TE Connectivity Reports Strong Fourth Quarter and Full Year Results; Sales $14.3 Billion; Adjusted EPS $3.12

Nov 03, 2011, 06:00 ET from TE Connectivity Ltd.

SCHAFFHAUSEN, Switzerland, Nov. 3, 2011 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported fiscal fourth quarter and full year results ended Sept. 30, 2011.  The company reported net sales of $3.9 billion during the fourth quarter, up 25 percent versus the prior year.  Annual sales were $14.3 billion, up 19 percent versus the prior year.  Strong annual and quarterly sales results were driven by the Transportation and Network Solutions segments.  Earnings Per Share from Continuing Operations (GAAP EPS) were $0.75 for the quarter and adjusted EPS were $0.89.  Full year GAAP EPS were $2.82 and adjusted EPS were $3.12.  Fiscal 2011 and fourth quarter results include an additional week.  Excluding the impact of this additional week, fourth quarter adjusted EPS were $0.81 and full year adjusted EPS were $3.03, up 13 percent and 19 percent versus the prior year, respectively.  Free cash flow was $560 million for the quarter and $1.4 billion for the year.

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

“We are very pleased with the strong performance in 2011 as our team executed well in a volatile environment.  We continued to strengthen the company’s position in our Automotive and Telecom Networks businesses as well as in high-growth emerging markets,” said TE Connectivity Chief Executive Officer Tom Lynch.  “Our increased investment in engineering in recent years and the acquisition of ADC have served us well and expanded the range of products and solutions we provide for our customers.”

Total company orders were $3.6 billion in the fourth quarter, an increase of 22 percent compared to the prior year.  The book-to-bill ratio was 0.93 overall, and 0.94 excluding the Subsea Communications business.

FISCAL FOURTH QUARTER RESULTS

   ($ in millions)

Sept. 30, 2011

Sept. 24, 2010

YoY

Net Sales

$3,911

$3,137

25%

Operating Income

$465

$382

22%

Restructuring and Other Charges

$62

$56

Acquisition Related Charges

$23

$8

Adjusted Operating Income

$550

$446

23%

Operating Margin

11.9%

12.2%

Adjusted Operating Margin

14.1%

14.2%

IMPACT OF ADDITIONAL WEEK

($ in millions, except per share amounts)

Sept. 30, 2011

14 Weeks

14th Week

Sept. 30, 2011

13 Weeks

Net Sales

$3,911

($277)

$3,634

Adjusted Operating Income

$550

($53)

$497

Adjusted Operating Margin

14.1%

13.7%

Adjusted EPS

$0.89

($0.08)

$0.81

2012 OUTLOOK

For the full year, the company expects sales of $14.3 to $14.9 billion and Adjusted EPS of $3.10 to $3.40.  GAAP EPS are expected to be $3.00 to $3.30, including restructuring and other charges.  This compares to fiscal 2011 revenue of $14.0 billion and adjusted EPS of $3.03 excluding the additional week in the year.

“We expect full year organic sales growth of 2 to 6 percent,” Lynch said.  “This assumes continued growth in automotive production, increased investment in broadband networks and an improvement in the markets served by our Communications and Industrial Solutions (CIS) segment in the second half.”

For the first quarter, the company expects net sales of $3.4 to $3.5 billion and adjusted EPS of $0.68 to $0.72.  GAAP EPS are expected to be $0.66 to $0.70, including restructuring and other charges.  “First quarter sales and earnings are expected to decline sequentially due to normal seasonality and a continuation of soft demand and inventory corrections in our CIS markets,” Lynch said.

This outlook assumes current foreign exchange and commodity rates.  

ADDITIONAL ITEMS

  • The Board of Directors approved a recommendation to increase the quarterly dividend by 17%, from $0.18 to $0.21 per share, for the four fiscal quarters beginning with the third quarter of fiscal 2012.  This recommendation will be presented for shareholder approval at the company's Annual General Meeting of Shareholders in March 2012.
  • The Board of Directors also authorized an increase in the company's share repurchase program of $1.5 billion on September 27, 2011.
  • The company will hold an Investor Meeting on Tuesday, December 6, 2011 at The Waldorf Astoria in New York City.  

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 is a global, $14 billion company that designs and manufactures approximately 500,000 products that connect and protect the flow of power and data inside the products that touch every aspect of our lives. Our nearly 100,000 employees partner with customers in virtually every industry — from consumer electronics, energy and healthcare, to automotive, aerospace and communication networks — enabling smarter, faster, better technologies to connect products to possibilities. More information on TE Connectivity can be found at http://www.te.com.

CONFERENCE CALL AND WEBCAST

  • The company will hold a conference call for investors today beginning at 8:30 a.m. EDT.
  • Internet users will be able to access the company’s earnings webcast, including slide materials, at the “Investors” section of TE Connectivity’s website: http://investors.te.com.
  • For both “listen-only” participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1059. The telephone dial-in number for participants outside the United States is (612) 234-9959.
  • An audio replay of the conference call will be available beginning at 10:30 a.m. EDT on November 3, 2011 and ending at 11:59 p.m. EST on November 10, 2011. The dial-in number for participants in the United States is (800) 475-6701.  For participants outside the United States, the replay dial-in number is (320) 365-3844. The replay access code for all callers is 218704.

NON-GAAP MEASURES

“Organic Sales Growth,” “Adjusted Operating Income,” “Adjusted Operating Margin,” “Adjusted Other Income, Net,” “Adjusted Income Tax Expense,” “Adjusted Income from Continuing Operations,” “Adjusted Earnings Per Share,” and “Free Cash Flow” (FCF) are non-GAAP measures and should not be considered replacements for GAAP results.  

“Organic Sales Growth” is a useful measure used by us to measure the underlying results and trends in the business.  The difference between reported net sales growth (the most comparable GAAP measure) and Organic Sales Growth (the non-GAAP measure) consists of the impact from foreign currency exchange rates, acquisitions, divestitures, and an additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length.  Organic Sales Growth is a useful measure of our performance because it excludes items that: i) are not completely under management’s control, such as the impact of changes in foreign currency exchange rates; or ii) do not reflect the underlying growth of the company, such as acquisition and divestiture activity and the impact of an additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length.  The limitation of this measure is that it excludes items that have an impact on our sales.  This limitation is best addressed by using organic sales growth in combination with the GAAP results.  See the accompanying tables to this release for the reconciliation presenting the components of Organic Sales Growth.

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

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

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

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

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

We have presented diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. before special items, including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, and, if applicable, related tax effects (“Adjusted Earnings Per Share”).  We present Adjusted Earnings Per Share because we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP.  We believe such a measure provides a picture of our results that is more comparable among periods since it excludes the impact of special items, which may recur, but tend to be irregular as to timing, thereby making comparisons between periods more difficult.  It 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 cash generation which is free from any significant existing obligation.  It also is a significant component in our incentive compensation plans.  The difference between cash flows from operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) consists mainly of significant cash outflows and inflows that we believe are useful to identify.  FCF permits management and investors to gain insight into the amount that management employs to measure cash that is free from any significant existing obligation.  The difference reflects the impact from:

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

Net capital expenditures are subtracted because they represent long-term commitments.  Voluntary pension contributions are subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity.  We forecast our cash flow results excluding any voluntary pension contributions because we have not yet made a determination about the amount and timing of any such future contributions.  In addition, our forecast excludes the cash impact of special items because we cannot predict the amount and timing of such items.

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

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

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

FORWARD-LOOKING STATEMENTS

This release contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995.  These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements.  All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements.  We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law.  The forward-looking statements in this release include statements addressing our future financial condition, operating results, dividends and share repurchases.  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 the automotive industry and the telecommunications, computer and consumer electronics 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; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that revenue opportunities, cost savings and other anticipated synergies from our acquisition of ADC Telecommunications, Inc. (“ADC”) may not be fully realized or may take longer to realize than expected and the risk that ADC’s operations will not be successfully integrated into ours.  More detailed information about these and other factors is set forth in our Annual Report on Form 10-K for the fiscal year ended Sept. 24, 2010 and Quarterly Reports on Form 10-Q for the quarterly periods ended Dec. 24, 2010, Mar. 25, 2011 and Jun. 24, 2011 as well as in our Current Reports on Form 8-K and other reports filed by us with the Securities and Exchange Commission.

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Quarters Ended

For the Years Ended

September 30,

September 24,

September 30,

September 24,

2011

2010

2011

2010

(in millions, except per share data)

Net sales

$              3,911

$              3,137

$            14,312

$            12,070

Cost of sales

2,679

2,144

9,890

8,293

Gross margin

1,232

993

4,422

3,777

Selling, general, and administrative expenses

481

389

1,780

1,538

Research, development, and engineering expenses

202

158

733

585

Acquisition and integration costs

-

8

19

8

Restructuring and other charges, net

84

56

149

137

Pre-separation litigation income

-

-

-

(7)

  Operating income  

465

382

1,741

1,516

Interest income

6

6

22

20

Interest expense

(43)

(40)

(161)

(155)

Other income, net

14

52

27

177

  Income from continuing operations before income taxes

442

400

1,629

1,558

Income tax expense

(115)

(145)

(376)

(493)

  Income from continuing operations

327

255

1,253

1,065

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

-

44

(3)

44

  Net income  

327

299

1,250

1,109

Less: net income attributable to noncontrolling interests

(1)

(2)

(5)

(6)

Net income attributable to TE Connectivity Ltd.

$                 326

$                 297

$              1,245

$              1,103

Amounts attributable to TE Connectivity Ltd.:

Income from continuing operations

$                 326

$                 253

$              1,248

$              1,059

Income (loss) from discontinued operations

-

44

(3)

44

Net income  

$                 326

$                 297

$              1,245

$              1,103

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

  Income from continuing operations

$                0.76

$                0.57

$                2.85

$                2.34

  Income (loss) from discontinued operations

-

0.10

(0.01)

0.09

  Net income  

$                0.76

$                0.67

$                2.84

$                2.43

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

  Income from continuing operations

$                0.75

$                0.56

$                2.82

$                2.32

  Income (loss) from discontinued operations

-

0.10

(0.01)

0.09

  Net income  

$                0.75

$                0.66

$                2.81

$                2.41

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

$                0.18

$                0.16

$                0.68

$                0.64

Weighted-average number of shares outstanding:

  Basic

429

446

438

453

  Diluted

433

450

443

457

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30,

September 24,

2011

2010

(in millions, except share data)

Assets

Current Assets:

Cash and cash equivalents

$               1,219

$              1,990

Accounts receivable, net of allowance for doubtful accounts of $39 and $44, respectively

2,425

2,259

Inventories

1,939

1,583

Prepaid expenses and other current assets

646

651

Deferred income taxes

403

248

 Total current assets

6,632

6,731

Property, plant, and equipment, net

3,163

2,867

Goodwill

3,586

3,211

Intangible assets, net

655

392

Deferred income taxes

2,365

2,447

Receivable from Tyco International Ltd. and Covidien plc

1,066

1,127

Other assets

256

217

Total Assets

$             17,723

$            16,992

Liabilities and Equity

Current Liabilities:

Current maturities of long-term debt

$                      1

$                 106

Accounts payable

1,483

1,386

Accrued and other current liabilities

1,772

1,804

Deferred revenue

145

164

Total current liabilities

3,401

3,460

Long-term debt

2,668

2,307

Long-term pension and postretirement liabilities

1,204

1,280

Deferred income taxes

333

285

Income taxes

2,122

2,152

Other liabilities

511

452

Total Liabilities

10,239

9,936

Commitments and contingencies

Equity:

TE Connectivity Ltd. Shareholders’ Equity:

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

September 30, 2011; 468,215,574 shares authorized and issued, CHF 1.73 par value, at

September 24, 2010

593

599

Contributed surplus

7,604

8,085

Accumulated earnings (deficit)

84

(1,161)

Treasury shares, at cost, 39,303,550 and 24,845,929 shares, respectively

(1,235)

(721)

Accumulated other comprehensive income

428

246

Total TE Connectivity Ltd. shareholders' equity

7,474

7,048

Noncontrolling interests

10

8

Total Equity

7,484

7,056

Total Liabilities and Equity

$             17,723

$            16,992

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Quarters Ended

For the Years Ended

September 30,

September 24,

September 30,

September 24,

2011

2010

2011

2010

(in millions)

Cash Flows From Operating Activities:

Net income

$                 327

$                 299

$              1,250

$              1,109

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

-

(44)

3

(44)

Income from continuing operations

327

255

1,253

1,065

Adjustments to reconcile net cash provided by operating activities:

Non-cash restructuring and other charges, net

3

1

9

17

Loss on divestitures

-

42

-

43

Depreciation and amortization

147

125

574

520

Deferred income taxes

(4)

(240)

109

35

Provision for losses on accounts receivable and inventories

(2)

(3)

19

(4)

Tax sharing income

(14)

(37)

(27)

(163)

Share-based compensation expense

14

16

73

63

Other

(1)

(19)

(11)

12

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

Accounts receivable, net

142

51

34

(323)

Inventories

3

48

(241)

(213)

Inventoried costs on long-term contracts

16

31

32

36

Prepaid expenses and other current assets

93

17

185

(25)

Accounts payable

(127)

(50)

(48)

317

Accrued and other current liabilities

26

(9)

(224)

77

Income taxes

(52)

302

(31)

302

Deferred revenue

40

(3)

(28)

(38)

Long-term pension and postretirement liabilities

22

(66)

75

(25)

Other

(3)

13

26

(17)

Net cash provided by operating activities

630

474

1,779

1,679

Cash Flows From Investing Activities:

Capital expenditures

(206)

(136)

(581)

(385)

Proceeds from sale of property, plant, and equipment

7

11

65

16

Proceeds from sale of intangible assets

-

-

68

-

Proceeds from sale of short-term investments

-

-

155

1

Acquisition of businesses, net of cash acquired

-

(23)

(731)

(93)

Payment of acquisition-related earn-out liabilities

(15)

-

(15)

-

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

-

3

-

15

Other

10

25

-

4

Net cash used in continuing investing activities

(204)

(120)

(1,039)

(442)

Net cash used in discontinued investing activities

(4)

-

(4)

-

Net cash used in investing activities

(208)

(120)

(1,043)

(442)

Cash Flows From Financing Activities:

Net increase (decrease) in commercial paper

-

100

(100)

100

Proceeds from long-term debt

-

-

249

-

Repayment of long-term debt

-

(100)

(565)

(100)

Proceeds from exercise of share options

6

-

80

12

Repurchase of common shares

(325)

(115)

(865)

(488)

Payment of common share dividends and cash distributions to shareholders

(76)

(71)

(296)

(289)

Other

(6)

(6)

(19)

(14)

Net cash used in continuing financing activities

(401)

(192)

(1,516)

(779)

Net cash provided by discontinued financing activities

4

-

4

-

Net cash used in financing activities

(397)

(192)

(1,512)

(779)

Effect of currency translation on cash

(18)

13

5

11

Net increase (decrease) in cash and cash equivalents

7

175

(771)

469

Cash and cash equivalents at beginning of period

1,212

1,815

1,990

1,521

Cash and cash equivalents at end of period

$              1,219

$              1,990

$              1,219

$              1,990

Supplemental Cash Flow Information:

Income taxes paid, net of refunds

$                 172

$                   83

$                 299

$                 156

Reconciliation to Free Cash Flow:

Net cash provided by continuing operating activities

$                 630

$                 474

$              1,779

$              1,679

Capital expenditures, net

(199)

(125)

(516)

(369)

Payments related to pre-separation tax matters, net

129

-

129

-

Pre-separation litigation payments

-

25

-

25

Voluntary pension contributions

-

69

-

69

Free cash flow (1)

$                 560

$                 443

$              1,392

$              1,404

(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 30,

September 24,

September 30,

September 24,

2011

2010

2011

2010

($ in millions)

Net Sales:

Transportation Solutions

$               1,535

$              1,208

$              5,629

$              4,799

Communications and Industrial Solutions

1,343

1,315

5,071

4,820

Network Solutions

1,033

614

3,612

2,451

Total

$               3,911

$              3,137

$            14,312

$            12,070

Operating Income:

Transportation Solutions

$                  237

15.4%

$                 108

8.9%

$                 848

15.1%

$                 515

10.7%

Communications and Industrial Solutions

103

7.7%

200

15.2%

564

11.1%

682

14.1%

Network Solutions

125

12.1%

74

12.1%

329

9.1%

312

12.7%

Pre-separation litigation income

-

-

-

7

Total

$                  465

11.9%

$                 382

12.2%

$              1,741

12.2%

$              1,516

12.6%

TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

Percentage

of

Change in Net Sales for the

Quarter Ended September 30, 2011

Segment's

Total

versus Net Sales for the

Quarter Ended September 24, 2010

Net Sales

for the

Organic (1)

Translation (2)

Impact of     14th Week (3)

Acquisition (Divestiture)

Total

Quarter

Ended

September

30, 2011

($ in millions)

Transportation Solutions (4):

Automotive

$ 131

12.7%

$             83

$             102

$              (18)

$    298

28.6%

87%

Aerospace, Defense, and Marine

13

7.9

6

10

-

29

17.4

13

Total

144

12.0

89

112

(18)

327

27.1

100%

Communications and Industrial Solutions (4):

Industrial

(20)

(4.8)

20

30

-

30

7.7

31

Data Communications

(38)

(13.8)

9

16

-

(13)

(4.7)

20

Appliance

(12)

(6.0)

8

14

-

10

5.1

15

Consumer Devices

(28)

(13.1)

9

14

(6)

(11)

(5.1)

15

Computer

(4)

(3.1)

1

9

-

6

4.8

10

Touch Solutions

(6)

(5.6)

4

8

-

6

5.4

9

Total

(108)

(8.1)

51

91

(6)

28

2.1

100%

Network Solutions (4):

Telecom Networks

7

5.5

12

34

249

302

205.4

43

Energy

17

8.6

16

14

-

47

23.6

24

Enterprise Networks

5

4.2

6

16

48

75

61.5

19

Subsea Communications

(15)

(10.3)

-

10

-

(5)

(3.4)

14

Total

14

2.4

34

74

297

419

68.2

100%

  Total

$   50

1.6%

$           174

$             277

$              273

$    774

24.7%

Percentage

of

Change in Net Sales for the

Year Ended September 30, 2011

Segment's

Total

versus Net Sales for the

Year Ended September 24, 2010

Net Sales

for the

Organic (1)

Translation (2)

Impact of     53rd Week (3)

Acquisition (Divestitures)

Total

Year

Ended

September

30, 2011

($ in millions)

Transportation Solutions (4):

Automotive

$ 562

13.5%

$           169

$             102

$              (82)

$    751

18.0%

88%

Aerospace, Defense, and Marine

59

9.5

10

10

-

79

12.7

12

Total

621

13.0

179

112

(82)

830

17.3

100%

Communications and Industrial Solutions (4):

Industrial

96

6.9

43

30

(2)

167

11.9

31

Data Communications

25

2.6

28

16

-

69

7.2

20

Appliance

27

3.6

20

14

-

61

8.1

16

Consumer Devices

(99)

(12.0)

26

14

(20)

(79)

(9.5)

15

Computer

(6)

(1.2)

7

9

-

10

2.1

10

Touch Solutions

7

1.8

8

8

-

23

5.9

8

Total

50

1.1

132

91

(22)

251

5.2

100%

Network Solutions (4):

Telecom Networks

111

22.6

31

34

786

962

187.5

41

Energy

81

11.4

34

14

(12)

117

15.5

24

Enterprise Networks

41

9.7

18

16

152

227

49.3

19

Subsea Communications

(155)

(21.4)

-

10

-

(145)

(20.0)

16

Total

78

3.3

83

74

926

1,161

47.4

100%

  Total

$ 749

6.2%

$           394

$             277

$              822

$ 2,242

18.6%

(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, and in fiscal 2011, the impact of an additional week in the fourth quarter.  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) Represents the impact of an additional week in the fourth quarter of fiscal 2011.  Includes $26 million related to ADC.

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

TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

Percentage

of

Change in Net Sales for the

Quarter Ended September 30, 2011

Segment's

Total

versus Net Sales for the

Quarter Ended June 24, 2011

Net Sales

for the

Organic (1)

Translation (2)

Impact of     14th Week (3)

Acquisition

Total

Quarter

Ended

September

30, 2011

($ in millions)

Transportation Solutions (4):

Automotive

$    2

0.2%

$             (4)

$             102

$                -

$ 100

8.1%

87%

Aerospace, Defense, and Marine

-

(0.1)

(1)

10

-

9

4.8

13

Total

2

0.1

(5)

112

-

109

7.6

100%

Communications and Industrial Solutions (4):

Industrial

(14)

(3.6)

1

30

-

17

4.2

31

Data Communications

(19)

(7.6)

(1)

16

-

(4)

(1.5)

20

Appliance

(18)

(8.3)

-

14

-

(4)

(1.9)

15

Consumer Devices

18

10.3

2

14

-

34

20.0

15

Computer

(10)

(7.6)

(1)

9

-

(2)

(1.5)

10

Touch Solutions

(3)

(2.8)

-

8

-

5

4.4

9

Total

(46)

(3.7)

1

91

-

46

3.5

100%

Network Solutions (4):

Telecom Networks

(20)

(11.9)

(4)

34

(11)

(1)

(0.2)

43

Energy

10

4.3

(3)

14

-

21

9.3

24

Enterprise Networks

2

1.1

(2)

16

(3)

13

7.1

19

Subsea Communications

(16)

(10.6)

-

10

-

(6)

(4.1)

14

Total

(24)

(4.0)

(9)

74

(14)

27

2.7

100%

  Total

$ (68)

(2.2) %

$           (13)

$             277

$           (14)

$ 182

4.9%

(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, and in fiscal 2011, the impact of an additional week in the fourth quarter.  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) Represents the impact of an additional week in the fourth quarter of fiscal 2011.  Includes $26 million related to ADC.

(4) 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 30, 2011

(UNAUDITED)

Adjustments

Acquisition

Restructuring

Related

and Other

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

(Non-GAAP) (2)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        237

$                -

$                    4

$               241

Communications and Industrial Solutions

103

-

57

160

Network Solutions

125

23

1

149

   Total

$        465

$             23

$                  62

$               550

Operating Margin

11.9%

14.1%

Other Income, Net

$          14

$                -

$                    -

$                 14

Income Tax Expense

$       (115)

$             (7)

$                (17)

$             (139)

Income from Continuing Operations

 Attributable to TE Connectivity Ltd.

$        326

$             16

$                  45

$               387

Diluted Earnings per Share from

 Continuing Operations Attributable

 to TE Connectivity Ltd.

$       0.75

$          0.04

$               0.10

$              0.89

(1) Includes $22 million of restructuring charges and $1 million of non-cash amortization associated with acquisition accounting-related adjustments recorded in cost of sales.

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 24, 2010

(UNAUDITED)

Adjustments

Acquisition

Restructuring

and Integration

and Other

Tax

Adjusted

U.S. GAAP

Costs

Charges, Net

Items (1)

(Non-GAAP) (2)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        108

$                       -

$                  51

$         -

$               159

Communications and Industrial Solutions

200

-

2

-

202

Network Solutions

74

8

3

-

85

Total

$        382

$                      8

$                  56

$         -

$               446

Operating Margin

12.2%

14.2%

Other Income, Net

$          52

$                       -

$                    -

$     (40)

$                 12

Income Tax Expense

$       (145)

$                       -

$                (13)

$       62

$                (96)

Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        253

$                      8

$                  43

$       22

$               326

Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       0.56

$                 0.02

$               0.10

$    0.05

$              0.72

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

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 30, 2011

(UNAUDITED)

Adjustments

Acquisition

Restructuring

Related

and Other

Tax

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

Items (2)

(Non-GAAP) (3)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        848

$                -

$                (14)

$         -

$               834

Communications and Industrial Solutions

564

-

76

-

640

Network Solutions

329

142

5

-

476

Total

$     1,741

$           142

$                  67

$         -

$            1,950

Operating Margin

12.2%

13.6%

Other Income, Net

$          27

$                -

$                    -

$      14

$                 41

Income Tax Expense

$       (376)

$           (36)

$                (20)

$     (35)

$             (467)

Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$     1,248

$           106

$                  47

$     (21)

$            1,380

Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       2.82

$          0.24

$               0.11

$  (0.05)

$              3.12

(1) Includes $82 million of restructuring charges, $41 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of ADC acquisition and integration costs.

(2) Includes income tax benefits associated with the settlement of certain tax matters related to an audit of prior year tax returns.  Also includes the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 24, 2010

(UNAUDITED)

Adjustments

Restructuring

and Other

Tax

Other Items,

Adjusted

U.S. GAAP

Charges, Net (1)

Items (2)

Net (3)

(Non-GAAP) (4)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        515

$                    94

$         -

$                  -

$               609

Communications and Industrial Solutions

682

20

-

-

702

Network Solutions

312

20

-

8

340

Pre-separation litigation income

7

-

-

(7)

-

Total

$     1,516

$                  134

$         -

$                 1

$            1,651

Operating Margin

12.6%

13.7%

Other Income, Net

$        177

$                      -

$   (137)

$                  -

$                 40

Income Tax Expense

$       (493)

$                  (30)

$     134

$                  -

$              (389)

Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$     1,059

$                  104

$       (3)

$                 1

$            1,161

Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       2.32

$                 0.23

$  (0.01)

$                  -

$              2.54

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

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

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

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

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended December 24, 2010

(UNAUDITED)

Adjustments

Acquisition

Restructuring

Related

and Other

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

(Non-GAAP) (2)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        189

$                -

$                    1

$               190

Communications and Industrial Solutions

181

-

3

184

Network Solutions

30

59

-

89

Total

$        400

$             59

$                    4

$               463

Operating Margin

12.5%

14.5%

Other Income, Net

$          12

$                -

$                    -

$                 12

Income Tax Expense

$       (113)

$                -

$                  (1)

$              (114)

Income from Continuing Operations

 Attributable to TE Connectivity Ltd.

$        268

$             59

$                    3

$               330

Diluted Earnings per Share from

 Continuing Operations Attributable

 to TE Connectivity Ltd.

$       0.60

$          0.13

$               0.01

$              0.73

(1) Includes $35 million of restructuring charges, $17 million of ADC acquisition and integration costs, and $7 million of non-cash amortization associated with fair value adjustments to acquired inventories and customer order backlog recorded in cost of sales.

(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 June 24, 2011

(UNAUDITED)

Adjustments

Acquisition

Restructuring

Related

and Other

Tax

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

Items (2)

(Non-GAAP) (3)

($ in millions, except per share data)

Operating Income:

Transportation Solutions

$        211

$                -

$                (13)

$         -

$               198

Communications and Industrial Solutions

134

-

15

-

149

Network Solutions

126

12

3

-

141

   Total

$        471

$             12

$                    5

$         -

$               488

Operating Margin

12.6%

13.1%

Other Income (Expense), Net

$           (5)

$                -

$                    -

$      14

$                   9

Income Tax Expense

$         (74)

$             (3)

$                  (2)

$     (35)

$             (114)

Income from Continuing

 Operations Attributable

 to TE Connectivity Ltd.

$        355

$               9

$                    3

$     (21)

$               346

Diluted Earnings per Share

 from Continuing

 Operations Attributable to

 TE Connectivity Ltd.

$       0.80

$          0.02

$               0.01

$  (0.05)

$              0.78

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

(2) Includes income tax benefits associated with the settlement of certain tax matters related to an audit of prior year tax returns.  Also includes the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

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

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

For the Quarter Ended September 30, 2011

Adjustments

Adjustment

Acquisition

Restructuring

14 Weeks

13 Weeks

14 Weeks

Related

and Other

Adjusted

Impact of

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

Tax Items

(Non-GAAP) (2)

14th Week

(Non-GAAP) (3)

($ in millions, except per share data)

Operating Income

$        465

$             23

$                  62

$              -

$               550

$            (53)

$               497

Operating Margin

11.9%

14.1%

13.7%

Diluted

 Earnings

 per Share

 from

 Continuing

 Operations

 Attributable

 to TE

 Connectivity

 Ltd.

$       0.75

$          0.04

$               0.10

$              -

$              0.89

$         (0.08)

$              0.81

(1) Includes $22 million of restructuring charges and $1 million of non-cash amortization associated with acquisition accounting-related adjustments recorded in cost of sales.

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

(3) Excludes the impact of an additional week in the fourth quarter of fiscal 2011.

For the Year Ended September 30, 2011

Adjustments

Adjustment

Acquisition

Restructuring

53 Weeks

52 Weeks

53 Weeks

Related

and Other

Adjusted

Impact of

Adjusted

U.S. GAAP

Charges (1)

Charges, Net

Tax Items (2)

(Non-GAAP) (3)

53rd Week

(Non-GAAP) (4)

($ in millions, except per share data)

Operating Income

$     1,741

$           142

$                  67

$              -

$            1,950

$            (53)

$            1,897

Operating Margin

12.2%

13.6%

13.5%

Diluted

 Earnings

 per Share

 from

 Continuing

 Operations

 Attributable

 to TE

 Connectivity

 Ltd.

$       2.82

$          0.24

$               0.11

$         (0.05)

$              3.12

$         (0.08)

$              3.03

(1) Includes $82 million of restructuring charges, $41 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of ADC acquisition and integration costs.

(2) Includes income tax benefits associated with the settlement of certain tax matters related to an audit of prior year tax returns.  Also includes the related impact to other income pursuant to the Tax Sharing Agreement with Tyco International and Covidien.

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

(4) Excludes the impact of an additional week in the fourth quarter of fiscal 2011.

SOURCE TE Connectivity Ltd.



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