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. 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 Dollars, in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Organic net sales growth and free cash flow are non-GAAP financial measures which are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations. We believe these non-GAAP financial measures, together with GAAP financial measures, provide useful information to investors because they reflect the financial measures that management uses in evaluating the underlying results of our operations. See "Non-GAAP Financial Measures" for more information about these non-GAAP financial measures, including our reasons for including the measures and material limitations with respect to the usefulness of the measures.

Overview

TE Connectivity Ltd. ("TE Connectivity" or the "Company", which may be referred to as "we," "us," or "our") is a global company that designs and manufactures approximately 500,000 products that connect and protect the flow of power and data inside millions of products used by consumers and industries. We partner with customers in a broad array of industries from consumer electronics, energy, and healthcare to automotive, aerospace, and communication networks. We operate through three reportable segments: Transportation Solutions, Communications and Industrial Solutions, and Network Solutions.

Our business and operating results have been and will continue to be affected by worldwide economic conditions. Our sales are dependent on certain industry end markets that are impacted by consumer as well as industrial and infrastructure spending, and our operating results can be affected by changes in demand in those markets. Overall, our net sales decreased 2.2% and 1.1% in the third quarter and first nine months of fiscal 2012, respectively, as compared to the same periods of fiscal 2011. On an organic basis, net sales decreased 3.1% and 2.5% in the third quarter and first nine months of fiscal 2012, respectively, as compared to the same periods of fiscal 2011. On an organic basis, we experienced declines in our sales into industrial and infrastructure based markets, primarily as a result of weakness in the industrial and data communications end markets in our Communications and Industrial Solutions segment and telecom networks and subsea communications end markets in our Network Solutions segment. On an organic basis, we experienced growth in our sales into consumer based markets, as growth in the automotive end market in our Transportation Solutions segment was partially offset by declines within the consumer devices and appliance end markets in our Communications and Industrial Solutions segment. The acquisition of Deutsch Group SAS ("Deutsch") in April 2012 benefited the automotive and aerospace, defense, and marine end markets in the Transportation Solutions segment. Deutsch contributed net sales of $174 million in the third quarter of fiscal 2012.

Net sales in the fourth quarter of fiscal 2012 are expected to be between $3.325 billion and $3.425 billion. This reflects declines in the Communications and Industrial Solutions and Network Solutions segments as compared to the fourth quarter of fiscal 2011. The Transportation Solutions segment will benefit from Deutsch sales which are expected to be approximately $180 million in the fourth quarter of fiscal 2012. We expect global automotive production to increase approximately 1% relative to the fourth quarter of fiscal 2011. During the fourth quarter of fiscal 2012, we expect the Communications and Industrial Solutions segment to be adversely impacted by continued weakness in the industrial, data communications, and appliance end markets. We also expect the Network Solutions segment to be negatively impacted by lower carrier spending in the telecom networks end market. In the fourth quarter of fiscal 2012, we expect diluted earnings per share to be in the range of $0.64 to $0.68 per share.

For fiscal 2012, we expect net sales to be between $13.25 billion and $13.35 billion, reflecting decreases in all end markets in the Communications and Industrial Solutions and Network Solutions segments from fiscal 2011 levels, partially offset by an increase in the Transportation Solutions segment. Deutsch sales are expected to be approximately $360 million in fiscal 2012. We expect our sales into the automotive end market to benefit from an anticipated increase in global automotive production of 5% over fiscal 2011 levels. We expect diluted earnings per share to be in the range of $2.41 to $2.45 per share for fiscal 2012.

The above outlook assumes current foreign exchange and commodity rates.

We are monitoring the current environment and its potential effects on our customers and on the end markets we serve. Additionally, we continue to closely manage our costs in order to respond to changing conditions. We are also 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.")

On April 3, 2012, we acquired 100% of the outstanding shares of Deutsch. The total value paid for the transaction amounted to €1.55 billion (approximately $2.05 billion using an exchange rate of $1.33 per €1.00), net of cash acquired. The total value paid included $659 million related to the repayment of Deutsch's financial debt plus accrued interest. Deutsch is a global leader in high-performance connectors for harsh environments, and significantly expands our product portfolio and enables us to better serve customers in the industrial and commercial transportation, aerospace, defense, and marine, and rail markets. This acquisition is reported primarily as part of our Transportation Solutions segment from the date of acquisition.

During the quarter ended June 29, 2012, Deutsch contributed net sales of $174 million and an operating loss of $62 million to our Condensed Consolidated Financial Statements. The operating loss included charges of $68 million associated with the amortization of acquisition-accounting related fair value adjustments primarily related to acquired inventories and customer order backlog, acquisition costs of $13 million, restructuring charges of $11 million, and integration costs of $2 million. During the nine months ended June 29, 2012, we incurred Deutsch-related acquisition and integration costs of $21 million and $2 million, respectively.

See additional information regarding the acquisition of Deutsch in Note 4 to the Condensed Consolidated Financial Statements.

On June 1, 2012, we sold our Touch Solutions business for net cash proceeds of $380 million, subject to working capital adjustments, of which we received $370 million during the quarter ended June 29, 2012. Also, on April 27, 2012, we sold our TE Professional Services business for net cash proceeds of $29 million, of which we received $24 million during the quarter ended June 29, 2012. These businesses met the held for sale and discontinued operations criteria and have been included in discontinued operations in all periods presented. Prior to reclassification to discontinued operations, the Touch Solutions and TE Professional Services businesses were included in the Communications and Industrial Solutions and Network Solutions segments, respectively.

See Note 5 to the Condensed Consolidated Financial Statements for additional information regarding discontinued operations.

During fiscal 2012, we initiated a restructuring plan associated with the integration of Deutsch, which is expected to generate cost efficiencies in our consolidated operations. We expect to incur restructuring charges of approximately $12 million during fiscal 2012, primarily related to employee severance and benefits. As discussed above, in the first nine months of fiscal 2012, we recorded charges of $11 million related to this plan. Cash spending related to this plan was $4 million in the first nine months of fiscal 2012. We expect total cash spending, which will be funded with cash from operations, to be approximately $10 million in fiscal 2012. Annualized cost savings related to these actions are expected to be approximately $9 million and will be realized in fiscal 2013. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses.

We plan to continue to simplify our global manufacturing footprint by migrating facilities from higher-cost to lower-cost countries, consolidating within countries, and transferring product lines to lower-cost countries. These initiatives are designed to help us maintain our competitiveness in the industry, improve our operating leverage, and position us for profitability growth in the years ahead.

In connection with our manufacturing simplification plan, we incurred restructuring charges of approximately $80 million during the first nine months of fiscal 2012 and expect to incur restructuring charges of approximately $110 million during fiscal 2012. In the first nine months of fiscal 2012, cash spending related to restructuring was $102 million. We expect total spending, which will be funded with cash from operations, to be approximately $150 million in fiscal 2012. Annualized cost savings related to these actions are expected to be approximately $85 million. Cost savings will be reflected primarily in cost of sales and selling, general, and administrative expenses.

Consolidated Operations

Key business factors that influenced our results of operations during the periods discussed in this report include:

º •
º Raw material prices. We expect to purchase approximately 174 million pounds of copper, 141,000 troy ounces of gold, and 2.9 million troy ounces of silver in fiscal 2012. Prices have increased in recent years and continue to fluctuate. Although copper prices have declined from prior year

levels, they remain high relative to historic levels. The following table sets forth the average prices incurred related to copper, gold, and silver during the periods presented:

                                       For the                   For the
                                    Quarters Ended          Nine Months Ended
                                June 29,     June 24,     June 29,      June 24,
                     Measure      2012         2011         2012          2011
            Copper     Lb.        $  3.86    $    4.03    $    3.91     $    4.06
            Gold     Troy oz.     $ 1,615    $   1,409    $   1,588     $   1,356
            Silver   Troy oz.     $ 34.36    $   33.64    $   34.78     $   30.89

º •
º Foreign exchange. Approximately 54% of our net sales are invoiced in currencies other than the U.S. Dollar. Our results of operations are influenced by changes in foreign currency exchange rates. Increases or decreases in the value of the U.S. Dollar, as 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. The percentage of net sales in the first nine months of fiscal 2012 by major currencies invoiced was as follows:

                          U.S. Dollar                 46 %
                          Euro                        29
                          Japanese Yen                 8
                          Chinese Renminbi             6
                          Korean Won                   3
                          Brazilian Real               2
                          British Pound Sterling       1
                          All others                   5

                          Total                      100 %

The following table sets forth certain items from our Condensed Consolidated Statements of Operations and the percentage of net sales that such items represent for the periods shown.

                               For the Quarters Ended                 For the Nine Months Ended
                            June 29,            June 24,            June 29,             June 24,
                              2012                2011                2012                 2011
                                                       ($ in millions)
Net sales               $ 3,499     100.0 % $ 3,579     100.0 % $ 9,918     100.0 % $ 10,025     100.0 %
Cost of sales             2,481      70.9     2,491      69.6     6,936      69.9      6,938      69.2

Gross margin              1,018      29.1     1,088      30.4     2,982      30.1      3,087      30.8
Selling, general, and
administrative
expenses                    423      12.1       441      12.3     1,233      12.4      1,261      12.6
Research,
development, and
engineering expenses        173       4.9       178       5.0       523       5.3        507       5.1
Acquisition and
integration costs            15       0.4         1         -        23       0.2         19       0.2
Restructuring and
other charges, net           36       1.0         8       0.2        86       0.9         58       0.6

Operating income            371      10.6       460      12.9     1,117      11.3      1,242      12.4
Interest income               6       0.2         5       0.1        18       0.2         16       0.2
Interest expense            (48 )    (1.4 )     (39 )    (1.1 )    (131 )    (1.3 )     (117 )    (1.2 )
Other income
(expense), net               19       0.5        (5 )    (0.1 )      31       0.3         13       0.1

Income from
continuing operations
before income taxes         348       9.9       421      11.8     1,035      10.4      1,154      11.5
Income tax expense          (88 )    (2.5 )     (70 )    (2.0 )    (267 )    (2.7 )     (247 )    (2.5 )

Income from
continuing operations       260       7.4       351       9.8       768       7.7        907       9.0
Income (loss) from
discontinued
operations, net of
income taxes                (61 )    (1.7 )       6       0.2       (49 )    (0.5 )       16       0.2

Net income                  199       5.7       357      10.0       719       7.2        923       9.2
Less: net income
attributable to
noncontrolling
interests                     -         -        (2 )    (0.1 )      (3 )       -         (4 )       -

Net income
attributable to TE
Connectivity Ltd.       $   199       5.7 % $   355       9.9 % $   716       7.2 % $    919       9.2 %

Net Sales. Net sales decreased $80 million, or 2.2%, to $3,499 million in the third quarter of fiscal 2012 from $3,579 million in the third quarter of fiscal 2011. The decrease was primarily a result of lower net sales in the Communications and Industrial Solutions and Network Solutions segments, partially offset by an increase in net sales in the Transportation Solutions segment. Deutsch, which was acquired on April 3, 2012, contributed net sales of $174 million in the third quarter of fiscal 2012. Foreign currency exchange rates negatively affected net sales by $143 million in the third quarter of fiscal 2012 as compared to the same period of fiscal 2011. On an organic basis, net sales decreased $111 million, or 3.1%, in the third quarter of fiscal 2012 as compared to the third quarter of fiscal 2011.

In the first nine months of fiscal 2012, net sales decreased $107 million, or 1.1%, to $9,918 million from $10,025 million in the first nine months of fiscal 2011. The decrease was due primarily to decreased net sales in the Communications and Industrial Solutions segment, and to a lesser degree the Network Solutions segment, partially offset by increased net sales in the Transportation Solutions segment. Deutsch contributed net sales of $174 million in the first nine months of fiscal 2012. Foreign currency exchange rates negatively affected net sales by $184 million in the first nine months of fiscal 2012 as compared to the same period of fiscal 2011. On an organic basis, net sales decreased $251 million, or 2.5%, in the first nine months of fiscal 2012 as compared to the first nine months of fiscal 2011. See further discussion of organic net sales below under Results of Operations by Segment.

The following table sets forth the percentage of our total net sales by geographic region:

                                               For the                  For the
                                           Quarters Ended          Nine Months Ended
                                       June 29,      June 24,    June 29,     June 24,
                                         2012          2011        2012         2011
    Europe/Middle East/Africa (EMEA)          34 %          36 %        34 %         36 %
    Asia-Pacific                              33            31          34           33
    Americas                                  33            33          32           31

    Total                                    100 %         100 %       100 %        100 %

The following table provides an analysis of the change in our net sales by geographic region:

                                  Change in Net Sales for the Quarter                                         Change in Net Sales for the Nine Months
                                Ended June 29, 2012 versus Net Sales for                                      Ended June 29, 2012 versus Net Sales for
                                    the Quarter Ended June 24, 2011                                             the Nine Months Ended June 24, 2011
                    Organic(1)          Translation(2)     Acquisition         Total              Organic(1)          Translation(2)    Acquisitions         Total
                                                                                   ($ in millions)
EMEA            $   (57 )      (4.3 )%   $         (130 )   $        80   $ (107 )   (8.2 )%  $  (148 )      (4.1 )%   $         (197 )   $       110   $ (235 )   (6.5 )%
Asia-Pacific         11         1.0                  (1 )            11       21      1.9         (19 )      (0.6 )                42              40       63      1.9
Americas            (65 )      (5.6 )               (12 )            83        6      0.5         (84 )      (2.7 )               (29 )           178       65      2.1

Total           $  (111 )      (3.1 )%   $         (143 )   $       174   $  (80 )   (2.2 )%  $  (251 )      (2.5 )%   $         (184 )   $       328   $ (107 )   (1.1 )%

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

The following table sets forth the percentage of our total net sales by segment:

                                                 For the                   For the
                                             Quarters Ended           Nine Months Ended
                                         June 29,      June 24,     June 29,     June 24,
                                           2012          2011         2012         2011
Transportation Solutions                        46 %           40 %        45 %         41 %
Communications and Industrial
Solutions                                       30             33          30           34
Network Solutions                               24             27          25           25

Total                                          100 %          100 %       100 %        100 %

The following table provides an analysis of the change in our net sales by segment:

                                    Change in Net Sales for the Quarter                                         Change in Net Sales for the Nine Months
                                  Ended June 29, 2012 versus Net Sales for                                      Ended June 29, 2012 versus Net Sales for
                                      the Quarter Ended June 24, 2011                                             the Nine Months Ended June 24, 2011
                     Organic(1)          Translation(2)     Acquisition         Total              Organic(1)          Translation(2)    Acquisitions         Total
                                                                                     ($ in millions)
Transportation
Solutions         $    86        6.1 %    $          (79 )   $       174   $  181      12.7 %   $   301        7.3 %    $         (100 )   $       174   $  375       9.2 %
Communications
and Industrial
Solutions            (111 )     (9.4 )               (28 )             -     (139 )   (11.7 )      (418 )    (12.2 )               (21 )             -     (439 )   (12.8 )
Network
Solutions             (86 )     (8.9 )               (36 )             -     (122 )   (12.6 )      (134 )     (5.4 )               (63 )           154      (43 )    (1.7 )

Total             $  (111 )     (3.1 )%   $         (143 )   $       174   $  (80 )    (2.2 )%  $  (251 )     (2.5 )%   $         (184 )   $       328   $ (107 )    (1.1 )%

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

Gross Margin. Gross margin decreased $70 million to $1,018 million in the third quarter of fiscal 2012 from $1,088 million in the third quarter of fiscal 2011. Gross margin as a percentage of net sales decreased to 29.1% in the third quarter of fiscal 2012 from 30.4% in the same period of fiscal 2011. The decline in gross margin resulted primarily from charges of $68 million associated with the amortization of acquisition accounting-related fair value adjustments primarily related to acquired inventories and customer order backlog associated with Deutsch in the third quarter of fiscal 2012 as compared to charges of $2 million associated with the amortization of acquisition accounting-related adjustments associated with ADC Telecommunications, Inc. ("ADC") in the third quarter of fiscal 2011. Excluding these items, gross margin was flat as improved manufacturing productivity and the gross margin on incremental Deutsch sales largely offset the impact of decreased volume.

Gross margin decreased $105 million to $2,982 million in the first nine months of fiscal 2012 from $3,087 million in the first nine months of fiscal 2011. Gross margin as a percentage of net sales decreased to 30.1% in the first nine months of fiscal 2012 from 30.8% in the same period of fiscal 2011. In the first nine months of fiscal 2012, gross margin included charges of $68 million associated with the amortization of acquisition accounting-related fair value adjustments primarily related to acquired inventories and customer order backlog associated with Deutsch, whereas, in the first nine months of fiscal 2011, gross margin included charges of $38 million associated with the amortization of acquisition accounting-related fair value adjustments primarily related to acquired inventories and customer order backlog associated with ADC. In addition, gross margin was negatively impacted by decreased volume and increased material costs, partially offset by improved manufacturing productivity and the gross margin on incremental ADC and Deutsch sales.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased $18 million to $423 million in the third quarter of fiscal 2012 from $441 million in the third quarter of fiscal 2011. Selling, general, and administrative expenses as a percentage of net sales were 12.1% and 12.3% in the third quarters of fiscal 2012 and 2011, respectively. Selling, general, and administrative expenses decreased $28 million to $1,233 million in the first nine months of fiscal 2012 from $1,261 million in the first nine months of fiscal 2011. Selling, general, and administrative expenses as a percentage of net sales were 12.4% and 12.6% in the first nine months of fiscal 2012 and 2011, respectively.

Acquisition and Integration Costs. In connection with the acquisition of Deutsch, we incurred acquisition and integration costs of $15 million and $23 million during the third quarter and first nine months of fiscal 2012, respectively. We incurred acquisition and integration costs of $1 million and $19 million during the third quarter and first nine months of fiscal 2011, respectively, in connection with the acquisition of ADC.

Restructuring and Other Charges, Net. Net restructuring and other charges were $36 million in the third quarter of fiscal 2012 as compared to $8 million in the same period of fiscal 2011. Net restructuring and other charges were $86 million in the first nine months of fiscal 2012 and $58 million in the first nine months of fiscal 2011. We initiated restructuring programs during fiscal 2012 associated with the acquisition of Deutsch and related headcount reductions primarily in the Transportations Solutions segment as well as headcount reductions in the Communications and Industrial Solutions segment. Fiscal 2011 actions were primarily associated with the acquisition of ADC and related headcount reductions in the Network Solutions segment. See Note 3 to the Condensed Consolidated Financial Statements for additional information regarding net restructuring and other charges.

Operating Income. In the third quarter of fiscal 2012, operating income was $371 million as compared to $460 million in the third quarter of fiscal 2011. As discussed above, results for the third quarter of fiscal 2012 included $94 million of charges related to the acquisition of Deutsch, including . . .