Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 29, 2023 | Jan. 19, 2024 | |
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 | Dec. 29, 2023 | |
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 | --09-27 | |
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 | 308,798,987 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net sales | $ 3,831 | $ 3,841 |
Cost of sales | 2,507 | 2,654 |
Gross margin | 1,324 | 1,187 |
Selling, general, and administrative expenses | 424 | 392 |
Research, development, and engineering expenses | 173 | 173 |
Acquisition and integration costs | 8 | 9 |
Restructuring and other charges, net | 21 | 111 |
Operating income | 698 | 502 |
Interest income | 22 | 9 |
Interest expense | (18) | (21) |
Other expense, net | (3) | (5) |
Income from continuing operations before income taxes | 699 | 485 |
Income tax (expense) benefit | 1,105 | (87) |
Income from continuing operations | 1,804 | 398 |
Loss from discontinued operations, net of income taxes | (1) | (1) |
Net income | $ 1,803 | $ 397 |
Basic earnings per share: | ||
Income from continuing operations (in dollars per share) | $ 5.80 | $ 1.26 |
Net income (in dollars per share) | 5.80 | 1.25 |
Diluted earnings per share: | ||
Income from continuing operations (in dollars per share) | 5.76 | 1.25 |
Net income (in dollars per share) | $ 5.76 | $ 1.24 |
Weighted-average number of shares outstanding: | ||
Basic (in shares) | 311 | 317 |
Diluted (in shares) | 313 | 319 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 1,803 | $ 397 |
Other comprehensive income: | ||
Currency translation | 163 | 305 |
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes | (18) | 2 |
Gains on cash flow hedges, net of income taxes | 28 | 69 |
Other comprehensive income | 173 | 376 |
Comprehensive income | 1,976 | 773 |
Less: comprehensive income attributable to noncontrolling interests | (4) | (9) |
Comprehensive income attributable to TE Connectivity Ltd. | $ 1,972 | $ 764 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 29, 2023 | Sep. 29, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 1,170 | $ 1,661 |
Accounts receivable, net of allowance for doubtful accounts of $37 and $30, respectively | 2,828 | 2,967 |
Inventories | 2,783 | 2,552 |
Prepaid expenses and other current assets | 660 | 712 |
Total current assets | 7,441 | 7,892 |
Property, plant, and equipment, net | 3,854 | 3,754 |
Goodwill | 5,836 | 5,463 |
Intangible assets, net | 1,278 | 1,175 |
Deferred income taxes | 3,852 | 2,600 |
Other assets | 810 | 828 |
Total assets | 23,071 | 21,712 |
Current liabilities: | ||
Short-term debt | 613 | 682 |
Accounts payable | 1,690 | 1,563 |
Accrued and other current liabilities | 1,708 | 2,218 |
Total current liabilities | 4,011 | 4,463 |
Long-term debt | 3,585 | 3,529 |
Long-term pension and postretirement liabilities | 744 | 728 |
Deferred income taxes | 188 | 185 |
Income taxes | 380 | 365 |
Other liabilities | 914 | 787 |
Total liabilities | 9,822 | 10,057 |
Commitments and contingencies (Note 9) | ||
Redeemable noncontrolling interests | 108 | 104 |
Equity: | ||
Common shares, CHF 0.57 par value, 322,470,281 shares authorized and issued | 142 | 142 |
Accumulated earnings | 14,678 | 12,947 |
Treasury shares, at cost, 13,050,787 and 10,487,742 shares, respectively | (1,695) | (1,380) |
Accumulated other comprehensive income (loss) | 11 | (158) |
Total TE Connectivity Ltd. shareholders' equity | 13,136 | 11,551 |
Noncontrolling interests | 5 | |
Equity | 13,141 | 11,551 |
Total liabilities, redeemable noncontrolling interests, and equity | $ 23,071 | $ 21,712 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Millions | Dec. 29, 2023 USD ($) shares | Dec. 29, 2023 SFr / shares | Sep. 29, 2023 USD ($) shares | Sep. 29, 2023 SFr / shares |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ | $ 37 | $ 30 | ||
Common shares, par value (in currency per share) | SFr / shares | SFr 0.57 | SFr 0.57 | ||
Common shares, shares authorized | 322,470,281 | 322,470,281 | ||
Common shares, shares issued | 322,470,281 | 322,470,281 | ||
Treasury shares | 13,050,787 | 10,487,742 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Common Shares | Treasury Shares | Contributed Surplus | Accumulated Earnings | Accumulated Other Comprehensive Income (Loss) | TE Connectivity Ltd. Shareholders' Equity | Noncontrolling Interests | Total |
Balance at Sep. 30, 2022 | $ 146 | $ (1,681) | $ 12,832 | $ (495) | $ 10,802 | $ 10,802 | ||
Balance (in shares) at Sep. 30, 2022 | 331,000,000 | |||||||
Treasury Stock balance (in shares) at Sep. 30, 2022 | (13,000,000) | |||||||
Increase (Decrease) in Shareholders' Equity: | ||||||||
Net income | 397 | 397 | 397 | |||||
Other comprehensive income | 367 | 367 | 367 | |||||
Share-based compensation expense | $ 32 | 32 | 32 | |||||
Exercise of share options | $ 11 | 11 | 11 | |||||
Restricted share award vestings and other activity | $ 49 | (32) | (29) | (12) | (12) | |||
Restricted share award vestings and other activity (in shares) | 1,000,000 | |||||||
Repurchase of common shares | $ (233) | (233) | $ (233) | |||||
Repurchase of common shares (in shares) | (2,000,000) | (2,000,000) | ||||||
Balance at Dec. 30, 2022 | $ 146 | $ (1,854) | 13,200 | (128) | 11,364 | $ 11,364 | ||
Treasury Stock balance (in shares) at Dec. 30, 2022 | (14,000,000) | |||||||
Balance (in shares) at Dec. 30, 2022 | 331,000,000 | |||||||
Balance at Sep. 29, 2023 | $ 142 | $ (1,380) | 12,947 | (158) | 11,551 | $ 11,551 | ||
Balance (in shares) at Sep. 29, 2023 | 322,000,000 | |||||||
Treasury Stock balance (in shares) at Sep. 29, 2023 | (10,000,000) | 10,487,742 | ||||||
Increase (Decrease) in Shareholders' Equity: | ||||||||
Acquisition | $ 5 | $ 5 | ||||||
Net income | 1,803 | 1,803 | 1,803 | |||||
Other comprehensive income | 169 | 169 | 169 | |||||
Share-based compensation expense | 34 | 34 | 34 | |||||
Exercise of share options | $ 11 | 11 | 11 | |||||
Restricted share award vestings and other activity | 94 | $ (34) | (72) | (12) | (12) | |||
Repurchase of common shares | $ (420) | (420) | $ (420) | |||||
Repurchase of common shares (in shares) | (3,000,000) | (3,000,000) | ||||||
Balance at Dec. 29, 2023 | $ 142 | $ (1,695) | $ 14,678 | $ 11 | $ 13,136 | $ 5 | $ 13,141 | |
Treasury Stock balance (in shares) at Dec. 29, 2023 | (13,000,000) | 13,050,787 | ||||||
Balance (in shares) at Dec. 29, 2023 | 322,000,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 1,803 | $ 397 |
Loss from discontinued operations, net of income taxes | 1 | 1 |
Income from continuing operations | 1,804 | 398 |
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||
Depreciation and amortization | 194 | 187 |
Deferred income taxes | (1,217) | (35) |
Non-cash lease cost | 34 | 34 |
Provision for losses on accounts receivable and inventories | 42 | 51 |
Share-based compensation expense | 34 | 32 |
Other | 40 | 49 |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | ||
Accounts receivable, net | 127 | (54) |
Inventories | (282) | (324) |
Prepaid expenses and other current assets | (48) | (86) |
Accounts payable | 128 | 149 |
Accrued and other current liabilities | (239) | (39) |
Income taxes | 12 | 25 |
Other | 90 | 194 |
Net cash provided by operating activities | 719 | 581 |
Cash flows from investing activities: | ||
Capital expenditures | (151) | (183) |
Proceeds from sale of property, plant, and equipment | 2 | 1 |
Acquisition of businesses, net of cash acquired | (349) | (109) |
Proceeds from divestiture of business, net of cash retained by businesses sold | 38 | |
Other | (8) | 26 |
Net cash used in investing activities | (468) | (265) |
Cash flows from financing activities: | ||
Net decrease in commercial paper | (69) | (139) |
Repayment of debt | (1) | (4) |
Proceeds from exercise of share options | 11 | 11 |
Repurchase of common shares | (476) | (287) |
Payment of common share dividends to shareholders | (183) | (178) |
Other | (27) | (24) |
Net cash used in financing activities | (745) | (621) |
Effect of currency translation on cash | 3 | 10 |
Net decrease in cash, cash equivalents, and restricted cash | (491) | (295) |
Cash, cash equivalents, and restricted cash at beginning of period | 1,661 | 1,088 |
Cash, cash equivalents, and restricted cash at end of period | $ 1,170 | $ 793 |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 3 Months Ended |
Dec. 29, 2023 | |
Basis of Presentation and Accounting Policies | |
Basis of Presentation and Accounting Policies | 1. Basis of Presentation and Accounting Policies 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 29, 2023. Unless otherwise indicated, references in the Condensed Consolidated Financial Statements to fiscal 2024 and fiscal 2023 are to our fiscal years ending September 27, 2024 and ended September 29, 2023, respectively. Recently Issued Accounting Pronouncements Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvement to Income Tax Disclosures, Recently Adopted Accounting Pronouncement In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50)—Disclosure of Supplier Finance Program Obligations |
Restructuring and Other Charges
Restructuring and Other Charges, Net | 3 Months Ended |
Dec. 29, 2023 | |
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 Quarters Ended December 29, December 30, 2023 2022 (in millions) Restructuring charges, net $ 9 $ 104 Loss on divestiture and impairment of held for sale business 11 6 Other charges, net 1 1 Restructuring and other charges, net $ 21 $ 111 Restructuring Charges, Net Net restructuring and charges by segment were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Transportation Solutions $ 2 $ 74 Industrial Solutions 6 6 Communications Solutions 1 24 Restructuring charges, net $ 9 $ 104 Activity in our restructuring reserves was as follows: Balance at Balance at September 29, Changes in Cash Non-Cash Currency December 29, 2023 Charges Estimate Payments Items Translation 2023 (in millions) Fiscal 2024 Actions: Employee severance $ — $ 5 $ — $ — $ — $ — $ 5 Fiscal 2023 Actions: Employee severance 187 — (8) (20) — 8 167 Facility and other exit costs 2 1 — (3) — — — Property, plant, and equipment — 4 — — (4) — — Total 189 5 (8) (23) (4) 8 167 Pre-Fiscal 2023 Actions: Employee severance 127 — 5 (23) — 4 113 Facility and other exit costs 4 2 — (2) — — 4 Total 131 2 5 (25) — 4 117 Total Activity $ 320 $ 12 $ (3) $ (48) $ (4) $ 12 $ 289 Fiscal 2024 Actions Fiscal 2023 Actions During fiscal 2023, we initiated a restructuring program associated with cost structure improvements across all segments. In connection with this program, during the quarters ended December 29, 2023 and December 30, 2022, we recorded net restructuring credits of $3 million and charges of $105 million, respectively. We expect to complete all restructuring actions commenced during fiscal 2023 by the end of fiscal 2025, and to incur additional charges of approximately $24 million related primarily to employee severance and facility exit costs. The following table summarizes expected, incurred, and remaining charges for the fiscal 2023 program by segment as of December 29, 2023: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 153 $ 138 $ 15 Industrial Solutions 80 73 7 Communications Solutions 35 33 2 Total $ 268 $ 244 $ 24 Pre-Fiscal 2023 Actions During the quarters ended December 29, 2023 and December 30, 2022, we recorded net restructuring charges of $7 million and credits of $1 million, respectively, related to pre-fiscal 2023 actions. We expect that any additional charges related to restructuring actions commenced prior to fiscal 2023 will be insignificant. Total Restructuring Reserves Restructuring reserves included on the Condensed Consolidated Balance Sheets were as follows: December 29, September 29, 2023 2023 (in millions) Accrued and other current liabilities $ 204 $ 240 Other liabilities 85 80 Restructuring reserves $ 289 $ 320 Divestiture During the quarter ended December 29, 2023, we sold one business for net cash proceeds of $38 million. In connection with the divestiture, we recorded a pre-tax loss on sale of $11 million. The business sold was reported in our Transportation Solutions segment. |
Acquisitions
Acquisitions | 3 Months Ended |
Dec. 29, 2023 | |
Acquisitions | |
Acquisitions | 3. Acquisitions During the quarter ended December 29, 2023, we acquired approximately 98.7% of the outstanding shares of Schaffner Holding AG (“Schaffner”), a leader in electromagnetic solutions based in Switzerland, for CHF 505.00 per share in cash for a purchase price of CHF 302 million (equivalent to $349 million), net of cash acquired. As a result of the transaction, we recognized a noncontrolling interest with a fair value of $5 million as of the acquisition date. Due to the timing of the transaction, which was reported as part of our Industrial Solutions segment, we preliminarily allocated the purchase price to goodwill and identifiable intangible assets. Our valuation of identifiable intangible assets, assets acquired, and liabilities assumed is currently in process; therefore, the current allocation is subject to adjustment upon finalization of the valuations. The amount of these potential adjustments could be significant. We intend to initiate a squeeze-out procedure and delist the remaining Schaffner shares from SIX Swiss Exchange during fiscal 2024. We acquired one business for a cash purchase price of $109 million, net of cash acquired, during the quarter ended December 30, 2022. The acquisition was reported as part of our Industrial Solutions segment from the date of acquisition. |
Inventories
Inventories | 3 Months Ended |
Dec. 29, 2023 | |
Inventories | |
Inventories | 4. Inventories Inventories consisted of the following: December 29, September 29, 2023 2023 (in millions) Raw materials $ 394 $ 367 Work in progress 1,284 1,185 Finished goods 1,105 1,000 Inventories $ 2,783 $ 2,552 |
Goodwill
Goodwill | 3 Months Ended |
Dec. 29, 2023 | |
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 29, 2023 (1) $ 1,478 $ 3,263 $ 722 $ 5,463 Acquisition — 257 — 257 Currency translation and other 29 71 16 116 December 29, 2023 (1) $ 1,507 $ 3,591 $ 738 $ 5,836 (1) At December 29, 2023 and September 29, 2023, 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 quarter ended December 29, 2023, we recognized goodwill in the Industrial Solutions segment in connection with an acquisition. See Note 3 for additional information regarding acquisitions. |
Intangible Assets, Net
Intangible Assets, Net | 3 Months Ended |
Dec. 29, 2023 | |
Intangible Assets, Net | |
Intangible Assets, Net | 6. Intangible Assets, Net Intangible assets consisted of the following: December 29, 2023 September 29, 2023 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Customer relationships $ 1,876 $ (856) $ 1,020 $ 1,720 $ (806) $ 914 Intellectual property 1,129 (884) 245 1,186 (938) 248 Other 19 (6) 13 19 (6) 13 Total $ 3,024 $ (1,746) $ 1,278 $ 2,925 $ (1,750) $ 1,175 Intangible asset amortization expense was $42 million and $46 million for the quarters ended December 29, 2023 and December 30, 2022, respectively. At December 29, 2023, the aggregate amortization expense on intangible assets is expected to be as follows: (in millions) Remainder of fiscal 2024 $ 128 Fiscal 2025 161 Fiscal 2026 154 Fiscal 2027 135 Fiscal 2028 102 Fiscal 2029 95 Thereafter 503 Total $ 1,278 |
Debt
Debt | 3 Months Ended |
Dec. 29, 2023 | |
Debt | |
Debt | 7. Debt As of December 29, 2023, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, had $261 million of commercial paper outstanding at a weighted-average interest rate of 5.50%. TEGSA had $330 million of commercial paper outstanding at a weighted-average interest rate of 5.50% at September 29, 2023. The fair value of our debt, based on indicative valuations, was approximately $4,103 million and $3,974 million at December 29, 2023 and September 29, 2023, respectively. |
Leases
Leases | 3 Months Ended |
Dec. 29, 2023 | |
Leases | |
Leases | 8. Leases The components of lease cost were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Operating lease cost $ 34 $ 34 Variable lease cost 12 12 Total lease cost $ 46 $ 46 Cash flow information, including significant non-cash transactions, related to leases was as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases (1) $ 34 $ 32 Right-of-use assets, including modifications of existing leases, obtained in exchange for operating lease liabilities 70 35 (1) These payments are included in cash flows from operating activities, primarily in changes in accrued and other current liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 29, 2023 | |
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 have been investigating our past compliance with relevant U.S. trade controls and have made voluntary disclosures of apparent trade controls violations to the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) and the U.S. State Department’s Directorate of Defense Trade Controls (“DDTC”). We are cooperating with the BIS and DDTC on these matters, and the resulting investigations are ongoing. We have also been contacted by the U.S. Department of Justice concerning aspects of these matters. 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. Although 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 December 29, 2023, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $17 million to $44 million, and we accrued $20 million as the probable loss, which was the best estimate within this range. We believe that any potential payment of such estimated amounts will not have a material adverse effect on our results of operations, financial position, or cash flows. Guarantees In disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover 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. Supply Chain Finance Program We have an agreement with a financial institution that allows participating suppliers the ability to finance payment obligations. The financial institution has separate arrangements with the suppliers and provides them with the option to request early payment for invoices. We do not determine the terms or conditions of the arrangement between the financial institution and suppliers. Our obligation to suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangement and we are not required to post collateral with the financial institution. The outstanding payment obligations under our supply chain finance program, which are included in accounts payable on our Condensed Consolidated Balance Sheets, were $122 million and $109 million at December 29, 2023 and September 29, 2023, respectively. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Dec. 29, 2023 | |
Financial Instruments | |
Financial Instruments | 10. Financial Instruments Foreign Currency Exchange Rate Risk As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on intercompany and other cash transactions. We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with the cash flow hedge-designated instruments addressing foreign exchange risks will be reclassified into the Condensed Consolidated Statement of Operations within the next twelve months. Hedge of Net Investment We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $2,792 million and $1,709 million at December 29, 2023 and September 29, 2023, 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 $3,599 million and $3,806 million at December 29, 2023 and September 29, 2023, respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 1.6% per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2028, we will pay the notional value of the contracts in the designated foreign currency and receive U.S. dollars from our counterparties. We are not required to provide collateral for these contracts. These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: December 29, September 29, 2023 2023 (in millions) Prepaid expenses and other current assets $ 60 $ 109 Other assets 35 79 Accrued and other current liabilities 9 4 Other liabilities 59 10 The impacts of our hedge of net investment programs were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Foreign currency exchange losses on intercompany loans and external borrowings (1) $ (107) $ (165) Losses on cross-currency swap contracts designated as hedges of net investment (1) (125) (137) (1) Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes attributable to the translation of the net investment. 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 $431 million and $459 million at December 29, 2023 and September 29, 2023, respectively, and were designated as cash flow hedges. These commodity swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows: December 29, September 29, 2023 2023 (in millions) Prepaid expenses and other current assets $ 11 $ 3 Accrued and other current liabilities 6 21 Other liabilities 1 5 The impacts of our commodity swap contracts were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Gains recorded in other comprehensive income (loss) $ 26 $ 47 Losses reclassified from accumulated other comprehensive income (loss) into cost of sales (4) (29) 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 | 3 Months Ended |
Dec. 29, 2023 | |
Retirement Plans | |
Retirement Plans | 11. Retirement Plans The net periodic pension benefit cost 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 December 29, December 30, December 29, December 30, 2023 2022 2023 2022 (in millions) Operating expense: Service cost $ 7 $ 7 $ 2 $ 2 Other (income) expense: Interest cost 15 14 10 9 Expected returns on plan assets (12) (11) (10) (9) Amortization of net actuarial loss 1 1 1 1 Amortization of prior service credit (1) (1) — — Net periodic pension benefit cost $ 10 $ 10 $ 3 $ 3 During the quarter ended December 29, 2023, we contributed $12 million to our non-U.S. pension plans. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 29, 2023 | |
Income Taxes | |
Income Taxes | 12. Income Taxes We recorded an income tax benefit of $1,105 million and expense of $87 million for the quarters ended December 29, 2023 and December 30, 2022, respectively. The income tax benefit for the quarter ended December 29, 2023 included an $874 million net income tax benefit associated with a ten-year tax credit obtained by a Swiss subsidiary and a $262 million income tax benefit related to the revaluation of deferred tax assets as a result of a corporate tax rate increase in Switzerland. In addition, the income tax benefit for the quarter ended December 29, 2023 included a $118 million income tax benefit associated with the tax impacts of a legal entity restructuring with related costs of $4 million recorded in selling, general, and administrative expenses for other non-income taxes. Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that, as of December 29, 2023, approximately $30 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months. We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Condensed Consolidated Balance Sheet as of December 29, 2023. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 29, 2023 | |
Earnings Per Share | |
Earnings Per Share | 13. Earnings Per Share The weighted-average number of shares outstanding used in the computations of basic and diluted earnings per share were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Basic 311 317 Dilutive impact of share-based compensation arrangements 2 2 Diluted 313 319 The following share options were not included in the computation of diluted earnings per share because the instruments’ underlying exercise prices were greater than the average market prices of our common shares and inclusion would be antidilutive: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Antidilutive share options 2 2 |
Equity
Equity | 3 Months Ended |
Dec. 29, 2023 | |
Equity | |
Equity | 14. Equity Dividends We paid cash dividends to shareholders as follows: For the Quarters Ended December 29, December 30, 2023 2022 Dividends paid per common share $ 0.59 $ 0.56 Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to equity. At December 29, 2023 and September 29, 2023, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $183 million and $368 million, respectively. Share Repurchase Program During the quarter ended December 29, 2023, our board of directors authorized an increase of $1.5 billion in our share repurchase program. Common shares repurchased under the share repurchase program were as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Number of common shares repurchased 3 2 Repurchase value $ 420 $ 233 At December 29, 2023, we had $1.8 billion of availability remaining under our share repurchase authorization. |
Share Plans
Share Plans | 3 Months Ended |
Dec. 29, 2023 | |
Share Plans | |
Share Plans | 15. Share Plans Share-based compensation expense, which was included in selling, general, and administrative expenses on the Condensed Consolidated Statements of Operations, was as follows: For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Share-based compensation expense $ 34 $ 32 As of December 29, 2023, there was $211 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 1.9 years. During the quarter ended December 29, 2023, we granted the following share-based awards as part of our annual incentive plan grant: Grant-Date Shares Fair Value (in millions) Share options 0.9 $ 39.77 Restricted share awards 0.4 131.77 Performance share awards 0.2 131.77 As of December 29, 2023, we had six million shares available for issuance under the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and restated as of December 12, 2023. 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 31 % Risk-free interest rate 4.6 % Expected annual dividend per share $ 2.36 Expected life of options (in years) 5.3 |
Segment and Geographic Data
Segment and Geographic Data | 3 Months Ended |
Dec. 29, 2023 | |
Segment and Geographic Data | |
Segment and Geographic Data | 16. Segment and Geographic Data Net sales by segment (1) (2) For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Transportation Solutions: Automotive $ 1,776 $ 1,649 Commercial transportation 356 348 Sensors 241 262 Total Transportation Solutions 2,373 2,259 Industrial Solutions: Industrial equipment 330 434 Aerospace, defense, and marine 290 264 Energy 205 189 Medical 200 173 Total Industrial Solutions 1,025 1,060 Communications Solutions: Data and devices 279 329 Appliances 154 193 Total Communications Solutions 433 522 Total $ 3,831 $ 3,841 (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 Quarters Ended December 29, December 30, 2023 2022 (in millions) Europe/Middle East/Africa (“EMEA”): Transportation Solutions $ 867 $ 812 Industrial Solutions 477 444 Communications Solutions 67 70 Total EMEA 1,411 1,326 Asia–Pacific: Transportation Solutions 1,012 924 Industrial Solutions 147 189 Communications Solutions 220 294 Total Asia–Pacific 1,379 1,407 Americas: Transportation Solutions 494 523 Industrial Solutions 401 427 Communications Solutions 146 158 Total Americas 1,041 1,108 Total $ 3,831 $ 3,841 (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. Operating income by segment was as follows: December 29, December 30, 2023 2022 (in millions) Transportation Solutions $ 478 $ 282 Industrial Solutions 141 156 Communications Solutions 79 64 Total $ 698 $ 502 |
Basis of Presentation and Acc_2
Basis of Presentation and Accounting Policies (Policies) | 3 Months Ended |
Dec. 29, 2023 | |
Basis of Presentation and Accounting Policies | |
Recently Issued and Adopted Accounting Pronouncement | Recently Issued Accounting Pronouncements Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvement to Income Tax Disclosures, Recently Adopted Accounting Pronouncement In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50)—Disclosure of Supplier Finance Program Obligations |
Restructuring and Other Charg_2
Restructuring and Other Charges, Net (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Restructuring and Other Charges, Net | |
Schedule of net restructuring and other charges | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Restructuring charges, net $ 9 $ 104 Loss on divestiture and impairment of held for sale business 11 6 Other charges, net 1 1 Restructuring and other charges, net $ 21 $ 111 |
Net restructuring and related charges by segment | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Transportation Solutions $ 2 $ 74 Industrial Solutions 6 6 Communications Solutions 1 24 Restructuring charges, net $ 9 $ 104 |
Summary of activity in restructuring reserves | Balance at Balance at September 29, Changes in Cash Non-Cash Currency December 29, 2023 Charges Estimate Payments Items Translation 2023 (in millions) Fiscal 2024 Actions: Employee severance $ — $ 5 $ — $ — $ — $ — $ 5 Fiscal 2023 Actions: Employee severance 187 — (8) (20) — 8 167 Facility and other exit costs 2 1 — (3) — — — Property, plant, and equipment — 4 — — (4) — — Total 189 5 (8) (23) (4) 8 167 Pre-Fiscal 2023 Actions: Employee severance 127 — 5 (23) — 4 113 Facility and other exit costs 4 2 — (2) — — 4 Total 131 2 5 (25) — 4 117 Total Activity $ 320 $ 12 $ (3) $ (48) $ (4) $ 12 $ 289 |
Restructuring reserves included on Consolidated Balance Sheets | December 29, September 29, 2023 2023 (in millions) Accrued and other current liabilities $ 204 $ 240 Other liabilities 85 80 Restructuring reserves $ 289 $ 320 |
Fiscal 2023 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 2023 program by segment as of December 29, 2023: Total Cumulative Remaining Expected Charges Expected Charges Incurred Charges (in millions) Transportation Solutions $ 153 $ 138 $ 15 Industrial Solutions 80 73 7 Communications Solutions 35 33 2 Total $ 268 $ 244 $ 24 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Inventories | |
Schedule of inventories | December 29, September 29, 2023 2023 (in millions) Raw materials $ 394 $ 367 Work in progress 1,284 1,185 Finished goods 1,105 1,000 Inventories $ 2,783 $ 2,552 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Goodwill | |
Changes in the carrying amount of goodwill by segment | Transportation Industrial Communications Solutions Solutions Solutions Total (in millions) September 29, 2023 (1) $ 1,478 $ 3,263 $ 722 $ 5,463 Acquisition — 257 — 257 Currency translation and other 29 71 16 116 December 29, 2023 (1) $ 1,507 $ 3,591 $ 738 $ 5,836 (1) At December 29, 2023 and September 29, 2023, 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) | 3 Months Ended |
Dec. 29, 2023 | |
Intangible Assets, Net | |
Schedule of finite-lived intangible assets | December 29, 2023 September 29, 2023 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Customer relationships $ 1,876 $ (856) $ 1,020 $ 1,720 $ (806) $ 914 Intellectual property 1,129 (884) 245 1,186 (938) 248 Other 19 (6) 13 19 (6) 13 Total $ 3,024 $ (1,746) $ 1,278 $ 2,925 $ (1,750) $ 1,175 |
Schedule of finite-lived intangible assets, future amortization expense | At December 29, 2023, the aggregate amortization expense on intangible assets is expected to be as follows: (in millions) Remainder of fiscal 2024 $ 128 Fiscal 2025 161 Fiscal 2026 154 Fiscal 2027 135 Fiscal 2028 102 Fiscal 2029 95 Thereafter 503 Total $ 1,278 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Leases | |
Schedule of components of lease cost | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Operating lease cost $ 34 $ 34 Variable lease cost 12 12 Total lease cost $ 46 $ 46 |
Schedule of Cash Flow information, including significant non-cash transactions, related to leases | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Payments for operating leases (1) $ 34 $ 32 Right-of-use assets, including modifications of existing leases, obtained in exchange for operating lease liabilities 70 35 (1) These payments are included in cash flows from operating activities, primarily in changes in accrued and other current liabilities. |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Net investment hedges | |
Schedule of impacts of hedging program | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Foreign currency exchange losses on intercompany loans and external borrowings (1) $ (107) $ (165) Losses on cross-currency swap contracts designated as hedges of net investment (1) (125) (137) (1) Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes attributable to the translation of the net investment. |
Cross-currency swap contracts | Net investment hedges | |
Summary of fair value of derivative instruments | December 29, September 29, 2023 2023 (in millions) Prepaid expenses and other current assets $ 60 $ 109 Other assets 35 79 Accrued and other current liabilities 9 4 Other liabilities 59 10 |
Commodity swap contracts | Cash flow hedges | |
Summary of fair value of derivative instruments | December 29, September 29, 2023 2023 (in millions) Prepaid expenses and other current assets $ 11 $ 3 Accrued and other current liabilities 6 21 Other liabilities 1 5 |
Schedule of impacts of hedging program | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Gains recorded in other comprehensive income (loss) $ 26 $ 47 Losses reclassified from accumulated other comprehensive income (loss) into cost of sales (4) (29) |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Retirement Plans | |
Net periodic pension benefit cost | Non-U.S. Plans U.S. Plans For the For the Quarters Ended Quarters Ended December 29, December 30, December 29, December 30, 2023 2022 2023 2022 (in millions) Operating expense: Service cost $ 7 $ 7 $ 2 $ 2 Other (income) expense: Interest cost 15 14 10 9 Expected returns on plan assets (12) (11) (10) (9) Amortization of net actuarial loss 1 1 1 1 Amortization of prior service credit (1) (1) — — Net periodic pension benefit cost $ 10 $ 10 $ 3 $ 3 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Weighted-average number of shares outstanding: | |
Schedule of weighted-average shares outstanding, basic and diluted | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Basic 311 317 Dilutive impact of share-based compensation arrangements 2 2 Diluted 313 319 |
Schedule of antidilutive securities excluded from computation of earnings per share | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Antidilutive share options 2 2 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Equity | |
Schedule of cash dividends to shareholders | For the Quarters Ended December 29, December 30, 2023 2022 Dividends paid per common share $ 0.59 $ 0.56 |
Schedule of common shares repurchased | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Number of common shares repurchased 3 2 Repurchase value $ 420 $ 233 |
Share Plans (Tables)
Share Plans (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Share Plans | |
Share-based compensation expense | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Share-based compensation expense $ 34 $ 32 |
Summary of share-based award activity | During the quarter ended December 29, 2023, we granted the following share-based awards as part of our annual incentive plan grant: Grant-Date Shares Fair Value (in millions) Share options 0.9 $ 39.77 Restricted share awards 0.4 131.77 Performance share awards 0.2 131.77 |
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 31 % Risk-free interest rate 4.6 % Expected annual dividend per share $ 2.36 Expected life of options (in years) 5.3 |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 3 Months Ended |
Dec. 29, 2023 | |
Segment and Geographic Data | |
Schedule of net sales by segment | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Transportation Solutions: Automotive $ 1,776 $ 1,649 Commercial transportation 356 348 Sensors 241 262 Total Transportation Solutions 2,373 2,259 Industrial Solutions: Industrial equipment 330 434 Aerospace, defense, and marine 290 264 Energy 205 189 Medical 200 173 Total Industrial Solutions 1,025 1,060 Communications Solutions: Data and devices 279 329 Appliances 154 193 Total Communications Solutions 433 522 Total $ 3,831 $ 3,841 (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 segment and geographic region | For the Quarters Ended December 29, December 30, 2023 2022 (in millions) Europe/Middle East/Africa (“EMEA”): Transportation Solutions $ 867 $ 812 Industrial Solutions 477 444 Communications Solutions 67 70 Total EMEA 1,411 1,326 Asia–Pacific: Transportation Solutions 1,012 924 Industrial Solutions 147 189 Communications Solutions 220 294 Total Asia–Pacific 1,379 1,407 Americas: Transportation Solutions 494 523 Industrial Solutions 401 427 Communications Solutions 146 158 Total Americas 1,041 1,108 Total $ 3,831 $ 3,841 (1) Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. |
Schedule of operating income by segment | December 29, December 30, 2023 2022 (in millions) Transportation Solutions $ 478 $ 282 Industrial Solutions 141 156 Communications Solutions 79 64 Total $ 698 $ 502 |
Restructuring and Other Charg_3
Restructuring and Other Charges, Net - Restructuring and Other Charges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Restructuring and other charges, net | ||
Restructuring charges, net | $ 9 | $ 104 |
Loss on divestiture and impairment of held for sale business | 11 | 6 |
Other charges, net | 1 | 1 |
Restructuring and other charges, net | 21 | 111 |
Restructuring charges, net | ||
Restructuring and other charges, net | ||
Restructuring charges, net | 9 | 104 |
Restructuring charges, net | Transportation Solutions | ||
Restructuring and other charges, net | ||
Restructuring charges, net | 2 | 74 |
Restructuring charges, net | Industrial Solutions | ||
Restructuring and other charges, net | ||
Restructuring charges, net | 6 | 6 |
Restructuring charges, net | Communications Solutions | ||
Restructuring and other charges, net | ||
Restructuring charges, net | $ 1 | $ 24 |
Restructuring and Other Charg_4
Restructuring and Other Charges, Net - Restructuring Reserve Activity (Details) $ in Millions | 3 Months Ended |
Dec. 29, 2023 USD ($) | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | $ 320 |
Charges | 12 |
Changes in Estimate | (3) |
Cash Payments | (48) |
Non-Cash Items | (4) |
Currency Translation | 12 |
Restructuring reserve at the end of the period | 289 |
Fiscal 2024 Actions | Employee severance | |
Restructuring reserve | |
Charges | 5 |
Restructuring reserve at the end of the period | 5 |
Fiscal 2023 Actions | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 189 |
Charges | 5 |
Changes in Estimate | (8) |
Cash Payments | (23) |
Non-Cash Items | (4) |
Currency Translation | 8 |
Restructuring reserve at the end of the period | 167 |
Fiscal 2023 Actions | Employee severance | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 187 |
Changes in Estimate | (8) |
Cash Payments | (20) |
Currency Translation | 8 |
Restructuring reserve at the end of the period | 167 |
Fiscal 2023 Actions | Facility and other exit costs | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 2 |
Charges | 1 |
Cash Payments | (3) |
Restructuring reserve at the end of the period | 0 |
Fiscal 2023 Actions | Property, plant, and equipment | |
Restructuring reserve | |
Charges | 4 |
Non-Cash Items | (4) |
Restructuring reserve at the end of the period | 0 |
Pre-Fiscal 2023 Actions | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 131 |
Charges | 2 |
Changes in Estimate | 5 |
Cash Payments | (25) |
Currency Translation | 4 |
Restructuring reserve at the end of the period | 117 |
Pre-Fiscal 2023 Actions | Employee severance | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 127 |
Changes in Estimate | 5 |
Cash Payments | (23) |
Currency Translation | 4 |
Restructuring reserve at the end of the period | 113 |
Pre-Fiscal 2023 Actions | Facility and other exit costs | |
Restructuring reserve | |
Restructuring reserve at the beginning of the period | 4 |
Charges | 2 |
Cash Payments | (2) |
Restructuring reserve at the end of the period | $ 4 |
Restructuring and Other Charg_5
Restructuring and Other Charges, Net - Actions (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Restructuring Charges | ||
Charges Incurred | $ 9 | $ 104 |
Fiscal 2024 Actions | ||
Restructuring Charges | ||
Charges Incurred | 5 | |
Fiscal 2023 Actions | ||
Restructuring Charges | ||
Total Expected Charges | 268 | |
Cumulative Charges Incurred | 244 | |
Remaining Expected Charges | 24 | |
Charges Incurred | (3) | 105 |
Fiscal 2023 Actions | Transportation Solutions | ||
Restructuring Charges | ||
Total Expected Charges | 153 | |
Cumulative Charges Incurred | 138 | |
Remaining Expected Charges | 15 | |
Fiscal 2023 Actions | Industrial Solutions | ||
Restructuring Charges | ||
Total Expected Charges | 80 | |
Cumulative Charges Incurred | 73 | |
Remaining Expected Charges | 7 | |
Fiscal 2023 Actions | Communications Solutions | ||
Restructuring Charges | ||
Total Expected Charges | 35 | |
Cumulative Charges Incurred | 33 | |
Remaining Expected Charges | 2 | |
Pre-Fiscal 2023 Actions | ||
Restructuring Charges | ||
Charges Incurred | $ 7 | $ (1) |
Restructuring and Other Charg_6
Restructuring and Other Charges, Net - Restructuring Reserve Balances (Details) - USD ($) $ in Millions | Dec. 29, 2023 | Sep. 29, 2023 |
Restructuring reserves included on the Consolidated Balance Sheets | ||
Accrued and other current liabilities | $ 204 | $ 240 |
Other liabilities | 85 | 80 |
Restructuring reserves | $ 289 | $ 320 |
Restructuring and Other Charg_7
Restructuring and Other Charges, Net - Divestitures (Details) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 USD ($) item | Dec. 30, 2022 USD ($) | |
Divestitures, Not Discontinued Operation | ||
Proceeds from divestiture of business, net of cash retained by businesses sold | $ 38 | |
Impairment of held for sale business and loss on divestiture | $ 11 | $ 6 |
Fiscal 2024 Divestitures | Transportation Solutions | ||
Divestitures, Not Discontinued Operation | ||
Number of Businesses Sold | item | 1 | |
Proceeds from divestiture of business, net of cash retained by businesses sold | $ 38 | |
Net pre-tax loss on divestiture | $ (11) |
Acquisitions (Details)
Acquisitions (Details) SFr / shares in Units, SFr in Millions, $ in Millions | 3 Months Ended | |||
Dec. 29, 2023 USD ($) | Dec. 29, 2023 CHF (SFr) | Dec. 30, 2022 USD ($) item | Dec. 29, 2023 SFr / shares | |
Acquisitions | ||||
Net cash paid | $ 349 | $ 109 | ||
2023 Acquisitions | ||||
Acquisitions | ||||
Number of businesses acquired | item | 1 | |||
Net cash paid | $ 109 | |||
Schaffner Holding AG | ||||
Acquisitions | ||||
Net cash paid | $ 349 | SFr 302 | ||
Percentage of voting interest acquired | 98.70% | |||
Per share value of the purchase (in dollars per share) | SFr / shares | SFr 505 | |||
Fair value of noncontrolling interest | $ 5 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 29, 2023 | Sep. 29, 2023 |
Inventories | ||
Raw materials | $ 394 | $ 367 |
Work in progress | 1,284 | 1,185 |
Finished goods | 1,105 | 1,000 |
Inventories | $ 2,783 | $ 2,552 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Sep. 29, 2023 | |
Goodwill: | ||
Goodwill, beginning balance | $ 5,463 | |
Acquisition | 257 | |
Currency translation and other | 116 | |
Goodwill, ending balance | 5,836 | |
Transportation Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 1,478 | |
Currency translation and other | 29 | |
Goodwill, ending balance | 1,507 | |
Accumulated impairment losses | 3,091 | $ 3,091 |
Industrial Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 3,263 | |
Acquisition | 257 | |
Currency translation and other | 71 | |
Goodwill, ending balance | 3,591 | |
Accumulated impairment losses | 669 | 669 |
Communications Solutions | ||
Goodwill: | ||
Goodwill, beginning balance | 722 | |
Currency translation and other | 16 | |
Goodwill, ending balance | 738 | |
Accumulated impairment losses | $ 489 | $ 489 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Sep. 29, 2023 | |
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | $ 3,024 | $ 2,925 | |
Accumulated Amortization | (1,746) | (1,750) | |
Net Carrying Amount | 1,278 | 1,175 | |
Finite-lived intangible assets, amortization expense | 42 | $ 46 | |
Aggregate amortization expense on intangible assets | |||
Remainder of fiscal 2024 | 128 | ||
Fiscal 2025 | 161 | ||
Fiscal 2026 | 154 | ||
Fiscal 2027 | 135 | ||
Fiscal 2028 | 102 | ||
Fiscal 2029 | 95 | ||
Thereafter | 503 | ||
Net Carrying Amount | 1,278 | 1,175 | |
Customer relationships | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 1,876 | 1,720 | |
Accumulated Amortization | (856) | (806) | |
Net Carrying Amount | 1,020 | 914 | |
Aggregate amortization expense on intangible assets | |||
Net Carrying Amount | 1,020 | 914 | |
Intellectual property | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 1,129 | 1,186 | |
Accumulated Amortization | (884) | (938) | |
Net Carrying Amount | 245 | 248 | |
Aggregate amortization expense on intangible assets | |||
Net Carrying Amount | 245 | 248 | |
Other | |||
Finite-Lived Intangible Assets | |||
Gross Carrying Amount | 19 | 19 | |
Accumulated Amortization | (6) | (6) | |
Net Carrying Amount | 13 | 13 | |
Aggregate amortization expense on intangible assets | |||
Net Carrying Amount | $ 13 | $ 13 |
Debt - Summary (Details)
Debt - Summary (Details) - USD ($) $ in Millions | Dec. 29, 2023 | Sep. 29, 2023 |
Debt | ||
Fair value of debt | $ 4,103 | $ 3,974 |
Commercial paper | ||
Debt | ||
Commercial paper | $ 261 | $ 330 |
Weighted-average interest rate (as a percent) | 5.50% | 5.50% |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Leases | ||
Operating lease cost | $ 34 | $ 34 |
Variable lease cost | 12 | 12 |
Total lease cost | $ 46 | $ 46 |
Leases - Cash Flow Information
Leases - Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Leases | ||
Payments for operating leases | $ 34 | $ 32 |
Right-of-use assets, including modifications of existing leases, obtained in exchange for operating lease liabilities | $ 70 | $ 35 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 29, 2023 | Sep. 29, 2023 |
Loss Contingencies | ||
Accrual environmental loss contingency, estimate of probable loss | $ 20 | |
Supplier Finance Program, Obligation [Roll Forward] | ||
Supplier Finance Program, Obligation | 122 | $ 109 |
Minimum | ||
Loss Contingencies | ||
Accrual environmental loss contingency, estimate of probable loss | 17 | |
Maximum | ||
Loss Contingencies | ||
Accrual environmental loss contingency, estimate of probable loss | 44 | |
Outstanding letters of credit, letters of guarantee and surety bonds | ||
Guarantees | ||
Guarantor obligations, maximum exposure | 196 | |
Discontinued Operations, Disposed of by Sale | Subsea Communications | Performance guarantee | ||
Guarantees | ||
Guarantor obligations, maximum exposure | 26 | |
Discontinued Operations, Disposed of by Sale | Subsea Communications | Letters of credit | ||
Guarantees | ||
Guarantor obligations, maximum exposure | $ 22 |
Financial Instruments (Details)
Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | Sep. 29, 2023 | |
Cash flow hedges | Commodity swap contracts | |||
Financial Instruments | |||
Notional amount | $ 431 | $ 459 | |
Gains (losses) recorded in other comprehensive income (loss) | 26 | $ 47 | |
Losses reclassified from accumulated other comprehensive income (loss) into cost of sales | (4) | (29) | |
Net investment hedges | Intercompany loans and external borrowings | |||
Financial Instruments | |||
Notional amount of non-derivative instruments | 2,792 | 1,709 | |
Foreign currency exchange gains (losses) on intercompany loans and external borrowings | (107) | (165) | |
Net investment hedges | Cross-currency swap contracts | |||
Financial Instruments | |||
Notional amount | $ 3,599 | 3,806 | |
Interest paid in foreign currency, fixed interest rate | 0% | ||
Interest received in U.S. dollars, weighted-average fixed interest rate | 1.60% | ||
Gains (losses) on cross-currency swap contracts designated as hedges of net investment | $ (125) | $ (137) | |
Prepaid expenses and other current assets | Cash flow hedges | Commodity swap contracts | |||
Financial Instruments | |||
Fair Value of Asset Positions | 11 | 3 | |
Prepaid expenses and other current assets | Net investment hedges | Cross-currency swap contracts | |||
Financial Instruments | |||
Fair Value of Asset Positions | 60 | 109 | |
Other assets | Net investment hedges | Cross-currency swap contracts | |||
Financial Instruments | |||
Fair Value of Asset Positions | 35 | 79 | |
Accrued and other current liabilities | Cash flow hedges | Commodity swap contracts | |||
Financial Instruments | |||
Fair Value of Liability Positions | 6 | 21 | |
Accrued and other current liabilities | Net investment hedges | Cross-currency swap contracts | |||
Financial Instruments | |||
Fair Value of Liability Positions | 9 | 4 | |
Other liabilities | Cash flow hedges | Commodity swap contracts | |||
Financial Instruments | |||
Fair Value of Liability Positions | 1 | 5 | |
Other liabilities | Net investment hedges | Cross-currency swap contracts | |||
Financial Instruments | |||
Fair Value of Liability Positions | $ 59 | $ 10 |
Retirement Plans (Details)
Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Net Periodic Postretirement Benefit Cost | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Interest Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Expected Return (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Amortization of Prior Service Cost (Credit), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Non-U.S. Plans | ||
Net Periodic Postretirement Benefit Cost | ||
Service cost | $ 7 | $ 7 |
Interest cost | 15 | 14 |
Expected returns on plan assets | (12) | (11) |
Amortization of net actuarial loss | 1 | 1 |
Amortization of prior service credit | (1) | (1) |
Net periodic pension benefit cost | 10 | 10 |
Defined benefit plan, contributions by employer | 12 | |
U.S. Plans | ||
Net Periodic Postretirement Benefit Cost | ||
Service cost | 2 | 2 |
Interest cost | 10 | 9 |
Expected returns on plan assets | (10) | (9) |
Amortization of net actuarial loss | 1 | 1 |
Net periodic pension benefit cost | $ 3 | $ 3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Income Taxes | ||
Income tax expense (benefit) | $ (1,105) | $ 87 |
Income tax benefit associated with a ten-year tax credit obtained by a Swiss subsidiary | $ 874 | |
Duration of income tax benefit associated with a tax credit obtained by a Swiss subsidiary | 10 years | |
Income tax benefit relating to revaluation of deferred tax assets resulting from corporate tax rate increase | $ 262 | |
Income tax benefit associated with the tax impacts of a legal entity restructuring | 118 | |
Non-income tax expense related to a legal entity restructuring | 4 | |
Unrecognized income tax benefits, approximate amount that could be resolved in next twelve months | $ 30 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Weighted-average number of shares outstanding: | ||
Basic (in shares) | 311 | 317 |
Dilutive impact of share-based compensation arrangements (in shares) | 2 | 2 |
Diluted (in shares) | 313 | 319 |
Employee Stock Option [Member] | ||
Antidilutive shares excluded from computation of earnings per share | ||
Antidilutive share options | 2 | 2 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Sep. 29, 2023 | |
Dividends paid per common share | $ 0.59 | $ 0.56 | |
Unpaid portion of the dividend payment recorded in accrued and other current liabilities | $ 183 | $ 368 | |
Share repurchase program, increase in authorized amount | $ 1,500 | ||
Number of common shares repurchased | 3 | 2 | |
Repurchase value | $ 420 | $ 233 | |
Amount available for repurchase, at end of period | $ 1,800 | ||
Treasury Shares | |||
Number of common shares repurchased | 3 | 2 | |
Repurchase value | $ 420 | $ 233 |
Share Plans (Details)
Share Plans (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Share Based Compensation Arrangements: | ||
Share-based compensation expense | $ 34 | $ 32 |
Shares available for issuance | 6 | |
Share Based Compensation Expenses Not Recognized | ||
Share-based compensation, share-based awards, total compensation expense not yet recognized | $ 211 | |
Share-based compensation, share-based awards, total compensation expense not yet recognized, expected period for recognition | 1 year 10 months 24 days | |
Employee Stock Option [Member] | ||
Share Based Compensation Arrangements: | ||
Share options granted | 0.9 | |
Options granted, grant-date fair value (in dollars per share) | $ 39.77 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology | ||
Expected share price volatility (as a percent) | 31% | |
Risk-free interest rate (as a percent) | 4.60% | |
Expected annual dividend per share | $ 2.36 | |
Expected life of options (in years) | 5 years 3 months 18 days | |
Restricted share awards | ||
Share Based Compensation Arrangements: | ||
Shares granted | 0.4 | |
Shares granted, grant-date fair value (in dollars per share) | $ 131.77 | |
Performance share awards | ||
Share Based Compensation Arrangements: | ||
Shares granted | 0.2 | |
Shares granted, grant-date fair value (in dollars per share) | $ 131.77 |
Segment and Geographic Data - N
Segment and Geographic Data - Net Sales by Segment and Industry End Market (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Segment and Geographic Data | ||
Net sales | $ 3,831 | $ 3,841 |
Transportation Solutions | ||
Segment and Geographic Data | ||
Net sales | 2,373 | 2,259 |
Transportation Solutions | Automotive | ||
Segment and Geographic Data | ||
Net sales | 1,776 | 1,649 |
Transportation Solutions | Commercial transportation | ||
Segment and Geographic Data | ||
Net sales | 356 | 348 |
Transportation Solutions | Sensors | ||
Segment and Geographic Data | ||
Net sales | 241 | 262 |
Industrial Solutions | ||
Segment and Geographic Data | ||
Net sales | 1,025 | 1,060 |
Industrial Solutions | Industrial equipment | ||
Segment and Geographic Data | ||
Net sales | 330 | 434 |
Industrial Solutions | Aerospace, defense, and marine | ||
Segment and Geographic Data | ||
Net sales | 290 | 264 |
Industrial Solutions | Energy | ||
Segment and Geographic Data | ||
Net sales | 205 | 189 |
Industrial Solutions | Medical | ||
Segment and Geographic Data | ||
Net sales | 200 | 173 |
Communications Solutions | ||
Segment and Geographic Data | ||
Net sales | 433 | 522 |
Communications Solutions | Data and devices | ||
Segment and Geographic Data | ||
Net sales | 279 | 329 |
Communications Solutions | Appliances | ||
Segment and Geographic Data | ||
Net sales | $ 154 | $ 193 |
Segment and Geographic Data -_2
Segment and Geographic Data - Net Sales by Geographic Region and Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Segment and Geographic Data | ||
Net sales | $ 3,831 | $ 3,841 |
Transportation Solutions | ||
Segment and Geographic Data | ||
Net sales | 2,373 | 2,259 |
Industrial Solutions | ||
Segment and Geographic Data | ||
Net sales | 1,025 | 1,060 |
Communications Solutions | ||
Segment and Geographic Data | ||
Net sales | 433 | 522 |
Total Europe/Middle East/Africa | ||
Segment and Geographic Data | ||
Net sales | 1,411 | 1,326 |
Total Europe/Middle East/Africa | Transportation Solutions | ||
Segment and Geographic Data | ||
Net sales | 867 | 812 |
Total Europe/Middle East/Africa | Industrial Solutions | ||
Segment and Geographic Data | ||
Net sales | 477 | 444 |
Total Europe/Middle East/Africa | Communications Solutions | ||
Segment and Geographic Data | ||
Net sales | 67 | 70 |
Total Asia-Pacific | ||
Segment and Geographic Data | ||
Net sales | 1,379 | 1,407 |
Total Asia-Pacific | Transportation Solutions | ||
Segment and Geographic Data | ||
Net sales | 1,012 | 924 |
Total Asia-Pacific | Industrial Solutions | ||
Segment and Geographic Data | ||
Net sales | 147 | 189 |
Total Asia-Pacific | Communications Solutions | ||
Segment and Geographic Data | ||
Net sales | 220 | 294 |
Total Americas | ||
Segment and Geographic Data | ||
Net sales | 1,041 | 1,108 |
Total Americas | Transportation Solutions | ||
Segment and Geographic Data | ||
Net sales | 494 | 523 |
Total Americas | Industrial Solutions | ||
Segment and Geographic Data | ||
Net sales | 401 | 427 |
Total Americas | Communications Solutions | ||
Segment and Geographic Data | ||
Net sales | $ 146 | $ 158 |
Segment and Geographic Data - O
Segment and Geographic Data - Operating Income by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Segment and Geographic Data | ||
Operating income | $ 698 | $ 502 |
Transportation Solutions | ||
Segment and Geographic Data | ||
Operating income | 478 | 282 |
Industrial Solutions | ||
Segment and Geographic Data | ||
Operating income | 141 | 156 |
Communications Solutions | ||
Segment and Geographic Data | ||
Operating income | $ 79 | $ 64 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 1,803 | $ 397 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 29, 2023 shares | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Shad Kroeger | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | ● In the quarter ended December 29, 2023, Shad Kroeger , President, Industrial Solutions , adopted a plan for the sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Mr. Kroeger’s plan was adopted November 17, 2023 and expires October 31, 2024 , and provides for the potential exercise and related sale of (i) stock options representing up to 5,000 common shares, with such sale to occur no earlier than March 1, 2024, (ii) stock options representing up to 5,000 common shares, with such sale to occur no earlier than June 3, 2024, and (iii) stock options representing up to 8,750 common shares, with such sale to occur no earlier than September 3, 2024. |
Name | Shad Kroeger |
Title | President, Industrial Solutions |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | November 17, 2023 |
Termination Date | October 31, 2024 |
First Trading Scenario Arrangement | Shad Kroeger | |
Trading Arrangements, by Individual | |
Aggregate Available | 5,000 |
Second Trading Scenario Arrangement | Shad Kroeger | |
Trading Arrangements, by Individual | |
Aggregate Available | 5,000 |
Third Trading Scenario Arrangement | Shad Kroeger | |
Trading Arrangements, by Individual | |
Aggregate Available | 8,750 |