Fiscal Fourth Quarter Results - Net Sales of $2.7 Billion Increased
8 Percent Sequentially; Decreased 25 Percent Year-Over-Year - GAAP
Operating Income of $176 Million; Adjusted Operating Income of $221
Million, a 74 Percent Sequential Increase - Diluted Earnings Per
Share (EPS) From Continuing Operations of $0.18 on a GAAP Basis;
Adjusted EPS of $0.30 - Cash From Continuing Operations of $549
Million; Free Cash Flow of $608 Million Fiscal First Quarter
Outlook - Company Expects Sales of $2.7 to $2.8 Billion - GAAP
Operating Income Expected to be $190 to $220 Million; Adjusted
Operating Income Expected to be $250 to $280 Million - EPS From
Continuing Operations Expected to be $0.25 to $0.29; Adjusted EPS
Expected to be $0.35 to $0.39 SCHAFFHAUSEN, Switzerland, Nov. 4
/PRNewswire-FirstCall/ -- Tyco Electronics Ltd. (NYSE:TEL) today
reported results for the fiscal fourth quarter ended Sept. 25,
2009. The company reported net sales of $2.7 billion for the fiscal
fourth quarter, an 8 percent increase sequentially and a 25 percent
decrease compared to the prior-year period. GAAP diluted earnings
per share from continuing operations were $0.18 for the quarter,
compared to $0.19 in the prior-year period. Included in the
earnings per share from continuing operations were $0.08 per share
of restructuring and other charges, $0.09 per share of income tax
related charges, and $0.04 per share of income related to a gain
from the early retirement of debt. This compares to $0.46 per share
of net charges in the prior-year quarter. Adjusted EPS from
continuing operations were $0.30 in the quarter, compared to last
year's adjusted EPS of $0.65. "Our fourth quarter was a strong
finish to a challenging year," said Tyco Electronics Chief
Executive Officer Tom Lynch. "Sales increased 8 percent
sequentially due to continued improvement in our automotive and
consumer-related businesses which grew 17 percent. This more than
offset the expected slowdown in our Undersea Telecommunications
segment. The aggressive cost actions we initiated in response to
the downturn, coupled with the sales increase, improved our
adjusted operating margins from 5 to 8 percent sequentially.
Further improvements in working capital enabled us to generate more
than $600 million in free cash flow in the quarter, bringing our
full-year free cash flow to more than $1.2 billion. "In the first
quarter, we expect our sales to be flat to up slightly due to
continued strengthening in our Electronic Components segment,
partially offset by the continued slowdown in our Undersea
Telecommunications business. We expect another quarter of solid
operating margin improvement." The following discussion includes
non-GAAP financial measures which are described at the end of this
press release. For a reconciliation of these non-GAAP financial
measures, see the attached tables. All dollar amounts are pre-tax
and stated in millions. All comparisons are to the fiscal quarter
ended Sept. 26, 2008 unless otherwise indicated. ($ in millions)
Sept. 25, 2009 Sept. 26, 2008 $ Change % Change --------------
-------------- -------- -------- Net Sales $2,698 $3,576 $(878)
(25)% Operating Income $176 $205 $(29) (14)% Restructuring and
Other Charges $(45) $(165) Impairment of Goodwill $0 $(103) --
------ Adjusted Operating Income $221 $473 $(252) (53)% Operating
Margin 6.5% 5.7% Adjusted Operating Margin 8.2% 13.2% GAAP
operating income was $176 million, compared to $205 million of
operating income in the prior-year period. Included in the current
quarter were restructuring and other charges of $45 million.
Included in prior-year operating income were $165 million of
restructuring and other charges and $103 million related to an
impairment of goodwill. Excluding these items in both periods,
adjusted operating income was $221 million compared to $473 million
a year ago, a decrease of 53 percent. The adjusted operating margin
was 8.2 percent, compared to 13.2 percent a year ago -- reflecting
a 25 percent decline in sales. CASH FLOW Cash from continuing
operations was $549 million during the quarter, compared to $597
million in the year-ago period. Free cash flow was $608 million,
compared to $437 million in the prior-year period. The increase in
free cash flow was primarily driven by inventory reductions, as
well as reduced capital expenditures versus the prior year.
ADDITIONAL ITEMS -- In early July, the company repurchased
approximately $152 million of principal amount of its senior notes.
As a result, the company reported a net gain of $19 million in the
fiscal fourth quarter. -- On Oct. 8, the company's shareholders
approved 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.
ORDERS Total company orders increased 25 percent sequentially in
the fourth quarter. On a year-over-year basis, orders declined 8
percent. The book-to-bill ratio was 1.07 in the quarter. Excluding
the company's Undersea Telecommunications segment, which is a
project-oriented business with uneven order patterns, orders
increased 12 percent sequentially and declined 17 percent
year-over-year and the book-to-bill ratio was 1.05. FIRST QUARTER
FISCAL 2010 OUTLOOK For the first quarter of fiscal 2010, the
company expects sales of $2.7 to $2.8 billion, which is flat to a 4
percent increase sequentially. The company expects income from
operations of $190 to $220 million, which includes restructuring
and other charges of approximately $60 million. Adjusted operating
income is expected to be $250 to $280 million. GAAP EPS from
continuing operations is expected to be $0.25 to $0.29, including
restructuring and other charges of approximately $0.10 per share.
Adjusted EPS from continuing operations are expected to be $0.35 to
$0.39, compared to adjusted EPS of $0.21 in the prior-year period.
This outlook assumes current foreign exchange rates. ($ in
millions, except per share amounts) Q1 Outlook ---------- Sales
$2,700 to $2,800 GAAP Operating Income $190 to $220 Restructuring
and Other Charges $(60) Adjusted Operating Income $250 to $280 GAAP
Earnings Per Share $0.25 to $0.29 Adjusted EPS from Continuing
Operations $0.35 to $0.39 SEGMENT RESULTS Tyco Electronics is
comprised of four reporting segments: Electronic Components,
Network Solutions, Specialty Products and Undersea
Telecommunications. Electronic Components The Electronic Components
segment is one of the world's largest suppliers of passive
electronic components, including connectors and interconnect
systems, relays, switches, sensors, and wire and cable. ($ in
millions) Sept. 25, Sept. 26, 2009 2008 $ Change % Change Organic
Growth ------ ------ -------- -------- -------------- Net Sales
$1,632 $2,255 $(623) (28)% (24)% Operating Income $38 $29 $9 31%
Restructuring and Other Charges $(24) $(157) Impairment of Goodwill
$0 $(103) -- ----- Adjusted Operating Income $62 $289 $(227) (79)%
Operating Margin 2.3% 1.3% Adjusted Operating Margin 3.8% 12.8%
Sales in the segment declined 28 percent compared to the prior-year
quarter and increased 15 percent on a sequential basis. The segment
experienced year-over-year declines across all end-markets,
including automotive which was down 19 percent, computer down 37
percent, communications down 39 percent and industrial down 43
percent. Operating margin and 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
$24 million of restructuring and other charges, compared to $157
million of restructuring and other charges and $103 million of
charges related to an impairment of goodwill in the prior-year
quarter. Network Solutions The Network Solutions segment is one of
the world's largest suppliers of infrastructure components and
systems for the communication service provider, enterprise networks
and energy markets. ($ in millions) Sept. 25, Sept. 26, 2009 2008 $
Change % Change Organic Growth ------ ------ -------- --------
-------------- Net Sales $436 $560 $(124) (22)% (18)% Operating
Income $37 $65 $(28) (43)% Restructuring and Other Charges $(14)
$(4) ---- --- Adjusted Operating Income $51 $69 $(18) (26)%
Operating Margin 8.5% 11.6% Adjusted Operating Margin 11.7% 12.3%
Segment sales declined 22 percent compared to the prior-year
quarter and increased 3 percent sequentially. Compared to the prior
year, sales to the communication service provider market declined
27 percent, sales to the energy market declined 20 percent and
sales to the enterprise networks market declined 24 percent. The
revenue decline was due to reduced capital spending by customers in
these markets. Operating margin and adjusted operating margin
decreased primarily due to the sales declines, partially offset by
the company's cost reduction activities. Restructuring and other
charges in the quarter were $14 million, compared to $4 million in
the prior-year quarter. Specialty Products The Specialty Products
segment is a leader in providing highly-engineered custom
solutions, components and connectors for electronic systems,
subsystems and devices in the aerospace, defense and marine;
medical; touch systems; and circuit protection markets. ($ in
millions) Sept. 25, Sept. 26, 2009 2008 $ Change % Change Organic
Growth ------ ------ -------- -------- -------------- Net Sales
$362 $459 $(97) (21)% (22)% Operating Income $47 $65 $(18) (28)%
Restructuring and Other Charges $(4) $(3) Other Items $0 $(8) --
--- Adjusted Operating Income $51 $76 $(25) (33)% Operating Margin
13.0% 14.2% Adjusted Operating Margin 14.1% 16.6% Segment sales
declined 21 percent compared to the prior-year quarter and
increased 6 percent sequentially. Year-over-year, sales to the
aerospace, defense and marine market declined 23 percent, touch
systems declined 25 percent, circuit protection declined 14
percent, and medical decreased 16 percent. Operating margin and
adjusted operating margin decreased primarily due to the sales
declines, partially offset by the company's cost reduction
activities. Restructuring and other charges in the quarter were $4
million, compared to $3 million of restructuring and other charges
and $8 million of other items in the prior-year quarter. Undersea
Telecommunications The company's Undersea Telecommunications
segment is a world leader in developing, manufacturing, installing
and maintaining the world's most advanced fiber optic undersea
networks. ($ in millions) Sept. 25, Sept. 26, 2009 2008 $ Change %
Change Organic Growth ------ ------ -------- --------
-------------- Net Sales $268 $302 $(34) (11)% (11)% Operating
Income $54 $38 $16 42% Restructuring and Other Charges $(3) $(1)
--- --- Adjusted Operating Income $57 $39 $18 46% Operating Margin
20.1% 12.6% Adjusted Operating Margin 21.3% 12.9% Segment sales
decreased 11 percent compared to the prior-year quarter and
decreased 16 percent sequentially. Operating margin and adjusted
operating margin increases were due to favorable project mix and
execution. Restructuring and other charges in the quarter were $3
million compared to $1 million in the prior-year quarter. 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 2009
sales of $10.3 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. EST. -- 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)
234-9959. -- An audio replay of the conference call will be
available beginning at 10:30 a.m. on Nov. 4, 2009 and ending at
11:59 p.m. on Nov. 11, 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 117013. NON-GAAP MEASURES
"Organic Sales Growth," "Adjusted Operating Income," "Adjusted
Operating Margin," "Adjusted Interest Expense," "Adjusted Other
Income (Expense), 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 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 interest
expense before unusual items including costs related to the
retirement of debt ("Adjusted Interest Expense"). The company
presents Adjusted Interest Expense as it believes that it is
appropriate for investors to consider results excluding these items
in addition to its results in accordance with GAAP. The difference
between Adjusted Interest Expense and interest expense (the most
comparable GAAP measure) is the gain related to retirement of debt.
The limitation of this measure is that it excludes the financial
impact of items that would otherwise either increase or decrease
interest expense. This limitation is best addressed by using
Adjusted Interest Expense in combination with interest expense (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 other income (expense),
net before unusual items including tax sharing income related to
the adoption of the uncertain tax position provisions of Accounting
Standards Codification ("ASC") 740 (Income Taxes) and the gain on
retirement of debt ("Adjusted Other Income (Expense), Net"). The
company presents Adjusted Other Income (Expense), Net as it
believes that it is appropriate for investors to consider results
excluding these items in addition to its results in accordance with
GAAP. The difference between Adjusted Other Income (Expense), Net
and other income (expense), net (the most comparable GAAP measure)
consists of tax sharing income related to the adoption of the
uncertain tax position provisions of ASC 740 and the gain related
to retirement of debt 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 other
income (expense), net. This limitation is best addressed by using
Adjusted Other Income (Expense), Net in combination with other
income (expense), net (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
income tax expense after adjusting for the tax effect of unusual
items including charges related to restructuring, impairment
charges 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 the uncertain tax position provisions of
ASC 740, 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 the
uncertain tax position provisions of ASC 740, 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 the uncertain tax position provisions of ASC 740 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
in which we operate; 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 Sept. 26, 2008 and Quarterly
Reports on Form 10-Q for the quarterly periods ended Dec. 26, 2008,
March 27, 2009, and June 26, 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 Quarter Ended For the Year Ended
--------------------- ------------------ Sept. 25, Sept. 26, Sept.
25, Sept. 26, 2009 2008 2009 2008 ---- ---- ---- ---- (in millions,
except per share data) Net sales $2,698 $3,576 $10,256 $14,373 Cost
of sales 2,007 2,568 7,720 10,200 ----- ----- ----- ------ Gross
income 691 1,008 2,536 4,173 Selling, general, and administrative
expenses 338 396 1,408 1,573 Research, development, and engineering
expenses 131 155 536 593 Pre-Separation litigation charges, net -
(8) 144 22 Restructuring and other charges, net 46 157 375 219
Impairment of goodwill - 103 3,547 103 -- --- ----- --- Operating
income (loss) 176 205 (3,474) 1,663 Interest income 4 7 17 32
Interest expense (40) (46) (165) (190) Other income (expense), net
(55) (39) (48) 567 --- --- --- --- Income (loss) from continuing
operations before income taxes and minority interest 85 127 (3,670)
2,072 Income tax (expense) benefit (1) (38) 576 (540) Minority
interest (1) (1) (6) (5) -- -- -- -- Income (loss) from continuing
operations 83 88 (3,100) 1,527 Income (loss) from discontinued
operations, net of income taxes 10 114 (156) 255 -- --- ---- ---
Net income (loss) $93 $202 $(3,256) $1,782 === ==== ======= ======
Basic earnings (loss) per share: Income (loss) from continuing
operations $0.18 $0.19 $(6.75) $3.16 Income (loss) from
discontinued operations 0.02 0.24 (0.34) 0.53 ---- ---- ----- ----
Net income (loss) $0.20 $0.43 $(7.09) $3.69 ===== ===== ======
===== Diluted earnings (loss) per share: Income (loss) from
continuing operations $0.18 $0.19 $(6.75) $3.14 Income (loss) from
discontinued operations 0.02 0.24 (0.34) 0.53 ---- ---- ----- ----
Net income (loss) $0.20 $0.43 $(7.09) $3.67 ===== ===== ======
===== Weighted-average number of shares outstanding: Basic 459 470
459 483 Diluted 461 473 459 486 TYCO ELECTRONICS LTD. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) Sept. 25, Sept. 26, 2009
2008 ---- ---- (in millions, except share data) Assets Current
Assets: Cash and cash equivalents $1,521 $1,090 Accounts
receivable, net of allowance for doubtful accounts of $48 and $40,
respectively 1,975 2,656 Inventories 1,435 2,159 Prepaid expenses
and other current assets 487 756 Deferred income taxes 161 204
Assets held for sale - 770 -- --- Total current assets 5,579 7,635
Property, plant, and equipment, net 3,111 3,342 Goodwill 3,160
6,749 Intangible assets, net 407 454 Deferred income taxes 2,518
1,915 Receivable from Tyco International Ltd. and Covidien Ltd.
1,211 1,218 Other assets 234 287 --- --- Total Assets $16,220
$21,600 ======= ======= Liabilities and Shareholders' Equity
Current Liabilities: Current maturities of long-term debt $101 $20
Accounts payable 1,068 1,433 Accrued and other current liabilities
1,243 1,558 Deferred revenue 203 207 Liabilities held for sale -
169 -- --- Total current liabilities 2,615 3,387 Long-term debt
2,316 3,161 Long-term pension and postretirement liabilities 1,129
721 Deferred income taxes 188 289 Income taxes 2,312 2,291 Other
liabilities 634 668 --- --- Total Liabilities 9,194 10,517 -----
------ Commitments and contingencies Minority interest 10 10
Shareholders' Equity: Preferred shares, none at Sept. 25, 2009;
125,000,000 shares authorized and none outstanding, $0.20 par
value, at Sept. 26, 2008 - - Common shares, 468,215,574 shares
authorized and issued, CHF 2.43 par value, at Sept. 25, 2009;
1,000,000,000 shares authorized and 500,241,706 issued, $0.20 par
value, at Sept. 26, 2008 1,049 100 Capital in excess: Share premium
- 61 Contributed surplus 8,135 10,106 Accumulated (deficit)
earnings (2,274) 1,141 Treasury shares, at cost, 9,425,172 shares
at Sept. 25, 2009; 36,904,702 shares at Sept. 26, 2008 (349)
(1,264) Accumulated other comprehensive income 455 929 --- ---
Total Shareholders' Equity 7,016 11,073 ----- ------ Total
Liabilities and Shareholders' Equity $16,220 $21,600 =======
======= TYCO ELECTRONICS LTD. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED) For the Quarter Ended For the Year Ended
--------------------- ------------------ Sept. 25, Sept. 26, Sept.
25, Sept. 26, 2009 2008 2009 2008 ---- ---- ---- ---- (in millions)
Cash Flows From Operating Activities: Net income (loss) $93 $202
$(3,256) $1,782 (Income) loss from discontinued operations, net of
income taxes (10) (114) 156 (255) --- ---- --- ---- Income (loss)
from continuing operations 83 88 (3,100) 1,527 Adjustments to
reconcile net cash provided by (used in) operating activities:
Impairment of goodwill - 103 3,547 103 Class action settlement - -
- (936) Non-cash restructuring and other charges, net 20 53 49 81
Depreciation and amortization 133 140 515 539 Deferred income taxes
109 (41) (583) 164 Provision for losses on accounts receivable and
inventory 17 12 74 42 Tax sharing (income) loss 77 39 68 (567)
Other (3) 30 53 42 Changes in assets and liabilities, net of the
effects of acquisitions and divestitures: Accounts receivable, net
(128) 45 651 (107) Inventories 167 48 638 (221) Inventoried costs
on long-term contracts 103 (5) (4) (46) Prepaid expenses and other
current assets (40) (6) 184 56 Accounts payable 50 (40) (420) 41
Accrued and other liabilities 124 168 (124) 120 Income taxes (142)
18 (115) 18 Deferred revenue 34 (2) (7) 120 Other (55) (53) (48)
(54) --- --- --- --- Net cash provided by (used in) continuing
operating activities 549 597 1,378 922 Net cash provided by (used
in) discontinued operating activities (7) 41 (49) 67 -- -- --- --
Net cash provided by (used in) operating activities 542 638 1,329
989 --- --- ----- --- Cash Flows From Investing Activities: Capital
expenditures (58) (165) (328) (610) Proceeds from sale of property,
plant, and equipment 4 5 13 42 Class action settlement escrow - - -
936 Proceeds from divestiture of discontinued operations, net of
cash retained by operations sold (1) 469 693 571 Other 2 (8) 16
(29) -- -- -- --- Net cash provided by (used in) continuing
investing activities (53) 301 394 910 Net cash provided by (used
in) discontinued investing activities - (5) (3) (15) -- -- -- ---
Net cash provided by (used in) investing activities (53) 296 391
895 --- --- --- --- Cash Flows From Financing Activities: Net
(decrease) increase in commercial paper - (21) (649) 630 Repayment
of long-term debt (141) (400) (602) (1,751) Proceeds from long-term
debt - 400 448 900 Repurchase of common shares - (410) (152)
(1,242) Payment of common share dividends and cash distributions to
shareholders (73) (66) (294) (271) Proceeds from exercise of share
options - 3 1 54 Transfers (to) from discontinued operations (7)
(27) (56) 5 Other (2) - (6) (12) -- -- -- --- Net cash provided by
(used in) continuing financing activities (223) (521) (1,310)
(1,687) Net cash provided by (used in) discontinued financing
activities 7 (21) 56 (52) -- --- -- --- Net cash provided by (used
in) financing activities (216) (542) (1,254) (1,739) ---- ----
------ ------ Effect of currency translation on cash (10) (18) (31)
1 Net increase (decrease) in cash and cash equivalents 263 374 435
146 Less: net (increase) decrease in cash and cash equivalents
related to discontinued operations - (15) (4) - Cash and cash
equivalents at beginning of period 1,258 731 1,090 944 ----- ---
----- --- Cash and cash equivalents at end of period $1,521 $1,090
$1,521 $1,090 ====== ====== ====== ====== Supplemental Cash Flow
Information: Income taxes paid, net of refunds $34 $62 $121 $359
Reconciliation to Free Cash Flow: Net cash provided by continuing
operating activities $549 $597 $1,378 $922 Capital expenditures,
net (54) (160) (315) (568) Pre-Separation litigation payments 52 -
102 - Voluntary pension contributions 61 - 61 - Class action
settlement - - - 936 -- -- -- --- Free cash flow (1) $608 $437
$1,226 $1,290 ==== ==== ====== ====== (1) Free cash flow is a
non-GAAP measure. See description of non-GAAP measures contained in
this release. TYCO ELECTRONICS LTD. CONSOLIDATED SEGMENT DATA
(UNAUDITED) For the Quarter Ended --------------------- Sept. 25,
Sept. 26, 2009 2008 ---- ---- ($ in millions) Net Sales: Electronic
Components $1,632 $2,255 Network Solutions 436 560 Specialty
Products 362 459 Undersea Telecommunications 268 302 --- --- Total
$2,698 $3,576 ====== ====== Operating Income (Loss): Electronic
Components $38 2.3% $29 1.3% Network Solutions 37 8.5% 65 11.6%
Specialty Products 47 13.0% 65 14.2% Undersea Telecommunications 54
20.1% 38 12.6% Pre-Separation litigation charges, net - 8 -- --
Total $176 6.5% $205 5.7% ==== ==== For the Year Ended
------------------ Sept. 25, Sept. 26, 2009 2008 ---- ---- ($ in
millions) Net Sales: Electronic Components $5,961 $9,277 Network
Solutions 1,719 2,162 Specialty Products 1,415 1,769 Undersea
Telecommunications 1,161 1,165 ----- ----- Total $10,256 $14,373
======= ======= Operating Income (Loss): Electronic Components
$(3,716) -62.3% $978 10.5% Network Solutions 133 7.7% 251 11.6%
Specialty Products 34 2.4% 296 16.7% Undersea Telecommunications
219 18.9% 160 13.7% Pre-Separation litigation charges, net (144)
(22) ---- --- Total $(3,474) -33.9% $1,663 11.6% ======= ======
TYCO ELECTRONICS LTD. NET SALES GROWTH RECONCILIATION (UNAUDITED)
Change in Net Sales for the Quarter Ended Sept. 25, 2009 versus Net
Sales for the Quarter Ended Sept. 26, 2008
--------------------------------------- Organic (1) Translation (2)
Divestiture ------------ -------------- ----------- ($ in millions)
Electronic Components (3): Automotive $(155) (15.3)% $(35) $-
Computer (90) (36.7) 1 (2) Communications (77) (30.4) 8 (31)
Appliance (33) (24.0) (2) - Industrial (56) (41.0) (3) - Consumer
Electronics (17) (32.2) - (2) Other (120) (29.0) (6) (3) ---- -----
-- -- Total (548) (24.3) (37) (38) ---- ----- --- --- Network
Solutions (3): Energy (40) (15.3) (12) - Service Providers (34)
(21.7) (7) - Enterprise Networks (28) (19.7) (6) - Other 1 7.9 2 -
-- --- -- -- Total (101) (18.0) (23) - ---- ----- --- -- Specialty
Products (3): Aerospace, Defense, and Marine (44) (22.7) (1) -
Touch Systems (29) (24.9) (1) - Medical (11) (15.5) - - Circuit
Protection (15) (18.9) 4 - --- ----- -- -- Total (99) (21.5) 2 -
--- ----- -- -- Undersea Telecommunications (32) (10.9) (2) - ---
----- -- -- Total $(780) (21.8)% $(60) $(38) ===== ===== ==== ====
Change in Net Sales for the Quarter Ended Sept. 25, 2009 Percentage
of versus Net Segment's Sales for the Total Quarter Ended Net Sales
Sept. 26, 2008 for the --------------- Quarter Ended Total Sept.
25, 2009 ----- --------- ($ in millions) Electronic Components (3):
Automotive $(190) (18.8)% 50% Computer (91) (37.0) 10
Communications (100) (39.4) 9 Appliance (35) (25.4) 6 Industrial
(59) (43.1) 5 Consumer Electronics (19) (35.2) 2 Other (129) (31.2)
18 ---- ----- -- Total (623) (27.6) 100% ---- ----- --- Network
Solutions (3): Energy (52) (20.1) 48 Service Providers (41) (26.5)
26 Enterprise Networks (34) (23.8) 25 Other 3 100.0 1 -- ----- --
Total (124) (22.1) 100% ---- ----- --- Specialty Products (3):
Aerospace, Defense, and Marine (45) (23.2) 41 Touch Systems (30)
(25.4) 24 Medical (11) (15.9) 16 Circuit Protection (11) (14.1) 19
--- ----- -- Total (97) (21.1) 100% --- ----- --- Undersea
Telecommunications (34) (11.3) --- ----- Total $(878) (24.6)% =====
===== Change in Net Sales for the Year Ended Sept. 25, 2009 versus
Net Sales for the Year Ended Sept. 26, 2008
------------------------------------ Organic (1) Translation (2)
Divestiture ------------ --------------- ----------- ($ in
millions) Electronic Components (3): Automotive $(1,471) (33.1)%
$(227) $- Computer (350) (35.9) 2 (3) Communications (258) (26.4)
18 (74) Appliance (156) (29.1) (12) - Industrial (181) (35.2) (23)
2 Consumer Electronics (53) (27.7) 2 (8) Other (467) (28.2) (47)
(10) ---- ----- --- --- Total (2,936) (31.7) (287) (93) ------
----- ---- --- Network Solutions (3): Energy (88) (9.0) (89) -
Service Providers (76) (12.3) (53) - Enterprise Networks (105)
(19.1) (35) - Other (1) (5.7) 4 - -- ---- -- -- Total (270) (12.5)
(173) - ---- ----- ---- -- Specialty Products (3): Aerospace,
Defense, and Marine (104) (14.0) (18) - Touch Systems (106) (23.7)
(10) - Medical (23) (8.6) (2) - Circuit Protection (99) (32.1) 8 -
--- ----- -- -- Total (332) (18.8) (22) - ---- ----- --- --
Undersea Telecommunications (4) (0.4) - - -- ---- -- -- Total
$(3,542) (24.6)% $(482) $(93) ======= ===== ===== ==== Change in
Net Sales for the Year Ended Sept. 25, 2009 Percentage of versus
Net Segment's Sales for the Total Year Ended Net Sales Sept. 26,
2008 for the --------------- Year Ended Total Sept. 25, 2009 -----
--------- ($ in millions) Electronic Components (3): Automotive
$(1,698) (38.2)% 46% Computer (351) (36.0) 11 Communications (314)
(32.1) 11 Appliance (168) (31.4) 6 Industrial (202) (39.4) 5
Consumer Electronics (59) (31.1) 2 Other (524) (31.9) 19 ---- -----
-- Total (3,316) (35.7) 100% ------ ----- --- Network Solutions
(3): Energy (177) (18.1) 47 Service Providers (129) (20.9) 28
Enterprise Networks (140) (25.5) 24 Other 3 16.7 1 -- ---- -- Total
(443) (20.5) 100% ---- ----- --- Specialty Products (3): Aerospace,
Defense, and Marine (122) (16.4) 44 Touch Systems (116) (26.0) 24
Medical (25) (9.3) 17 Circuit Protection (91) (29.5) 15 --- -----
-- Total (354) (20.0) 100% ---- ----- --- Undersea
Telecommunications (4) (0.3) -- ---- Total $(4,117) (28.6)% =======
===== (1) Represents the change in net sales resulting from volume
and price changes, before consideration of acquisitions,
divestitures, and the impact of changes in foreign currency
exchange rates. Organic net sales growth is a non-GAAP measure. See
description of non-GAAP measures contained in this release. (2)
Represents the change in net sales resulting from changes in
foreign currency exchange rates. (3) Industry end market
information about net sales is presented consistently with our
internal management reporting and may be periodically revised as
management deems necessary. TYCO ELECTRONICS LTD. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES For the
Quarter Ended Sept. 25, 2009 (UNAUDITED) Adjustments -----------
Restructuring and Other Adjusted U.S. Charges, Tax Retirement (Non-
GAAP Net (1) Items (2) of Debt GAAP) (3) ---- -------------
--------- ---------- --------- ($ in millions, except per share
data) Operating Income: Electronic Components $38 $24 $- $- $62
Network Solutions 37 14 - - 51 Specialty Products 47 4 - - 51
Undersea Telecommunications 54 3 - - 57 -- -- -- -- -- Total $176
$45 $- $- $221 ==== === == == ==== Operating Margin 6.5% 8.2% ===
=== Interest Expense $(40) $- $- $3 $(37) ==== == == == ==== Other
Income (Expense), Net $(55) $- $86 $(22) $9 ==== == === ==== ==
Income Tax Expense $(1) $(9) $(46) $- $(56) === === ==== == ====
Income from Continuing Operations $83 $36 $40 $(19) $140 === ===
=== ==== ==== Diluted Earnings per Share from Continuing Operations
$0.18 $0.08 $0.09 $(0.04) $0.30 ===== ===== ===== ====== ===== (1)
Includes $46 million recorded in net restructuring and other
charges and a $1 million credit recorded in cost of sales. (2)
Includes an income tax benefit primarily related to proposed
adjustments to prior year tax returns, and charges to other expense
pursuant to the Tax Sharing Agreement with Tyco International and
Covidien. (3) See description of non-GAAP measures contained in
this release. TYCO ELECTRONICS LTD. RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES For the Quarter Ended
Sept. 26, 2008 (UNAUDITED) Adjustments ----------- Restructuring
and Other Impair- Other Adjusted U.S. Charges, ment of Tax Items,
(Non- GAAP Net (1) Goodwill Items (2) Net (3) GAAP) (4) ----
--------- -------- --------- ------- --------- ($ in millions,
except per share data) Operating Income: Electronic Components $29
$157 $103 $- $- $289 Network Solutions 65 4 - - - 69 Specialty
Products 65 3 - - 8 76 Undersea Tele- communications 38 1 - - - 39
Pre-Separation litigation charges, net 8 - - - (8) - -- -- -- -- --
-- Total $205 $165 $103 $- $- $473 ==== ==== ==== == == ====
Operating Margin 5.7% 13.2% === ==== Other Income (Expense), Net
$(39) $- $- $54 $- $15 ==== == == === == === Income Tax Expense
$(38) $(8) $(14) $(76) $(4) $(140) ==== === ==== ==== === =====
Income from Continuing Operations $88 $157 $89 $(22) $(4) $308 ===
==== === ==== === ==== Diluted Earnings per Share from Continuing
Operations $0.19 $0.33 $0.19 $(0.05) $(0.01) $0.65 ===== =====
===== ====== ====== ===== (1) Includes $157 million recorded in net
restructuring and other charges and $8 million recorded in cost of
sales. (2) Includes $22 million of income related to various tax
matters, including a tax settlement. (3) Consists of $8 million of
income related to insurance recoveries on pre-Separation securities
litigation and $8 million of costs related to a customs settlement
recorded in selling, general, and administrative expenses. (4) See
description of non-GAAP measures contained in this release. TYCO
ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
GAAP FINANCIAL MEASURES For the Year Ended Sept. 25, 2009
(UNAUDITED) Adjustments ----------- Restructuring and Other Impair-
Other Adjusted U.S. Charges, ment of Tax Items, (Non- GAAP Net (1)
Goodwill Items (2) Net (3) GAAP) (4) ---- --------- --------
--------- ------- --------- ($ in millions, except per share data)
Operating Income (Loss): Electronic Components $(3,716) $278 $3,435
$- $- $(3) Network Solutions 133 56 - - - 189 Specialty Products 34
31 112 - 8 185 Undersea Tele- communications 219 8 - - - 227
Pre-Separation litigation charges, net (144) - - - 144 - ---- -- --
-- --- -- Total $(3,474) $373 $3,547 $- $152 $598 ======= ====
====== == ==== ==== Operating Margin -33.9% 5.8% ===== === Interest
Expense $(165) $- $- $- $3 $(162) ===== == == == == ===== Other
Income (Expense), Net $(48) $- $- $86 $(22) $16 ==== == == === ====
=== Income Tax (Expense) Benefit $576 $(87) $(523) $(46) $(3) $(83)
==== ==== ===== ==== === ==== Income (Loss) from Continuing
Operations $(3,100) $286 $3,024 $40 $130 $380 ======= ==== ======
=== ==== ==== Diluted Earnings (Loss) per Share from Continuing
Operations (5) $(6.75) $0.62 $6.57 $0.09 $0.28 $0.83 ====== =====
===== ===== ===== ===== (1) Includes $375 million recorded in net
restructuring and other charges and a $2 million credit recorded in
cost of sales. (2) Includes an income tax benefit primarily related
to proposed adjustments to prior year tax returns, and charges to
other expense pursuant to the Tax Sharing Agreement with Tyco
International and Covidien. (3) Consists of $144 million of costs
related to the settlement of pre-Separation securities litigation
and $8 million of costs related to a product liability matter from
several years ago recorded in selling, general, and administrative
expenses. Also includes net gain related to retirement of debt of
$19 million. (4) See description of non-GAAP measures contained in
this release. (5) GAAP diluted shares excludes 1 million of
non-vested restricted share awards and non-vested options as the
inclusion of these securities would have been anti-dilutive. Such
amounts are included in non-GAAP diluted shares. TYCO ELECTRONICS
LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP
FINANCIAL MEASURES For the Year Ended Sept. 26, 2008 (UNAUDITED)
Adjustments ----------- Restructuring and Other Impair- Other
Adjusted U.S. Charges, ment of Tax Items, (Non- GAAP Net (1)
Goodwill Items (2) Net (3) GAAP) (4) ---- --------- --------
--------- ------- --------- ($ in millions, except per share data)
Operating Income (Loss): Electronic Components $978 $198 $103 $-
$(36) $1,243 Network Solutions 251 22 - - - 273 Specialty Products
296 3 - - 8 307 Undersea Tele- communications 160 5 - - - 165
Pre-Separation litigation charges, net (22) - - - 22 - --- -- -- --
-- -- Total $1,663 $228 $103 $- $(6) $1,988 ====== ==== ==== == ===
====== Operating Margin 11.6% 13.8% ==== ==== Other Income
(Expense), Net $567 $- $- $(518) $- $49 ==== == == ===== == ===
Income Tax (Expense) Benefit $(540) $(27) $(14) $(76) $16 $(641)
===== ==== ==== ==== === ===== Income (Loss) from Continuing
Operations $1,527 $201 $89 $(594) $10 $1,233 ====== ==== === =====
=== ====== Diluted Earnings (Loss) per Share from Continuing
Operations $3.14 $0.41 $0.18 $(1.22) $0.02 $2.54 ===== ===== =====
====== ===== ===== (1) Includes $219 million recorded in net
restructuring and other charges and $9 million recorded in cost of
sales. (2) In connection with the adoption of the uncertain tax
position provisions of ASC 740 (Income Taxes), the Company recorded
income of $545 million pursuant to its Tax Sharing Agreement with
Tyco International and Covidien. The Company also recorded $49
million of income, of which $27 million of expense is recorded in
net other income (expense) and $76 million of tax benefits are
recorded in income tax (expense) benefit, related to various tax
matters, including a tax settlement. (3) Consists of a $36 million
gain on the sale of real estate and $8 million of costs related to
a customs settlement, both of which are recorded in selling,
general and administrative expenses, and $22 million of net costs
related to the settlement of pre-Separation securities litigation.
(4) See description of non-GAAP measures contained in this release.
TYCO ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES For the Quarter Ended June 26, 2009
(UNAUDITED) Adjustments ----------- Restructuring and Other
Adjusted U.S. Charges, (Non- GAAP Net (1) GAAP) (2) ---- --------
--------- ($ 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 net restructuring and
other charges. (2) 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, ; 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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