TE Connectivity Reports Record Earnings and Improves Full Year Outlook

Third Quarter Results

- Net Sales of $3.7 Billion, Up 21 Percent Year-Over-Year

- GAAP EPS of $0.80; Adjusted EPS of $0.78, Up From $0.70 in Prior Year

- Free Cash Flow of $340 Million, Up From $283 Million in Prior Year

Outlook

- Fourth Quarter:

* Sales of $3.9 to $4.0 Billion, Up 24 to 28 Percent From Prior Year

* Adjusted EPS of $0.84 to $0.88, Up From $0.72 in the Prior Year

- Full Year:

* Sales of $14.3 to $14.4 Billion, Up 18 to 19 Percent From Prior Year

Jul 20, 2011

SCHAFFHAUSEN, Switzerland, July 20, 2011 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended Jun. 24, 2011.  The company reported a net sales increase of 21 percent year-over-year, and 7 percent sequentially, to $3.7 billion.  Earnings Per Share from Continuing Operations (GAAP EPS) were $0.80 for the quarter, compared to $0.72 in the prior-year period.  Included in the GAAP EPS were $0.02 per share of ADC acquisition-related charges, $0.01 per share of restructuring and other charges and $0.05 of tax-related income.  This compares to $0.01 per share of restructuring and other charges and $0.04 per share of income related to tax and other items in the prior-year quarter.  Adjusted EPS were $0.78 in the quarter, up 11 percent compared to $0.70 in the prior-year quarter.

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

"Our third quarter results were strong and our earnings represent a new high for TE. We continue to capitalize on automotive sales growth and investment in broadband networks, particularly outside of the United States.  These trends more than offset the impact on our company from the Japan earthquake," said TE Connectivity Chief Executive Officer Tom Lynch.  "Although there is macroeconomic uncertainty, we expect our momentum to continue through the fourth quarter and to deliver full year adjusted earnings per share in excess of $3.00, up about 20 percent from last year."

UPDATED 2011 OUTLOOK

For the fourth quarter, the company expects net sales of $3.9 to $4.0 billion, an increase of 24 to 28 percent over the prior-year period.  GAAP EPS are expected to be $0.76 to $0.80, including acquisition-related and restructuring and other charges of $0.08.  Adjusted EPS are expected to be $0.84 to $0.88, compared to adjusted EPS of $0.72 in the prior-year period.  Included in the adjusted EPS guidance are $240 million of sales and $0.05 of EPS due to the additional week in the fourth quarter.

For the full fiscal year, which includes 53 weeks, the company expects sales of $14.3 to $14.4 billion, an increase of 18 to 19 percent over the prior year.  GAAP EPS are expected to be $2.83 to $2.87, including acquisition-related and restructuring and other charges of approximately $0.23 per share.  Adjusted EPS are expected to be $3.06 to $3.10, up 20 to 22 percent compared to adjusted EPS of $2.54 in the prior year.  Included in the adjusted EPS guidance are approximately $950 million of sales and $0.12 of adjusted EPS due to the ADC acquisition, $240 million of sales and $0.05 of EPS due to the additional week in the fiscal year 2011, as well as the negative impact of approximately $120 million of sales and $0.08 of EPS due to the Japan earthquake.

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.  

FISCAL THIRD QUARTER 2011 RESULTS

All dollar amounts are pre-tax and stated in millions.  





% Change

   ($ in millions)

Jun. 24, 2011

Jun. 25, 2010

YoY

Net Sales

$3,729

$3,084

21%

Operating Income

$471

$467

1%

Restructuring and Other Credits (Charges)

$(5)

$(3)


Acquisition Related Charges

$(12)

-


Other Items

-

$7


Adjusted Operating Income

$488

$463

5%

Operating Margin

12.6%

15.1%


Adjusted Operating Margin

13.1%

15.0%





Sales grew 21 percent compared to the prior-year quarter and 5 percent organically.  Overall growth includes 10 percent from the ADC acquisition and 7 percent from currency translation.  By segment, and on an organic basis, sales in Transportation Solutions were up 11 percent compared to the prior year, driven primarily by increased automotive production and increased electronic content in automobiles.  Network Solutions sales were up 7 percent compared to the prior year driven by double-digit increases in the telecom networks and energy businesses.  Sales in Communications and Industrial Solutions were down 1 percent compared to the prior year.  Strength in the industrial market was offset by declines in the company's consumer devices business.  The adjusted operating margin was slightly better than expected at 13.1 percent in the quarter.

CASH FLOW

Cash from continuing operations was $438 million during the quarter.  Free cash flow was $340 million.  The company continues to expect free cash flow in excess of $1.3 billion in fiscal 2011, excluding the estimated $105 million of cash expenditures related to the ADC acquisition.

ORDERS

Total company orders were $3.9 billion, an increase of 19 percent compared to the prior year and 6 percent organically.  The book-to-bill ratio was 1.04 overall and 1.00, excluding the Subsea Communications business.

ABOUT TE CONNECTIVITY

TE Connectivity is a global, $12.1 billion company that designs and manufactures over 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 100,000 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. EDT.
  • 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) 230-1074. The telephone dial-in number for participants outside the United States is (612) 332-0725.
  • An audio replay of the conference call will be available beginning at 10:30 a.m. EDT on July 20, 2011 and ending at 11:59 p.m. EDT on July 27, 2011. 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 205447.

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, divestitures, and an additional week in the fourth quarter of the 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 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.  See the accompanying tables to this release for the reconciliation presenting the components of Organic Sales Growth.

We have presented operating income before special items including charges or income related to legal settlements and reserves, restructuring and other charges, and acquisition related charges ("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 is also a significant component in our incentive compensation plans.  Adjusted Operating Income is a useful measure for investors because it better reflects 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, and acquisition related charges 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 have presented operating margin before special items including charges or income related to legal settlements and reserves, restructuring and other charges, and acquisition related charges ("Adjusted Operating Margin").  We present Adjusted Operating Margin before special items to give investors a perspective on the underlying business results.  It is also a significant component in our incentive compensation plans.  Because we cannot predict the amount and timing of such items and the associated charges or gains that will be recorded in our financial statements, it is difficult to include the impact of those items in the forecast.

We have presented other income, net before special items including tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items ("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.  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 have presented income tax expense after adjusting for the tax effect of special items including charges related to restructuring and other charges, acquisition related charges, and certain significant special tax items ("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.  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 have presented 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, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, 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, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, 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 have presented 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, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, 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 is also 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 cash generation which is free from any significant existing obligation.  It is also a significant component in our incentive compensation plans.  The difference between cash flows from 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.  FCF permits management and investors to gain insight into the amount that management employs to measure cash that is free from any significant existing obligation.  The difference reflects the impact from:

  • net capital expenditures,
  • voluntary pension contributions, and
  • cash impact of special items.

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.  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.

The limitation associated with using FCF is that it subtracts cash items that are ultimately within management's and the Board of Directors' discretion to direct and that therefore may imply that there is less or more cash that is available for the company's programs than the most comparable GAAP measure.  This limitation is best addressed by using FCF in combination with the GAAP cash flow results.

FCF as presented herein may not be comparable to similarly-titled measures reported by other companies.  The measure should be used in conjunction with other GAAP financial measures.  Investors are urged to read our financial statements as filed with the Securities and Exchange Commission, as well as the accompanying tables to this release that show all the elements of the GAAP measures of Cash Flows from Operating Activities, Cash Flows from Investing Activities, Cash Flows from Financing Activities and a reconciliation of our total cash and cash equivalents for the period.  See the accompanying tables to this release for a cash flow statement presented in accordance with GAAP and a reconciliation presenting the components of FCF.

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 United States 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 developments in the credit markets; conditions affecting demand for products, particularly the automotive industry and the telecommunications, computer and consumer electronics industries; future goodwill impairment; 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; 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 ADC's operations will not be successfully integrated into ours; and the risk that revenue opportunities, cost savings and other anticipated synergies from the transaction 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 our Annual Report on Form 10-K for the fiscal year ended Sept. 24, 2010 and Quarterly Reports on Form 10-Q for the quarterly periods ended Dec. 24, 2010 and Mar. 25, 2011, as well as in our Current Reports on Form 8-K and other reports filed by us with the Securities and Exchange Commission.

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


















For the Quarters Ended


For the Nine Months Ended


June 24,


June 25,


June 24,


June 25,


2011


2010


2011


2010


(in millions, except per share data)









Net sales

$   3,729


$   3,084


$ 10,401


$   8,933

Cost of sales

2,604


2,099


7,211


6,149

Gross margin

1,125


985


3,190


2,784

Selling, general, and administrative expenses

452


375


1,299


1,149

Research, development, and engineering expenses

188


147


531


427

Acquisition and integration costs

1


-


19


-

Restructuring and other charges, net

13


3


65


81

Pre-separation litigation income

-


(7)


-


(7)

  Operating income  

471


467


1,276


1,134

Interest income

5


4


16


14

Interest expense

(40)


(38)


(118)


(115)

Other income (expense), net

(5)


42


13


125

  Income from continuing operations before income taxes

431


475


1,187


1,158

Income tax expense

(74)


(144)


(261)


(348)

  Income from continuing operations

357


331


926


810

Loss from discontinued operations, net of income taxes

-


-


(3)


-

  Net income  

357


331


923


810

Less: net income attributable to noncontrolling interests

(2)


(1)


(4)


(4)

Net income attributable to TE Connectivity Ltd.

$      355


$      330


$      919


$      806









Amounts attributable to TE Connectivity Ltd.:








Income from continuing operations

$      355


$      330


$      922


$      806

Loss from discontinued operations

-


-


(3)


-

Net income  

$      355


$      330


$      919


$      806









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








  Income from continuing operations

$     0.81


$     0.73


$     2.09


$     1.77

  Loss from discontinued operations

-


-


(0.01)


-

  Net income  

$     0.81


$     0.73


$     2.08


$     1.77









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








  Income from continuing operations

$     0.80


$     0.72


$     2.06


$     1.75

  Loss from discontinued operations

-


-


-


-

  Net income  

$     0.80


$     0.72


$     2.06


$     1.75









Cash distributions paid per common share of TE Connectivity Ltd.

$     0.18


$     0.16


$     0.50


$     0.48









Weighted-average number of shares outstanding:








  Basic

437


451


441


456

  Diluted

442


456


447


460



TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)










June 24,


September 24,


2011


2010


(in millions, except share data)

Assets




Current Assets:




Cash and cash equivalents

$   1,212


$              1,990

Accounts receivable, net of allowance for doubtful accounts of $45 and $44, respectively

2,614


2,259

Inventories

1,996


1,583

Prepaid expenses and other current assets

775


651

Deferred income taxes

263


248

 Total current assets

6,860


6,731

Property, plant, and equipment, net

3,147


2,867

Goodwill

3,600


3,211

Intangible assets, net

673


392

Deferred income taxes

2,447


2,447

Receivable from Tyco International Ltd. and Covidien plc

1,055


1,127

Other assets

250


217

Total Assets

$ 18,032


$            16,992





Liabilities and Shareholders' Equity




Current Liabilities:




Current maturities of long-term debt

$          1


$                 106

Accounts payable

1,612


1,386

Accrued and other current liabilities

1,974


1,804

Deferred revenue

104


164

 Total current liabilities

3,691


3,460

Long-term debt

2,654


2,307

Long-term pension and postretirement liabilities

1,205


1,280

Deferred income taxes

290


285

Income taxes

2,068


2,152

Other liabilities

538


452

Total Liabilities

10,446


9,936

Commitments and contingencies




Shareholders' Equity:




Common shares, 463,080,684 shares authorized and issued, CHF 1.37 par value, and  




468,215,574 shares authorized and issued, CHF 1.73 par value, respectively

593


599

Contributed surplus

7,607


8,085

Accumulated deficit

(242)


(1,161)

Treasury shares, at cost, 30,270,462 and 24,845,929 shares, respectively

(959)


(721)

Accumulated other comprehensive income

576


246

Total TE Connectivity Ltd. shareholders' equity

7,575


7,048

Noncontrolling interests

11


8

Total Shareholders' Equity

7,586


7,056

Total Liabilities and Shareholders' Equity

$ 18,032


$            16,992



TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



For the Quarters Ended


For the Nine Months Ended


June 24,


June 25,


June 24,


June 25,


2011


2010


2011


2010


(in millions)

Cash Flows From Operating Activities:








Net income

$      357


$      331


$      923


$      810

   Loss from discontinued operations, net of income taxes

-


-


3


-

Income from continuing operations

357


331


926


810

Adjustments to reconcile net cash provided by operating activities:








Non-cash restructuring and other charges, net

1


1


6


17

Depreciation and amortization

146


129


427


395

Deferred income taxes

9


120


113


275

Provision for losses on accounts receivable and inventories

8


(1)


21


(1)

Tax sharing income

4


(43)


(13)


(126)

Other

-


40


49


78

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








Accounts receivable, net

(96)


(228)


(108)


(374)

Inventories

(67)


(132)


(244)


(261)

Inventoried costs on long-term contracts

(15)


30


16


5

Prepaid expenses and other current assets

43


(68)


92


(42)

Accounts payable

50


107


79


367

Accrued and other current liabilities

8


82


(250)


86

Income taxes

8


-


21


-

Deferred revenue

(30)


5


(68)


(35)

Long-term pension and postretirement liabilities

9


26


53


41

Other

3


(24)


29


(30)

Net cash provided by operating activities

438


375


1,149


1,205

Cash Flows From Investing Activities:








Capital expenditures

(144)


(92)


(375)


(249)

Proceeds from sale of property, plant, and equipment

46


-


58


5

Proceeds from sale of intangible assets

68


-


68


-

Proceeds from sale of short-term investments

-


-


155


1

Acquisition of businesses, net of cash acquired

(14)


(15)


(731)


(70)

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

-


-


-


12

Other

(1)


(16)


(10)


(21)

Net cash used in investing activities

(45)


(123)


(835)


(322)

Cash Flows From Financing Activities:








Decrease in commercial paper

-


-


(100)


-

Proceeds from long-term debt

-


-


249


-

Repayment of long-term debt

(95)


-


(565)


-

Proceeds from exercise of share options

9


9


74


12

Repurchase of common shares

(259)


(208)


(540)


(373)

Payment of common share dividends and cash distributions to shareholders

(79)


(72)


(220)


(218)

Other

(7)


(3)


(13)


(8)

Net cash used in financing activities

(431)


(274)


(1,115)


(587)

Effect of currency translation on cash

11


(2)


23


(2)

Net increase (decrease) in cash and cash equivalents

(27)


(24)


(778)


294

Cash and cash equivalents at beginning of period

1,239


1,839


1,990


1,521

Cash and cash equivalents at end of period

$   1,212


$   1,815


$   1,212


$   1,815









Supplemental Cash Flow Information:








Income taxes paid, net of refunds

$        58


$        25


$      127


$        73









Reconciliation to Free Cash Flow:








Net cash provided by continuing operating activities

$      438


$      375


$   1,149


$   1,205

Capital expenditures, net

(98)


(92)


(317)


(244)

Free cash flow (1)

$      340


$      283


$      832


$      961









(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 Nine Months Ended



June 24,



June 25,



June 24,



June 25,



2011



2010



2011



2010



($ in millions)


Net Sales:












Transportation Solutions

$   1,426



$   1,214



$   4,094



$   3,591


Communications and Industrial Solutions

1,297



1,258



3,728



3,505


Network Solutions

1,006



612



2,579



1,837


Total

$   3,729



$   3,084



$ 10,401



$   8,933


























Operating Income:












Transportation Solutions

$      211

14.8%


$      159

13.1%


$      611

14.9%


$      407

11.3%

Communications and Industrial Solutions

134

10.3%


205

16.3%


461

12.4%


482

13.8%

Network Solutions

126

12.5%


96

15.7%


204

7.9%


238

13.0%

Pre-separation litigation income

-



7



-



7


Total

$      471

12.6%


$      467

15.1%


$   1,276

12.3%


$   1,134

12.7%



TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)


















































Percentage

of


Change in Net Sales for the

Quarter Ended June 24, 2011


Segment's

Total


versus Net Sales for the

Quarter Ended June 25, 2010


Net Sales

for the


Organic (1)



Translation (2)


Acquisition

(Divestiture)


Total



Quarter

Ended

June 24,

2011


($ in millions)




Transportation

Solutions (3):

















Automotive

$             111


10.6%


$               95


$              (20)


$             186


17.7%


87%


Aerospace, Defense, and Marine

19


11.5



7


-


26


16.1



13


Total

130


10.7



102


(20)


212


17.5



100%


Communications

and Industrial

Solutions (3):

















Industrial

10


2.7



22


(1)


31


8.3



31


Data Communications

2


0.8



12


-


14


5.5



21


Appliance

-


0.2



11


-


11


5.5



16


Consumer Devices

(36)


(17.8)



9


(5)


(32)


(15.8)



13


Computer

-


-



3


-


3


2.3



10


Touch Solutions

7


7.0



5


-


12


11.9



9


Total

(17)


(1.3)



62


(6)


39


3.1



100%


Network

Solutions (3):

















Telecom Networks

33


24.2



16


260


309


219.1



45


Energy

22


12.9



21


-


43


23.6



22


Enterprise Networks

7


6.2



7


51


65


54.6



18


Subsea Communications

(23)


(13.8)



-


-


(23)


(13.5)



15


Total

39


6.6



44


311


394


64.4



100%


  Total

$             152


4.9%



$             208


$              285


$             645


20.9%







































Percentage

of


Change in Net Sales for the

Nine Months Ended June 24, 2011


Segment's

Total


versus Net Sales for the

Nine Months Ended June 25, 2010


Net Sales

for the


Organic (1)



Translation (2)


Acquisition

(Divestitures)


Total



Nine Months

Ended

June 24,

2011


($ in millions)




Transportation

Solutions (3):

















Automotive

$             432


13.8%


$               85


$              (64)


$             453


14.4%


88%


Aerospace, Defense, and Marine

44


10.1



6


-


50


11.0



12


Total

476


13.3



91


(64)


503


14.0



100%


Communications

and Industrial

Solutions (3):

















Industrial

116


11.5



23


(2)


137


13.5



31


Data Communications

63


9.3



19


-


82


11.9



20


Appliance

38


7.1



13


-


51


9.3



16


Consumer Devices

(72)


(11.6)



17


(14)


(69)


(11.2)



15


Computer

(3)


(0.5)



7


-


4


1.1



10


Touch Solutions

14


4.9



4


-


18


6.5



8


Total

156


4.5



83


(16)


223


6.4



100%


Network

Solutions (3):

















Telecom Networks

104


29.7



18


537


659


180.1



40


Energy

65


12.5



17


(12)


70


12.6



24


Enterprise Networks

36


11.7



12


104


152


45.0



19


Subsea Communications

(140)


(24.2)



1


-


(139)


(24.0)



17


Total

65


3.6



48


629


742


40.4



100%


  Total

$             697


7.8%



$             222


$              549


$          1,468


16.4%






















(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.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

































Percentage

of
















Segment's

Total


Change in Net Sales for the

Quarter Ended June 24, 2011


Net Sales

for the


versus Net Sales for the

Quarter Ended March 25, 2011


Quarter

Ended


Organic (1)



Translation (2)


Acquisition


Total



June 24,

2011


($ in millions)




Transportation

Solutions (3):

















Automotive

$     4


0.4%



$             40


$               1


$   45


3.8%



87%


Aerospace, Defense, and Marine

20


13.0



4


-


24


14.7



13


Total

24


2.0



44


1


69


5.1



100%


Communications

and Industrial

Solutions (3):

















Industrial

17


4.8



9


(1)


25


6.6



31


Data Communications

15


6.5



4


-


19


7.7



21


Appliance

12


5.9



3


-


15


7.6



16


Consumer Devices

(3)


(1.7)



2


-


(1)


(0.6)



13


Computer

15


12.7



-


-


15


12.8



10


Touch Solutions

15


15.4



1


-


16


16.5



9


Total

71


6.1



19


(1)


89


7.4



100%


Network

Solutions (3):

















Telecom Networks

30


21.5



9


28


67


17.5



45


Energy

22


11.7



8


-


30


15.4



22


Enterprise Networks

(5)


(2.0)



5


4


4


2.2



18


Subsea Communications

(3)


(1.7)



1


-


(2)


(1.3)



15


Total

44


7.7



23


32


99


10.9



100%


  Total

$ 139


4.7%



$             86


$             32


$ 257


7.4%






















(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 June 24, 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

$        211


$                -


$                (13)


$         -


$               198

Communications and Industrial Solutions

134


-


15


-


149

Network Solutions

126


12


3


-


141

   Total

$        471


$             12


$                    5


$         -


$               488











Operating Margin

12.6%








13.1%











Other Income (Expense), Net

$           (5)


$                -


$                    -


$      14


$                   9











Income Tax Expense

$         (74)


$             (3)


$                  (2)


$     (35)


$             (114)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        355


$               9


$                    3


$     (21)


$               346































Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       0.80


$          0.02


$               0.01


$  (0.05)


$              0.78











(1) Includes $8 million of restructuring charges, $3 million of non-cash amortization associated with acquisition accounting-related adjustments recorded in cost of sales, and $1 million of ADC 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 June 25, 2010

(UNAUDITED)


































Adjustments






Restructuring










and Other


Tax


Other Items,


Adjusted


U.S. GAAP


Charges, Net


Items (1)


Net (2)


(Non-GAAP) (3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$        159


$                    6


$         -


$                  -


$               165

Communications and Industrial Solutions

205


(1)


-


-


204

Network Solutions

96


(2)


-


-


94

Pre-separation litigation income

7


-


-


(7)


-

Total

$        467


$                    3


$         -


$                (7)


$               463











Operating Margin

15.1%








15.0%











Other Income, Net

$          42


$                    -


$     (33)


$                  -


$                   9











Income Tax Expense

$       (144)


$                    -


$       26


$                  -


$             (118)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        330


$                    3


$       (7)


$                (7)


$               319































Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       0.72


$               0.01


$  (0.02)


$           (0.02)


$              0.70











(1) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the completion of 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.

(2) Consists of $7 million of income related to pre-separation securities litigation.

(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 Nine Months Ended June 24, 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

$        611


$                -


$                (18)


$         -


$               593

Communications and Industrial Solutions

461


-


19


-


480

Network Solutions

204


119


4


-


327

Total

$     1,276


$           119


$                    5


$         -


$            1,400











Operating Margin

12.3%








13.5%











Other Income, Net

$          13


$                -


$                    -


$      14


$                 27











Income Tax Expense

$       (261)


$           (29)


$                  (3)


$     (35)


$             (328)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        922


$             90


$                    2


$     (21)


$               993































Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       2.06


$          0.20


$                    -


$  (0.05)


$              2.22











(1) Includes $60 million of restructuring charges, $40 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 ADC 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 Nine Months Ended June 25, 2010

(UNAUDITED)


































Adjustments






Restructuring










and Other


Tax


Other Items,


Adjusted


U.S. GAAP


Charges, Net  (1)


Items (2)


Net (3)


(Non-GAAP) (4)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$        407


$                    43


$         -


$                  -


$               450

Communications and Industrial Solutions

482


18


-


-


500

Network Solutions

238


17


-


-


255

Pre-separation litigation income

7


-


-


(7)


-

   Total

$     1,134


$                    78


$         -


$                (7)


$            1,205











Operating Margin

12.7%








13.5%











Other Income, Net

$        125


$                      -


$     (97)


$                  -


$                 28











Income Tax Expense

$       (348)


$                  (17)


$       72


$                  -


$             (293)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        806


$                    61


$     (25)


$                (7)


$               835































Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       1.75


$                 0.13


$  (0.05)


$           (0.02)


$              1.82











(1) Includes $81 million recorded in net restructuring and other charges and a $3 million credit recorded in cost of sales.

(2) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the settlement of an audit of prior year tax returns as well as the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.  Also includes an income tax benefit recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards.

(3) Consists of $7 million of income related to pre-separation securities litigation.

(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 March 25, 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

$        211


$                -


$                  (6)


$               205

Communications and Industrial Solutions

146


-


1


147

Network Solutions

48


48


1


97

   Total

$        405


$             48


$                  (4)


$               449









Operating Margin

11.7%






12.9%









Other Income, Net

$            6


$                -


$                    -


$                   6









Income Tax Expense

$         (74)


$           (26)


$                    -


$             (100)

















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        299


$             22


$                  (4)


$               317

























Diluted Earnings per Share

 from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$       0.67


$          0.05


$             (0.01)


$              0.71









(1) Includes $30 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $17 million of restructuring charges, and $1 million of ADC acquisition and integration costs.

(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 September 24, 2010

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








and Integration


and Other


Tax


Adjusted


U.S. GAAP


Costs


Charges, Net


Items (1)


(Non-GAAP) (2)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$        108


$                       -


$                  51


$         -


$               159

Communications and Industrial Solutions

200


-


2


-


202

Network Solutions

74


8


3


-


85

Total

$        382


$                      8


$                  56


$         -


$               446











Operating Margin

12.2%








14.2%











Other Income, Net

$          52


$                       -


$                    -


$     (40)


$                 12











Income Tax Expense

$       (145)


$                       -


$                (13)


$       62


$                (96)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        253


$                      8


$                  43


$       22


$               326































Diluted Earnings per Share

 from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$       0.56


$                 0.02


$               0.10


$    0.05


$              0.72











(1) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the settlement of an audit of prior year tax returns as well as the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

(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 24, 2010

(UNAUDITED)


































Adjustments






Restructuring










and Other


Tax


Other Items,


Adjusted


U.S. GAAP


Charges, Net  (1)


Items (2)


Net (3)


(Non-GAAP) (4)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$        515


$                    94


$         -


$                  -


$               609

Communications and Industrial Solutions

682


20


-


-


702

Network Solutions

312


20


-


8


340

Pre-separation litigation income

7


-


-


(7)


-

Total

$     1,516


$                  134


$         -


$                 1


$            1,651











Operating Margin

12.6%








13.7%











Other Income, Net

$        177


$                      -


$   (137)


$                  -


$                 40











Income Tax Expense

$       (493)


$                  (30)


$     134


$                  -


$              (389)





















Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$     1,059


$                  104


$       (3)


$                 1


$            1,161































Diluted Earnings per Share

 from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$       2.32


$                 0.23


$  (0.01)


$                  -


$              2.54











(1) Includes $137 million recorded in net restructuring and other charges and a $3 million credit recorded in cost of sales.

(2) Includes income tax expense related to certain proposed adjustments to prior year tax returns and income tax benefits associated with the settlement of an audit of prior year tax returns as well as the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.  Also includes an income tax benefit recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards.

(3) Consists of $8 million of acquisition and integration costs and $7 million of income related to pre-separation securities litigation.

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



SOURCE TE Connectivity Ltd.


Email Page Print RSS
email print rss