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TE Connectivity Reports Fourth Quarter and Full Year Results

Nov 5, 2012

SCHAFFHAUSEN, Switzerland, Nov. 5, 2012 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter ended September 28, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110310/PH62357LOGO )

Fourth Quarter Highlights

  • Sales, Adjusted Earnings Per Share (EPS), and Free Cash Flow in line with guidance
  • Net sales were $3.36 billion
  • Adjusted EPS were $0.76
  • Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $0.93
  • Free Cash Flow was $569 million
  • Returned $283 million to shareholders through share repurchases and dividends

Full Year Highlights

  • Net sales were $13.3 billion
  • Adjusted EPS were $2.86
  • Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $2.70
  • Free Cash Flow exceeded $1.4 billion
  • Strengthened market position with the successful integration of Deutsch

"We had a solid fourth quarter with sales and EPS in line with our guidance despite an increasingly uncertain economic environment," said TE Connectivity Chief Executive Officer Tom Lynch. "We delivered another strong year of free cash flow and resumed our share repurchase program in the fourth quarter. During the year, we continued to strengthen and focus the Company with the acquisition of Deutsch and the divestitures of Touch and Professional Services.

"We expect sales and adjusted EPS in the first quarter to be up slightly from the prior year due to the addition of Deutsch more than offsetting slower end-market demand, particularly in Europe and China."

FISCAL FOURTH QUARTER RESULTS
The Company reported net sales of $3.36 billion compared to prior year sales of $3.75 billion. Adjusted EPS were $0.76, compared to $0.87 in the prior year ($0.79 on a comparative 13-week basis). GAAP EPS were $0.93 for the quarter. Free cash flow was $569 million for the quarter.

GAAP EPS included $0.03 per share of acquisition-related charges, $0.07 per share of restructuring and other charges and $0.27 of income related to tax items.

Total Company orders were $3.19 billion in the fourth quarter and the book-to-bill ratio was 0.95.

OUTLOOK
For the first quarter, the Company expects net sales of $3.150 to $3.250 billion and adjusted EPS of $0.62 to $0.66. GAAP EPS are expected to be $0.43 to $0.47, including restructuring and acquisition-related charges of $0.19.

For the full year, the Company expects net sales of $13.4 to $14.0 billion and adjusted EPS of $3.00 to $3.30. GAAP EPS are expected to be $2.61 to $2.91, including restructuring and acquisition-related charges of $0.39.

In light of the weaker than expected economic environment, the Company is expanding its restructuring effort to generate approximately $75 million of additional annualized cost savings. The Company expects to incur approximately $200 million in charges during fiscal year 2013, of which approximately $100 million is expected to be incurred in the current quarter.

This outlook assumes current foreign exchange and commodity rates.

Information about TE Connectivity's use of non-GAAP financial measures is described at the end of this press release. For a reconciliation of these non-GAAP financial measures, see the attached tables.

ABOUT TE CONNECTIVITY
TE Connectivity (NYSE: TEL) is a global, $13 billion company that designs and manufactures approximately 500,000 products that connect and protect the flow of power and data inside the products that touch every aspect of our lives. Our nearly 90,000 employees partner with customers in virtually every industry—from consumer electronics, energy and healthcare, to automotive, aerospace and communication networks—enabling smarter, faster, better technologies to connect products to possibilities. More information on TE Connectivity can be found at http://www.te.com.

CONFERENCE CALL AND WEBCAST

  • The Company will hold a conference call for investors today beginning at 8:30 a.m. EST.
  • Internet users will be able to access the Company's earnings webcast, including slide materials, at the "Investors" section of TE Connectivity's website: http://investors.te.com.
  • For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1059. The telephone dial-in number for participants outside the United States is (612) 234-9960.
  • An audio replay of the conference call will be available beginning at 10:30 a.m. on November 5, 2012 and ending at 11:59 p.m. on November 12, 2012. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the replay dial-in number is (320) 365-3844. The replay access code for all callers is 267199.

NON-GAAP MEASURES
"Organic Sales Growth," "Adjusted Operating Income," "Adjusted Operating Margin," "Adjusted Other Income, Net," "Adjusted Income Tax Expense," "Adjusted Income from Continuing Operations," "Adjusted Earnings Per Share," and "Free Cash Flow" (FCF) are non-GAAP measures and should not be considered replacements for GAAP results.

"Organic Sales Growth" is a useful measure used by us to measure the underlying results and trends in the business. The difference between reported net sales growth (the most comparable GAAP measure) and Organic Sales Growth (the non-GAAP measure) consists of the impact from foreign currency exchange rates, acquisitions and divestitures, if any, and an additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. Organic Sales Growth is a useful measure of our performance because it excludes items that: i) are not completely under management's control, such as the impact of changes in foreign currency exchange rates; or ii) do not reflect the underlying growth of the company, such as acquisition and divestiture activity and the impact of an additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. The limitation of this measure is that it excludes items that have an impact on our sales. This limitation is best addressed by using organic sales growth in combination with the GAAP results.

We present operating income before special items including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any ("Adjusted Operating Income"). We utilize Adjusted Operating Income to assess segment level core operating performance and to provide insight to management in evaluating segment operating plan execution and underlying market conditions. It also is a significant component in our incentive compensation plans. Adjusted Operating Income is a useful measure for investors because it provides insight into our underlying operating results, trends, and the comparability of these results between periods. The difference between Adjusted Operating Income and operating income (the most comparable GAAP measure) consists of the impact of charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any, that may mask the underlying operating results and/or business trends. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported operating income. This limitation is best addressed by using Adjusted Operating Income in combination with operating income (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.

We present operating margin before special items including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any ("Adjusted Operating Margin"). We present Adjusted Operating Margin before special items to give investors a perspective on the underlying business results. It also is a significant component in our incentive compensation plans. This measure should be considered in conjunction with operating margin calculated using our GAAP results in order to understand the amounts, character and impact of adjustments to operating margin.

We present other income, net before special items including tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, if any ("Adjusted Other Income, Net"). We present Adjusted Other Income, Net as we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP. The difference between Adjusted Other Income, Net and other income, net (the most comparable GAAP measure) consists of tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, if any. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease other income, net. This limitation is best addressed by using Adjusted Other Income, Net in combination with other income, net (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease in reported amounts.

We present income tax expense after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, impairment charges, other income or charges, and certain significant special tax items, if any ("Adjusted Income Tax Expense"). We present Adjusted Income Tax Expense to provide investors further information regarding the tax effects of adjustments used in determining the non-GAAP financial measure Adjusted Income from Continuing Operations (as defined below). The difference between Adjusted Income Tax Expense and income tax expense (the most comparable GAAP measure) is the tax effect of adjusting items and certain significant special tax items, if any. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease income tax expense. This limitation is best addressed by using Adjusted Income Tax Expense in combination with income tax expense (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease in reported amounts.

We present income from continuing operations attributable to TE Connectivity Ltd. before special items including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, other income or charges, if any, and, if applicable, related tax effects ("Adjusted Income from Continuing Operations"). We present Adjusted Income from Continuing Operations as we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP. Adjusted Income from Continuing Operations provides additional information regarding our underlying operating results, trends and the comparability of these results between periods. The difference between Adjusted Income from Continuing Operations and income from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) consists of the impact of charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, other income or charges, if any, and, if applicable, related tax effects. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using Adjusted Income from Continuing Operations in combination with income from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease in reported amounts.

We present diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. before special items, including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, other income or charges, if any, and, if applicable, related tax effects ("Adjusted Earnings Per Share"). We present Adjusted Earnings Per Share because we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP. We believe such a measure provides a picture of our results that is more comparable among periods since it excludes the impact of special items, which may recur, but tend to be irregular as to timing, thereby making comparisons between periods more difficult. It also is a significant component in our incentive compensation plans. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using Adjusted Earnings Per Share in combination with diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.

"Free Cash Flow" (FCF) is a useful measure of our performance and ability to generate cash. It also is a significant component in our incentive compensation plans. The difference between net cash provided by continuing operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) 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. The difference reflects the impact from net capital expenditures, voluntary pension contributions, and special items, if any.

Net capital expenditures are subtracted because they represent long-term commitments. Voluntary pension contributions are subtracted from the GAAP 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, also are considered by management in evaluating free cash flow. We believe investors should consider these items in evaluating our free cash flow. We forecast our cash flow results excluding any voluntary pension contributions because we have not yet made a determination about the amount and timing of any such future contributions. In addition, our forecast excludes the cash impact of special items because we cannot predict the amount and timing of such items.

FCF as presented herein may not be comparable to similarly-titled measures reported by other companies. The primary limitation of this measure is that it excludes items that have an impact on our GAAP cash flow. Also, it subtracts 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 measure indicates. This limitation is best addressed by using FCF in combination with the GAAP cash flow results. 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.

Because we do not predict the amount and timing of special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, we do not provide reconciliations to GAAP of our forward-looking financial measures.

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 industry and the telecommunications, computer and consumer electronics 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; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that Deutsch's operations will not be successfully integrated into ours; and the risk that revenue opportunities, cost savings and other anticipated synergies from the Deutsch acquisition may not be fully realized or may take longer to realize than expected. 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. 30, 2011 as well as in our Quarterly Reports on Form 10-Q for the fiscal quarters ended Dec. 30, 2011, March 30, 2012, and June 29, 2012, 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 Years Ended


September 28,


September 30,


September 28,


September 30,


2012


2011


2012


2011


(in millions, except per share data)









Net sales

$3,364


$3,753


$13,282


$13,778

Cost of sales 

2,300


2,569


9,236


9,507

Gross margin

1,064


1,184


4,046


4,271

Selling, general, and administrative expenses

452


467


1,685


1,728

Research, development, and engineering expenses

165


194


688


701

Acquisition and integration costs

4


-


27


19

Restructuring and other charges, net

42


78


128


136

   Operating income  

401


445


1,518


1,687

Interest income

5


6


23


22

Interest expense

(45)


(44)


(176)


(161)

Other income, net

19


14


50


27

   Income from continuing operations before income taxes

380


421


1,415


1,575

Income tax (expense) benefit

18


(100)


(249)


(347)

   Income from continuing operations

398


321


1,166


1,228

Income (loss) from discontinued operations, net of income taxes

(2)


6


(51)


22

   Net income  

396


327


1,115


1,250

Less: net income attributable to noncontrolling interests

-


(1)


(3)


(5)

Net income attributable to TE Connectivity Ltd.

$396


$326


$1,112


$1,245









Amounts attributable to TE Connectivity Ltd.:








Income from continuing operations

$398


$320


$1,163


$1,223

Income (loss) from discontinued operations

(2)


6


(51)


22

Net income  

$396


$326


$1,112


$1,245









Basic earnings (loss) per share attributable to TE Connectivity Ltd.:








   Income from continuing operations

$0.93


$0.75


$2.73


$2.79

   Income (loss) from discontinued operations

-


0.01


(0.12)


0.05

   Net income  

$0.93


$0.76


$2.61


$2.84









Diluted earnings (loss) per share attributable to TE Connectivity Ltd.:








   Income from continuing operations

$0.93


$0.74


$2.70


$2.76

   Income (loss) from discontinued operations

(0.01)


0.01


(0.11)


0.05

   Net income  

$0.92


$0.75


$2.59


$2.81









Dividends and cash distributions paid per common share of TE Connectivity Ltd.

$0.21


$0.18


$0.78


$0.68









Weighted-average number of shares outstanding: 








   Basic

426


429


426


438

   Diluted

429


433


430


443

 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)










September 28,


September 30, 


2012


2011


(in millions, except share data)

Assets




Current Assets:




Cash and cash equivalents

$1,589


$1,218

Accounts receivable, net of allowance for doubtful accounts of $41 and $38, respectively

2,343


2,341

Inventories

1,808


1,878

Prepaid expenses and other current assets

474


634

Deferred income taxes

289


402

Assets held for sale

-


508

  Total current assets

6,503


6,981

Property, plant, and equipment, net

3,213


3,140

Goodwill

4,308


3,288

Intangible assets, net

1,352


631

Deferred income taxes

2,460


2,364

Receivable from Tyco International Ltd. and Covidien plc

1,180


1,066

Other assets

290


253

Total Assets

$19,306


$17,723





Liabilities and Equity




Current Liabilities:




Current maturities of long-term debt

$1,015


$ -

Accounts payable

1,292


1,454

Accrued and other current liabilities

1,576


1,733

Deferred revenue

121


143

Liabilities held for sale

-


80

Total current liabilities

4,004


3,410

Long-term debt

2,696


2,667

Long-term pension and postretirement liabilities

1,353


1,202

Deferred income taxes

448


333

Income taxes

2,311


2,122

Other liabilities

517


505

Total Liabilities

11,329


10,239

Commitments and contingencies




Equity:




TE Connectivity Ltd. Shareholders' Equity:




Common shares, 439,092,124 shares authorized and issued, CHF 0.97 par value, and 463,080,684 shares authorized and issued, CHF 1.37 par value, respectively




193


593

Contributed surplus

6,837


7,604

Accumulated earnings 

1,196


84

Treasury shares, at cost, 16,408,049 and 39,303,550 shares, respectively

(484)


(1,235)

Accumulated other comprehensive income

229


428

Total TE Connectivity Ltd. shareholders' equity

7,971


7,474

Noncontrolling interests

6


10

Total Equity

7,977


7,484

Total Liabilities and Equity

$19,306


$17,723





 

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



For the Quarters Ended


For the Years Ended


September 28,


September 30,


September 28,


September 30,


2012


2011


2012


2011


(in millions)

Cash Flows From Operating Activities:








Net income 

$396


$327


$1,115


$1,250

    (Income) loss from discontinued operations, net of income taxes

2


(6)


51


(22)

Income from continuing operations

398


321


1,166


1,228

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:








Depreciation and amortization

156


145


609


564

Deferred income taxes

(148)


-


(48)


103

Provision for losses on accounts receivable and inventories

14


(2)


58


18

Tax sharing income

(20)


(14)


(52)


(27)

Share-based compensation expense

16


13


68


71

Other 

15


3


64


(3)

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








Accounts receivable, net

43


148


17


26

Inventories

92


(4)


116


(239)

Inventoried costs on long-term contracts

(2)


15


7


31

Prepaid expenses and other current assets

17


96


103


190

Accounts payable

(98)


(122)


(189)


(38)

Accrued and other current liabilities

103


26


(92)


(225)

Income taxes

81


(76)


7


(54)

Deferred revenue

21


39


(31)


(27)

Long-term pension and postretirement liabilities

10


22


43


75

Other

16


(2)


42


29

Net cash provided by continuing operating activities

714


608


1,888


1,722

Net cash provided by (used in) discontinued operating activities

(1)


22


59


57

Net cash provided by operating activities

713


630


1,947


1,779

Cash Flows From Investing Activities:








Capital expenditures

(148)


(204)


(533)


(574)

Proceeds from sale of property, plant, and equipment

10


7


23


65

Proceeds from sale of intangible assets

-


-


-


68

Proceeds from sale of short-term investments

-


-


-


155

Acquisition of businesses, net of cash acquired

-


-


(1,384)


(731)

Proceeds from divestiture of discontinued operations, net of cash retained by sold operations

-


-


394


-

Other

(2)


2


(9)


(8)

Net cash used in continuing investing activities

(140)


(195)


(1,509)


(1,025)

Net cash used in discontinued investing activities

-


(13)


(1)


(18)

Net cash used in investing activities

(140)


(208)


(1,510)


(1,043)

Cash Flows From Financing Activities:








Net increase (decrease) in commercial paper

(50)


-


300


(100)

Proceeds from long-term debt

-


-


748


249

Repayment of long-term debt

-


-


(642)


(565)

Proceeds from exercise of share options

8


6


60


80

Repurchase of common shares

(168)


(325)


(185)


(865)

Payment of common share dividends and cash distributions to shareholders

(89)


(76)


(332)


(296)

Other

(1)


6


44


23

Net cash used in continuing financing activities

(300)


(389)


(7)


(1,474)

Net cash provided by (used in) discontinued financing activities

1


(8)


(58)


(38)

Net cash used in financing activities

(299)


(397)


(65)


(1,512)

Effect of currency translation on cash

13


(18)


(1)


5

Net increase (decrease) in cash and cash equivalents

287


7


371


(771)

Less: net increase in cash and cash equivalents related to discontinued operations

-


(1)


-


(1)

Cash and cash equivalents at beginning of period

1,302


1,212


1,218


1,990

Cash and cash equivalents at end of period

$1,589


$1,218


$1,589


$1,218









Supplemental Cash Flow Information:








Interest paid

$25


$17


$181


$162

Income taxes paid, net of refunds

50


172


290


299









Reconciliation to Free Cash Flow:








Net cash provided by continuing operating activities

$714


$608


$1,888


$1,722

Capital expenditures, net

(138)


(197)


(510)


(509)

Payments related to pre-separation tax matters, net

(7)


129


19


129

Payments related to accrued interest on debt assumed in the acquisition of Deutsch

-


-


17


-

Payments to settle acquisition-related foreign currency derivative contracts

-


-


20


-

Free cash flow(1)

$569


$540


$1,434


$1,342









(1) Free cash flow is a non-GAAP measure.  See description of non-GAAP measures contained in this release.

 

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)




















For the Quarters Ended 


For the Years Ended 



September 28,


September 30,


September 28,


September 30,



2012


2011


2012


2011




($ in millions)




Net Sales:









Transportation Solutions

$1,538


$1,535


$6,007


$5,629


Communications and Industrial Solutions

996


1,225


3,990


4,658


Network Solutions

830


993


3,285


3,491


Total

$3,364


$3,753


$13,282


$13,778




















Operating Income:









Transportation Solutions

$214

13.9%

$237

15.4%

$847

14.1%

$848

15.1%

Communications and Industrial Solutions

105

10.5%

89

7.3%

337

8.4%

515

11.1%

Network Solutions

82

9.9%

119

12.0%

334

10.2%

324

9.3%

Total

$401

11.9%

$445

11.9%

$1,518

11.4%

$1,687

12.2%

 

TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)





































Percentage of


















Segment's Total


Change in Net Sales for the Quarter Ended September 28, 2012


Net Sales for the


 versus Net Sales for the Quarter Ended September 30, 2011


Quarter Ended


Organic (1) 



Translation (2)


Impact of

14th Week (3)


Acquisition


Total



September 28,

2012


($ in millions)




Transportation Solutions(4):



















Automotive

$54


4.0

%


$(88)


$(102)


$78


$(58)


(4.3)

%


83

%

Aerospace, Defense, and Marine

4


1.9



(8)


(10)


75


61


31.1



17


Total

58


3.7



(96)


(112)


153


3


0.2



100

%

Communications and Industrial Solutions (4):



















Industrial

(72)


(17.1)



(5)


(30)


-


(107)


(25.8)



31


Consumer Devices

(8)


(2.5)



(4)


(23)


-


(35)


(10.5)



30


Data Communications

(27)


(10.1)



(5)


(16)


-


(48)


(17.7)



22


Appliance

(19)


(9.3)



(6)


(14)


-


(39)


(18.8)



17


Total

(126)


(10.3)



(20)


(83)


-


(229)


(18.7)



100

%

Network Solutions (4):



















Telecom Networks

(25)


(6.2)



(15)


(32)


-


(72)


(17.6)



41


Energy

(4)


(1.6)



(15)


(14)


-


(33)


(13.4)



26


Enterprise Networks 

(1)


(0.1)



(11)


(16)


-


(28)


(14.2)



20


Subsea Communications

(22)


(15.4)



2


(10)


-


(30)


(21.3)



13


Total

(52)


(5.2)



(39)


(72)


-


(163)


(16.4)



100

%

   Total 

$(120)


(3.2)

%


$(155)


$(267)


$153


$(389)


(10.4)

%



























































Percentage of


















Segment's Total


Change in Net Sales for the Year Ended September 28, 2012


Net Sales for the


 versus Net Sales for the Year Ended September 30, 2011


Year Ended


Organic (1) 



Translation (2)


Impact of

53rd Week (3)


Acquisitions


Total



September 28,

2012


($ in millions)




Transportation Solutions(4):



















Automotive

$320


6.5

%


$(181)


$(102)


$174


$211


4.3

%


86

%

Aerospace, Defense, and Marine

40


5.6



(16)


(10)


153


167


23.8



14


Total

360


6.4



(197)


(112)


327


378


6.7



100

%

Communications and Industrial Solutions (4):



















Industrial

(232)


(14.9)



(16)


(30)


-


(278)


(17.9)



32


Consumer Devices

(79)


(6.5)



(1)


(23)


-


(103)


(8.4)



28


Data Communications

(169)


(15.9)



(7)


(16)


-


(192)


(18.0)



22


Appliance

(65)


(8.1)



(16)


(14)


-


(95)


(11.8)



18


Total

(545)


(11.7)



(40)


(83)


-


(668)


(14.3)



100

%

Network Solutions (4):



















Telecom Networks

(110)


(8.2)



(37)


(32)


117


(62)


(4.6)



39


Energy

14


1.5



(37)


(14)


-


(37)


(4.2)



25


Enterprise Networks 

-


-



(29)


(16)


37


(8)


(1.2)



21


Subsea Communications

(91)


(15.8)



2


(10)


-


(99)


(17.1)



15


Total

(187)


(5.4)



(101)


(72)


154


(206)


(5.9)



100

%

   Total 

$(372)


(2.7)

%


$(338)


$(267)


$481


$(496)


(3.6)

%























(1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, the impact of changes in foreign currency exchange rates, and the impact of an additional week in the fourth quarter of fiscal 2011.  Organic net sales growth is a non-GAAP measure.  See description of non-GAAP measures contained in this release.

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

(3) Represents the impact of an additional week in the fourth quarter of fiscal 2011. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year.

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



 

TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)





























Percentage of


Change in Net Sales for the Quarter Ended September 28, 2012


Segment's Total

Net Sales for the


 versus Net Sales for the Quarter Ended June 29, 2012


Quarter Ended


Organic (1) 



Translation (2)


Total



September 28,

2012


($ in millions)




Transportation Solutions(3):















Automotive

$(40)


(2.7)

%


$(26)


$(66)


(4.9)

%


83

%

Aerospace, Defense, and Marine

2


1.3



(5)


(3)


(1.2)



17


Total

(38)


(2.3)



(31)


(69)


(4.3)



100

%

Communications and Industrial Solutions (3):















Industrial

(29)


(8.3)



-


(29)


(8.6)



31


Consumer Devices

11


4.0



1


12


4.2



30


Data Communications

(5)


(2.1)



(1)


(6)


(2.6)



22


Appliance

(26)


(13.1)



-


(26)


(13.3)



17


Total

(49)


(4.7)



-


(49)


(4.7)



100

%

Network Solutions (3):















Telecom Networks

(2)


(0.4)



(3)


(5)


(1.5)



41


Energy

(2)


(0.9)



(2)


(4)


(1.8)



26


Enterprise Networks 

(1)


(0.7)



(2)


(3)


(1.7)



20


Subsea Communications

(6)


(4.9)



1


(5)


(4.3)



13


Total

(11)


(1.3)



(6)


(17)


(2.0)



100

%

   Total 

$(98)


(2.8)

%


$(37)


$(135)


(3.9)

%



















(1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates.  Organic net sales growth is a non-GAAP measure.  See description of non-GAAP measures contained in this release.


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


(3) Industry end market information about net sales 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 September 28, 2012

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges(1)


Charges, Net 


Items(2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$214


$14


$15


$ -


$243

Communications and Industrial Solutions

105


-


7


-


112

Network Solutions

82


-


17


-


99

    Total 

$401


$14


$39


$ -


$454











Operating Margin

11.9%








13.5%











Other Income, Net

$19


$ -


$ -


$(7)


$12











Income Tax (Expense) Benefit

$18


$(1)


$(10)


$(107)


$(100)











Income from Continuing Operations Attributable to TE Connectivity Ltd.










$398


$13


$29


$(114)


$326











Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



















$0.93


$0.03


$0.07


$(0.27)


$0.76











(1) Includes $7 million of non-cash amortization associated with acquisition-related adjustments recorded in cost of sales, $4 million of acquisition and integration costs, and $3 million of restructuring costs. 

(2) Other income adjustment relates to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters. Income tax expense adjustment includes income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards.

(3) See description of non-GAAP measures contained in this release.











 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 30, 2011

(UNAUDITED)




























Adjustments






Acquisition


Restructuring






Related


and Other


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


(Non-GAAP)(2)


($ in millions, except per share data)

Operating Income:








Transportation Solutions

$237


$ -


$ 4


$241

Communications and Industrial Solutions

89


-


51


140

Network Solutions

119


23


1


143

    Total 

$445


$23


$56


$524









Operating Margin

11.9%






14.0%









Other Income, Net

$14


$ -


$ -


$14









Income Tax Expense

$(100)


$(7)


$(17)


$(124)









Income from Continuing Operations Attributable to TE Connectivity Ltd.








$320


$16


$39


$375









Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.















$0.74


$0.04


$0.09


$0.87









(1) Includes $22 million of restructuring charges and $1 million of non-cash amortization associated with acquisition-related adjustments recorded in cost of sales.

(2) See description of non-GAAP measures contained in this release.









 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 28, 2012

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges(1)


Charges, Net 


Items(2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$847


$116


$16


$ -


$979

Communications and Industrial Solutions

337


-


58


-


395

Network Solutions

334


-


40


-


374

    Total 

$1,518


$116


$114


$ -


$1,748











Operating Margin

11.4%








13.2%











Other Income, Net

$50


$ -


$ -


$(17)


$33











Income Tax Expense

$(249)


$(24)


$(33)


$(90)


$(396)











Income from Continuing Operations    Attributable to TE Connectivity Ltd.










$1,163


$92


$81


$(107)


$1,229











Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



















$2.70


$0.21


$0.19


$(0.25)


$2.86











(1) Includes $75 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $27 million of acquisition and integration costs, and $14 million of restructuring costs. 

(2) Other income adjustment relates to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters. Income tax expense adjustments include income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards and income tax expense associated with certain non-U.S tax rate changes.

(3) See description of non-GAAP measures contained in this release.











 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 30, 2011

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


Items(2)


(Non-GAAP)(3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$848


$ -


$(14)


$  -


$834

Communications and Industrial Solutions

515


-


65


-


580

Network Solutions

324


138


5


-


467

Total

$1,687


$138


$56


$ -


$1,881











Operating Margin

12.2%








13.7%











Other Income, Net

$27


$ -


$ -


$14


$41











Income Tax Expense

$(347)


$(35)


$(18)


$(35)


$(435)











Income from Continuing Operations Attributable to TE Connectivity Ltd.










$1,223


$103


$38


$(21)


$1,343











Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



















$2.76


$0.23


$0.09


$(0.05)


$3.03











(1) Includes $80 million of restructuring charges, $39 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of acquisition and integration costs.

(2) Includes income tax benefits associated with the settlement of certain tax matters related to an audit of prior year tax returns.  Also includes the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

(3) See description of non-GAAP measures contained in this release.











 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 30, 2011

(UNAUDITED)


































                               Adjustments








Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges


Charges, Net 


Items(1)


(Non-GAAP) (2)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$223


$4


$(4)


$ -


$223

Communications and Industrial Solutions

61


-


17


-


78

Network Solutions

77


-


5


-


82

    Total 

$361


$ 4


$18


$ -


$383











Operating Margin

11.4%








12.1%











Other Income, Net

$ 1


$ -


$ -


$ -


$ 1











Income Tax Expense

$(88)


$ -


$(8)


$17


$(79)











Income from Continuing Operations Attributable to TE Connectivity Ltd.










$238


$ 4


$10


$17


$269











Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



















$0.55


$0.01


$0.02


$0.04


$0.63











(1) Primarily relates to income tax expense associated with certain non-U.S tax rate changes.

(2) See description of non-GAAP measures contained in this release.











 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended June 29, 2012

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges(1)


Charges, Net 


Items(2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$183


$94


$ 3


$ -


$280

Communications and Industrial Solutions

96


-


16


-


112

Network Solutions

92


-


6


-


98

    Total 

$371


$94


$25


$ -


$490











Operating Margin

10.6%








14.0%











Other Income, Net

$19


$ -


$  -


$(10)


$ 9











Income Tax Expense

$(88)


$(23)


$(6)


$ -


$(117)











Income from Continuing Operations Attributable to TE Connectivity Ltd.










$260


$71


$19


$(10)


$340











Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



















$0.60


$0.16


$0.04


$(0.02)


$0.79











(1) Includes $68 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $15 million of acquisition and integration costs, and $11 million of restructuring costs. 

(2) Relates to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters. 

(3) See description of non-GAAP measures contained in this release.











 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)






























For the Quarter Ended September 30, 2011
























Adjustments




Adjustment






Acquisition


Restructuring




14 Weeks




13 Weeks


14 Weeks


Related


and Other




Adjusted


Impact of


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


Tax Items


(Non-GAAP) (2)


14th Week (3)


(Non-GAAP) (4)


 ($ in millions, except per share data)















Operating Income

$445


$23


$56


$ -


$524


$(52)


$472















Operating Margin

11.9%








14.0%




13.5%















Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



























$0.74


$0.04


$0.09


$ -


$ 0.87


$(0.08)


$0.79















(1) Includes $22 million of restructuring charges and $1 million of non-cash amortization associated with acquisition accounting-related adjustments recorded in cost of sales.

(2) See description of non-GAAP measures contained in this release.







(3) Estimated impact of the 14th week using an average weekly sales figure for the last month of the fiscal year.







(4) Excludes the impact of an additional week in the fourth quarter of fiscal 2011.




































For the Year Ended September 30, 2011
























Adjustments




Adjustment






Acquisition


Restructuring




53 Weeks




52 Weeks


53 Weeks


Related


and Other




Adjusted


Impact of


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


Tax Items(2)


(Non-GAAP) (3)


53rd Week(4)


(Non-GAAP) (5)


 ($ in millions, except per share data)















Operating Income

$1,687


$138


$56


$ -


$1,881


$(52)


$1,829















Operating Margin

12.2%








13.7%




13.5%















Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.



























$2.76


$0.23


$0.09


$(0.05)


$3.03


$(0.08)


$2.95















(1) Includes $80 million of restructuring charges, $39 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of acquisition and integration costs.

(2) Includes income tax benefits associated with the settlement of certain tax matters related to an audit of prior year tax returns.  Also includes the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

(3) See description of non-GAAP measures contained in this release.

(4) Estimated impact of the 53rd week using an average weekly sales figure for the last month of the fiscal year.







(5) Excludes the impact of an additional week in the fourth quarter of fiscal 2011.





















 

SOURCE TE Connectivity Ltd.

For further information: Media Relations: Amy Shah, +1-610-893-9555 Office, amy.shah@te.com, or Brian Schaffer, +1-212-279-3115 Office, bschaffer@prosek.com; Investor Relations: Keith Kolstrom, +1-610-893-9551 Office, keith.kolstrom@te.com, or Will Ruthrauff, +1-610-893-9565 Office, will.ruthrauff@te.com


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