TE Connectivity Reports Strong Third Quarter Results; Raises Full Year Guidance

SCHAFFHAUSEN, Switzerland, July 24, 2013 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended June 28, 2013.

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

Third Quarter Highlights

  • Adjusted Earnings Per Share (EPS) were $0.88, a third quarter record; up 11% over the prior year
  • Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $0.79
  • Net sales were $3.45 billion, above the high end of the guidance range
  • Adjusted operating margin of 14.8%, up 80 basis points versus the prior year; GAAP operating margin of 12.7%
  • Free cash flow was $431 million for the quarter and $1.1 billion for the fiscal year to date
  • Returned $314 million to shareholders through share repurchases and dividends
  • Orders increased over the prior year and book-to-bill was 1.02, excluding Subsea Communications

"We had a strong third quarter with sales and EPS above the high end of our guidance," said TE Connectivity Chairman and Chief Executive Officer Tom Lynch. "Sales were up six percent sequentially driven by continued strength in our Transportation segment and improving demand in our Industrial and Network segments. Adjusted operating margins increased in all segments due to significant productivity gains and the increase in sales. We had another quarter of outstanding free cash flow, reaching $1.1 billion year to date.
 
"Orders increased over the prior year in most of our businesses and we expect another strong quarter in the fourth quarter, in line with our prior guidance. We are raising our full year adjusted EPS guidance to $3.18 to $3.22, up about 12% over the prior year."

FISCAL THIRD QUARTER RESULTS
The company reported net sales of $3.45 billion compared to prior year sales of $3.50 billion. Adjusted EPS were $0.88, compared to $0.79 in the prior year. GAAP EPS were $0.79 for the quarter. Free cash flow was $431 million for the quarter.

GAAP EPS included $0.11 per share of restructuring and other charges and $0.02 of income related to tax items.

Company orders, excluding the Subsea Communications business, were $3.41 billion in the third quarter and the book-to-bill ratio was 1.02.

OUTLOOK
For the fourth quarter, the company expects net sales of $3.35 to $3.45 billion and adjusted EPS of $0.88 to $0.92. GAAP EPS are expected to be $0.82 to $0.86, including restructuring and acquisition-related charges of $0.06.

For the full year, the company is raising its annual EPS guidance. The company now expects adjusted EPS of $3.18 to $3.22 and sales of $13.2 to $13.3 billion. GAAP EPS are expected to be $2.92 to $2.96, including restructuring and acquisition-related charges of $0.48 and income from tax-related items of $0.22.

This outlook assumes foreign exchange rates and commodity prices 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) 288-8968. The telephone dial-in number for participants outside the United States is (612) 288-0329.
  • An audio replay of the conference call will be available beginning at 10:30 a.m. on July 24, 2013 and ending at 11:59 p.m. on July 31, 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 295904.

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 performance and 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. The difference reflects the impact from net capital expenditures, voluntary pension contributions, and special items, if any.

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. 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 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.

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, 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 Deutsch's operations will not be successfully integrated into ours; and the risk that revenue opportunities, cost savings and other anticipated synergies from the Deutsch acquisition may not be fully realized or may take longer to realize than expected. 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 and March 29, 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 Nine Months Ended


June 28,


June 29,


June 28,


June 29,


2013


2012


2013


2012


(in millions, except per share data)









Net sales

$            3,449


$            3,499


$            9,848


$            9,918

Cost of sales 

2,317


2,481


6,675


6,936

Gross margin

1,132


1,018


3,173


2,982

Selling, general, and administrative expenses

456


423


1,322


1,233

Research, development, and engineering expenses

167


173


509


523

Acquisition and integration costs

3


15


11


23

Restructuring and other charges, net

67


36


240


86

   Operating income  

439


371


1,091


1,117

Interest income

4


6


13


18

Interest expense

(36)


(48)


(108)


(131)

Other income (expense), net

18


19


(199)


31

   Income from continuing operations before income taxes

425


348


797


1,035

Income tax (expense) benefit

(93)


(88)


92


(267)

   Income from continuing operations

332


260


889


768

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

3


(61)


-


(49)

   Net income  

335


199


889


719

Less: net income attributable to noncontrolling interests

-


-


-


(3)

Net income attributable to TE Connectivity Ltd.

$               335


$               199


$               889


$               716









Amounts attributable to TE Connectivity Ltd.:








Income from continuing operations

$               332


$               260


$               889


$               765

Income (loss) from discontinued operations

3


(61)


-


(49)

Net income  

$               335


$               199


$               889


$               716









Basic earnings per share attributable to TE Connectivity Ltd.:








   Income from continuing operations

$              0.80


$              0.61


$              2.12


$              1.79

   Income (loss) from discontinued operations

0.01


(0.15)


-


(0.11)

   Net income  

0.81


0.46


2.12


1.68









Diluted earnings per share attributable to TE Connectivity Ltd.:








   Income from continuing operations

$              0.79


$              0.60


$              2.10


$              1.78

   Income (loss) from discontinued operations

0.01


(0.14)


-


(0.11)

   Net income  

0.80


0.46


2.10


1.67









Dividends and cash distributions paid per common share








   of TE Connectivity Ltd.

$              0.25


$              0.21


$              0.67


$              0.57









Weighted-average number of shares outstanding: 








   Basic

415


428


419


427

   Diluted

421


431


423


430









TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)










June 28,


September 28, 


2013


2012


(in millions, except share data)

Assets




Current Assets:




Cash and cash equivalents

$            1,262


$            1,589

Accounts receivable, net of allowance for doubtful accounts of $49 and $41, respectively

2,257


2,343

Inventories

1,762


1,808

Prepaid expenses and other current assets

453


474

Deferred income taxes

284


289

  Total current assets

6,018


6,503

Property, plant, and equipment, net

3,071


3,213

Goodwill

4,285


4,308

Intangible assets, net

1,263


1,352

Deferred income taxes

2,198


2,460

Receivable from Tyco International Ltd. and Covidien plc

984


1,180

Other assets

271


290

Total Assets

$          18,090


$          19,306





Liabilities and Equity




Current Liabilities:




Current maturities of long-term debt

$               711


$            1,015

Accounts payable

1,357


1,292

Accrued and other current liabilities

1,842


1,576

Deferred revenue

93


121

Total current liabilities

4,003


4,004

Long-term debt

2,307


2,696

Long-term pension and postretirement liabilities

1,293


1,353

Deferred income taxes

304


448

Income taxes

1,936


2,311

Other liabilities

359


517

Total Liabilities

10,202


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

6,092


6,837

Accumulated earnings 

2,085


1,196

Treasury shares, at cost, 14,557,154 and 16,408,049 shares, respectively

(556)


(484)

Accumulated other comprehensive income

72


229

Total TE Connectivity Ltd. shareholders' equity

7,882


7,971

Noncontrolling interests

6


6

Total Equity

7,888


7,977

Total Liabilities and Equity

$          18,090


$          19,306









TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



For the Quarters Ended


For the Nine Months Ended


June 28,


June 29,


June 28,


June 29,


2013


2012


2013


2012


(in millions)

Cash Flows From Operating Activities:








Net income 

$               335


$               199


$               889


$               719

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

(3)


61


-


49

Income from continuing operations

332


260


889


768

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








    Tax sharing (income) expense

(18)


(19)


198


(32)

Depreciation and amortization

147


174


457


453

Non-cash restructuring charges (credits)

42


-


66


(3)

Deferred income taxes

(1)


22


92


100

Provision for losses on accounts receivable and inventories

10


9


49


44

Share-based compensation expense

19


17


59


52

Other 

20


51


30


52

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








Accounts receivable, net

(79)


(10)


(30)


(26)

Inventories

(17)


33


(91)


24

Inventoried costs on long-term contracts

25


14


31


9

Prepaid expenses and other current assets

43


(15)


7


86

Accounts payable

25


(45)


132


(91)

Accrued and other current liabilities

24


(7)


(28)


(195)

Income taxes

39


(7)


(412)


(74)

Other

3


21


4


7

Net cash provided by continuing operating activities

614


498


1,453


1,174

Net cash provided by discontinued operating activities

2


7


-


60

Net cash provided by operating activities

616


505


1,453


1,234

Cash Flows From Investing Activities:








Capital expenditures

(159)


(115)


(412)


(385)

Proceeds from sale of property, plant, and equipment

15


6


19


13

Acquisition of business, net of cash acquired

-


(1,384)


-


(1,384)

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

9


394


14


394

Other

10


-


22


(7)

Net cash used in continuing investing activities

(125)


(1,099)


(357)


(1,369)

Net cash used in discontinued investing activities

-


-


-


(1)

Net cash used in investing activities

(125)


(1,099)


(357)


(1,370)

Cash Flows From Financing Activities:








Net increase (decrease) in commercial paper

-


(219)


50


350

Proceeds from long-term debt

-


-


-


748

Repayment of long-term debt

(1)


(642)


(715)


(642)

Proceeds from exercise of share options

67


4


153


52

Repurchase of common shares

(253)


-


(618)


(17)

Payment of common share dividends and cash distributions to shareholders

(104)


(90)


(281)


(243)

Other

2


5


-


45

Net cash provided by (used in) continuing financing activities

(289)


(942)


(1,411)


293

Net cash used in discontinued financing activities

(2)


(7)


-


(59)

Net cash provided by (used in) financing activities

(291)


(949)


(1,411)


234

Effect of currency translation on cash

(11)


(21)


(12)


(14)

Net increase (decrease) in cash and cash equivalents

189


(1,564)


(327)


84

Cash and cash equivalents at beginning of period

1,073


2,866


1,589


1,218

Cash and cash equivalents at end of period

$            1,262


$            1,302


$            1,262


$            1,302









Supplemental Cash Flow Information:








Income taxes paid, net of refunds

$                 56


$                 72


$               229


$               240






 . 


 . 

Reconciliation to Free Cash Flow:








Net cash provided by continuing operating activities

$               614


$               498


$            1,453


$            1,174

Capital expenditures, net

(144)


(109)


(393)


(372)

Payments related to pre-separation U.S. tax matters, net

(39)


8


28


26

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

-


17


-


17

Payments to settle acquisition-related foreign currency derivative contracts

-


-


-


20

Free cash flow (1)

$               431


$               414


$            1,088


$               865









(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 Nine Months Ended 




June 28,



June 29,



June 28,



June 29,




2013



2012



2013



2012




($ in millions)



Net Sales:













Transportation Solutions

$            1,438



$            1,344



$            4,087



$            3,849



Network Solutions

803



855



2,262



2,472



Industrial Solutions

779



814



2,215



2,210



Consumer Solutions

429



486



1,284



1,387



Total

$            3,449



$            3,499



$            9,848



$            9,918





























Operating Income:













Transportation Solutions

$               282

19.6%


$               178

13.2%


$               715

17.5%


$               558

14.5%


Network Solutions

48

6.0%


64

7.5%


103

4.6%


176

7.1%


Industrial Solutions

84

10.8%


87

10.7%


232

10.5%


281

12.7%


Consumer Solutions

25

5.8%


42

8.6%


41

3.2%


102

7.4%


Total

$               439

12.7%


$               371

10.6%


$            1,091

11.1%


$            1,117

11.3%















TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

































Percentage of
















Segment's Total


Change in Net Sales for the Quarter Ended June 28, 2013


Net Sales for the


versus Net Sales for the Quarter Ended June 29, 2012


Quarter Ended


Organic (1) 



Translation (2)


Divestiture


Total



June 28, 2013


($ in millions)




Transportation Solutions (3):

















Automotive

$               109


8.1

%


$                (15)


$                    -


$                 94


7.0

%


100

%

Total

109


8.1



(15)


-


94


7.0



100

%

Network Solutions (3):

















Telecom Networks

2


0.6



1


-


3


0.9



43


Data Communications

(19)


(8.0)



(1)


(19)


(39)


(17.0)



24


Enterprise Networks 

(1)


(0.8)



(2)


-


(3)


(1.8)



20


Subsea Communications

(13)


(10.9)



-


-


(13)


(11.1)



13


Total

(31)


(3.6)



(2)


(19)


(52)


(6.1)



100

%

Industrial Solutions (3):

















Industrial    

(30)


(8.2)



(2)


-


(32)


(9.5)



39


Aerospace, Defense, and Marine

8


2.9



(2)


-


6


2.3



34


Energy

(9)


(4.3)



-


-


(9)


(4.1)



27


Total

(31)


(3.8)



(4)


-


(35)


(4.3)



100

%

Consumer Solutions (3):

















Consumer Devices

(35)


(12.1)



(6)


-


(41)


(14.4)



57


Appliance

(15)


(7.2)



(1)


-


(16)


(7.9)



43


Total

(50)


(10.2)



(7)


-


(57)


(11.7)



100

%

   Total 

$                  (3)


(0.1)

%


$                (28)


$                (19)


$                (50)


(1.4)

%




















































Percentage of


Change in Net Sales for the Nine Months Ended June 28, 2013


Segment's Total


versus Net Sales for the Nine Months Ended June 29, 2012


Net Sales for the


Organic (1) 



Translation (2)


Acquisition/ Divestiture


Total



Nine Months Ended
June 28, 2013


($ in millions)




Transportation Solutions (3):

















Automotive

$               131


3.4

%


$                (53)


$               160


$               238


6.2

%


100

%

Total

131


3.4



(53)


160


238


6.2



100

%

Network Solutions (3):

















Telecom Networks

(32)


(3.3)



(4)


-


(36)


(3.7)



41


Data Communications

(48)


(7.1)



1


(18)


(65)


(10.0)



26


Enterprise Networks 

(28)


(5.7)



(6)


-


(34)


(7.0)



20


Subsea Communications

(75)


(20.3)



-


-


(75)


(20.3)



13


Total

(183)


(7.4)



(9)


(18)


(210)


(8.5)



100

%

Industrial Solutions (3):

















Industrial    

(111)


(11.4)



(12)


-


(123)


(12.6)



38


Aerospace, Defense, and Marine

4


0.7



(3)


160


161


26.4



35


Energy

(30)


(4.8)



(3)


-


(33)


(5.3)



27


Total

(137)


(6.2)



(18)


160


5


0.2



100

%

Consumer Solutions (3):

















Consumer Devices

(48)


(5.9)



(16)


-


(64)


(7.8)



59


Appliance

(35)


(6.2)



(4)


-


(39)


(6.9)



41


Total

(83)


(6.0)



(20)


-


(103)


(7.4)



100

%

   Total 

$              (272)


(2.7)

%


$              (100)


$               302


$                (70)


(0.7)

%





















(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.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

































Percentage of
















Segment's Total


Change in Net Sales for the Quarter Ended June 28, 2013


Net Sales for the


 versus Net Sales for the Quarter Ended March 29, 2013


Quarter Ended


Organic (1) 



Translation (2)


Divestiture


Total



June 28, 2013


($ in millions)




Transportation Solutions (3):

















Automotive

$               75


5.4

%

$                 (22)


$                    -


$                  53


3.8

%

100

%

Total

75


5.4



(22)


-


53


3.8



100

%

Network Solutions (3):

















Telecom Networks

51


16.6



(4)


-


47


15.6



43


Data Communications

20


10.2



(3)


(21)


(4)


(2.1)



24


Enterprise Networks 

15


10.3



(2)


-


13


8.8



20


Subsea Communications

21


25.9



1


-


22


26.8



13


Total

107


14.8



(8)


(21)


78


10.8



100

%

Industrial Solutions (3):

















Industrial    

31


11.1



(4)


-


27


9.7



39


Aerospace, Defense, and Marine

3


1.0



(2)


-


1


0.4



34


Energy

17


9.0



(2)


-


15


7.8



27


Total

51


6.9



(8)


-


43


5.8



100

%

Consumer Solutions (3):

















Consumer Devices

1


0.6



(2)


-


(1)


(0.4)



57


Appliance

13


7.2



(2)


-


11


6.3



43


Total

14


3.3



(4)


-


10


2.4



100

%

   Total 

$             247


7.5

%


$                 (42)


$                (21)


$                184


5.6

%






(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.  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 June 28, 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

$               282


$                   1


$                   1


$                    -


$               284

Network Solutions

48


-


26


-


74

Industrial Solutions

84


2


22


-


108

Consumer Solutions

25


-


18


-


43

    Total 

$               439


$                   3


$                 67


$                    -


$               509











Operating Margin

12.7%








14.8%











Other Income, Net

$                 18


$                    -


$                    -


$                  (8)


$                 10











Income Tax Expense

$                (93)


$                  (1)


$                (21)


$                    -


$              (115)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$               332


$                   2


$                 46


$                  (8)


$               372











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$              0.79


$                    -


$              0.11


$             (0.02)


$              0.88











(1)Relates 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 June 29, 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

$               178


$                    57


$                   3


$                    -


$               238

Network Solutions

64


-


18


-


82

Industrial Solutions

87


37


-


-


124

Consumer Solutions

42


-


4


-


46

    Total 

$               371


$                    94


$                 25


$                    -


$               490











Operating Margin

10.6%








14.0%











Other Income, Net

$                 19


$                      -


$                    -


$                (10)


$                   9











Income Tax Expense

$                (88)


$                  (23)


$                  (6)


$                    -


$              (117)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$               260


$                    71


$                 19


$                (10)


$               340











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$              0.60


$                 0.16


$              0.04


$             (0.02)


$              0.79











(1)Includes $68 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $15 million of acquisition and integration costs, and $11 million of restructuring charges. 

(2)Relates to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters. 

(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 Nine Months Ended June 28, 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

$               715


$                   5


$                 29


$                    -


$               749

Network Solutions

103


-


76


-


179

Industrial Solutions

232


6


55


-


293

Consumer Solutions

41


-


80


-


121

    Total 

$            1,091


$                 11


$               240


$                    -


$            1,342











Operating Margin

11.1%








13.6%











Other Income (Expense), Net

$              (199)


$                    -


$                    -


$               222


$                 23











Income Tax (Expense) Benefit

$                 92


$                  (3)


$                (72)


$              (314)


$              (297)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$               889


$                   8


$               168


$                (92)


$               973











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$              2.10


$              0.02


$              0.40


$             (0.22)


$              2.30











(1)Includes income tax benefits associated with the settlement of an audit of prior year income tax returns as well as the related impact 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 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 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 Nine Months Ended June 29, 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

$               558


$                 62


$                   4


$                    -


$               624


Network Solutions

176


-


48


-


224


Industrial Solutions

281


40


9


-


330


Consumer Solutions

102


-


14


-


116


    Total 

$            1,117


$               102


$                 75


$                    -


$            1,294













Operating Margin

11.3%








13.0%













Other Income, Net

$                 31


$                    -


$                    -


$                (10)


$                 21













Income Tax Expense

$              (267)


$                (23)


$                (23)


$                 17


$              (296)













Income from Continuing Operations 











   Attributable to TE Connectivity Ltd.

$               765


$                 79


$                 52


$                   7


$               903













Diluted Earnings per Share from 











   Continuing Operations Attributable 











   to TE Connectivity Ltd.

$              1.78


$              0.18


$              0.12


$              0.02


$              2.10













(1)Includes $68 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $23 million of acquisition and integration costs, and $11 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 primarily relates to 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 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 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.











 

SOURCE TE Connectivity Ltd.



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