EX-99.1 2 tm1920914d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

TE Connectivity announces fourth quarter and full year results for fiscal year 2019

 

Revenue and earnings exceed mid-point of company’s guidance; strong free cash flow performance

 

SCHAFFHAUSEN, Switzerland – October 30, 2019 – TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal fourth quarter and year ended September 27, 2019.

 

Fourth Quarter Highlights

·Net sales were $3.3 billion, down 6% as reported and 5% organically over the fourth quarter of 2018.
·Diluted earnings per share (EPS) from continuing operating operations were $1.11, and adjusted EPS were $1.33, both exceeding the mid-point of the company’s guidance.
·Cash flow from continuing operating activities was $879 million and free cash flow was $688 million, with $332 million returned to shareholders.

 

Full Year Highlights

·Net sales were $13.4 billion, down 4% as reported and 2% organically from fiscal year 2018.
·Diluted EPS from continuing operations were $5.72, and adjusted EPS were $5.55, down 1% versus the prior year.
·Cash flow from continuing operations was $2.5 billion and free cash flow was $1.6 billion, up 15% year over year.
·Deployed approximately $300 million on acquisitions and announced intent to acquire First Sensor

 

Fourth Quarter Results

For the fourth quarter, the company reported net sales of $3.3 billion, with diluted EPS from continuing operations of $1.11. Adjusted EPS were $1.33, exceeding the mid-point of the company’s guidance. Cash flow from continuing operating activities was $879 million, and free cash flow was $688 million. Total orders were $3.2 billion, down 3% sequentially.

 

Full Year Results

For the full year, the company reported net sales of $13.4 billion and diluted EPS from continuing operations of $5.72. Adjusted EPS were $5.55, cash flow from continuing operating activities was $2.5 billion and free cash flow was $1.6 billion, up 15% from fiscal year 2018. The company continued to strengthen its portfolio in growing markets, completing the acquisition of the Kissling Group and Alpha Technics, and announcing the acquisitions of Silicon Microstructures Inc. (SMI) and First Sensor AG.

 

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“Our results through the fourth quarter of fiscal 2019 reflect the ability of our teams to execute in what continues to be a challenging market environment. I’m pleased that we quickly responded to market weakness and demonstrated earnings resiliency despite a decline in revenue. Our Industrial segment continued to show top-line organic growth and margin expansion, led by strength in our aerospace, defense and medical businesses, while our Transportation segment outperformed auto production declines through product content gains and our strong global position,” said TE Connectivity CEO Terrence Curtin. “I want to thank our employees for their solid execution of our strategy and their commitment to our customers and our purpose, which once again helped TE achieve external recognition, including being named by Fortune as a World’s Most Admired Company for the second consecutive year.”

 

2020 Outlook

For the fiscal first quarter of 2020, the company expects net sales of $3.0 billion to $3.2 billion, reflecting a decrease of 7% on an actual basis and 6% on an organic basis year over year at the mid-point. Diluted EPS from continuing operations are expected to be $0.93 to $0.99, including net restructuring, acquisition-related and other charges of $0.17. The company expects adjusted EPS of $1.10 to $1.16.

 

For the full year, the company expects net sales of $12.7 to $13.3 billion, reflecting 3% actual and 2% organic decline at the mid-point versus the prior year. Diluted EPS from continuing operations are expected to be $4.21 to $4.61, including net restructuring, acquisition-related and other charges of $0.64. The company expects adjusted EPS of $4.85 to $5.25.

 

“We continue to see a challenging and uncertain global market environment in fiscal 2020 and remain confident in the ability of our teams to adjust to changing dynamics and deliver strong performance for our owners and customers,” said Curtin. “We will continue to execute cost reduction plans to preserve operating resiliency and generate strong cash flow, while maintaining our strategy of expanding content with our highly engineered solutions. At the same time, we will continue to invest in long-term global growth trends where our innovative technologies create a safer, sustainable, productive and connected future.”

 

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

 

Conference Call and Webcast

The company will hold a conference call today beginning at 8:30 a.m. ET. The dial-in information is provided here:

·At TE Connectivity's website: investors.te.com
·By telephone: For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the dial-in number in the United States is (866) 211-4092, and for international callers, the dial-in number is (647) 689-6620.
·A replay of the conference call will be available on TE Connectivity’s investor website at investors.te.com at 10:30 a.m. ET on Oct. 30, 2019.

 

About TE Connectivity

TE Connectivity Ltd. (NYSE: TEL) is a $13 billion global industrial technology leader creating a safer, sustainable, productive, and connected future. Our broad range of connectivity and sensor solutions, proven in the harshest environments, enable advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. With nearly 80,000 employees, including more than 8,000 engineers, working alongside customers in approximately 150 countries, TE ensures that EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn, Facebook, WeChat and Twitter.

 

Non-GAAP Financial Measures

We present non-GAAP performance and liquidity measures as we believe it is appropriate for investors to consider adjusted financial measures in addition to results in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures provide supplemental information and should not be considered replacements for results in accordance with GAAP. Management uses non-GAAP financial measures internally for planning and forecasting purposes and in its decision-making processes related to the operations of our company. We believe these measures provide meaningful information to us and investors because they enhance the understanding of our operating performance, ability to generate cash, and the trends of our business. Additionally, we believe that investors benefit from having access to the same financial measures that management uses in evaluating our operations. The primary limitation of these measures is that they exclude the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using these non-GAAP financial measures in combination with the most directly comparable GAAP financial measures in order to better understand the amounts, character, and impact of any increase or decrease in reported amounts. These non-GAAP financial measures may not be comparable to similarly-titled measures reported by other companies.

 

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The following provides additional information regarding our non-GAAP financial measures:

 

·Organic Net Sales Growth – represents net sales growth (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. This measure is a significant component in our incentive compensation plans.
·Adjusted Operating Income and Adjusted Operating Margin – represent operating income and operating margin, respectively, (the most comparable GAAP financial measures) before special items including restructuring and other charges, acquisition related charges, and other income or charges, if any. We utilize these adjusted measures in combination with operating income and operating margin to assess segment level operating performance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant component in our incentive compensation plans.
·Adjusted Other Income (Expense), Net – represents net other income (expense) (the most comparable GAAP financial measure) before special items including tax sharing income related to adjustments to prior period tax returns and other items, if any.
·Adjusted Income Tax Expense and Adjusted Effective Tax Rate – represent income tax expense and effective tax rate, respectively (the most comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition related charges, other income or charges, and certain significant tax items, if any.
·Adjusted Income from Continuing Operations – represents income from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.
·Adjusted Earnings Per Share – represents diluted earnings per share from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. This measure is a significant component in our incentive compensation plans.
·Free Cash Flow (FCF) – is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflows and inflows that we believe are useful to identify. We believe Free Cash Flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations.

 

Free Cash Flow is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial 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 and cash paid (collected) pursuant to collateral requirements related to cross-currency swap contracts, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments.

 

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In the calculation of Free Cash Flow, we subtract certain cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and may imply that there is less or more cash available for our programs than the most comparable GAAP financial measure indicates. It should not be inferred that the entire Free Cash Flow amount is available for future discretionary expenditures, as our definition of Free Cash Flow does not consider certain non-discretionary expenditures, such as debt payments. In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of Free Cash Flow.

 

Forward-Looking Statements

This release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this 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 and data and devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation, including the effects of Swiss tax reform. 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, 2018 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

 

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Contacts:

Media Relations:

Rachel Quimby

TE Connectivity

610-893-9593

Rachel.quimby@te.com

Investor Relations:

Sujal Shah

TE Connectivity

610-893-9790

sujal.shah@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,
 
   2019   2018   2019   2018 
   (in millions, except per share data) 
Net sales  $3,300   $3,509   $13,448   $13,988 
Cost of sales   2,248    2,327    9,054    9,243 
Gross margin   1,052    1,182    4,394    4,745 
Selling, general, and administrative expenses   372    414    1,490    1,594 
Research, development, and engineering expenses   159    171    644    680 
Acquisition and integration costs   6    5    27    14 
Restructuring and other charges, net   71    22    255    126 
Operating income   444    570    1,978    2,331 
Interest income   6    4    19    15 
Interest expense   (13)   (27)   (68)   (107)
Other income (expense), net   -    (1)   2    1 
Income from continuing operations before income taxes   437   546    1,931   2,240 
Income tax (expense) benefit   (61)   1,128    15    344 
Income from continuing operations   376    1,674    1,946    2,584 
Loss from discontinued operations, net of income taxes   (4)   (13)   (102)   (19)
Net income  $372   $1,661   $1,844   $2,565 
                     
                     
Basic earnings per share:                    
Income from continuing operations  $1.12   $4.82   $5.76   $7.38 
Loss from discontinued operations   (0.01)   (0.04)   (0.30)   (0.05)
Net income   1.11    4.79    5.46    7.33 
                     
Diluted earnings per share:                    
Income from continuing operations  $1.11   $4.78   $5.72   $7.32 
Loss from discontinued operations   (0.01)   (0.04)   (0.30)   (0.05)
Net income   1.10    4.75    5.42    7.27 
                     
Weighted-average number of shares outstanding:                    
Basic   336    347    338    350 
Diluted   338    350    340    353 

 

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TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

   September 27,
   September 28,
 
   2019   2018 
   (in millions, except share data) 
Assets        
Current assets:          
Cash and cash equivalents  $927   $848 
Accounts receivable, net of allowance for doubtful accounts of $25 and $22, respectively   2,320    2,361 
Inventories   1,836    1,857 
Prepaid expenses and other current assets   471    661 
Assets held for sale   -    472 
Total current assets   5,554    6,199 
Property, plant, and equipment, net   3,574    3,497 
Goodwill   5,740    5,684 
Intangible assets, net   1,596    1,704 
Deferred income taxes   2,776    2,144 
Other assets   454    1,158 
Total assets  $19,694   $20,386 
           
Liabilities and shareholders' equity          
Current liabilities:          
Short-term debt  $570   $963 
Accounts payable   1,357    1,548 
Accrued and other current liabilities   1,613    1,711 
Liabilities held for sale   -    188 
Total current liabilities   3,540    4,410 
Long-term debt   3,395    3,037 
Long-term pension and postretirement liabilities   1,367    1,102 
Deferred income taxes   156    207 
Income taxes   239    312 
Other liabilities   427    487 
Total liabilities   9,124    9,555 
Commitments and contingencies          
Shareholders' equity:          
Common shares, CHF 0.57 par value, 350,951,381 shares authorized and issued, and 357,069,981 shares authorized and issued, respectively   154    157 
Accumulated earnings   12,256    12,114 
Treasury shares, at cost, 15,862,337 and 12,279,603 shares, respectively   (1,337)   (1,134)
Accumulated other comprehensive loss   (503)   (306)
Total shareholders' equity   10,570    10,831 
Total liabilities and shareholders' equity  $19,694   $20,386 

 

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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,
 
   2019   2018   2019   2018 
   (in millions) 
Cash flows from operating activities:                    
Net income  $372   $1,661   $1,844   $2,565 
Loss from discontinued operations, net of income taxes   4    13    102    19 
Income from continuing operations   376    1,674    1,946    2,584 
Adjustments to reconcile income from continuing operations to net cash                    
provided by operating activities:                    
Depreciation and amortization   175    171    690    667 
Deferred income taxes   72    (1,233)   (218)   (791)
Provision for losses on accounts receivable and inventories   7    1    43    30 
Share-based compensation expense   19    24    75    95 
Other   25    17    51    5 
Changes in assets and liabilities, net of the effects of acquisitions and divestitures:                    
Accounts receivable, net   136    110    31    (269)
Inventories   123    (30)   64    (247)
Prepaid expenses and other current assets   35    (13)   144    (63)
Accounts payable   (92)   24    (178)   201 
Accrued and other current liabilities   132    148    (15)   5 
Income taxes   (72)   30    (135)   54 
Other   (57)   (1)   (44)   30 
Net cash provided by continuing operating activities   879    922    2,454    2,301 
Net cash provided by (used in) discontinued operating activities   (1)   2    (32)   150 
Net cash provided by operating activities   878    924    2,422    2,451 
Cash flows from investing activities:                    
Capital expenditures   (179)   (262)   (749)   (935)
Proceeds from sale of property, plant, and equipment   27    4    43    23 
Acquisition of businesses, net of cash acquired   -    (153)   (283)   (153)
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation   -    -    297    - 
Other   (1)   -    2    (8)
Net cash used in continuing investing activities   (153)   (411)   (690)   (1,073)
Net cash used in discontinued investing activities   -    (8)   (2)   (21)
Net cash used in investing activities   (153)   (419)   (692)   (1,094)
Cash flows from financing activities:                    
Net increase (decrease) in commercial paper   219    (1)   (51)   270 
Proceeds from issuance of debt   -    -    746    119 
Repayment of debt   (250)   -    (691)   (708)
Proceeds from exercise of share options   30    4    85    100 
Repurchase of common shares   (178)   (268)   (1,091)   (879)
Payment of common share dividends to shareholders   (154)   (153)   (608)   (588)
Transfers (to) from discontinued operations   (1)   (6)   (34)   129 
Other   (1)   (2)   (33)   (36)
Net cash used in continuing financing activities   (335)   (426)   (1,677)   (1,593)
Net cash provided by (used in) discontinued financing activities   1    6    34    (129)
Net cash used in financing activities   (334)   (420)   (1,643)   (1,722)
Effect of currency translation on cash   (10)   (7)   (8)   (5)
Net increase (decrease) in cash, cash equivalents, and restricted cash   381    78    79    (370)
Cash, cash equivalents, and restricted cash at beginning of period   546    770    848    1,218 
Cash, cash equivalents, and restricted cash at end of period  $927   $848   $927   $848 
                     
Supplemental cash flow information:                    
Interest paid on debt, net  $19   $30   $75   $127 
Income taxes paid, net of refunds   61    76    338    393 

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)

 

   For the Quarters Ended   For the Years Ended 
   September 27,
   September 28,
   September 27,
   September 28,
 
   2019   2018   2019   2018 
   (in millions) 
Net cash provided by continuing operating activities  $879   $922   $2,454   $2,301 
Excluding:                    
Receipts related to pre-separation U.S. tax matters, net   -    -    -    (5)
Cash (collected) paid pursuant to collateral requirements related to cross-currency swap contracts   (39)   6    (132)   16 
Capital expenditures, net   (152)   (258)   (706)   (912)
Free cash flow (1)  $688   $670   $1,616   $1,400 

 

(1) Free cash flow is a non-GAAP financial measure. See description of non-GAAP financial measures.

 

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TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

 

   For the Quarters Ended   For the Years Ended 
   September 27,   September 28,   September 27,   September 28, 
   2019   2018   2019   2018 
   ($ in millions) 
    Net Sales         Net Sales         Net Sales         Net Sales      
Transportation Solutions  $1,896        $2,012        $7,821        $8,290      
Industrial Solutions   1,014         1,014         3,954         3,856      
Communications Solutions   390         483         1,673         1,842      
Total  $3,300        $3,509        $13,448        $13,988      
                                         
    Operating    Operating    Operating    Operating    Operating    Operating    Operating    Operating 
    Income    Margin    Income    Margin    Income    Margin    Income    Margin 
Transportation Solutions  $270    14.2%  $341    16.9%  $1,226    15.7%  $1,578    19.0%
Industrial Solutions   150    14.8    146    14.4    543    13.7    465    12.1 
Communications Solutions   24    6.2    83    17.2    209    12.5    288    15.6 
Total  $444    13.5%  $570    16.2%  $1,978    14.7%  $2,331    16.7%
                                         
    Adjusted    Adjusted    Adjusted    Adjusted    Adjusted    Adjusted    Adjusted    Adjusted 
    Operating    Operating    Operating    Operating    Operating    Operating    Operating    Operating 
    Income (1)    Margin (1)    Income (1)    Margin (1)    Income (1)    Margin (1)    Income (1)    Margin (1) 
Transportation Solutions  $334    17.6%  $364    18.1%  $1,401    17.9%  $1,623    19.6%
Industrial Solutions   157    15.5    152    15.0    621    15.7    555    14.4 
Communications Solutions   47    12.1    81    16.8    258    15.4    301    16.3 
Total  $538    16.3%  $597    17.0%  $2,280    17.0%  $2,479    17.7%

 

(1) Adjusted operating income and adjusted operating margin are non-GAAP financial measures. See description of non-GAAP financial measures.

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

 

   Change in Net Sales for the Quarter Ended September 27, 2019 
   versus Net Sales for the Quarter Ended September 28, 2018 
   Net   Organic Net         
   Sales Growth   Sales Growth (1)   Translation (2)   Acquisitions 
   ($ in millions) 
Transportation Solutions (3):                              
Automotive  $(89)   (6.1)%  $(59)   (4.1)%  $(30)  $- 
Commercial transportation   (29)   (9.3)   (41)   (13.6)   (7)   19 
Sensors   2    0.8    1    0.4    (4)   5 
Total   (116)   (5.8)   (99)   (4.9)   (41)   24 
Industrial Solutions (3):                              
Industrial equipment   (35)   (6.8)   (40)   (7.9)   (5)   10 
Aerospace, defense, oil, and gas   38    12.3    42    13.2    (4)   - 
Energy   (3)   (1.6)   4    2.0    (7)   - 
Total   -    -    6    0.6    (16)   10 
Communications Solutions (3):                              
Data and devices   (54)   (18.4)   (53)   (18.0)   (1)   - 
Appliances   (39)   (20.6)   (34)   (18.3)   (5)   - 
Total   (93)   (19.3)   (87)   (18.0)   (6)   - 
Total  $(209)   (6.0)%  $(180)   (5.1)%  $(63)  $34 
                               

 

                         
   Change in Net Sales for the Year Ended September 27, 2019 
   versus Net Sales for the Year Ended September 28, 2018 
   Net   Organic Net         
   Sales Growth   Sales Growth (1)   Translation (2)   Acquisitions 
   ($ in millions) 
Transportation Solutions (3):                              
Automotive  $(406)   (6.7)%  $(198)   (3.3)%  $(208)  $- 
Commercial transportation   (59)   (4.6)   (48)   (3.9)   (40)   29 
Sensors   (4)   (0.4)   14    1.4    (26)   8 
Total   (469)   (5.7)   (232)   (2.8)   (274)   37 
Industrial Solutions (3):                              
Industrial equipment   (38)   (1.9)   (66)   (3.4)   (45)   73 
Aerospace, defense, oil, and gas   149    12.9    165    14.1    (16)   - 
Energy   (13)   (1.8)   21    2.7    (34)   - 
Total   98    2.5    120    3.1    (95)   73 
Communications Solutions (3):                              
Data and devices   (75)   (7.0)   (58)   (5.4)   (17)   - 
Appliances   (94)   (12.1)   (71)   (9.3)   (23)   - 
Total   (169)   (9.2)   (129)   (7.0)   (40)   - 
Total  $(540)   (3.9)%  $(241)   (1.7)%  $(409)  $110 

 

(1) Organic net sales growth is a non-GAAP financial measure. See description of non-GAAP financial measures.

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

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

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 27, 2019

(UNAUDITED)

 

       Adjustments     
       Acquisition-             
       Related Charges   Restructuring         
       and Other   and Other   Tax   Adjusted 
   U.S. GAAP   Items (1)(2)   Charges, Net (1)   Items   (Non-GAAP) (3) 
   ($ in millions, except per share data) 
Operating income:                         
Transportation Solutions  $270   $18   $46   $-   $334 
Industrial Solutions   150    4    3    -    157 
Communications Solutions   24    1    22    -    47 
Total  $444   $23   $71   $-   $538 
                          
Operating margin   13.5%                  16.3%
                          
Income tax expense  $(61)  $(5)  $(15)  $1   $(80)
                          
Effective tax rate   14.0%                  15.1%
                          
Income from continuing operations  $376   $18   $56   $1   $451 
                          
Diluted earnings per share from continuing operations  $1.11   $0.05   $0.17   $-   $1.33 

 

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

(2) Includes acquisition-related charges of $6 million and a write-off of spare parts of $17 million.

(3) See description of non-GAAP financial measures.

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 28, 2018

(UNAUDITED)

 

       Adjustments     
       Acquisition-   Restructuring         
       Related   and Other   Tax   Adjusted 
   U.S. GAAP   Charges (1)   Charges, Net (1)   Items (2)   (Non-GAAP) (3) 
   ($ in millions, except per share data) 
Operating income:                         
Transportation Solutions  $341   $3   $20   $-   $364 
Industrial Solutions   146    2    4    -    152 
Communications Solutions   83    -    (2)   -    81 
Total  $570   $5   $22   $-   $597 
                          
Operating margin   16.2%                  17.0%
                          
Other expense, net  $(1)  $-   $-   $-   $(1)
                          
Income tax (expense) benefit  $1,128   $(1)  $(4)  $(1,222)  $(99)
                          
Effective tax rate   (206.6)%                  17.3%
                          
Income from continuing operations  $1,674   $4   $18   $(1,222)  $474 
                          
Diluted earnings per share from continuing operations  $4.78   $0.01   $0.05   $(3.49)  $1.35 

 

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

(2) Includes a $1,222 million net income tax benefit associated with the tax impacts of certain intercompany transactions including an increase to the valuation allowance.

(3) See description of non-GAAP financial measures.

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 27, 2019

(UNAUDITED)

 

       Adjustments     
       Acquisition-             
       Related Charges   Restructuring         
       and Other   and Other   Tax   Adjusted 
   U.S. GAAP   Items (1)(2)   Charges, Net (1)   Items (3)   (Non-GAAP) (4) 
   ($ in millions, except per share data) 
Operating income:                         
Transportation Solutions  $1,226   $31   $144   $-   $1,401 
Industrial Solutions   543    15    63    -    621 
Communications Solutions   209    1    48    -    258 
Total  $1,978   $47   $255   $-   $2,280 
                          
Operating margin   14.7%                  17.0%
                          
Other income, net  $2   $-   $-   $-   $2 
                          
Income tax (expense) benefit  $15   $(9)  $(61)  $(291)  $(346)
                          
Effective tax rate   (0.8)%                  15.5%
                          
Income from continuing operations  $1,946   $38   $194   $(291)  $1,887 
                          
Diluted earnings per share from continuing operations  $5.72   $0.11   $0.57   $(0.86)  $5.55 

 

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

(2) Includes acquisition-related charges of $30 million and a write-off of spare parts of $17 million.

(3) Includes a $216 million income tax benefit related to the tax impacts of certain measures of Swiss tax reform, a $90 million income tax benefit related to the effective settlement of a tax audit in a non-U.S. jurisdiction, and $15 million of income tax expense associated with the tax impacts of certain legal entity restructurings and intercompany transactions.

(4) See description of non-GAAP financial measures.

 

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TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 28, 2018

(UNAUDITED)

 

       Adjustments     
       Acquisition-   Restructuring         
       Related   and Other   Tax   Adjusted 
   U.S. GAAP   Charges (1)   Charges, Net (1)   Items (2)   (Non-GAAP) (3) 
   ($ in millions, except per share data) 
Operating income:                         
Transportation Solutions  $1,578   $12   $33   $-   $1,623 
Industrial Solutions   465    10    80    -    555 
Communications Solutions   288    -    13    -    301 
Total  $2,331   $22   $126   $-   $2,479 
                          
Operating margin   16.7%                  17.7%
                          
Other income, net  $1   $-   $-   $(1)  $- 
                          
Income tax (expense) benefit  $344   $(5)  $(31)  $(716)  $(408)
                          
Effective tax rate   (15.4)%                  17.1%
                          
Income from continuing operations  $2,584   $17   $95   $(717)  $1,979 
                          
Diluted earnings per share from continuing operations  $7.32   $0.05   $0.27   $(2.03)  $5.61 

 

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

(2) Includes a $1,283 million net income tax benefit associated with the tax impacts of certain intercompany transactions and legal entity restructurings including an increase to the valuation allowance. Also includes $567 million of income tax expense related to the tax impacts of the Tax Cuts and Jobs Act.

(3) See description of non-GAAP financial measures.

 

  15

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 28, 2018

(UNAUDITED)

 

       Adjustments     
       Acquisition-   Restructuring     
       Related   and Other   Adjusted 
   U.S. GAAP   Charges (1)   Charges, Net (1)   (Non-GAAP) (2) 
   ($ in millions, except per share data) 
Operating income:                    
Transportation Solutions  $332   $3   $21   $356 
Industrial Solutions   100    3    35    138 
Communications Solutions   52    -    19    71 
Total  $484   $6   $75   $565 
                     
Operating margin   14.5%             16.9%
                     
Other expense, net  $(1)  $-   $-   $(1)
                     
Income tax expense  $(78)  $(1)  $(19)  $(98)
                     
Effective tax rate   16.9%             18.1%
                     
Income from continuing operations  $383   $5   $56   $444 
                     
Diluted earnings per share from continuing operations  $1.11   $0.01   $0.16   $1.29 

 

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

(2) See description of non-GAAP financial measures.

 

  16

 

 

TE CONNECTIVITY LTD.

RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of October 30, 2019

(UNAUDITED)

 

   Outlook for     
   Quarter Ending     
   December 27,   Outlook for 
   2019   Fiscal 2020 
Diluted earnings per share from continuing operations (GAAP)    $0.93 - $0.99      $4.21 - $4.61  
Restructuring and other charges, net   0.13    0.56 
Acquisition-related charges   0.04    0.08 
Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)    $1.10 - $1.16      $4.85 - $5.25  
           
           
Net sales growth (GAAP)    (10)% - (4)%     (5)% - (1)% 
Translation   2    2 
(Acquisitions) divestitures, net   (1)   (1)
Organic net sales growth (non-GAAP) (1)   (9)% - (3)%    (4)% - 0% 

 

(1) See description of non-GAAP financial measures.

 

  17