Non-GAAP Financial Measures

We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.

The following provides additional information regarding our non-GAAP financial measures:

· Organic Net Sales Growth — represents net sales growth (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 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. This measure is a significant component in our incentive compensation plans.

· Adjusted Operating Income and Adjusted Operating Margin — represent operating income and operating margin, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, acquisition related charges, and other income or charges, if any. We utilize these adjusted measures in combination with operating income and operating margin to assess segment level operating performance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant component in our incentive compensation plans.

· Adjusted Other Income (Expense), Net — represents net other income (expense) (the most comparable GAAP financial measure) before special items including tax sharing income related to adjustments to prior period tax returns and other items, if any.

· Adjusted Income Tax Expense and Adjusted Effective Tax Rate — represent income tax expense and effective tax rate, respectively (the most comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition related charges, other income or charges, and certain significant tax items, if any.

· Adjusted Income from Continuing Operations — represents income from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.

· Adjusted Earnings Per Share — represents diluted earnings per share from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. This measure is a significant component in our incentive compensation plans.

· Free Cash Flow (FCF) — is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflows and inflows that we believe are useful to identify. We believe Free Cash Flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations.

Free Cash Flow is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters and cash paid (collected) pursuant to collateral requirements related to cross-currency swap contracts, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments.

In the calculation of Free Cash Flow, we subtract certain cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and may imply that there is less or more cash available for our programs than the most comparable GAAP financial measure indicates. It should not be inferred that the entire Free Cash Flow amount is available for future discretionary expenditures, as our definition of Free Cash Flow does not consider certain non-discretionary expenditures, such as debt payments. In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of Free Cash Flow.

Forward-Looking Statements

This release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive and data and devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. More detailed information about these and other factors is set forth in TE Connectivity Ltd.’s Annual Report on Form 10-K for the fiscal year ended Sept. 28, 2018 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

# # #

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	For the Quarters Ended
	December 28,			December 29,
	2018			2017
	(in millions, except per share data)
Net sales	$	3,347		$	3,336
Cost of sales	2,233			2,172
Gross margin	1,114			1,164
Selling, general, and administrative expenses	389			377
Research, development, and engineering expenses	161			165
Acquisition and integration costs	5			2
Restructuring and other charges, net	75			34
Operating income	484			586
Interest income	5			4
Interest expense	(27		)	(26		)
Other income (expense), net	(1		)	2
Income from continuing operations before income taxes	461			566
Income tax expense	(78		)	(599		)
Income (loss) from continuing operations	383			(33		)
Loss from discontinued operations, net of income taxes	(107		)	(7		)
Net income (loss)	$	276		$	(40	)

Basic earnings (loss) per share:
Income (loss) from continuing operations	$	1.12		$	(0.09	)
Loss from discontinued operations	(0.31		)	(0.02		)
Net income (loss)	0.81			(0.11		)

Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	1.11		$	(0.09	)
Loss from discontinued operations	(0.31		)	(0.02		)
Net income (loss)	0.80			(0.11		)

Weighted-average number of shares outstanding:
Basic	342			352
Diluted	344			352

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	December 28,			September 28,
	2018			2018
	(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents	$	505		$	848
Accounts receivable, net of allowance for doubtful accounts of $26 and $22, respectively	2,380			2,361
Inventories	1,986			1,857
Prepaid expenses and other current assets	507			661
Current assets held for sale	—			472
Total current assets	5,378			6,199
Property, plant, and equipment, net	3,550			3,497
Goodwill	5,648			5,684
Intangible assets, net	1,648			1,704
Deferred income taxes	2,580			2,144
Other assets	384			1,158
Total Assets	$	19,188		$	20,386

Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	$	585		$	963
Accounts payable	1,538			1,548
Accrued and other current liabilities	1,348			1,711
Current liabilities held for sale	—			188
Total current liabilities	3,471			4,410
Long-term debt	3,382			3,037
Long-term pension and postretirement liabilities	1,101			1,102
Deferred income taxes	207			207
Income taxes	335			312
Other liabilities	456			487
Total Liabilities	8,952			9,555
Commitments and contingencies
Shareholders’ equity:
Common shares, CHF 0.57 par value, 357,069,981 shares authorized and issued	157			157
Accumulated earnings	11,886			12,114
Treasury shares, at cost, 17,727,608 and 12,279,603 shares, respectively	(1,550		)	(1,134		)
Accumulated other comprehensive loss	(257		)	(306		)
Total Shareholders’ Equity	10,236			10,831
Total Liabilities and Shareholders’ Equity	$	19,188		$	20,386

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Quarters Ended
	December 28,			December 29,
	2018			2017
	(in millions)
Cash Flows From Operating Activities:
Net income (loss)	$	276		$	(40	)
Loss from discontinued operations, net of income taxes	107			7
Income (loss) from continuing operations	383			(33		)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
Depreciation and amortization	168			162
Deferred income taxes	(11		)	510
Provision for losses on accounts receivable and inventories	23			17
Share-based compensation expense	23			28
Other	18			(6		)
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:
Accounts receivable, net	(26		)	(139		)
Inventories	(119		)	(177		)
Prepaid expenses and other current assets	67			(45		)
Accounts payable	(9		)	161
Accrued and other current liabilities	(190		)	(239		)
Income taxes	15			7
Other	(14		)	37
Net cash provided by continuing operating activities	328			283
Net cash provided by (used in) discontinued operating activities	(31		)	67
Net cash provided by operating activities	297			350
Cash Flows From Investing Activities:
Capital expenditures	(210		)	(237		)
Proceeds from sale of property, plant, and equipment	1			—
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation	288			—
Other	3			—
Net cash provided by (used in) continuing investing activities	82			(237		)
Net cash used in discontinued investing activities	(2		)	(4		)
Net cash provided by (used in) investing activities	80			(241		)
Cash Flows From Financing Activities:
Net increase in commercial paper	63			241
Proceeds from issuance of debt	350			119
Repayment of debt	(441		)	(708		)
Proceeds from exercise of share options	7			54
Repurchase of common shares	(519		)	(167		)
Payment of common share dividends to shareholders	(150		)	(141		)
Transfers (to) from discontinued operations	(33		)	63
Other	(29		)	(32		)
Net cash used in continuing financing activities	(752		)	(571		)
Net cash provided by (used in) discontinued financing activities	33			(63		)
Net cash used in financing activities	(719		)	(634		)
Effect of currency translation on cash	(1		)	11
Net decrease in cash, cash equivalents, and restricted cash	(343		)	(514		)
Cash, cash equivalents, and restricted cash at beginning of period	848			1,218
Cash, cash equivalents, and restricted cash at end of period	$	505		$	704

Supplemental Cash Flow Information:
Interest paid	$	19		$	41
Income taxes paid, net of refunds	75			82

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

	For the Quarters Ended
	December 28,		December 29,
	2018		2017
	($ in millions)
	Net Sales		Net Sales
Transportation Solutions	$	1,986	$	2,032
Industrial Solutions	928		882
Communications Solutions	433		422
Total	$	3,347	$	3,336

	Operating		Operating		Operating		Operating
	Income		Margin		Income		Margin
Transportation Solutions	$	332	16.7	%	$	417	20.5	%
Industrial Solutions	100		10.8		102		11.6
Communications Solutions	52		12.0		67		15.9
Total	$	484	14.5	%	$	586	17.6	%

	Adjusted		Adjusted		Adjusted		Adjusted
	Operating		Operating		Operating		Operating
	Income (1)		Margin (1)		Income (1)		Margin (1)
Transportation Solutions	$	356	17.9	%	$	426	21.0	%
Industrial Solutions	138		14.9		126		14.3
Communications Solutions	71		16.4		75		17.8
Total	$	565	16.9	%	$	627	18.8	%

(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

	Change in Net Sales for the Quarter Ended December 28, 2018
	versus Net Sales for the Quarter Ended December 29, 2017
	Net					Organic Net
	Sales Growth					Sales Growth (1)					Translation (2)			Acquisition
	($ in millions)
Transportation Solutions (3):
Automotive	$	(48	)	(3.2	)%	$	(9	)	(0.6	)%	$	(39	)	$	—
Commercial transportation	(3		)	(1.0	)	5			1.7		(8		)	—
Sensors	5			2.3		8			3.8		(3		)	—
Total	(46		)	(2.3	)	4			0.2		(50		)	—
Industrial Solutions (3):
Industrial equipment	12			2.5		(2		)	(0.5	)	(7		)	21
Aerospace, defense, oil, and gas	31			12.2		33			12.7		(2		)	—
Energy	3			1.9		9			5.8		(6		)	—
Total	46			5.2		40			4.5		(15		)	21
Communications Solutions (3):
Data and devices	19			8.0		22			9.3		(3		)	—
Appliances	(8		)	(4.3	)	(3		)	(1.7	)	(5		)	—
Total	11			2.6		19			4.6		(8		)	—
Total	$	11		0.3	%	$	63		1.9	%	$	(73	)	$	21

(1) Organic net sales growth is a non-GAAP financial measure. See description of non-GAAP financial measures.

(2) Represents the change in net sales resulting from changes in foreign currency exchange rates.

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 28, 2018

(UNAUDITED)

				Adjustments
				Acquisition			Restructuring
				Related			and Other			Adjusted
	U.S. GAAP			Charges (1)			Charges, Net (1)			(Non-GAAP) (2)
	($ in millions, except per share data)
Operating Income:
Transportation Solutions	$	332		$	3		$	21		$	356
Industrial Solutions	100			3			35			138
Communications Solutions	52			—			19			71
Total	$	484		$	6		$	75		$	565

Operating Margin	14.5		%							16.9		%

Other Expense, Net	$	(1	)	$	—		$	—		$	(1	)

Income Tax Expense	$	(78	)	$	(1	)	$	(19	)	$	(98	)

Effective Tax Rate	16.9		%							18.1		%

Income from Continuing Operations	$	383		$	5		$	56		$	444

Diluted Earnings per Share from Continuing Operations	$	1.11		$	0.01		$	0.16		$	1.29

(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.

(2) See description of non-GAAP financial measures.

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 29, 2017

(UNAUDITED)

				Adjustments
				Acquisition			Restructuring
				Related			and Other			Tax			Adjusted
	U.S. GAAP			Charges (1)			Charges, Net (1)			Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating Income:
Transportation Solutions	$	417		$	5		$	4		$	—		$	426
Industrial Solutions	102			2			22			—			126
Communications Solutions	67			—			8			—			75
Total	$	586		$	7		$	34		$	—		$	627

Operating Margin	17.6		%										18.8		%

Other Income, Net	$	2		$	—		$	—		$	(1	)	$	1

Income Tax Expense	$	(599	)	$	(2	)	$	(8	)	$	506		$	(103	)

Effective Tax Rate	105.8		%										17.0		%

Income (Loss) from Continuing Operations	$	(33	)	$	5		$	26		$	505		$	503

Diluted Earnings (Loss) per Share from Continuing Operations (4)	$	(0.09	)	$	0.01		$	0.07		$	1.42		$	1.42

(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.

(2) Includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act and a $61 million income tax benefit related to certain legal entity restructurings.

(3) See description of non-GAAP financial measures.

(4) U.S. GAAP diluted shares excludes 3 million of nonvested restricted share awards and nonvested options as the inclusion of these securities would have been antidilutive because of our loss during the period. Such amounts are included in adjusted (non-GAAP) diluted shares.

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended March 30, 2018

(UNAUDITED)

				Adjustments
						Restructuring
				Acquisition		and Other
				Related		Charges			Adjusted
	U.S. GAAP			Charges (1)		(Credits), Net (1)			(Non-GAAP) (2)
	($ in millions, except per share data)
Operating Income:
Transportation Solutions	$	427		$	2	$	(2	)	$	427
Industrial Solutions	125			3		7			135
Communications Solutions	69			—		1			70
Total	$	621		$	5	$	6		$	632

Operating Margin	17.4		%						17.7		%

Other Income, Net	$	1		$	—	$	—		$	1

Income Tax Expense	$	(108	)	$	—	$	1		$	(107	)

Effective Tax Rate	18.1		%						17.6		%

Income from Continuing Operations	$	490		$	5	$	7		$	502

Diluted Earnings per Share from Continuing Operations	$	1.38		$	0.01	$	0.02		$	1.42

(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.

(2) See description of non-GAAP financial measures.

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 28, 2018

(UNAUDITED)

				Adjustments
				Acquisition			Restructuring
				Related			and Other			Tax			Adjusted
	U.S. GAAP			Charges (1)			Charges, Net (1)			Items (2)			(Non-GAAP) (3)
	($ in millions, except per share data)
Operating Income:
Transportation Solutions	$	1,578		$	12		$	33		$	—		$	1,623
Industrial Solutions	465			10			80			—			555
Communications Solutions	288			—			13			—			301
Total	$	2,331		$	22		$	126		$	—		$	2,479

Operating Margin	16.7		%										17.7		%

Other Income, Net	$	1		$	—		$	—		$	(1	)	$	—

Income Tax (Expense) Benefit	$	344		$	(5	)	$	(31	)	$	(716	)	$	(408	)

Effective Tax Rate	(15.4		)%										17.1		%

Income from Continuing Operations	$	2,584		$	17		$	95		$	(717	)	$	1,979

Diluted Earnings per Share from Continuing Operations	$	7.32		$	0.05		$	0.27		$	(2.03	)	$	5.61

(1) The tax effect of each non-GAAP adjustment is calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.

(2) Includes a $1,283 million net income tax benefit associated with the tax impacts of certain intercompany transactions and legal entity restructurings including an increase to the valuation allowance. Also includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act.

(3) See description of non-GAAP financial measures.

TE CONNECTIVITY LTD.

RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of January 23, 2019

(UNAUDITED)

	Outlook for
	Quarter Ending
	March 29,	Outlook for
	2019	Fiscal 2019
Diluted earnings per share from continuing operations (GAAP)	$1.13 - $1.17	$4.94 - $5.14
Restructuring and other charges, net	0.10	0.33
Acquisition related charges	0.02	0.08
Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)	$1.25 - $1.29	$5.35 - $5.55

Net sales growth (GAAP)	(7)% - (5)%	(4)% - (1)%
Translation	5	3
(Acquisitions) divestitures, net	(1)	(1)
Organic net sales growth (non-GAAP) (1)	(3)% - (1)%	(2)% - 1%

(1) See description of non-GAAP financial measures.

Contacts:	Media Relations:	Investor Relations:
	B.J. Talley	Sujal Shah
	TE Connectivity	TE Connectivity
	610-893-9553	610-893-9790
	bj.talley@te.com	sujal.shah@te.com