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2014

TE Connectivity Reports Fourth Quarter And Full Year Results

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

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

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. 

"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.

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 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 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.

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.

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.

SOURCE TE Connectivity Ltd.



RELATED LINKS
http://www.te.com

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