PR Newswire | Oct 28, 2020 06:01AM EDT

2020

10/28 05:00 CDT

TE Connectivity announces fourth quarter and full year results for fiscal year 2020Sales up 28% sequentially, exceeding company's expectations; strong cash flow performance for full year SCHAFFHAUSEN, Switzerland, Oct. 28, 2020

SCHAFFHAUSEN, Switzerland, Oct. 28, 2020 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended Sept. 25, 2020.

Fourth Quarter Highlights

* Net sales were $3.26 billion, up 28% sequentially on a reported basis compared to the 10% increase the company expected. Sales were down 1% on a reported basis and down 4% on an organic basis year over year. * Growth in all segments sequentially, with Transportation segment up 49%, driven by Auto business. * GAAP earnings per share (EPS) from continuing operations were $0.69, and adjusted EPS were $1.16. * Cash flow from continuing operating activities was $719 million and free cash flow was $648 million.

Full Year Highlights

* Net sales were $12.2 billion, down 10% from fiscal year 2019 as a result of COVID-19 impact. * GAAP EPS from continuing operations were a loss of $0.78, and adjusted EPS were $4.26. * Cash flow from continuing operating activities was $2 billion and free cash flow was $1.5 billion, with $1.1 billion returned to shareholders.

"I am proud of our employees for delivering fourth quarter results well above our expectations, exiting the year with sequential sales growth in all segments. In particular, our Transportation segment was up nearly 50% from last quarter, driven by a recovery in auto production and our continued outperformance versus the market due to our strong position in hybrid and electric vehicle platform technology," said TE Connectivity CEO Terrence Curtin. "Our global manufacturing strategy and acceleration of our cost reduction activities enabled us to meet our commitments to our customers as they continue to navigate the impacts of COVID-19. Our full year results demonstrate strong cash flow generation and our portfolio is well positioned. While the markets remain uncertain, we do expect our first quarter of 2021 to be back to pre-COVID revenue levels and we expect an increase in profitability with year-over-year adjusted margin and EPS growth."

First Quarter FY21 Outlook

For the first quarter of fiscal 2021, the company expects net sales of approximately $3.2 billion, reflecting an increase of 1% on a reported basis and down 2% on an organic basis year over year. GAAP EPS from continuing operations are expected to be approximately $0.83, with adjusted EPS of approximately $1.25.

The company is not providing full year guidance due to limited visibility of COVID-19 impact on future demand. Information about TE Connectivity's use of non-GAAP financial measures is provided below. For reconciliations of these non-GAAP financial measures, see the attached tables.

Conference Call and Webcast

The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:

* At TE Connectivity's website: investors.te.com * By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (866) 211-4092, and for international callers, the dial-in number is (647) 689-6620. * A replay of the conference call will be available on TE Connectivity's investor website at investors.te.com at 11:30 a.m. ET on Oct. 28, 2020.

About TE Connectivity

TE Connectivity Ltd. (NYSE: TEL) is a $12 billion global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With approximately 80,000 employees, including more than 7,500 engineers, working alongside customers in approximately 140 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat and Twitter.

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 (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. This measure is a significant component in our incentive compensation plans. * Adjusted Operating Income (Loss) and Adjusted Operating Margin - represent operating income (loss) and operating margin, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, and other income or charges, if any. We utilize these adjusted measures in combination with operating income (loss) 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 (Loss) 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) Benefit and Adjusted Effective Tax Rate - represent income tax (expense) benefit 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, impairment of goodwill, other income or charges, and certain significant tax items, if any. * Adjusted Income (Loss) from Continuing Operations - represents income (loss) from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, 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 (Loss) Per Share - represents diluted earnings (loss) per share from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition-related charges, impairment of goodwill, 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, and the impact on our operations resulting from the coronavirus disease 2019 ("COVID-19"). Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, the extent, severity and duration of COVID-19 negatively affecting our business operations; business, economic, competitive and regulatory risks, such as conditions affecting demand for products in the automotive and other industries we serve; 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, including the effects of Swiss tax reform. In addition, the extent to which COVID-19 will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the geographic spread of the virus, the severity of the virus, the duration of the outbreak, the impact on our suppliers' and customers' supply chains, the actions that may be taken by various governmental authorities in response to the outbreak in jurisdictions in which we operate, and the possible impact on the global economy and local economies in which we operate. 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. 27, 2019 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 For the Year Ended

September 25, September 27, September 25, September 27,

2020 2019 2020 2019

(in millions, except per share data)

Net sales $ 3,261 $ 3,300 $ 12,172 $ 13,448

Cost of sales 2,292 2,248 8,437 9,054

Gross margin 969 1,052 3,735 4,394

Selling, general, and administrative expenses 352 372 1,392 1,490

Research, development, and engineering expenses 148 159 613 644

Acquisition and integration costs 9 6 36 27

Restructuring and other charges, net 113 71 257 255

Impairment of goodwill - - 900 -

Operating income 347 444 537 1,978

Interest income 2 6 15 19

Interest expense (12) (13) (48) (68)

Other income, net - - 20 2

Income from continuing operations before income taxes 337 437 524 1,931

Income tax (expense) benefit (109) (61) (783) 15

Income (loss) from continuing operations 228 376 (259) 1,946

Income (loss) from discontinued operations, net of income taxes 2 (4) 18 (102)

Net income (loss) $ 230 $ 372 $ (241) $ 1,844

Basic earnings (loss) per share:

Income (loss) from continuing operations $ 0.69 $ 1.12 $ (0.78) $ 5.76

Income (loss) from discontinued operations 0.01 (0.01) 0.05 (0.30)

Net income (loss) 0.70 1.11 (0.73) 5.46

Diluted earnings (loss) per share:

Income (loss) from continuing operations $ 0.69 $ 1.11 $ (0.78) $ 5.72

Income (loss) from discontinued operations 0.01 (0.01) 0.05 (0.30)

Net income (loss) 0.69 1.10 (0.73) 5.42

Weighted-average number of shares outstanding:

Basic 330 336 332 338

Diluted 332 338 332 340

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 25, September 27,

2020 2019

(in millions, except share data)

Assets

Current assets:

Cash and cash equivalents $ 945 $ 927

Accounts receivable, net of allowance for doubtful accounts of $29 and $25, 2,377 2,320respectively

Inventories 1,950 1,836

Prepaid expenses and other current assets 512 471

Total current assets 5,784 5,554

Property, plant, and equipment, net 3,650 3,574

Goodwill 5,224 5,740

Intangible assets, net 1,593 1,596

Deferred income taxes 2,178 2,776

Other assets 813 454

Total assets $ 19,242 $ 19,694

Liabilities, redeemable noncontrolling interests, and shareholders' equity

Current liabilities:

Short-term debt $ 694 $ 570

Accounts payable 1,276 1,357

Accrued and other current liabilities 1,720 1,613

Total current liabilities 3,690 3,540

Long-term debt 3,452 3,395

Long-term pension and postretirement liabilities 1,336 1,367

Deferred income taxes 143 156

Income taxes 252 239

Other liabilities 874 427

Total liabilities 9,747 9,124

Commitments and contingencies

Redeemable noncontrolling interests 112 -

Shareholders' equity:

Common shares, CHF 0.57 par value, 338,953,381 shares authorized and issued,and 149 154350,951,381 shares authorized and issued, respectively

Accumulated earnings 10,348 12,256

Treasury shares, at cost, 8,295,878 and 15,862,337 shares, respectively (669) (1,337)

Accumulated other comprehensive loss (445) (503)

Total shareholders' equity 9,383 10,570

Total liabilities, redeemable noncontrolling interests, and shareholders' $ 19,242 $ 19,694equity

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Quarters Ended For the Year Ended

September 25, September 27, September 25, September 27,

2020 2019 2020 2019

(in millions)

Cash flows from operating activities:

Net income (loss) $ 230 $ 372 $ (241) $ 1,844

(Income) loss from discontinued operations, net of income taxes (2) 4 (18) 102

Income (loss) from continuing operations 228 376 (259) 1,946

Adjustments to reconcile income (loss) from continuing operations to net cashprovided by operatingactivities:

Impairment of goodwill - - 900 -

Depreciation and amortization 181 175 711 690

Deferred income taxes 76 72 535 (218)

Non-cash lease cost 29 - 108 -

Provision for losses on accounts receivable and inventories (14) 7 14 43

Share-based compensation expense 20 19 74 75

Other 14 25 54 51

Changes in assets and liabilities, net of the effects of acquisitions anddivestitures:

Accounts receivable, net (245) 136 (63) 31

Inventories 253 123 (89) 64

Prepaid expenses and other current assets 24 35 51 144

Accounts payable 1 (92) (80) (178)

Accrued and other current liabilities 105 132 (99) (15)

Income taxes (29) (72) (9) (135)

Other 76 (57) 143 (44)

Net cash provided by continuing operating activities 719 879 1,991 2,454

Net cash provided by (used in) discontinued operating activities 1 (1) 1 (32)

Net cash provided by operating activities 720 878 1,992 2,422

Cash flows from investing activities:

Capital expenditures (121) (179) (560) (749)

Proceeds from sale of property, plant, and equipment 11 27 17 43

Acquisition of businesses, net of cash acquired (11) - (339) (283)

Proceeds from divestiture of discontinued operation, net of cash retained by - - - 297sold operation

Other 4 (1) 17 2

Net cash used in continuing investing activities (117) (153) (865) (690)

Net cash used in discontinued investing activities - - - (2)

Net cash used in investing activities (117) (153) (865) (692)

Cash flows from financing activities:

Net increase (decrease) in commercial paper - 219 (219) (51)

Proceeds from issuance of debt - - 593 746

Repayment of debt - (250) (352) (691)

Proceeds from exercise of share options 26 30 55 85

Repurchase of common shares - (178) (523) (1,091)

Payment of common share dividends to shareholders (159) (154) (625) (608)

Transfers (to) from discontinued operations 1 (1) 1 (34)

Other (2) (1) (34) (33)

Net cash used in continuing financing activities (134) (335) (1,104) (1,677)

Net cash provided by (used in) discontinued financing activities (1) 1 (1) 34

Net cash used in financing activities (135) (334) (1,105) (1,643)

Effect of currency translation on cash 3 (10) (4) (8)

Net increase in cash, cash equivalents, and restricted cash 471 381 18 79

Cash, cash equivalents, and restricted cash at beginning of fiscal year 474 546 927 848

Cash, cash equivalents, and restricted cash at end of fiscal year $ 945 $ 927 $ 945 $ 927

Supplemental cash flow information:

Interest paid on debt, net $ 19 $ 19 $ 50 $ 75

Income taxes paid, net of refunds 62 61 257 338

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)

For the Quarters Ended For the Year Ended

September 25, September 27, September 25, September 27,

2020 2019 2020 2019

(in millions)

Net cash provided by continuing operating activities $ 719 $ 879 $ 1,991 $ 2,454

Excluding:

Cash (collected) paid pursuant to collateral requirements related to 39 (39) 34 (132)cross-currency swap contracts

Capital expenditures, net (110) (152) (543) (706)

Free cash flow ^(1) $ 648 $ 688 $ 1,482 $ 1,616

^(1) Free cash flow is a non-GAAP financial measure. See description ofnon-GAAP financial measures.

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

For the Quarters Ended For the Year Ended

September 25, September 27, September 25, September 27,

2020 2019 2020 2019

($ in millions)

Net Sales Net Sales Net Sales Net Sales

Transportation Solutions $ 1,865 $ 1,896 $ 6,845 $ 7,821

Industrial Solutions 959 1,014 3,713 3,954

Communications Solutions 437 390 1,614 1,673

Total $ 3,261 $ 3,300 $ 12,172 $ 13,448

Operating Operating Operating Operating Operating Operating Operating Operating

Income Margin Income Margin Income (Loss) Margin Income Margin

Transportation Solutions $ 198 10.6 % $ 270 14.2 % $ (93) (1.4) % $ 1,226 15.7 %

Industrial Solutions 85 8.9 150 14.8 412 11.1 543 13.7

Communications Solutions 64 14.6 24 6.2 218 13.5 209 12.5

Total $ 347 10.6 % $ 444 13.5 % $ 537 4.4 % $ 1,978 14.7 %

Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted Adjusted

Operating Operating Operating Operating Operating Operating Operating Operating

Income ^(1) Margin ^(1) Income ^(1) Margin ^(1) Income ^(1) Margin ^(1) Income ^(1) Margin ^(1)

Transportation Solutions $ 245 13.1 % $ 334 17.6 % $ 952 13.9 % $ 1,401 17.9 %

Industrial Solutions 133 13.9 157 15.5 522 14.1 621 15.7

Communications Solutions 95 21.7 47 12.1 260 16.1 258 15.4

Total $ 473 14.5 % $ 538 16.3 % $ 1,734 14.2 % $ 2,280 17.0 %

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (DECLINE) (UNAUDITED)

Change in Net Sales for the Quarter Ended September 25, 2020

versus Net Sales for the Quarter Ended September 27, 2019

Net Sales Organic Net Sales

Growth (Decline) Growth (Decline) ^(1) Translation ^(2) Acquisitions

($ in millions)

Transportation Solutions ^(3):

Automotive $ (38) (2.8) % $ (61) (4.2) % $ 23 $ -

Commercial transportation (17) (6.0) (17) (6.0) - -

Sensors 24 10.0 (39) (16.5) 3 60

Total (31) (1.6) (117) (6.0) 26 60

Industrial Solutions ^(3):

Aerospace, defense, oil, and gas (39) (11.2) (43) (12.5) 4 -

Industrial equipment (2) (0.7) (6) (2.2) 4 -

Medical (16) (8.6) (16) (8.6) - -

Energy 2 1.1 - - 2 -

Total (55) (5.4) (65) (6.4) 10 -

Communications Solutions ^(3):

Data and devices 20 8.3 17 7.1 3 -

Appliances 27 18.0 27 18.0 - -

Total 47 12.1 44 11.3 3 -

Total $ (39) (1.2) % $ (138) (4.1) % $ 39 $ 60

Change in Net Sales for the Year Ended September 25, 2020

versus Net Sales for the Year Ended September 27, 2019

Net Sales Organic Net Sales

Growth (Decline) Growth (Decline) ^(1) Translation ^(2) Acquisitions

($ in millions)

Transportation Solutions ^(3):

Automotive $ (783) (13.8) % $ (742) (12.9) % $ (41) $ -

Commercial transportation (170) (13.9) (176) (14.4) (21) 27

Sensors (23) (2.5) (148) (16.3) (3) 128

Total (976) (12.5) (1,066) (13.5) (65) 155

Industrial Solutions ^(3):

Aerospace, defense, oil, and gas (105) (8.0) (100) (7.8) (5) -

Industrial equipment (144) (11.6) (133) (10.7) (11) -

Medical (10) (1.4) (9) (1.3) (1) -

Energy 18 2.6 30 4.3 (12) -

Total (241) (6.1) (212) (5.4) (29) -

Communications Solutions ^(3):

Data and devices (20) (2.0) (23) (2.5) 3 -

Appliances (39) (5.7) (31) (4.4) (8) -

Total (59) (3.5) (54) (3.2) (5) -

Total $ (1,276) (9.5) % $ (1,332) (9.9) % $ (99) $ 155

^(1) Organic net sales growth (decline) is a non-GAAP financial measure. Seedescription of non-GAAP financial measures.

^(2) Represents the change in net sales resulting from changes in foreigncurrency exchange rates.

^(3) Industry end market information is presented consistently with ourinternal management reporting and may be periodically revised as managementdeemsnecessary.

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 25, 2020

(UNAUDITED)

Adjustments

Acquisition- Restructuring

Related and Other Adjusted

U.S. GAAP Charges ^(1) Charges, Net ^(1) Tax Items ^(2) (Non-GAAP) ^(3)

($ in millions, except per share data)

Operating income:

Transportation Solutions $ 198 $ 11 $ 36 $ - $ 245

Industrial Solutions 85 2 46 - 133

Communications Solutions 64 - 31 - 95

Total $ 347 $ 13 $ 113 $ - $ 473

Operating margin 10.6 % 14.5 %

Income tax expense $ (109) $ (4) $ (21) $ 56 $ (78)

Effective tax rate 32.3 % 16.8 %

Income from continuing operations $ 228 $ 9 $ 92 $ 56 $ 385

Diluted earnings per share from continuing operations $ 0.69 $ 0.03 $ 0.28 $ 0.17 $ 1.16

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

^(2) Income tax expense related to increases to the valuation allowance forcertain deferred tax assets.

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 27, 2019

(UNAUDITED)

Adjustments

Acquisition-

Related Charges Restructuring

and Other and Other Adjusted

U.S. GAAP Items ^(1)(2) Charges, Net ^(1) Tax Items (Non-GAAP) ^(3)

($ in millions, except per share data)

Operating income:

Transportation Solutions $ 270 $ 18 $ 46 $ - $ 334

Industrial Solutions 150 4 3 - 157

Communications Solutions 24 1 22 - 47

Total $ 444 $ 23 $ 71 $ - $ 538

Operating margin 13.5 % 16.3 %

Income tax expense $ (61) $ (5) $ (15) $ 1 $ (80)

Effective tax rate 14.0 % 15.1 %

Income from continuing operations $ 376 $ 18 $ 56 $ 1 $ 451

Diluted earnings per share from continuing operations $ 1.11 $ 0.05 $ 0.17 $ - $ 1.33

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

^(2) Includes acquisition-related charges of $6 million and a write-off ofspare parts of $17 million.

^(3) 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 25, 2020

(UNAUDITED)

Adjustments

Acquisition- Restructuring

Related and Other Impairment Adjusted

U.S. GAAP Charges ^(1) Charges, Net ^(1) of Goodwill ^(1) Tax Items ^(2) (Non-GAAP) ^(4)

($ in millions, except per share data)

Operating income (loss):

Transportation Solutions $ (93) $ 32 $ 113 $ 900 $ - $ 952

Industrial Solutions 412 8 102 - - 522

Communications Solutions 218 - 42 - - 260

Total $ 537 $ 40 $ 257 $ 900 $ - $ 1,734

Operating margin 4.4 % 14.2 %

Other income, net $ 20 $ - $ - $ - $ (8) $ 12

Income tax expense $ (783) $ (8) $ (46) $ (4) $ 550 $ (291)

Effective tax rate 149.4 % 17.0 %

Income (loss) from continuing $ (259) $ 32 $ 211 $ 896 $ 542 $ 1,422operations

Diluted earnings (loss) per share from $ (0.78) $ 0.10 $ 0.63 $ 2.68 $ 1.62 $ 4.26continuing operations ^(3)

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

^(2) Includes $355 million of income tax expense related to the tax impacts ofcertain measures of Swiss tax reform and $226 million of income tax expenserelated toincreases to the valuation allowance for certain deferred tax assets, partiallyoffset by a $31 million income tax benefit related to pre-separation taxmatters and thetermination of the tax sharing agreement with Tyco International and Covidien.

^(3) U.S. GAAP diluted shares excludes two million of nonvested share awardsand options outstanding as the inclusion of these securities would have beenantidilutive because of our loss during the period. Such amounts are includedin adjusted (non-GAAP) diluted shares.

^(4) 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 27, 2019

(UNAUDITED)

Adjustments

Acquisition-

Related Charges Restructuring

and Other and Other Adjusted

U.S. GAAP Items ^(1)(2) Charges, Net ^(1) Tax Items ^(3) (Non-GAAP) ^(4)

($ in millions, except per share data)

Operating income:

Transportation Solutions $ 1,226 $ 31 $ 144 $ - $ 1,401

Industrial Solutions 543 15 63 - 621

Communications Solutions 209 1 48 - 258

Total $ 1,978 $ 47 $ 255 $ - $ 2,280

Operating margin 14.7 % 17.0 %

Other income, net $ 2 $ - $ - $ - $ 2

Income tax (expense) benefit $ 15 $ (9) $ (61) $ (291) $ (346)

Effective tax rate (0.8) % 15.5 %

Income from continuing operations $ 1,946 $ 38 $ 194 $ (291) $ 1,887

Diluted earnings per share from continuing operations $ 5.72 $ 0.11 $ 0.57 $ (0.86) $ 5.55

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

^(2) Includes acquisition-related charges of $30 million and a write-off ofspare parts of $17 million.

^(3) Includes a $216 million income tax benefit related to the tax impacts ofcertain measures of Swiss tax reform, a $90 million income tax benefit relatedto theeffective settlement of a tax audit in a non-U.S. jurisdiction, and $15 millionof income tax expense associated with the tax impacts of certain legal entityrestructurings and intercompany transactions.

^(4) 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 27, 2019

(UNAUDITED)

Adjustments

Acquisition- Restructuring

Related and Other Adjusted

U.S. GAAP Charges ^(1) Charges, Net ^(1) Tax Items ^(2) (Non-GAAP) ^(3)

($ in millions, except per share data)

Operating income:

Transportation Solutions $ 316 $ 5 $ 4 $ - $ 325

Industrial Solutions 115 2 15 - 132

Communications Solutions 40 - 5 - 45

Total $ 471 $ 7 $ 24 $ - $ 502

Operating margin 14.9 % 15.8 %

Other income, net $ 5 $ - $ - $ - $ 5

Income tax expense $ (447) $ (1) $ - $ 355 $ (93)

Effective tax rate 95.1 % 18.6 %

Income from continuing operations $ 23 $ 6 $ 24 $ 355 $ 408

Diluted earnings per share from continuing operations $ 0.07 $ 0.02 $ 0.07 $ 1.05 $ 1.21

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

^(2) Income tax expense related to the tax impacts of certain measures of Swisstax reform.

^(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 October 28, 2020

(UNAUDITED)

Outlook for

Quarter Ending

December 25,

2020

Diluted earnings per share from continuing operations $ 0.83

Restructuring and other charges, net 0.40

Acquisition-related charges 0.02

Adjusted diluted earnings per share from continuing operations ^(1) $ 1.25

Net sales growth (decline) 1.0 %

Translation (1.7)

(Acquisitions) divestitures, net (1.3)

Organic net sales growth (decline) ^(1) (2.0) %

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

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SOURCE TE Connectivity Ltd.