TE Connectivity FY2026 sales rise 15.2% to $19.9B
Of $91 million in tariff refunds received, $87 million was recorded as a net-sales reduction because it is expected to be returned to customers.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
TE Connectivity plc reported fiscal 2026 net sales of $19.885 billion, up 15.2% from fiscal 2025, with organic net sales growth of 11.9%. Industrial Solutions sales rose 25.8%, while Transportation Solutions sales rose 7.3%. Operating income increased to $3.991 billion from $3.211 billion, and operating margin rose to 20.1% from 18.6%. Cash from operations reached $4.525 billion, up $386 million. TE received $91 million in IEEPA tariff refunds and recorded $87 million expected to be returned to customers as a reduction in net sales.
TE Connectivity agreed to acquire Astrodyne for approximately $1.4 billion in cash; closing is expected by the end of calendar year 2026, subject to customary regulatory approvals and other closing conditions. First-quarter fiscal 2027 net sales are expected to be approximately $5.35 billion, with diluted earnings per share of approximately $3.04; that outlook excludes Astrodyne. Full-year fiscal 2027 sales are expected to grow at a double-digit rate, with organic growth consistent with fiscal 2026 levels. The board increased share-repurchase authorization by $3.0 billion, with $2.5 billion remaining at fiscal year-end.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointFiscal 2026 net sales increased 15.2% to $19.885 billion.
- Moderate pointFiscal 2026 operating income reached $3.991 billion, versus $3.211 billion in fiscal 2025.
- Moderate pointOperating cash flow rose $386 million to $4.525 billion in fiscal 2026.
Negative
- None.
Filing Explained
In fiscal 2026, TE Connectivity repurchased
Key Figures
Key Terms
organic net sales growth (decline) financial
performance obligations financial
IEEPA tariffs regulatory
Consolidated EBITDA financial
valuation allowance financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were TEL's fiscal 2026 net sales?
What is TEL's first-quarter fiscal 2027 outlook?
How does TE Connectivity plan to finance the Astrodyne acquisition?
How much stock did TEL repurchase in fiscal 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) | |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended | |
or | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
(Commission File Number)
(Exact name of registrant as specified in its charter)
|
| (Registrant’s telephone number) |
(Address and postal code of principal executive offices) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered | ||
*Issued by Tyco Electronics Group S.A., an indirect wholly-owned subsidiary of TE Connectivity plc
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of the registrant’s ordinary shares held by non-affiliates was $
The number of ordinary shares outstanding as of November 5, 2026 was
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement to be filed in connection with the registrant’s 2027 annual general meeting of shareholders are incorporated by reference into Part III of this Form 10-K.
Table of Contents
TE CONNECTIVITY PLC
TABLE OF CONTENTS
Page | ||||
Part I | ||||
Item 1. | Business | 1 | ||
Item 1A. | Risk Factors | 7 | ||
Item 1B. | Unresolved Staff Comments | 21 | ||
Item 1C. | Cybersecurity | 21 | ||
Item 2. | Properties | 22 | ||
Item 3. | Legal Proceedings | 23 | ||
Item 4. | Mine Safety Disclosures | 23 | ||
Part II | ||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 24 | ||
Item 6. | Reserved | 25 | ||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 42 | ||
Item 8. | Financial Statements and Supplementary Data | 43 | ||
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 44 | ||
Item 9A. | Controls and Procedures | 44 | ||
Item 9B. | Other Information | 45 | ||
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 45 | ||
Part III | ||||
Item 10. | Directors, Executive Officers and Corporate Governance | 46 | ||
Item 11. | Executive Compensation | 46 | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 46 | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 47 | ||
Item 14. | Principal Accountant Fees and Services | 47 | ||
Part IV | ||||
Item 15. | Exhibits and Financial Statement Schedules | 48 | ||
Item 16. | Form 10-K Summary | 52 | ||
Signatures | 53 | |||
Index to Consolidated Financial Statements | 55 | |||
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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this Annual Report that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, acquisitions, divestitures, the effects of competition, and the effects of future legislation or regulations. Forward-looking statements also include statements addressing our environmental, social, governance, and sustainability plans and goals. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “aspire,” “estimate,” “predict,” “potential,” “goal,” “target,” “continue,” “may,” and “should,” or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we file this report except as required by law.
The risk factors discussed in “Part I. Item 1A. Risk Factors” and other risks described in this Annual Report could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.
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PART I
“TE Connectivity” and “TE Connectivity (logo)” are trademarks. This report further contains other trademarks of ours and additional trade names and trademarks of other companies that are not owned by TE Connectivity. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
© 2026 TE Connectivity plc. All rights reserved.
ITEM 1. BUSINESS
General
We are a global industrial technology leader creating a safer, sustainable, productive, and connected future. As a trusted innovation partner, our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers enabling artificial intelligence, and more. References in this report to “TE Connectivity,” the “Company,” “we,” “us,” or “our” refer to TE Connectivity Ltd. before September 30, 2024 and to TE Connectivity plc on or after September 30, 2024.
We became an independent, publicly traded company in 2007; however, through our predecessor companies, we trace our foundations in the connectivity business back to 1941.
On September 30, 2024, TE Connectivity Ltd., our former parent entity, merged with and into TE Connectivity plc, a public limited company incorporated under Irish law and the surviving entity, in order to effect our change in jurisdiction of incorporation from Switzerland to Ireland. Effective beginning in fiscal 2025, we are organized under the laws of Ireland.
We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2026, 2025, and 2024 ended on September 25, 2026, September 26, 2025, and September 27, 2024, respectively. Fiscal 2026, 2025, and 2024 were each 52 weeks in length. For fiscal years in which there are 53 weeks, the fourth fiscal quarter includes 14 weeks, with the next occurrence taking place in fiscal 2028.
Segments
We operate through two reportable segments: Transportation Solutions and Industrial Solutions. We believe our two segments served a combined market of approximately $135 billion as of fiscal year end 2026.
Our net sales by segment as a percentage of our total net sales were as follows:
Fiscal | ||||||||||
| 2026 | | | 2025 | | | 2024 | | | |
Transportation Solutions |
| 50 | % | 54 | % | 60 | % | |||
Industrial Solutions |
| 50 |
| 46 |
| 40 | ||||
Total |
| 100 | % | 100 | % | 100 | % | |||
Below is a description of our reportable segments and the primary products, markets, and competitors of each segment.
Transportation Solutions
The Transportation Solutions segment is a leader in connectivity and sensor technologies. The primary products sold by the Transportation Solutions segment include terminals and connector systems and components, sensors, heat shrink tubing, relays, and application tooling. The Transportation Solutions segment’s products, which must withstand harsh conditions, are used in the following end markets:
| ● | Automotive (75% of segment’s net sales)—We are one of the leading providers of advanced automobile connectivity solutions. The automotive industry uses our products in automotive technologies for body and chassis systems, convenience applications, driver information, infotainment solutions, miniaturization solutions, |
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| motor and powertrain applications, and safety and security systems. Hybrid and electronic mobility solutions include in-vehicle technologies, battery technologies, and charging solutions. |
| ● | Commercial transportation (16% of segment’s net sales)—We deliver reliable connectivity products designed to withstand harsh environmental conditions for on- and off-highway vehicles and recreational transportation, including heavy trucks, construction, agriculture, buses, and other vehicles. |
| ● | Sensors (9% of segment’s net sales)—We offer a portfolio of intelligent, efficient, and high-performing sensor solutions that are used by customers across multiple industries, including automotive, industrial, commercial transportation, medical solutions, aerospace and defense, and consumer applications. |
The Transportation Solutions segment’s major competitors include Yazaki, Aptiv, Sumitomo, Sensata, Honeywell, Molex, and Amphenol.
Industrial Solutions
The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and signals. The primary products sold by the Industrial Solutions segment include terminals and connector systems and components, heat shrink tubing, relays, interventional medical components, wire and cable, and filters. The Industrial Solutions segment’s products are used in the following end markets:
| ● | Digital data networks (32% of segment’s net sales)—We deliver advanced signal and power connectivity solutions, together with associated thermal solutions, for the rapidly evolving artificial intelligence (“AI”) data center and AI edge ecosystems. We also provide connectivity solutions for networking, wireless infrastructure, and the Internet of Things, helping our customers address today’s requirements and enable next-generation technologies. |
| ● | Automation and connected living (25% of segment’s net sales)—Our products are used in factory and warehouse automation and process control systems such as industrial controls, robotics, human machine interface, industrial communication, and power distribution. Our building automation and smart city infrastructure products are used to connect lighting and offer solutions in HVAC, elevators/escalators, and security. Our rail products are used in high-speed trains, metros, light rail vehicles, locomotives, and signaling switching equipment. Additionally, we provide both standard products and custom-designed solutions to meet the daily demands of home appliances. |
| ● | Energy (19% of segment’s net sales)—Our products are used by electric power utilities, OEMs, data center owners, and engineering procurement construction companies serving the electrical power grid and renewables industries. We offer products and solutions that are used to build resilient and modern grids, scale clean energy and data center power, and advance intelligent grid networks. These include a wide range of insulation, protection, and connection solutions for electrical power generation, transmission, distribution, and industrial markets. |
| ● | Aerospace, defense, and marine (17% of segment’s net sales)—We design, develop, and manufacture a comprehensive portfolio of critical electronic components and systems for the harsh operating conditions of the commercial aerospace, defense, and marine industries. Our products and systems are designed and manufactured to operate effectively in harsh conditions ranging from the depths of the ocean to the far reaches of space. |
| ● | Medical (7% of segment’s net sales)—Our products are used in imaging, diagnostic, surgical, and minimally invasive interventional applications. We specialize in the design and manufacture of advanced surgical, imaging, and interventional device solutions. Key markets served include cardiovascular, peripheral vascular, structural heart, endoscopy, electrophysiology, and neurovascular therapies. |
The Industrial Solutions segment competes primarily against Amphenol, Molex, Hubbell, JST, Integer Holdings, and Korea Electric Terminal (KET).
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Customers
As an industry leader, we have established close working relationships with many of our customers. These relationships allow us to better anticipate and respond to customer needs when designing new products and new technical solutions. By working with our customers in developing new products and technologies, we believe we can identify and act on trends and leverage knowledge about next-generation technology across our products.
Our approach to our customers is driven by our dedication to further develop our product families and ensure that we are globally positioned to best provide our customers with sales and engineering support. We believe that as electronic component technologies continue to proliferate, our broad product portfolio and engineering capability give us a potential competitive advantage when addressing the needs of our global customers.
We manufacture and sell a broad portfolio of products to customers in various industries. Our customers include many of the leaders in their respective industries, and our relationships with them typically date back many years. We believe that our diversified customer base provides us with an opportunity to leverage our skills and experience across markets and reduce our exposure to individual end markets, thereby reducing the variability of our financial performance. Additionally, we believe that the diversity of our customer base reduces the level of cyclicality in our results and distinguishes us from our competitors.
No single customer accounted for a significant amount of our net sales in fiscal 2026, 2025, or 2024.
Sales and Distribution
We maintain a strong local presence in each of the geographic regions in which we operate. Our net sales by geographic region(1) as a percentage of our total net sales were as follows:
Fiscal | ||||||||||
| 2026 | | | 2025 | | | 2024 | | | |
Asia–Pacific |
| 39 | % | 38 | % | 34 | % | |||
Europe/Middle East/Africa (“EMEA”) |
| 32 | 33 | 37 | ||||||
Americas |
| 29 |
| 29 |
| 29 | ||||
Total |
| 100 | % | 100 | % | 100 | % | |||
| (1) | Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. |
We sell our products into approximately 130 countries primarily through direct selling efforts to manufacturers. In fiscal 2026, our direct sales represented approximately 70% of total net sales. We also sell our products indirectly via third-party distributors.
We maintain distribution centers around the world. Products are generally delivered to the distribution centers by our manufacturing facilities and then subsequently delivered to the customer. In some instances, however, products are delivered directly from our manufacturing facility to the customer. Our global coverage positions us near our customers’ locations and allows us to assist them in consolidating their supply base and lowering their production costs. We contract with a wide range of transport providers to deliver our products globally via road, rail, sea, and air. We believe our balanced sales distribution lowers our exposure to any particular geography and improves our financial profile.
Seasonality and Backlog
Typically, we experience a slight seasonal pattern to our business. Overall, the third and fourth fiscal quarters are usually the strongest quarters of our fiscal year, whereas the first fiscal quarter is negatively affected by holidays and the second fiscal quarter may be affected by adverse winter weather conditions in some of our markets.
Certain of our end markets experience some seasonality. Our sales in the automotive market are dependent upon global vehicle production which generally follows seasonal trends. Production has historically been the strongest in the first fiscal quarter in Asia whereas European production typically declines in the fourth fiscal quarter. Also, our sales in the energy market typically increase in the third and fourth fiscal quarters as customer activity increases.
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Customer orders and demand may fluctuate as a result of economic and market conditions. Backlog by reportable segment was as follows:
Fiscal Year End |
| ||||||
| 2026 | | 2025 | | |||
| (in millions) | ||||||
Transportation Solutions | $ | 2,724 | $ | 2,278 | |||
Industrial Solutions |
| 5,664 |
| 3,910 | |||
Total | $ | 8,388 | $ | 6,188 | |||
We expect that the majority of our backlog at fiscal year end 2026 will be filled during fiscal 2027. Backlog is not necessarily indicative of future net sales as unfilled orders may be cancelled prior to shipment of goods.
Competition
The industries in which we operate are highly competitive, and we compete with thousands of companies that range from large multinational corporations to local manufacturers. Competition is generally based on breadth of product offering, product innovation, price, quality, delivery, and service. We continue to experience general downward pressure on our prices. However, as a result of increased costs and tariffs, certain of our businesses implemented price increases in recent years.
Raw Materials
We use a wide variety of raw materials in the manufacture of our products. The principal raw materials that we use include plastic resins for molding; precious metals such as gold, silver, and palladium for plating; and other metals such as copper, aluminum, brass, and steel for manufacturing cable, contacts, and other parts that are used for cable and component bodies and inserts. Many of these raw materials are produced in a limited number of countries around the world or are only available from a limited number of suppliers. The prices of these materials are driven by global supply and demand. In recent years, raw material prices and availability have been affected by worldwide economic conditions, including supply chain disruptions, trade wars, and inflationary cost pressures.
Intellectual Property
Patents and other proprietary rights are important to our business. We also rely upon trade secrets, manufacturing know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive position. We review third-party proprietary rights, including patents and patent applications, as available, in an effort to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities, and monitor the intellectual property claims of others.
We own a large portfolio of patents that relate principally to electrical, optical, and electronic products. We also own a portfolio of trademarks and are a licensee of various patents and trademarks. Patents for individual products extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. Trademark rights may potentially extend for longer periods of time and are dependent upon national laws and use of the trademarks.
While we consider our patents and trademarks to be valued assets, we do not believe that our competitive position or our operations are dependent upon or would be materially impacted by any single patent or group of related patents.
Human Capital Management
We have employees located throughout the world. As of fiscal year end 2026, we employed approximately 104,000 people worldwide, including 14,000 contract employees. Approximately 42,000 were in the Asia–Pacific region, 36,000 were in the EMEA region, and 26,000 were in the Americas region. Of our total employees, approximately 65,000 were employed in manufacturing. Our strong employee base, along with their commitment to uncompromising values, provides the foundation of our success.
We are governed by our core values of integrity, accountability, inclusion, teamwork, and innovation. They guide our decisions and our actions, both individually and as an organization. Additionally, our employees are responsible for upholding our purpose—to create a safer, sustainable, productive, and connected future. We track and report internally on
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key talent metrics including workforce demographics, critical role pipeline data, global diversity data, and engagement and inclusion indices. As part of its charter, the Management Development and Compensation Committee of our Board of Directors oversees our policies and practices related to the management of human capital resources including talent management, culture, global diversity, and inclusion.
Inclusion
We are committed to leveraging the skills and perspectives of a wealth of backgrounds and experiences, and building a workforce and supplier network that represents our global markets and the customers we serve. We strive to maintain a work environment where all employees are engaged, feel their differences are valued and mutually-respected, and believe that all opinions count. Our people reflect our customers and markets. Our employees work in over 50 countries and represent approximately 150 nationalities, and our total workforce is approximately 40% women.
Our employee resource groups (“ERGs”) are company-sponsored, employee-led groups that focus on shared identities or experiences of employees. These groups apply those perspectives to create value for our company as a whole. The ERGs provide a space where employees can foster connections and develop in a supportive environment. As of fiscal year end 2026, we had eight ERGs—African Heritage, ALIGN (lesbian, gay, bisexual, transgender, and queer employees (LGBTQ+) and their allies), Asian Heritage, Latin Heritage, TE Veterans, TE Young Professionals, THRIVE (employees with mental, emotional, and physical disabilities and their allies), and Women in Networking—with over 14,000 members worldwide. Our ERGs welcome any employee interested in supporting their mission and participation is optional.
Employee Engagement
Our annual employee engagement survey explores how employees feel about their experience at our company and enables us to develop tailored actions to enhance the working environment. Focused on measuring engagement, inclusion, well-being, and leadership effectiveness, this fully digital, enterprise-wide survey is available to all employees in 22 languages. We had a participation rate of 87% in fiscal 2026. Our engagement, inclusion, and leadership effectiveness indices were consistent with fiscal 2025 results and our well-being index increased slightly from fiscal 2025. Our engagement and inclusion scores were once again favorable when compared to external global manufacturing benchmarks.
Training and Development
We provide employees with a range of development programs, opportunities, skills, and resources, empowering them to unleash their potential. Also, we emphasize employee development and training to support engagement and retention. Our LEARN@TE platform supplements our talent development strategies. It is an online portal that enables employees to access instructor-led classroom or virtual courses and self-directed web-based courses. Strategy, execution, and talent (“SET”) leadership expectations, which focus on how we drive strategy, effectively execute, and build talent, are expectations of all employees and are embedded in all of our leadership programs. We integrate these behavioral expectations into the way we assess and select talent, manage performance, and develop and reward our people.
We are committed to identifying and developing our next generation of leaders. We have a robust talent and succession planning process, and we offer programs to support the development of leaders at all levels and those in critical roles, general management, engineering, and operations. We are focused on recruiting top candidates, developing employees at all levels, and providing opportunities for career advancement. On an annual basis, we conduct an organization and leadership review process with our Chief Executive Officer and all segment, business unit, and function leaders focusing on our high-performing and high-potential talent, globally diverse talent, and the succession for our most critical roles. Also, our Board of Directors reviews and assesses management development plans for senior executives and the succession plans relating to those positions.
We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Our Chief Executive Officer and segment leaders average over 25 years of industry experience. They are supported by an experienced and talented management team that is dedicated to maintaining and expanding our position as a global leader in the industry. For discussion of the risks relating to the attraction and retention of management and executive management employees, see “Part I. Item 1A. Risk Factors.”
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Health, Safety, and Well-being
We are committed to the health, safety, well-being, and human rights of our employees, ensuring that all of our people can thrive both at work and beyond. Our approach goes beyond compliance. We strive to create an environment where everyone feels safe, respected, and supported, while providing the tools and resources needed to balance work and personal lives and take ownership of their well-being. Our environmental, health, and safety teams continuously seek ways to raise the standards of safety, health, well-being, and human rights across our organization. Our “Mission Zero” strategy engages all employees to review our safety policies, complete training, and sign a personal commitment to uphold a safe work environment. We aspire to be an injury-free workplace and, as such, we have compliance audits and internal processes in place to stay ahead of workplace hazards. In fiscal 2026, our Occupational Safety and Health Administration (“OSHA”) total recordable incident rate—a rate equivalent to the number of incidents per 100 employees or 200,000 work hours—was 0.16, with no employee or contractor fatalities.
We remain focused on the protection of global human rights and have instituted several policies to guide us including our global human rights policy and our human trafficking and modern slavery policy. Our Human Rights Committee of cross-functional leaders assesses and mitigates the areas of greatest risk for our operations and value chain, and we have developed a roadmap to strengthen our human rights approach. We apply high standards of human rights and require that our suppliers do the same.
Government Regulation and Supervision
The import and export of products are subject to regulation by the various jurisdictions where we conduct business. A small portion of our products, including defense-related products, may require governmental import and export licenses, whose issuance may be influenced by geopolitical and other events. We have a trade compliance organization and other systems in place to apply for licenses and otherwise comply with such regulations. Any failure to maintain compliance with domestic and foreign trade regulation could limit our ability to import and export raw materials and finished goods into or from the relevant jurisdiction.
Environmental
Our operations are subject to numerous environmental, health, and safety laws and regulations, including those regulating the discharge of materials into the environment, greenhouse gas (“GHG”) emissions, hazardous materials in products, and chemical usage. We are committed to complying with these laws and to the protection of our employees and the environment. We maintain a global environmental, health, and safety program that includes appropriate policies and standards; staff dedicated to environmental, health, and safety issues; periodic compliance auditing; training; and other measures. We also have a program for compliance with the European Union (“EU”) Restriction of Hazardous Substances (“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) Directives; the China Administrative Measures for the Restriction of Hazardous Substances in Electrical and Electronic Products (“China RoHS”) regulation; the EU Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) regulation; and similar laws.
Compliance with these laws has increased our costs of doing business in a variety of ways and may continue to do so in the future. For example, laws regarding product content and chemical registration require extensive and costly data collection, management, and reporting, and laws regulating GHG emissions may increase our costs for energy and certain materials and products. We also have projects underway at a number of current and former manufacturing sites to investigate and remediate environmental contamination resulting from past operations. Based upon our experience, available information, and applicable laws, as of fiscal year end 2026, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $20 million to $53 million, and we accrued $27 million as the probable loss, which was the best estimate within this range. We do not anticipate any material capital expenditures during fiscal 2027 for environmental control facilities or other costs of compliance with laws or regulations relating to GHG emissions.
Sustainability
We look to build on our strong foundation of environmental sustainability in our operations. Our One Connected World strategy guides how we balance investor and customer expectations and drive improved environmental sustainability. We support a safer, sustainable, productive, and connected future through the products that come out of our facilities.
Our sustainability initiatives began several years ago and have continued to evolve. From fiscal 2020 to 2026, we achieved more than a 25% reduction in energy use intensity, approximately a 20% reduction in total water withdrawal, and
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more than a 70% reduction in absolute GHG emissions for Scopes 1 and 2. Also, in fiscal 2026, we diverted approximately 95% of waste away from landfill or incineration without energy recovery.
We have challenged ourselves to find new ways to continue to drive sustainability improvements. We have also committed to near-term, company-wide GHG emissions reductions in line with climate science and Science Based Targets initiative (“SBTi”) objectives. These reduction goals were validated by the SBTi and we are currently listed on its “Companies Taking Action” target dashboard which shows companies and financial institutions that have set science-based targets, or have committed to developing such targets.
Our mid-term goals and long-term ambitions, certain of which have already been achieved, include the following:
Targeted Fiscal Year | | ||||||
| Baseline Fiscal Year | | of Achievement | | Achieved | ||
70%+ reduction in absolute GHG emissions for Scopes 1 and 2 | 2020 | 2030 | X | ||||
30% reduction in absolute GHG emissions for Scope 3 | 2022 | 2032 | |||||
3% reduction in water withdrawal | 2024 | 2029 | |||||
98% Zero Waste to Landfill | n/a | 2029 | |||||
80% renewable electricity use in our operations | n/a | ongoing | X |
We continue to assess our goals and ambitions and periodically update our environmental commitments.
As we achieved our previously reported water reduction initiative in fiscal 2025, we have endeavored to expand our water stewardship from 30 targeted sites to a comprehensive water withdrawal goal starting in fiscal 2026. Our current goal is a 3% reduction in total water withdrawal on a company-wide basis by fiscal 2029 (from a fiscal 2024 base year).
Our waste initiative is focused on achieving Zero Waste to Landfill (“ZWTL”) by fiscal 2029 partnering across our organization to minimize waste, utilize circular materials, and divert waste from landfill or incineration without energy recovery. For us, ZWTL means that at least 98% of all operational waste will be diverted from landfill or incineration through prevention, reuse, recycling, or energy recovery.
While sustainability is embedded in our operations, we are exploring opportunities with our direct suppliers and logistics service providers to strengthen the environmental sustainability of our supply chain. In addition to improving the sustainability of our operations and working with our suppliers to reduce their GHG emissions, we help our customers produce smaller, lighter, and more energy-efficient products, reducing the environmental impact of the products throughout their lives.
Additional information regarding our sustainability initiatives and progress is available in our annual Corporate Responsibility Report located on our website at www.te.com under the heading “Sustainability—Reporting and Policies.” The contents of our Corporate Responsibility Report are not incorporated by reference in this Annual Report.
Available Information
All periodic and current reports, registration filings, and other filings that we are required to file with the United States Securities and Exchange Commission (“SEC”), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) are available free of charge through our website at www.te.com. Such documents are available as soon as reasonably practicable after electronic filing or furnishing of the material with the SEC. The information on our website is not incorporated by reference in this Annual Report.
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our securities. These risks are not the only ones facing us. Our business is also subject to general risks that affect many other companies. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations, financial condition, and liquidity.
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Risks Relating to the Macroeconomic Environment and Our Global Presence
Conditions in global or regional economies, capital and money markets, and banking systems, and cyclical industry demand may adversely affect our results of operations, financial position, and cash flows.
Our business and operating results have been and will continue to be affected by economic conditions regionally or globally, including new or increasing tariffs and other barriers to trade, including ongoing trade and tariff tensions between the United States (“U.S.”), China, the EU, and other countries, changes to fiscal and monetary policy, inflation or deflation, slower growth or recession, higher interest rates, labor disruptions, the cost and availability of consumer and business credit, end demand from consumer and industrial markets, significant bank failures, government shutdowns, and concerns as to sovereign debt levels including credit rating downgrades and defaults on sovereign debt. Any of these economic factors could cause our customers to experience deterioration of their businesses, cash flow, financial condition, and ability to obtain financing. As a result, existing or potential customers may delay or cancel plans to purchase our products and may not be able to fulfill their obligations to us in a timely fashion or in full. Further, our vendors may experience similar problems, which may impact their ability to fulfill our orders or meet agreed service and quality levels. If regional or global economic conditions deteriorate, our results of operations, financial position, and cash flows could be materially adversely affected. Also, deterioration in economic conditions, expectations for future revenue, projected future cash flows, or other factors have triggered and could trigger additional recognition of impairment charges for our goodwill or other long-lived assets. Impairment charges, if any, may be material to our results of operations and financial position.
Foreign currency exchange rates may adversely affect our results.
Our Consolidated Financial Statements are prepared in U.S. dollars; however, many of our non-U.S. operations have a functional currency other than the U.S. dollar, and their results are translated into U.S. dollars for reporting purposes. Changes in the relative values of currencies may have a significant effect on our results of operations, financial position, and cash flows.
We are exposed to the effects of changes in foreign currency exchange rates on our costs and revenue. Approximately 55% of our net sales for fiscal 2026 were invoiced in currencies other than the U.S. dollar, and we expect non-U.S. dollar revenue to continue to represent a significant portion of our future net sales. We have elected not to hedge this foreign currency exposure. Therefore, when the U.S. dollar strengthens in relation to the currencies of the countries where we sell our products, such as the euro or Asian currencies, our U.S. dollar reported revenue and income will decrease, which may have an adverse effect on our operating results as reported in U.S. dollars.
We manage certain cash, intercompany, and other balance sheet currency exposures in part by entering into financial derivative contracts. In addition to the risk of non-performance by the counterparty to these contracts, our efforts to manage these risks might not be successful.
We have suffered and could continue to suffer business interruptions, including impacts resulting from pandemics, severe weather events, and natural catastrophic events, including those caused or intensified by climate change, and other macroeconomic factors.
Our operations and those of our suppliers and customers, and the supply chains that support their operations, have been and may be in the future vulnerable to interruption by natural disasters such as hurricanes, earthquakes, tsunamis, typhoons, tornados, or floods, which may be exacerbated by the effects of climate change; other disasters such as fires, explosions, acts of terrorism, or war, including the continuing military conflicts in certain parts of the world; disease or other adverse health developments; or failures of management information or other systems due to internal or external causes. These events could cause some of our operations to suffer from supply chain disruptions and potential delays in fulfilling customer orders or order cancellations altogether, lost business and sales, changing costs or availability of insurance, and/or property damage or harm to our people, each and all of which could have an adverse effect on our business operations, financial condition, and results of operations. In addition, such interruptions could result in a widespread crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our end customers’ products. If a business interruption occurs and we are unsuccessful in our continuing efforts to minimize the impact of these events, our business, results of operations, financial position, and cash flows could be materially adversely affected.
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We could be adversely affected by a decline in the market value of our pension plans’ investment portfolios or a reduction in returns on plan assets.
Concerns about deterioration in the global economy, together with concerns about tariffs, credit, inflation, or deflation, have caused and could continue to cause significant volatility in the price of all securities, including fixed income and equity securities, which has reduced and could further reduce the value of our pension plans’ investment portfolios. In addition, the expected returns on plan assets may not be achieved. A decrease in the value of our pension plans’ investment portfolios or a reduction in returns on plan assets could require us to significantly increase funding of such obligations, which would have an adverse effect on our results of operations, financial position, and cash flows.
Disruption in credit markets and volatility in equity markets may affect our ability to access sufficient funding.
The global equity markets have been volatile and at times credit markets have been disrupted, which has reduced the availability of investment capital and credit. Downgrades of sovereign debt credit ratings in the past have similarly affected the availability and cost of capital. As a result, we may be unable to access adequate funding to operate and grow our business. Our inability to access adequate funding or to generate sufficient cash from operations may require us to reconsider certain projects and capital expenditures. The extent of any impact will depend on several factors, including our operating cash flows, the duration of tight credit conditions and volatile equity markets, our credit ratings and credit capacity, the cost of financing, and other general economic and business conditions.
Global political, economic, and military instability could negatively affect sales or profitability.
Our workforce; manufacturing, research, administrative, and sales facilities; markets; customers; and suppliers are located throughout the world. As a result, we are exposed to risks that could negatively affect sales or profitability, including:
· | changes in global trade policies, including sanctions, tariffs, trade barriers, and trade disputes; |
· | regulations related to customs and import/export matters; |
· | variations in lengths of payment cycles and challenges in collecting accounts receivable; |
· | tax law and regulatory changes, examinations by taxing authorities, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of cash generated or held in a number of jurisdictions; |
· | employment regulations and local labor conditions, including increases in employment costs, particularly in low-cost regions in which we currently operate; |
· | difficulties protecting intellectual property; |
· | instability in economic or political conditions, including elections, sovereign debt levels, government shutdowns, Eurozone uncertainty, inflation, recession, and actual or anticipated military or political conflicts, including the continuing military conflicts in certain parts of the world and any resulting supply chain or other disruptions; and |
· | the impact of each of the foregoing on our outsourcing and procurement arrangements. |
We have sizeable operations in China, including 19 principal manufacturing sites. In addition, approximately 25% of our net sales in fiscal 2026 were made to customers in China. Economic conditions in China have been, and may continue to be, volatile and uncertain. In addition, the legal and regulatory system in China continues to evolve and is subject to change. There also continues to be significant uncertainty about the relationship between the U.S. and China, including with respect to geopolitics, trade policies, treaties, government regulations, and tariffs. The current political climate has intensified concerns about trade tensions between the U.S. and China in connection with each country’s recent or proposed tariffs on the other country’s products. Accordingly, our operations and transactions with customers in China could be adversely affected by changes to market conditions; changes to the regulatory environment; increased trade barriers, tariffs, or restrictions; or interpretation of Chinese law.
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In addition, any further downgrade by rating agencies of long-term U.S. sovereign debt or downgrades or defaults of sovereign debt of other nations may negatively affect global financial markets and economic conditions, which could negatively affect our business, financial condition, and liquidity.
Global legislative and regulatory actions and proposals could cause a material change in our worldwide effective corporate tax rate and our global cash taxes.
Various legislative and regulatory proposals have been directed at multinational companies, such as:
· | The global minimum tax framework developed by the Organisation for Economic Co-operation and Development (“OECD”) represents a significant structural change to the international tax system, and participating countries continue to enact and implement rules imposing a 15% global minimum tax. Ireland implemented the OECD’s global minimum tax rules, which were effective for us beginning in fiscal 2025. We anticipate further legislative activity and administrative guidance as the framework evolves and will continue to assess the implications in the jurisdictions in which we operate. |
· | EU, U.S., and other countries’ initiatives to promote tax transparency and to prevent aggressive tax planning. |
The impact of these proposals may materially increase cash taxes, increase our worldwide corporate effective tax rate, cause double taxation, and increase audit risk. We cannot predict the outcome of any specific legislative proposals or initiatives, and we cannot provide assurance that any such legislation or initiative will not apply to us.
U.S. federal tax laws could result in adverse consequences to U.S. persons treated as owning 10% or more of our shares.
Although we are an Irish company, application of certain U.S. tax law ownership attribution rules may cause non-U.S. subsidiaries to be treated as Controlled Foreign Corporations (“CFCs”) for U.S. federal income tax purposes. Under the current rules, a U.S. person that is treated for U.S. federal income tax purposes as owning, directly, indirectly, or constructively, 10% or more of our shares may be required to annually report and include in its U.S. taxable income its pro rata share of certain types of income earned by our subsidiaries that are treated as CFCs, whether or not we make any distributions to such U.S. shareholder. Under recently enacted legislation, the current attribution rules cease to apply for tax years of foreign corporations beginning after December 31, 2025, and, as a result, based on our current ownership structure, our non-U.S. subsidiaries will not be treated as CFCs as of our tax year beginning September 26, 2026. A U.S. person that owns 10% or more of our shares should consult a tax adviser regarding the potential implications. The risk of U.S. federal income tax reporting and compliance obligations with respect to our subsidiaries that are treated as CFCs may deter our current shareholders from increasing their investment in us, and others from investing in us, which could impact the demand for, and value of, our shares.
We are subject to, and may continue to be subject to, incremental costs, risks, and regulations associated with efforts to combat the negative effects of climate change.
Public awareness regarding climate change has led to international treaties and agreements and legislative and regulatory efforts. We may also be subject to larger, global climate change initiatives, laws, regulations, or orders, such as any laws or regulations to implement the Paris Climate Agreement, which seek to reduce GHG emissions. In addition to government requirements, our customers also impose climate-related requirements on their suppliers, including us. Any failure, or perceived failure, to comply with these requirements may result in reduced demand for our products, reputational harm, or other adverse impacts on our business.
Any future regulations relating to GHG emissions and/or other climate change-related laws and regulations, beyond initiatives we already have in process, could subject us to additional and/or unforeseen compliance costs and limitations, increased energy and raw material costs, and incremental capital expenditure requirements. Also, there may be additional mandatory climate-related reporting obligations, and potentially GHG emissions reduction requirements, which would likely result in increased corporate and operational general and administrative efforts and associated costs and expenses.
Any future regulatory changes in any of the countries in which we operate could result in transition risks to us, including, but not limited to: (i) the nature and timing of any requirement to lower GHG emissions and adopt more energy-efficient energy use, which could result in changes or disruptions to the way we operate, (ii) financial risks where the compliance with such regulations requires unforeseen capital expenditures and becomes costly or financially burdensome,
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(iii) legal risks associated with the failure to adapt to or comply with future climate change-related regulations, (iv) risks of climate litigation associated with our disclosures and/or operations; (v) risks associated with the implementation of any new technologies required to comply with such regulations, which could impede our ability to innovate new products, meet customer and market demand, or compete on pricing and quality in the market, and/or (vi) reputational risks associated with our customers’ and investors’ perceptions of us and their preferences for maintaining relationships with companies with lower emissions, all of which could harm our reputation in the marketplace.
Continued scrutiny and expectations regarding environmental, social, and governance (“ESG”) and sustainability matters could result in additional costs or risks or otherwise adversely impact our business.
Companies across industries face scrutiny from a variety of stakeholders related to their ESG and sustainability practices. Expectations regarding voluntary and potential mandatory ESG initiatives and disclosures may result in increased costs, changes in demand for certain products, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations. Further, our ability to achieve our current and future ESG goals is uncertain and remains subject to numerous risks, including increasing regulatory requirements and stakeholder expectations, our ability to recruit, develop, and retain a diverse workforce, the availability of suppliers and other business partners that can meet our ESG expectations, the growth of our business, cost considerations, and the development and availability of cost-effective technologies or resources that support our goals. An inability to receive or maintain favorable ESG ratings could negatively impact our reputation or impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations. Unfavorable ESG ratings could also lead to negative investor sentiment towards us or our industry, which could negatively impact the price of our shares as well as our access to and cost of capital.
Risks Relating to the Industry in Which We Operate
We are dependent on the automotive and other industries and significant periodic downturns have had material adverse effects on our results of operations, financial position, and cash flows.
We are dependent on end market dynamics to sell our products, and our operating results could be adversely affected by cyclical and reduced demand in these markets. Periodic downturns in our customers’ industries can significantly reduce demand for certain of our products, which has in the past and could have in the future a material adverse effect on our results of operations, financial position, and cash flows.
Approximately 38% of our net sales for fiscal 2026 were to customers in the automotive end market. The automotive industry is dominated by large manufacturers that can exert significant price pressure on their suppliers. Additionally, the automotive industry has historically experienced significant downturns during periods of deteriorating global or regional economic or credit conditions. As a supplier of automotive electronics products, our sales of these products and our profitability have been and could continue to be negatively affected by significant declines in global or regional economic or credit conditions and changes in the operations, products, business models, part-sourcing requirements, financial condition, and market share of automotive manufacturers, as well as potential consolidations among automotive manufacturers. Further, work stoppages or slowdowns experienced by our customers in the automotive industry, or changes in consumer preferences, could result in slowdowns or closures of assembly plants where our products are included in assembled vehicles.
During fiscal 2026, approximately 16% of our net sales were to customers in the digital data networks end market and approximately 12% of our net sales were to customers in the automation and connected living end market. Demand in the digital data networks market can fluctuate significantly, depending on the underlying demand in the networking, data center, and wireless infrastructure industries. The overall market trends of increased data connectivity and continued movement to AI applications have had a favorable impact on demand. Demand in the automation and connected living end market is dependent upon economic conditions, including customer investment in factory and warehouse automation, process control systems, and building automation and smart city infrastructure, as well as market conditions in the home appliances market.
We encounter competition in substantially all areas of the electronic components industry, which has and could in the future negatively impact our prices, margins, and market share.
We operate in highly competitive markets for electronic components and expect that both direct and indirect competition will increase in the future. Our overall competitive position depends on various factors including the price, quality, and performance of our products; the level of customer service; the development of new technology; our ability to participate in emerging markets; and customers’ expectations relating to socially responsible operations. The competition we
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experience across product lines from other companies ranges in size from large, diversified manufacturers to small, highly specialized manufacturers. The electronic components industry has become increasingly concentrated and globalized in recent years, and our major competitors have significant financial resources and technological capabilities. A number of these competitors compete with us primarily on price and in some instances may have the benefit of lower production costs for certain products. We cannot provide assurance that additional competitors will not enter our markets or that we will be able to compete successfully against existing or new competitors. Increased competition has and may in the future result in price reductions, reduced margins, or loss of market share, any of which could materially and adversely affect our results of operations, financial position, and cash flows.
We are dependent on market acceptance of our new product introductions and product innovations for future revenue and failure of such introductions or innovations in a timely manner could cause our operating results to suffer.
Substantially all markets in which we operate are impacted by technological change or change in consumer tastes and preferences, which are rapid in certain end markets. Our operating results depend substantially upon our ability to continually design, develop, introduce, and sell new and innovative products; to modify existing products; and to customize products to meet customer requirements driven by such change. There are numerous risks inherent in these processes, including the risk that we will be unable to anticipate the direction of technological change or that we will be unable to develop and market profitable new products and applications in time to satisfy customer demands.
The pace of technological change continues to accelerate and our ability to react effectively to such change may present significant competitive risks.
The pace of technological change is increasing at an exponential rate. The continued creation, development, and advancement of new technologies such as AI, blockchain, quantum computing, data analytics, 3-D printing, robotics, sensor technology, data storage, neural networks, and augmented reality, as well as other technologies in the future that are not foreseeable today, continue to transform our processes, products, and services.
In order to remain competitive, we will need to stay abreast of such technologies, require our employees to continue to learn and adapt to new technologies, be able to integrate them into our current and future business models, products, services, and processes, and also guard against existing and new competitors disrupting their business using such technologies. Our strategy, value creation model, operating model, and innovation ecosystem have important technological elements and certain of our products and offerings are based on technological advances, including AI, machine learning, advanced analytics, and the Internet of Things. Meeting evolving industry requirements, including the increasing use of AI and machine learning technologies (including the need to run complex AI-based applications on devices), and introducing new products to the market in a timely manner and at prices that are acceptable to our customers are important factors in determining our competitiveness and success. Further, increasing use of AI may expose us to social and ethical issues, which may result in reputational harm and liability. In addition, we will need to compete for talent in a competitive market that is familiar with such technologies including upskilling our workforce. There can be no assurance we will continue to compete effectively with our industry peers due to technological changes, which could result in a material adverse effect on our business and results of operations.
Risks and uncertainties related to the development and use of AI could harm our business, damage our reputation, or give rise to legal or regulatory action.
AI technologies are rapidly evolving and are expected to play an increasingly important role in enhancing productivity, accelerating innovation, improving engineering and manufacturing processes, supporting customer engagement, and enabling data-driven decision making across business. AI technologies are complex, and we face significant competition, including from our own clients, who may develop their own internal AI-related capabilities, which can lead to reduced demand for our products. The development, adoption, and use of AI technologies is still in the early stages and involves significant risks and uncertainties, which may expose us to legal, reputational, and financial harm. AI algorithms and training methodologies may be flawed, and datasets may be overbroad, insufficient, or contain biased information. Moreover, the use of AI may give rise to risks related to harmful content, accuracy, bias, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and health and safety, among others, and also bring the possibility of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, or ethical concerns that could adversely affect our business, reputation, or financial results.
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As AI technologies continue to evolve, future adoption of more autonomous capabilities may introduce additional legal, regulatory, operational, cybersecurity, safety, and reputational risks. If we are unable to effectively address the risks associated with the development, deployment, use, or governance of AI technologies, our business, results of operations, financial condition, and reputation could be adversely affected. Additionally, there can be no assurances that the use of AI technologies will enhance our products and service or be beneficial to our business, including our efficiency, safety, or profitability.
Pressure to lower our prices has and may in the future result in price erosion.
We continue to experience general downward pressure on our prices. Although pricing actions initiated in recent years have positively impacted our net sales, we have previously experienced price erosion averaging from 1% to 2% each year. To maintain our margins, we must continue to reduce our costs by similar amounts. We cannot provide assurance that pressure to reduce our prices will not have a material adverse effect on our margins, results of operations, financial position, and cash flows.
We may be negatively affected as our customers and vendors continue to consolidate.
Many of the industries to which we sell our products, as well as many of the industries from which we buy materials, have become more concentrated in recent years, including the automotive, digital data networks, and aerospace and defense industries. Consolidation of customers may lead to decreased product purchases from us. In addition, as our customers buy in larger volumes, their volume buying power has increased, enabling them to negotiate more favorable pricing and find alternative sources from which to purchase. Our materials suppliers similarly have increased their ability to negotiate favorable pricing. These trends have and may continue to adversely affect the margins on our products, particularly for commodity components.
The life cycles of certain of our products can be very short and may not result in material revenue and may cause us to write off excess or obsolete inventory or equipment.
The life cycles of certain of our products can be very short relative to their development cycle. As a result, the resources devoted to product sales and marketing may not result in material revenue and, from time to time, we may need to write off excess or obsolete inventory or equipment. If we were to incur significant engineering expenses and investments in inventory and equipment that we were not able to recover and we were not able to compensate for those expenses, our gross margin, results of operations, financial position, and cash flows could be materially and adversely affected.
We may incur material losses and costs as a result of product liability, warranty, and product recall claims that may be brought against us.
We face exposure to product liability and warranty claims in the event that our products actually or allegedly fail to perform as expected, or the use of our products results, or is alleged to result, in death, bodily injury, and/or property damage. Further, if any of our products are, or are alleged to be, defective, we may be required to participate in a recall campaign, and a customer or other party may hold us responsible for some or all of the costs of these campaigns. Actual or alleged defects in our products may therefore cause us to incur significant warranty, support and repair, replacement, or other costs as part of a product recall or otherwise, suffer substantial negative publicity, face challenges in our ability to timely deliver products to our customers, write-off the value of related inventory, and divert the attention of our engineering and management personnel. Additionally, actual or alleged defects in our products could result in damage to our reputation and to our ability to win future business. Consequently, our costs and loss of revenue associated with product liability, warranty, and recall claims could be material to our financial position and results of operations.
Risks Relating to Our Operations
Our results are sensitive to raw material availability, quality, and cost, and shortages, deteriorations in quality, or price increases could lead to a materially negative impact on our results of operations, financial position, and cash flows.
We are a large buyer of resins, chemicals, additives, and metals, including copper, gold, silver, palladium, aluminum, brass, steel, and zinc. Many of these raw materials are produced in a limited number of countries around the world or are only available from a limited number of suppliers. The prices of many of these raw materials continue to fluctuate, and in many cases increase, and fluctuations may persist in the future. In addition, feedstock for resins and resins themselves, as well as certain other commodities, are increasingly subject to varied and unrelated force majeure events worldwide further
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impacting price and availability. In recent years, raw material prices and availability have been affected by worldwide economic conditions, including supply chain disruptions, inflationary cost pressures, and tariff and trade policies. If we have difficulty obtaining raw materials, the quality of available raw materials deteriorates, or there are significant price increases for these raw materials, it could have a substantial impact on the price we pay for raw materials. To the extent we cannot compensate for cost increases through productivity improvements or price increases to our customers, our margins may decline, materially affecting our results of operations, financial position, and cash flows. In addition, we use financial instruments to hedge the volatility of certain commodities prices. The success of our hedging program depends on accurate forecasts of planned consumption of the hedged commodity materials. We could experience unanticipated hedge gains or losses if these forecasts are inaccurate.
The SEC requires annual disclosure and reporting requirements for those companies which use tin, tantalum, tungsten, or gold (“conflict minerals” or “3TG”) mined from the Democratic Republic of the Congo (“DRC”) and adjoining countries (together with the DRC, the “Covered Countries”) in their products. These requirements, as well as new and additional regulations like the EU’s Conflict Minerals Regulation, could affect the sourcing, pricing, and availability of 3TG used in the manufacture of certain of our products, and may result in only a limited pool of suppliers which can demonstrate that they do not source any 3TG from the Covered Countries. Accordingly, we cannot provide assurance that we will be able to obtain non-conflict 3TG in sufficient quantities or at competitive prices. Further, since our supply chain is complex, we may face reputational challenges with our customers and other stakeholders if we are unable to meet customer non-conflict 3TG standards or sufficiently verify the origins and chain of custody for all conflict minerals used in our products through our due diligence procedures.
Poor quality of components and products manufactured by third parties could harm our business.
We may rely on third-party suppliers for the components used in our products, and we may rely on third-party manufacturers to manufacture certain of our assemblies and finished products. Our results of operations, financial position, and cash flows could be adversely affected if such third parties lack sufficient quality control or if there are significant changes in their financial or business condition. If these third parties fail to deliver quality products, parts, and components on time and at reasonable prices, we could have difficulties fulfilling our orders, sales and profits could decline, and our commercial reputation could be damaged.
Our future success is significantly dependent on our ability to attract and retain management and executive management employees.
Our success depends to a significant extent upon our continued ability to retain our management and executive management employees and hire new management and executive management employees to replace, succeed, or add to members of our management team. Our management team has significant industry experience and would be difficult to replace. Competition for management talent is intense, and any difficulties we may have in retaining or hiring members of management to achieve our objectives may have an adverse effect on our results of operations, financial position, and cash flows.
Cybersecurity incidents and other disruptions affecting our information technology infrastructure or violations of data privacy laws have and could interfere with our operations, compromise confidential information, and expose us to liability which could materially adversely impact our business and reputation.
Cybersecurity attacks, threats, and breaches and other disruptions to our information technology infrastructure and/or the information technology infrastructure of our third-party suppliers or business partners could interfere with our operations; compromise information belonging to us, our employees, customers, and suppliers; and expose us to liabilities or penalties which could adversely impact our business and reputation. In the normal course of business, we rely on information technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and customer-imposed controls. Specifically, we are subject to the laws of various states and countries where we operate or do business related to solicitation, collection, processing, transferring, storing, or use of consumer, customer, supplier, or employee information or related data, including the EU’s General Data Protection Regulation, the California Consumer Privacy Act, and China’s Personal Information Protection Law. In addition, certain countries in which we operate or do business have enacted or are considering enacting laws that impose additional data transfer restrictions. If countries in which we operate or do business were to adopt data localization or data residency laws, we could be required to implement new or
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expand existing data storage protocols, build new storage facilities, and/or devote additional resources to comply with the requirements of such laws, any of which could have significant implications to business operations and costs.
In addition to our own systems, we have outsourced, and expect to continue to outsource, certain information technology services—including cloud computing services and storage systems, system development, and information technology support services—which have in the past, and in the future may, subject our information technology and other sensitive information to additional risk.
Our information technology networks and infrastructure, and the technology networks and infrastructure of our third-party suppliers and business partners, are vulnerable to damage, disruptions or shutdowns due to attack by malicious actors with significant financial and technological resources, breaches, employee error or malfeasance, power outages, malware (such as computer viruses and ransomware), social engineering (i.e., phishing attacks), theft of system credentials, other increasingly sophisticated attacks, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events, which may require us to notify regulators, customers, or employees, and enlist identity theft protection in the event of a privacy breach. We continue to monitor and develop our systems to protect the integrity and functionality of our information technology infrastructure and access to and the security of our intellectual property and our employees’, customers’, and suppliers’ data. Cybersecurity breaches and other disruptions to our information technology infrastructure or the information technology infrastructure of our third-party suppliers and business partners, or violations of applicable laws, could result in legal claims or proceedings, liability or penalties, disruption in operations, and damage to our reputation, which could materially adversely affect our business. While we have experienced, and expect to continue to experience, attacks and threats to our information technology networks and infrastructure, including attempted cyber intrusions, to date none of these attacks and threats have had a material impact on our business or operations. Further, some of our employees have fully-remote or hybrid work arrangements, which may increase our vulnerability to cyber and other information technology risks.
Covenants in our debt instruments may adversely affect us.
Our five-year unsecured senior revolving credit facility (“Credit Facility”) contains financial and other covenants, such as a limit on the ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) and limits on the amount of subsidiary debt and incurrence of liens. Our outstanding notes’ indentures contain customary covenants including limits on incurrence of liens, sale and lease-back transactions, and our ability to consolidate, merge, and sell assets.
Although none of these covenants are presently restrictive to our operations, our continued ability to meet the Credit Facility financial covenant can be affected by events beyond our control, and we cannot provide assurance that we will continue to comply with the covenant. A breach of any of our covenants could result in a default under our Credit Facility or indentures. Upon the occurrence of certain defaults under our Credit Facility and indentures, the lenders or trustee could elect to declare all amounts outstanding thereunder to be immediately due and payable, and our lenders could terminate commitments to extend further credit under our Credit Facility. If the lenders or trustee accelerate the repayment of borrowings, we cannot provide assurance that we will have sufficient assets or access to lenders or capital markets to repay or fund the repayment of any amounts outstanding under our Credit Facility and our other affected indebtedness. Acceleration of any debt obligation under any of our material debt instruments may permit the holders or trustee of our other material debt to accelerate payment of debt obligations to the creditors thereunder.
The indentures governing our outstanding senior notes contain covenants that may require us to offer to buy back the notes for a price equal to 101% of the principal amount, plus accrued and unpaid interest to the repurchase date, upon a change of control triggering event (as defined in the indentures). We cannot provide assurance that we will have sufficient funds available or access to funding to repurchase tendered notes in that event, which could result in a default under the notes. Any future debt that we incur may contain covenants regarding repurchases in the event of a change of control triggering event.
The market price of our shares may fluctuate widely.
The market price of our shares may fluctuate widely, depending upon many factors, including:
· | our quarterly or annual earnings; |
· | quarterly or annual sales or earnings guidance that we may provide or changes thereto; |
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· | actual or anticipated fluctuations in our operating results; |
· | volatility in financial markets and market fluctuations caused by global and regional economic conditions and investors’ concerns about potential risks to future economic growth; |
· | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
· | changes in accounting standards, policies, guidance, interpretations, or principles; |
· | tax legislative and regulatory actions and proposals in the U.S., the EU, and other jurisdictions; |
· | announcements by us or our competitors of significant acquisitions or dispositions; and |
· | the operating and stock price performance of comparable companies and companies that serve end markets important to our business. |
Risks Relating to Strategic Transactions
Future acquisitions may not be successful.
We regularly evaluate the possible acquisition of strategic businesses, product lines, or technologies which have the potential to strengthen our market position or enhance our existing product offerings, and we have completed a number of acquisitions in recent years. We anticipate that we will continue to pursue acquisition opportunities as part of our growth strategy. We cannot provide assurance that we will identify or successfully complete transactions with acquisition candidates in the future. We also cannot provide assurance that completed acquisitions will be successful. Likewise, from time to time, we experience difficulty and unanticipated expenses associated with purchasing and integrating acquired businesses, and the acquired businesses do not always perform and deliver the financial benefits expected. We have also experienced challenges at times following the acquisition of a new company or business, including, but not limited to, managing the operations, manufacturing facilities, and technology; maintaining and increasing the customer base; or retaining key employees, suppliers, or distributors. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our existing business, our results of operations, financial position, and cash flows could be materially and adversely affected.
Future acquisitions could require us to issue additional debt or equity that may not be available on acceptable terms and could be dilutive.
If we were to make a substantial acquisition with cash, the acquisition may need to be financed in part through funding from banks, public offerings or private placements of debt or equity securities, or other arrangements. This acquisition financing might decrease our ratio of earnings to fixed charges and adversely affect other leverage measures. We cannot provide assurance that sufficient acquisition financing would be available to us on acceptable terms if and when required. If we were to complete an acquisition partially or wholly funded by issuing equity securities or equity-linked securities, the issued securities may have a dilutive effect on the interests of the holders of our shares.
Divestitures of some of our businesses or product lines may have a material adverse effect on our results of operations, financial position, and cash flows.
We continue to evaluate the strategic fit of specific businesses and products which may result in additional divestitures. Divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial position. Divestitures could involve additional risks, including difficulties in the separation of operations, services, products, and personnel; the diversion of management’s attention from other business concerns; the disruption of our business; and the potential loss of key employees. There can be no assurance that we will be successful in addressing these or any other significant risks encountered.
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Risks Relating to Intellectual Property, Litigation, and Regulations
Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our products and technology.
The electronics industry is characterized by litigation regarding patent and other intellectual property rights. Within this industry, companies have become more aggressive in asserting and defending patent claims against competitors. There can be no assurance that we will not be subject to future litigation alleging infringement or invalidity of certain of our intellectual property rights or that we will not have to pursue litigation to protect our property rights. Depending on the importance of the technology, product, patent, trademark, or trade secret in question, an unfavorable outcome regarding one of these matters may have a material adverse effect on our results of operations, financial position, and cash flows.
Litigation, regulatory actions, and compliance issues have and could subject us to fines, penalties, judgments, remediation costs, and/or other requirements that could cause a material adverse effect on our results of operations, financial position, and cash flows.
In the normal course of business, we are or may be, from time to time, the subject of government or private litigation as a result of a number of factors and from various sources, including (i) reviews, requests for information, investigations, and proceedings (both formal and informal) by state and federal governmental agencies and (ii) litigation alleging the infringement of intellectual property rights, anti-competitive behavior, securities law violations, product liability, breach of contract, and employment-related claims. In certain circumstances, patent infringement and antitrust laws permit successful plaintiffs to recover treble damages. The defense of these lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits. In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, which could cause a material adverse effect on our results of operations, financial position, and cash flows.
If any of our operations are found not to comply with applicable antitrust or competition laws or applicable trade regulations, our business may suffer.
Our operations are subject to applicable antitrust and competition laws in the jurisdictions in which we conduct our business, in particular the U.S. and the EU. These laws prohibit, among other things, anticompetitive agreements and practices. If any of our commercial agreements and practices with respect to the electronic components or other markets are found to violate or infringe such laws, we may be subject to civil and other penalties. We may also be subject to third-party claims for damages. Further, agreements that infringe these antitrust and competition laws may be void and unenforceable, in whole or in part, or require modification to be lawful and enforceable. If we are unable to enforce our commercial agreements, whether at all or in material part, our results of operations, financial position, and cash flows could be adversely affected.
We also must comply with applicable trade regulations in the jurisdictions where we operate. Some of our products, including defense-related products, may require governmental import and export licenses, the issuance of which may be influenced by geopolitical and other events. Any failure to maintain compliance with trade regulations could limit our ability to import and export raw materials and finished goods into or from the relevant jurisdiction, which could negatively impact our results of operations, financial position, and cash flows.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the United Kingdom’s Bribery Act, and similar worldwide anti-bribery laws.
The U.S. Foreign Corrupt Practices Act, the United Kingdom’s Bribery Act, and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance program, we cannot provide assurance that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial position, and cash flows.
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Our operations expose us to the risk of material environmental liabilities, litigation, government enforcement actions, and reputational risk.
We are subject to numerous federal, state, and local environmental protection and health and safety laws and regulations in the various countries where we operate and where our products are sold. These laws and regulations govern, among other things:
· | the generation, storage, use, and transportation and disposal of hazardous materials; |
· | emissions or discharges of substances into the environment; |
· | investigation and remediation of hazardous substances or materials at various sites; |
· | GHG emissions; |
· | product hazardous material content; |
· | the health and safety of our employees; and |
· | the importation of regulated or banned chemicals. |
We may not have been, or we may not always be, in compliance with all environmental and health and safety laws and regulations. If we violate these laws, we could be fined, criminally charged, or otherwise sanctioned by regulators, including temporary closures of facilities. In addition, environmental and health and safety laws are becoming more stringent, resulting in increased costs and compliance requirements.
Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, reporting, removal, and remediation of hazardous substances or materials at their properties or at properties at which they have disposed of or mishandled hazardous substances. Liability for investigation, reporting, removal, and remediation costs under certain regulatory regimes, such as U.S. federal and state laws, is retroactive, strict, and joint and several. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. We have received notifications from the U.S. Environmental Protection Agency, other environmental agencies, and third parties that conditions at a number of currently and formerly-owned or operated sites where we and others have disposed of or mishandled hazardous substances require investigation, cleanup, and other possible remedial action and require that we reimburse the government or otherwise pay for the costs of investigation and remediation and for natural resource damage claims from such sites. We also have independently investigated various sites and determined that further investigation and/or remediation is necessary.
While we plan for future capital and operating expenditures to maintain compliance with environmental laws, we cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws, or our liabilities arising from past or future releases of, or exposures to, hazardous substances will not exceed our estimates or adversely affect our results of operations, financial position, and cash flows or that we will not be subject to additional environmental claims for personal injury, property damage, damage to natural resources, and/or cleanup in the future based on our past, present, or future business activities.
Our products are subject to various requirements related to chemical usage, hazardous material content, recycling, and other circular economy initiatives.
The EU, China, U.S., and other jurisdictions in which our products are sold have enacted or are proposing to enact laws addressing environmental and other impacts from product disposal, use of hazardous materials in products, use of chemicals in manufacturing, recycling of products at the end of their useful life, circular economy initiatives, and other related matters. These laws include but are not limited to the EU RoHS, End-of-Life Vehicle, and WEEE Directives; the EU REACH regulation; and the China RoHS regulation. These laws prohibit the use of certain substances in the manufacture of our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes, registration, chemical testing, labeling, and other matters. These laws continue to proliferate and expand in these and other jurisdictions to address other materials and other aspects of our product manufacturing and sale. These laws could make the
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manufacture or sale of our products more expensive or impossible, could limit our ability to sell our products in certain jurisdictions, and could result in liability for product recalls, penalties, or other claims.
Risks Relating to Our Irish Jurisdiction of Incorporation
The laws of Ireland differ from the laws in effect in the U.S. and may afford less protection to holders of our securities.
It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland, based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our Directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.
As an Irish company, we are governed by the Irish Companies Act 2014, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.
As an Irish public limited company, certain decisions related to our capital structure will require the approval of shareholders, which may limit our flexibility to manage our capital structure.
Irish law generally provides that a company’s board of directors may allot and issue shares (or rights to subscribe for or convert into shares) without being required first to offer those shares to existing shareholders on a pro-rata basis, if authorized to do so by the company’s articles of association or by resolution of shareholders of the company. Such authorization may be granted in respect of up to the entirety of a company’s authorized but unissued share capital and for a maximum period of five years, at which point the authorization must be renewed by another shareholder resolution. Our articles of association authorize our Directors to allot shares up to the maximum of our authorized but unissued share capital for a period of five years from September 30, 2024. This authorization will need to be renewed upon its expiration and at periodic intervals thereafter. Under Irish law, these authorities may be given for up to five years at each renewal, but governance considerations may result in renewals for shorter periods or in respect of less than the maximum permitted number of shares being sought or approved.
Additionally, under Irish law, we may only pay dividends and, generally, make share repurchases and redemptions from profits available for distribution. These may be created through our earnings or other methods (including certain intragroup reorganizations involving the capitalization of our undistributable profits and their subsequent reduction). While it is our intention to maintain a sufficient level of profits available for distribution in order to pay dividends on our ordinary shares and make share repurchases, there is no assurance that we will maintain the necessary level to do so.
Provisions of our articles of association could delay or prevent a third-party’s effort to acquire us.
Our articles of association could delay, defer, or prevent a third party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the price of our ordinary shares. In addition to our articles of association, several mandatory provisions of Irish law could prevent or delay an acquisition of us. We are also subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer, and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in our shares in certain circumstances.
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These provisions, whether alone or together, may discourage potential takeover attempts, discourage bids for our ordinary shares at a premium over the market price, or adversely affect the market price of, and the voting and other rights of the holders of, our ordinary shares. These provisions, whether alone or together, could also discourage proxy contests and make it more difficult for our shareholders to elect directors other than the candidates nominated by our Board of Directors.
Transfers of our ordinary shares may be subject to Irish stamp duty.
For the majority of transfers of our ordinary shares, there will not be any Irish stamp duty. A transfer of our ordinary shares from a seller who holds shares beneficially (i.e., through Depository Trust Company (“DTC”)) to a buyer who holds the acquired shares beneficially (i.e., through DTC), which is effected by the debit/credit of book-entry interests representing the shares through DTC, will not be subject to Irish stamp duty. However, a transfer of our ordinary shares by a seller who holds shares directly (i.e., not through DTC) to any buyer, or by a seller who holds the shares beneficially to a buyer who holds the acquired shares directly, may be subject to Irish stamp duty (currently at the rate of 1% of the price paid or the market value of the shares acquired, if higher). A shareholder who directly holds shares may transfer those shares into his or her own broker account to be held through DTC without giving rise to Irish stamp duty provided that the shareholder has confirmed to our transfer agent that there is no change in the beneficial ownership of the shares as a result of the transfer and the transfer into DTC is not effected in contemplation of a sale of such shares by the beneficial owner to a third party. Because of the potential Irish stamp duty on transfers of our ordinary shares, we strongly recommend that any person who wishes to acquire our ordinary shares acquire such shares through DTC.
We do not intend to pay any stamp duty levied on transfers of our shares on behalf of a buyer. However, our memorandum and articles of association allow us in our absolute discretion to pay (or to cause one of our affiliates to pay) any such stamp duty payable. In the event of any such payment, we will be entitled to (i) seek reimbursement from the buyer, (ii) set-off the amount of the stamp duty against future dividends on such shares, and (iii) claim a first and paramount lien on our ordinary shares acquired by such buyer and any dividends paid on such shares. Our Directors have discretion to decline to register an instrument of transfer in the name of a buyer unless the instrument of transfer has been properly stamped (in circumstances where stamping is required).
Dividends you receive may be subject to Irish dividend withholding tax.
In certain circumstances, as an Irish tax resident company, we may be required to deduct Irish dividend withholding tax (currently at the rate of 25%) from dividends paid to our shareholders. Whether we will be required to deduct Irish dividend withholding tax from dividends paid to a shareholder will depend largely on whether the shareholder qualifies for an exemption from dividend withholding tax under Irish law and has provided a valid Dividend Withholding Tax (“DWT”) Form to his or her broker (in the case of the ordinary shares held beneficially), or to our transfer agent (in the case of the ordinary shares held directly).
Dividends received by investors could be subject to Irish income tax.
Dividends paid in respect of our ordinary shares generally are not subject to Irish income tax where the beneficial owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in TE Connectivity plc.
Our shareholders who receive their dividends subject to Irish dividend withholding tax generally will have no further liability to Irish income tax on the dividend unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in TE Connectivity plc.
Our ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
Irish capital acquisitions tax (“CAT”) could apply to a gift or inheritance of our ordinary shares irrespective of the place of residence, ordinary residence, or domicile of the parties. This is because our ordinary shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. Children currently have a tax-free threshold of €420,000 per lifetime in respect of taxable gifts or inheritances received from their parents.
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Legislation in the U.S. could adversely impact our results of operations, financial position, and cash flows.
Various U.S. federal and state legislative proposals have been introduced in recent years that may negatively impact the growth of our business by denying government contracts to foreign companies with U.S. operations.
We expect the U.S. Congress to continue to consider implementation and/or expansion of policies that would restrict the federal and state governments from contracting with entities that have corporate locations abroad. We cannot predict the likelihood that, or final form in which, any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, the effect such enactments and increased regulatory scrutiny may have on our business, or the outcome of any specific legislative proposals. Therefore, we cannot provide assurance that any such legislative action will not apply to us. In addition, we are unable to predict whether the final form of any potential legislation discussed above also would affect our indirect sales to U.S. federal or state governments or the willingness of our non-governmental customers to do business with us. As a result of these uncertainties, we are unable to assess the potential impact of any proposed legislation in this area and cannot provide assurance that the impact will not be materially adverse to us.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
Our 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
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 |
| ● | 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 |
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| ● |
Cybersecurity Program Governance
Cybersecurity incidents are evaluated by a cross-functional team based on defined criteria and regularly communicated to leadership pursuant to criteria set forth in our incident response plan and related processes. We have engaged cybersecurity and information technology third-party consultants to assist in cybersecurity incident response including forensics and technical analysis.
ITEM 2. PROPERTIES
Our principal executive office is located in Galway, Ireland. As of fiscal year end 2026, we owned approximately 17 million square feet and leased approximately 12 million square feet of aggregate floor space, used primarily for manufacturing, warehousing, and office space. We believe our facilities are suitable for the conduct of our business and adequate for our current needs.
We manufacture our products in over 25 countries worldwide. Our manufacturing sites focus on various aspects of our manufacturing processes, including our primary processes of stamping, plating, molding, extrusion, beaming, and assembly. We consider the productive capacity of our manufacturing facilities sufficient. As of fiscal year end 2026, our principal centers of manufacturing output by segment and geographic region were as follows:
| Transportation | | Industrial | | | ||
Solutions | Solutions | Total | | ||||
| (number of manufacturing facilities) | ||||||
Asia–Pacific |
| 10 |
| 16 |
| 26 | |
EMEA |
| 21 |
| 17 |
| 38 | |
Americas |
| 9 |
| 32 |
| 41 | |
Total |
| 40 |
| 65 |
| 105 | |
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ITEM 3. LEGAL PROCEEDINGS
In the normal course of business, we are subject to various legal proceedings and claims, including 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. In addition, we operate in an industry susceptible to significant patent legal claims. At any given time in the normal course of business, we are involved as either a plaintiff or defendant in a number of patent infringement actions. If infringement of a third party’s patent were to be determined against us, we might be required to make significant royalty or other payments or might be subject to an injunction or other limitation on our ability to manufacture or sell one or more products. If a patent owned by or licensed to us were determined to be invalid or unenforceable, we might be required to reduce the value of the patent on our Consolidated Balance Sheet and to record a corresponding charge, which could be significant in amount.
Management believes that these legal proceedings and claims likely will be resolved over an extended period of time. 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
Item 103 of Regulation S-K requires the disclosure of certain environmental matters in which a governmental authority is a party to the proceedings and when such proceedings involve the potential for monetary sanctions that we reasonably believe will exceed a specified threshold. In accordance with the SEC guidance on this item, we have chosen a reporting threshold for such proceedings of $1 million. Applying this threshold, there are no environmental matters to disclose.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Holders
Our ordinary shares are listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “TEL.” As of November 4, 2026, there were 14,689 shareholders of record of our ordinary shares.
Performance Graph
The following graph compares the cumulative total shareholder return on our ordinary shares against the cumulative return on the S&P 500 Index and the Dow Jones U.S. Electrical Components & Equipment Index. The graph assumes the investment of $100 in our ordinary shares and in each index at fiscal year end 2021 and assumes the reinvestment of all dividends and distributions. The graph shows the cumulative total return for the last five fiscal years. The comparisons in the graph are based upon historical data and are not indicative of, nor intended to forecast, future returns.
Fiscal Year End |
| ||||||||||||||||||
| 2021(1) | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | |||||||
TE Connectivity plc | $ | 100.00 | $ | 77.78 | $ | 88.65 | $ | 110.41 | $ | 161.09 | $ | 164.54 | |||||||
S&P 500 Index |
| 100.00 |
| 81.74 |
| 99.41 | 134.97 | 158.32 | 186.69 | ||||||||||
Dow Jones U.S. Electrical Components & Equipment Index |
| 100.00 |
| 82.91 |
| 105.07 | 143.49 | 198.38 | 273.40 | ||||||||||
(1) | $100 invested on September 24, 2021 in our ordinary shares and in indexes. Indexes calculated on month-end basis. |
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Dividends
As provided by Irish law and our articles of association, our Board of Directors may approve interim dividends. In exercising its discretion to approve such dividends, our Board of Directors will consider our results of operations, financial condition, cash requirements, future business prospects, statutory requirements of applicable law, contractual restrictions, restrictions imposed by Irish law, and other factors that they may deem relevant.
Issuer Purchases of Equity Securities
The following table presents information about our purchases of our ordinary shares during the quarter ended September 25, 2026:
Maximum | |||||||||||
Total Number of | Approximate | ||||||||||
Shares Purchased | Dollar Value | ||||||||||
as Part of | of Shares that May | ||||||||||
Total Number | Average Price | Publicly Announced | Yet Be Purchased | ||||||||
of Shares | Paid Per | Plans or | Under the Plans | ||||||||
Period | | Purchased(1) | | Share | | Programs(2) | | or Programs(2) | | ||
June 27–July 24, 2026 | 599,262 | $ | 199.85 | 599,262 | $ | 2,918,843,867 | |||||
July 25–August 28, 2026 |
| 1,163,022 |
| 208.40 |
| 1,163,022 |
| 2,676,475,866 | |||
August 29–September 25, 2026 |
| 869,598 |
| 207.16 |
| 869,598 |
| 2,496,328,231 | |||
Total |
| 2,631,882 | 206.04 |
| 2,631,882 |
| | ||||
| (1) | During the quarter ended September 25, 2026, all purchases were open market purchases of ordinary shares, summarized on a trade-date basis, made in conjunction with our share repurchase program originally announced in September 2007. This table does not include ordinary shares that we withheld in order to satisfy tax withholding requirements for the vesting and release of restricted stock units. |
| (2) | Our share repurchase program authorizes us to purchase a portion of our outstanding ordinary shares from time to time through open market or private transactions, depending on business and market conditions. The share repurchase program does not have an expiration date. See Note 17 to the Consolidated Financial Statements for additional information regarding our share repurchase program. |
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the accompanying notes included elsewhere in this Annual Report. The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Annual Report, particularly in “Part I. Item 1A. Risk Factors” and “Forward-Looking Information.”
Our Consolidated Financial Statements have been prepared in U.S. dollars, in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Discussion of our financial condition and results of operations for fiscal 2026 compared to fiscal 2025 is presented below. Discussion of our financial condition and results of operations for fiscal 2025 compared to fiscal 2024 can be found in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the fiscal year ended September 26, 2025.
The following discussion includes organic net sales growth (decline) which is a non-GAAP financial measure. See “Non-GAAP Financial Measure” for additional information regarding this measure.
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Overview
We are a global industrial technology leader creating a safer, sustainable, productive, and connected future. As a trusted innovation partner, our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers enabling artificial intelligence, and more.
Change in Place of Incorporation
On September 30, 2024, TE Connectivity Ltd., our former parent entity, merged with and into TE Connectivity plc, a public limited company incorporated under Irish law and the surviving entity, in order to effect our change in jurisdiction of incorporation from Switzerland to Ireland. Effective beginning in fiscal 2025, we are organized under the laws of Ireland.
Summary of Fiscal 2026 Performance
| ● | Our fiscal 2026 net sales increased 15.2% from fiscal 2025 due to sales growth in both the Industrial Solutions and Transportation Solutions segments. On an organic basis, our net sales increased 11.9% in fiscal 2026 as compared to fiscal 2025. |
| ● | Our net sales by segment were as follows: |
| ● | Transportation Solutions—Our net sales increased 7.3% in fiscal 2026 due to sales increases in the automotive and commercial transportation end markets. |
| ● | Industrial Solutions—Our net sales increased 25.8% in fiscal 2026 primarily as a result of sales growth in the digital data networks; energy; automation and connected living; and aerospace, defense, and marine end markets. |
| ● | We paid cash dividends to shareholders of $2.98 per ordinary share in fiscal 2026. Also, in September 2026, our Board of Directors approved an interim cash dividend of $0.78 per ordinary share, payable on December 11, 2026, to shareholders of record on November 20, 2026. |
| ● | Net cash provided by operating activities was $4,525 million in fiscal 2026. |
Economic Conditions
Our business and operating results have been and will continue to be affected by worldwide economic conditions. The global economy has been impacted in recent years by supply chain disruptions, inflationary cost pressures, and, most recently, tariff and trade policies. We are monitoring the current environment and its potential effects on our customers and the end markets we serve.
In recent years, we have experienced inflationary cost pressures including increased costs for transportation, energy, and raw materials. However, we have been able to mitigate increased costs and supply chain disruptions through productivity and/or price increases. Also, we have taken, and continue to focus on, actions to manage costs, including restructuring and other cost reduction initiatives such as reducing discretionary spending. Additionally, we are managing our capital resources and monitoring capital availability to ensure that we have sufficient resources to fund our future capital needs. See further discussion in “Liquidity and Capital Resources.”
We are actively monitoring developments in tariff and trade policies and the potential impacts on our business. In addition, we are using pricing actions and sourcing changes to largely mitigate the impacts of new tariffs and changes in existing tariff rates. In February 2026, the U.S. Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized by the statute. Following a March 2026 order to refund IEEPA tariffs, the U.S. Customs and Border Protection Agency (“CBP”) launched a refund process in April 2026 through which eligible importers could request refunds. During the fourth quarter of fiscal 2026, we filed certain claims and received tariff refunds of $91 million which were recorded as a reduction to cost of sales. These refunds relate to IEEPA tariffs paid since they were originally imposed in 2025 through February 2026. We expect to return $87 million of these refunds to customers and, as such, that amount was recorded as a reduction to net sales during the fourth quarter of fiscal 2026. The
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timing and amount of any further tariff refunds remain uncertain, and, accordingly, no benefit was recognized as of fiscal year end 2026 for any additional potential refunds related to IEEPA tariffs previously paid.
We continue to monitor military conflicts in certain parts of the world as well as escalating tensions in surrounding countries, associated sanctions, and any resulting supply chain or other disruptions. These did not have a significant impact on our business, financial condition, or results of operations during fiscal 2026 and 2025.
Outlook
In the first quarter of fiscal 2027, we expect our net sales to be approximately $5.35 billion as compared to $4.67 billion in the first quarter of fiscal 2026. This increase reflects sales growth in both the Industrial Solutions and Transportation Solutions segments. We expect diluted earnings per share from continuing operations to be approximately $3.04 per share in the first quarter of fiscal 2027. This outlook reflects the positive impact of foreign currency exchange rates on net sales and earnings per share of approximately $17 million and $0.06 per share, respectively, in the first quarter of fiscal 2027 as compared to the same period of fiscal 2026. Our outlook for the first quarter of fiscal 2027 does not include results related to our anticipated acquisition of Astrodyne TDI (“Astrodyne”).
For fiscal 2027, we expect double-digit sales growth driven by sales increases in the Industrial Solutions segment, which includes the benefit of our anticipated acquisition of Astrodyne, and, to a lesser degree, the Transportation Solutions segment. Organic net sales growth in fiscal 2027 is expected to be consistent with fiscal 2026 levels.
The above outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels.
Acquisitions
During fiscal 2026, we acquired two businesses for a combined cash purchase price of $212 million, net of cash acquired. One of the acquisitions includes certain earn-out provisions based on business performance for which we have estimated the acquisition-date fair value to be approximately $150 million. The acquired businesses have been reported as part of our Industrial Solutions and Transportation Solutions segments from the date of acquisition.
During fiscal 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. Also during fiscal 2025, we acquired two additional businesses for a combined cash purchase price of $321 million, net of cash acquired. These acquired businesses have been reported as part of our Industrial Solutions segment from the date of acquisition.
See Note 4 to the Consolidated Financial Statements for additional information regarding acquisitions.
Pending Acquisition
During the fourth quarter of fiscal 2026, we entered into a definitive agreement to acquire Astrodyne, a leading manufacturer of power and filter solutions, for approximately $1.4 billion in cash. The transaction, which is expected to close by the end of calendar year 2026, is subject to customary regulatory approvals and other closing conditions. The business will be reported as part of the automation and connected living business within our Industrial Solutions segment.
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Results of Operations
Net Sales
The following table presents our net sales and the percentage of total net sales by segment:
Fiscal | |||||||||||||
| 2026 | | | 2025 | | | |||||||
| ($ in millions) | ||||||||||||
Transportation Solutions | $ | 10,069 | | 50 | % | $ | 9,388 | | 54 | % | |||
Industrial Solutions |
| 9,903 |
| 50 |
| 7,874 |
| 46 | |||||
Reconciling item(1) | (87) | — | — | — | |||||||||
Total | $ | 19,885 |
| 100 | % | $ | 17,262 |
| 100 | % | |||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
The following table provides an analysis of the change in our net sales by segment:
Change in Net Sales for Fiscal 2026 versus Fiscal 2025 | |||||||||||||||||
Net Sales | Organic Net Sales | Translation | |||||||||||||||
| Growth (Decline) | Growth | and Other | | Acquisitions | | |||||||||||
($ in millions) | |||||||||||||||||
Transportation Solutions | $ | 681 | | 7.3 | % | $ | 423 | | 4.5 | % | $ | 258 | $ | — | |||
Industrial Solutions |
| 2,029 |
| 25.8 |
| 1,639 |
| 20.8 |
| 118 |
| 272 | |||||
Reconciling item(1) | (87) | — | (87) | — | |||||||||||||
Total | $ | 2,623 | 15.2 | % | $ | 2,062 |
| 11.9 | % | $ | 289 | $ | 272 | ||||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
Net sales increased $2,623 million, or 15.2%, in fiscal 2026 as compared to fiscal 2025. The increase in net sales resulted primarily from organic net sales growth of 11.9%, the positive impact of foreign currency translation of 2.2%, and the positive impact of 1.6% from acquisitions. Additionally, net sales in fiscal 2026 were reduced by $87 million for IEEPA tariff refunds that are expected to be returned to customers. Richards Manufacturing, which was acquired on April 1, 2025, contributed incremental net sales of $227 million in the first six months of fiscal 2026 over the same period of fiscal 2025. In fiscal 2026, net pricing actions positively affected organic net sales by $185 million. See further discussion of net sales below under “Segment Results.”
Net Sales by Geographic Region. Our business operates in three geographic regions—Asia–Pacific, EMEA, and the Americas—and our results of operations are influenced by changes in foreign currency exchange rates. Increases or decreases in the value of the U.S. dollar, compared to other currencies, will directly affect our reported results as we translate those currencies into U.S. dollars at the end of each fiscal period. We sell our products into approximately 130 countries, and approximately 55% of our net sales were invoiced in currencies other than the U.S. dollar in fiscal 2026. The percentage of net sales in fiscal 2026 by major currencies invoiced was as follows:
Currencies | | Percentage | | |
U.S. dollar |
| 45 | % | |
Euro |
| 26 | ||
Chinese renminbi |
| 20 | ||
Japanese yen |
| 3 | ||
All others |
| 6 | ||
Total |
| 100 | % |
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The following table presents our net sales and the percentage of total net sales by geographic region:
Fiscal | |||||||||||||
| 2026 | | | 2025 | | ||||||||
($ in millions) | |||||||||||||
Asia–Pacific | $ | 7,764 |
| 39 | % | $ | 6,552 |
| 38 | % | |||
EMEA | 6,386 | | 32 | 5,742 | | 33 | |||||||
Americas |
| 5,822 |
| 29 |
| 4,968 |
| 29 | |||||
Reconciling item(1) | (87) | — | — | — | |||||||||
Total | $ | 19,885 |
| 100 | % | $ | 17,262 |
| 100 | % | |||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
The following table provides an analysis of the change in our net sales by geographic region:
Change in Net Sales for Fiscal 2026 versus Fiscal 2025 |
| ||||||||||||||||
Net Sales | Organic Net Sales | Translation | |||||||||||||||
| Growth (Decline) | Growth | and Other | | Acquisitions | | |||||||||||
($ in millions) |
| ||||||||||||||||
Asia–Pacific | $ | 1,212 | | 18.5 | % | $ | 1,087 | | 16.6 | % | $ | 125 | $ | — | |||
EMEA | 644 | | 11.2 | 430 | | 7.5 | 214 | — | |||||||||
Americas |
| 854 |
| 17.2 |
| 545 |
| 11.0 |
| 37 |
| 272 | |||||
Reconciling item(1) | (87) | — | (87) | — | |||||||||||||
Total | $ | 2,623 | 15.2 | % | $ | 2,062 |
| 11.9 | % | $ | 289 | $ | 272 | ||||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
Cost of Sales and Gross Margin
The following table presents cost of sales and gross margin information:
Fiscal |
| |||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) |
| |||||||||||
Cost of sales | $ | 12,679 | (1) | $ | 11,183 | $ | 1,496 | |||||
As a percentage of net sales |
| 63.8 | % |
| 64.8 | % |
| | ||||
Gross margin | $ | 7,206 | (2) | $ | 6,079 | $ | 1,127 | |||||
As a percentage of net sales |
| 36.2 | % |
| 35.2 | % |
| | ||||
| (1) | Fiscal 2026 includes $91 million related to IEEPA tariff refunds which were recorded as a reduction to cost of sales. |
| (2) | Fiscal 2026 includes the net impact of $4 million related to IEEPA tariff refunds. |
In fiscal 2026, gross margin increased $1,127 million as compared to fiscal 2025 primarily as a result of higher volume, improved manufacturing productivity, and the positive impact of net pricing actions.
We use a wide variety of raw materials in the manufacture of our products. Cost of sales and gross margin are subject to variability in raw material prices, which continue to fluctuate for many of the raw materials we use. The following table presents the average prices incurred related to copper, gold, silver, and palladium:
Fiscal | |||||||||
| Measure | | 2026 | | 2025 | | |||
Copper |
| Lb. | $ | 4.81 | $ | 4.25 | |||
Gold |
| Troy oz. |
| 3,550 |
| 2,560 | |||
Silver | Troy oz. | 46.99 | 29.01 | ||||||
Palladium |
| Troy oz. |
| 1,275 |
| 1,065 | |||
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In fiscal 2026, we purchased approximately 194 million pounds of copper, 106,000 troy ounces of gold, 1.8 million troy ounces of silver, and 14,000 troy ounces of palladium. We expect to purchase approximately 200 million pounds of copper, 105,000 troy ounces of gold, 1.9 million troy ounces of silver, and 20,000 troy ounces of palladium in fiscal 2027.
Operating Expenses
The following table presents operating expense information:
Fiscal |
| |||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) |
| |||||||||||
Selling, general, and administrative expenses | $ | 2,124 | $ | 1,866 | $ | 258 | ||||||
As a percentage of net sales |
| 10.7 | % |
| 10.8 | % |
| | ||||
Restructuring and other charges, net | $ | 117 | $ | 126 | $ | (9) | ||||||
Selling, General, and Administrative Expenses. In fiscal 2026, selling, general, and administrative expenses increased $258 million as compared to fiscal 2025 due primarily to increased selling expenses to support higher sales levels and, to a lesser degree, the negative impact of foreign currency translation, higher incentive compensation costs, and the fiscal 2025 release of reserves associated with trade compliance matters.
Restructuring and Other Charges, Net. We are committed to continuous productivity improvements, and we evaluate opportunities to simplify our global manufacturing footprint, migrate facilities to lower-cost regions, reduce fixed costs, and eliminate excess capacity. These initiatives are designed to help us maintain our competitiveness in the industry, improve our operating leverage, and position us for future growth.
During fiscal 2026 and 2025, we initiated restructuring programs to optimize our manufacturing footprint and improve the cost structure of our organization. We incurred net restructuring charges of $110 million and $113 million in fiscal 2026 and 2025, respectively. Annualized cost savings related to actions initiated in fiscal 2026 are expected to be approximately $65 million and are expected to be fully realized by the end of fiscal 2029. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses. For fiscal 2027, we expect total restructuring charges to be approximately $80 million and total spending, which will be funded with cash from operations, to be approximately $100 million.
During fiscal 2025, we incurred costs of $11 million related to our change in place of incorporation from Switzerland to Ireland. See Note 1 to the Consolidated Financial Statements for additional information regarding the change.
See Note 3 to the Consolidated Financial Statements for additional information regarding net restructuring and other charges.
Operating Income
The following table presents operating income and operating margin information:
Fiscal | ||||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) | ||||||||||||
Transportation Solutions | $ | 1,969 | $ | 1,818 | $ | 151 | ||||||
Industrial Solutions | 2,018 | 1,393 | 625 | |||||||||
Reconciling item(1) | 4 | — | 4 | |||||||||
Operating income | $ | 3,991 | $ | 3,211 | $ | 780 | ||||||
Operating margin |
| 20.1 | % |
| 18.6 | % |
| | ||||
| (1) | Reconciling item relates to the net impact of IEEPA tariff refunds received in fiscal 2026. |
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Operating income included the following:
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Acquisition-related charges: | |
| |
| |||
Acquisition and integration costs | $ | 32 | $ | 47 | |||
Charges associated with the amortization of acquisition-related fair value adjustments |
| 3 |
| 10 | |||
| 35 |
| 57 | ||||
Restructuring and other charges, net |
| 117 |
| 126 | |||
Amortization expense | 227 | 190 | |||||
Total | $ | 379 | $ | 373 | |||
See discussion of operating income below under “Segment Results.”
Non-Operating Items
The following table presents select non-operating information:
Fiscal | | | ||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) | ||||||||||||
Interest expense | $ | 124 | $ | 77 | $ | 47 | ||||||
Income tax expense | 695 | 1,361 | (666) | |||||||||
Effective tax rate |
| 17.6 | % |
| 42.5 | % |
| | ||||
Interest Expense. Interest expense increased $47 million in fiscal 2026 as compared to fiscal 2025 due primarily to higher average debt levels and cost of debt.
Income Taxes. See Note 15 to the Consolidated Financial Statements for additional information regarding income taxes.
Segment Results
During fiscal 2026, we realigned a product line within the Transportation Solutions segment. Prior period results have been recast to conform to the current reporting structure. See Note 20 to the Consolidated Financial Statements for additional information regarding the realignment.
Transportation Solutions
Net Sales. The following table presents the Transportation Solutions segment’s net sales and the percentage of total net sales by industry end market:
Fiscal | |||||||||||||
| 2026 | | | 2025 | | | |||||||
($ in millions) | |||||||||||||
Automotive | $ | 7,523 | | 75 | % | $ | 7,106 | | 75 | % | |||
Commercial transportation |
| 1,635 |
| 16 |
| 1,371 |
| 15 | |||||
Sensors |
| 911 |
| 9 |
| 911 |
| 10 | |||||
Total | $ | 10,069 |
| 100 | % | $ | 9,388 |
| 100 | % | |||
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The following table provides an analysis of the change in the Transportation Solutions segment’s net sales by industry end market:
Change in Net Sales for Fiscal 2026 versus Fiscal 2025 |
| |||||||||||||
Net Sales | Organic Net Sales | | ||||||||||||
| Growth | Growth (Decline) | Translation | | ||||||||||
($ in millions) | ||||||||||||||
Automotive | $ | 417 | | 5.9 | % | $ | 212 | | 3.0 | % | $ | 205 | ||
Commercial transportation |
| 264 |
| 19.3 |
| 233 |
| 17.1 |
| 31 | ||||
Sensors |
| — |
| — |
| (22) |
| (2.4) |
| 22 | ||||
Total | $ | 681 |
| 7.3 | % | $ | 423 |
| 4.5 | % | $ | 258 | ||
Net sales in the Transportation Solutions segment increased $681 million, or 7.3%, in fiscal 2026 from fiscal 2025 as a result of organic net sales growth of 4.5% and the positive impact of foreign currency translation of 2.8%. Net price erosion negatively affected organic net sales by $34 million in fiscal 2026. Our organic net sales by industry end market were as follows:
| ● | Automotive—Our organic net sales increased 3.0% in fiscal 2026 as a result of growth of 5.0% in the Asia–Pacific region and 4.3% in the EMEA region, partially offset by declines of 5.4% in the Americas region. Overall, our organic net sales growth was due primarily to increased content per vehicle. |
| ● | Commercial transportation—Our organic net sales increased 17.1% in fiscal 2026 as a result of growth across all regions with the benefit of content growth. |
| ● | Sensors—Our organic net sales decreased 2.4% in fiscal 2026 due to declines in transportation applications, partially offset by growth in industrial applications. |
Operating Income. The following table presents the Transportation Solutions segment’s operating income and operating margin information:
Fiscal |
| |||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) |
| |||||||||||
Operating income | $ | 1,969 | $ | 1,818 | $ | 151 | ||||||
Operating margin |
| 19.6 | % |
| 19.4 | % |
| | ||||
Operating income in the Transportation Solutions segment increased $151 million in fiscal 2026 as compared to fiscal 2025. Excluding the items below, operating income increased in fiscal 2026 primarily as a result of improved manufacturing productivity.
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) |
| ||||||
Acquisition and integration costs | $ | 2 | $ | — | |||
Restructuring and other charges, net |
| 89 |
| 75 | |||
Amortization expense | 71 | 70 | |||||
Total | $ | 162 | $ | 145 | |||
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Industrial Solutions
Net Sales. The following table presents the Industrial Solutions segment’s net sales and the percentage of total net sales by industry end market:
Fiscal | |||||||||||||
| 2026 | | | 2025 | | | |||||||
($ in millions) | |||||||||||||
Digital data networks | $ | 3,183 | 32 | % | $ | 2,208 | 28 | % | |||||
Automation and connected living | 2,480 |
| 25 | 2,147 |
| 27 | |||||||
Energy | 1,887 | | 19 | 1,344 | | 17 | |||||||
Aerospace, defense, and marine |
| 1,670 |
| 17 |
| 1,483 |
| 19 | |||||
Medical | 683 | 7 | 692 | 9 | |||||||||
Total | $ | 9,903 |
| 100 | % | $ | 7,874 |
| 100 | % | |||
The following table provides an analysis of the change in the Industrial Solutions segment’s net sales by industry end market:
Change in Net Sales for Fiscal 2026 versus Fiscal 2025 | |||||||||||||||||
Net Sales | Organic Net Sales | ||||||||||||||||
| Growth (Decline) | Growth (Decline) | Translation | | Acquisitions | | |||||||||||
($ in millions) | |||||||||||||||||
Digital data networks | $ | 975 |
| 44.2 | % | $ | 961 | 43.5 | % | $ | 14 | $ | — | ||||
Automation and connected living | 333 | | 15.5 | 281 | | 13.1 | 51 | 1 | |||||||||
Energy |
| 543 |
| 40.4 |
| 243 |
| 18.1 |
| 29 |
| 271 | |||||
Aerospace, defense, and marine |
| 187 |
| 12.6 |
| 163 |
| 11.0 |
| 24 |
| — | |||||
Medical | (9) | (1.3) | (9) | (1.3) | — | — | |||||||||||
Total | $ | 2,029 |
| 25.8 | % | $ | 1,639 |
| 20.8 | % | $ | 118 | $ | 272 | |||
In the Industrial Solutions segment, net sales increased $2,029 million, or 25.8%, in fiscal 2026 from fiscal 2025 due to organic net sales growth of 20.8%, the positive impact of 3.5% from acquisitions, and the positive impact of foreign currency translation of 1.5%. Richards Manufacturing, which was acquired on April 1, 2025, contributed incremental net sales of $227 million in the first six months of fiscal 2026 over the same period of fiscal 2025. Net pricing actions positively affected organic net sales by $219 million in fiscal 2026. Our organic net sales by industry end market were as follows:
| ● | Digital data networks—Our organic net sales increased 43.5% in fiscal 2026 primarily as a result of growth in AI applications. |
| ● | Automation and connected living—Our organic net sales increased 13.1% in fiscal 2026 primarily as a result of growth in factory automation applications and, to a lesser degree, the appliances market. |
| ● | Energy—Our organic net sales increased 18.1% in fiscal 2026 with growth in all regions and strength in grid hardening and data center applications. |
| ● | Aerospace, defense, and marine—Our organic net sales increased 11.0% in fiscal 2026 due primarily to growth in the defense and commercial aerospace markets. |
| ● | Medical—Our organic net sales decreased 1.3% in fiscal 2026 primarily as a result of our strategic exit of a product line. |
Operating Income. The following table presents the Industrial Solutions segment’s operating income and operating margin information:
Fiscal | ||||||||||||
| 2026 | | | 2025 | | | Change | | ||||
($ in millions) | ||||||||||||
Operating income | $ | 2,018 | $ | 1,393 | $ | 625 | ||||||
Operating margin |
| 20.4 | % |
| 17.7 | % |
| |||||
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Operating income in the Industrial Solutions segment increased $625 million in fiscal 2026 from fiscal 2025. Excluding the items below, operating income increased in fiscal 2026 primarily as a result of higher volume and the positive impact of net pricing actions.
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) |
| ||||||
Acquisition-related charges: |
| |
| | |||
Acquisition and integration costs | $ | 30 | $ | 47 | |||
Charges associated with the amortization of acquisition-related fair value adjustments |
| 3 |
| 10 | |||
| 33 |
| 57 | ||||
Restructuring and other charges, net |
| 28 |
| 51 | |||
Amortization expense | 156 | 120 | |||||
Total | $ | 217 | $ | 228 | |||
Liquidity and Capital Resources
Our ability to fund our future capital needs will be affected by our ongoing ability to generate cash from operations and may be affected by our access to capital markets, money markets, or other sources of funding, as well as the capacity and terms of our financing arrangements. We believe that cash generated from operations and, to the extent necessary, these other sources of potential funding will be sufficient to meet our anticipated capital needs for the foreseeable future, including the repayment of $400 million of 3.125% senior notes due in August 2027. We may use excess cash to acquire strategic businesses or product lines, reduce our outstanding debt, or return cash to shareholders through dividends on our ordinary shares or purchases of our ordinary shares pursuant to our authorized share repurchase program. We may also use excess cash and other funding to make strategic acquisitions. We intend to fund the anticipated acquisition of Astrodyne with a combination of available cash and the issuance of commercial paper and, if necessary, borrowing under our existing credit facility and/or new debt financing. The cost or availability of future funding may be impacted by financial market conditions. We will continue to monitor financial markets and respond as necessary to changing conditions. We believe that we have sufficient financial resources and liquidity which will enable us to meet our ongoing working capital and other cash flow needs.
As of fiscal year end 2026, our cash and cash equivalents were held in subsidiaries which are located in various countries throughout the world. Under current applicable laws, substantially all of these amounts can be repatriated to Tyco Electronics Group S.A. (“TEGSA”), our Luxembourg subsidiary, which is the obligor of substantially all of our debt, and to TE Connectivity plc, our Irish parent company; however, the repatriation of these amounts could subject us to additional tax expense. We provide for tax liabilities on the Consolidated Financial Statements with respect to amounts that we expect to repatriate; however, no tax liabilities are recorded for amounts that we consider to be retained indefinitely and reinvested in our global manufacturing operations.
Cash Flows from Operating Activities
Net cash provided by operating activities increased $386 million to $4,525 million in fiscal 2026 as compared to $4,139 million in fiscal 2025. The increase resulted primarily from higher pre-tax income, partially offset by the impact of changes in working capital levels and an increase in income tax payments. The amount of income taxes paid, net of refunds, during fiscal 2026 and 2025 was $454 million and $276 million, respectively.
Pension contributions were $70 million and $69 million in fiscal 2026 and 2025, respectively. We expect pension contributions to be approximately $67 million in fiscal 2027, before consideration of any voluntary contributions. For additional information regarding pensions, see Note 14 to the Consolidated Financial Statements.
Cash Flows from Investing Activities
Capital expenditures were $1,122 million and $936 million in fiscal 2026 and 2025, respectively. We expect fiscal 2027 capital spending levels to be approximately 6% of net sales. We believe our capital funding levels are adequate to support new programs, and we continue to invest in our manufacturing infrastructure to further enhance productivity and manufacturing capabilities.
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During fiscal 2026, we acquired two businesses for a combined cash purchase price of $212 million, net of cash acquired. We acquired Richards Manufacturing for cash of approximately $2.3 billion, net of cash acquired, during fiscal 2025. Also during fiscal 2025, we acquired two additional businesses for a combined cash purchase price of $321 million, net of cash acquired. See Note 4 to the Consolidated Financial Statements for additional information regarding acquisitions.
Cash Flows from Financing Activities and Capitalization
Total debt at fiscal year end 2026 and 2025 was $5,639 million and $5,694 million, respectively. See Note 10 to the Consolidated Financial Statements for additional information regarding debt.
During fiscal 2026, TEGSA, our wholly-owned subsidiary, issued $200 million aggregate principal amount of 4.50% senior notes due in February 2031 and $550 million aggregate principal amount of 4.875% senior notes due in February 2036. The February 2031 senior notes represent a further issuance of TEGSA’s outstanding $450 million aggregate principal amount of 4.50% senior notes which were issued in fiscal 2025 and bring the total aggregate principal amount of the 4.50% senior notes due in February 2031 to $650 million. The new 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.
TEGSA entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in February 2026 with aggregate commitments of $3.0 billion, which refinanced and replaced in full TEGSA’s existing $1.5 billion five-year unsecured senior revolving credit facility (the “Replaced Credit Facility”). The Credit Facility matures in February 2031 and contains provisions that allow for incremental commitments of up to $1.0 billion, subject to terms and conditions in the Credit Facility. TEGSA had no borrowings under the Credit Facility at fiscal year end 2026 or the Replaced Credit Facility at fiscal year end 2025.
Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with respect to borrowings 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.’s base rate, (ii) the federal funds effective rate plus 1/2 of 1%, (iii) the Term SOFR for a one-month interest period plus 1%, and (iv) 1%, (2) with respect to borrowings in euro, the Euro Interbank Offered Rate, (3) with respect to borrowings in sterling, the Sterling Overnight Index Average Reference Rate, and (4) with respect to borrowings in yen, the Tokyo Interbank Offered Rate, plus, in each case, an applicable margin based upon the senior, unsecured, long-term debt rating of TEGSA. TEGSA is required to pay an annual facility fee. Based on the applicable credit ratings of TEGSA, this fee ranges from 5.0 to 12.5 basis points of the lenders’ commitments under the Credit Facility.
The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) for the then most recently concluded period of four consecutive fiscal quarters exceeds 3.75 (or temporarily 4.25 following a qualified acquisition) to 1.0, an Event of Default (as defined in the Credit Facility) is triggered. The Credit Facility and our other debt agreements contain other customary covenants. None of our covenants are presently considered restrictive to our operations. As of fiscal year end 2026, we were in compliance with all of our debt covenants and believe that we will continue to be in compliance with our existing covenants for the foreseeable future.
Periodically, TEGSA issues commercial paper to U.S. institutional accredited investors and qualified institutional buyers in accordance with available exemptions from the registration requirements of the Securities Act of 1933 as part of our ongoing effort to maintain financial flexibility and to potentially decrease the cost of borrowings. Borrowings under the commercial paper program are backed by the Credit Facility. At fiscal year end 2026, TEGSA had $100 million of commercial paper outstanding at a weighted-average interest rate of 4.10%. TEGSA had no commercial paper outstanding at fiscal year end 2025.
Payment obligations under TEGSA’s senior notes, commercial paper, and Credit Facility are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.
Payments of ordinary share dividends to shareholders were $869 million and $803 million in fiscal 2026 and 2025, respectively. See Note 17 to the Consolidated Financial Statements for additional information regarding dividends.
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In September 2026, our Board of Directors approved an interim cash dividend of $0.78 per ordinary share, payable on December 11, 2026, to shareholders of record on November 20, 2026.
As provided by Irish law and our articles of association, our Board of Directors may approve interim dividends. In exercising its discretion to approve such dividends, our Board of Directors will consider our results of operations, financial condition, cash requirements, future business prospects, statutory requirements of applicable law, contractual restrictions, restrictions imposed by Irish law, and other factors that they may deem relevant.
During fiscal 2026, our Board of Directors authorized an increase of $3.0 billion in our share repurchase program. Ordinary shares repurchased under the share repurchase program were as follows:
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Number of ordinary shares repurchased |
| 9 | 8 | ||||
Repurchase value |
| $ | 1,892 | $ | 1,356 | ||
At fiscal year end 2026, we had $2.5 billion of availability remaining under our share repurchase authorization.
Summarized Guarantor Financial Information
As discussed above, our senior notes, commercial paper, and Credit Facility are issued by TEGSA and are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc. In addition to being the issuer of our debt securities, TEGSA owns, directly or indirectly, all of our operating subsidiaries. The following tables present summarized financial information, excluding investments in and equity in earnings of our non-guarantor subsidiaries, for TE Connectivity plc, TE Connectivity Switzerland Ltd., and TEGSA on a combined basis.
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Balance Sheet Data: | |||||||
Total current assets | $ | 1,804 | $ | 1,236 | |||
Total noncurrent assets(1) |
| 4,132 |
| 2,465 | |||
Total current liabilities |
| 1,020 |
| 1,348 | |||
Total noncurrent liabilities(2) | 10,359 | 10,033 | |||||
| (1) | Includes $4,085 million and $2,444 million as of fiscal year end 2026 and 2025, respectively, of intercompany loans receivable from non-guarantor subsidiaries. |
| (2) | Includes $5,131 million and $5,001 million as of fiscal year end 2026 and 2025, respectively, of intercompany loans payable to non-guarantor subsidiaries. |
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Statement of Operations Data: | |||||||
Income (loss) from continuing operations | $ | 263 | $ | (197) | |||
Net income (loss) |
| 263 |
| (197) | |||
Off-Balance Sheet Arrangements
In certain instances, we have guaranteed the performance of third parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from fiscal 2027 through the completion of such transactions. The guarantees would be triggered in the event of nonperformance, and the potential exposure for nonperformance under the guarantees would not have a material effect on our results of operations, financial position, or cash flows.
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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 fiscal year end 2026, we had outstanding letters of credit, letters of guarantee, and surety bonds of $282 million to support normal business activities.
Commitments and Contingencies
The following table provides a summary of our contractual obligations and commitments for debt, minimum lease payment obligations under non-cancelable leases, and other material obligations at fiscal year end 2026:
Payments Due | ||||||||||
| In Fiscal 2027 | | Thereafter | | Total | | ||||
(in millions) |
| |||||||||
Long-term debt: | ||||||||||
Principal payments(1) | $ | 502 | $ | 5,194 | $ | 5,696 | ||||
Interest payments on debt(2) |
| 199 |
| 1,159 |
| 1,358 | ||||
Operating leases(3) |
| 131 |
| 494 |
| 625 | ||||
Purchase obligations(4) |
| 1,458 |
| 168 |
| 1,626 | ||||
Total contractual cash obligations(5)(6)(7) | $ | 2,290 | $ | 7,015 | $ | 9,305 | ||||
| (1) | See Note 10 to the Consolidated Financial Statements for additional information regarding debt. |
| (2) | Interest payments exclude the impact of any interest rate swap and cross-currency swap contracts. Interest payments on debt are projected for future periods using rates in effect as of fiscal year end 2026 and are subject to change in future periods. |
| (3) | Operating leases represents the undiscounted lease payments. See Note 11 to the Consolidated Financial Statements for additional information regarding leases. |
| (4) | Purchase obligations consist primarily of commitments for purchases of goods and services. |
| (5) | The above table does not reflect unrecognized income tax benefits of $659 million and related accrued interest and penalties of $42 million, the timing of which is uncertain. See Note 15 to the Consolidated Financial Statements for additional information regarding unrecognized income tax benefits, interest, and penalties. |
| (6) | The above table does not reflect pension obligations to certain employees and former employees. We are obligated to make contributions to our pension plans; however, we are unable to determine the amount of plan contributions due to the inherent uncertainties of obligations of this type, including timing, interest rate charges, investment performance, and amounts of benefit payments. We expect to contribute approximately $67 million to pension plans in fiscal 2027, before consideration of any voluntary contributions. See Note 14 to the Consolidated Financial Statements for additional information regarding these plans and our estimates of future contributions and benefit payments. |
| (7) | The above table does not reflect redeemable noncontrolling interests of $150 million associated with our First Sensor AG (“First Sensor”) subsidiary. Noncontrolling interest holders can elect either (1) to remain First Sensor 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 (plus any statutory interest, if applicable) and timing of any future cash payments is uncertain. See Note 17 to the Consolidated Financial Statements for additional information regarding redeemable noncontrolling interests. |
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, 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
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proceedings, either individually or in the aggregate, will have a material effect on our results of operations, financial position, or cash flows.
Trade Compliance Matters
As previously reported, as part of our ongoing internal compliance activities, we conducted an investigation related to country of origin for import matters and made a voluntary disclosure to CBP regarding potential Section 301 unpaid duties, fees, and interest for certain imported products into the U.S. During fiscal 2026, we filed a perfected prior disclosure to CBP and paid $14 million to CBP to resolve this matter. Although CBP has not yet completed its review of the disclosure, we do not expect that the outcome of the review will have a material effect on our results of operations, financial position, or cash flows.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses. Our significant accounting policies are summarized in Note 2 to the Consolidated Financial Statements. We believe the following accounting policies are the most critical as they require significant judgments and assumptions that involve inherent risks and uncertainties. Management’s estimates are based on the relevant information available at the end of each period.
Revenue Recognition
We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Our revenues are generated principally from the sale of our products. Revenue is recognized as performance obligations under the terms of a contract, such as a purchase order with a customer, are satisfied; generally this occurs with the transfer of control. We transfer control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the product, and we have a right to payment for such product. Revenue is measured as the amount of consideration that we expect to receive in exchange for those products and excludes taxes assessed by governmental authorities and collected from customers concurrent with the sale of products. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales. Since we typically invoice our customers when we satisfy our performance obligations, we do not have material contract assets or contract liabilities. Our credit terms are customary and do not contain significant financing components that extend beyond one year of fulfillment of performance obligations. We apply the practical expedient of ASC 606 with respect to financing components and do not evaluate contracts in which payment is due within one year of satisfaction of the related performance obligation. Since our performance obligations to deliver products are part of contracts that generally have original durations of one year or less, we have elected to use the optional exemption to not disclose the aggregate amount of transaction prices associated with unsatisfied or partially satisfied performance obligations.
Our standard terms of sale generally warrant that our products will conform to our, or mutually agreed to, specifications and that our products will be free from material defects in materials and workmanship for a limited time. In certain instances, we may sell products to customers under terms other than our standard terms. We do not account for warranties as separate performance obligations.
Although products are generally sold at fixed prices, certain distributors and customers receive incentives or awards, such as sales rebates, return allowances, scrap allowances, and other rights, which are accounted for as variable consideration. We estimate these amounts in the same period revenue is recognized based on the expected value to be provided to customers and reduce revenue accordingly. Our estimates of variable consideration and ultimate determination of the estimated amounts to include in the transaction price are based primarily on our assessment of anticipated performance and historical and forecasted information that is reasonably available to us.
Goodwill and Other Intangible Assets
We account for goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other.
Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible assets. Intangible assets with determinable lives primarily include customer relationships and intellectual property, consisting of patents, trademarks, and unpatented technology. Recoverability estimates range from 1 to 50 years and costs are generally
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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.
We test for goodwill impairment at the reporting unit level. A reporting unit is generally an operating segment or one level below an operating segment (a “component”) if the component constitutes a business for which discrete financial information is available and regularly reviewed by segment management. At fiscal year end 2026, we had four reporting units, all of which contained goodwill. There were two reporting units in both the Transportation Solutions and Industrial Solutions segments. 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. We review our reporting unit structure each year as part of our annual goodwill impairment test, or more frequently based on changes in our structure.
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 more frequently if events or changes in circumstances indicate that the asset may be impaired. In assessing a potential impairment, management relies on several reporting unit-specific factors including operating results, business plans, economic projections, anticipated future cash flows, transactions, and marketplace 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 is supported by a guideline analysis (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.
We completed our annual goodwill impairment test in the fourth quarter of fiscal 2026 and determined that no impairment existed.
Income Taxes
In determining pre-tax income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the income tax return and financial statement recognition of revenue and expense.
In evaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent years, and our forecast of taxable income. In estimating future taxable income, we develop assumptions including the amount of pre-tax operating income in various tax jurisdictions, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.
We currently have recorded significant valuation allowances that we intend to maintain until it is more likely than not the deferred tax assets will be realized. Our income tax expense recorded in the future will be reduced to the extent of decreases in our valuation allowances. The realization of our remaining deferred tax assets is dependent primarily on future taxable income in the appropriate jurisdictions. Any reduction in future taxable income including any future restructuring activities may require that we record an additional valuation allowance against our deferred tax assets. An increase in the valuation allowance would result in additional income tax expense in such period and could have a significant impact on our future earnings.
Changes in tax laws and rates also could affect recorded deferred tax assets and liabilities in the future. Impacts of enacted law changes that have a material effect on our results of operations, financial position, or cash flows have been recorded in the Consolidated Financial Statements.
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The calculation of our tax liabilities includes estimates for uncertainties in the application of complex tax regulations across multiple global jurisdictions where we conduct our operations. Under the uncertain tax position provisions of ASC 740, Income Taxes, we recognize liabilities for tax and related interest for issues in tax jurisdictions based on our estimate of whether, and to what extent, additional taxes and related interest will be due. These tax liabilities and related interest are reflected net of the impact of related tax loss carryforwards, as such tax loss carryforwards will be applied against these tax liabilities and will reduce the amount of cash tax payments due upon the eventual settlement with the tax authorities. These estimates may change due to changing facts and circumstances. Due to the complexity of these uncertainties, the ultimate resolution may result in a settlement that differs from our current estimate of the tax liabilities and related interest. These tax liabilities and related interest are recorded in income taxes and accrued and other current liabilities on the Consolidated Balance Sheets.
Pension Plans
Our defined benefit pension plan expense and obligations are developed from actuarial assumptions. The funded status of our plans is recognized on the Consolidated Balance Sheets and is measured as the difference between the fair value of plan assets and the projected benefit obligation at the measurement date. The projected benefit obligation represents the actuarial present value of benefits projected to be paid upon retirement factoring in estimated future compensation levels. The fair value of plan assets represents the current market value of cumulative company and participant contributions made to irrevocable trust funds, held for the sole benefit of participants, which are invested by the trustees of the funds. The benefits under our defined benefit pension plans are based on various factors, such as years of service and compensation.
Net periodic pension benefit cost is based on the utilization of the projected unit credit method of calculation and is charged to earnings on a systematic basis over the expected average remaining service lives of current participants, or, for inactive plans, over the remaining life expectancy of participants.
Two critical assumptions in determining pension expense and obligations are discount rates and expected long-term returns on plan assets. We evaluate these assumptions at least annually. Other assumptions reflect demographic factors such as retirement, mortality, and employee turnover. These assumptions are evaluated periodically and updated to reflect our actual experience. Actual results may differ from actuarial assumptions. Discount rates represent the market rate for high-quality fixed income investments and are used to calculate the present value of the expected future cash flows for benefit obligations to be paid under our pension plans. A decrease in discount rates increases the present value of pension benefit obligations. At fiscal year end 2026, a 25-basis-point decrease in discount rates would have increased the present value of our pension obligations by $53 million; a 25-basis-point increase would have decreased the present value of our pension obligations by $51 million. We consider the current and expected asset allocations of our pension plans, as well as historical and expected long-term rates of return on those types of plan assets, in determining the expected long-term rates of return on plan assets. A 50-basis-point decrease or increase in the expected long-term returns on plan assets would have increased or decreased, respectively, our fiscal 2026 pension expense by $9 million.
At fiscal year end 2026, the long-term target asset allocation in our U.S. plans’ master trust is 25% return-seeking assets and 75% liability-hedging assets. Asset re-allocation to meet that target is occurring over a multi-year period based on the funded status. We expect to reach our target allocation when the funded status of the plans exceeds 110%. Based on the funded status of the plans as of fiscal year end 2026, our target asset allocation is 60% return-seeking and 40% liability-hedging.
Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for information regarding recently issued and adopted accounting pronouncements.
Non-GAAP Financial Measure
Organic Net Sales Growth (Decline)
We present organic net sales growth (decline) as we believe it is appropriate for investors to consider this adjusted financial measure in addition to results in accordance with GAAP. Organic net sales growth (decline) represents net sales growth (decline) (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic net sales growth (decline) is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the
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impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity.
Organic net sales growth (decline) provides useful information about our results and the trends of our business. Management uses this measure to monitor and evaluate performance. Also, management uses this measure together with GAAP financial measures in its decision-making processes related to the operations of our reportable segments and our overall company. It is also a significant component in our incentive compensation plans. We believe that investors benefit from having access to the same financial measures that management uses in evaluating operations. The tables presented in “Results of Operations” and “Segment Results” provide reconciliations of organic net sales growth (decline) to net sales growth (decline) calculated in accordance with GAAP.
Organic net sales growth (decline) is a non-GAAP financial measure and should not be considered a replacement for results in accordance with GAAP. This non-GAAP financial measure may not be comparable to similarly-titled measures reported by other companies. The primary limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using organic net sales growth (decline) in combination with net sales growth (decline) to better understand the amounts, character, and impact of any increase or decrease in reported amounts.
Forward-Looking Information
Certain statements in this Annual Report are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These statements are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among others, the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, acquisitions, divestitures, the effects of competition, and the effects of future legislation or regulations. Forward-looking statements also include statements addressing our ESG and sustainability plans and goals. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “aspire,” “estimate,” “predict,” “potential,” “goal,” “target,” “continue,” “may,” and “should,” or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we file this report except as required by law.
The following and other risks, which are described in greater detail in “Part I. Item 1A. Risk Factors,” as well as other risks described in this Annual Report, could cause our results to differ materially from those expressed in forward- looking statements:
| ● | conditions in the global or regional economies and global capital markets, and cyclical industry conditions, including recession, inflation, tariffs, supply chain disruptions, and higher interest rates; |
| ● | conditions affecting demand for products in the industries we serve, particularly the automotive industry; |
| ● | risk of future goodwill impairment; |
| ● | pricing pressure and competition, including competitive risks associated with the pace of technological change; |
| ● | market acceptance of our new product introductions and product innovations and product life cycles; |
| ● | raw material availability, quality, and cost; |
| ● | product liability, warranty, and product recall claims and our ability to defend such claims; |
| ● | fluctuations in foreign currency exchange rates and impacts of offsetting hedges; |
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| ● | financial condition and consolidation of customers and vendors; |
| ● | reliance on third-party suppliers; |
| ● | risks associated with current and future acquisitions and divestitures; |
| ● | global risks of business interruptions due to natural disasters or other disasters which have impacted and could continue to negatively impact our results of operations as well as customer behaviors, business, and manufacturing operations as well as our facilities and the facilities of our suppliers, and other aspects of our business; |
| ● | global risks of political, economic, and military instability, including the continuing military conflicts in certain parts of the world and any resulting supply chain or other disruptions, and volatile and uncertain economic conditions and the evolving regulatory system in China; |
| ● | risks associated with cybersecurity incidents and other disruptions to our information technology infrastructure, including as a result of AI; |
| ● | risks related to compliance with current and future environmental and other laws and regulations, including those related to climate change; |
| ● | risks related to scrutiny and expectations regarding ESG matters; |
| ● | risks associated with compliance with applicable antitrust or competition laws or applicable trade regulations; |
| ● | our ability to protect our intellectual property rights; |
| ● | risks of litigation, regulatory actions, and compliance issues; |
| ● | our ability to operate within the limitations imposed by our debt instruments; |
| ● | the possible effects on us of various global legislative proposals and other initiatives that could materially increase our worldwide corporate effective tax rate, increase global cash taxes, and negatively impact our U.S. government contracts business; |
| ● | requirements related to chemical usage, hazardous material content, recycling, and other circular economy initiatives; |
| ● | various risks associated with being an Irish corporation; |
| ● | the impact of fluctuations in the market price of our shares; and |
| ● | the impact of certain provisions of our articles of association on unsolicited takeover proposals. |
There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, our financial position is routinely subject to a variety of risks, including market risks associated with interest rate and foreign currency movements on outstanding debt and non-U.S. dollar denominated assets and liabilities and commodity price movements. We utilize established risk management policies and procedures in executing derivative financial instrument transactions to manage a portion of these risks.
We do not execute transactions or hold derivative financial instruments for trading or speculative purposes. Substantially all counterparties to derivative financial instruments are limited to major financial institutions with at least an A/A2 credit rating. There is no significant concentration of exposures with any one counterparty.
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Foreign Currency Exposures
As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on intercompany and other cash transactions. In addition, we utilize cross-currency swap contracts to hedge our net investment in certain foreign operations. A 10% appreciation or depreciation of the underlying currency in our cross-currency swap contracts or foreign currency forward contracts from the fiscal year end 2026 market rates would have changed the unrealized value of our contracts by $594 million. Also, a 10% appreciation or depreciation of the underlying currency in our cross-currency swap contracts or foreign currency forward contracts from the fiscal year end 2025 market rates would have changed the unrealized value of our contracts by $594 million. Such gains or losses on these contracts would generally be offset by the losses or gains on the revaluation or settlement of the underlying transactions.
Interest Rate and Investment Exposures
We issue debt, as needed, to fund our operations and capital requirements. Such borrowings can result in interest rate exposure. To manage the interest rate exposure, we may use interest rate swap contracts to convert a portion of fixed rate debt into variable rate debt. Also, we may utilize forward starting interest rate swap contracts to manage interest rate exposure in periods prior to the anticipated issuance of fixed rate debt. There were no such contracts and no floating debt outstanding at fiscal year end 2026 or 2025.
We also utilize investment swap contracts to manage earnings exposure on certain nonqualified deferred compensation liabilities.
Commodity Exposures
Our worldwide operations and product lines may expose us to risks from fluctuations in commodity prices. To limit the effects of fluctuations in the future market price paid and related volatility in cash flows, we utilize commodity swap contracts designated as cash flow hedges. We continually evaluate the commodity market with respect to our forecasted usage requirements over the next eighteen months and periodically enter into commodity swap contracts to hedge a portion of usage requirements over that period. At fiscal year end 2026, our commodity hedges, which related to expected purchases of gold, silver, copper, and palladium, were in a net gain position of $40 million and had a notional value of $876 million. At fiscal year end 2025, our commodity hedges, which related to expected purchases of gold, silver, copper, and palladium, were in a net gain position of $80 million and had a notional value of $569 million. A 10% appreciation or depreciation of commodity prices from the fiscal year end 2026 prices would have changed the unrealized value of our forward contracts by $92 million. A 10% appreciation or depreciation of commodity prices from the fiscal year end 2025 prices would have changed the unrealized value of our forward contracts by $65 million.
See Note 13 to the Consolidated Financial Statements for additional information regarding financial instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements and schedule specified by this Item, together with the reports thereon of Deloitte & Touche LLP, are presented following Item 15 and the signature pages of this report:
Financial Statements:
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Consolidated Balance Sheets as of September 25, 2026 and September 26, 2025
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Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts
All other financial statements and schedules have been omitted since the information required to be submitted has been included on the Consolidated Financial Statements and related notes or because they are either not applicable or not required under the rules of Regulation S-X.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 25, 2026. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 25, 2026.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded our internal control over financial reporting was effective as of September 25, 2026.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on our internal control over financial reporting as of September 25, 2026, which is included in this Annual Report.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 25, 2026, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
In the quarter ended September 25, 2026, none of our Directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or
| ● | In the quarter ended September 25, 2026, |
The trading plan described above was entered into during an open insider trading window and was in compliance with our insider trading policies and procedures. Actual sale transactions will be disclosed publicly in filings with the SEC in accordance with applicable securities laws, rules, and regulations.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning directors, executive officers, and corporate governance may be found under the captions “Agenda Item No. 1—Election of Directors,” “Nominees for Election,” “Corporate Governance,” “The Board of Directors and Board Committees,” and “Executive Officers” in our definitive proxy statement for our 2027 Annual General Meeting of Shareholders (the “2027 Proxy Statement”), which will be filed with the SEC within 120 days after the close of our fiscal year. Such information is incorporated herein by reference. The information in the 2027 Proxy Statement under the caption “Delinquent Section 16(a) Reports” is incorporated herein by reference.
Code of Ethics
We have adopted a guide to ethical conduct, which applies to all employees, officers (including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer), and Directors. Our Guide to Ethical Conduct meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and satisfies the requirements of a code of business conduct and ethics under the listing standards of the NYSE. Our Guide to Ethical Conduct is posted on our website at www.te.com under the heading “Sustainability—Reporting and Policies.” We also will provide a copy of our Guide to Ethical Conduct to shareholders upon request. We intend to disclose any amendments to our Guide to Ethical Conduct, as well as any waivers for executive officers or Directors, on our website.
Insider Trading Policies and Procedures
We have
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation may be found under the captions “Compensation Discussion and Analysis,” “Management Development and Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Executive Officer Compensation,” “CEO Pay Ratio,” and “Compensation of Non-Employee Directors” in our 2027 Proxy Statement. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information in our 2027 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by reference.
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Equity Compensation Plan Information
The following table provides information as of fiscal year end 2026 with respect to ordinary shares issuable under our equity compensation plans:
Number of securities | ||||||||
remaining available for | ||||||||
Number of securities | future issuance under | |||||||
to be issued upon | Weighted‑average | equity compensation | ||||||
exercise of outstanding | exercise price of | plans (excluding | ||||||
options, warrants | outstanding options, | securities reflected | ||||||
and rights | warrants and rights | in column (a)) | ||||||
Plan Category | | (a) | | (b)(3) | | (c)(4) | | |
Equity compensation plans approved by security holders(1) | 5,175,228 | $ | 139.37 | 19,449,341 | ||||
Equity compensation plans not approved by security holders(2) | 75,775 |
| 88.20 | — | ||||
Total | 5,251,003 |
| | 19,449,341 | ||||
| (1) | Includes securities issuable upon exercise of outstanding options and rights under the TE Connectivity plc 2024 Stock and Incentive Plan, amended and restated as of September 30, 2024 (the “2024 Plan”); the TE Connectivity plc 2007 Stock and Incentive Plan, amended and restated as of September 30, 2024 (the “2007 Plan”); and the TE Connectivity plc Savings Related Share Plan, amended and restated as of September 30, 2024. The 2024 Plan provides for the award of annual performance bonuses and long-term performance awards, including share options; restricted, performance, and deferred share units; and other share-based awards (collectively, “Awards”) to board members, officers, and non-officer employees. The 2024 Plan provides for a maximum of 19,939,500 ordinary shares to be issued as Awards, subject to adjustment as provided under the terms of the plan. No additional grants will be made from the 2007 Plan and previously granted awards under the 2007 Plan will continue to be settled in our ordinary shares. |
| (2) | In connection with an acquisition in fiscal 2011, we assumed equity awards issued under plans sponsored by the acquired business and the remaining pool of shares available for grant under the plans. Subsequent to the acquisition, we registered 6,764,455 shares related to the plans via Forms S-3 and S-8. Those plans have since expired, and no additional grants will be made from them. Previously granted awards under the plans will continue to be settled in our ordinary shares. |
| (3) | Does not take into account restricted, performance, or deferred share unit awards that do not have exercise prices. |
| (4) | Includes securities remaining available for future issuance under the 2024 Plan; the TE Connectivity plc Savings Related Share Plan, amended and restated as of September 30, 2024; and the TE Connectivity plc Employee Stock Purchase Plan, amended and restated as of September 30, 2024. The 2024 Plan applies a weighting of 1.80 to outstanding nonvested restricted, performance, deferred share units, and other share-based awards. The remaining shares issuable under the 2024 Plan and the TE Connectivity plc Savings Related Share Plan are increased by forfeitures and cancellations, among other factors. Amounts include 821,303 shares remaining available for issuance under our TE Connectivity plc Savings Related Share Plan and 2,019,862 shares remaining available for issuance under our TE Connectivity plc Employee Stock Purchase Plan. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information in our 2027 Proxy Statement under the captions “Corporate Governance,” “The Board of Directors and Board Committees,” and “Certain Relationships and Related Transactions” is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information in our 2027 Proxy Statement under the caption “Agenda Item No. 2—Appointment of Auditors and Authority to Set Remuneration” is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)1.Financial Statements. See “Part II. Item 8. Financial Statements and Supplementary Data”
2. | Financial Statement Schedule. See “Part II. Item 8. Financial Statements and Supplementary Data” |
3. | Exhibit Index: |
Exhibit | Incorporated by Reference Herein | |||||||
|---|---|---|---|---|---|---|---|---|
Number | | Description | | Form | | Exhibit | | Date Filed with the SEC |
2.1 | Merger Agreement between TE Connectivity Ltd. and TE Connectivity plc | Current Report on Form 8-K | 2.1 | March 18, 2024 | ||||
2.2 | Transaction Agreement, dated February 11, 2025, by and among OCM Power V AIV Holdings (Delaware), L.P., OCM Power VI AIV Holdings (Delaware), L.P., OCM Power V Relay CTB, LLC, OCM Power VI Relay CTB, LLC, Relay Holding, LLC, TE Connectivity Corporation, Stella I LLC, TE Connectivity PLC, and OCM Power V AIV Holdings (Delaware), L.P.(1) | Quarterly Report on Form 10-Q for the quarterly period ended March 28, 2025 | 2.1 | April 28, 2025 | ||||
3.1 | Memorandum and Articles of Association of TE Connectivity plc, dated September 30, 2024 | Current Report on Form 8-K | 3.1 | September 30, 2024 | ||||
4.1 | * | Description of Registrant’s Securities | ||||||
4.2(a) | Indenture among Tyco Electronics Group S.A., as issuer, Tyco Electronics Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated September 25, 2007 | Annual Report on Form 10-K for the fiscal year ended September 28, 2007 | 4.1(a) | December 14, 2007 | ||||
4.2(b) | Third Supplemental Indenture among Tyco Electronics Group S.A., as issuer, Tyco Electronics Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated September 25, 2007 | Annual Report on Form 10-K for the fiscal year ended September 28, 2007 | 4.1(d) | December 14, 2007 | ||||
4.2(c) | Fourteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated August 3, 2017 | Current Report on Form 8-K | 4.2 | August 3, 2017 | ||||
4.2(d) | Seventeenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 16, 2021 | Current Report on Form 8-K | 4.1 | February 16, 2021 | ||||
4.2(e) | Eighteenth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 4, 2022 | Current Report on Form 8-K | 4.1 | February 4, 2022 | ||||
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Exhibit | Incorporated by Reference Herein | |||||||
|---|---|---|---|---|---|---|---|---|
Number | | Description | | Form | | Exhibit | | Date Filed with the SEC |
4.2(f) | Twentieth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity Ltd., as guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated August 2, 2024 | Current Report on Form 8-K | 4.1 | August 2, 2024 | ||||
4.2(g) | Twenty-First Supplemental Indenture among Tyco Electronics Group S.A., TE Connectivity Ltd., TE Connectivity plc, TE Connectivity Switzerland Ltd., and Deutsche Bank Trust Company Americas, dated September 24, 2024 | Current Report on Form 8-K | 4.1 | September 30, 2024 | ||||
4.2(h) | Amended and Restated Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated January 31, 2025 | Current Report on Form 8-K | 4.1 | January 31, 2025 | ||||
4.2(i) | First Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated January 31, 2025 | Current Report on Form 8-K | 4.2 | January 31, 2025 | ||||
4.2(j) | Second Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated May 6, 2025 | Current Report on Form 8-K | 4.1 | May 6, 2025 | ||||
4.2(k) | Third Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated May 9, 2025 | Current Report on Form 8-K | 4.1 | May 9, 2025 | ||||
4.2(l) | Fourth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated May 9, 2025 | Current Report on Form 8-K | 4.2 | May 9, 2025 | ||||
4.2(m) | Fifth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 9, 2026 | Current Report on Form 8-K | 4.1 | February 9, 2026 | ||||
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Exhibit | Incorporated by Reference Herein | |||||||
|---|---|---|---|---|---|---|---|---|
Number | | Description | | Form | | Exhibit | | Date Filed with the SEC |
4.2(n) | Sixth Supplemental Indenture among Tyco Electronics Group S.A., as issuer, TE Connectivity plc, as parent guarantor, TE Connectivity Switzerland Ltd., as additional guarantor, and Deutsche Bank Trust Company Americas, as trustee, dated February 9, 2026 | Current Report on Form 8-K | 4.2 | February 9, 2026 | ||||
10.1 | Five-Year Senior Credit Agreement by and among Tyco Electronics Group S.A., as borrower, TE Connectivity Switzerland Ltd., as intermediate guarantor, TE Connectivity plc, as parent guarantor, the lenders party thereto, and Bank of America, N.A., as administrative agent, dated February 13, 2026 | Current Report on Form 8-K | 10.1 | February 17, 2026 | ||||
10.2 | ‡* | TE Connectivity Annual Incentive Plan (as Amended and Restated) | ||||||
10.3 | ‡ | TE Connectivity plc 2007 Stock and Incentive Plan (Amended and Restated as of September 30, 2024) | Current Report on Form 8-K | 10.7 | September 30, 2024 | |||
10.4 | ‡ | TE Connectivity plc 2024 Stock and Incentive Plan (Amended and Restated as of September 30, 2024) | Current Report on Form 8-K | 10.5 | September 30, 2024 | |||
10.5 | ‡ | TE Connectivity plc Employee Stock Purchase Plan (Amended and Restated as of September 30, 2024) | Current Report on Form 8-K | 10.6 | September 30, 2024 | |||
10.6 | ‡ | Form of Option Award Terms and Conditions for Option Grants Beginning in November 2017 | Annual Report on Form 10-K for the fiscal year ended September 29, 2017 | 10.8 | November 14, 2017 | |||
10.7 | ‡ | Form of Option Award Terms and Conditions for Option Grants Beginning in November 2019 | Annual Report on Form 10-K for the fiscal year ended September 27, 2019 | 10.8 | November 12, 2019 | |||
10.8 | ‡ | Form of Option Award Terms and Conditions for Option Grants Beginning in November 2020 | Quarterly Report on Form 10-Q for the quarterly period ended December 25, 2020 | 10.1 | January 28, 2021 | |||
10.9 | ‡ | Form of Option Award Terms and Conditions for Option Grants Beginning in November 2021 | Annual Report on Form 10-K for the fiscal year ended September 30, 2022 | 10.11 | November 15, 2022 | |||
10.10 | ‡ | Form of Option Award Terms and Conditions for Option Grants Beginning in November 2024 | Current Report on Form 8-K | 10.10 | September 30, 2024 | |||
10.11 | ‡ | Form of Restricted Stock Unit Award Terms and Conditions for RSU Grants Beginning in November 2024 | Current Report on Form 8-K | 10.11 | September 30, 2024 | |||
10.12 | ‡ | Form of Performance Stock Unit Award Terms and Conditions for Performance Cycles Starting in and After Fiscal Year 2024 | Current Report on Form 8-K | 10.12 | September 30, 2024 | |||
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Exhibit | Incorporated by Reference Herein | |||||||
|---|---|---|---|---|---|---|---|---|
Number | | Description | | Form | | Exhibit | | Date Filed with the SEC |
10.13 | ‡ | TE Connectivity Change in Control Severance Plan for Certain U.S. Executives (Amended and Restated as of September 30, 2024) | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.20 | November 12, 2024 | |||
10.14 | ‡ | TE Connectivity Severance Plan for U.S. Executives (Amended and Restated as of September 30, 2024) | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.21 | November 12, 2024 | |||
10.15 | ‡* | TE Connectivity Supplemental Savings and Retirement Plan (Amended and Restated as of January 1, 2026) | ||||||
10.16 | ‡ | TE Connectivity plc Savings Related Share Plan (Amended and Restated as of September 30, 2024) | Current Report on Form 8-K | 10.8 | September 30, 2024 | |||
10.17 | Form of Deed of Indemnification for directors and executive officers of TE Connectivity plc | Current Report on Form 8-K | 10.2 | September 30, 2024 | ||||
10.18 | Form of Indemnification for directors and executive officers of TE Connectivity plc | Current Report on Form 8-K | 10.3 | September 30, 2024 | ||||
10.19 | ‡ | Employment Agreement between Terrence R. Curtin and Tyco Electronics Corporation dated December 15, 2015, as amended | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.26 | November 12, 2024 | |||
10.20 | ‡ | Employment Agreement between Heath A. Mitts and Tyco Electronics Corporation dated September 30, 2016, as amended | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.28 | November 12, 2024 | |||
10.21 | ‡ | Employment Agreement between John S. Jenkins and Tyco Electronics Corporation dated December 15, 2015, as amended | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.29 | November 12, 2024 | |||
10.22 | ‡ | Employment Agreement between Shad Kroeger and TE Connectivity Corporation dated February 23, 2018 | Quarterly Report on Form 10-Q for the quarterly period ended December 25, 2020 | 10.4 | January 28, 2021 | |||
10.23 | ‡ | Employment Agreement between Aaron Stucki and TE Connectivity Corporation dated October 1, 2020, as amended | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 10.31 | November 12, 2024 | |||
19.1 | TE Insider Trading and Communications with the Public Policy | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 19.1 | November 12, 2024 | ||||
19.2 | TE Connectivity plc Policy Relating to Open Market Securities Repurchases and Compliance with Insider Trading Securities Laws | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 19.2 | November 12, 2024 | ||||
21.1 | * | Subsidiaries of TE Connectivity plc | ||||||
22.1 | * | Guaranteed Securities | ||||||
23.1 | * | Consent of Independent Registered Public Accounting Firm | ||||||
24.1 | * | Power of Attorney | ||||||
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Exhibit | Incorporated by Reference Herein | |||||||
|---|---|---|---|---|---|---|---|---|
Number | | Description | | Form | | Exhibit | | Date Filed with the SEC |
31.1 | * | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
31.2 | * | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
32.1 | ** | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||
97.1 | TE Connectivity plc Incentive-Based Compensation Recovery Policy | Annual Report on Form 10-K for the fiscal year ended September 27, 2024 | 97.1 | November 12, 2024 | ||||
101.INS | * | Inline XBRL Instance Document(2) | ||||||
101.SCH | * | Inline XBRL Taxonomy Extension Schema Document | ||||||
101.CAL | * | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||
101.DEF | * | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||
101.LAB | * | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||
101.PRE | * | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||
104 | * | Cover Page Interactive Data File(3) | ||||||
‡ | Management contract or compensatory plan or arrangement |
* | Filed herewith |
** | Furnished herewith |
| (1) | The schedules to this agreement have been omitted pursuant to Item 601(a)(5) and Item 601(b)(2) of Regulation S-K. We will furnish copies of any of the omitted schedules to the SEC upon its request; however, we may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished. |
| (2) | The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| (3) | Formatted in Inline XBRL and contained in exhibit 101 |
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TE CONNECTIVITY PLC | ||
By: | /s/ Heath A. Mitts | |
Heath A. Mitts | ||
Executive Vice President | ||
and Chief Financial Officer | ||
(Principal Financial Officer) | ||
Date: November 9, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | | Title | Date | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
/s/ Terrence R. Curtin | Chief Executive Officer and Director | November 9, 2026 | ||||||||
Terrence R. Curtin | (Principal Executive Officer) | |||||||||
/s/ Heath A. Mitts | Executive Vice President, | |||||||||
Heath A. Mitts | Chief Financial Officer and Director | November 9, 2026 | ||||||||
(Principal Financial Officer) | ||||||||||
/s/ Reuben M. Shaffer | Senior Vice President and | |||||||||
Reuben M. Shaffer | Corporate Controller | November 9, 2026 | ||||||||
(Principal Accounting Officer) | ||||||||||
* | Director | November 9, 2026 | ||||||||
Jean-Pierre Clamadieu | ||||||||||
* | Director | November 9, 2026 | ||||||||
Carol A. Davidson | ||||||||||
* | Director | November 9, 2026 | ||||||||
Lynn A. Dugle | ||||||||||
* | Director | November 9, 2026 | ||||||||
Sam Eldessouky | ||||||||||
* | Director | November 9, 2026 | ||||||||
William A. Jeffrey | ||||||||||
* | Director | November 9, 2026 | ||||||||
Syaru Shirley Lin | ||||||||||
* | Director | November 9, 2026 | ||||||||
Abhijit Y. Talwalkar | ||||||||||
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Signature | | Title | Date | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
* | Director | November 9, 2026 | ||||||||
Mark C. Trudeau | ||||||||||
* | Director | November 9, 2026 | ||||||||
Kenneth Washington | ||||||||||
* | Director | November 9, 2026 | ||||||||
Dawn C. Willoughby | ||||||||||
* | Director | November 9, 2026 | ||||||||
Laura H. Wright | ||||||||||
* | John S. Jenkins, Jr., by signing his name hereto, does sign this document on behalf of the above noted individuals, pursuant to powers of attorney duly executed by such individuals, which have been filed as Exhibit 24.1 to this Report. |
By: | /s/ John S. Jenkins, Jr. | |
John S. Jenkins, Jr. | ||
Attorney-in-fact |
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TE CONNECTIVITY PLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | ||
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. | | 56 |
Consolidated Statements of Operations for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024 | 59 | |
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024 | 60 | |
Consolidated Balance Sheets as of September 25, 2026 and September 26, 2025 | 61 | |
Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024 | 62 | |
Consolidated Statements of Cash Flows for the Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024 | 63 | |
Notes to Consolidated Financial Statements | 64 | |
Schedule II—Valuation and Qualifying Accounts | 103 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of TE Connectivity plc
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TE Connectivity plc and subsidiaries (the "Company") as of September 25, 2026 and September 26, 2025, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the period ended September 25, 2026, and the related notes and the schedule listed in the Index at Item 15(a)2 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 25, 2026 and September 26, 2025, and the results of its operations and its cash flows for each of the three years in the period ended September 25, 2026, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 25, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 9, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income Taxes — Realizability of Deferred Tax Assets — Refer to Notes 2 and 15 to the financial statements
Critical Audit Matter Description
The Company recognizes deferred income taxes for temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Future realization of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character prior to expiration. Sources of taxable income include future reversals of deferred tax assets and liabilities, expected future taxable income, taxable income in prior carryback years if permitted under the tax law, and tax planning strategies. Management has determined that it is more likely than not that sufficient taxable income will be generated in the future to
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realize a portion of its deferred tax assets, and therefore, a valuation allowance of $9.3 billion has been recorded to offset the Company’s gross deferred tax assets as of September 25, 2026 of $12.2 billion.
We identified the realizability of certain deferred tax assets as a critical audit matter because of the Company’s tax structure and the significant judgments and estimates made by management to determine that sufficient taxable income will be generated in the future prior to expiration to realize a portion of its deferred tax assets. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the appropriateness of qualifying tax planning strategies and the reasonableness of management’s estimates of taxable income prior to expiration.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the determination that it is more likely than not that sufficient taxable income will be generated in the future to realize certain deferred tax assets included the following, among others:
| • | We tested the effectiveness of controls over management’s estimates of the realization of the deferred tax assets, including those over the estimates of taxable income, the approval of tax planning strategies and the determination of whether it is more likely than not that the deferred tax assets will be realized prior to expiration. |
| • | We evaluated the reasonableness of management’s assessment of the significance and weighting of negative evidence and positive evidence that is objectively verifiable. |
| • | We evaluated management’s ability to accurately estimate taxable income by comparing actual results to management’s historical estimates and evaluating whether there have been any changes that would impact management’s ability to continue accurately estimating taxable income. |
| • | We tested the reasonableness of management’s estimates of taxable income by comparing the estimates to: |
| – | Historical taxable income. |
| – | Internal communications to management and the board of directors. |
| – | Management’s history of carrying out its stated plans and its ability to carry out its plans considering contractual commitments, available financing, or debt covenants. |
| • | We evaluated whether the estimates of future taxable income were consistent with evidence obtained in other areas of the audit. |
| • | We evaluated whether the taxable income in prior carryback years was of the appropriate character and available under the tax law. |
| • | With the assistance of our income tax specialists, we evaluated (1) the appropriateness of qualifying tax planning strategies, including that they were prudent, feasible and would more likely than not result in the realization of deferred tax assets and (2) management’s assessment that sufficient taxable income will be generated in the future to realize a portion of the deferred tax assets prior to expiration. |
/s/
November 9, 2026
We have served as the Company’s auditor since 2007.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of TE Connectivity plc
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of TE Connectivity plc and subsidiaries (the “Company”) as of September 25, 2026, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 25, 2026, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended September 25, 2026 of the Company and our report dated November 9, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
November 9, 2026
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TE CONNECTIVITY PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions, except per share data) | ||||||||||
Net sales | $ | | $ | | $ | | ||||
Cost of sales |
| |
| |
| | ||||
Gross margin |
| |
| |
| | ||||
Selling, general, and administrative expenses | | | | |||||||
Research, development, and engineering expenses | | | | |||||||
Acquisition and integration costs | | | | |||||||
Restructuring and other charges, net | | | | |||||||
Operating income | | | | |||||||
Interest income | | | | |||||||
Interest expense | ( | ( | ( | |||||||
Other expense, net | ( | ( | ( | |||||||
Income from continuing operations before income taxes |
| |
| |
| | ||||
Income tax (expense) benefit | ( | ( | | |||||||
Income from continuing operations |
| |
| |
| | ||||
Loss from discontinued operations, net of income taxes | ( | ( | ( | |||||||
Net income | $ | | $ | | $ | | ||||
Basic earnings per share: | ||||||||||
Income from continuing operations | $ | | $ | | $ | | ||||
Loss from discontinued operations |
| ( |
| — |
| — | ||||
Net income |
| |
| |
| | ||||
Diluted earnings per share: | ||||||||||
Income from continuing operations | $ | | $ | | $ | | ||||
Loss from discontinued operations |
| ( |
| — |
| — | ||||
Net income |
| |
| |
| | ||||
Weighted-average number of shares outstanding: | ||||||||||
Basic | | | | |||||||
Diluted | | | | |||||||
See accompanying Notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
| Fiscal | |||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Net income | $ | | $ | | $ | | ||||
Other comprehensive income: | ||||||||||
Currency translation |
| |
| ( |
| | ||||
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes |
| |
| |
| ( | ||||
Gains (losses) on cash flow hedges, net of income taxes |
| ( |
| |
| | ||||
Other comprehensive income |
| |
| |
| | ||||
Comprehensive income | | | | |||||||
Less: comprehensive (income) loss attributable to noncontrolling interests | | ( | ( | |||||||
Comprehensive income attributable to TE Connectivity plc | $ | | $ | | $ | | ||||
See accompanying Notes to Consolidated Financial Statements.
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TE CONNECTIVITY PLC
CONSOLIDATED BALANCE SHEETS
As of September 25, 2026 and September 26, 2025
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions, except | |||||||
share data) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Accounts receivable, net of allowance for doubtful accounts of $ |
| |
| | |||
Inventories |
| |
| | |||
Prepaid expenses and other current assets |
| |
| | |||
Total current assets |
| |
| | |||
Property, plant, and equipment, net |
| |
| | |||
Goodwill |
| |
| | |||
Intangible assets, net |
| |
| | |||
Deferred income taxes |
| |
| | |||
Other assets |
| |
| | |||
Total assets | $ | | $ | | |||
Liabilities, redeemable noncontrolling interests, and shareholders' equity | |||||||
Current liabilities: | |||||||
Short-term debt | $ | | $ | | |||
Accounts payable |
| |
| | |||
Accrued and other current liabilities |
| |
| | |||
Total current liabilities |
| |
| | |||
Long-term debt |
| |
| | |||
Long-term pension and postretirement liabilities |
| |
| | |||
Deferred income taxes |
| |
| | |||
Income taxes |
| |
| | |||
Other liabilities |
| |
| | |||
Total liabilities |
| |
| | |||
Commitments and contingencies (Note 12) | |||||||
Redeemable noncontrolling interests | | | |||||
Shareholders' equity: | |||||||
Preferred shares, $ | |||||||
Ordinary class A shares, € | |||||||
Ordinary shares, $ |
| |
| | |||
Accumulated earnings |
| |
| | |||
Ordinary shares held in treasury, at cost, |
| ( |
| ( | |||
Accumulated other comprehensive income |
| |
| | |||
Total shareholders' equity |
| |
| | |||
Total liabilities, redeemable noncontrolling interests, and shareholders' equity | $ | | $ | | |||
See accompanying Notes to Consolidated Financial Statements.
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TE CONNECTIVITY PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Common/ | Accumulated | ||||||||||||||||||||||
Common/ | Ordinary Shares | Other | Total | ||||||||||||||||||||
Ordinary Shares | Held in Treasury | Contributed | Accumulated | Comprehensive | Shareholders' | ||||||||||||||||||
| Shares | | Amount | | Shares | | Amount | | Surplus | | Earnings | | Income (Loss) | | Equity | | |||||||
(in millions) | |||||||||||||||||||||||
Balance at fiscal year end 2023 |
| | $ | |
| ( | $ | ( | $ | — | $ | | $ | ( | $ | | |||||||
Net income |
| — | — | — | — | — | | — |
| | |||||||||||||
Other comprehensive income |
| — | — | — | — | — | — | |
| | |||||||||||||
Share-based compensation expense |
| — | — | — | — | | — | — |
| | |||||||||||||
Dividends |
| — | — | — | — | — | ( | — |
| ( | |||||||||||||
Exercise of share options |
| — | — | | | — | — | — |
| | |||||||||||||
Restricted share award vestings and other activity |
| — | — | — | | ( | ( | — |
| | |||||||||||||
Repurchase of common shares |
| — | — | ( | ( | — | — | — |
| ( | |||||||||||||
Cancellation of treasury shares |
| ( | ( | | | — | ( | — |
| — | |||||||||||||
Balance at fiscal year end 2024 |
| | $ | |
| ( | $ | ( | $ | — | $ | | $ | | $ | | |||||||
Change in place of incorporation | — | ( | — | — | — | | — | ||||||||||||||||
Net income |
| — | — | — | — | — | | — | | ||||||||||||||
Other comprehensive income |
| — | — | — | — | — | — | | | ||||||||||||||
Share-based compensation expense |
| — | — | — | — | | — | — | | ||||||||||||||
Dividends |
| — | — | — | — | — | ( | — | ( | ||||||||||||||
Exercise of share options |
| | — | — | — | | — | — | | ||||||||||||||
Restricted share award vestings and other activity |
| | — | — | — | ( | | — | | ||||||||||||||
Repurchase of ordinary shares |
| — | — | ( | ( | — | — | — | ( | ||||||||||||||
Cancellation of treasury shares |
| ( | — | | | — | ( | — | — | ||||||||||||||
Balance at fiscal year end 2025 | | $ | |
| ( | $ | ( | $ | — | $ | | $ | | $ | | ||||||||
Net income | — | — | — | — | — | | — | | |||||||||||||||
Other comprehensive income | — | — | — | — | — | — | | | |||||||||||||||
Share-based compensation expense | — | — | — | — | | — | — | | |||||||||||||||
Dividends ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||
Exercise of share options | — | — | — | — | | — | — | | |||||||||||||||
Restricted share award vestings and other activity | | — | — | — | ( | | — | | |||||||||||||||
Repurchase of ordinary shares | — | — | ( | ( | — | — | — | ( | |||||||||||||||
Cancellation of treasury shares | ( | — | | | — | ( | — | — | |||||||||||||||
Balance at fiscal year end 2026 |
| | $ | |
| ( | $ | ( | $ | — | $ | | $ | | $ | | |||||||
See accompanying Notes to Consolidated Financial Statements.
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TE CONNECTIVITY PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | | $ | | $ | | ||||
Loss from discontinued operations, net of income taxes |
| |
| |
| | ||||
Income from continuing operations |
| |
| |
| | ||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||||
Depreciation and amortization |
| |
| |
| | ||||
Deferred income taxes |
| |
| |
| ( | ||||
Non-cash lease cost | | | | |||||||
Provision for losses on accounts receivable and inventories |
| |
| |
| | ||||
Share-based compensation expense |
| |
| |
| | ||||
Other |
| ( |
| |
| | ||||
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | ||||||||||
Accounts receivable, net |
| ( |
| ( |
| ( | ||||
Inventories |
| ( |
| ( |
| ( | ||||
Prepaid expenses and other current assets |
| |
| |
| | ||||
Accounts payable |
| |
| |
| | ||||
Accrued and other current liabilities |
| ( |
| ( |
| ( | ||||
Income taxes |
| ( |
| |
| ( | ||||
Other |
| ( |
| |
| | ||||
Net cash provided by operating activities |
| |
| |
| | ||||
Cash flows from investing activities: | ||||||||||
Capital expenditures |
| ( |
| ( |
| ( | ||||
Proceeds from sale of property, plant, and equipment |
| |
| |
| | ||||
Acquisition of businesses, net of cash acquired |
| ( |
| ( |
| ( | ||||
Proceeds from divestiture of business, net of cash retained by business sold | — | — | | |||||||
Other |
| ( |
| ( |
| ( | ||||
Net cash used in investing activities |
| ( |
| ( |
| ( | ||||
Cash flows from financing activities: | ||||||||||
Net increase (decrease) in commercial paper |
| |
| ( |
| ( | ||||
Proceeds from issuance of debt |
| |
| |
| | ||||
Repayment of debt |
| ( |
| ( |
| ( | ||||
Proceeds from exercise of share options |
| |
| |
| | ||||
Repurchase of ordinary/common shares |
| ( |
| ( |
| ( | ||||
Payment of ordinary/common share dividends to shareholders |
| ( |
| ( |
| ( | ||||
Other |
| ( |
| ( |
| ( | ||||
Net cash used in financing activities |
| ( |
| ( |
| ( | ||||
Effect of currency translation on cash |
| — |
| ( |
| — | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
| |
| ( |
| ( | ||||
Cash, cash equivalents, and restricted cash at beginning of fiscal year |
| |
| |
| | ||||
Cash, cash equivalents, and restricted cash at end of fiscal year | $ | | $ | | $ | | ||||
Supplemental cash flow information: | ||||||||||
Interest paid on debt, net | $ | | $ | | $ | | ||||
Income taxes paid, net of refunds |
| |
| |
| | ||||
See accompanying Notes to Consolidated Financial Statements.
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The Consolidated Financial Statements reflect the consolidated operations of TE Connectivity plc and its subsidiaries and have been prepared in United States (“U.S.”) dollars in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Description of the Business
TE Connectivity plc (“TE Connectivity” or the “Company,” which may be referred to as “we,” “us,” or “our”) is a global industrial technology leader creating a safer, sustainable, productive, and connected future. As a trusted innovation partner, our broad range of connectivity and sensor solutions enable the distribution of power, signal, and data to advance next-generation transportation, energy networks, automated factories, data centers enabling artificial intelligence, and more.
We operate through
| ● | Transportation Solutions—The Transportation Solutions segment is a leader in connectivity and sensor technologies. Our products, which must withstand harsh conditions, are used in the automotive, commercial transportation, and sensors markets. |
| ● | Industrial Solutions—The Industrial Solutions segment is a leading supplier of products that connect and distribute power, data, and signals. Our products are used in the digital data networks; automation and connected living; energy; aerospace, defense, and marine; and medical markets. |
See Note 20 for additional information regarding our segments.
Use of Estimates
The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.
Fiscal Year
We have a 52- or 53-week fiscal year that ends on the last Friday of September. Fiscal 2026, 2025, and 2024 ended on September 25, 2026, September 26, 2025, and September 27, 2024, respectively. Fiscal 2026, 2025, and 2024 were each 52 weeks in length. For fiscal years in which there are 53 weeks, the fourth fiscal quarter includes 14 weeks, with the next occurrence taking place in fiscal 2028.
Change in Place of Incorporation
On September 30, 2024, TE Connectivity Ltd., our former parent entity, merged with and into TE Connectivity plc, a public limited company incorporated under Irish law and the surviving entity, in order to effect our change in jurisdiction of incorporation from Switzerland to Ireland. Shareholders received
2. Summary of Significant Accounting Policies
Principles of Consolidation
We consolidate entities in which we own or control more than
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Revenue Recognition
We account for revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which is a single, comprehensive, five-step revenue recognition model. Our revenues are generated principally from the sale of our products. Revenue is recognized as performance obligations under the terms of a contract, such as a purchase order with a customer, are satisfied; generally this occurs with the transfer of control. We transfer control and recognize revenue when we ship product to our customers, the customers accept and have legal title for the product, and we have a right to payment for such product. Revenue is measured as the amount of consideration that we expect to receive in exchange for those products and excludes taxes assessed by governmental authorities and collected from customers concurrent with the sale of products. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales. Since we typically invoice our customers when we satisfy our performance obligations, we do not have material contract assets or contract liabilities. Our credit terms are customary and do not contain significant financing components that extend beyond one year of fulfillment of performance obligations. We apply the practical expedient of ASC 606 with respect to financing components and do not evaluate contracts in which payment is due within
Our standard terms of sale generally warrant that our products will conform to our, or mutually agreed to, specifications and that our products will be free from material defects in materials and workmanship for a limited time. In certain instances, we may sell products to customers under terms other than our standard terms. We do not account for warranties as separate performance obligations. Amounts accrued for warranty claims were $
Although products are generally sold at fixed prices, certain distributors and customers receive incentives or awards, such as sales rebates, return allowances, scrap allowances, and other rights, which are accounted for as variable consideration. We estimate these amounts in the same period revenue is recognized based on the expected value to be provided to customers and reduce revenue accordingly. Our estimates of variable consideration and ultimate determination of the estimated amounts to include in the transaction price are based primarily on our assessment of anticipated performance and historical and forecasted information that is reasonably available to us.
Inventories
Inventories are recorded at the lower of cost or net realizable value using the first-in, first-out cost method.
Property, Plant, and Equipment, Net
Property, plant, and equipment is recorded at cost less accumulated depreciation. Maintenance and repair expenditures are charged to expense when incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are to
We periodically evaluate, when events and circumstances warrant, the net realizable value of property, plant, and equipment and other long-lived assets, relying on several factors including operating results, business plans, economic projections, and anticipated future cash flows. When indicators of potential impairment are present, the carrying values of the asset group are evaluated in relation to the operating performance and estimated future undiscounted cash flows of the underlying asset group. Impairment of the carrying value is recognized whenever anticipated future undiscounted cash flow estimates are less than the carrying value of the asset. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk.
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Goodwill and Other Intangible Assets
We account for goodwill and other intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other.
Intangible assets include both indeterminable-lived residual goodwill and determinable-lived identifiable intangible assets. Intangible assets with determinable lives primarily include customer relationships and intellectual property, consisting of patents, trademarks, and unpatented technology. Recoverability estimates range from
At fiscal year end 2026, we had
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 more frequently if events or changes in circumstances indicate that the asset may be impaired. In assessing a potential impairment, management relies on several reporting unit-specific factors including operating results, business plans, economic projections, anticipated future cash flows, transactions, and marketplace 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 is supported by a guideline analysis (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.
Research and Development
Research and development expenditures are expensed when incurred and are included in research, development, and engineering expenses on the Consolidated Statements of Operations. Research and development expenses include salaries, direct costs incurred, and building and overhead expenses. The amounts expensed in fiscal 2026, 2025, and 2024 were $
Income Taxes
Income taxes are computed in accordance with the provisions of ASC 740, Income Taxes. A tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current and prior years. A deferred tax liability or asset is recognized for the estimated future tax consequences of events that have been recognized in the Consolidated Financial Statements or tax returns. A valuation allowance is provided to reduce the measurement of deferred tax assets if, based on all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law and the effects of future changes in tax laws or rates are not anticipated.
The calculation of our tax liabilities includes estimates for uncertainties in the application of complex tax regulations across multiple global jurisdictions where we conduct our operations. Under the uncertain tax position provisions of ASC 740, we recognize liabilities for tax and related interest for issues in tax jurisdictions based on our estimate of whether, and to what extent, additional taxes and related interest will be due. These tax liabilities and related interest are reflected net of the impact of related tax loss carryforwards, as such tax loss carryforwards will be applied against these tax liabilities and will reduce the amount of cash tax payments due upon the eventual settlement with the tax authorities. These estimates may
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
change due to changing facts and circumstances. Due to the complexity of these uncertainties, the ultimate resolution may result in a settlement that differs from our current estimate of the tax liabilities and related interest.
Financial Instruments
Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt, and derivative financial instruments.
We account for derivative financial instrument contracts on the Consolidated Balance Sheets at fair value. For instruments not designated as hedges under ASC 815, Derivatives and Hedging, the changes in the instruments’ fair value are recognized currently in earnings. For instruments designated as cash flow hedges, the effective portion of changes in the fair value of a derivative is recorded in other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. Amounts excluded from the hedging relationship are recognized currently in earnings. Changes in the fair value of instruments designated as fair value hedges affect the carrying value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being recognized currently in earnings. Changes in the fair value of instruments designated as hedges of net investment are recorded in currency translation, a component of accumulated other comprehensive income (loss).
We determine the fair value of our financial instruments using methods and assumptions that are based on market conditions and risks existing at each balance sheet date. Standard market conventions are used to determine the fair value of financial instruments, including derivatives.
The cash flows related to derivative financial instruments are reported in the operating activities section of the Consolidated Statements of Cash Flows.
Our derivative financial instruments present certain market and counterparty risks. Concentration of counterparty risk is mitigated, however, by our use of financial institutions worldwide, substantially all of which have long-term S&P, Moody’s, and/or Fitch credit ratings of A/A2 or higher. In addition, we utilize only conventional derivative financial instruments. We are exposed to potential losses if a counterparty fails to perform according to the terms of its agreement. With respect to counterparty net asset positions recognized at fiscal year end 2026, we have assessed the likelihood of counterparty default as remote. We currently provide guarantees from a wholly-owned subsidiary to the counterparties to our commodity swap derivatives. The likelihood of performance on the guarantees has been assessed as remote. For all other derivative financial instruments, we are not required to provide, nor do we require counterparties to provide, collateral or other security.
Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, specifies a fair value hierarchy based upon the observable inputs utilized in valuation of certain assets and liabilities. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:
| ● | Level 1—Quoted prices in active markets for identical assets and liabilities. |
| ● | Level 2—Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
| ● | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flows methodologies, and similar techniques that use significant unobservable inputs. |
Derivative financial instruments measured at fair value on a recurring basis are generally valued using level 2 inputs.
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Financial instruments other than derivative instruments include cash and cash equivalents, accounts receivable, accounts payable, and debt. These instruments are recorded on the Consolidated Balance Sheets at book value. For cash and cash equivalents, accounts receivable, and accounts payable, we believe book value approximates fair value due to the short-term nature of these instruments. See Note 10 for disclosure of the fair value of debt. The following is a description of the valuation methodologies used for cash and cash equivalents and debt:
| ● | Cash and cash equivalents—Cash and cash equivalents are valued at book value, which we consider to be equivalent to unadjusted quoted prices (level 1). |
| ● | Debt—The fair value of debt, including both current and non-current maturities, is derived from quoted market prices or other pricing determinations based on the results of market approach valuation models using observable market data such as recently reported trades, bid and offer information, and benchmark securities (level 2). |
Pension Plans
The funded status of our defined benefit pension plans is recognized on the Consolidated Balance Sheets and is measured as the difference between the fair value of plan assets and the projected benefit obligation at the measurement date. The projected benefit obligation represents the actuarial present value of benefits projected to be paid upon retirement factoring in estimated future compensation levels. The fair value of plan assets represents the current market value of cumulative company and participant contributions made to irrevocable trust funds, held for the sole benefit of participants, which are invested by the trustees of the funds. The benefits under our defined benefit pension plans are based on various factors, such as years of service and compensation.
Net periodic pension benefit cost is based on the utilization of the projected unit credit method of calculation and is charged to earnings on a systematic basis over the expected average remaining service lives of current participants, or, for inactive plans, over the remaining life expectancy of participants.
The measurement of benefit obligations and net periodic benefit cost is based on estimates and assumptions determined by our management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age, and years of service, as well as certain assumptions, including estimates of discount rates, expected returns on plan assets, rates of compensation increases, interest crediting rates, and mortality rates.
Share-Based Compensation
We determine the fair value of share awards on the date of grant. Share options are valued using the Black-Scholes-Merton valuation model; restricted share awards and performance awards are valued using our end-of-day share price on the date of grant. The fair value is expensed ratably over the expected service period, with an allowance made for estimated forfeitures based on historical employee activity. Estimates regarding the attainment of performance criteria are reviewed periodically; the cumulative impact of a change in estimate regarding the attainment of performance criteria is recorded in the period in which that change is made.
Earnings Per Share
Basic earnings per share is computed by dividing net income by the basic weighted-average number of ordinary shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding adjusted for the potentially dilutive impact of share-based compensation arrangements.
Leases
We account for leases in accordance with ASC 842, 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
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 right-of-use (“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 assets for the lease term and lease liabilities represent the obligation to make lease payments arising from the leases. 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 fixed lease and non-lease components in our real estate leases as a
Currency Translation
For our non-U.S. dollar functional currency subsidiaries, assets and liabilities are translated into U.S. dollars using fiscal year end exchange rates. Sales and expenses are translated at average monthly exchange rates. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income (loss) within equity. Gains and losses resulting from foreign currency transactions are included in earnings.
Restructuring Charges
Restructuring activities involve employee-related termination costs, facility exit costs, and asset impairments resulting from reductions-in-force, migration of facilities or product lines from higher-cost to lower-cost countries, or consolidation of facilities within countries. We recognize termination costs based on requirements established by severance policy, government law, or previous actions. Facility exit costs generally reflect the accelerated rent expense for ROU assets, expected lease termination costs, or costs that will continue to be incurred under the facility lease without future economic benefit to us. Restructuring activities often result in the disposal or abandonment of assets that require an acceleration of depreciation or impairment reflecting the excess of the assets’ carrying values over fair value.
The recognition of restructuring costs require that we make certain judgments and estimates regarding the nature, timing, and amount of costs associated with the planned exit activity. To the extent our actual results differ from our estimates and assumptions, we may be required to revise the estimated liabilities, requiring the recognition of additional restructuring costs or the reduction of liabilities already recognized. At the end of each reporting period, we evaluate the remaining accrued balances to ensure these balances are properly stated and the utilization of the reserves are for their intended purpose in accordance with developed exit plans.
Contingent Liabilities
We record a loss contingency when the available information indicates it is probable that we have incurred a liability and the amount of the loss is reasonably estimable. When a range of possible losses with equal likelihood exists, we record the low end of the range. The likelihood of a loss with respect to a particular contingency is often difficult to predict, and determining a meaningful estimate of the loss or a range of loss may not be practicable based on information available. In addition, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must continuously be evaluated to determine whether a loss is probable and a reasonable estimate of that loss can be made. When a loss is probable but a reasonable estimate cannot be made, or when a loss is at least reasonably possible, disclosure is provided.
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Recently Issued Accounting Pronouncement
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve disclosures about the nature of expenses in commonly presented financial statement captions. The amendments are effective for our fiscal 2028 Annual Report and subsequent interim periods; however, early adoption is permitted. The amendments can be applied either prospectively or retrospectively to all periods presented in the financial statements. We are currently assessing the impact that adoption will have on our Consolidated Financial Statements.
Recently Adopted Accounting Pronouncement
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures through improvements to disclosures related primarily to the rate reconciliation and income taxes paid information. We adopted this update, on a prospective basis, in fiscal 2026. Adoption did not have a material impact on our Consolidated Financial Statements. See Note 15 for additional information regarding income taxes.
3. Restructuring and Other Charges, Net
Net restructuring and other charges consisted of the following:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Restructuring charges, net | $ | | $ | | $ | | ||||
Impairment of held for sale business and (gain) on divestitures, net | | ( | ( | |||||||
Costs related to change in place of incorporation | — | | | |||||||
Other charges, net |
| |
| |
| | ||||
Restructuring and other charges, net | $ | | $ | | $ | | ||||
Restructuring Charges, Net
Net restructuring charges by segment were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Transportation Solutions | $ | | $ | | $ | | ||||
Industrial Solutions |
| |
| |
| | ||||
Restructuring charges, net | $ | | $ | | $ | | ||||
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Activity in our restructuring reserves was as follows:
Balance at | Balance at | | ||||||||||||||||||||
Beginning | Currency | End | ||||||||||||||||||||
of Fiscal | Changes in | Cash | Non-Cash | Translation | of Fiscal | |||||||||||||||||
| Year | | | Estimate | | Payments | | Items | | and Other | | Year | | |||||||||
(in millions) | ||||||||||||||||||||||
Fiscal 2026 Activity: | ||||||||||||||||||||||
Fiscal 2026 Actions: | ||||||||||||||||||||||
Employee severance | $ | — | $ | | $ | — | $ | ( | $ | — | $ | — | $ | | ||||||||
Facility and other exit costs | — | | — | ( | — | — | — | |||||||||||||||
Property, plant, and equipment | — | | ( | — | ( | — | — | |||||||||||||||
Total | — | | ( | ( | ( | — | | |||||||||||||||
Fiscal 2025 Actions: | ||||||||||||||||||||||
Employee severance | | | ( | ( | — | ( | | |||||||||||||||
Facility and other exit costs | — | | — | ( | — | — | | |||||||||||||||
Property, plant, and equipment | — | | — | — | ( | — | — | |||||||||||||||
Total | | | ( | ( | ( | ( | | |||||||||||||||
Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance | | | | ( | — | | | |||||||||||||||
Total | | | | ( | — | | | |||||||||||||||
Pre-Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance | | | | ( | — | ( | | |||||||||||||||
Facility and other exit costs | | | — | ( | — | — | — | |||||||||||||||
Property, plant, and equipment | — | — | | — | ( | — | — | |||||||||||||||
Total | | | | ( | ( | ( | | |||||||||||||||
Total fiscal 2026 activity | $ | | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | ||||||||
Fiscal 2025 Activity: | ||||||||||||||||||||||
Fiscal 2025 Actions: | ||||||||||||||||||||||
Employee severance | $ | — | $ | | $ | — | $ | ( | $ | — | $ | | $ | | ||||||||
Property, plant, and equipment | — | | — | — | ( | — | — | |||||||||||||||
Total | — | | — | ( | ( | | | |||||||||||||||
Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance | | | ( | ( | — | — | | |||||||||||||||
Property, plant, and equipment | — | | | — | ( | — | — | |||||||||||||||
Total | | | ( | ( | ( | — | | |||||||||||||||
Pre-Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance | | | | ( | — | ( | | |||||||||||||||
Facility and other exit costs | | | ( | ( | — | | | |||||||||||||||
Total | | | ( | ( | — | ( | | |||||||||||||||
Total fiscal 2025 activity | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | ||||||||
Fiscal 2024 Activity: | ||||||||||||||||||||||
Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance | $ | — | $ | | $ | — | $ | ( | $ | — | $ | | $ | | ||||||||
Property, plant, and equipment |
| — | | — | — | ( | — | — | ||||||||||||||
Total |
| — | | — | ( | ( | | | ||||||||||||||
Pre-Fiscal 2024 Actions: | ||||||||||||||||||||||
Employee severance |
| | | ( | ( | — | | | ||||||||||||||
Facility and other exit costs |
| | | | ( | — | — | | ||||||||||||||
Property, plant, and equipment | — | | ( | — | ( | — | — | |||||||||||||||
Total |
| |
| |
| ( |
| ( |
| ( |
| |
| | ||||||||
Total fiscal 2024 activity | $ | | $ | | $ | ( | $ | ( | $ | ( | $ | | $ | | ||||||||
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Fiscal 2026 Actions
During fiscal 2026, we initiated a restructuring program to optimize our manufacturing footprint and improve the cost structure of our organization. In connection with this program, we recorded net restructuring charges of $
Fiscal 2025 Actions
During fiscal 2025, we initiated a restructuring program associated with footprint consolidation and cost structure improvements in both of our segments. In connection with this program, during fiscal 2026 and 2025, we recorded net restructuring charges of $
Fiscal 2024 Actions
During fiscal 2024, we initiated a restructuring program to optimize our manufacturing footprint and improve the cost structure of our organization. In connection with this program, during fiscal 2026, 2025, and 2024, we recorded net restructuring charges of $
Pre-Fiscal 2024 Actions
During fiscal 2026, 2025, and 2024, we recorded net restructuring charges of $
Total Restructuring Reserves
Restructuring reserves included on the Consolidated Balance Sheets were as follows:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Accrued and other current liabilities | $ | | $ | | |||
Other liabilities |
| |
| | |||
Restructuring reserves | $ | | $ | | |||
Divestiture
During fiscal 2024, we sold
Change in Place of Incorporation
During fiscal 2025 and 2024, we incurred costs of $
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4. Acquisitions
Fiscal 2026 Acquisitions
During fiscal 2026, we acquired
Fiscal 2025 Acquisitions
Richards Manufacturing Co.
In April 2025, we acquired
During fiscal 2026, we finalized the valuation of identifiable intangible assets, fixed assets, and pre-acquisition contingencies. The following table summarizes the 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 | $ | | ||
Accounts receivable | | |||
Inventories | | |||
Other current assets |
| | ||
Property, plant, and equipment | | |||
Goodwill |
| | ||
Intangible assets | | |||
Other noncurrent assets |
| | ||
Total assets acquired |
| | ||
Accounts payable | | |||
Other current liabilities | | |||
Deferred income taxes |
| | ||
Other noncurrent liabilities |
| | ||
Total liabilities assumed |
| | ||
Net assets acquired |
| | ||
Cash and cash equivalents acquired |
| ( | ||
Net cash paid | $ | | ||
The fair values assigned to intangible assets were 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. Significant judgments used in valuing tangible assets include estimated selling prices, costs to complete, and reasonable profit. Useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.
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Intangible assets acquired consisted of the following:
Weighted-Average | ||||||
Amortization | ||||||
| Amount | | Period | | ||
(in millions) | (in years) | |||||
Customer relationships | $ | | ||||
Developed technology |
| | ||||
Trade names and trademarks |
| | ||||
Total | $ | | ||||
The acquired intangible assets are being amortized on a straight-line basis over their expected useful lives.
Goodwill of $
During fiscal 2025, Richards Manufacturing contributed net sales of $
Pro Forma Financial Information
The following unaudited pro forma financial information reflects our consolidated results of operations had the Richards Manufacturing acquisition occurred at the beginning of fiscal 2024:
Fiscal | |||||||
2025 | | 2024 | |||||
(in millions, except | |||||||
per share data) | |||||||
Net sales | $ | | $ | | |||
Net income |
| |
| | |||
Diluted earnings per share | $ | | $ | | |||
The significant pro forma adjustments, which are described below, are net of income tax expense (benefit) at the statutory rate.
Pro forma results for fiscal 2025 were adjusted to exclude $
Pro forma results for fiscal 2024 were adjusted to include $
Pro forma results do not include any anticipated synergies or other anticipated benefits of the acquisition. Accordingly, the unaudited pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the Richards Manufacturing acquisition occurred at the beginning of fiscal 2024.
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Other Acquisitions
We acquired
Fiscal 2024 Acquisition
During the quarter ended December 29, 2023, we acquired approximately
Pending Acquisition
On July 22, 2026, we entered into a definitive agreement to acquire Astrodyne TDI, a leading manufacturer of power and filter solutions, for approximately $
5. Inventories
Inventories consisted of the following:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Raw materials | $ | | $ | | |||
Work in progress |
| |
| | |||
Finished goods |
| |
| | |||
Inventories | $ | | $ | | |||
6. Property, Plant, and Equipment, Net
Net property, plant, and equipment consisted of the following:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Property, plant, and equipment, gross: | |||||||
Land and improvements | $ | | $ | | |||
Buildings and improvements |
| |
| | |||
Machinery and equipment |
| |
| | |||
Construction in process |
| |
| | |||
| |
| | ||||
Accumulated depreciation |
| ( |
| ( | |||
Property, plant, and equipment, net | $ | | $ | | |||
Depreciation expense was $
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7. Goodwill
The changes in the carrying amount of goodwill by segment were as follows:
Transportation | Industrial | |||||||||
| Solutions | | Solutions | | Total | | ||||
(in millions) | ||||||||||
Balance at fiscal year end 2024(1) | $ | | $ | | $ | | ||||
Acquisitions and purchase accounting adjustments | — | | | |||||||
Currency translation |
| |
| |
| | ||||
Balance at fiscal year end 2025(1) | | | | |||||||
Acquisitions and purchase accounting adjustments | | | | |||||||
Currency translation | ( | ( | ( | |||||||
Balance at fiscal year end 2026(1) | $ | | $ | | $ | | ||||
| (1) | At fiscal year end 2026, 2025, and 2024, accumulated impairment losses for the Transportation Solutions and Industrial Solutions segments were $ |
During fiscal 2026, we recognized goodwill of $
We completed our annual goodwill impairment test in the fourth quarter of fiscal 2026 and determined that
8. Intangible Assets, Net
Net intangible assets consisted of the following:
Fiscal Year End | |||||||||||||||||||
2026 | 2025 | ||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||
| Amount | | Amortization | | Amount | | Amount | | Amortization | | Amount | | |||||||
(in millions) | |||||||||||||||||||
Customer relationships | $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
Intellectual property | | ( | | | ( | | |||||||||||||
Other |
| |
| ( |
| |
| |
| ( |
| | |||||||
Total | $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
Intangible asset amortization expense was $
At fiscal year end 2026, the aggregate amortization expense on intangible assets is expected to be as follows:
| (in millions) | | ||
Fiscal 2027 | $ | | ||
Fiscal 2028 | | |||
Fiscal 2029 |
| | ||
Fiscal 2030 |
| | ||
Fiscal 2031 |
| | ||
Thereafter |
| | ||
Total | $ | | ||
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9. Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Accrued payroll and employee benefits | $ | | $ | | |||
Dividends payable to shareholders |
| |
| | |||
Income taxes payable |
| |
| | |||
Lease liability | | | |||||
Derivative liabilities | | | |||||
Deferred revenue | | | |||||
Restructuring reserves |
| |
| | |||
Interest payable |
| |
| | |||
Other |
| |
| | |||
Accrued and other current liabilities | $ | | $ | | |||
10. Debt
Debt was as follows:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Principal debt: | |||||||
Commercial paper, at a weighted-average interest rate of | $ | | $ | — | |||
— | | ||||||
— | | ||||||
| | ||||||
| | ||||||
| | ||||||
| | ||||||
| | ||||||
| | ||||||
| | ||||||
| | ||||||
| — | ||||||
| |
| | ||||
Other | | | |||||
| | ||||||
Unamortized discounts, premiums, and debt issuance costs, net | ( | ( | |||||
Total debt | $ | | $ | | |||
During fiscal 2026, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, issued $
TEGSA entered into a new
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unsecured senior revolving credit facility (the “Replaced Credit Facility”). The Credit Facility matures in February 2031 and contains provisions that allow for incremental commitments of up to $
Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of TEGSA, (1) with respect to borrowings in U.S. dollars, (a) (as defined in the Credit Facility) or (b) an alternate base rate equal to the highest of (i) , N.A.’s base rate, (ii) the rate plus of 1%, (iii) plus
The Credit Facility contains a financial ratio covenant providing that if, as of the last day of each fiscal quarter, our ratio of Consolidated Total Debt to Consolidated EBITDA (as defined in the Credit Facility) for the then most recently concluded period of
Periodically, TEGSA issues commercial paper to U.S. institutional accredited investors and qualified institutional buyers in accordance with available exemptions from the registration requirements of the Securities Act of 1933 as part of our ongoing effort to maintain financial flexibility and to potentially decrease the cost of borrowings. Borrowings under the commercial paper program are backed by the Credit Facility.
Payment obligations under TEGSA’s senior notes, commercial paper, and Credit Facility are fully and unconditionally guaranteed on an unsecured basis by TEGSA’s parent, TE Connectivity Switzerland Ltd., and its parent, TE Connectivity plc.
At fiscal year end 2026, principal payments required for debt were as follows:
| (in millions) | | ||
Fiscal 2027 | $ | | ||
Fiscal 2028 |
| | ||
Fiscal 2029 |
| | ||
Fiscal 2030 |
| | ||
Fiscal 2031 |
| | ||
Thereafter |
| | ||
Total | $ | | ||
The fair value of our debt, based on indicative valuations, was approximately $
11. Leases
The components of lease cost were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
| (in millions) | | ||||||||
Operating lease cost | $ | | $ | | $ | | ||||
Variable lease cost | | | | |||||||
Total lease cost | $ | | $ | | $ | | ||||
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Amounts recognized on the Consolidated Balance Sheets were as follows:
Fiscal Year End | |||||||
| 2026 | | 2025 | ||||
| ($ in millions) | ||||||
Operating lease ROU assets: | |||||||
$ | | $ | | ||||
Operating lease liabilities: | |||||||
$ | | $ | | ||||
| | ||||||
Total operating lease liabilities | $ | | $ | | |||
Weighted-average remaining lease term (in years) | |||||||
Weighted-average discount rate | | % | | % | |||
Cash flow information, including significant non-cash transactions, related to leases was as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
| (in millions) | | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||
Payments for operating leases(1) | $ | | $ | | $ | | ||||
ROU assets, including modifications of existing leases, obtained in exchange for operating lease liabilities | | | | |||||||
| (1) | These payments are included in cash flows from operating activities, primarily in changes in accrued and other current liabilities. |
At fiscal year end 2026, the maturities of operating lease liabilities were as follows:
| (in millions) | | ||
Fiscal 2027 | $ | | ||
Fiscal 2028 | | |||
Fiscal 2029 | | |||
Fiscal 2030 | | |||
Fiscal 2031 | | |||
Thereafter | | |||
Total lease payments | | |||
Less: interest | ( | |||
Present value of lease liabilities | $ | | ||
12. 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, 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.
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Trade Compliance Matters
As previously reported, as part of our ongoing internal compliance activities, we conducted an investigation related to country of origin for import matters and made a voluntary disclosure to the U.S. Customs and Border Protection Agency (“CBP”) regarding potential Section 301 unpaid duties, fees, and interest for certain imported products into the U.S. During fiscal 2026, we filed a perfected prior disclosure to CBP and paid $
IEEPA Tariff Refunds
In February 2026, the U.S. Supreme Court ruled that the tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized by the statute. Following a March 2026 order to refund IEEPA tariffs, CBP launched a refund process in April 2026 through which eligible importers could request refunds. During the quarter ended September 25, 2026, we filed certain claims and received tariff refunds of $
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 fiscal year end 2026, we concluded that we would incur investigation and remediation costs at these sites in the reasonably possible range of $
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 fiscal year end 2026, we had outstanding letters of credit, letters of guarantee, and surety bonds of $
Supply Chain Finance Program
We have an agreement with a financial institution that allows participating suppliers the ability to finance payment obligations. The financial institution has separate arrangements with the suppliers and provides them with the option to request early payment for invoices. We do not determine the terms or conditions of the arrangement between the financial institution and suppliers. Our obligation to suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangement and we are not required to post collateral with the
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financial institution. Outstanding payment obligations under our supply chain finance program are included in accounts payable on our Consolidated Balance Sheets. The changes in our payment obligations were as follows:
Fiscal | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Balance at beginning of fiscal year | $ | | $ | | |||
Invoices confirmed during the fiscal year |
| |
| | |||
Invoices paid during the fiscal year |
| ( |
| ( | |||
Balance at end of fiscal year | $ | | $ | | |||
13. Financial Instruments and Fair Value Measurements
We use derivative and non-derivative financial instruments to manage certain exposures to foreign currency, interest rate, investment, and commodity risks.
Foreign Currency Exchange Rate Risk
As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on intercompany and other cash transactions. We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with the cash flow hedge-designated instruments addressing foreign exchange risks will be reclassified into the Consolidated Statement of Operations within the next
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 $
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 $
These cross-currency swap contracts were recorded on the Consolidated Balance Sheets as follows:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) |
| ||||||
Prepaid expenses and other current assets | $ | | | $ | | ||
Other assets |
| |
| | |||
Accrued and other current liabilities | | | |||||
Other liabilities | | | |||||
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The impacts of our hedge of net investment programs were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) |
| |||||||||
Foreign currency exchange gains (losses) on intercompany loans and external borrowings(1) | $ | | $ | ( | $ | ( | ||||
Gains (losses) on cross-currency swap contracts designated as hedges of net investment(1) |
| |
| ( |
| ( | ||||
| (1) | Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes attributable to the translation of the net investment. |
Interest Rate and Investment Risk Management
We issue debt, as needed, to fund our operations and capital requirements. Such borrowings can result in interest rate exposure. To manage the interest rate exposure, we may use interest rate swap contracts to convert a portion of fixed rate debt into variable rate debt. Also, we may utilize forward starting interest rate swap contracts to manage interest rate exposure in periods prior to the anticipated issuance of fixed rate debt. We also utilize investment swap contracts to manage earnings exposure on certain nonqualified deferred compensation liabilities.
Commodity Hedges
As part of managing the exposure to certain commodity price fluctuations, we utilize commodity swap contracts. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in prices of commodities used in production. These contracts had an aggregate notional value of $
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) |
| ||||||
Prepaid expenses and other current assets | $ | | | $ | | ||
Other assets |
| |
| | |||
Accrued and other current liabilities | | — | |||||
Other liabilities | | — | |||||
The impacts of our commodity swap contracts were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) |
| |||||||||
Gains recorded in other comprehensive income (loss) | $ | | | $ | | | $ | | ||
Gains reclassified from accumulated other comprehensive income (loss) into cost of sales | | | | |||||||
We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with commodity hedges will be reclassified into the Consolidated Statement of Operations within the next
Fair Value Measurements
Financial instruments recorded at fair value on a recurring basis, which consist of marketable securities and derivative instruments not discussed above, were immaterial at fiscal year end 2026 and 2025.
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14. Retirement Plans
Defined Benefit Pension Plans
We have several contributory and noncontributory defined benefit retirement plans covering certain of our non-U.S. and U.S. employees, designed in accordance with local customs and practice.
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 | |||||||||||||||||||
Fiscal | Fiscal | |||||||||||||||||||
| 2026 | | 2025 | | 2024 | | 2026 | | 2025 | | 2024 | | | |||||||
($ in millions) | ||||||||||||||||||||
Operating expense: | ||||||||||||||||||||
Service cost | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||
Other (income) expense: | ||||||||||||||||||||
| |
| |
| |
| |
| |
| | |||||||||
| ( |
| ( |
| ( |
| ( |
| ( |
| ( | |||||||||
| |
| |
| |
| |
| |
| | |||||||||
| ( |
| ( |
| ( |
| — |
| — |
| — | |||||||||
| | ( | — | — | — | |||||||||||||||
Net periodic pension benefit cost (credit) | $ | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||||
Weighted-average assumptions used to determine net pension benefit cost (credit) during the fiscal year: | ||||||||||||||||||||
Discount rate |
| | % |
| | % |
| | % |
| | % |
| | % |
| | % | ||
Expected returns on plan assets |
| | % |
| | % |
| | % |
| | % |
| | % |
| | % | ||
Rates of compensation increases |
| | % |
| | % |
| | % |
| — | % |
| — | % |
| — | % | ||
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table represents the changes in benefit obligation and plan assets and the net amount recognized on the Consolidated Balance Sheets for all non-U.S. and U.S. defined benefit pension plans:
Non-U.S. Plans | U.S. Plans | |||||||||||||
Fiscal | Fiscal | |||||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | | | |||||
($ in millions) | ||||||||||||||
Change in benefit obligation: | ||||||||||||||
Benefit obligation at beginning of fiscal year | $ | | $ | | $ | | $ | | ||||||
Service cost |
| |
| |
| |
| | ||||||
| |
| |
| |
| | |||||||
Actuarial gains |
| ( |
| ( |
| ( |
| ( | ||||||
Benefits and administrative expenses paid |
| ( |
| ( |
| ( |
| ( | ||||||
Settlements and curtailments | ( | ( | — | — | ||||||||||
Currency translation |
| ( |
| |
| — |
| — | ||||||
Other |
| |
| |
| — |
| — | ||||||
Benefit obligation at end of fiscal year |
| |
| |
| |
| | ||||||
Change in plan assets: | ||||||||||||||
Fair value of plan assets at beginning of fiscal year |
| |
| |
| |
| | ||||||
Actual returns on plan assets |
| |
| |
| |
| | ||||||
Employer contributions |
| |
| |
| |
| | ||||||
Benefits and administrative expenses paid |
| ( |
| ( |
| ( |
| ( | ||||||
Settlements | ( | ( | — | — | ||||||||||
Currency translation |
| ( |
| |
| — |
| — | ||||||
Other |
| |
| |
| — |
| — | ||||||
Fair value of plan assets at end of fiscal year |
| |
| |
| |
| | ||||||
Funded status | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Amounts recognized on the Consolidated Balance Sheets: | ||||||||||||||
Other assets | $ | | $ | | $ | | $ | — | ||||||
Accrued and other current liabilities | ( | ( | ( | ( | ||||||||||
Long-term pension and postretirement liabilities |
| ( |
| ( |
| ( |
| ( | ||||||
Net amount recognized | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Pre-tax amounts included in accumulated other comprehensive income (loss) which have not yet been recognized in net periodic pension benefit cost: | ||||||||||||||
Net actuarial loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Prior service cost | ( | ( | — | — | ||||||||||
Total | $ | ( | $ | ( | $ | ( | $ | ( | ||||||
Weighted-average assumptions used to determine pension benefit obligation at fiscal year end: | ||||||||||||||
Discount rate |
| | % |
| | % |
| | % |
| | % | ||
Rates of compensation increases |
| | % |
| | % |
| — | % |
| — | % | ||
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The pre-tax amounts recognized in accumulated other comprehensive income (loss) for all non-U.S. and U.S. defined benefit pension plans were as follows:
Non-U.S. Plans | U.S. Plans | ||||||||||||
Fiscal | Fiscal | ||||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | | |||||
(in millions) | |||||||||||||
Current year net actuarial gain recorded in accumulated other comprehensive income (loss) | $ | | $ | | $ | | $ | | |||||
Amortization of net actuarial loss |
| |
| |
| |
| | |||||
Current year prior service cost recorded in accumulated other comprehensive income (loss) |
| ( |
| ( |
| — |
| — | |||||
Amortization of prior service credit |
| ( |
| ( |
| — |
| — | |||||
$ | | $ | | $ | | $ | | ||||||
In fiscal 2026, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were primarily the result of higher discount rates, partially offset by unfavorable asset performance, for our U.S. and non-U.S. defined benefit pension plans as compared to fiscal 2025. In fiscal 2025, unrecognized actuarial gains recorded in accumulated other comprehensive income (loss) were primarily the result of higher discount rates and favorable asset performance for our U.S. defined benefit pension plans, partially offset by unfavorable asset performance for our non-U.S. defined benefit pension plans as compared to fiscal 2024.
In determining the expected returns on plan assets, we consider the relative weighting of plan assets by class and individual asset class performance expectations.
The investment strategies for non-U.S. and U.S. pension plans are governed locally. Our investment strategy for our pension plans is to manage the plans on a going concern basis. Current investment policy is to achieve a reasonable return on assets, subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for participants. Projected returns are based primarily on pro forma asset allocation, expected long-term returns, and forward-looking estimates of active portfolio and investment management.
At fiscal year end 2026, the long-term target asset allocation in our U.S. plans’ master trust is
Target weighted-average asset allocation and weighted-average asset allocation for non-U.S. and U.S. pension plans were as follows:
Non-U.S. Plans | U.S. Plans | |||||||||||||
Fiscal | Fiscal | Fiscal | Fiscal | |||||||||||
Year End | Year End | Year End | Year End | |||||||||||
| Target | | 2026 | | 2025 | | Target | | 2026 | | 2025 | | | |
Asset category: | ||||||||||||||
Equity securities |
| | % | | % | | % | | % | | % | | % | |
Fixed income |
| | | | | | | |||||||
Other | | | | — | — | — | ||||||||
Total |
| | % | | % | | % | | % | | % | | % | |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Our ordinary shares are not a direct investment of our pension funds; however, the pension funds may indirectly include our ordinary shares. The aggregate amount of our ordinary shares would not be considered material relative to the total pension fund assets.
Our funding policy is to make contributions in accordance with the laws and customs of the various countries in which we operate as well as to make discretionary voluntary contributions from time to time. We expect to make the minimum required contributions of approximately $
At fiscal year end 2026, benefit payments, which reflect future expected service, as appropriate, are expected to be paid as follows:
| Non-U.S. Plans | | U.S. Plans | | |||
(in millions) | |||||||
Fiscal 2027 | $ | | $ | | |||
Fiscal 2028 |
| | | ||||
Fiscal 2029 |
| | | ||||
Fiscal 2030 |
| | | ||||
Fiscal 2031 |
| | | ||||
Fiscal 2032-2036 |
| | | ||||
Presented below is the accumulated benefit obligation for all non-U.S. and U.S. pension plans as well as additional information related to plans with an accumulated benefit obligation in excess of plan assets and plans with a projected benefit obligation in excess of plan assets.
Non-U.S. Plans | U.S. Plans | ||||||||||||
Fiscal Year End | Fiscal Year End | ||||||||||||
| 2026 | | 2025 | | 2026 | | 2025 | | |||||
(in millions) | |||||||||||||
Accumulated benefit obligation | $ | | $ | | $ | | $ | | |||||
Pension plans with accumulated benefit obligations in excess of plan assets: | |||||||||||||
Accumulated benefit obligation |
| |
| |
| |
| | |||||
Fair value of plan assets |
| |
| |
| |
| | |||||
Pension plans with projected benefit obligations in excess of plan assets: | |||||||||||||
Projected benefit obligation |
| |
| |
| |
| | |||||
Fair value of plan assets |
| |
| |
| |
| | |||||
We value our pension assets based on the fair value hierarchy of ASC 820, Fair Value Measurements and Disclosures. Details of the fair value hierarchy are described in Note 2. The following table presents our defined benefit pension plans’ asset categories and their associated fair value within the fair value hierarchy:
Fiscal Year End 2026 | |||||||||||||||||||||||||
Non-U.S. Plans | U.S. Plans | ||||||||||||||||||||||||
| Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | |||||||||
(in millions) | |||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||
Commingled equity funds(1) | $ | — | $ | | $ | — | $ | | $ | — | $ | | $ | — | $ | | |||||||||
Fixed income: | |||||||||||||||||||||||||
Commingled fixed income funds(2) |
| — |
| |
| — |
| |
| — |
| |
| — |
| | |||||||||
Other(3) |
| — |
| |
| — |
| |
| — |
| |
| — |
| | |||||||||
Subtotal | $ | — | $ | | $ | — |
| | $ | — | $ | | $ | — |
| | |||||||||
Items to reconcile to fair value of plan assets(4) |
| |
| | |||||||||||||||||||||
Fair value of plan assets | $ | | $ | | |||||||||||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Fiscal Year End 2025 | |||||||||||||||||||||||||
Non-U.S. Plans | U.S. Plans | ||||||||||||||||||||||||
| Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | |||||||||
(in millions) | |||||||||||||||||||||||||
Equity: | |||||||||||||||||||||||||
Commingled equity funds(1) | $ | — | $ | | $ | — | $ | | $ | — | $ | | $ | — | $ | | |||||||||
Fixed income: | |||||||||||||||||||||||||
Commingled fixed income funds(2) |
| — |
| |
| — |
| |
| — |
| |
| — |
| | |||||||||
Other(3) |
| — |
| |
| — |
| |
| — |
| |
| — |
| | |||||||||
Subtotal | $ | — | $ | | $ | — |
| | $ | — | $ | | $ | — |
| | |||||||||
Items to reconcile to fair value of plan assets(4) |
| |
| | |||||||||||||||||||||
Fair value of plan assets | $ | | $ | | |||||||||||||||||||||
| (1) | Commingled equity funds are pooled investments in multiple equity-type securities. Fair value is calculated as the closing price of the underlying investments, an observable market condition, divided by the number of shares of the fund outstanding. |
| (2) | Commingled fixed income funds are pooled investments in multiple fixed income-type securities. Fair value is calculated as the closing price of the underlying investments, an observable market condition, divided by the number of shares of the fund outstanding. |
| (3) | Other investments are composed of insurance contracts, derivatives, short-term investments, and structured products such as collateralized obligations and mortgage- and asset-backed securities. Insurance contracts are valued using cash surrender value, or face value of the contract if a cash surrender value is unavailable (level 2), as these values represent the amount that the plan would receive on termination of the underlying contract. Derivatives, short-term investments, and structured products are marked to fair value using models that are supported by observable market-based data (level 2). |
| (4) | Items to reconcile to fair value of plan assets include certain investments containing no significant redemption restrictions that were measured at net asset value (“NAV”) using the NAV practical expedient available in ASC 820 and amounts receivable or payable for unsettled transactions and cash balances, both of which are considered to be carried at book value. |
Defined Contribution Retirement Plans
We maintain several defined contribution retirement plans, the most significant of which is located in the U.S. These plans include 401(k) matching programs, as well as qualified and nonqualified profit sharing and share bonus retirement plans. Expense for the defined contribution plans is computed as a percentage of participants’ compensation and was $
Deferred Compensation Plans
We maintain nonqualified deferred compensation plans which permit eligible employees to defer a portion of their compensation. A record-keeping account is set up for each participant and the participant chooses from a variety of measurement funds for the deemed investment of their accounts. The measurement funds correspond to several funds in our 401(k) plans and the account balance fluctuates with the investment returns on those funds. At fiscal year end 2026 and 2025, total deferred compensation liabilities were $
Postretirement Benefit Plans
In addition to providing pension and 401(k) benefits, we also provide certain health care coverage continuation for qualifying retirees from the date of retirement to age 65 or lifetime, as applicable. The accumulated postretirement benefit obligation was $
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. Income Taxes
As discussed in Note 2, we adopted ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis, in fiscal 2026. Additionally, beginning prospectively in fiscal 2026, we disaggregate income tax information for Ireland, our jurisdiction of incorporation, from foreign jurisdictions.
Income Tax Expense for Fiscal 2026
Components of income tax expense were as follows:
Fiscal | ||||
| 2026 | | ||
(in millions) | ||||
Current income tax expense: | ||||
$ | | |||
Foreign |
| | ||
| ||||
Deferred income tax expense: | ||||
Ireland |
| | ||
Foreign |
| | ||
| ||||
Income tax expense | $ | | ||
Components of income from continuing operations before income taxes were as follows:
Fiscal | ||||
| 2026 | | ||
(in millions) | ||||
Ireland | $ | | ||
Foreign |
| | ||
Income from continuing operations before income taxes | $ | | ||
Income taxes paid, net of refunds, were as follows:
Fiscal | ||||
| 2026 | | ||
(in millions) | ||||
Ireland | $ | — | ||
Foreign: |
| |||
China | | |||
Japan | | |||
Other foreign jurisdictions |
| | ||
Income taxes paid, net of refunds | $ | | ||
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The reconciliation between income tax expense at the Irish statutory rate and income tax expense was as follows:
Fiscal | |||||||
| 2026 | | |||||
Amount | | Percentage(1) | |||||
($ in millions) | |||||||
Provision for income taxes at the Irish statutory rate(2) | $ | | | % | |||
Foreign tax effects: | |||||||
China | |||||||
Statutory rate differences(3) | | | |||||
Withholding taxes | | | |||||
Other | ( | — | |||||
Luxembourg | |||||||
Statutory rate differences(3) | | | |||||
Statutory revaluation of investments in subsidiaries | ( | ( | |||||
Changes in valuation allowance | | | |||||
Nondeductible interest expense | | | |||||
Other | | | |||||
Malta | |||||||
Statutory rate differences(3) | | | |||||
Changes in valuation allowance | | | |||||
Notional interest deduction | ( | ( | |||||
Other | ( | ( | |||||
Switzerland | |||||||
Statutory rate differences(3) | ( | ( | |||||
Subnational taxes | | | |||||
Other | ( | ( | |||||
U.S. | |||||||
Changes in valuation allowance | ( | ( | |||||
Nondeductible interest expense | | | |||||
Other | | | |||||
Other foreign jurisdictions | | | |||||
Other | | | |||||
Worldwide changes in unrecognized tax benefits | ( | ( | |||||
Income tax expense | $ | | | % | |||
| (1) | Represents percentage of income from continuing operations before income taxes. |
| (2) | The Irish statutory rate for trading income was |
| (3) | Represents statutory rate differences between Ireland and the named jurisdiction. |
The income tax expense for fiscal 2026 included a $
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Income Tax Expense (Benefit) for Fiscal 2025 and 2024
The following income tax expense (benefit) information is presented as historically disclosed in our fiscal 2025 Annual Report.
Components of the income tax expense (benefit) were as follows:
Fiscal | |||||||
| 2025 | | 2024 | | |||
(in millions) | |||||||
Current income tax expense: | |||||||
$ | | $ | | ||||
U.S. State |
| |
| | |||
Non-U.S. |
| |
| | |||
| | ||||||
Deferred income tax expense (benefit): | |||||||
U.S. Federal |
| |
| ( | |||
U.S. State |
| |
| | |||
Non-U.S. |
| |
| ( | |||
| ( | ||||||
Income tax expense (benefit) | $ | | $ | ( | |||
Components of income from continuing operations before income taxes were as follows:
Fiscal | |||||||
| 2025 | | 2024 | | |||
(in millions) | |||||||
U.S. | $ | ( | $ | ( | |||
Non-U.S. |
| |
| | |||
Income from continuing operations before income taxes | $ | | $ | | |||
The reconciliation between income tax expense at the U.S. federal statutory rate and income tax expense (benefit) was as follows:
Fiscal | |||||||
| 2025 | | 2024 | | |||
(in millions) | |||||||
Notional U.S. federal income tax expense at the statutory rate(1) | $ | | $ | | |||
Adjustments to reconcile to the income tax expense (benefit): | |||||||
U.S. state income tax expense, net |
| |
| | |||
Tax law changes |
| — |
| ( | |||
Tax credits |
| ( |
| ( | |||
Non-U.S. net (earnings) loss(2) |
| |
| ( | |||
Change in accrued income tax liabilities |
| |
| | |||
Valuation allowance |
| |
| | |||
Legal entity restructurings and intercompany transactions | | ( | |||||
Excess tax benefits from share-based payments | ( | ( | |||||
Other |
| |
| | |||
Income tax expense (benefit) | $ | | $ | ( | |||
| (1) | The U.S. federal statutory rate was |
| (2) | Excludes items which are separately presented. |
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The income tax expense for fiscal 2025 included $
The income tax benefit for fiscal 2024 included a $
Deferred Tax Assets and Liabilities
Deferred income taxes result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax asset were as follows:
Fiscal Year End | |||||||
| 2026 | | 2025 | | |||
(in millions) | |||||||
Deferred tax assets: | |||||||
Accrued liabilities and reserves | $ | | $ | | |||
Tax loss, credit, and other tax attribute carryforwards |
| |
| | |||
Intangible assets | | | |||||
Interest |
| |
| | |||
Other |
| |
| | |||
Gross deferred tax assets |
| |
| | |||
Valuation allowance |
| ( |
| ( | |||
Deferred tax assets, net of valuation allowance | | | |||||
Deferred tax liabilities: | |||||||
Statutory revaluation of investments in subsidiaries | ( | ( | |||||
Other |
| ( |
| ( | |||
Total deferred tax liabilities |
| ( |
| ( | |||
Net deferred tax assets | $ | | $ | | |||
Our tax loss, credit, and other tax attribute carryforwards (tax effected) at fiscal year end 2026 were as follows:
Expiration Period | |||||||||||||
Fiscal 2032 | |||||||||||||
Through | Through | No | |||||||||||
| Fiscal 2031 | | Fiscal 2046 | | Expiration | | Total | | |||||
(in millions) | |||||||||||||
Net operating loss | $ | | $ | | $ | | $ | | |||||
Tax credit | | | | | |||||||||
Notional interest deduction | — | — | | | |||||||||
Capital loss | — | | | | |||||||||
Total tax loss, credit, and other tax attribute carryforwards | $ | | $ | | $ | | $ | | |||||
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The valuation allowance for deferred tax assets of $
We have provided income taxes for earnings that are currently distributed as well as the taxes associated with several subsidiaries’ earnings that are expected to be distributed in the future. No additional provision has been made for Irish or foreign income taxes on the undistributed earnings of subsidiaries or for unrecognized deferred tax liabilities for temporary differences related to basis differences in investments in subsidiaries, as such earnings are expected to be permanently reinvested, the investments are essentially permanent in duration, or we have concluded that no additional tax liability will arise as a result of the distribution of such earnings. A liability could arise if our intention to permanently reinvest such earnings were to change and amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries.
Uncertain Tax Positions
The following table summarizes the activity related to unrecognized income tax benefits:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Balance at beginning of fiscal year | $ | | $ | | $ | | ||||
Additions for tax positions related to prior years |
| |
| |
| | ||||
Reductions for tax positions related to prior years |
| ( |
| ( |
| ( | ||||
Additions for tax positions related to the current year |
| |
| |
| | ||||
Settlements |
| ( |
| ( |
| ( | ||||
Reductions due to lapse of applicable statutes of limitations |
| ( |
| ( |
| ( | ||||
Foreign currency translation | ( | ( | | |||||||
Balance at end of fiscal year | $ | | $ | | $ | | ||||
The total amount of unrecognized tax benefits that, if recognized, would reduce income tax expense and the effective tax rate were $
We record accrued interest and penalties related to uncertain tax positions as part of income tax expense (benefit). As of fiscal year end 2026 and 2025, we had $
Our subsidiaries file income tax returns in the countries in which they have operations. Generally, these countries have statutes of limitations ranging from to
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of fiscal year end 2026, under applicable statutes, the following tax years remained subject to examination in the major tax jurisdictions indicated:
Jurisdiction | | Open Years | |
China |
| 2016 through 2026 | |
Germany |
| 2015 through 2026 | |
Ireland | 2021 through 2026 | ||
Japan |
| 2020 through 2026 | |
Luxembourg |
| 2021 through 2026 | |
Switzerland |
| 2022 through 2026 | |
U.S. |
| 2023 through 2026 |
In most jurisdictions, taxing authorities retain the ability to review prior tax years and to adjust any net operating loss and tax credit carryforwards from these years that are utilized in a subsequent period.
16. Earnings Per Share
The weighted-average number of shares outstanding used in the computations of basic and diluted earnings per share were as follows:
Fiscal | |||||||
| 2026 | | 2025 | | 2024 | | |
(in millions) | |||||||
Basic | |
| |
| | ||
Dilutive impact of share-based compensation arrangements | |
| |
| | ||
Diluted | |
| |
| | ||
The following share options were not included in the computation of diluted earnings per share because the instruments’ underlying exercise prices were greater than the average market prices of our shares and inclusion would be antidilutive:
Fiscal | |||||||
| 2026 | | 2025 | | 2024 | | |
(in millions) | |||||||
Antidilutive share options | — |
| |
| | ||
17. Shareholders’ Equity and Redeemable Noncontrolling Interest
Ordinary Shares
Effective beginning in fiscal 2025, we are organized under the laws of Ireland. The rights of holders of our shares are governed by Irish law and our Irish articles of association. The par value of our ordinary shares is stated in U.S. dollars.
As discussed in Note 1, pursuant to the terms of a merger agreement between TE Connectivity Ltd. and TE Connectivity plc, shareholders received
Our articles of association authorize our Board of Directors to allot and issue shares up to the maximum of our authorized but unissued share capital for a period of
The authorized but unissued share capital may be increased or reduced by way of an ordinary resolution of shareholders. The shares comprising the authorized share capital may be divided into shares of such par value as the resolution shall prescribe.
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Ordinary Shares Held in Treasury
Approximately
In fiscal 2026, our Board of Directors approved the cancellation of approximately
All treasury shares held as of fiscal year end 2024 were cancelled at the beginning of fiscal 2025 following our change in place of incorporation. See Note 1 for additional information regarding our change in place of incorporation.
In fiscal 2024, our shareholders approved the cancellation of
Authorized Share Capital
In connection with our merger and change in place of incorporation, we converted
Our authorized share capital consisted of
Contributed Surplus
As a result of cumulative equity transactions, including dividend activity and treasury share cancellations, our contributed surplus balance was reduced to zero with residual activity recorded against accumulated earnings as reflected on the Consolidated Statement of Shareholders’ Equity. To the extent that the contributed surplus balance continues to be zero, the impact of future transactions that normally would have been recorded as a reduction of contributed surplus will be recorded in accumulated earnings.
As an Irish company, our dividends may only be paid from profits available for distribution as defined under Irish law. As of fiscal year end 2026, such amounts were approximately $
Dividends
We paid cash dividends to shareholders of $
As provided by Irish law and our articles of association, our Board of Directors may approve interim dividends on our ordinary shares at its discretion. Shareholder approval is not required for such interim dividends.
In , our Board of Directors approved an interim cash dividend of $
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Share Repurchase Program
In fiscal 2026, our Board of Directors authorized an increase of $
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Number of ordinary/common shares repurchased | |
| |
| | |||||
Repurchase value | $ | |
| $ | |
| $ | | ||
At fiscal year end 2026, we had $
Redeemable Noncontrolling Interest
We owned approximately
95
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TE CONNECTIVITY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. Accumulated Other Comprehensive Income (Loss)
The changes in each component of accumulated other comprehensive income (loss) were as follows:
Foreign | Unrecognized | Gains (Losses) | Accumulated | ||||||||||
Currency | Pension and | on Cash | Other | ||||||||||
Translation | Postretirement | Flow | Comprehensive | ||||||||||
| Adjustments(1) | | Benefit Costs | | Hedges | | Income (Loss) | | |||||
(in millions) | |||||||||||||
Balance at fiscal year end 2023 | $ | | $ | ( | $ | ( | $ | ( | |||||
Other comprehensive income (loss), net of tax: | |||||||||||||
Other comprehensive income (loss) before reclassifications |
| | ( | | | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss) |
| | | ( | ( | ||||||||
Income tax (expense) benefit | — | | ( | | |||||||||
Other comprehensive income (loss), net of tax | | ( | | | |||||||||
Less: other comprehensive income attributable to noncontrolling interests | ( | — | — | ( | |||||||||
Balance at fiscal year end 2024 | $ | | $ | ( | $ | | $ | | |||||
Other comprehensive income (loss), net of tax: | |||||||||||||
Other comprehensive income (loss) before reclassifications | ( | | | | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) |
| — | | ( | ( | ||||||||
Income tax expense |
| — | ( | ( | ( | ||||||||
Other comprehensive income (loss), net of tax | ( | | | | |||||||||
Less: other comprehensive income attributable to noncontrolling interests | ( | — | — | ( | |||||||||
Balance at fiscal year end 2025 | $ | | $ | ( | $ | | $ | | |||||
Other comprehensive income (loss), net of tax: | |||||||||||||
Other comprehensive income before reclassifications | | | | | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | | ( | ( | |||||||||
Income tax (expense) benefit | — | ( | | ( | |||||||||
Other comprehensive income (loss), net of tax | | | ( | | |||||||||
Less: other comprehensive loss attributable to noncontrolling interests | | — | — | | |||||||||
Balance at fiscal year end 2026 | $ | | $ | ( | $ | | $ | | |||||
| (1) | Includes hedges of net investment foreign currency exchange gains or losses which offset foreign currency exchange losses or gains attributable to the translation of the net investments. |
19. Share Plans
Our equity compensation plans, of which the 2024 Stock and Incentive Plan, amended and restated as of September 30, 2024 (the “2024 Plan”), is the primary plan, provide for the award of annual performance bonuses and long-term performance awards, including share options; restricted, performance, and deferred share units; and other share-based awards (collectively, “Awards”) and allow for the use of unissued shares or treasury shares to be used to satisfy such Awards. As of fiscal year end 2026, the 2024 Plan provided for a maximum of
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Share-Based Compensation Expense
Share-based compensation expense, which was included in selling, general, and administrative expenses on the Consolidated Statements of Operations, was as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Share-based compensation expense | $ | |
| $ | |
| $ | | ||
We recognized a related tax benefit associated with our share-based compensation arrangements of $
Restricted Share Awards
Restricted share awards, which are generally in the form of restricted share units, are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant. All restrictions on an award will lapse upon death or disability of the employee. If the employee satisfies retirement requirements, all or a portion of the award may vest, depending on the terms and conditions of the particular grant. Recipients of restricted share units have no voting rights, but do receive dividend equivalents. For grants that vest through passage of time, the fair value of the award at the time of the grant is amortized to expense over the period of vesting. The fair value of restricted share awards is determined based on the closing value of our shares on the grant date. Restricted share awards generally vest in increments over a period of
Restricted share award activity was as follows:
Weighted-Average | ||||||
Grant-Date | ||||||
| Shares | | Fair Value | | ||
Nonvested at fiscal year end 2025 |
| | $ | | ||
Granted |
| |
| | ||
Vested |
| ( |
| | ||
Forfeited |
| ( |
| | ||
Nonvested at fiscal year end 2026 |
| | $ | | ||
The weighted-average grant-date fair value of restricted share awards granted during fiscal 2026, 2025, and 2024 was $
The total fair value of restricted share awards that vested during fiscal 2026, 2025, and 2024 was $
As of fiscal year end 2026, there was $
Performance Share Awards
Performance share awards, which are generally in the form of performance share units, are granted with pay-out subject to vesting requirements and certain performance conditions that are determined at the time of grant. Based on our performance, the pay-out of performance share units can range from
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Performance share award activity was as follows:
Weighted-Average | ||||||
Grant-Date | ||||||
| Shares | | Fair Value | | ||
Outstanding at fiscal year end 2025 |
| | $ | | ||
Granted |
| |
| | ||
Vested | ( | | ||||
Forfeited |
| ( |
| | ||
Outstanding at fiscal year end 2026 |
| | $ | | ||
The weighted-average grant-date fair value of performance share awards granted during fiscal 2026, 2025, and 2024 was $
The total fair value of performance share awards that vested during fiscal 2026, 2025, and 2024 was $
As of fiscal year end 2026, there was $
Share Options
Share options are granted to purchase our shares at prices which are equal to or greater than the market price of the shares on the date the option is granted. Conditions of vesting are determined at the time of grant. All restrictions on the award will lapse upon death or disability of the employee. If the employee satisfies retirement requirements, all or a portion of the award may vest, depending on the terms and conditions of the particular grant. Options generally vest and become exercisable in equal annual installments over a period of
Share option award activity was as follows:
Weighted-Average | |||||||||||
Weighted-Average | Remaining | Aggregate | |||||||||
Exercise | Contractual | Intrinsic | |||||||||
| Shares | | Price | | Term | | Value | | |||
(in years) | (in millions) | ||||||||||
Outstanding at fiscal year end 2025 |
| | $ | | |||||||
Granted |
| |
| | |||||||
Exercised |
| ( |
| | |||||||
Forfeited |
| ( |
| | |||||||
Outstanding at fiscal year end 2026 |
| | $ | |
| $ | | ||||
Vested and expected to vest at fiscal year end 2026 |
| | $ | |
| $ | | ||||
Exercisable at fiscal year end 2026 |
| | $ | |
| $ | | ||||
The weighted-average exercise price of share option awards granted during fiscal 2026, 2025, and 2024 was $
The total intrinsic value of options exercised during fiscal 2026, 2025, and 2024 was $
As of fiscal year end 2026, there was $
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Share-Based Compensation Assumptions
The grant-date fair value of each share option grant was estimated using the Black-Scholes-Merton option pricing model. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. We employ our historical share volatility when calculating the grant-date fair value of our share option grants using the Black-Scholes-Merton option pricing model. Currently, we do not have exchange-traded options of sufficient duration to employ an implied volatility assumption in the calculation and therefore rely solely on the historical volatility calculation. The average expected life was based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The risk-free interest rate was based on U.S. Treasury zero-coupon issues with a remaining term that approximated the expected life assumed at the date of grant. The expected annual dividend per share was based on our expected dividend rate. The recognized share-based compensation expense was net of estimated forfeitures, which are based on voluntary termination behavior as well as an analysis of actual option forfeitures.
The weighted-average grant-date fair value of options granted and the weighted-average assumptions we used in the Black-Scholes-Merton option pricing model were as follows:
| Fiscal | ||||||||||
2026 | | 2025 | | 2024 | | | |||||
Weighted-average grant-date fair value | $ | | $ | | $ | | |||||
Assumptions: | |||||||||||
Expected share price volatility | |
| | % |
| | % |
| | % | |
Risk-free interest rate |
| | % |
| | % |
| | % | ||
Expected annual dividend per share | $ | | $ | | $ | | |||||
Expected life of options (in years) |
|
|
| ||||||||
20. Segment and Geographic Data
We operate through
Our segments are organized based on several factors, including differences in markets, products, and customers. See Note 1 for a description of our segments.
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 generally 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.
As discussed in Note 12, in fiscal 2026, we received $
No single customer accounted for a significant amount of our net sales in fiscal 2026, 2025, or 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As we are not organized by product or service, it is not practicable to disclose net sales by product or service.
Net sales by segment and industry end market were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Transportation Solutions: | ||||||||||
Automotive | $ | | $ | | $ | | ||||
Commercial transportation |
| |
| |
| | ||||
Sensors |
| |
| |
| | ||||
Total Transportation Solutions | | | | |||||||
Industrial Solutions: | ||||||||||
Digital data networks | | | | |||||||
Automation and connected living | | | | |||||||
Energy | | | | |||||||
Aerospace, defense, and marine | | | | |||||||
Medical | | | | |||||||
Total Industrial Solutions | | | | |||||||
Segment net sales | | | | |||||||
Reconciling item(1) | ( | — | — | |||||||
Total | $ | | $ | | $ | | ||||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
Net sales by geographic region and segment were as follows:
Fiscal | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Asia–Pacific: | ||||||||||
Transportation Solutions | $ | | $ | | $ | | ||||
Industrial Solutions | | | | |||||||
Total Asia–Pacific | | | | |||||||
Europe/Middle East/Africa (“EMEA”): | ||||||||||
Transportation Solutions | | | | |||||||
Industrial Solutions | | | | |||||||
Total EMEA | | | | |||||||
Americas: | ||||||||||
Transportation Solutions | | | | |||||||
Industrial Solutions | | | | |||||||
Total Americas | | | | |||||||
Regional net sales | | | | |||||||
Reconciling item(1) | ( | — | — | |||||||
Total | $ | | $ | | $ | | ||||
| (1) | Reconciling item relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents operating results and other data by reportable segment:
Transportation | Industrial | |||||||||
Solutions | | Solutions | | Total | | |||||
(in millions) | ||||||||||
As of or for the fiscal year ended September 25, 2026 | ||||||||||
Net sales | $ | | ||||||||
Reconciling item(1) | | |||||||||
Segment net sales | $ | | $ | | | |||||
Less: | ||||||||||
Cost of sales(2) | | | ||||||||
Selling, general, and administrative expenses | | | ||||||||
Research, development, and engineering expenses | | | ||||||||
Other segment items(3) | | | ||||||||
Segment operating income | $ | | $ | | | |||||
Reconciling item(4) | | |||||||||
Operating income | $ | | ||||||||
Depreciation | $ | | $ | | $ | | ||||
Amortization | | | | |||||||
Capital expenditures | | | | |||||||
Segment assets(5) | | | | |||||||
As of or for the fiscal year ended September 26, 2025 | ||||||||||
Net sales | $ | | $ | | $ | | ||||
Less: | ||||||||||
Cost of sales | | | ||||||||
Selling, general, and administrative expenses | | | ||||||||
Research, development, and engineering expenses | | | ||||||||
Other segment items(3) | | | ||||||||
Operating income | $ | | $ | | $ | | ||||
Depreciation | $ | | $ | | $ | | ||||
Amortization | | | | |||||||
Capital expenditures | | | | |||||||
Segment assets(5) | | | | |||||||
As of or for the fiscal year ended September 27, 2024 | ||||||||||
Net sales | $ | | $ | | $ | | ||||
Less: | ||||||||||
Cost of sales | | | ||||||||
Selling, general, and administrative expenses | | | ||||||||
Research, development, and engineering expenses | | | ||||||||
Other segment items(3) | | | ||||||||
Operating income | $ | | $ | | $ | | ||||
Depreciation | $ | | $ | | $ | | ||||
Amortization | | | | |||||||
Capital expenditures | | | | |||||||
Segment assets(5) | | | | |||||||
| (1) | Reconciling item for net sales relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| (2) | Excludes $ |
| (3) |
| (4) | Reconciling item for operating income relates to the net impact of IEEPA tariff refunds received in fiscal 2026. |
| (5) | Segment assets are composed of accounts receivable, inventories, and net property, plant, and equipment. |
The following table presents a reconciliation of segment assets to total assets:
Fiscal Year End | ||||||||||
| 2026 | | 2025 | | 2024 | | ||||
(in millions) | ||||||||||
Total segment assets | $ | | $ | | $ | | ||||
Other current assets |
| |
| |
| | ||||
Other noncurrent assets |
| |
|
| | |||||
Total assets | $ | | $ | | $ | | ||||
Net sales and net property, plant, and equipment by geographic region were as follows:
Property, Plant, and | |||||||||||||||||||
Net Sales(1) | Equipment, Net | ||||||||||||||||||
Fiscal | Fiscal Year End | ||||||||||||||||||
| 2026 | | 2025 | | 2024 | | 2026 | | 2025 | | 2024 | | |||||||
(in millions) | |||||||||||||||||||
Asia–Pacific: | |||||||||||||||||||
China | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
Other Asia–Pacific |
| |
| |
| |
| |
| |
| | |||||||
Total Asia–Pacific | | | | | | | |||||||||||||
EMEA: | |||||||||||||||||||
Switzerland | | | | | | | |||||||||||||
Germany |
| |
| |
| |
| |
| |
| | |||||||
Other EMEA | | | | | | | |||||||||||||
Total EMEA |
| |
| |
| |
| |
| |
| | |||||||
Americas: | |||||||||||||||||||
U.S. | | | | | | | |||||||||||||
Other Americas |
| |
| |
| |
| |
| |
| | |||||||
Total Americas |
| |
| |
| |
| |
| |
| | |||||||
| | | | | | ||||||||||||||
Reconciling item(2) | ( | — | — | — | — | — | |||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | |||||||
(1) | Net sales to external customers are attributed to individual countries based on the legal entity that records the sale. |
| (2) | Reconciling item for net sales relates to IEEPA tariff refunds received in fiscal 2026 that are expected to be returned to customers. |
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SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Fiscal Years Ended September 25, 2026, September 26, 2025, and September 27, 2024
Additions | ||||||||||||||||
Balance at | Charged to | Acquisitions, | Write-offs | Balance at | ||||||||||||
Beginning of | Costs and | Divestitures, | and | End of | ||||||||||||
Description | | Fiscal Year | | Expenses | | and Other | | Deductions | | Fiscal Year | | |||||
(in millions) | ||||||||||||||||
Fiscal 2026: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | | $ | | $ | — | $ | ( | $ | | ||||||
Valuation allowance on deferred tax assets |
| | | ( | ( |
| | |||||||||
Fiscal 2025: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | | $ | | $ | | $ | ( | $ | | ||||||
Valuation allowance on deferred tax assets |
| | | | ( |
| | |||||||||
Fiscal 2024: | ||||||||||||||||
Allowance for doubtful accounts receivable | $ | | $ | | $ | | $ | ( | $ | | ||||||
Valuation allowance on deferred tax assets |
| | | | ( |
| | |||||||||
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