April 25, 2012 at 06:00 AM EDT
TE Connectivity Reports Second Quarter Results

SCHAFFHAUSEN, Switzerland, April 25, 2012 /PRNewswire/ -- TE Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal second quarter ended March 30, 2012. The company reported net sales of $3.25 billion compared to prior year sales of $3.34 billion. Diluted Earnings Per Share from Continuing Operations (GAAP EPS) were $0.62 for the quarter which included $0.05 of restructuring and other charges and $0.01 of acquisition-related charges.

Adjusted EPS were $0.68, equal to the prior year and above guidance of $0.62 to $0.66. Free cash flow was $379 million for the quarter.

Total company orders were $3.3 billion in the second quarter. The book-to-bill ratio was 1.01 overall, and 1.03 excluding the Subsea Communications business.

"We had a strong quarter in our Transportation Solutions segment and adjusted operating margins improved in all of our segments when compared to last quarter," said TE Connectivity Chief Executive Officer Tom Lynch. "In the third quarter, we expect sequential earnings growth to exceed 15% due to double-digit sales increases in our CIS and Networks segments and the addition of Deutsch. We anticipate operating margins to be about 14% in the second half of our year and full year adjusted earnings per share to be in the range of $2.88 to $2.98."

2012 OUTLOOK

For the third quarter, the Company expects net sales of $3.55 to $3.65 billion and adjusted EPS of $0.77 to $0.81. GAAP EPS are expected to be $0.58 to $0.62, including restructuring and acquisition-related charges of $0.19.

For the full year, the Company expects sales of $13.5 to $13.8 billion and adjusted EPS of $2.88 to $2.98. GAAP EPS are expected to be $2.50 to $2.60 including restructuring and acquisition-related charges of $0.38. This outlook compares to fiscal 2011 revenue of $13.5 billion and adjusted EPS of $2.95 excluding the additional week in 2011.

The Company's outlook assumes current foreign exchange and commodity rates and includes the recently completed acquisition of Deutsch Group SAS. The Company's Touch Solutions and TE Professional Services businesses are included in discontinued operations for all periods.

FISCAL SECOND QUARTER RESULTS

($ in millions)

Mar. 30, 2012

Mar. 25, 2011

YoY

Net Sales

$3,249

$3,339

(3)%

Operating Income

$385

$392

(2)%

Restructuring and Other Charges

$32

$(5)


Acquisition Related Charges

$4

$46


Adjusted Operating Income

$421

$433

(3)%

Operating Margin

11.8%

11.7%


Adjusted Operating Margin

13.0%

13.0%


ADDITIONAL ITEMS

  • On April 10, 2012, the Company announced the planned divestiture of its Touch Solutions and TE Professional Services businesses. Total proceeds are expected to be approximately $400 million and the transactions are anticipated to close in the third fiscal quarter of 2012.

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

ABOUT TE CONNECTIVITY

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

CONFERENCE CALL AND WEBCAST

  • The company will hold a conference call for investors today beginning at 8:30 a.m. EDT.
  • Internet users will be able to access the company's earnings webcast, including slide materials, at the "Investors" section of TE Connectivity's website: http://investors.te.com.
  • For both "listen-only" participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (800) 230-1059. The telephone dial-in number for participants outside the United States is (612) 332-0107.
  • An audio replay of the conference call will be available beginning at 10:00 a.m. EDT on April 25, 2012 and ending at 11:59 p.m. on May 2, 2012. 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 242188.

NON-GAAP MEASURES

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

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

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

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

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

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

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

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

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

Net capital expenditures are subtracted because they represent long-term commitments. Voluntary pension contributions are subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity. Certain special items, including net payments related to pre-separation tax matters, also are considered by management in evaluating free cash flow. We believe investors should consider these items in evaluating our free cash flow. We forecast our cash flow results excluding any voluntary pension contributions because we have not yet made a determination about the amount and timing of any such future contributions. In addition, our forecast excludes the cash impact of special items because we cannot predict the amount and timing of such items.

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

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

FORWARD-LOOKING STATEMENTS

This release contains certain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this release include statements addressing our future financial condition and operating results and our sale of the Touch Solutions and TE Professional Services businesses. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industry and the telecommunications, computer and consumer electronics industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that Deutsch's operations will not be successfully integrated into ours; the risk that revenue opportunities, cost savings and other anticipated synergies from the Deutsch acquisition may not be fully realized or may take longer to realize than expected; and the risks that the divestitures of our Touch Solutions and TE Professional Services businesses may not be consummated. 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, 2011 as well as in our Quarterly Report on Form 10-Q for the fiscal quarter ended Dec. 30, 2011, Current Reports on Form 8-K and other reports filed by us with the U.S. Securities and Exchange Commission.

 

TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


















For the Quarters Ended


For the Six Months Ended


March 30,


March 25,


March 30,


March 25,


2012


2011


2012


2011


(in millions, except per share data)









Net sales

$    3,249


$    3,339


$    6,419


$    6,446

Cost of sales 

2,228


2,331


4,455


4,447

Gross margin

1,021


1,008


1,964


1,999

Selling, general, and administrative expenses

427


431


810


820

Research, development, and engineering expenses

173


173


350


329

Acquisition and integration costs

4


1


8


18

Restructuring and other charges, net

32


11


50


50

   Operating income  

385


392


746


782

Interest income

7


6


12


11

Interest expense

(44)


(43)


(83)


(78)

Other income, net

11


6


12


18

   Income from continuing operations before income taxes

359


361


687


733

Income tax expense 

(91)


(69)


(179)


(177)

   Income from continuing operations

268


292


508


556

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

(10)


8


12


10

   Net income  

258


300


520


566

Less: net income attributable to noncontrolling interests

(1)


(1)


(3)


(2)

Net income attributable to TE Connectivity Ltd.

$       257


$       299


$       517


$       564









Amounts attributable to TE Connectivity Ltd.:








Income from continuing operations

$       267


$       291


$       505


$       554

Income (loss) from discontinued operations

(10)


8


12


10

Net income  

$       257


$       299


$       517


$       564









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








   Income from continuing operations

$      0.63


$      0.66


$      1.19


$      1.25

   Income (loss) from discontinued operations

(0.03)


0.01


0.02


0.02

   Net income  

$      0.60


$      0.67


$      1.21


$      1.27









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








   Income from continuing operations

$      0.62


$      0.65


$      1.17


$      1.23

   Income (loss) from discontinued operations

(0.02)


0.02


0.03


0.03

   Net income  

$      0.60


$      0.67


$      1.20


$      1.26









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

$      0.18


$      0.16


$      0.36


$      0.32









Weighted-average number of shares outstanding: 








   Basic

427


443


426


444

   Diluted

431


449


430


449

  

TE CONNECTIVITY LTD.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)










March 30,


September 30, 


2012


2011


(in millions, except share data)

Assets




Current Assets:




Cash and cash equivalents

$    2,866


$             1,218

Accounts receivable, net of allowance for doubtful accounts of $40 and $38, respectively

2,288


2,341

Inventories

1,833


1,878

Prepaid expenses and other current assets

453


634

Deferred income taxes

402


402

Assets held for sale

469


508

  Total current assets

8,311


6,981

Property, plant, and equipment, net

3,107


3,140

Goodwill

3,283


3,288

Intangible assets, net

606


631

Deferred income taxes

2,290


2,364

Receivable from Tyco International Ltd. and Covidien plc

1,167


1,066

Other assets

265


253

Total Assets

$  19,029


$           17,723





Liabilities and Equity




Current Liabilities:




Current maturities of long-term debt

$    1,285


$                     -

Accounts payable

1,367


1,454

Accrued and other current liabilities

1,555


1,733

Deferred revenue

98


143

Liabilities held for sale

66


80

Total current liabilities

4,371


3,410

Long-term debt

2,687


2,667

Long-term pension and postretirement liabilities

1,173


1,202

Deferred income taxes

333


333

Income taxes

2,264


2,122

Other liabilities

518


505

Total Liabilities

11,346


10,239

Commitments and contingencies




Equity:




TE Connectivity Ltd. Shareholders' Equity:




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

204


593

Contributed surplus

7,592


7,604

Accumulated earnings 

601


84

Treasury shares, at cost, 35,579,778 and 39,303,550 shares, respectively

(1,112)


(1,235)

Accumulated other comprehensive income

389


428

Total TE Connectivity Ltd. shareholders' equity

7,674


7,474

Noncontrolling interests

9


10

Total Equity

7,683


7,484

Total Liabilities and Equity

$  19,029


$           17,723













TE CONNECTIVITY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



For the Quarters Ended


For the Six Months Ended


March 30,


March 25,


March 30,


March 25,


2012


2011


2012


2011


(in millions)

Cash Flows From Operating Activities:








Net income 

$       258


$       300


$       520


$       566

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

10


(8)


(12)


(10)

Income from continuing operations

268


292


508


556

Adjustments to reconcile net cash provided by operating activities:








Depreciation and amortization

138


145


279


276

Deferred income taxes

29


(5)


78


97

Provision for losses on accounts receivable and inventories

8


7


35


12

Share-based compensation expense

18


17


35


39

Other 

(6)


8


(15)


(4)

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








Accounts receivable, net

(114)


(37)


(16)


(38)

Inventories

73


(74)


(9)


(172)

Inventoried costs on long-term contracts

(1)


36


(5)


29

Prepaid expenses and other current assets

80


7


101


50

Accounts payable

5


24


(46)


34

Accrued and other current liabilities

16


84


(188)


(256)

Income taxes

(54)


14


(67)


14

Deferred revenue

2


(25)


(44)


(37)

Long-term pension and postretirement liabilities

13


22


20


44

Other

6


6


10


25

Net cash provided by continuing operating activities

481


521


676


669

Net cash provided by discontinued operating activities

41


36


53


42

Net cash provided by operating activities

522


557


729


711

Cash Flows From Investing Activities:








Capital expenditures

(140)


(113)


(270)


(227)

Proceeds from sale of property, plant, and equipment

2


4


7


12

Proceeds from sale of short-term investments

-


118


-


155

Acquisition of business, net of cash acquired

-


-


-


(717)

Other

(6)


(5)


(7)


(9)

Net cash provided by (used in) continuing investing activities

(144)


4


(270)


(786)

Net cash used in discontinued investing activities

(1)


(1)


(1)


(4)

Net cash provided by (used in) investing activities

(145)


3


(271)


(790)

Cash Flows From Financing Activities:








Increase (decrease) in commercial paper

390


-


569


(100)

Proceeds from long-term debt

748


-


748


249

Repayment of long-term debt

-


(470)


-


(470)

Proceeds from exercise of share options

36


41


48


65

Repurchase of common shares

-


(236)


(17)


(281)

Payment of common share dividends and cash distributions to shareholders

(76)


(70)


(153)


(141)

Other

32


34


40


32

Net cash provided by (used in) continuing financing activities

1,130


(701)


1,235


(646)

Net cash used in discontinued financing activities

(40)


(36)


(52)


(38)

Net cash provided by (used in) financing activities

1,090


(737)


1,183


(684)

Effect of currency translation on cash

10


9


7


12

Net increase (decrease) in cash and cash equivalents

1,477


(168)


1,648


(751)

Less: net  decrease in cash and cash equivalents related to discontinued operations

-


1


-


-

Cash and cash equivalents at beginning of period

1,389


1,406


1,218


1,990

Cash and cash equivalents at end of period

$    2,866


$    1,239


$    2,866


$    1,239









Supplemental Cash Flow Information:








Income taxes paid, net of refunds

$       115


$         61


$       168


$         69









Reconciliation to Free Cash Flow:








Net cash provided by continuing operating activities

$       481


$       521


$       676


$       669

Capital expenditures, net

(138)


(109)


(263)


(215)

Payments related to pre-separation tax matters, net

16


-


16


-

Payments to settle acquisition-related foreign currency derivative contracts

20


-


20


-

Free cash flow(1)

$       379


$       412


$       449


$       454










(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 Six Months Ended 



March 30,



March 25,



March 30,



March 25,



2012



2011



2012



2011



($ in millions)


Net Sales:












Transportation Solutions

$    1,457



$    1,357



$    2,862



$    2,668


Communications and Industrial Solutions

975



1,111



1,949



2,249


Network Solutions

817



871



1,608



1,529


Total

$    3,249



$    3,339



$    6,419



$    6,446


























Operating Income:












Transportation Solutions

$       227

15.6%


$       211

15.5%


$       450

15.7%


$       400

15.0%

Communications and Industrial Solutions

75

7.7%


135

12.2%


136

7.0%


306

13.6%

Network Solutions

83

10.2%


46

5.3%


160

10.0%


76

5.0%

Total

$       385

11.8%


$       392

11.7%


$       746

11.6%


$       782

12.1%













  


















TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)

































Percentage of
















Segment's

Total


Change in Net Sales for the

Quarter Ended March 30, 2012


Net Sales

for the


 versus Net Sales for the

Quarter Ended March 25, 2011


Quarter

Ended


Organic (1) 



Translation (2)


Acquisition


Total



March

30, 2012


($ in millions)




Transportation Solutions(3):

















Automotive

$101


8.5%



$        (18)


$          -


$ 83


7.0%



88%


Aerospace, Defense, and Marine

21


12.6



(4)


-


17


10.4



12


Total

122


8.9



(22)


-


100


7.4



100%


Communications and Industrial Solutions (3):

















Industrial

(55)


(14.3)



(1)


-


(56)


(14.9)



33


Consumer Devices

(21)


(7.5)



1


-


(20)


(7.1)



27


Data Communications

(46)


(18.1)



(1)


-


(47)


(18.4)



21


Appliance

(12)


(6.0)



(1)


-


(13)


(6.6)



19


Total

(134)


(12.1)



(2)


-


(136)


(12.2)



100%


Network Solutions (3):

















Telecom Networks

(20)


(5.9)



(11)


-


(31)


(8.9)



39


Energy

18


9.0



(5)


-


13


6.7



25


Enterprise Networks 

(1)


(0.7)



(7)


-


(8)


(4.4)



21


Subsea Communications

(28)


(18.5)



-


-


(28)


(18.8)



15


Total

(31)


(3.7)



(23)


-


(54)


(6.2)



100%


  Total

$(43)


(1.3)%



$        (47)


$          -


$(90)


(2.7)%























































Percentage of
















Segment's

Total


Change in Net Sales for the

Six Months Ended March 30, 2012


Net Sales

for the


 versus Net Sales for the

Six Months Ended March 25, 2011


Six Months

Ended


Organic (1) 



Translation (2)


Acquisition


Total



March

30, 2012


($ in millions)




Transportation Solutions(3):

















Automotive

$ 176


7.5%



$       (13)


$            -


$163


6.9%



88%


Aerospace, Defense, and Marine

35


10.9



(4)


-


31


9.7



12


Total

211


7.9



(17)


-


194


7.3



100%


Communications and Industrial Solutions (3):

















Industrial

(109)


(14.7)



(1)


-


(110)


(14.7)



33


Consumer Devices

(57)


(9.7)



4


-


(53)


(8.9)



28


Data Communications

(98)


(18.9)



2


-


(96)


(18.6)



21


Appliance

(41)


(10.5)



-


-


(41)


(10.6)



18


Total

(305)


(13.6)



5


-


(300)


(13.3)



100%


Network Solutions (3):

















Telecom Networks

(23)


(4.5)



(11)


117


83


15.6



38


Energy

10


2.3



(6)


-


4


1.0



25


Enterprise Networks 

5


1.6



(10)


37


32


10.5



21


Subsea Communications

(40)


(13.6)



-


-


(40)


(13.7)



16


Total

(48)


(3.2)



(27)


154


79


5.2



100%


   Total 

$(142)


(2.2)%



$      (39)


$       154


$(27)


(0.4)%























(1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates.  Organic net sales growth is a non-GAAP measure.  See description of non-GAAP measures contained in this release.

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

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

  
















TE CONNECTIVITY LTD.

NET SALES GROWTH RECONCILIATION (UNAUDITED)





























Percentage of














Segment's

Total


Change in Net Sales for the

Quarter Ended March 30, 2012


Net Sales

for the


 versus Net Sales for the

Quarter Ended December 30, 2011


Quarter

Ended


Organic (1) 



Translation (2)


Total



March

30, 2012


($ in millions)



Transportation Solutions(3):














Automotive

$   63


5.2%



$              (20)


$ 43


3.5%



88%


Aerospace, Defense, and Marine

11


7.0



(2)


9


5.3



12


Total

74


5.3



(22)


52


3.7



100%


Communications and Industrial Solutions (3):















Industrial

8


3.0



(2)


6


1.9



33


Consumer Devices

(19)


(7.1)



(2)


(21)


(7.4)



27


Data Communications

(1)


(0.7)



(2)


(3)


(1.4)



21


Appliance

21


13.1



(2)


19


11.6



19


Total

9


0.9



(8)


1


0.1



100%


Network Solutions (3):















Telecom Networks

18


6.5



-


18


6.0



39


Energy

14


7.0



(2)


12


6.1



25


Enterprise Networks 

6


3.5



-


6


3.6



21


Subsea Communications

(10)


(7.3)



-


(10)


(7.6)



15


Total

28


3.8



(2)


26


3.3



100%


   Total 

$ 111


3.5%



$              (32)


$ 79


2.5%





















(1) Represents the change in net sales resulting from volume and price changes, before consideration of acquisitions, divestitures, and the impact of changes in foreign currency exchange rates.  Organic net sales growth is a non-GAAP measure.  See description of non-GAAP measures contained in this release.

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

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

  









TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended March 30, 2012

(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

$         227


$              4


$                   2


$                233

Communications and Industrial Solutions

75


-


18


93

Network Solutions

83


-


12


95

    Total 

$         385


$              4


$                 32


$                421









Operating Margin

11.8%






13.0%









Other Income, Net

$           11


$               -


$                   -


$                  11









Income Tax Expense

$         (91)


$               -


$                 (9)


$              (100)









Income from Continuing Operations 








   Attributable to TE Connectivity Ltd.

$         267


$              4


$                 23


$                294









Diluted Earnings per Share from 








   Continuing Operations Attributable 








   to TE Connectivity Ltd.

$        0.62


$         0.01


$              0.05


$               0.68










(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 March 25, 2011

(UNAUDITED)




























Adjustments






Acquisition


Restructuring






Related


and Other


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


(Non-GAAP)(2)


($ in millions, except per share data)

Operating Income:








Transportation Solutions

$         211


$               -


$                 (6)


$               205

Communications and Industrial Solutions

135


-


-


135

Network Solutions

46


46


1


93

    Total 

$         392


$            46


$                 (5)


$               433









Operating Margin

11.7%






13.0%









Other Income, Net

$             6


$               -


$                   -


$                   6









Income Tax Expense

$         (69)


$           (25)


$                   -


$                (94)









Income from Continuing Operations 








   Attributable to TE Connectivity Ltd.

$         291


$            21


$                 (5)


$               307









Diluted Earnings per Share from 








   Continuing Operations Attributable 








   to TE Connectivity Ltd.

$        0.65


$         0.05


$            (0.01)


$              0.68










(1) Includes $29 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, $16 million of restructuring charges, and $1 million of acquisition and integration costs.

(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 Six Months Ended March 30, 2012

(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

$         450


$              8


$                 (2)


$        -


$                456

Communications and Industrial Solutions

136


-


35


-


171

Network Solutions

160


-


17


-


177

    Total 

$         746


$              8


$                 50


$        -


$                804











Operating Margin

11.6%








12.5%











Other Income, Net

$           12


$               -


$                   -


$        -


$                  12











Income Tax Expense

$       (179)


$               -


$               (17)


$     17


$              (179)











Income from Continuing

   Operations Attributable

   to TE Connectivity Ltd.

$         505


$              8


$                 33


$     17


$                563











Diluted Earnings per Share

   from Continuing

   Operations Attributable

   to TE Connectivity Ltd.

$        1.17


$         0.02


$              0.08


$  0.04


$               1.31












(1) Primarily relates to income tax expense associated with certain non-U.S tax rate changes.

(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 Six Months Ended March 25, 2011

(UNAUDITED)




























Adjustments






Acquisition


Restructuring






Related


and Other


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


(Non-GAAP) (2)


($ in millions, except per share data)

Operating Income:








Transportation Solutions

$               400


$                    -


$                  (5)


$               395

Communications and Industrial Solutions

306


-


3


309

Network Solutions

76


105


1


182

Total

$               782


$               105


$                  (1)


$               886









Operating Margin

12.1%






13.7%









Other Income, Net

$                 18


$                    -


$                    -


$                 18









Income Tax Expense

$              (177)


$                (25)


$                  (1)


$              (203)









Income from Continuing Operations 








   Attributable to TE Connectivity Ltd.

$               554


$                 80


$                  (2)


$               632









Diluted Earnings per Share from 








   Continuing Operations Attributable 








   to TE Connectivity Ltd.

$              1.23


$              0.18


$             (0.00)


$              1.41










(1) Includes $51 million of restructuring charges, $36 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $18 million of acquisition and integration costs.

(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 December 30, 2011

(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

$         223


$              4


$                 (4)


$        -


$                223

Communications and Industrial Solutions

61


-


17


-


78

Network Solutions

77


-


5


-


82

    Total 

$         361


$              4


$                 18


$        -


$                383











Operating Margin

11.4%








12.1%











Other Income, Net

$             1


$               -


$                   -


$        -


$                    1











Income Tax Expense

$         (88)


$               -


$                 (8)


$     17


$                (79)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$         238


$              4


$                 10


$     17


$                269











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$        0.55


$         0.01


$              0.02


$  0.04


$               0.63












(1) Primarily relates to income tax expense associated with certain non-U.S tax rate changes.

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


  











TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Quarter Ended June 24, 2011

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


Items(2)


(Non-GAAP)(3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$         211


$               -


$               (13)


$        -


$               198

Communications and Industrial Solutions

120


-


11


-


131

Network Solutions

129


10


3


-


142

    Total 

$         460


$            10


$                   1


$        -


$               471











Operating Margin

12.9%








13.2%











Other Income (Expense), Net

$           (5)


$               -


$                   -


$     14


$                   9











Income Tax Expense

$         (70)


$             (3)


$                   -


$    (35)


$              (108)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$         349


$              7


$                   1


$    (21)


$               336











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$        0.79


$         0.02


$              0.00


$ (0.05)


$              0.76












(1) Includes $7 million of restructuring charges, $2 million of non-cash amortization associated with acquisition accounting-related adjustments recorded in cost of sales, and $1 million of acquisition and integration costs.

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

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

 

TE CONNECTIVITY LTD.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

For the Year Ended September 30, 2011

(UNAUDITED)


































Adjustments






Acquisition


Restructuring








Related


and Other


Tax


Adjusted


U.S. GAAP


Charges (1)


Charges, Net 


Items(2)


(Non-GAAP)(3)


($ in millions, except per share data)

Operating Income:










Transportation Solutions

$     848


$                    -


$                (14)


$                    -


$               834

Communications and Industrial Solutions

515


-


65


-


580

Network Solutions

324


138


5


-


467

Total

$  1,687


$               138


$                 56


$                    -


$            1,881











Operating Margin

12.2%








13.7%











Other Income, Net

$       27


$                    -


$                    -


$                 14


$                 41











Income Tax Expense

$    (347)


$                (35)


$                (18)


$                (35)


$              (435)











Income from Continuing Operations 










   Attributable to TE Connectivity Ltd.

$  1,223


$               103


$                 38


$                (21)


$            1,343











Diluted Earnings per Share from 










   Continuing Operations Attributable 










   to TE Connectivity Ltd.

$     2.76


$              0.23


$              0.09


$             (0.05)


$              3.03











(1) Includes $80 million of restructuring charges, $39 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of acquisition and integration costs.

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

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

     















TE CONNECTIVITY LTD.

IMPACT OF ADDITIONAL WEEK (UNAUDITED)





























For the Quarter Ended September 30, 2011


















Adjustments




Adjustment




14 Weeks

U.S. GAAP


 

 

Acquisition

Related

Charges (1)


 

Restructuring

and Other

Charges, Net 


Tax Items


14 Weeks

Adjusted

(Non-GAAP) (2)


Impact of

14th Week (3)


13 Weeks

Adjusted

(Non-GAAP) (4)


 ($ in millions, except per share data)















Operating Income

$ 445


$ 23


$ 56


$   -


$ 524


$ (52)


$ 472















Operating Margin

11.9%








14.0%




13.5%















Diluted

  Earnings

  per Share

  from

  Continuing

  Operations

  Attributable

  to TE

  Connectivity

  Ltd.

$ 0.74


$ 0.04


$ 0.09


$   -


$ 0.87


$ (0.08)


$ 0.79
















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

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

(3) Estimated impact of the 14th week using an average weekly sales figure for the last month of the fiscal year.

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






























For the Year Ended September 30, 2011


















Adjustments




Adjustment




53 Weeks

U.S. GAAP


 

 

Acquisition

Related

Charges (1)


 

 

Restructuring

and Other

Charges, Net 


Tax Items(2)


 

 

53 Weeks

Adjusted

(Non-GAAP) (3)


 

Impact of

53rd Week(4)


 

 

52 Weeks

Adjusted

(Non-GAAP) (5)


 ($ in millions, except per share data)















Operating Income

$  1,687


$  138


$  56


$   -


$  1,881


$  (52)


$ 1,829















Operating Margin

12.2%








13.7%




13.5%





























Diluted

  Earnings

  per Share

  from

  Continuing 

  Operations

  Attributable

  to TE

  Connectivity

  Ltd.

$  2.76


$  0.23


$  0.09


$(0.05)


$  3.03


$  (0.08)


$  2.95
















(1) Includes $80 million of restructuring charges, $39 million of non-cash amortization associated with fair value adjustments primarily related to acquired inventories and customer order backlog recorded in cost of sales, and $19 million of acquisition and integration costs.

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

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

(4) Estimated impact of the 53rd week using an average weekly sales figure for the last month of the fiscal year.

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

SOURCE TE Connectivity Ltd.

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