TE CONNECTIVITY LTD., 10-Q filed on 5/4/2020
Quarterly Report
v3.20.1
Document and Entity Information - shares
6 Months Ended
Mar. 27, 2020
Apr. 24, 2020
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 Mar. 27, 2020  
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 --09-25  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Shell Company false  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   329,847,873
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        
Net sales $ 3,195 $ 3,412 $ 6,363 $ 6,759
Cost of sales 2,166 2,294 4,304 4,527
Gross margin 1,029 1,118 2,059 2,232
Selling, general, and administrative expenses 352 373 719 762
Research, development, and engineering expenses 158 166 319 327
Acquisition and integration costs 12 7 19 12
Restructuring and other charges, net 22 42 46 117
Impairment of goodwill 900   900  
Operating income (loss) (415) 530 56 1,014
Interest income 5 4 11 9
Interest expense (11) (15) (23) (42)
Other income, net 11 1 16  
Income (loss) from continuing operations before income taxes (410) 520 60 981
Income tax expense (42) (91) (489) (169)
Income (loss) from continuing operations (452) 429 (429) 812
Income (loss) from discontinued operations, net of income taxes (4) 10 (1) (97)
Net income (loss) $ (456) $ 439 $ (430) $ 715
Basic earnings (loss) per share:        
Income (loss) from continuing operations (in dollars per share) $ (1.35) $ 1.27 $ (1.28) $ 2.39
Income (loss) from discontinued operations (in dollars per share) (0.01) 0.03   (0.29)
Net income (loss) (in dollars per share) (1.37) 1.30 (1.29) 2.10
Diluted earnings (loss) per share:        
Income (loss) from continuing operations (in dollars per share) (1.35) 1.26 (1.28) 2.37
Income (loss) from discontinued operations (in dollars per share) (0.01) 0.03   (0.28)
Net income (loss) (in dollars per share) $ (1.37) $ 1.29 $ (1.29) $ 2.09
Weighted-average number of shares outstanding:        
Basic (in shares) 334 338 334 340
Diluted (in shares) 334 340 334 342
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)        
Net income (loss) $ (456) $ 439 $ (430) $ 715
Other comprehensive income (loss):        
Currency translation (114) 64 (64) 83
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes 8 6 16 12
Gains (losses) on cash flow hedges, net of income taxes (53) 27 (22) 51
Other comprehensive income (loss) (159) 97 (70) 146
Comprehensive income (loss) (615) 536 (500) 861
Less: comprehensive loss attributable to noncontrolling interests 2   2  
Comprehensive income (loss) attributable to TE Connectivity Ltd. $ (613) $ 536 $ (498) $ 861
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 27, 2020
Sep. 27, 2019
Current assets:    
Cash and cash equivalents $ 796 $ 927
Accounts receivable, net of allowance for doubtful accounts of $32 and $25, respectively 2,461 2,320
Inventories 2,001 1,836
Prepaid expenses and other current assets 457 471
Total current assets 5,715 5,554
Property, plant, and equipment, net 3,558 3,574
Goodwill 5,235 5,740
Intangible assets, net 1,547 1,596
Deferred income taxes 2,382 2,776
Other assets 930 454
Total assets 19,367 19,694
Current liabilities:    
Short-term debt 603 570
Accounts payable 1,390 1,357
Accrued and other current liabilities 1,966 1,613
Total current liabilities 3,959 3,540
Long-term debt 3,752 3,395
Long-term pension and postretirement liabilities 1,359 1,367
Deferred income taxes 126 156
Income taxes 228 239
Other liabilities 772 427
Total liabilities 10,196 9,124
Commitments and contingencies (Note 10)
TE Connectivity Ltd. shareholders' equity    
Common shares, CHF 0.57 par value, 350,951,381 shares authorized and issued 154 154
Accumulated earnings 11,122 12,256
Treasury shares, at cost, 19,877,795 and 15,862,337 shares, respectively (1,639) (1,337)
Accumulated other comprehensive loss (571) (503)
Total TE Connectivity Ltd. shareholders' equity 9,066 10,570
Noncontrolling interests 105  
Total equity 9,171 10,570
Total liabilities and equity $ 19,367 $ 19,694
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical)
$ in Millions
Mar. 27, 2020
SFr / shares
Mar. 27, 2020
USD ($)
shares
Sep. 27, 2019
SFr / shares
Sep. 27, 2019
USD ($)
shares
CONDENSED CONSOLIDATED BALANCE SHEETS        
Accounts receivable, allowance for doubtful accounts (in dollars) | $   $ 32   $ 25
Common shares, par value (in currency per share) | SFr / shares SFr 0.57   SFr 0.57  
Common shares, shares authorized   350,951,381   350,951,381
Common shares, shares issued   350,951,381   350,951,381
Treasury shares   19,877,795   15,862,337
v3.20.1
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. 28, 2018 $ 157 $ (1,134)   $ 12,114 $ (306) $ 10,831   $ 10,831
Balance (in shares) at at Sep. 28, 2018 357 (12)            
Increase (Decrease) in Equity:                
Adoption of ASU No. 2016-16 | ASU 2016-16       (443)   (443)   (443)
Net income (loss)       715   715   715
Other comprehensive income (loss)         146 146   146
Share-based compensation expense     $ 39     39   39
Dividends       (616)   (616)   (616)
Exercise of share options   $ 17       17   17
Restricted share award vestings and other activity   $ 88 (39) (60)   (11)   (11)
Restricted share award vestings and other activity (in shares)   1            
Repurchase of common shares   $ (684)       (684)   $ (684)
Repurchase of common shares (in shares)   (9)           (9)
Balance at at Mar. 29, 2019 $ 157 $ (1,713)   11,710 (160) 9,994   $ 9,994
Balance (in shares) at at Mar. 29, 2019 357 (20)            
Balance at at Dec. 28, 2018 $ 157 $ (1,550)   11,886 (257) 10,236   10,236
Balance (in shares) at at Dec. 28, 2018 357 (18)            
Increase (Decrease) in Equity:                
Net income (loss)       439   439   439
Other comprehensive income (loss)         97 97   97
Share-based compensation expense     16     16   16
Dividends       (620)   (620)   (620)
Exercise of share options   $ 10       10   10
Restricted share award vestings and other activity   $ 16 (16) 5   5   5
Restricted share award vestings and other activity (in shares)   1            
Repurchase of common shares   $ (189)       (189)   (189)
Repurchase of common shares (in shares)   (3)            
Balance at at Mar. 29, 2019 $ 157 $ (1,713)   11,710 (160) 9,994   9,994
Balance (in shares) at at Mar. 29, 2019 357 (20)            
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)       (430)   (430)   (430)
Other comprehensive income (loss)         (68) (68) (2) (70)
Share-based compensation expense     37     37   37
Dividends       (635)   (635)   (635)
Exercise of share options   $ 27       27   27
Restricted share award vestings and other activity   $ 94 (37) (69)   (12)   (12)
Restricted share award vestings and other activity (in shares)   1            
Repurchase of common shares   $ (423)       (423)   $ (423)
Repurchase of common shares (in shares)   (5)           (5)
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)            
Balance at at Dec. 27, 2019 $ 154 $ (1,389)   12,206 (414) 10,557   10,557
Balance (in shares) at at Dec. 27, 2019 351 (17)            
Increase (Decrease) in Equity:                
Acquisition             107 107
Net income (loss)       (456)   (456)   (456)
Other comprehensive income (loss)         (157) (157) (2) (159)
Share-based compensation expense     15     15   15
Dividends       (635)   (635)   (635)
Exercise of share options   $ 13       13   13
Restricted share award vestings and other activity   17 $ (15) 7   9   9
Repurchase of common shares   $ (280)       (280)   (280)
Repurchase of common shares (in shares)   (3)            
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)            
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Cash flows from operating activities:    
Net income (loss) $ (430) $ 715
Loss from discontinued operations, net of income taxes 1 97
Income (loss) from continuing operations (429) 812
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:    
Impairment of goodwill 900  
Depreciation and amortization 354 341
Deferred income taxes 345 (28)
Non-cash lease cost 52  
Provision for losses on accounts receivable and inventories 18 28
Share-based compensation expense 37 38
Other 11 32
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:    
Accounts receivable, net (140) (107)
Inventories (151) (70)
Prepaid expenses and other current assets 25 91
Accounts payable 49 (44)
Accrued and other current liabilities (180) (206)
Income taxes 1 21
Other   (25)
Net cash provided by continuing operating activities 892 883
Net cash used in discontinued operating activities   (30)
Net cash provided by operating activities 892 853
Cash flows from investing activities:    
Capital expenditures (309) (401)
Proceeds from sale of property, plant, and equipment 3 13
Acquisition of businesses, net of cash acquired (359) 8
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation   297
Other (2)  
Net cash used in continuing investing activities (667) (83)
Net cash used in discontinued investing activities   (2)
Net cash used in investing activities (667) (85)
Cash flows from financing activities:    
Net increase (decrease) in commercial paper (219) 90
Proceeds from issuance of debt 593 350
Repayment of debt   (441)
Proceeds from exercise of share options 27 17
Repurchase of common shares (408) (739)
Payment of common share dividends to shareholders (307) (299)
Transfers to discontinued operations   (32)
Other (31) (30)
Net cash used in continuing financing activities (345) (1,084)
Net cash provided by discontinued financing activities   32
Net cash used in financing activities (345) (1,052)
Effect of currency translation on cash (11) 1
Net decrease in cash, cash equivalents, and restricted cash (131) (283)
Cash, cash equivalents, and restricted cash at beginning of period 927 848
Cash, cash equivalents, and restricted cash at end of period $ 796 $ 565
v3.20.1
Basis of Presentation and Accounting Policies
6 Months Ended
Mar. 27, 2020
Basis of Presentation and Accounting Policies  
Basis of Presentation and Accounting Policies

1. Basis of Presentation and Accounting Policies

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 27, 2019.

Unless otherwise indicated, references in the Condensed Consolidated Financial Statements to fiscal 2020 and fiscal 2019 are to our fiscal years ending September 25, 2020 and ended September 27, 2019, respectively.

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles–Goodwill and Other, as updated by Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment.

Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible assets. Intangible assets with determinable lives primarily include intellectual property, consisting of patents, trademarks, and unpatented technology, and customer relationships. Recoverability estimates range from 1 to 50 years and costs are generally amortized on a straight-line basis. Evaluations of the remaining useful lives of determinable-lived intangible assets are performed on a periodic basis and when events and circumstances warrant.

At March 27, 2020, we had five reporting units, all of which contained goodwill. There were two reporting units in both the Transportation Solutions and Industrial Solutions segments and one reporting unit in the Communications Solutions segment. When changes occur in the composition of one or more reporting units, goodwill is reassigned to the reporting units affected based on their relative fair values.

Goodwill impairment is evaluated by comparing the carrying value of each reporting unit to its fair value on the first day of the fourth fiscal quarter of each year or whenever we believe a triggering event requiring a more frequent assessment has occurred. In assessing the existence of a triggering event, management relies on several reporting unit-specific factors including operating results, business plans, economic projections, anticipated future cash flows, transactions, and market place data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors to the impairment analysis.

When testing for goodwill impairment, we identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment charge will be recorded for the amount of the excess, limited to the total amount of goodwill allocated to the reporting unit.

Fair value estimates used in the goodwill impairment tests are calculated using an income approach based on the present value of future cash flows of each reporting unit. The income approach has been supported by guideline analyses (a market approach). These approaches incorporate several assumptions including future growth rates, discount rates, income tax rates, and market activity in assessing fair value and are reporting unit specific. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods.

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, an update to ASC 350, Intangibles–Goodwill and Other. The update simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the amendments in the update, goodwill impairment should be tested by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are to be applied on a prospective basis. We elected to early adopt this update and applied it during the quarter ended March 27, 2020. See Note 6 for additional information regarding the interim goodwill impairment test.

In February 2016, the FASB issued ASU No. 2016-02 which codified ASC 842, Leases. This guidance, as subsequently amended, requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset for most leases. We adopted ASC 842, as amended, in the quarter ended December 27, 2019 using the optional transition method permitted by ASU No. 2018-11 which allows for application of the standard at the adoption date and no restatement of comparative periods. We elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows the carry forward of historical lease classification of existing and expired leases. In addition, we elected to use the hindsight practical expedient in determining the lease term for existing leases. As a result of adoption, we recorded ROU assets and related lease liabilities of approximately $520 million on the Condensed Consolidated Balance Sheet. Adoption did not have a material impact on our results of operations or cash flows. See Note 9 for additional information regarding leases.

v3.20.1
Restructuring and Other Charges, Net
6 Months Ended
Mar. 27, 2020
Restructuring and Other Charges, Net  
Restructuring and Other Charges, Net

2. Restructuring and Other Charges, Net

Net restructuring charges by segment were as follows:

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions

$

18

$

24

$

22

$

45

Industrial Solutions

 

1

 

17

 

16

 

52

Communications Solutions

 

3

 

1

 

8

 

20

Restructuring charges, net

$

22

$

42

$

46

$

117

Activity in our restructuring reserves was as follows:

Balance at

Currency

Balance at

  

September 27,

Changes in

Cash

Non-Cash

Translation

March 27,

    

2019

    

Charges

    

Estimate

    

Payments

    

Items

    

and Other

    

2020

    

(in millions)

Fiscal 2020 Actions:

Employee severance

$

$

43

$

$

(4)

$

$

$

39

Fiscal 2019 Actions:

Employee severance

188

6

(13)

(51)

(1)

1

130

Facility and other exit costs

1

4

(7)

2

Property, plant, and equipment

5

(5)

Total

189

15

(13)

(58)

(6)

3

130

Pre-Fiscal 2019 Actions:

Employee severance

73

1

(5)

(34)

1

36

Facility and other exit costs

2

4

(5)

1

Property, plant, and equipment

1

(1)

Total

75

6

(5)

(39)

(1)

1

37

Total Activity

$

264

$

64

$

(18)

$

(101)

$

(7)

$

4

$

206

Fiscal 2020 Actions

During fiscal 2020, we initiated a restructuring program associated with footprint consolidation and structural improvements across all segments. In connection with this program, during the six months ended March 27, 2020, we recorded restructuring charges of $43 million. We expect to complete all restructuring actions commenced during the six months ended March 27, 2020 by the end of fiscal 2021 and to incur additional charges of approximately $10 million related primarily to employee severance and facility exit costs in the Transportation Solutions and Industrial Solutions segments.

Fiscal 2019 Actions

During fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural improvements impacting all segments. In connection with this program, during the six months ended March 27, 2020 and March 29, 2019, we recorded net restructuring charges of $2 million and $107 million, respectively. We expect to complete all restructuring actions commenced during fiscal 2019 by the end of fiscal 2021 and to incur additional charges of approximately $15 million related primarily to employee severance and facility exit costs in the Transportation Solutions and Industrial Solutions segments.

Pre-Fiscal 2019 Actions

Prior to fiscal 2019, we initiated a restructuring program associated with footprint consolidation and structural improvements primarily impacting the Industrial Solutions and Transportation Solutions segments. Also prior to fiscal 2019, we initiated a restructuring program associated with footprint consolidation related to recent acquisitions and structural improvements impacting all segments. During the six months ended March 27, 2020 and March 29, 2019, we recorded net restructuring charges of $1 million and $10 million, respectively, related to pre-fiscal 2019 actions. We expect additional charges related to pre-fiscal 2019 actions to be insignificant.

Total Restructuring Reserves

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

March 27,

September 27,

    

2020

    

2019

(in millions)

Accrued and other current liabilities

$

170

$

245

Other liabilities

 

36

 

19

Restructuring reserves

$

206

$

264

v3.20.1
Acquisitions
6 Months Ended
Mar. 27, 2020
Acquisitions  
Acquisitions

4. Acquisitions

First Sensor AG

In March 2020, we acquired approximately 72% of the outstanding shares of First Sensor AG (“First Sensor”), a provider of sensing solutions based in Germany, for €209 million in cash (equivalent to $232 million). As a result of the transaction, we recognized a noncontrolling interest with a fair value of €96 million (equivalent to $107 million) as of the acquisition date. The fair value of the noncontrolling interest for First Sensor common shares that were not acquired was determined using the stated price in the Domination and Profit and Loss Transfer Agreement (“DPLTA”) which is considered

to be a level 2 observable input under the fair value hierarchy. The First Sensor business has been reported as part of our Transportation Solutions segment from the date of acquisition.

In April 2020, we and First Sensor entered into a DPLTA which will become effective following consenting resolution of the shareholders’ meeting of First Sensor and subsequent registration in the commercial register of First Sensor. We expect the DPLTA registration to occur in our fourth fiscal quarter. Under the terms of the DPLTA, upon its effectiveness, First Sensor minority shareholders will be offered to 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. The exercise of the put right by First Sensor minority shareholders is not within our control and will result in the First Sensor noncontrolling interest being presented as redeemable noncontrolling interest outside of equity on the Condensed Consolidated Balance Sheet following registration of the DPLTA.

Other Acquisitions

During the six months ended March 27, 2020, we acquired three additional businesses for a combined cash purchase price of $124 million, net of cash acquired. The acquisitions were reported as part of our Transportation Solutions and Industrial Solutions segments from the date of acquisition.

v3.20.1
Inventories
6 Months Ended
Mar. 27, 2020
Inventories  
Inventories

5. Inventories

Inventories consisted of the following:

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Raw materials

$

277

$

260

Work in progress

 

838

 

739

Finished goods

 

886

 

837

Inventories

$

2,001

$

1,836

v3.20.1
Goodwill
6 Months Ended
Mar. 27, 2020
Goodwill  
Goodwill

6. Goodwill

The changes in the carrying amount of goodwill by segment were as follows:

    

Transportation

    

Industrial

    

Communications

    

    

Solutions

Solutions

Solutions

Total

(in millions)

September 27, 2019(1)

$

2,124

$

3,039

$

577

$

5,740

Impairment of goodwill

(900)

(900)

Acquisitions

403

10

413

Currency translation

 

(5)

 

(11)

 

(2)

 

(18)

March 27, 2020(2)

$

1,622

$

3,038

$

575

$

5,235

(1)At September 27, 2019, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $2,191 million, $669 million, and $489 million, respectively.
(2)At March 27, 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $3,091 million, $669 million, and $489 million, respectively.

In March 2020, we completed the acquisition of First Sensor and recognized goodwill in the Transportation Solutions segment. Due to the timing of the transaction, we have preliminarily allocated the purchase price of First Sensor to

goodwill. We are in the process of completing the valuation of identifiable intangible assets, assets acquired, and liabilities assumed; therefore, the current allocation is subject to adjustment upon finalization of those valuations. The amount of these potential adjustments could be significant. In addition, during the six months ended March 27, 2020, we recognized goodwill in the Transportation Solutions and Industrial Solutions segments in connection with other recent acquisitions. See Note 4 for additional information regarding acquisitions.

We test goodwill allocated to reporting units for impairment annually during the fiscal fourth quarter, or more frequently if events occur or circumstances exist that indicate that a reporting unit’s carrying value may exceed its fair value. As a result of current and projected declines in sales and profitability, due in part to the impact of the coronavirus disease COVID-19 and projected reductions in global automotive production, of the Sensors reporting unit of the Transportation Solutions segment during the quarter ended March 27, 2020, we determined that an indicator of impairment had occurred and goodwill impairment testing of this reporting unit was required.

As discussed in Note 1, during the quarter ended March 27, 2020, we adopted ASU No. 2017-04 which simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the new standard, goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. We determined the fair value of the Sensors reporting unit to be $1.0 billion. This valuation was based on a discounted cash flows analysis incorporating our estimate of future operating performance, which we consider to be a level 3 unobservable input in the fair value hierarchy, and was corroborated using a market approach valuation. The goodwill impairment test indicated that the carrying value of the reporting unit exceeded its fair value by $900 million. As a result, we recorded a partial impairment charge of $900 million. The Sensors reporting unit had a remaining goodwill allocation of $626 million as of March 27, 2020.

Should economic conditions deteriorate further or remain depressed for a prolonged period of time, estimates of future cash flows for each of our reporting units may be insufficient to support the carrying value and the goodwill assigned to it, requiring impairment charges, including additional impairment charges for the Sensors reporting unit. Further impairment charges, if any, may be material to our results of operations and financial position.

v3.20.1
Intangible Assets, Net
6 Months Ended
Mar. 27, 2020
Intangible Assets, Net  
Intangible Assets, Net

7. Intangible Assets, Net

Intangible assets consisted of the following:

March 27, 2020

September 27, 2019

    

Gross

    

    

Net

    

Gross

    

    

Net

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amount

Amortization

Amount

    

(in millions)

Customer relationships

$

1,542

$

(498)

$

1,044

$

1,513

$

(459)

$

1,054

Intellectual property

1,259

(771)

488

1,260

(734)

526

Other

 

32

 

(17)

 

15

 

33

 

(17)

 

16

Total

$

2,833

$

(1,286)

$

1,547

$

2,806

$

(1,210)

$

1,596

Intangible asset amortization expense was $46 million and $45 million for the quarters ended March 27, 2020 and March 29, 2019, respectively, and $91 million and $90 million for the six months ended March 27, 2020 and March 29, 2019, respectively.

At March 27, 2020, the aggregate amortization expense on intangible assets is expected to be as follows:

    

(in millions)

  

Remainder of fiscal 2020

$

90

Fiscal 2021

179

Fiscal 2022

 

179

Fiscal 2023

 

179

Fiscal 2024

 

148

Fiscal 2025

 

129

Thereafter

 

643

Total

$

1,547

v3.20.1
Debt
6 Months Ended
Mar. 27, 2020
Debt  
Debt

8. Debt

During the quarter ended March 27, 2020, Tyco Electronics Group S.A. (“TEGSA”), our 100%-owned subsidiary, issued €550 million aggregate principal amount of 0.0% senior notes due February 2025. 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.

During the quarter ended March 27, 2020, we reclassified $250 million of 4.875% senior notes due January 2021 from long-term debt to short-term debt on the Condensed Consolidated Balance Sheet.

As of September 27, 2019, TEGSA had $219 million of commercial paper outstanding at a weighted-average interest rate of 2.20%. TEGSA had no commercial paper outstanding at March 27, 2020.

The fair value of our debt, based on indicative valuations, was approximately $4,697 million and $4,278 million at March 27, 2020 and September 27, 2019, respectively.

v3.20.1
Leases
6 Months Ended
Mar. 27, 2020
Leases  
Leases

9. Leases

We have facility, land, vehicle, and equipment leases that expire at various dates. We determine if a contract qualifies as a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the identified asset and the right to direct the use of the identified asset.

Lease ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of remaining lease payments over the lease term. Lease ROU assets represent our right to use the underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. We do not recognize ROU assets or lease liabilities that arise from short-term leases. Since our lease contracts do not contain a readily determinable implicit rate, we determine a fully-collateralized incremental borrowing rate that reflects a similar term to the lease and the economic environment of the applicable country or region in which the asset is leased.

We have elected to account for lease and non-lease components in our real estate leases as a single lease component; other leases generally do not contain non-lease components. The non-lease components in our real estate leases include logistics services, warehousing, and other operational costs. Many of these costs are variable, fluctuating based on services provided, such as pallets shipped in and out of a location or square footage of space occupied. These costs, and any other variable rental costs, are excluded from our ROU assets and lease liabilities, and instead are expensed as incurred. Some of our leases may include options to either renew or early terminate the lease. The exercise of these options is generally at our sole discretion and would only occur if there is an economic, financial, or business reason to do so. Such options are included in the lease term if we determine it is reasonably certain they will be exercised.

The components of lease cost were as follows:

For the

For the

Quarter Ended

    

Six Months Ended

March 27,

March 27,

2020

2020

    

(in millions)

    

Operating lease cost

$

25

$

52

Variable lease cost

15

26

Total lease cost

$

40

$

78

Amounts recognized on the Condensed Consolidated Balance Sheet were as follows:

March 27,

2020

    

($ in millions)

Operating lease ROU assets:

Other assets

$

454

Operating lease liabilities:

Accrued and other current liabilities

$

115

Other liabilities

351

Total operating lease liabilities

$

466

Weighted-average remaining lease term (in years)

5.9

Weighted-average discount rate

1.3

%

Cash flow information, including significant non-cash transactions, related to leases was as follows:

For the

Six Months Ended

March 27,

2020

    

(in millions)

    

Cash paid for amounts included in the measurement of lease liabilities:

Payments for operating leases(1)

$

51

ROU assets obtained in exchange for new operating lease liabilities

12

(1)These payments are included in cash flows from continuing operating activities, primarily in changes in other liabilities.

At March 27, 2020, the maturities of operating lease liabilities were as follows:

    

(in millions)

    

Remainder of fiscal 2020

$

60

Fiscal 2021

 

105

Fiscal 2022

83

Fiscal 2023

67

Fiscal 2024

53

Thereafter

115

Total lease payments

483

Less: interest

(17)

Present value of lease liabilities

$

466

The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019 and presented in accordance with the previous lease accounting standard, presents the future minimum lease payments under non-cancelable operating lease obligations as of September 27, 2019:

    

(in millions)

  

Fiscal 2020

$

117

Fiscal 2021

 

102

Fiscal 2022

 

81

Fiscal 2023

 

67

Fiscal 2024

 

55

Thereafter

 

118

Total

$

540

v3.20.1
Commitments and Contingencies
6 Months Ended
Mar. 27, 2020
Commitments and Contingencies  
Commitments and Contingencies

10. 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.

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 March 27, 2020, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $14 million to $45 million, and we accrued $17 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 March 27, 2020, we had outstanding letters of credit, letters of guarantee, and surety bonds of $271 million.

We sold our SubCom business during fiscal 2019. In connection with the sale, we contractually agreed to honor certain performance guarantees and letters of credit related to the SubCom business. See Note 3 for additional information regarding these guarantees and the divestiture of the SubCom business.

v3.20.1
Financial Instruments
6 Months Ended
Mar. 27, 2020
Financial Instruments  
Financial Instruments

11. Financial Instruments

Foreign Currency Exchange Rate Risk

During fiscal 2015, we entered into cross-currency swap contracts to reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans. The aggregate notional value of these contracts was €700 million and €1,000 million at March 27, 2020 and September 27, 2019, respectively. Certain contracts were terminated during the quarter ended March 27, 2020; the remaining contracts mature in fiscal 2022. 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, 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:

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Other assets

$

39

$

19

At March 27, 2020 and September 27, 2019, 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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Gains recorded in other comprehensive income (loss)

$

28

$

13

$

32

    

$

32

Gains (losses) excluded from the hedging relationship(1)

 

17

 

21

 

(5)

 

38

(1)Gains and losses excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses and gains generated as a result of re-measuring certain intercompany loans to the U.S. dollar.

Hedge of Net Investment

We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $3,429 million and $3,374 million at March 27, 2020 and September 27, 2019, 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 $1,889 million and $1,844 million at March 27, 2020 and September 27, 2019, respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 2.62% per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2024, 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:

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Prepaid expenses and other current assets

$

23

$

27

Other assets

 

50

 

46

Accrued and other current liabilities

2

2

Other liabilities

1

The impacts of our hedge of net investment programs were as follows:

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Foreign currency exchange gains (losses) on intercompany loans and external borrowings(1)

$

57

$

36

$

(8)

$

112

Gains on cross-currency swap contracts designated as hedges of net investment(2)

 

55

 

42

 

22

 

37

(1)Foreign currency exchange gains and losses on intercompany loans and external borrowings are recorded as currency translation, a component of accumulated other comprehensive income (loss), and are offset by changes attributable to the translation of the net investment.
(2)Gains and losses on cross-currency swap contracts designated as hedges of net investment are recorded as currency translation.
v3.20.1
Retirement Plans
6 Months Ended
Mar. 27, 2020
Retirement Plans  
Retirement Plans

12. 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

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Operating expense:

Service cost

$

12

$

12

$

2

$

3

Other (income) expense:

Interest cost

 

6

 

10

 

9

 

11

Expected return on plan assets

 

(15)

 

(16)

 

(14)

 

(15)

Amortization of net actuarial loss

 

10

 

6

 

2

 

5

Amortization of prior service credit

 

(1)

 

(2)

 

 

Net periodic pension benefit cost (credit)

$

12

$

10

$

(1)

$

4

Non-U.S. Plans

U.S. Plans

For the

For the

Six Months Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Operating expense:

Service cost

$

25

$

24

$

5

$

6

Other (income) expense:

Interest cost

 

12

 

21

 

18

 

23

Expected return on plan assets

 

(30)

 

(32)

 

(29)

 

(29)

Amortization of net actuarial loss

 

20

 

12

 

4

 

9

Amortization of prior service credit

 

(3)

 

(4)

 

 

Net periodic pension benefit cost (credit)

$

24

$

21

$

(2)

$

9

During the six months ended March 27, 2020, we contributed $19 million to our non-U.S. pension plans.

v3.20.1
Income Taxes
6 Months Ended
Mar. 27, 2020
Income Taxes  
Income Taxes

13. Income Taxes

We recorded income tax expense of $42 million and $91 million for the quarters ended March 27, 2020 and March 29, 2019, respectively. The income tax expense for the quarter ended March 27, 2020 included an income tax benefit of $31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement. See the “Tax Sharing Agreement” section below for additional information. The pre-tax goodwill impairment charge of $900 million recorded during the quarter ended March 27, 2020 resulted in a tax benefit of $4 million as the associated goodwill was primarily not deductible for income tax purposes.  See Note 6 for additional information regarding the impairment of goodwill. The income tax expense for the quarter ended March 29, 2019 included $15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions, partially offset by a $12 million income tax benefit resulting from lapses of statutes of limitations in certain non-U.S. jurisdictions.

We recorded income tax expense of $489 million and $169 million for the six months ended March 27, 2020 and March 29, 2019, respectively. The income tax expense for the six months ended March 27, 2020 included $355 million of income tax expense related to the tax impacts of certain measures of the Switzerland Federal Act on Tax Reform and AHV Financing (“Swiss Tax Reform”), and an income tax benefit of $31 million related to pre-separation tax matters and the termination of the Tax Sharing Agreement. See the “Swiss Tax Reform” and “Tax Sharing Agreement” sections below for additional information. The income tax expense for the six months ended March 29, 2019 included $15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.

Although it is difficult to predict the timing or results of our worldwide examinations, we estimate that approximately $100 million of unrecognized income tax benefits, excluding the impact relating to accrued interest and penalties, could be resolved within the next twelve months.

We are not aware of any other matters that would result in significant changes to the amount of unrecognized income tax benefits reflected on the Condensed Consolidated Balance Sheet as of March 27, 2020.

Swiss Tax Reform

The Federal Act on Tax Reform and AHV Financing eliminates certain preferential tax items and implements 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 six months ended March 27, 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.

Tax Sharing Agreement

Upon our separation from Tyco International plc in fiscal 2007, we entered into a Tax Sharing Agreement with Tyco International plc (now part of Johnson Controls International plc) and Covidien plc (now part of Medtronic plc) under which we shared certain income tax liabilities for periods prior to and including June 29, 2007. Pursuant to the Tax Sharing Agreement, we entered into certain guarantee commitments and indemnifications.

In March 2020, we, Johnson Controls International plc, and Medtronic plc entered into an agreement to terminate the Tax Sharing Agreement. We believe that substantially all income tax matters that may be subject to the Tax Sharing Agreement have been settled with tax authorities and we do not expect any remaining tax matters to have a material effect on our results of operations, financial position, or cash flows. Accordingly, during the quarter ended March 27, 2020, we recognized an income tax benefit of $31 million and net other income of $8 million representing settlement of the remaining shared pre-separation income tax matters and indemnification balances.

v3.20.1
Earnings (Loss) Per Share
6 Months Ended
Mar. 27, 2020
Earnings (Loss) Per Share  
Earnings (Loss) Per Share

14. 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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Basic

 

334

338

334

340

Dilutive impact of share-based compensation arrangements

 

2

2

Diluted

 

334

 

340

334

 

342

For the quarter and six months ended March 27, 2020, there were 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. Such shares not included in the computation of diluted loss per share were one million and two million in the quarter and six months ended March 27, 2020, respectively.

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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Antidilutive share options

 

3

1

3

1

v3.20.1
Equity
6 Months Ended
Mar. 27, 2020
Equity  
Equity

15. Equity

Common Shares

In March 2020, our shareholders reapproved and extended through March 11, 2022, our board of directors’ authorization to issue additional new shares, subject to certain conditions specified in our articles of association, in aggregate not exceeding 50% of the amount of our authorized shares.

Common Shares Held in Treasury

In March 2020, our shareholders approved the cancellation of approximately 12 million shares purchased under our share repurchase program during the period beginning September 29, 2018 and ending September 27, 2019. The capital reduction by cancellation of these shares is subject to a notice period and filing with the commercial register in Switzerland and is not yet reflected on the Condensed Consolidated Balance Sheet.

Dividends

We paid cash dividends to shareholders as follows:

For the

For the

 

Quarters Ended

Six Months Ended

 

    

March 27,

    

March 29,

    

March 27,

    

March 29,

 

    

2020

    

2019

    

2020

    

2019

    

Dividends paid per common share

$

0.46

$

0.44

$

0.92

$

0.88

In March 2020, our shareholders approved a dividend payment to shareholders of $1.92 per share, payable in four equal quarterly installments of $0.48 per share beginning in the third quarter of fiscal 2020 and ending in the second quarter of fiscal 2021.

Upon shareholders’ approval of a dividend payment, we record a liability with a corresponding charge to shareholders’ equity. At March 27, 2020 and September 27, 2019, the unpaid portion of the dividends recorded in accrued and other current liabilities on the Condensed Consolidated Balance Sheets totaled $636 million and $308 million, respectively.

Share Repurchase Program

Common shares repurchased under the share repurchase program were as follows:

For the

Six Months Ended

March 27,

March 29,

    

2020

    

2019

    

(in millions)

Number of common shares repurchased

 

5

 

9

Repurchase value

 

$

423

 

$

684

At March 27, 2020, we had $1.1 billion of availability remaining under our share repurchase authorization.

v3.20.1
Share Plans
6 Months Ended
Mar. 27, 2020
Share Plans  
Share Plans

16. 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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Share-based compensation expense

 

$

15

 

$

15

$

37

 

$

38

As of March 27, 2020, there was $150 million of unrecognized compensation expense related to share-based awards, which is expected to be recognized over a weighted-average period of 2.1 years.

During the quarter ended December 27, 2019, we granted the following share-based awards as part of our annual incentive plan grant:

Grant-Date

    

Shares

    

Fair Value

    

(in millions)

Share options

1.5

$

15.52

Restricted share awards

0.5

 

93.63

Performance share awards

0.2

93.63

As of March 27, 2020, we had 15 million shares available for issuance under our stock and incentive plans, of which the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and restated as of March 8, 2017, was the primary plan.

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

 

21

%  

Risk-free interest rate

 

1.8

%  

Expected annual dividend per share

$

1.84

Expected life of options (in years)

 

5.1

v3.20.1
Segment and Geographic Data
6 Months Ended
Mar. 27, 2020
Segment and Geographic Data  
Segment and Geographic Data

17. Segment and Geographic Data

Net sales by segment(1) and industry end market(2) were as follows:

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions:

Automotive

$

1,365

$

1,425

$

2,770

$

2,894

Commercial transportation

 

294

 

324

 

552

 

621

Sensors

 

198

 

222

 

403

 

442

Total Transportation Solutions

1,857

1,971

3,725

3,957

Industrial Solutions:

Aerospace, defense, oil, and gas

 

318

 

331

 

627

 

616

Industrial equipment

280

326

543

641

Medical(3)

186

176

365

344

Energy

 

178

 

174

 

354

 

334

Total Industrial Solutions

962

1,007

1,889

1,935

Communications Solutions:

Data and devices

218

251

437

508

Appliances

 

158

 

183

 

312

 

359

Total Communications Solutions

376

434

749

867

Total

$

3,195

$

3,412

$

6,363

$

6,759

(1)Intersegment sales were not material and were recorded at selling prices that approximated market prices.
(2)Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary.
(3)Effective for fiscal 2020, we are separately presenting net sales in the medical end market. Such amounts were previously included in net sales in the industrial equipment end market.

Net sales by geographic region(1) and segment were as follows:

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions

$

766

$

824

$

1,468

$

1,580

Industrial Solutions

 

361

 

382

 

701

 

732

Communications Solutions

 

61

 

70

 

116

 

135

Total EMEA

 

1,188

 

1,276

 

2,285

 

2,447

Asia–Pacific:

Transportation Solutions

 

631

 

674

 

1,373

 

1,438

Industrial Solutions

 

138

 

155

 

283

 

310

Communications Solutions

222

241

448

495

Total Asia–Pacific

 

991

 

1,070

 

2,104

 

2,243

Americas:

Transportation Solutions

460

473

884

939

Industrial Solutions

 

463

 

470

 

905

 

893

Communications Solutions

93

123

185

237

Total Americas

 

1,016

 

1,066

 

1,974

 

2,069

Total

$

3,195

$

3,412

$

6,363

$

6,759

(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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions

$

(606)

(1)

$

316

$

(290)

(1)

$

648

Industrial Solutions

142

137

257

237

Communications Solutions

49

77

89

129

Total

$

(415)

$

530

$

56

$

1,014

(1)Includes goodwill impairment charge of $900 million. See Note 6 for additional information.
v3.20.1
Tyco Electronics Group S.A.
6 Months Ended
Mar. 27, 2020
Tyco Electronics Group S.A.  
Tyco Electronics Group S.A.

18. Tyco Electronics Group S.A.

Tyco Electronics Group S.A. (“TEGSA”), a Luxembourg company and our 100%-owned subsidiary, is a holding company that owns, directly or indirectly, all of our operating subsidiaries. TEGSA is the obligor under our senior notes, commercial paper, and five-year unsecured senior revolving credit facility, which are fully and unconditionally guaranteed by its parent, TE Connectivity Ltd. The following tables present condensed consolidating financial information for TE Connectivity Ltd., TEGSA, and all other subsidiaries that are not providing a guarantee of debt but which represent assets of TEGSA, using the equity method of accounting.

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 27, 2020

TE

 

Connectivity

Other

Consolidating

 

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

    

(in millions)

 

Net sales

$

$

$

3,195

$

$

3,195

Cost of sales

 

 

 

2,166

 

 

2,166

Gross margin

 

 

 

1,029

 

 

1,029

Selling, general, and administrative expenses, net(1)

 

23

 

(122)

 

451

 

 

352

Research, development, and engineering expenses

 

 

 

158

 

 

158

Acquisition and integration costs

 

 

 

12

 

 

12

Restructuring and other charges, net

 

 

 

22

 

 

22

Impairment of goodwill

900

900

Operating income (loss)

 

(23)

 

122

 

(514)

 

 

(415)

Interest income

 

 

 

5

 

 

5

Interest expense

 

 

(10)

 

(1)

 

 

(11)

Other income, net

 

 

 

11

 

 

11

Equity in net loss of subsidiaries

 

(403)

 

(493)

 

 

896

 

Equity in net loss of subsidiaries of discontinued operations

 

(4)

 

(4)

 

 

8

 

Intercompany interest income (expense), net

 

(26)

 

(22)

 

48

 

 

Loss from continuing operations before income taxes

 

(456)

 

(407)

 

(451)

 

904

 

(410)

Income tax expense

 

 

 

(42)

 

 

(42)

Loss from continuing operations

 

(456)

 

(407)

 

(493)

 

904

 

(452)

Loss from discontinued operations, net of income taxes

 

 

 

(4)

 

 

(4)

Net loss

 

(456)

 

(407)

 

(497)

 

904

 

(456)

Other comprehensive loss

 

(159)

 

(159)

 

(198)

 

357

 

(159)

Less: other comprehensive loss attributable to noncontrolling interests

2

2

2

(4)

2

Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries

$

(613)

$

(564)

$

(693)

$

1,257

$

(613)

(1)

TEGSA selling, general, and administrative expenses include gains of $115 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 29, 2019

TE

 

Connectivity

Other

Consolidating

 

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

    

(in millions)

 

Net sales

$

$

$

3,412

$

$

3,412

Cost of sales

 

 

 

2,294

 

 

2,294

Gross margin

 

 

 

1,118

 

 

1,118

Selling, general, and administrative expenses, net

 

28

 

9

 

336

 

 

373

Research, development, and engineering expenses

 

 

 

166

 

 

166

Acquisition and integration costs

 

 

 

7

 

 

7

Restructuring and other charges, net

 

 

 

42

 

 

42

Operating income (loss)

 

(28)

 

(9)

 

567

 

 

530

Interest income

 

 

1

 

3

 

 

4

Interest expense

 

 

(14)

 

(1)

 

 

(15)

Other income, net

 

 

1

 

 

 

1

Equity in net income of subsidiaries

 

489

560

(1,049)

Equity in net income of subsidiaries of discontinued operations

 

10

 

3

 

 

(13)

 

Intercompany interest income (expense), net

 

(32)

(50)

82

Income from continuing operations before income taxes

 

439

 

492

 

651

 

(1,062)

 

520

Income tax expense

 

 

 

(91)

 

 

(91)

Income from continuing operations

 

439

 

492

 

560

 

(1,062)

 

429

Income from discontinued operations, net of income taxes

 

 

7

 

3

 

 

10

Net income

 

439

 

499

 

563

 

(1,062)

 

439

Other comprehensive income

 

97

 

97

 

47

 

(144)

 

97

Comprehensive income

$

536

$

596

$

610

$

(1,206)

$

536

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Net sales

$

$

$

6,363

$

$

6,363

Cost of sales

 

 

 

4,304

 

 

4,304

Gross margin

 

 

 

2,059

 

 

2,059

Selling, general, and administrative expenses, net(1)

 

49

 

(106)

 

776

 

 

719

Research, development, and engineering expenses

 

 

 

319

 

 

319

Acquisition and integration costs

 

1

 

 

18

 

 

19

Restructuring and other charges, net

 

 

 

46

 

 

46

Impairment of goodwill

900

900

Operating income (loss)

 

(50)

 

106

 

 

 

56

Interest income

 

 

 

11

 

 

11

Interest expense

 

 

(20)

 

(3)

 

 

(23)

Other income, net

 

 

 

16

 

 

16

Equity in net loss of subsidiaries

 

(329)

 

(392)

 

 

721

 

Equity in net loss of subsidiaries of discontinued operations

(1)

(4)

5

Intercompany interest income (expense), net

 

(50)

 

(23)

 

73

 

 

Income (loss) from continuing operations before income taxes

 

(430)

 

(333)

 

97

 

726

 

60

Income tax expense

 

 

 

(489)

 

 

(489)

Loss from continuing operations

 

(430)

 

(333)

 

(392)

 

726

 

(429)

Income (loss) from discontinued operations, net of income taxes

 

 

3

 

(4)

 

 

(1)

Net loss

 

(430)

 

(330)

 

(396)

 

726

 

(430)

Other comprehensive loss

 

(70)

 

(70)

 

(90)

 

160

 

(70)

Less: other comprehensive loss attributable to noncontrolling interests

2

2

2

(4)

2

Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries

$

(498)

$

(398)

$

(484)

$

882

$

(498)

(1)

TE Connectivity Ltd. and TEGSA selling, general, and administrative expenses include gains of $14 million and $101 million, respectively, related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 29, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Net sales

$

$

$

6,759

$

$

6,759

Cost of sales

 

 

 

4,527

 

 

4,527

Gross margin

 

 

 

2,232

 

 

2,232

Selling, general, and administrative expenses, net(1)

 

63

 

(98)

 

797

 

 

762

Research, development, and engineering expenses

 

 

 

327

 

 

327

Acquisition and integration costs

 

 

 

12

 

 

12

Restructuring and other charges, net

 

 

 

117

 

 

117

Operating income (loss)

 

(63)

 

98

 

979

 

 

1,014

Interest income

 

 

1

 

8

 

 

9

Interest expense

 

 

(41)

 

(1)

 

 

(42)

Other income (expense), net

 

 

1

 

(1)

 

 

Equity in net income of subsidiaries

930

949

(1,879)

Equity in net loss of subsidiaries of discontinued operations

 

(97)

 

(46)

 

 

143

 

Intercompany interest income (expense), net

(55)

(78)

133

Income from continuing operations before income taxes

 

715

 

884

 

1,118

 

(1,736)

 

981

Income tax expense

 

 

 

(169)

 

 

(169)

Income from continuing operations

 

715

 

884

 

949

 

(1,736)

 

812

Loss from discontinued operations, net of income taxes

 

 

(51)

 

(46)

 

 

(97)

Net income

 

715

 

833

 

903

 

(1,736)

 

715

Other comprehensive income

 

146

 

146

 

82

 

(228)

 

146

Comprehensive income

$

861

$

979

$

985

$

(1,964)

$

861

(1)

TEGSA selling, general, and administrative expenses include gains of $110 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Balance Sheet (unaudited)

As of March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Assets

Current assets:

Cash and cash equivalents

$

$

$

796

$

$

796

Accounts receivable, net

 

 

 

2,461

 

 

2,461

Inventories

 

 

 

2,001

 

 

2,001

Intercompany receivables

 

46

 

3,590

 

59

 

(3,695)

 

Prepaid expenses and other current assets

 

6

 

32

 

419

 

 

457

Total current assets

 

52

 

3,622

 

5,736

 

(3,695)

 

5,715

Property, plant, and equipment, net

 

 

 

3,558

 

 

3,558

Goodwill

 

 

 

5,235

 

 

5,235

Intangible assets, net

 

 

 

1,547

 

 

1,547

Deferred income taxes

 

 

 

2,382

 

 

2,382

Investment in subsidiaries

 

13,418

 

27,701

 

 

(41,119)

 

Intercompany loans receivable

 

 

2,568

 

16,040

 

(18,608)

 

Other assets

 

 

100

 

830

 

 

930

Total assets

$

13,470

$

33,991

$

35,328

$

(63,422)

$

19,367

Liabilities and equity

Current liabilities:

Short-term debt

$

$

602

$

1

$

$

603

Accounts payable

 

1

 

 

1,389

 

 

1,390

Accrued and other current liabilities

 

655

 

102

 

1,209

 

 

1,966

Intercompany payables

3,643

52

(3,695)

Total current liabilities

 

4,299

 

704

 

2,651

 

(3,695)

 

3,959

Long-term debt

 

 

3,752

 

 

 

3,752

Intercompany loans payable

 

 

16,040

 

2,568

 

(18,608)

 

Long-term pension and postretirement liabilities

 

 

 

1,359

 

 

1,359

Deferred income taxes

 

 

 

126

 

 

126

Income taxes

 

 

 

228

 

 

228

Other liabilities

 

 

77

 

695

 

 

772

Total liabilities

 

4,299

 

20,573

 

7,627

 

(22,303)

 

10,196

Total equity

 

9,171

 

13,418

 

27,701

 

(41,119)

 

9,171

Total liabilities and equity

$

13,470

$

33,991

$

35,328

$

(63,422)

$

19,367

Condensed Consolidating Balance Sheet (unaudited)

As of September 27, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Assets

Current assets:

Cash and cash equivalents

$

$

$

927

$

$

927

Accounts receivable, net

 

 

 

2,320

 

 

2,320

Inventories

 

 

 

1,836

 

 

1,836

Intercompany receivables

 

49

 

2,959

 

60

 

(3,068)

 

Prepaid expenses and other current assets

 

4

 

36

 

431

 

 

471

Total current assets

 

53

 

2,995

 

5,574

 

(3,068)

 

5,554

Property, plant, and equipment, net

 

 

 

3,574

 

 

3,574

Goodwill

 

 

 

5,740

 

 

5,740

Intangible assets, net

 

 

 

1,596

 

 

1,596

Deferred income taxes

 

 

 

2,776

 

 

2,776

Investment in subsidiaries

 

13,865

 

28,336

 

 

(42,201)

 

Intercompany loans receivable

 

2,562

 

16,033

 

(18,595)

 

Other assets

 

 

72

 

382

 

 

454

Total assets

$

13,918

$

33,965

$

35,675

$

(63,864)

$

19,694

Liabilities and equity

Current liabilities:

Short-term debt

$

$

568

$

2

$

$

570

Accounts payable

 

1

 

 

1,356

 

 

1,357

Accrued and other current liabilities

 

328

 

57

 

1,228

 

 

1,613

Intercompany payables

 

3,019

 

 

49

 

(3,068)

 

Total current liabilities

 

3,348

 

625

 

2,635

 

(3,068)

 

3,540

Long-term debt

 

 

3,395

 

 

 

3,395

Intercompany loans payable

 

 

16,033

 

2,562

 

(18,595)

 

Long-term pension and postretirement liabilities

 

 

 

1,367

 

 

1,367

Deferred income taxes

 

 

 

156

 

 

156

Income taxes

 

 

 

239

 

 

239

Other liabilities

 

 

47

 

380

 

 

427

Total liabilities

 

3,348

 

20,100

 

7,339

 

(21,663)

 

9,124

Total equity

 

10,570

13,865

28,336

(42,201)

10,570

Total liabilities and equity

$

13,918

$

33,965

$

35,675

$

(63,864)

$

19,694

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Cash flows from operating activities:

Net cash provided by (used in) operating activities(1)

$

(114)

$

493

$

971

$

(458)

$

892

Cash flows from investing activities:

Capital expenditures

 

 

 

(309)

 

 

(309)

Proceeds from sale of property, plant, and equipment

 

 

 

3

 

 

3

Acquisition of businesses, net of cash acquired

(359)

(359)

Change in intercompany loans

 

 

(625)

 

 

625

 

Other

 

 

 

(2)

 

 

(2)

Net cash used in investing activities

(625)

(667)

625

(667)

Cash flows from financing activities:

Changes in parent company equity(2)

 

59

 

(105)

 

46

 

 

Net decrease in commercial paper

 

 

(219)

 

 

 

(219)

Proceeds from issuance of debt

593

593

Proceeds from exercise of share options

 

 

13

 

14

 

 

27

Repurchase of common shares

 

(262)

 

(146)

 

 

 

(408)

Payment of common share dividends to shareholders

 

(307)

 

 

 

 

(307)

Intercompany distributions(1)

 

 

 

(458)

 

458

 

Loan activity with parent

 

624

 

 

1

 

(625)

 

Other

 

 

(4)

 

(27)

 

 

(31)

Net cash provided by (used in) financing activities

114

132

(424)

(167)

(345)

Effect of currency translation on cash

 

 

 

(11)

 

 

(11)

Net decrease in cash, cash equivalents, and restricted cash

 

 

 

(131)

 

 

(131)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

 

927

 

 

927

Cash, cash equivalents, and restricted cash at end of period

$

$

$

796

$

$

796

(1)Other subsidiaries made distributions to TEGSA in the amount of $458 million. Cash flows are presented based upon the nature of the distributions.
(2)Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 29, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Cash flows from operating activities:

Net cash provided by (used in) continuing operating activities

$

(121)

$

(79)

$

1,083

$

$

883

Net cash used in discontinued operating activities

 

 

 

(30)

 

 

(30)

Net cash provided by (used in) operating activities

 

(121)

 

(79)

 

1,053

 

 

853

Cash flows from investing activities:

Capital expenditures

 

 

 

(401)

 

 

(401)

Proceeds from sale of property, plant, and equipment

 

 

 

13

 

 

13

Acquisition of businesses, net of cash acquired

 

 

 

8

 

 

8

Proceeds from divestiture of discontinued operation, net of cash retained by sold operation

312

(15)

297

Change in intercompany loans

 

 

5,475

 

 

(5,475)

 

Net cash provided by (used in) continuing investing activities

5,787

(395)

(5,475)

(83)

Net cash used in discontinued investing activities

(2)

(2)

Net cash provided by (used in) investing activities

5,787

(397)

(5,475)

(85)

Cash flows from financing activities:

Changes in parent company equity(1)

 

38

 

(5,704)

 

5,666

 

 

Net increase in commercial paper

 

 

90

 

 

 

90

Proceeds from issuance of debt

350

350

Repayment of debt

(441)

(441)

Proceeds from exercise of share options

 

 

 

17

 

 

17

Repurchase of common shares

 

(739)

 

 

 

 

(739)

Payment of common share dividends to shareholders

 

(299)

 

 

 

 

(299)

Loan activity with parent

 

1,121

 

 

(6,596)

 

5,475

 

Transfers to discontinued operations

(32)

(32)

Other

 

 

(3)

 

(27)

 

 

(30)

Net cash provided by (used in) continuing financing activities

 

121

 

(5,708)

 

(972)

 

5,475

 

(1,084)

Net cash provided by discontinued financing activities

 

 

 

32

 

 

32

Net cash provided by (used in) financing activities

 

121

 

(5,708)

 

(940)

 

5,475

 

(1,052)

Effect of currency translation on cash

 

 

 

1

 

 

1

Net decrease in cash, cash equivalents, and restricted cash

 

 

 

(283)

 

 

(283)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

 

848

 

 

848

Cash, cash equivalents, and restricted cash at end of period

$

$

$

565

$

$

565

(1)Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.
v3.20.1
Basis of Presentation and Accounting Policies (Policies)
6 Months Ended
Mar. 27, 2020
Basis of Presentation and Accounting Policies  
Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles–Goodwill and Other, as updated by Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment.

Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible assets. Intangible assets with determinable lives primarily include intellectual property, consisting of patents, trademarks, and unpatented technology, and customer relationships. Recoverability estimates range from 1 to 50 years and costs are generally amortized on a straight-line basis. Evaluations of the remaining useful lives of determinable-lived intangible assets are performed on a periodic basis and when events and circumstances warrant.

At March 27, 2020, we had five reporting units, all of which contained goodwill. There were two reporting units in both the Transportation Solutions and Industrial Solutions segments and one reporting unit in the Communications Solutions segment. When changes occur in the composition of one or more reporting units, goodwill is reassigned to the reporting units affected based on their relative fair values.

Goodwill impairment is evaluated by comparing the carrying value of each reporting unit to its fair value on the first day of the fourth fiscal quarter of each year or whenever we believe a triggering event requiring a more frequent assessment has occurred. In assessing the existence of a triggering event, management relies on several reporting unit-specific factors including operating results, business plans, economic projections, anticipated future cash flows, transactions, and market place data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors to the impairment analysis.

When testing for goodwill impairment, we identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment charge will be recorded for the amount of the excess, limited to the total amount of goodwill allocated to the reporting unit.

Fair value estimates used in the goodwill impairment tests are calculated using an income approach based on the present value of future cash flows of each reporting unit. The income approach has been supported by guideline analyses (a market approach). These approaches incorporate several assumptions including future growth rates, discount rates, income tax rates, and market activity in assessing fair value and are reporting unit specific. Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, an update to ASC 350, Intangibles–Goodwill and Other. The update simplifies the subsequent measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under the amendments in the update, goodwill impairment should be tested by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments are to be applied on a prospective basis. We elected to early adopt this update and applied it during the quarter ended March 27, 2020. See Note 6 for additional information regarding the interim goodwill impairment test.

In February 2016, the FASB issued ASU No. 2016-02 which codified ASC 842, Leases. This guidance, as subsequently amended, requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset for most leases. We adopted ASC 842, as amended, in the quarter ended December 27, 2019 using the optional transition method permitted by ASU No. 2018-11 which allows for application of the standard at the adoption date and no restatement of comparative periods. We elected to use the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows the carry forward of historical lease classification of existing and expired leases. In addition, we elected to use the hindsight practical expedient in determining the lease term for existing leases. As a result of adoption, we recorded ROU assets and related lease liabilities of approximately $520 million on the Condensed Consolidated Balance Sheet. Adoption did not have a material impact on our results of operations or cash flows. See Note 9 for additional information regarding leases.

v3.20.1
Restructuring and Other Charges, Net (Tables)
6 Months Ended
Mar. 27, 2020
Restructuring and Other Charges, Net  
Net restructuring charges by segment

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions

$

18

$

24

$

22

$

45

Industrial Solutions

 

1

 

17

 

16

 

52

Communications Solutions

 

3

 

1

 

8

 

20

Restructuring charges, net

$

22

$

42

$

46

$

117

Summary of activity in restructuring reserves

Balance at

Currency

Balance at

  

September 27,

Changes in

Cash

Non-Cash

Translation

March 27,

    

2019

    

Charges

    

Estimate

    

Payments

    

Items

    

and Other

    

2020

    

(in millions)

Fiscal 2020 Actions:

Employee severance

$

$

43

$

$

(4)

$

$

$

39

Fiscal 2019 Actions:

Employee severance

188

6

(13)

(51)

(1)

1

130

Facility and other exit costs

1

4

(7)

2

Property, plant, and equipment

5

(5)

Total

189

15

(13)

(58)

(6)

3

130

Pre-Fiscal 2019 Actions:

Employee severance

73

1

(5)

(34)

1

36

Facility and other exit costs

2

4

(5)

1

Property, plant, and equipment

1

(1)

Total

75

6

(5)

(39)

(1)

1

37

Total Activity

$

264

$

64

$

(18)

$

(101)

$

(7)

$

4

$

206

Restructuring reserves included on Consolidated Balance Sheets

March 27,

September 27,

    

2020

    

2019

(in millions)

Accrued and other current liabilities

$

170

$

245

Other liabilities

 

36

 

19

Restructuring reserves

$

206

$

264

v3.20.1
Discontinued Operations (Tables)
6 Months Ended
Mar. 27, 2020
Discontinued Operations  
Schedule of components of income (loss) from discontinued operations, net of income taxes

The following table presents the summarized components of loss from discontinued operations, net of income taxes for the six months ended March 29, 2019:

(in millions)

Net sales

$

41

Cost of sales

 

(50)

Operating expenses

(11)

Pre-tax loss from discontinued operations

 

(20)

Pre-tax loss on sale of discontinued operations

 

(86)

Income tax benefit

 

9

Loss from discontinued operations, net of income taxes

$

(97)

v3.20.1
Inventories (Tables)
6 Months Ended
Mar. 27, 2020
Inventories  
Schedule of inventories

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Raw materials

$

277

$

260

Work in progress

 

838

 

739

Finished goods

 

886

 

837

Inventories

$

2,001

$

1,836

v3.20.1
Goodwill (Tables)
6 Months Ended
Mar. 27, 2020
Goodwill  
Changes in the carrying amount of goodwill by segment

    

Transportation

    

Industrial

    

Communications

    

    

Solutions

Solutions

Solutions

Total

(in millions)

September 27, 2019(1)

$

2,124

$

3,039

$

577

$

5,740

Impairment of goodwill

(900)

(900)

Acquisitions

403

10

413

Currency translation

 

(5)

 

(11)

 

(2)

 

(18)

March 27, 2020(2)

$

1,622

$

3,038

$

575

$

5,235

(1)At September 27, 2019, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $2,191 million, $669 million, and $489 million, respectively.
(2)At March 27, 2020, accumulated impairment losses for the Transportation Solutions, Industrial Solutions, and Communications Solutions segments were $3,091 million, $669 million, and $489 million, respectively.
v3.20.1
Intangible Assets, Net (Tables)
6 Months Ended
Mar. 27, 2020
Intangible Assets, Net  
Schedule of finite-lived intangible assets

March 27, 2020

September 27, 2019

    

Gross

    

    

Net

    

Gross

    

    

Net

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amount

Amortization

Amount

    

(in millions)

Customer relationships

$

1,542

$

(498)

$

1,044

$

1,513

$

(459)

$

1,054

Intellectual property

1,259

(771)

488

1,260

(734)

526

Other

 

32

 

(17)

 

15

 

33

 

(17)

 

16

Total

$

2,833

$

(1,286)

$

1,547

$

2,806

$

(1,210)

$

1,596

Schedule of finite-lived intangible assets, future amortization expense

At March 27, 2020, the aggregate amortization expense on intangible assets is expected to be as follows:

    

(in millions)

  

Remainder of fiscal 2020

$

90

Fiscal 2021

179

Fiscal 2022

 

179

Fiscal 2023

 

179

Fiscal 2024

 

148

Fiscal 2025

 

129

Thereafter

 

643

Total

$

1,547

v3.20.1
Leases (Tables)
6 Months Ended
Mar. 27, 2020
Leases  
Schedule of components of lease cost

For the

For the

Quarter Ended

    

Six Months Ended

March 27,

March 27,

2020

2020

    

(in millions)

    

Operating lease cost

$

25

$

52

Variable lease cost

15

26

Total lease cost

$

40

$

78

Schedule of Balance Sheet information related to leases

March 27,

2020

    

($ in millions)

Operating lease ROU assets:

Other assets

$

454

Operating lease liabilities:

Accrued and other current liabilities

$

115

Other liabilities

351

Total operating lease liabilities

$

466

Weighted-average remaining lease term (in years)

5.9

Weighted-average discount rate

1.3

%

Schedule of Cash Flow information, including significant non-cash transactions, related to leases

For the

Six Months Ended

March 27,

2020

    

(in millions)

    

Cash paid for amounts included in the measurement of lease liabilities:

Payments for operating leases(1)

$

51

ROU assets obtained in exchange for new operating lease liabilities

12

(1)These payments are included in cash flows from continuing operating activities, primarily in changes in other liabilities.
Schedule of maturities of operating lease liabilities

At March 27, 2020, the maturities of operating lease liabilities were as follows:

    

(in millions)

    

Remainder of fiscal 2020

$

60

Fiscal 2021

 

105

Fiscal 2022

83

Fiscal 2023

67

Fiscal 2024

53

Thereafter

115

Total lease payments

483

Less: interest

(17)

Present value of lease liabilities

$

466

Schedule of minimum lease payment obligations under ASC 840

The following table, which was included in our Annual Report on Form 10-K for the fiscal year ended September 27, 2019 and presented in accordance with the previous lease accounting standard, presents the future minimum lease payments under non-cancelable operating lease obligations as of September 27, 2019:

    

(in millions)

  

Fiscal 2020

$

117

Fiscal 2021

 

102

Fiscal 2022

 

81

Fiscal 2023

 

67

Fiscal 2024

 

55

Thereafter

 

118

Total

$

540

v3.20.1
Financial Instruments (Tables)
6 Months Ended
Mar. 27, 2020
Cash flow hedges  
Schedule of impacts of hedging program

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Gains recorded in other comprehensive income (loss)

$

28

$

13

$

32

    

$

32

Gains (losses) excluded from the hedging relationship(1)

 

17

 

21

 

(5)

 

38

(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.
Net investment hedges  
Schedule of impacts of hedging program

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Foreign currency exchange gains (losses) on intercompany loans and external borrowings(1)

$

57

$

36

$

(8)

$

112

Gains on cross-currency swap contracts designated as hedges of net investment(2)

 

55

 

42

 

22

 

37

(1)Foreign currency exchange gains and losses on intercompany loans and external borrowings are recorded as currency translation, a component of accumulated other comprehensive income (loss), and are offset by changes attributable to the translation of the net investment.
(2)Gains and losses on cross-currency swap contracts designated as hedges of net investment are recorded as currency translation.
Cross-currency swap contracts | Cash flow hedges  
Summary of fair value of derivative instruments

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Other assets

$

39

$

19

Cross-currency swap contracts | Net investment hedges  
Summary of fair value of derivative instruments

March 27,

September 27,

    

2020

    

2019

    

(in millions)

Prepaid expenses and other current assets

$

23

$

27

Other assets

 

50

 

46

Accrued and other current liabilities

2

2

Other liabilities

1

v3.20.1
Retirement Plans (Tables)
6 Months Ended
Mar. 27, 2020
Retirement Plans  
Net periodic pension benefit cost

Non-U.S. Plans

U.S. Plans

For the

For the

Quarters Ended

Quarters Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Operating expense:

Service cost

$

12

$

12

$

2

$

3

Other (income) expense:

Interest cost

 

6

 

10

 

9

 

11

Expected return on plan assets

 

(15)

 

(16)

 

(14)

 

(15)

Amortization of net actuarial loss

 

10

 

6

 

2

 

5

Amortization of prior service credit

 

(1)

 

(2)

 

 

Net periodic pension benefit cost (credit)

$

12

$

10

$

(1)

$

4

Non-U.S. Plans

U.S. Plans

For the

For the

Six Months Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Operating expense:

Service cost

$

25

$

24

$

5

$

6

Other (income) expense:

Interest cost

 

12

 

21

 

18

 

23

Expected return on plan assets

 

(30)

 

(32)

 

(29)

 

(29)

Amortization of net actuarial loss

 

20

 

12

 

4

 

9

Amortization of prior service credit

 

(3)

 

(4)

 

 

Net periodic pension benefit cost (credit)

$

24

$

21

$

(2)

$

9

v3.20.1
Earnings (Loss) Per Share (Tables)
6 Months Ended
Mar. 27, 2020
Earnings (Loss) Per Share  
Schedule of weighted-average shares outstanding, basic and diluted

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Basic

 

334

338

334

340

Dilutive impact of share-based compensation arrangements

 

2

2

Diluted

 

334

 

340

334

 

342

Schedule of antidilutive securities excluded from computation of earnings per share

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Antidilutive share options

 

3

1

3

1

v3.20.1
Equity (Tables)
6 Months Ended
Mar. 27, 2020
Equity  
Schedule of cash dividends to shareholders

For the

For the

 

Quarters Ended

Six Months Ended

 

    

March 27,

    

March 29,

    

March 27,

    

March 29,

 

    

2020

    

2019

    

2020

    

2019

    

Dividends paid per common share

$

0.46

$

0.44

$

0.92

$

0.88

Schedule of common shares repurchased

For the

Six Months Ended

March 27,

March 29,

    

2020

    

2019

    

(in millions)

Number of common shares repurchased

 

5

 

9

Repurchase value

 

$

423

 

$

684

v3.20.1
Share Plans (Tables)
6 Months Ended
Mar. 27, 2020
Share Plans  
Share-based compensation expense

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Share-based compensation expense

 

$

15

 

$

15

$

37

 

$

38

Summary of share-based award activity

Grant-Date

    

Shares

    

Fair Value

    

(in millions)

Share options

1.5

$

15.52

Restricted share awards

0.5

 

93.63

Performance share awards

0.2

93.63

Weighted-average assumptions

Expected share price volatility

 

21

%  

Risk-free interest rate

 

1.8

%  

Expected annual dividend per share

$

1.84

Expected life of options (in years)

 

5.1

v3.20.1
Segment and Geographic Data (Tables)
6 Months Ended
Mar. 27, 2020
Segment and Geographic Data  
Schedule of net sales by segment

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions:

Automotive

$

1,365

$

1,425

$

2,770

$

2,894

Commercial transportation

 

294

 

324

 

552

 

621

Sensors

 

198

 

222

 

403

 

442

Total Transportation Solutions

1,857

1,971

3,725

3,957

Industrial Solutions:

Aerospace, defense, oil, and gas

 

318

 

331

 

627

 

616

Industrial equipment

280

326

543

641

Medical(3)

186

176

365

344

Energy

 

178

 

174

 

354

 

334

Total Industrial Solutions

962

1,007

1,889

1,935

Communications Solutions:

Data and devices

218

251

437

508

Appliances

 

158

 

183

 

312

 

359

Total Communications Solutions

376

434

749

867

Total

$

3,195

$

3,412

$

6,363

$

6,759

(1)Intersegment sales were not material and were recorded at selling prices that approximated market prices.
(2)Industry end market information is presented consistently with our internal management reporting and may be revised periodically as management deems necessary.
(3)Effective for fiscal 2020, we are separately presenting net sales in the medical end market. Such amounts were previously included in net sales in the industrial equipment end market.
Schedule of net sales by geographic region and segment

For the

For the

Quarters Ended

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Europe/Middle East/Africa (“EMEA”):

Transportation Solutions

$

766

$

824

$

1,468

$

1,580

Industrial Solutions

 

361

 

382

 

701

 

732

Communications Solutions

 

61

 

70

 

116

 

135

Total EMEA

 

1,188

 

1,276

 

2,285

 

2,447

Asia–Pacific:

Transportation Solutions

 

631

 

674

 

1,373

 

1,438

Industrial Solutions

 

138

 

155

 

283

 

310

Communications Solutions

222

241

448

495

Total Asia–Pacific

 

991

 

1,070

 

2,104

 

2,243

Americas:

Transportation Solutions

460

473

884

939

Industrial Solutions

 

463

 

470

 

905

 

893

Communications Solutions

93

123

185

237

Total Americas

 

1,016

 

1,066

 

1,974

 

2,069

Total

$

3,195

$

3,412

$

6,363

$

6,759

(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

Six Months Ended

March 27,

March 29,

March 27,

March 29,

    

2020

    

2019

    

2020

    

2019

    

(in millions)

Transportation Solutions

$

(606)

(1)

$

316

$

(290)

(1)

$

648

Industrial Solutions

142

137

257

237

Communications Solutions

49

77

89

129

Total

$

(415)

$

530

$

56

$

1,014

(1)Includes goodwill impairment charge of $900 million. See Note 6 for additional information.
v3.20.1
Tyco Electronics Group S.A. (Tables)
6 Months Ended
Mar. 27, 2020
Tyco Electronics Group S.A.  
Condensed Consolidating Statements of Operations

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 27, 2020

TE

 

Connectivity

Other

Consolidating

 

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

    

(in millions)

 

Net sales

$

$

$

3,195

$

$

3,195

Cost of sales

 

 

 

2,166

 

 

2,166

Gross margin

 

 

 

1,029

 

 

1,029

Selling, general, and administrative expenses, net(1)

 

23

 

(122)

 

451

 

 

352

Research, development, and engineering expenses

 

 

 

158

 

 

158

Acquisition and integration costs

 

 

 

12

 

 

12

Restructuring and other charges, net

 

 

 

22

 

 

22

Impairment of goodwill

900

900

Operating income (loss)

 

(23)

 

122

 

(514)

 

 

(415)

Interest income

 

 

 

5

 

 

5

Interest expense

 

 

(10)

 

(1)

 

 

(11)

Other income, net

 

 

 

11

 

 

11

Equity in net loss of subsidiaries

 

(403)

 

(493)

 

 

896

 

Equity in net loss of subsidiaries of discontinued operations

 

(4)

 

(4)

 

 

8

 

Intercompany interest income (expense), net

 

(26)

 

(22)

 

48

 

 

Loss from continuing operations before income taxes

 

(456)

 

(407)

 

(451)

 

904

 

(410)

Income tax expense

 

 

 

(42)

 

 

(42)

Loss from continuing operations

 

(456)

 

(407)

 

(493)

 

904

 

(452)

Loss from discontinued operations, net of income taxes

 

 

 

(4)

 

 

(4)

Net loss

 

(456)

 

(407)

 

(497)

 

904

 

(456)

Other comprehensive loss

 

(159)

 

(159)

 

(198)

 

357

 

(159)

Less: other comprehensive loss attributable to noncontrolling interests

2

2

2

(4)

2

Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries

$

(613)

$

(564)

$

(693)

$

1,257

$

(613)

(1)

TEGSA selling, general, and administrative expenses include gains of $115 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 29, 2019

TE

 

Connectivity

Other

Consolidating

 

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

    

(in millions)

 

Net sales

$

$

$

3,412

$

$

3,412

Cost of sales

 

 

 

2,294

 

 

2,294

Gross margin

 

 

 

1,118

 

 

1,118

Selling, general, and administrative expenses, net

 

28

 

9

 

336

 

 

373

Research, development, and engineering expenses

 

 

 

166

 

 

166

Acquisition and integration costs

 

 

 

7

 

 

7

Restructuring and other charges, net

 

 

 

42

 

 

42

Operating income (loss)

 

(28)

 

(9)

 

567

 

 

530

Interest income

 

 

1

 

3

 

 

4

Interest expense

 

 

(14)

 

(1)

 

 

(15)

Other income, net

 

 

1

 

 

 

1

Equity in net income of subsidiaries

 

489

560

(1,049)

Equity in net income of subsidiaries of discontinued operations

 

10

 

3

 

 

(13)

 

Intercompany interest income (expense), net

 

(32)

(50)

82

Income from continuing operations before income taxes

 

439

 

492

 

651

 

(1,062)

 

520

Income tax expense

 

 

 

(91)

 

 

(91)

Income from continuing operations

 

439

 

492

 

560

 

(1,062)

 

429

Income from discontinued operations, net of income taxes

 

 

7

 

3

 

 

10

Net income

 

439

 

499

 

563

 

(1,062)

 

439

Other comprehensive income

 

97

 

97

 

47

 

(144)

 

97

Comprehensive income

$

536

$

596

$

610

$

(1,206)

$

536

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Net sales

$

$

$

6,363

$

$

6,363

Cost of sales

 

 

 

4,304

 

 

4,304

Gross margin

 

 

 

2,059

 

 

2,059

Selling, general, and administrative expenses, net(1)

 

49

 

(106)

 

776

 

 

719

Research, development, and engineering expenses

 

 

 

319

 

 

319

Acquisition and integration costs

 

1

 

 

18

 

 

19

Restructuring and other charges, net

 

 

 

46

 

 

46

Impairment of goodwill

900

900

Operating income (loss)

 

(50)

 

106

 

 

 

56

Interest income

 

 

 

11

 

 

11

Interest expense

 

 

(20)

 

(3)

 

 

(23)

Other income, net

 

 

 

16

 

 

16

Equity in net loss of subsidiaries

 

(329)

 

(392)

 

 

721

 

Equity in net loss of subsidiaries of discontinued operations

(1)

(4)

5

Intercompany interest income (expense), net

 

(50)

 

(23)

 

73

 

 

Income (loss) from continuing operations before income taxes

 

(430)

 

(333)

 

97

 

726

 

60

Income tax expense

 

 

 

(489)

 

 

(489)

Loss from continuing operations

 

(430)

 

(333)

 

(392)

 

726

 

(429)

Income (loss) from discontinued operations, net of income taxes

 

 

3

 

(4)

 

 

(1)

Net loss

 

(430)

 

(330)

 

(396)

 

726

 

(430)

Other comprehensive loss

 

(70)

 

(70)

 

(90)

 

160

 

(70)

Less: other comprehensive loss attributable to noncontrolling interests

2

2

2

(4)

2

Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries

$

(498)

$

(398)

$

(484)

$

882

$

(498)

(1)

TE Connectivity Ltd. and TEGSA selling, general, and administrative expenses include gains of $14 million and $101 million, respectively, related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 29, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Net sales

$

$

$

6,759

$

$

6,759

Cost of sales

 

 

 

4,527

 

 

4,527

Gross margin

 

 

 

2,232

 

 

2,232

Selling, general, and administrative expenses, net(1)

 

63

 

(98)

 

797

 

 

762

Research, development, and engineering expenses

 

 

 

327

 

 

327

Acquisition and integration costs

 

 

 

12

 

 

12

Restructuring and other charges, net

 

 

 

117

 

 

117

Operating income (loss)

 

(63)

 

98

 

979

 

 

1,014

Interest income

 

 

1

 

8

 

 

9

Interest expense

 

 

(41)

 

(1)

 

 

(42)

Other income (expense), net

 

 

1

 

(1)

 

 

Equity in net income of subsidiaries

930

949

(1,879)

Equity in net loss of subsidiaries of discontinued operations

 

(97)

 

(46)

 

 

143

 

Intercompany interest income (expense), net

(55)

(78)

133

Income from continuing operations before income taxes

 

715

 

884

 

1,118

 

(1,736)

 

981

Income tax expense

 

 

 

(169)

 

 

(169)

Income from continuing operations

 

715

 

884

 

949

 

(1,736)

 

812

Loss from discontinued operations, net of income taxes

 

 

(51)

 

(46)

 

 

(97)

Net income

 

715

 

833

 

903

 

(1,736)

 

715

Other comprehensive income

 

146

 

146

 

82

 

(228)

 

146

Comprehensive income

$

861

$

979

$

985

$

(1,964)

$

861

(1)

TEGSA selling, general, and administrative expenses include gains of $110 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheet (unaudited)

As of March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Assets

Current assets:

Cash and cash equivalents

$

$

$

796

$

$

796

Accounts receivable, net

 

 

 

2,461

 

 

2,461

Inventories

 

 

 

2,001

 

 

2,001

Intercompany receivables

 

46

 

3,590

 

59

 

(3,695)

 

Prepaid expenses and other current assets

 

6

 

32

 

419

 

 

457

Total current assets

 

52

 

3,622

 

5,736

 

(3,695)

 

5,715

Property, plant, and equipment, net

 

 

 

3,558

 

 

3,558

Goodwill

 

 

 

5,235

 

 

5,235

Intangible assets, net

 

 

 

1,547

 

 

1,547

Deferred income taxes

 

 

 

2,382

 

 

2,382

Investment in subsidiaries

 

13,418

 

27,701

 

 

(41,119)

 

Intercompany loans receivable

 

 

2,568

 

16,040

 

(18,608)

 

Other assets

 

 

100

 

830

 

 

930

Total assets

$

13,470

$

33,991

$

35,328

$

(63,422)

$

19,367

Liabilities and equity

Current liabilities:

Short-term debt

$

$

602

$

1

$

$

603

Accounts payable

 

1

 

 

1,389

 

 

1,390

Accrued and other current liabilities

 

655

 

102

 

1,209

 

 

1,966

Intercompany payables

3,643

52

(3,695)

Total current liabilities

 

4,299

 

704

 

2,651

 

(3,695)

 

3,959

Long-term debt

 

 

3,752

 

 

 

3,752

Intercompany loans payable

 

 

16,040

 

2,568

 

(18,608)

 

Long-term pension and postretirement liabilities

 

 

 

1,359

 

 

1,359

Deferred income taxes

 

 

 

126

 

 

126

Income taxes

 

 

 

228

 

 

228

Other liabilities

 

 

77

 

695

 

 

772

Total liabilities

 

4,299

 

20,573

 

7,627

 

(22,303)

 

10,196

Total equity

 

9,171

 

13,418

 

27,701

 

(41,119)

 

9,171

Total liabilities and equity

$

13,470

$

33,991

$

35,328

$

(63,422)

$

19,367

Condensed Consolidating Balance Sheet (unaudited)

As of September 27, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Assets

Current assets:

Cash and cash equivalents

$

$

$

927

$

$

927

Accounts receivable, net

 

 

 

2,320

 

 

2,320

Inventories

 

 

 

1,836

 

 

1,836

Intercompany receivables

 

49

 

2,959

 

60

 

(3,068)

 

Prepaid expenses and other current assets

 

4

 

36

 

431

 

 

471

Total current assets

 

53

 

2,995

 

5,574

 

(3,068)

 

5,554

Property, plant, and equipment, net

 

 

 

3,574

 

 

3,574

Goodwill

 

 

 

5,740

 

 

5,740

Intangible assets, net

 

 

 

1,596

 

 

1,596

Deferred income taxes

 

 

 

2,776

 

 

2,776

Investment in subsidiaries

 

13,865

 

28,336

 

 

(42,201)

 

Intercompany loans receivable

 

2,562

 

16,033

 

(18,595)

 

Other assets

 

 

72

 

382

 

 

454

Total assets

$

13,918

$

33,965

$

35,675

$

(63,864)

$

19,694

Liabilities and equity

Current liabilities:

Short-term debt

$

$

568

$

2

$

$

570

Accounts payable

 

1

 

 

1,356

 

 

1,357

Accrued and other current liabilities

 

328

 

57

 

1,228

 

 

1,613

Intercompany payables

 

3,019

 

 

49

 

(3,068)

 

Total current liabilities

 

3,348

 

625

 

2,635

 

(3,068)

 

3,540

Long-term debt

 

 

3,395

 

 

 

3,395

Intercompany loans payable

 

 

16,033

 

2,562

 

(18,595)

 

Long-term pension and postretirement liabilities

 

 

 

1,367

 

 

1,367

Deferred income taxes

 

 

 

156

 

 

156

Income taxes

 

 

 

239

 

 

239

Other liabilities

 

 

47

 

380

 

 

427

Total liabilities

 

3,348

 

20,100

 

7,339

 

(21,663)

 

9,124

Total equity

 

10,570

13,865

28,336

(42,201)

10,570

Total liabilities and equity

$

13,918

$

33,965

$

35,675

$

(63,864)

$

19,694

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 27, 2020

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Cash flows from operating activities:

Net cash provided by (used in) operating activities(1)

$

(114)

$

493

$

971

$

(458)

$

892

Cash flows from investing activities:

Capital expenditures

 

 

 

(309)

 

 

(309)

Proceeds from sale of property, plant, and equipment

 

 

 

3

 

 

3

Acquisition of businesses, net of cash acquired

(359)

(359)

Change in intercompany loans

 

 

(625)

 

 

625

 

Other

 

 

 

(2)

 

 

(2)

Net cash used in investing activities

(625)

(667)

625

(667)

Cash flows from financing activities:

Changes in parent company equity(2)

 

59

 

(105)

 

46

 

 

Net decrease in commercial paper

 

 

(219)

 

 

 

(219)

Proceeds from issuance of debt

593

593

Proceeds from exercise of share options

 

 

13

 

14

 

 

27

Repurchase of common shares

 

(262)

 

(146)

 

 

 

(408)

Payment of common share dividends to shareholders

 

(307)

 

 

 

 

(307)

Intercompany distributions(1)

 

 

 

(458)

 

458

 

Loan activity with parent

 

624

 

 

1

 

(625)

 

Other

 

 

(4)

 

(27)

 

 

(31)

Net cash provided by (used in) financing activities

114

132

(424)

(167)

(345)

Effect of currency translation on cash

 

 

 

(11)

 

 

(11)

Net decrease in cash, cash equivalents, and restricted cash

 

 

 

(131)

 

 

(131)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

 

927

 

 

927

Cash, cash equivalents, and restricted cash at end of period

$

$

$

796

$

$

796

(1)Other subsidiaries made distributions to TEGSA in the amount of $458 million. Cash flows are presented based upon the nature of the distributions.
(2)Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 29, 2019

TE

Connectivity

Other

Consolidating

    

Ltd.

    

TEGSA

    

Subsidiaries

    

Adjustments

    

Total

  

(in millions)

Cash flows from operating activities:

Net cash provided by (used in) continuing operating activities

$

(121)

$

(79)

$

1,083

$

$

883

Net cash used in discontinued operating activities

 

 

 

(30)

 

 

(30)

Net cash provided by (used in) operating activities

 

(121)

 

(79)

 

1,053

 

 

853

Cash flows from investing activities:

Capital expenditures

 

 

 

(401)

 

 

(401)

Proceeds from sale of property, plant, and equipment

 

 

 

13

 

 

13

Acquisition of businesses, net of cash acquired

 

 

 

8

 

 

8

Proceeds from divestiture of discontinued operation, net of cash retained by sold operation

312

(15)

297

Change in intercompany loans

 

 

5,475

 

 

(5,475)

 

Net cash provided by (used in) continuing investing activities

5,787

(395)

(5,475)

(83)

Net cash used in discontinued investing activities

(2)

(2)

Net cash provided by (used in) investing activities

5,787

(397)

(5,475)

(85)

Cash flows from financing activities:

Changes in parent company equity(1)

 

38

 

(5,704)

 

5,666

 

 

Net increase in commercial paper

 

 

90

 

 

 

90

Proceeds from issuance of debt

350

350

Repayment of debt

(441)

(441)

Proceeds from exercise of share options

 

 

 

17

 

 

17

Repurchase of common shares

 

(739)

 

 

 

 

(739)

Payment of common share dividends to shareholders

 

(299)

 

 

 

 

(299)

Loan activity with parent

 

1,121

 

 

(6,596)

 

5,475

 

Transfers to discontinued operations

(32)

(32)

Other

 

 

(3)

 

(27)

 

 

(30)

Net cash provided by (used in) continuing financing activities

 

121

 

(5,708)

 

(972)

 

5,475

 

(1,084)

Net cash provided by discontinued financing activities

 

 

 

32

 

 

32

Net cash provided by (used in) financing activities

 

121

 

(5,708)

 

(940)

 

5,475

 

(1,052)

Effect of currency translation on cash

 

 

 

1

 

 

1

Net decrease in cash, cash equivalents, and restricted cash

 

 

 

(283)

 

 

(283)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

 

848

 

 

848

Cash, cash equivalents, and restricted cash at end of period

$

$

$

565

$

$

565

(1)Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.
v3.20.1
Basis of Presentation and Accounting Policies - Goodwill and Other Intangible Assets (Details)
6 Months Ended
Mar. 27, 2020
item
Goodwill and Other Intangible Assets  
Number of reporting units 5
Transportation Solutions  
Goodwill and Other Intangible Assets  
Number of reporting units 2
Industrial Solutions  
Goodwill and Other Intangible Assets  
Number of reporting units 2
Communications Solutions  
Goodwill and Other Intangible Assets  
Number of reporting units 1
Minimum  
Goodwill and Other Intangible Assets  
Useful life of intangible assets with a determinable life 1 year
Maximum  
Goodwill and Other Intangible Assets  
Useful life of intangible assets with a determinable life 50 years
v3.20.1
Basis of Presentation and Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($)
$ in Millions
6 Months Ended
Mar. 27, 2020
Sep. 28, 2019
Recently Adopted Accounting Pronouncements    
ROU assets $ 454  
Lease liabilities $ 466  
ASU 2016-02    
Recently Adopted Accounting Pronouncements    
Practical Expedient, Package true  
Practical Expedient, Hindsight true  
ROU assets   $ 520
Lease liabilities   $ 520
v3.20.1
Restructuring and Other Charges, Net - Restructuring and Other Charges (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Restructuring and other charges, net        
Restructuring charges, net $ 22 $ 42 $ 46 $ 117
Transportation Solutions        
Restructuring and other charges, net        
Restructuring charges, net 18 24 22 45
Industrial Solutions        
Restructuring and other charges, net        
Restructuring charges, net 1 17 16 52
Communications Solutions        
Restructuring and other charges, net        
Restructuring charges, net $ 3 $ 1 $ 8 $ 20
v3.20.1
Restructuring and Other Charges, Net - Restructuring Reserve Activity (Details)
$ in Millions
6 Months Ended
Mar. 27, 2020
USD ($)
Restructuring reserve  
Restructuring reserve at the beginning of the period $ 264
Charges 64
Changes in Estimate (18)
Cash Payments (101)
Non-Cash Items (7)
Currency Translation and Other 4
Restructuring reserve at the end of the period 206
Fiscal 2020 Actions | Employee severance  
Restructuring reserve  
Charges 43
Cash Payments (4)
Restructuring reserve at the end of the period 39
Fiscal 2019 Actions  
Restructuring reserve  
Restructuring reserve at the beginning of the period 189
Charges 15
Changes in Estimate (13)
Cash Payments (58)
Non-Cash Items (6)
Currency Translation and Other 3
Restructuring reserve at the end of the period 130
Fiscal 2019 Actions | Employee severance  
Restructuring reserve  
Restructuring reserve at the beginning of the period 188
Charges 6
Changes in Estimate (13)
Cash Payments (51)
Non-Cash Items (1)
Currency Translation and Other 1
Restructuring reserve at the end of the period 130
Fiscal 2019 Actions | Facility and other exit costs  
Restructuring reserve  
Restructuring reserve at the beginning of the period 1
Charges 4
Cash Payments (7)
Currency Translation and Other 2
Fiscal 2019 Actions | Property, plant, and equipment  
Restructuring reserve  
Charges 5
Non-Cash Items (5)
Pre-Fiscal 2019 Actions  
Restructuring reserve  
Restructuring reserve at the beginning of the period 75
Charges 6
Changes in Estimate (5)
Cash Payments (39)
Non-Cash Items (1)
Currency Translation and Other 1
Restructuring reserve at the end of the period 37
Pre-Fiscal 2019 Actions | Employee severance  
Restructuring reserve  
Restructuring reserve at the beginning of the period 73
Charges 1
Changes in Estimate (5)
Cash Payments (34)
Currency Translation and Other 1
Restructuring reserve at the end of the period 36
Pre-Fiscal 2019 Actions | Facility and other exit costs  
Restructuring reserve  
Restructuring reserve at the beginning of the period 2
Charges 4
Cash Payments (5)
Restructuring reserve at the end of the period 1
Pre-Fiscal 2019 Actions | Property, plant, and equipment  
Restructuring reserve  
Charges 1
Non-Cash Items $ (1)
v3.20.1
Restructuring and Other Charges, Net - Actions (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Restructuring Charges        
Charges Incurred $ 22 $ 42 $ 46 $ 117
Fiscal 2020 Actions        
Restructuring Charges        
Charges Incurred     43  
Remaining Expected Charges 10   10  
Fiscal 2019 Actions        
Restructuring Charges        
Charges Incurred     2 107
Remaining Expected Charges $ 15   15  
Pre-Fiscal 2019 Actions        
Restructuring Charges        
Charges Incurred     $ 1 $ 10
v3.20.1
Restructuring and Other Charges, Net - Restructuring Reserve Balances (Details) - USD ($)
$ in Millions
Mar. 27, 2020
Sep. 27, 2019
Restructuring reserves included on the Consolidated Balance Sheets    
Accrued and other current liabilities $ 170 $ 245
Other liabilities 36 19
Restructuring reserves $ 206 $ 264
v3.20.1
Discontinued Operations - Subsea (Details) - USD ($)
$ in Millions
6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Discontinued Operations    
Net cash proceeds   $ 297
Pre-tax loss on sale of discontinued operations   (86)
Discontinued Operations, Disposed of by Sale | Subsea Communications    
Discontinued Operations    
Net cash proceeds   297
Pre-tax loss on sale of discontinued operations   (86)
Cumulative translation adjustment losses   $ 67
Existing guarantees value $ 1,200  
New performance guarantees outstanding 0  
Discontinued Operations, Disposed of by Sale | Subsea Communications | Maximum    
Discontinued Operations    
New performance guarantees issuable amount $ 300  
Period for issuance of new performance guarantees 3 years  
v3.20.1
Discontinued Operations - Summary Information (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Loss from discontinued operations, net of income taxes        
Net sales       $ 41
Cost of sales       (50)
Operating expenses       (11)
Pre-tax loss from discontinued operations       (20)
Pre-tax loss on sale of discontinued operations       (86)
Income tax benefit       9
Loss from discontinued operations, net of income taxes $ (4) $ 10 $ (1) $ (97)
v3.20.1
Acquisitions (Details)
€ / shares in Units, € in Millions, $ in Millions
1 Months Ended 6 Months Ended
Mar. 31, 2020
EUR (€)
Mar. 31, 2020
USD ($)
Mar. 27, 2020
USD ($)
item
Mar. 29, 2019
USD ($)
Apr. 30, 2020
€ / shares
Mar. 31, 2020
USD ($)
Acquisitions            
Net cash paid | $     $ 359 $ (8)    
2020 Acquisitions            
Acquisitions            
Net cash paid | $     $ 124      
Number of other businesses acquired | item     3      
First Sensor AG            
Acquisitions            
Net cash paid € 209 $ 232        
Percentage of voting interest acquired 72.00%         72.00%
Fair value of noncontrolling interest € 96         $ 107
Expected | Domination And Profit And Loss Transfer Agreement ("DPLTA") | First Sensor AG            
Acquisitions            
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  
v3.20.1
Inventories (Details) - USD ($)
$ in Millions
Mar. 27, 2020
Sep. 27, 2019
Inventories    
Raw materials $ 277 $ 260
Work in progress 838 739
Finished goods 886 837
Inventories $ 2,001 $ 1,836
v3.20.1
Goodwill (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 27, 2020
Sep. 27, 2019
Goodwill:      
Goodwill, beginning balance   $ 5,740  
Impairment of goodwill $ (900) (900)  
Acquisitions   413  
Currency translation   (18)  
Goodwill, ending balance 5,235 5,235  
Goodwill impairment 900 900  
Transportation Solutions      
Goodwill:      
Goodwill, beginning balance   2,124  
Impairment of goodwill   (900)  
Acquisitions   403  
Currency translation   (5)  
Goodwill, ending balance 1,622 1,622  
Accumulated impairment losses 3,091 3,091 $ 2,191
Goodwill impairment   900  
Transportation Solutions | Sensors      
Goodwill:      
Impairment of goodwill (900)    
Goodwill, ending balance 626 626  
Fair value of reporting unit 1,000 1,000  
Amount of carrying amount of reporting unit in excess of fair value 900 900  
Goodwill impairment 900    
Industrial Solutions      
Goodwill:      
Goodwill, beginning balance   3,039  
Acquisitions   10  
Currency translation   (11)  
Goodwill, ending balance 3,038 3,038  
Accumulated impairment losses 669 669 669
Communications Solutions      
Goodwill:      
Goodwill, beginning balance   577  
Currency translation   (2)  
Goodwill, ending balance 575 575  
Accumulated impairment losses $ 489 $ 489 $ 489
v3.20.1
Intangible Assets, Net (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Sep. 27, 2019
Finite-Lived Intangible Assets          
Gross Carrying Amount $ 2,833   $ 2,833   $ 2,806
Accumulated Amortization (1,286)   (1,286)   (1,210)
Net Carrying Amount 1,547   1,547   1,596
Finite-lived intangible assets, amortization expense 46 $ 45 91 $ 90  
Aggregate amortization expense on intangible assets          
Remainder of fiscal 2020 90   90    
Fiscal 2021 179   179    
Fiscal 2022 179   179    
Fiscal 2023 179   179    
Fiscal 2024 148   148    
Fiscal 2025 129   129    
Thereafter 643   643    
Customer relationships          
Finite-Lived Intangible Assets          
Gross Carrying Amount 1,542   1,542   1,513
Accumulated Amortization (498)   (498)   (459)
Net Carrying Amount 1,044   1,044   1,054
Intellectual property          
Finite-Lived Intangible Assets          
Gross Carrying Amount 1,259   1,259   1,260
Accumulated Amortization (771)   (771)   (734)
Net Carrying Amount 488   488   526
Other          
Finite-Lived Intangible Assets          
Gross Carrying Amount 32   32   33
Accumulated Amortization (17)   (17)   (17)
Net Carrying Amount $ 15   $ 15   $ 16
v3.20.1
Debt (Details)
€ in Millions, $ in Millions
Mar. 27, 2020
EUR (€)
Mar. 27, 2020
USD ($)
Sep. 27, 2019
USD ($)
Debt      
Ownership percentage in TEGSA 100.00% 100.00%  
Fair value of debt   $ 4,697 $ 4,278
Long-term debt   3,752 3,395
Short-term debt   $ 603 570
0.00% euro-denominated senior notes due 2025      
Debt      
Debt Instrument, Face Amount | € € 550    
Debt instrument, interest rate (as a percent) 0.00% 0.00%  
Commercial paper      
Debt      
Commercial paper   $ 0 $ 219
Weighted-average interest rate (as a percent)     2.20%
4.875% senior notes due 2021      
Debt      
Debt instrument, interest rate (as a percent) 4.875% 4.875%  
Reclassification | 4.875% senior notes due 2021      
Debt      
Long-term debt   $ (250)  
Short-term debt   $ 250  
v3.20.1
Leases - Components of Lease Cost (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 27, 2020
Leases    
Operating lease cost $ 25 $ 52
Variable lease cost 15 26
Total lease cost $ 40 $ 78
v3.20.1
Leases - Balance Sheet Information (Details)
$ in Millions
Mar. 27, 2020
USD ($)
Leases  
Operating lease ROU assets $ 454
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] Other Assets, Noncurrent
Operating lease liabilities, current $ 115
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] Other Liabilities, Current
Operating lease liabilities, non-current $ 351
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] Other Liabilities, Noncurrent
Total operating lease liabilities $ 466
Weighted-average remaining lease term (in years) - Operating leases 5 years 10 months 24 days
Weighted-average discount rate (as a percent) - Operating leases 1.30%
v3.20.1
Leases - Cash Flow Information (Details)
$ in Millions
6 Months Ended
Mar. 27, 2020
USD ($)
Leases  
Payments for operating leases $ 51
ROU asset obtained in exchange for operating lease liability $ 12
v3.20.1
Leases - Maturities of Lease Liabilities (Details)
$ in Millions
Mar. 27, 2020
USD ($)
Operating Leases  
Remainder of fiscal 2020 $ 60
Fiscal 2021 105
Fiscal 2022 83
Fiscal 2023 67
Fiscal 2024 53
Thereafter 115
Total lease payments 483
Less: interest (17)
Present value of lease liabilities $ 466
v3.20.1
Leases - Future Minimum Lease Payments Under Non-cancelable Operating Lease Obligations (Details)
$ in Millions
Sep. 27, 2019
USD ($)
Lease payment obligations  
Fiscal 2020 $ 117
Fiscal 2021 102
Fiscal 2022 81
Fiscal 2023 67
Fiscal 2024 55
Thereafter 118
Total $ 540
v3.20.1
Commitments and Contingencies (Details)
$ in Millions
Mar. 27, 2020
USD ($)
Loss Contingencies  
Accrual environmental loss contingency, estimate of probable loss $ 17
Minimum  
Loss Contingencies  
Accrual environmental loss contingency, estimate of probable loss 14
Maximum  
Loss Contingencies  
Accrual environmental loss contingency, estimate of probable loss 45
Outstanding Letters of Credit, Letters of Guarantee, and Surety Bonds  
Guarantees  
Guarantor obligations, maximum exposure $ 271
v3.20.1
Financial Instruments (Details)
€ in Millions, $ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Mar. 27, 2020
USD ($)
Mar. 29, 2019
USD ($)
Mar. 27, 2020
USD ($)
Mar. 29, 2019
USD ($)
Sep. 27, 2019
USD ($)
Mar. 27, 2020
EUR (€)
Mar. 27, 2020
USD ($)
Sep. 27, 2019
EUR (€)
Sep. 27, 2019
USD ($)
Sep. 25, 2015
Cash flow hedges | Cross-currency swap contracts                    
Financial Instruments                    
Notional amount | €           € 700   € 1,000    
Interest paid in foreign currency, fixed interest rate                   3.50%
Interest received in U.S. dollars, weighted-average fixed interest rate                   5.34%
Gains recorded in other comprehensive income (loss) $ 28 $ 13 $ 32 $ 32            
Gains (losses) excluded from the hedging relationship 17 21 (5) 38            
Net investment hedges | Intercompany loans and external borrowings                    
Financial Instruments                    
Notional amount of non-derivative instruments 3,429       $ 3,374          
Foreign currency exchange gains (losses) on intercompany loans and external borrowings 57 36 (8) 112            
Net investment hedges | Cross-currency swap contracts                    
Financial Instruments                    
Notional amount             $ 1,889   $ 1,844  
Interest paid in foreign currency, fixed interest rate           0.00% 0.00%      
Interest received in U.S. dollars, weighted-average fixed interest rate           2.62% 2.62%      
Gains on cross-currency swap contracts designated as hedges of net investment $ 55 $ 42 $ 22 $ 37            
Prepaid expenses and other current assets | Net investment hedges | Cross-currency swap contracts                    
Financial Instruments                    
Fair Value of Asset Positions             $ 23   27  
Other assets | Cash flow hedges | Cross-currency swap contracts                    
Financial Instruments                    
Fair Value of Asset Positions             39   19  
Other assets | Net investment hedges | Cross-currency swap contracts                    
Financial Instruments                    
Fair Value of Asset Positions             50   46  
Accrued and other current liabilities | Net investment hedges | Cross-currency swap contracts                    
Financial Instruments                    
Fair Value of Liability Positions             $ 2   2  
Other liabilities | Net investment hedges | Cross-currency swap contracts                    
Financial Instruments                    
Fair Value of Liability Positions                 $ 1  
v3.20.1
Retirement Plans (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Non-U.S. Plans        
Net Periodic Postretirement Benefit Cost (Credit)        
Service cost $ 12 $ 12 $ 25 $ 24
Interest cost 6 10 12 21
Expected return on plan assets (15) (16) (30) (32)
Amortization of net actuarial loss 10 6 20 12
Amortization of prior service credit (1) (2) (3) (4)
Net periodic pension benefit cost (credit) 12 10 24 21
Defined benefit plan, contributions by employer     19  
U.S. Plans        
Net Periodic Postretirement Benefit Cost (Credit)        
Service cost 2 3 5 6
Interest cost 9 11 18 23
Expected return on plan assets (14) (15) (29) (29)
Amortization of net actuarial loss 2 5 4 9
Net periodic pension benefit cost (credit) $ (1) $ 4 $ (2) $ 9
v3.20.1
Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Income Taxes        
Income tax expense $ 42 $ 91 $ 489 $ 169
Income tax benefit related to pre-separation tax matters and termination of the tax sharing agreement 31   31  
Goodwill impairment 900   900  
Goodwill impairment tax benefit 4      
Income tax expense related to tax impacts of Swiss Tax Reform     355  
Income tax expense associated with certain legal entity restructurings and intercompany transactions   15   $ 15
Income tax benefit resulting from lapses of statutes of limitations   $ 12    
Unrecognized income tax benefits, approximate amount that could be resolved in next twelve months 100   $ 100  
Net other income related to pre-separation tax matters and the termination of the tax sharing agreement $ 8      
v3.20.1
Earnings (Loss) Per Share (Details) - shares
shares in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Earnings (Loss) Per Share        
Basic (in shares) 334 338 334 340
Dilutive impact of share-based compensation arrangements (in shares)   2   2
Diluted (in shares) 334 340 334 342
Share options        
Antidilutive shares excluded from computation of earnings per share        
Antidilutive share options 3 1 3 1
Nonvested share awards and options, antidilutive due to loss in period        
Antidilutive shares excluded from computation of earnings per share        
Antidilutive share options 1   2  
v3.20.1
Equity (Details)
$ / shares in Units, shares in Millions, $ in Millions
1 Months Ended 3 Months Ended 6 Months Ended
Mar. 31, 2020
installment
$ / shares
shares
Mar. 27, 2020
USD ($)
$ / shares
Mar. 29, 2019
USD ($)
$ / shares
Mar. 27, 2020
USD ($)
$ / shares
shares
Mar. 29, 2019
USD ($)
$ / shares
shares
Sep. 27, 2019
USD ($)
Equity            
Maximum percentage of shares that the board may authorize for issuance 50.00%          
Cancellation of treasury shares (in shares) | shares 12          
Dividends paid per common share | $ / shares   $ 0.46 $ 0.44 $ 0.92 $ 0.88  
Dividend or cash distribution approved (in currency per share) | $ / shares $ 1.92          
Number of quarterly dividend installments | installment 4          
Cash distribution quarterly installment payable (in dollars per share) | $ / shares $ 0.48          
Unpaid portion of the dividend payment recorded in accrued and other current liabilities | $   $ 636   $ 636   $ 308
Number of common shares repurchased | shares       5 9  
Repurchase value | $   280 $ 189 $ 423 $ 684  
Amount available for repurchase, at end of period | $   $ 1,100   $ 1,100    
v3.20.1
Share Plans (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Dec. 27, 2019
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Share Based Compensation Arrangements:          
Share-based compensation expense $ 15   $ 15 $ 37 $ 38
Shares available for issuance 15.0     15.0  
Share Based Compensation Expenses Not Recognized          
Share-based compensation, share-based awards, total compensation expense not yet recognized $ 150     $ 150  
Share-based compensation, share-based awards, total compensation expense not yet recognized, expected period for recognition 2 years 1 month 6 days        
Share options          
Share Based Compensation Arrangements:          
Share options granted   1.5      
Options granted, grant-date fair value (in dollars per share)   $ 15.52      
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology          
Expected share price volatility (as a percent)   21.00%      
Risk-free interest rate (as a percent)   1.80%      
Expected annual dividend per share   $ 1.84      
Expected life of options (in years)   5 years 1 month 6 days      
Restricted share awards          
Share Based Compensation Arrangements:          
Shares granted   0.5      
Shares granted, grant-date fair value (in dollars per share)   $ 93.63      
Performance share awards          
Share Based Compensation Arrangements:          
Shares granted   0.2      
Shares granted, grant-date fair value (in dollars per share)   $ 93.63      
v3.20.1
Segment and Geographic Data - Net Sales by Segment and Industry End Market (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Segment and Geographic Data        
Net sales $ 3,195 $ 3,412 $ 6,363 $ 6,759
Transportation Solutions        
Segment and Geographic Data        
Net sales 1,857 1,971 3,725 3,957
Transportation Solutions | Automotive        
Segment and Geographic Data        
Net sales 1,365 1,425 2,770 2,894
Transportation Solutions | Commercial transportation        
Segment and Geographic Data        
Net sales 294 324 552 621
Transportation Solutions | Sensors        
Segment and Geographic Data        
Net sales 198 222 403 442
Industrial Solutions        
Segment and Geographic Data        
Net sales 962 1,007 1,889 1,935
Industrial Solutions | Aerospace, defense, oil, and gas        
Segment and Geographic Data        
Net sales 318 331 627 616
Industrial Solutions | Industrial equipment        
Segment and Geographic Data        
Net sales 280 326 543 641
Industrial Solutions | Medical        
Segment and Geographic Data        
Net sales 186 176 365 344
Industrial Solutions | Energy        
Segment and Geographic Data        
Net sales 178 174 354 334
Communications Solutions        
Segment and Geographic Data        
Net sales 376 434 749 867
Communications Solutions | Data and devices        
Segment and Geographic Data        
Net sales 218 251 437 508
Communications Solutions | Appliances        
Segment and Geographic Data        
Net sales $ 158 $ 183 $ 312 $ 359
v3.20.1
Segment and Geographic Data - Net Sales by Geographic Region and Segment (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Segment and Geographic Data        
Net sales $ 3,195 $ 3,412 $ 6,363 $ 6,759
Transportation Solutions        
Segment and Geographic Data        
Net sales 1,857 1,971 3,725 3,957
Industrial Solutions        
Segment and Geographic Data        
Net sales 962 1,007 1,889 1,935
Communications Solutions        
Segment and Geographic Data        
Net sales 376 434 749 867
Total Europe/Middle East/Africa        
Segment and Geographic Data        
Net sales 1,188 1,276 2,285 2,447
Total Europe/Middle East/Africa | Transportation Solutions        
Segment and Geographic Data        
Net sales 766 824 1,468 1,580
Total Europe/Middle East/Africa | Industrial Solutions        
Segment and Geographic Data        
Net sales 361 382 701 732
Total Europe/Middle East/Africa | Communications Solutions        
Segment and Geographic Data        
Net sales 61 70 116 135
Total Asia-Pacific        
Segment and Geographic Data        
Net sales 991 1,070 2,104 2,243
Total Asia-Pacific | Transportation Solutions        
Segment and Geographic Data        
Net sales 631 674 1,373 1,438
Total Asia-Pacific | Industrial Solutions        
Segment and Geographic Data        
Net sales 138 155 283 310
Total Asia-Pacific | Communications Solutions        
Segment and Geographic Data        
Net sales 222 241 448 495
Total Americas        
Segment and Geographic Data        
Net sales 1,016 1,066 1,974 2,069
Total Americas | Transportation Solutions        
Segment and Geographic Data        
Net sales 460 473 884 939
Total Americas | Industrial Solutions        
Segment and Geographic Data        
Net sales 463 470 905 893
Total Americas | Communications Solutions        
Segment and Geographic Data        
Net sales $ 93 $ 123 $ 185 $ 237
v3.20.1
Segment and Geographic Data - Operating Income by Segment (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Segment and Geographic Data        
Operating income $ (415) $ 530 $ 56 $ 1,014
Goodwill impairment 900   900  
Transportation Solutions        
Segment and Geographic Data        
Operating income (606) 316 (290) 648
Goodwill impairment     900  
Industrial Solutions        
Segment and Geographic Data        
Operating income 142 137 257 237
Communications Solutions        
Segment and Geographic Data        
Operating income $ 49 $ 77 $ 89 $ 129
v3.20.1
Tyco Electronics Group S.A. - Narrative (Details)
6 Months Ended
Mar. 27, 2020
Ownership percentage in TEGSA 100.00%
Five-Year Credit Facility  
Revolving credit facility term 5 years
v3.20.1
Tyco Electronics Group S.A. - Operations (Details) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Mar. 27, 2020
Mar. 29, 2019
Statement of Operations Detail:        
Net sales $ 3,195 $ 3,412 $ 6,363 $ 6,759
Cost of sales 2,166 2,294 4,304 4,527
Gross margin 1,029 1,118 2,059 2,232
Selling, general, and administrative expenses, net 352 373 719 762
Research, development, and engineering expenses 158 166 319 327
Acquisition and integration costs 12 7 19 12
Restructuring and other charges, net 22 42 46 117
Impairment of goodwill 900   900  
Operating income (loss) (415) 530 56 1,014
Interest income 5 4 11 9
Interest expense (11) (15) (23) (42)
Other income, net 11 1 16  
Income (loss) from continuing operations before income taxes (410) 520 60 981
Income tax expense (42) (91) (489) (169)
Income (loss) from continuing operations (452) 429 (429) 812
Income (loss) from discontinued operations, net of income taxes (4) 10 (1) (97)
Net income (loss) (456) 439 (430) 715
Other comprehensive income (loss) (159) 97 (70) 146
Less: other comprehensive loss attributable to noncontrolling interests 2   2  
Comprehensive income (loss) attributable to TE Connectivity Ltd. (613) 536 (498) 861
Consolidating Adjustments        
Statement of Operations Detail:        
Equity in net income (loss) of subsidiaries 896 (1,049) 721 (1,879)
Equity in net income (loss) of subsidiaries of discontinued operations 8 (13) 5 143
Income (loss) from continuing operations before income taxes 904 (1,062) 726 (1,736)
Income (loss) from continuing operations 904 (1,062) 726 (1,736)
Net income (loss) 904 (1,062) 726 (1,736)
Other comprehensive income (loss) 357 (144) 160 (228)
Less: other comprehensive loss attributable to noncontrolling interests (4)   (4)  
Comprehensive income (loss) attributable to TE Connectivity Ltd. 1,257 (1,206) 882 (1,964)
TE Connectivity Ltd. | Reportable entities        
Statement of Operations Detail:        
Selling, general, and administrative expenses, net 23 28 49 63
Acquisition and integration costs     1  
Operating income (loss) (23) (28) (50) (63)
Equity in net income (loss) of subsidiaries (403) 489 (329) 930
Equity in net income (loss) of subsidiaries of discontinued operations (4) 10 (1) (97)
Intercompany interest income (expense), net (26) (32) (50) (55)
Income (loss) from continuing operations before income taxes (456) 439 (430) 715
Income (loss) from continuing operations (456) 439 (430) 715
Net income (loss) (456) 439 (430) 715
Other comprehensive income (loss) (159) 97 (70) 146
Less: other comprehensive loss attributable to noncontrolling interests 2   2  
Comprehensive income (loss) attributable to TE Connectivity Ltd. (613) 536 (498) 861
Intercompany transaction gains (losses)     14  
TEGSA | Reportable entities        
Statement of Operations Detail:        
Selling, general, and administrative expenses, net (122) 9 (106) (98)
Operating income (loss) 122 (9) 106 98
Interest income   1   1
Interest expense (10) (14) (20) (41)
Other income, net   1   1
Equity in net income (loss) of subsidiaries (493) 560 (392) 949
Equity in net income (loss) of subsidiaries of discontinued operations (4) 3 (4) (46)
Intercompany interest income (expense), net (22) (50) (23) (78)
Income (loss) from continuing operations before income taxes (407) 492 (333) 884
Income (loss) from continuing operations (407) 492 (333) 884
Income (loss) from discontinued operations, net of income taxes   7 3 (51)
Net income (loss) (407) 499 (330) 833
Other comprehensive income (loss) (159) 97 (70) 146
Less: other comprehensive loss attributable to noncontrolling interests 2   2  
Comprehensive income (loss) attributable to TE Connectivity Ltd. (564) 596 (398) 979
Intercompany transaction gains (losses) 115   101 110
Other Subsidiaries | Reportable entities        
Statement of Operations Detail:        
Net sales 3,195 3,412 6,363 6,759
Cost of sales 2,166 2,294 4,304 4,527
Gross margin 1,029 1,118 2,059 2,232
Selling, general, and administrative expenses, net 451 336 776 797
Research, development, and engineering expenses 158 166 319 327
Acquisition and integration costs 12 7 18 12
Restructuring and other charges, net 22 42 46 117
Impairment of goodwill 900   900  
Operating income (loss) (514) 567   979
Interest income 5 3 11 8
Interest expense (1) (1) (3) (1)
Other income, net 11   16 (1)
Intercompany interest income (expense), net 48 82 73 133
Income (loss) from continuing operations before income taxes (451) 651 97 1,118
Income tax expense (42) (91) (489) (169)
Income (loss) from continuing operations (493) 560 (392) 949
Income (loss) from discontinued operations, net of income taxes (4) 3 (4) (46)
Net income (loss) (497) 563 (396) 903
Other comprehensive income (loss) (198) 47 (90) 82
Less: other comprehensive loss attributable to noncontrolling interests 2   2  
Comprehensive income (loss) attributable to TE Connectivity Ltd. $ (693) $ 610 $ (484) $ 985
v3.20.1
Tyco Electronics Group S.A. - Balance Sheet (Details) - USD ($)
$ in Millions
Mar. 27, 2020
Dec. 27, 2019
Sep. 27, 2019
Mar. 29, 2019
Dec. 28, 2018
Sep. 28, 2018
Current assets:            
Cash and cash equivalents $ 796   $ 927      
Accounts receivable, net 2,461   2,320      
Inventories 2,001   1,836      
Prepaid expenses and other current assets 457   471      
Total current assets 5,715   5,554      
Property, plant, and equipment, net 3,558   3,574      
Goodwill 5,235   5,740      
Intangible assets, net 1,547   1,596      
Deferred income taxes 2,382   2,776      
Other assets 930   454      
Total assets 19,367   19,694      
Current liabilities:            
Short-term debt 603   570      
Accounts payable 1,390   1,357      
Accrued and other current liabilities 1,966   1,613      
Total current liabilities 3,959   3,540      
Long-term debt 3,752   3,395      
Long-term pension and postretirement liabilities 1,359   1,367      
Deferred income taxes 126   156      
Income taxes 228   239      
Other liabilities 772   427      
Total liabilities 10,196   9,124      
Total equity 9,171 $ 10,557 10,570 $ 9,994 $ 10,236 $ 10,831
Total liabilities and equity 19,367   19,694      
Consolidating Adjustments            
Current assets:            
Intercompany receivables (3,695)   (3,068)      
Total current assets (3,695)   (3,068)      
Investment in subsidiaries (41,119)   (42,201)      
Intercompany loans receivable (18,608)   (18,595)      
Total assets (63,422)   (63,864)      
Current liabilities:            
Intercompany payables (3,695)   (3,068)      
Total current liabilities (3,695)   (3,068)      
Intercompany loans payable (18,608)   (18,595)      
Total liabilities (22,303)   (21,663)      
Total equity (41,119)   (42,201)      
Total liabilities and equity (63,422)   (63,864)      
TE Connectivity Ltd. | Reportable entities            
Current assets:            
Intercompany receivables 46   49      
Prepaid expenses and other current assets 6   4      
Total current assets 52   53      
Investment in subsidiaries 13,418   13,865      
Total assets 13,470   13,918      
Current liabilities:            
Accounts payable 1   1      
Accrued and other current liabilities 655   328      
Intercompany payables 3,643   3,019      
Total current liabilities 4,299   3,348      
Total liabilities 4,299   3,348      
Total equity 9,171   10,570      
Total liabilities and equity 13,470   13,918      
TEGSA | Reportable entities            
Current assets:            
Intercompany receivables 3,590   2,959      
Prepaid expenses and other current assets 32   36      
Total current assets 3,622   2,995      
Investment in subsidiaries 27,701   28,336      
Intercompany loans receivable 2,568   2,562      
Other assets 100   72      
Total assets 33,991   33,965      
Current liabilities:            
Short-term debt 602   568      
Accrued and other current liabilities 102   57      
Total current liabilities 704   625      
Long-term debt 3,752   3,395      
Intercompany loans payable 16,040   16,033      
Other liabilities 77   47      
Total liabilities 20,573   20,100      
Total equity 13,418   13,865      
Total liabilities and equity 33,991   33,965      
Other Subsidiaries | Reportable entities            
Current assets:            
Cash and cash equivalents 796   927      
Accounts receivable, net 2,461   2,320      
Inventories 2,001   1,836      
Intercompany receivables 59   60      
Prepaid expenses and other current assets 419   431      
Total current assets 5,736   5,574      
Property, plant, and equipment, net 3,558   3,574      
Goodwill 5,235   5,740      
Intangible assets, net 1,547   1,596      
Deferred income taxes 2,382   2,776      
Intercompany loans receivable 16,040   16,033      
Other assets 830   382      
Total assets 35,328   35,675      
Current liabilities:            
Short-term debt 1   2      
Accounts payable 1,389   1,356      
Accrued and other current liabilities 1,209   1,228      
Intercompany payables 52   49      
Total current liabilities 2,651   2,635      
Intercompany loans payable 2,568   2,562      
Long-term pension and postretirement liabilities 1,359   1,367      
Deferred income taxes 126   156      
Income taxes 228   239      
Other liabilities 695   380      
Total liabilities 7,627   7,339      
Total equity 27,701   28,336      
Total liabilities and equity $ 35,328   $ 35,675      
v3.20.1
Tyco Electronics Group S.A. - Cash Flows (Details) - USD ($)
$ in Millions
6 Months Ended
Mar. 27, 2020
Mar. 29, 2019
Cash flows from operating activities:    
Net cash provided by (used in) continuing operating activities $ 892 $ 883
Net cash provided by (used in) discontinued operating activities   (30)
Net cash provided by operating activities 892 853
Cash flows from investing activities:    
Capital expenditures (309) (401)
Proceeds from sale of property, plant, and equipment 3 13
Acquisition of businesses, net of cash acquired (359) 8
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation   297
Other (2)  
Net cash used in continuing investing activities (667) (83)
Net cash used in discontinued investing activities   (2)
Net cash used in investing activities (667) (85)
Cash flows from financing activities:    
Net increase (decrease) in commercial paper (219) 90
Proceeds from issuance of debt 593 350
Repayment of debt   (441)
Proceeds from exercise of share options 27 17
Repurchase of common shares (408) (739)
Payment of common share dividends to shareholders (307) (299)
Transfers to discontinued operations   (32)
Other (31) (30)
Net cash used in continuing financing activities (345) (1,084)
Net cash provided by discontinued financing activities   32
Net cash used in financing activities (345) (1,052)
Effect of currency translation on cash (11) 1
Net decrease in cash, cash equivalents, and restricted cash (131) (283)
Cash, cash equivalents, and restricted cash at beginning of period 927 848
Cash, cash equivalents, and restricted cash at end of period 796 565
Consolidating Adjustments    
Cash flows from operating activities:    
Net cash provided by operating activities (458)  
Cash flows from investing activities:    
Change in intercompany loans 625 (5,475)
Net cash used in continuing investing activities   (5,475)
Net cash used in investing activities 625 (5,475)
Cash flows from financing activities:    
Intercompany distributions 458  
Loan activity with parent (625) 5,475
Net cash used in continuing financing activities   5,475
Net cash used in financing activities (167) 5,475
TE Connectivity Ltd. | Reportable entities    
Cash flows from operating activities:    
Net cash provided by (used in) continuing operating activities   (121)
Net cash provided by operating activities (114) (121)
Cash flows from financing activities:    
Changes in parent company equity 59 38
Repurchase of common shares (262) (739)
Payment of common share dividends to shareholders (307) (299)
Loan activity with parent 624 1,121
Net cash used in continuing financing activities   121
Net cash used in financing activities 114 121
TEGSA | Reportable entities    
Cash flows from operating activities:    
Net cash provided by (used in) continuing operating activities   (79)
Net cash provided by operating activities 493 (79)
Cash flows from investing activities:    
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation   312
Change in intercompany loans (625) 5,475
Net cash used in continuing investing activities   5,787
Net cash used in investing activities (625) 5,787
Cash flows from financing activities:    
Changes in parent company equity (105) (5,704)
Net increase (decrease) in commercial paper (219) 90
Proceeds from issuance of debt 593 350
Repayment of debt   (441)
Proceeds from exercise of share options 13  
Repurchase of common shares (146)  
Other (4) (3)
Net cash used in continuing financing activities   (5,708)
Net cash used in financing activities 132 (5,708)
Other Subsidiaries | Reportable entities    
Cash flows from operating activities:    
Net cash provided by (used in) continuing operating activities   1,083
Net cash provided by (used in) discontinued operating activities   (30)
Net cash provided by operating activities 971 1,053
Cash flows from investing activities:    
Capital expenditures (309) (401)
Proceeds from sale of property, plant, and equipment 3 13
Acquisition of businesses, net of cash acquired (359) 8
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation   (15)
Other (2)  
Net cash used in continuing investing activities   (395)
Net cash used in discontinued investing activities   (2)
Net cash used in investing activities (667) (397)
Cash flows from financing activities:    
Changes in parent company equity 46 5,666
Proceeds from exercise of share options 14 17
Intercompany distributions (458)  
Loan activity with parent 1 (6,596)
Transfers to discontinued operations   (32)
Other (27) (27)
Net cash used in continuing financing activities   (972)
Net cash provided by discontinued financing activities   32
Net cash used in financing activities (424) (940)
Effect of currency translation on cash (11) 1
Net decrease in cash, cash equivalents, and restricted cash (131) (283)
Cash, cash equivalents, and restricted cash at beginning of period 927 848
Cash, cash equivalents, and restricted cash at end of period $ 796 $ 565