TE Connectivity TEL · USD

20. Segment and Geographic DataEffective for fiscal 2025, we reorganized our management and segments to align the organization around our current strategy. Our businesses in the former Communications Solutions segment have been moved into the Industrial Solutions segment. Also, the appliances and industrial equipment businesses have been combined to form the automation and connected living business. In addition, we realigned certain product lines and businesses from the Industrial Solutions and former Communications Solutions segments to the Transportation Solutions segment. We now operate through two reportable segments: Transportation Solutions and Industrial Solutions. Our segments are organized based on several factors, including differences in markets, products, and customers. See Note 1 for a description of our segments. The following segment information reflects the new segment reporting structure. Prior period segment results have been recast to conform to the new segment structure.Segment performance is evaluated by our chief operating decision maker (“CODM”), the Chief Executive Officer, based primarily on net sales and operating income. On a regular basis, the CODM considers segment results in combination with budget-to-actual variances, segment performance reviews, trends and forecasts, and the overall economic environment to assess segment performance, make decisions, and determine how to allocate capital and other resources to the segments.Costs specific to a segment are charged to the segment, and corporate expenses, such as headquarters administrative costs, are allocated to the segments based on each segment’s share of total operating income. Intersegment sales are not material. Corporate assets are allocated to the segments based on each segment’s share of total segment assets.No single customer accounted for a significant amount of our net sales in fiscal 2025, 2024, or 2023.As we are not organized by product or service, it is not practicable to disclose net sales by product or service.

12. Commitments and ContingenciesLegal ProceedingsIn 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, trade compliance matters, 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 MattersWe are involved in various stages of investigation and cleanup related to environmental remediation matters at a number of sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods. As of fiscal year end 2025, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $18 million to $44 million, and we accrued $23 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.GuaranteesIn disposing of assets or businesses, we often provide representations, warranties, and/or indemnities to cover various risks including unknown damage to assets, environmental risks involved in the sale of real estate, liability for investigation and remediation of environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities and legal fees related to periods prior to disposition. We do not expect that these uncertainties will have a material adverse effect on our results of operations, financial position, or cash flows.At fiscal year end 2025, we had outstanding letters of credit, letters of guarantee, and surety bonds of $219 million. Supply Chain Finance ProgramWe have an agreement with a financial institution that allows participating suppliers the ability to finance payment obligations.

10. DebtDebt was as follows:​​​​​​​​​​​Fiscal Year End​​ 2025 2024 ​​(in millions)​Principal debt:​​​​​​​Commercial paper, at a weighted-average interest rate of 4.95% at fiscal year end 2024​$ —​$ 255​0.00% euro-denominated senior notes due 2025​​ —​​ 615​4.50% senior notes due 2026​​ 500​​ 500​3.70% senior notes due 2026​​ 350​​ 350​3.125% senior notes due 2027​​ 400​​ 400​2.50% euro-denominated senior notes due 2028​​ 585​​ —​0.00% euro-denominated senior notes due 2029​​ 643​​ 615​4.625% senior notes due 2030​​ 350​​ 350​4.50% senior notes due 2031​​ 450​​ —​2.50% senior notes due 2032​​ 600​​ 600​3.25% euro-denominated senior notes due 2033​​ 877​​ —​5.00% senior notes due 2035​​ 450​​ —​7.125% senior notes due 2037​ 477​ 477​Other​​ 71​​ 76​​​​ 5,753​​ 4,238​Unamortized discounts, premiums, and debt issuance costs, net​​ (59)​​ (35)​Total debt​$ 5,694​$ 4,203​​During fiscal 2025, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued €500 million aggregate principal amount of 2.50% senior notes due in May 2028, $450 million aggregate principal amount of 4.50% senior notes due in February 2031, €750 million aggregate principal amount of 3.25% senior notes due in January 2033, and $450 million aggregate principal amount of 5.00% senior notes due in May 2035. The notes issued during fiscal 2025 are TEGSA’s unsecured senior obligations and rank equally in right of payment with all existing and any future senior indebtedness of TEGSA and senior to any subordinated indebtedness that TEGSA may incur. TEGSA has a five-year unsecured senior revolving credit facility (“Credit Facility”) with a maturity date of April 2029 and aggregate commitments of $1.5 billion. The Credit Facility contains provisions that allow for incremental commitments of up to $500 million and borrowings in designated currencies. TEGSA had no borrowings under the Credit Facility at fiscal year end 2025 or 2024.Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with respect to revolving loans denominated in U.S. dollars, (a) the term secured overnight financing rate (“Term SOFR”) (as defined in the Credit Facility) or (b) an alternate base rate equal to the highest of (i) Bank of America, N.A.

15. Income TaxesIncome Tax Expense (Benefit)Significant components of the income tax expense (benefit) were as follows:​​​​​​​​​​​​​​Fiscal​​ 2025 2024 2023 ​​(in millions)​Current income tax expense:​​​​​​​​​​U.S. Federal​$ 22​$ 23​$ 23​U.S. State​ 6​ 4​ —​Non-U.S.​ 395​ 365​ 418​​​​ 423​​ 392​​ 441​Deferred income tax expense (benefit):​​​​​​​​​​U.S. Federal​ 47​ (49)​ (90)​U.S. State​ 5​ 3​ (6)​Non-U.S.​ 886​ (743)​ 19​​​​ 938​​ (789)​​ (77)​Income tax expense (benefit)​$ 1,361​$ (397)​$ 364​​The U.S. and non-U.S. components of income from continuing operations before income taxes were as follows:​​​​​​​​​​​​​​Fiscal​​ 2025 2024 2023 ​​(in millions)​U.S.​$ (70)​$ (96)​$ (137)​Non-U.S.​ 3,274​ 2,893​ 2,405​Income from continuing operations before income taxes​$ 3,204​$ 2,797​$ 2,268​​The reconciliation between U.S. federal income taxes at the statutory rate and income tax expense (benefit) was as follows:​​​​​​​​​​​​​​Fiscal​​ 2025 2024 2023 ​​(in millions)​Notional U.S. federal income tax expense at the statutory rate(1)​$ 673​$ 587​$ 476​Adjustments to reconcile to the income tax expense (benefit):​​​​​​​​​​U.S. state income tax expense (benefit), net​ 9​ 6​ (5)​Tax law changes​ —​ (260)​ (1)​Tax credits​ (24)​ (982)​ (13)​Non-U.S. net (earnings) loss(2)​ 40​ (15)​ (58)​Change in accrued income tax liabilities​ 38​ 160​ 47​Valuation allowance​ 617​ 328​ (47)​Legal entity restructurings and intercompany transactions​​ 2​​ (234)​​ (1)​Divestitures​​ (1)​​ —​​ (17)​Excess tax benefits from share-based payments​​ (22)​​ (8)​​ (6)​Other​​ 29​ 21​ (11)​Income tax expense (benefit)​$ 1,361​$ (397)​$ 364​(1)The U.S. federal statutory rate was 21% for fiscal 2025, 2024, and 2023.(2)Excludes items which are separately presented.The income tax expense for fiscal 2025 included $574 million of income tax expense related to a net increase in the valuation allowance for certain deferred tax assets associated with a ten-year tax credit obtained by a Swiss subsidiary in fiscal 2024. See “Global Minimum Tax” below for additional information regarding the impact of guidance issued by the Organisation for Economic Co-operation and Development (“OECD”) in January 2025 on the ten-year tax credit obtained by a Swiss subsidiary. In addition, the income tax expense for fiscal 2025 included $44 million of income tax expense related to an increase in the valuation allowance for certain U.S. tax loss and credit carryforwards.

11. LeasesThe components of lease cost were as follows:​​​​​​​​​​​​​​Fiscal​​ 2025 2024 2023 ​ (in millions) Operating lease cost​$ 145​$ 134​$ 129​Variable lease cost​​ 57​​ 53​​ 55​Total lease cost​$ 202​$ 187​$ 184​​Amounts recognized on the Consolidated Balance Sheets were as follows:​​​​​​​​​​​Fiscal Year End​​ 2025 2024​​ ($ in millions)​Operating lease ROU assets:​​​​​​​Other assets​$ 479​$ 433​Operating lease liabilities:​​​​​​​Accrued and other current liabilities​$ 126​$ 128​Other liabilities​​ 365​​ 313​Total operating lease liabilities​$ 491​$ 441​​​​​​​​​Weighted-average remaining lease term (in years)​​ 5.7​​ 5.5​Weighted-average discount rate​​ 3.4%​ 3.4%​Cash flow information, including significant non-cash transactions, related to leases was as follows:​​​​​​​​​​​​​​Fiscal​​ 2025 2024 2023 ​ (in millions) Cash paid for amounts included in the measurement of lease liabilities:​​​​​​​​​​Payments for operating leases(1)​$ 148​$ 141​$ 127​​​​​​​​​​​​ROU assets, including modifications of existing leases, obtained in exchange for operating lease liabilities​​ 183​​ 180​​ 106​(1)These payments are included in cash flows from operating activities, primarily in changes in accrued and other current liabilities.

4. AcquisitionsRichards Manufacturing Co.On April 1, 2025, we acquired 100% of Richards Manufacturing Co. (“Richards Manufacturing”), a U.S.-based producer of overhead and underground electrical and gas distribution products, for cash of approximately $2.3 billion, net of cash acquired. The acquired business has been reported as part of the energy business within our Industrial Solutions segment from the date of acquisition.The Richards Manufacturing acquisition was accounted for under the provisions of ASC 805, Business Combinations. We have preliminarily allocated the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. We are in the process of completing the valuation of identifiable intangible assets, fixed assets, and pre-acquisition contingencies and, therefore, the fair values set forth below are subject to adjustment upon finalizing the valuations. The amount of these potential adjustments could be significant. We expect to complete the purchase price allocation during the third quarter of fiscal 2026. The following table summarizes the preliminary allocation of the purchase price to the fair value of identifiable assets acquired and liabilities assumed at the date of acquisition, in accordance with the acquisition method of accounting:​​​​​​​ (in millions) Cash and cash equivalents​$ 41​Accounts receivable​​ 47​Inventories​​ 165​Other current assets​ 6​Property, plant, and equipment​​ 62​Goodwill​ 1,028​Intangible assets​​ 1,120​Other noncurrent assets​ 4​Total assets acquired​ 2,473​Accounts payable​​ 18​Other current liabilities​​ 14​Deferred income taxes​ 87​Other noncurrent liabilities​ 6​Total liabilities assumed​ 125​Net assets acquired​ 2,348​Cash and cash equivalents acquired​ (41)​Net cash paid​$ 2,307​​The fair values assigned to intangible assets were preliminarily determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. Both valuation methods rely on management judgment, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, peer group cost of capital and royalty rates, and other factors. The valuation of tangible assets was derived using a combination of the income, market, and cost approaches.

Cybersecurity Risk Management and StrategyOur cybersecurity risk management strategy and processes are designed to identify, assess, and manage risks to the confidentiality, integrity, and availability of our information technology environment, systems, and information. The cybersecurity risk management process is managed centrally and is led by our Chief Information Security Officer (“CISO”) who reports to our Chief Information Officer. Our cybersecurity program takes a risk-based approach and is integrated with our global enterprise risk management program. Our cybersecurity risk strategy is aligned with cyber/information security frameworks and industry standards, including the National Institute of Standards and Technology Cybersecurity Framework.Our cybersecurity program includes the following risk management practices:●a formal cybersecurity risk assessment is performed annually in collaboration with our enterprise risk management function, resulting in updates to plans and actions that are incorporated into improvement projects;●our cybersecurity program maturity is benchmarked annually against global industry standards and norms. The result serves as a guide to identifying evolving risks, prioritizing improvements, and enhancing the program;●cybersecurity threats are evaluated throughout the year by our around-the-clock security operations center, utilizing a variety of third-party subscription and threat intelligence data sources, and data collected via internal monitoring and scanning processes;●annual security awareness trainings are required to be completed by employees, and monthly phishing campaigns and additional function-specific cybersecurity trainings are also conducted;●security and risk metrics are reviewed monthly and reported to leadership regularly;●external penetration tests are conducted annually by independent third parties and appropriate actions are taken to strengthen controls;●a cybersecurity incident response plan and governance charter are maintained by the cybersecurity incident response team. The cybersecurity incident response plan and supporting playbooks are utilized during table-top exercises and trainings. Participants may include information technology, business, corporate function, and external resources depending on the table-top scenario; and●third-party supplier security reviews are conducted based on risk.

7. GoodwillThe changes in the carrying amount of goodwill by segment were as follows(1):​​​​​​​​​​​​​​Transportation​Industrial​​​​​ Solutions Solutions Total ​​(in millions)​Balance at fiscal year end 2023(2)​$ 1,543​$ 3,920​$ 5,463​Acquisition​​ —​​ 180​​ 180​Currency translation and other​ 41​ 117​ 158​Balance at fiscal year end 2024(2)​​ 1,584​​ 4,217​​ 5,801​Acquisitions and purchase accounting adjustments​​ —​​ 1,227​​ 1,227​Currency translation​​ 25​​ 73​​ 98​Balance at fiscal year end 2025(2)​$ 1,609​$ 5,517​$ 7,126​(1)In connection with the reorganization of our segments, goodwill was reallocated to reporting units using a relative fair value approach. See Notes 1 and 20 for additional information regarding our new segment structure.(2)At fiscal year end 2025, 2024, and 2023, accumulated impairment losses for the Transportation Solutions and Industrial Solutions segments were $3,091 million and $1,158 million, respectively.During fiscal 2025, we completed the acquisition of Richards Manufacturing and recognized $1,028 million of goodwill which benefits the Industrial Solutions segment. During fiscal 2025 and 2024, we recognized goodwill of $199 million and $180 million, respectively, in the Industrial Solutions segment in connection with other acquisitions. See Note 4 for additional information regarding acquisitions.We completed our annual goodwill impairment test in the fourth quarter of fiscal 2025 and determined that no impairment existed.