TE CONNECTIVITY LTD.

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TE CONNECTIVITY LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

04/29/2022 | 11:30am EDT
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Condensed Consolidated
Financial Statements and the accompanying notes included elsewhere in this
Quarterly Report on Form 10-Q. 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 as a result of many factors, including but not
limited to those under the heading "Forward-Looking Information" and "Part II.
Item 1A. Risk Factors."

Our Condensed Consolidated Financial Statements have been prepared in United States ("U.S.") dollars, in accordance with accounting principles generally accepted in the U.S. ("GAAP").

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.


                                    Overview

TE Connectivity Ltd. ("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. Our broad range of
connectivity and sensor solutions, proven in the harshest environments, enable
advancements in transportation, industrial applications, medical technology,
energy, data communications, and the home.

The second quarter and first six months of fiscal 2022 included the following:

Our net sales increased 7.2% and 7.8% in the second quarter and first six

months of fiscal 2022, respectively, as compared to the same periods of fiscal

? 2021 due primarily to sales growth in the Industrial Solutions and

Communications Solutions segments. On an organic basis, our net sales increased

8.4% and 8.2% during the second quarter and first six months of fiscal 2022,

respectively, as compared to the same periods of fiscal 2021.

? Our net sales by segment were as follows:

Transportation Solutions-Our net sales increased 1.2% in the second quarter of

fiscal 2022 due to sales increases in the automotive and commercial

? transportation end markets, partially offset by sales declines in the sensors

end market. In the first six months of fiscal 2022, our net sales decreased

0.9% due primarily to sales declines in the automotive end market, partially

offset by sales increases in the commercial transportation end market.

Industrial Solutions-Our net sales increased 12.9% and 16.9% in the second

? quarter and first six months of fiscal 2022, respectively, primarily as a

result of sales increases in the industrial equipment end market.

Communications Solutions-Our net sales increased 23.8% and 31.9% in the second

? quarter and first six months of fiscal 2022, respectively, due to sales

increases in both the data and devices and the appliances end markets.

? Net cash provided by operating activities was $945 million in the first six

months of fiscal 2022.

Russia-Ukraine Military Conflict


We are monitoring the military conflict between Russia and Ukraine, escalating
tensions in surrounding countries, and associated sanctions. We suspended our
business operations in Russia, and our operations in Ukraine have been paused

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to focus on the safety of our employees. We have experienced increased costs for
transportation, energy, and raw materials due in part to the negative impact of
the Russia-Ukraine military conflict on the global economy. These increased
costs and supply chain implications have not been significant to our business,
and we have been able to partially mitigate them through price increases or
productivity. Neither Russia nor Ukraine represents a material portion of our
business, and the military conflict has not had a significant impact on our
business, financial condition, or result of operations during the first six
months of fiscal 2022.

The full impact of the military conflict on our business operations and
financial performance remains uncertain. The extent to which the conflict may
impact our business in future periods will depend on future developments,
including the severity and duration of the conflict, its impact on regional and
global economic conditions, and supply chain disruptions. We will continue to
actively monitor the conflict and assess the related sanctions and other effects
and may take further actions if necessary.

COVID-19 Pandemic

The COVID-19 pandemic has affected nearly all regions around the world and
resulted in business slowdowns or shutdowns and travel restrictions in affected
areas. The pandemic had a negative impact on certain of our businesses in fiscal
2021 and continued to impact certain of our operations in China in the first six
months of fiscal 2022. The pandemic has not had a significant impact on our
ability to staff our operations, and we do not expect that it will continue to
have a significant impact on our businesses globally in fiscal 2022, with the
exception of certain locations in China where operations are shutdown.
Throughout our operations, we implemented additional health and safety measures
for the protection of our employees, including providing personal protective
equipment, enhanced cleaning and sanitizing of our facilities, and remote
working arrangements.

The COVID-19 pandemic has impacted and continues to impact our business
operations globally, causing disruption in our suppliers' and customers' supply
chains, some of our business locations to reduce or suspend operations, and a
reduction in demand for certain products from direct customers or end markets.
In addition, the pandemic had far-reaching impacts on many additional aspects of
our operations, both directly and indirectly, including with respect to its
impacts on customer behaviors, business and manufacturing operations, inventory,
our employees, and the market generally. We assessed the impact of the COVID-19
pandemic and adjusted our operations and businesses, a number of which are
operating as essential businesses, and will continue to do so if necessary.

The extent to which the pandemic will continue to impact our business and the
markets we serve will depend on future developments which may include the
further spread of the virus, variant strains of the virus, and the resumption of
high levels of infections and hospitalizations as well as the success of public
health advancements, including vaccine production and distribution. With the
exception of shutdowns in China, we do not expect the COVID-19 pandemic to have
a significant impact on our businesses in fiscal 2022. However, it may have a
negative impact on our financial condition, liquidity, and results of operations
in future periods.

In response to the pandemic and resulting economic environment, we have taken
and continue to focus on actions to manage costs. These include restructuring
and other cost reduction initiatives, such as reducing discretionary spending
and travel. We will continue to actively monitor the situation and may take
further actions that alter our business operations as may be required by
federal, state, or local authorities or that we determine are in the best
interests of our employees, customers, suppliers, shareholders, and the
communities in which we operate.

Outlook


In the third quarter of fiscal 2022, we expect our net sales to be approximately
$3.9 billion as compared to $3.8 billion in the third quarter of fiscal 2021. We
expect shutdowns in China related to the COVID-19 pandemic to negatively impact
our net sales by approximately 300 basis points in the third quarter of fiscal
2022 as compared to the third quarter of fiscal 2021. We expect diluted earnings
per share from continuing operations to be approximately $1.71 per share in the
third quarter of fiscal 2022. This outlook reflects the negative impact of
foreign currency exchange rates on net sales and earnings per share of
approximately $154 million and $0.02 per share, respectively, in the third
quarter of fiscal 2022 as compared to the third quarter of fiscal 2021. Also,
this outlook is based on foreign currency exchange rates and commodity prices
that are consistent with current levels.

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We are monitoring the current macroeconomic environment, including any continued
impacts from the Russia-Ukraine military conflict and the COVID-19 pandemic, and
its potential effects on our customers and the end markets we serve. We have
taken actions to manage costs and will continue to closely manage our costs in
line with economic conditions. Additionally, we are managing our capital
resources and monitoring capital availability to ensure that we have sufficient
resources to fund future capital needs. See further discussion in "Liquidity and
Capital Resources."

Acquisition
During the first six months of fiscal 2022, we acquired one business for a cash
purchase price of $127 million, net of cash acquired. The acquisition was
reported as part of our Communications Solutions segment from the date of
acquisition. See Note 3 to the Condensed Consolidated Financial Statements for
additional information regarding acquisitions.

                             Results of Operations

Net Sales


The following table presents our net sales and the percentage of total net sales
by segment:

                                              For the                                 For the
                                          Quarters Ended                         Six Months Ended
                                   March 25,           March 26,           March 25,           March 26,
                                     2022                2021                2022                2021

                                                              ($ in millions)
Transportation Solutions         $ 2,314    58 %     $ 2,287    61 %     $ 4,472    57 %     $ 4,511    62 %
Industrial Solutions               1,075    27           952    26         2,134    27         1,825    25
Communications Solutions             618    15           499    13         1,219    16           924    13
Total                            $ 4,007   100 %     $ 3,738   100 %     $ 7,825   100 %     $ 7,260   100 %

The following table provides an analysis of the change in our net sales by segment:


                                      Change in Net Sales for the Quarter Ended March 25, 2022                                    Change in Net Sales

for the Six Months Ended March 25, 2022

                                        versus Net Sales for the Quarter Ended March 26, 2021                                      versus Net Sales

for the Six Months Ended March 26, 2021

                            Net Sales               Organic Net Sales                            Acquisitions             Net Sales               Organic Net Sales                           Acquisitions
                              Growth                      Growth               Translation      (Divestitures)        Growth (Decline)                  Growth              Translation      (Divestitures)

                                                                                                         ($ in millions)
Transportation
Solutions             $       27         1.2 %    $      101         4.5 %    $        (74)    $              -    $     (39)        (0.9) %    $        59        1.3 %    $       (98)    $              -
Industrial
Solutions                    123        12.9             101        10.5               (28)                  50           309         16.9              255       13.9              (48)                 102
Communications
Solutions                    119        23.8             114        22.8                (8)                  13           295         31.9              286       30.8               (9)                  18
Total                 $      269         7.2 %    $      316         8.4 %    $       (110)    $             63    $      565          7.8 %    $       600        8.2 %    $      (155)    $            120

Net sales increased $269 million, or 7.2%, in the second quarter of fiscal 2022
as compared to the second quarter of fiscal 2021. The increase in net sales
resulted from organic net sales growth of 8.4% and net sales contributions of
1.7% from acquisitions and divestitures, partially offset by the negative impact
of foreign currency translation of 2.9% due to the weakening of certain foreign
currencies. In the second quarter of fiscal 2022, pricing actions positively
affected organic net sales by $121 million.

In the first six months of fiscal 2022, net sales increased $565 million, or
7.8%, as compared to the first six months of fiscal 2021. The increase in net
sales resulted from organic net sales growth of 8.2% and net sales contributions
of 1.7% from acquisitions and divestitures, partially offset by the negative
impact of foreign currency translation of 2.1% due to the weakening of certain
foreign currencies. Pricing actions positively affected organic net sales by
$173 million in the first six months of fiscal 2022.

See further discussion of net sales below under "Segment Results."


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Net Sales by Geographic Region. Our business operates in three geographic
regions-Europe/Middle East/Africa ("EMEA"), Asia-Pacific, 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.

Approximately 60% of our net sales were invoiced in currencies other than the U.S. dollar in the first six months of fiscal 2022.


The following table presents our net sales and the percentage of total net sales
by geographic region(1):

                             For the                                 For the
                         Quarters Ended                         Six Months Ended
                  March 25,           March 26,           March 25,           March 26,
                    2022                2021                2022                2021

                                             ($ in millions)
EMEA            $ 1,433    36 %     $ 1,390    37 %     $ 2,747    35 %     $ 2,706    37 %
Asia-Pacific      1,411    35         1,336    36         2,881    37      
  2,629    36
Americas          1,163    29         1,012    27         2,197    28         1,925    27
Total           $ 4,007   100 %     $ 3,738   100 %     $ 7,825   100 %     $ 7,260   100 %

(1) Net sales to external customers are attributed to individual countries based

on the legal entity that records the sale.

The following table provides an analysis of the change in our net sales by geographic region:


                              Change in Net Sales for the Quarter Ended March 25, 2022                               Change in Net Sales for the 

Six Months Ended March 25, 2022

                               versus Net Sales for the Quarter Ended March 26, 2021                                  versus Net Sales for the Six 

Months Ended March 26, 2021

                     Net Sales             Organic Net Sales                          Acquisitions            Net Sales              Organic Net Sales                         Acquisitions
                       Growth                    Growth             Translation      (Divestitures)            Growth                     Growth               Translation    (Divestitures)

                                                                                               ($ in millions)
EMEA            $      43        3.1 %    $     100        7.2 %            (92)    $             35    $      41         1.5 %    $     106         3.8 %    $       (136)  $             71
Asia-Pacific           75        5.6             79        5.9      $       (16)                  12          252         9.6            243         9.2               (16)                25
Americas              151       14.9            137       13.5               (2)                  16          272        14.1            251        13.0                (3)                24
Total           $     269        7.2 %    $     316        8.4 %    $      (110)    $             63    $     565         7.8 %    $     600         8.2 %    $       (155)  $            120

Cost of Sales and Gross Margin

The following table presents cost of sales and gross margin information:

                                                    For the                                    For the
                                                 Quarters Ended                           Six Months Ended
                                            March 25,      March 26,                  March 25,      March 26,
                                              2022           2021         Change         2022          2021         Change

                                                                           ($ in millions)
Cost of sales                              $     2,670    $     2,528    $    142     $    5,258    $     4,904    $    354
As a percentage of net sales                      66.6 %         67.6 %                     67.2 %         67.5 %

Gross margin                               $     1,337    $     1,210    $    127     $    2,567    $     2,356    $    211
As a percentage of net sales                      33.4 %         32.4 %                     32.8 %         32.5 %


Gross margin increased $127 million and $211 million in the second quarter and
first six months of fiscal 2022, respectively, as compared to the same periods
of fiscal 2021. The increases were primarily a result of higher volume and the
positive impacts of pricing actions, partially offset by higher material costs
and, to a lesser degree, the negative impact of foreign currency translation.

We use a wide variety of raw materials in the manufacture of our products, and
cost of sales and gross margin are subject to variability in raw material
prices. In recent years, raw material prices and availability have been impacted
by worldwide events, including the COVID-19 pandemic and, more recently, the
military conflict between Russia and Ukraine. As a result, we have experienced
shortages and price increases in some of our input materials-including copper,
gold, silver,

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and palladium-however, we have been able to initiate pricing actions which have
partially offset these impacts. The following table presents the average prices
incurred related to copper, gold, silver, and palladium:

                                  For the                       For the
                               Quarters Ended              Six Months Ended
                          March 25,      March 26,     March 25,      March 26,
             Measure        2022           2021           2022          2021
Copper            Lb.    $      4.13    $      2.95    $     3.97    $      2.93
Gold         Troy oz.          1,831          1,659         1,814          1,629
Silver       Troy oz.          24.64          20.48         24.10          20.11
Palladium    Troy oz.          2,380          2,114         2,363          2,125


We expect to purchase approximately 225 million pounds of copper, 140,000 troy
ounces of gold, 2.9 million troy ounces of silver, and 15,000 troy ounces of
palladium in fiscal 2022.

Operating Expenses

The following table presents operating expense information:

                                                    For the                                   For the
                                                 Quarters Ended                           Six Months Ended
                                            March 25,      March 26,                 March 25,       March 26,
                                              2022           2021        Change         2022           2021        Change

                                                                           ($ in millions)
Selling, general, and administrative
expenses                                   $       416    $       401    $    15     $      779     $       762    $    17
As a percentage of net sales                      10.4 %         10.7 %                    10.0 %          10.5 %

Restructuring and other charges, net $ 21 $ 17 $

4 $ 33 $ 184 $ (151)



Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased $15 million and $17 million in the second
quarter and first six months of fiscal 2022, respectively, from the same periods
of fiscal 2021 due primarily to increased selling expenses to support higher
sales levels and incremental expenses attributable to recently acquired
businesses, partially offset by lower incentive compensation costs.

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 2022 and 2021, we initiated restructuring programs associated with
footprint consolidation and cost structure improvements across all segments. We
incurred net restructuring and related charges of $55 million during the first
six months of fiscal 2022, of which $12 million was recorded in cost of sales.
Annualized cost savings related to the fiscal 2022 actions commenced during the
first six months of fiscal 2022 are expected to be approximately $50 million and
are expected to be realized by the end of fiscal 2024. Cost savings will be
reflected primarily in cost of sales and selling, general, and administrative
expenses. For fiscal 2022, we expect total restructuring charges to be
approximately $150 million and total spending, which will be funded with cash
from operations, to be approximately $175 million.

See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding net restructuring and other charges.

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Operating Income

The following table presents operating income and operating margin information:

                                                    For the                                   For the
                                                 Quarters Ended                          Six Months Ended
                                            March 25,      March 26,                 March 25,      March 26,
                                              2022           2021        Change         2022          2021         Change

                                                                           ($ in millions)
Operating income                           $       705    $       612    $    93     $    1,377    $     1,060    $    317
Operating margin                                  17.6 %         16.4 %                    17.6 %         14.6 %

Operating income included the following:

                                                             For the                         For the
                                                          Quarters Ended                Six Months Ended
                                                   March 25,        March 26,      March 25,        March 26,
                                                      2022             2021           2022            2021

                                                                          (in millions)
Acquisition-related charges:
Acquisition and integration costs                  $       10      $          6    $       18      $        14
Charges associated with the amortization of
acquisition-related fair value adjustments                  -                 2             8                3
                                                           10                 8            26               17
Restructuring and other charges, net                       21                17            33              184
Restructuring-related charges recorded in cost
of sales                                                    -                 -            12                -
Total                                              $       31      $         25    $       71      $       201

See discussion of operating income below under "Segment Results."

Non-Operating Items

The following table presents select non-operating information:

                                                    For the                                   For the
                                                 Quarters Ended                           Six Months Ended
                                            March 25,      March 26,                 March 25,       March 26,
                                              2022           2021        Change         2022           2021        Change

                                                                           ($ in millions)
Income tax expense                         $       136    $       106    $    30     $      246     $       166    $    80
Effective tax rate                                19.5 %         17.3 %                    17.9 %          15.9 %


Income Taxes. See Note 12 to the Condensed Consolidated Financial Statements for
discussion of items impacting income tax expense and the effective tax rate for
the second quarters and first six months of fiscal 2022 and 2021.

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                                Segment Results

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(1):


                                             For the                                  For the
                                         Quarters Ended                          Six Months Ended
                                 March 25,            March 26,            March 25,           March 26,
                                    2022                 2021                2022                2021

                                                             ($ in millions)
Automotive                     $ 1,653     71 %     $ 1,630     71 %     $ 3,173    71 %     $ 3,259    72 %
Commercial transportation          394     17           382     17           759    17           713    16
Sensors                            267     12           275     12           540    12           539    12
Total                          $ 2,314    100 %     $ 2,287    100 %     $ 4,472   100 %     $ 4,511   100 %

Industry end market information is presented consistently with our internal (1) management reporting and may be revised periodically as management deems

necessary.

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 the Quarter Ended March 25, 2022                         Change in Net Sales for the Six Months Ended March 25, 2022
                                 versus Net Sales for the Quarter Ended March 26, 2021                           versus Net Sales for the Six Months Ended March 26, 2021
                              Net Sales                    Organic Net Sales                                   Net Sales                    Organic Net Sales
                           Growth (Decline)                      Growth               Translation          Growth (Decline)                 Growth (Decline)             Translation

                                                                                             ($ in millions)
Automotive           $         23             1.4 %     $         80         4.9 %   $        (57)    $       (86)          (2.6) %    $       (11)          (0.4) %    $        (75)
Commercial
transportation                 12             3.1                 21         5.4               (9)              46            6.5                57            7.9               (11)
Sensors                       (8)           (2.9)                  -           -               (8)               1            0.2                13            2.5               (12)
Total                $         27             1.2 %     $        101         4.5 %   $        (74)    $       (39)          (0.9) %    $         59            1.3 %    $        (98)

Net sales in the Transportation Solutions segment increased $27 million, or
1.2%, in the second quarter of fiscal 2022 from the second quarter of fiscal
2021 due to organic net sales growth of 4.5%, partially offset by the negative
impact of foreign currency translation of 3.3%. Our organic net sales by
industry end market were as follows:

Automotive-Our organic net sales increased 4.9% in the second quarter of fiscal

2022 with growth of 7.9% in the Americas region, 6.4% in the Asia-Pacific

? region, and 2.1% in the EMEA region. Our overall net sales increased due

primarily to increased content per vehicle, despite declines in global

automotive production.

Commercial transportation-Our organic net sales increased 5.4% in the second

? quarter of fiscal 2022 primarily as a result of market growth in the EMEA and

Americas regions.

Sensors-Our organic net sales were flat in the second quarter of fiscal 2022 as

? growth in industrial applications was offset by declines in transportation

applications.



In the first six months of fiscal 2022, net sales in the Transportation
Solutions segment decreased $39 million, or 0.9%, as compared to the first six
months of fiscal 2021 due to the negative impact of foreign currency translation
of 2.2%, partially offset by organic net sales growth of 1.3%. Our organic net
sales by industry end market were as follows:

Automotive-Our organic net sales were essentially flat in the first six months

of fiscal 2022 with declines of 7.6% in the EMEA region, largely offset by

? growth of 6.0% in the Asia-Pacific region and 1.4% in the Americas region. The

   impact of declines in global automotive production were offset by increased
   content per vehicle.


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Commercial transportation-Our organic net sales increased 7.9% in the first six

? months of fiscal 2022 primarily as a result of market growth in the EMEA and

Americas regions.

Sensors-Our organic net sales increased 2.5% in the first six months of fiscal

? 2022 as growth in industrial applications was partially offset by declines in

transportation applications.

Operating Income. The following table presents the Transportation Solutions segment's operating income and operating margin information:


                                                     For the                                    For the
                                                 Quarters Ended                             Six Months Ended
                                            March 25,       March 26,                  March 25,        March 26,
                                               2022           2021        Change          2022            2021        Change

                                                                            ($ in millions)
Operating income                           $        409    $       398    $    11     $        804     $       706    $    98
Operating margin                                   17.7 %         17.4 %                      18.0 %          15.7 %


Operating income in the Transportation Solutions segment increased $11 million
and $98 million in the second quarter and first six months of fiscal 2022,
respectively, as compared to the same periods of fiscal 2021. Excluding the
items below, operating income in the second quarter of fiscal 2022 increased
slightly as the positive impacts of pricing actions were largely offset by
higher material and utilities costs. Excluding the items below, operating income
in the first six months of fiscal 2022 decreased primarily as a result of higher
material and utilities costs, partially offset by the positive impacts of
pricing actions.

                                                             For the                         For the
                                                          Quarters Ended                Six Months Ended
                                                   March 25,        March 26,      March 25,        March 26,
                                                      2022             2021           2022            2021

                                                                          (in millions)
Acquisition-related charges:
Acquisition and integration costs                  $        4      $          3    $        7      $         7
Charges associated with the amortization of
acquisition-related fair value adjustments                  -                 2             -                3
                                                            4                 5             7               10
Restructuring and other charges, net                        9              
 10             3              128
Total                                              $       13      $         15    $       10      $       138


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(1):


                                                For the                                 For the
                                             Quarters Ended                        Six Months Ended
                                      March 25,          March 26,           March 25,           March 26,
                                        2022                2021               2022                2021

                                                                ($ in millions)
Industrial equipment                $   472    44 %     $  339    36 %     $   934    44 %     $   634    35 %
Aerospace, defense, oil, and gas        261    24          267    28       
   503    24           517    28
Energy                                  184    17          185    19           372    17           357    20
Medical                                 158    15          161    17           325    15           317    17
Total                               $ 1,075   100 %     $  952   100 %     $ 2,134   100 %     $ 1,825   100 %

Industry end market information is presented consistently with our internal (1) management reporting and may be revised periodically as management deems

    necessary.


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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 the Quarter Ended March 25, 2022                                  Change in Net Sales 

for the Six Months Ended March 25, 2022

                                       versus Net Sales for the Quarter Ended March 26, 2021                                    versus Net Sales 

for the Six Months Ended March 26, 2021

                            Net Sales              Organic Net Sales                           Acquisition             Net Sales               Organic Net Sales                          Acquisitions
                        Growth (Decline)           Growth (Decline)          Translation      (Divestitures)        Growth (Decline)           Growth (Decline)          Translation     (Divestitures)

                                                                                                       ($ in millions)
Industrial
equipment             $     133        39.2 %    $      93        27.2 %    $        (13)    $             53    $      300        47.3 %    $     212        33.0 %    $        (25)    $           113
Aerospace,
defense, oil, and
gas                         (6)       (2.2)              -           -                (5)                 (1)          (14)       (2.7)            (6)       (1.4)                (8)                  -
Energy                      (1)       (0.5)              9         4.8                (8)                 (2)            15         4.2             38        10.5               (12)               (11)
Medical                     (3)       (1.9)            (1)       (1.2)                (2)                   -             8         2.5             11         3.1                (3)                  -
Total                 $     123        12.9 %    $     101        10.5 %    $        (28)    $             50    $      309        16.9 %    $     255        13.9 %    $        (48)    $           102


In the Industrial Solutions segment, net sales increased $123 million, or 12.9%,
in the second quarter of fiscal 2022 as compared to the second quarter of fiscal
2021 due to organic net sales growth of 10.5% and net sales contributions of
5.3% from an acquisition and divestitures, partially offset by the negative
impact of foreign currency translation of 2.9%. Our organic net sales by
industry end market were as follows:

Industrial equipment-Our organic net sales increased 27.2% in the second

? quarter of fiscal 2022 due to growth in all regions primarily as a result of

strength in factory automation and controls applications.

Aerospace, defense, oil, and gas-Our organic net sales were flat in the second

? quarter of fiscal 2022 as declines in the defense market were largely offset by

growth in the commercial aerospace market.

Energy-Our organic net sales increased 4.8% in the second quarter of fiscal

? 2022 with growth across all regions and continued strength in renewable energy

applications.

? Medical-Our organic net sales decreased 1.2% in the second quarter of fiscal

2022 due primarily to sales declines in interventional medical applications.



Net sales in the Industrial Solutions segment increased $309 million, or 16.9%,
in the first six months of fiscal 2022 as compared to the first six months of
fiscal 2021 due to organic net sales growth of 13.9% and net sales contributions
of 5.6% from acquisitions and divestitures, partially offset by the negative
impact of foreign currency translation of 2.6%. Our organic net sales by
industry end market were as follows:

Industrial equipment-Our organic net sales increased 33.0% in the first six

? months of fiscal 2022 as a result of growth in all regions due primarily to

strength in factory automation and controls applications.

Aerospace, defense, oil, and gas-Our organic net sales decreased 1.4% in the

? first six months of fiscal 2022 with declines in the defense and the oil and

gas markets partially offset by growth in the commercial aerospace market.

Energy-Our organic net sales increased 10.5% in the first six months of fiscal

? 2022 due to growth across all regions and continued strength in renewable

energy applications.

Medical-Our organic net sales increased 3.1% in the first six months of fiscal

? 2022 primarily as a result of market growth in interventional medical

   applications.


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  Table of Contents

Operating Income. The following table presents the Industrial Solutions segment's operating income and operating margin information:


                                                    For the                                   For the
                                                 Quarters Ended                           Six Months Ended
                                            March 25,      March 26,                 March 25,       March 26,
                                              2022           2021        Change         2022           2021        Change

                                                                           ($ in millions)
Operating income                           $       148    $       111    $    37     $      271     $       187    $    84
Operating margin                                  13.8 %         11.7 %                    12.7 %          10.2 %

Operating income in the Industrial Solutions segment increased $37 million and
$84 million in the second quarter and first six months of fiscal 2022,
respectively, as compared to the same periods of fiscal 2021. Excluding the
items below, operating income increased primarily as a result of higher volume
and the positive impacts of pricing actions.

                                                              For the                        For the
                                                          Quarters Ended                 Six Months Ended
                                                    March 25,         March 26,     March 25,       March 26,
                                                       2022             2021           2022            2021

                                                                          (in millions)
Acquisition-related charges:
Acquisition and integration costs                  $          6      $         3    $       10      $        7
Charges associated with the amortization of
acquisition-related fair value adjustments                    -                -             8               -
                                                              6                3            18               7
Restructuring and other charges, net                         10                5            20              43
Restructuring-related charges recorded in cost
of sales                                                      -                -            12               -
Total                                              $         16      $         8    $       50      $       50


Communications Solutions

Net Sales. The following table presents the Communications Solutions segment's net sales and the percentage of total net sales by industry end market(1):

                                For the                               For the
                            Quarters Ended                        Six Months Ended
                     March 25,          March 26,           March 25,          March 26,
                        2022               2021               2022                2021

                                               ($ in millions)
Data and devices    $  385    62 %     $  278    56 %     $   734    60 %     $  512    55 %
Appliances             233    38          221    44           485    40          412    45
Total               $  618   100 %     $  499   100 %     $ 1,219   100 %     $  924   100 %

Industry end market information is presented consistently with our internal (1) management reporting and may be revised periodically as management deems

necessary.

The following table provides an analysis of the change in the Communications Solutions segment's net sales by industry end market:


                                         Change in Net Sales for the Quarter Ended March 25, 2022                                     Change in

Net Sales for the Six Months Ended March 25, 2022

                                           versus Net Sales for the Quarter Ended March 26, 2021                                       versus Net Sales

for the Six Months Ended March 26, 2021

                                 Net Sales              Organic Net Sales                                                   Net Sales                   Organic Net Sales
                                  Growth                     Growth               Translation      Acquisition               Growth                          Growth                  Translation      Acquisition

                                                                                                               ($ in millions)
Data and devices           $     107        38.5 %    $      98        35.0 %    $         (4)    $           13    $       222          43.4 %     $       209          40.7 %     $         (5)    $           18
Appliances                        12         5.4             16         7.3                (4)                 -             73          17.7                77          18.4                 (4)                 -
Total                      $     119        23.8 %    $     114        22.8 %    $         (8)    $           13    $       295          31.9 %     $       286          30.8 %     $         (9)    $           18


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  Table of Contents

Net sales in the Communications Solutions segment increased $119 million, or
23.8%, in the second quarter of fiscal 2022 as compared to the second quarter of
fiscal 2021 due primarily to organic net sales growth of 22.8%. Our organic net
sales by industry end market were as follows:

Data and devices-Our organic net sales increased 35.0% in the second quarter of

? fiscal 2022 primarily as a result of market strength and growth in high-speed

cloud applications.

Appliances-Our organic net sales increased 7.3% in the second quarter of fiscal

? 2022 due to sales growth in the Americas and EMEA regions attributable

primarily to share gains.



In the first six months of fiscal 2022, net sales in the Communications
Solutions segment increased $295 million, or 31.9%, as compared to the first six
months of fiscal 2021 due primarily to organic net sales growth of 30.8%. Our
organic net sales by industry end market were as follows:

Data and devices-Our organic net sales increased 40.7% in the first six months

? of fiscal 2022 due primarily to market strength and growth in high-speed cloud

applications.

Appliances-Our organic net sales increased 18.4% in the first six months of

? fiscal 2022 as a result of sales growth in the Americas and EMEA regions

attributable primarily to share gains.

Operating Income. The following table presents the Communications Solutions segment's operating income and operating margin information:


                                                    For the                                   For the
                                                 Quarters Ended                           Six Months Ended
                                            March 25,      March 26,                 March 25,       March 26,
                                              2022           2021        Change         2022           2021         Change

                                                                           ($ in millions)
Operating income                           $       148    $       103    $    45     $      302     $       167    $    135
Operating margin                                  23.9 %         20.6 %                    24.8 %          18.1 %

Operating income in the Communications Solutions segment increased $45 million and $135 million in the second quarter and first six months of fiscal 2022, respectively, as compared to the same periods of fiscal 2021. Excluding the items below, operating income increased due primarily to higher volume.

                                                              For the                        For the
                                                          Quarters Ended                 Six Months Ended
                                                    March 25,         March 26,     March 25,       March 26,
                                                       2022             2021           2022            2021

                                                                          (in millions)
Acquisition and integration costs                  $          -      $         -    $        1      $        -
Restructuring and other charges, net                          2            
   2            10              13
Total                                              $          2      $         2    $       11      $       13


                        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 payment of €550 million of 1.10% senior notes
due in March 2023. We may use excess cash to purchase a portion of our common
shares pursuant to our authorized share repurchase program, to acquire strategic
businesses or product lines, to pay dividends on our common shares, or to reduce
our outstanding debt. 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.

                                       31

Table of Contents

Cash Flows from Operating Activities


In the first six months of fiscal 2022, net cash provided by operating
activities decreased $275 million to $945 million from $1,220 million in the
first six months of fiscal 2021. The decrease resulted primarily from the impact
of higher incentive compensation payments and increased working capital levels,
partially offset by higher pre-tax income. The amount of income taxes paid, net
of refunds, during the first six months of fiscal 2022 and 2021 was $177 million
and $181 million, respectively.

Cash Flows from Investing Activities


Capital expenditures were $351 million and $284 million in the first six months
of fiscal 2022 and 2021, respectively. We expect fiscal 2022 capital spending
levels to be approximately 5% 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.

During the first six months of fiscal 2022, we acquired one business for a cash
purchase price of $127 million, net of cash acquired. We acquired one business
for a cash purchase price of $106 million, net of cash acquired, during the
first six months of fiscal 2021. See Note 3 to the Condensed Consolidated
Financial Statements for additional information regarding acquisitions.

Cash Flows from Financing Activities and Capitalization

Total debt at March 25, 2022 and September 24, 2021 was $4,051 million and $4,092 million, respectively. See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding debt.


During the second quarter of fiscal 2022, Tyco Electronics Group S.A. ("TEGSA"),
our wholly-owned subsidiary, issued $600 million aggregate principal amount of
2.50% senior notes due in February 2032. The notes are TEGSA's unsecured senior
obligations and rank equally in right of payment with all existing and any
future senior indebtedness of TEGSA and senior to any subordinated indebtedness
that TEGSA may incur.

During the first six months of fiscal 2022, TEGSA completed an early redemption
of $500 million aggregate principal amount of 3.50% senior notes due in February
2022.

TEGSA has a five-year unsecured senior revolving credit facility ("Credit Facility") with a maturity date of June 2026 and total commitments of $1.5 billion. TEGSA had no borrowings under the Credit Facility at March 25, 2022 or September 24, 2021.

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 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 March 25, 2022, 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.

In addition to the Credit Facility, TEGSA is the borrower under our senior notes
and commercial paper. TEGSA's payment obligations under its senior notes,
commercial paper, and Credit Facility are fully and unconditionally guaranteed
on an unsecured basis by its parent, TE Connectivity Ltd.

Payments of common share dividends to shareholders were $326 million and $318 million in the first six months of fiscal 2022 and 2021, respectively.

In March 2022, our shareholders approved a dividend payment to shareholders of
$2.24 per share, payable in four equal quarterly installments of $0.56 per share
beginning in the third quarter of fiscal 2022 and ending in the second quarter
of fiscal 2023.

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  Table of Contents

We repurchased approximately five million of our common shares for $752 million
and approximately three million of our common shares for $309 million under the
share repurchase program during the first six months of fiscal 2022 and 2021,
respectively. At March 25, 2022, we had $839 million 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 Ltd. 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 Ltd. and TEGSA on a combined basis.

                                    March 25,      September 24,
                                      2022             2021

                                           (in millions)
Balance Sheet Data:
Total current assets               $       252    $           452
Total noncurrent assets(1)               2,674              1,829

Total current liabilities                1,553              1,144
Total noncurrent liabilities(2)         16,159             12,443


Includes $2,627 million and $1,810 million as of March 25, 2022 and

(1) September 24, 2021, respectively, of intercompany loans receivable from

non-guarantor subsidiaries.

Includes $12,726 million and $8,832 million as of March 25, 2022 and

(2) September 24, 2021, respectively, of intercompany loans payable to

     non-guarantor subsidiaries.


                                        For the               For the
                                   Six Months Ended      Fiscal Year Ended
                                       March 25,           September 24,
                                         2022                  2021

                                                (in millions)
Statement of Operations Data:
Loss from continuing operations    $             (3)    $             (486)
Net loss                                         (3)                  (479)


Guarantees

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 2022
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.

In disposing of assets or businesses, we often provide representations,
warranties, and/or indemnities to cover various risks including unknown damage
to assets, environmental risks involved in the sale of real estate, liability
for investigation and remediation of environmental contamination at waste
disposal sites and manufacturing facilities, and unidentified tax liabilities
and legal fees related to periods prior to disposition. We do not expect that
these uncertainties will have a material adverse effect on our results of
operations, financial position, or cash flows.

At March 25, 2022, we had outstanding letters of credit, letters of guarantee, and surety bonds of $120 million, excluding those related to our Subsea Communications ("SubCom") business which are discussed below.


During fiscal 2019, we sold our SubCom business. In connection with the sale, we
contractually agreed to continue to honor performance guarantees and letters of
credit related to the SubCom business' projects that existed as of the date
of

                                       33

  Table of Contents

sale. These performance guarantees and letters of credit had a combined value of
approximately $117 million as of March 25, 2022 and are expected to expire at
various dates through fiscal 2027. We have contractual recourse against the
SubCom business if we are required to perform on any SubCom guarantees; however,
based on historical experience, we do not anticipate having to perform.

                         Commitments and Contingencies

Legal Proceedings


In the normal course of business, we are subject to various legal proceedings
and claims, including patent infringement claims, product liability matters,
employment disputes, disputes on agreements, other commercial disputes,
environmental matters, antitrust claims, and tax matters, including non-income
tax matters such as value added tax, sales and use tax, real estate tax, and
transfer tax. Although it is not feasible to predict the outcome of these
proceedings, based upon our experience, current information, and applicable law,
we do not expect that the outcome of these proceedings, either individually or
in the aggregate, will have a material effect on our results of operations,
financial position, or cash flows.

Trade Compliance Matters

We are investigating our past compliance with relevant U.S. trade controls and
have made voluntary disclosures of apparent trade controls violations to the
U.S. Department of Commerce's Bureau of Industry and Security ("BIS") and the
U.S. State Department's Directorate of Defense Trade Controls ("DDTC"). We are
cooperating with the BIS and DDTC on these matters, and both our internal
assessment and the resulting investigations by the agencies remain ongoing. We
are unable to predict the timing and final outcome of the agencies'
investigations. An unfavorable outcome may include fines or penalties imposed in
response to our disclosures, but we are not yet able to reasonably estimate the
extent of any such fines or penalties. While we have reserved for potential
fines and penalties relating to these matters based on our current understanding
of the facts, the investigations into these matters have yet to be completed and
the final outcome of such investigations and related fines and penalties may
differ from amounts currently reserved.

                   Critical Accounting Policies and Estimates

The preparation of the Condensed 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 accounting policies for revenue recognition, goodwill and other intangible
assets, income taxes, and pension plans are based on, among other things,
judgments and assumptions made by management. For additional information
regarding these policies and the underlying accounting assumptions and estimates
used in these policies, refer to "Part II. Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Critical Accounting
Policies and Estimates" and the Consolidated Financial Statements and
accompanying notes contained in our Annual Report on Form 10-K for the
fiscal year ended September 24, 2021. There were no significant changes to this
information during the first six months of fiscal 2022.

                           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 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.

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Table of Contents


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 Quarterly Report on Form 10-Q are "forward-looking
statements" within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. 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 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," "estimate,"
"predict," "potential," "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.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2022 15 785 M - -
Net income 2022 2 237 M - -
Net Debt 2022 2 814 M - -
P/E ratio 2022 16,5x
Yield 2022 1,80%
Capitalization 36 391 M 36 391 M -
EV / Sales 2022 2,48x
EV / Sales 2023 2,29x
Nbr of Employees 89 000
Free-Float 94,9%
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Managers and Directors
Terrence R. Curtin Executive VP & President-Industrial Solutions
Heath A. Mitts Chief Financial Officer, Director & Executive VP
Thomas J. Lynch Chairman
Joseph F. Eckroth Chief Information Officer & Senior Vice President
Phil Gilchrist Chief Technology Officer & Vice President