UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

 

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Soliciting Material under §240.14a-12

 

MEASUREMENT SPECIALTIES, INC.

(Name of Registrant as Specified In Its Charter)

 

TE CONNECTIVITY LTD.

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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The attached press release was publicly released by TE Connectivity Ltd. on July 23, 2014.

 

ADDITIONAL INFORMATION AND WHERE TO FIND IT

 

This communication is for informational purposes only and does not constitute an offer to purchase or a solicitation of any proxy, vote or approval. In connection with the proposed merger, Measurement Specialties, Inc. (“MEAS”) intends to file a proxy statement and related documents with the SEC.  The definitive proxy statement will be mailed to MEAS shareholders.  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the proxy statement and other relevant documents (in each case when available) filed by MEAS and TE Connectivity Ltd. with the SEC at the website maintained by the SEC at www.sec.gov. Copies of the documents filed by MEAS with the SEC will be available free of charge at the website maintained by MEAS at www.meas-spec.com. Copies of the documents filed by TE Connectivity Ltd. with the SEC will be available free of charge at the website maintained by TE at www.te.com.

 

MEAS and its directors, executive officers and certain other employees may be deemed to be participants in the solicitation of proxies from MEAS’ shareholders with respect to the proposed merger.  Information about MEAS’ directors and executive officers and their ownership of MEAS’ common stock is set forth in the proxy statement for MEAS’ 2013 Annual Meeting of Shareholders, which was filed with the SEC on July 29, 2013.  Additional information regarding persons who may be deemed to be participants in the solicitation of proxies in respect of the proposed merger will be contained in the proxy statement to be filed by MEAS with the SEC.  TE Connectivity Ltd. and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from MEAS’ shareholders with respect to the merger. Information about TE’s directors and executive officers is set forth in the proxy statement for TE’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on January 15, 2014, TE’s Annual Report on Form 10-K for the fiscal year ended September 27, 2013, which was filed with the SEC on November 15, 2013, and TE’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 28, 2014 and December 27, 2013, which were filed with the SEC on April 24, 2014 and January 23, 2014 respectively.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

 

This communication 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 communication include statements addressing our future financial condition and operating results, our ability to realize projected financial impacts of and to integrate the acquisition of the SEACON Group (“SEACON”) and our planned acquisition of MEAS. 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 acquisition of MEAS may not be consummated; the risk that a regulatory approval that may be required for the MEAS acquisition is not obtained or is obtained subject to conditions that are not anticipated; the risk that revenue opportunities, cost savings and other anticipated synergies from the MEAS acquisition or the SEACON acquisition may not be fully realized or may take longer to realize than expected; and the risk that MEAS’ operations or SEACON’s operations will not be successfully integrated into ours. 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. 27, 2013 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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TE Connectivity Reports Third Quarter Results

 

Sales Up 4 Percent; GAAP EPS Up 23 Percent; Adjusted EPS Up 14 Percent

 

SCHAFFHAUSEN, Switzerland — July 23, 2014 — TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal third quarter ended June 27, 2014.

 

Third Quarter Highlights

 

·                  Net sales increased to $3.58 billion, up 4 percent versus the prior year

 

·                  Adjusted Earnings Per Share were $1.00, up 14 percent versus the prior year and at the high end of our guidance range

 

·                  Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $0.97, up 23 percent versus the prior year

 

·                  Free Cash Flow was $530 million; returned $169 million to shareholders through share repurchases and dividends

 

·                  Announced the planned acquisition of Measurement Specialties, Inc. to establish TE as a leader in the high-growth sensor market

 

“We had a strong quarter with continued sales momentum and adjusted EPS at the high end of our guidance range,” said Tom Lynch, TE Connectivity Chairman and CEO. “Our performance was led by continued strength in our Transportation and Industrial segments and our Appliances business — businesses that are focused on higher margin harsh environment applications.

 

“Since the last quarter, we announced strategic acquisitions that expand our position in high-growth industries. We are excited about the announced acquisition of Measurement Specialties, Inc., which will add nearly $40 billion to our addressable market.  Having closed on the acquisition of the SEACON Group, we have significantly expanded our business in the very attractive oil and gas market. These acquisitions position TE as a leading provider of highly engineered connectivity and sensor solutions — technologies that are essential in an increasingly connected world.

 

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“We expect continued strength in our Transportation and Industrial segments for the remainder of the fiscal year. For the first nine months of the year, we generated $1.1 billion in free cash flow and returned over 70 percent to shareholders. For the full year, we are reiterating our guidance and expect adjusted EPS growth of approximately 17 percent, sales growth of 5 percent, and adjusted operating margins above our target of 15 percent.”

 

FISCAL THIRD QUARTER RESULTS

 

The company reported net sales of $3.58 billion, compared to prior year sales of $3.45 billion. Adjusted EPS were $1.00, compared to $0.88 in the prior year. GAAP EPS were $0.97, compared to $0.79 in the prior year.  Free cash flow was $530 million for the quarter.

 

GAAP EPS includes $0.03 of restructuring and other charges.

 

Excluding Subsea Communications, total company orders were $3.48 billion, up 2 percent, and the book-to-bill ratio was 0.99.

 

OUTLOOK

 

For the fourth quarter, the company expects net sales of $3.56 to $3.66 billion and adjusted EPS of $0.98 to $1.02.  GAAP EPS are expected to be $0.93 to $0.97, including restructuring charges of $0.03, acquisition related charges of $0.06, and income related to other items of $0.04.

 

For the full year, the company expects net sales of $13.9 to $14 billion and adjusted EPS of $3.76 to $3.80. GAAP EPS are expected to be $3.62 to $3.66, including restructuring charges of $0.10, acquisition related charges of $0.07, expense from tax-related items of $0.01, and income related to other items of $0.04.

 

The outlook assumes foreign exchange and commodity rates that are consistent with current levels.

 

Information about TE Connectivity’s use of non-GAAP financial measures is described at the end of this press release. For a reconciliation of these non-GAAP financial measures, see the attached tables.

 

CONFERENCE CALL AND WEBCAST

 

·                  The company will hold a conference call for investors today beginning at 8:30 a.m. EDT.

 

·                  Internet users will be able to access the company’s earnings webcast, including slide materials, at the “Investors” section of TE Connectivity’s website: http://investors.te.com

 

·                  By telephone: For both “listen-only” participants and those participants who wish to take part in the

 

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question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1074. The telephone dial-in number for participants outside the United States is (612) 234-9960.

 

·                  An audio replay of the conference call will be available beginning at 10:30 a.m. EDT on July 23, 2014, and ending at 11:59 p.m. EDT on July 30, 2014. 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 329466.

 

NON-GAAP MEASURES

 

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

 

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

 

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

 

We present operating margin before special items including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, and other income or charges, if any (“Adjusted Operating Margin”). We present Adjusted Operating Margin before special items to give investors a perspective on the underlying business results. It also is a significant component in our incentive compensation plans. This measure should be considered in conjunction with operating margin calculated using our GAAP results in order to understand the amounts, character and impact of adjustments to operating margin.

 

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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.

 

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

 

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

 

We present diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. before special items, including charges or income related to legal settlements and reserves, restructuring and other charges, acquisition related charges, impairment charges, tax sharing income related to certain proposed adjustments to prior period tax returns and other tax items, certain significant special tax items, other income or

 

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charges, if any, and, if applicable, related tax effects (“Adjusted Earnings Per Share”). We present Adjusted Earnings Per Share because we believe that it is appropriate for investors to consider results excluding these items in addition to results in accordance with GAAP. We believe such a measure provides a picture of our results that is more comparable among periods since it excludes the impact of special items, which may recur, but tend to be irregular as to timing, thereby making comparisons between periods more difficult. It also is a significant component in our incentive compensation plans. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease our reported results. This limitation is best addressed by using Adjusted Earnings Per Share in combination with diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.

 

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

 

FCF is defined as net cash provided by continuing operating activities excluding voluntary pension contributions and the cash impact of special items, if any, minus net capital expenditures. Net capital expenditures 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.  We forecast our cash flow results excluding any voluntary pension contributions because we have not yet made a determination about the amount and timing of any such future contributions.  In addition, our forecast excludes the cash impact of special items because we cannot predict the amount and timing of such items.

 

FCF as presented herein may not be comparable to similarly-titled measures reported by other companies.  The primary limitation of this measure is that it excludes items that have an impact on our GAAP cash flow.  Also, it subtracts certain cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and may imply that there is less or more cash available for our programs than the most comparable GAAP measure indicates.  This limitation is best addressed by using FCF in combination with the GAAP cash flow results.  It should not be inferred that the entire free cash flow amount is available for future discretionary expenditures, as our definition of free cash flow does not consider certain non-discretionary expenditures, such as debt payments.  In addition, we may have other discretionary expenditures, such as discretionary dividends, share repurchases, and business acquisitions, that are not considered in the calculation of free cash flow.

 

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

 

5



 

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, our ability to realize projected financial impacts of and to integrate the acquisition of the SEACON Group (“SEACON”) and our planned acquisition of Measurement Specialties, Inc. (“MEAS”). 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 acquisition of MEAS may not be consummated; the risk that a regulatory approval that may be required for the MEAS acquisition is not obtained or is obtained subject to conditions that are not anticipated; the risk that revenue opportunities, cost savings and other anticipated synergies from the MEAS acquisition or the SEACON acquisition may not be fully realized or may take longer to realize than expected; and the risk that MEAS’ operations or SEACON’s operations will not be successfully integrated into ours. 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. 27, 2013 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.

 

ADDITIONAL INFORMATION AND WHERE TO FIND IT

 

This communication is for informational purposes only and does not constitute an offer to purchase or a solicitation of any proxy, vote or approval. In connection with the proposed merger, Measurement Specialties, Inc. (“MEAS”) intends to file a proxy statement and related documents with the SEC.  The definitive proxy statement will be mailed to MEAS shareholders.  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the proxy statement and other relevant documents (in each case when available) filed by MEAS and TE Connectivity Ltd. with the SEC at the website maintained by the SEC at www.sec.gov. Copies of the documents filed by MEAS with the SEC will be available free of charge at the website maintained by MEAS at www.meas-spec.com. Copies of the documents filed by TE Connectivity Ltd. with the SEC will be available free of charge at the website maintained by TE at www.te.com.

 

MEAS and its directors, executive officers and certain other employees may be deemed to be participants in the solicitation of proxies from MEAS’ shareholders with respect to the proposed merger.  Information about MEAS’ directors and executive officers and their ownership of MEAS’ common stock is set forth in the proxy statement for MEAS’ 2013 Annual Meeting of Shareholders, which was filed with the SEC on July 29, 2013.  Additional information regarding persons who may be deemed to be participants in the solicitation of proxies in respect of the proposed merger will be contained in the proxy statement to be filed by MEAS with the SEC.  TE Connectivity Ltd. and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from MEAS’ shareholders with respect to the merger. Information about TE’s directors and executive officers is set forth in the proxy statement for TE’s 2014 Annual Meeting of Shareholders, which was filed with the SEC on

 

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January 15, 2014, TE’s Annual Report on Form 10-K for the fiscal year ended September 27, 2013, which was filed with the SEC on November 15, 2013, and TE’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 28, 2014 and December 27, 2013, which were filed with the SEC on April 24, 2014 and January 23, 2014 respectively.

 

ABOUT TE CONNECTIVITY

 

TE Connectivity (NYSE: TEL) is a $13 billion world leader in connectivity. The company designs and manufactures products at the heart of electronic connections for the world’s leading industries including automotive, energy and industrial, broadband communications, consumer devices, healthcare, and aerospace and defense. TE Connectivity’s long-standing commitment to innovation and engineering excellence helps its customers solve the need for more energy efficiency, always-on communications and ever-increasing productivity. With nearly 90,000 employees in over 50 countries, TE Connectivity makes connections the world relies on to work flawlessly every day. To connect with the company, visit www.TE.com.

 

# # #

 

Contacts:

Media Relations:

Jane Crawford

TE Connectivity

610-893-9689 - Office

Jane.crawford@te.com

Investor Relations:

Sujal Shah

TE Connectivity

610-893-9790 - Office

Sujal.shah@te.com

 

Will Ruthrauff

TE Connectivity

610-893-9565 - Office

Will.ruthrauff@te.com

 

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TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 27,

 

June 28,

 

June 27,

 

June 28,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(in millions, except per share data)

 

Net sales

 

$

3,580

 

$

3,449

 

$

10,337

 

$

9,848

 

Cost of sales

 

2,376

 

2,317

 

6,843

 

6,675

 

Gross margin

 

1,204

 

1,132

 

3,494

 

3,173

 

Selling, general, and administrative expenses

 

483

 

456

 

1,421

 

1,322

 

Research, development, and engineering expenses

 

171

 

167

 

505

 

509

 

Acquisition and integration costs

 

1

 

3

 

2

 

11

 

Restructuring and other charges, net

 

14

 

67

 

42

 

240

 

Operating income

 

535

 

439

 

1,524

 

1,091

 

Interest income

 

4

 

4

 

13

 

13

 

Interest expense

 

(30

)

(36

)

(94

)

(108

)

Other income (expense), net

 

9

 

18

 

57

 

(199

)

Income from continuing operations before income taxes

 

518

 

425

 

1,500

 

797

 

Income tax (expense) benefit

 

(113

)

(93

)

(376

)

92

 

Income from continuing operations

 

405

 

332

 

1,124

 

889

 

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

 

(2

)

3

 

(6

)

 

Net income attributable to TE Connectivity Ltd.

 

$

403

 

$

335

 

$

1,118

 

$

889

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to TE Connectivity Ltd.:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.99

 

$

0.80

 

$

2.74

 

$

2.12

 

Income (loss) from discontinued operations

 

 

0.01

 

(0.01

)

 

Net income

 

0.99

 

0.81

 

2.73

 

2.12

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to TE Connectivity Ltd.:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.97

 

$

0.79

 

$

2.70

 

$

2.10

 

Income (loss) from discontinued operations

 

 

0.01

 

(0.01

)

 

Net income

 

0.97

 

0.80

 

2.68

 

2.10

 

 

 

 

 

 

 

 

 

 

 

Dividends and cash distributions paid per common share

 

$

0.29

 

$

0.25

 

$

0.79

 

$

0.67

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

409

 

415

 

410

 

419

 

Diluted

 

416

 

421

 

417

 

423

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

June 27,

 

September 27,

 

 

 

2014

 

2013

 

 

 

(in millions, except share data)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,613

 

$

1,403

 

Accounts receivable, net of allowance for doubtful accounts of $39 and $48, respectively

 

2,503

 

2,323

 

Inventories

 

1,810

 

1,762

 

Prepaid expenses and other current assets

 

605

 

487

 

Deferred income taxes

 

342

 

334

 

Total current assets

 

6,873

 

6,309

 

Property, plant, and equipment, net

 

3,154

 

3,166

 

Goodwill

 

4,354

 

4,326

 

Intangible assets, net

 

1,173

 

1,244

 

Deferred income taxes

 

1,997

 

2,146

 

Receivable from Tyco International Ltd. and Covidien plc

 

1,024

 

1,002

 

Other assets

 

296

 

268

 

Total Assets

 

$

18,871

 

$

18,461

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

625

 

$

711

 

Accounts payable

 

1,433

 

1,383

 

Accrued and other current liabilities

 

1,683

 

1,762

 

Deferred revenue

 

119

 

68

 

Total current liabilities

 

3,860

 

3,924

 

Long-term debt

 

2,375

 

2,303

 

Long-term pension and postretirement liabilities

 

1,125

 

1,155

 

Deferred income taxes

 

321

 

321

 

Income taxes

 

2,012

 

1,979

 

Other liabilities

 

330

 

393

 

Total Liabilities

 

10,023

 

10,075

 

Commitments and contingencies

 

 

 

 

 

Equity:

 

 

 

 

 

TE Connectivity Ltd. shareholders’ equity:

 

 

 

 

 

Common shares, 419,070,781 shares authorized and issued, CHF 0.57 par value, and 428,527,307 shares authorized and issued, CHF 0.57 par value, respectively

 

184

 

189

 

Contributed surplus

 

5,224

 

6,136

 

Accumulated earnings

 

3,590

 

2,472

 

Treasury shares, at cost, 9,397,171 and 17,020,636 shares, respectively

 

(513

)

(720

)

Accumulated other comprehensive income

 

357

 

303

 

Total TE Connectivity Ltd. shareholders’ equity

 

8,842

 

8,380

 

Noncontrolling interests

 

6

 

6

 

Total Equity

 

8,848

 

8,386

 

Total Liabilities and Equity

 

$

18,871

 

$

18,461

 

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

For the Quarters Ended

 

For the Nine Months Ended

 

 

 

June 27,

 

June 28,

 

June 27,

 

June 28,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(in millions)

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

 

 

 

Net income attributable to TE Connectivity Ltd.

 

$

403

 

$

335

 

$

1,118

 

$

889

 

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

 

2

 

(3

)

6

 

 

Income from continuing operations

 

405

 

332

 

1,124

 

889

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

154

 

147

 

457

 

457

 

Non-cash restructuring charges

 

9

 

42

 

17

 

66

 

Deferred income taxes

 

10

 

(1

)

77

 

92

 

Provision for losses on accounts receivable and inventories

 

13

 

10

 

49

 

49

 

Tax sharing (income) expense

 

(8

)

(18

)

(59

)

198

 

Share-based compensation expense

 

21

 

19

 

64

 

59

 

Other

 

11

 

20

 

46

 

30

 

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

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(83

)

(79

)

(190

)

(30

)

Inventories

 

30

 

(17

)

(103

)

(91

)

Inventoried costs on long-term contracts

 

 

25

 

20

 

31

 

Accounts payable

 

(1

)

25

 

39

 

132

 

Accrued and other current liabilities

 

(140

)

24

 

(358

)

(28

)

Income taxes

 

23

 

39

 

95

 

(412

)

Other

 

57

 

46

 

63

 

11

 

Net cash provided by continuing operating activities

 

501

 

614

 

1,341

 

1,453

 

Net cash provided by (used in) discontinued operating activities

 

(1

)

2

 

(7

)

 

Net cash provided by operating activities

 

500

 

616

 

1,334

 

1,453

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(175

)

(159

)

(476

)

(412

)

Proceeds from sale of property, plant, and equipment

 

4

 

15

 

25

 

19

 

Other

 

(2

)

19

 

(20

)

36

 

Net cash used in investing activities

 

(173

)

(125

)

(471

)

(357

)

Cash Flows From Financing Activities:

 

 

 

 

 

 

 

 

 

Net increase in commercial paper

 

 

 

25

 

50

 

Proceeds from issuance of long-term debt

 

 

 

323

 

 

Repayment of long-term debt

 

 

(1

)

(360

)

(715

)

Proceeds from exercise of share options

 

31

 

67

 

140

 

153

 

Repurchase of common shares

 

(60

)

(253

)

(452

)

(618

)

Payment of common share dividends and cash distributions to shareholders

 

(119

)

(104

)

(324

)

(281

)

Other

 

(3

)

2

 

(9

)

 

Net cash used in continuing financing activities

 

(151

)

(289

)

(657

)

(1,411

)

Net cash provided by (used in) discontinued financing activities

 

1

 

(2

)

7

 

 

Net cash used in financing activities

 

(150

)

(291

)

(650

)

(1,411

)

Effect of currency translation on cash

 

7

 

(11

)

(3

)

(12

)

Net increase (decrease) in cash and cash equivalents

 

184

 

189

 

210

 

(327

)

Cash and cash equivalents at beginning of period

 

1,429

 

1,073

 

1,403

 

1,589

 

Cash and cash equivalents at end of period

 

$

1,613

 

$

1,262

 

$

1,613

 

$

1,262

 

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

 

Interest paid

 

$

48

 

$

44

 

$

111

 

$

132

 

Income taxes paid, net of refunds

 

81

 

56

 

205

 

229

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Free Cash Flow:

 

 

 

 

 

 

 

 

 

Net cash provided by continuing operating activities

 

$

501

 

$

614

 

$

1,341

 

$

1,453

 

Capital expenditures, net

 

(171

)

(144

)

(451

)

(393

)

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

 

200

 

(39

)

179

 

28

 

Free cash flow (1)

 

$

530

 

$

431

 

$

1,069

 

$

1,088

 

 


(1) Free cash flow is a non-GAAP measure.  See description of non-GAAP measures contained in this release.

 



 

TE CONNECTIVITY LTD.

CONSOLIDATED SEGMENT DATA (UNAUDITED)

 

 

 

For the Quarters Ended

 

 

 

For the Nine Months Ended

 

 

 

 

 

June 27,

 

 

 

June 28,

 

 

 

June 27,

 

 

 

June 28,

 

 

 

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

 

Net Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

1,585

 

 

 

$

1,438

 

 

 

$

4,596

 

 

 

$

4,087

 

 

 

Industrial Solutions

 

849

 

 

 

803

 

 

 

2,401

 

 

 

2,281

 

 

 

Network Solutions

 

738

 

 

 

803

 

 

 

2,139

 

 

 

2,262

 

 

 

Consumer Solutions

 

408

 

 

 

405

 

 

 

1,201

 

 

 

1,218

 

 

 

Total

 

$

3,580

 

 

 

$

3,449

 

 

 

$

10,337

 

 

 

$

9,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

335

 

21.1

%

$

282

 

19.6

%

$

978

 

21.3

%

$

715

 

17.5

%

Industrial Solutions

 

125

 

14.7

%

84

 

10.5

%

330

 

13.7

%

235

 

10.3

%

Network Solutions

 

39

 

5.3

%

48

 

6.0

%

108

 

5.0

%

103

 

4.6

%

Consumer Solutions

 

36

 

8.8

%

25

 

6.2

%

108

 

9.0

%

38

 

3.1

%

Total

 

$

535

 

14.9

%

$

439

 

12.7

%

$

1,524

 

14.7

%

$

1,091

 

11.1

%

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NET SALES GROWTH (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

Change in Net Sales for the Quarter Ended June 27, 2014

 

Segment’s Total

 

 

 

versus Net Sales for the Quarter Ended June 28, 2013

 

Net Sales for the

 

 

 

Organic (1)

 

Translation (2)

 

Acquisitions
(Divestiture)

 

Total

 

Quarter Ended
June 27, 2014

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

119

 

8.3

%

$

28

 

$

 

$

147

 

10.2

%

100

%

Total

 

119

 

8.3

 

28

 

 

147

 

10.2

 

100

%

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Equipment

 

10

 

3.0

 

4

 

 

14

 

4.2

 

41

 

Aerospace, Defense, Oil, and Gas

 

22

 

8.3

 

4

 

5

 

31

 

11.9

 

34

 

Energy

 

3

 

1.3

 

2

 

(4

)

1

 

0.5

 

25

 

Total

 

35

 

4.3

 

10

 

1

 

46

 

5.7

 

100

%

Network Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Networks

 

(4

)

(1.2

)

3

 

 

(1

)

(0.3

)

47

 

Data Communications

 

(10

)

(5.0

)

2

 

 

(8

)

(4.2

)

25

 

Enterprise Networks

 

(1

)

(0.6

)

(3

)

 

(4

)

(2.5

)

21

 

Subsea Communications

 

(52

)

(50.1

)

 

 

(52

)

(50.1

)

7

 

Total

 

(67

)

(8.3

)

2

 

 

(65

)

(8.1

)

100

%

Consumer Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Devices

 

(12

)

(5.1

)

(1

)

 

(13

)

(5.3

)

56

 

Appliances

 

14

 

8.6

 

2

 

 

16

 

9.9

 

44

 

Total

 

2

 

0.4

 

1

 

 

3

 

0.7

 

100

%

Total

 

$

89

 

2.6

%

$

41

 

$

1

 

$

131

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of

 

 

 

Change in Net Sales for the Nine Months Ended June 27, 2014

 

Segment’s Total

 

 

 

versus Net Sales for the Nine Months Ended June 28, 2013

 

Net Sales for the

 

 

 

Organic (1)

 

Translation (2)

 

Acquisitions
(Divestitures)

 

Total

 

Nine Months Ended
June 27, 2014

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

 

 

Transportation Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automotive

 

$

481

 

11.7

%

$

28

 

$

 

$

509

 

12.5

%

100

%

Total

 

481

 

11.7

 

28

 

 

509

 

12.5

 

100

%

Industrial Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Equipment

 

61

 

6.5

 

5

 

 

66

 

7.1

 

42

 

Aerospace, Defense, Oil, and Gas

 

41

 

5.4

 

9

 

6

 

56

 

7.4

 

34

 

Energy

 

10

 

1.7

 

 

(12

)

(2

)

(0.3

)

24

 

Total

 

112

 

4.9

 

14

 

(6

)

120

 

5.3

 

100

%

Network Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Networks

 

46

 

4.9

 

4

 

 

50

 

5.4

 

46

 

Data Communications

 

(39

)

(6.7

)

(1

)

(39

)

(79

)

(13.5

)

24

 

Enterprise Networks

 

15

 

3.2

 

(13

)

 

2

 

0.4

 

21

 

Subsea Communications

 

(96

)

(32.8

)

 

 

(96

)

(32.8

)

9

 

Total

 

(74

)

(3.4

)

(10

)

(39

)

(123

)

(5.4

)

100

%

Consumer Solutions (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Devices

 

(40

)

(5.2

)

(10

)

 

(50

)

(6.6

)

59

 

Appliances

 

33

 

7.2

 

 

 

33

 

7.2

 

41

 

Total

 

(7

)

(0.6

)

(10

)

 

(17

)

(1.4

)

100

%

Total

 

$

512

 

5.2

%

$

22

 

$

(45

)

$

489

 

5.0

%

 

 

 


(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 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 27, 2014

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

Related

 

and Other

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

(Non-GAAP) (1)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

335

 

$

 

$

 

$

335

 

Industrial Solutions

 

125

 

1

 

1

 

127

 

Network Solutions

 

39

 

 

1

 

40

 

Consumer Solutions

 

36

 

 

12

 

48

 

Total

 

$

535

 

$

1

 

$

14

 

$

550

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

14.9

%

 

 

 

 

15.4

%

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

9

 

$

 

$

 

$

9

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(113

)

$

 

$

(3

)

$

(116

)

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

405

 

$

1

 

$

11

 

$

417

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

0.97

 

$

 

$

0.03

 

$

1.00

 

 


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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended June 28, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

282

 

$

1

 

$

1

 

$

 

$

284

 

Industrial Solutions

 

84

 

2

 

22

 

 

108

 

Network Solutions

 

48

 

 

26

 

 

74

 

Consumer Solutions

 

25

 

 

18

 

 

43

 

Total

 

$

439

 

$

3

 

$

67

 

$

 

$

509

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

12.7

%

 

 

 

 

 

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

18

 

$

 

$

 

$

(8

)

$

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(93

)

$

(1

)

$

(21

)

$

 

$

(115

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

332

 

$

2

 

$

46

 

$

(8

)

$

372

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

0.79

 

$

 

$

0.11

 

$

(0.02

)

$

0.88

 

 


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

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Nine Months Ended June 27, 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

 

$

978

 

$

 

$

 

$

 

$

978

 

Industrial Solutions

 

330

 

2

 

7

 

 

339

 

Network Solutions

 

108

 

 

22

 

 

130

 

Consumer Solutions

 

108

 

 

13

 

 

121

 

Total

 

$

1,524

 

$

2

 

$

42

 

$

 

$

1,568

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

14.7

%

 

 

 

 

 

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

57

 

$

 

$

 

$

(39

)

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(376

)

$

 

$

(14

)

$

43

 

$

(347

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

1,124

 

$

2

 

$

28

 

$

4

 

$

1,158

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

2.70

 

$

 

$

0.07

 

$

0.01

 

$

2.78

 

 


(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 Nine Months Ended June 28, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

715

 

$

5

 

$

29

 

$

 

$

749

 

Industrial Solutions

 

235

 

6

 

55

 

 

296

 

Network Solutions

 

103

 

 

76

 

 

179

 

Consumer Solutions

 

38

 

 

80

 

 

118

 

Total

 

$

1,091

 

$

11

 

$

240

 

$

 

$

1,342

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

11.1

%

 

 

 

 

 

 

13.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(199

)

$

 

$

 

$

222

 

$

23

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

92

 

$

(3

)

$

(72

)

$

(314

)

$

(297

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

889

 

$

8

 

$

168

 

$

(92

)

$

973

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

2.10

 

$

0.02

 

$

0.40

 

$

(0.22

)

$

2.30

 

 


(1) Includes income tax benefits associated with the settlement of an audit of prior year income tax returns as well as the related impact to other expense pursuant to the tax sharing agreement with Tyco International and Covidien.  Also includes income tax expense related to adjustments to prior year income tax returns and income tax benefits recognized in connection with the lapse of statutes of limitations for examinations of prior year income tax returns.  In addition, the other income adjustment includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters.

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended September 27, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

257

 

$

2

 

$

9

 

$

 

$

268

 

Industrial Solutions

 

127

 

1

 

7

 

 

135

 

Network Solutions

 

33

 

 

49

 

 

82

 

Consumer Solutions

 

48

 

 

6

 

 

54

 

Total

 

$

465

 

$

3

 

$

71

 

$

 

$

539

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

13.5

%

 

 

 

 

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

$

16

 

$

 

$

 

$

(9

)

$

7

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

$

(63

)

$

(2

)

$

(18

)

$

(40

)

$

(123

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

387

 

$

1

 

$

53

 

$

(49

)

$

392

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

0.92

 

$

 

$

0.13

 

$

(0.12

)

$

0.93

 

 


(1) Includes income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards partially offset by income tax expense related to adjustments to prior year income tax returns. In addition, the other income adjustment includes amounts related to reimbursements by Tyco International and Covidien in connection with pre-separation tax matters.

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

 



 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 27, 2013

(UNAUDITED)

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

Acquisition

 

Restructuring

 

 

 

 

 

 

 

 

 

Related

 

and Other

 

Tax

 

Adjusted

 

 

 

U.S. GAAP

 

Charges

 

Charges, Net

 

Items (1)

 

(Non-GAAP) (2)

 

 

 

($ in millions, except per share data)

 

Operating Income:

 

 

 

 

 

 

 

 

 

 

 

Transportation Solutions

 

$

972

 

$

7

 

$

38

 

$

 

$

1,017

 

Industrial Solutions

 

362

 

7

 

62

 

 

431

 

Network Solutions

 

136

 

 

125

 

 

261

 

Consumer Solutions

 

86

 

 

86

 

 

172

 

Total

 

$

1,556

 

$

14

 

$

311

 

$

 

$

1,881

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

11.7

%

 

 

 

 

 

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense), Net

 

$

(183

)

$

 

$

 

$

213

 

$

30

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

$

29

 

$

(5

)

$

(90

)

$

(354

)

$

(420

)

 

 

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

1,276

 

$

9

 

$

221

 

$

(141

)

$

1,365

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share from Continuing Operations Attributable to TE Connectivity Ltd.

 

$

3.02

 

$

0.02

 

$

0.52

 

$

(0.33

)

$

3.23

 

 


(1) Includes $331 million of income tax benefits associated with the settlement of an audit of prior year income tax returns as well as the related impact of $231 million to other expense pursuant to the tax sharing agreement with Tyco International and Covidien. Also includes income tax expense related to adjustments to prior year income tax returns, income tax benefits recognized in connection with a reduction in the valuation allowance associated with certain tax loss carryforwards, and income tax benefits recognized in connection with the lapse of statutes of limitations for examinations of prior year income tax returns. In addition, the other income adjustment includes amounts related to 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 FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES

TO FORWARD-LOOKING GAAP FINANCIAL MEASURES

As of July 23, 2014

(UNAUDITED)

 

 

 

Outlook for

 

 

 

 

 

Quarter Ending

 

 

 

 

 

September 26,

 

Outlook for

 

 

 

2014

 

Fiscal 2014

 

Diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (GAAP)

 

$0.93 - 0.97

 

$3.62 - 3.66

 

Restructuring and other charges, net

 

0.03

 

0.10

 

Acquisition related charges

 

0.06

 

0.07

 

Tax items

 

 

0.01

 

Other items

 

(0.04)

 

(0.04)

 

Adjusted diluted earnings per share from continuing operations attributable to TE Connectivity Ltd. (non-GAAP) (1)

 

$0.98 - 1.02

 

$3.76 - 3.80

 

 


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