EX-99.1 2 a13-22749_1ex99d1.htm EX-99.1

Exhibit 99.1

 

News Release

GRAPHIC

 

TE CONNECTIVITY REPORTS FOURTH QUARTER AND FULL YEAR RESULTS

 

SCHAFFHAUSEN, Switzerland — October 30, 2013 — TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter ended September 27, 2013.

 

Fourth Quarter Highlights

 

·                  Increased net sales by 2 percent to $3.43 billion; up 3 percent organically

 

·                  Grew adjusted Earnings Per Share 22 percent to a fourth quarter record of $0.93

 

·                  Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $0.92

 

·                  Free Cash Flow was $412 million; Returned $313 million to shareholders through share repurchases and dividends

 

·                  Board of Directors authorized an additional $1 billion in share repurchase

 

·                  Named Top 100 Innovator by Thomson Reuters for the third consecutive year

 

Full Year Highlights

 

·                  Net sales were $13.3 billion; flat versus the prior year

 

·                  Adjusted EPS were $3.23; up 13 percent versus the prior year

 

·                  Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $3.02

 

·                  Free Cash Flow was $1.5 billion

 

·                  Returned $1.2 billion to shareholders through share repurchases and dividends

 

“I am pleased with our fourth quarter results and the strong finish to our fiscal year,” said TE Connectivity Chairman and Chief Executive Officer Tom Lynch. “Our Transportation segment continued to perform extremely well and demand in our Telecom Networks and Industrial businesses strengthened. Adjusted EPS of $0.93 was a record for the Company and adjusted operating margin was very strong at 15.7 percent.  During the year we returned $1.2 billion to shareholders through dividends and share repurchases. This is our sixth consecutive year with a free cash flow-to-sales ratio of 10 percent or greater.

 

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“I am encouraged by the current trends in our business and expect sales and adjusted EPS in the first quarter and for the full year to be up solidly versus the prior year.”

 

FISCAL FOURTH QUARTER RESULTS

 

The Company reported net sales of $3.43 billion compared to prior year sales of $3.36 billion. Adjusted EPS were $0.93, compared to $0.76 in the prior year. GAAP EPS were $0.92 for the quarter. Free cash flow was $412 million for the quarter.

 

GAAP EPS included $0.13 per share of restructuring and other charges and $0.12 of income related to tax items.

 

Total Company orders were $3.25 billion in the fourth quarter, up 6 percent, and the book-to-bill ratio was 0.98 excluding Subsea Communications.

 

OUTLOOK

 

For the first quarter, the Company expects net sales of $3.225 to $3.325 billion and adjusted EPS of $0.74 to $0.78. GAAP EPS are expected to be $0.71 to $0.75, including restructuring charges of $0.03.

 

For the full year, the Company expects net sales of $13.65 to $14.15 billion and adjusted EPS of $3.50 to $3.80. GAAP EPS are expected to be $3.41 to $3.71, including restructuring charges of $0.09.

 

This outlook assumes foreign exchange and commodity rates that are consistent with current levels.

 

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

 

ABOUT TE CONNECTIVITY

 

TE Connectivity (NYSE: TEL) is a $13 billion world leader in connectivity. The company designs and manufactures products at the heart of electronic connections for the world’s leading industries including automotive, energy and industrial, broadband communications, consumer devices, healthcare, and aerospace and defense. TE Connectivity’s long-standing commitment to innovation and engineering excellence helps its customers solve the need for more energy efficiency, always-on communications and ever-increasing productivity. With nearly 90,000 employees in over 50 countries, TE Connectivity makes connections the world relies on to work flawlessly every day. To connect with the company, visit: www.TE.com.

 

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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) 230-1085. The telephone dial-in number for participants outside the United States is (651) 291-0278.

·                  An audio replay of the conference call will be available beginning at 10:30 a.m. on October 30, 2013 and ending at 11:59 p.m. on November 6, 2013. 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 303736.

 

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 and acquisitions and divestitures, if any. 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. The limitation of this measure is that it excludes items that have an impact on our sales. This limitation is best addressed by using organic sales growth in combination with the GAAP results.

 

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

 

We present operating margin before special items including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, and other

 

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

 

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

 

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

 

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

 

We present diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. before special items, including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, other income or charges, if any, and, if applicable, related tax effects (“Adjusted Earnings Per Share”). We

 

4



 

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

 

“Free Cash Flow” (FCF) is a useful measure of our ability to generate cash.  It also is a significant component in our incentive compensation plans.  The difference between net cash provided by continuing operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) consists mainly of significant cash outflows and inflows that we believe are useful to identify.  We believe free cash flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations.

 

FCF is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Net capital expenditures are subtracted because they represent long-term commitments.  Voluntary pension contributions are excluded from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity.  Certain special items, including net payments related to pre-separation tax matters, also are considered by management in evaluating free cash flow.  We believe investors should also consider these items in evaluating our free cash flow.  We forecast our cash flow results excluding any voluntary pension contributions because we have not yet made a determination about the amount and timing of any such future contributions.  In addition, our forecast excludes the cash impact of special items because we cannot predict the amount and timing of such items.

 

FCF as presented herein may not be comparable to similarly-titled measures reported by other companies.  The primary limitation of this measure is that it excludes items that have an impact on our GAAP cash flow.  Also, it subtracts certain cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and may imply that there is less or more cash available for our programs than the most comparable GAAP measure indicates.  This limitation is best addressed by using FCF in combination with the GAAP cash flow results.  It should not be inferred that the entire free cash flow amount is available for future discretionary expenditures, as our definition of free cash flow does not consider certain non-discretionary expenditures, such as debt payments.  In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of free cash flow.

 

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

 

SHARE REPURCHASE PROGRAM

 

The Company announced above an increase in the authorization for its share repurchase program. Any repurchases by the Company will be made in accordance with applicable securities laws in the open market or in private transactions. The repurchase program is subject to business and market conditions, and may be commenced, suspended or discontinued at any time or from time to time without prior notice.

 

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FORWARD-LOOKING STATEMENTS

 

This release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industry and the telecommunications networks and consumer devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. More detailed information about these and other factors is set forth in TE Connectivity Ltd.’s Annual Report on Form 10-K for the fiscal year ended Sept. 28, 2012 as well as in our Quarterly Reports on Form 10-Q for the fiscal quarters ended Dec. 28, 2012, March 29, 2013 and June 28, 2013, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

 

# # #

 

Contacts:

Media Relations:

Investor Relations:

 

Amy Shah

Keith Kolstrom

 

610-893-9555 Office

610-893-9551 Office

 

amy.shah@te.com

keith.kolstrom@te.com

 

 

 

 

Brian Schaffer

Will Ruthrauff

 

212-279-3115 Office

610-893-9565 Office

 

bschaffer@prosek.com

will.ruthrauff@te.com

 

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TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Years Ended

 

 

 

September 27,

 

September 28,

 

September 27,

 

September 28,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,432

 

$

3,364

 

$

13,280

 

$

13,282

 

Cost of sales

 

2,276

 

2,300

 

8,951

 

9,236

 

Gross margin

 

1,156

 

1,064

 

4,329

 

4,046

 

Selling, general, and administrative expenses

 

451

 

452

 

1,773

 

1,685

 

Research, development, and engineering expenses

 

166

 

165

 

675

 

688

 

Acquisition and integration costs

 

3

 

4

 

14

 

27

 

Restructuring and other charges, net

 

71

 

42

 

311

 

128

 

Operating income

 

465

 

401

 

1,556

 

1,518

 

Interest income

 

4

 

5

 

17

 

23

 

Interest expense

 

(34

)

(45

)

(142

)

(176

)

Other income (expense), net

 

16

 

19

 

(183

)

50

 

Income from continuing operations before income taxes

 

451

 

380

 

1,248

 

1,415

 

Income tax (expense) benefit

 

(63

)

18

 

29

 

(249

)

Income from continuing operations

 

388

 

398

 

1,277

 

1,166

 

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

 

 

(2

)

 

(51

)

Net income

 

388

 

396

 

1,277

 

1,115

 

Less: net income attributable to noncontrolling interests

 

(1

)

 

(1

)

(3

)

Net income attributable to TE Connectivity Ltd.

 

$

387

 

$

396

 

$

1,276

 

$

1,112

 

 

 

 

 

 

 

 

 

 

 

Amounts attributable to TE Connectivity Ltd.:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

387

 

$

398

 

$

1,276

 

$

1,163

 

Income (loss) from discontinued operations

 

 

(2

)

 

(51

)

Net income

 

$

387

 

$

396

 

$

1,276

 

$

1,112

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to TE Connectivity Ltd.:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.94

 

$

0.93

 

$

3.05

 

$

2.73

 

Income (loss) from discontinued operations

 

 

 

 

(0.12

)

Net income

 

0.94

 

0.93

 

3.05

 

2.61

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to TE Connectivity Ltd.:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.92

 

$

0.93

 

$

3.02

 

$

2.70

 

Income (loss) from discontinued operations

 

 

(0.01

)

 

(0.11

)

Net income

 

0.92

 

0.92

 

3.02

 

2.59

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.25

 

$

0.21

 

$

0.92

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

413

 

426

 

418

 

426

 

Diluted

 

420

 

429

 

423

 

430

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

September 27,

 

September 28,

 

 

 

2013

 

2012

 

 

 

(in millions, except share data)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,403

 

$

1,589

 

Accounts receivable, net of allowance for doubtful accounts of $48 and $41, respectively

 

2,323

 

2,343

 

Inventories

 

1,762

 

1,808

 

Prepaid expenses and other current assets

 

487

 

474

 

Deferred income taxes

 

334

 

289

 

Total current assets

 

6,309

 

6,503

 

Property, plant, and equipment, net

 

3,166

 

3,213

 

Goodwill

 

4,326

 

4,308

 

Intangible assets, net

 

1,244

 

1,352

 

Deferred income taxes

 

2,146

 

2,460

 

Receivable from Tyco International Ltd. and Covidien plc

 

1,002

 

1,180

 

Other assets

 

268

 

290

 

Total Assets

 

$

18,461

 

$

19,306

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

711

 

$

1,015

 

Accounts payable

 

1,383

 

1,292

 

Accrued and other current liabilities

 

1,762

 

1,576

 

Deferred revenue

 

68

 

121

 

Total current liabilities

 

3,924

 

4,004

 

Long-term debt

 

2,303

 

2,696

 

Long-term pension and postretirement liabilities

 

1,155

 

1,353

 

Deferred income taxes

 

321

 

448

 

Income taxes

 

1,979

 

2,311

 

Other liabilities

 

393

 

517

 

Total Liabilities

 

10,075

 

11,329

 

Commitments and contingencies

 

 

 

 

 

Equity:

 

 

 

 

 

TE Connectivity Ltd. shareholders’ equity:

 

 

 

 

 

Common shares, 428,527,307 shares authorized and issued, CHF 0.57 par value, and 439,092,124 shares authorized and issued, CHF 0.97 par value, respectively

 

189

 

193

 

Contributed surplus

 

6,136

 

6,837

 

Accumulated earnings

 

2,472

 

1,196

 

Treasury shares, at cost, 17,020,636 and 16,408,049 shares, respectively

 

(720

)

(484

)

Accumulated other comprehensive income

 

303

 

229

 

Total TE Connectivity Ltd. shareholders’ equity

 

8,380

 

7,971

 

Noncontrolling interests

 

6

 

6

 

Total Equity

 

8,386

 

7,977

 

Total Liabilities and Equity

 

$

18,461

 

$

19,306

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Years Ended

 

 

 

September 27,

 

September 28,

 

September 27,

 

September 28,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in millions)

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

388

 

$

396

 

$

1,277

 

$

1,115

 

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

 

 

2

 

 

51

 

Income from continuing operations

 

388

 

398

 

1,277

 

1,166

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

150

 

156

 

607

 

609

 

Non-cash restructuring charges

 

18

 

4

 

84

 

1

 

Deferred income taxes

 

(62

)

(148

)

30

 

(48

)

Provision for losses on accounts receivable and inventories

 

10

 

14

 

59

 

58

 

Tax sharing (income) expense

 

(17

)

(20

)

181

 

(52

)

Share-based compensation expense

 

19

 

16

 

78

 

68

 

Other

 

26

 

11

 

56

 

63

 

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

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(51

)

43

 

(81

)

17

 

Inventories

 

30

 

92

 

(61

)

116

 

Inventoried costs on long-term contracts

 

(13

)

(2

)

18

 

7

 

Prepaid expenses and other current assets

 

4

 

17

 

11

 

103

 

Accounts payable

 

35

 

(98

)

167

 

(189

)

Accrued and other current liabilities

 

15

 

103

 

(13

)

(92

)

Income taxes

 

41

 

81

 

(371

)

7

 

Other

 

2

 

47

 

6

 

54

 

Net cash provided by continuing operating activities

 

595

 

714

 

2,048

 

1,888

 

Net cash provided by (used in) discontinued operating activities

 

(2

)

(1

)

(2

)

59

 

Net cash provided by operating activities

 

593

 

713

 

2,046

 

1,947

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(203

)

(148

)

(615

)

(533

)

Proceeds from sale of property, plant, and equipment

 

20

 

10

 

39

 

23

 

Acquisition of businesses, net of cash acquired

 

(6

)

 

(6

)

(1,384

)

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

 

 

 

14

 

394

 

Other

 

1

 

(2

)

23

 

(9

)

Net cash used in continuing investing activities

 

(188

)

(140

)

(545

)

(1,509

)

Net cash used in discontinued investing activities

 

 

 

 

(1

)

Net cash used in investing activities

 

(188

)

(140

)

(545

)

(1,510

)

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

 

Net increase (decrease) in commercial paper

 

 

(50

)

50

 

300

 

Proceeds from long-term debt

 

 

 

 

748

 

Repayment of long-term debt

 

 

 

(715

)

(642

)

Proceeds from exercise of share options

 

61

 

8

 

214

 

60

 

Repurchase of common shares

 

(226

)

(168

)

(844

)

(185

)

Payment of common share dividends and cash distributions to shareholders

 

(103

)

(89

)

(384

)

(332

)

Other

 

(1

)

(1

)

(1

)

44

 

Net cash used in continuing financing activities

 

(269

)

(300

)

(1,680

)

(7

)

Net cash provided by (used in) discontinued financing activities

 

2

 

1

 

2

 

(58

)

Net cash used in financing activities

 

(267

)

(299

)

(1,678

)

(65

)

Effect of currency translation on cash

 

3

 

13

 

(9

)

(1

)

Net increase (decrease) in cash and cash equivalents

 

141

 

287

 

(186

)

371

 

Cash and cash equivalents at beginning of period

 

1,262

 

1,302

 

1,589

 

1,218

 

Cash and cash equivalents at end of period

 

$

1,403

 

$

1,589

 

$

1,403

 

$

1,589

 

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

 

Interest paid

 

$

23

 

$

25

 

$

155

 

$

181

 

Income taxes paid, net of refunds

 

83

 

50

 

312

 

290

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Free Cash Flow:

 

 

 

 

 

 

 

 

 

Net cash provided by continuing operating activities

 

$

595

 

$

714

 

$

2,048

 

$

1,888

 

Capital expenditures, net

 

(183

)

(138

)

(576

)

(510

)

Payments related to pre-separation tax matters, net

 

 

(7

)

28

 

19

 

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

 

 

 

 

17

 

Payments to settle acquisition-related foreign currency derivative contracts

 

 

 

 

20

 

Free cash flow (1)

 

$

412

 

$

569

 

$

1,500

 

$

1,434

 

 


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

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

 

 

 

For the Quarters Ended

 

 

 

For the Years Ended

 

 

 

 

 

September 27,

 

 

 

September 28,

 

 

 

September 27,

 

 

 

September 28,

 

 

 

 

 

2013

 

 

 

2012

 

 

 

2013

 

 

 

2012

 

 

 

 

 

($ in millions)

 

 

 

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

1,398

 

 

 

$

1,279

 

 

 

$

5,485

 

 

 

$

5,128

 

 

 

Network Solutions

 

804

 

 

 

838

 

 

 

3,066

 

 

 

3,310

 

 

 

Industrial Solutions

 

792

 

 

 

777

 

 

 

3,007

 

 

 

2,987

 

 

 

Consumer Solutions

 

438

 

 

 

470

 

 

 

1,722

 

 

 

1,857

 

 

 

Total

 

$

3,432

 

 

 

$

3,364

 

 

 

$

13,280

 

 

 

$

13,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

257

 

18.4

%

$

196

 

15.3

%

$

972

 

17.7

%

$

754

 

14.7

%

Network Solutions

 

33

 

4.1

%

71

 

8.5

%

136

 

4.4

%

247

 

7.5

%

Industrial Solutions

 

127

 

16.0

%

97

 

12.5

%

359

 

11.9

%

378

 

12.7

%

Consumer Solutions

 

48

 

11.0

%

37

 

7.9

%

89

 

5.2

%

139

 

7.5

%

Total

 

$

465

 

13.5

%

$

401

 

11.9

%

$

1,556

 

11.7

%

$

1,518

 

11.4

%

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment’s Total

 

 

 

Change in Net Sales for the Quarter Ended September 27, 2013

 

Net Sales for the

 

 

 

versus Net Sales for the Quarter Ended September 28, 2012

 

Quarter Ended

 

 

 

Organic (1)

 

Translation (2)

 

Divestiture

 

Total

 

September 27, 2013

 

 

 

($ in millions)

 

 

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

122

 

9.5

%

$

(3

)

$

 

$

119

 

9.3

%

100

%

Total

 

122

 

9.5

 

(3

)

 

119

 

9.3

 

100

%

Network Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Networks

 

4

 

1.1

 

(1

)

 

3

 

0.9

 

43

 

Data Communications

 

(9

)

(4.2

)

(2

)

(18

)

(29

)

(12.9

)

24

 

Enterprise Networks

 

2

 

1.4

 

(3

)

 

(1

)

(0.6

)

20

 

Subsea Communications

 

(8

)

(7.4

)

1

 

 

(7

)

(6.4

)

13

 

Total

 

(11

)

(1.3

)

(5

)

(18

)

(34

)

(4.1

)

100

%

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

12

 

4.0

 

(1

)

 

11

 

3.6

 

40

 

Aerospace, Defense, and Marine

 

8

 

3.0

 

1

 

 

9

 

3.5

 

34

 

Energy

 

(6

)

(2.9

)

1

 

 

(5

)

(2.3

)

26

 

Total

 

14

 

1.8

 

1

 

 

15

 

1.9

 

100

%

Consumer Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Devices

 

(36

)

(12.5

)

(9

)

 

(45

)

(15.3

)

57

 

Appliances

 

12

 

7.0

 

1

 

 

13

 

7.4

 

43

 

Total

 

(24

)

(5.2

)

(8

)

 

(32

)

(6.8

)

100

%

Total

 

$

101

 

3.0

%

$

(15

)

$

(18

)

$

68

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

Change in Net Sales for the Year Ended September 27, 2013

 

Segment’s Total

 

 

 

versus Net Sales for the Year Ended September 28, 2012

 

Net Sales for the

 

 

 

 

 

 

 

 

 

Acquisition/

 

 

 

 

 

Year Ended

 

 

 

Organic (1)

 

Translation (2)

 

Divestiture

 

Total

 

September 27, 2013

 

 

 

($ in millions)

 

 

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

251

 

4.9

%

$

(54

)

$

160

 

$

357

 

7.0

%

100

%

Total

 

251

 

4.9

 

(54

)

160

 

357

 

7.0

 

100

%

Network Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Networks

 

(29

)

(2.2

)

(4

)

 

(33

)

(2.5

)

42

 

Data Communications

 

(55

)

(6.3

)

(3

)

(36

)

(94

)

(10.8

)

25

 

Enterprise Networks

 

(25

)

(3.9

)

(9

)

 

(34

)

(5.2

)

20

 

Subsea Communications

 

(83

)

(17.3

)

 

 

(83

)

(17.3

)

13

 

Total

 

(192

)

(5.8

)

(16

)

(36

)

(244

)

(7.4

)

100

%

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

(98

)

(7.7

)

(15

)

 

(113

)

(8.8

)

39

 

Aerospace, Defense, and Marine

 

12

 

1.4

 

(2

)

160

 

170

 

19.6

 

34

 

Energy

 

(36

)

(4.3

)

(1

)

 

(37

)

(4.4

)

27

 

Total

 

(122

)

(4.1

)

(18

)

160

 

20

 

0.7

 

100

%

Consumer Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Devices

 

(86

)

(7.6

)

(22

)

 

(108

)

(9.7

)

59

 

Appliances

 

(22

)

(3.0

)

(5

)

 

(27

)

(3.7

)

41

 

Total

 

(108

)

(5.8

)

(27

)

 

(135

)

(7.3

)

100

%

Total

 

$

(171

)

(1.3

)%

$

(115

)

$

284

 

$

(2

)

%

 

 

 


(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 NET SALES GROWTH (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment’s Total

 

 

 

Change in Net Sales for the Quarter Ended September 27, 2013

 

Net Sales for the

 

 

 

versus Net Sales for the Quarter Ended June 28, 2013

 

Quarter Ended

 

 

 

Organic (1)

 

Translation (2)

 

Total

 

September 27, 2013

 

 

 

($ in millions)

 

 

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

(40

)

(2.8

)%

$

 

$

(40

)

(2.8

)%

100

%

Total

 

(40

)

(2.8

)

 

(40

)

(2.8

)

100

%

Network Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Networks

 

 

 

(3

)

(3

)

(0.9

)

43

 

Data Communications

 

5

 

2.4

 

 

5

 

2.6

 

24

 

Enterprise Networks

 

3

 

2.1

 

(3

)

 

 

20

 

Subsea Communications

 

(1

)

(0.8

)

 

(1

)

(1.0

)

13

 

Total

 

7

 

0.9

 

(6

)

1

 

0.1

 

100

%

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial

 

12

 

3.9

 

 

12

 

3.9

 

40

 

Aerospace, Defense, and Marine

 

1

 

0.3

 

 

1

 

0.4

 

34

 

Energy

 

1

 

0.7

 

(1

)

 

 

26

 

Total

 

14

 

1.8

 

(1

)

13

 

1.7

 

100

%

Consumer Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Devices

 

8

 

3.3

 

(1

)

7

 

2.9

 

57

 

Appliances

 

1

 

0.4

 

1

 

2

 

1.1

 

43

 

Total

 

9

 

2.0

 

 

9

 

2.1

 

100

%

Total

 

$

(10

)

(0.3

)%

$

(7

)

$

(17

)

(0.5

)%

 

 

 


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

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

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 27, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

257

 

$

2

 

$

9

 

$

 

$

268

 

Network Solutions

 

33

 

 

49

 

 

82

 

Industrial Solutions

 

127

 

1

 

7

 

 

135

 

Consumer Solutions

 

48

 

 

6

 

 

54

 

Total

 

$

465

 

$

3

 

$

71

 

$

 

$

539

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

13.5

%

 

 

 

 

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

16

 

$

 

$

 

$

(9

)

$

7

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(63

)

$

(2

)

$

(18

)

$

(40

)

$

(123

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

387

 

$

1

 

$

53

 

$

(49

)

$

392

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.92

 

$

 

$

0.13

 

$

(0.12

)

$

0.93

 

 


(1) Includes income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards partially offset by income tax expense related to adjustments to prior year income tax returns. In addition, the other income adjustment includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters.

(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 28, 2012

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)

 

Charges, Net

 

Items (2)

 

(Non-GAAP) (3)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

196

 

$

5

 

$

5

 

$

 

$

206

 

Network Solutions

 

71

 

 

11

 

 

82

 

Industrial Solutions

 

97

 

9

 

14

 

 

120

 

Consumer Solutions

 

37

 

 

9

 

 

46

 

Total

 

$

401

 

$

14

 

$

39

 

$

 

$

454

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

11.9

%

 

 

 

 

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

19

 

$

 

$

 

$

(7

)

$

12

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

18

 

$

(1

)

$

(10

)

$

(107

)

$

(100

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

398

 

$

13

 

$

29

 

$

(114

)

$

326

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.93

 

$

0.03

 

$

0.07

 

$

(0.27

)

$

0.76

 

 


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

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

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 27, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

972

 

$

7

 

$

38

 

$

 

$

1,017

 

Network Solutions

 

136

 

 

125

 

 

261

 

Industrial Solutions

 

359

 

7

 

62

 

 

428

 

Consumer Solutions

 

89

 

 

86

 

 

175

 

Total

 

$

1,556

 

$

14

 

$

311

 

$

 

$

1,881

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

11.7

%

 

 

 

 

 

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(183

)

$

 

$

 

$

213

 

$

30

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

29

 

$

(5

)

$

(90

)

$

(354

)

$

(420

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

1,276

 

$

9

 

$

221

 

$

(141

)

$

1,365

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

3.02

 

$

0.02

 

$

0.52

 

$

(0.33

)

$

3.23

 

 


(1) Includes $331 million of income tax benefits associated with the settlement of an audit of prior year income tax returns as well as the related impact of $231 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax expense related to adjustments to prior year income tax returns, income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards, and income tax benefits recognized in connection with the lapse of statutes of limitations for examinations of prior year income tax returns. In addition, the other income adjustment includes amounts related to reimursements by Tyco International and Covidien in connection with pre-separation tax matters.

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 28, 2012

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)

 

Charges, Net

 

Items (2)

 

(Non-GAAP) (3)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

754

 

$

67

 

$

9

 

$

 

$

830

 

Network Solutions

 

247

 

 

59

 

 

306

 

Industrial Solutions

 

378

 

49

 

23

 

 

450

 

Consumer Solutions

 

139

 

 

23

 

 

162

 

Total

 

$

1,518

 

$

116

 

$

114

 

$

 

$

1,748

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

11.4

%

 

 

 

 

 

 

13.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

50

 

$

 

$

 

$

(17

)

$

33

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(249

)

$

(24

)

$

(33

)

$

(90

)

$

(396

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

1,163

 

$

92

 

$

81

 

$

(107

)

$

1,229

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2.70

 

$

0.21

 

$

0.19

 

$

(0.25

)

$

2.86

 

 


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

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

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 28, 2012

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

192

 

$

3

 

$

10

 

$

 

$

205

 

Network Solutions

 

36

 

 

24

 

 

60

 

Industrial Solutions

 

70

 

2

 

12

 

 

84

 

Consumer Solutions

 

(5

)

 

46

 

 

41

 

Total

 

$

293

 

$

5

 

$

92

 

$

 

$

390

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

9.3

%

 

 

 

 

 

 

12.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(226

)

$

 

$

 

$

231

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

245

 

$

(1

)

$

(27

)

$

(301

)

$

(84

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

279

 

$

4

 

$

65

 

$

(70

)

$

278

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.65

 

$

0.01

 

$

0.15

 

$

(0.16

)

$

0.65

 

 


(1) Includes $331 million income of tax benefits associated with the settlement of an audit of prior year tax returns as well as the related impact of $231 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax expense related to adjustments to prior year income tax returns and the estimated impacts of certain intercompany dividends.

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