Item 2. 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 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.

Change in Place of Incorporation

In March 2024, our board of directors approved a proposed change in our jurisdiction of incorporation from Switzerland to Ireland. In connection with the proposed change, we entered into a merger agreement with our wholly-owned subsidiary, TE Connectivity plc, a public limited company incorporated under Irish law. Under the merger agreement, we will be merged with and into TE Connectivity plc, which will be the surviving entity. Completion of the merger is subject to shareholder approval at a special general meeting which we expect to be held in June 2024 and certain other customary closing conditions. If approved, we expect to implement the change in calendar year 2024 and our shareholders will receive one ordinary share of TE Connectivity plc for each common share of TE Connectivity Ltd. held immediately prior to the merger. Upon completion of the merger, we will be organized under the laws of Ireland. We do not anticipate any material change in our operations or financial results as a result of the merger and change in place of incorporation.

Ov****erview

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 enable the distribution of power, signal, and data to advance next-generation transportation, renewable energy, automated factories, data centers, medical technology, and more.

Summary of Performance

	●	Our net sales decreased 4.6% in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023 with declines across all three segments. In the first six months of fiscal 2024, our net sales decreased 2.5% as compared to the first six months of fiscal 2023 due to declines in the Communications Solutions and Industrial Solutions segments. On an organic basis, our net sales decreased 3.1% and 2.0% during the second quarter and first six months of fiscal 2024, respectively, as compared to the same periods of fiscal 2023.

	●	Our net sales by segment were as follows:

	●	Transportation Solutions—Our net sales decreased 4.0% in the second quarter of fiscal 2024 as a result of declines across all end markets. In the first six months of fiscal 2024, our net sales were flat compared to the same period of fiscal 2023 with sales increases in the automotive end market largely offset by sales declines in the sensors and the commercial transportation end markets.

	●	Industrial Solutions—Our net sales decreased 4.0% and 3.7% in the second quarter and first six months of fiscal 2024, respectively, as a result of sales declines in the industrial equipment end market,

		partially offset by sales increases in the aerospace, defense, and marine; the medical; and the energy end markets.

	●	Communications Solutions—Our net sales decreased 9.5% and 13.4% in the second quarter and first six months of fiscal 2024, respectively, due to sales declines in both the appliances and the data and devices end markets.

	●	Net cash provided by operating activities was $1,429 million in the first six months of fiscal 2024.

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 and inflationary cost pressures as well as military conflict in certain parts of the world and the COVID-19 pandemic. 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 or price increases which were initiated in prior years. 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 and travel. 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 continue to monitor military conflict in certain parts of the world as well as escalating tensions in surrounding countries and associated sanctions. These did not have a significant impact on our business, financial condition, or results of operations during fiscal 2023 or the first six months of fiscal 2024.

The COVID-19 pandemic had a global impact and resulted in business slowdowns or shutdowns, including systemic disruptions of global supply chains. The pandemic impacted certain aspects of our business, including certain of our operations in China in early fiscal 2023; however, we do not expect the pandemic to have a significant impact on our businesses globally in fiscal 2024.

Outlook

In the third quarter of fiscal 2024, we expect our net sales to be approximately $4.0 billion, consistent with third quarter fiscal 2023 levels. Sales growth in the Communications Solutions and Industrial Solutions segments is expected to be offset by declines in the Transportation Solutions segment. Additional information regarding expectations for our reportable segments is as follow:

	●	Transportation Solutions—We expect our net sales to increase in the automotive end market in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. For full year fiscal 2024, we expect sales in the automotive end market to benefit from slight growth in global vehicle production from fiscal 2023 levels. In the third quarter of fiscal 2024, we expect our net sales to decrease from the same period of fiscal 2023 in the commercial transportation end market as result of market declines.

	●	_Industrial Solutions—_In the third quarter of fiscal 2024, we expect our net sales to increase from the same period of fiscal 2023 in the aerospace, defense, and marine end market due to ongoing market improvement. Also, we expect our net sales in the medical end market to increase as a result of continued growth in interventional medical applications. These increases are expected to be partially offset by sales declines in the industrial equipment end market which continues to be negatively impacted by market weakness and inventory corrections in the supply chain.

	●	_Communications Solutions—_In the third quarter of fiscal 2024, we expect our net sales to increase from the same period of fiscal 2023 in both the data and devices and the appliances end markets as a result of supply chain normalization.

We expect diluted earnings per share from continuing operations to be approximately $1.71 per share in the third quarter of fiscal 2024. This outlook reflects the negative impact of foreign currency exchange rates on net sales and earnings per share of approximately $63 million and $0.06 per share, respectively, in the third quarter of fiscal 2024 as compared to the same period of fiscal 2023. Also, this outlook is based on foreign currency exchange rates and commodity prices that are consistent with current levels.

Acquisition

During the first six months of fiscal 2024, we acquired approximately 98.7% of the outstanding shares of Schaffner Holding AG (“Schaffner”), a leader in electromagnetic solutions based in Switzerland, for CHF 505.00 per share in cash for a purchase price of CHF 294 million (equivalent to $339 million), net of cash acquired. The Schaffner business has been reported as part of our Industrial Solutions segment from the date of acquisition. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

Divestiture

During the first six months of fiscal 2024, we sold one business for net cash proceeds of $38 million. In connection with the divestiture, we recorded a pre-tax loss on sale of $11 million in the first six months of fiscal 2024. Additionally, during the first six months of fiscal 2023, we recorded a pre-tax impairment charge of $60 million when the business was reclassified to held for sale. The business sold was reported in our Transportation Solutions segment. See Note 2 to the Condensed Consolidated Financial Statements for additional information regarding divestitures.

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 29,				​	​	March 31,				​	​	March 29,				​	​	March 31,				​	​
​		2024						2023						2024						2023
​		($ in millions)
Transportation Solutions	​	$	2,384	​	60	%	​	$	2,483	​	60	%	​	$	4,757	​	61	%	​	$	4,742	​	59	%	​
Industrial Solutions	​		1,143		29	​	​		1,191		28	​	​		2,168		28	​	​		2,251		28	​	​
Communications Solutions	​		440		11	​	​		486		12	​	​		873		11	​	​		1,008		13	​	​
Total	​	$	3,967		100	%	​	$	4,160		100	%	​	$	7,798		100	%	​	$	8,001		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 29, 2024															​	Change in Net Sales for the Six Months Ended March 29, 2024															​
​	versus Net Sales for the Quarter Ended March 31, 2023															​	versus Net Sales for the Six Months Ended March 31, 2023															​
​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​
​	Decline				​	Decline				​	Translation		​	(Divestitures)			Growth (Decline)				​	Growth (Decline)					Translation			(Divestitures)
​	($ in millions)
Transportation Solutions	$	(99)		(4.0)	%	$	(24)		(1.0)	%	$	(31)	​	$	(44)	​	$	15		0.3	%	$	89		1.9	%	$	(5)	​	$	(69)	​
Industrial Solutions		(48)		(4.0)	​		(67)		(5.6)	​		(13)	​		32	​		(83)		(3.7)	​		(119)		(5.3)	​		5	​		31	​
Communications Solutions		(46)		(9.5)	​		(40)		(8.2)	​		(6)	​		—	​		(135)		(13.4)	​		(129)		(12.8)	​		(6)	​		—	​
Total	$	(193)		(4.6)	%	$	(131)		(3.1)	%	$	(50)	​	$	(12)	​	$	(203)		(2.5)	%	$	(159)		(2.0)	%	$	(6)	​	$	(38)	​

Net sales decreased $193 million, or 4.6%, in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023. The decrease in net sales resulted primarily from organic net sales declines of 3.1% and the negative impact of foreign currency translation of 1.2% due to the weakening of certain foreign currencies. Pricing actions initiated during fiscal 2023 positively affected organic net sales by $14 million in the second quarter of fiscal 2024.

In the first six months of fiscal 2024, net sales decreased $203 million, or 2.5%, as compared to the first six months of fiscal 2023 due primarily to organic net sales declines of 2.0%. Pricing actions initiated during fiscal 2023 positively affected organic net sales by $82 million in the first six months of fiscal 2024.

See further discussion of net sales below under “Segment Results.”

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 2024.

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 29,				​	​	March 31,				​	​	March 29,				​	​	March 31,				​	​
​		2024						2023						2024						2023
​	​	($ in millions)																							​
EMEA	​	$	1,552	​	39	%	​	$	1,667	​	40	%	​	$	2,963	​	38	%	​	$	2,993	​	37	%	​
Asia–Pacific	​	​	1,257		32	​	​	​	1,299		31	​	​	​	2,636		34	​	​	​	2,706		34	​	​
Americas	​		1,158		29	​	​		1,194		29	​	​		2,199		28	​	​		2,302		29	​	​
Total	​	$	3,967		100	%	​	$	4,160		100	%	​	$	7,798		100	%	​	$	8,001		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 29, 2024															​	Change in Net Sales for the Six Months Ended March 29, 2024															​
​	​	versus Net Sales for the Quarter Ended March 31, 2023															​	versus Net Sales for the Six Months Ended March 31, 2023															​
​	​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​
​		Decline					Growth (Decline)					Translation			(Divestitures)			Decline					Growth (Decline)				​	Translation		​	(Divestitures)
​	​	($ in millions)
EMEA	​	$	(115)		(6.9)	%	$	(126)		(7.5)	%	$	15	​	$	(4)	​	$	(30)		(1.0)	%	$	(93)	​	(3.1)	%	$	75	​	$	(12)	​
Asia–Pacific	​	​	(42)	​	(3.2)	​	​	16	​	1.2	​	​	(60)	​	​	2	​	​	(70)		(2.6)	​	​	10		0.4	​	​	(78)	​	​	(2)	​
Americas	​		(36)		(3.0)	​		(21)		(1.8)	​		(5)	​		(10)	​		(103)		(4.5)	​		(76)		(3.3)	​		(3)	​		(24)	​
Total	​	$	(193)		(4.6)	%	$	(131)		(3.1)	%	$	(50)	​	$	(12)	​	$	(203)		(2.5)	%	$	(159)	​	(2.0)	%	$	(6)	​	$	(38)	​

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 29,		​	​	March 31,		​	​	​		​	March 29,		​	​	March 31,		​	​	​		​
​		2024				2023				Change			2024				2023				Change
​	​	($ in millions)																					​
Cost of sales	​	$	2,604	​	​	$	2,876	​	​	$	(272)	​	$	5,111	​	​	$	5,530	​	​	$	(419)	​
As a percentage of net sales	​		65.6	%	​		69.1	%	​			​		65.5	%	​		69.1	%	​			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Gross margin	​	$	1,363	​	​	$	1,284	​	​	$	79	​	$	2,687	​	​	$	2,471	​	​	$	216	​
As a percentage of net sales	​		34.4	%	​		30.9	%	​			​		34.5	%	​		30.9	%	​			​

Gross margin increased $79 million in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023 due primarily to improved manufacturing productivity, partially offset by the negative impact of foreign currency translation. In the first six months of fiscal 2024, gross margin increased $216 million as compared to the same period of fiscal 2023 primarily as a result of improved manufacturing productivity and the positive impact of prior year pricing actions, partially offset by lower volume.

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 affected by worldwide economic conditions, including supply chain disruptions and inflationary cost pressures. 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 29,		​	March 31,		​	March 29,		​	March 31,		​
​		Measure		2024			2023			2024			2023
Copper		Lb.	​	$	3.79	​	$	4.13		$	3.83	​	$	4.16
Gold		Troy oz.	​		1,966	​		1,870			1,955	​		1,843
Silver	​	Troy oz.	​	​	23.32	​	​	23.34	​	​	23.23	​	​	23.75	​
Palladium		Troy oz.	​		1,493	​		2,308			1,497	​		2,185

We expect to purchase approximately 190 million pounds of copper, 100,000 troy ounces of gold, 2.1 million troy ounces of silver, and 10,000 troy ounces of palladium in fiscal 2024.

Operating Expenses

The following table presents operating expense information:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the						​	​	​	​	​	For the						​	​	​	​	​
​	​	Quarters Ended						​	​	​	​	​	Six Months Ended						​	​	​	​	​
​	​	March 29,		​	​	March 31,		​	​	​		​	March 29,		​	​	March 31,		​	​	​		​
​		2024				2023				Change			2024				2023				Change
​	​	($ in millions)																					​
Selling, general, and administrative expenses	​	$	444	​	​	$	435	​	​	$	9	​	$	868	​	​	$	827	​	​	$	41	​
As a percentage of net sales	​		11.2	%	​		10.5	%	​			​		11.1	%	​		10.3	%	​			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring and other charges, net	​	$	40	​	​	$	119	​	​	$	(79)	​	$	61	​	​	$	230	​	​	$	(169)	​

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses increased $41 million in the first six months of fiscal 2024 as compared to the first six months of fiscal 2023 due primarily to the impact of inflation, partially offset by savings attributable to prior restructuring actions.

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 2024, we initiated a restructuring program to optimize our manufacturing footprint and improve the cost structure of the organization, primarily in the Industrial Solutions and Transportation Solutions segments. We incurred net restructuring charges of $41 million during the first six months of fiscal 2024. Annualized cost savings related to the fiscal 2024 actions commenced during the first six months of fiscal 2024 are expected to be approximately $10 million and are expected to be fully realized by the end of fiscal 2025. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses. For fiscal 2024, we expect total restructuring charges to be approximately $100 million and total spending, which will be funded with cash from operations, to be approximately $200 million.

During the first six months of fiscal 2024, we incurred costs of $8 million related to our proposed change in place of incorporation from Switzerland to Ireland. See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the proposed change.

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

Operating Income

The following table presents operating income and operating margin information:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the						​	​	​	​	​	For the						​	​	​	​	​
​	​	Quarters Ended						​	​		​	​	Six Months Ended						​	​		​	​
​	​	March 29,		​	​	March 31,		​	​	​		​	March 29,		​	​	March 31,		​	​	​		​
​		2024				2023				Change			2024				2023				Change
​	​	($ in millions)																					​
Operating income	​	$	692	​	​	$	537	​	​	$	155	​	$	1,390	​	​	$	1,039	​	​	$	351	​
Operating margin	​		17.4	%	​		12.9	%	​			​		17.8	%	​		13.0	%	​			​

Operating income included the following:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the					​	For the					​
​	​	Quarters Ended					​	Six Months Ended					​
​	​	March 29,		​	March 31,		​	March 29,		​	March 31,		​
​		2024			2023			2024			2023
​	​	(in millions)											​
Acquisition and integration costs	​	$	3	​	$	8	​	$	11	​	$	17	​
Restructuring and other charges, net	​		40	​		119	​		61	​		230	​
Taxes (non-income tax) recorded in selling, general, and administrative expenses	​	​	—	​	​	—	​	​	4	​	​	—	​
Total	​	$	43	​	$	127	​	$	76	​	$	247	​

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 29,		​	​	March 31,		​	​	​		​	March 29,		​	​	March 31,		​	​	​		​
​		2024				2023				Change			2024				2023				Change
​	​	($ in millions)																					​
Interest income	​	$	19	​	​	$	12	​	​	$	7	​	$	41	​	​	$	21	​	​	$	20	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income tax expense (benefit)	​	​	146	​	​	​	100	​	​	​	46	​	​	(959)	​	​	​	187	​	​	​	(1,146)	​
Effective tax rate	​		21.3	%	​		19.0	%	​			​		(69.2)	%	​		18.5	%	​			​

Interest Income. Interest income increased $7 million and $20 million in the second quarter and first six months of fiscal 2024, respectively, as compared to the same periods of fiscal 2023 due to higher interest rates as well as an increase in our cash balances held and invested.

Income Taxes. See Note 12 to the Condensed Consolidated Financial Statements for discussion of income taxes.

The Organisation for Economic Co-operation and Development (“OECD”) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax. Member states have begun to enact the rules, with some countries accelerating the impact of these rules by proposing immediate statutory rate increases. Both Switzerland and Ireland have implemented elements of the OECD’s global minimum tax rules, effective as of January 1, 2024. The OECD and participating countries continue to work on defining the underlying rules and administrative procedures. The global minimum tax is a significant structural change to the international taxation framework, which is expected to affect us beginning in fiscal 2025. We are currently monitoring global minimum tax developments and evaluating the impact, which could be material to our results of operations, cash taxes, and worldwide corporate effective tax rate.

​

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 29,				​	​	March 31,				​	​	March 29,				​	​	March 31,				​	​
​		2024						2023						2024						2023
​	​	($ in millions)																						​	​
Automotive	​	$	1,749		73	%	​	$	1,795		73	%	​	$	3,525	​	74	%	​	$	3,444	​	73	%	​
Commercial transportation	​		384		16	​	​		405		16	​	​		740		16	​	​		753		16	​	​
Sensors	​		251		11	​	​		283		11	​	​		492		10	​	​		545		11	​	​
Total	​	$	2,384		100	%	​	$	2,483		100	%	​	$	4,757		100	%	​	$	4,742		100	%	​

(1)	Industry end market information is presented consistently with our internal 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 29, 2024															​	Change in Net Sales for the Six Months Ended March 29, 2024															​
​	​	versus Net Sales for the Quarter Ended March 31, 2023															​	versus Net Sales for the Six Months Ended March 31, 2023															​
​		Net Sales					Organic Net Sales					​	​		​	​		Net Sales					Organic Net Sales					​	​		​	​
​	​	Decline				​	Growth (Decline)				​	Translation		​	Divestiture		​	Growth (Decline)				​	Growth (Decline)				​	Translation		​	Divestiture
​	​	($ in millions)
Automotive	​	$	(46)	​	(2.6)	%	$	22	​	1.2	%	$	(24)		$	(44)	​	$	81		2.4	%	$	157	​	4.5	%	$	(7)		$	(69)	​
Commercial transportation	​		(21)		(5.2)	​		(17)		(4.2)	​		(4)	​		—	​		(13)		(1.7)	​		(15)		(2.0)	​		2	​		—	​
Sensors	​		(32)		(11.3)	​		(29)		(10.3)	​		(3)	​		—	​		(53)		(9.7)	​		(53)		(9.7)	​		—	​		—	​
Total	​	$	(99)		(4.0)	%	$	(24)		(1.0)	%	$	(31)	​	$	(44)	​	$	15		0.3	%	$	89		1.9	%	$	(5)	​	$	(69)	​

Net sales in the Transportation Solutions segment decreased $99 million, or 4.0%, in the second quarter of fiscal 2024 from the second quarter of fiscal 2023 due to the negative impact of 1.8% from a divestiture, the negative impact of foreign currency translation of 1.2%, and organic net sales declines of 1.0%. Our organic net sales by industry end market were as follows:

	●	_Automotive—_Our organic net sales increased 1.2% in the second quarter of fiscal 2024 as a result of growth of 12.1% in the Asia–Pacific region, partially offset by declines of 7.2% in the EMEA region and 2.2% in the Americas region. Our organic net sales growth in the Asia–Pacific region was attributable primarily to increased content per vehicle. In the EMEA and Americas regions, our organic net sales declined primarily as a result of declines in vehicle production.

	●	_Commercial transportation—_Our organic net sales decreased 4.2% in the second quarter of fiscal 2024 due to declines in the Americas and EMEA regions, partially offset by growth in the Asia–Pacific region.

	●	_Sensors—_Our organic net sales decreased 10.3% in the second quarter of fiscal 2024 as a result of market weakness in industrial applications and our strategic exit of certain lower margin and lower growth product lines.

In the first six months of fiscal 2024, net sales in the Transportation Solutions segment were flat as compared to the first six months of fiscal 2023 with organic net sales growth of 1.9% largely offset by the negative impact of 1.5% from a divestiture. Our organic net sales by industry end market were as follows:

	●	_Automotive—_Our organic net sales increased 4.5% in the first six months of fiscal 2024 with growth of 12.8% in the Asia–Pacific region, partially offset by declines of 3.1% in the Americas region and 0.9% in the EMEA region. Our organic net sales growth in the Asia–Pacific region resulted from vehicle production growth as well as increased content per vehicle. In the Americas and EMEA regions, our organic net sales were impacted by essentially flat vehicle production levels compared to prior year and a shift in consumer demand to lower content vehicles.

	●	_Commercial transportation—_Our organic net sales decreased 2.0% in the first six months of fiscal 2024 as a result of declines in the Americas and EMEA regions, partially offset by growth in the Asia–Pacific region.

	●	_Sensors—_Our organic net sales decreased 9.7% in the first six months of fiscal 2024 due to market weakness in industrial applications and our strategic exit of certain lower margin and lower growth product lines.

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 29,		​	​	March 31,		​	​		​	​	March 29,		​	​	March 31,		​	​		​	​
​		2024				2023				Change			2024			​	2023			​	Change
​	​	($ in millions)																					​
Operating income	​	$	467	​		$	333	​		$	134	​	$	945	​	​	$	615	​	​	$	330	​
Operating margin	​		19.6	%	​		13.4	%	​		​	​		19.9	%	​		13.0	%	​		​	​

Operating income in the Transportation Solutions segment increased $134 million and $330 million in the second quarter and first six months of fiscal 2024, respectively, as compared to the same periods of fiscal 2023. Excluding the items below, operating income increased in the second quarter and first six months of fiscal 2024 primarily as a result of improved manufacturing productivity.

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the					​	For the					​
​	​	Quarters Ended					​	Six Months Ended					​
​	​	March 29,		​	March 31,		​	March 29,		​	March 31,		​
​		2024			2023			2024			2023
​	​	(in millions)											​
Acquisition and integration costs	​	$	—	​	$	—	​	$	—	​	$	2	​
Restructuring and other charges, net	​	​	19	​	​	78	​		33	​		152	​
Taxes (non-income tax) recorded in selling, general, and administrative expenses	​	​	—	​	​	—	​	​	3	​	​	—	​
Total	​	$	19	​	$	78	​	$	36	​	$	154	​

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 29,				​	​	March 31,				​	​	March 29,				​	​	March 31,				​	​
​		2024						2023						2024						2023
​	​	($ in millions)																						​	​
Industrial equipment	​	$	356		32	%	​	$	461		38	%	​	$	686		32	%	​	$	895		39	%	​
Aerospace, defense, and marine	​	​	342	​	30	​	​	​	298	​	25	​	​	​	632	​	29	​	​	​	562	​	25	​	​
Energy	​		234		20	​	​		233		20	​	​		439		20	​	​		422		19	​	​
Medical	​	​	211		18	​	​	​	199	​	17	​	​	​	411	​	19	​	​	​	372	​	17	​	​
Total	​	$	1,143		100	%	​	$	1,191		100	%	​	$	2,168		100	%	​	$	2,251		100	%	​

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

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 29, 2024															​	Change in Net Sales for the Six Months Ended March 29, 2024															​
​	​	versus Net Sales for the Quarter Ended March 31, 2023															​	versus Net Sales for the Six Months Ended March 31, 2023															​
​	​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​	Net Sales				​	Organic Net Sales				​	​	​	​	Acquisitions		​
​		Growth (Decline)					Growth (Decline)					Translation			(Divestiture)			Growth (Decline)					Growth (Decline)					Translation			(Divestiture)
​	​	($ in millions)
Industrial equipment	​	$	(105)		(22.8)	%	$	(131)		(28.4)	%	$	(3)	​	$	29	​	$	(209)		(23.4)	%	$	(246)	​	(27.4)	%	$	8	​	$	29	​
Aerospace, defense, and marine	​		44	​	14.8	​	​	51	​	17.0	​	​	—	​	​	(7)	​		70	​	12.5	​	​	84	​	14.9	​	​	4	​	​	(18)	​
Energy	​	​	1		0.4	​		1		0.6	​		(10)	​		10	​	​	17		4.0	​		4	​	1.0	​		(7)	​	​	20	​
Medical	​		12		6.0	​		12		6.0	​		—	​		—	​		39		10.5	​		39	​	10.5	​		—	​	​	—	​
Total	​	$	(48)		(4.0)	%	$	(67)		(5.6)	%	$	(13)	​	$	32	​	$	(83)	​	(3.7)	%	$	(119)		(5.3)	%	$	5	​	$	31	​

In the Industrial Solutions segment, net sales decreased $48 million, or 4.0%, in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023 due primarily to organic net sales declines of 5.6%, partially offset by the net positive impact of 2.7% from acquisitions and a divestiture. Pricing actions initiated in fiscal 2023 positively affected organic net sales by $45 million in the second quarter of fiscal 2024. Our organic net sales by industry end market were as follows:

	●	_Industrial equipment—_Our organic net sales decreased 28.4% in the second quarter of fiscal 2024 with declines across all regions and reduced demand resulting from inventory corrections in the supply chain.

	●	_Aerospace, defense, and marine—_Our organic net sales increased 17.0% in the second quarter of fiscal 2024 primarily as a result of growth in the commercial aerospace and defense markets.

	●	_Energy—_Our organic net sales increased 0.6% in the second quarter of fiscal 2024 as a result of growth in the Americas region, partially offset by declines in the Asia–Pacific and EMEA regions.

	●	_Medical—_Our organic net sales increased 6.0% in the second quarter of fiscal 2024 due primarily to growth in interventional medical applications.

Net sales in the Industrial Solutions segment decreased $83 million, or 3.7%, in the first six months of fiscal 2024 as compared to the first six months of fiscal 2023 due primarily to organic net sales declines of 5.3%, partially offset by the net positive impact of 1.4% from acquisitions and a divestiture. In the first six months of fiscal 2024, pricing actions initiated in fiscal 2023 positively affected organic net sales by $95 million. Our organic net sales by industry end market were as follows:

	●	_Industrial equipment—_Our organic net sales decreased 27.4% in the first six months of fiscal 2024 as a result of declines across all regions and reduced demand resulting from inventory corrections in the supply chain.

	●	_Aerospace, defense, and marine—_Our organic net sales increased 14.9% in the first six months of fiscal 2024 due to growth in all markets.

	●	_Energy—_Our organic net sales increased 1.0% in the first six months of fiscal 2024 due to growth in the Americas region, partially offset by declines in the EMEA and Asia–Pacific regions.

	●	_Medical—_Our organic net sales increased 10.5% in the first six months of fiscal 2024 as a result of growth in interventional medical applications.

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 29,		​	March 31,		​	​	​	​	March 29,		​	March 31,		​	​	​	​
​		2024			2023			Change			2024			2023			Change
​	​	($ in millions)																	​
Operating income	​	$	157	​	$	134	​	$	23	​	$	298	​	$	290	​	$	8	​
Operating margin	​		13.7	%		11.3	%			​		13.7	%		12.9	%			​

Operating income in the Industrial Solutions segment increased $23 million and $8 million in the second quarter and first six months of fiscal 2024, respectively, as compared to the same periods of fiscal 2023. Excluding the items below, operating income in the second quarter of fiscal 2024 was consistent with fiscal 2023 levels as lower volume was largely offset by the positive impact of prior year pricing actions. Excluding the items below, operating income decreased in the first six months of fiscal 2024 primarily as a result of lower volume and higher operating costs, partially offset by the positive impact of prior year pricing actions.

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the					​	For the					​
​	​	Quarters Ended					​	Six Months Ended					​
​	​	March 29,		​	March 31,		​	March 29,		​	March 31,		​
​		2024			2023			2024			2023
​	​	(in millions)											​
Acquisition and integration costs	​	$	3	​	$	7	​	$	10	​	$	13	​
Restructuring and other charges, net	​		13	​		33	​		19	​		46	​
Taxes (non-income tax) recorded in selling, general, and administrative expenses	​	​	—	​	​	—	​	​	1	​	​	—	​
Total	​	$	16	​	$	40	​	$	30	​	$	59	​

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 29,				​	​	March 31,				​	​	March 29,				​	​	March 31,				​	​
​		2024						2023						2024						2023
​	​	($ in millions)																						​	​
Data and devices	​	$	273	​	62	%	​	$	288	​	59	%	​	$	552	​	63	%	​	$	617	​	61	%	​
Appliances	​		167		38	​	​		198		41	​	​		321		37	​	​		391		39	​	​
Total	​	$	440		100	%	​	$	486		100	%	​	$	873		100	%	​	$	1,008		100	%	​

(1)	Industry end market information is presented consistently with our internal 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 29, 2024												​	Change in Net Sales for the Six Months Ended March 29, 2024												​
​	​	versus Net Sales for the Quarter Ended March 31, 2023												​	versus Net Sales for the Six Months Ended March 31, 2023												​
​		Net Sales					Organic Net Sales					​	​		Net Sales					Organic Net Sales					​	​
​	​	Decline				​	Decline				​	Translation		​	Decline				​	Decline				​	Translation		​
​	​	($ in millions)																									​
Data and devices	​	$	(15)	​	(5.2)	%	$	(13)	​	(4.4)	%	$	(2)	​	$	(65)	​	(10.5)	%	$	(63)	​	(10.2)	%	$	(2)	​
Appliances	​		(31)		(15.7)	​		(27)		(13.8)	​		(4)	​		(70)		(17.9)	​		(66)		(16.9)	​		(4)	​
Total	​	$	(46)		(9.5)	%	$	(40)		(8.2)	%	$	(6)	​	$	(135)		(13.4)	%	$	(129)		(12.8)	%	$	(6)	​

Net sales in the Communications Solutions segment decreased $46 million, or 9.5%, in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023 due primarily to organic net sales declines of 8.2%. Our organic net sales by industry end market were as follows:

	●	Data and devices—Our organic net sales decreased 4.4% in the second quarter of fiscal 2024 as a result of market declines and reduced demand resulting from inventory corrections in the supply chain, partially offset by growth in cloud and artificial intelligence applications.

	●	Appliances—Our organic net sales decreased 13.8% in the second quarter of fiscal 2024 due to market declines across all regions and reduced demand resulting from inventory corrections in the supply chain.

In the first six months of fiscal 2024, net sales in the Communications Solutions segment decreased $135 million, or 13.4%, as compared to the first six months of fiscal 2023 due primarily to organic net sales declines of 12.8%. Our organic net sales by industry end market were as follows:

	●	Data and devices—Our organic net sales decreased 10.2% in the first six months of fiscal 2024 due to market declines and reduced demand resulting from inventory corrections in the supply chain, partially offset by growth in artificial intelligence applications.

	●	Appliances—Our organic net sales decreased 16.9% in the first six months of fiscal 2024 as a result of market declines across all regions and reduced demand resulting from inventory corrections in the supply chain.

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 29,		​	March 31,		​	​	​	​	March 29,		​	March 31,		​	​	​	​
​		2024			2023			Change			2024			2023			Change
​	​	($ in millions)																	​
Operating income	​	$	68	​	$	70	​	$	(2)	​	$	147	​	$	134	​	$	13	​
Operating margin	​		15.5	%		14.4	%		​	​		16.8	%		13.3	%			​

Operating income in the Communications Solutions segment decreased $2 million and increased $13 million in the second quarter and first six months of fiscal 2024, respectively, as compared to the same periods of fiscal 2023. Excluding the items below, operating income in the second quarter of fiscal 2024 was consistent with fiscal 2023 levels as price erosion was largely offset by the favorable impact of product mix. Operating income decreased in the first six months of fiscal 2024 due primarily to price erosion and lower volume, partially offset by improved manufacturing productivity.

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	For the					​	For the					​
​	​	Quarters Ended					​	Six Months Ended					​
​	​	March 29,		​	March 31,		​	March 29,		​	March 31,
​		2024			2023			2024			2023		​
​	​	(in millions)											​
Acquisition and integration costs	​	$	—	​	$	1	​	$	1	​	$	2	​
Restructuring and other charges, net	​	​	8	​	​	8	​	​	9	​	​	32	​
Total	​	$	8	​	$	9	​	$	10	​	$	34	​

​

​

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 payments of $350 million of 3.45% senior notes due in August 2024 and €550 million of 0.00% euro-denominated senior notes due in February 2025. 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.

Cash Flows from Operating Activities

In the first six months of fiscal 2024, net cash provided by operating activities increased $214 million to $1,429 million from $1,215 million in the first six months of fiscal 2023. The increase resulted primarily from higher pre-tax income, partially offset by the impact of changes in working capital levels. The amount of income taxes paid, net of refunds, during the first six months of fiscal 2024 and 2023 was $238 million and $223 million, respectively.

Cash Flows from Investing Activities

Capital expenditures were $318 million and $372 million in the first six months of fiscal 2024 and 2023, respectively. We expect fiscal 2024 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 2024, we acquired one business for a cash purchase price of $339 million, net of cash acquired. We acquired one business for a cash purchase price of $108 million, net of cash acquired, during the first six months of fiscal 2023. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding acquisitions.

During the first six months of fiscal 2024, we received net cash proceeds of $38 million related to the sale of one business. We received net cash proceeds of $51 million related to the sale of two businesses during the first six months of fiscal 2023. See Note 2 to the Condensed Consolidated Financial Statements for additional information.

Cash Flows from Financing Activities and Capitalization

Total debt at March 29, 2024 and September 29, 2023 was $4,196 million and $4,211 million, respectively. See Note 7 to the Condensed Consolidated Financial Statements for additional information regarding debt.

As of March 29, 2024, Tyco Electronics Group S.A. (“TEGSA”), our wholly-owned subsidiary, had $291 million of commercial paper outstanding at a weighted-average interest rate of 5.50%. TEGSA had $330 million of commercial paper outstanding at a weighted-average interest rate of 5.50% at September 29, 2023.

TEGSA entered into a new five-year unsecured senior revolving credit facility (“Credit Facility”) in April 2024 with aggregate commitments of $1.5 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 April 2029 and permits, subject to conditions set forth therein, our contemplated merger and change in jurisdiction of incorporation. See Note 1 to the Condensed Consolidated Financial Statements for additional information regarding the merger and change in our jurisdiction of incorporation. TEGSA had no borrowings under the Replaced Credit Facility at March 29, 2024 or September 29, 2023.

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 29, 2024, 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 $365 million and $355 million in the first six months of fiscal 2024 and 2023, respectively.

In March 2024, our shareholders approved a dividend payment to shareholders of $2.60 per share, payable in four equal quarterly installments of $0.65 per share beginning in the third quarter of fiscal 2024 and ending in the second quarter of fiscal 2025.

During the first six months of fiscal 2024, our board of directors authorized an increase of $1.5 billion in our share repurchase program. We repurchased approximately six million of our common shares for $826 million and approximately four million of our common shares for $432 million under the share repurchase program during the first six months of fiscal 2024 and 2023, respectively. At March 29, 2024, we had $1.4 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 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 29,		​	September 29,		​
​		2024			2023
​	​	(in millions)					​
Balance Sheet Data:	​	​	​	​	​	​	​
Total current assets	​	$	1,077	​	$	1,632	​
Total noncurrent assets(1)	​		3,625	​		2,857	​
​	​	​	​	​	​	​	​
Total current liabilities	​		2,157	​		1,303	​
Total noncurrent liabilities(2)	​	​	13,231	​	​	7,592	​

	(1)	Includes $3,588 million and $2,783 million as of March 29, 2024 and September 29, 2023, respectively, of intercompany loans receivable from non-guarantor subsidiaries.

	(2)	Includes $10,241 million and $4,056 million as of March 29, 2024 and September 29, 2023, respectively, of intercompany loans payable to non-guarantor subsidiaries.

​	​	​	​	​	​	​	​
​	​	For the		​	For the		​
​	​	Six Months Ended		​	Fiscal Year Ended		​
​	​	March 29,		​	September 29,		​
​		2024			2023
​	​	(in millions)					​
Statement of Operations Data:	​	​	​	​	​	​	​
Loss from continuing operations	​	$	(48)	​	$	(606)	​
Net loss	​		(48)	​		(606)	​

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 2024 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 29, 2024, we had outstanding letters of credit, letters of guarantee, and surety bonds of $180 million, including letters of credit of $22 million associated with our divestiture of the Subsea Communications business. In addition, as of March 29, 2024, we had $25 million of performance guarantees associated with the divestiture. We contractually agreed to continue to honor letters of credit and performance guarantees related to the business’ projects that existed as of the date of sale; however, based on historical experience, we do not anticipate having to perform on these guarantees.

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 have been 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 the resulting investigations are ongoing. We have also been contacted by the U.S. Department of Justice concerning aspects of these matters. 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. Although 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 29, 2023. There were no significant changes to this information during the first six months of fiscal 2024.

Accounting Pronouncements

See Note 1 to the Condensed Consolidated Financial Statements for additional 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 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 Quarterly Report on Form 10-Q 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 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. Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended September 29, 2023, and in this 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, 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;

	●	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 conflict in certain parts of the world, 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;

	●	risks related to compliance with current and future environmental and other laws and regulations, including those related to climate change;

	●	risks related to the increasing scrutiny and expectations regarding environmental, social, and governance 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 non-U.S. and U.S. legislative proposals and other initiatives that, if adopted, 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 a Swiss corporation;

	●	the impact of fluctuations in the market price of our shares;

	●	the impact of certain provisions of our articles of association on unsolicited takeover proposals; and

	●	risks associated with the proposed change in our jurisdiction of incorporation to Ireland.

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.