TE Connectivity Announces Fourth Quarter and Full Year Results for Fiscal Year 2016

Company Posts Strong Fourth Quarter GAAP EPS and Record Quarterly Adjusted EPS

Nov 2, 2016

SCHAFFHAUSEN, Switzerland, Nov. 2, 2016 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended September 30, 2016.

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Fourth Quarter Highlights

  • Net sales were $3.3 billion
  • Diluted earnings per share (EPS) from continuing operations were $1.22
  • Adjusted EPS were $1.27, above the high end of the guidance range
  • Cash flow from continuing operating activities was strong at $782 million and free cash flow was a record for the company at $594 million

Full Year Highlights

  • Net sales were $12.2 billion
  • Diluted EPS from continuing operations (GAAP EPS) were $5.26
  • Adjusted EPS were $4.08, up 13 percent versus the prior year
  • Cash flow from continuing operating activities was $2 billion; free cash flow was $1.6 billion
  • $3.1 billion returned to shareholders through dividends and share repurchases
  • Strengthened harsh environment portfolio with acquisitions in interventional medical (Creganna), industrial connectors (Intercontec), and automotive sensors (Jaquet)
  • Strong performance and momentum in the SubCom business, with $1 billion of backlog

Fourth Quarter Results
For the fourth quarter, the company reported net sales of $3.3 billion, with diluted EPS from continuing operations (GAAP EPS) of $1.22. Adjusted EPS were $1.27, cash flow from continuing operating activities was strong at $782 million, and free cash flow was a record for the company at $594 million. Excluding SubCom, total orders were $3.2 billion and the book-to-bill ratio was 1.03. All metrics include the impact of an additional week in the fourth quarter.

"The fourth quarter was a strong finish to a solid year for TE, despite a challenging macro environment," said TE Connectivity Chairman and CEO Tom Lynch. "Our performance was led by strength in several businesses including Automotive, Commercial Transportation, SubCom, Aerospace and Defense, and Energy. We continued to build our harsh environment portfolio with the acquisition of Intercontec, which expanded our product range in the industrial equipment market. Our SubCom business continued its momentum by being awarded a contract in October for the Pacific Light Cable Network, a trans-pacific cable installation for Google and Facebook."

Full Year Results
For the full year, the company reported net sales of $12.2 billion and diluted EPS from continuing operations (GAAP EPS) of $5.26. Adjusted EPS were $4.08, cash flow from continuing operating activities was $2 billion and free cash flow was $1.6 billion for the year. All metrics include the impact of an additional week in the fourth quarter.

"Our strategy to focus on harsh environment applications and our strong execution delivered solid results for the full fiscal year," said Lynch. "At a segment level, results were driven by excellent performance in our Transportation Solutions segment and a solid second half of the year in our Industrial Solutions and Communications Solutions segments. We also continued our disciplined capital allocation strategy, returning $3.1 billion to shareholders."

2017 Outlook
For the fiscal first quarter 2017, the company expects net sales of $2.95 billion to $3.05 billion, reflecting an increase of 6 percent on an actual basis and 3 percent on an organic basis year over year at the mid-point. GAAP EPS are expected to be $0.84 to $0.88, including net restructuring, acquisition-related and other charges of $0.14. TE expects adjusted EPS of $0.98 to $1.02 which represents a 19 percent improvement at the mid-point versus the first quarter of 2016.

For the full year, the company expects net sales of $12.3 to $12.9 billion, reflecting 5 percent actual and 3 percent organic growth at the mid-point versus the prior year, excluding the additional week in fiscal year 2016. GAAP EPS are expected to be $3.84 to $4.14, including net restructuring, acquisition-related and other charges of $0.35. TE expects adjusted EPS of $4.19 to $4.49, reflecting 10 percent growth at the mid-point compared to 2016, when excluding the additional week.

"These are exciting times for TE, and we have never been better positioned to capitalize on the strong underlying trends of a safer, greener, smarter and more connected world," said Lynch. "We expect a good start to fiscal 2017 due to strong order momentum in the fourth quarter of 2016. Our guidance for 2017 implies 5 percent growth in sales, and another year of double-digit improvement in adjusted EPS."

Information about TE Connectivity's use of non-GAAP financial measures is provided below. For a reconciliation of these non-GAAP financial measures, see the attached tables.

Chief Executive Officer Transition
On October 3, 2016, the company announced that its Board of Directors appointed Terrence Curtin to succeed Tom Lynch as the company's chief executive officer, effective March 9, 2017. Upon completion of the transition, Lynch will continue as executive chairman of the board.

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: http://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 (800) 230-1059, and for international callers, the dial-in number is (612) 332-0107.             
  • An audio replay of the conference call will be available beginning at 10:30 a.m. ET on November 2, 2016, and ending at 11:59 p.m. ET on November 9, 2016. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the dial-in number is (320) 365-3844. The replay access code for all callers is 403245.

About TE Connectivity
TE Connectivity (NYSE: TEL) is a $12 billion global technology leader. Our connectivity and sensor solutions are essential in today's increasingly connected world. We collaborate with engineers to transform their concepts into creations – redefining what's possible using intelligent, efficient and high-performing TE products and solutions proven in harsh environments. Our 75,000 people, including over 7,000 engineers, partner with customers in close to 150 countries across a wide range of industries. We believe EVERY CONNECTION COUNTS – www.TE.com.

Non-GAAP Measures
"Organic Net Sales Growth," "Organic Net Sales Growth Excluding the Impact of the Additional Week," "Net Sales Excluding the Impact of the Additional Week," "Net Sales Growth Excluding the Impact of the Additional Week," "Adjusted Operating Income," "Adjusted Operating Income Excluding the Impact of the Additional Week," "Adjusted Operating Margin Excluding the Impact of the Additional Week," "Adjusted Operating Margin," "Adjusted Other Income, Net," "Adjusted Income Tax Expense," "Adjusted Income from Continuing Operations," "Adjusted Earnings Per Share," "Adjusted Earnings Per Share Excluding the Impact of the Additional Week," and "Free Cash Flow" are non-GAAP measures and should not be considered replacements for results in accordance with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP measures may not be comparable to similarly-titled measures reported by other companies. 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 measures in combination with the most directly comparable GAAP measures in order to better understand the amounts, character and impact of any increase or decrease in reported amounts. The following provides additional information regarding these non-GAAP measures:

  • Organic Net Sales Growth – is a useful measure of our underlying results and trends in the business. It is also a significant component in our incentive compensation plans. The difference between reported net sales growth (the most comparable GAAP measure) and Organic Net Sales Growth consists of the impact from foreign currency exchange rates and acquisitions and divestitures, if any. Organic Net 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.
  • Organic Net Sales Growth Excluding the Impact of the Additional Week, Net Sales Excluding the Impact of the Additional Week, and Net Sales Growth Excluding the Impact of the Additional Week – represent Organic Net Sales Growth, net sales (the most comparable GAAP measure), and net sales growth (the most comparable GAAP measure), respectively, excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year. We believe these measures are useful to investors because they provide insight into our underlying operating results, trends, and the comparability of these results between periods.
  • Adjusted Operating Income – represents operating income (the most comparable GAAP measure) before special items including charges or income related to restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any. 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 useful to investors because it provides insight into our underlying operating results, trends, and the comparability of these results between periods.
  • Adjusted Operating Income Excluding the Impact of the Additional Week and Adjusted Operating Margin Excluding the Impact of the Additional Week – represents Adjusted Operating Income and Adjusted Operating Margin, respectively, excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. We believe these measures are useful to investors because they provide insight into our underlying operating results, trends, and the comparability of these results between periods.
  • Adjusted Operating Margin – represents operating margin (the most comparable GAAP measure) before special items including charges or income related to restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any. We present Adjusted Operating Margin before special items to give investors a perspective on the underlying business results. 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.
  • Adjusted Other Income, Net – represents other income, net (the most comparable GAAP measure) before special items including tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, if any. 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.
  • Adjusted Income Tax Expense – represents income tax expense (the most comparable GAAP measure) 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. 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).
  • Adjusted Income from Continuing Operations – represents income from continuing operations (the most comparable GAAP measure) before special items including charges or income related to 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, the related tax effects. 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.
  • Adjusted Earnings Per Share – represents diluted earnings per share from continuing operations (the most comparable GAAP measure) before special items, including charges or income related to 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, the related tax effects. 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 insight into our underlying operating results, trends, and the comparability of these results between periods, since it excludes the impact of special items, which may recur, but tend to be irregular as to timing. It also is a significant component in our incentive compensation plans.
  • Adjusted Earnings Per Share Excluding the Impact of the Additional Week – represents Adjusted Earnings Per Share excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. We believe Adjusted Earnings Per Share Excluding the Impact of the Additional Week is useful to investors because it provides insight into our underlying operating results, trends, and the comparability of these results between periods.
  • 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 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 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, 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 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 presentation include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive and data and devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation.  More detailed information about these and other factors is set forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the fiscal year ended Sept. 25, 2015 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 Years Ended

 

September 30,

 

September 25,

 

September 30,

 

September 25,

 

2016

 

2015

 

2016

 

2015

 

(in millions, except per share data)

Net sales

$            3,332

 

$            2,984

 

$          12,238

 

$          12,233

Cost of sales 

2,228

 

2,016

 

8,205

 

8,146

Gross margin

1,104

 

968

 

4,033

 

4,087

Selling, general, and administrative expenses

389

 

334

 

1,463

 

1,504

Research, development, and engineering expenses

165

 

148

 

644

 

627

Acquisition and integration costs

3

 

9

 

22

 

55

Restructuring and other charges, net

30

 

70

 

2

 

152

   Operating income  

517

 

407

 

1,902

 

1,749

Interest income

7

 

4

 

19

 

17

Interest expense

(34)

 

(32)

 

(127)

 

(136)

Other income (expense), net

(1)

 

9

 

(632)

 

(55)

   Income from continuing operations before income taxes

489

 

388

 

1,162

 

1,575

Income tax (expense) benefit

(52)

 

(252)

 

779

 

(337)

   Income from continuing operations

437

 

136

 

1,941

 

1,238

Income from discontinued operations, net of income taxes

-

 

904

 

68

 

1,182

Net income

$               437

 

$            1,040

 

$            2,009

 

$            2,420

               

Basic earnings per share:

             

   Income from continuing operations

$              1.23

 

$              0.34

 

$              5.30

 

$              3.06

   Income from discontinued operations

-

 

2.26

 

0.19

 

2.92

   Net income  

1.23

 

2.60

 

5.49

 

5.98

               

Diluted earnings per share:

             

   Income from continuing operations

$              1.22

 

$              0.34

 

$              5.26

 

$              3.01

   Income from discontinued operations

-

 

2.23

 

0.18

 

2.88

   Net income  

1.22

 

2.57

 

5.44

 

5.89

               

Dividends paid per common share

$              0.37

 

$              0.33

 

$              1.40

 

$              1.24

               

Weighted-average number of shares outstanding: 

             

   Basic

355

 

400

 

366

 

405

   Diluted

359

 

405

 

369

 

411

 

 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

       
       
 

September 30,

 

September 25,

 

2016

 

2015

 

(in millions, except share data)

Assets

     

Current assets:

     

Cash and cash equivalents

$               647

 

$            3,329

Accounts receivable, net of allowance for doubtful accounts of $17 and $18, respectively

2,046

 

2,120

Inventories

1,596

 

1,615

Prepaid expenses and other current assets

486

 

476

Deferred income taxes

-

 

345

  Total current assets

4,775

 

7,885

Property, plant, and equipment, net

3,052

 

2,920

Goodwill

5,492

 

4,824

Intangible assets, net

1,879

 

1,555

Deferred income taxes

2,111

 

2,144

Receivable from Tyco International plc and Covidien plc

12

 

964

Other assets

287

 

297

Total Assets

$          17,608

 

$          20,589

       

Liabilities and Shareholders' Equity

     

Current liabilities:

     

Short-term debt

$               331

 

$               498

Accounts payable

1,090

 

1,143

Accrued and other current liabilities

1,437

 

1,749

Deferred revenue

208

 

185

Total current liabilities

3,066

 

3,575

Long-term debt

3,739

 

3,386

Long-term pension and postretirement liabilities

1,502

 

1,327

Deferred income taxes

207

 

329

Income taxes

247

 

1,954

Other liabilities

362

 

433

Total Liabilities

9,123

 

11,004

Commitments and contingencies

     

Shareholders' Equity:

     

Common shares, CHF 0.57 par value, 382,835,381 shares authorized and issued, and

     

414,064,381 shares authorized and issued, respectively

168

 

182

Contributed surplus

1,801

 

4,359

Accumulated earnings 

8,682

 

6,673

Treasury shares, at cost, 27,554,005 and 20,071,089 shares, respectively

(1,624)

 

(1,256)

Accumulated other comprehensive loss

(542)

 

(373)

Total Shareholders' Equity

8,485

 

9,585

Total Liabilities and Shareholders' Equity

$          17,608

 

$          20,589

 

 

TE CONNECTIVITY LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 
 

For the Quarters Ended

 

For the Years Ended

 

September 30,

 

September 25,

 

September 30,

 

September 25,

 

2016

 

2015

 

2016

 

2015

 

(in millions)

Cash Flows From Operating Activities:

             

Net income

$               437

 

$            1,040

 

$            2,009

 

$            2,420

Income from discontinued operations, net of income taxes

-

 

(904)

 

(68)

 

(1,182)

Income from continuing operations

437

 

136

 

1,941

 

1,238

Adjustments to reconcile income from continuing operations to net cash 

             

provided by operating activities:

             

Depreciation and amortization

147

 

161

 

585

 

616

Non-cash restructuring charges

28

 

6

 

41

 

21

Deferred income taxes

16

 

146

 

178

 

40

Provision for losses on accounts receivable and inventories

(10)

 

1

 

17

 

36

Tax sharing (income) expense

-

 

(10)

 

632

 

52

Share-based compensation expense

25

 

24

 

91

 

89

Gain on divestiture

(1)

 

-

 

(144)

 

-

Other 

(10)

 

46

 

61

 

105

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

             

Accounts receivable, net

101

 

(85)

 

116

 

(210)

Inventories

18

 

(2)

 

16

 

(220)

Prepaid expenses and other current assets

(20)

 

1

 

282

 

36

Accounts payable

(71)

 

7

 

(100)

 

(22)

Accrued and other current liabilities

64

 

51

 

(4)

 

(155)

Deferred revenue

48

 

8

 

26

 

12

Income taxes

(29)

 

38

 

(1,764)

 

(52)

Other

39

 

12

 

45

 

33

Net cash provided by continuing operating activities

782

 

540

 

2,019

 

1,619

Net cash provided by (used in) discontinued operating activities

(98)

 

84

 

(97)

 

294

Net cash provided by operating activities

684

 

624

 

1,922

 

1,913

Cash Flows From Investing Activities:

             

Capital expenditures

(208)

 

(175)

 

(628)

 

(600)

Proceeds from sale of property, plant, and equipment

5

 

7

 

8

 

17

Acquisition of businesses, net of cash acquired

(342)

 

1

 

(1,336)

 

(1,725)

Proceeds from divestiture of business, net of cash retained by sold business

7

 

-

 

333

 

-

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

-

 

2,957

 

(19)

 

2,957

Other

14

 

14

 

61

 

12

Net cash provided by (used in) continuing investing activities

(524)

 

2,804

 

(1,581)

 

661

Net cash used in discontinued investing activities

-

 

(3)

 

-

 

(25)

Net cash provided by (used in) investing activities

(524)

 

2,801

 

(1,581)

 

636

Cash Flows From Financing Activities:

             

Net increase (decrease) in commercial paper

30

 

(131)

 

330

 

(328)

Proceeds from issuance of debt

2

 

-

 

352

 

617

Repayment of debt

(1)

 

-

 

(501)

 

(473)

Proceeds from exercise of share options

13

 

6

 

90

 

103

Repurchase of common shares

(130)

 

(512)

 

(2,787)

 

(1,023)

Payment of common share dividends to shareholders

(132)

 

(132)

 

(509)

 

(502)

Transfer (to) from discontinued operations

(98)

 

81

 

(97)

 

269

Other

-

 

2

 

(5)

 

-

Net cash used in continuing financing activities

(316)

 

(686)

 

(3,127)

 

(1,337)

Net cash provided by (used in) discontinued financing activities

98

 

(81)

 

97

 

(269)

Net cash used in financing activities

(218)

 

(767)

 

(3,030)

 

(1,606)

Effect of currency translation on cash

11

 

(30)

 

7

 

(71)

Net increase (decrease) in cash and cash equivalents

(47)

 

2,628

 

(2,682)

 

872

Cash and cash equivalents at beginning of period

694

 

701

 

3,329

 

2,457

Cash and cash equivalents at end of period

$               647

 

$            3,329

 

$               647

 

$            3,329

               

Supplemental Cash Flow Information:

             

Interest paid

$                 15

 

$                 18

 

$               117

 

$               128

Income taxes paid, net of refunds

64

 

69

 

806

 

350

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)

               
               
               
 

For the Quarters Ended

 

For the Years Ended

 

September 30,

 

September 25,

 

September 30,

 

September 25,

 

2016

 

2015

 

2016

 

2015

 

(in millions)

Net cash provided by continuing operating activities

$               782

 

$               540

 

$            2,019

 

$            1,619

Excluding:

             

Payments related to pre-separation U.S. tax matters, net

5

 

17

 

150

 

40

Payments related to income taxes on the sale of the

             

Broadband Network Solutions business

10

 

-

 

36

 

-

Capital expenditures, net

(203)

 

(168)

 

(620)

 

(583)

Free cash flow (1)

$               594

 

$               389

 

$            1,585

 

$            1,076

               

(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 30,

 

September 25,

 

September 30,

 

September 25,

 

2016

 

2015

 

2016

 

2015

 

($ in millions)

 

Net Sales

       

Net Sales

       

Net Sales

       

Net Sales

     

Transportation Solutions

$          1,736

       

$          1,508

       

$          6,503

       

$          6,351

     

Industrial Solutions

919

       

792

       

3,215

       

3,179

     

Communications Solutions

677

       

684

       

2,520

       

2,703

     

Total

$          3,332

       

$          2,984

       

$        12,238

       

$        12,233

     
                                       
                                       
 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Income

 

Margin

 

Income

 

Margin

 

Income

 

Margin

 

Income

 

Margin

Transportation Solutions

$             344

 

19.8

%

 

$             272

 

18.0

%

 

$          1,191

 

18.3

%

 

$          1,193

 

18.8

%

Industrial Solutions

119

 

12.9

   

84

 

10.6

   

343

 

10.7

   

352

 

11.1

 

Communications Solutions

54

 

8.0

   

51

 

7.5

   

368

 

14.6

   

204

 

7.5

 

Total

$             517

 

15.5

%

 

$             407

 

13.6

%

 

$          1,902

 

15.5

%

 

$          1,749

 

14.3

%

                                       
                                       
 

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

$             341

 

19.6

%

 

$             306

 

20.3

%

 

$          1,246

 

19.2

%

 

$          1,293

 

20.4

%

Industrial Solutions

123

 

13.4

   

110

 

13.9

   

397

 

12.3

   

429

 

13.5

 

Communications Solutions

87

 

12.9

   

72

 

10.5

   

293

 

11.6

   

270

 

10.0

 

Total

$             551

 

16.5

%

 

$             488

 

16.4

%

 

$          1,936

 

15.8

%

 

$          1,992

 

16.3

%

                                       

(1) Adjusted operating income and adjusted operating margin are non-GAAP measures. See description of non-GAAP measures contained in this release.

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

                                 
                                 
                                 
                             

Percentage of

 

Change in Net Sales for the Quarter Ended September 30, 2016

 

Segment's Total

 

 versus Net Sales for the Quarter Ended September 25, 2015

 

Net Sales for the

           

Acquisitions

           

Quarter Ended

 

Total

   

Translation (1)

 

(Divestiture)

 

Organic (2) 

   

September 30, 2016

 

($ in millions)

     

Transportation Solutions (3):

                               

Automotive

$ 183

 

16.2

%

 

$                11

 

$                 -

 

$ 172

 

15.3

%

 

76

%

Commercial Transportation

25

 

13.2

   

3

 

-

 

22

 

12.1

   

12

 

Sensors

20

 

10.5

   

(2)

 

14

 

8

 

4.2

   

12

 

Total

228

 

15.1

   

12

 

14

 

202

 

13.4

   

100

%

Industrial Solutions (3):

                               

Industrial Equipment

84

 

24.5

   

2

 

79

 

3

 

0.7

   

46

%

Aerospace, Defense, Oil, and Gas

23

 

8.3

   

-

 

1

 

22

 

8.0

   

33

 

Energy

20

 

11.6

   

(3)

 

-

 

23

 

13.4

   

21

 

Total

127

 

16.0

   

(1)

 

80

 

48

 

6.0

   

100

%

Communications Solutions (3):

                               

Data and Devices

(61)

 

(18.9)

   

-

 

(47)

 

(14)

 

(5.8)

   

39

%

Subsea Communications

37

 

18.3

   

-

 

-

 

37

 

18.3

   

35

 

Appliances

17

 

10.7

   

-

 

-

 

17

 

10.4

   

26

 

Total

(7)

 

(1.0)

   

-

 

(47)

 

40

 

5.9

   

100

%

Total 

$ 348

 

11.7

%

 

$                11

 

$              47

 

$ 290

 

9.8

%

     
                                 
                               
                               
                             

Percentage of

 

Change in Net Sales for the Year Ended September 30, 2016

 

Segment's Total

 

 versus Net Sales for the Year Ended September 25, 2015

 

Net Sales for the

               

Acquisitions

           

Year Ended

 

Total

   

Translation (1)

 

(Divestiture)

 

Organic (2) 

   

September 30, 2016

 

($ in millions)

     

Transportation Solutions (3):

                               

Automotive

$ 132

 

2.8

%

 

$            (134)

 

$                 -

 

$ 266

 

5.6

%

 

75

%

Commercial Transportation

5

 

0.6

   

(16)

 

-

 

21

 

2.6

   

13

 

Sensors

15

 

2.0

   

(24)

 

16

 

23

 

3.1

   

12

 

Total

152

 

2.4

   

(174)

 

16

 

310

 

4.9

   

100

%

Industrial Solutions (3):

                               

Industrial Equipment

96

 

7.3

   

(14)

 

179

 

(69)

 

(5.2)

   

44

%

Aerospace, Defense, Oil, and Gas

(51)

 

(4.4)

   

(15)

 

9

 

(45)

 

(3.8)

   

34

 

Energy

(9)

 

(1.3)

   

(34)

 

-

 

25

 

3.6

   

22

 

Total

36

 

1.1

   

(63)

 

188

 

(89)

 

(2.8)

   

100

%

Communications Solutions (3):

                               

Data and Devices

(337)

 

(24.8)

   

(6)

 

(123)

 

(208)

 

(17.8)

   

40

%

Subsea Communications

176

 

24.8

   

-

 

-

 

176

 

24.8

   

35

 

Appliances

(22)

 

(3.5)

   

(11)

 

-

 

(11)

 

(1.8)

   

25

 

Total

(183)

 

(6.8)

   

(17)

 

(123)

 

(43)

 

(1.6)

   

100

%

Total 

$     5

 

-

%

 

$            (254)

 

$              81

 

$ 178

 

1.5

%

     
                                 

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

 

(2) 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.

 

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

 

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 30, 2016

(UNAUDITED)

               
               
     

Adjustments

 
         

Restructuring

   
     

Acquisition

 

and Other

   
     

Related

 

Charges

 

Adjusted

 

U.S. GAAP

 

Charges (1)(2)

 

(Credits), Net (2)

 

(Non-GAAP) (3)

 

($ in millions, except per share data)

Operating Income:

             

Transportation Solutions

$         344

 

$               3

 

$                    (6)

 

$                341

Industrial Solutions

119

 

1

 

3

 

123

Communications Solutions

54

 

-

 

33

 

87

    Total 

$         517

 

$               4

 

$                    30

 

$                551

               

Operating Margin

15.5%

         

16.5%

               

Other Expense, Net

$           (1)

 

$                -

 

$                      -

 

$                  (1)

               

Income Tax Expense

$         (52)

 

$              (1)

 

$                  (15)

 

$                (68)

               

Income from Continuing Operations 

$         437

 

$               3

 

$                    15

 

$                455

               

Diluted Earnings per Share from 

             

   Continuing Operations

$        1.22

 

$          0.01

 

$                 0.04

 

$               1.27

               

(1) Includes $3 million of acquisition and integration costs and $1 million of non-cash amortization associated with fair value adjustments related to acquired customer order backlog recorded in cost of sales.

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

(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 25, 2015

(UNAUDITED)

                   
                   
                   
     

Adjustments

   
     

Acquisition

 

Restructuring

       
     

Related

 

and Other

 

Tax

 

Adjusted

 

U.S. GAAP

 

Charges (1)(2)

 

Charges, Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

($ in millions, except per share data)

Operating Income:

                 

Transportation Solutions

$         272

 

$               5

 

$                   29

 

$        -

 

$                306

Industrial Solutions

84

 

6

 

20

 

-

 

110

Communications Solutions

51

 

-

 

21

 

-

 

72

    Total 

$         407

 

$             11

 

$                   70

 

$        -

 

$                488

                   

Operating Margin

13.6%

             

16.4%

                   

Other Income, Net

$             9

 

$                -

 

$                     -

 

$      (5)

 

$                    4

                   

Income Tax Expense

$       (252)

 

$               1

 

$                 (17)

 

$    168

 

$              (100)

                   

Income from Continuing Operations 

$         136

 

$             12

 

$                   53

 

$    163

 

$                364

                   

Diluted Earnings per Share from 

                 

   Continuing Operations

$        0.34

 

$          0.03

 

$                0.13

 

$   0.40

 

$               0.90

                   

(1) Includes $9 million of acquisition and integration costs and $2 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales. 

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

(3) Includes $216 million of income tax charges associated with the tax impacts of certain intercompany legal entity restructurings made in connection with our integration of Measurement Specialties, Inc.  Also includes $63 million of income tax benefits associated with the settlement of audits of prior year income tax returns.

(4) 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, 2016

(UNAUDITED)

                   
                   
     

Adjustments

   
         

Restructuring

       
     

Acquisition

 

and Other

       
     

Related

 

Charges

 

Tax

 

Adjusted

 

U.S. GAAP

 

Charges (1)(2)

 

(Credits), Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

($ in millions, except per share data)

Operating Income:

                 

Transportation Solutions

$            1,191

 

$                   9

 

$                 46

 

$                    -

 

$            1,246

Industrial Solutions

343

 

23

 

31

 

-

 

397

Communications Solutions

368

 

-

 

(75)

 

-

 

293

    Total 

$            1,902

 

$                 32

 

$                   2

 

$                    -

 

$            1,936

                   

Operating Margin

15.5%

             

15.8%

                   

Other Income (Expense), Net

$              (632)

 

$                    -

 

$                    -

 

$               650

 

$                 18

                   

Income Tax (Expense) Benefit

$               779

 

$                  (7)

 

$                  (2)

 

$           (1,111)

 

$              (341)

                   

Income from Continuing Operations 

$            1,941

 

$                 25

 

$                    -

 

$              (461)

 

$            1,505

                   

Diluted Earnings per Share from 

                 

   Continuing Operations

$              5.26

 

$              0.07

 

$                    -

 

$             (1.25)

 

$              4.08

                   

(1) Includes $22 million of acquisition and integration costs and $10 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

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

(3) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

(4) 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 25, 2015

(UNAUDITED)

                   
                   
                   
     

Adjustments

   
     

Acquisition

 

Restructuring

       
     

Related

 

and Other

 

Tax

 

Adjusted

 

U.S. GAAP

 

Charges (1)(2)

 

Charges, Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

($ in millions, except per share data)

Operating Income:

                 

Transportation Solutions

$            1,193

 

$                 61

 

$                 39

 

$                    -

 

$            1,293

Industrial Solutions

352

 

33

 

44

 

-

 

429

Communications Solutions

204

 

-

 

66

 

-

 

270

    Total 

$            1,749

 

$                 94

 

$               149

 

$                    -

 

$            1,992

                   

Operating Margin

14.3%

             

16.3%

                   

Other Income (Expense), Net

$                (55)

 

$                    -

 

$                    -

 

$                 84

 

$                 29

                   

Income Tax Expense

$              (337)

 

$                (22)

 

$                (29)

 

$                (36)

 

$              (424)

                   

Income from Continuing Operations 

$            1,238

 

$                 72

 

$               120

 

$                 48

 

$            1,478

                   

Diluted Earnings per Share from 

                 

   Continuing Operations

$              3.01

 

$              0.18

 

$              0.29

 

$              0.12

 

$              3.60

                   

(1) Includes $55 million of acquisition and integration costs, $36 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales, and $3 million of restructuring costs. 

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

(3) Includes $264 million of income tax benefits associated with the settlement of audits of prior year income tax returns as well as the related impact of $84 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes $216 million of income tax charges associated with the tax impacts of certain intercompany legal entity restructurings made in connection with our integration of Measurement Specialties, Inc. and $29 million of income tax charges for the tax impacts of certain intercompany dividends related to the restructuring and sale of the Broadband Network Solutions business.

(4) 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 25, 2015

(UNAUDITED)

                   
                   
                   
     

Adjustments

   
     

Acquisition

 

Restructuring

       
     

Related

 

and Other

 

Tax

 

Adjusted

 

U.S. GAAP

 

Charges (1)(2)

 

Charges, Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

($ in millions, except per share data)

Operating Income:

                 

Transportation Solutions

$               261

 

$                   3

 

$                 16

 

$                    -

 

$               280

Industrial Solutions

66

 

3

 

9

 

-

 

78

Communications Solutions

71

 

-

 

15

 

-

 

86

    Total 

$               398

 

$                   6

 

$                 40

 

$                    -

 

$               444

                   

Operating Margin

14.0%

             

15.7%

                   

Other Income, Net

$                   8

 

$                    -

 

$                    -

 

$                    -

 

$                   8

                   

Income Tax Expense

$                (58)

 

$                  (2)

 

$                (12)

 

$                (28)

 

$              (100)

                   

Income from Continuing Operations 

$               324

 

$                   4

 

$                 28

 

$                (28)

 

$               328

                   

Diluted Earnings per Share from 

                 

   Continuing Operations 

$              0.83

 

$              0.01

 

$              0.07

 

$             (0.07)

 

$              0.84

                   

(1) Includes $5 million of acquisition and integration costs and $1 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales. 

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

(3) Income tax benefits related to deferred tax assets recognized in connection with the anticipated sale of the Circuit Protection Devices business.

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

 

 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

For the Quarter Ended September 30, 2016

                                       
                                       
                 

Change in Net Sales for the Quarter Ended
September 30, 2016 versus Net Sales for the
Quarter Ended September 25, 2015

 

Change in Organic Net Sales for the Quarter Ended
September 30, 2016 versus Organic Net Sales for the
Quarter Ended September 25, 2015 (2)

                   
 

For the Quarter Ended September 30, 2016

 

For the
Quarter Ended
September 25,
2015

   
     

Adjustment

           

Adjustment

         

Adjustment

   
 

14 Weeks

 

Impact of

 

13 Weeks

   

14 Weeks

 

Impact of

 

13 Weeks

 

14 Weeks

 

Impact of

 

13 Weeks

 

U.S. GAAP

 

14th Week

 

(Non-GAAP) (1)(2)

   

U.S. GAAP

 

14th Week

 

(Non-GAAP) (1)(2)

 

(Non-GAAP) (2)

 

14th Week

 

(Non-GAAP) (1)(2)

 

 ($ in millions)

Net Sales:

                                     

Transportation Solutions

                                     

Automotive

$            1,311

 

$              (102)

 

$            1,209

 

$            1,128

 

16.2%

 

(9.0)%

 

7.2%

 

15.3%

 

(9.0)%

 

6.3%

Commercial Transportation

215

 

(15)

 

200

 

190

 

13.2

 

(7.9)

 

5.3

 

12.1

 

(7.9)

 

4.2

Sensors

210

 

(13)

 

197

 

190

 

10.5

 

(6.8)

 

3.7

 

4.2

 

(6.5)

 

(2.3)

Total

1,736

 

(130)

 

1,606

 

1,508

 

15.1

 

(8.6)

 

6.5

 

13.4

 

(8.5)

 

4.9

Industrial Solutions

                                     

Industrial Equipment

427

 

(32)

 

395

 

343

 

24.5

 

(9.3)

 

15.2

 

0.7

 

(7.8)

 

(7.1)

Aerospace, Defense, Oil, and Gas

299

 

(20)

 

279

 

276

 

8.3

 

(7.2)

 

1.1

 

8.0

 

(7.1)

 

0.9

Energy

193

 

(13)

 

180

 

173

 

11.6

 

(7.6)

 

4.0

 

13.4

 

(7.6)

 

5.8

Total

919

 

(65)

 

854

 

792

 

16.0

 

(8.2)

 

7.8

 

6.0

 

(7.5)

 

(1.5)

Communications Solutions

                                     

Data and Devices

262

 

(21)

 

241

 

323

 

(18.9)

 

(6.5)

 

(25.4)

 

(5.8)

 

(7.5)

 

(13.3)

Subsea Communications

239

 

(11)

 

228

 

202

 

18.3

 

(5.4)

 

12.9

 

18.3

 

(5.2)

 

13.1

Appliances

176

 

(11)

 

165

 

159

 

10.7

 

(6.9)

 

3.8

 

10.4

 

(7.4)

 

3.0

Total

677

 

(43)

 

634

 

684

 

(1.0)

 

(6.3)

 

(7.3)

 

5.9

 

(6.8)

 

(0.9)

Total

$            3,332

 

$              (238)

 

$            3,094

 

$            2,984

 

11.7%

 

(8.0)%

 

3.7%

 

9.8%

 

(7.9)%

 

1.9%

                                       
                                       
                                       
     

Adjustments

     

Adjustment

                   
     

Acquisition

 

Restructuring

                           
     

Related

 

and Other

 

14 Weeks

 

Impact of

 

13 Weeks

               
 

U.S. GAAP

 

Charges (3)

 

Charges, Net 

 

(Non-GAAP) (2)

 

14th Week

 

(Non-GAAP) (1)(2)

               
 

 ($ in millions, except per share data)

               
                                       

Operating Income

$               517

 

$                   4

 

$                 30

 

$               551

 

$                (55)

 

$               496

               
                                       

Operating Margin

15.5%

         

16.5%

     

16.0%

               
                                       

Diluted Earnings per Share from 

                                     

   Continuing Operations

$              1.22

 

$              0.01

 

$              0.04

 

$              1.27

 

$             (0.13)

 

$              1.14

               
                                       
                                       

(1) Excludes the impact of an additional week in the fourth quarter of fiscal 2016. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year.

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

(3) Includes $3 million of acquisition and integration costs and $1 million of non-cash amortization associated with fair value adjustments related to acquired customer order backlog recorded in cost of sales.

 

 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

For the Year Ended September 30, 2016

                                       
                                       
                 

Change in Net Sales for Fiscal 2016
versus Net Sales for Fiscal 2015

 

Change in Organic Net Sales for Fiscal 2016
versus Organic Net Sales for Fiscal 2015(2)

                   
 

Fiscal 2016

 

Fiscal 2015

   
     

Adjustment

           

Adjustment

         

Adjustment

   
 

53 Weeks

 

Impact of

 

52 Weeks

   

53 Weeks

 

Impact of

 

52 Weeks

 

53 Weeks

 

Impact of

 

52 Weeks

 

U.S. GAAP

 

53rd Week

 

(Non-GAAP) (1)(2)

   

U.S. GAAP

 

53rd Week

 

(Non-GAAP) (1)(2)

 

(Non-GAAP) (2)

 

53rd Week

 

(Non-GAAP) (1)(2)

 

 ($ in millions)

Net Sales:

                                     

Transportation Solutions

                                     

Automotive

$            4,912

 

$              (102)

 

$            4,810

 

$            4,780

 

2.8%

 

(2.2)%

 

0.6%

 

5.6%

 

(2.2)%

 

3.4%

Commercial Transportation

825

 

(15)

 

810

 

820

 

0.6

 

(1.8)

 

(1.2)

 

2.6

 

(1.8)

 

0.8

Sensors

766

 

(13)

 

753

 

751

 

2.0

 

(1.7)

 

0.3

 

3.1

 

(1.7)

 

1.4

Total

6,503

 

(130)

 

6,373

 

6,351

 

2.4

 

(2.1)

 

0.3

 

4.9

 

(2.1)

 

2.8

Industrial Solutions

                                     

Industrial Equipment

1,419

 

(32)

 

1,387

 

1,323

 

7.3

 

(2.5)

 

4.8

 

(5.2)

 

(2.1)

 

(7.3)

Aerospace, Defense, Oil, and Gas

1,100

 

(20)

 

1,080

 

1,151

 

(4.4)

 

(1.8)

 

(6.2)

 

(3.8)

 

(1.7)

 

(5.5)

Energy

696

 

(13)

 

683

 

705

 

(1.3)

 

(1.8)

 

(3.1)

 

3.6

 

(1.9)

 

1.7

Total

3,215

 

(65)

 

3,150

 

3,179

 

1.1

 

(2.0)

 

(0.9)

 

(2.8)

 

(1.9)

 

(4.7)

Communications Solutions

                                     

Data and Devices

1,020

 

(21)

 

999

 

1,357

 

(24.8)

 

(1.6)

 

(26.4)

 

(17.8)

 

(1.7)

 

(19.5)

Subsea Communications

885

 

(11)

 

874

 

709

 

24.8

 

(1.5)

 

23.3

 

24.8

 

(1.3)

 

23.5

Appliances

615

 

(11)

 

604

 

637

 

(3.5)

 

(1.7)

 

(5.2)

 

(1.8)

 

(1.9)

 

(3.7)

Total

2,520

 

(43)

 

2,477

 

2,703

 

(6.8)

 

(1.6)

 

(8.4)

 

(1.6)

 

(1.7)

 

(3.3)

Total

$          12,238

 

$              (238)

 

$          12,000

 

$          12,233

 

-%

 

(1.9)%

 

(1.9)%

 

1.5%

 

(2.0)%

 

(0.5)%

                                       
                                       
                                       
     

Adjustments

     

Adjustment

               
     

Acquisition

 

Restructuring

                           
     

Related

 

and Other

     

53 Weeks

 

Impact of

 

52 Weeks

           
 

U.S. GAAP

 

Charges (3)

 

Charges, Net 

 

Tax Items (4)

 

(Non-GAAP) (2)

 

53rd Week

 

(Non-GAAP) (1)(2)

           
 

 ($ in millions, except per share data)

           
                                       

Operating Income

$            1,902

 

$                 32

 

$                   2

 

$                    -

 

$            1,936

 

$                (55)

 

$            1,881

           
                                       

Operating Margin

15.5%

             

15.8%

     

15.7%

           
                                       

Diluted Earnings per Share from 

                                     

   Continuing Operations

$              5.26

 

$              0.07

 

$                  -

 

$             (1.25)

 

$              4.08

 

$             (0.13)

 

$              3.95

           
                                       
                                       

(1) Excludes the impact of an additional week in the fourth quarter of fiscal 2016. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year.

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

(3) Includes $22 million of acquisition and integration costs and $10 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

(4) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of November 2, 2016

(UNAUDITED)

       
 

Outlook for

   
 

Quarter Ending

   
 

December 30,

 

 Outlook for 

 

2016

 

 Fiscal 2017 

Diluted earnings per share from continuing operations (GAAP)

 $0.84 - $0.88 

 

 $3.84 - $4.14 

Restructuring and other charges, net

0.13

 

0.31

Acquisition related charges

0.01

 

0.04

Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)

 $0.98 - $1.02 

 

 $4.19 - $4.49 

       
       

Net sales growth (GAAP)

 4 - 8% 

 

 0.5 - 5.5% 

Impact of additional week

 N/A 

 

2

Net sales growth excluding the impact of the additional week in fiscal 2016 (non-GAAP) (1)

 N/A 

 

 2.5 - 7.5% 

Translation

(1)

 

-

(Acquisitions) divestitures, net

(2)

 

(2)

Organic net sales growth excluding the impact of the additional week in fiscal 2016 (non-GAAP) (1)

 1 - 5% 

 

 0.5 - 5.5% 

       

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

     

 

Tom Lynch, Chairman & CEO

 

Terrence Curtin, Board Member and President

 

Heath Mitts, CFO

 

SOURCE TE Connectivity Ltd.

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


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