction, agriculture, and recreational vehicle markets. Demand in the industrial
equipment industry is dependent upon economic conditions, including customer investment in factory and warehouse
automation, process control systems, and building automation and smart city infrastructure, as well as market conditions in
the rail transportation, lighting, and other major industrial markets we serve.
We encounter competition in substantially all areas of the electronic components industry, which has and could
in the future negatively impact our prices, margins, and market share.
We operate in highly competitive markets for electronic components and expect that both direct and indirect
competition will increase in the future. Our overall competitive position depends on various factors including the price,
quality, and performance of our products; the level of customer service; the development of new technology; our ability to
participate in emerging markets; and customers’ expectations relating to socially responsible operations. The competition we
experience across product lines from other companies ranges in size from large, diversified manufacturers to small, highly
specialized manufacturers. The electronic components industry has become increasingly concentrated and globalized in
recent years, and our major competitors have significant financial resources and technological capabilities. A number of these
competitors compete with us primarily on price and in some instances may have the benefit of lower production costs for
certain products. We cannot provide assurance that additional competitors will not enter our markets or that we will be able
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to compete successfully against existing or new competitors. Increased competition has and may in the future result in price
reductions, reduced margins, or loss of market share, any of which could materially and adversely affect our results of
operations, financial position, and cash flows.
We are dependent on market acceptance of our new product introductions and product innovations for future
revenue and failure of such introductions or innovations in a timely manner could cause our operating results to suffer.
Substantially all markets in which we operate are impacted by technological change or change in consumer tastes
and preferences, which are rapid in certain end markets. Our operating results depend substantially upon our ability to
continually design, develop, introduce, and sell new and innovative products; to modify existing products; and to customize
products to meet customer requirements driven by such change. There are numerous risks inherent in these processes,
including the risk that we will be unable to anticipate the direction of technological change or that we will be unable to
develop and market profitable new products and applications in time to satisfy customer demands.
The pace of technological change continues to accelerate and our ability to react effectively to such change may
present significant competitive risks.
The pace of technological change is increasing at an exponential rate. The continued creation, development, and
advancement of new technologies such as artificial intelligence (“AI”), blockchain, quantum computing, data analytics, 3-D
printing, robotics, sensor technology, data storage, neural networks, and augmented reality, as well as other technologies in
the future that are not foreseen today, continue to transform our processes, products, and services.
In order to remain competitive, we will need to stay abreast of such technologies, require our employees to continue
to learn and adapt to new technologies, be able to integrate them into our current and future business models, products,
services, and processes, and also guard against existing and new competitors disrupting their business using such
technologies. Our strategy, value creation model, operating model, and innovation ecosystem have important technological
elements and certain of our products and offerings are based on technological advances, including AI, machine learning,
advanced analytics, and the Internet of Things. Increasing use of AI may expose us to social and ethical issues, which may
result in reputational harm and liability. In addition, we will need to compete for talent in a competitive market that is
familiar with such technologies including upskilling our workforce. There can be no assurance we will continue to compete
effectively with our industry peers due to technological changes, which could result in a material adverse effect on our
business and results of operations.
Risks and uncertainties related to the development and use of AI could harm our business, damage our
reputation, or give rise to legal or regulatory action.
AI technologies are complex and rapidly evolving, and we face significant competition, including from our own
clients, who may develop their own internal AI-related capabilities, which can lead to reduced demand for our products. The
development, adoption, and use of AI technologies is still in the early stages and involve significant risks and uncertainties,
which may expose us to legal, reputational, and financial harm. AI algorithms and training methodologies may be flawed,
and datasets may be overbroad, insufficient, or contain biased information. Moreover, the use of AI may give rise to risks
related to harmful content, accuracy, bias, intellectual property infringement or misappropriation, defamation, data privacy,
cybersecurity, and health and safety, among others, and also bring the possibility of new or enhanced governmental or
regulatory scrutiny, litigation, or other legal liability, or ethical concerns that could adversely affect our business, reputation,
or financial results.
Pressure to lower our prices has and may in the future result in price erosion.
We have experienced, and may in the future experience, pressure to lower our prices. Although pricing actions
initiated in recent years have positively impacted our net sales, we have historically experienced price erosion averaging from
1% to 2% each year. To maintain our margins, we must continue to reduce our costs by similar amounts. We cannot provide
assurance that pressure to reduce our prices will not have a material adverse effect on our margins, results of operations,
financial position, and cash flows.
We may be negatively affected as our customers and vendors continue to consolidate.
Many of the industries to which we sell our products, as well as many of the industries from which we buy
materials, have become more concentrated in recent years, including the automotive, data and devices, and aerospace and
13
defense industries. Consolidation of customers may lead to decreased product purchases from us. In addition, as our
customers buy in larger volumes, their volume buying power has increased, enabling them to negotiate more favorable
pricing and find alternative sources from which to purchase. Our materials suppliers similarly have increased their ability to
negotiate favorable pricing. These trends have and may continue to adversely affect the margins on our products, particularly
for commodity components.
The life cycles of certain of our products can be very short and may not result in material revenue and may cause
us to write off excess or obsolete inventory or equipment.
The life cycles of certain of our products can be very short relative to their development cycle. As a result, the
resources devoted to product sales and marketing may not result in material revenue and, from time to time, we may need to
write off excess or obsolete inventory or equipment. If we were to incur significant engineering expenses and investments in
inventory and equipment that we were not able to recover and we were not able to compensate for those expenses, our gross
margin, results of operations, financial position, and cash flows could be materially and adversely affected.
We may incur material losses and costs as a result of product liability, warranty, and product recall claims that
may be brought against us.
We face exposure to product liability and warranty claims in the event that our products actually or allegedly fail to
perform as expected, or the use of our products results, or is alleged to result, in death, bodily injury, and/or property damage.
Further, if any of our products are, or are alleged to be, defective, we may be required to participate in a recall campaign, and
a customer or other party may hold us responsible for some or all of the costs of these campaigns. Actual or alleged defects in
our products may therefore cause us to incur significant warranty, support and repair, replacement, or other costs as part of a
product recall or otherwise, suffer substantial negative publicity, face challenges in our ability to timely deliver products to
our customers, write-off the value of related inventory, and divert the attention of our engineering and management
personnel. Additionally, actual or alleged defects in our products could result in damage to our reputation and to our ability to
win future business. Consequently, our costs and loss of revenue associated with product liability, warranty, and recall claims
could be material to our financial position and results of operations.
Risks Relating to Our Operations
Our results are sensitive to raw material availability, quality, and cost and shortages, deteriorations in quality, or
price increases could lead to a materially negative impact on our results of operations, financial position, and cash flows.
We are a large buyer of resins, chemicals, additives, and metals, including copper, gold, silver, palladium,
aluminum, brass, steel, and zinc. 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 many of these raw materials continue to increase and
fluctuations may persist in the future. In addition, feedstock for resins and resins themselves, as well as certain other
commodities, are increasingly subject to varied and unrelated force majeure events worldwide further impacting price and
availability. In recent years, raw material prices and availability have been affected by worldwide economic conditions,
including supply chain disruptions, and inflationary cost pressures. If we have difficulty obtaining raw materials, the quality
of available raw materials deteriorates, or there are significant price increases for these raw materials, it could have a
substantial impact on the price we pay for raw materials. To the extent we cannot compensate for cost increases through
productivity improvements or price increases to our customers, our margins may decline, materially affecting our results of
operations, financial position, and cash flows. In addition, we use financial instruments to hedge the volatility of certain
commodities prices. The success of our hedging program depends on accurate forecasts of planned consumption of the
hedged commodity materials. We could experience unanticipated hedge gains or losses if these forecasts are inaccurate.
The SEC requires annual disclosure and reporting requirements for those companies which use tin, tantalum,
tungsten, or gold (“conflict minerals” or “3TG”) mined from the Democratic Republic of the Congo (“DRC”) and adjoining
countries (together with the DRC, the “Covered Countries”) in their products. These requirements, as well as new and
additional regulations like the EU’s Conflict Minerals Regulation, could affect the sourcing, pricing, and availability of 3TG
used in the manufacture of certain of our products, and may result in only a limited pool of suppliers which can demonstrate
that they do not source any 3TG from the Covered Countries. Accordingly, we cannot provide assurance that we will be able
to obtain non-conflict 3TG in sufficient quantities or at competitive prices. Further, since our supply chain is complex, we
may face reputational challenges with our customers and other stakeholders if we are unable to meet customer non-conflict
3TG standards or sufficiently verify the origins and chain of custody for all conflict minerals used in our products through
our due diligence procedures.
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Poor quality of components and products manufactured by third parties could harm our business.
We may rely on third-party suppliers for the components used in our products, and we may rely on third-party
manufacturers to manufacture certain of our assemblies and finished products. Our results of operations, financial position,
and cash flows could be adversely affected if such third parties lack sufficient quality control or if there are significant
changes in their financial or business condition. If these third parties fail to deliver quality products, parts, and components
on time and at reasonable prices, we could have difficulties fulfilling our orders, sales and profits could decline, and our
commercial reputation could be damaged.
Our future success is significantly dependent on our ability to attract and retain management and executive
management employees.
Our success depends to a significant extent upon our continued ability to retain our management and executive
management employees and hire new management and executive management employees to replace, succeed, or add to
members of our management team. Our management team has significant industry experience and would be difficult to
replace. Competition for management talent is intense, and any difficulties we may have to retain or hire members of
management to achieve our objectives may have an adverse effect on our results of operations, financial position, and cash
flows.
Cybersecurity incidents and other disruptions affecting our information technology infrastructure or violations of
data privacy laws have and could interfere with our operations, compromise confidential information, and expose us to
liability which could materially adversely impact our business and reputation.
Cybersecurity attacks, threats, and breaches and other disruptions to our information technology infrastructure
and/or the information technology infrastructure of our third-party suppliers or business partners could interfere with our
operations; compromise information belonging to us, our employees, customers, and suppliers; and expose us to liabilities or
penalties which could adversely impact our business and reputation. In the normal course of business, we rely on information
technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic
information, and to manage or support a variety of business processes and activities. Additionally, we collect and store
certain data, including proprietary business information and customer and employee data, and may have access to
confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and
customer-imposed controls. Specifically, we are subject to the laws of various states and countries where we operate or do
business related to solicitation, collection, processing, transferring, storing, or use of consumer, customer, supplier, or
employee information or related data, including the EU’s General Data Protection Regulation, the California Consumer
Privacy Act, and China’s Personal Information Protection Law. In addition, certain countries in which we operate or do
business have enacted or are considering enacting laws that impose additional data transfer restrictions. If countries in which
we operate or do business were to adopt data localization or data residency laws, we could be required to implement new or
expand existing data storage protocols, build new storage facilities, and/or devote additional resources to comply with the
requirements of such laws, any of which could have significant implications to business operations and costs.
In addition to our own systems, we have outsourced, and expect to continue to outsource, certain information
technology services—including cloud computing services and storage systems, system development, and information
technology support services—which have in the past, and in the future may, subject our information technology and other
sensitive information to additional risk.
Our information technology networks and infrastructure, and the technology networks and infrastructure of our
third-party suppliers and business partners, are vulnerable to damage, disruptions or shutdowns due to attack by malicious
actors with significant financial and technological resources, breaches, employee error or malfeasance, power outages,
malware (such as computer viruses and ransomware), social engineering (i.e., phishing attacks), theft of system credentials,
other increasingly sophisticated attacks, telecommunication or utility failures, systems failures, natural disasters, or other
catastrophic events, which may require us to notify regulators, customers, or employees, and enlist identity theft protection in
the event of a privacy breach. We continue to monitor and develop our systems to protect the integrity and functionality of
our information technology infrastructure and access to and the security of our intellectual property and our employees’,
customers’, and suppliers’ data. Cybersecurity breaches and other disruptions to our information technology infrastructure or
the information technology infrastructure of our third-party suppliers and business partners, or violations of applicable laws,
could result in legal claims or proceedings, liability or penalties, disruption in operations, and damage to our reputation,
which could materially adversely affect our business. While we have experienced, and expect to continue to experience,
attacks and threats to our information technology networks and infrastructure, including attempted cyber intrusions, to date
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none of these attacks and threats have had a material impact on our business or operations. Further, some of our employees
have fully-remote or hybrid work arrangements, which may increase our vulnerability to cyber and other information
technology risks.
Covenants in our debt instruments may adversely affect us.
Our five-year unsecured senior revolving credit facility (“Credit Facility”) contains financial and other covenants,
such as a limit on the ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) and limits
on the amount of subsidiary debt and incurrence of liens. Our outstanding notes’ indentures contain customary covenants
including limits on incurrence of liens, sale and lease-back transactions, and our ability to consolidate, merge, and sell assets.
Although none of these covenants are presently restrictive to our operations, our continued ability to meet the Credit
Facility financial covenant can be affected by events beyond our control, and we cannot provide assurance that we will
continue to comply with the covenant. A breach of any of our covenants could result in a default under our Credit Facility or
indentures. Upon the occurrence of certain defaults under our Credit Facility and indentures, the lenders or trustee could elect
to declare all amounts outstanding thereunder to be immediately due and payable, and our lenders could terminate
commitments to extend further credit under our Credit Facility. If the lenders or trustee accelerate the repayment of
borrowings, we cannot provide assurance that we will have sufficient assets or access to lenders or capital markets to repay or
fund the repayment of any amounts outstanding under our Credit Facility and our other affected indebtedness. Acceleration
of any debt obligation under any of our material debt instruments may permit the holders or trustee of our other material debt
to accelerate payment of debt obligations to the creditors thereunder.
The indentures governing our outstanding senior notes contain covenants that may require us to offer to buy back
the notes for a price equal to 101% of the principal amount, plus accrued and unpaid interest to the repurchase date, upon a
change of control triggering event (as defined in the indentures). We cannot provide assurance that we will have sufficient
funds available or access to funding to repurchase tendered notes in that event, which could result in a default under the
notes. Any future debt that we incur may contain covenants regarding repurchases in the event of a change of control
triggering event.
The market price of our shares may fluctuate widely.
The market price of our shares may fluctuate widely, depending upon many factors, including:
•
our quarterly or annual earnings;
•
quarterly or annual sales or earnings guidance that we may provide or changes thereto;
•
actual or anticipated fluctuations in our operating results;
•
volatility in financial markets and market fluctuations caused by global and regional economic conditions and
investors’ concerns about potential risks to future economic growth;
•
changes in earnings estimates by securities analysts or our ability to meet those estimates;
•
changes in accounting standards, policies, guidance, interpretations, or principles;
•
tax legislative and regulatory actions and proposals in the U.S., the EU, and other jurisdictions;
•
announcements by us or our competitors of significant acquisitions or dispositions; and
•
the operating and stock price performance of comparable companies and companies that serve end markets
important to our business.
16
Risks Relating to Strategic Transactions
Future acquisitions may not be successful.
We regularly evaluate the possible acquisition of strategic businesses, product lines, or technologies which have the
potential to strengthen our market position or enhance our existing product offerings, and we have completed a number of
acquisitions in recent years. We anticipate that we will continue to pursue acquisition opportunities as part of our growth
strategy. We cannot provide assurance that we will identify or successfully complete transactions with acquisition candidates
in the future. We also cannot provide assurance that completed acquisitions will be successful. Likewise, from time to time,
we experience difficulty and unanticipated expenses associated with purchasing and integrating acquisitions, and acquisitions
do not always perform and deliver the financial benefits expected. We have also experienced challenges at times following
the acquisition of a new company or business, including, but not limited to, managing the operations, manufacturing
facilities, and technology; maintaining and increasing the customer base; or retaining key employees, suppliers, or
distributors. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our existing
business, our results of operations, financial position, and cash flows could be materially and adversely affected.
Future acquisitions could require us to issue additional debt or equity that may not be available on acceptable
terms and could be dilutive.
If we were to make a substantial acquisition with cash, the acquisition may need to be financed in part through
funding from banks, public offerings or private placements of debt or equity securities, or other arrangements. This
acquisition financing might decrease our ratio of earnings to fixed charges and adversely affect other leverage measures. We
cannot provide assurance that sufficient acquisition financing would be available to us on acceptable terms if and when
required. If we were to complete an acquisition partially or wholly funded by issuing equity securities or equity-linked
securities, the issued securities may have a dilutive effect on the interests of the holders of our shares.
Divestitures of some of our businesses or product lines may have a material adverse effect on our results of
operations, financial position, and cash flows.
We continue to evaluate the strategic fit of specific businesses and products which may result in additional
divestitures. Divestitures may result in significant write-offs, including those related to goodwill and other intangible assets,
which could have a material adverse effect on our results of operations and financial position. Divestitures could involve
additional risks, including difficulties in the separation of operations, services, products, and personnel; the diversion of
management’s attention from other business concerns; the disruption of our business; and the potential loss of key
employees. There can be no assurance that we will be successful in addressing these or any other significant risks
encountered.
Risks Relating to Intellectual Property, Litigation, and Regulations
Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our
products and technology.
The electronics industry is characterized by litigation regarding patent and other intellectual property rights. Within
this industry, companies have become more aggressive in asserting and defending patent claims against competitors. There
can be no assurance that we will not be subject to future litigation alleging infringement or invalidity of certain of our
intellectual property rights or that we will not have to pursue litigation to protect our property rights. Depending on the
importance of the technology, product, patent, trademark, or trade secret in question, an unfavorable outcome regarding one
of these matters may have a material adverse effect on our results of operations, financial position, and cash flows.
Litigation, regulatory actions, and compliance issues have and could subject us to fines, penalties, judgments,
remediation costs, and/or other requirements that could cause a material adverse effect on our results of operations,
financial position, and cash flows.
In the normal course of business, we are or may be, from time to time, the subject of government or private litigation
as a result of a number of factors and from various sources, including (i) reviews, requests for information, investigations,
and proceedings (both formal and informal) by state and federal governmental agencies and (ii) litigation alleging the
infringement of intellectual property rights, anti-competitive behavior, securities law violations, product liability, breach of
contract, and employment-related claims. In certain circumstances, patent infringement and antitrust laws permit successful
17
plaintiffs to recover treble damages. The defense of these lawsuits may divert our management’s attention, and we may incur
significant expenses in defending these lawsuits. In addition, we may be required to pay damage awards or settlements, or
become subject to injunctions or other equitable remedies, that could cause a material adverse effect on our results of
operations, financial position, and cash flows.
If any of our operations are found not to comply with applicable antitrust or competition laws or applicable trade
regulations, our business may suffer.
Our operations are subject to applicable antitrust and competition laws in the jurisdictions in which we conduct our
business, in particular the U.S. and the EU. These laws prohibit, among other things, anticompetitive agreements and
practices. If any of our commercial agreements and practices with respect to the electronic components or other markets are
found to violate or infringe such laws, we may be subject to civil and other penalties. We may also be subject to third-party
claims for damages. Further, agreements that infringe these antitrust and competition laws may be void and unenforceable, in
whole or in part, or require modification to be lawful and enforceable. If we are unable to enforce our commercial
agreements, whether at all or in material part, our results of operations, financial position, and cash flows could be adversely
affected.
We also must comply with applicable trade regulations in the jurisdictions where we operate. A small portion of our
products, including defense-related products, may require governmental import and export licenses, the issuance of which
may be influenced by geopolitical and other events. Any failure to maintain compliance with trade regulations could limit our
ability to import and export raw materials and finished goods into or from the relevant jurisdiction, which could negatively
impact our results of operations, financial position, and cash flows. In this regard, we have been investigating our past
compliance with relevant U.S. trade controls and have made voluntary disclosures of apparent trade controls violations to the
U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the U.S. State Department’s Directorate of
Defense Trade Controls (“DDTC”). We have also been contacted by the U.S. Department of Justice concerning certain
aspects of the BIS matters. During the fourth quarter of fiscal 2024, we concluded our open matters with BIS, with our
settlement including the payment of a penalty of approximately $6 million. We are cooperating with the DDTC in its ongoing
investigation. We are unable to predict the timing and final outcome of the agency’s investigation. An unfavorable outcome
may include fines or penalties imposed in response to our disclosures, but we are not yet able to reasonably estimate the
extent of any such fines or penalties. Although we have reserved for potential fines and penalties relating to these matters
based on our current understanding of the facts, the investigation into these matters has yet to be completed and the final
outcome of such investigation and related fines and penalties may differ from amounts currently reserved.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the United Kingdom’s
Bribery Act, and similar worldwide anti-bribery laws.
The U.S. Foreign Corrupt Practices Act, the United Kingdom’s Bribery Act, and similar worldwide anti-bribery
laws generally prohibit companies and their intermediaries from making improper payments to government officials for the
purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws. We operate in
many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances, strict
compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance
program, we cannot provide assurance that our internal control policies and procedures always will protect us from reckless
or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could
disrupt our business and result in a material adverse effect on our results of operations, financial position, and cash flows.
Our operations expose us to the risk of material environmental liabilities, litigation, government enforcement
actions, and reputational risk.
We are subject to numerous federal, state, and local environmental protection and health and safety laws and
regulations in the various countries where we operate and where our products are sold. These laws and regulations govern,
among other things:
•
the generation, storage, use, and transportation and disposal of hazardous materials;
•
emissions or discharges of substances into the environment;
•
investigation and remediation of hazardous substances or materials at various sites;
18
•
GHG emissions;
•
product hazardous material content;
•
the health and safety of our employees; and
•
the importation of regulated or banned chemicals.
We may not have been, or we may not always be, in compliance with all environmental and health and safety laws
and regulations. If we violate these laws, we could be fined, criminally charged, or otherwise sanctioned by regulators,
including temporary closures of facilities. In addition, environmental and health and safety laws are becoming more stringent,
resulting in increased costs and compliance requirements.
Certain environmental laws assess liability on current or previous owners or operators of real property for the costs
of investigation, reporting, removal, and remediation of hazardous substances or materials at their properties or at properties
at which they have disposed of or mishandled hazardous substances. Liability for investigation, reporting, removal, and
remediation costs under certain regulatory regimes, such as U.S. federal and state laws, is retroactive, strict, and joint and
several. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or
other claims due to the presence of, or exposure to, hazardous substances. We have received notifications from the U.S.
Environmental Protection Agency, other environmental agencies, and third parties that conditions at a number of currently
and formerly-owned or operated sites where we and others have disposed of or mishandled hazardous substances require
investigation, cleanup, and other possible remedial action and require that we reimburse the government or otherwise pay for
the costs of investigation and remediation and for natural resource damage claims from such sites. We also have
independently investigated various sites and determined that further investigation and/or remediation is necessary.
While we plan for future capital and operating expenditures to maintain compliance with environmental laws, we
cannot provide assurance that our costs of complying with current or future environmental protection and health and safety
laws, or our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our
estimates or adversely affect our results of operations, financial position, and cash flows or that we will not be subject to
additional environmental claims for personal injury, property damage, damage to natural resources, and/or cleanup in the
future based on our past, present, or future business activities.
Our products are subject to various requirements related to chemical usage, hazardous material content,
recycling, and other circular economy initiatives.
The EU, China, U.S., and other jurisdictions in which our products are sold have enacted or are proposing to enact
laws addressing environmental and other impacts from product disposal, use of hazardous materials in products, use of
chemicals in manufacturing, recycling of products at the end of their useful life, circular economy initiatives, and other
related matters. These laws include but are not limited to the EU RoHS, End-of-Life Vehicle, and WEEE Directives; the EU
REACH regulation; and the China RoHS regulation. These laws prohibit the use of certain substances in the manufacture of
our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes,
registration, chemical testing, labeling, and other matters. These laws continue to proliferate and expand in these and other
jurisdictions to address other materials and other aspects of our product manufacturing and sale. These laws could make the
manufacture or sale of our products more expensive or impossible, could limit our ability to sell our products in certain
jurisdictions, and could result in liability for product recalls, penalties, or other claims.
19
Risks Relating to Our Irish Jurisdiction of Incorporation
The laws of Ireland differ from the laws in effect in the U.S. and may afford less protection to holders of our
securities.
It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland, based on the civil
liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts
of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the
civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those
laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal
recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of
money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state
securities laws, would not automatically be enforceable in Ireland.
As an Irish company, we are governed by the Irish Companies Act 2014, which differs in some material respects
from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to
interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish
company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of
action against directors or officers of the company and may exercise such rights of action on behalf of the company only in
limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would
holders of securities of a corporation incorporated in a jurisdiction of the U.S.
As an Irish public limited company, certain decisions related to our capital structure will require the approval of
shareholders, which may limit our flexibility to manage our capital structure.
Irish law generally provides that a board of directors may allot and issue shares (or rights to subscribe for or convert
into shares) if authorized to do so by a company’s constitution or by an ordinary resolution of shareholders. Such
authorization may be granted in respect of up to the entirety of a company’s authorized but unissued share capital and for a
maximum period of five years from September 30, 2024, at which point it must be renewed by another ordinary resolution.
Our articles of association authorize our directors to allot shares up to the maximum of our authorized but unissued share
capital for a period of five years. This authorization will need to be renewed by ordinary resolution upon its expiration and at
periodic intervals thereafter. Under Irish law, an allotment authority may be given for up to five years at each renewal, but
governance considerations may result in renewals for shorter periods or in respect of less than the maximum permitted
number of shares being sought or approved.
Additionally, under Irish law, we may only pay dividends and, generally, make share repurchases and redemptions
from distributable profits. Distributable profits may be created through our earnings or other methods (including certain
intragroup reorganizations involving the capitalization of our undistributable profits and their subsequent reduction). While it
is our intention to maintain a sufficient level of distributable profits in order to pay dividends on our ordinary shares and
make share repurchases, there is no assurance that we will maintain the necessary level of distributable profits to do so.
20
Provisions of our articles of association could delay or prevent a third-party’s effort to acquire us.
Our articles of association could delay, defer, or prevent a third party from acquiring us, despite the possible benefit
to our shareholders, or otherwise adversely affect the price of our ordinary shares. In addition to our articles of association,
several mandatory provisions of Irish law could prevent or delay an acquisition of us. We are also subject to various
provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer, and minimum price
requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in our shares in certain
circumstances.
These provisions, whether alone or together, may discourage potential takeover attempts, discourage bids for our
ordinary shares at a premium over the market price, or adversely affect the market price of, and the voting and other rights of
the holders of, our ordinary shares. These provisions, whether alone or together, could also discourage proxy contests and
make it more difficult for our shareholders to elect directors other than the candidates nominated by our board.
Transfers of our ordinary shares may be subject to Irish stamp duty.
For the majority of transfers of our ordinary shares, there will not be any Irish stamp duty. A transfer of our ordinary
shares from a seller who holds shares beneficially (i.e., through Depository Trust Company (“DTC”)) to a buyer who holds
the acquired shares beneficially (i.e., through DTC), which is effected by the debit/credit of book-entry interests representing
the shares through DTC, will not be subject to Irish stamp duty. However, a transfer of our ordinary shares by a seller who
holds shares directly (i.e., not through DTC) to any buyer, or by a seller who holds the shares beneficially to a buyer who
holds the acquired shares directly, may be subject to Irish stamp duty (currently at the rate of 1% of the price paid or the
market value of the shares acquired, if higher) generally payable by the buyer. A shareholder who directly holds shares may
transfer those shares into his or her own broker account to be held through DTC without giving rise to Irish stamp duty
provided that the shareholder has confirmed to our transfer agent that there is no change in the beneficial ownership of the
shares as a result of the transfer and the transfer into DTC is not effected in contemplation of a sale of such shares by the
beneficial owner to a third party. Because of the potential Irish stamp duty on transfers of our ordinary shares, we strongly
recommend that any person who wishes to acquire our ordinary shares acquire such shares through DTC.
We do not intend to pay any stamp duty levied on transfers of our shares on behalf of a buyer. However, our
memorandum and articles of association allow us in our absolute discretion, to pay (or to cause one of our affiliates to pay)
any such stamp duty payable. In the event of any such payment, we will be entitled to (i) seek reimbursement from the buyer,
(ii) set-off the amount of the stamp duty against future dividends on such shares, and (iii) claim a first and paramount lien on
our ordinary shares acquired by such buyer and any dividends paid on such shares. Our directors have discretion to decline to
register an instrument of transfer in the name of a buyer unless the instrument of transfer has been properly stamped (in
circumstances where stamping is required).
Dividends you receive may be subject to Irish dividend withholding tax.
In certain circumstances, as an Irish tax resident company, we may be required to deduct Irish dividend withholding
tax (currently at the rate of 25%) from dividends paid to our shareholders. Whether we will be required to deduct Irish
dividend withholding tax from dividends paid to a shareholder will depend largely on whether the shareholder qualifies for an
exemption from dividend withholding tax under Irish law and has provided a valid Dividend Withholding Tax (“DWT”)
Form to his or her broker (in the case of the ordinary shares held beneficially), or to our transfer agent (in the case of the
ordinary shares held directly).
Dividends received by investors could be subject to Irish income tax.
Dividends paid in respect of our ordinary shares generally are not subject to Irish income tax where the beneficial
owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some
connection with Ireland other than his or her shareholding in TE Connectivity plc.
TE shareholders who receive their dividends subject to Irish dividend withholding tax generally will have no further
liability to Irish income tax on the dividend unless the beneficial owner of the dividend has some connection with Ireland
other than his or her shareholding in TE Connectivity plc.
21
Our ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
Irish capital acquisitions tax (“CAT”) could apply to a gift or inheritance of our ordinary shares irrespective of the
place of residence, ordinary residence, or domicile of the parties. This is because our ordinary shares will be regarded as
property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and
inheritances passing between spouses are exempt from CAT. Children currently have a tax-free threshold of €400,000 per
lifetime in respect of taxable gifts or inheritances received from their parents.
Global legislative and regulatory actions and proposals could cause a material change in our worldwide effective
corporate tax rate and our global cash taxes.
Various legislative and regulatory proposals have been directed at multinational companies with operations in
lower-tax jurisdictions. There has been heightened focus on adoption of such legislation and on other initiatives, such as:
•
the Organisation for Economic Co-operation and Development (“OECD”) and participating countries continue
to work toward the enactment of a 15% global minimum corporate tax. More than 30 countries have thus far
enacted global minimum tax legislation. Both Ireland and Switzerland have implemented elements of the
OECD’s global minimum tax rules, effective as of January 1, 2024. The global minimum tax is a significant
structural change to the international taxation framework, which will affect us beginning in fiscal 2025. We
anticipate further legislative activity and administrative guidance throughout fiscal 2025. We are currently
monitoring these developments and evaluating the impact, which could be material to our cash taxes and
worldwide corporate effective tax rate.
•
EU and other countries’ initiatives to promote tax transparency and to prevent aggressive tax planning,
including the European Anti-Tax Avoidance Directive.
•
tax policy changes in the U.S., such as additional federal tax reform measures and new tax regulations.
The impact of these proposals may materially increase cash taxes, increase our worldwide corporate effective tax
rate, cause double taxation, and increase audit risk. We cannot predict the outcome of any specific legislative proposals or
initiatives, and we cannot provide assurance that any such legislation or initiative will not apply to us.
Legislation in the U.S. could adversely impact our results of operations, financial position, and cash flows.
Various U.S. federal and state legislative proposals have been introduced in recent years that may negatively impact
the growth of our business by denying government contracts to U.S. companies that have moved to lower-tax jurisdictions.
We expect the U.S. Congress to continue to consider implementation and/or expansion of policies that would restrict
the federal and state governments from contracting with entities that have corporate locations abroad. We cannot predict the
likelihood that, or final form in which, any such proposed legislation might become law, the nature of regulations that may be
promulgated under any future legislative enactments, the effect such enactments and increased regulatory scrutiny may have
on our business, or the outcome of any specific legislative proposals. Therefore, we cannot provide assurance that any such
legislative action will not apply to us. In addition, we are unable to predict whether the final form of any potential legislation
discussed above also would affect our indirect sales to U.S. federal or state governments or the willingness of our non-
governmental customers to do business with us. As a result of these uncertainties, we are unable to assess the potential impact
of any proposed legislation in this area and cannot provide assurance that the impact will not be materially adverse to us.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
Our cybersecurity risk management strategy and processes are designed to identify, assess, and manage risks to the
confidentiality, integrity, and availability of our information technology environment, systems, and information. The
cybersecurity risk management process is managed centrally and is led by our global chief information security officer
22
(“CISO”) who reports to our global chief information officer. Our cybersecurity program takes a risk-based approach and is
integrated with our global enterprise risk management program. Our cybersecurity risk strategy is aligned with
cyber/information security frameworks and industry standards, including the National Institute of Standards and Technology
Cybersecurity Framework.
Our cybersecurity program includes the following risk management practices:
•
a formal cybersecurity risk assessment is performed annually in collaboration with our enterprise risk
management function, resulting in updates to plans and actions that are incorporated into improvement projects;
•
our cybersecurity program maturity is benchmarked annually against industry standards and norms. The result
serves as a guide to identifying evolving risks, prioritizing improvements, and enhancing the program;
•
cybersecurity threats are evaluated throughout the year by our around-the-clock security operations center,
utilizing a variety of third-party subscription and threat intelligence data sources and data collected via internal
monitoring and scanning processes;
•
annual security awareness trainings are required to be completed by employees, and monthly phishing
campaigns and additional function-specific cybersecurity trainings are also conducted;
•
security and risk metrics are reviewed monthly and reported to leadership quarterly;
•
external penetration tests are conducted annually by independent third parties and appropriate actions are taken
to strengthen controls;
•
a cybersecurity incident response charter and plan, and playbooks are maintained by the cybersecurity incident
response team. The plan and playbooks are utilized during table-top exercises and trainings. Participants may
include information technology, business, corporate function, and external resources depending on the table-top
scenario; and
•
third-party supplier security reviews are conducted based on risk. Reviews may include the assessment of
security architecture, connections between our systems and the third party, data security controls, and user
access controls.
To date, we do not believe that any risks from cybersecurity threats, nor any previous cybersecurity incidents, have
materially affected our business strategy, results of operations, or financial condition. However, the sophistication of cyber
threats continues to increase, and the preventative actions we have taken and continue to take to reduce the risk of cyber
incidents and protect our systems and information may not successfully protect against future cyber incidents, which could
materially affect our business strategy, results of operations, or financial condition. For additional information on certain
risks associated with cybersecurity, refer to the risk factors related to cybersecurity and information technology systems in
“Part I, Item 1A. Risk Factors.”
Cybersecurity Program Governance
Our cybersecurity program is governed by the information security committee (“ISC”), composed of our leaders
from information technology, enterprise risk, legal, compliance, strategy, human resources, finance, internal audit, and
various business units. On a quarterly basis, the CISO reports to the ISC on topics such as risk mitigation project status, audit
results, security metrics, cyber incidents investigated and impact, if any, and significant changes that contribute toward
protecting the enterprise from cybersecurity threats.
Our CISO has over 20 years of experience in information security leadership roles and over 8 years as our CISO.
Nearly half of our board of directors have completed cybersecurity program trainings or have cybersecurity and information
security industry experience.
Cybersecurity incidents are evaluated by a cross-functional management team based on defined quantitative and
qualitative criteria and communicated to leadership. We have cybersecurity and information technology third-party
consultants to assist in performing forensic and technical analyses and advising leadership as needed.
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The cybersecurity committee of our board of directors has oversight responsibility for cybersecurity risks. The CISO
provides updates at least twice a year to the cybersecurity committee regarding matters related to information technology and
cybersecurity risks including the state of our cybersecurity programs, emerging cybersecurity developments and threats, and
our strategy to mitigate cybersecurity risk. Additionally, the full board of directors receives updates on our cybersecurity
program twice a year as part of the enterprise risk management meetings.
ITEM 2. PROPERTIES
During fiscal 2024, our principal executive office was located in Schaffhausen, Switzerland. In connection with our
change in place of incorporation, Galway, Ireland became the new location of our principal executive office in fiscal 2025.
As of fiscal year end 2024, we owned approximately 17 million square feet and leased approximately 10 million square feet
of aggregate floor space, used primarily for manufacturing, warehousing, and office space. We believe our facilities are
suitable for the conduct of our business and adequate for our current needs.
We manufacture our products in over 25 countries worldwide. Our manufacturing sites focus on various aspects of
our manufacturing processes, including our primary processes of stamping, plating, molding, extrusion, beaming, and
assembly. We consider the productive capacity of our manufacturing facilities sufficient. As of fiscal year end 2024, our
principal centers of manufacturing output by segment and geographic region were as follows:
Transportation Industrial Communications
Solutions
Solutions
Solutions
Total
(number of manufacturing facilities)
EMEA
20
18
1 39
Asia–Pacific
10
9
8 27
Americas
7
25
2 34
Total
37
52
11 100
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, we are subject to various legal proceedings and claims, including 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.
In addition, we operate in an industry susceptible to significant patent legal claims. At any given time in the normal course of
business, we are involved as either a plaintiff or defendant in a number of patent infringement actions. If infringement of a
third party’s patent were to be determined against us, we might be required to make significant royalty or other payments or
might be subject to an injunction or other limitation on our ability to manufacture or sell one or more products. If a patent
owned by or licensed to us were determined to be invalid or unenforceable, we might be required to reduce the value of the
patent on our Consolidated Balance Sheet and to record a corresponding charge, which could be significant in amount.
Management believes that these legal proceedings and claims likely will be resolved over an extended period of
time. 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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
24
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Holders
Our shares are listed and traded on the NYSE under the symbol “TEL.” As of November 8, 2024, there were 15,324
shareholders of record.
Performance Graph
The following graph compares the cumulative total shareholder return on our shares against the cumulative return on
the S&P 500 Index and the Dow Jones U.S. Electrical Components & Equipment Index. The graph assumes the investment
of $100 in our shares and in each index at fiscal year end 2019 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 returns.
Fiscal Year End
2019(1)
2020
2021
2022
2023
2024
TE Connectivity
$ 100.00 $ 105.07 $ 161.14 $ 125.33 $ 142.85 $ 177.91
S&P 500 Index
100.00 113.50 155.59 127.18 154.68 210.00
Dow Jones U.S. Electrical Components & Equipment
Index
100.00 104.82 152.18 126.17 159.89 218.36
(1)
$100 invested on September 27, 2019 in our common shares and in indexes. Indexes calculated on month-end basis.
25
Dividends
At the Annual General Meeting on March 13, 2024, shareholders approved a dividend payment of $2.60 per share,
payable in four equal quarterly installments of $0.65 per share. The third and fourth installments are expected to occur in our
first and second quarters of fiscal 2025.
As a result of our change in place of incorporation, beginning in our third quarter of fiscal 2025, future dividends on
our ordinary shares, if any, will be declared on a quarterly basis by our board of directors as provided by Irish law.
Shareholder approval is no longer required. In exercising their discretion to approve such dividends, our board of directors
will consider our results of operations, financial condition, cash requirements, future business prospects, statutory
requirements of applicable law, contractual restrictions, restrictions imposed by Irish law, and other factors that they may
deem relevant.
Issuer Purchases of Equity Securities
The following table presents information about our purchases of our common shares during the quarter ended
September 27, 2024:
Maximum
Total Number of
Approximate
Shares Purchased
Dollar Value
as Part of
of Shares that May
Total Number Average Price Publicly Announced
Yet Be Purchased
of Shares
Paid Per
Plans or
Under the Plans
Period
Purchased(1)
Share(1)
Programs(2)
or Programs(2)
June 29–July 26, 2024
798,713 $ 153.63
798,713 $ 876,909,949
July 27–August 30, 2024
2,490,228
148.83
2,480,852 507,682,852
August 31–September 27, 2024
1,797,756
146.33
1,797,756 244,622,761
Total
5,086,697
148.70
5,077,321
(1)
These columns include the following transactions which occurred during the quarter ended September 27, 2024:
(i)
the acquisition of 9,376 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
(ii)
open market purchases totaling 5,077,321 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. On October 30, 2024, our board of directors authorized an increase of $2.5 billion in our share repurchase
program. See Note 17 to the Consolidated Financial Statements for additional information regarding our share repurchase
program.
ITEM 6. RESERVED
ITEM 7. 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
“Part I. Item 1A. Risk Factors” and “Forward-Looking Information.”
Our Consolidated Financial Statements have been prepared in U.S. dollars, in accordance with accounting principles
generally accepted in the U.S. (“GAAP”).
26
Discussion of our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented
below. Discussion of our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 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 29, 2023.
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.
Change in Place of Incorporation
During fiscal 2024, our board of directors and shareholders approved a change in our jurisdiction of incorporation
from Switzerland to Ireland. In connection with the change, we entered into a merger agreement with our wholly-owned
subsidiary, TE Connectivity plc, a public limited company incorporated under Irish law. Under the merger agreement, we
were merged with and into TE Connectivity plc, which was the surviving entity, in order to effect our change in jurisdiction
of incorporation from Switzerland to Ireland. The merger and change in jurisdiction of incorporation were completed on
September 30, 2024. Our shareholders received one ordinary share of TE Connectivity plc for each common share of TE
Connectivity Ltd. held immediately prior to the merger. Effective for fiscal 2025, we are organized under the laws of Ireland.
We do not anticipate any material changes in our operations or financial results as a result of the merger and change in place
of incorporation. See Notes 1 and 21 to the Consolidated Financial Statements for additional information regarding the
change in place of incorporation.
Overview
We are a global industrial technology leader creating a safer, sustainable, productive, and connected future. Our
broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation
transportation, renewable energy, automated factories, data centers, medical technology, and more.
Summary of Fiscal 2024 Performance
•
Our fiscal 2024 net sales decreased 1.2% from fiscal 2023 levels due to sales declines in the Transportation
Solutions and Industrial Solutions segments, partially offset by sales growth in the Communications Solutions
segment. On an organic basis, our net sales were flat in fiscal 2024 as compared to fiscal 2023.
•
Our net sales by segment were as follows:
•
Transportation Solutions—Our net sales decreased 2.0% due primarily to sales declines in the sensors
end market and, to a lesser degree, the commercial transportation end market.
•
Industrial Solutions—Our net sales decreased 1.5% as a result of sales declines in the industrial
equipment end market, partially offset by sales growth in all other end markets.
•
Communications Solutions—Our net sales increased 3.7% due to sales growth in the data and devices
end market, partially offset by sales declines in the appliances end market.
•
During fiscal 2024, our shareholders approved a dividend payment of $2.60 per share, payable in four equal
quarterly installments of $0.65 per share beginning in the third quarter of fiscal 2024 and ending in the second
quarter of fiscal 2025.
•
Net cash provided by operating activities was $3,477 million in fiscal 2024.
Economic Conditions
Our business and operating results have been and will continue to be affected by worldwide economic conditions.
The global economy has been impacted in recent years by supply chain disruptions and inflationary cost pressures. We are
monitoring the current environment and its potential effects on our customers and the end markets we serve.
27
In recent years, we have experienced inflationary cost pressures including increased costs for transportation, energy,
and raw materials. However, we have been able to mitigate increased costs and supply chain disruptions through productivity
and/or price increases. Also, we have taken and continue to focus on actions to manage costs, including restructuring and
other cost reduction initiatives such as reducing discretionary spending and travel. Additionally, we are managing our capital
resources and monitoring capital availability to ensure that we have sufficient resources to fund our future capital needs. See
further discussion in “Liquidity and Capital Resources.”
We continue to monitor military conflicts in certain parts of the world as well as escalating tensions in surrounding
countries and associated sanctions. These did not have a significant impact on our business, financial condition, or results of
operations during fiscal 2024 and 2023.
Outlook
In the first quarter of fiscal 2025, we expect our net sales to be approximately $3.9 billion as compared to $3.8
billion in the first quarter of fiscal 2024. As discussed below, we will have a new segment structure effective for fiscal 2025.
Under the new structure, net sales increases in the Industrial Solutions segment are expected to be partially offset by sales
declines in the Transportation Solutions segment. We expect diluted earnings per share from continuing operations to be
approximately $1.64 per share in the first quarter of fiscal 2025. This outlook reflects the positive impact of foreign currency
exchange rates on net sales and earnings per share of approximately $32 million and $0.04 per share, respectively, in the first
quarter of fiscal 2025 as compared to the same period of fiscal 2024. Also, this outlook is based on foreign currency
exchange rates and commodity prices that are consistent with current levels.
Acquisitions
During the first quarter of fiscal 2024, we acquired approximately 98.7% of the outstanding shares of Schaffner
Holding AG (“Schaffner”), a leader in electromagnetic solutions based in Switzerland, for CHF 505.00 per share in cash for a
purchase price of CHF 294 million (equivalent to $339 million), net of cash acquired. The acquired business has been
reported as part of our Industrial Solutions segment from the date of acquisition. During the third quarter of fiscal 2024, we
completed a squeeze-out of the remaining minority shareholders for $5 million and the Schaffner shares were delisted from
the SIX Swiss Exchange.
We acquired one business for a cash purchase price of $110 million, net of cash acquired, during fiscal 2023. The
acquired business has been reported as part of our Industrial Solutions segment from the date of acquisition.
See Note 4 to the Consolidated Financial Statements for additional information regarding acquisitions.
Divestitures
During fiscal 2024, we sold one business for net cash proceeds of $59 million. In connection with the divestiture, we
recorded a pre-tax gain on sale of $10 million. Additionally, during fiscal 2023, we recorded a pre-tax impairment charge of
$68 million when the business was reclassified to held for sale. The business sold was reported in our Transportation
Solutions segment.
During fiscal 2023, we sold three businesses for net cash proceeds of $48 million. In connection with the
divestitures, we recorded pre-tax impairment charges and a net pre-tax loss on sales, which totaled to a net charge of $9
million. The businesses sold were reported in our Industrial Solutions segment.
See Note 3 to the Consolidated Financial Statements for additional information regarding divestitures.
28
Results of Operations
Net Sales
The following table presents our net sales and the percentage of total net sales by segment:
Fiscal
2024
2023
($ in millions)
Transportation Solutions
$ 9,398 60 % $ 9,588 60 %
Industrial Solutions
4,481
28
4,551
28
Communications Solutions
1,966
12
1,895
12
Total
$ 15,845 100 % $ 16,034 100 %
The following table provides an analysis of the change in our net sales by segment:
Change in Net Sales for Fiscal 2024 versus Fiscal 2023
Net Sales
Organic Net Sales
Acquisitions
Growth (Decline)
Growth (Decline)
Translation (Divestitures)
($ in millions)
Transportation Solutions
$ (190) (2.0)% $ 29 0.3 % $
(60) $
(159)
Industrial Solutions
(70) (1.5)
(150) (3.3)
(23)
103
Communications Solutions
71
3.7
91
4.8
(20)
—
Total
$ (189) (1.2)% $ (30) (0.2)% $
(103) $
(56)
Net sales decreased $189 million, or 1.2%, in fiscal 2024 as compared to fiscal 2023. The decrease in net sales
resulted primarily from the negative impact of foreign currency translation of 0.7% due to the weakening of certain foreign
currencies and the net negative impact of 0.3% from divestitures and acquisitions. In fiscal 2024, pricing actions positively
affected organic net sales by $105 million. See further discussion of net sales below under “Segment Results.”
Net Sales by Geographic Region. Our business operates in three geographic regions—EMEA, Asia–Pacific, and
the Americas—and our results of operations are influenced by changes in foreign currency exchange rates. Increases or
decreases in the value of the U.S. dollar, compared to other currencies, will directly affect our reported results as we translate
those currencies into U.S. dollars at the end of each fiscal period. We sell our products into approximately 130 countries, and
approximately 60% of our net sales were invoiced in currencies other than the U.S. dollar in fiscal 2024. The percentage of
net sales in fiscal 2024 by major currencies invoiced was as follows:
Currencies
Percentage
U.S. dollar
41 %
Euro
30
Chinese renminbi
18
Japanese yen
4
All others
7
Total
100 %
The following table presents our net sales and the percentage of total net sales by geographic region:
Fiscal
2024
2023
($ in millions)
EMEA
$ 5,899 37 % $ 6,208 39 %
Asia–Pacific
5,367
34
5,156
32
Americas
4,579
29
4,670
29
Total
$ 15,845 100 % $ 16,034 100 %
29
The following table provides an analysis of the change in our net sales by geographic region:
Change in Net Sales for Fiscal 2024 versus Fiscal 2023
Net Sales
Organic Net Sales
Acquisitions
Growth (Decline)
Growth (Decline)
Translation (Divestitures)
($ in millions)
EMEA
$ (309) (5.0)% $ (339) (5.5)% $
67 $
(37)
Asia–Pacific
211 4.1
336 6.5
(132)
7
Americas
(91) (1.9)
(27) (0.6)
(38)
(26)
Total
$ (189) (1.2)% $ (30) (0.2)% $
(103) $
(56)
Cost of Sales and Gross Margin
The following table presents cost of sales and gross margin information:
Fiscal
2024
2023
Change
($ in millions)
Cost of sales
$ 10,389
$ 10,979
$ (590)
As a percentage of net sales
65.6 %
68.5 %
Gross margin
$ 5,456
$ 5,055
$ 401
As a percentage of net sales
34.4 %
31.5 %
In fiscal 2024, gross margin increased $401 million as compared to fiscal 2023 primarily as a result of improved
manufacturing productivity and the positive impact of pricing actions.
We use a wide variety of raw materials in the manufacture of our products. Cost of sales and gross margin are
subject to variability in raw material prices, which continue to fluctuate for many of the raw materials we use. The following
table presents the average prices incurred related to copper, gold, silver, and palladium:
Fiscal
Measure
2024
2023
Copper
Lb. $ 3.91 $ 4.09
Gold
Troy oz. 2,027 1,860
Silver
Troy oz. 24.59 23.33
Palladium
Troy oz. 1,409 2,162
In fiscal 2024, we purchased approximately 182 million pounds of copper, 98,000 troy ounces of gold, 2.0 million
troy ounces of silver, and 10,000 troy ounces of palladium. We expect to purchase approximately 190 million pounds of
copper, 95,000 troy ounces of gold, 2.0 million troy ounces of silver, and 11,000 troy ounces of palladium in fiscal 2025.
Operating Expenses
The following table presents operating expense information:
Fiscal
2024
2023
Change
($ in millions)
Selling, general, and administrative expenses
$ 1,732
$ 1,670
$
62
As a percentage of net sales
10.9 % 10.4 %
Restructuring and other charges, net
$ 166
$ 340
$ (174)
Selling, General, and Administrative Expenses. In fiscal 2024, selling, general, and administrative expenses
increased $62 million as compared to fiscal 2023 due primarily to the impact of inflation, partially offset by savings
attributable to prior restructuring actions.
30
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 2024 and 2023, we initiated restructuring programs to optimize our manufacturing footprint and
improve the cost structure of the organization. We incurred net restructuring charges of $144 million and $260 million in
fiscal 2024 and 2023, respectively. Annualized cost savings related to actions initiated in fiscal 2024 are expected to be
approximately $85 million and we expect the majority of these savings will be realized by the end of fiscal 2027. Cost
savings will be reflected primarily in cost of sales and selling, general, and administrative expenses. For fiscal 2025, we
expect total restructuring charges to be approximately $100 million and total spending, which will be funded with cash from
operations, to be approximately $200 million.
During fiscal 2024, we recorded a gain on divestiture of $10 million. We recorded net charges of $77 million related
to pre-tax impairment of held for sale businesses and loss (gain) on divestitures in fiscal 2023.
During fiscal 2024, we incurred costs of $20 million related to our change in place of incorporation from
Switzerland to Ireland. See Notes 1 and 21 to the Consolidated Financial Statements for additional information regarding the
change.
See Note 3 to the Consolidated Financial Statements for additional information regarding net restructuring and other
charges.
Operating Income
The following table presents operating income and operating margin information:
Fiscal
2024
2023
Change
($ in millions)
Operating income
$ 2,796
$ 2,304
$ 492
Operating margin
17.6 % 14.4 %
Operating income included the following:
Fiscal
2024
2023
(in millions)
Acquisition and integration costs
$
21
$
33
Restructuring and other charges, net
166
340
Taxes (non-income tax) recorded in selling, general, and administrative expenses
4
—
Total
$
191
$
373
See discussion of operating income below under “Segment Results.”
Non-Operating Items
The following table presents select non-operating information:
Fiscal
2024 2023 Change
($ in millions)
Interest income
$
87
$ 60
$
27
Income tax expense (benefit)
(397)
364
(761)
Effective tax rate
(14.2)% 16.0 %
Interest Income. Interest income increased $27 million in fiscal 2024 from fiscal 2023 due to higher interest rates
as well as an increase in our average cash balances held and invested.
31
Income Taxes. See Note 15 to the Consolidated Financial Statements for discussion of items impacting income tax
expense and the effective tax rate.
The Organisation for Economic Co-operation and Development (“OECD”) and participating countries continue to
work toward the enactment of a 15% global minimum corporate tax. More than 30 countries have thus far enacted global
minimum tax legislation. Both Ireland and Switzerland have implemented elements of the OECD’s global minimum tax
rules, effective as of January 1, 2024. The global minimum tax is a significant structural change to the international taxation
framework, which will affect us beginning in fiscal 2025. We anticipate further legislative activity and administrative
guidance throughout fiscal 2025. We are currently monitoring these developments and evaluating the impact, which could be
material to our cash taxes and worldwide corporate effective tax rate.
The valuation allowance for deferred tax assets was $8,285 million and $7,416 million at fiscal year end 2024 and
2023, respectively. See Note 15 to the Consolidated Financial Statements for further information regarding the valuation
allowance for deferred tax assets.
As of fiscal year end 2024, certain subsidiaries had approximately $39.0 billion of cumulative undistributed earnings
that have been retained indefinitely and reinvested in our global manufacturing operations, including working capital;
property, plant, and equipment; intangible assets; and research and development activities. See Note 15 to the Consolidated
Financial Statements for additional information regarding undistributed earnings.
Segment Results
Transportation Solutions
Net Sales. The following table presents the Transportation Solutions segment’s net sales and the percentage of total
net sales by industry end market(1):
Fiscal
2024
2023
($ in millions)
Automotive
$ 6,956 75 % $ 6,951 72 %
Commercial transportation
1,456
15
1,525
16
Sensors
986
10
1,112
12
Total
$ 9,398 100 % $ 9,588 100 %
(1) Industry end market information is presented consistently with our internal management reporting
and may be revised periodically as management deems necessary.
The following table provides an analysis of the change in the Transportation Solutions segment’s net sales by
industry end market:
Change in Net Sales for Fiscal 2024 versus Fiscal 2023
Net Sales
Organic Net Sales
Growth (Decline)
Growth (Decline)
Translation Divestiture
($ in millions)
Automotive
$
5
0.1 % $ 210
3.0 % $
(46) $ (159)
Commercial transportation
(69)
(4.5)
(62)
(4.1)
(7)
—
Sensors
(126) (11.3)
(119) (10.8)
(7)
—
Total
$ (190)
(2.0)% $
29
0.3 % $
(60) $ (159)
Net sales in the Transportation Solutions segment decreased $190 million, or 2.0%, in fiscal 2024 from fiscal 2023
primarily as a result of the negative impact of a divestiture of 1.7% and the negative impact of foreign currency translation of
0.6%. Our organic net sales by industry end market were as follows:
•
Automotive—Our organic net sales increased 3.0% in fiscal 2024 as a result of growth of 14.2% in the Asia–
Pacific region, partially offset by declines of 4.8% in the Americas region and 4.5% in the EMEA region. Our
organic net sales growth in the Asia–Pacific region was due to vehicle production growth as well as increased
content per vehicle. In the Americas and EMEA regions, our organic net sales were impacted by slight declines
32
in vehicle production levels compared to prior year and a shift in platform mix consistent with consumer
demand.
•
Commercial transportation—Our organic net sales decreased 4.1% in fiscal 2024 as a result of declines in the
EMEA and Americas regions, partially offset by growth in the Asia–Pacific region.
•
Sensors—Our organic net sales decreased 10.8% in fiscal 2024 due primarily to market weakness in industrial
applications and our strategic exit of certain lower margin and lower growth product lines.
Operating Income. The following table presents the Transportation Solutions segment’s operating income and
operating margin information:
Fiscal
2024
2023
Change
($ in millions)
Operating income
$ 1,847
$ 1,451
$ 396
Operating margin
19.7 % 15.1 %
Operating income in the Transportation Solutions segment increased $396 million in fiscal 2024 as compared to
fiscal 2023. Excluding the items below, operating income increased in fiscal 2024 primarily as a result of improved
manufacturing productivity.
Fiscal
2024
2023
(in millions)
Acquisition and integration costs
$
—
$
3
Restructuring and other charges, net
67
211
Taxes (non-income tax) recorded in selling, general, and administrative expenses
3
—
Total
$
70
$
214
Industrial Solutions
Net Sales. The following table presents the Industrial Solutions segment’s net sales and the percentage of total net
sales by industry end market(1):
Fiscal
2024
2023
($ in millions)
Industrial equipment
$ 1,385
30 % $ 1,706
38 %
Aerospace, defense, and marine
1,344 30
1,178 26
Energy
919
21
883
19
Medical
833
19
784
17
Total
$ 4,481 100 % $ 4,551 100 %
(1)
Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.
The following table provides an analysis of the change in the Industrial Solutions segment’s net sales by industry
end market:
Change in Net Sales for Fiscal 2024 versus Fiscal 2023
Net Sales
Organic Net Sales
Acquisitions
Growth (Decline)
Growth (Decline)
Translation (Divestiture)
($ in millions)
Industrial equipment
$ (321) (18.8)% $ (425) (24.9)% $
3 $
101
Aerospace, defense, and marine
166
14.1
181
15.4
3
(18)
Energy
36
4.1
43
4.9
(27)
20
Medical
49
6.3
51
6.5
(2)
—
Total
$ (70)
(1.5)% $ (150)
(3.3)% $
(23) $
103
33
In the Industrial Solutions segment, net sales decreased $70 million, or 1.5%, in fiscal 2024 from fiscal 2023 due
primarily to organic net sales declines of 3.3%, partially offset by the net positive impact of 2.3% from acquisitions and a
divestiture. In fiscal 2024, pricing actions positively affected organic net sales by $179 million. Our organic net sales by
industry end market were as follows:
•
Industrial equipment—Our organic net sales decreased 24.9% in fiscal 2024 as a result of declines across all
regions and reduced demand resulting from inventory corrections in the supply chain.
•
Aerospace, defense, and marine—Our organic net sales increased 15.4% in fiscal 2024 due to growth in all
markets.
•
Energy—Our organic net sales increased 4.9% in fiscal 2024 due to growth in the Americas and EMEA
regions, partially offset by declines in the Asia–Pacific region.
•
Medical—Our organic net sales increased 6.5% in fiscal 2024 primarily as a result of growth in interventional
medical applications.
Operating Income. The following table presents the Industrial Solutions segment’s operating income and operating
margin information:
Fiscal
2024
2023 Change
($ in millions)
Operating income
$ 588
$ 602
$ (14)
Operating margin
13.1 % 13.2 %
Operating income in the Industrial Solutions segment decreased $14 million in fiscal 2024 from fiscal 2023.
Excluding the items below, operating income decreased in fiscal 2024 primarily as a result of lower volume and higher
operating costs, partially offset by the positive impact of pricing actions.
Fiscal
2024
2023
(in millions)
Acquisition and integration costs
$
19
$
27
Restructuring and other charges, net
75
84
Taxes (non-income tax) recorded in selling, general, and administrative expenses
1
—
Total
$
95
$
111
Communications Solutions
Net Sales. The following table presents the Communications Solutions segment’s net sales and the percentage of
total net sales by industry end market(1):
Fiscal
2024
2023
($ in millions)
Data and devices
$ 1,274 65 % $ 1,162 61 %
Appliances
692
35
733 39
Total
$ 1,966 100 % $ 1,895 100 %
(1)
Industry end market information is presented consistently with our internal management
reporting and may be revised periodically as management deems necessary.
34
The following table provides an analysis of the change in the Communications Solutions segment’s net sales by
industry end market:
Change in Net Sales for Fiscal 2024 versus Fiscal 2023
Net Sales
Organic Net Sales
Growth (Declines)
Growth (Declines)
Translation
($ in millions)
Data and devices
$ 112 9.6 % $ 118 10.2 % $
(6)
Appliances
(41)
(5.6)
(27)
(3.7)
(14)
Total
$
71
3.7 % $
91
4.8 % $
(20)
Net sales in the Communications Solutions segment increased $71 million, or 3.7%, in fiscal 2024 as compared to
fiscal 2023 due primarily to organic net sales growth of 4.8%. In fiscal 2024, price erosion negatively affected organic net
sales by $62 million. Our organic net sales by industry end market were as follows:
•
Data and devices—Our organic net sales increased 10.2% in fiscal 2024 due to growth in AI applications,
partially offset by reduced demand resulting from inventory corrections in the supply chain in the first half of
the year.
•
Appliances—Our organic net sales decreased 3.7% in fiscal 2024 primarily as a result of reduced demand
resulting from inventory corrections in the supply chain in the first half of the year and our strategic exit of
certain product lines, partially offset by share gains.
Operating Income. The following table presents the Communications Solutions segment’s operating income and
operating margin information:
Fiscal
2024 2023 Change
($ in millions)
Operating income
$ 361
$ 251
$ 110
Operating margin
18.4 % 13.2 %
In the Communications Solutions segment, operating income increased $110 million in fiscal 2024 as compared to
fiscal 2023. Excluding the items below, operating income increased in fiscal 2024 due primarily to higher volume and
improved manufacturing productivity, partially offset by price erosion.
Fiscal
2024
2023
(in millions)
Acquisition and integration costs
$
2
$
3
Restructuring and other charges, net
24
45
Total
$
26
$
48
New Segment Structure Effective for Fiscal 2025
Effective for the first quarter of fiscal 2025, we will reorganize our management and segments to align the
organization around our fiscal 2025 strategy. In this Annual Report, results for fiscal 2024 and prior periods are reported on
the basis under which we managed our business in fiscal 2024 and do not reflect the fiscal 2025 segment reorganization. See
Note 21 to the Consolidated Financial Statements for additional information regarding our new segment structure.
Liquidity and Capital Resources
Our ability to fund our future capital needs will be affected by our ongoing ability to generate cash from operations
and may be affected by our access to capital markets, money markets, or other sources of funding, as well as the capacity and
terms of our financing arrangements. We believe that cash generated from operations and, to the extent necessary, these other
sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the
payment of €550 million of 0.00% euro-denominated senior notes due in February 2025. We may use excess cash to
purchase a portion of our ordinary shares pursuant to our authorized share repurchase program, to acquire strategic businesses
or product lines, to pay dividends on our ordinary 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
35
necessary to changing conditions. 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.
As of fiscal year end 2024, our cash and cash equivalents were held in subsidiaries which are located in various
countries throughout the world. Under current applicable laws, substantially all of these amounts can be repatriated to Tyco
Electronics Group S.A. (“TEGSA”), our Luxembourg subsidiary, which is the obligor of substantially all of our debt, and to
TE Connectivity plc, our now 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 2024, we had approximately $4.7 billion of cash, cash equivalents,
and intercompany deposits, principally in our subsidiaries, that we have the ability to distribute to TEGSA and now to TE
Connectivity plc but we consider to be permanently reinvested. We estimate that an immaterial amount 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 operating activities increased $345 million to $3,477 million in fiscal 2024 as compared to
$3,132 million in fiscal 2023. The increase resulted primarily from higher pre-tax income, partially offset by the impact of
changes in working capital levels. The amount of income taxes paid, net of refunds, during fiscal 2024 and 2023 was $475
million and $425 million, respectively.
Pension contributions were $69 million and $71 million in fiscal 2024 and 2023, respectively. We expect pension
contributions to be approximately $70 million in fiscal 2025, before consideration of any voluntary contributions. For
additional information regarding pensions, see Note 14 to the Consolidated Financial Statements.
Cash Flows from Investing Activities
Capital expenditures were $680 million and $732 million in fiscal 2024 and 2023, respectively. We expect fiscal
2025 capital spending levels to be approximately 5% of net sales. We believe our capital funding levels are adequate to
support new programs, and we continue to invest in our manufacturing infrastructure to further enhance productivity and
manufacturing capabilities.
During fiscal 2024, we acquired one business for a cash purchase price of $339 million, net of cash acquired. We
acquired one business for a cash purchase price of $110 million, net of cash acquired, during fiscal 2023. See Note 4 to the
Consolidated Financial Statements for additional information regarding acquisitions.
During fiscal 2024, we received net cash proceeds of $59 million related to the sale of one business. We received net
cash proceeds of $48 million related to the sale of three businesses during fiscal 2023. See Note 3 to the Consolidated
Financial Statements for additional information regarding divestitures.
Cash Flows from Financing Activities and Capitalization
Total debt at fiscal year end 2024 and 2023 was $4,203 million and $4,211 million, respectively. See Note 10 to the
Consolidated Financial Statements for additional information regarding debt.
During fiscal 2024, TEGSA, our wholly-owned subsidiary, issued $350 million aggregate principal amount of
4.625% senior notes due in February 2030. 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 entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in April 2024 with
aggregate commitments of $1.5 billion, which refinanced and replaced in full TEGSA’s existing $1.5 billion five-year
unsecured senior revolving credit facility (the “Replaced Credit Facility”). The Credit Facility matures in April 2029. TEGSA
had no borrowings under the Credit Facility at fiscal year end 2024 or the Replaced Credit Facility at fiscal year end 2023.
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Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with
respect to revolving loans denominated in U.S. dollars, (a) the term secured overnight financing rate (“Term SOFR”) (as
defined in the Credit Facility) or (b) an alternate base rate equal to the highest of (i) Bank of America, N.A.’s base rate, (ii)
the federal funds effective rate plus 1/2 of 1%, (iii) the Term SOFR for a one-month interest period plus 1%, and (iv) 1%, and
(2) with respect to revolving loans determined in an alternative currency, (a) an alternative currency daily rate or (b) an
alternative currency term rate, as applicable, plus, in each case, an applicable margin based upon the senior, unsecured,
long-term debt rating of TEGSA. TEGSA is required to pay an annual facility fee. Based on the applicable credit ratings of
TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’ commitments under the Credit Facility.
The 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 2024, we were in compliance with all of
our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable
future.
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. At fiscal year end 2024, TEGSA had $255 million of
commercial paper outstanding at a weighted-average interest rate of 4.95%. TEGSA had $330 million of commercial paper
outstanding at a weighted-average interest rate of 5.50% at fiscal year end 2023.
During fiscal 2024, TEGSA’s payment obligations under its senior notes, commercial paper, and Credit Facility
were fully and unconditionally guaranteed on an unsecured basis by its then parent, TE Connectivity Ltd., and, as of
September 24, 2024, also by TE Connectivity Ltd.’s wholly-owned subsidiary, TE Connectivity Switzerland Ltd. As a result
of our change in place of incorporation, such guarantees are provided by TE Connectivity plc and its wholly-owned
subsidiary, TE Connectivity Switzerland Ltd., in fiscal 2025.
Payments of common share dividends to shareholders were $760 million and $725 million in fiscal 2024 and 2023,
respectively. See Note 17 to the Consolidated Financial Statements for additional information regarding dividends.
In March 2024, our shareholders approved a dividend payment of $2.60 per share, payable in four equal quarterly
installments of $0.65 per share beginning in the third quarter of fiscal 2024 and ending in the second quarter of fiscal 2025.
As a result of our change in place of incorporation, beginning in our third quarter of fiscal 2025, future dividends on
our ordinary shares, if any, will be declared on a quarterly basis by our board of directors as provided by Irish law.
Shareholder approval is no longer required. In exercising their discretion to approve such dividends, our board of directors
will consider our results of operations, financial condition, cash requirements, future business prospects, statutory
requirements of applicable law, contractual restrictions, restrictions imposed by Irish law, and other factors that they may
deem relevant.
During fiscal 2024, our board of directors authorized an increase of $1.5 billion in our share repurchase program.
We repurchased approximately 14 million of our common shares for $1,991 million and approximately 8 million of our
common shares for $946 million under the share repurchase program during fiscal 2024 and 2023, respectively. At fiscal year
end 2024, we had $245 million of availability remaining under our share repurchase authorization. On October 30, 2024, our
board of directors authorized an additional increase of $2.5 billion in our share repurchase program.
Summarized Guarantor Financial Information
As discussed above, our senior notes, commercial paper, and Credit Facility are issued by TEGSA and were fully
and unconditionally guaranteed on an unsecured basis by TEGSA’s then parent, TE Connectivity Ltd. during fiscal 2024 and,
as of September 24, 2024, also by TE Connectivity Ltd.’s wholly-owned subsidiary, TE Connectivity Switzerland Ltd. In
addition to being the issuer of our debt securities, TEGSA owns, directly or indirectly, all of our operating subsidiaries. The
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following tables present summarized financial information, excluding investments in and equity in earnings of our non-
guarantor subsidiaries, for TE Connectivity Ltd., TE Connectivity Switzerland Ltd., and TEGSA on a combined basis.
Fiscal Year End
2024
2023
(in millions)
Balance Sheet Data:
Total current assets
$ 1,164
$ 1,632
Total noncurrent assets(1)
2,377
2,857
Total current liabilities
1,362
1,303
Total noncurrent liabilities(2)
10,738 7,592
(1)
Includes $2,368 million and $2,783 million as of fiscal year end 2024 and 2023, respectively, of
intercompany loans receivable from non-guarantor subsidiaries.
(2)
Includes $7,309 million and $4,056 million as of fiscal year end 2024 and 2023, respectively,
of intercompany loans payable to non-guarantor subsidiaries.
Fiscal
2024
2023
(in millions)
Statement of Operations Data:
Loss from continuing operations
$
(271) $
(606)
Net loss
(271)
(606)
Off-Balance Sheet Arrangements
In certain instances, we have guaranteed the performance of third parties and provided financial guarantees for
uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from fiscal 2025
through the completion of such transactions. The guarantees would be triggered in the event of nonperformance, and the
potential exposure for nonperformance under the guarantees would not have a material effect on our results of operations,
financial position, or cash flows.
In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover
various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for
investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and
unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will
have a material adverse effect on our results of operations, financial position, or cash flows.
At fiscal year end 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $186 million,
including letters of credit of $22 million associated with our divestiture of the Subsea Communications business. In addition,
at fiscal year end 2024, we had $23 million of performance guarantees associated with the divestiture. We contractually
agreed to continue to honor letters of credit and performance guarantees related to the business’ projects that existed as of the
date of sale; however, based on historical experience, we do not anticipate having to perform on these guarantees.
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Commitments and Contingencies
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 2024:
Payments Due
In Fiscal 2025 Thereafter
Total
(in millions)
Long-term debt:
Principal payments(1)
$
872 $
3,366 $
4,238
Interest payments on debt(2)
114
642
756
Operating leases(3)
128
358
486
Purchase obligations(4)
961
48
1,009
Total contractual cash obligations(5)(6)(7)
$
2,075 $
4,414 $
6,489
(1)
See Note 10 to the Consolidated Financial Statements for additional information regarding debt.
(2)
Interest payments exclude the impact of any 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 2024 and are subject to change in future periods.
(3)
Operating leases represents the undiscounted lease payments. See Note 11 to the Consolidated Financial Statements for
additional information regarding leases.
(4)
Purchase obligations consist primarily of commitments for purchases of goods and services.
(5)
The above table does not reflect unrecognized income tax benefits of $652 million and related accrued interest and penalties of
$80 million, the timing of which is uncertain. See Note 15 to the Consolidated Financial Statements for additional information
regarding unrecognized income tax benefits, interest, and penalties.
(6)
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 approximately $70 million to pension plans in fiscal 2025, before consideration of any
voluntary contributions. See Note 14 to the Consolidated Financial Statements for additional information regarding these plans
and our estimates of future contributions and benefit payments.
(7)
The above table does not reflect redeemable noncontrolling interests of $131 million associated with our First Sensor AG (“First
Sensor”) subsidiary. Noncontrolling interest holders can elect either (1) to remain First Sensor noncontrolling interest
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 is
uncertain. See Note 17 to the Consolidated Financial Statements for additional information regarding redeemable noncontrolling
interests.
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 have been investigating our past compliance with relevant U.S. trade controls and have made voluntary
disclosures of apparent trade controls violations to the U.S. Department of Commerce’s Bureau of Industry and Security
(“BIS”) and the U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). We have also been contacted by
the U.S. Department of Justice concerning certain aspects of the BIS matters. During the fourth quarter of fiscal 2024, we
concluded our open matters with BIS, with our settlement including the payment of a penalty of approximately $6 million.
We are cooperating with the DDTC in its ongoing investigation. We are unable to predict the timing and final outcome of the
39
agency’s investigation. An unfavorable outcome may include fines or penalties imposed in response to our disclosures, but
we are not yet able to reasonably estimate the extent of any such fines or penalties. Although we have reserved for potential
fines and penalties relating to these matters based on our current understanding of the facts, the investigation into these
matters has yet to be completed and the final outcome of such investigation and related fines and penalties may differ from
amounts currently reserved.
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.
Our standard terms of sale 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. In
certain instances, we may sell products to customers under terms other than our standard terms. We do not account for
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 2024, we had five reporting
40
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.
We completed our annual goodwill impairment test in the fourth quarter of fiscal 2024 and determined that no
impairment existed.
Income Taxes
In determining pre-tax 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
41
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 trustees 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 discount rates and expected long-term
returns 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. Discount rates represent the market rate for high-
quality fixed income investments and are 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 discount rates increases the present value of pension benefit
obligations. At fiscal year end 2024, a 25-basis-point decrease in discount rates would have increased the present value of our
pension obligations by $68 million; a 25-basis-point increase would have decreased the present value of our pension
obligations by $67 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 rates of return on
plan assets. A 50-basis-point decrease or increase in the expected long-term returns on plan assets would have increased or
decreased, respectively, our fiscal 2024 pension expense by $8 million.
At fiscal year end 2024, the long-term target asset allocation in our U.S. plans’ master trust is 25% return-seeking
assets and 75% 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 110%. Based on the
funded status of the plans as of fiscal year end 2024, our target asset allocation is 67% return-seeking and 33% liability-
hedging.
Accounting Pronouncement
See Note 2 to the Consolidated Financial Statements for information regarding recently issued and adopted
accounting pronouncements.
Non-GAAP Financial Measure
Organic Net Sales Growth (Decline)
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
42
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, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act. 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 also include statements addressing our ESG, and
sustainability plans and goals. 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,”
“aspire,” “estimate,” “predict,” “potential,” “goal,” “target,” “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,” as well as
other risks described 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,
including recession, inflation, and higher interest rates;
•
conditions affecting demand for products in the industries we serve, particularly the automotive industry;
•
risk of future goodwill impairment;
•
pricing pressure and competition, including competitive risks associated with the pace of technological change;
•
market acceptance of our new product introductions and product innovations and product life cycles;
•
raw material availability, quality, and cost;
•
product liability, warranty, and product recall claims and our ability to defend such claims;
•
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;
43
•
global risks of business interruptions due to natural disasters or other disasters 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 the continuing military conflicts in certain
parts of the world, and volatile and uncertain economic conditions and the evolving regulatory system in China;
•
risks associated with cybersecurity incidents and other disruptions to our information technology infrastructure,
including as a result of AI;
•
risks related to compliance with current and future environmental and other laws and regulations, including
those related to climate change;
•
risks related to the increasing scrutiny and expectations regarding ESG matters;
•
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, regulatory actions, and compliance issues;
•
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;
•
requirements related to chemical usage, hazardous material content, recycling, and other circular economy
initiatives;
•
various risks associated with being an Irish 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.
ITEM 7A. 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
44
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 2024 market rates would have changed the unrealized
value of our contracts by $538 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 2023 market rates would have changed the
unrealized value of our contracts by $368 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. Also, 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. There were no such contracts and no floating debt outstanding at
fiscal year end 2024 or 2023.
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 2024, our commodity hedges, which related to expected purchases of
gold, silver, copper, and palladium, were in a net gain position of $55 million and had a notional value of $488 million. At
fiscal year end 2023, our commodity hedges, which related to expected purchases of gold, silver, copper, and palladium, were
in a net loss position of $23 million and had a notional value of $459 million. A 10% appreciation or depreciation of
commodity prices from the fiscal year end 2024 prices would have changed the unrealized value of our forward contracts by
$54 million. A 10% appreciation or depreciation of commodity prices from the fiscal year end 2023 prices would have
changed the unrealized value of our forward contracts by $44 million.
See Note 13 to the Consolidated Financial Statements for additional information regarding financial instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements and schedule specified by this Item, together with the reports
thereon of Deloitte & Touche LLP, are presented following Item 15 and the signature pages of this report:
Financial Statements:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the Fiscal Years Ended September 27, 2024, September 29, 2023,
and September 30, 2022
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 27, 2024,
September 29, 2023, and September 30, 2022
Consolidated Balance Sheets as of September 27, 2024 and September 29, 2023
Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 27, 2024,
September 29, 2023, and September 30, 2022
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 27, 2024, September 29, 2023,
and September 30, 2022
Notes to Consolidated Financial Statements
45
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts
All other financial statements and schedules have been omitted since the information required to be submitted has
been included on the Consolidated Financial Statements and related notes or because they are either not applicable or not
required under the rules of Regulation S-X.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure 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 27, 2024. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of September 27, 2024.
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 27, 2024.
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 27, 2024, which is included in this Annual Report.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 27, 2024, 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.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
In the quarter ended September 27, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the
Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities,
within the meaning of Item 408 of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
46
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning directors, executive officers, and corporate governance may be found under the captions
“Agenda Item No. 1—Election of Directors,” “Nominees for Election,” “Corporate Governance,” “The Board of Directors
and Board Committees,” and “Executive Officers” in our definitive proxy statement for our 2025 Annual General Meeting of
Shareholders (the “2025 Proxy Statement”), which will be filed with the SEC within 120 days after the close of our fiscal
year. Such information is incorporated herein by reference. The information in the 2025 Proxy Statement under the caption
“Delinquent Section 16(a) Reports” is incorporated herein by reference.
Code of Ethics
We have adopted a guide to ethical conduct, which applies to all employees, officers, and directors. Our Guide to
Ethical Conduct meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and applies to our
Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, as well as all other employees and directors.
Our Guide to Ethical Conduct also meets the requirements of a code of business conduct and ethics under the listing
standards of the NYSE. Our Guide to Ethical Conduct is posted on our website at www.te.com under the heading “Corporate
Responsibility—Disclosures.” We also will provide a copy of our Guide to Ethical Conduct to shareholders upon request. We
intend to disclose any amendments to our Guide to Ethical Conduct, as well as any waivers for executive officers or directors,
on our website.
Insider Trading Policies and Procedures
We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of
our securities by directors, officers, and employees, or by us, that are reasonably designed to promote compliance with
insider trading laws, rules, and regulations, and the listing standards of the New York Stock Exchange. Copies of such
policies and procedures can be found in Exhibits 19.1 and 19.2.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation may be found under the captions “Compensation Discussion and
Analysis,” “Management Development and Compensation Committee Report,” “Compensation Committee Interlocks and
Insider Participation,” “Executive Officer Compensation,” and “Compensation of Non-Employee Directors” in our 2025
Proxy Statement. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information in our 2025 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners
and Management” is incorporated herein by reference.
47
Equity Compensation Plan Information
The following table provides information as of fiscal year end 2024 with respect to shares issuable under our equity
compensation plans:
Number of securities
remaining available for
Number of securities
future issuance under
to be issued upon
Weightedဩaverage
equity compensation
exercise of outstanding
exercise price of
plans (excluding
options, warrants
outstanding options,
securities reflected
and rights
warrants and rights
in column (a))
Plan Category
(a)
(b)(3)
(c)(4)
Equity compensation plans approved by security holders(1)
7,108,778 $
113.60
23,626,420
Equity compensation plans not approved by security
holders(2)
236,556
83.18
—
Total
7,345,334
23,626,420
(1)
Includes securities issuable upon exercise of outstanding options and rights under the TE Connectivity plc. 2024 Stock and
Incentive Plan, amended and restated as of September 30, 2024 (the “2024 Plan”), the TE Connectivity plc. 2007 Stock and
Incentive Plan, amended and restated as of September 30, 2024 (the “2007 Plan”), and the TE Connectivity plc Savings Related
Share Plan, amended and restated as of September 30, 2024. The 2024 Plan provides 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”) to board members, officers, and non-officer employees. The 2024 Plan provides for
a maximum of 19,939,500 shares to be issued as Awards, subject to adjustment as provided under the terms of the plan. No
additional grants will be made from the 2007 Plan and previously granted awards under the 2007 Plan will continue to be settled
in TE Connectivity shares.
(2)
In connection with an acquisition in fiscal 2011, we assumed equity awards issued under plans sponsored by the acquired
business and the remaining pool of shares available for grant under the plans. Subsequent to the acquisition, we registered
6,764,455 shares related to the plans via Forms S-3 and S-8. Those plans have since expired, and no additional grants will be
made from them. Previously granted awards under the plans will continue to be settled in TE Connectivity shares.
(3)
Does not take into account restricted, performance, or deferred share unit awards that do not have exercise prices.
(4)
Includes securities remaining available for future issuance under the 2024 Plan, the TE Connectivity plc Savings Related Share
Plan, and the TE Connectivity plc Employee Stock Purchase Plan, amended and restated as of September 30, 2024. The 2024
Plan applies a weighting of 1.80 to outstanding nonvested restricted, performance, deferred share units, and other share-based
awards. The remaining shares issuable under the 2024 Plan and the TE Connectivity plc Savings Related Share Plan are increased
by forfeitures and cancellations, among other factors. Amounts include 856,441 shares remaining available for issuance under
our TE Connectivity plc Savings Related Share Plan and 3,032,664 shares remaining available for issuance under our TE
Connectivity plc Employee Stock Purchase Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information in our 2025 Proxy Statement under the captions “Corporate Governance,” “The Board of Directors
and Board Committees,” and “Certain Relationships and Related Transactions” is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information in our 2025 Proxy Statement under the caption “Agenda Item No. 2—Ratification of Auditors” is
incorporated herein by reference.
48
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
1.
Financial Statements. See “Part II. Item 8. Financial Statements and Supplementary Data”
2.
Financial Statement Schedule. See “Part II. Item 8. Financial Statements and Supplementary Data”
3.
Exhibit Index:
Exhibit
Incorporated by Reference Herein
Number
Description
Form
Exhibit
Date Filed with the SEC
2.1
Stock Purchase Agreement, dated as of
September 16, 2018, by and between Tyco
Electronics Group S.A. and Crown Subsea
AcquisitionCo LLC(1)
Current Report on
Form 8-K
2.1
September 17, 2018
2.2
Merger Agreement between TE Connectivity
Ltd. and TE Connectivity plc
Current Report on
Form 8-K
2.1
March 18, 2024
3.1
Memorandum and Articles of Association of
TE Connectivity plc, dated as of September
30, 2024
Current Report on
Form 8-K
3.1
September 30, 2024
4.1
*
Description of Registrant’s Securities
4.2(a)
Indenture among Tyco Electronics Group
S.A., as issuer, Tyco Electronics Ltd., as
guarantor, and Deutsche Bank Trust
Company Americas, as trustee, dated
September 25, 2007
Annual Report on
Form 10-K for the
fiscal year ended
September 28, 2007
4.1(a) December 14, 2007
4.2(b)
Third Supplemental Indenture among Tyco
Electronics Group S.A., as issuer, Tyco
Electronics Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated September 25, 2007
Annual Report on
Form 10-K for the
fiscal year ended
September 28, 2007
4.1(d) December 14, 2007
4.2(c)
Thirteenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated January 28, 2016
Current Report on
Form 8-K
4.1
January 28, 2016
4.2(d)
Fourteenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated August 3, 2017
Current Report on
Form 8-K
4.2
August 3, 2017
4.2(e)
Sixteenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated February 14, 2020
Current Report on
Form 8-K
4.1
February 14, 2020
4.2(f)
Seventeenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated February 16, 2021
Current Report on
Form 8-K
4.1
February 16, 2021
49
Exhibit
Incorporated by Reference Herein
Number
Description
Form
Exhibit
Date Filed with the SEC
4.2(g)
Eighteenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated February 4, 2022
Current Report on
Form 8-K
4.1
February 4, 2022
4.2(h)
Nineteenth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated February 13, 2023
Current Report on
Form 8-K
4.1
February 13, 2023
4.2(i)
Twentieth Supplemental Indenture among
Tyco Electronics Group S.A., as issuer, TE
Connectivity Ltd., as guarantor, and Deutsche
Bank Trust Company Americas, as trustee,
dated August 2, 2024
Current Report on
Form 8-K
4.1
August 2, 2024
4.2(j)
Twenty First Supplemental Indenture among
Tyco Electronics Group S.A., TE
Connectivity Ltd., TE Connectivity plc, TE
Connectivity Switzerland Ltd., and Deutsche
Bank Trust Company Americas, dated
September 24, 2024
Current Report on
Form 8-K
4.1
September 30, 2024
10.1
Second Amended and Restated Five-Year
Senior Credit Agreement, dated as of April
24, 2024, by and among Tyco Electronics
Group S.A., as borrower, TE Connectivity
Ltd., as parent guarantor, the lenders party
thereto, and Bank of America, N.A., as
administrative agent
Current Report on
Form 8-K
10.1
April 25, 2024
10.2
Assumption and Joinder Agreement, dated
September 24, 2024, by TE Connectivity plc,
TE Connectivity Switzerland Ltd., and Bank
of America, N.A., as administrative agent
under that certain Second Amended and
Restated Credit Agreement, dated as of April
24, 2024
Current Report on
Form 8-K
10.1 September 30, 2024
10.3
‡* TE Connectivity Annual Incentive Plan (as
amended and restated)
10.4
‡
TE Connectivity plc 2007 Stock and
Incentive Plan (Amended and Restated as of
September 30, 2024)
Current Report on
Form 8-K
10.7 September 30, 2024
10.5
‡
TE Connectivity plc 2010 Stock and
Incentive Plan (Amended and Restated as of
September 30, 2024)
Current Report on
Form 8-K
10.9 September 30, 2024
10.6
‡
TE Connectivity plc 2024 Stock and
Incentive Plan (Amended and Restated as of
September 30, 2024)
Current Report on
Form 8-K
10.5 September 30, 2024
10.7
‡
TE Connectivity plc Employee Stock
Purchase Plan (Amended and Restated as of
September 30, 2024)
Current Report on
Form 8-K
10.6 September 30, 2024
10.8
‡
Form of Option Award Terms and Conditions
Quarterly Report on
Form 10-Q for the
quarterly period
ended December 24,
2010
10.3
January 24, 2011
50
Exhibit
Incorporated by Reference Herein
Number
Description
Form
Exhibit
Date Filed with the SEC
10.9
‡
Form of Option Award Terms and Conditions
for Option Grants Beginning in November
2017
Annual Report on
Form 10-K for the
fiscal year ended
September 29, 2017
10.8
November 14, 2017
10.10
‡
Form of Option Award Terms and Conditions
for Option Grants Beginning in November
2019
Annual Report on
Form 10-K for the
fiscal year ended
September 27, 2019
10.8
November 12, 2019
10.11
‡
Form of Option Award Terms and Conditions
for Option Grants Beginning in November
2020
Quarterly Report on
Form 10-Q for the
quarterly period
ended December 25,
2020
10.1
January 28, 2021
10.12
‡
Form of Option Award Terms and Conditions
for Option Grants Beginning in November
2021
Annual Report on
Form 10-K for the
fiscal year ended
September 30, 2022
10.11 November 15, 2022
10.13
‡
Form of Option Award Terms and Conditions
for Option Grants Beginning in November
2024
Current Report on
Form 8-K
10.10 September 30, 2024
10.14
‡
Form of Restricted Stock Unit Award Terms
and Conditions for RSU Grants Beginning in
November 2020
Quarterly Report on
Form 10-Q for the
quarterly period
ended December 25,
2020
10.2
January 28, 2021
10.15
‡
Form of Restricted Stock Unit Award Terms
and Conditions for RSU Grants Beginning in
November 2021
Annual Report on
Form 10-K for the
fiscal year ended
September 30, 2022
10.14 November 15, 2022
10.16
‡
Form of Restricted Stock Unit Award Terms
and Conditions for RSU Grants Beginning in
November 2024
Current Report on
Form 8-K
10.11 September 30, 2024
10.17
‡
Form of Performance Stock Unit Award
Terms and Conditions for Performance
Cycles Starting in and After Fiscal Year 2021
Quarterly Report on
Form 10-Q for the
quarterly period
ended December 25,
2020
10.3
January 28, 2021
10.18
‡
Form of Performance Stock Unit Award
Terms and Conditions for Performance
Cycles Starting in and After Fiscal Year 2022
Annual Report on
Form 10-K for the
fiscal year ended
September 30, 2022
10.17 November 15, 2022
10.19
‡
Form of Performance Stock Unit Award
Terms and Conditions for Performance
Cycles Starting in and After Fiscal Year 2024
Current Report on
Form 8-K
10.12 September 30, 2024
10.20
‡* TE Connectivity Change in Control
Severance Plan for Certain U.S. Executives
(amended and restated as of September 30,
2024)
10.21
‡* TE Connectivity Severance Plan for U.S.
Executives (amended and restated as of
September 30, 2024)
51
Exhibit
Incorporated by Reference Herein
Number
Description
Form
Exhibit
Date Filed with the SEC
10.22
‡
TE Connectivity Supplemental Savings and
Retirement Plan (amended and restated as of
January 1, 2022)
Annual Report on
Form 10-K for the
fiscal year end
September 29, 2023
10.20 November 13, 2023
10.23
‡
TE Connectivity plc Savings Related Share
Plan (Amended and Restated as of September
30, 2024)
Current Report on
Form 8-K
10.8 September 30, 2024
10.24
Form of Deed of Indemnification for
directors and executive officers of TE
Connectivity plc
Current Report on
Form 8-K
10.2 September 30, 2024
10.25
Form of Indemnification for directors and
executive officers of TE Connectivity plc
Current Report on
Form 8-K
10.3 September 30, 2024
10.26
‡* Employment Agreement between Terrence R.
Curtin and Tyco Electronics Corporation
dated December 15, 2015, as amended
10.27
‡* Employment Agreement between Steven T.
Merkt and Tyco Electronics Corporation
dated December 15, 2015, as amended
10.28
‡* Employment Agreement between Heath A.
Mitts and Tyco Electronics Corporation dated
September 30, 2016, as amended
10.29
‡* Employment Agreement between John S.
Jenkins and Tyco Electronics Corporation
dated December 15, 2015, as amended
10.30
‡
Employment Agreement between Shad
Kroeger and TE Connectivity Corporation
dated February 23, 2018
Quarterly Report on
Form 10-Q for the
quarterly period
ended December 25,
2020
10.4
January 28, 2021
10.31
‡* Employment Agreement between Aaron
Stucki and TE Connectivity Corporation
dated October 1, 2020, as amended
10.32
Credit Support Agreement dated November
2, 2018 by and between Tyco Electronics
Group S.A. and Crown Subsea
Communications Holding, Inc.
Annual Report on
Form 10-K for the
fiscal year ended
September 27, 2019
10.28 November 12, 2019
19.1
*
TE Insider Trading and Communications
with the Public Policy
19.2
*
TE Connectivity plc Policy Relating to Open
Market Securities Repurchases and
Compliance with Insider Trading Securities
Laws
21.1
*
Subsidiaries of TE Connectivity plc
22.1
*
Guaranteed Securities
23.1
*
Consent of Independent Registered Public
Accounting Firm
24.1
*
Power of Attorney
31.1
*
Certification by the Chief Executive Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
52
Exhibit
Incorporated by Reference Herein
Number
Description
Form
Exhibit
Date Filed with the SEC
31.2
*
Certification by the Chief Financial Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
32.1
** Certification by the Chief Executive Officer
and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
97.1
*
TE Connectivity plc Incentive-Based
Compensation Recovery Policy
101.INS
*
Inline XBRL Instance Document(2)
101.SCH
*
Inline XBRL Taxonomy Extension Schema
Document
101.CAL
*
Inline XBRL Taxonomy Extension
Calculation Linkbase Document
101.DEF
*
Inline XBRL Taxonomy Extension Definition
Linkbase Document
101.LAB
*
Inline XBRL Taxonomy Extension Label
Linkbase Document
101.PRE
*
Inline XBRL Taxonomy Extension
Presentation Linkbase Document
104
*
Cover Page Interactive Data File(3)
‡
Management contract or compensatory plan or arrangement
*
Filed herewith
**
Furnished herewith
(1)
The schedules to the Stock Purchase Agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.
We will furnish copies of such schedules to the SEC upon its request; provided, however, that we may request confidential
treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished.
(2)
The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL
document
(3)
Formatted in Inline XBRL and contained in exhibit 101
ITEM 16. FORM 10-K SUMMARY
None.
53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TE CONNECTIVITY PLC
By:
/s/ Heath A. Mitts
Heath A. Mitts
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date: November 12, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Terrence R. Curtin
Chief Executive Officer and Director
November 12, 2024
Terrence R. Curtin
(Principal Executive Officer)
/s/ Heath A. Mitts
Executive Vice President,
Heath A. Mitts
Chief Financial Officer, and Director
November 12, 2024
(Principal Financial Officer)
/s/ Robert J. Ott
Senior Vice President and
Robert J. Ott
Corporate Controller
November 12, 2024
(Principal Accounting Officer)
*
Director
November 12, 2024
Jean-Pierre Clamadieu
*
Director
November 12, 2024
Carol A. Davidson
*
Director
November 12, 2024
Lynn A. Dugle
*
Director
November 12, 2024
Sam Eldessouky
*
Director
November 12, 2024
William A. Jeffrey
*
Director
November 12, 2024
Syaru Shirley Lin
*
Director
November 12, 2024
Abhijit Y. Talwalkar
54
Signature
Title
Date
*
Director
November 12, 2024
Mark C. Trudeau
*
Director
November 12, 2024
Dawn C. Willoughby
*
Director
November 12, 2024
Laura H. Wright
*
John S. Jenkins, Jr., by signing his name hereto, does sign this document on behalf of the above noted individuals,
pursuant to powers of attorney duly executed by such individuals, which have been filed as Exhibit 24.1 to this Report.
By:
/s/ John S. Jenkins, Jr.
John S. Jenkins, Jr.
Attorney-in-fact
55
TE CONNECTIVITY LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
56
Consolidated Statements of Operations for the Fiscal Years Ended September 27, 2024, September 29, 2023, and
September 30, 2022
59
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 27, 2024, September 29,
2023, and September 30, 2022
60
Consolidated Balance Sheets as of September 27, 2024 and September 29, 2023
61
Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 27, 2024, September 29,
2023, and September 30, 2022
62
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 27, 2024, September 29, 2023, and
September 30, 2022
63
Notes to Consolidated Financial Statements
64
Schedule II—Valuation and Qualifying Accounts
101
56
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of TE Connectivity plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TE Connectivity Ltd. and subsidiaries (the
"Company") as of September 27, 2024 and September 29, 2023, 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
27, 2024, and the related notes and the schedule listed in the Index at Item 15 (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 27, 2024 and September 29, 2023, and the results of its operations and its cash flows for each of
the three years in the period ended September 27, 2024, 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 27, 2024, 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 12, 2024, expressed an unqualified opinion on the Company's internal
control over financial reporting.
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 Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates 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 matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Income Taxes — Realizability of Deferred Tax Assets — Refer to Notes 2 and 15 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
57
realize a portion of its deferred tax assets, and therefore, a valuation allowance of $8.3 billion has been recorded to offset the
Company’s gross deferred tax assets as of September 27, 2024 of $12.2 billion.
We identified the realizability of certain 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 certain 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 12, 2024
We have served as the Company’s auditor since 2007.
58
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of TE Connectivity plc
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 27, 2024, 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 27, 2024, 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 consolidated financial statements as of and for the fiscal year ended September 27, 2024, of the
Company and our report dated November 12, 2024 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.
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 the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
November 12, 2024
59
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022
Fiscal
2024
2023
2022
(in millions, except per share data)
Net sales
$ 15,845 $ 16,034 $ 16,281
Cost of sales
10,389 10,979 11,037
Gross margin
5,456
5,055
5,244
Selling, general, and administrative expenses
1,732
1,670
1,584
Research, development, and engineering expenses
741
708
718
Acquisition and integration costs
21
33
45
Restructuring and other charges, net
166
340
141
Operating income
2,796
2,304
2,756
Interest income
87
60
15
Interest expense
(70)
(80)
(66)
Other income (expense), net
(16)
(16)
28
Income from continuing operations before income taxes
2,797
2,268
2,733
Income tax (expense) benefit
397
(364)
(306)
Income from continuing operations
3,194
1,904
2,427
Income (loss) from discontinued operations, net of income taxes
(1)
6
1
Net income
$
3,193 $
1,910 $
2,428
Basic earnings per share:
Income from continuing operations
$
10.40 $
6.04 $
7.51
Income (loss) from discontinued operations
—
0.02
—
Net income
10.40
6.06
7.52
Diluted earnings per share:
Income from continuing operations
$
10.34 $
6.01 $
7.47
Income (loss) from discontinued operations
—
0.02
—
Net income
10.33
6.03
7.47
Weighted-average number of shares outstanding:
Basic
307
315
323
Diluted
309
317
325
See Notes to Consolidated Financial Statements.
60
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022
Fiscal
2024
2023
2022
(in millions)
Net income
$
3,193
$
1,910
$
2,428
Other comprehensive income (loss):
Currency translation
131
261
(510)
Adjustments to unrecognized pension and postretirement benefit costs, net of
income taxes
(37)
20
259
Gains (losses) on cash flow hedges, net of income taxes
76
65
(95)
Other comprehensive income (loss)
170
346
(346)
Comprehensive income
3,363
2,256
2,082
Less: comprehensive (income) loss attributable to noncontrolling interests
(7)
(9)
19
Comprehensive income attributable to TE Connectivity Ltd.
$
3,356
$
2,247
$
2,101
See Notes to Consolidated Financial Statements.
61
TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS
As of September 27, 2024 and September 29, 2023
Fiscal Year End
2024
2023
(in millions, except
share data)
Assets
Current assets:
Cash and cash equivalents
$
1,319
$
1,661
Accounts receivable, net of allowance for doubtful accounts of $32 and $30, respectively
3,055
2,967
Inventories
2,517
2,552
Prepaid expenses and other current assets
740
712
Total current assets
7,631
7,892
Property, plant, and equipment, net
3,903
3,754
Goodwill
5,801
5,463
Intangible assets, net
1,174
1,175
Deferred income taxes
3,497
2,600
Other assets
848
828
Total assets
$
22,854
$
21,712
Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt
$
871
$
682
Accounts payable
1,728
1,563
Accrued and other current liabilities
2,147
2,218
Total current liabilities
4,746
4,463
Long-term debt
3,332
3,529
Long-term pension and postretirement liabilities
810
728
Deferred income taxes
199
185
Income taxes
411
365
Other liabilities
870
787
Total liabilities
10,368
10,057
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests
131
104
Shareholders' equity:
Common shares, CHF 0.57 par value, 316,574,781 shares authorized and issued, and
322,470,281 shares authorized and issued, respectively
139
142
Accumulated earnings
14,533
12,947
Treasury shares, at cost, 16,656,681 and 10,487,742 shares, respectively
(2,322)
(1,380)
Accumulated other comprehensive income (loss)
5
(158)
Total shareholders' equity
12,355
11,551
Total liabilities, redeemable noncontrolling interests, and shareholders' equity
$
22,854
$
21,712
See Notes to Consolidated Financial Statements.
62
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022
Accumulated
Other
Total
Common Shares
Treasury Shares Contributed Accumulated Comprehensive Shareholders'
Shares Amount Shares Amount
Surplus Earnings Income (Loss)
Equity
(in millions)
Balance at fiscal year end 2021 336 $ 148
(9) $ (1,055) $
— $ 11,709 $
(168) $ 10,634
Net income
—
—
—
—
—
2,428
—
2,428
Other comprehensive loss
—
—
—
—
—
—
(327)
(327)
Share-based compensation
expense
—
—
—
—
119
—
—
119
Dividends
—
—
—
—
—
(714)
—
(714)
Exercise of share options
—
—
—
54
—
—
—
54
Restricted share award vestings
and other activity
—
—
1
20
(119)
116
—
17
Repurchase of common shares
—
—
(10) (1,409)
—
—
—
(1,409)
Cancellation of treasury shares
(5)
(2)
5
709
—
(707)
—
—
Balance at fiscal year end 2022 331 $ 146 (13) $ (1,681) $
— $ 12,832 $
(495) $ 10,802
Net income
—
—
—
—
—
1,910
—
1,910
Other comprehensive income
—
—
—
—
—
—
337
337
Share-based compensation
expense
—
—
—
—
123
—
—
123
Dividends
—
—
—
—
—
(737)
—
(737)
Exercise of share options
—
—
1
43
—
—
—
43
Restricted share award vestings
and other activity
—
—
1
109
(123)
33
—
19
Repurchase of common shares
—
—
(8)
(946)
—
—
—
(946)
Cancellation of treasury shares
(9)
(4)
9 1,095
—
(1,091)
—
—
Balance at fiscal year end 2023
322 $ 142 (10) $ (1,380) $
— $ 12,947 $
(158) $ 11,551
Net income
—
—
—
—
—
3,193
—
3,193
Other comprehensive income
—
—
—
—
—
—
163
163
Share-based compensation
expense
—
—
—
—
127
—
—
127
Dividends
—
—
—
—
—
(782)
—
(782)
Exercise of share options
—
—
1
89
—
—
—
89
Restricted share award vestings
and other activity
—
—
—
213
(127)
(81)
—
5
Repurchase of common shares
—
—
(14) (1,991)
—
—
—
(1,991)
Cancellation of treasury shares
(6)
(3)
6
747
—
(744)
—
—
Balance at fiscal year end 2024 316 $ 139 (17) $ (2,322) $
— $ 14,533 $
5 $ 12,355
See Notes to Consolidated Financial Statements.
63
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022
Fiscal
2024
2023
2022
(in millions)
Cash flows from operating activities:
Net income
$ 3,193 $ 1,910 $ 2,428
(Income) loss from discontinued operations, net of income taxes
1
(6)
(1)
Income from continuing operations
3,194
1,904
2,427
Adjustments to reconcile income from continuing operations to net cash provided
by operating activities:
Depreciation and amortization
826
794
785
Deferred income taxes
(789)
(77)
(147)
Non-cash lease cost
134
129
131
Provision for losses on accounts receivable and inventories
57
76
70
Share-based compensation expense
127
123
119
Impairment of held for sale businesses
—
74
14
Other
71
101
9
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net
(134)
(146)
200
Inventories
(30)
(45)
(41)
Prepaid expenses and other current assets
25
17
50
Accounts payable
159
(1)
(396)
Accrued and other current liabilities
(165)
21
(398)
Income taxes
(83)
17
32
Other
85
145
(387)
Net cash provided by operating activities
3,477
3,132
2,468
Cash flows from investing activities:
Capital expenditures
(680)
(732)
(768)
Proceeds from sale of property, plant, and equipment
16
4
106
Acquisition of businesses, net of cash acquired
(339)
(110)
(220)
Proceeds from divestiture of businesses, net of cash retained by businesses sold
59
48
16
Other
(6)
22
(12)
Net cash used in investing activities
(950)
(768)
(878)
Cash flows from financing activities:
Net increase (decrease) in commercial paper
(75)
(40)
370
Proceeds from issuance of debt
348
499
588
Repayment of debt
(352)
(591)
(558)
Proceeds from exercise of share options
89
43
54
Repurchase of common shares
(2,062)
(945) (1,412)
Payment of common share dividends to shareholders
(760)
(725)
(685)
Other
(57)
(34)
(41)
Net cash used in financing activities
(2,869) (1,793) (1,684)
Effect of currency translation on cash
—
2
(21)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(342)
573
(115)
Cash, cash equivalents, and restricted cash at beginning of fiscal year
1,661
1,088
1,203
Cash, cash equivalents, and restricted cash at end of fiscal year
$ 1,319 $ 1,661 $ 1,088
Supplemental cash flow information:
Interest paid on debt, net
$
64 $
75 $
58
Income taxes paid, net of refunds
475
425
421
See Notes to Consolidated Financial Statements.
64
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
global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of
connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation,
renewable energy, automated factories, data centers, medical technology, and more.
We operated through three reportable segments during fiscal 2024:
•
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, and
marine; 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
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Fiscal Year
We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2024, 2023, and 2022 ended
on September 27, 2024, September 29, 2023, and September 30, 2022, respectively. Fiscal 2024 and 2023 were each 52
weeks in length. Fiscal 2022 was 53 weeks in length. For fiscal years in which there are 53 weeks, the fourth fiscal quarter
includes 14 weeks.
Change in Place of Incorporation
During fiscal 2024, our board of directors and shareholders approved a change in our jurisdiction of incorporation
from Switzerland to Ireland. In connection with the change, we entered into a merger agreement with our wholly-owned
subsidiary, TE Connectivity plc, a public limited company incorporated under Irish law. Under the merger agreement, we
were merged with and into TE Connectivity plc, which was the surviving entity, in order to effect our change in jurisdiction
of incorporation from Switzerland to Ireland. The merger and change in jurisdiction of incorporation were completed on
September 30, 2024. See Note 21 for additional information regarding the change in place of incorporation.
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.
65
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
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 20
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.
Our standard terms of sale 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. In
certain instances, we may sell products to customers under terms other than our standard terms. We do not account for
warranties as separate performance obligations. Amounts accrued for warranty claims were $34 million and $25 million at
fiscal year end 2024 and 2023, respectively.
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.
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.
66
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.
At fiscal year end 2024, 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
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.
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 2024, 2023, and 2022 were $621
million, $593 million, and $610 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.
67
Financial Instruments
Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable,
debt, and derivative financial instruments.
We account for derivative financial instrument contracts on the Consolidated Balance Sheets at fair value. For
instruments not designated as hedges under ASC 815, Derivatives and Hedging, the changes in the instruments’ fair value are
recognized currently in earnings. For instruments designated as cash flow hedges, the effective portion of changes in the fair
value of a derivative is recorded in other comprehensive income (loss) and reclassified into earnings in the same period or
periods during which the underlying hedged item affects earnings. Amounts excluded from the hedging relationship are
recognized currently in earnings. Changes in the fair value of instruments designated as fair value hedges affect the carrying
value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being
recognized currently in earnings.
We determine the fair value of our financial instruments 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 S&P,
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 2024, 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. 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 10 for disclosure of the fair value of debt. The following is a description of the
valuation methodologies used for the respective financial instruments:
68
•
Cash and cash equivalents—Cash and cash equivalents are valued at book value, which we consider to be
equivalent to unadjusted quoted prices (level 1).
•
Accounts receivable—Accounts receivable are valued based on the net value expected to be realized. The net
realizable value generally represents an observable contractual agreement (level 2).
•
Accounts payable—Accounts payable are valued based on the net value expected to be paid, generally
supported by an observable contractual agreement (level 2).
•
Debt—The fair value of debt, including both current and non-current maturities, is derived from quoted market
prices or other pricing determinations based on the results of market approach valuation models using
observable market data such as recently reported trades, bid and offer information, and benchmark securities
(level 2).
Pension Plans
The funded status of our defined benefit pension plans is recognized on the Consolidated Balance Sheets and is
measured as the difference between the fair value of plan assets and the projected benefit obligation at the measurement date.
The projected benefit obligation represents the actuarial present value of benefits projected to be paid upon retirement
factoring in estimated future compensation levels. The fair value of plan assets represents the current market value of
cumulative company and participant contributions made to irrevocable trust funds, held for the sole benefit of participants,
which are invested by the trustees 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
returns on plan assets, rates 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
We account for leases in accordance with 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.
69
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 assets for the lease term and lease liabilities represent the obligation to make lease payments arising from the
leases. We do not recognize ROU assets or lease liabilities that arise from short-term leases. Since our lease contracts do not
contain a readily determinable implicit rate, we determine a fully-collateralized incremental borrowing rate that reflects a
similar term to the lease and the economic environment of the applicable country or region in which the asset is leased.
We have elected to account for fixed lease and non-lease components in our real estate leases as a single lease
component; other leases generally do not contain non-lease components. The non-lease components in our real estate leases
include logistics services, warehousing, and other operational costs. Many of these costs are variable, fluctuating based on
services provided, such as pallets shipped in and out of a location or square footage of space occupied. These costs, and any
other variable rental costs, are excluded from our ROU assets and lease liabilities and 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.
70
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve disclosures about the nature of expenses in
commonly presented financial statement captions. The amendments are effective for our fiscal 2028 Annual Report and
subsequent interim periods; however, early adoption is permitted. The amendments can be applied either prospectively or
retrospectively to all periods presented in the financial statements. We are currently assessing the impact that adoption will
have on our Consolidated Financial Statements.
In March 2024, the U.S. Securities and Exchange Commission (“SEC”) issued its final climate disclosure rules, The
Enhancement and Standardization of Climate-Related Disclosures for Investors, which require all registrants to provide
certain climate-related information in their registration statements and annual reports. The rules require disclosure of, among
other things, material climate-related risks, activities to mitigate or adapt to such risks, governance and oversight of such
risks, material climate targets and goals, and Scope 1 and/or Scope 2 greenhouse gas emissions, on a phased-in basis, when
those emissions are material. In addition, the final rules require certain disclosures in the notes to the financial statements,
including the effects of severe weather events and other natural conditions. The rules are effective for us on a phased-in
timeline starting in fiscal 2026; however, in April 2024, the SEC issued an order to voluntarily stay its final climate rules
pending the completion of judicial review thereof by the U.S. Court of Appeals for the Eighth Circuit. We are currently
assessing the impact of the rules on our Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax
Disclosures, to enhance the transparency and decision usefulness of income tax disclosures through improvements to
disclosures related primarily to the rate reconciliation and income taxes paid information. The amendments are effective for
us in fiscal 2026; however, early adoption is permitted. We are currently assessing the impact that adoption will have on our
Consolidated Financial Statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced
disclosures about significant segment expenses. The amendments are effective for our fiscal 2025 Annual Report and
subsequent interim periods; however, early adoption is permitted. The amendments should be applied retrospectively to all
periods presented in the financial statements. We are currently assessing the impact that adoption will have on our
Consolidated Financial Statements.
Recently Adopted Accounting Pronouncement
In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-
50): Disclosure of Supplier Finance Program Obligations, to enhance transparency and introduce new disclosures related to
an entity’s use of supplier finance programs in connection with the purchase of goods and services. The ASU requires us, as a
buyer in a supplier finance program, to disclose the key terms of the program, the amount of obligations outstanding, the
balance sheet presentation of such amounts, and a rollforward of the obligation activity during the annual period. We adopted
this update in the first quarter of fiscal 2024. Adoption did not have a material impact on our Consolidated Financial
Statements. See Note 12 for additional information regarding our supply chain finance program.
71
3. Restructuring and Other Charges, Net
Net restructuring and other charges consisted of the following:
Fiscal
2024
2023 2022
(in millions)
Restructuring charges, net
$ 144 $ 260 $ 137
(Gain) loss on divestitures and impairment of held for sale
businesses, net
(10)
77
4
Costs related to change in place of incorporation
20
—
—
Other charges, net
12
3
—
Restructuring and other charges, net
$ 166 $ 340 $ 141
Restructuring Charges, Net
Net restructuring and related charges by segment were as follows:
Fiscal
2024
2023 2022
(in millions)
Transportation Solutions
$
62 $ 145 $
80
Industrial Solutions
60
70
34
Communications Solutions
22
45
23
Restructuring charges, net
144
260
137
Plus: charges included in cost of sales(1)
—
—
16
Restructuring and related charges, net
$ 144 $ 260 $ 153
(1)
Charges included in cost of sales were attributable to inventory-related charges within the
Industrial Solutions segment.
72
Activity in our restructuring reserves was as follows:
Balance at
Balance at
Beginning
End
of Fiscal
Changes in
Cash
Non-Cash Currency of Fiscal
Year
Charges Estimate Payments Items Translation
Year
(in millions)
Fiscal 2024 Activity:
Fiscal 2024 Actions:
Employee severance
$
— $
79 $
— $
(9) $
— $
2 $
72
Property, plant, and equipment
—
7
—
—
(7)
—
—
Total
—
86
—
(9)
(7)
2
72
Fiscal 2023 Actions:
Employee severance
187
18
(16)
(79)
—
6
116
Facility and other exit costs
2
7
—
(9)
—
—
—
Property, plant, and equipment
—
13
—
—
(13)
—
—
Total
189
38
(16)
(88)
(13)
6
116
Fiscal 2022 Actions:
Employee severance
52
5
6
(53)
—
3
13
Facility and other exit costs
—
8
10
(10)
—
—
8
Property, plant, and equipment
—
(2)
(2)
—
4
—
—
Total
52
11
14
(63)
4
3
21
Pre-Fiscal 2022 Actions:
Employee severance
75
11
(10)
(21)
—
2
57
Facility and other exit costs
4
10
—
(7)
—
—
7
Total
79
21
(10)
(28)
—
2
64
Total fiscal 2024 activity
$
320 $ 156 $
(12) $ (188) $
(16) $
13 $
273
Fiscal 2023 Activity:
Fiscal 2023 Actions:
Employee severance
$
— $ 238 $
— $
(50) $
— $
(1) $
187
Facility and other exit costs
—
3
—
(1)
—
—
2
Property, plant, and equipment
—
6
—
—
(6)
—
—
Total
—
247
—
(51)
(6)
(1)
189
Fiscal 2022 Actions:
Employee severance
108
7
(7)
(61)
—
5
52
Facility and other exit costs
1
7
2
(10)
—
—
—
Property, plant, and equipment
—
3
—
—
(3)
—
—
Total
109
17
(5)
(71)
(3)
5
52
Pre-Fiscal 2022 Actions:
Employee severance
112
6
(1)
(49)
—
7
75
Facility and other exit costs
7
—
4
(7)
—
—
4
Property, plant, and equipment
—
—
(8)
—
8
—
—
Total
119
6
(5)
(56)
8
7
79
Total fiscal 2023 activity
$
228 $ 270 $
(10) $ (178) $
(1) $
11 $
320
Fiscal 2022 Activity:
Fiscal 2022 Actions:
Employee severance
$
— $ 126 $
— $
(15) $
— $
(3) $
108
Facility and other exit costs
—
2
—
(1)
—
—
1
Property, plant, and equipment and other non-
cash charges
—
33
—
—
(33)
—
—
Total
—
161
—
(16)
(33)
(3)
109
Pre-Fiscal 2022 Actions:
Employee severance
287
2
(25)
(124)
—
(28)
112
Facility and other exit costs
17
13
(2)
(20)
—
(1)
7
Property, plant, and equipment
—
7
(3)
—
(4)
—
—
Total
304
22
(30) (144)
(4)
(29)
119
Total fiscal 2022 activity
$
304 $ 183 $
(30) $ (160) $
(37) $
(32) $
228
73
Fiscal 2024 Actions
During fiscal 2024, we initiated a restructuring program to optimize our manufacturing footprint and improve the
cost structure of the organization, primarily in the Industrial Solutions and Transportation Solutions segments. In connection
with this program, we recorded restructuring charges of $86 million during fiscal 2024. We expect to complete all
restructuring actions commenced during fiscal 2024 by the end of fiscal 2025 and anticipate that additional charges related to
fiscal 2024 actions will be insignificant.
Fiscal 2023 Actions
During fiscal 2023, we initiated a restructuring program associated with cost structure improvements across all
segments. In connection with this program, during fiscal 2024 and 2023, we recorded net restructuring charges of $22 million
and $247 million, respectively. We expect additional charges related to fiscal 2023 actions will be insignificant.
The following table summarizes cumulative charges incurred for the fiscal 2023 program by segment as of fiscal
year end 2024:
Cumulative
Charges
Incurred
(in millions)
Transportation Solutions
$
142
Industrial Solutions
92
Communications Solutions
35
Total
$
269
Fiscal 2022 Actions
During fiscal 2022, we initiated a restructuring program associated with footprint consolidation and cost structure
improvements across all segments. In connection with this program, during fiscal 2024, 2023, and 2022, we recorded net
restructuring charges of $25 million, net restructuring charges of $12 million, and restructuring and related charges of $161
million, respectively. We expect that any additional charges related to fiscal 2022 actions will be insignificant.
The following table summarizes cumulative charges incurred for the fiscal 2022 program by segment as of fiscal
year end 2024:
Cumulative
Charges
Incurred
(in millions)
Transportation Solutions
$
119
Industrial Solutions
51
Communications Solutions
28
Total
$
198
Pre-Fiscal 2022 Actions
During fiscal 2024, 2023, and 2022, we recorded net restructuring charges of $11 million, charges of $1 million, and
credits of $8 million, respectively, related to pre-fiscal 2022 actions. We expect that any additional charges related to
restructuring actions commenced prior to fiscal 2022 will be insignificant.
74
Total Restructuring Reserves
Restructuring reserves included on the Consolidated Balance Sheets were as follows:
Fiscal Year End
2024
2023
(in millions)
Accrued and other current liabilities
$
233 $
240
Other liabilities
40
80
Restructuring reserves
$
273 $
320
Divestitures
During fiscal 2024, we sold one business for net cash proceeds of $59 million. In connection with the divestiture, we
recorded a pre-tax gain on sale of $10 million. Additionally, during fiscal 2023, we recorded a pre-tax impairment charge of
$68 million when the business was reclassified to held for sale. The business sold was reported in our Transportation
Solutions segment.
We sold three businesses for net cash proceeds of $48 million during fiscal 2023. In connection with the
divestitures, we recorded pre-tax impairment charges and a net pre-tax loss on sales, which totaled to a net charge of $9
million. Additionally, during fiscal 2022, we recorded pre-tax impairment charges of $14 million when the businesses were
reclassified to held for sale. The businesses sold were reported in our Industrial Solutions segment.
During fiscal 2022, we sold two businesses for net cash proceeds of $16 million and recognized a net pre-tax gain on
sales of $10 million. The businesses sold were reported in our Transportation Solutions and Industrial Solutions segments.
Change in Place of Incorporation
During fiscal 2024, we incurred costs of $20 million related to our change in place of incorporation from
Switzerland to Ireland. See Notes 1 and 21 for additional information regarding the change.
4. Acquisitions
During the quarter ended December 29, 2023, we acquired approximately 98.7% of the outstanding shares of
Schaffner Holding AG (“Schaffner”), a leader in electromagnetic solutions based in Switzerland, for CHF 505.00 per share in
cash for a purchase price of CHF 294 million (equivalent to $339 million), net of cash acquired. As a result of the transaction,
we recognized a noncontrolling interest with a fair value of $5 million as of the acquisition date. The acquired business has
been reported as part of our Industrial Solutions segment from the date of acquisition. Our valuation of identifiable intangible
assets, assets acquired, and liabilities assumed is currently in process; therefore, the current allocation is subject to adjustment
upon finalization of the valuations. The amount of these potential adjustments could be significant. During the quarter ended
June 28, 2024, we completed a squeeze-out of the remaining minority shareholders for $5 million and the Schaffner shares
were delisted from the SIX Swiss Exchange.
We acquired one business for a cash purchase price of $110 million, net of cash acquired, during fiscal 2023. The
acquired business has been reported as part of our Industrial Solutions segment from the date of acquisition.
We acquired three businesses for a combined cash purchase price of $245 million, net of cash acquired, during fiscal
2022. The acquired businesses have been reported as part of our Communications Solutions segment from the date of
acquisition. During fiscal 2022, we finalized the purchase price allocation of certain fiscal 2021 acquisitions, which included
the recognition of $25 million of cash acquired, and the associated goodwill was reduced.
75
5. Inventories
Inventories consisted of the following:
Fiscal Year End
2024
2023
(in millions)
Raw materials
$
328 $
367
Work in progress
1,063 1,185
Finished goods
1,126 1,000
Inventories
$ 2,517 $ 2,552
6. Property, Plant, and Equipment, Net
Net property, plant, and equipment consisted of the following:
Fiscal Year End
2024
2023
(in millions)
Property, plant, and equipment, gross:
Land and improvements
$
120 $
116
Buildings and improvements
1,571 1,438
Machinery and equipment
8,931 8,311
Construction in process
659
625
11,281 10,490
Accumulated depreciation
(7,378) (6,736)
Property, plant, and equipment, net
$ 3,903 $ 3,754
Depreciation expense was $660 million, $607 million, and $593 million in fiscal 2024, 2023, and 2022, respectively.
7. Goodwill
The changes in the carrying amount of goodwill by segment were as follows:
Transportation Industrial Communications
Solutions
Solutions
Solutions
Total
(in millions)
Balance at fiscal year end 2022(1)
$
1,439 $ 3,118 $
701 $ 5,258
Acquisition
—
75
—
75
Currency translation and other
39
70
21 130
Balance at fiscal year end 2023(1)
1,478 3,263
722 5,463
Acquisition
—
180
—
180
Currency translation and other
41
95
22
158
Balance at fiscal year end 2024(1)
$
1,519 $ 3,538 $
744 $ 5,801
(1)
At fiscal year end 2024, 2023, and 2022, 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 2024 and 2023, we recognized goodwill of $180 million and $75 million, respectively, in the Industrial
Solutions segment connection with new acquisitions. See Note 4 for additional information regarding acquisitions.
We completed our annual goodwill impairment test in the fourth quarter of fiscal 2024 and determined that no
impairment existed.
76
8. Intangible Assets, Net
Intangible assets consisted of the following:
2024
2023
Gross
Net
Gross
Net
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Amount Amortization Amount Amount Amortization Amount
(in millions)
Customer relationships
$ 1,901 $
(948) $ 953 $ 1,720 $
(806) $ 914
Intellectual property
686
(481)
205 1,186
(938)
248
Other
23
(7)
16
19
(6)
13
Total
$ 2,610 $ (1,436) $ 1,174 $ 2,925 $ (1,750) $ 1,175
Intangible asset amortization expense was $166 million, $187 million, and $192 million for fiscal 2024, 2023, and
2022, respectively. At fiscal year end 2024, the aggregate amortization expense on intangible assets is expected to be as
follows:
(in millions)
Fiscal 2025
$
164
Fiscal 2026
157
Fiscal 2027
138
Fiscal 2028
103
Fiscal 2029
96
Thereafter
516
Total
$ 1,174
9. Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:
Fiscal Year End
2024
2023
(in millions)
Accrued payroll and employee benefits
$
657 $
577
Dividends payable to shareholders
390
368
Restructuring reserves
233
240
Income taxes payable
113
140
Lease liability
128
118
Deferred revenue
58
74
Share repurchase program payable
—
71
Interest payable
27
28
Other
541
602
Accrued and other current liabilities
$ 2,147 $ 2,218
77
10. Debt
Debt was as follows:
Fiscal Year End
2024
2023
(in millions)
Principal debt:
Commercial paper, at a weighted-average interest rate of 4.95%
and 5.50%, respectively
$
255 $
330
3.45% senior notes due 2024
—
350
0.00% euro-denominated senior notes due 2025
615
582
4.50% senior notes due 2026
500
500
3.70% senior notes due 2026
350
350
3.125% senior notes due 2027
400
400
0.00% euro-denominated senior notes due 2029
615
582
4.625% senior notes due 2030
350
—
2.50% senior notes due in 2032
600
600
7.125% senior notes due 2037
477
477
Other
76
75
4,238 4,246
Unamortized discounts, premiums, and debt issuance costs, net
(35)
(35)
Total debt
$ 4,203 $ 4,211
During fiscal 2024, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued $350 million
aggregate principal amount of 4.625% senior notes due in February 2030. 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 entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in April 2024 with
aggregate commitments of $1.5 billion, which refinanced and replaced in full TEGSA’s existing $1.5 billion five-year
unsecured senior revolving credit facility (the “Replaced Credit Facility”). The Credit Facility matures in April 2029. TEGSA
had no borrowings under the Credit Facility at fiscal year end 2024 or the Replaced Credit Facility at fiscal year end 2023.
Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with
respect to revolving loans denominated in U.S. dollars, (a) the term secured overnight financing rate (“Term SOFR”) (as
defined in the Credit Facility) or (b) an alternate base rate equal to the highest of (i) Bank of America, N.A.’s base rate, (ii)
the federal funds effective rate plus 1/2 of 1%, (iii) the Term SOFR for a one-month interest period plus 1%, and (iv) 1%, and
(2) with respect to revolving loans determined in an alternative currency, (a) an alternative currency daily rate or (b) an
alternative currency term rate, as applicable, plus, in each case, an applicable margin based upon the senior, unsecured,
long-term debt rating of TEGSA. TEGSA is required to pay an annual facility fee. Based on the applicable credit ratings of
TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’ commitments under the Credit Facility.
The 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.
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.
During fiscal 2024, TEGSA’s payment obligations under its senior notes, commercial paper, and Credit Facility
were fully and unconditionally guaranteed on an unsecured basis by its then parent, TE Connectivity Ltd., and, as of
September 24, 2024, also by TE Connectivity Ltd.’s wholly-owned subsidiary, TE Connectivity Switzerland Ltd. As a result
78
of our change in place of incorporation, such guarantees are provided by TE Connectivity plc and its wholly-owned
subsidiary, TE Connectivity Switzerland Ltd., in fiscal 2025.
At fiscal year end 2024, principal payments required for debt are as follows:
(in millions)
Fiscal 2025
$
872
Fiscal 2026
852
Fiscal 2027
402
Fiscal 2028
—
Fiscal 2029
615
Thereafter
1,497
Total
$ 4,238
The fair value of our debt, based on indicative valuations, was approximately $4,190 million and $3,974 million at
fiscal year end 2024 and 2023, respectively.
11. Leases
The components of lease cost were as follows:
Fiscal
2024
2023
2022
(in millions)
Operating lease cost
$
134 $
129 $
131
Variable lease cost
53
55
52
Total lease cost
$
187 $
184 $
183
Amounts recognized on the Consolidated Balance Sheets were as follows:
Fiscal Year End
2024
2023
($ in millions)
Operating lease ROU assets:
Other assets
$
433 $
390
Operating lease liabilities:
Accrued and other current liabilities
$
128 $
118
Other liabilities
313
280
Total operating lease liabilities
$
441 $
398
Weighted-average remaining lease term (in years)
5.5
5.0
Weighted-average discount rate
3.4 %
3.0 %
Cash flow information, including significant non-cash transactions, related to leases was as follows:
Fiscal
2024
2023
2022
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Payments for operating leases(1)
$
141 $
127 $
122
ROU assets, including modifications of existing leases, obtained in exchange for
operating lease liabilities
180
106
135
(1)
These payments are included in cash flows from operating activities, primarily in changes in accrued and other current
liabilities.
79
At fiscal year end 2024, the maturities of operating lease liabilities were as follows:
(in millions)
Fiscal 2025
$
128
Fiscal 2026
103
Fiscal 2027
72
Fiscal 2028
53
Fiscal 2029
36
Thereafter
94
Total lease payments
486
Less: interest
(45)
Present value of lease liabilities
$
441
12. 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 have been investigating our past compliance with relevant U.S. trade controls and have made voluntary
disclosures of apparent trade controls violations to the U.S. Department of Commerce’s Bureau of Industry and Security
(“BIS”) and the U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). We have also been contacted by
the U.S. Department of Justice concerning certain aspects of the BIS matters. During the quarter ended September 27, 2024,
we concluded our open matters with BIS, with our settlement including the payment of a penalty of approximately $6
million. We are cooperating with the DDTC in its ongoing investigation. We are unable to predict the timing and final
outcome of the agency’s investigation. An unfavorable outcome may include fines or penalties imposed in response to our
disclosures, but we are not yet able to reasonably estimate the extent of any such fines or penalties. Although we have
reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the
investigation into these matters has yet to be completed and the final outcome of such investigation and related fines and
penalties may differ from amounts currently reserved.
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
2024, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of
$17 million to $43 million, and we accrued $21 million as the probable loss, which was the best estimate within this range.
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.
80
At fiscal year end 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $186 million,
including letters of credit of $22 million associated with our divestiture of the Subsea Communications business. In addition,
at fiscal year end 2024, we had $23 million of performance guarantees associated with the divestiture. We contractually
agreed to continue to honor letters of credit and performance guarantees related to the business’ projects that existed as of the
date of sale; however, based on historical experience, we do not anticipate having to perform on these guarantees.
Supply Chain Finance Program
We have an agreement with a financial institution that allows participating suppliers the ability to finance payment
obligations. The financial institution has separate arrangements with the suppliers and provides them with the option to
request early payment for invoices. We do not determine the terms or conditions of the arrangement between the financial
institution and suppliers. Our obligation to suppliers, including amounts due and scheduled payment dates, are not impacted
by the suppliers’ decisions to finance amounts under the arrangement and we are not required to post collateral with the
financial institution. The outstanding payment obligations under our supply chain finance program, which are included in
accounts payable on our Consolidated Balance Sheets, were $105 million and $109 million at fiscal year end 2024 and 2023,
respectively.
13. 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
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. We expect that significantly all of the balance in accumulated other comprehensive
income (loss) associated with the cash flow hedge-designated instruments addressing foreign exchange risks will be
reclassified into the Consolidated Statement of Operations within the next twelve months.
During fiscal 2015, we entered into cross-currency swap contracts, which were designated as cash flow hedges, to
reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans. As of fiscal year end
2022, all such cross-currency swap contracts had been terminated or matured and were settled; additionally, all related
collateral positions were settled. During fiscal 2024 and 2023, we did not enter into any cross-currency swap contracts and
there were no amounts outstanding.
The impacts of our cross-currency swap contracts were as follows:
Fiscal
2022
(in millions)
Losses recorded in other comprehensive income (loss)
$
(7)
Gains excluded from the hedging relationship(1)
70
Gains reclassified from other comprehensive income (loss) into selling, general, and administrative
expenses
2
(1)
Gains excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and
are offset by losses 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 $2,417 million and $1,709 million at
fiscal year end 2024 and 2023, respectively.
81
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 $5,367 million and $3,806 million at fiscal year end 2024 and 2023,
respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 1.7% per
annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2028, we will pay the notional
value of the contracts in the designated foreign currency and receive U.S. 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:
Fiscal Year End
2024
2023
(in millions)
Prepaid expenses and other current assets
$
31 $
109
Other assets
11
79
Accrued and other current liabilities
51
4
Other liabilities
99
10
The impacts of our hedge of net investment programs were as follows:
Fiscal
2024
2023
2022
(in millions)
Foreign currency exchange gains (losses) on intercompany loans and external
borrowings(1)
$
(112)
$
(162)
$
516
Gains (losses) on cross-currency swap contracts designated as hedges of net
investment(1)
(194)
(29)
265
(1)
Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes
attributable to the translation of the net investment.
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 utilize forward starting interest rate swap contracts to manage interest rate exposure in
periods prior to the anticipated issuance of fixed rate debt. During fiscal 2022, we terminated forward starting interest rate
swap contracts as a result of the issuance of our 2.50% senior notes due in 2032. During fiscal 2024 and 2023, we did not
enter into any forward starting interest rate swap contracts and there were no amounts outstanding.
The impacts of our forward starting interest rate swap contracts were as follows:
Fiscal
2022
(in millions)
Gains recorded in other comprehensive income (loss)
$
13
We also utilize investment swap contracts to manage earnings exposure on certain nonqualified deferred
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 $488 million and $459 million at fiscal
82
year end 2024 and 2023, respectively, and were designated as cash flow hedges. These commodity swap contracts were
recorded on the Consolidated Balance Sheets as follows:
Fiscal Year End
2024
2023
(in millions)
Prepaid expenses and other current assets
$
52 $
3
Other assets
4
—
Accrued and other current liabilities
1
21
Other liabilities
—
5
The impacts of our commodity swap contracts were as follows:
Fiscal
2024
2023
2022
(in millions)
Gains (losses) recorded in other comprehensive income (loss)
$
102 $
31 $
(86)
Gains (losses) reclassified from accumulated other comprehensive income (loss)
into cost of sales
19
(39)
22
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 2024 and 2023.
14. 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
U.S. Plans
Fiscal
Fiscal
2024
2023
2022
2024
2023
2022
($ in millions)
Operating expense:
Service cost
$
28
$
29
$
38
$
7
$
9
$
8
Other (income) expense:
Interest cost
63
60
32
39
38
26
Expected returns on plan assets
(53)
(48)
(55)
(38)
(38)
(47)
Amortization of net actuarial loss
5
6
24
4
4
3
Amortization of prior service credit
(4)
(4)
(5)
—
—
—
Settlement and curtailment gains and other
(1)
(2)
(3)
—
—
—
Net periodic pension benefit cost (credit)
$
38
$
41
$
31
$ 12
$ 13
$ (10)
Weighted-average assumptions used to determine net
pension benefit cost (credit) during the fiscal year:
Discount rate
4.13 % 3.80 % 1.37 % 6.04 % 5.53 % 2.84 %
Expected returns on plan assets
5.08 % 4.61 % 3.77 % 7.10 % 6.60 % 5.90 %
Rates of compensation increases
2.68 % 2.62 % 2.53 %
— %
— %
— %
83
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:
Non-U.S. Plans
U.S. Plans
Fiscal
Fiscal
2024
2023
2024
2023
($ in millions)
Change in benefit obligation:
Benefit obligation at beginning of fiscal year
$ 1,509
$ 1,502
$
674
$
717
Service cost
28
29
7
9
Interest cost
63
60
39
38
Actuarial (gains) losses
112
(79)
57
(23)
Benefits and administrative expenses paid
(75)
(73)
(77)
(67)
Settlements and curtailments
(15)
(38)
—
—
Currency translation
106
105
—
—
Other
50
3
—
—
Benefit obligation at end of fiscal year
1,778
1,509
700
674
Change in plan assets:
Fair value of plan assets at beginning of fiscal year
1,007
989
566
612
Actual returns on plan assets
124
(3)
94
20
Employer contributions
45
70
24
1
Benefits and administrative expenses paid
(75)
(73)
(77)
(67)
Settlements
(15)
(35)
—
—
Currency translation
82
54
—
—
Other
49
5
—
—
Fair value of plan assets at end of fiscal year
1,217
1,007
607
566
Funded status
$ (561)
$ (502)
$
(93)
$ (108)
Amounts recognized on the Consolidated Balance Sheets:
Other assets
$
182
$
143
$
—
$
—
Accrued and other current liabilities
(34)
(30)
(2)
(4)
Long-term pension and postretirement liabilities
(709)
(615)
(91)
(104)
Net amount recognized
$ (561)
$ (502)
$
(93)
$ (108)
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
$ (204)
$ (154)
$ (137)
$ (140)
Prior service credit
5
9
—
—
Total
$ (199)
$ (145)
$ (137)
$ (140)
Weighted-average assumptions used to determine pension benefit
obligation at fiscal year end:
Discount rate
3.59 %
4.13 %
4.94 %
6.04 %
Rates of compensation increases
2.59 %
2.68 %
— %
— %
84
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:
Non-U.S. Plans
U.S. Plans
Fiscal
Fiscal
2024
2023
2024
2023
(in millions)
Current year net actuarial gain (loss) recorded in accumulated other
comprehensive income (loss)
$
(55) $
16 $
(1) $
5
Amortization of net actuarial loss
5
6
4
4
Current year prior service credit (cost) recorded in accumulated other
comprehensive income (loss)
—
(1)
—
1
Amortization of prior service credit
(4)
(6)
—
—
$
(54) $
15 $
3 $
10
In fiscal 2024, unrecognized actuarial losses recorded in accumulated other comprehensive income (loss) were
primarily the result of lower discount rates, partially offset by favorable asset performance for our non-U.S. defined benefit
pension plans as compared to fiscal 2023.
In determining the expected returns 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 2024, the long-term target asset allocation in our U.S. plans’ master trust is 25% return-seeking
assets and 75% 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 110%. Based
on the funded status of the plans as of fiscal year end 2024, our target asset allocation is 67% return-seeking and 33%
liability-hedging.
Target weighted-average asset allocation and weighted-average asset allocation for non-U.S. and U.S. pension plans
were as follows:
Non-U.S. Plans
U.S. Plans
Fiscal
Fiscal
Fiscal
Fiscal
Year End
Year End
Year End
Year End
Target
2024
2023
Target
2024
2023
Asset category:
Equity securities
33 %
40 %
38 % 67 %
54 %
50 %
Fixed income
36
36
36
33
46
50
Other
31
24
26
—
—
—
Total
100 %
100 %
100 % 100 %
100 %
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
85
minimum required contributions of approximately $50 million and $20 million to our non-U.S. and U.S. pension plans,
respectively, in fiscal 2025. We may also make voluntary contributions at our discretion.
At fiscal year end 2024, benefit payments, which reflect future expected service, as appropriate, are expected to be
paid as follows:
Non-U.S. Plans U.S. Plans
(in millions)
Fiscal 2025
$
98 $
61
Fiscal 2026
98
61
Fiscal 2027
96
60
Fiscal 2028
102
59
Fiscal 2029
105
58
Fiscal 2030-2034
572
268
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.
Non-U.S. Plans
U.S. Plans
Fiscal Year End
Fiscal Year End
2024
2023
2024
2023
(in millions)
Accumulated benefit obligation
$ 1,700 $ 1,446 $
700 $
674
Pension plans with accumulated benefit obligations in excess of plan
assets:
Accumulated benefit obligation
743
643
700
674
Fair value of plan assets
50
42
607
566
Pension plans with projected benefit obligations in excess of plan assets:
Projected benefit obligation
856
742
700
674
Fair value of plan assets
113
91
607
566
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:
Fiscal Year End 2024
Non-U.S. Plans
U.S. Plans
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(in millions)
Equity:
Commingled equity funds(1)
$ — $ 205 $ — $ 205 $ — $ 184 $ — $ 184
Fixed income:
Commingled fixed income funds(2)
— 711 — 711 — 275 — 275
Other(3)
— 181 — 181 —
2 —
2
Subtotal
$ — $ 1,097 $ — 1,097 $ — $ 461 $ — 461
Items to reconcile to fair value of plan assets(4)
120
146
Fair value of plan assets
$ 1,217
$ 607
86
Fiscal Year End 2023
Non-U.S. Plans
U.S. Plans
Level 1 Level 2 Level 3
Total Level 1 Level 2 Level 3 Total
(in millions)
Equity:
Commingled equity funds(1)
$ — $ 185 $ — $ 185 $ — $ 153 $ — $ 153
Fixed income:
Commingled fixed income funds(2)
— 559 — 559 — 252 — 252
Other(3)
— 167 — 167 — 14 — 14
Subtotal
$ — $ 911 $ — 911 $ — $ 419 $ — 419
Items to reconcile to fair value of plan assets(4)
96
147
Fair value of plan assets
$ 1,007
$ 566
(1)
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.
(2)
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.
(3)
Other investments are composed of insurance contracts, derivatives, short-term investments, and structured products such as
collateralized obligations and mortgage- and asset-backed securities. 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).
(4)
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.
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 $57
million, $56 million, and $59 million for fiscal 2024, 2023, and 2022, 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 2024 and 2023,
total deferred compensation liabilities were $285 million and $236 million, respectively, and were recorded in other liabilities
on the Consolidated Balance Sheets. See Note 13 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 $11 million at both fiscal year end 2024 and 2023, 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 2024, 2023, and 2022 was not significant.
87
15. Income Taxes
Income Tax Expense (Benefit)
Significant components of the income tax expense (benefit) were as follows:
Fiscal
2024
2023
2022
(in millions)
Current income tax expense (benefit):
U.S. Federal
$
23 $
23 $
20
U.S. State
4
—
(19)
Non-U.S.
365 418 452
392
441
453
Deferred income tax expense (benefit):
U.S. Federal
(49)
(90)
(90)
U.S. State
3
(6)
—
Non-U.S.
(743)
19
(57)
(789)
(77) (147)
Income tax expense (benefit)
$ (397) $ 364 $ 306
The U.S. and non-U.S. components of income from continuing operations before income taxes were as follows:
Fiscal
2024
2023
2022
(in millions)
U.S.
$
(96) $ (137) $
(4)
Non-U.S.
2,893 2,405 2,737
Income from continuing operations before income taxes $ 2,797 $ 2,268 $ 2,733
The reconciliation between U.S. federal income taxes at the statutory rate and income tax expense (benefit) was as
follows:
Fiscal
2024
2023
2022
(in millions)
Notional U.S. federal income tax expense at the statutory rate(1)
$
587
$
476
$
574
Adjustments to reconcile to the income tax expense (benefit):
U.S. state income tax expense (benefit), net
6
(5)
(15)
Tax law changes
(260)
(1)
21
Tax credits
(982)
(13)
(13)
Non-U.S. net earnings(2)
(15)
(58)
(105)
Change in accrued income tax liabilities
160
47
(14)
Valuation allowance
328
(47)
(37)
Legal entity restructurings and intercompany transactions
(234)
(1)
(123)
Divestitures
—
(17)
—
Excess tax benefits from share-based payments
(8)
(6)
(15)
Other
21
(11)
33
Income tax expense (benefit)
$
(397)
$
364
$
306
(1)
The U.S. federal statutory rate was 21% for fiscal 2024, 2023, and 2022.
(2)
Excludes items which are separately presented.
The income tax benefit for fiscal 2024 included a $636 million net income tax benefit associated with a $972 million
ten-year tax credit obtained by a Swiss subsidiary reduced by a $336 million valuation allowance related to the amount of the
tax credit not expected to be realized. In addition, the income tax benefit for fiscal 2024 included a $262 million income tax
88
benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland, as well as a
$118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of $4 million
recorded in selling, general, and administrative expenses for other non-income taxes.
The income tax expense for fiscal 2023 included a $49 million income tax benefit related to a decrease in the
valuation allowance for certain U.S. tax loss and credit carryforwards.
The income tax expense for fiscal 2022 included a $124 million income tax benefit related to the tax impacts of
certain intercompany transactions, a $64 million income tax benefit related primarily to a lapse of a statute of limitation, and
a $51 million income tax benefit related to the release of a valuation allowance associated primarily with improved current
and expected future operating profit and taxable income. In addition, the income tax expense for fiscal 2022 included $27
million of income tax expense related to the write-down of certain deferred tax assets to the lower corporate tax rate enacted
in the canton of Schaffhausen and $12 million of income tax expense related to an income tax audit of an acquired entity. As
we are entitled to indemnification of pre-acquisition period tax obligations under the terms of the purchase agreement, we
recorded an associated indemnification receivable and other income of $11 million during fiscal 2022.
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
2024
2023
(in millions)
Deferred tax assets:
Accrued liabilities and reserves
$
417 $
387
Tax loss and credit carryforwards
10,075 8,547
Inventories
81
78
Intangible assets
884
519
Pension and postretirement benefits
84
70
Deferred revenue
10
10
Interest
524
468
Lease liabilities
85
84
Other
3
15
Gross deferred tax assets
12,163 10,178
Valuation allowance
(8,285) (7,416)
Deferred tax assets, net of valuation allowance
3,878 2,762
Deferred tax liabilities:
Property, plant, and equipment
(93)
(96)
Write-down of investments in subsidiaries
(244)
(95)
Lease ROU assets
(84)
(82)
Other
(159)
(74)
Total deferred tax liabilities
(580)
(347)
Net deferred tax assets
$ 3,298 $ 2,415
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Our tax loss and credit carryforwards (tax effected) at fiscal year end 2024 were as follows:
Expiration Period
Fiscal 2030
Through
Through
No
Fiscal 2029 Fiscal 2044 Expiration
Total
(in millions)
U.S. Federal:
Net operating loss carryforwards
$
162 $
217 $
58 $
437
Tax credit carryforwards
53
109
—
162
U.S. State:
Net operating loss carryforwards
26
13
6
45
Tax credit carryforwards
5
1
6
12
Non-U.S.:
Net operating loss carryforwards
169 6,816 1,401 8,386
Tax credit carryforwards
1
987
1
989
Capital loss carryforwards
3
—
41
44
Total tax loss and credit carryforwards
$
419 $ 8,143 $ 1,513 $ 10,075
The valuation allowance for deferred tax assets of $8,285 million and $7,416 million at fiscal year end 2024 and
2023, respectively, related principally to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and
credit carryforwards in various jurisdictions. During fiscal 2024, the valuation allowance increased primarily, as discussed
above, by $336 million related to the portion of a tax credit obtained by a Swiss subsidiary not expected to be realized and by
$281 million for a non-U.S. subsidiary intercompany transaction with a corresponding increase to deferred tax assets. In
addition, a $247 million increase in the valuation allowance was associated with net write-downs of investments in
subsidiaries in certain jurisdictions, with a corresponding increase to tax loss and credit carryforwards. 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 2024, certain subsidiaries had
approximately $39.0 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 2024, we had approximately $4.7 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 plc, our now parent company, but we consider to be
permanently reinvested. We estimate that an immaterial amount 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.
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Uncertain Tax Positions
The following table summarizes the activity related to unrecognized income tax benefits:
Fiscal
2024
2023
2022
(in millions)
Balance at beginning of fiscal year
$ 454 $ 287 $ 359
Additions for tax positions related to prior years
8
78
10
Reductions for tax positions related to prior years
(4)
(1)
(17)
Additions for tax positions related to the current year
214 107
37
Current year acquisitions
—
1
—
Settlements
(5)
(2)
(2)
Reductions due to lapse of applicable statutes of
limitations
(15)
(16) (100)
Balance at end of fiscal year
$ 652 $ 454 $ 287
The total amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and the
effective tax rate were $485 million, $327 million, and $272 million at fiscal year end 2024, 2023, and 2022, respectively.
We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit).
As of fiscal year end 2024 and 2023, we had $80 million and $65 million, respectively, of accrued interest and penalties
related to uncertain tax positions on the Consolidated Balance Sheets, recorded primarily in income taxes. During fiscal 2024,
2023, and 2022, we recognized income tax expense of $15 million, $11 million, and $3 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.
91
As of fiscal year end 2024, under applicable statutes, the following tax years remained subject to examination in the
major tax jurisdictions indicated:
Jurisdiction
Open Years
Brazil
2019 through 2024
China
2014 through 2024
Czech Republic
2017 through 2024
France
2017 through 2024
Germany
2012 through 2024
Hong Kong
2018 through 2024
India
2012 through 2024
Ireland
2019 through 2024
Italy
2018 through 2024
Japan
2018 through 2024
Luxembourg
2019 through 2024
Mexico
2019 through 2024
Morocco
2022 through 2024
Singapore
2019 through 2024
South Korea
2019 through 2024
Spain
2020 through 2024
Switzerland
2020 through 2024
Thailand
2022 through 2024
United Kingdom
2022 through 2024
U.S.—federal
2021 through 2024
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 $30 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and
penalties, could be resolved within the next twelve months.
We are not aware of any other matters that would result in significant changes to the amount of unrecognized
income tax benefits reflected on the Consolidated Balance Sheet as of fiscal year end 2024.
16. Earnings Per Share
The weighted-average number of shares outstanding used in the computations of basic and diluted earnings per
share were as follows:
Fiscal
2024
2023 2022
(in millions)
Basic
307
315
323
Dilutive impact of share-based compensation arrangements
2
2
2
Diluted
309
317
325
The following share options were not included in the computation of diluted earnings per share because the
instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion
would be antidilutive:
Fiscal
2024 2023
2022
(in millions)
Antidilutive share options
1
1
1
92
17. Shareholders’ Equity and Redeemable Noncontrolling Interest
Common Shares
During fiscal 2024, we were organized under the laws of Switzerland and the rights of holders of our shares were
governed by Swiss law, our Swiss articles of association, and our Swiss organizational regulations. The par value of our
common shares was stated in Swiss francs (“CHF”); however, we used the U.S. dollar as our reporting currency on the
Consolidated Financial Statements.
Subject to certain conditions specified in our Swiss articles of association, we were authorized to increase our
conditional share capital by issuing new shares in aggregate not exceeding 50% of our authorized shares. Additionally, in
March 2024, our shareholders reapproved and extended, for a period of one year ending March 13, 2025, our board of
directors’ authorization to issue additional new shares to a maximum of 120% and/or reduce shares to a minimum of 80% of
the existing share capital, subject to certain conditions specified in our articles of association. During fiscal 2024, there were
no increases or decreases in our share capital and, following our change in place of incorporation, these authorizations ended.
Common Shares Held in Treasury
At fiscal year end 2024, approximately 17 million common shares were held in treasury, all of which were owned by
one of our subsidiaries. At fiscal year end 2023, approximately 10 million common shares were held in treasury, of which 4
million were owned by one of our subsidiaries. Shares held both directly by us and by our subsidiary are presented as
treasury shares on the Consolidated Balance Sheets.
In fiscal 2024, 2023, and 2022, our shareholders approved the cancellation of six million, eight and a half million,
and five million shares, respectively, purchased under our share repurchase program. These capital reductions by cancellation
of shares were subject to a notice period, filing with the commercial register in Switzerland, and other requirements.
At the beginning of fiscal 2025, all treasury shares were cancelled in connection with our change in place of
incorporation.
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 2024
and 2023, Swiss Contributed Surplus was CHF 2,862 million and CHF 3,562 million, respectively (equivalent to $1,657
million and $2,454 million, respectively).
In connection with our change in place of incorporation, we expect future dividends to be made from accumulated
earnings as defined under Irish GAAP.
Dividends
We paid cash dividends to shareholders of $2.48, $2.30, and $2.12 per share in fiscal 2024, 2023, and 2022,
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 were required to be approved
by our shareholders.
93
Our shareholders approved the following dividends on our common shares:
Approval Date
Annual Payment Per Share
Payment Timing
March 2021
$2.00, payable in four quarterly installments of $0.50
Third quarter of fiscal 2021
Fourth quarter of fiscal 2021
First quarter of fiscal 2022
Second quarter of fiscal 2022
March 2022
$2.24, payable in four quarterly installments of $0.56
Third quarter of fiscal 2022
Fourth quarter of fiscal 2022
First quarter of fiscal 2023
Second quarter of fiscal 2023
March 2023
$2.36, payable in four quarterly installments of $0.59
Third quarter of fiscal 2023
Fourth quarter of fiscal 2023
First quarter of fiscal 2024
Second quarter of fiscal 2024
March 2024
$2.60, payable in four quarterly installments of $0.65
Third quarter of fiscal 2024
Fourth quarter of fiscal 2024
First quarter of fiscal 2025
Second quarter of fiscal 2025
The third and fourth installments of the dividends approved by our shareholders in March 2024 are expected to
occur in fiscal 2025, subsequent to our merger with TE Connectivity plc and change in jurisdiction of incorporation. In
accordance with the merger agreement, TE Connectivity plc has assumed these liabilities and is obligated to pay the dividend
installments that were unpaid at the time of the merger.
As a result of our change in place of incorporation, beginning in our third quarter of fiscal 2025, future dividends on
our ordinary shares, if any, will be declared on a quarterly basis by our board of directors as provided by Irish law.
Shareholder approval is no longer required.
Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to
shareholders’ equity. At fiscal year end 2024 and 2023, the unpaid portion of the dividends recorded in accrued and other
current liabilities on the Consolidated Balance Sheets totaled $390 million and $368 million, respectively.
Share Repurchase Program
In fiscal 2024, our board of directors authorized an increase of $1.5 billion in our share repurchase program.
Common shares repurchased under the share repurchase program were as follows:
Fiscal
2024
2023
2022
(in millions)
Number of common shares repurchased
14
8
10
Repurchase value
$ 1,991 $ 946 $ 1,409
At fiscal year end 2024, we had $245 million of availability remaining under our share repurchase authorization. See
additional information regarding our share repurchase program in Note 21.
Redeemable Noncontrolling Interest
We own approximately 72% of our First Sensor AG (“First Sensor”) subsidiary. The noncontrolling interest holders
can elect either (1) to remain First Sensor 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. As the exercise of
the put right by First Sensor noncontrolling interest shareholders is not within our control, our First Sensor noncontrolling
interest balance is recorded as redeemable noncontrolling interest outside of equity on the Consolidated Balance Sheets as of
fiscal year end 2024 and 2023.
94
18. Accumulated Other Comprehensive Income (Loss)
The changes in each component of accumulated other comprehensive income (loss) were as follows:
Foreign
Unrecognized Gains (Losses) Accumulated
Currency
Pension and
on Cash
Other
Translation Postretirement
Flow
Comprehensive
Adjustments(1) Benefit Costs
Hedges
Income (Loss)
(in millions)
Balance at fiscal year end 2021
$
314 $
(475) $
(7) $
(168)
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) before reclassifications
(510)
344
(76)
(242)
Amounts reclassified from accumulated other comprehensive
income (loss)
—
19
(26)
(7)
Income tax (expense) benefit
—
(104)
7
(97)
Other comprehensive income (loss), net of tax
(510)
259
(95)
(346)
Less: other comprehensive loss attributable to noncontrolling
interests
19
—
—
19
Balance at fiscal year end 2022
$
(177) $
(216) $
(102) $
(495)
Other comprehensive income, net of tax:
Other comprehensive income before reclassifications
251
21
31
303
Amounts reclassified from accumulated other comprehensive
income (loss)
10
4
38
52
Income tax expense
—
(5)
(4)
(9)
Other comprehensive income, net of tax
261
20
65
346
Less: other comprehensive income attributable to noncontrolling
interests
(9)
—
—
(9)
Balance at fiscal year end 2023
$
75 $
(196) $
(37) $
(158)
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) before reclassifications
130
(56)
102
176
Amounts reclassified from accumulated other comprehensive
income (loss)
1
4
(18)
(13)
Income tax (expense) benefit
—
15
(8)
7
Other comprehensive income (loss), net of tax
131
(37)
76
170
Less: other comprehensive income attributable to noncontrolling
interests
(7)
—
—
(7)
Balance at fiscal year end 2024
$
199 $
(233) $
39 $
5
(1)
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.
19. Share Plans
During fiscal 2024, shareholders approved our 2024 Stock and Incentive Plan (the “2024 Plan”). The 2024 Plan
replaced our 2007 Stock and Incentive Plan, as amended and restated (the “2007 Plan”), as the source of awards granted. No
further awards will be granted under the 2007 Plan and all remaining shares available under the 2007 Plan have been
cancelled.
Our equity compensation plans, of which the 2024 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 2024, the 2024 Plan provided for a maximum of 20 million shares to be
issued as Awards, subject to adjustment as provided under the terms of the plan. We had 20 million shares available for
issuance under the 2024 Plan as of fiscal year end 2024.
95
Share-Based Compensation Expense
Share-based compensation expense, which was included in selling, general, and administrative expenses on the
Consolidated Statements of Operations, was as follows:
Fiscal
2024
2023 2022
(in millions)
Share-based compensation expense
$ 127 $ 123 $ 119
We recognized a related tax benefit associated with our share-based compensation arrangements of $25 million, $25
million, and $24 million in fiscal 2024, 2023, and 2022, 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:
Weighted-Average
Grant-Date
Shares
Fair Value
Nonvested at fiscal year end 2023
1,479,275 $
129.48
Granted
632,628
135.32
Vested
(575,494)
126.15
Forfeited
(107,208)
130.66
Nonvested at fiscal year end 2024
1,429,201 $
133.29
The weighted-average grant-date fair value of restricted share awards granted during fiscal 2024, 2023, and 2022
was $135.32, $124.92, and $150.99, respectively.
The total fair value of restricted share awards that vested during fiscal 2024, 2023, and 2022 was $73 million, $54
million, and $44 million, respectively.
As of fiscal year end 2024, there was $87 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.
96
Performance share award activity was as follows:
Weighted-Average
Grant-Date
Shares
Fair Value
Outstanding at fiscal year end 2023
471,344 $
126.44
Granted
206,342
129.05
Vested
(192,088)
104.69
Forfeited
(17,600)
134.85
Outstanding at fiscal year end 2024
467,998 $
136.11
The weighted-average grant-date fair value of performance share awards granted during fiscal 2024, 2023, and 2022
was $129.05, $120.06, and $157.56, respectively.
The total fair value of performance share awards that vested during fiscal 2024, 2023, and 2022 was $20 million,
$17 million, and $12 million, respectively.
As of fiscal year end 2024, there was $25 million of unrecognized compensation expense related to nonvested
performance share awards, which is expected to be recognized over a weighted-average period of 1.2 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
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Shares
Price
Term
Value
(in years)
(in millions)
Outstanding at fiscal year end 2023
5,618,649 $
105.73
Granted
880,150
131.86
Exercised
(976,155)
89.08
Forfeited
(139,359)
132.32
Outstanding at fiscal year end 2024
5,383,285 $
112.33
6.1 $
214
Vested and expected to vest at fiscal year end 2024
5,314,593 $
112.09
6.0 $
213
Exercisable at fiscal year end 2024
3,273,955 $
100.41
4.8 $
169
The weighted-average exercise price of share option awards granted during fiscal 2024, 2023, and 2022 was
$131.86, $124.56, and $157.02, respectively.
The total intrinsic value of options exercised during fiscal 2024, 2023, and 2022 was $59 million, $30 million, and
$49 million, respectively. We received cash related to the exercise of options of $89 million, $43 million, and $54 million in
fiscal 2024, 2023, and 2022, respectively.
As of fiscal year end 2024, there was $24 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.
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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:
Fiscal
2024
2023
2022
Weighted-average grant-date fair value
$ 39.79
$ 35.90
$ 37.51
Assumptions:
Expected share price volatility
31 %
31 %
29 %
Risk-free interest rate
4.6 %
4.0 %
1.2 %
Expected annual dividend per share
$ 2.36
$ 2.24
$ 2.00
Expected life of options (in years)
5.3
5.1
5.1
20. Segment and Geographic Data
During fiscal 2024, we operated through three reportable segments: Transportation Solutions, Industrial Solutions,
and Communications Solutions. See Note 1 for a description of our fiscal 2024 segments. Also see Note 21 for information
regarding our new segment structure effective for fiscal 2025.
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.
98
Net sales by segment and industry end market(1) were as follows:
Fiscal
2024
2023
2022
(in millions)
Transportation Solutions:
Automotive
$ 6,956 $ 6,951 $ 6,527
Commercial transportation
1,456 1,525 1,582
Sensors
986 1,112 1,110
Total Transportation Solutions
9,398 9,588 9,219
Industrial Solutions:
Industrial equipment
1,385 1,706 1,904
Aerospace, defense, and marine
1,344 1,178 1,087
Energy
919
883
804
Medical
833
784
695
Total Industrial Solutions
4,481 4,551 4,490
Communications Solutions:
Data and devices
1,274 1,162 1,606
Appliances
692
733
966
Total Communications Solutions
1,966 1,895 2,572
Total
$ 15,845 $ 16,034 $ 16,281
(1)
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:
Fiscal
2024
2023
2022
(in millions)
Europe/Middle East/Africa (“EMEA”):
Transportation Solutions
$ 3,548
$ 3,848
$ 3,490
Industrial Solutions
2,083
2,046
1,862
Communications Solutions
268
314
355
Total EMEA
5,899
6,208
5,707
Asia–Pacific:
Transportation Solutions
3,701
3,439
3,537
Industrial Solutions
626
732
827
Communications Solutions
1,040
985
1,407
Total Asia–Pacific
5,367
5,156
5,771
Americas:
Transportation Solutions
2,149
2,301
2,192
Industrial Solutions
1,772
1,773
1,801
Communications Solutions
658
596
810
Total Americas
4,579
4,670
4,803
Total
$ 15,845 $ 16,034 $ 16,281
99
Operating income by segment was as follows:
Fiscal
2024
2023
2022
(in millions)
Transportation Solutions
$ 1,847 $ 1,451 $ 1,534
Industrial Solutions
588
602
607
Communications Solutions
361
251
615
Total
$ 2,796 $ 2,304 $ 2,756
No single customer accounted for a significant amount of our net sales in fiscal 2024, 2023, or 2022.
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
Capital Expenditures
Fiscal
Fiscal
2024
2023
2022
2024
2023
2022
(in millions)
Transportation Solutions
$ 516 $ 484 $ 505 $ 427 $ 468 $ 483
Industrial Solutions
221 210 194 146 171 153
Communications Solutions
89 100
86 107
93 132
Total
$ 826 $ 794 $ 785 $ 680 $ 732 $ 768
Segment assets and a reconciliation of segment assets to total assets were as follows:
Segment Assets
Fiscal Year End
2024
2023
2022
(in millions)
Transportation Solutions
$ 5,679 $ 5,678 $ 5,530
Industrial Solutions
2,716 2,623 2,428
Communications Solutions
1,080
972 1,150
Total segment assets(1)
9,475 9,273 9,108
Other current assets
2,059 2,373 1,727
Other non-current assets
11,320 10,066 9,947
Total assets
$ 22,854 $ 21,712 $ 20,782
(1)
Segment assets are composed of accounts receivable, inventories, and net property, plant,
and equipment.
100
Net sales and net property, plant, and equipment by geographic region were as follows:
Property, Plant, and
Net Sales(1)
Equipment, Net
Fiscal
Fiscal Year End
2024
2023
2022
2024
2023
2022
(in millions)
EMEA:
Switzerland
$ 3,906 $ 4,111 $ 3,709 $
7 $
6 $
16
Germany
236
405
561 586 637 597
Other EMEA
1,757 1,692 1,437 1,060
965
821
Total EMEA
5,899 6,208 5,707 1,653 1,608 1,434
Asia–Pacific:
China
3,571 3,182 3,589
844
794
779
Other Asia–Pacific
1,796 1,974 2,182 332 294 296
Total Asia–Pacific
5,367 5,156 5,771 1,176 1,088 1,075
Americas:
U.S.
4,020 4,107 4,280
953
933
947
Other Americas
559
563
523 121 125 111
Total Americas
4,579 4,670 4,803 1,074 1,058 1,058
Total
$ 15,845 $ 16,034 $ 16,281 $ 3,903 $ 3,754 $ 3,567
(1)
Net sales to external customers are attributed to individual countries based on the legal entity that records the sale.
21. Subsequent Events
Change in Place of Incorporation
Our merger with TE Connectivity plc, our wholly-owned subsidiary, was completed on September 30, 2024, thereby
changing our jurisdiction of incorporation from Switzerland to Ireland. Our shareholders received one ordinary share of TE
Connectivity plc for each common share of TE Connectivity Ltd. held immediately prior to the merger. Effective for fiscal
2025, we are organized under the laws of Ireland. We do not anticipate any material changes in our operations or financial
results as a result of the merger and change in place of incorporation.
Share Repurchase Program
On October 30, 2024, our board of directors authorized an increase of $2.5 billion in our share repurchase program.
New Segment Structure Effective for Fiscal 2025
Effective for the first quarter of fiscal 2025, we will reorganize our management and segments to align the
organization around our fiscal 2025 strategy. Our businesses in the Communications Solutions segment will be moved into
the Industrial Solutions segment. Also, the appliances and industrial equipment businesses will be combined to form the
automation and connected living business. In addition, we will realign certain product lines and businesses from the
Industrial Solutions and Communications Solutions segments to the Transportation Solutions segment. The following
represents the new segment structure:
•
Transportation Solutions—This segment will contain our automotive, commercial transportation, and sensors
businesses.
•
Industrial Solutions—This segment will contain our aerospace, defense, and marine; medical; energy; digital
data networks (historically referred to as data and devices); and automation and connected living businesses.
In the Consolidated Financial Statements, results for fiscal 2024 and prior periods are reported on the basis under
which we managed our business in fiscal 2024 and do not reflect the fiscal 2025 segment reorganization.
101
TE CONNECTIVITY LTD.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022
Additions
Balance at Charged to Acquisitions,
Write-offs
Balance at
Beginning of
Costs and
Divestitures,
and
End of
Description
Fiscal Year Expenses and Other Deductions Fiscal Year
(in millions)
Fiscal 2024:
Allowance for doubtful accounts receivable
$
30 $
15 $
2 $
(15) $
32
Valuation allowance on deferred tax assets
7,416
916
—
(47) 8,285
Fiscal 2023:
Allowance for doubtful accounts receivable
$
45 $
(1) $
— $
(14) $
30
Valuation allowance on deferred tax assets
7,112
406
—
(102) 7,416
Fiscal 2022:
Allowance for doubtful accounts receivable
$
41 $
15 $
(7) $
(4) $
45
Valuation allowance on deferred tax assets
2,729 4,463
—
(80) 7,112
BOARD OF DIRECTORS
LEADERSHIP TEAM AND OFFICERS
Carol A. “John” Davidson*
Former Senior Vice President,
Controller and
Chief Accounting Officer,
Tyco International Ltd.
Jean-Pierre Clamadieu
Former Chief Executive Officer
and Chairman of the
Executive Committee,
Solvay S.A.
Terrence R. Curtin
Director and
Chief Executive Officer,
TE Connectivity plc
Lynn A. Dugle
Former Chief Executive Officer
and President,
Engility Holdings, Inc.
Sam Eldessouky
Executive Vice President
and Chief Financial Officer,
Bausch + Lomb Corporation
Dr. William A. Jeffrey
Retired Chief Executive Officer,
SRI International
Prof. Syaru Shirley Lin
Research Professor,
University of Virginia
Heath A. Mitts
Director and Executive Vice
President, Chief Financial Officer
TE Connectivity plc
Abhijit Y. Talwalkar
Former President and
Chief Executive Officer,
LSI Corporation
Mark C. Trudeau
Former President and
Chief Executive Officer,
Mallinckrodt plc
Dawn C. Willoughby
Former Executive Vice President
and Chief Operating Officer,
The Clorox Company
Laura H. Wright
Former Chief Financial Officer,
Southwest Airlines Co.
Terrence R. Curtin
Chief Executive Officer;
Board Member
Claudia Anderson
Vice President and
Chief Continuous
Improvement Officer
Vish Ananthan
President, Automation and
Connected Living Sector
Davy Brown
Vice President and
Chief Technology Officer,
Transportation Solutions
Teresa Dickerson
Vice President and
Chief Supply Chain Officer
Jennifer Diener
Senior Vice President and
General Manager, Channel
Joseph F. Eckroth, Jr.
Senior Vice President and
Chief Information Officer
Jean-Jacques Fotzeu
Senior Vice President,
Treasurer
John S. Jenkins, Jr.
Executive Vice President
and General Counsel
Arvind Kaushal
Senior Vice President
and Chief Strategy Officer
Shad W. Kroeger
President,
Industrial Solutions
Heath A. Mitts
Executive Vice President
and Chief Financial Officer;
Board Member
Keith Myers
Vice President and Chief
Marketing Officer,
Transportation Solutions
Maushumi Nerurkar
Senior Vice President
and Chief Tax Officer
Jeanne Quirk
Senior Vice President,
Mergers and Acquisitions
Jean-Michel Renaudie
President,
Global Automotive Sector
Malavika Sagar
Senior Vice President and
Chief Human Resources Officer
Reuben M. Shaffer
Senior Vice President
and Corporate Controller
Aaron K. Stucki
President,
Transportation Solutions
Jim Tobojka
Senior Vice President
of Operations
* Chairman of the TE Connectivity plc
Board of Directors