16. Tyco Electronics Group S.A.

Tyco Electronics Group S.A. (“TEGSA”), a Luxembourg company and our 100%-owned subsidiary, is a holding company that owns, directly or indirectly, all of our operating subsidiaries. TEGSA is the obligor under our senior notes, commercial paper, and Credit Facility, which are fully and unconditionally guaranteed by its parent, TE Connectivity Ltd. The following tables present condensed consolidating financial information for TE Connectivity Ltd., TEGSA, and all other subsidiaries that are not providing a guarantee of debt but which represent assets of TEGSA, using the equity method of accounting.

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 29, 2019


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,412	$	—	$	3,412
Cost of sales		—		—		2,294		—		2,294
Gross margin		—		—		1,118		—		1,118
Selling, general, and administrative expenses, net		28		9		336		—		373
Research, development, and engineering expenses		—		—		166		—		166
Acquisition and integration costs		—		—		7		—		7
Restructuring and other charges, net		—		—		42		—		42
Operating income (loss)		(28)		(9)		567		—		530
Interest income		—		1		3		—		4
Interest expense		—		(14)		(1)		—		(15)
Other income, net		—		1		—		—		1
Equity in net income of subsidiaries		489		560		—		(1,049)		—
Equity in net income of subsidiaries of discontinued operations		10		3		—		(13)		—
Intercompany interest income (expense), net		(32)		(50)		82		—		—
Income from continuing operations before income taxes		439		492		651		(1,062)		520
Income tax expense		—		—		(91)		—		(91)
Income from continuing operations		439		492		560		(1,062)		429
Income from discontinued operations, net of income taxes		—		7		3		—		10
Net income		439		499		563		(1,062)		439
Other comprehensive income		97		97		47		(144)		97
Comprehensive income	$	536	$	596	$	610	$	(1,206)	$	536

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 30, 2018


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,562	$	—	$	3,562
Cost of sales		—		—		2,350		—		2,350
Gross margin		—		—		1,212		—		1,212
Selling, general, and administrative expenses, net		41		9		359		—		409
Research, development, and engineering expenses		—		—		173		—		173
Acquisition and integration costs		—		—		3		—		3
Restructuring and other charges, net		—		—		6		—		6
Operating income (loss)		(41)		(9)		671		—		621
Interest income		—		1		3		—		4
Interest expense		—		(29)		1		—		(28)
Other income, net		—		—		1		—		1
Equity in net income of subsidiaries		548		555		—		(1,103)		—
Intercompany interest income (expense), net		(17)		30		(13)		—		—
Income from continuing operations before income taxes		490		548		663		(1,103)		598
Income tax expense		—		—		(108)		—		(108)
Net income		490		548		555		(1,103)		490
Other comprehensive income		73		73		94		(167)		73
Comprehensive income	$	563	$	621	$	649	$	(1,270)	$	563

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 29, 2019


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	6,759	$	—	$	6,759
Cost of sales		—		—		4,527		—		4,527
Gross margin		—		—		2,232		—		2,232
Selling, general, and administrative expenses, net		63		(98)		797		—		762
Research, development, and engineering expenses		—		—		327		—		327
Acquisition and integration costs		—		—		12		—		12
Restructuring and other charges, net		—		—		117		—		117
Operating income (loss)		(63)		98		979		—		1,014
Interest income		—		1		8		—		9
Interest expense		—		(41)		(1)		—		(42)
Other income (expense), net		—		1		(1)		—		—
Equity in net income of subsidiaries		930		949		—		(1,879)		—
Equity in net loss of subsidiaries of discontinued operations		(97)		(46)		—		143		—
Intercompany interest income (expense), net		(55)		(78)		133		—		—
Income from continuing operations before income taxes		715		884		1,118		(1,736)		981
Income tax expense		—		—		(169)		—		(169)
Income from continuing operations		715		884		949		(1,736)		812
Loss from discontinued operations, net of income taxes		—		(51)		(46)		—		(97)
Net income		715		833		903		(1,736)		715
Other comprehensive income		146		146		82		(228)		146
Comprehensive income	$	861	$	979	$	985	$	(1,964)	$	861

Condensed Consolidating Statement of Operations (unaudited)
For the Six Months Ended March 30, 2018


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	6,898	$	—	$	6,898
Cost of sales		—		—		4,522		—		4,522
Gross margin		—		—		2,376		—		2,376
Selling, general, and administrative expenses, net		88		6		692		—		786
Research, development, and engineering expenses		—		—		338		—		338
Acquisition and integration costs		—		—		5		—		5
Restructuring and other charges, net		—		—		40		—		40
Operating income (loss)		(88)		(6)		1,301		—		1,207
Interest income		—		1		7		—		8
Interest expense		—		(55)		1		—		(54)
Other income, net		—		—		3		—		3
Equity in net income of subsidiaries		575		577		—		(1,152)		—
Equity in net loss of subsidiaries of discontinued operations		(7)		(7)		—		14		—
Intercompany interest income (expense), net		(30)		58		(28)		—		—
Income from continuing operations before income taxes		450		568		1,284		(1,138)		1,164
Income tax expense		—		—		(707)		—		(707)
Income from continuing operations		450		568		577		(1,138)		457
Loss from discontinued operations, net of income taxes		—		—		(7)		—		(7)
Net income		450		568		570		(1,138)		450
Other comprehensive income		149		149		181		(330)		149
Comprehensive income	$	599	$	717	$	751	$	(1,468)	$	599

Condensed Consolidating Balance Sheet (unaudited)

As of March 29, 2019


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	565	$	—	$	565
Accounts receivable, net		—		—		2,463		—		2,463
Inventories		—		—		1,970		—		1,970
Intercompany receivables		43		3,493		64		(3,600)		—
Prepaid expenses and other current assets		3		52		393		—		448
Total current assets		46		3,545		5,455		(3,600)		5,446
Property, plant, and equipment, net		—		—		3,596		—		3,596
Goodwill		—		—		5,626		—		5,626
Intangible assets, net		—		—		1,596		—		1,596
Deferred income taxes		—		—		2,607		—		2,607
Investment in subsidiaries		14,169		32,623		—		(46,792)		—
Intercompany loans receivable		—		1,565		19,531		(21,096)		—
Other assets		—		30		361		—		391
Total assets	$	14,215	$	37,763	$	38,772	$	(71,488)	$	19,262
Liabilities and shareholders' equity
Current liabilities:
Short-term debt	$	—	$	610	$	2	$	—	$	612
Accounts payable		3		—		1,482		—		1,485
Accrued and other current liabilities		662		36		1,072		—		1,770
Intercompany payables		3,556		2		42		(3,600)		—
Total current liabilities		4,221		648		2,598		(3,600)		3,867
Long-term debt		—		3,368		2		—		3,370
Intercompany loans payable		—		19,531		1,565		(21,096)		—
Long-term pension and postretirement liabilities		—		—		1,081		—		1,081
Deferred income taxes		—		—		196		—		196
Income taxes		—		—		333		—		333
Other liabilities		—		47		374		—		421
Total liabilities		4,221		23,594		6,149		(24,696)		9,268
Total shareholders' equity		9,994		14,169		32,623		(46,792)		9,994
Total liabilities and shareholders' equity	$	14,215	$	37,763	$	38,772	$	(71,488)	$	19,262

Condensed Consolidating Balance Sheet (unaudited)

As of September 28, 2018


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	848	$	—	$	848
Accounts receivable, net		—		—		2,361		—		2,361
Inventories		—		—		1,857		—		1,857
Intercompany receivables		37		2,391		48		(2,476)		—
Prepaid expenses and other current assets		5		112		544		—		661
Assets held for sale		—		—		472		—		472
Total current assets		42		2,503		6,130		(2,476)		6,199
Property, plant, and equipment, net		—		—		3,497		—		3,497
Goodwill		—		—		5,684		—		5,684
Intangible assets, net		—		—		1,704		—		1,704
Deferred income taxes		—		—		2,144		—		2,144
Investment in subsidiaries		13,626		26,613		—		(40,239)		—
Intercompany loans receivable		2		6,535		17,887		(24,424)		—
Other assets		—		—		1,158		—		1,158
Total assets	$	13,670	$	35,651	$	38,204	$	(67,139)	$	20,386
Liabilities and shareholders' equity
Current liabilities:
Short-term debt	$	—	$	961	$	2	$	—	$	963
Accounts payable		2		—		1,546		—		1,548
Accrued and other current liabilities		400		36		1,275		—		1,711
Intercompany payables		2,437		—		39		(2,476)		—
Liabilities held for sale		—		—		188		—		188
Total current liabilities		2,839		997		3,050		(2,476)		4,410
Long-term debt		—		3,033		4		—		3,037
Intercompany loans payable		—		17,888		6,536		(24,424)		—
Long-term pension and postretirement liabilities		—		—		1,102		—		1,102
Deferred income taxes		—		—		207		—		207
Income taxes		—		—		312		—		312
Other liabilities		—		107		380		—		487
Total liabilities		2,839		22,025		11,591		(26,900)		9,555
Total shareholders' equity		10,831		13,626		26,613		(40,239)		10,831
Total liabilities and shareholders' equity	$	13,670	$	35,651	$	38,204	$	(67,139)	$	20,386

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 29, 2019


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Cash flows from operating activities:
Net cash provided by (used in) continuing operating activities	$	(121)	$	(79)	$	1,083	$	—	$	883
Net cash used in discontinued operating activities		—		—		(30)		—		(30)
Net cash provided by (used in) operating activities		(121)		(79)		1,053		—		853
Cash flows from investing activities:
Capital expenditures		—		—		(401)		—		(401)
Proceeds from sale of property, plant, and equipment		—		—		13		—		13
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation		—		312		(15)		—		297
Change in intercompany loans		—		5,475		—		(5,475)		—
Other		—		—		8		—		8
Net cash provided by (used in) continuing investing activities		—		5,787		(395)		(5,475)		(83)
Net cash used in discontinued investing activities		—		—		(2)		—		(2)
Net cash provided by (used in) investing activities		—		5,787		(397)		(5,475)		(85)
Cash flows from financing activities:
Changes in parent company equity(1)		38		(5,704)		5,666		—		—
Net increase in commercial paper		—		90		—		—		90
Proceeds from issuance of debt		—		350		—		—		350
Repayment of debt		—		(441)		—		—		(441)
Proceeds from exercise of share options		—		—		17		—		17
Repurchase of common shares		(739)		—		—		—		(739)
Payment of common share dividends to shareholders		(299)		—		—		—		(299)
Loan activity with parent		1,121		—		(6,596)		5,475		—
Transfers to discontinued operations		—		—		(32)		—		(32)
Other		—		(3)		(27)		—		(30)
Net cash provided by (used in) continuing financing activities		121		(5,708)		(972)		5,475		(1,084)
Net cash provided by discontinued financing activities		—		—		32		—		32
Net cash provided by (used in) financing activities		121		(5,708)		(940)		5,475		(1,052)
Effect of currency translation on cash		—		—		1		—		1
Net decrease in cash, cash equivalents, and restricted cash		—		—		(283)		—		(283)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		848		—		848
Cash, cash equivalents, and restricted cash at end of period	$	—	$	—	$	565	$	—	$	565

(1)

Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 30, 2018


	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Cash flows from operating activities:
Net cash provided by (used in) continuing operating activities (1)	$	(116)	$	(67)	$	835	$	(7)	$	645
Net cash provided by discontinued operating activities		—		—		82		—		82
Net cash provided by (used in) operating activities		(116)		(67)		917		(7)		727
Cash flows from investing activities:
Capital expenditures		—		—		(439)		—		(439)
Proceeds from sale of property, plant, and equipment		—		—		7		—		7
Intercompany distribution receipts(1)		—		64		—		(64)		—
Change in intercompany loans		—		335		—		(335)		—
Other		—		—		(2)		—		(2)
Net cash provided by (used in) continuing investing activities		—		399		(434)		(399)		(434)
Net cash used in discontinued investing activities		—		—		(8)		—		(8)
Net cash provided by (used in) investing activities		—		399		(442)		(399)		(442)
Cash flows from financing activities:
Changes in parent company equity(2)		62		32		(94)		—		—
Net increase in commercial paper		—		225		—		—		225
Proceeds from issuance of debt		—		119		—		—		119
Repayment of debt		—		(708)		—		—		(708)
Proceeds from exercise of share options		—		—		94		—		94
Repurchase of common shares		(218)		—		(163)		—		(381)
Payment of common share dividends to shareholders		(285)		—		4		—		(281)
Intercompany distributions(1)		—		—		(71)		71		—
Loan activity with parent		557		—		(892)		335		—
Transfers from discontinued operations		—		—		74		—		74
Other		—		—		(32)		—		(32)
Net cash provided by (used in) continuing financing activities		116		(332)		(1,080)		406		(890)
Net cash used in discontinued financing activities		—		—		(74)		—		(74)
Net cash provided by (used in) financing activities		116		(332)		(1,154)		406		(964)
Effect of currency translation on cash		—		—		20		—		20
Net decrease in cash, cash equivalents, and restricted cash		—		—		(659)		—		(659)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		1,218		—		1,218
Cash, cash equivalents, and restricted cash at end of period	$	—	$	—	$	559	$	—	$	559

(1)

During fiscal 2018, other subsidiaries made distributions to TEGSA in the amount of $71 million. Cash flows are presented based upon the nature of the distributions.

(2)

Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.