Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 25, 2021 | Jul. 23, 2021 | |
Document and Entity Information | ||
Entity Registrant Name | TE CONNECTIVITY LTD. | |
Entity Central Index Key | 0001385157 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 25, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-33260 | |
Entity Incorporation, State or Country Code | V8 | |
Entity Tax Identification Number | 98-0518048 | |
Entity Address, Address Line One | Mühlenstrasse 26 | |
Entity Address, City or Town | Schaffhausen | |
Entity Address, Country | CH | |
Entity Address, Postal Zip Code | CH-8200 | |
Country Region | +41 | |
City Area Code | (0)52 | |
Local Phone Number | 633 66 61 | |
Title of 12(b) Security | Common Shares, Par Value CHF 0.57 | |
Trading Symbol | TEL | |
Security Exchange Name | NYSE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-24 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 327,996,918 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 3,845 | $ 2,548 | $ 11,105 | $ 8,911 |
Cost of sales | 2,577 | 1,841 | 7,481 | 6,145 |
Gross margin | 1,268 | 707 | 3,624 | 2,766 |
Selling, general, and administrative expenses | 366 | 321 | 1,128 | 1,040 |
Research, development, and engineering expenses | 168 | 146 | 504 | 465 |
Acquisition and integration costs | 9 | 8 | 23 | 27 |
Restructuring and other charges, net | 11 | 98 | 195 | 144 |
Impairment of goodwill | 900 | |||
Operating income | 714 | 134 | 1,774 | 190 |
Interest income | 3 | 2 | 14 | 13 |
Interest expense | (14) | (13) | (42) | (36) |
Other income, net | 2 | 4 | 5 | 20 |
Income from continuing operations before income taxes | 705 | 127 | 1,751 | 187 |
Income tax expense | (124) | (185) | (290) | (674) |
Income (loss) from continuing operations | 581 | (58) | 1,461 | (487) |
Income (loss) from discontinued operations, net of income taxes | (1) | 17 | 6 | 16 |
Net income (loss) | $ 580 | $ (41) | $ 1,467 | $ (471) |
Basic earnings (loss) per share: | ||||
Income (loss) from continuing operations (in dollars per share) | $ 1.76 | $ (0.18) | $ 4.41 | $ (1.46) |
Income (loss) from discontinued operations (in dollars per share) | 0.05 | 0.02 | 0.05 | |
Net income (loss) (in dollars per share) | 1.76 | (0.12) | 4.43 | (1.41) |
Diluted earnings (loss) per share: | ||||
Income (loss) from continuing operations (in dollars per share) | 1.74 | (0.18) | 4.39 | (1.46) |
Income (loss) from discontinued operations (in dollars per share) | 0.05 | 0.02 | 0.05 | |
Net income (loss) (in dollars per share) | $ 1.74 | $ (0.12) | $ 4.41 | $ (1.41) |
Weighted-average number of shares outstanding: | ||||
Basic (in shares) | 330 | 330 | 331 | 333 |
Diluted (in shares) | 333 | 330 | 333 | 333 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ 580 | $ (41) | $ 1,467 | $ (471) |
Other comprehensive income (loss): | ||||
Currency translation | 40 | 21 | 172 | (43) |
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes | 7 | 7 | 19 | 23 |
Gains (losses) on cash flow hedges, net of income taxes | (15) | 37 | 42 | 15 |
Other comprehensive income (loss) | 32 | 65 | 233 | (5) |
Comprehensive income (loss) | 612 | 24 | 1,700 | (476) |
Less: comprehensive income attributable to noncontrolling interests | (2) | (3) | (4) | (1) |
Comprehensive income (loss) attributable to TE Connectivity Ltd. | $ 610 | $ 21 | $ 1,696 | $ (477) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 25, 2021 | Sep. 25, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 1,416 | $ 945 |
Accounts receivable, net of allowance for doubtful accounts of $41 and $29, respectively | 2,985 | 2,377 |
Inventories | 2,392 | 1,950 |
Prepaid expenses and other current assets | 601 | 512 |
Total current assets | 7,394 | 5,784 |
Property, plant, and equipment, net | 3,723 | 3,650 |
Goodwill | 5,401 | 5,224 |
Intangible assets, net | 1,516 | 1,593 |
Deferred income taxes | 2,224 | 2,178 |
Other assets | 800 | 813 |
Total assets | 21,058 | 19,242 |
Current liabilities: | ||
Short-term debt | 505 | 694 |
Accounts payable | 1,938 | 1,276 |
Accrued and other current liabilities | 2,219 | 1,720 |
Total current liabilities | 4,662 | 3,690 |
Long-term debt | 3,629 | 3,452 |
Long-term pension and postretirement liabilities | 1,305 | 1,336 |
Deferred income taxes | 149 | 143 |
Income taxes | 299 | 252 |
Other liabilities | 852 | 874 |
Total liabilities | 10,896 | 9,747 |
Commitments and contingencies (Note 9) | ||
Redeemable noncontrolling interests | 116 | 112 |
Shareholders' equity: | ||
Common shares, CHF 0.57 par value, 336,099,881 shares authorized and issued, and 338,953,381 shares authorized and issued, respectively | 148 | 149 |
Accumulated earnings | 10,892 | 10,348 |
Treasury shares, at cost, 7,518,936 and 8,295,878 shares, respectively | (778) | (669) |
Accumulated other comprehensive loss | (216) | (445) |
Total shareholders' equity | 10,046 | 9,383 |
Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ 21,058 | $ 19,242 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Millions | Jun. 25, 2021USD ($)shares | Jun. 25, 2021SFr / shares | Sep. 25, 2020USD ($)shares | Sep. 25, 2020SFr / shares |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ | $ 41 | $ 29 | ||
Common shares, par value (in currency per share) | SFr / shares | SFr 0.57 | SFr 0.57 | ||
Common shares, shares authorized | 336,099,881 | 338,953,381 | ||
Common shares, shares issued | 336,099,881 | 338,953,381 | ||
Treasury shares | 7,518,936 | 8,295,878 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Millions, $ in Millions | Common Shares | Treasury Shares | Contributed Surplus | Accumulated Earnings | Accumulated Other Comprehensive Loss | TE Connectivity Ltd. Shareholders' Equity | Noncontrolling Interests | Total |
Balance at at Sep. 27, 2019 | $ 154 | $ (1,337) | $ 12,256 | $ (503) | $ 10,570 | $ 10,570 | ||
Balance (in shares) at at Sep. 27, 2019 | 351 | (16) | ||||||
Increase (Decrease) in Equity: | ||||||||
Acquisition | $ 107 | 107 | ||||||
Net income (loss) | (471) | (471) | (471) | |||||
Other comprehensive income (loss) | (6) | (6) | 1 | (5) | ||||
Share-based compensation expense | $ 54 | 54 | 54 | |||||
Dividends | (633) | (633) | (633) | |||||
Exercise of share options | $ 29 | 29 | 29 | |||||
Restricted share award vestings and other activity | $ 109 | (54) | (57) | (2) | (2) | |||
Restricted share award vestings and other activity (in shares) | 1 | |||||||
Repurchase of common shares | $ (505) | (505) | $ (505) | |||||
Repurchase of common shares (in shares) | (6) | (6) | ||||||
Cancellation of treasury shares | $ (5) | $ 975 | (970) | |||||
Cancellation of treasury shares (in shares) | (12) | 12 | ||||||
Balance at at Jun. 26, 2020 | $ 149 | $ (729) | 10,125 | (509) | 9,036 | 108 | $ 9,144 | |
Balance (in shares) at at Jun. 26, 2020 | 339 | (9) | ||||||
Balance at at Mar. 27, 2020 | $ 154 | $ (1,639) | 11,122 | (571) | 9,066 | 105 | 9,171 | |
Balance (in shares) at at Mar. 27, 2020 | 351 | (20) | ||||||
Increase (Decrease) in Equity: | ||||||||
Net income (loss) | (41) | (41) | (41) | |||||
Other comprehensive income (loss) | 62 | 62 | 3 | 65 | ||||
Share-based compensation expense | 17 | 17 | 17 | |||||
Dividends | 2 | 2 | 2 | |||||
Exercise of share options | $ 2 | 2 | 2 | |||||
Restricted share award vestings and other activity | 15 | (17) | 12 | 10 | 10 | |||
Repurchase of common shares | $ (82) | (82) | (82) | |||||
Repurchase of common shares (in shares) | (1) | |||||||
Cancellation of treasury shares | $ (5) | $ 975 | (970) | |||||
Cancellation of treasury shares (in shares) | (12) | 12 | ||||||
Balance at at Jun. 26, 2020 | $ 149 | $ (729) | 10,125 | (509) | 9,036 | $ 108 | 9,144 | |
Balance (in shares) at at Jun. 26, 2020 | 339 | (9) | ||||||
Balance at at Sep. 25, 2020 | $ 149 | $ (669) | 10,348 | (445) | 9,383 | 9,383 | ||
Balance (in shares) at at Sep. 25, 2020 | 339 | (8) | ||||||
Increase (Decrease) in Equity: | ||||||||
Net income (loss) | 1,467 | 1,467 | 1,467 | |||||
Other comprehensive income (loss) | 229 | 229 | 229 | |||||
Share-based compensation expense | 73 | 73 | 73 | |||||
Dividends | (658) | (658) | (658) | |||||
Exercise of share options | $ 130 | 130 | 130 | |||||
Exercise of share options (in shares) | 2 | |||||||
Restricted share award vestings and other activity | $ 90 | (73) | (4) | 13 | 13 | |||
Repurchase of common shares | $ (591) | (591) | $ (591) | |||||
Repurchase of common shares (in shares) | (5) | (5) | ||||||
Cancellation of treasury shares | $ (1) | $ 262 | (261) | |||||
Cancellation of treasury shares (in shares) | (3) | 3 | ||||||
Balance at at Jun. 25, 2021 | $ 148 | $ (778) | 10,892 | (216) | 10,046 | $ 10,046 | ||
Balance (in shares) at at Jun. 25, 2021 | 336 | (8) | ||||||
Balance at at Mar. 26, 2021 | $ 149 | $ (775) | 10,541 | (246) | 9,669 | 9,669 | ||
Balance (in shares) at at Mar. 26, 2021 | 339 | (9) | ||||||
Increase (Decrease) in Equity: | ||||||||
Net income (loss) | 580 | 580 | 580 | |||||
Other comprehensive income (loss) | 30 | 30 | 30 | |||||
Share-based compensation expense | 24 | 24 | 24 | |||||
Dividends | 3 | 3 | 3 | |||||
Exercise of share options | $ 11 | 11 | 11 | |||||
Restricted share award vestings and other activity | 6 | $ (24) | 29 | 11 | 11 | |||
Repurchase of common shares | $ (282) | (282) | (282) | |||||
Repurchase of common shares (in shares) | (2) | |||||||
Cancellation of treasury shares | $ (1) | $ 262 | (261) | |||||
Cancellation of treasury shares (in shares) | (3) | 3 | ||||||
Balance at at Jun. 25, 2021 | $ 148 | $ (778) | $ 10,892 | $ (216) | $ 10,046 | $ 10,046 | ||
Balance (in shares) at at Jun. 25, 2021 | 336 | (8) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Jun. 25, 2021 | Jun. 26, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 1,467 | $ (471) |
Income from discontinued operations, net of income taxes | (6) | (16) |
Income (loss) from continuing operations | 1,461 | (487) |
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: | ||
Impairment of goodwill | 900 | |
Depreciation and amortization | 590 | 530 |
Deferred income taxes | (62) | 459 |
Non-cash lease cost | 90 | 79 |
Provision for losses on accounts receivable and inventories | 32 | 28 |
Share-based compensation expense | 73 | 54 |
Other | (45) | 40 |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | ||
Accounts receivable, net | (638) | 182 |
Inventories | (482) | (342) |
Prepaid expenses and other current assets | (14) | 27 |
Accounts payable | 646 | (81) |
Accrued and other current liabilities | 110 | (204) |
Income taxes | 61 | 20 |
Other | 80 | 67 |
Net cash provided by operating activities | 1,902 | 1,272 |
Cash flows from investing activities: | ||
Capital expenditures | (454) | (439) |
Proceeds from sale of property, plant, and equipment | 85 | 6 |
Acquisition of businesses, net of cash acquired | (126) | (328) |
Other | (2) | 13 |
Net cash used in investing activities | (497) | (748) |
Cash flows from financing activities: | ||
Net decrease in commercial paper | (219) | |
Proceeds from issuance of debt | 661 | 593 |
Repayment of debt | (706) | (352) |
Proceeds from exercise of share options | 130 | 29 |
Repurchase of common shares | (518) | (523) |
Payment of common share dividends to shareholders | (483) | (466) |
Other | (27) | (32) |
Net cash used in financing activities | (943) | (970) |
Effect of currency translation on cash | 9 | (7) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 471 | (453) |
Cash, cash equivalents, and restricted cash at beginning of period | 945 | 927 |
Cash, cash equivalents, and restricted cash at end of period | $ 1,416 | $ 474 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jun. 25, 2021 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The unaudited Condensed Consolidated Financial Statements of TE Connectivity Ltd. (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) have been prepared in United States (“U.S.”) dollars, in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and the instructions to Form 10-Q under the Securities Exchange Act of 1934. In management’s opinion, the unaudited Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire fiscal year or any subsequent interim period. The year-end balance sheet data was derived from audited financial statements, but does not include all of the information and disclosures required by GAAP. These financial statements should be read in conjunction with our audited Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 25, 2020. Unless otherwise indicated, references in the Condensed Consolidated Financial Statements to fiscal 2021 and fiscal 2020 are to our fiscal years ending September 24, 2021 and ended September 25, 2020, respectively. |
Restructuring and Other Charges
Restructuring and Other Charges, Net | 9 Months Ended |
Jun. 25, 2021 | |
Restructuring and Other Charges, Net | |
Restructuring and Other Charges, Net | 2. Restructuring and Other Charges, Net Net restructuring and other charges consisted of the following: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Restructuring charges, net $ 10 $ 98 $ 170 $ 144 Impairment of held for sale businesses and loss on divestitures — — 21 — Other charges, net 1 — 4 — Restructuring and other charges, net $ 11 $ 98 $ 195 $ 144 Net restructuring charges by segment were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions $ 2 $ 55 $ 130 $ 77 Industrial Solutions 6 40 26 56 Communications Solutions 2 3 14 11 Restructuring charges, net $ 10 $ 98 $ 170 $ 144 Activity in our restructuring reserves was as follows: Balance at Balance at September 25, Changes in Cash Non-Cash Currency June 25, 2020 Charges Estimate Payments Items Translation 2021 (in millions) Fiscal 2021 Actions: Employee severance $ — $ 170 $ (17) $ (17) $ — $ 2 $ 138 Facility and other exit costs — 2 — (2) — — — Property, plant, and equipment — 7 — — (7) — — Total — 179 (17) (19) (7) 2 138 Fiscal 2020 Actions: Employee severance 180 3 — (74) — 2 111 Facility and other exit costs 8 9 — (3) — — 14 Property, plant, and equipment — 6 — — (6) — — Total 188 18 — (77) (6) 2 125 Pre-Fiscal 2020 Actions: Employee severance 93 — (8) (44) — 1 42 Facility and other exit costs 4 1 — (7) — 2 — Property, plant, and equipment — — (3) — 3 — — Total 97 1 (11) (51) 3 3 42 Total Activity $ 285 $ 198 $ (28) $ (147) $ (10) $ 7 $ 305 Fiscal 2021 Actions During fiscal 2021, we initiated a restructuring program across all segments to optimize our manufacturing footprint and improve the cost structure of the organization. During the nine months ended June 25, 2021, we recorded net restructuring charges of $162 million in connection with this program. We expect to complete all restructuring actions commenced during the nine months ended June 25, 2021 by the end of fiscal 2022 and to incur additional charges of approximately $20 million related primarily to employee severance and facility exit costs. The following table summarizes expected, incurred, and remaining charges for the fiscal 2021 program by segment: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 131 $ 120 $ 11 Industrial Solutions 34 28 6 Communications Solutions 17 14 3 Total $ 182 $ 162 $ 20 Fiscal 2020 Actions During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural improvements, due in part to the COVID-19 pandemic, across all segments. In connection with this program, during the nine months ended June 25, 2021 and June 26, 2020, we recorded restructuring charges of $18 million and $138 million, respectively. We expect to complete all restructuring actions commenced during fiscal 2020 by the end of fiscal 2023 and to incur additional charges of approximately $22 million related primarily to employee severance and facility exit costs. The following table summarizes expected, incurred, and remaining charges for the fiscal 2020 program by segment: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 139 $ 129 $ 10 Industrial Solutions 110 102 8 Communications Solutions 41 37 4 Total $ 290 $ 268 $ 22 Pre-Fiscal 2020 Actions Prior to fiscal 2020, we initiated restructuring programs associated with footprint consolidation and structural improvements impacting all segments. During the nine months ended June 25, 2021 and June 26, 2020, we recorded net restructuring credits of $10 million and charges of $6 million, respectively, related to pre-fiscal 2020 actions. We expect additional charges related to pre-fiscal 2020 actions to be insignificant. Total Restructuring Reserves Restructuring reserves included on the Condensed Consolidated Balance Sheets were as follows: June 25, September 25, 2021 2020 (in millions) Accrued and other current liabilities $ 236 $ 229 Other liabilities 69 56 Restructuring reserves $ 305 $ 285 |
Acquisitions
Acquisitions | 9 Months Ended |
Jun. 25, 2021 | |
Acquisitions | |
Acquisitions | 3. Acquisitions During the nine months ended June 25, 2021, we acquired two businesses for a combined cash purchase price of $125 million, net of cash acquired. The acquisitions were reported as part of our Industrial Solutions segment from the date of acquisition. We acquired four businesses, including First Sensor AG (“First Sensor”), for a combined cash purchase price of $325 million, net of cash acquired, during the nine months ended June 26, 2020. The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments from the date of acquisition. In connection with the acquisition of First Sensor, we and First Sensor entered into a Domination and Profit and Loss Transfer Agreement (“DPLTA”). Under the terms of the DPLTA, upon its effectiveness in July 2020, First Sensor minority shareholders can elect either (1) to remain First Sensor minority shareholders and receive recurring annual compensation of €0.56 per First Sensor share or (2) to put their First Sensor shares in exchange for compensation of €33.27 per First Sensor share. The ultimate amount and timing of any future cash payments related to the DPLTA is uncertain. Our First Sensor noncontrolling interest balance, which was originally recorded at a fair value of €96 million (equivalent to $107 million), is recorded as redeemable noncontrolling interest outside of equity on the Condensed Consolidated Balance Sheets as of June 25, 2021 and September 25, 2020 as the exercise of the put right by First Sensor minority shareholders is not within our control. |
Inventories
Inventories | 9 Months Ended |
Jun. 25, 2021 | |
Inventories | |
Inventories | 4. Inventories Inventories consisted of the following: June 25, September 25, 2021 2020 (in millions) Raw materials $ 315 $ 251 Work in progress 1,000 851 Finished goods 1,077 848 Inventories $ 2,392 $ 1,950 |
Goodwill
Goodwill | 9 Months Ended |
Jun. 25, 2021 | |
Goodwill | |
Goodwill | 5. Goodwill The changes in the carrying amount of goodwill by segment were as follows: Transportation Industrial Communications Solutions Solutions Solutions Total (in millions) September 25, 2020 (1) $ 1,527 $ 3,110 $ 587 $ 5,224 Acquisitions — 73 — 73 Purchase price adjustments 10 (1) — 9 Currency translation and other 29 54 12 95 June 25, 2021 (1) $ 1,566 $ 3,236 $ 599 $ 5,401 (1) At June 25, 2021 and September 25, 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $3,091 million, $669 million, and $489 million, respectively. During the nine months ended June 25, 2021, we recognized goodwill in the Industrial Solutions segment in connection with recent acquisitions. See Note 3 for additional information regarding acquisitions. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended |
Jun. 25, 2021 | |
Intangible Assets, Net | |
Intangible Assets, Net | 6. Intangible Assets, Net Intangible assets consisted of the following: June 25, 2021 September 25, 2020 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Customer relationships $ 1,714 $ (637) $ 1,077 $ 1,648 $ (554) $ 1,094 Intellectual property 1,237 (812) 425 1,225 (739) 486 Other 20 (6) 14 19 (6) 13 Total $ 2,971 $ (1,455) $ 1,516 $ 2,892 $ (1,299) $ 1,593 Intangible asset amortization expense was $48 million and $46 million for the quarters ended June 25, 2021 and June 26, 2020, respectively, and $144 million and $137 million for the nine months ended June 25, 2021 and June 26, 2020, respectively. At June 25, 2021, the aggregate amortization expense on intangible assets is expected to be as follows: (in millions) Remainder of fiscal 2021 $ 48 Fiscal 2022 194 Fiscal 2023 192 Fiscal 2024 160 Fiscal 2025 145 Fiscal 2026 138 Thereafter 639 Total $ 1,516 |
Debt
Debt | 9 Months Ended |
Jun. 25, 2021 | |
Debt | |
Debt | 7. Debt During the nine months ended June 25, 2021, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, repaid, at maturity, $250 million of 4.875% senior notes due in January 2021 and €350 million of fixed-to-floating rate senior notes due in June 2021. During the nine months ended June 25, 2021, TEGSA issued €550 million aggregate principal amount of 0.00% senior notes due in February 2029. The notes are TEGSA’s unsecured senior obligations and rank equally in right of payment with all existing and any future senior indebtedness of TEGSA and senior to any subordinated indebtedness that TEGSA may incur. The notes are fully and unconditionally guaranteed as to payment on an unsecured basis by TE Connectivity Ltd. TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with total commitments of $1.5 billion. The Credit Facility was amended in June 2021 primarily to extend the maturity date from November 2023 to June 2026. The amended Credit Facility contains customary provisions for the replacement of London Interbank Offered Rate (“LIBOR”) with successor rates and amends certain representations, warranties, and covenants applicable to us and TEGSA as obligors under the credit agreement. TEGSA had no borrowings under the Credit Facility at June 25, 2021 or September 25, 2020. Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) LIBOR Bank of America federal funds effective 1 / 2 one-month LIBOR alternative currency daily rate alternative currency term rate During the nine months ended June 25, 2021, we reclassified $500 million of 3.50% senior notes due in February 2022 from long-term debt to short-term The fair value of our debt, based on indicative valuations, was approximately $4,510 million and $4,550 million at June 25, 2021 and September 25, 2020, respectively. |
Leases
Leases | 9 Months Ended |
Jun. 25, 2021 | |
Leases | |
Leases | 8. Leases The components of lease cost were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating lease cost $ 31 $ 27 $ 90 $ 79 Variable lease cost 13 12 37 38 Total lease cost $ 44 $ 39 $ 127 $ 117 Cash flow information, including significant non-cash transactions, related to leases was as follows: For the Nine Months Ended June 25, June 26, 2021 2020 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases (1) $ 90 $ 78 Right-of-use assets obtained in exchange for new operating lease liabilities 65 17 (1) These payments are included in cash flows from operating activities, primarily in changes in other liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 25, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Legal Proceedings In the normal course of business, we are subject to various legal proceedings and claims, including patent infringement claims, product liability matters, employment disputes, disputes on agreements, other commercial disputes, environmental matters, antitrust claims, and tax matters, including non-income tax matters such as value added tax, sales and use tax, real estate tax, and transfer tax. Although it is not feasible to predict the outcome of these proceedings, based upon our experience, current information, and applicable law, we do not expect that the outcome of these proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows. Trade Compliance Matters We are investigating our past compliance with relevant U.S. trade controls and have made voluntary disclosures of apparent trade controls violations to the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). We are cooperating with the BIS and DDTC on these matters, and both our internal assessment and the resulting investigations by the agencies remain ongoing. We are unable to predict the timing and final outcome of the agencies’ investigations. An unfavorable outcome may include fines or penalties imposed in response to our disclosures, but we are not yet able to reasonably estimate the extent of any such fines or penalties. While we have reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such investigations and related fines and penalties may differ from amounts currently reserved. 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 June 25, 2021, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $18 million to $47 million, and we accrued $21 million as the probable loss, which was the best estimate within this range. We believe that any potential payment of such estimated amounts will not have a material adverse effect on our results of operations, financial position, or cash flows. Guarantees In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows. At June 25, 2021, we had outstanding letters of credit, letters of guarantee, and surety bonds of $135 million, excluding those related to our Subsea Communications (“SubCom”) business which are discussed below. During fiscal 2019, we sold our SubCom business. In connection with the sale, we contractually agreed to continue to honor performance guarantees and letters of credit related to the SubCom business’ projects that existed as of the date of sale. These performance guarantees and letters of credit had a combined value of approximately $129 million as of June 25, 2021 and are expected to expire at various dates through fiscal 2025. During the nine months ended June 25, 2021, we amended our agreement with SubCom and removed the requirement to issue new performance guarantees. We have contractual recourse against the SubCom business if we are required to perform on any SubCom guarantees; however, based on historical experience, we do not anticipate having to perform. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Jun. 25, 2021 | |
Financial Instruments | |
Financial Instruments | 10. Financial Instruments Foreign Currency Exchange Rate Risk We utilize cross-currency swap contracts to reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans. The aggregate notional value of these contracts was €700 million at June 25, 2021 and September 25, 2020. Under the terms of these contracts, which have been designated as cash flow hedges, we make interest payments in euros at 3.50% per annum and receive interest in U.S. dollars at a weighted-average rate of 5.34% per annum. Upon maturity in fiscal 2022, we will pay the notional value of the contracts in euros and receive U.S. dollars from our counterparties. In connection with the cross-currency swap contracts, both counterparties to each contract are required to provide cash collateral. These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: June 25, September 25, 2021 2020 (in millions) Other assets $ — $ 1 Other liabilities 36 9 At June 25, 2021 and September 25, 2020, collateral received from or paid to our counterparties approximated the net derivative position. Collateral is recorded in accrued and other current liabilities when the contracts are in a net asset position, or prepaid expenses and other current assets when the contracts are in a net liability position on the Condensed Consolidated Balance Sheets. The impacts of these cross-currency swap contracts were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains (losses) recorded in other comprehensive income (loss) $ (1) $ — $ (5) $ 32 Losses excluded from the hedging relationship (1) (11) (14) (23) (19) (1) Gains and losses excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses and gains generated as a result of re-measuring certain intercompany loans to the U.S. dollar. Hedge of Net Investment We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $4,216 million and $3,511 million at June 25, 2021 and September 25, 2020, respectively. We also use a cross-currency swap program to hedge our net investment in certain foreign operations. The aggregate notional value of the contracts under this program was $1,509 million and $1,664 million at June 25, 2021 and September 25, 2020, respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 1.98% per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2025, we will pay the notional value of the contracts in the designated foreign currency and receive U.S. dollars from our counterparties. We are not required to provide collateral for these contracts. These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 2 $ 1 Other assets 15 3 Accrued and other current liabilities 19 6 Other liabilities 30 16 The impacts of our hedge of net investment programs were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Foreign currency exchange losses on intercompany loans and external borrowings (1) $ (46) $ (52) $ (81) $ (60) Losses on cross-currency swap contracts designated as hedges of net investment (1) (14) (25) (41) (3) (1) Recorded as currency translation, a component of accumulated other comprehensive income (loss). Interest Rate Risk Management We utilize forward starting interest rate swap contracts to manage interest rate exposure in periods prior to the anticipated issuance of fixed rate debt. These contracts had an aggregate notional value of $450 million at June 25, 2021 and September 25, 2020 and were designated as cash flow hedges. These forward starting interest rate swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 8 $ — Accrued and other current liabilities 36 — Other liabilities — 64 The impacts of these forward starting interest rate swap contracts were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains (losses) recorded in other comprehensive income (loss) $ (11) $ — $ 36 $ (32) 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 $478 million and $312 million at June 25, 2021 and September 25, 2020, respectively, and were designated as cash flow hedges. These commodity swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 49 $ 41 Other assets 1 3 Accrued and other current liabilities 8 2 Other liabilities 2 1 The impacts of these commodity swap contracts were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains recorded in other comprehensive income (loss) $ 24 $ 40 $ 78 $ 22 Gains reclassified from accumulated other comprehensive income (loss) into cost of sales 27 — 66 3 We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with commodity hedges will be reclassified into the Condensed Consolidated Statement of Operations within the next twelve months. |
Retirement Plans
Retirement Plans | 9 Months Ended |
Jun. 25, 2021 | |
Retirement Plans | |
Retirement Plans | 11. Retirement Plans 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 For the For the Quarters Ended Quarters Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating expense: Service cost $ 10 $ 13 $ 3 $ 2 Other (income) expense: Interest cost 7 6 7 9 Expected return on plan assets (13) (15) (13) (15) Amortization of net actuarial loss 8 10 3 3 Amortization of prior service credit and other (3) (1) — — Net periodic pension benefit cost (credit) $ 9 $ 13 $ — $ (1) Non-U.S. Plans U.S. Plans For the For the Nine Months Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating expense: Service cost $ 34 $ 38 $ 9 $ 7 Other (income) expense: Interest cost 21 18 23 27 Expected return on plan assets (40) (45) (39) (44) Amortization of net actuarial loss 23 30 7 7 Amortization of prior service credit and other (6) (4) — — Net periodic pension benefit cost (credit) $ 32 $ 37 $ — $ (3) During the nine months ended June 25, 2021, we contributed $31 million and $18 million to our non-U.S. and U.S. pension plans, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 25, 2021 | |
Income Taxes | |
Income Taxes | 12. Income Taxes We recorded income tax expense of $124 million and $185 million for the quarters ended June 25, 2021 and June 26, 2020, respectively. The income tax expense for the quarter ended June 26, 2020 included $170 million of income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets. Due to the COVID-19 pandemic and its negative impact on our current and expected future operating profit and taxable income, we believed it was more likely than not that a portion of our deferred tax assets would not be realized. Depending on business conditions, additional adjustments to our valuation allowance may be required in future periods as we continue to assess the realizability of our deferred tax assets. We recorded income tax expense of $290 million and $674 million for the nine months ended June 25, 2021 and June 26, 2020, respectively. The income tax expense for the nine months ended June 25, 2021 included a $29 million income tax benefit related to an Internal Revenue Service approved change in the tax method of depreciating or amortizing certain assets. The income tax expense for the nine months ended June 26, 2020 included $355 million of income tax expense related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”). See “Swiss Tax Reform” below for additional information. In addition, the income tax expense included $170 million of income tax expense related to an increase to the valuation allowance for certain non-U.S. deferred tax assets, partially offset by an income tax benefit of $31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement with Tyco International plc (now part of Johnson Controls International plc) and Covidien plc (now part of Medtronic plc). The pre-tax goodwill impairment charge of $900 million recorded during the nine months ended June 26, 2020 resulted in a tax benefit of $4 million as the associated goodwill was primarily not deductible for income tax purposes. Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that approximately $90 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 Condensed Consolidated Balance Sheet as of June 25, 2021. Swiss Tax Reform The Federal Act on Tax Reform and AHV Financing eliminated certain preferential tax items and implemented new tax rates at both the federal and cantonal levels. During fiscal 2019, Switzerland enacted the federal provisions of Swiss Tax Reform and the federal tax authority issued guidance abolishing certain interest deductions. The impacts of these measures were reflected in our fiscal 2019 Consolidated Financial Statements. In October 2019, the canton of Schaffhausen enacted Swiss Tax Reform into law, including reductions in tax rates. During the nine months ended June 26, 2020, we recognized $355 million of income tax expense related primarily to cantonal implementation and the resulting write-down of certain deferred tax assets to the lower tax rates. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Jun. 25, 2021 | |
Earnings (Loss) Per Share | |
Earnings (Loss) Per Share | 13. Earnings (Loss) Per Share The weighted-average number of shares outstanding used in the computations of basic and diluted earnings (loss) per share were as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Basic 330 330 331 333 Dilutive impact of share-based compensation arrangements 3 — 2 — Diluted 333 330 333 333 For both the quarter and nine months ended June 26, 2020, there were one million nonvested share awards and options outstanding with underlying exercise prices less than the average market prices of our common shares; however, these were excluded from the calculation of diluted loss per share as inclusion would be antidilutive as a result of our loss during the period. The following share options were not included in the computation of diluted earnings (loss) per share because the instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion would be antidilutive: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Antidilutive share options — 4 — 3 |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Jun. 25, 2021 | |
Shareholders' Equity | |
Shareholder' Equity | 14. Shareholders’ Equity Common Shares Held in Treasury In March 2021, our shareholders approved the cancellation of approximately 3 million shares purchased under our share repurchase program during the period beginning September 28, 2019 and ending September 25, 2020. The capital reduction by cancellation of these shares was subject to a notice period and filing with the commercial register in Switzerland and became effective in May 2021. Dividends We paid cash dividends to shareholders as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 Dividends paid per common share $ 0.50 $ 0.48 $ 1.46 $ 1.40 In March 2021, our shareholders approved a dividend payment to shareholders of $2.00 per share, payable in four equal quarterly installments of $0.50 per share beginning in the third quarter of fiscal 2021 and ending in the second quarter of fiscal 2022. Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to shareholders’ equity. At June 25, 2021 and September 25, 2020, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $493 million and $317 million, respectively. Share Repurchase Program During the quarter ended June 25, 2021, our board of directors authorized an increase of $1.5 billion in the share repurchase program. Common shares repurchased under the share repurchase program were as follows: For the Nine Months Ended June 25, June 26, 2021 2020 (in millions) Number of common shares repurchased 5 6 Repurchase value $ 591 $ 505 At June 25, 2021, we had $1.9 billion of availability remaining under our share repurchase authorization. |
Share Plans
Share Plans | 9 Months Ended |
Jun. 25, 2021 | |
Share Plans | |
Share Plans | 15. Share Plans Share-based compensation expense, which was included primarily in selling, general, and administrative expenses on the Condensed Consolidated Statements of Operations, was as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Share-based compensation expense $ 24 $ 17 $ 73 $ 54 As of June 25, 2021, there was $140 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.8 years. During the quarter ended December 25, 2020, we granted the following share-based awards as part of our annual incentive plan grant: Grant-Date Shares Fair Value (in millions) Share options 1.3 $ 22.03 Restricted share awards 0.4 105.86 Performance share awards 0.2 105.86 As of June 25, 2021, we had 13 million shares available for issuance under the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and restated as of September 17, 2020. Share-Based Compensation Assumptions The assumptions we used in the Black-Scholes-Merton option pricing model for the options granted as part of our annual incentive plan grant were as follows: Expected share price volatility 28 % Risk-free interest rate 0.5 % Expected annual dividend per share $ 1.92 Expected life of options (in years) 5.4 |
Segment and Geographic Data
Segment and Geographic Data | 9 Months Ended |
Jun. 25, 2021 | |
Segment and Geographic Data | |
Segment and Geographic Data | 16. Segment and Geographic Data Net sales by segment (1) (2) For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions: Automotive $ 1,600 $ 797 $ 4,859 $ 3,567 Commercial transportation 382 233 1,095 785 Sensors 283 225 822 628 Total Transportation Solutions 2,265 1,255 6,776 4,980 Industrial Solutions: Aerospace, defense, oil, and gas 260 265 777 892 Industrial equipment 377 265 1,011 808 Medical 178 161 495 526 Energy 187 174 544 528 Total Industrial Solutions 1,002 865 2,827 2,754 Communications Solutions: Data and devices 329 276 841 713 Appliances 249 152 661 464 Total Communications Solutions 578 428 1,502 1,177 Total $ 3,845 $ 2,548 $ 11,105 $ 8,911 (1) Intersegment sales were not material. (2) 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 (1) For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Asia–Pacific: Transportation Solutions $ 868 $ 606 $ 2,619 $ 1,979 Industrial Solutions 183 153 517 436 Communications Solutions 333 273 877 721 Total Asia–Pacific 1,384 1,032 4,013 3,136 Europe/Middle East/Africa (“EMEA”): Transportation Solutions 913 410 2,729 1,878 Industrial Solutions 417 313 1,168 1,014 Communications Solutions 83 54 222 170 Total EMEA 1,413 777 4,119 3,062 Americas: Transportation Solutions 484 239 1,428 1,123 Industrial Solutions 402 399 1,142 1,304 Communications Solutions 162 101 403 286 Total Americas 1,048 739 2,973 2,713 Total $ 3,845 $ 2,548 $ 11,105 $ 8,911 (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. Operating income (loss) by segment was as follows: For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions $ 433 $ (1) $ 1,139 $ (291) (1) Industrial Solutions 148 70 335 327 Communications Solutions 133 65 300 154 Total $ 714 $ 134 $ 1,774 $ 190 (1) Includes goodwill impairment charge of $900 million. |
Restructuring and Other Charg_2
Restructuring and Other Charges, Net (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Restructuring and Other Charges, Net | |
Schedule of net restructuring and other charges | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Restructuring charges, net $ 10 $ 98 $ 170 $ 144 Impairment of held for sale businesses and loss on divestitures — — 21 — Other charges, net 1 — 4 — Restructuring and other charges, net $ 11 $ 98 $ 195 $ 144 |
Net restructuring charges by segment | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions $ 2 $ 55 $ 130 $ 77 Industrial Solutions 6 40 26 56 Communications Solutions 2 3 14 11 Restructuring charges, net $ 10 $ 98 $ 170 $ 144 |
Summary of activity in restructuring reserves | Balance at Balance at September 25, Changes in Cash Non-Cash Currency June 25, 2020 Charges Estimate Payments Items Translation 2021 (in millions) Fiscal 2021 Actions: Employee severance $ — $ 170 $ (17) $ (17) $ — $ 2 $ 138 Facility and other exit costs — 2 — (2) — — — Property, plant, and equipment — 7 — — (7) — — Total — 179 (17) (19) (7) 2 138 Fiscal 2020 Actions: Employee severance 180 3 — (74) — 2 111 Facility and other exit costs 8 9 — (3) — — 14 Property, plant, and equipment — 6 — — (6) — — Total 188 18 — (77) (6) 2 125 Pre-Fiscal 2020 Actions: Employee severance 93 — (8) (44) — 1 42 Facility and other exit costs 4 1 — (7) — 2 — Property, plant, and equipment — — (3) — 3 — — Total 97 1 (11) (51) 3 3 42 Total Activity $ 285 $ 198 $ (28) $ (147) $ (10) $ 7 $ 305 |
Restructuring reserves included on Consolidated Balance Sheets | June 25, September 25, 2021 2020 (in millions) Accrued and other current liabilities $ 236 $ 229 Other liabilities 69 56 Restructuring reserves $ 305 $ 285 |
Fiscal 2020 Actions | |
Restructuring and Other Charges, Net | |
Schedule of expected, incurred and remaining charges by segment | The following table summarizes expected, incurred, and remaining charges for the fiscal 2020 program by segment: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 139 $ 129 $ 10 Industrial Solutions 110 102 8 Communications Solutions 41 37 4 Total $ 290 $ 268 $ 22 |
Fiscal 2021 Actions | |
Restructuring and Other Charges, Net | |
Schedule of expected, incurred and remaining charges by segment | The following table summarizes expected, incurred, and remaining charges for the fiscal 2021 program by segment: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 131 $ 120 $ 11 Industrial Solutions 34 28 6 Communications Solutions 17 14 3 Total $ 182 $ 162 $ 20 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Inventories | |
Schedule of inventories | June 25, September 25, 2021 2020 (in millions) Raw materials $ 315 $ 251 Work in progress 1,000 851 Finished goods 1,077 848 Inventories $ 2,392 $ 1,950 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Goodwill | |
Changes in the carrying amount of goodwill by segment | Transportation Industrial Communications Solutions Solutions Solutions Total (in millions) September 25, 2020 (1) $ 1,527 $ 3,110 $ 587 $ 5,224 Acquisitions — 73 — 73 Purchase price adjustments 10 (1) — 9 Currency translation and other 29 54 12 95 June 25, 2021 (1) $ 1,566 $ 3,236 $ 599 $ 5,401 (1) At June 25, 2021 and September 25, 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $3,091 million, $669 million, and $489 million, respectively. |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Intangible Assets, Net | |
Schedule of finite-lived intangible assets | June 25, 2021 September 25, 2020 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Customer relationships $ 1,714 $ (637) $ 1,077 $ 1,648 $ (554) $ 1,094 Intellectual property 1,237 (812) 425 1,225 (739) 486 Other 20 (6) 14 19 (6) 13 Total $ 2,971 $ (1,455) $ 1,516 $ 2,892 $ (1,299) $ 1,593 |
Schedule of finite-lived intangible assets, future amortization expense | At June 25, 2021, the aggregate amortization expense on intangible assets is expected to be as follows: (in millions) Remainder of fiscal 2021 $ 48 Fiscal 2022 194 Fiscal 2023 192 Fiscal 2024 160 Fiscal 2025 145 Fiscal 2026 138 Thereafter 639 Total $ 1,516 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Leases | |
Schedule of components of lease cost | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating lease cost $ 31 $ 27 $ 90 $ 79 Variable lease cost 13 12 37 38 Total lease cost $ 44 $ 39 $ 127 $ 117 |
Schedule of Cash Flow information, including significant non-cash transactions, related to leases | For the Nine Months Ended June 25, June 26, 2021 2020 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases (1) $ 90 $ 78 Right-of-use assets obtained in exchange for new operating lease liabilities 65 17 (1) These payments are included in cash flows from operating activities, primarily in changes in other liabilities. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Net investment hedges | |
Schedule of impacts of hedging program | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Foreign currency exchange losses on intercompany loans and external borrowings (1) $ (46) $ (52) $ (81) $ (60) Losses on cross-currency swap contracts designated as hedges of net investment (1) (14) (25) (41) (3) (1) Recorded as currency translation, a component of accumulated other comprehensive income (loss). |
Cross-currency swap contracts | Cash flow hedges | |
Summary of fair value of derivative instruments | June 25, September 25, 2021 2020 (in millions) Other assets $ — $ 1 Other liabilities 36 9 |
Schedule of impacts of hedging program | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains (losses) recorded in other comprehensive income (loss) $ (1) $ — $ (5) $ 32 Losses excluded from the hedging relationship (1) (11) (14) (23) (19) (1) Gains and losses excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses and gains generated as a result of re-measuring certain intercompany loans to the U.S. dollar. |
Cross-currency swap contracts | Net investment hedges | |
Summary of fair value of derivative instruments | June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 2 $ 1 Other assets 15 3 Accrued and other current liabilities 19 6 Other liabilities 30 16 |
Forward starting interest rate swap contracts | Cash flow hedges | |
Summary of fair value of derivative instruments | June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 8 $ — Accrued and other current liabilities 36 — Other liabilities — 64 |
Schedule of impacts of hedging program | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains (losses) recorded in other comprehensive income (loss) $ (11) $ — $ 36 $ (32) |
Commodity swap contracts | Cash flow hedges | |
Summary of fair value of derivative instruments | June 25, September 25, 2021 2020 (in millions) Prepaid expenses and other current assets $ 49 $ 41 Other assets 1 3 Accrued and other current liabilities 8 2 Other liabilities 2 1 |
Schedule of impacts of hedging program | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Gains recorded in other comprehensive income (loss) $ 24 $ 40 $ 78 $ 22 Gains reclassified from accumulated other comprehensive income (loss) into cost of sales 27 — 66 3 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Retirement Plans | |
Net periodic pension benefit cost | Non-U.S. Plans U.S. Plans For the For the Quarters Ended Quarters Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating expense: Service cost $ 10 $ 13 $ 3 $ 2 Other (income) expense: Interest cost 7 6 7 9 Expected return on plan assets (13) (15) (13) (15) Amortization of net actuarial loss 8 10 3 3 Amortization of prior service credit and other (3) (1) — — Net periodic pension benefit cost (credit) $ 9 $ 13 $ — $ (1) Non-U.S. Plans U.S. Plans For the For the Nine Months Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Operating expense: Service cost $ 34 $ 38 $ 9 $ 7 Other (income) expense: Interest cost 21 18 23 27 Expected return on plan assets (40) (45) (39) (44) Amortization of net actuarial loss 23 30 7 7 Amortization of prior service credit and other (6) (4) — — Net periodic pension benefit cost (credit) $ 32 $ 37 $ — $ (3) |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Earnings (Loss) Per Share | |
Schedule of weighted-average shares outstanding, basic and diluted | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Basic 330 330 331 333 Dilutive impact of share-based compensation arrangements 3 — 2 — Diluted 333 330 333 333 |
Schedule of antidilutive securities excluded from computation of earnings per share | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Antidilutive share options — 4 — 3 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Shareholders' Equity | |
Schedule of cash dividends to shareholders | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 Dividends paid per common share $ 0.50 $ 0.48 $ 1.46 $ 1.40 |
Schedule of common shares repurchased | For the Nine Months Ended June 25, June 26, 2021 2020 (in millions) Number of common shares repurchased 5 6 Repurchase value $ 591 $ 505 |
Share Plans (Tables)
Share Plans (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Share Plans | |
Share-based compensation expense | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Share-based compensation expense $ 24 $ 17 $ 73 $ 54 |
Summary of share-based award activity | During the quarter ended December 25, 2020, we granted the following share-based awards as part of our annual incentive plan grant: Grant-Date Shares Fair Value (in millions) Share options 1.3 $ 22.03 Restricted share awards 0.4 105.86 Performance share awards 0.2 105.86 |
Weighted-average assumptions | The assumptions we used in the Black-Scholes-Merton option pricing model for the options granted as part of our annual incentive plan grant were as follows: Expected share price volatility 28 % Risk-free interest rate 0.5 % Expected annual dividend per share $ 1.92 Expected life of options (in years) 5.4 |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 9 Months Ended |
Jun. 25, 2021 | |
Segment and Geographic Data | |
Schedule of net sales by segment and industry end market | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions: Automotive $ 1,600 $ 797 $ 4,859 $ 3,567 Commercial transportation 382 233 1,095 785 Sensors 283 225 822 628 Total Transportation Solutions 2,265 1,255 6,776 4,980 Industrial Solutions: Aerospace, defense, oil, and gas 260 265 777 892 Industrial equipment 377 265 1,011 808 Medical 178 161 495 526 Energy 187 174 544 528 Total Industrial Solutions 1,002 865 2,827 2,754 Communications Solutions: Data and devices 329 276 841 713 Appliances 249 152 661 464 Total Communications Solutions 578 428 1,502 1,177 Total $ 3,845 $ 2,548 $ 11,105 $ 8,911 (1) Intersegment sales were not material. (2) Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary. |
Schedule of net sales by geographic region and segment | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Asia–Pacific: Transportation Solutions $ 868 $ 606 $ 2,619 $ 1,979 Industrial Solutions 183 153 517 436 Communications Solutions 333 273 877 721 Total Asia–Pacific 1,384 1,032 4,013 3,136 Europe/Middle East/Africa (“EMEA”): Transportation Solutions 913 410 2,729 1,878 Industrial Solutions 417 313 1,168 1,014 Communications Solutions 83 54 222 170 Total EMEA 1,413 777 4,119 3,062 Americas: Transportation Solutions 484 239 1,428 1,123 Industrial Solutions 402 399 1,142 1,304 Communications Solutions 162 101 403 286 Total Americas 1,048 739 2,973 2,713 Total $ 3,845 $ 2,548 $ 11,105 $ 8,911 (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. |
Schedule of operating income (loss) by segment | For the For the Quarters Ended Nine Months Ended June 25, June 26, June 25, June 26, 2021 2020 2021 2020 (in millions) Transportation Solutions $ 433 $ (1) $ 1,139 $ (291) (1) Industrial Solutions 148 70 335 327 Communications Solutions 133 65 300 154 Total $ 714 $ 134 $ 1,774 $ 190 (1) Includes goodwill impairment charge of $900 million. |
Restructuring and Other Charg_3
Restructuring and Other Charges, Net - Restructuring and Other Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Restructuring and other charges, net | ||||
Restructuring charges, net | $ 10 | $ 98 | $ 170 | $ 144 |
Impairment of held for sale businesses and Loss on divestiture | 21 | |||
Other charges, net | 1 | 4 | ||
Restructuring and other charges, net | 11 | 98 | 195 | 144 |
Transportation Solutions | ||||
Restructuring and other charges, net | ||||
Restructuring charges, net | 2 | 55 | 130 | 77 |
Industrial Solutions | ||||
Restructuring and other charges, net | ||||
Restructuring charges, net | 6 | 40 | 26 | 56 |
Communications Solutions | ||||
Restructuring and other charges, net | ||||
Restructuring charges, net | $ 2 | $ 3 | $ 14 | $ 11 |
Restructuring and Other Charg_4
Restructuring and Other Charges, Net - Restructuring Reserve Activity (Details) $ in Millions | 9 Months Ended |
Jun. 25, 2021USD ($) | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | $ 285 |
Charges | 198 |
Changes in Estimate | (28) |
Cash Payments | (147) |
Non-Cash Items | (10) |
Currency Translation | 7 |
Restructuring reserve at the end of the period | 305 |
Fiscal 2021 Actions | |
Restructuring reserve | |
Charges | 179 |
Changes in Estimate | (17) |
Cash Payments | (19) |
Non-Cash Items | (7) |
Currency Translation | 2 |
Restructuring reserve at the end of the period | 138 |
Fiscal 2021 Actions | Employee severance | |
Restructuring reserve | |
Charges | 170 |
Changes in Estimate | (17) |
Cash Payments | (17) |
Currency Translation | 2 |
Restructuring reserve at the end of the period | 138 |
Fiscal 2021 Actions | Facility and other exit costs | |
Restructuring reserve | |
Charges | 2 |
Cash Payments | (2) |
Restructuring reserve at the end of the period | 0 |
Fiscal 2021 Actions | Property, plant, and equipment | |
Restructuring reserve | |
Charges | 7 |
Non-Cash Items | (7) |
Restructuring reserve at the end of the period | 0 |
Fiscal 2020 Actions | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 188 |
Charges | 18 |
Cash Payments | (77) |
Non-Cash Items | (6) |
Currency Translation | 2 |
Restructuring reserve at the end of the period | 125 |
Fiscal 2020 Actions | Employee severance | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 180 |
Charges | 3 |
Cash Payments | (74) |
Currency Translation | 2 |
Restructuring reserve at the end of the period | 111 |
Fiscal 2020 Actions | Facility and other exit costs | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 8 |
Charges | 9 |
Cash Payments | (3) |
Restructuring reserve at the end of the period | 14 |
Fiscal 2020 Actions | Property, plant, and equipment | |
Restructuring reserve | |
Charges | 6 |
Non-Cash Items | (6) |
Restructuring reserve at the end of the period | 0 |
Pre-Fiscal 2020 Actions | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 97 |
Charges | 1 |
Changes in Estimate | (11) |
Cash Payments | (51) |
Non-Cash Items | 3 |
Currency Translation | 3 |
Restructuring reserve at the end of the period | 42 |
Pre-Fiscal 2020 Actions | Employee severance | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 93 |
Changes in Estimate | (8) |
Cash Payments | (44) |
Currency Translation | 1 |
Restructuring reserve at the end of the period | 42 |
Pre-Fiscal 2020 Actions | Facility and other exit costs | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 4 |
Charges | 1 |
Cash Payments | (7) |
Currency Translation | 2 |
Restructuring reserve at the end of the period | 0 |
Pre-Fiscal 2020 Actions | Property, plant, and equipment | |
Restructuring reserve | |
Changes in Estimate | (3) |
Non-Cash Items | 3 |
Restructuring reserve at the end of the period | $ 0 |
Restructuring and Other Charg_5
Restructuring and Other Charges, Net - Actions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Restructuring Charges | ||||
Charges Incurred | $ 10 | $ 98 | $ 170 | $ 144 |
Transportation Solutions | ||||
Restructuring Charges | ||||
Charges Incurred | 2 | 55 | 130 | 77 |
Industrial Solutions | ||||
Restructuring Charges | ||||
Charges Incurred | 6 | 40 | 26 | 56 |
Communications Solutions | ||||
Restructuring Charges | ||||
Charges Incurred | 2 | $ 3 | 14 | 11 |
Fiscal 2021 Actions | ||||
Restructuring Charges | ||||
Total Expected Charges | 182 | 182 | ||
Cumulative Charges Incurred | 162 | 162 | ||
Remaining Expected Charges | 20 | 20 | ||
Charges Incurred | 162 | |||
Fiscal 2021 Actions | Transportation Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 131 | 131 | ||
Cumulative Charges Incurred | 120 | 120 | ||
Remaining Expected Charges | 11 | 11 | ||
Fiscal 2021 Actions | Industrial Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 34 | 34 | ||
Cumulative Charges Incurred | 28 | 28 | ||
Remaining Expected Charges | 6 | 6 | ||
Fiscal 2021 Actions | Communications Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 17 | 17 | ||
Cumulative Charges Incurred | 14 | 14 | ||
Remaining Expected Charges | 3 | 3 | ||
Fiscal 2020 Actions | ||||
Restructuring Charges | ||||
Total Expected Charges | 290 | 290 | ||
Cumulative Charges Incurred | 268 | 268 | ||
Remaining Expected Charges | 22 | 22 | ||
Charges Incurred | 18 | 138 | ||
Fiscal 2020 Actions | Transportation Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 139 | 139 | ||
Cumulative Charges Incurred | 129 | 129 | ||
Remaining Expected Charges | 10 | 10 | ||
Fiscal 2020 Actions | Industrial Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 110 | 110 | ||
Cumulative Charges Incurred | 102 | 102 | ||
Remaining Expected Charges | 8 | 8 | ||
Fiscal 2020 Actions | Communications Solutions | ||||
Restructuring Charges | ||||
Total Expected Charges | 41 | 41 | ||
Cumulative Charges Incurred | 37 | 37 | ||
Remaining Expected Charges | $ 4 | 4 | ||
Pre-Fiscal 2020 Actions | ||||
Restructuring Charges | ||||
Charges Incurred | $ (10) | $ 6 |
Restructuring and Other Charg_6
Restructuring and Other Charges, Net - Restructuring Reserve Balances (Details) - USD ($) $ in Millions | Jun. 25, 2021 | Sep. 25, 2020 |
Restructuring reserves included on the Consolidated Balance Sheets | ||
Accrued and other current liabilities | $ 236 | $ 229 |
Other liabilities | 69 | 56 |
Restructuring reserves | $ 305 | $ 285 |
Acquisitions (Details)
Acquisitions (Details) € / shares in Units, € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 25, 2021€ / shares | Jun. 25, 2021USD ($)item | Jun. 26, 2020USD ($)item | Mar. 27, 2020USD ($) | Mar. 27, 2020EUR (€) | |
Acquisitions | |||||
Net cash paid | $ 126 | $ 328 | |||
2021 Acquisitions | |||||
Acquisitions | |||||
Number of businesses acquired | item | 2 | ||||
Net cash paid | $ 125 | ||||
2020 Acquisitions | |||||
Acquisitions | |||||
Number of businesses acquired | item | 4 | ||||
Net cash paid | $ 325 | ||||
Domination And Profit And Loss Transfer Agreement ("DPLTA") | First Sensor AG | |||||
Acquisitions | |||||
Fair value of noncontrolling interest | $ 107 | € 96 | |||
First Sensor minority shareholders recurring annual compensation (in euro per share) | € / shares | € 0.56 | ||||
First Sensor minority shareholders exchange compensation amount (in euro per share) | € / shares | € 33.27 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 25, 2021 | Sep. 25, 2020 |
Inventories | ||
Raw materials | $ 315 | $ 251 |
Work in progress | 1,000 | 851 |
Finished goods | 1,077 | 848 |
Inventories | $ 2,392 | $ 1,950 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 25, 2021 | Sep. 25, 2020 | |
Goodwill: | ||
Goodwill, beginning balance | $ 5,224 | |
Acquisitions | 73 | |
Purchase price adjustments | 9 | |
Currency translation and other | 95 | |
Goodwill, ending balance | 5,401 | |
Transportation Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 1,527 | |
Purchase price adjustments | 10 | |
Currency translation and other | 29 | |
Goodwill, ending balance | 1,566 | |
Accumulated impairment losses | 3,091 | $ 3,091 |
Industrial Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 3,110 | |
Acquisitions | 73 | |
Purchase price adjustments | (1) | |
Currency translation and other | 54 | |
Goodwill, ending balance | 3,236 | |
Accumulated impairment losses | 669 | 669 |
Communications Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 587 | |
Currency translation and other | 12 | |
Goodwill, ending balance | 599 | |
Accumulated impairment losses | $ 489 | $ 489 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | Sep. 25, 2020 | |
Finite-Lived Intangible Assets | |||||
Gross Carrying Amount | $ 2,971 | $ 2,971 | $ 2,892 | ||
Accumulated Amortization | (1,455) | (1,455) | (1,299) | ||
Net Carrying Amount | 1,516 | 1,516 | 1,593 | ||
Finite-lived intangible assets, amortization expense | 48 | $ 46 | 144 | $ 137 | |
Aggregate amortization expense on intangible assets | |||||
Remainder of fiscal 2021 | 48 | 48 | |||
Fiscal 2022 | 194 | 194 | |||
Fiscal 2023 | 192 | 192 | |||
Fiscal 2024 | 160 | 160 | |||
Fiscal 2025 | 145 | 145 | |||
Fiscal 2026 | 138 | 138 | |||
Thereafter | 639 | 639 | |||
Customer relationships | |||||
Finite-Lived Intangible Assets | |||||
Gross Carrying Amount | 1,714 | 1,714 | 1,648 | ||
Accumulated Amortization | (637) | (637) | (554) | ||
Net Carrying Amount | 1,077 | 1,077 | 1,094 | ||
Intellectual property | |||||
Finite-Lived Intangible Assets | |||||
Gross Carrying Amount | 1,237 | 1,237 | 1,225 | ||
Accumulated Amortization | (812) | (812) | (739) | ||
Net Carrying Amount | 425 | 425 | 486 | ||
Other | |||||
Finite-Lived Intangible Assets | |||||
Gross Carrying Amount | 20 | 20 | 19 | ||
Accumulated Amortization | (6) | (6) | (6) | ||
Net Carrying Amount | $ 14 | $ 14 | $ 13 |
Debt (Details)
Debt (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Jun. 25, 2021USD ($) | Jun. 25, 2021USD ($) | Jun. 25, 2021EUR (€) | Jun. 26, 2020USD ($) | Jun. 25, 2021EUR (€) | Sep. 25, 2020USD ($) | |
Debt | ||||||
Repayment of debt | $ 706 | $ 352 | ||||
Fair value of debt | $ 4,510 | 4,510 | $ 4,550 | |||
Short-term debt | 505 | 505 | 694 | |||
Long-term debt | $ 3,629 | 3,629 | 3,452 | |||
4.875% senior notes due 2021 | ||||||
Debt | ||||||
Repayment of debt | $ 250 | |||||
Debt instrument, interest rate (as a percent) | 4.875% | 4.875% | 4.875% | |||
Euro-denominated fixed-to-floating rate senior notes due 2021 | ||||||
Debt | ||||||
Repayment of debt | € | € 350 | |||||
0.00% senior notes due 2029 | ||||||
Debt | ||||||
Debt Instrument, Face Amount | € | € 550 | |||||
Debt instrument, interest rate (as a percent) | 0.00% | 0.00% | 0.00% | |||
Five-Year Credit Facility | ||||||
Debt | ||||||
Revolving credit facility term | 5 years | 5 years | ||||
Maximum borrowing capacity | $ 1,500 | $ 1,500 | ||||
Borrowings under the Credit Facility | $ 0 | 0 | $ 0 | |||
Five-Year Credit Facility | LIBOR | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | LIBOR, or an alternative benchmark rate, plus margin based on debt rating | |||||
Five-Year Credit Facility | Bank of America Base Rate | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | Bank of America base rate plus margin based on debt rating | |||||
Five-Year Credit Facility | Federal funds effective rate | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | federal funds effective rate plus margin based on debt rating | |||||
Debt instrument basis spread on variable rate (as a percent) | 0.50% | |||||
Five-Year Credit Facility | One-Month LIBOR | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | one-month LIBOR, or an alternative benchmark rate, plus margin based on debt rating | |||||
Debt instrument basis spread on variable rate (as a percent) | 1.00% | |||||
Five-Year Credit Facility | Alternative currency daily rate | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | Alternative currency daily rate plus margin based on debt rating | |||||
Five-Year Credit Facility | Alternative currency term rate | ||||||
Debt | ||||||
Debt instrument description of variable rate basis | Alternative currency term rate plus margin based on debt rating | |||||
Five-Year Credit Facility | Minimum | ||||||
Debt | ||||||
Annual facility fee, basis points (as a percent) | 0.05% | |||||
Five-Year Credit Facility | Maximum | ||||||
Debt | ||||||
Annual facility fee, basis points (as a percent) | 0.125% | |||||
Reclassification | 3.50% senior notes due 2022 | ||||||
Debt | ||||||
Short-term debt | $ 500 | 500 | ||||
Long-term debt | $ (500) | $ (500) | ||||
Debt instrument, interest rate (as a percent) | 3.50% | 3.50% | 3.50% |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Leases | ||||
Operating lease cost | $ 31 | $ 27 | $ 90 | $ 79 |
Variable lease cost | 13 | 12 | 37 | 38 |
Total lease cost | $ 44 | $ 39 | $ 127 | $ 117 |
Leases - Cash Flow Information
Leases - Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 25, 2021 | Jun. 26, 2020 | |
Leases | ||
Payments for operating leases | $ 90 | $ 78 |
Right-of-use asset obtained in exchange for operating lease liability | $ 65 | $ 17 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 25, 2021USD ($) |
Loss Contingencies | |
Accrual environmental loss contingency, estimate of probable loss | $ 21 |
Minimum | |
Loss Contingencies | |
Accrual environmental loss contingency, estimate of probable loss | 18 |
Maximum | |
Loss Contingencies | |
Accrual environmental loss contingency, estimate of probable loss | 47 |
Outstanding letters of credit, letters of guarantee and surety bonds | |
Guarantees | |
Guarantor obligations, maximum exposure | 135 |
Discontinued Operations, Disposed of by Sale | Subsea Communications | |
Guarantees | |
Guarantor obligations, maximum exposure | $ 129 |
Financial Instruments (Details)
Financial Instruments (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Jun. 25, 2021USD ($) | Jun. 26, 2020USD ($) | Jun. 25, 2021USD ($) | Jun. 26, 2020USD ($) | Sep. 25, 2020USD ($) | Jun. 25, 2021EUR (€) | Jun. 25, 2021USD ($) | Sep. 25, 2020EUR (€) | Sep. 25, 2020USD ($) | |
Cash flow hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Notional amount | € | € 700 | € 700 | |||||||
Interest paid in foreign currency, fixed interest rate | 3.50% | 3.50% | |||||||
Interest received in U.S. dollars, weighted-average fixed interest rate | 5.34% | 5.34% | |||||||
Gains (losses) recorded in other comprehensive income (loss) | $ (1) | $ (5) | $ 32 | ||||||
Gains (losses) excluded from the hedging relationship | (11) | $ (14) | (23) | (19) | |||||
Cash flow hedges | Forward starting interest rate swap contracts | |||||||||
Financial Instruments | |||||||||
Notional amount | $ 450 | $ 450 | |||||||
Gains (losses) recorded in other comprehensive income (loss) | (11) | 36 | (32) | ||||||
Cash flow hedges | Commodity swap contracts | |||||||||
Financial Instruments | |||||||||
Notional amount | 478 | 312 | |||||||
Gains (losses) recorded in other comprehensive income (loss) | 24 | 40 | 78 | 22 | |||||
Gains (losses) reclassified from accumulated other comprehensive income (loss) into cost of sales | 27 | 66 | 3 | ||||||
Net investment hedges | Intercompany loans and external borrowings | |||||||||
Financial Instruments | |||||||||
Notional amount of non-derivative instruments | 4,216 | $ 3,511 | |||||||
Foreign currency exchange losses on intercompany loans and external borrowings | (46) | (52) | (81) | (60) | |||||
Net investment hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Notional amount | $ 1,509 | 1,664 | |||||||
Interest paid in foreign currency, fixed interest rate | 0.00% | 0.00% | |||||||
Interest received in U.S. dollars, weighted-average fixed interest rate | 1.98% | 1.98% | |||||||
Losses on cross-currency swap contracts designated as hedges of net investment | $ (14) | $ (25) | $ (41) | $ (3) | |||||
Prepaid expenses and other current assets | Cash flow hedges | Forward starting interest rate swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | $ 8 | ||||||||
Prepaid expenses and other current assets | Cash flow hedges | Commodity swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | 49 | 41 | |||||||
Prepaid expenses and other current assets | Net investment hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | 2 | 1 | |||||||
Other assets | Cash flow hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | 1 | ||||||||
Other assets | Cash flow hedges | Commodity swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | 1 | 3 | |||||||
Other assets | Net investment hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Asset Positions | 15 | 3 | |||||||
Accrued and other current liabilities | Cash flow hedges | Forward starting interest rate swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 36 | ||||||||
Accrued and other current liabilities | Cash flow hedges | Commodity swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 8 | 2 | |||||||
Accrued and other current liabilities | Net investment hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 19 | 6 | |||||||
Other liabilities | Cash flow hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 36 | 9 | |||||||
Other liabilities | Cash flow hedges | Forward starting interest rate swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 64 | ||||||||
Other liabilities | Cash flow hedges | Commodity swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | 2 | 1 | |||||||
Other liabilities | Net investment hedges | Cross-currency swap contracts | |||||||||
Financial Instruments | |||||||||
Fair Value of Liability Positions | $ 30 | $ 16 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Non-U.S. Plans | ||||
Net Periodic Postretirement Benefit Cost (Credit) | ||||
Service cost | $ 10 | $ 13 | $ 34 | $ 38 |
Interest cost | 7 | 6 | 21 | 18 |
Expected return on plan assets | (13) | (15) | (40) | (45) |
Amortization of net actuarial loss | 8 | 10 | 23 | 30 |
Amortization of prior service credit and other | (3) | (1) | (6) | (4) |
Net periodic pension benefit cost (credit) | 9 | 13 | 32 | 37 |
Defined benefit plan, contributions by employer | 31 | |||
U.S. Plans | ||||
Net Periodic Postretirement Benefit Cost (Credit) | ||||
Service cost | 3 | 2 | 9 | 7 |
Interest cost | 7 | 9 | 23 | 27 |
Expected return on plan assets | (13) | (15) | (39) | (44) |
Amortization of net actuarial loss | $ 3 | 3 | 7 | 7 |
Net periodic pension benefit cost (credit) | $ (1) | $ (3) | ||
Defined benefit plan, contributions by employer | $ 18 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Income Taxes | ||||
Income tax expense | $ 124 | $ 185 | $ 290 | $ 674 |
Income tax benefit from change in the tax method of depreciating or amortizing certain assets | 29 | |||
Income tax benefit related to pre-separation tax matters and termination of the tax sharing agreement | 31 | |||
Income tax expense related to the increase in the valuation allowance recorded against certain non-U.S. deferred tax assets | $ 170 | 170 | ||
Goodwill impairment | 900 | |||
Goodwill impairment tax benefit | 4 | |||
Income tax expense related to tax impacts of Swiss Tax Reform | $ 355 | |||
Unrecognized income tax benefits, approximate amount that could be resolved in next twelve months | $ 90 | $ 90 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Earnings (Loss) Per Share | ||||
Basic (in shares) | 330 | 330 | 331 | 333 |
Dilutive impact of share-based compensation arrangements (in shares) | 3 | 2 | ||
Diluted (in shares) | 333 | 330 | 333 | 333 |
Share options | ||||
Antidilutive shares excluded from computation of earnings per share | ||||
Antidilutive share options | 4 | 3 | ||
Nonvested share awards and options, antidilutive due to loss in period | ||||
Antidilutive shares excluded from computation of earnings per share | ||||
Antidilutive share options | 1 | 1 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2021shares | Mar. 31, 2021installment$ / shares | Jun. 25, 2021USD ($)$ / shares | Jun. 26, 2020USD ($)$ / shares | Jun. 25, 2021USD ($)$ / sharesshares | Jun. 26, 2020USD ($)$ / sharesshares | Sep. 25, 2020USD ($) | |
Shareholders' Equity | |||||||
Dividends paid per common share | $ / shares | $ 0.50 | $ 0.48 | $ 1.46 | $ 1.40 | |||
Cancellation of treasury shares (in shares) | shares | 3 | ||||||
Dividend or cash distribution approved (in currency per share) | $ / shares | $ 2 | ||||||
Number of quarterly dividend installments | installment | 4 | ||||||
Cash distribution quarterly installment payable (in dollars per share) | $ / shares | $ 0.50 | ||||||
Unpaid portion of the dividend payment recorded in accrued and other current liabilities | $ 493 | $ 493 | $ 317 | ||||
Share repurchase program, increase in authorized amount | 1,500 | ||||||
Number of common shares repurchased | shares | 5 | 6 | |||||
Repurchase value | 282 | $ 82 | $ 591 | $ 505 | |||
Amount available for repurchase, at end of period | $ 1,900 | $ 1,900 |
Share Plans (Details)
Share Plans (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 25, 2021 | Dec. 25, 2020 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Share Based Compensation Arrangements: | |||||
Share-based compensation expense | $ 24 | $ 17 | $ 73 | $ 54 | |
Shares available for issuance | 13 | 13 | |||
Share Based Compensation Expenses Not Recognized | |||||
Share-based compensation, share-based awards, total compensation expense not yet recognized | $ 140 | $ 140 | |||
Share-based compensation, share-based awards, total compensation expense not yet recognized, expected period for recognition | 1 year 9 months 18 days | ||||
Share options | |||||
Share Based Compensation Arrangements: | |||||
Share options granted | 1.3 | ||||
Options granted, grant-date fair value (in dollars per share) | $ 22.03 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | |||||
Expected share price volatility (as a percent) | 28.00% | ||||
Risk-free interest rate (as a percent) | 0.50% | ||||
Expected annual dividend per share | $ 1.92 | ||||
Expected life of options (in years) | 5 years 4 months 24 days | ||||
Restricted share awards | |||||
Share Based Compensation Arrangements: | |||||
Shares granted | 0.4 | ||||
Shares granted, grant-date fair value (in dollars per share) | $ 105.86 | ||||
Performance share awards | |||||
Share Based Compensation Arrangements: | |||||
Shares granted | 0.2 | ||||
Shares granted, grant-date fair value (in dollars per share) | $ 105.86 |
Segment and Geographic Data - N
Segment and Geographic Data - Net Sales by Segment and Industry End Market (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Segment and Geographic Data | ||||
Net sales | $ 3,845 | $ 2,548 | $ 11,105 | $ 8,911 |
Transportation Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 2,265 | 1,255 | 6,776 | 4,980 |
Transportation Solutions | Automotive | ||||
Segment and Geographic Data | ||||
Net sales | 1,600 | 797 | 4,859 | 3,567 |
Transportation Solutions | Commercial transportation | ||||
Segment and Geographic Data | ||||
Net sales | 382 | 233 | 1,095 | 785 |
Transportation Solutions | Sensors | ||||
Segment and Geographic Data | ||||
Net sales | 283 | 225 | 822 | 628 |
Industrial Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 1,002 | 865 | 2,827 | 2,754 |
Industrial Solutions | Aerospace, defense, oil, and gas | ||||
Segment and Geographic Data | ||||
Net sales | 260 | 265 | 777 | 892 |
Industrial Solutions | Industrial equipment | ||||
Segment and Geographic Data | ||||
Net sales | 377 | 265 | 1,011 | 808 |
Industrial Solutions | Medical | ||||
Segment and Geographic Data | ||||
Net sales | 178 | 161 | 495 | 526 |
Industrial Solutions | Energy | ||||
Segment and Geographic Data | ||||
Net sales | 187 | 174 | 544 | 528 |
Communications Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 578 | 428 | 1,502 | 1,177 |
Communications Solutions | Data and devices | ||||
Segment and Geographic Data | ||||
Net sales | 329 | 276 | 841 | 713 |
Communications Solutions | Appliances | ||||
Segment and Geographic Data | ||||
Net sales | $ 249 | $ 152 | $ 661 | $ 464 |
Segment and Geographic Data -_2
Segment and Geographic Data - Net Sales by Geographic Region and Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Segment and Geographic Data | ||||
Net sales | $ 3,845 | $ 2,548 | $ 11,105 | $ 8,911 |
Transportation Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 2,265 | 1,255 | 6,776 | 4,980 |
Industrial Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 1,002 | 865 | 2,827 | 2,754 |
Communications Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 578 | 428 | 1,502 | 1,177 |
Asia-Pacific | ||||
Segment and Geographic Data | ||||
Net sales | 1,384 | 1,032 | 4,013 | 3,136 |
Asia-Pacific | Transportation Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 868 | 606 | 2,619 | 1,979 |
Asia-Pacific | Industrial Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 183 | 153 | 517 | 436 |
Asia-Pacific | Communications Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 333 | 273 | 877 | 721 |
Europe/Middle East/Africa | ||||
Segment and Geographic Data | ||||
Net sales | 1,413 | 777 | 4,119 | 3,062 |
Europe/Middle East/Africa | Transportation Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 913 | 410 | 2,729 | 1,878 |
Europe/Middle East/Africa | Industrial Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 417 | 313 | 1,168 | 1,014 |
Europe/Middle East/Africa | Communications Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 83 | 54 | 222 | 170 |
Americas | ||||
Segment and Geographic Data | ||||
Net sales | 1,048 | 739 | 2,973 | 2,713 |
Americas | Transportation Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 484 | 239 | 1,428 | 1,123 |
Americas | Industrial Solutions | ||||
Segment and Geographic Data | ||||
Net sales | 402 | 399 | 1,142 | 1,304 |
Americas | Communications Solutions | ||||
Segment and Geographic Data | ||||
Net sales | $ 162 | $ 101 | $ 403 | $ 286 |
Segment and Geographic Data - O
Segment and Geographic Data - Operating Income (Loss) by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 25, 2021 | Jun. 26, 2020 | Jun. 25, 2021 | Jun. 26, 2020 | |
Segment and Geographic Data | ||||
Operating income (loss) | $ 714 | $ 134 | $ 1,774 | $ 190 |
Impairment of goodwill | 900 | |||
Transportation Solutions | ||||
Segment and Geographic Data | ||||
Operating income (loss) | 433 | (1) | 1,139 | (291) |
Impairment of goodwill | 900 | |||
Industrial Solutions | ||||
Segment and Geographic Data | ||||
Operating income (loss) | 148 | 70 | 335 | 327 |
Communications Solutions | ||||
Segment and Geographic Data | ||||
Operating income (loss) | $ 133 | $ 65 | $ 300 | $ 154 |