Third Quarter Results - Net Sales Increased 7 Percent Sequentially;
Decreased 34 Percent Year-Over-Year - GAAP Operating Income of $64
Million; Adjusted Operating Income of $127 Million, a 76 Percent
Sequential Increase - Diluted Earnings Per Share (EPS) From
Continuing Operations of $0.06 on a GAAP Basis; Adjusted EPS of
$0.17 - Cash From Continuing Operations of $336 Million; Free Cash
Flow of $327 Million Fourth Quarter Outlook - Company Expects Sales
of $2.53 Billion to $2.63 Billion, a Sequential Increase of 1 to 5
Percent - GAAP Operating Income Expected to be $105 to $145
Million; Adjusted Operating Income Expected to be $160 to $200
Million - EPS From Continuing Operations Expected to be $0.15 to
$0.22; Adjusted EPS Expected to be $0.22 to $0.29 SCHAFFHAUSEN,
Switzerland, July 29 /PRNewswire-FirstCall/ -- Tyco Electronics
Ltd. (NYSE:TEL) today reported results for the fiscal third quarter
ended June 26, 2009. The company reported net sales of $2.5 billion
for the fiscal third quarter, a 7 percent increase sequentially and
a 34 percent decrease compared to the prior-year period. GAAP
diluted earnings per share from continuing operations were $0.06
for the quarter, compared to EPS of $0.59 in the prior-year period.
Included in the earnings per share from continuing operations were
$0.11 per share of restructuring charges. This compares to $0.04
per share of charges in the prior-year quarter. Adjusted EPS from
continuing operations were $0.17 in the quarter, a decline of 73
percent from last year's adjusted EPS of $0.63. "Our third quarter
results reflect improved operating performance sequentially.
Adjusted operating margin increased from 3 to 5 percent due to
higher sales, coupled with continued strong productivity gains. We
also generated $327 million of free cash flow, driven primarily by
a significant reduction in inventory," said Tyco Electronics Chief
Executive Officer Tom Lynch. "Demand for our consumer-related
products is showing signs of improvement, as supply chain inventory
reductions that impacted us over the past six months appear to be
substantially over. This more than offset weakness in the
industrial markets we serve." Organic Sales Growth, Adjusted
Operating Income, Adjusted Operating Margin, Adjusted Income Tax
Expense, Adjusted Income From Continuing Operations, Adjusted
Earnings Per Share and Free Cash Flow are all non-GAAP financial
measures and are described at the end of this press release. For a
reconciliation of these non-GAAP measures, see the attached tables.
All dollar amounts are pre-tax and stated in millions. All
comparisons are to the fiscal quarter ended June 27, 2008 unless
otherwise indicated. ($ in millions) June 26, 2009 June 27, 2008
$Change % Change ------------- ------------- ------- -------- Net
Sales $2,508 $3,782 $(1,274) (34)% Operating Income $64 $515 $(451)
(88)% Restructuring-Related Charges $(63) $(16) Pre-Separation
Litigation Charges $0 $(7) -- --- Adjusted Operating Income $127
$538 $(411) (76)% Operating Margin 2.6% 13.6% Adjusted Operating
Margin 5.1% 14.2% GAAP operating income was $64 million, compared
to $515 million of income in the prior-year period. Included in the
current quarter were restructuring charges of $63 million. Included
in prior-year operating income were $16 million of restructuring
costs and $7 million of pre-separation litigation charges.
Excluding these items in both periods, adjusted operating income
was $127 million compared to $538 million a year ago, a decrease of
76 percent. The adjusted operating margin was 5.1 percent, compared
to 14.2 percent a year ago -- reflecting a 34 percent decline in
sales. CASH FLOW Cash from continuing operations was $336 million
during the quarter, which included a $285 million reduction related
to changes in accounts receivable, inventory and accounts payable.
Free cash flow was $327 million, compared to $262 million in the
prior-year period. The increase in free cash flow was driven by
inventory reductions, as well as reduced capital expenditures
versus the prior year. ADDITIONAL ITEMS -- During the quarter, the
company received shareholder approval to change its place of
incorporation from Bermuda to Switzerland. This change became
effective on June 25. -- Tyco Electronics completed the
previously-announced sale of its Wireless Systems business. The
company received net cash proceeds of $665 million, including a $10
million working capital adjustment. Beginning in the third quarter,
the Wireless Systems business unit is included in discontinued
operations. -- In early July, as part of the company's
previously-announced debt tender offer, the company repurchased
approximately $152 million of principal amount of its senior notes.
As a result, the company will report a net gain of approximately
$20 million in the fiscal fourth quarter from this early retirement
of debt. -- On July 27, 2009, the company's Board of Directors
recommended a dividend in the form of a capital reduction of $0.16
per share for each of the first and second quarters of fiscal 2010,
subject to shareholder approval. For more details, please see the
related press release issued by the company today. ORDERS Total
company orders declined 43 percent overall and 38 percent
organically compared to the prior year. The book-to-bill ratio was
0.93 in the quarter. Excluding the company's Undersea
Telecommunications segment, which is a project-oriented business
with uneven order patterns, orders declined 35 percent overall and
30 percent organically in the quarter. The book-to-bill ratio was
1.04. FOURTH QUARTER FISCAL 2009 OUTLOOK For the fourth quarter of
fiscal 2009, the company expects sales of $2.53 billion to $2.63
billion, a sequential increase of 1 to 5 percent. The company
expects income from operations of $105 to $145 million, which
includes restructuring and other charges of approximately $75
million and a net gain of approximately $20 million on early
retirement of debt. Adjusted operating income is expected to be
$160 million to $200 million. GAAP EPS from continuing operations
is expected to be $0.15 to $0.22, including restructuring and other
charges of approximately $0.11 per share and approximately $0.04
per share related to a net gain on early retirement of debt.
Adjusted EPS from continuing operations are expected to be $0.22 to
$0.29, compared to adjusted EPS of $0.65 in the prior-year period.
This outlook assumes current foreign exchange rates. ($ in
millions, except per share amounts) Q4 Outlook ---------- Sales
$2,530 to $2,630 Operating Income $105 to $145 Restructuring and
Other Charges $(75) Gain on Early Retirement of Debt, net $20
Adjusted Operating Income $160 to $200 GAAP Earnings Per Share
$0.15 to $0.22 Adjusted EPS from Continuing Operations $0.22 to
$0.29 Lynch said, "Our outlook assumes a slight sequential
improvement in sales and continued margin improvement due to
productivity gains and increased manufacturing utilization. We also
expect our Electronic Components segment to return to profitability
in the fourth quarter." SEGMENT RESULTS Tyco Electronics is
comprised of four reporting segments: Electronic Components,
Network Solutions, Specialty Products and Undersea
Telecommunications. Electronic Components The Electronic Components
segment is one of the world's largest suppliers of passive
electronic components, including connectors and interconnect
systems, relays, switches, sensors, and wire and cable. June 26,
June 27, Organic ($ in millions) 2009 2008 $ Change % Change Growth
---- ---- -------- -------- ------ Net Sales $1,424 $2,467 $(1,043)
(42)% (37)% Operating Income/(Loss) $(82) $333 $(415) NM
Restructuring-Related Charges $(46) $(11) ----- ----- Adjusted
Operating Income/(Loss) $(36) $344 $(380) NM Operating Margin
(5.8)% 13.5% Adjusted Operating Margin (2.5)% 13.9% Sales in the
segment declined 42 percent compared to the prior-year quarter. On
a sequential basis, sales increased 11 percent. The segment
experienced year-over-year declines across all end-markets,
including automotive which was down 42 percent, computer which was
down 43 percent, communications which was down 36 percent and
industrial which was down 55 percent. The operating margin and the
adjusted operating margin decreased primarily due to the sales
declines and the negative impact of lower production to reduce
inventory, partially offset by the company's cost reduction
activities. The current quarter included $46 million of
restructuring charges, compared to $11 million of restructuring
charges in the prior-year quarter. Network Solutions The Network
Solutions segment is one of the world's largest suppliers of
infrastructure components and systems for the communication service
provider, enterprise networks and energy markets. June 26, June 27,
Organic ($ in millions) 2009 2008 $ Change % Change Growth ----
---- -------- -------- ------- Net Sales $425 $574 $(149) (26)%
(17)% Operating Income $31 $66 $(35) (53)% Restructuring-Related
Charges $(15) $(4) ---- ---- Adjusted Operating Income $46 $70
$(24) (34)% Operating Margin 7.3% 11.5% Adjusted Operating Margin
10.8% 12.2% Segment sales declined 26 percent compared to the
prior-year quarter. Sequentially, sales increased 6 percent.
Compared to the prior year, sales to the communication service
provider market declined 22 percent, sales to the energy market
declined 25 percent and sales to the enterprise networks market
declined 34 percent. The revenue decline was due to reduced capital
spending by customers in these markets. The decrease in the
operating margin and the adjusted operating margin was primarily
due to the sales declines and the negative impact of lower
production to reduce inventory, partially offset by the company's
cost reduction activities. Restructuring charges in the quarter
were $15 million, compared to $4 million in the prior-year quarter.
Specialty Products The Specialty Products segment is a leader in
providing highly-engineered custom solutions, components and
connectors for electronic systems, subsystems and devices in the
aerospace, defense and marine; medical; touch systems; and circuit
protection markets. June 26, June 27, Organic ($ in millions) 2009
2008 $ Change % Change Growth ---- ---- -------- -------- -------
Net Sales $340 $463 $(123) (27)% (24)% Operating Income $42 $83
$(41) (49)% Restructuring-Related Charges $(1) $0 --- -- Adjusted
Operating Income $43 $83 $(40) (48)% Operating Margin 12.4% 17.9%
Adjusted Operating Margin 12.6% 17.9% Segment sales declined 27
percent compared to the prior-year quarter, and fell 2 percent
sequentially. Year-over-year, sales to the medical market decreased
15 percent, sales to the aerospace, defense and marine market
declined 23 percent, sales of touch systems declined 36 percent and
sales of circuit protection products declined 33 percent. The
operating margin and the adjusted operating margin decreased
primarily due to the sales declines and the negative impact of
lower production to reduce inventory, partially offset by the
company's cost reduction activities. Restructuring charges in the
quarter were $1 million, compared to no such charges in the
prior-year quarter. Undersea Telecommunications The company's
Undersea Telecommunications segment is a world leader in
developing, manufacturing, installing and maintaining the world's
most advanced fiber optic undersea networks. June 26, June 27,
Organic ($ in millions) 2009 2008 $ Change % Change Growth ----
---- -------- -------- ------- Net Sales $319 $278 $41 15% 15%
Operating Income $73 $40 $33 83% Restructuring-Related Charges $(1)
$(1) --- --- Adjusted Operating Income $74 $41 $33 80% Operating
Margin 22.9% 14.4% Adjusted Operating Margin 23.2% 14.7% Segment
sales increased 15 percent compared to the prior-year quarter. On a
sequential basis, sales increased 3 percent. The operating margin
and adjusted operating margin increases were due to favorable
project mix and execution. Restructuring charges in the quarter
were $1 million in both the current and prior-year quarters. ABOUT
TYCO ELECTRONICS Tyco Electronics Ltd. is a leading global provider
of engineered electronic components, network solutions, specialty
products and undersea telecommunication systems, with fiscal 2008
sales of $14.4 billion to customers in more than 150 countries. We
design, manufacture and market products for customers in a broad
array of industries including automotive; data communication
systems and consumer electronics; telecommunications; aerospace,
defense and marine; medical; energy; and lighting. With
approximately 7,000 engineers and worldwide manufacturing, sales
and customer service capabilities, Tyco Electronics' commitment is
our customers' advantage. More information on Tyco Electronics can
be found at http://www.tycoelectronics.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 Tyco Electronics' website:
http://investors.tycoelectronics.com/. -- For both "listen-only"
telephone participants and those participants who wish to take part
in the question-and-answer portion of the call, the dial-in number
in the United States is (800) 230-1059. 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. on July 29, 2009 and ending at
11:59 p.m. on August 5, 2009. 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 105486. NON-GAAP MEASURES
"Organic Sales Growth," "Adjusted Operating Income," "Adjusted
Operating Margin," "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 the company 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, acquisitions and divestitures. Organic Sales
Growth is a useful measure of the company's performance because it
excludes items that: i) are not completely under management's
control, such as the impact of foreign currency exchange; or ii) do
not reflect the underlying growth of the company, such as
acquisition and divestiture activity. It is also a component of the
company's compensation programs. The limitation of this measure is
that it excludes items that have an impact on the company's sales.
This limitation is best addressed by using organic sales growth in
combination with the GAAP numbers. See the accompanying tables to
this press release for the reconciliation presenting the components
of Organic Sales Growth. The company has presented its operating
income before unusual items including charges related to legal
settlements and reserves, restructuring charges, impairment charges
and other income or charges ("Adjusted Operating Income"). The
company utilizes 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 is also a significant component in the company's
incentive compensation plans. Adjusted Operating Income is a useful
measure for investors because it better reflects the company's
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 related to legal settlements and
reserves, restructuring charges, impairment charges and other
income or charges 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 the company's 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. The company
has presented its operating margin before unusual items including
charges related to legal settlements and reserves, restructuring
charges, impairment charges and other income or charges ("Adjusted
Operating Margin"). The company presents and forecasts its Adjusted
Operating Margin before unusual items to give investors a
perspective on the underlying business results. Because the company
cannot predict the amount and timing of such items and the
associated charges or gains that will be recorded in the company's
financial statements, it is difficult to include the impact of
those items in the forecast. The company has presented income tax
expense after adjusting for the tax effect of unusual items
including charges related to restructuring, impairment and other
income or charges ("Adjusted Income Tax Expense"). The company
presents 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. 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 in order
to better understand the amounts, character and impact of any
increase or decrease in reported amounts. The company has presented
income from continuing operations before unusual items including
charges related to legal settlements and reserves, restructuring
charges, impairment charges, tax sharing income related to the
adoption of FIN 48, other income or charges and, if applicable,
related tax effects ("Adjusted Income from Continuing Operations").
The company presents Adjusted Income from Continuing Operations as
it believes that it is appropriate for investors to consider
results excluding these items in addition to its results in
accordance with GAAP. Adjusted Income from Continuing Operations
provides additional information regarding the company's 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 (the
most comparable GAAP measure) consists of the impact of charges
related to legal settlements and reserves, restructuring charges,
impairment charges, tax sharing income related to the adoption of
FIN 48, other income or charges 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 the company's reported results. This limitation is best
addressed by using Adjusted Income from Continuing Operations in
combination with income from continuing operations (the most
comparable GAAP measure) in order to better understand the amounts,
character and impact of any increase or decrease in reported
amounts. The company has presented adjusted diluted earnings per
share, which is diluted earnings per share from continuing
operations before unusual items, including charges related to legal
settlements and reserves, restructuring charges, impairment
charges, tax sharing income related to the adoption of FIN 48 and
other income or charges ("Adjusted Earnings Per Share"). The
company presents Adjusted Earnings Per Share because it believes
that it is appropriate for investors to consider results excluding
these items in addition to its results in accordance with GAAP. The
company believes such a measure provides a picture of its results
that is more comparable among periods since it excludes the impact
of unusual items, which may recur occasionally, but tend to be
irregular as to timing, thereby making comparisons between periods
more difficult. This limitation is best addressed by using Adjusted
Earnings Per Share in combination with diluted earnings per share
from continuing operations (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 the company's cash generation which is free
from any significant existing obligation. The difference between
cash flows from operating activities (the most comparable GAAP
measure) and FCF (the non-GAAP measure) consists mainly of
significant cash outflows that the company believes are useful to
identify. FCF permits management and investors to gain insight into
the number that management employs to measure cash that is free
from any significant existing obligation. The difference reflects
the impact from: -- net capital expenditures, -- voluntary pension
contributions, and -- cash impact of unusual items. 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. The company
forecasts its cash flow results excluding any voluntary pension
contributions because it has not yet made a determination about the
amount and timing of any future such contributions. In addition,
the company's forecast excludes the cash impact of unusual items
because the company cannot predict the amount and timing of such
items. The limitation associated with using FCF is that it
subtracts cash items that are ultimately within management's and
the Board of Directors' discretion to direct and that therefore may
imply that there is less or more cash that is available for the
company's programs than the most comparable GAAP measure. This
limitation is best addressed by using FCF in combination with the
GAAP cash flow numbers. FCF as presented herein may not be
comparable to similarly-titled measures reported by other
companies. The measure should be used in conjunction with other
GAAP financial measures. Investors are urged to read the company's
financial statements as filed with the Securities and Exchange
Commission, as well as the accompanying tables to this press
release that show all the elements of the GAAP measures of Cash
Flows from Operating Activities, Cash Flows from Investing
Activities, Cash Flows from Financing Activities and a
reconciliation of the company's total cash and cash equivalents for
the period. See the accompanying tables to this press release for a
cash flow statement presented in accordance with GAAP and a
reconciliation presenting the components of FCF. Because the
company does not predict the amount and timing of unusual items
that might occur in the future, and its forecasts are developed at
a level of detail different than that used to prepare GAAP-based
financial measures, the company does not provide reconciliations to
GAAP of its forward-looking financial measures. FORWARD-LOOKING
STATEMENTS This release may contain certain "forward-looking
statements" within the meaning of the United States 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. Tyco Electronics has no intention and is under no
obligation to update or alter (and expressly disclaims any such
intention or obligation to do so) its forward-looking statements
whether as a result of new information, future events or otherwise,
except to the extent required by law. The forward-looking
statements in this release include statements addressing our future
financial condition and operating results. Examples of factors that
could cause actual results to differ materially from those
described in the forward-looking statements include, among others,
business, economic, competitive and regulatory risks, such as
developments in the credit markets; conditions affecting demand for
products, particularly the automotive industry and the
telecommunications, computer and consumer electronics industries;
future goodwill impairment; competition and pricing pressure;
fluctuations in foreign currency exchange rates and commodity
prices; political, economic and military instability in countries
outside the U.S.; compliance with current and future environmental
and other laws and regulations; and the possible effects on us of
changes in tax laws, tax treaties and other legislation. More
detailed information about these and other factors is set forth in
Tyco Electronics' Annual Report on Form 10-K/A for the fiscal year
ended September. 26, 2008 and Quarterly Reports on Form 10-Q for
the quarterly periods ended December 26, 2008 and March 27, 2009,
as well as in Tyco Electronics' Current Reports on Form 8-K and
other reports filed by Tyco Electronics with the Securities and
Exchange Commission. TYCO ELECTRONICS LTD. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) For the For the Nine Quarters
Ended Months Ended -------------- ------------ June 26, June 27,
June 26, June 27, 2009 2008 2009 2008 ---- ---- ---- ---- (in
millions, except per share data) Net sales $2,508 $3,782 $7,558
$10,797 Cost of sales 1,921 2,683 5,713 7,632 ----- ----- -----
----- Gross income 587 1,099 1,845 3,165 Selling, general, and
administrative expenses 330 409 1,070 1,177 Research, development,
and engineering expenses 130 152 405 438 Pre-Separation litigation
charges, net - 7 144 30 Restructuring and other charges, net 63 16
329 62 Impairment of goodwill - - 3,547 - -- -- ----- -- Operating
income (loss) 64 515 (3,650) 1,458 Interest income 4 6 13 25
Interest expense (42) (44) (125) (144) Other income 5 1 7 606 -- --
-- --- Income (loss) from continuing operations before income taxes
and minority interest 31 478 (3,755) 1,945 Income tax (expense)
benefit (3) (191) 577 (502) Minority interest (2) (2) (5) (4) -- --
-- -- Income (loss) from continuing operations 26 285 (3,183) 1,439
Income (loss) from discontinued operations, net of income taxes
(100) 45 (166) 141 ---- -- ---- --- Net income (loss) $(74) $330
$(3,349) $1,580 ==== ==== ======= ====== Basic earnings (loss) per
share: Income (loss) from continuing operations $0.06 $0.60 $(6.95)
$2.95 Income (loss) from discontinued operations (0.22) 0.09 (0.36)
0.29 ----- ---- ----- ---- Net income (loss) $(0.16) $0.69 $(7.31)
$3.24 ====== ===== ====== ===== Diluted earnings (loss) per share:
Income (loss) from continuing operations $0.06 $0.59 $(6.95) $2.94
Income (loss) from discontinued operations (0.22) 0.09 (0.36) 0.28
----- ---- ----- ---- Net income (loss) $(0.16) $0.68 $(7.31) $3.22
====== ===== ====== ===== Weighted-average number of shares
outstanding: Basic 458 478 458 487 Diluted 459 482 458 490 TYCO
ELECTRONICS LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 26, September 26, 2009 2008 ---- ---- (in millions, except
share data) Assets Current Assets: Cash and cash equivalents $1,258
$1,090 Accounts receivable, net of allowance for doubtful accounts
of $44 and $40, respectively 1,795 2,656 Inventories 1,640 2,159
Prepaid expenses and other current assets 662 756 Deferred income
taxes 203 204 Assets held for sale - 770 -- --- Total current
assets 5,558 7,635 Property, plant, and equipment, net 3,106 3,342
Goodwill 3,152 6,749 Intangible assets, net 415 454 Deferred income
taxes 2,577 1,915 Receivable from Tyco International Ltd. and
Covidien Ltd. 1,246 1,218 Other assets 238 287 --- --- Total Assets
$16,292 $21,600 ======= ======= Liabilities and Shareholders'
Equity Current Liabilities: Current maturities of long-term debt $1
$20 Accounts payable 951 1,433 Accrued and other current
liabilities 1,505 1,558 Deferred revenue 168 207 Liabilities held
for sale - 169 -- --- Total current liabilities 2,625 3,387
Long-term debt 2,578 3,161 Long-term pension and postretirement
liabilities 706 721 Deferred income taxes 285 289 Income taxes
2,372 2,291 Other liabilities 645 668 --- --- Total Liabilities
9,211 10,517 ----- ------ Commitments and contingencies Minority
interest 10 10 Shareholders' equity: Preferred shares, none at June
26, 2009; 125,000,000 shares authorized and none outstanding, $0.20
par value, at September 26, 2008 - - Common shares, 468,215,574
shares authorized and issued, CHF 2.43 par value, at June 26, 2009;
1,000,000,000 shares authorized and 500,241,706 issued, $0.20 par
value, at September 26, 2008 1,049 100 Capital in excess: Share
premium - 61 Contributed surplus 8,156 10,106 Accumulated (deficit)
earnings (2,361) 1,141 Treasury stock, at cost, 10,000,000 and
36,904,702 shares, respectively (371) (1,264) Accumulated other
comprehensive income 598 929 --- --- Total Shareholders' Equity
7,071 11,073 ----- ------ Total Liabilities and Shareholders'
Equity $16,292 $21,600 ======= ======= TYCO ELECTRONICS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the
For the Quarters Ended Nine Months Ended --------------
----------------- June 26, June 27, June 26, June 27, 2009 2008
2009 2008 ---- ---- ---- ---- (in millions) Cash Flows From
Operating Activities: Net income (loss) $(74) $330 $(3,349) $1,580
(Income) loss from discontinued operations, net of income taxes 100
(45) 166 (141) --- --- --- ---- Income (loss) from continuing
operations 26 285 (3,183) 1,439 Adjustments to reconcile net cash
provided by (used in) operating activities: Impairment of goodwill
- - 3,547 - Tax sharing income (4) (1) (9) (606) Class action
settlement - - - (936) Non-cash restructuring and other charges,
net 6 8 29 28 Depreciation and amortization 130 138 382 399
Deferred income taxes (13) 90 (692) 205 Provision for losses on
accounts receivable and inventory 19 17 57 30 Other 19 8 56 12
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures: Accounts receivable, net (53) (79)
779 (152) Inventories 264 (50) 471 (269) Inventoried costs on
long-term contracts (48) 8 (107) (41) Prepaid expenses and other
current assets 9 34 224 62 Accounts payable 74 45 (470) 81 Accrued
and other liabilities (92) (10) (248) (48) Income taxes (1) (22) 27
- Deferred revenue 18 (19) (41) 122 Other (18) (31) 7 (1) --- ---
-- -- Net cash provided by continuing operating activities 336 421
829 325 Net cash (used in) provided by discontinued operating
activities (6) (17) (42) 26 -- --- --- -- Net cash provided by
operating activities 330 404 787 351 --- --- --- --- Cash Flows
From Investing Activities: Capital expenditures (61) (165) (270)
(445) Proceeds from sale of property, plant, and equipment 2 6 9 37
Class action settlement escrow - - - 936 Proceeds from divestiture
of discontinued operations, net of cash retained by operations sold
665 - 694 102 Proceeds from divestiture of businesses, net of cash
retained by businesses sold 10 - 16 - Other 1 (5) (2) (21) -- -- --
--- Net cash provided by (used in) continuing investing activities
617 (164) 447 609 Net cash used in discontinued investing
activities (1) (2) (3) (10) -- -- -- --- Net cash provided by (used
in) investing activities 616 (166) 444 599 --- ---- --- --- Cash
Flows From Financing Activities: Net increase (decrease) in
commercial paper - 1 (649) 651 Repayment of long-term debt (342)
(400) (461) (1,351) Proceeds from long-term debt 6 400 448 500
Repurchase of common shares - (240) (152) (832) Payment of common
share dividends (74) (69) (221) (205) Proceeds from exercise of
share options 1 23 1 51 Transfers (to) from discontinued operations
(17) 11 (49) 32 Other (1) (3) (4) (12) -- -- -- --- Net cash used
in continuing financing activities (427) (277) (1,087) (1,166) Net
cash provided by (used in) discontinued financing activities 12 5
49 (31) -- -- -- --- Net cash used in financing activities (415)
(272) (1,038) (1,197) ---- ---- ------ ------ Effect of currency
translation on cash 5 2 (21) 19 Net increase (decrease) in cash and
cash equivalents 536 (32) 172 (228) Less: net (increase) decrease
in cash and cash equivalents related to discontinued operations (5)
14 (4) 15 Cash and cash equivalents at beginning of period 727 749
1,090 944 --- --- ----- --- Cash and cash equivalents at end of
period $1,258 $731 $1,258 $731 ====== ==== ====== ==== Supplemental
Cash Flow Information: Income taxes paid, net of refunds $15 $105
$87 $297 Reconciliation to Free Cash Flow: Net cash provided by
continuing operating activities $336 $421 $829 $325 Capital
expenditures, net (59) (159) (261) (408) Pre-Separation litigation
payments 50 - 50 - Class action settlement - - - 936 -- -- -- ---
Free cash flow (1) $327 $262 $618 $853 ==== ==== ==== ==== (1) Free
cash flow is a non-GAAP measure. See description of non-GAAP
measures contained in this release. TYCO ELECTRONICS LTD.
CONSOLIDATED SEGMENT DATA (UNAUDITED) For the Quarters Ended
---------------------- June 26, June 27, 2009 2008 ---- ---- ($ in
millions) Net Sales: Electronic Components $1,424 $2,467 Network
Solutions 425 574 Specialty Products 340 463 Undersea
Telecommunications 319 278 --- --- Total $2,508 $3,782 ======
====== Operating Income (Loss): Electronic Components $(82) -5.8%
$333 13.5% Network Solutions 31 7.3% 66 11.5% Specialty Products 42
12.4% 83 17.9% Undersea Telecommunications 73 22.9% 40 14.4%
Pre-Separation litigation charges, net - (7) -- -- Total $64 2.6%
$515 13.6% === ==== For the Nine Months Ended
------------------------- June 26, June 27, 2009 2008 ---- ---- ($
in millions) Net Sales: Electronic Components $4,329 $7,022 Network
Solutions 1,283 1,602 Specialty Products 1,053 1,310 Undersea
Telecommunications 893 863 --- --- Total $7,558 $10,797 ======
======= Operating Income (Loss): Electronic Components $(3,754)
-86.7% $949 13.5% Network Solutions 96 7.5% 186 11.6% Specialty
Products (13) -1.2% 231 17.6% Undersea Telecommunications 165 18.5%
122 14.1% Pre-Separation litigation charges, net (144) (30) ----
--- Total $(3,650) -48.3% $1,458 13.5% ======= ====== TYCO
ELECTRONICS LTD. NET SALES GROWTH RECONCILIATION (UNAUDITED) Change
in Net Sales for the Quarter Ended June 26, 2009 versus Net Sales
for the Quarter Ended June 27, 2008
---------------------------------------------------- Organic (1)
Translation (2) Divestiture ----------- --------------- -----------
($ in millions) Electronic Components (3): Automotive $(433)
(35.9)% $(78) $- Communications (69) (28.3) 2 (22) Computer (101)
(41.6) (2) (1) Appliance (46) (32.6) (5) - Industrial (73) (51.1)
(7) 2 Consumer Electronics (12) (25.4) 1 (5) Other (174) (39.1)
(16) (4) ---- ----- --- -- Total (908) (36.9) (105) (30) ---- -----
---- --- Network Solutions (3): Energy (38) (14.7) (26) - Service
Providers (20) (12.3) (16) - Enterprise Networks (40) (27.0) (11) -
Other - (4.8) 2 - -- ---- -- -- Total (98) (17.2) (51) - --- -----
--- -- Specialty Products (3): Aerospace, Defense, and Marine (38)
(19.6) (6) - Touch Systems (39) (32.6) (4) - Medical (9) (12.5) (1)
- Circuit Protection (26) (33.5) - - --- ----- -- -- Total (112)
(24.3) (11) - ---- ----- --- -- Undersea Telecommunications 40 14.5
1 - -- ---- -- -- Total $(1,078) (28.4)% $(166) $(30) ======= =====
===== ==== Change in Net Sales for the Quarter Ended June 26, 2009
Percentage of versus Net Segment's Sales for the Total Quarter
Ended Net Sales June 27, 2008 for the ------------- Quarter Ended
Total June 26, 2009 ----- ------------- ($ in millions) Electronic
Components (3): Automotive $(511) (42.4)% 49% Communications (89)
(36.3) 11 Computer (104) (43.0) 10 Appliance (51) (35.9) 6
Industrial (78) (54.9) 5 Consumer Electronics (16) (34.0) 2 Other
(194) (43.8) 17 ---- ----- -- Total (1,043) (42.3) 100% ------
----- --- Network Solutions (3): Energy (64) (24.8) 46 Service
Providers (36) (22.4) 29 Enterprise Networks (51) (33.8) 24 Other 2
50.0 1 -- ---- -- Total (149) (26.0) 100% ---- ----- --- Specialty
Products (3): Aerospace, Defense, and Marine (44) (22.6) 45 Touch
Systems (43) (35.5) 23 Medical (10) (14.5) 17 Circuit Protection
(26) (33.3) 15 --- ----- -- Total (123) (26.6) 100% ---- ----- ---
Undersea Telecommunications 41 14.7 -- ---- Total $(1,274) (33.7)%
======= ===== Change in Net Sales for the Nine Months Ended June
26, 2009 versus Net Sales for the Nine Months Ended June 27, 2008
-------------------------------------------------------- Organic
(1) Translation (2) Divestiture ----------- ---------------
----------- ($ in millions) Electronic Components (3): Automotive
$(1,317) (38.4)% $(192) $- Communications (179) (24.9) 11 (43)
Computer (262) (35.9) (3) (2) Appliance (122) (30.8) (12) -
Industrial (125) (33.1) (21) 2 Consumer Electronics (36) (25.9) 4
(7) Other (343) (27.9) (41) (5) ---- ----- --- -- Total (2,384)
(34.0) (254) (55) ------ ----- ---- --- Network Solutions (3):
Energy (49) (6.8) (76) - Service Providers (42) (9.1) (47) -
Enterprise Networks (76) (18.9) (30) - Other (1) (10.0) 2 - --
----- -- -- Total (168) (10.6) (151) - ---- ----- ---- -- Specialty
Products (3): Aerospace, Defense, and Marine (60) (11.1) (16) -
Touch Systems (76) (23.3) (10) - Medical (12) (6.2) (2) - Circuit
Protection (84) (36.5) 3 - --- ----- -- -- Total (232) (17.8) (25)
- ---- ----- --- -- Undersea Telecommunications 29 3.3 1 - -- ---
-- -- Total $(2,755) (25.5)% $(429) $(55) ======= ===== ===== ====
Change in Net Sales for the Nine Months Ended June 26, 2009 versus
Net Sales for the Nine Percentage of Months Ended Segment's Total
June 27, 2008 Net Sales for the ---------------- Nine Months Ended
Total June 26, 2009 ----- ------------- ($ in millions) Electronic
Components (3): Automotive $(1,509) (44.0)% 45% Communications
(211) (29.3) 12 Computer (267) (36.6) 11 Appliance (134) (33.8) 6
Industrial (144) (38.2) 5 Consumer Electronics (39) (28.1) 2 Other
(389) (31.6) 19 ---- ----- -- Total (2,693) (38.4) 100 ------ -----
--- Network Solutions (3): Energy (125) (17.4) 46 Service Providers
(89) (19.3) 29 Enterprise Networks (106) (26.0) 24 Other 1 6.7 1 --
--- -- Total (319) (19.9) 100% ---- ----- --- Specialty Products
(3): Aerospace, Defense, and Marine (76) (13.8) 45 Touch Systems
(86) (26.2) 23 Medical (14) (7.0) 18 Circuit Protection (81) (35.1)
14 --- ----- -- Total (257) (19.6) 100% ---- ----- --- Undersea
Telecommunications 30 3.5 -- --- Total $(3,239) (30.0)% =======
===== (1) Represents the change in net sales resulting from volume
and price changes, before consideration of acquisitions,
divestitures, and the impact of changes in foreign currency
exchange rates. Organic net sales growth is a non-GAAP measure. See
description of non-GAAP measures contained in this release. (2)
Represents the change in net sales resulting from changes in
foreign currency exchange rates. (3) Industry end market
information about net sales is presented consistently with our
internal management reporting and may be periodically revised as
management deems necessary. TYCO ELECTRONICS LTD. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES For the
Quarter Ended June 26, 2009 (UNAUDITED) Adjustments -----------
Restructuring and U.S. Other Charges, Adjusted GAAP Net (1)
(Non-GAAP) (2) ---- ------- -------------- ($ in millions, except
per share data) Operating Income: Electronic Components $(82) $46
$(36) Network Solutions 31 15 46 Specialty Products 42 1 43
Undersea Telecommunications 73 1 74 -- -- -- Total $64 $63 $127 ===
=== ==== Operating Margin 2.6% 5.1% === === Income Tax Expense $(3)
$(12) $(15) === ==== ==== Income from Continuing Operations $26 $51
$77 === === === Diluted Earnings per Share from Continuing
Operations $0.06 $0.11 $0.17 ===== ===== ===== (1) Includes $63
million recorded in restructuring and other charges, net. (2) See
description of non-GAAP measures contained in this release. TYCO
ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
GAAP FINANCIAL MEASURES For the Quarter Ended June 27, 2008
(UNAUDITED) Adjustments ----------- Restructuring and Other U.S.
Other Charges, Items, Adjusted GAAP Net (1) Net (2) (Non-GAAP) (3)
---- ------- ------- -------------- ($ in millions, except per
share data) Operating Income: Electronic Components $333 $11 $-
$344 Network Solutions 66 4 - 70 Specialty Products 83 - - 83
Undersea Telecommunications 40 1 - 41 Pre-Separation litigation
charges, net (7) - 7 - -- -- -- -- Total $515 $16 $7 $538 ==== ===
== ==== Operating Margin 13.6% 14.2% ==== ==== Income Tax Expense
$(191) $(5) $- $(196) ===== === == ===== Income from Continuing
Operations $285 $11 $7 $303 ==== === == ==== Diluted Earnings per
Share from Continuing Operations $0.59 $0.02 $0.01 $0.63 =====
===== ===== ===== (1) Includes $16 million recorded in
restructuring and other charges, net. (2) Consists of $7 million of
net costs related to the settlement of pre-Separation securities
litigation recorded in pre-Separation litigation charges, net. (3)
See description of non-GAAP measures contained in this release.
TYCO ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES For the Nine Months Ended June 26, 2009
(UNAUDITED) Adjustments ----------- Restructuring and Other Other
Adjusted U.S. Charges, Impairment of Items, (Non- GAAP Net (1)
Goodwill (2) Net (3) GAAP) (4) ---- ------- ------------ -------
--------- ($ in millions, except per share data) Operating Income
(Loss): Electronic Components $(3,754) $254 $3,435 $- $(65) Network
Solutions 96 42 - - 138 Specialty Products (13) 27 112 8 134
Undersea Telecommunications 165 5 - - 170 Pre-Separation litigation
charges, net (144) - - 144 - ---- -- -- --- -- Total $(3,650) $328
$3,547 $152 $377 ======= ==== ====== ==== ==== Operating Margin
-48.3% 5.0% ===== === Income Tax (Expense) Benefit $577 $(78)
$(523) $(3) $(27) ==== ==== ===== === ==== Income (Loss) from
Continuing Operations $(3,183) $250 $3,024 $149 $240 ======= ====
====== ==== ==== Diluted Earnings (Loss) per Share from Continuing
Operations $(6.95) $0.54 $6.59 $0.32 $0.52 ====== ===== ===== =====
===== (1) Includes $329 million recorded in restructuring and other
charges, net and a $1 million credit recorded in cost of sales. (2)
Consists of goodwill impairment of $3,547 million recorded in
impairment of goodwill. (3) Consists of $144 million of costs
related to the settlement of pre-Separation securities litigation
recorded in pre-Separation litigation charges, net and $8 million
of costs related to a product liability matter from several years
ago recorded in selling, general, and administrative expenses. (4)
See description of non-GAAP measures contained in this release.
TYCO ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES For the Nine Months Ended June 27, 2008
(UNAUDITED) Adjustments ----------- Restructuring and Other Other
Adjusted U.S. Charges, Tax Items, (Non- GAAP Net (1) Items (2) Net
(3) GAAP) (4) ---- ------- --------- ------- --------- ($ in
millions, except per share data) Operating Income (Loss):
Electronic Components $949 $41 $- $(36) $954 Network Solutions 186
18 - - 204 Specialty Products 231 - - - 231 Undersea
Telecommunications 122 4 - - 126 Pre-Separation litigation charges,
net (30) - - 30 - --- -- -- -- -- Total $1,458 $63 $- $(6) $1,515
====== === == === ====== Operating Margin 13.5% 14.0% ==== ====
Income Tax (Expense) Benefit $(502) $(19) $- $20 $(501) ===== ====
== === ===== Income (Loss) from Continuing Operations $1,439 $44
$(572) $14 $925 ====== === ===== === ==== Diluted Earnings (Loss)
per Share from Continuing Operations $2.94 $0.09 $(1.17) $0.03
$1.89 ===== ===== ====== ===== ===== (1) Includes $62 million
recorded in restructuring and other charges, net and $1 million
recorded in cost of sales. (2) In connection with the adoption of
FIN 48, the Company recorded income of $572 million in other
income, net pursuant to its Tax Sharing Agreement with Tyco
International and Covidien. (3) Consists of a $36 million gain on
the sale of real estate recorded in selling, general and
administrative expenses and $30 million of net costs related to the
settlement of pre-Separation securities litigation recorded in
pre-Separation litigation charges, net. (4) See description of
non-GAAP measures contained in this release. TYCO ELECTRONICS LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES For the Quarter Ended March 27, 2009 (UNAUDITED)
Adjustments ----------- Restructuring and Other Other Adjusted U.S.
Charges, Impairment of Items, (Non- GAAP Net (1) Goodwill (2) Net
(3) GAAP) (4) ---- ------- ------------ ------- --------- ($ in
millions, except per share data) (Loss) Income from Operations:
Electronic Components $(3,654) $166 $3,435 $- $(53) Network
Solutions 21 8 - - 29 Specialty Products (83) 12 112 - 41 Undersea
Telecommunications 54 1 - - 55 Pre-Separation litigation charges,
net (135) - - 135 - ---- -- -- --- -- Total $(3,797) $187 $3,547
$135 $72 ======= ==== ====== ==== === Operating Margin -162.5% 3.1%
====== === Income Tax Benefit (Expense) $594 $(43) $(523) $- $28
==== ==== ===== == === (Loss) Income from Continuing Operations
$(3,239) $144 $3,024 $135 $64 ======= ==== ====== ==== === Diluted
(Loss) Earnings per Share from Continuing Operations $(7.07) $0.31
$6.60 $0.29 $0.14 ====== ===== ===== ===== ===== (1) Includes $189
million recorded in restructuring and other charges, net and a $2
million credit recorded in cost of sales. (2) Consists of goodwill
impairment of $3,547 million recorded in impairment of goodwill.
(3) Consists of $135 million of costs related to the settlement of
pre-Separation securities litigation recorded in pre-Separation
litigation charges, net. (4) See description of non-GAAP measures
contained in this release. DATASOURCE: Tyco Electronics Ltd.
CONTACT: Media Relations, Sheri Woodruff, Office, +1-610-893-9555,
or Mobile, +1-609-933-9243, , or Investor Relations, John Roselli,
Office, +1-610-893-9559, , or Keith Kolstrom, Office,
+1-610-893-9551, , all of Tyco Electronics Ltd. Web Site:
http://www.tycoelectronics.com/
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