Form 8-K TE Connectivity Ltd. For: Jan 28
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): January�28, 2015
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TE CONNECTIVITY LTD.
(Exact Name of Registrant as Specified in its Charter)
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Switzerland |
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98-0518048 |
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(Jurisdiction of Incorporation) |
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(IRS Employer |
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001-33260
(Commission File Number)
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Rheinstrasse 20
CH-8200 Schaffhausen
Switzerland
(Address of Principal Executive Offices, including Zip Code)
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+41 (0)52 633 66 61
(Registrant�s Telephone Number, including Area Code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o������������ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o������������ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o������������ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o������������ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.� Results of Operations and Financial Condition
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On January�28, 2015, TE Connectivity�Ltd. (the �Company�) issued a press release reporting the Company�s first quarter results for fiscal 2015. A copy of the press release is furnished as Exhibit�99.1 to this report and incorporated by reference in this Item�2.02.
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Item 7.01.� Regulation FD Disclosure
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On January�28, 2015, the Company issued a press release announcing that it has entered into a definitive agreement to sell its Broadband Network Solutions Business. A copy of the press release is furnished as Exhibit�99.2 to this report and incorporated by reference in this Item�7.01.
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The Company will hold a conference call and webcast on January�28, 2015 (see information in the press release attached hereto as Exhibit�99.1 under �Conference Call and Webcast� and in the press release attached hereto as Exhibit�99.2 under �Conference call and Webcast�).� A copy of the slide materials to be discussed at the conference call and webcast is being furnished pursuant to Regulation FD as Exhibit�99.3 and is incorporated herein by reference, and the slide materials also can be accessed at the �Investors� section of the Company�s website (www.te.com).
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Item 8.01.� Other Events
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The press releases also announced the board of directors� decision to authorize an increase in the Company�s share repurchase program by $3.0 billion.
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Item 9.01.� Financial Statements and Exhibits
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(d)������� Exhibits
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Exhibit |
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Description |
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99.1 |
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Press release issued January�28, 2015 reporting the Company�s first quarter results for fiscal 2015 |
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99.2 |
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Press release issued January�28, 2015 reporting the Company�s entry into a definitive agreement to sell its Broadband Network Solutions Business |
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99.3 |
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Presentation dated January�28, 2015 |
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TE CONNECTIVITY LTD. | |
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(Registrant) | |
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By: |
/s/ Robert W. Hau |
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Robert W. Hau |
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Executive Vice President and Chief Financial Officer |
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Date: January�28, 2015
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Exhibit 99.1
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TE Connectivity Posts Strong Fiscal 2015 First Quarter Earnings
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Sales Up 4 Percent; GAAP EPS Up 34 Percent; Adjusted EPS Up 20 Percent
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Company Announces Divestiture of Broadband Network Solutions for $3.0 Billion
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SCHAFFHAUSEN, Switzerland � January�28, 2015 � TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal first quarter ended December�26, 2014.
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First Quarter Highlights
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������������������ Net sales increased to $3.47 billion, up 4 percent versus the prior year and up 3 percent organically
������������������ Adjusted Earnings Per Share (EPS) were $0.98, up 20 percent versus the prior year and above the high end of the guidance range
������������������ Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $1.14
������������������ Sales from harsh environment applications increased 10 percent over the prior year
������������������ Recent sensor acquisitions closed and performing ahead of plan
������������������ Recognized as a Thomson Reuters 2014 Top 100 Global Innovator for fourth consecutive year
������������������ Board of Directors recommended a fifth consecutive double-digit percentage increase in the annual dividend, subject to shareholder approval at the annual general meeting on March�3, 2015
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�We are off to a very good start in the first quarter, with revenues up 4 percent, adjusted operating margins at record levels and EPS exceeding the high end of our guidance range,� said Tom Lynch, TE Connectivity Chairman and CEO. �Our performance was led by our businesses focused on highly engineered harsh environment applications, which include automotive, commercial transportation, commercial aerospace and appliances. Sales from harsh environment businesses grew 10 percent over last year. These businesses also continued to drive content growth with their customers by leveraging TE�s unmatched range of connectivity and sensor solutions. I am also encouraged with the progress of our SubCom business, which is in the early stages of a build cycle and gaining momentum. We delivered another quarter of strong margin performance driven by volume growth and productivity gains powered by our TEOA business system.
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�This was also a quarter of good strategic progress as we closed the Measurement Specialties acquisition and established TE as a leader in the attractive sensor market with the broadest range of sensor technologies,� said Lynch. �Our sensors business is off to a good start, with first quarter financial performance ahead of plan.
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�Our decision to sell our Broadband Network Solutions (BNS) business reflects our strategy to continue focusing on and expanding our leadership position in the attractive connectivity and sensor markets, with particular emphasis on harsh environment applications,� said Lynch. �These markets represent a $165 billion opportunity with strong growth rates and profit levels, and are driven by global trends of a safer, smarter, greener and more connected world.
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�For the full year, we expect to deliver double digit adjusted EPS growth driven by continued strong performance in our harsh environment businesses and the improving SubCom market. Strength in these businesses will offset the impact of significant foreign exchange headwinds.�
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FISCAL FIRST QUARTER RESULTS
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The company reported net sales of $3.47 billion, compared to prior year sales of $3.33 billion. Adjusted EPS were $0.98, compared to $0.82 in the prior year. GAAP EPS were $1.14, compared to $0.85 in the prior year. Free cash flow was $162 million for the quarter.
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GAAP EPS included $62 million of acquisition related, restructuring and other charges, more than offset by $128 million of income related to tax items.
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Total company orders were $3.7 billion, up 9 percent overall, and up 4 percent excluding SubCom. The book-to-bill ratio was 1.03, excluding SubCom.
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OUTLOOK
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For the fiscal second quarter 2015, the company expects net sales of $3.55 billion to $3.65 billion and adjusted EPS of $0.98 to $1.02. GAAP EPS are expected to be $0.89 to $0.93, including acquisition related charges of $0.05, and restructuring and other charges of $0.04.
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For the full year, the company expects net sales of $14.45 to $14.85 billion and adjusted EPS of $4.05 to $4.35. GAAP EPS are expected to be $4.04 to $4.34, including acquisition related charges of $0.22, restructuring and
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other charges of $0.10, and income from tax related items of $0.31. The outlook includes foreign exchange headwinds, reducing sales by $900 million and adjusted EPS by $0.35.
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The outlook includes the results of the company�s BNS business, as well as foreign exchange and commodity rates that are consistent with current levels. Results related to the BNS business will be recast for prior periods and reported as discontinued operations on the company�s financial statements beginning with its fiscal second quarter ending March�27, 2015.
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Information about TE Connectivity�s use of non-GAAP financial measures is provided below. For a reconciliation of these non-GAAP financial measures, see the attached tables.
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BNS DIVESTITURE
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In a separate news release issued today, the company announced it has reached a definitive agreement to sell its BNS business unit to CommScope (NASDAQ: COMM) for $3.0 billion. The BNS business, which consists of TE�s Telecommunications, Enterprise Networks and Wireless businesses, had revenue of $1.9 billion in fiscal year 2014.�CommScope is a global provider of telecommunications infrastructure solutions for wireless, business enterprise and residential broadband networks.
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In the first quarter of fiscal year 2015, TE established itself as a leader in the high growth sensor market with two key acquisitions. These acquisitions, in conjunction with the sale of BNS, will result in approximately 90 percent of TE�s revenue focused on providing OEM customers with leading connectivity and sensor solutions. Additionally, upon completion of the transaction, approximately 80 percent of TE�s revenues will serve harsh environment applications.
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TE intends to use the majority of the sale proceeds for share repurchase. TE�s Board of Directors has authorized an expansion of its share repurchase program by an additional $3.0 billion. Sale proceeds will also be used to make strategic investments in the company�s connectivity and sensor businesses.
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This transaction is subject to customary closing conditions and regulatory approvals.
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CONFERENCE CALL AND WEBCAST
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������������������ Important note: updated start time - The company will hold a conference call for investors today beginning at 8:15�a.m. EST to discuss both first quarter performance as well as the BNS announcement.
������������������ 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.
������������������ By telephone: For both �listen-only� participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1096. The telephone dial-in number for participants outside the United States is (612) 332-0107.
������������������ An audio replay of the conference call will be available beginning at 10:30�a.m. on January�28, 2015, and ending at 11:59�p.m. on February�4, 2015. 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 346561.
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NON-GAAP MEASURES
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�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.
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�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.
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We present operating income before special items including charges or income related to 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 special items 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
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comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.
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We present operating margin before special items including charges or income related to 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. 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.
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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.
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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.
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We present income from continuing operations attributable to TE Connectivity Ltd. before special items including charges or income related to 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 special 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
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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.
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We present diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. before special items, including charges or income related to 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.
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�Free Cash Flow� (FCF) is a useful measure of our ability to generate cash.� It also is a significant component in our incentive compensation plans.� The difference between net cash provided by continuing operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) consists mainly of significant cash outflows and inflows that we believe are useful to identify.� We believe free cash flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations.
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FCF is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant and equipment.� These items are subtracted because they represent long-term commitments.� Voluntary pension contributions are excluded from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity.� Certain special items, including net payments related to pre-separation tax matters, also are considered by management in evaluating free cash flow.� We believe investors should also consider these items in evaluating our free cash flow.
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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.
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SHARE REPURCHASE PROGRAM
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The Company announced above an increase in the authorization for its share repurchase program. Any repurchases by the Company will be made in accordance with applicable securities laws in the open market or in private transactions. The repurchase program is subject to business and market conditions, and may be commenced, suspended or discontinued at any time or from time to time without prior notice.
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FORWARD-LOOKING STATEMENTS
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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 and our planned sale of the Broadband Network Solutions business. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industry and the telecommunications networks and consumer devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that the operations of Measurement Specialties will not be successfully integrated into ours; the risk that revenue opportunities, cost savings and other anticipated synergies from the Measurement Specialties acquisition may not be fully realized or may take longer to realize than expected; and the risk that the sale of the Broadband Network Solutions business may not be consummated, or if consummated, we do not realize the anticipated benefits from such transaction. 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. 26, 2014 as well as in our Quarterly Reports on Form�10-Q, Current Reports on Form�8-K and other reports filed by us with the U.S. Securities and Exchange Commission.
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ABOUT TE CONNECTIVITY
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TE Connectivity (NYSE: TEL) is a $14 billion global technology leader. Our connectivity and sensor solutions are essential in today�s increasingly connected world. We collaborate with engineers to transform their concepts into creations � redefining what�s possible using intelligent, efficient and high-performing TE products and solutions proven in harsh environments.�Our 80,000 people, including 7,500 design engineers, partner with
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customers in over 150�countries across a wide range of industries. We believe EVERY CONNECTION COUNTS � www.TE.com.
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Contacts: |
Media Relations: |
Investor Relations: |
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TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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For�the�Quarters�Ended |
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December�26, |
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December�27, |
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2014 |
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2013 |
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(in�millions,�except�per�share�data) |
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Net sales |
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$ |
3,466 |
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$ |
3,326 |
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Cost of sales |
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2,295 |
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2,209 |
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Gross margin |
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1,171 |
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1,117 |
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Selling, general, and administrative expenses |
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459 |
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467 |
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Research, development, and engineering expenses |
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184 |
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164 |
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Acquisition and integration costs |
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24 |
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� |
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Restructuring and other charges, net |
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27 |
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7 |
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Operating income |
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477 |
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479 |
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Interest income |
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5 |
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5 |
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Interest expense |
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(35 |
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(34 |
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Other income (expense), net |
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(70 |
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32 |
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Income from continuing operations before income taxes |
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377 |
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482 |
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Income tax (expense) benefit |
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95 |
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(127 |
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Income from continuing operations |
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472 |
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355 |
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Loss from discontinued operations, net of income taxes |
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� |
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(2 |
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Net income attributable to TE Connectivity Ltd. |
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$ |
472 |
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$ |
353 |
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� |
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� |
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Basic earnings per share attributable to TE Connectivity Ltd.: |
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� |
� |
� |
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Income from continuing operations |
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$ |
1.16 |
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$ |
0.86 |
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Net income |
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1.16 |
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0.86 |
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� |
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Diluted earnings per share attributable to TE Connectivity Ltd.: |
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� |
� |
� |
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Income from continuing operations |
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$ |
1.14 |
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$ |
0.85 |
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Net income |
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1.14 |
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0.84 |
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� |
� |
� |
� |
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Dividends paid per common share |
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$ |
0.29 |
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$ |
0.25 |
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� |
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Weighted-average number of shares outstanding: |
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Basic |
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407 |
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411 |
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Diluted |
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413 |
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418 |
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TE CONNECTIVITY LTD.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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December�26, |
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September�26, |
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2014 |
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2014 |
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(in�millions,�except�share�data) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
868 |
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$ |
2,457 |
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Accounts receivable, net of allowance for doubtful accounts of $37 and $35, respectively |
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2,349 |
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2,439 |
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Inventories |
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1,942 |
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1,745 |
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Prepaid expenses and other current assets |
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551 |
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567 |
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Deferred income taxes |
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335 |
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336 |
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Total current assets |
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6,045 |
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7,544 |
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Property, plant, and equipment, net |
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3,118 |
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3,126 |
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Goodwill |
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5,638 |
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4,595 |
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Intangible assets, net |
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1,830 |
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1,329 |
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Deferred income taxes |
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2,092 |
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2,058 |
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Receivable from Tyco International plc and Covidien plc |
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956 |
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1,037 |
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Other assets |
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474 |
� |
463 |
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Total Assets |
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$ |
20,153 |
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$ |
20,152 |
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� |
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� |
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Liabilities and Equity |
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� |
� |
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Current liabilities: |
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� |
� |
� |
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Current maturities of long-term debt |
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$ |
937 |
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$ |
667 |
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Accounts payable |
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1,382 |
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1,391 |
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Accrued and other current liabilities |
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1,436 |
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1,717 |
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Deferred revenue |
� |
121 |
� |
179 |
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Total current liabilities |
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3,876 |
� |
3,954 |
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Long-term debt |
� |
3,286 |
� |
3,281 |
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Long-term pension and postretirement liabilities |
� |
1,257 |
� |
1,287 |
� | ||
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Deferred income taxes |
� |
304 |
� |
240 |
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Income taxes |
� |
1,915 |
� |
2,045 |
� | ||
|
Other liabilities |
� |
345 |
� |
332 |
� | ||
|
Total Liabilities |
� |
10,983 |
� |
11,139 |
� | ||
|
Commitments and contingencies |
� |
� |
� |
� |
� | ||
|
Equity: |
� |
� |
� |
� |
� | ||
|
TE Connectivity Ltd. shareholders� equity: |
� |
� |
� |
� |
� | ||
|
Common shares, 419,070,781 shares authorized and issued, CHF 0.57 par value |
� |
184 |
� |
184 |
� | ||
|
Contributed surplus |
� |
5,181 |
� |
5,231 |
� | ||
|
Accumulated earnings |
� |
4,725 |
� |
4,253 |
� | ||
|
Treasury shares, at cost, 12,139,242 and 11,383,631 shares, respectively |
� |
(703 |
) |
(644 |
) | ||
|
Accumulated other comprehensive loss |
� |
(223 |
) |
(17 |
) | ||
|
Total TE Connectivity Ltd. shareholders� equity |
� |
9,164 |
� |
9,007 |
� | ||
|
Noncontrolling interests |
� |
6 |
� |
6 |
� | ||
|
Total Equity |
� |
9,170 |
� |
9,013 |
� | ||
|
Total Liabilities and Equity |
� |
$ |
20,153 |
� |
$ |
20,152 |
� |
�
�
TE CONNECTIVITY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
�
|
� |
� |
For�the�Quarters�Ended |
� | ||||
|
� |
� |
December�26, |
� |
December�27, |
� | ||
|
� |
� |
2014 |
� |
2013 |
� | ||
|
� |
� |
(in�millions) |
� | ||||
|
Cash Flows From Operating Activities: |
� |
� |
� |
� |
� | ||
|
Net income attributable to TE Connectivity Ltd. |
� |
$ |
472 |
� |
$ |
353 |
� |
|
Loss from discontinued operations, net of income taxes |
� |
� |
� |
2 |
� | ||
|
Income from continuing operations |
� |
472 |
� |
355 |
� | ||
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: |
� |
� |
� |
� |
� | ||
|
Depreciation and amortization |
� |
175 |
� |
149 |
� | ||
|
Non-cash restructuring charges |
� |
15 |
� |
3 |
� | ||
|
Deferred income taxes |
� |
(67 |
) |
31 |
� | ||
|
Provision for losses on accounts receivable and inventories |
� |
25 |
� |
23 |
� | ||
|
Tax sharing (income) expense |
� |
69 |
� |
(34 |
) | ||
|
Share-based compensation expense |
� |
25 |
� |
22 |
� | ||
|
Other |
� |
30 |
� |
22 |
� | ||
|
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: |
� |
� |
� |
� |
� | ||
|
Accounts receivable, net |
� |
98 |
� |
27 |
� | ||
|
Inventories |
� |
(170 |
) |
(97 |
) | ||
|
Prepaid expenses and other current assets |
� |
24 |
� |
23 |
� | ||
|
Accounts payable |
� |
(21 |
) |
(19 |
) | ||
|
Accrued and other current liabilities |
� |
(232 |
) |
(144 |
) | ||
|
Income taxes |
� |
(115 |
) |
40 |
� | ||
|
Deferred revenue |
� |
(56 |
) |
9 |
� | ||
|
Other |
� |
23 |
� |
(23 |
) | ||
|
Net cash provided by continuing operating activities |
� |
295 |
� |
387 |
� | ||
|
Net cash used in discontinued operating activities |
� |
� |
� |
(2 |
) | ||
|
Net cash provided by operating activities |
� |
295 |
� |
385 |
� | ||
|
Cash Flows From Investing Activities: |
� |
� |
� |
� |
� | ||
|
Capital expenditures |
� |
(142 |
) |
(133 |
) | ||
|
Proceeds from sale of property, plant, and equipment |
� |
5 |
� |
12 |
� | ||
|
Acquisition of businesses, net of cash acquired |
� |
(1,511 |
) |
� |
� | ||
|
Other |
� |
(3 |
) |
(2 |
) | ||
|
Net cash used in investing activities |
� |
(1,651 |
) |
(123 |
) | ||
|
Cash Flows From Financing Activities: |
� |
� |
� |
� |
� | ||
|
Net increase (decrease) in commercial paper |
� |
270 |
� |
(25 |
) | ||
|
Proceeds from issuance of long-term debt |
� |
� |
� |
323 |
� | ||
|
Repayment of long-term debt |
� |
(223 |
) |
(303 |
) | ||
|
Proceeds from exercise of share options |
� |
16 |
� |
57 |
� | ||
|
Repurchase of common shares |
� |
(155 |
) |
(210 |
) | ||
|
Payment of common share dividends to shareholders |
� |
(118 |
) |
(103 |
) | ||
|
Other |
� |
1 |
� |
(3 |
) | ||
|
Net cash used in continuing financing activities |
� |
(209 |
) |
(264 |
) | ||
|
Net cash provided by discontinued financing activities |
� |
� |
� |
2 |
� | ||
|
Net cash used in financing activities |
� |
(209 |
) |
(262 |
) | ||
|
Effect of currency translation on cash |
� |
(24 |
) |
(6 |
) | ||
|
Net decrease in cash and cash equivalents |
� |
(1,589 |
) |
(6 |
) | ||
|
Cash and cash equivalents at beginning of period |
� |
2,457 |
� |
1,403 |
� | ||
|
Cash and cash equivalents at end of period |
� |
$ |
868 |
� |
$ |
1,397 |
� |
|
� |
� |
� |
� |
� |
� | ||
|
Supplemental Cash Flow Information: |
� |
� |
� |
� |
� | ||
|
Interest paid |
� |
$ |
46 |
� |
$ |
47 |
� |
|
Income taxes paid, net of refunds |
� |
87 |
� |
56 |
� | ||
|
� |
� |
� |
� |
� |
� | ||
|
Reconciliation to Free Cash Flow: |
� |
� |
� |
� |
� | ||
|
Net cash provided by continuing operating activities |
� |
$ |
295 |
� |
$ |
387 |
� |
|
Capital expenditures, net |
� |
(137 |
) |
(121 |
) | ||
|
Payments related to pre-separation U.S. tax matters, net |
� |
4 |
� |
� |
� | ||
|
Free Cash Flow (1) |
� |
$ |
162 |
� |
$ |
266 |
� |
�
(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 |
� |
� |
� | ||||||
|
� |
� |
December�26, |
� |
� |
� |
December�27, |
� |
� |
� | ||
|
� |
� |
2014 |
� |
� |
� |
2013 |
� |
� |
� | ||
|
� |
� |
� |
� |
($�in�millions) |
� |
� |
� |
� |
� | ||
|
Net Sales: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||
|
Transportation Solutions |
� |
$ |
1,612 |
� |
� |
� |
$ |
1,440 |
� |
� |
� |
|
Industrial Solutions |
� |
784 |
� |
� |
� |
763 |
� |
� |
� | ||
|
Network Solutions |
� |
704 |
� |
� |
� |
713 |
� |
� |
� | ||
|
Consumer Solutions |
� |
366 |
� |
� |
� |
410 |
� |
� |
� | ||
|
Total |
� |
$ |
3,466 |
� |
� |
� |
$ |
3,326 |
� |
� |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||
|
Operating Income: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||
|
Transportation Solutions |
� |
$ |
303 |
� |
18.8 |
% |
$ |
296 |
� |
20.6 |
% |
|
Industrial Solutions |
� |
89 |
� |
11.4 |
% |
99 |
� |
13.0 |
% | ||
|
Network Solutions |
� |
61 |
� |
8.7 |
% |
46 |
� |
6.5 |
% | ||
|
Consumer Solutions |
� |
24 |
� |
6.6 |
% |
38 |
� |
9.3 |
% | ||
|
Total |
� |
$ |
477 |
� |
13.8 |
% |
$ |
479 |
� |
14.4 |
% |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||
|
Adjusted Operating Income (1): |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||
|
Transportation Solutions |
� |
$ |
345 |
� |
21.4 |
% |
$ |
297 |
� |
20.6 |
% |
|
Industrial Solutions |
� |
101 |
� |
12.9 |
% |
100 |
� |
13.1 |
% | ||
|
Network Solutions |
� |
62 |
� |
8.8 |
% |
51 |
� |
7.2 |
% | ||
|
Consumer Solutions |
� |
47 |
� |
12.8 |
% |
38 |
� |
9.3 |
% | ||
|
Total |
� |
$ |
555 |
� |
16.0 |
% |
$ |
486 |
� |
14.6 |
% |
�
(1)�Adjusted operating income is a non-GAAP measure. See description of non-GAAP measures contained in this release.
�
�
TE CONNECTIVITY LTD.
RECONCILIATION OF NET SALES GROWTH (UNAUDITED)
�
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
Percentage�of |
� | ||||
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
Segment�s�Total |
� | ||||
|
� |
� |
Change�in�Net�Sales�for�the�Quarter�Ended�December�26,�2014 |
� |
Net�Sales�for�the |
� | ||||||||||||||
|
� |
� |
versus�Net�Sales�for�the�Quarter�Ended�December�27,�2013 |
� |
Quarter�Ended |
� | ||||||||||||||
|
� |
� |
Organic�(1) |
� |
Translation�(2) |
� |
Acquisitions |
� |
Total |
� |
December�26,�2014 |
� | ||||||||
|
� |
� |
($�in�millions) |
� |
� |
� | ||||||||||||||
|
Transportation Solutions (3): |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Automotive |
� |
$ |
95 |
� |
8.0 |
% |
$ |
(61 |
) |
$ |
� |
� |
$ |
34 |
� |
2.8 |
% |
76 |
% |
|
Commercial Transportation |
� |
15 |
� |
7.4 |
� |
(8 |
) |
� |
� |
7 |
� |
3.5 |
� |
13 |
� | ||||
|
Sensors |
� |
4 |
� |
7.4 |
� |
(4 |
) |
131 |
� |
131 |
� |
272.9 |
� |
11 |
� | ||||
|
Total |
� |
114 |
� |
7.9 |
� |
(73 |
) |
131 |
� |
172 |
� |
11.9 |
� |
100 |
% | ||||
|
Industrial Solutions (3): |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Industrial Equipment |
� |
1 |
� |
0.3 |
� |
(13 |
) |
1 |
� |
(11 |
) |
(3.4 |
) |
40 |
� | ||||
|
Aerospace, Defense, Oil, and Gas |
� |
18 |
� |
7.5 |
� |
(8 |
) |
34 |
� |
44 |
� |
17.7 |
� |
37 |
� | ||||
|
Energy |
� |
1 |
� |
0.8 |
� |
(13 |
) |
� |
� |
(12 |
) |
(6.2 |
) |
23 |
� | ||||
|
Total |
� |
20 |
� |
2.7 |
� |
(34 |
) |
35 |
� |
21 |
� |
2.8 |
� |
100 |
% | ||||
|
Network Solutions (3): |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Telecom Networks |
� |
(29 |
) |
(9.4 |
) |
(12 |
) |
� |
� |
(41 |
) |
(13.1 |
) |
39 |
� | ||||
|
Data Communications |
� |
(7 |
) |
(4.1 |
) |
(4 |
) |
� |
� |
(11 |
) |
(6.7 |
) |
21 |
� | ||||
|
Enterprise Networks |
� |
1 |
� |
0.5 |
� |
(7 |
) |
� |
� |
(6 |
) |
(4.0 |
) |
21 |
� | ||||
|
Subsea Communications |
� |
49 |
� |
57.4 |
� |
� |
� |
� |
� |
49 |
� |
57.4 |
� |
19 |
� | ||||
|
Total |
� |
14 |
� |
1.9 |
� |
(23 |
) |
� |
� |
(9 |
) |
(1.3 |
) |
100 |
% | ||||
|
Consumer Solutions (3): |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Consumer Devices |
� |
(45 |
) |
(17.4 |
) |
(5 |
) |
� |
� |
(50 |
) |
(19.4 |
) |
57 |
� | ||||
|
Appliances |
� |
10 |
� |
6.7 |
� |
(4 |
) |
� |
� |
6 |
� |
3.9 |
� |
43 |
� | ||||
|
Total |
� |
(35 |
) |
(8.5 |
) |
(9 |
) |
� |
� |
(44 |
) |
(10.7 |
) |
100 |
% | ||||
|
Total |
� |
$ |
113 |
� |
3.4 |
% |
$ |
(139 |
) |
$ |
166 |
� |
$ |
140 |
� |
4.2 |
% |
� |
� |
�
(1)�Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates.� Organic net sales growth is a non-GAAP measure.� See description of non-GAAP measures contained in this release.
(2)�Represents the change in net sales resulting from changes in foreign currency exchange rates.
(3)�Industry end market information about net sales is presented consistently with our internal management reporting and may be periodically revised as management deems necessary.
�
�
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 26, 2014
(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 |
� |
$ |
303 |
� |
$ |
41 |
� |
$ |
1 |
� |
$ |
� |
� |
$ |
345 |
� |
|
Industrial Solutions |
� |
89 |
� |
10 |
� |
2 |
� |
� |
� |
101 |
� | |||||
|
Network Solutions |
� |
61 |
� |
� |
� |
1 |
� |
� |
� |
62 |
� | |||||
|
Consumer Solutions |
� |
24 |
� |
� |
� |
23 |
� |
� |
� |
47 |
� | |||||
|
Total |
� |
$ |
477 |
� |
$ |
51 |
� |
$ |
27 |
� |
$ |
� |
� |
$ |
555 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Operating Margin |
� |
13.8 |
% |
� |
� |
� |
� |
� |
� |
16.0 |
% | |||||
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Other Income (Expense), Net |
� |
$ |
(70 |
) |
$ |
� |
� |
$ |
� |
� |
$ |
83 |
� |
$ |
13 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income Tax (Expense) Benefit |
� |
$ |
95 |
� |
$ |
(14 |
) |
$ |
(2 |
) |
$ |
(211 |
) |
$ |
(132 |
) |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
472 |
� |
$ |
37 |
� |
$ |
25 |
� |
$ |
(128 |
) |
$ |
406 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
1.14 |
� |
$ |
0.09 |
� |
$ |
0.06 |
� |
$ |
(0.31 |
) |
$ |
0.98 |
� |
�
(1) Includes $24 million of acquisition and integration costs and $27 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.
(2) Includes $189 million of income tax benefits associated with the settlement of audits of prior year income tax returns as well as the related impact of $83 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax benefits related to the impacts of certain non-U.S. tax law changes and the associated reduction in the valuation allowance for tax loss carryforwards.
(3) See description of non-GAAP measures contained in this release.
�
�
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended December 27, 2013
(UNAUDITED)
�
|
� |
� |
� |
� |
Adjustments |
� |
� |
� | ||||||
|
� |
� |
� |
� |
Restructuring |
� |
� |
� |
� |
� | ||||
|
� |
� |
� |
� |
and�Other |
� |
Tax |
� |
Adjusted |
� | ||||
|
� |
� |
U.S.�GAAP |
� |
Charges,�Net |
� |
Items�(1) |
� |
(Non-GAAP)�(2) |
� | ||||
|
� |
� |
($�in�millions,�except�per�share�data) |
� | ||||||||||
|
Operating Income: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Transportation Solutions |
� |
$ |
296 |
� |
$ |
1 |
� |
$ |
� |
� |
$ |
297 |
� |
|
Industrial Solutions |
� |
99 |
� |
1 |
� |
� |
� |
100 |
� | ||||
|
Network Solutions |
� |
46 |
� |
5 |
� |
� |
� |
51 |
� | ||||
|
Consumer Solutions |
� |
38 |
� |
� |
� |
� |
� |
38 |
� | ||||
|
Total |
� |
$ |
479 |
� |
$ |
7 |
� |
$ |
� |
� |
$ |
486 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Operating Margin |
� |
14.4 |
% |
� |
� |
� |
� |
14.6 |
% | ||||
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Other Income, Net |
� |
$ |
32 |
� |
$ |
� |
� |
$ |
(25 |
) |
$ |
7 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Income Tax Expense |
� |
$ |
(127 |
) |
$ |
(1 |
) |
$ |
7 |
� |
$ |
(121 |
) |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Income from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
355 |
� |
$ |
6 |
� |
$ |
(18 |
) |
$ |
343 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
|
Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
0.85 |
� |
$ |
0.01 |
� |
$ |
(0.04 |
) |
$ |
0.82 |
� |
�
(1) Includes income tax expense related to adjustments to prior year income tax returns. In addition, other income includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters, including $18 million related to our share of a settlement agreement entered into by Tyco International with a former subsidiary.
(2) See description of non-GAAP measures contained in this release.
�
�
TE CONNECTIVITY LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
For the Quarter Ended March 28, 2014
(UNAUDITED)
�
|
� |
� |
� |
� |
Adjustments |
� |
� |
� | |||||||||
|
� |
� |
� |
� |
Acquisition |
� |
Restructuring |
� |
� |
� |
� |
� | |||||
|
� |
� |
� |
� |
Related |
� |
and�Other |
� |
Tax |
� |
Adjusted |
� | |||||
|
� |
� |
U.S.�GAAP |
� |
Charges |
� |
Charges,�Net |
� |
Items�(1) |
� |
(Non-GAAP)�(2) |
� | |||||
|
� |
� |
($�in�millions,�except�per�share�data) |
� | |||||||||||||
|
Operating Income: |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Transportation Solutions |
� |
$ |
347 |
� |
$ |
� |
� |
$ |
(1 |
) |
$ |
� |
� |
$ |
346 |
� |
|
Industrial Solutions |
� |
106 |
� |
1 |
� |
5 |
� |
� |
� |
112 |
� | |||||
|
Network Solutions |
� |
23 |
� |
� |
� |
16 |
� |
� |
� |
39 |
� | |||||
|
Consumer Solutions |
� |
34 |
� |
� |
� |
1 |
� |
� |
� |
35 |
� | |||||
|
Total |
� |
$ |
510 |
� |
$ |
1 |
� |
$ |
21 |
� |
$ |
� |
� |
$ |
532 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Operating Margin |
� |
14.9 |
% |
� |
� |
� |
� |
� |
� |
15.5 |
% | |||||
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Other Income, Net |
� |
$ |
16 |
� |
$ |
� |
� |
$ |
� |
� |
$ |
(14 |
) |
$ |
2 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income Tax Expense |
� |
$ |
(136 |
) |
$ |
� |
� |
$ |
(10 |
) |
$ |
36 |
� |
$ |
(110 |
) |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
364 |
� |
$ |
1 |
� |
$ |
11 |
� |
$ |
22 |
� |
$ |
398 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
0.87 |
� |
$ |
� |
� |
$ |
0.03 |
� |
$ |
0.05 |
� |
$ |
0.95 |
� |
�
(1) Includes income tax expense related to adjustments to prior year income tax returns. In addition, other income 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 Year Ended September 26, 2014
(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 |
� |
$ |
1,283 |
� |
$ |
4 |
� |
$ |
4 |
� |
$ |
� |
� |
$ |
1,291 |
� |
|
Industrial Solutions |
� |
446 |
� |
31 |
� |
7 |
� |
� |
� |
484 |
� | |||||
|
Network Solutions |
� |
163 |
� |
� |
� |
35 |
� |
� |
� |
198 |
� | |||||
|
Consumer Solutions |
� |
153 |
� |
� |
� |
13 |
� |
� |
� |
166 |
� | |||||
|
Total |
� |
$ |
2,045 |
� |
$ |
35 |
� |
$ |
59 |
� |
$ |
� |
� |
$ |
2,139 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Operating Margin |
� |
14.7 |
% |
� |
� |
� |
� |
� |
� |
15.4 |
% | |||||
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Other Income, Net |
� |
$ |
63 |
� |
$ |
� |
� |
$ |
� |
� |
$ |
(39 |
) |
$ |
24 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income Tax Expense |
� |
$ |
(207 |
) |
$ |
(1 |
) |
$ |
(22 |
) |
$ |
(239 |
) |
$ |
(469 |
) |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Income from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
1,789 |
� |
$ |
34 |
� |
$ |
37 |
� |
$ |
(278 |
) |
$ |
1,582 |
� |
|
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||||
|
Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. |
� |
$ |
4.29 |
� |
$ |
0.08 |
� |
$ |
0.09 |
� |
$ |
(0.67 |
) |
$ |
3.79 |
� |
�
(1) Includes $31 million of acquisition and integration costs and $4 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales.
(2) Includes income tax benefits of $282 million recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards and income tax expense related to adjustments to prior year income tax returns. In addition, other income includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters, including $18 million related to our share of a settlement agreement entered into by Tyco International with a former subsidiary.
(3) See description of non-GAAP measures contained in this release.
�
�
TE CONNECTIVITY LTD.
RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
TO FORWARD-LOOKING GAAP FINANCIAL MEASURES
As of January 28, 2015
(UNAUDITED)
�
|
� |
� |
Outlook�for |
� |
� |
� |
|
� |
� |
Quarter�Ending |
� |
� |
� |
|
� |
� |
March�27, |
� |
Outlook�for |
� |
|
� |
� |
2015 |
� |
Fiscal�2015 |
� |
|
Diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (GAAP) |
� |
$0.89 - 0.93 |
� |
$4.04 - 4.34 |
� |
|
Restructuring and other charges, net |
� |
0.04 |
� |
0.10 |
� |
|
Acquisition related charges |
� |
0.05 |
� |
0.22 |
� |
|
Tax items |
� |
� |
� |
(0.31 |
) |
|
Adjusted diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (non-GAAP) (1) |
� |
$0.98 - 1.02 |
� |
$4.05 - 4.35 |
� |
�
(1) See description of non-GAAP measures contained in this release.
�
Exhibit 99.2
�

�
TE Connectivity Announces Definitive Agreement to Sell Its
Broadband Network Solutions Business to CommScope for $3.0 Billion
�
Increases Revenue from Connectivity and Sensor Solutions to 90 Percent
�
Advances Strategy to Focus and Expand Position in Harsh Environment Connectivity
�
SCHAFFHAUSEN, Switzerland � January�28, 2015 � TE Connectivity Ltd. (NYSE: TEL), a world leader in connectivity, announced today it has reached a definitive agreement to sell its Broadband Network Solutions (BNS) business unit to CommScope (NASDAQ: COMM) for $3.0 billion. The BNS business, which consists of TE�s Telecommunications, Enterprise Networks and Wireless businesses, had revenue of $1.9 billion in fiscal year 2014.�CommScope is a global provider of telecommunications infrastructure solutions for wireless, business enterprise and residential broadband networks.
�
�Our decision to sell our BNS business reflects our strategy to continue focusing on and expanding our leadership position in the attractive connectivity and sensor markets, with particular emphasis on harsh environment applications,� said Tom Lynch, TE Connectivity Chairman and Chief Executive Officer.��These markets represent a $165 billion opportunity for TE and have strong growth rates and attractive profit levels driven by the global trends of a safer, smarter, greener and more connected world.
�
�Earlier this fiscal year, we established TE as a leader in the high growth sensor market with two key acquisitions,� said Lynch. �These acquisitions, in conjunction with the sale of BNS, will result in approximately 90 percent of TE�s portfolio focused on providing leading connectivity and sensor solutions.
�
�We intend to use the majority of the proceeds from the sale for share repurchase,� said Lynch. �We also expect to increase organic investments to strengthen our unmatched range of connectivity and sensor solutions and make strategic acquisitions to further expand our customer offering.
�
�CommScope is an industry leader, and we believe they are the right company to lead our BNS team and business going forward,� said Lynch. �Our BNS team has built a successful business, and I want to thank them for their contributions, innovation leadership and commitment to TE over the years. We look forward to working closely with the CommScope team to close the transaction.�
�
�
Strategic Rationale
�
������������������ The transaction sharpens TE�s focus and enables the company to continue to expand its leadership position in the connector and sensor markets, where TE offers its customers the broadest range of products and solutions available. These markets represent a $165 billion opportunity for TE with attractive margins. As billions of devices, objects and people become part of the Internet of Things (IoT), TE technology is essential in sensing, connecting and transmitting the explosion of data that is being created. Upon completion of the transaction, 90 percent of TE�s revenue will be focused on providing customers with leading connectivity and sensor solutions.
������������������ TE�s products are critical to harsh environment applications requiring highly engineered solutions that perform in extreme conditions. Upon completion of the transaction, approximately 80 percent of TE�s revenues will be derived from harsh environment applications.
������������������ The majority of the sale proceeds will be used for share repurchase. Sale proceeds will also be used to make strategic investments in the company�s connectivity and sensor businesses.
�
Transaction Highlights
�
TE has agreed to sell its BNS business for $3.0 billion. The BNS business, with sales in fiscal 2014 of $1.9 billion, is part of TE�s Network Solutions segment. The sale price represents approximately 10X adjusted EBITDA. The sale does not include TE�s Subsea Communications or Data Communications businesses, which also report into TE�s Network Solutions segment.
�
The transaction is expected to close by December�31, 2015, and is subject to customary closing conditions and regulatory approvals.
�
TE�s Board of Directors has authorized an expansion of its share repurchase program by an additional $3.0 billion.
�
Results related to the BNS business will be recast for prior periods and reported as discontinued operations on the company�s financial statements beginning with its fiscal second quarter ending March�27, 2015.
�
�
Centerview Partners LLC, Goldman Sachs�& Co. and Citi are serving as financial advisors to TE.�Simpson Thacher�& Bartlett, LLP, Allen�& Overy, LLP and Sutherland Asbill�& Brennan, LLP are serving as legal advisors to TE.
�
CONFERENCE CALL AND WEBCAST
�
������������������ Important note: updated start time - The company will hold a conference call for investors today beginning at 8:15�a.m. EST to discuss both the BNS announcement and first quarter performance.
������������������ 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.
������������������ By telephone: For both �listen-only� participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1096. The telephone dial-in number for participants outside the United States is (612) 332-0107.
������������������ An audio replay of the conference call will be available beginning at 10:30�a.m. on January�28, 2015, and ending at 11:59�p.m. on February�4, 2015. 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 346561.
�
NON-GAAP MEASURE
�
The adjusted EBITDA amount for the Broadband Network Solutions business that is set forth in this release is a non-GAAP measure and should not be considered a replacement for GAAP results. Adjusted EBITDA represents net income before interest expense, interest income, income taxes, depreciation and amortization, as adjusted for restructuring related expenses. Adjusted EBITDA is not intended to represent results of operations in accordance with GAAP and should not be considered a substitute for net income or any other operating measure prepared in accordance with GAAP.
�
SHARE REPURCHASE PROGRAM
�
The Company announced above an increase in the authorization for its share repurchase program. Any repurchases by the Company will be made in accordance with applicable securities laws in the open market or in private transactions. The repurchase program is subject to business and market conditions, and may be commenced, suspended or discontinued at any time or from time to time without prior notice.
�
FORWARD LOOKING STATEMENT
�
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 and our planned sale of the Broadband Network Solutions business. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industry and the telecommunications networks and consumer devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; the possible effects on us of changes in tax laws, tax treaties and other legislation; and the risk that the sale of the Broadband Network Solutions business may not be consummated, or if consummated, we do not realize the anticipated benefits from such transaction. 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. 26, 2014 as well as in our Quarterly Reports on Form�10-Q, Current Reports on Form�8-K and other reports filed by us with the U.S. Securities and Exchange Commission.
�
ABOUT TE CONNECTIVITY
�
TE Connectivity (NYSE: TEL) is a $14 billion global technology leader. Our connectivity and sensor solutions are essential in today�s increasingly connected world. We collaborate with engineers to transform their concepts into creations � redefining what�s possible using intelligent, efficient and high-performing TE products and solutions proven in harsh environments.�Our 80,000 people, including 7,500 design engineers, partner with customers in over 150�countries across a wide range of industries. We believe EVERY CONNECTION COUNTS � www.TE.com.
�
# # #
�
|
Contacts: |
Media Relations: |
Investor Relations: |
|
� |
Jane Crawford |
Sujal Shah |
|
� |
TE Connectivity |
TE Connectivity |
|
� |
610-893-9689 |
610-893-9790 |
|
� |
�
Exhibit 99.3
�
|
|
Q1 2015 Earnings and Broadband Networks Divestiture January, 2015 |
�
|
|
Forward-Looking Statements This presentation 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 presentation include statements addressing our future financial condition and operating results and our planned sale of the Broadband Network Solutions business. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industry and the telecommunications networks and consumer devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that the operations of Measurement Specialties will not be successfully integrated into ours; the risk that revenue opportunities, cost savings and other anticipated synergies from the Measurement Specialties acquisition may not be fully realized or may take longer to realize than expected; and the risk that the sale of the Broadband Network Solutions business may not be consummated, or if consummated, we do not realize the anticipated benefits from such transaction. 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. 26, 2014 as well as in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports filed by us with the U.S. Securities and Exchange Commission. Non-GAAP Measures Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non-GAAP measure, in this presentation. Forward-Looking Statements and Non-GAAP Measures 2 |
�
|
|
BNS Divestiture Overview 3 |
�
|
|
Continues our focus on expanding leadership in connectors and sensors $165B market, where TE has the broadest portfolio of products & solutions Results in approximately 90% of TE's portfolio providing leading connectivity and sensor solutions Increases focus on harsh environment applications Highly engineered solutions growing to 80% of company total revenues vs. 70% today and 50% several years ago Intend to use the majority of the sale proceeds for share repurchase Reinforces strong growth and profitability profile for TE going forward Strategic Rationale for the Sale of BNS 4 |
�
|
|
Selling BNS assets to CommScope for $3B, ~10X adjusted EBITDA BNS represented $1.9B in FY14 revenue BNS includes the Telecom, Enterprise and Wireless businesses Expect the transaction to be neutral to EPS one year after closure BNS will be reported as discontinued operations, going forward FY15 guidance remains the same, on a combined basis Intend to use majority of proceeds for share buyback Board increased share buyback authorization by $3B Expect to continue to return ~2/3 of FCF to shareholders over time Expect to close by the end of calendar 2015 Subject only to regulatory and other customary approvals Transaction Value Financial Impact Use of Proceeds Timing Transaction Highlights 5 |
�
|
|
Q1 2015 Results & Guidance 6 |
�
|
|
Strong Q1 Results Sales $3.47B, up 4% Y/Y; Adjusted EPS up 20% to $0.98 Y/Y, a record for Q1 Free Cash Flow $162M; Returned $259M to shareholders Harsh Environment Focus Driving Growth Harsh environment revenue up 10% versus prior year TEOA Delivering Strong Margins 34.6% adjusted gross margin, up 100 basis points vs prior year Adjusted Operating Margin 16.0%, Up 140 bps vs prior year Established TE as a Leader in Sensors Acquisitions performing ahead of plan Reiterating Full Year EPS Outlook Despite FX Headwinds Maintaining adjusted EPS range of $4.05 - $4.35, up 11% vs prior year Raising FY15 organic revenue guidance by $150M, up 6% vs prior year FY15 FX headwinds now total $900M in revenue and $0.35 in EPS Adjusted EPS, Adjusted Operating Margin, Adjusted Gross Margin, and Free Cash Flow are non-GAAP measures; see Appendix for description and reconciliation. Harsh Driving Growth, TEOA Driving Profitability Q1 2015 Summary 7 |
�
|
|
Y/Y Growth Rates Actual Organic Automotive $1,227 3% 8% Commercial Transportation $206 3% 7% Sensors $179 273% 7%* Transportation Solutions $1,612 12% 8% $�in Millions Revenue Revenue up 8% organically on 0.5% auto production growth, driven by continued content growth and share gains Growth in Automotive and Commercial Trans. driven by strength in US and China Sensor growth ahead of expectations with new wins across multiple market segments TEOA driving margin improvement Business Performance Actual Up 12% Organic Up 8% Actual Organic Orders $1,668 14% 9% Adjusted Operating Margin Adjusted Operating Income $345M, Up 16% *Sensors organic sales growth represents TE�s organic sensors business, excluding the impact of the Measurement Specialties and AST acquisitions and changes in foreign currency exchange rates Organic Sales Growth, Adjusted Operating Income, and Adjusted Operating Margin are non-GAAP measures; see Appendix for description and reconciliation. Transportation Solutions 8 |
�
|
|
Y/Y Growth Rates Actual Organic Industrial Equipment $311 (3)% Flat Aerospace, Defense, Oil & Gas 292 18% 8% Energy 181 (6)% 1% Industrial Solutions $784 3% 3% $�in Millions Revenue 6 consecutive quarters of year-over-year growth Strength in US and China offsetting continued weakness in Europe Strong performance in Commercial Aerospace Continuing to invest in footprint optimization and go to market resources to accelerate profit growth Business Performance Actual Up 3% Organic Up 3% Actual Organic Orders $818 1% 1% Adjusted Operating Margin Adjusted Operating Income $101M, Up 1% Organic Sales Growth, Adjusted Operating Income, and Adjusted Operating Margin are non-GAAP measures; see Appendix for description and reconciliation. Industrial Solutions 9 |
�
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Y/Y Growth Rates Actual Organic Broadband Networks (Telecom & Enterprise) $417 (10)% (6)% Data Communications 153 (7)% (4)% Subsea Communications 134 57% 57% Network Solutions $704 (1)% 2% $�in Millions Revenue SubCom business building momentum Broadband Networks strength in North America offset by project delays in Europe & South America Data Communications continues to be impacted by market weakness 160 bps adjusted operating margin expansion on productivity gains Business Performance Actual Down 1% Organic Up 2% Actual Organic Orders $863 19% 23% Adjusted Operating Margin Adjusted Operating Income $62M, Up 22% Organic Sales Growth, Adjusted Operating Income, and Adjusted Operating Margin are non-GAAP measures; see Appendix for description and reconciliation. Network Solutions 10 |
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Y/Y Growth Rates Actual Organic Consumer Devices $208 (20)% (17)% Appliances 158 4% 7% Consumer Solutions $366 (11)% (9)% $�in Millions Revenue Continued strong performance in our market-leading Appliances business Being selective on new programs in Consumer Devices; exiting lower margin businesses 350 bps adjusted operating margin expansion driven by Appliances strength, productivity, and product rationalization in Consumer Devices Business Performance Actual Down 11% Organic Down 9% Actual Organic Orders $363 (12)% (10)% Adjusted Operating Margin Adjusted Operating Income $47M, Up 24% Organic Sales Growth, Adjusted Operating Income, and Adjusted Operating Margin are non-GAAP measures; see Appendix for description and reconciliation. Consumer Solutions 11 |
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Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP measures; see Appendix for description. ($�in Millions, except per share amounts) Q1 FY14 Q1 FY15 Net Sales $�3,326 $�3,466 Operating Income $�479 $�477 Acquisition Related Charges - 51 Restructuring & Other Charges, net 7 27 Adjusted Operating Income $�486 $�555 Operating Margin 14.4% 13.8% Adjusted Operating Margin 14.6% 16.0% GAAP Earnings Per Share $�0.85 $�1.14 Acquisition Related Charges - 0.09 Restructuring & Other Charges, net 0.01 0.06 Tax Items (0.04) (0.31) Adjusted EPS $�0.82 $�0.98 20% Adjusted EPS Growth with 16% Adjusted Operating Margins Q1 Financial Summary 12 |
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$�in Millions Adjusted Gross Margin Percentage Adjusted Gross Margin increases 100bps with productivity gains from TEOA initiatives and leverage on additional volume Adjusted Operating margin expansion driven by productivity and operating expense leverage FCF impacted by timing of tax payments and SubCom project activity Adjusted Operating Margin Free Cash Flow Adjusted Gross Margin Percentage, Free Cash Flow, and Adjusted Operating Margin are non-GAAP measures; See Appendix for description and reconciliation. 16.0% TE Operating Advantage (TEOA) 13 |
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Revenue Guidance Revenue up 6% organically, with 5% adjusted EPS growth versus prior year Transportation Solutions Industrial Solutions Network Solutions Consumer Solutions TE Connectivity Highlights Revenue $3.55B to $3.65B Adjusted EPS $.98 to $1.02 Revenue up 5% Actual and 6% Organic Acquisition Revenue more than offset by $250M FX impact Adjusted EPS up 3-7%, includes ~$0.10 FX headwind Continued strong performance in Transportation, with growth well in excess of 1% auto production growth Expect continued strength in Commercial Aerospace and improved Industrial Equipment demand to offset slight weakness in Oil & Gas SubCom momentum continues with sales of ~$175M in Q2 Another quarter of solid growth expected in Appliances Continue to be selective with opportunities in Consumer Devices Up Mid Single Digits Up Mid Single Digits Organic Up Mid Teens Up High Teens Organic Down High Single Digits Down Mid Single Digits Organic Up Low Single Digits Up Mid Single Digits Organic * Assumes foreign exchange rates and commodity prices that are consistent with current levels ** Organic Sales Growth and Adjusted EPS are non-GAAP measures; see Appendix for description and reconciliation. Q2 Outlook* (Includes BNS) 14 |
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Organic Revenue up 6% with 11% Adjusted EPS growth versus prior year Revenue of $14.45 - $14.85B Adjusted EPS of $4.05 - $4.35 Revenue up 5% at midpoint, up 6% organic FX impacting revenue by ~$900M at current rates Adjusted EPS up 11% at midpoint, with ~$0.35 FX headwind Expect harsh revenue growth as strong momentum continues in Automotive, Commercial Transportation, Aerospace, Industrial Equipment, and Appliances Transportation growth expected to be well ahead of Global auto production growth of 2-3% Y/Y Expect Sensor business to exit year at ~$1B annual run rate SubCom revenues now expected to be ~$650M Benefit of lower commodity prices impacts financials later in the year Strong organic growth more than offsetting $.35 FX headwind Up High Single Digits Up Mid Single Digits Organic Up High Single Digits Up Mid Teens Organic Down High Single Digits Down Low Single Digits Organic Up Low Single Digits Up Mid Single Digits Organic * Assumes foreign exchange rates and commodity prices that are consistent with current levels ** Organic Sales Growth and Adjusted EPS are non-GAAP measures; see Appendix for description and reconciliation. FY15 Outlook* (Includes BNS) Revenue Guidance Transportation Solutions Industrial Solutions Network Solutions Consumer Solutions TE Connectivity Highlights 15 |
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TE Connectivity, Going Forward 16 |
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Unmatched Connectivity and Sensor Portfolio Increased focus on Harsh environment applications Central to IoT and increasingly connected world Delivering extraordinary customer experiences Strongly positioned in growth markets Today�s products are SAFER, GREENER, SMARTER AND MORE CONNECTED. These megatrends are driving the demand for electronics and more TE products. $165 BILLION Connectivity and Sensor Market 17 World Leader Enabling Connectivity |
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Automotive � Megatrends of safe, green, and connected driving 4-6% TE content growth/year Sensors � Adds $80 billion to addressable market Automotive content opportunity doubles from an average of $200 to $400 per vehicle with sensors Aerospace � New aircraft platforms increasing TE content per design by more than 2X in new models vs. prior generations Industrial Equipment � Smart factories, robotics, and manufacturing automation are driving more TE connectors and sensors 18 Examples of TE�s Content Growth |
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80% LEADER IN HARSH ENVIRONMENTS High pressure Vibration High-voltage Moisture High/Low Temperature TE products withstand harsh environments where failure is not an option Strong margins and revenue growth of 10% YOY Leadership position in harsh businesses � Transportation, Industrial, Oil & Gas, Appliances REVENUE UP TO: 19 Increasing Revenue from Harsh Demands excellence in engineering & manufacturing |
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Commercial Transportation Consumer Devices Industrial Equipment SubCom Aerospace & Defense Automotive Appliances Medical Data Communications Energy Oil & Gas The World Leader in Connectivity & Sensors If Data, Power, or Signal Moves Through It TE Connects AND Senses It 20 |
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Appendix 21 |
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Liquidity Summary ($�in Millions) Q1 2015 Q1 2014 Beginning Cash Balance $2,457 $1,403 Free Cash Flow 162 266 Dividends (118) (103) Share repurchases (155) (210) Acquisitions, net of cash required (1,511) - Proceeds from exercise of share options 16 57 Proceeds from issuance of debt and CP, net 270 298 Repayment of long-term debt (223) (303) Other (30) (11) Ending Cash Balance $868 $1,397 Total Debt $4,223 $2,998 ($�in Millions) Q1 2015 Q1 2014 Cash from Continuing Operations $295 $387 Capital expenditures, net Pre separation US tax payments (137) 4 (121) Free Cash Flow $162 $266 A/R - $�$2,349 $2,284 Days Sales Outstanding 61* 62 Inventory (Excl. CIP) - $�$1,919 $1,809 Days on Hand 76* 74 Accounts Payable - $�$1,382 $1,361 Days Outstanding 54* 56 Free Cash Flow is a non-GAAP measure, see Appendix for description * Adjusted to exclude the impact of the Measurement Specialties acquisition Free Cash Flow and Working Capital Liquidity, Cash & Debt Q1 Balance Sheet & Cash Flow Summary 22 |
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Non-GAAP Measures �Organic Sales Growth,� �Adjusted Gross Margin,� �Adjusted Gross Margin Percentage,� �Adjusted EBITDA,� �Adjusted Operating Income,� �Adjusted Operating Margin,� �Adjusted Other Income, Net,� �Adjusted Income Tax Expense,� �Adjusted Effective Tax Rate,� �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 gross margin and gross margin percentage before special items including charges or income related to restructuring and other charges and acquisition related charges, if any ("Adjusted Gross Margin� and �Adjusted Gross Margin Percentage�). We present Adjusted Gross Margin and Adjusted Gross Margin Percentage before special items to give investors a perspective on the underlying business results. These measures should be considered in conjunction with gross margin calculated using our GAAP results in order to understand the amounts, character and impact of adjustments to gross margin. The adjusted EBITDA amount for the Broadband Network Solutions business that is set forth in this presentation is a non-GAAP measure and should not be considered a replacement for GAAP results. Adjusted EBITDA represents net income before interest expense, interest income, income taxes, depreciation and amortization, as adjusted for restructuring related expenses. Adjusted EBITDA is not intended to represent results of operations in accordance with GAAP and should not be considered a substitute for net income or any other operating measure prepared in accordance with GAAP. We present operating income before special items including charges or income related to 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 special items 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 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. 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. * U.S. Generally Accepted Accounting Principles 23 |
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Non-GAAP Measures (cont.) We present effective income tax rate 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 Effective Tax Rate�). We presentAdjusted Effective Tax Rate to provide investors further information regarding the tax rate effects of adjustments used in determining the non-GAAP financial measure Adjusted Income from Continuing Operations (as defined below). The difference between Adjusted Effective Tax Rate and effective income tax rate (the most comparable GAAP measure) is the tax rate effect of the 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 the effective income tax rate. This limitation is best addressed by using Adjusted Effective Tax Rate in combination with effective income tax rate (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 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. AdjustedIncome 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 impactof special 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 decreaseour reported results. This limitation is best addressed by using Adjusted Income from Continuing Operations in combination with income from continuing operations attributable to TE ConnectivityLtd. (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 restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to priorperiod 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 presentAdjusted Earnings Per Share because we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP. We believe such a measure provides a picture of our results that is more comparable among periods since it excludes the impact of special items, which may recur, but tend to be irregular as to timing, thereby making comparisons between periods more difficult. It also is a significant component in our incentive compensation plans. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using Adjusted Earnings Per Share in combination with diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results. �Free Cash Flow� (FCF) is a useful measure of our ability to generate cash. It also is a significant component in our incentive compensation plans. The difference between net cash provided by continuing operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) consists mainly of significantcash outflows and inflows that we believe are useful to identify. We believe free cash flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations. FCF is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cashimpact of special items, if any, minus net capital expenditures. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments. Voluntary pension contributions are excluded from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters, also are considered by management in evaluating free cash flow. We believe investors should also consider these items in evaluating our free cash flow. 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 FCFin 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.24 |
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Segment Summary Q1 FY2015 25 ($�in millions) Adjusted Actual Organic Operating Segment Q1 FY15 Q1 FY14 Growth Growth (1) Margin (1) Transportation Solutions 1,612 $�1,440 $�11.9 % 7.9 % 21.4 % Industrial Solutions 784 763 2.8 2.7 12.9 Network Solutions 704 713 (1.3) 1.9 8.8 Consumer Solutions 366 410 (10.7) (8.5) 12.8 Total 3,466 $�3,326 $�4.2 % 3.4 % 16.0 % (1) See description and reconciliation of non-GAAP measures contained in this appendix. Net Sales |
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Reconciliation of Net Sales Growth� Q1 15 vs. Q1 14 26 Translation (2) Acquisitions Transportation Solutions (3) : Automotive 95 $�8.0 % (61) $�- $�34 $�2.8 % 76 % Commercial Transportation 15 7.4 (8) - 7 3.5 13 Sensors 4 7.4 (4) 131 131 272.9 11 Total 114 7.9 (73) 131 172 11.9 100 % Industrial Solutions (3) : Industrial Equipment 1 0.3 (13) 1 (11) (3.4) 40 Aerospace, Defense, Oil, and Gas 18 7.5 (8) 34 44 17.7 37 Energy 1 0.8 (13) - (12) (6.2) 23 Total 20 2.7 (34) 35 21 2.8 100 % Network Solutions (3) : Broadband Network Solutions (BNS): Telecom Networks (29) (9.4) (12) - (41) (13.1) 39 Enterprise Networks 1 0.5 (7) - (6) (4.0) 21 BNS Total (28) (6.2) (19) - (47) (10.1) 60 Data Communications (7) (4.1) (4) - (11) (6.7) 21 Subsea Communications 49 57.4 - - 49 57.4 19 Total 14 1.9 (23) - (9) (1.3) 100 % Consumer Solutions (3) : Consumer Devices (45) (17.4) (5) - (50) (19.4) 57 Appliances 10 6.7 (4) - 6 3.9 43 Total (35) (8.5) (9) - (44) (10.7) 100 % Total 113 $�3.4 % (139) $�166 $�140 $�4.2 % Percentage of Segment's Total (1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates. Organic net sales growth is a non-GAAP measure. See description of non-GAAP measures contained in this appendix. (3) Industry end market information about net sales is presented consistently with our internal management reporting and may be periodically revised as management deems necessary. Quarter Ended Change in Net Sales for the Quarter Ended December 26, 2014 Net Sales for the (2) Represents the change in net sales resulting from changes in foreign currency exchange rates. versus Net Sales for the Quarter Ended December 27, 2013 Organic (1) Total December 26, 2014 ($�in millions) |
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Reconciliation of Net Sales Growth by Segment and Geography � Q1 15 vs. Q1 14 27 Translation (2) Acquisitions Transportation Solutions: EMEA 30 $�5.1 % (47) $�59 $�42 $�7.2 % Asia-Pacific 88 16.9 (19) 19 88 16.9 Americas (4) (1.3) (7) 53 42 12.6 Total 114 7.9 (73) 131 172 11.9 Industrial Solutions: EMEA (4) (1.2) (26) 9 (21) (6.6) Asia-Pacific 6 4.9 (5) 1 2 1.4 Americas 18 6.0 (3) 25 40 13.5 Total 20 2.7 (34) 35 21 2.8 Network Solutions: EMEA (13) (6.6) (12) - (25) (13.0) Asia-Pacific (5) (3.1) (6) - (11) (6.4) Americas 32 9.1 (5) - 27 7.8 Total 14 1.9 (23) - (9) (1.3) Consumer Solutions: EMEA (2) (4.2) (4) - (6) (11.1) Asia-Pacific (36) (12.3) (5) - (41) (14.1) Americas 3 5.0 - - 3 5.0 Total (35) (8.5) (9) - (44) (10.7) Total: EMEA 11 1.0 (89) 68 (10) (0.9) Asia-Pacific 53 4.8 (35) 20 38 3.3 Americas 49 4.7 (15) 78 112 10.7 Total 113 $�3.4 % (139) $�166 $�140 $�4.2 % (1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates. Organic net sales growth is a non-GAAP measure. See description of non- GAAP measures contained in this appendix. (2) Represents the change in net sales resulting from changes in foreign currency exchange rates. versus Net Sales for the Quarter Ended December 27, 2013 Change in Net Sales for the Quarter Ended December 26, 2014 Organic (1) Total ($�in millions) |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 26, 2014 28 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 303 $�41 $�1 $�- $�345 $�Industrial Solutions 89 10 2 - 101 Network Solutions 61 - 1 - 62 Consumer Solutions 24 - 23 - 47 Total 477 $�51 $�27 $�- $�555 $�Operating Margin 13.8% 16.0% Other Income (Expense), Net (70) $�- $�- $�83 $�13 $�Income Tax (Expense) Benefit 95 $�(14) $�(2) $�(211) $�(132) $�Effective Tax Rate NM (4) 24.5% Income from Continuing Operations Attributable to TE Connectivity Ltd. 472 $�37 $�25 $�(128) $�406 $�Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. 1.14 $�0.09 $�0.06 $�(0.31) $�0.98 $�(3) See description of non-GAAP measures contained in this appendix. (4) Not meaningful. Adjustments ($�in millions, except per share data) (1) Includes $24 million of acquisition and integration costs and $27 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales. (2) Includes $189 million of income tax benefits associated with the settlement of audits of prior year income tax returns as well as the related impact of $83 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax benefits related to the impacts of certain non-U.S. tax law changes and the associated reduction in the valuation allowance for tax loss carryforwards. |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended December 27, 2013 29 Restructuring and Other Tax Adjusted U.S. GAAP Charges, Net Items (1) (Non-GAAP) (2) Operating Income: Transportation Solutions 296 $�1 $�- $�297 $�Industrial Solutions 99 1 - 100 Network Solutions 46 5 - 51 Consumer Solutions 38 - - 38 Total 479 $�7 $�- $�486 $�Operating Margin 14.4% 14.6% Other Income, Net 32 $�- $�(25) $�7 $�Income Tax Expense (127) $�(1) $�7 $�(121) $�Effective Tax Rate 26.3% 26.1% Income from Continuing Operations Attributable to TE Connectivity Ltd. 355 $�6 $�(18) $�343 $�Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. 0.85 $�0.01 $�(0.04) $�0.82 $�(1) Includes income tax expense related to adjustments to prior year income tax returns. In addition, other income includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters, including $18 million related to our share of a settlement agreement entered into by Tyco International with a former subsidiary. (2) See description of non-GAAP measures contained in this appendix. Adjustments ($�in millions, except per share data) |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Quarter Ended March 28, 2014 30 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges Charges, Net Items (1) (Non-GAAP) (2) Operating Income: Transportation Solutions 347 $�- $�(1) $�- $�346 $�Industrial Solutions 106 1 5 - 112 Network Solutions 23 - 16 - 39 Consumer Solutions 34 - 1 - 35 Total 510 $�1 $�21 $�- $�532 $�Operating Margin 14.9% 15.5% Other Income, Net 16 $�- $�- $�(14) $�2 $�Income Tax Expense (136) $�- $�(10) $�36 $�(110) $�Effective Tax Rate 27.2% 21.7% Income from Continuing Operations Attributable to TE Connectivity Ltd. 364 $�1 $�11 $�22 $�398 $�Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. 0.87 $�- $�0.03 $�0.05 $�0.95 $�(1) Includes income tax expense related to adjustments to prior year income tax returns. In addition, other income includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters. (2) See description of non-GAAP measures contained in this appendix. Adjustments ($�in millions, except per share data) |
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures for the Year Ended September 26, 2014 31 Acquisition Restructuring Related and Other Tax Adjusted U.S. GAAP Charges (1) Charges, Net Items (2) (Non-GAAP) (3) Operating Income: Transportation Solutions 1,283 $�4 $�4 $�- $�1,291 $�Industrial Solutions 446 31 7 - 484 Network Solutions 163 - 35 - 198 Consumer Solutions 153 - 13 - 166 Total 2,045 $�35 $�59 $�- $�2,139 $�Operating Margin 14.7% 15.4% Other Income, Net 63 $�- $�- $�(39) $�24 $�Income Tax Expense (207) $�(1) $�(22) $�(239) $�(469) $�Effective Tax Rate 10.4% 22.9% Income from Continuing Operations Attributable to TE Connectivity Ltd. 1,789 $�34 $�37 $�(278) $�1,582 $�Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd. 4.29 $�0.08 $�0.09 $�(0.67) $�3.79 $�(2) Includes income tax benefits of $282 million recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards and income tax expense related to adjustments to prior year income tax returns. In addition, other income includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters, including $18 million related to our share of a settlement agreement entered into by Tyco International with a former subsidiary. (3) See description of non-GAAP measures contained in this appendix. ($�in millions, except per share data) (1) Includes $31 million of acquisition and integration charges and $4 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales. Adjustments |
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Reconciliation of Gross Margin & Gross Margin Percentage 32 December 27, December 26, 2013 2014 Net Sales 3,326 $�3,466 $�Cost of Sales 2,209 2,295 Gross Margin 1,117 1,171 Gross Margin Percentage 33.6% 33.8% Acquisition Related Charges - 27 Adjusted Gross Margin (1) 1,117 $�1,198 $�Adjusted Gross Margin Percentage (1) 33.6% 34.6% (1) See description of non-GAAP measures contained in this appendix. ($�in millions) For the Quarters Ended |
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Reconciliation of Forward-Looking Non-GAAP Financial Measures to Forward-Looking GAAP Financial Measures 33 Outlook for Quarter Ending March 27, Outlook for 2015 Fiscal 2015 Diliuted earnings per share from continuing operations attributable to TE Connectivity Ltd. (GAAP) $0.89 - 0.93 $4.04 - 4.34 Restructuring and other charges, net 0.04 0.10 Acquisition related charges 0.05 0.22 Tax items - (0.31) Adjusted diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (non-GAAP) (1) $0.98 - 1.02 $4.05 - 4.35 Net sales growth (GAAP) 3 - 6% 4 - 7% Translation 7 6 (Acquisitions) divestitures (5) (5) Organic net sales growth (non-GAAP) (1) 5 - 8% 5 - 8% (1) See description of non-GAAP measures contained in this appendix. |
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