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EX-99.2 - EX-99.2 - TE Connectivity Ltd.a17-18209_1ex99d2.htm
8-K - 8-K - TE Connectivity Ltd.a17-18209_18k.htm

Exhibit 99.1

 

 

TE Connectivity Reports Third Quarter 2017 Financial Results

 

Net sales and earnings per share exceed guidance; company raises full year sales and earnings outlook

 

SCHAFFHAUSEN, Switzerland — July 26, 2017 — TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter that ended June 30, 2017.

 

Third Quarter Highlights

 

·                  Net sales were $3.4 billion, up 8 percent, as reported and organically, from third quarter of 2016;

 

·                  Orders, excluding the company’s SubCom business, were $3.3 billion, up 12 percent from the prior year;

 

·                  Diluted earnings per share from continuing operations were $1.21;

 

·                  Adjusted earnings per share were $1.24;

 

·                  Cash flow from continuing operating activities was $524 million, with free cash flow of $408 million, and $324 million returned to shareholders.

 

Third Quarter Results

 

For the third quarter, the company reported net sales of $3.4 billion, with growth of 8 percent year-over-year. Diluted earnings per share (EPS) from continuing operations (GAAP EPS) were $1.21 and adjusted EPS were $1.24. Cash flow from continuing operating activities was $524 million, and free cash flow was $408 million. The company returned $324 million to shareholders in the quarter through dividends and share repurchases. Orders for the quarter, excluding the company’s SubCom business, totaled $3.3 billion, up 12 percent from the prior year, with a book-to-bill ratio of 1.06.

 

“Our teams continued to deliver strong financial performance and growth across all segments and regions, reflecting our strategy to create safer, sustainable, productive and connected solutions for our customers,” said TE Connectivity Chief Executive Officer Terrence Curtin. “This quarter’s results were driven by content growth in Transportation Solutions; strength in our Industrial Solutions segment, particularly in factory automation and medical applications; and strong results in our Communications Solutions segment, especially in areas connected to cloud solutions.

 

“In connection with these results, we are raising the midpoint of our fiscal 2017 sales and adjusted EPS guidance to $12.9 billion and $4.73 respectively, representing 7 percent organic sales growth and 20 percent adjusted EPS

 



 

growth versus the prior year,” Curtin added. “This increase in our guidance is due to above market growth in all of our segments and strong execution of our strategy.”

 

During the third quarter, the company announced a definitive agreement to acquire Hirschmann Car Communication, which focuses on vehicle connectivity technology used in antenna and infotainment systems and acquired MicroGroup, a producer of specialized shafts for medical applications. These acquisitions will enable further content growth in key applications for the automotive and medical markets.

 

2017 Outlook

 

For the fiscal fourth quarter of 2017, the company expects net sales of $3.2 billion to $3.3 billion, reflecting an increase of 5 percent on an as reported basis and 4 percent organically, at the midpoint versus the fourth quarter of 2016, excluding the additional week in fiscal year 2016. GAAP EPS are expected to be $1.07 to $1.09, including net restructuring, acquisition-related and other charges of $0.07. TE expects adjusted EPS of $1.14 to $1.16, which includes a $0.09 favorable impact from growth and margin improvements year-over-year, offset by a $0.08 tax rate impact due to an unusually low tax rate in the prior year.

 

For the full year, the company expects net sales of $12.85 billion to $12.95 billion, reflecting 8 percent growth on an as reported basis and 7 percent organically at the mid-point versus the prior year, excluding the additional week in fiscal year 2016. GAAP EPS are expected to be $4.54 to $4.56, including net restructuring, acquisition-related and other charges of $0.34 and a tax-related benefit of $0.16. TE expects adjusted EPS of $4.72 to $4.74 reflecting 20 percent growth at the mid-point compared to 2016, when excluding the additional week.

 

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

 

Conference Call and Webcast

 

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

 

·                  At TE Connectivity’s website: 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 dial-in number in the United States is (800) 230-1059, and for international callers, the dial-in number is (612) 234-9959.

 



 

·                  An audio replay of the conference call will be available beginning at 10:30 a.m. ET on July 26, 2017, and ending at 11:59 p.m. ET on August 2, 2017. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the dial-in number is (320) 365-3844. The replay access code for all callers is 426345.

 

About TE Connectivity

 

TE Connectivity (NYSE: TEL) is a global technology leader with revenues of approximately $13 billion. Our commitment to innovation enables advancements in transportation, industrial applications, medical technology, energy, data communications, and the home. TE’s unmatched breadth of connectivity and sensor solutions, proven in the harshest of environments, helps build a safer, greener, smarter and more connected world. With 75,000 people — including more than 7,000 engineers — working alongside customers in nearly 150 countries, we help ensure that EVERY CONNECTION COUNTS — www.TE.com

 

Non-GAAP Financial Measures

 

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

 

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

 

·                  Organic Net Sales Growth — represents net sales growth (the most comparable GAAP financial measure) excluding the impact of foreign currency exchange rates, and acquisitions and divestitures that occurred in the preceding twelve months, if any. Organic Net Sales Growth is a useful measure of our performance because it excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity. This measure is a significant component in our incentive compensation plans.

 

·                  Adjusted Operating Income and Adjusted Operating Margin — represent operating income and operating margin, respectively, (the most comparable GAAP financial measures) before special items including

 



 

restructuring and other charges, acquisition related charges, and other income or charges, if any. We utilize these measures to assess segment level operating performance and to provide insight to management in evaluating segment operating plan execution and market conditions. Adjusted Operating Income is a significant component in our incentive compensation plans.

 

·                  Adjusted Other Income, Net — represents net other income (the most comparable GAAP financial measure) before special items including tax sharing income related to adjustments to prior period tax returns and other items, if any.

 

·                  Adjusted Income Tax Expense and Adjusted Effective Tax Rate — represent income tax expense and effective tax rate, respectively (the most comparable GAAP financial measures) after adjusting for the tax effect of special items including restructuring and other charges, acquisition related charges, other income or charges, and certain significant tax items, if any.

 

·                  Adjusted Income from Continuing Operations — represents income from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects.

 

·                  Adjusted Earnings Per Share — represents diluted earnings per share from continuing operations (the most comparable GAAP financial measure) before special items including restructuring and other charges, acquisition related charges, tax sharing income related to adjustments to prior period tax returns and other tax items, other income or charges, and certain significant tax items, if any, and, if applicable, the related tax effects. This measure is a significant component in our incentive compensation plans.

 

·                  Net Sales Excluding the Impact of the Additional Week, Net Sales Growth Excluding the Impact of the Additional Week, Organic Net Sales Growth Excluding the Impact of the Additional Week, Adjusted Operating Income Excluding the Impact of the Additional Week, Adjusted Operating Margin Excluding the Impact of the Additional Week, and Adjusted Earnings Per Share Excluding the Impact of the Additional Week — represent certain GAAP and non-GAAP financial measures excluding the impact of the additional week in the fourth quarter of the fiscal year for fiscal years which are 53 weeks in length. The impact of the additional week is estimated using an average weekly sales figure for the last month of the fiscal year.

 

·                  Free Cash Flow (FCF) — is a useful measure of our ability to generate cash. The difference between net cash provided by continuing operating activities (the most comparable GAAP financial measure) and Free Cash Flow consists mainly of significant cash outflows and inflows that we believe are useful to identify. We believe Free Cash Flow provides useful information to investors as it provides insight into the primary cash flow metric used by management to monitor and evaluate cash flows generated from our operations.

 

Free Cash Flow is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Voluntary pension contributions are excluded from the GAAP financial measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters and cash paid (collected) pursuant to collateral requirements related to cross currency swaps, are also excluded by management in evaluating Free Cash Flow. Net capital expenditures consist of capital expenditures less proceeds from the sale of property, plant, and equipment. These items are subtracted because they represent long-term commitments.

 

In the calculation of Free Cash Flow, we subtract certain cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and may imply that there is less or more

 



 

cash available for our programs than the most comparable GAAP financial measure indicates. It should not be inferred that the entire Free Cash Flow amount is available for future discretionary expenditures, as our definition of Free Cash Flow does not consider certain non-discretionary expenditures, such as debt payments. In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of Free Cash Flow.

 

Forward-Looking Statements

 

This release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive and data and devices industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation.  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. 30, 2016 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.

 

# # #

 

Contacts:

Media Relations:

Investor Relations:

 

B.J. Talley

Sujal Shah

 

TE Connectivity

TE Connectivity

 

610-893-9553

610-893-9790

 

bj.talley@te.com

sujal.shah@te.com

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 30,

 

June 24,

 

June 30,

 

June 24,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

(in millions, except per share data)

 

Net sales

 

$

3,367

 

$

3,121

 

$

9,657

 

$

8,906

 

Cost of sales

 

2,229

 

2,099

 

6,346

 

5,977

 

Gross margin

 

1,138

 

1,022

 

3,311

 

2,929

 

Selling, general, and administrative expenses

 

412

 

367

 

1,196

 

1,074

 

Research, development, and engineering expenses

 

170

 

161

 

490

 

479

 

Acquisition and integration costs

 

1

 

11

 

5

 

19

 

Restructuring and other charges (credits), net

 

19

 

31

 

125

 

(28

)

Operating income

 

536

 

452

 

1,495

 

1,385

 

Interest income

 

3

 

2

 

14

 

12

 

Interest expense

 

(32

)

(31

)

(95

)

(93

)

Other expense, net

 

(4

)

(651

)

(6

)

(631

)

Income (loss) from continuing operations before income taxes

 

503

 

(228

)

1,408

 

673

 

Income tax (expense) benefit

 

(71

)

1,019

 

(164

)

831

 

Income from continuing operations

 

432

 

791

 

1,244

 

1,504

 

Income from discontinued operations, net of income taxes

 

3

 

48

 

5

 

68

 

Net income

 

$

435

 

$

839

 

$

1,249

 

$

1,572

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.22

 

$

2.22

 

$

3.50

 

$

4.08

 

Income from discontinued operations

 

0.01

 

0.13

 

0.01

 

0.18

 

Net income

 

1.23

 

2.35

 

3.52

 

4.26

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.21

 

$

2.19

 

$

3.47

 

$

4.03

 

Income from discontinued operations

 

0.01

 

0.13

 

0.01

 

0.18

 

Net income

 

1.22

 

2.32

 

3.48

 

4.21

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

$

0.40

 

$

0.37

 

$

1.14

 

$

1.03

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

355

 

357

 

355

 

369

 

Diluted

 

358

 

361

 

359

 

373

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

June 30,

 

September 30,

 

 

 

2017

 

2016

 

 

 

(in millions, except share data)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

755

 

$

647

 

Accounts receivable, net of allowance for doubtful accounts of $20 and $17, respectively

 

2,271

 

2,046

 

Inventories

 

1,787

 

1,596

 

Prepaid expenses and other current assets

 

541

 

486

 

Total current assets

 

5,354

 

4,775

 

Property, plant, and equipment, net

 

3,165

 

3,052

 

Goodwill

 

5,516

 

5,492

 

Intangible assets, net

 

1,790

 

1,879

 

Deferred income taxes

 

2,287

 

2,111

 

Other assets

 

408

 

299

 

Total Assets

 

$

18,520

 

$

17,608

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Short-term debt

 

$

878

 

$

331

 

Accounts payable

 

1,309

 

1,090

 

Accrued and other current liabilities

 

1,623

 

1,437

 

Deferred revenue

 

62

 

208

 

Total current liabilities

 

3,872

 

3,066

 

Long-term debt

 

3,113

 

3,739

 

Long-term pension and postretirement liabilities

 

1,494

 

1,502

 

Deferred income taxes

 

197

 

207

 

Income taxes

 

283

 

247

 

Other liabilities

 

420

 

362

 

Total Liabilities

 

9,379

 

9,123

 

Commitments and contingencies

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares, CHF 0.57 par value, 357,069,981 shares authorized and issued, and 382,835,381 shares authorized and issued, respectively

 

157

 

168

 

Contributed surplus

 

 

1,801

 

Accumulated earnings

 

9,747

 

8,682

 

Treasury shares, at cost, 3,380,507 and 27,554,005 shares, respectively

 

(257

)

(1,624

)

Accumulated other comprehensive loss

 

(506

)

(542

)

Total Shareholders’ Equity

 

9,141

 

8,485

 

Total Liabilities and Shareholders’ Equity

 

$

18,520

 

$

17,608

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 30,

 

June 24,

 

June 30,

 

June 24,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

(in millions)

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

435

 

$

839

 

$

1,249

 

$

1,572

 

Income from discontinued operations, net of income taxes

 

(3

)

(48

)

(5

)

(68

)

Income from continuing operations

 

432

 

791

 

1,244

 

1,504

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

157

 

148

 

469

 

438

 

Deferred income taxes

 

(28

)

214

 

(146

)

162

 

Provision for losses on accounts receivable and inventories

 

6

 

4

 

15

 

27

 

Tax sharing expense

 

5

 

651

 

6

 

632

 

Share-based compensation expense

 

26

 

23

 

73

 

66

 

(Gain) loss on divestiture

 

 

3

 

 

(143

)

Other

 

6

 

22

 

17

 

84

 

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

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(45

)

6

 

(260

)

15

 

Inventories

 

(126

)

59

 

(195

)

(2

)

Prepaid expenses and other current assets

 

(38

)

 

(6

)

302

 

Accounts payable

 

69

 

12

 

217

 

(4

)

Accrued and other current liabilities

 

43

 

70

 

56

 

(68

)

Deferred revenue

 

(67

)

48

 

(150

)

(22

)

Income taxes

 

21

 

(1,339

)

54

 

(1,735

)

Other

 

63

 

3

 

55

 

6

 

Net cash provided by continuing operating activities

 

524

 

715

 

1,449

 

1,262

 

Net cash provided by (used in) discontinued operating activities

 

(1

)

3

 

(1

)

1

 

Net cash provided by operating activities

 

523

 

718

 

1,448

 

1,263

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(163

)

(150

)

(452

)

(420

)

Proceeds from sale of property, plant, and equipment

 

4

 

2

 

12

 

3

 

Acquisition of businesses, net of cash acquired

 

(77

)

(988

)

(77

)

(994

)

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

 

4

 

65

 

4

 

326

 

Other

 

(9

)

(1

)

(25

)

28

 

Net cash used in investing activities

 

(241

)

(1,072

)

(538

)

(1,057

)

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

 

Net increase (decrease) in commercial paper

 

 

150

 

(162

)

300

 

Proceeds from issuance of debt

 

 

 

89

 

350

 

Repayment of debt

 

 

 

 

(500

)

Proceeds from exercise of share options

 

22

 

16

 

86

 

77

 

Repurchase of common shares

 

(178

)

(134

)

(376

)

(2,657

)

Payment of common share dividends to shareholders

 

(142

)

(132

)

(405

)

(377

)

Other

 

(2

)

3

 

(24

)

(29

)

Net cash used in continuing financing activities

 

(300

)

(97

)

(792

)

(2,836

)

Net cash provided by (used in) discontinued financing activities

 

1

 

(3

)

1

 

(1

)

Net cash used in financing activities

 

(299

)

(100

)

(791

)

(2,837

)

Effect of currency translation on cash

 

(1

)

(2

)

(11

)

(4

)

Net increase (decrease) in cash and cash equivalents

 

(18

)

(456

)

108

 

(2,635

)

Cash and cash equivalents at beginning of period

 

773

 

1,150

 

647

 

3,329

 

Cash and cash equivalents at end of period

 

$

755

 

$

694

 

$

755

 

$

694

 

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

 

Interest paid

 

$

40

 

$

40

 

$

106

 

$

102

 

Income taxes paid, net of refunds

 

79

 

107

 

256

 

742

 

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF FREE CASH FLOW (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 30,

 

June 24,

 

June 30,

 

June 24,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

(in millions)

 

Net cash provided by continuing operating activities

 

$

524

 

$

715

 

$

1,449

 

$

1,262

 

Excluding:

 

 

 

 

 

 

 

 

 

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

 

(15

)

5

 

(23

)

145

 

Payments related to income taxes on the sale of the Broadband Network Solutions business

 

 

17

 

 

26

 

Cash paid pursuant to collateral requirements related to cross currency swaps

 

58

 

 

19

 

19

 

Capital expenditures, net

 

(159

)

(148

)

(440

)

(417

)

Free cash flow (1)

 

$

408

 

$

589

 

$

1,005

 

$

1,035

 

 


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

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 30,

 

June 24,

 

June 30,

 

June 24,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

($ in millions)

 

 

 

Net Sales

 

 

 

Net Sales

 

 

 

Net Sales

 

 

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

1,765

 

 

 

$

1,652

 

 

 

$

5,195

 

 

 

$

4,767

 

 

 

Industrial Solutions

 

905

 

 

 

849

 

 

 

2,553

 

 

 

2,296

 

 

 

Communications Solutions

 

697

 

 

 

620

 

 

 

1,909

 

 

 

1,843

 

 

 

Total

 

$

3,367

 

 

 

$

3,121

 

 

 

$

9,657

 

 

 

$

8,906

 

 

 

 

 

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

 

 

Income

 

Margin

 

Income

 

Margin

 

Income

 

Margin

 

Income

 

Margin

 

Transportation Solutions

 

$

328

 

18.6

%

$

297

 

18.0

%

$

971

 

18.7

%

$

847

 

17.8

%

Industrial Solutions

 

98

 

10.8

 

95

 

11.2

 

251

 

9.8

 

224

 

9.8

 

Communications Solutions

 

110

 

15.8

 

60

 

9.7

 

273

 

14.3

 

314

 

17.0

 

Total

 

$

536

 

15.9

%

$

452

 

14.5

%

$

1,495

 

15.5

%

$

1,385

 

15.6

%

 

 

 

Adjusted

 

Adjusted

 

Adjusted

 

Adjusted

 

Adjusted

 

Adjusted

 

Adjusted

 

Adjusted

 

 

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

Operating

 

 

 

Income (1)

 

Margin (1)

 

Income (1)

 

Margin (1)

 

Income (1)

 

Margin (1)

 

Income (1)

 

Margin (1)

 

Transportation Solutions

 

$

332

 

18.8

%

$

320

 

19.4

%

$

1,033

 

19.9

%

$

905

 

19.0

%

Industrial Solutions

 

115

 

12.7

 

112

 

13.2

 

313

 

12.3

 

274

 

11.9

 

Communications Solutions

 

112

 

16.1

 

69

 

11.1

 

284

 

14.9

 

206

 

11.2

 

Total

 

$

559

 

16.6

%

$

501

 

16.1

%

$

1,630

 

16.9

%

$

1,385

 

15.6

%

 


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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

 

 

 

Change in Net Sales for the Quarter Ended June 30, 2017

 

 

 

versus Net Sales for the Quarter Ended June 24, 2016

 

 

 

Net

 

Organic Net

 

 

 

 

 

 

 

Sales Growth

 

Sales Growth (1)

 

Translation (2)

 

Acquisitions

 

 

 

($ in millions)

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

49

 

3.9

%

$

70

 

5.6

%

$

(21

)

$

 

Commercial transportation

 

45

 

20.7

 

50

 

23.1

 

(5

)

 

Sensors

 

19

 

10.0

 

14

 

7.2

 

(4

)

9

 

Total

 

113

 

6.8

 

134

 

8.1

 

(30

)

9

 

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial equipment

 

61

 

15.4

 

40

 

10.2

 

(7

)

28

 

Aerospace, defense, oil, and gas

 

(5

)

(1.8

)

(2

)

(0.6

)

(3

)

 

Energy

 

 

 

4

 

1.7

 

(4

)

 

Total

 

56

 

6.6

 

42

 

4.9

 

(14

)

28

 

Communications Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and devices

 

10

 

4.3

 

14

 

5.8

 

(4

)

 

Subsea communications

 

48

 

21.5

 

48

 

21.5

 

 

 

Appliances

 

19

 

11.7

 

22

 

13.6

 

(3

)

 

Total

 

77

 

12.4

 

84

 

13.5

 

(7

)

 

Total

 

$

246

 

7.9

%

$

260

 

8.3

%

$

(51

)

$

37

 

 

 

 

Change in Net Sales for the Nine Months Ended June 30, 2017

 

 

 

versus Net Sales for the Nine Months Ended June 24, 2016

 

 

 

Net

 

Organic Net

 

 

 

Acquisitions

 

 

 

Sales Growth

 

Sales Growth (1)

 

Translation (2)

 

(Divestiture)

 

 

 

($ in millions)

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

277

 

7.7

%

$

326

 

9.1

%

$

(49

)

$

 

Commercial transportation

 

113

 

18.5

 

123

 

20.1

 

(10

)

 

Sensors

 

38

 

6.8

 

18

 

3.2

 

(10

)

30

 

Total

 

428

 

9.0

 

467

 

9.8

 

(69

)

30

 

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial equipment

 

265

 

26.7

 

56

 

5.7

 

(17

)

226

 

Aerospace, defense, oil, and gas

 

(10

)

(1.2

)

(1

)

(0.1

)

(10

)

1

 

Energy

 

2

 

0.4

 

9

 

1.8

 

(7

)

 

Total

 

257

 

11.2

 

64

 

2.8

 

(34

)

227

 

Communications Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and devices

 

(49

)

(6.5

)

34

 

4.1

 

(13

)

(70

)

Subsea communications

 

60

 

9.3

 

60

 

9.3

 

 

 

Appliances

 

55

 

12.5

 

63

 

14.0

 

(8

)

 

Total

 

66

 

3.6

 

157

 

8.5

 

(21

)

(70

)

Total

 

$

751

 

8.4

%

$

688

 

7.7

%

$

(124

)

$

187

 

 


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

 

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

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended June 30, 2017

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)

 

Charges, Net (1)

 

Items (2)

 

(Non-GAAP) (3)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

328

 

$

1

 

$

3

 

$

 

$

332

 

Industrial Solutions

 

98

 

3

 

14

 

 

115

 

Communications Solutions

 

110

 

 

2

 

 

112

 

Total

 

$

536

 

$

4

 

$

19

 

$

 

$

559

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.9

%

 

 

 

 

 

 

16.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(4

)

$

 

$

 

$

7

 

$

3

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(71

)

$

(1

)

$

(3

)

$

(14

)

$

(89

)

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

14.1

%

 

 

 

 

 

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

432

 

$

3

 

$

16

 

$

(7

)

$

444

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

1.21

 

$

0.01

 

$

0.04

 

$

(0.02

)

$

1.24

 

 


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

 

(2) Income tax benefits associated with pre-separation tax matters and the related impact to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended June 24, 2016

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)(2)

 

Charges, Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

297

 

$

2

 

$

21

 

$

 

$

320

 

Industrial Solutions

 

95

 

16

 

1

 

 

112

 

Communications Solutions

 

60

 

 

9

 

 

69

 

Total

 

$

452

 

$

18

 

$

31

 

$

 

$

501

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

14.5

%

 

 

 

 

 

 

16.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Expense, Net

 

$

(651

)

$

 

$

 

$

650

 

$

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

1,019

 

$

(3

)

$

(10

)

$

(1,086

)

$

(80

)

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

446.9

%

 

 

 

 

 

 

17.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

791

 

$

15

 

$

21

 

$

(436

)

$

391

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

2.19

 

$

0.04

 

$

0.06

 

$

(1.21

)

$

1.08

 

 


(1) Includes $11 million of acquisition and integration costs and $7 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

 

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

 

(3) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Nine Months Ended June 30, 2017

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)

 

Charges, Net (1)

 

Items (2)

 

(Non-GAAP) (3)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

971

 

$

2

 

$

60

 

$

 

$

1,033

 

Industrial Solutions

 

251

 

8

 

54

 

 

313

 

Communications Solutions

 

273

 

 

11

 

 

284

 

Total

 

$

1,495

 

$

10

 

$

125

 

$

 

$

1,630

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.5

%

 

 

 

 

 

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(6

)

$

 

$

 

$

7

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(164

)

$

(2

)

$

(33

)

$

(66

)

$

(265

)

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

11.6

%

 

 

 

 

 

 

17.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

1,244

 

$

8

 

$

92

 

$

(59

)

$

1,285

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

3.47

 

$

0.02

 

$

0.26

 

$

(0.16

)

$

3.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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

 

(2) Includes income tax benefits associated with the tax impacts of certain intercompany transactions and the corresponding reduction in the valuation allowance for U.S. tax loss carryforwards. Also includes income tax benefits associated with pre-separation tax matters and the related impact to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Nine Months Ended June 24, 2016

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 

 

 

 

 

 

 

Acquisition

 

and Other

 

 

 

 

 

 

 

 

 

Related

 

Charges

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)(2)

 

(Credits), Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

847

 

$

6

 

$

52

 

$

 

$

905

 

Industrial Solutions

 

224

 

22

 

28

 

 

274

 

Communications Solutions

 

314

 

 

(108

)

 

206

 

Total

 

$

1,385

 

$

28

 

$

(28

)

$

 

$

1,385

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.6

%

 

 

 

 

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(631

)

$

 

$

 

$

650

 

$

19

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

831

 

$

(6

)

$

13

 

$

(1,111

)

$

(273

)

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

(123.5

)%

 

 

 

 

 

 

20.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

1,504

 

$

22

 

$

(15

)

$

(461

)

$

1,050

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

 

$

4.03

 

$

0.06

 

$

(0.04

)

$

(1.24

)

$

2.82

 

 


(1) Includes $19 million of acquisition and integration costs and $9 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

 

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

 

(3) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 30, 2016

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 

 

 

 

 

Acquisition

 

and Other

 

 

 

 

 

 

 

Related

 

Charges

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)

 

(Credits), Net (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

344

 

$

3

 

$

(6

)

$

341

 

Industrial Solutions

 

119

 

1

 

3

 

123

 

Communications Solutions

 

54

 

 

33

 

87

 

Total

 

$

517

 

$

4

 

$

30

 

$

551

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.5

%

 

 

 

 

16.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expense, Net

 

$

(1

)

$

 

$

 

$

(1

)

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(52

)

$

(1

)

$

(15

)

$

(68

)

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

10.6

%

 

 

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

437

 

$

3

 

$

15

 

$

455

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

1.22

 

$

0.01

 

$

0.04

 

$

1.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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

 

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 30, 2016

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

 

 

Restructuring

 

 

 

 

 

 

 

 

 

Acquisition

 

and Other

 

 

 

 

 

 

 

 

 

Related

 

Charges

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges (1)(2)

 

(Credits), Net (2)

 

Items (3)

 

(Non-GAAP) (4)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

1,191

 

$

9

 

$

46

 

$

 

$

1,246

 

Industrial Solutions

 

343

 

23

 

31

 

 

397

 

Communications Solutions

 

368

 

 

(75

)

 

293

 

Total

 

$

1,902

 

$

32

 

$

2

 

$

 

$

1,936

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.5

%

 

 

 

 

 

 

15.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(632

)

$

 

$

 

$

650

 

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

779

 

$

(7

)

$

(2

)

$

(1,111

)

$

(341

)

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

(67.0

)%

 

 

 

 

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

1,941

 

$

25

 

$

 

$

(461

)

$

1,505

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

5.26

 

$

0.07

 

$

 

$

(1.25

)

$

4.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1) Includes $22 million of acquisition and integration costs and $10 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

 

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

 

(3) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 

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

 



 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

For the Quarter Ended September 30, 2016

 

 

 

For the Quarter Ended September 30, 2016

 

 

 

Change in Net Sales for the Quarter Ended

September 30, 2016 versus Net Sales for the

Quarter Ended September 25, 2015

 

Change in Organic Net Sales for the Quarter Ended
September 30, 2016 versus Organic Net Sales for the
Quarter Ended September 25, 2015 (2)

 

 

 

 

 

 

 

 

 

For the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment

 

 

 

Quarter Ended

 

 

 

Adjustment

 

 

 

 

 

Adjustment

 

 

 

 

 

14 Weeks

 

Impact of

 

13 Weeks

 

September 25,

 

14 Weeks

 

Impact of

 

13 Weeks

 

14 Weeks

 

Impact of

 

13 Weeks

 

 

 

U.S. GAAP

 

14th Week

 

(Non-GAAP) (1)(2)

 

2015

 

U.S. GAAP

 

14th Week

 

(Non-GAAP) (1)(2)

 

(Non-GAAP) (2)

 

14th Week

 

(Non-GAAP) (1)(2)

 

 

 

($ in millions)

 

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

1,311

 

$

(102

)

$

1,209

 

$

1,128

 

16.2

%

(9.0

)%

7.2

%

15.3

%

(9.0

)%

6.3

%

Commercial Transportation

 

215

 

(15

)

200

 

190

 

13.2

 

(7.9

)

5.3

 

12.1

 

(7.9

)

4.2

 

Sensors

 

210

 

(13

)

197

 

190

 

10.5

 

(6.8

)

3.7

 

4.2

 

(6.5

)

(2.3

)

Total

 

1,736

 

(130

)

1,606

 

1,508

 

15.1

 

(8.6

)

6.5

 

13.4

 

(8.5

)

4.9

 

Industrial Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Equipment

 

427

 

(32

)

395

 

343

 

24.5

 

(9.3

)

15.2

 

0.7

 

(7.8

)

(7.1

)

Aerospace, Defense, Oil, and Gas

 

299

 

(20

)

279

 

276

 

8.3

 

(7.2

)

1.1

 

8.0

 

(7.1

)

0.9

 

Energy

 

193

 

(13

)

180

 

173

 

11.6

 

(7.6

)

4.0

 

13.4

 

(7.6

)

5.8

 

Total

 

919

 

(65

)

854

 

792

 

16.0

 

(8.2

)

7.8

 

6.0

 

(7.5

)

(1.5

)

Communications Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and Devices

 

262

 

(21

)

241

 

323

 

(18.9

)

(6.5

)

(25.4

)

(5.8

)

(7.5

)

(13.3

)

Subsea Communications

 

239

 

(11

)

228

 

202

 

18.3

 

(5.4

)

12.9

 

18.3

 

(5.2

)

13.1

 

Appliances

 

176

 

(11

)

165

 

159

 

10.7

 

(6.9

)

3.8

 

10.4

 

(7.4

)

3.0

 

Total

 

677

 

(43

)

634

 

684

 

(1.0

)

(6.3

)

(7.3

)

5.9

 

(6.8

)

(0.9

)

Total

 

$

3,332

 

$

(238

)

$

3,094

 

$

2,984

 

11.7

%

(8.0

)%

3.7

%

9.8

%

(7.9

)%

1.9

%

 

 

 

 

 

Adjustments

 

 

 

Adjustment

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

14 Weeks

 

Impact of

 

13 Weeks

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

(Non-GAAP) (2)

 

14th Week

 

(Non-GAAP) (1)(2)

 

 

 

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

517

 

$

4

 

$

30

 

$

551

 

$

(55

)

$

496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.5

%

 

 

 

 

16.5

%

 

 

16.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

1.22

 

$

0.01

 

$

0.04

 

$

1.27

 

$

(0.13

)

$

1.14

 

 


(1) Excludes the impact of an additional week in the fourth quarter of fiscal 2016. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year.

 

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

 



 

TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)

For the Year Ended September 30, 2016

 

 

 

Fiscal 2016

 

 

 

Change in Net Sales for Fiscal 2016
versus Net Sales for Fiscal 2015

 

Change in Organic Net Sales for Fiscal 2016
versus Organic Net Sales for Fiscal 2015 (2)

 

 

 

 

 

Adjustment

 

 

 

 

 

 

 

Adjustment

 

 

 

 

 

Adjustment

 

 

 

 

 

53 Weeks

 

Impact of

 

52 Weeks

 

 

 

53 Weeks

 

Impact of

 

52 Weeks

 

53 Weeks

 

Impact of

 

52 Weeks

 

 

 

U.S. GAAP

 

53rd Week

 

(Non-GAAP) (1)(2)

 

Fiscal 2015

 

U.S. GAAP

 

53rd Week

 

(Non-GAAP) (1)(2)

 

(Non-GAAP) (2)

 

53rd Week

 

(Non-GAAP) (1)(2)

 

 

 

($ in millions)

 

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

4,912

 

$

(102

)

$

4,810

 

$

4,780

 

2.8

%

(2.2

)%

0.6

%

5.6

%

(2.2

)%

3.4

%

Commercial transportation

 

825

 

(15

)

810

 

820

 

0.6

 

(1.8

)

(1.2

)

2.6

 

(1.8

)

0.8

 

Sensors

 

766

 

(13

)

753

 

751

 

2.0

 

(1.7

)

0.3

 

3.1

 

(1.7

)

1.4

 

Total

 

6,503

 

(130

)

6,373

 

6,351

 

2.4

 

(2.1

)

0.3

 

4.9

 

(2.1

)

2.8

 

Industrial Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial equipment

 

1,419

 

(32

)

1,387

 

1,323

 

7.3

 

(2.5

)

4.8

 

(5.2

)

(2.1

)

(7.3

)

Aerospace, defense, oil, and gas

 

1,100

 

(20

)

1,080

 

1,151

 

(4.4

)

(1.8

)

(6.2

)

(3.8

)

(1.7

)

(5.5

)

Energy

 

696

 

(13

)

683

 

705

 

(1.3

)

(1.8

)

(3.1

)

3.6

 

(1.9

)

1.7

 

Total

 

3,215

 

(65

)

3,150

 

3,179

 

1.1

 

(2.0

)

(0.9

)

(2.8

)

(1.9

)

(4.7

)

Communications Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data and devices

 

1,020

 

(21

)

999

 

1,357

 

(24.8

)

(1.6

)

(26.4

)

(17.8

)

(1.7

)

(19.5

)

Subsea communications

 

885

 

(11

)

874

 

709

 

24.8

 

(1.5

)

23.3

 

24.8

 

(1.3

)

23.5

 

Appliances

 

615

 

(11

)

604

 

637

 

(3.5

)

(1.7

)

(5.2

)

(1.8

)

(1.9

)

(3.7

)

Total

 

2,520

 

(43

)

2,477

 

2,703

 

(6.8

)

(1.6

)

(8.4

)

(1.6

)

(1.7

)

(3.3

)

Total

 

$

12,238

 

$

(238

)

$

12,000

 

$

12,233

 

%

(1.9

)%

(1.9

)%

1.5

%

(2.0

)%

(0.5

)%

 

 

 

 

 

Adjustments

 

 

 

Adjustment

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

 

 

53 Weeks

 

Impact of

 

52 Weeks

 

 

 

U.S. GAAP

 

Charges (3)

 

Charges, Net

 

Tax Items (4)

 

(Non-GAAP) (2)

 

53rd Week

 

(Non-GAAP) (1)(2)

 

 

 

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

1,902

 

$

32

 

$

2

 

$

 

$

1,936

 

$

(55

)

$

1,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

15.5

%

 

 

 

 

 

 

15.8

%

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations

 

$

5.26

 

$

0.07

 

$

 

$

(1.25

)

$

4.08

 

$

(0.13

)

$

3.95

 

 


(1) Excludes the impact of an additional week in the fourth quarter of fiscal 2016. The impact of the additional week was estimated using an average weekly sales figure for the last month of the fiscal year.

 

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

 

(3) Includes $22 million of acquisition and integration costs and $10 million of non-cash amortization associated with fair value adjustments related to acquired inventories and customer order backlog recorded in cost of sales.

 

(4) Includes $1,135 million of income tax benefits associated with the settlement of tax matters for the years 1997 through 2000 which resolved all aspects of the disputed debt matter with the IRS through the year 2007, as well as the related impact of $604 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax charges related to a $91 million increase in the valuation allowance for certain U.S. deferred tax assets; and an $83 million net income tax benefit related to tax settlements in certain other tax jurisdictions, as well as the related impact of $46 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of July 26, 2017

(UNAUDITED)

 

 

 

Outlook for

 

 

 

 

 

Quarter Ending

 

 

 

 

 

September 29,

 

Outlook for

 

 

 

2017

 

Fiscal 2017

 

Diluted earnings per share from continuing operations (GAAP)

 

$1.07 - $1.09

 

$4.54 - 4.56

 

Restructuring and other charges, net

 

0.06

 

0.31

 

Acquisition related charges

 

0.01

 

0.03

 

Tax items

 

 

(0.16)

 

Adjusted diluted earnings per share from continuing operations (non-GAAP) (1)

 

$1.14 - 1.16

 

$4.72 - 4.74

 

 

 

 

 

 

 

Net sales growth (GAAP)

 

(5) - (1)%

 

5 - 6%

 

Impact of additional week in fiscal 2016

 

8

 

2

 

Net sales growth excluding the impact of the additional week in fiscal 2016 (non-GAAP) (1)

 

3 - 7%

 

7 - 8%

 

Translation

 

 

1

 

(Acquisitions) divestitures, net

 

(1)

 

(2)

 

Organic net sales growth excluding the impact of the additional week in fiscal 2016 (non-GAAP) (1)

 

2 - 6%

 

6 - 7%

 

 

 

 

 

 

 

Effective tax rate (GAAP)

 

18.5%

 

13.8%

 

Effective tax rate adjustments(2)

 

0.5

 

4.2

 

Adjusted effective tax rate (non-GAAP) (1)

 

19.0%

 

18.0%

 

 


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

 

(2) Includes adjustments for special tax items and the tax effect of acquisition related charges and restructuring and other charges, calculated based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction.