TE Connectivity (TEL) 10-K risk factor changes: FY2020 vs FY2019

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

| ​ | ​ |

| --- | --- |

| (Mark One) | |

| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| For the fiscal year ended September 25, 2020 | |

| or | |

| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

001-33260

(Commission File Number)


TE CONNECTIVITY LTD.

(Exact name of registrant as specified in its charter)

| Switzerland (Jurisdiction of Incorporation) | 98-0518048 (I.R.S. Employer Identification No.) |

| --- | --- |

| Mühlenstrasse 26, CH-8200 Schaffhausen, Switzerland (Address of principal executive offices) | +41 (0)52 633 66 61 (Registrant’s telephone number) |

Securities registered pursuant to Section 12(b) of the Act:

| Title of each class | ​ | Trading symbol | ​ | Name of each exchange on which registered |

| --- | --- | --- | --- | --- |

| Common Shares, Par Value CHF 0.57 | ​ | TEL | ​ | New York Stock Exchange |

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.

Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ☐ No ☒

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.

Yes ☒ No ☐

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).

Yes ☒ No ☐

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:

| Large accelerated filer ☒ | 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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

None.

ITEM 2.

PROPERTIES

Our principal executive office is located in Schaffhausen, Switzerland.

As of fiscal year end 2020, we owned approximately 18 million square feet and leased approximately 9 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 2020, our principal centers of manufacturing output by segment and geographic region were as follows:

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ​ | | Transportation | | Industrial | | Communications | | ​ | |

| ​ | ​ | Solutions | ​ | Solutions | ​ | Solutions | ​ | Total | |

| | | | | | | | | | |

| ​ | | (number of manufacturing facilities) | | | | | | | ​ |

| Asia–Pacific | | 9 | | 7 | | 7 | | 23 | ​ |

| EMEA | | 22 | | 22 | | 3 | | 47 | ​ |

| Americas | | 10 | | 24 | | 3 | | 37 | ​ |

| Total | | 41 | | 53 | | 13 | | 107 | ​ |

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, 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.

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 common shares are listed and traded on the NYSE under the symbol “TEL.” As of November 4, 2020, there were 18,230 shareholders of record of our common shares.

Performance Graph

The following graph compares the cumulative total shareholder return on our common shares against the cumulative return on the S&P 500 Index and the Dow Jones Electrical Components and Equipment Index.

The graph assumes the investment of $100 in our common shares and in each index at fiscal year end 2015 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 performance of our common shares.


| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ​ | ​ | Fiscal Year End | | | | | | | | | | | | | | | | | |

| ​ | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | |

| TE Connectivity Ltd. | ​ | $ | 100.00 | ​ | $ | 112.75 | ​ | $ | 148.52 | ​ | $ | 160.01 | ​ | $ | 172.38 | ​ | $ | 181.13 | ​ |

| S&P 500 Index | ​ | | 100.00 | ​ | | 114.80 | ​ | | 136.17 | ​ | | 160.55 | ​ | | 166.53 | ​ | | 189.01 | ​ |

| Dow Jones Electrical Components and Equipment Index | ​ | | 100.00 | ​ | | 118.71 | ​ | | 153.08 | ​ | | 170.22 | ​ | | 163.89 | ​ | | 171.79 | ​ |

| (1) | $100 invested on September 25, 2015 in TE Connectivity Ltd.’s common shares and in indexes. Indexes calculated on month-end basis. |

| --- | --- |

Issuer Purchases of Equity Securities

The following table presents information about our purchases of our common shares during the quarter ended September 25, 2020:

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ​ | ​ | ​ | ​ | ​ | | ​ | ​ | ​ | 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(1) | | | Programs(2) | | or Programs(2) | | |

| June 27–July 24, 2020 | ​ | 295 | ​ | $ | 81.09 | ​ | — | ​ | $ | 995,115,788 | ​ |

| July 25–August 28, 2020 | | 6,752 | ​ | | 88.11 | | — | ​ | | 995,115,788 | ​ |

| August 29–September 25, 2020 | | 8,106 | ​ | | 99.26 | | — | ​ | | 995,115,788 | ​ |

| Total | | 15,153 | ​ | $ | 93.94 | | — | ​ | | | ​ |

| (1) | These columns represent the acquisition of common shares from individuals to satisfy tax withholding requirements in connection with the vesting of restricted share awards issued under equity compensation plans. |

| --- | --- |

| (2) | Our share repurchase program authorizes us to purchase a portion of our outstanding common 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. |

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, 2020.

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, 2020.

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, 2020.

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, 2020, which is included in this Annual Report.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 25, 2020, 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.

None.

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 2021 Annual General Meeting of Shareholders (the “2021 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 2021 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, 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 applies to our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, as well as all other employees and directors.

Our Guide to Ethical Conduct also meets 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 “Corporate Responsibility—Governance—Compliance.” 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.

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,” and “Compensation of Non-Employee Directors” in our 2021 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 2021 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by reference.

Equity Compensation Plan Information

The following table provides information as of fiscal year end 2020 with respect to common 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) | ​ | 7,098,225 | ​ | $ | 77.38 | ​ | 17,234,923 | ​ |

| Equity compensation plans not approved by security holders(2) | ​ | 1,583,175 | ​ | | 79.71 | ​ | — | ​ |

| Total | ​ | 8,681,400 | ​ | | | ​ | 17,234,923 | ​ |

| (1) | Includes securities issuable upon exercise of outstanding options and rights under the TE Connectivity Ltd. 2007 Stock and Incentive Plan, amended and restated as of September 17, 2020 (the “2007 Plan”), and the Tyco Electronics Limited Savings Related Share Plan. The 2007 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 2007 Plan provides for a maximum of 69,843,452 common shares to be issued as Awards, subject to adjustment as provided under the terms of the 2007 Plan. |

| --- | --- |

| (2) | In connection with the acquisition of ADC Telecommunications, Inc. (“ADC”) in fiscal 2011, we assumed equity awards issued under plans sponsored by ADC 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 and renamed the primary ADC plan the TE Connectivity Ltd. 2010 Stock and Incentive Plan, amended and restated as of March 9, 2017 (the “2010 Plan”). Grants under the 2010 Plan are settled in TE Connectivity common shares. |

| --- | --- |

| (3) | Does not take into account restricted, performance, or deferred share unit awards that do not have exercise prices. |

None.

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 LTD. | |

| ​ | ​ | ​ |

| ​ | By: | /s/ Heath A. Mitts |

| ​ | ​ | Heath A. Mitts |

| ​ | ​ | _Executive Vice President_ |

| ​ | ​ | _and Chief Financial Officer_ |

| ​ | ​ | _(Principal Financial Officer)_ |

Date: November 10, 2020

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 10, 2020 | | |

| Terrence R. Curtin | | | ​ | (Principal Executive Officer) | | | ​ | ​ | | |

| | | | ​ | | | | ​ | | | |

| /s/ Heath A. Mitts | | | ​ | Executive Vice President and | | | ​ | ​ | | |

| Heath A. Mitts | | | ​ | Chief Financial Officer | | | ​ | November 10, 2020 | | |

| | | | ​ | (Principal Financial Officer) | | | ​ | | | |

| ​ | | | ​ | ​ | | | ​ | ​ | | |

| /s/ Robert J. Ott | | | ​ | Senior Vice President and | | | ​ | ​ | | |

| Robert J. Ott | | | ​ | Corporate Controller | | | ​ | November 10, 2020 | | |

| | | | ​ | (Principal Accounting Officer) | | | ​ | | | |

| ​ | | | ​ | ​ | | | ​ | ​ | | |

| * | | | ​ | Director | | | ​ | November 10, 2020 | | |

| Pierre R. Brondeau | | | ​ | ​ | | | ​ | ​ | | |

| | | | ​ | | | | ​ | | | |

| * | | | ​ | Director | | | ​ | November 10, 2020 | | |

| Carol A. Davidson | | | ​ | | | | ​ | | | |

| ​ | | | ​ | ​ | | | ​ | ​ | | |

| * | | | ​ | Director | | | ​ | November 10, 2020 | | |

| Lynn A. Dugle | | | ​ | | | | ​ | | | |

| ​ | | | ​ | ​ | | | ​ | ​ | | |

| * | | | ​ | Director | | | ​ | November 10, 2020 | | |

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

| ​ | ​ |

| --- | --- |

| (Mark One) | ​ |

| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| For the fiscal year ended September 27, 2019 ​ | |

| or ​ | |

| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

001-33260

(Commission File Number)


TE CONNECTIVITY LTD.

(Exact name of registrant as specified in its charter)

| Switzerland (Jurisdiction of Incorporation) | 98-0518048 (I.R.S. Employer Identification No.) |

| --- | --- |

| Rheinstrasse 20, CH-8200 Schaffhausen, Switzerland (Address of principal executive offices) | +41 (0)52 633 66 61 (Registrant’s telephone number) |

Securities registered pursuant to Section 12(b) of the Act:

| Title of each class | Trading symbol | Name of each exchange on which registered |

| --- | --- | --- |

| Common Shares, Par Value CHF 0.57 | TEL | New York Stock Exchange |

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.

Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ☐ No ☒

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.

Yes ☒ No ☐

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).

Yes ☒ No ☐

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:

| Large accelerated filer ☒ | 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 is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒