SCHAFFHAUSEN, Switzerland,
Oct. 30, 2019 /PRNewswire/ -- TE
Connectivity Ltd. (NYSE: TEL) today reported results for the fiscal
fourth quarter and year ended September 27,
2019.
Fourth Quarter Highlights
- Net sales were $3.3 billion, down
6% as reported and 5% organically over the fourth quarter of
2018.
- Diluted earnings per share (EPS) from continuing operating
operations were $1.11, and adjusted
EPS were $1.33, both exceeding the
mid-point of the company's guidance.
- Cash flow from continuing operating activities was $879 million and free cash flow was $688 million, with $332
million returned to shareholders.
Full Year Highlights
- Net sales were $13.4 billion,
down 4% as reported and 2% organically from fiscal year 2018.
- Diluted EPS from continuing operations were $5.72, and adjusted EPS were $5.55, down 1% versus the prior year.
- Cash flow from continuing operations was $2.5 billion and free cash flow was $1.6 billion, up 15% year over year.
- Deployed approximately $300
million on acquisitions and announced intent to acquire
First Sensor
Fourth Quarter Results
For the fourth quarter, the
company reported net sales of $3.3
billion, with diluted EPS from continuing operations of
$1.11. Adjusted EPS were $1.33, exceeding the mid-point of the company's
guidance. Cash flow from continuing operating activities was
$879 million, and free cash flow was
$688 million. Total orders were
$3.2 billion, down 3%
sequentially.
Full Year Results
For the full year, the company
reported net sales of $13.4 billion
and diluted EPS from continuing operations of $5.72. Adjusted EPS were $5.55, cash flow from continuing operating
activities was $2.5 billion and free
cash flow was $1.6 billion, up 15%
from fiscal year 2018. The company continued to strengthen its
portfolio in growing markets, completing the acquisition of the
Kissling Group and Alpha Technics, and announcing the acquisitions
of Silicon Microstructures Inc. (SMI) and First Sensor AG.
"Our results through the fourth quarter of fiscal 2019 reflect
the ability of our teams to execute in what continues to be a
challenging market environment. I'm pleased that we quickly
responded to market weakness and demonstrated earnings resiliency
despite a decline in revenue. Our Industrial segment continued to
show top-line organic growth and margin expansion, led by strength
in our aerospace, defense and medical businesses, while our
Transportation segment outperformed auto production declines
through product content gains and our strong global position," said
TE Connectivity CEO Terrence Curtin.
"I want to thank our employees for their solid execution of our
strategy and their commitment to our customers and our purpose,
which once again helped TE achieve external recognition, including
being named by Fortune as a World's Most Admired Company for
the second consecutive year."
2020 Outlook
For the fiscal first quarter of 2020,
the company expects net sales of $3.0
billion to $3.2 billion,
reflecting a decrease of 7% on an actual basis and 6% on an organic
basis year over year at the mid-point. Diluted EPS from continuing
operations are expected to be $0.93
to $0.99, including net
restructuring, acquisition-related and other charges of
$0.17. The company expects adjusted
EPS of $1.10 to $1.16.
For the full year, the company expects net sales of $12.7 to $13.3
billion, reflecting 3% actual and 2% organic decline at the
mid-point versus the prior year. Diluted EPS from continuing
operations are expected to be $4.21
to $4.61, including net
restructuring, acquisition-related and other charges of
$0.64. The company expects adjusted
EPS of $4.85 to $5.25.
"We continue to see a challenging and uncertain global market
environment in fiscal 2020 and remain confident in the ability of
our teams to adjust to changing dynamics and deliver strong
performance for our owners and customers," said Curtin. "We will
continue to execute cost reduction plans to preserve operating
resiliency and generate strong cash flow, while maintaining our
strategy of expanding content with our highly engineered solutions.
At the same time, we will continue to invest in long-term global
growth trends where our innovative technologies create a safer,
sustainable, productive and connected future."
Information about TE Connectivity's use of non-GAAP financial
measures is provided below. For reconciliations of these non-GAAP
financial measures, see the attached tables.
Conference Call and Webcast
The company will hold a
conference call today beginning at 8:30 a.m.
ET. The dial-in information is provided here:
- At TE Connectivity's website: investors.te.com
- By telephone: For both "listen-only" participants and those
participants who wish to take part in the question-and-answer
portion of the call, the dial-in number in the United States is (866) 211-4092, and for
international callers, the dial-in number is (647)
689-6620.
- A replay of the conference call will be available on TE
Connectivity's investor website at investors.te.com at 10:30 a.m. ET on Oct. 30,
2019.
About TE Connectivity
TE Connectivity Ltd. (NYSE:
TEL) is a $13 billion global
industrial technology leader creating a safer, sustainable,
productive, and connected future. Our broad range of connectivity
and sensor solutions, proven in the harshest environments, enable
advancements in transportation, industrial applications, medical
technology, energy, data communications, and the home. With nearly
80,000 employees, including more than 8,000 engineers, working
alongside customers in approximately 150 countries, TE ensures that
EVERY CONNECTION COUNTS. Learn more at www.te.com and on LinkedIn,
Facebook, WeChat and Twitter.
Non-GAAP Financial Measures
We present non-GAAP
performance and liquidity measures as we believe it is appropriate
for investors to consider adjusted financial measures in addition
to results in accordance with accounting principles generally
accepted in the U.S. ("GAAP"). These non-GAAP financial measures
provide supplemental information and should not be considered
replacements for results in accordance with GAAP. Management uses
non-GAAP financial measures internally for planning and forecasting
purposes and in its decision-making processes related to the
operations of our company. We believe these measures provide
meaningful information to us and investors because they enhance the
understanding of our operating performance, ability to generate
cash, and the trends of our business. Additionally, we believe that
investors benefit from having access to the same financial measures
that management uses in evaluating our operations. The primary
limitation of these measures is that they exclude the financial
impact of items that would otherwise either increase or decrease
our reported results. This limitation is best addressed by using
these non-GAAP financial measures in combination with the most
directly comparable GAAP financial measures in order to better
understand the amounts, character, and impact of any increase or
decrease in reported amounts. These non-GAAP financial measures may
not be comparable to similarly-titled measures reported by other
companies.
The following provides additional information regarding our
non-GAAP financial measures:
- Organic Net Sales Growth – represents net sales growth (the
most comparable GAAP financial measure) excluding the impact of
foreign currency exchange rates, and acquisitions and divestitures
that occurred in the preceding twelve months, if any. Organic Net
Sales Growth is a useful measure of our performance because it
excludes items that are not completely under management's control,
such as the impact of changes in foreign currency exchange rates,
and items that do not reflect the underlying growth of the company,
such as acquisition and divestiture activity. This measure is a
significant component in our incentive compensation plans.
- Adjusted Operating Income and Adjusted Operating Margin –
represent operating income and operating margin, respectively, (the
most comparable GAAP financial measures) before special items
including restructuring and other charges, acquisition related
charges, and other income or charges, if any. We utilize these
adjusted measures in combination with operating income and
operating margin to assess segment level operating performance and
to provide insight to management in evaluating segment operating
plan execution and market conditions. Adjusted Operating Income is
a significant component in our incentive compensation plans.
- Adjusted Other Income (Expense), Net – represents net other
income (expense) (the most comparable GAAP financial measure)
before special items including tax sharing income related to
adjustments to prior period tax returns and other items, if
any.
- Adjusted Income Tax Expense and Adjusted Effective Tax Rate –
represent income tax expense and effective tax rate, respectively
(the most comparable GAAP financial measures) after adjusting for
the tax effect of special items including restructuring and other
charges, acquisition related charges, other income or charges, and
certain significant tax items, if any.
- Adjusted Income from Continuing Operations – represents income
from continuing operations (the most comparable GAAP financial
measure) before special items including restructuring and other
charges, acquisition related charges, tax sharing income related to
adjustments to prior period tax returns and other tax items, other
income or charges, and certain significant tax items, if any, and,
if applicable, the related tax effects.
- Adjusted Earnings Per Share – represents diluted earnings per
share from continuing operations (the most comparable GAAP
financial measure) before special items including restructuring and
other charges, acquisition related charges, tax sharing income
related to adjustments to prior period tax returns and other tax
items, other income or charges, and certain significant tax items,
if any, and, if applicable, the related tax effects. This measure
is a significant component in our incentive compensation
plans.
- Free Cash Flow (FCF) – is a useful measure of our ability to
generate cash. The difference between net cash provided by
continuing operating activities (the most comparable GAAP financial
measure) and Free Cash Flow consists mainly of significant cash
outflows and inflows that we believe are useful to identify. We
believe Free Cash Flow provides useful information to investors as
it provides insight into the primary cash flow metric used by
management to monitor and evaluate cash flows generated from our
operations.
Free Cash Flow is defined as net cash provided by continuing
operating activities excluding voluntary pension contributions and
the cash impact of special items, if any, minus net capital
expenditures. Voluntary pension contributions are excluded from the
GAAP financial measure because this activity is driven by economic
financing decisions rather than operating activity. Certain special
items, including net payments related to pre-separation tax matters
and cash paid (collected) pursuant to collateral requirements
related to cross-currency swap contracts, are also excluded by
management in evaluating Free Cash Flow. Net capital expenditures
consist of capital expenditures less proceeds from the sale of
property, plant, and equipment. These items are subtracted because
they represent long-term commitments.
In the calculation of Free Cash Flow, we subtract certain cash
items that are ultimately within management's and the Board of
Directors' discretion to direct and may imply that there is less or
more cash available for our programs than the most comparable GAAP
financial measure indicates. It should not be inferred that the
entire Free Cash Flow amount is available for future discretionary
expenditures, as our definition of Free Cash Flow does not consider
certain non-discretionary expenditures, such as debt payments. In
addition, we may have other discretionary expenditures, such as
discretionary dividends, share repurchases, and business
acquisitions, that are not considered in the calculation of Free
Cash Flow.
Forward-Looking Statements
This release contains
certain "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations and are subject to
risks, uncertainty and changes in circumstances, which may cause
actual results, performance, financial condition or achievements to
differ materially from anticipated results, performance, financial
condition or achievements. All statements contained herein that are
not clearly historical in nature are forward-looking and the words
"anticipate," "believe," "expect," "estimate," "plan," and similar
expressions are generally intended to identify forward-looking
statements. We have no intention and are under no obligation to
update or alter (and expressly disclaim any such intention or
obligation to do so) our forward-looking statements whether as a
result of new information, future events or otherwise, except to
the extent required by law. The forward-looking statements in this
release include statements addressing our future financial
condition and operating results. Examples of factors that could
cause actual results to differ materially from those described in
the forward-looking statements include, among others, business,
economic, competitive and regulatory risks, such as conditions
affecting demand for products, particularly in the automotive and
data and devices industries; competition and pricing pressure;
fluctuations in foreign currency exchange rates and commodity
prices; natural disasters and political, economic and military
instability in countries in which we operate; developments in the
credit markets; future goodwill impairment; compliance with current
and future environmental and other laws and regulations; and the
possible effects on us of changes in tax laws, tax treaties and
other legislation, including the effects of Swiss tax reform.
More detailed information about these and other factors is set
forth in TE Connectivity Ltd.'s Annual Report on Form 10-K for the
fiscal year ended Sept. 28, 2018 as
well as in our Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and other reports filed by us with the U.S. Securities and
Exchange Commission.
TE CONNECTIVITY
LTD.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters
Ended
|
|
For the Years
Ended
|
|
September
27,
|
|
September
28,
|
|
September
27,
|
|
September
28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in millions,
except per share data)
|
Net
sales
|
$
3,300
|
|
$
3,509
|
|
$
13,448
|
|
$
13,988
|
Cost of
sales
|
2,248
|
|
2,327
|
|
9,054
|
|
9,243
|
Gross
margin
|
1,052
|
|
1,182
|
|
4,394
|
|
4,745
|
Selling, general, and
administrative expenses
|
372
|
|
414
|
|
1,490
|
|
1,594
|
Research,
development, and engineering expenses
|
159
|
|
171
|
|
644
|
|
680
|
Acquisition and
integration costs
|
6
|
|
5
|
|
27
|
|
14
|
Restructuring and
other charges, net
|
71
|
|
22
|
|
255
|
|
126
|
Operating
income
|
444
|
|
570
|
|
1,978
|
|
2,331
|
Interest
income
|
6
|
|
4
|
|
19
|
|
15
|
Interest
expense
|
(13)
|
|
(27)
|
|
(68)
|
|
(107)
|
Other income
(expense), net
|
-
|
|
(1)
|
|
2
|
|
1
|
Income from
continuing operations before income taxes
|
437
|
|
546
|
|
1,931
|
|
2,240
|
Income tax (expense)
benefit
|
(61)
|
|
1,128
|
|
15
|
|
344
|
Income from
continuing operations
|
376
|
|
1,674
|
|
1,946
|
|
2,584
|
Loss from
discontinued operations, net of income taxes
|
(4)
|
|
(13)
|
|
(102)
|
|
(19)
|
Net
income
|
$
372
|
|
$
1,661
|
|
$
1,844
|
|
$
2,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
1.12
|
|
$
4.82
|
|
$
5.76
|
|
$
7.38
|
Loss from
discontinued operations
|
(0.01)
|
|
(0.04)
|
|
(0.30)
|
|
(0.05)
|
Net
income
|
1.11
|
|
4.79
|
|
5.46
|
|
7.33
|
|
|
|
|
|
|
|
|
Diluted earnings
per share:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
1.11
|
|
$
4.78
|
|
$
5.72
|
|
$
7.32
|
Loss from
discontinued operations
|
(0.01)
|
|
(0.04)
|
|
(0.30)
|
|
(0.05)
|
Net
income
|
1.10
|
|
4.75
|
|
5.42
|
|
7.27
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
336
|
|
347
|
|
338
|
|
350
|
Diluted
|
338
|
|
350
|
|
340
|
|
353
|
TE CONNECTIVITY
LTD.
|
CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
September
27,
|
|
September
28,
|
|
2019
|
|
2018
|
|
(in millions,
except share data)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
927
|
|
$
848
|
Accounts receivable,
net of allowance for doubtful accounts of $25 and $22,
respectively
|
2,320
|
|
2,361
|
Inventories
|
1,836
|
|
1,857
|
Prepaid expenses and
other current assets
|
471
|
|
661
|
Assets held for
sale
|
-
|
|
472
|
Total current
assets
|
5,554
|
|
6,199
|
Property, plant, and
equipment, net
|
3,574
|
|
3,497
|
Goodwill
|
5,740
|
|
5,684
|
Intangible assets,
net
|
1,596
|
|
1,704
|
Deferred income
taxes
|
2,776
|
|
2,144
|
Other
assets
|
454
|
|
1,158
|
Total
assets
|
$
19,694
|
|
$
20,386
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
debt
|
$
570
|
|
$
963
|
Accounts
payable
|
1,357
|
|
1,548
|
Accrued and other
current liabilities
|
1,613
|
|
1,711
|
Liabilities held for
sale
|
-
|
|
188
|
Total current
liabilities
|
3,540
|
|
4,410
|
Long-term
debt
|
3,395
|
|
3,037
|
Long-term pension and
postretirement liabilities
|
1,367
|
|
1,102
|
Deferred income
taxes
|
156
|
|
207
|
Income
taxes
|
239
|
|
312
|
Other
liabilities
|
427
|
|
487
|
Total
liabilities
|
9,124
|
|
9,555
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common shares, CHF
0.57 par value, 350,951,381 shares authorized and
issued,
|
|
|
|
and 357,069,981
shares authorized and issued, respectively
|
154
|
|
157
|
Accumulated
earnings
|
12,256
|
|
12,114
|
Treasury shares, at
cost, 15,862,337 and 12,279,603 shares, respectively
|
(1,337)
|
|
(1,134)
|
Accumulated other
comprehensive loss
|
(503)
|
|
(306)
|
Total
shareholders' equity
|
10,570
|
|
10,831
|
Total liabilities
and shareholders' equity
|
$
19,694
|
|
$
20,386
|
TE CONNECTIVITY
LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters
Ended
|
|
For the Years
Ended
|
|
September
27,
|
|
September
28,
|
|
September
27,
|
|
September
28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in
millions)
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
372
|
|
$
1,661
|
|
$
1,844
|
|
$
2,565
|
Loss from
discontinued operations, net of income taxes
|
4
|
|
13
|
|
102
|
|
19
|
Income from
continuing operations
|
376
|
|
1,674
|
|
1,946
|
|
2,584
|
Adjustments to
reconcile income from continuing operations to net
cash
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
175
|
|
171
|
|
690
|
|
667
|
Deferred income
taxes
|
72
|
|
(1,233)
|
|
(218)
|
|
(791)
|
Provision for losses
on accounts receivable and inventories
|
7
|
|
1
|
|
43
|
|
30
|
Share-based
compensation expense
|
19
|
|
24
|
|
75
|
|
95
|
Other
|
25
|
|
17
|
|
51
|
|
5
|
Changes in assets and
liabilities, net of the effects of acquisitions
|
|
|
|
|
|
|
|
and
divestitures:
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
136
|
|
110
|
|
31
|
|
(269)
|
Inventories
|
123
|
|
(30)
|
|
64
|
|
(247)
|
Prepaid expenses and
other current assets
|
35
|
|
(13)
|
|
144
|
|
(63)
|
Accounts
payable
|
(92)
|
|
24
|
|
(178)
|
|
201
|
Accrued and other
current liabilities
|
132
|
|
148
|
|
(15)
|
|
5
|
Income
taxes
|
(72)
|
|
30
|
|
(135)
|
|
54
|
Other
|
(57)
|
|
(1)
|
|
(44)
|
|
30
|
Net cash provided by
continuing operating activities
|
879
|
|
922
|
|
2,454
|
|
2,301
|
Net cash provided by
(used in) discontinued operating activities
|
(1)
|
|
2
|
|
(32)
|
|
150
|
Net cash provided by
operating activities
|
878
|
|
924
|
|
2,422
|
|
2,451
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(179)
|
|
(262)
|
|
(749)
|
|
(935)
|
Proceeds from sale of
property, plant, and equipment
|
27
|
|
4
|
|
43
|
|
23
|
Acquisition of
businesses, net of cash acquired
|
-
|
|
(153)
|
|
(283)
|
|
(153)
|
Proceeds from
divestiture of discontinued operation, net of cash
|
|
|
|
|
|
|
|
retained by sold
operation
|
-
|
|
-
|
|
297
|
|
-
|
Other
|
(1)
|
|
-
|
|
2
|
|
(8)
|
Net cash used in
continuing investing activities
|
(153)
|
|
(411)
|
|
(690)
|
|
(1,073)
|
Net cash used in
discontinued investing activities
|
-
|
|
(8)
|
|
(2)
|
|
(21)
|
Net cash used in
investing activities
|
(153)
|
|
(419)
|
|
(692)
|
|
(1,094)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Net increase
(decrease) in commercial paper
|
219
|
|
(1)
|
|
(51)
|
|
270
|
Proceeds from
issuance of debt
|
-
|
|
-
|
|
746
|
|
119
|
Repayment of
debt
|
(250)
|
|
-
|
|
(691)
|
|
(708)
|
Proceeds from
exercise of share options
|
30
|
|
4
|
|
85
|
|
100
|
Repurchase of common
shares
|
(178)
|
|
(268)
|
|
(1,091)
|
|
(879)
|
Payment of common
share dividends to shareholders
|
(154)
|
|
(153)
|
|
(608)
|
|
(588)
|
Transfers (to) from
discontinued operations
|
(1)
|
|
(6)
|
|
(34)
|
|
129
|
Other
|
(1)
|
|
(2)
|
|
(33)
|
|
(36)
|
Net cash used in
continuing financing activities
|
(335)
|
|
(426)
|
|
(1,677)
|
|
(1,593)
|
Net cash provided by
(used in) discontinued financing activities
|
1
|
|
6
|
|
34
|
|
(129)
|
Net cash used in
financing activities
|
(334)
|
|
(420)
|
|
(1,643)
|
|
(1,722)
|
Effect of currency
translation on cash
|
(10)
|
|
(7)
|
|
(8)
|
|
(5)
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
381
|
|
78
|
|
79
|
|
(370)
|
Cash, cash
equivalents, and restricted cash at beginning of
period
|
546
|
|
770
|
|
848
|
|
1,218
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
927
|
|
$
848
|
|
$
927
|
|
$
848
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
Interest paid on
debt, net
|
$
19
|
|
$
30
|
|
$
75
|
|
$
127
|
Income taxes paid,
net of refunds
|
61
|
|
76
|
|
338
|
|
393
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
FREE CASH FLOW (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters
Ended
|
|
For the Years
Ended
|
|
September
27,
|
|
September
28,
|
|
September
27,
|
|
September
28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in
millions)
|
Net cash provided by
continuing operating activities
|
$
879
|
|
$
922
|
|
$
2,454
|
|
$
2,301
|
Excluding:
|
|
|
|
|
|
|
|
Receipts related to
pre-separation U.S. tax matters, net
|
-
|
|
-
|
|
-
|
|
(5)
|
Cash (collected) paid
pursuant to collateral requirements related
|
|
|
|
|
|
|
|
to cross-currency
swap contracts
|
(39)
|
|
6
|
|
(132)
|
|
16
|
Capital expenditures,
net
|
(152)
|
|
(258)
|
|
(706)
|
|
(912)
|
Free cash flow
(1)
|
$
688
|
|
$
670
|
|
$
1,616
|
|
$
1,400
|
|
|
|
|
|
|
|
|
(1) Free
cash flow is a non-GAAP financial measure. See description of
non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
CONSOLIDATED
SEGMENT DATA (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters
Ended
|
|
For the Years
Ended
|
|
September
27,
|
|
September
28,
|
|
September
27,
|
|
September
28,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
($ in
millions)
|
|
Net
Sales
|
|
|
Net
Sales
|
|
|
Net
Sales
|
|
|
Net
Sales
|
|
Transportation
Solutions
|
$
1,896
|
|
|
$
2,012
|
|
|
$
7,821
|
|
|
$
8,290
|
|
Industrial
Solutions
|
1,014
|
|
|
1,014
|
|
|
3,954
|
|
|
3,856
|
|
Communications
Solutions
|
390
|
|
|
483
|
|
|
1,673
|
|
|
1,842
|
|
Total
|
$
3,300
|
|
|
$
3,509
|
|
|
$
13,448
|
|
|
$
13,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Income
|
Margin
|
|
Income
|
Margin
|
|
Income
|
Margin
|
|
Income
|
Margin
|
Transportation
Solutions
|
$
270
|
14.2%
|
|
$
341
|
16.9%
|
|
$
1,226
|
15.7%
|
|
$
1,578
|
19.0%
|
Industrial
Solutions
|
150
|
14.8
|
|
146
|
14.4
|
|
543
|
13.7
|
|
465
|
12.1
|
Communications
Solutions
|
24
|
6.2
|
|
83
|
17.2
|
|
209
|
12.5
|
|
288
|
15.6
|
Total
|
$
444
|
13.5%
|
|
$
570
|
16.2%
|
|
$
1,978
|
14.7%
|
|
$
2,331
|
16.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
|
Adjusted
|
Adjusted
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Operating
|
Operating
|
|
Income
(1)
|
Margin
(1)
|
|
Income
(1)
|
Margin
(1)
|
|
Income
(1)
|
Margin
(1)
|
|
Income
(1)
|
Margin
(1)
|
Transportation
Solutions
|
$
334
|
17.6%
|
|
$
364
|
18.1%
|
|
$
1,401
|
17.9%
|
|
$
1,623
|
19.6%
|
Industrial
Solutions
|
157
|
15.5
|
|
152
|
15.0
|
|
621
|
15.7
|
|
555
|
14.4
|
Communications
Solutions
|
47
|
12.1
|
|
81
|
16.8
|
|
258
|
15.4
|
|
301
|
16.3
|
Total
|
$
538
|
16.3%
|
|
$
597
|
17.0%
|
|
$
2,280
|
17.0%
|
|
$
2,479
|
17.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted operating income and adjusted operating margin are
non-GAAP financial measures. See description of non-GAAP financial
measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NET SALES GROWTH (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Net
Sales for the Quarter Ended September 27, 2019
|
|
versus Net
Sales for the Quarter Ended September 28, 2018
|
|
Net
|
|
Organic
Net
|
|
|
|
|
|
Sales
Growth
|
|
Sales Growth
(1)
|
|
Translation
(2)
|
|
Acquisitions
|
|
($ in
millions)
|
Transportation
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Automotive
|
$
(89)
|
(6.1)%
|
|
$
(59)
|
(4.1)%
|
|
$
(30)
|
|
$
-
|
Commercial
transportation
|
(29)
|
(9.3)
|
|
(41)
|
(13.6)
|
|
(7)
|
|
19
|
Sensors
|
2
|
0.8
|
|
1
|
0.4
|
|
(4)
|
|
5
|
Total
|
(116)
|
(5.8)
|
|
(99)
|
(4.9)
|
|
(41)
|
|
24
|
Industrial
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Industrial
equipment
|
(35)
|
(6.8)
|
|
(40)
|
(7.9)
|
|
(5)
|
|
10
|
Aerospace, defense,
oil, and gas
|
38
|
12.3
|
|
42
|
13.2
|
|
(4)
|
|
-
|
Energy
|
(3)
|
(1.6)
|
|
4
|
2.0
|
|
(7)
|
|
-
|
Total
|
-
|
-
|
|
6
|
0.6
|
|
(16)
|
|
10
|
Communications
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Data and
devices
|
(54)
|
(18.4)
|
|
(53)
|
(18.0)
|
|
(1)
|
|
-
|
Appliances
|
(39)
|
(20.6)
|
|
(34)
|
(18.3)
|
|
(5)
|
|
-
|
Total
|
(93)
|
(19.3)
|
|
(87)
|
(18.0)
|
|
(6)
|
|
-
|
Total
|
$
(209)
|
(6.0)%
|
|
$
(180)
|
(5.1)%
|
|
$
(63)
|
|
$
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Net
Sales for the Year Ended September 27, 2019
|
|
versus Net
Sales for the Year Ended September 28, 2018
|
|
Net
|
|
Organic
Net
|
|
|
|
|
|
Sales
Growth
|
|
Sales Growth
(1)
|
|
Translation
(2)
|
|
Acquisitions
|
|
($ in
millions)
|
Transportation
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Automotive
|
$
(406)
|
(6.7)%
|
|
$
(198)
|
(3.3)%
|
|
$
(208)
|
|
$
-
|
Commercial
transportation
|
(59)
|
(4.6)
|
|
(48)
|
(3.9)
|
|
(40)
|
|
29
|
Sensors
|
(4)
|
(0.4)
|
|
14
|
1.4
|
|
(26)
|
|
8
|
Total
|
(469)
|
(5.7)
|
|
(232)
|
(2.8)
|
|
(274)
|
|
37
|
Industrial
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Industrial
equipment
|
(38)
|
(1.9)
|
|
(66)
|
(3.4)
|
|
(45)
|
|
73
|
Aerospace, defense,
oil, and gas
|
149
|
12.9
|
|
165
|
14.1
|
|
(16)
|
|
-
|
Energy
|
(13)
|
(1.8)
|
|
21
|
2.7
|
|
(34)
|
|
-
|
Total
|
98
|
2.5
|
|
120
|
3.1
|
|
(95)
|
|
73
|
Communications
Solutions (3):
|
|
|
|
|
|
|
|
|
|
Data and
devices
|
(75)
|
(7.0)
|
|
(58)
|
(5.4)
|
|
(17)
|
|
-
|
Appliances
|
(94)
|
(12.1)
|
|
(71)
|
(9.3)
|
|
(23)
|
|
-
|
Total
|
(169)
|
(9.2)
|
|
(129)
|
(7.0)
|
|
(40)
|
|
-
|
Total
|
$
(540)
|
(3.9)%
|
|
$
(241)
|
(1.7)%
|
|
$
(409)
|
|
$
110
|
|
|
|
|
|
|
|
|
|
|
(1)
Organic net sales growth is a non-GAAP financial measure. See
description of non-GAAP financial measures.
|
(2)
Represents the change in net sales resulting from changes in
foreign currency exchange rates.
|
(3)
Industry end market information is presented consistently with our
internal management reporting and may be periodically revised as
management deems necessary.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
For the Quarter
Ended September 27, 2019
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Acquisition-
|
|
|
|
|
|
|
|
|
|
Related
Charges
|
|
Restructuring
|
|
|
|
|
|
|
|
and
Other
|
|
and
Other
|
|
Tax
|
|
Adjusted
|
|
U.S.
GAAP
|
|
Items
(1)(2)
|
|
Charges, Net
(1)
|
|
Items
|
|
(Non-GAAP)
(3)
|
|
($ in millions,
except per share data)
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
Transportation
Solutions
|
$
270
|
|
$
18
|
|
$
46
|
|
$
-
|
|
$
334
|
Industrial
Solutions
|
150
|
|
4
|
|
3
|
|
-
|
|
157
|
Communications
Solutions
|
24
|
|
1
|
|
22
|
|
-
|
|
47
|
Total
|
$
444
|
|
$
23
|
|
$
71
|
|
$
-
|
|
$
538
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
13.5%
|
|
|
|
|
|
|
|
16.3%
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
(61)
|
|
$
(5)
|
|
$
(15)
|
|
$
1
|
|
$
(80)
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
14.0%
|
|
|
|
|
|
|
|
15.1%
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
376
|
|
$
18
|
|
$
56
|
|
$
1
|
|
$
451
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
1.11
|
|
$
0.05
|
|
$
0.17
|
|
$
-
|
|
$
1.33
|
|
|
|
|
|
|
|
|
|
|
(1) The
tax effect of each non-GAAP adjustment is calculated based on the
jurisdictions in which the expense (income) is incurred and the tax
laws in effect for each such jurisdiction.
|
(2)
Includes acquisition-related charges of $6 million and a write-off
of spare parts of $17 million.
|
(3) See
description of non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
For the Quarter
Ended September 28, 2018
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Acquisition-
|
|
Restructuring
|
|
|
|
|
|
|
|
Related
|
|
and
Other
|
|
Tax
|
|
Adjusted
|
|
U.S.
GAAP
|
|
Charges
(1)
|
|
Charges, Net
(1)
|
|
Items
(2)
|
|
(Non-GAAP)
(3)
|
|
($ in millions,
except per share data)
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
Transportation
Solutions
|
$
341
|
|
$
3
|
|
$
20
|
|
$
-
|
|
$
364
|
Industrial
Solutions
|
146
|
|
2
|
|
4
|
|
-
|
|
152
|
Communications
Solutions
|
83
|
|
-
|
|
(2)
|
|
-
|
|
81
|
Total
|
$
570
|
|
$
5
|
|
$
22
|
|
$
-
|
|
$
597
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
16.2%
|
|
|
|
|
|
|
|
17.0%
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
$
(1)
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
(1)
|
|
|
|
|
|
|
|
|
|
|
Income tax
(expense) benefit
|
$
1,128
|
|
$
(1)
|
|
$
(4)
|
|
$
(1,222)
|
|
$
(99)
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
(206.6)%
|
|
|
|
|
|
|
|
17.3%
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
1,674
|
|
$
4
|
|
$
18
|
|
$
(1,222)
|
|
$
474
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
4.78
|
|
$
0.01
|
|
$
0.05
|
|
$
(3.49)
|
|
$
1.35
|
|
|
|
|
|
|
|
|
|
|
(1) The
tax effect of each non-GAAP adjustment is calculated based on the
jurisdictions in which the expense (income) is incurred and the tax
laws in effect for each such jurisdiction.
|
(2)
Includes a $1,222 million net income tax benefit associated with
the tax impacts of certain intercompany transactions including an
increase to the valuation allowance.
|
(3) See
description of non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
For the Year Ended
September 27, 2019
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Acquisition-
|
|
|
|
|
|
|
|
|
|
Related
Charges
|
|
Restructuring
|
|
|
|
|
|
|
|
and
Other
|
|
and
Other
|
|
Tax
|
|
Adjusted
|
|
U.S.
GAAP
|
|
Items
(1)(2)
|
|
Charges, Net
(1)
|
|
Items
(3)
|
|
(Non-GAAP)
(4)
|
|
($ in millions,
except per share data)
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
Transportation
Solutions
|
$
1,226
|
|
$
31
|
|
$
144
|
|
$
-
|
|
$
1,401
|
Industrial
Solutions
|
543
|
|
15
|
|
63
|
|
-
|
|
621
|
Communications
Solutions
|
209
|
|
1
|
|
48
|
|
-
|
|
258
|
Total
|
$
1,978
|
|
$
47
|
|
$
255
|
|
$
-
|
|
$
2,280
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
14.7%
|
|
|
|
|
|
|
|
17.0%
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
$
2
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
2
|
|
|
|
|
|
|
|
|
|
|
Income tax
(expense)benefit
|
$
15
|
|
$
(9)
|
|
$
(61)
|
|
$
(291)
|
|
$
(346)
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
(0.8)%
|
|
|
|
|
|
|
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
1,946
|
|
$
38
|
|
$
194
|
|
$
(291)
|
|
$
1,887
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
5.72
|
|
$
0.11
|
|
$
0.57
|
|
$
(0.86)
|
|
$
5.55
|
|
|
|
|
|
|
|
|
|
|
(1) The
tax effect of each non-GAAP adjustment is calculated based on the
jurisdictions in which the expense (income) is incurred and the tax
laws in effect for each such jurisdiction.
|
(2)
Includes acquisition-related charges of $30 million and a write-off
of spare parts of $17 million.
|
(3)
Includes a $216 million income tax benefit related to the tax
impacts of certain measures of Swiss tax reform, a $90 million
income tax benefit related to the effective settlement of a tax
audit in a non-U.S. jurisdiction, and $15 million of income tax
expense associated with the tax impacts of certain legal entity
restructurings and intercompany transactions.
|
(4) See
description of non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
For the Year Ended
September 28, 2018
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Acquisition-
|
|
Restructuring
|
|
|
|
|
|
|
|
Related
|
|
and
Other
|
|
Tax
|
|
Adjusted
|
|
U.S.
GAAP
|
|
Charges
(1)
|
|
Charges, Net
(1)
|
|
Items
(2)
|
|
(Non-GAAP)
(3)
|
|
($ in millions,
except per share data)
|
Operating
income:
|
|
|
|
|
|
|
|
|
|
Transportation
Solutions
|
$
1,578
|
|
$
12
|
|
$
33
|
|
$
-
|
|
$
1,623
|
Industrial
Solutions
|
465
|
|
10
|
|
80
|
|
-
|
|
555
|
Communications
Solutions
|
288
|
|
-
|
|
13
|
|
-
|
|
301
|
Total
|
$
2,331
|
|
$
22
|
|
$
126
|
|
$
-
|
|
$
2,479
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
16.7%
|
|
|
|
|
|
|
|
17.7%
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
$
1
|
|
$
-
|
|
$
-
|
|
$
(1)
|
|
$
-
|
|
|
|
|
|
|
|
|
|
|
Income tax
(expense) benefit
|
$
344
|
|
$
(5)
|
|
$
(31)
|
|
$
(716)
|
|
$
(408)
|
|
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
(15.4)%
|
|
|
|
|
|
|
|
17.1%
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
2,584
|
|
$
17
|
|
$
95
|
|
$
(717)
|
|
$
1,979
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from
|
|
|
|
|
|
|
|
|
|
continuing
operations
|
$
7.32
|
|
$
0.05
|
|
$
0.27
|
|
$
(2.03)
|
|
$
5.61
|
|
|
|
|
|
|
|
|
|
|
(1) The
tax effect of each non-GAAP adjustment is calculated based on the
jurisdictions in which the expense (income) is incurred and the tax
laws in effect for each such jurisdiction.
|
(2)
Includes a $1,283 million net income tax benefit associated with
the tax impacts of certain intercompany transactions and legal
entity restructurings including an increase to the valuation
allowance. Also includes $567 million of income tax expense related
to the tax impacts of the Tax Cuts and Jobs Act.
|
(3) See
description of non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
For the Quarter
Ended December 28, 2018
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
Acquisition-
|
|
Restructuring
|
|
|
|
|
|
Related
|
|
and
Other
|
|
Adjusted
|
|
U.S.
GAAP
|
|
Charges
(1)
|
|
Charges, Net
(1)
|
|
(Non-GAAP)
(2)
|
|
($ in millions,
except per share data)
|
Operating
income:
|
|
|
|
|
|
|
|
Transportation
Solutions
|
$
332
|
|
$
3
|
|
$
21
|
|
$
356
|
Industrial
Solutions
|
100
|
|
3
|
|
35
|
|
138
|
Communications
Solutions
|
52
|
|
-
|
|
19
|
|
71
|
Total
|
$
484
|
|
$
6
|
|
$
75
|
|
$
565
|
|
|
|
|
|
|
|
|
Operating
margin
|
14.5%
|
|
|
|
|
|
16.9%
|
|
|
|
|
|
|
|
|
Other expense,
net
|
$
(1)
|
|
$
-
|
|
$
-
|
|
$
(1)
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
(78)
|
|
$
(1)
|
|
$
(19)
|
|
$
(98)
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
16.9%
|
|
|
|
|
|
18.1%
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
383
|
|
$
5
|
|
$
56
|
|
$
444
|
|
|
|
|
|
|
|
|
Diluted earnings
per share from
|
|
|
|
|
|
|
|
continuing
operations
|
$
1.11
|
|
$
0.01
|
|
$
0.16
|
|
$
1.29
|
|
|
|
|
|
|
|
|
(1) The
tax effect of each non-GAAP adjustment is calculated based on the
jurisdictions in which the expense (income) is incurred and the tax
laws in effect for each such jurisdiction.
|
(2) See
description of non-GAAP financial measures.
|
TE CONNECTIVITY
LTD.
|
RECONCILIATION OF
FORWARD-LOOKING NON-GAAP FINANCIAL MEASURES
|
TO FORWARD-LOOKING
GAAP FINANCIAL MEASURES
|
As of October 30,
2019
|
(UNAUDITED)
|
|
|
|
|
|
Outlook
for
|
|
|
|
Quarter
Ending
|
|
|
|
December
27,
|
|
Outlook
for
|
|
2019
|
|
Fiscal
2020
|
Diluted earnings
per share from continuing operations (GAAP)
|
$0.93 -
$0.99
|
|
$4.21 -
$4.61
|
Restructuring and
other charges, net
|
0.13
|
|
0.56
|
Acquisition-related
charges
|
0.04
|
|
0.08
|
Adjusted diluted
earnings per share from continuing operations (non-GAAP)
(1)
|
$1.10 -
$1.16
|
|
$4.85 -
$5.25
|
|
|
|
|
|
|
|
|
Net sales growth
(GAAP)
|
(10)% -
(4)%
|
|
(5)% -
(1)%
|
Translation
|
2
|
|
2
|
(Acquisitions)
divestitures, net
|
(1)
|
|
(1)
|
Organic net sales
growth (non-GAAP) (1)
|
(9)% -
(3)%
|
|
(4)% - 0%
|
|
|
|
|
|
|
|
|
(1) See
description of non-GAAP financial measures.
|
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SOURCE TE Connectivity Ltd.