PRNewswire-FirstCall
PEMBROKE, Bermuda
(BSX:TEL)
Nov 15, 2007
PEMBROKE, Bermuda, Nov. 15 /PRNewswire-FirstCall/ -- Tyco Electronics Ltd. (NYSE: TEL)(BSX: TEL) today reported net sales of $3.6 billion for the fiscal fourth quarter ended Sept. 28, 2007, an increase of 11 percent over the prior-year period. Excluding currency effects, organic sales growth was 8 percent. GAAP diluted earnings per share (EPS) from continuing operations was $0.53 for the quarter. Included in EPS from continuing operations were $0.06 per share of net charges related to restructuring, separation and other items. Adjusted diluted EPS from continuing operations was $0.59 in the quarter.
"Our fourth quarter was a good finish to our fiscal year and I was pleased with our progress against our financial and strategic objectives," said Chief Executive Officer Tom Lynch. "Our strong sales growth was largely due to continued strength in our international markets, which account for more than 60 percent of our sales, along with another very strong quarter in our Undersea Telecommunications business. Our operating margin was better than we anticipated due to the higher sales. We also made good progress on our strategic initiatives as we accelerated our manufacturing simplification activities and, in early October, we announced an agreement to sell our Power Systems business. In addition, we essentially completed our debt structure, announced a $750 million share repurchase program and declared our first dividend payment."
Organic Sales Growth, Adjusted Operating Income, Adjusted EPS, Adjusted Operating Margin and Free Cash Flow are all non-GAAP financial measures and are described near the end of this press release. For a reconciliation of these non-GAAP measures, see the attached tables. All dollar amounts are pre- tax and stated in millions. All comparisons are to the quarter ended Sept. 29, 2006 unless otherwise indicated.
($ in millions) Sept. 28, Sept. 29,
2007 2006 $ Change % Change
Net Sales $3,619 $3,248 $371 11%
Operating Income $443 $158 $285 180%
Restructuring-Related Costs $(59) $(5)
Separation-Related Costs $(20) $0
Other Items, Net $28 $(316)
Adjusted Operating Income $494 $479 $15 3%
Operating Margin 12.2% 4.9%
Adjusted Operating Margin 13.7% 14.7%
GAAP operating income was $443 million, compared to $158 million in the prior-year period. The operating margin on a GAAP basis was 12.2 percent, compared to 4.9 percent in the prior-year period. Included in operating income were restructuring-related costs of $59 million and separation-related costs of $20 million, partially offset by a $24 million gain on the sale of real estate and $4 million of income related to an insurance recovery. Operating income in the prior-year quarter included a $316 million goodwill impairment charge and $5 million of restructuring-related costs. Excluding these items in both periods, adjusted operating income was $494 million, compared to $479 million a year ago. The adjusted operating margin was 13.7 percent, compared to 14.7 percent a year ago. Consistent with the prior two quarters, the year-over-year decline in the operating margin was largely due to lower production levels in the Electronic Components segment and a lower margin sales mix compared to last year.
CASH FLOW
Cash provided by operating activities was $655 million in the quarter, an increase of 11 percent over the prior-year quarter and free cash flow was $545 million. The increase was largely due to improved inventory performance compared to the prior-year quarter.
Gross capital expenditures were $145 million in the quarter, consistent with the company's expected long-term capital investment levels of 4 to 5 percent of sales. Net capital expenditures were $110 million, which reflected gross capital expenditures less $35 million of proceeds from the sale of real estate. The company ended the quarter with a cash balance of $936 million.
OTHER ITEMS
-- During the quarter, the company announced that its Board of Directors
had authorized a $750 million share repurchase program and declared its
first regular quarterly dividend of $0.14 per share, which was paid on
Nov. 1.
-- On Oct. 19, the company announced the execution of an agreement to sell
its Power Systems business for $100 million in cash, subject to a final
working capital adjustment. The transaction is expected to close by
the end of calendar 2007 or early in 2008.
ORDERS
Excluding the company's Wireless Systems and Undersea Telecommunications segments, which are project-oriented businesses with uneven order patterns, orders grew 8 percent organically in the quarter and the book-to-bill ratio was 0.99. Total company orders grew 4 percent organically in the quarter compared to the prior year, and the book-to-bill ratio was 0.93.
OUTLOOK
For the full year 2008, the company expects organic sales growth of 6 to 8 percent and EPS from continuing operations of $2.23 to $2.33, including restructuring and separation-related costs of approximately $130 million ($0.17 per share). This compares to a GAAP loss from continuing operations of $0.29 per share in fiscal 2007, which included $2.33 per share of net charges related to the Tyco International shareholder litigation settlement, separation-related costs and other items. Excluding these charges, EPS in the prior year was $2.04, which included restructuring-related costs of $107 million ($0.14 per share). On an adjusted basis, excluding restructuring and other items, the company expects EPS from continuing operations of $2.40 to $2.50 in 2008, compared to $2.18 in the prior year, an increase of 10 to 15 percent.
For the first quarter of fiscal 2008, the company expects sales growth of 14 to 16 percent over prior-year sales of $3.1 billion, with organic sales growth of 10 to 12 percent. Excluding the strong growth expected in the company's Undersea Telecommunications segment, the company expects organic sales growth of 4 to 6 percent. The company further expects diluted EPS from continuing operations of $0.51 to $0.53 including restructuring and separation-related costs of approximately $40 million ($0.05 per share). This compares to EPS of $0.48 per share in the prior-year quarter, which included separation and restructuring-related costs of $12 million ($0.02 per share). On an adjusted basis, first quarter EPS is expected to be $0.56 to $0.58 compared to $0.50 last year, an increase of 12 to 16 percent.
Lynch said, "For the full year, we expect continued growth in our international markets and relatively flat sales in the U.S. The growth in our Undersea Telecommunications business is expected to be very strong in the first quarter before tapering off over the balance of the year." Lynch continued, "We expect to see solid improvement in our operating margin before restructuring costs in 2008 as we continue to make progress on our strategic priorities and our EPS will also benefit slightly from our recently-announced share repurchase plan. In the first quarter, our adjusted operating margin should be flat-to-slightly higher than last year's adjusted margin of 13.1 percent."
SEGMENT RESULTS
Tyco Electronics is comprised of four reporting segments: Electronic Components, Network Solutions, Wireless Systems and Undersea Telecommunications.
Electronic Components
The Electronic Components segment is the world's largest supplier of passive electronic components, including connectors and interconnect systems, relays, switches, circuit protection devices, touchscreens, sensors, and wire and cable.
($ in millions) Sept. 28, Sept. 29, Organic
2007 2006 $ Change % Change Growth
Net Sales $2,630 $2,439 $191 8% 4%
Operating Income $347 $352 $(5) (1)%
Restructuring-Related Costs $(23) $(1)
Adjusted Operating Income $370 $353 $17 5%
Operating Margin 13.2% 14.4%
Adjusted Operating Margin 14.1% 14.5%
Sales in the segment grew 8 percent year over year, or 4 percent organically. On an organic basis, growth was driven by strength in the communications (+12 percent), industrial machinery (+9 percent), aerospace and defense (+8 percent), consumer electronics (+8 percent) and automotive (+7 percent) markets. This growth was partially offset by a 4 percent decline in the computer market, primarily driven by the strategic decision to exit certain low-margin business and relatively flat sales in our appliance market. On a geographic basis, segment sales grew 10 percent organically in Asia, 4 percent in Europe, and declined 3 percent in the Americas.
Operating income decreased by $5 million, due entirely to restructuring- related costs. Adjusted operating income grew $17 million, due to higher sales levels. The adjusted operating margin decreased by 40 basis points due primarily to lower production and productivity levels in North America, particularly in automotive, communications equipment and housing-related markets. Restructuring-related costs in the quarter were $23 million, compared to $1 million in the prior-year quarter.
Network Solutions
The Network Solutions segment is a supplier of infrastructure components and systems for telecommunications and energy networks.
($ in millions) Sept. 28, Sept. 29, Organic
2007 2006 $ Change % Change Growth
Net Sales $522 $460 $62 13% 7%
Operating Income $46 $70 $(24) (34)%
Restructuring-Related Costs $(31) $(1)
Adjusted Operating Income $77 $71 $6 8%
Operating Margin 8.8% 15.2%
Adjusted Operating Margin 14.8% 15.4%
Segment sales grew 13 percent compared to the prior-year quarter, or 7 percent organically. On an organic basis, sales to the building networks market grew 17 percent, reflecting strong demand for faster and more secure networks and higher pricing on copper cabling products. Sales to the communication service provider market increased 7 percent, due to an increase in sales of fiber optic network components. Sales to the energy market grew 4 percent, reflecting growth in Europe and Asia.
Operating income decreased by $24 million, due to restructuring-related costs. Adjusted operating income increased by $6 million, due to the increase in sales. The decrease in the adjusted operating margin primarily relates to a lower margin sales mix compared to the prior year. Restructuring-related costs in the quarter were $31 million, compared to $1 million in the prior- year quarter.
Wireless Systems
The Wireless Systems segment is a leading innovator of wireless technology for critical communications, radar and defense applications.
($ in millions) Sept. 28, Sept. 29, Organic
2007 2006 $ Change % Change Growth
Net Sales $254 $252 $2 1% 1%
Operating Income $47 $(282) $329 NM
Other Items, Net $24 $(316)
Restructuring-Related Costs $(3) $(3)
Adjusted Operating Income $26 $37 $(11) (30)%
Operating Margin 18.5% NM
Adjusted Operating Margin 10.2% 14.7%
Sales in the segment were essentially flat year over year. Modest growth in the wireless networks and aerospace and defense businesses was offset by a decline in the commercial products business, primarily due to continued softness in the wireless infrastructure market.
Operating income increased by $329 million, primarily due to a $316 million goodwill impairment charge in last year's fourth quarter. The current quarter included a $24 million gain related to the sale of real estate. On an adjusted basis, the decrease in the operating margin was largely due to the softness in the wireless infrastructure market. Restructuring-related costs in both the current and year-ago quarter were $3 million.
Undersea Telecommunications
The company's Undersea Telecommunications segment installs and maintains undersea telecommunication systems.
($ in millions) Sept. 28, Sept. 29, $ Change % Change Organic
2007 2006 Growth
Net Sales $213 $97 $116 120% 122%
Operating Income $19 $18 $1 6%
Restructuring-Related Costs $(2) $0
Adjusted Operating Income $21 $18 $3 17%
Operating Margin 8.9% 18.6%
Adjusted Operating Margin 9.9% 18.6%
Sales in the segment grew 122 percent organically versus the prior year due to the continued construction of a large trans-Pacific network project. Adjusted operating income increased $3 million, driven by the increased sales. The adjusted operating margin decline was primarily due to $8 million of income in the prior-year quarter related to divestitures in this segment. Restructuring-related costs in the quarter were $2 million, compared to no such costs in the prior-year quarter.
ABOUT TYCO ELECTRONICS
Tyco Electronics Ltd. is a leading global provider of engineered electronic components, network solutions, wireless systems and undersea telecommunications systems and services, with 2007 sales of US$13.5 billion to customers in more than 150 countries. We design, manufacture and market products for customers in industries from automotive, appliances and aerospace and defense to telecommunications, computers and consumer electronics. With approximately 8,000 engineers and worldwide manufacturing, sales and customer service capabilities, Tyco Electronics' commitment is our customers' advantage. More information on Tyco Electronics can be found at http://www.tycoelectronics.com/.
CONFERENCE CALL AND WEBCAST
The company will hold a conference call for investors today beginning at 5:30 p.m. EST. The call can be accessed in three ways:
-- Web -- Go to Tyco Electronics' website at
http://investors.tycoelectronics.com/. A replay of the call will be
available through Nov. 30, 2007 at the same website.
-- Telephone -- The telephone dial-in number in the United States is (877)
260-8897. The telephone dial-in number for participants outside the
United States is (612) 332-0923.
-- Audio replay -- The conference call will be available for replay
beginning at 9:00 p.m. on Nov. 15, 2007 and ending at 11:59 p.m. on
Nov. 22, 2007. 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 890947.
NON-GAAP MEASURES
"Organic Sales Growth," "Adjusted Operating Income," "Adjusted Earnings Per Share," "Adjusted Operating Margin," 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 the company 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, acquisitions and divestitures. Organic Sales Growth is a useful measure of the company's performance because it excludes items that: i) are not completely under management's control, such as the impact of foreign currency exchange; or ii) do not reflect the underlying growth of the company, such as acquisition and divestiture activity. It is also a component of the company's compensation programs. The limitation of this measure is that it excludes items that have an impact on the company's sales. This limitation is best addressed by using organic sales growth in combination with the GAAP numbers. See the accompanying tables to this press release for the reconciliation presenting the components of Organic Sales Growth.
The company has presented its operating income before unusual items including costs related to the separation, legal settlements, restructuring costs and other income or charges ("Adjusted Operating Income"). The company utilizes 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 the company's incentive compensation plans. Adjusted Operating Income is a useful measure for investors because it better reflects the company's 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 related to litigation settlement costs, separation-related costs and restructuring costs and other income or 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 the company's 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.
The company has presented adjusted diluted earnings per share, which is earnings per share from continuing operations before unusual items, including costs related to the separation, legal settlements, restructuring costs, loss on retirement of debt and other income or charges ("Adjusted Earnings Per Share"). The company presents Adjusted Earnings Per Share because we believe that it is appropriate for investors to consider results excluding these items in addition to our 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 unusual items, which may recur occasionally, but tend to be irregular as to timing, thereby making comparisons between periods more difficult. This limitation is best addressed by using Adjusted Earnings Per Share in combination with earnings per share (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.
The company has presented its operating margin before unusual items including costs related to the separation, legal settlements, restructuring costs and other income or charges ("Adjusted Operating Margin"). The company presents and forecasts its Adjusted Operating Margin before unusual items to give investors a perspective on the underlying business results. Because the company cannot predict the amount and timing of such items and the associated charges or gains that will be recorded in the company's financial statements, it is difficult to include the impact of those items in the forecast.
"Free Cash Flow" (FCF) is a useful measure of the company's cash generation which is free from any significant existing obligation. 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 that the company believes are useful to identify. FCF permits management and investors to gain insight into the number that management employs to measure cash that is free from any significant existing obligation. It is also a significant component in the company's incentive compensation plans. The difference reflects the impact from:
-- net capital expenditures, -- voluntary pension contributions, -- cash impact of unusual 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. The company forecasts its cash flow results excluding any voluntary pension contributions because it has not yet made a determination about the amount and timing of any future such contributions. In addition, the company's forecast excludes the cash impact of unusual items because the company 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 numbers.
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 the company's financial statements as filed with the Securities and Exchange Commission, as well as the accompanying tables to this press 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 the company's total cash and cash equivalents for the period. See the accompanying tables to this press release for a cash flow statement presented in accordance with GAAP and a reconciliation presenting the components of FCF.
FORWARD-LOOKING STATEMENTS
This release may contain 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 or achievements to differ materially from anticipated results, performance 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. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco Electronics' businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward- looking statements. In addition, Tyco Electronics' historical combined financial information is not necessarily representative of the results it would have achieved as an independent, publicly-traded company and may not be a reliable indicator of its future results. Tyco Electronics has no intention and is under no obligation to update or alter (and expressly disclaims any such intention or obligation to do so) its forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. More detailed information about these and other factors is set forth in the following reports filed with the Securities and Exchange Commission: Information Statement included as Exhibit 99.1 to Tyco Electronics' Current Report on Form 8-K filed June 8, 2007; Tyco Electronics' Quarterly Report on Form 10-Q for the Quarterly Period ended June 29, 2007; and Tyco Electronics' Current Report on Form 8-K filed September 20, 2007.
TYCO ELECTRONICS LTD.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Quarters For the Twelve
Ended Months Ended
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2007 2006 2007 2006
(in millions, except per share data)
Net sales $3,619 $3,248 $13,460 $12,300
Cost of sales 2,708 2,379 10,012 8,999
Gross income 911 869 3,448 3,301
Selling, general, and administrative
expenses 401 394 1,664 1,524
Allocated class action settlement
(income) costs, net (4) - 887 -
Separation costs 20 - 45 -
Restructuring and other charges, net 51 1 99 13
Goodwill impairment - 316 - 316
Income from operations 443 158 753 1,448
Interest income 13 14 53 48
Interest expense (56) (60) (231) (256)
Other income (expense), net 13 - (219) -
Income from continuing operations
before income taxes and minority
interest 413 112 356 1,240
Income taxes (146) 215 (494) (46)
Minority interest (3) (3) (6) (6)
Income (loss) from continuing
operations 264 324 (144) 1,188
(Loss) income from discontinued
operations, net of income taxes (8) 45 (410) 13
Income (loss) before cumulative
effect of accounting change 256 369 (554) 1,201
Cumulative effect of accounting
change, net of income taxes - - - (8)
Net income (loss) $256 $369 $(554) $1,193
Basic earnings (loss) per share:
Income (loss) from continuing
operations $0.53 $0.65 $(0.29) $2.39
(Loss) income from discontinued
operations (0.01) 0.09 (0.82) 0.03
Income (loss) before cumulative
effect of accounting change 0.52 0.74 (1.11) 2.42
Cumulative effect of accounting
change - - - (0.02)
Net income (loss) $0.52 $0.74 $(1.11) $2.40
Diluted earnings (loss) per share:
Income (loss) from continuing
operations $0.53 $0.65 $(0.29) $2.39
(Loss) income from discontinued
operations (0.02) 0.09 (0.82) 0.03
Income (loss) before cumulative
effect of accounting change 0.51 0.74 (1.11) 2.42
Cumulative effect of accounting
change - - - (0.02)
Net income (loss) $0.51 $0.74 $(1.11) $2.40
Weighted-average number of shares
outstanding:
Basic 496 497 497 497
Diluted 500 497 497 497
TYCO ELECTRONICS LTD.
CONSOLIDATED AND COMBINED BALANCE SHEETS (UNAUDITED)
September 28, September 29,
2007 2006
(in millions, except share data)
Assets
Current Assets:
Cash and cash equivalents $936 $469
Accounts receivable, net of allowance
for doubtful accounts of $60 and
$59, respectively 2,686 2,434
Inventories 2,047 1,850
Class action settlement escrow 928 -
Class action settlement receivable 2,064 -
Prepaid expenses and other current assets 672 447
Deferred income taxes 325 368
Assets held for sale 215 982
Total current assets 9,873 6,550
Property, plant, and equipment, net 3,505 3,076
Goodwill 7,177 7,135
Intangible assets, net 554 576
Deferred income taxes 1,397 1,501
Other assets 1,182 253
Total Assets $23,688 $19,091
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt,
including amounts due to Tyco
International Ltd. and affiliates of $285
at September 29, 2006 $5 $291
Accounts payable 1,382 1,251
Class action settlement liability 2,992 -
Accrued and other current liabilities 1,450 1,307
Deferred revenue 191 155
Liabilities held for sale 165 145
Total current liabilities 6,185 3,149
Long-term debt, including amounts due
to Tyco International Ltd. and affiliates
of $3,225 at September 29, 2006 3,373 3,371
Long-term pension and postretirement
liabilities 607 491
Deferred income taxes 271 380
Income taxes 1,242 190
Other liabilities 618 334
Total Liabilities 12,296 7,915
Commitments and contingencies
Minority interest 15 16
Shareholders' equity:
Common shares, $0.20 par value,
1,000,000,000 authorized; 497,423,476
issued and outstanding at September 28, 2007 99 -
Capital in excess:
Share premium 13 -
Contributed surplus 10,027 -
Parent company investment - 10,490
Accumulated earnings 186 -
Accumulated other comprehensive income 1,052 670
Total Shareholders' Equity 11,377 11,160
Total Liabilities and Shareholders' Equity $23,688 $19,091
TYCO ELECTRONICS LTD.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Quarters For the Twelve
Ended Months Ended
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2007 2006 2007 2006
(in millions)
Cash Flows From Operating Activities:
Net income (loss) $256 $369 $(554) $1,193
Income (loss) from discontinued
operations, net of income taxes 8 (45) 410 (13)
Cumulative effect of accounting
change, net of income taxes - - - 8
Income (loss) from continuing
operations 264 324 (144) 1,188
Adjustments to reconcile net cash
provided by operating activities:
Allocated class action settlement
(income) costs, net (4) - 887 -
Depreciation and amortization 138 127 535 484
Deferred income taxes 41 (63) 162 (51)
Loss on retirement of debt - - 232 -
Goodwill impairment - 316 - 316
Other (6) 28 79 85
Changes in assets and liabilities,
net of the effects of acquisitions
and divestitures:
Accounts receivable, net (13) (5) (95) (134)
Inventories 99 (30) (124) (334)
Accounts payable 50 7 87 262
Accrued and other liabilities 128 60 105 91
Income taxes 38 (179) (125) (179)
Other (80) 5 (61) (63)
Net cash provided by operating
activities 655 590 1,538 1,665
Net cash used in discontinued
operating activities (12) (14) (13) (2)
Cash Flows From Investing Activities:
Capital expenditures (145) (156) (892) (555)
Proceeds from sale of property,
plant, and equipment 35 2 72 12
Class action settlement escrow (7) - (928) -
Proceeds from divestiture of
discontinued operation, net of cash
retained by business sold - - 227 -
Other (14) 8 (3) -
Net cash used in investing
activities (131) (146) (1,524) (543)
Net cash used in discontinued
investing activities - (6) (4) (96)
Cash Flows From Financing Activities:
Debt proceeds 2,045 - 5,676 -
Allocated debt activity - 47 (3,743) (731)
Repayment of debt (2,381) - (2,455) (113)
Net transactions with former parent (27) (368) 1,112 (74)
Transfers from (to) discontinued
operations - 2 (181) 2
Minority interest distributions paid (2) (3) (7) (12)
Other 3 (1) 5 (4)
Net cash (used in) provided by
financing activities (362) (323) 407 (932)
Net cash provided by discontinued
financing activities 13 21 24 104
Effect of currency translation on
cash 24 (5) 46 (1)
Net increase in cash and cash
equivalents 187 117 474 195
Less: net increase in cash related to
discontinued operations (1) (1) (7) (6)
Cash and cash equivalents at
beginning of period 750 353 469 280
Cash and cash equivalents at end of
period $936 $469 $936 $469
Reconciliation to Free Cash Flow:
Net cash provided by operating
activities $655 $590 $1,538 $1,665
Capital expenditures, net (110) (154) (820) (543)
Income tax advance payment - - 163 -
Free cash flow (1) $545 $436 $881 $1,122
(1) Free cash flow is a non-GAAP measure. See description of non-GAAP
measures contained in this release.
TYCO ELECTRONICS LTD.
CONSOLIDATED AND COMBINED SEGMENT DATA (UNAUDITED)
For the Quarters Ended
September 28, September 29,
2007 2006
($ in millions)
Net Sales:
Electronic Components $2,630 $2,439
Network Solutions 522 460
Wireless Systems 254 252
Undersea Telecommunications 213 97
Total $3,619 $3,248
Income from Operations:
Electronic Components $347 13.2% $352 14.4%
Network Solutions 46 8.8% 70 15.2%
Wireless Systems 47 18.5% (282) NM
Undersea Telecommunications 19 8.9% 18 18.6%
Allocated class action
settlement costs, net and
separation costs (16) -
Total $443 12.2% $158 4.9%
For the Twelve Months Ended
September 28, September 29,
2007 2006
($ in millions)
Net Sales:
Electronic Components $10,111 $9,386
Network Solutions 1,897 1,740
Wireless Systems 887 874
Undersea Telecommunications 565 300
Total $13,460 $12,300
Income from Operations:
Electronic Components $1,339 13.2% $1,404 15.0%
Network Solutions 231 12.2% 268 15.4%
Wireless Systems 77 8.7% (239) (27.3)%
Undersea Telecommunications 38 6.7% 15 5.0%
Allocated class action
settlement costs, net and
separation costs (932) -
Total $753 5.6% $1,448 11.8%
TYCO ELECTRONICS LTD.
NET SALES GROWTH RECONCILIATION (UNAUDITED)
Change in Net Sales for the Quarter Ended
September 28, 2007
versus Net Sales for the Quarter Ended
September 29, 2006
Acquis-
Trans- ition/
Organic lation Divest-
(1) (2) iture Total
($ in millions)
Electronic Components (3):
Automotive $61 6.8% $48 $- $109 12.2%
Computer (13) (4.2) 4 - (9) (3.0)
Communication Equipment 23 11.6 7 - 30 15.2
Appliance 1 1.3 6 - 7 5.5
Industrial Machinery 11 8.6 6 - 17 13.3
Aerospace and Defense 6 8.0 3 - 9 10.8
Consumer Electronics 4 7.6 1 - 5 9.6
Other 2 0.4 21 - 23 3.5
Total 95 3.9 96 - 191 7.8
Network Solutions (3):
Energy 8 3.6 14 - 22 10.4
Communication Service Provider 9 7.4 8 - 17 13.2
Building Networks 17 16.5 8 - 25 24.3
Other (1) (6.9) (1) - (2) (11.8)
Total 33 7.2 29 - 62 13.5
Wireless Systems 2 0.8 - - 2 0.8
Undersea Telecommunications 118 121.9 (2) - 116 119.6
Total $248 7.7% $123 $- $371 11.4%
Change in Net Sales for the Twelve Months
Ended September 28, 2007
versus Net Sales for the Twelve Months
Ended September 29, 2006
Acquis-
Trans- ition/
Organic lation Divest-
(1) (2) iture Total
($ in millions)
Electronic Components (3):
Automotive $192 5.4% $176 $17 $385 10.8%
Computer (44) (3.9) 17 - (27) (2.4)
Communication Equipment 45 6.1 22 - 67 9.1
Appliance 17 3.5 16 - 33 6.7
Industrial Machinery 53 11.5 17 - 70 15.2
Aerospace and Defense 32 10.5 9 - 41 13.4
Consumer Electronics 21 11.7 4 - 25 13.4
Other 59 2.3 72 - 131 5.1
Total 375 4.0 333 17 725 7.7
Network Solutions (3):
Energy 43 5.7 47 - 90 11.9
Communication Service Provider (41) (7.4) 25 - (16) (2.9)
Building Networks 61 16.2 19 - 80 21.4
Other (2) (2.7) 5 - 3 5.0
Total 61 3.5 96 - 157 9.0
Wireless Systems 12 1.4 1 - 13 1.5
Undersea Telecommunications 266 88.9 (1) - 265 88.3
Total $714 5.8% $429 $17 $1,160 9.4%
(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.
TYCO ELECTRONICS LTD.
CONSOLIDATED AND COMBINED SEGMENT DATA (UNAUDITED)
For the
Twelve
Months
For the Quarters Ended Ended
Dec. March June Sept. Sept.
29, 30, 29, 28, 28,
2006 2007 2007 2007 2007
(in millions)
Net Sales:
Electronic Components $2,390 $2,540 $2,551 $2,630 $10,111
Network Solutions 421 454 500 522 1,897
Wireless Systems 207 219 207 254 887
Undersea Telecommunications 76 122 154 213 565
Total $3,094 $3,335 $3,412 $3,619 $13,460
Income (Loss) from Operations:
Electronic Components $327 $351 $314 $347 $1,339
Network Solutions 54 59 72 46 231
Wireless Systems 14 10 6 47 77
Undersea Telecommunications (1) 4 16 19 38
Allocated class action
settlement costs, net and
separation costs - - (916) (16) (932)
Total $394 $424 $(508) $443 $753
For the
Twelve
Months
For the Quarters Ended Ended
Dec. March June Sept. Sept.
30, 31, 30, 29, 29,
2005 2006 2006 2006 2006
(in millions)
Net Sales:
Electronic Components $2,158 $2,340 $2,449 $2,439 $9,386
Network Solutions 393 412 475 460 1,740
Wireless Systems 202 206 214 252 874
Undersea Telecommunications 64 71 68 97 300
Total $2,817 $3,029 $3,206 $3,248 $12,300
Income (Loss) from Operations:
Electronic Components $313 $373 $366 $352 $1,404
Network Solutions 59 61 78 70 268
Wireless Systems 17 13 13 (282) (239)
Undersea Telecommunications (3) (2) 2 18 15
Allocated class action
settlement costs, net and
separation costs - - - - -
Total $386 $445 $459 $158 $1,448
TYCO ELECTRONICS LTD.
ADJUSTED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Twelve Months Ended September 28, 2007
Adjustments
Restruct-
uring
and
Alloc- Other
ated Charges,
Separa- Class Net
tion Action and Adjusted
Rel- Settle- Rel- Other Results
ated ment ated Items, (Non-
Costs Costs, Costs Net GAAP)
US GAAP (1) Net (2) (3) (4)
(in millions, except per share data)
Net sales $13,460 $- $- $- $- $13,460
Cost of sales 10,012 - - (8) - 10,004
Gross income 3,448 - - 8 - 3,456
Selling, general, and
administrative expenses 1,664 (41) - - 24 1,647
Allocated class action
settlement costs, net 887 - (887) - - -
Separation costs 45 (45) - - - -
Restructuring and other charges,
net 99 - - (99) - -
Income from operations 753 86 887 107 (24) 1,809
Interest income 53 - - - - 53
Interest expense (231) - - - - (231)
Other (expense) income, net (219) - - - 232 13
Income from continuing
operations before income
taxes and minority interest 356 86 887 107 208 1,644
Income taxes (494) (25) - (35) 4 (550)
Minority interest (6) - - - - (6)
(Loss) income from continuing
operations $(144) $61 $887 $72 $212 $1,088
Basic (loss) earnings per share:
(Loss) income from continuing
operations $(0.29) $2.19
Diluted (loss) earnings per
share:
(Loss) income from continuing
operations $(0.29) $2.18
Weighted-average number of
shares
outstanding:
Basic 497 497
Diluted 497 500
ADJUSTED CONSOLIDATED AND COMBINED INCOME FROM OPERATIONS
BY SEGMENT (UNAUDITED)
For the Twelve Months Ended September 28, 2007
Adjustments
Restruct-
uring
and
Alloc- Other
ated Charges,
Separa- Class Net
tion Action and Adjusted
Rel- Settle- Rel- Other Results
ated ment ated Items, (Non-
Costs Costs, Costs Net GAAP)
US GAAP (1) Net (2) (3) (4)
(in millions)
Income from Operations:
Electronic Components $1,339 $33 $- $57 $- $1,429
Network Solutions 231 5 - 35 - 271
Wireless Systems 77 2 - 10 (24) 65
Undersea Telecommunications 38 1 - 5 - 44
Allocated class action
settlement costs, net
and separation costs (932) 45 887 - - -
Total $753 $86 $887 $107 $(24) $1,809
(1) Includes $45 million of separation costs, primarily related to
employee costs, and $41 million of costs related to building separate
company functions that did not exist in the prior year.
(2) Includes $104 million of net restructuring and other charges, of which
$5 million is recorded in cost of sales, and $3 million of
restructuring related moving costs (recorded in cost of goods sold).
(3) Consists of a $24 million gain on the sale of real estate and $232
million loss on retirement of debt.
(4) Adjusted results is a non-GAAP measure. See description of non-GAAP
measures contained in this release.
TYCO ELECTRONICS LTD.
ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the Quarter Ended September 28, 2007
Adjustments
Restruct-
uring
and
Other
Charges,
Separa- Net
tion and Adjusted
Rel- Rel- Other Results
ated ated Items, (Non-
Costs Costs Net GAAP)
US GAAP (1) (2) (3) (4)
(in millions, except per share data)
Net sales $3,619 $- $- $- $3,619
Cost of sales 2,708 - (8) - 2,700
Gross income 911 - 8 - 919
Selling, general, and administrative
expenses 401 - - 24 425
Allocated class action settlement
income (4) - - 4 -
Separation costs 20 (20) - - -
Restructuring and other charges, net 51 - (51) - -
Income from operations 443 20 59 (28) 494
Interest income 13 - - - 13
Interest expense (56) - - - (56)
Other expense, net 13 - - - 13
Income from continuing operations
before income taxes and minority
interest 413 20 59 (28) 464
Income taxes (146) (6) (18) 4 (166)
Minority interest (3) - - - (3)
Income from continuing operations $264 $14 $41 $(24) $295
Basic earnings per share:
Income from continuing operations $0.53 $0.59
Diluted earnings per share:
Income from continuing operations $0.53 $0.59
Weighted-average number of shares
outstanding:
Basic 496 496
Diluted 500 500
ADJUSTED CONSOLIDATED INCOME FROM OPERATIONS BY SEGMENT (UNAUDITED)
For the Quarter Ended September 28, 2007
Adjustments
Restruct-
uring
and
Other
Charges,
Separa- Net
tion and Adjusted
Rel- Rel- Other Results
ated ated Items, (Non-
Costs Costs Net GAAP)
US GAAP (1) (2) (3) (4)
(in millions)
Income from Operations:
Electronic Components $347 $- $23 $- $370
Network Solutions 46 - 31 - 77
Wireless Systems 47 - 3 (24) 26
Undersea Telecommunications 19 - 2 - 21
Allocated class action settlement
income and separation costs (16) 20 - (4) -
Total $443 $20 $59 $(28) $494
(1) Includes $20 million of separation costs, primarily related to
employee costs.
(2) Includes $56 million of net restructuring and other charges, of
which $5 million is recorded in cost of sales, and $3 million of
restructuring related moving costs (recorded in cost of goods sold).
(3) Consists of $24 million gain on the sale of real estate and $4
million of class action settlement income related to an insurance
recovery.
(4) Adjusted results is a non-GAAP measure. See description of non-
GAAP measures contained in this release.
TYCO ELECTRONICS LTD.
ADJUSTED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Quarter Ended June 29, 2007
Adjustments
Alloc-
ated Restr- Loss
Class Separa- uctur- on
Action tion ing Ret- Adjusted
Settle- Rel- and ire- Results
ment ated Other ment (Non-
Costs, Costs Charges, of GAAP)
US GAAP Net (1) Net Debt (2)
(in millions, except per share data)
Net sales $3,412 $- $- $- $- $3,412
Cost of sales 2,550 - - - - 2,550
Gross income 862 - - - - 862
Selling, general, and
administrative expenses 426 - (25) - - 401
Allocated class action settlement
costs, net 891 (891) - - - -
Separation costs 25 - (25) - - -
Restructuring and other charges,
net 28 - - (28) - -
(Loss) income from operations (508) 891 50 28 - 461
Interest income 11 - - - - 11
Interest expense (57) - - - - (57)
Other expense, net (232) - - - 232 -
(Loss) income from continuing
operations before income
taxes and minority interest (786) 891 50 28 232 415
Income taxes (146) - (14) (10) - (170)
Minority interest (1) - - - - (1)
(Loss) income from
continuing operations $(933) $891 $36 $18 $232 $244
Basic and diluted (loss)
earnings per share:
(Loss) income from
continuing operations $(1.88) $0.49
Weighted-average number of
shares outstanding:
Basic and diluted 497 497
ADJUSTED COMBINED (LOSS) INCOME FROM OPERATIONS BY SEGMENT (UNAUDITED)
For the Quarter Ended June 29, 2007
Adjustments
Alloc-
ated Restr-
Class Separa- uctur-
Action tion ing Adjusted
Settle- Rel- and Results
ment ated Other (Non-
Costs, Costs Charges, GAAP)
US GAAP Net (1) Net (2)
(in millions)
(Loss) Income from Operations:
Electronic Components $314 $- $20 $18 $352
Network Solutions 72 - 3 4 79
Wireless Systems 6 - 1 4 11
Undersea Telecommunications 16 - 1 2 19
Allocated class action settlement
costs, net and separation costs (916) 891 25 - -
Total $(508) $891 $50 $28 $461
(1) Includes $25 million of separation costs, primarily related to
employee costs, and $25 million of costs related to building separate
company functions that did not exist in the prior year.
(2) Adjusted results is a non-GAAP measure. See description of non-GAAP
measures contained in this release.
TYCO ELECTRONICS LTD.
ADJUSTED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Quarter Ended March 30, 2007
Adjustments
Restruct-
Separa- uring Adjusted
tion and Results
Related Other (Non-
Costs Charges, GAAP)
US GAAP (1) Net (2)
(in millions, except per share data)
Net sales $3,335 $- $- $3,335
Cost of sales 2,475 - - 2,475
Gross income 860 - - 860
Selling, general, and administrative
expenses 426 (14) - 412
Restructuring and other charges, net 10 - (10) -
Income from operations 424 14 10 448
Interest income 14 - - 14
Interest expense (58) - - (58)
Income from continuing operations
before income taxes and minority
interest 380 14 10 404
Income taxes (94) (4) (3) (101)
Minority interest (1) - - (1)
Income from continuing operations $285 $10 $7 $302
Basic and diluted earnings per share:
Income from continuing operations $0.57 $0.61
Weighted-average number of shares
outstanding:
Basic and diluted 497 497
ADJUSTED COMBINED INCOME FROM OPERATIONS BY SEGMENT (UNAUDITED)
For the Quarter Ended March 30, 2007
Adjustments
Restruct-
Separa- uring Adjusted
tion and Results
Related Other (Non-
Costs Charges, GAAP)
US GAAP (1) Net (2)
(in millions)
Income from Operations:
Electronic Components $351 $11 $8 $370
Network Solutions 59 2 - 61
Wireless Systems 10 1 2 13
Undersea Telecommunications 4 - - 4
Total $424 $14 $10 $448
(1) Includes $14 million of costs related to building separate company
functions that did not exist in the prior year.
(2) Adjusted results is a non-GAAP measure. See description of non-GAAP
measures contained in this release.
TYCO ELECTRONICS LTD.
ADJUSTED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the Quarter Ended December 29, 2006
Adjustments
Restruct-
Separa- uring Adjusted
tion and Results
Related Other (Non-
Costs Charges, GAAP)
US GAAP (1) Net (2)
(in millions, except per share data)
Net sales $3,094 $- $- $3,094
Cost of sales 2,279 - - 2,279
Gross income 815 - - 815
Selling, general, and administrative
expenses 411 (2) - 409
Restructuring and other charges, net 10 - (10) -
Income from operations 394 2 10 406
Interest income 15 - - 15
Interest expense (60) - - (60)
Income from continuing operations
before income taxes and minority
interest 349 2 10 361
Income taxes (108) (1) (4) (113)
Minority interest (1) - - (1)
Income from continuing operations $240 $1 $6 $247
Basic and diluted earnings per share:
Income from continuing operations $0.48 $0.50
Weighted-average number of shares
outstanding:
Basic and diluted 497 497
ADJUSTED COMBINED INCOME FROM OPERATIONS BY SEGMENT (UNAUDITED)
For the Quarter Ended December 29, 2006
Adjustments
Restruct-
Separa- uring Adjusted
tion and Results
Related Other (Non-
Costs Charges, GAAP)
US GAAP (1) Net (2)
(in millions)
Income from Operations:
Electronic Components $327 $2 $8 $337
Network Solutions 54 - - 54
Wireless Systems 14 - 1 15
Undersea Telecommunications (1) - 1 -
Total $394 $2 $10 $406
(1) Includes $2 million of costs related to building separate company
functions that did not exist in the prior year.
(2) Adjusted results is a non-GAAP measure. See description of non-GAAP
measures contained in this release.
SOURCE: Tyco Electronics Ltd.
CONTACT: Media Relations, Sheri Woodruff, +1-610-893-9555,
+1-609-933-9243 Mobile, swoodruff@tycoelectronics.com; Investor Relations,
John Roselli, +1-610-893-9559, john.roselli@tycoelectronics.com, or Keith
Kolstrom, +1-610-893-9551, keith.kolstrom@tycoelectronics.com
Web site: http://www.tycoelectronics.com/