UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2023
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

001-33260

(Commission File Number)

TE CONNECTIVITY LTD.

(Exact name of registrant as specified in its charter)

Switzerland
(Jurisdiction of Incorporation)

98-0518048
(I.R.S. Employer Identification No.)

Mühlenstrasse 26, CH-8200 Schaffhausen, Switzerland

(Address of principal executive offices)

+41 (0)52 633 66 61

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Shares, Par Value CHF 0.57	TEL	New York Stock Exchange

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 ☒ No ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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 ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of common shares outstanding as of July 21, 2023 was 313,938,622.

Table of Contents

TE CONNECTIVITY LTD.

INDEX TO FORM 10-Q


		Page
Part I.	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations for the Quarters and Nine Months Ended June 30, 2023 and June 24, 2022 (unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended June 30, 2023 and June 24, 2022 (unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2023 and September 30, 2022 (unaudited)	3
	Condensed Consolidated Statements of Shareholders’ Equity for the Quarters and Nine Months Ended June 30, 2023 and June 24, 2022 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2023 and June 24, 2022 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

Part II.	Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		40

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the				For the
	Quarters Ended				Nine Months Ended
	June 30,		June 24,		June 30,		June 24,
	2023		2022		2023		2022

	(in millions, except per share data)
Net sales	$	3,998	$	4,097	$	11,999	$	11,922
Cost of sales		2,699		2,769		8,229		8,027
Gross margin		1,299		1,328		3,770		3,895
Selling, general, and administrative expenses		431		393		1,258		1,172
Research, development, and engineering expenses		176		179		534		539
Acquisition and integration costs		9		11		26		29
Restructuring and other charges, net		53		26		283		59
Operating income		630		719		1,669		2,096
Interest income		18		3		39		9
Interest expense		(20)		(18)		(61)		(48)
Other income (expense), net		(4)		4		(13)		24
Income from continuing operations before income taxes		624		708		1,634		2,081
Income tax expense		(96)		(116)		(283)		(362)
Income from continuing operations		528		592		1,351		1,719
Income from discontinued operations, net of income taxes		—		2		7		1
Net income	$	528	$	594	$	1,358	$	1,720

Basic earnings per share:
Income from continuing operations	$	1.68	$	1.84	$	4.28	$	5.31
Income from discontinued operations		—		0.01		0.02		—
Net income		1.68		1.84		4.30		5.31

Diluted earnings per share:
Income from continuing operations	$	1.67	$	1.83	$	4.25	$	5.26
Income from discontinued operations		—		0.01		0.02		—
Net income		1.67		1.83		4.27		5.26

Weighted-average number of shares outstanding:
Basic		315		322		316		324
Diluted		317		324		318		327

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	For the				For the
	Quarters Ended				Nine Months Ended
	June 30,		June 24,		June 30,		June 24,
	2023		2022		2023		2022

	(in millions)
Net income	$	528	$	594	$	1,358	$	1,720
Other comprehensive income (loss):
Currency translation		(25)		(225)		358		(216)
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes		1		4		4		12
Gains (losses) on cash flow hedges, net of income taxes		(42)		(112)		65		(65)
Other comprehensive income (loss)		(66)		(333)		427		(269)
Comprehensive income		462		261		1,785		1,451
Less: comprehensive (income) loss attributable to noncontrolling interests		(1)		4		(12)		11
Comprehensive income attributable to TE Connectivity Ltd.	$	461	$	265	$	1,773	$	1,462

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	June 30,		September 30,
	2023		2022

	(in millions, except share
	data)
Assets
Current assets:
Cash and cash equivalents	$	1,131	$	1,088
Accounts receivable, net of allowance for doubtful accounts of $42 and $45, respectively		2,998		2,865
Inventories		2,801		2,676
Prepaid expenses and other current assets		719		639
Total current assets		7,649		7,268
Property, plant, and equipment, net		3,781		3,567
Goodwill		5,528		5,258
Intangible assets, net		1,242		1,288
Deferred income taxes		2,680		2,498
Other assets		821		903
Total assets	$	21,701	$	20,782
Liabilities, redeemable noncontrolling interests, and shareholders' equity
Current liabilities:
Short-term debt	$	291	$	914
Accounts payable		1,616		1,593
Accrued and other current liabilities		2,351		2,125
Total current liabilities		4,258		4,632
Long-term debt		3,915		3,292
Long-term pension and postretirement liabilities		735		695
Deferred income taxes		211		244
Income taxes		335		304
Other liabilities		791		718
Total liabilities		10,245		9,885
Commitments and contingencies (Note 9)
Redeemable noncontrolling interests		107		95
Shareholders' equity:
Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued, and 330,830,781 shares authorized and issued, respectively		142		146
Accumulated earnings		12,372		12,832
Treasury shares, at cost, 8,271,688 and 12,749,540 shares, respectively		(1,085)		(1,681)
Accumulated other comprehensive loss		(80)		(495)
Total shareholders' equity		11,349		10,802
Total liabilities, redeemable noncontrolling interests, and shareholders' equity	$	21,701	$	20,782

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)


	For the Quarter Ended June 30, 2023
											Accumulated
											Other		Total
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Shares	Amount		Surplus		Earnings		Loss		Equity

	(in millions)
Balance at March 31, 2023	322	$	142	(7)	$	(933)	$	—	$	11,824	$	(13)	$	11,020
Net income	—		—	—		—		—		528		—		528
Other comprehensive loss	—		—	—		—		—		—		(67)		(67)
Share-based compensation expense	—		—	—		—		32		—		—		32
Dividends	—		—	—		—		—		4		—		4
Exercise of share options	—		—	—		13		—		—		—		13
Restricted share award vestings and other activity	—		—	—		24		(32)		16		—		8
Repurchase of common shares	—		—	(1)		(189)		—		—		—		(189)
Balance at June 30, 2023	322	$	142	(8)	$	(1,085)	$	—	$	12,372	$	(80)	$	11,349


	For the Nine Months Ended June 30, 2023
											Accumulated
											Other		Total
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Shares	Amount		Surplus		Earnings		Loss		Equity

	(in millions)
Balance at September 30, 2022	331	$	146	(13)	$	(1,681)	$	—	$	12,832	$	(495)	$	10,802
Net income	—		—	—		—		—		1,358		—		1,358
Other comprehensive income	—		—	—		—		—		—		415		415
Share-based compensation expense	—		—	—		—		95		—		—		95
Dividends	—		—	—		—		—		(740)		—		(740)
Exercise of share options	—		—	—		33		—		—		—		33
Restricted share award vestings and other activity	—		—	1		89		(95)		13		—		7
Repurchase of common shares	—		—	(5)		(621)		—		—		—		(621)
Cancellation of treasury shares	(9)		(4)	9		1,095		—		(1,091)		—		—
Balance at June 30, 2023	322	$	142	(8)	$	(1,085)	$	—	$	12,372	$	(80)	$	11,349

Table of Contents

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED) (Continued)


	For the Quarter Ended June 24, 2022
											Accumulated
											Other		Total
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Shares	Amount		Surplus		Earnings		Loss		Equity

	(in millions)
Balance at March 25, 2022	336	$	148	(13)	$	(1,769)	$	—	$	12,160	$	(97)	$	10,442
Net income	—		—	—		—		—		594		—		594
Other comprehensive loss	—		—	—		—		—		—		(329)		(329)
Share-based compensation expense	—		—	—		—		28		—		—		28
Dividends	—		—	—		—		—		5		—		5
Exercise of share options	—		—	—		4		—		—		—		4
Restricted share award vestings and other activity	—		—	1		6		(28)		32		—		10
Repurchase of common shares	—		—	(3)		(320)		—		—		—		(320)
Cancellation of treasury shares	(5)		(2)	5		709		—		(707)		—		—
Balance at June 24, 2022	331	$	146	(10)	$	(1,370)	$	—	$	12,084	$	(426)	$	10,434


	For the Nine Months Ended June 24, 2022
											Accumulated
											Other		Total
	Common Shares			Treasury Shares			Contributed		Accumulated		Comprehensive		Shareholders'
	Shares	Amount		Shares	Amount		Surplus		Earnings		Loss		Equity

	(in millions)
Balance at September 24, 2021	336	$	148	(9)	$	(1,055)	$	—	$	11,709	$	(168)	$	10,634
Net income	—		—	—		—		—		1,720		—		1,720
Other comprehensive loss	—		—	—		—		—		—		(258)		(258)
Share-based compensation expense	—		—	—		—		88		—		—		88
Dividends	—		—	—		—		—		(717)		—		(717)
Exercise of share options	—		—	—		34		—		—		—		34
Restricted share award vestings and other activity	—		—	2		14		(88)		79		—		5
Repurchase of common shares	—		—	(8)		(1,072)		—		—		—		(1,072)
Cancellation of treasury shares	(5)		(2)	5		709		—		(707)		—		—
Balance at June 24, 2022	331	$	146	(10)	$	(1,370)	$	—	$	12,084	$	(426)	$	10,434

See Notes to Condensed Consolidated Financial Statements.

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TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the
	Nine Months Ended
	June 30,		June 24,
	2023		2022

	(in millions)
Cash flows from operating activities:
Net income	$	1,358	$	1,720
Income from discontinued operations, net of income taxes		(7)		(1)
Income from continuing operations		1,351		1,719
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		594		597
Deferred income taxes		(121)		(18)
Non-cash lease cost		106		98
Provision for losses on accounts receivable and inventories		82		79
Share-based compensation expense		95		88
Impairment of held for sale businesses		67		—
Other		85		(19)
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net		(202)		(108)
Inventories		(323)		(439)
Prepaid expenses and other current assets		(30)		57
Accounts payable		68		(48)
Accrued and other current liabilities		(14)		(316)
Income taxes		51		53
Other		185		(219)
Net cash provided by operating activities		1,994		1,524
Cash flows from investing activities:
Capital expenditures		(538)		(556)
Proceeds from sale of property, plant, and equipment		3		98
Acquisition of businesses, net of cash acquired		(108)		(116)
Proceeds from divestiture of businesses, net of cash retained by businesses sold		48		16
Other		22		(10)
Net cash used in investing activities		(573)		(568)
Cash flows from financing activities:
Net increase (decrease) in commercial paper		(82)		237
Proceeds from issuance of debt		499		588
Repayment of debt		(591)		(558)
Proceeds from exercise of share options		33		34
Repurchase of common shares		(674)		(1,086)
Payment of common share dividends to shareholders		(541)		(506)
Other		(30)		(39)
Net cash used in financing activities		(1,386)		(1,330)
Effect of currency translation on cash		8		(9)
Net increase (decrease) in cash, cash equivalents, and restricted cash		43		(383)
Cash, cash equivalents, and restricted cash at beginning of period		1,088		1,203
Cash, cash equivalents, and restricted cash at end of period	$	1,131	$	820

See Notes to Condensed Consolidated Financial Statements.

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TE CONNECTIVITY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)