Second Quarter Results PEMBROKE, Bermuda, April 29
/PRNewswire-FirstCall/ -- Tyco Electronics Ltd. (NYSE:TEL)(BSX:TEL)
today reported results for the fiscal second quarter ended March
27, 2009. The company reported net sales of $2.5 billion for the
fiscal second quarter, a decrease of 33 percent compared to the
prior-year period. Excluding currency effects, the organic sales
decline was 28 percent. The GAAP loss per share from continuing
operations was $7.08 for the quarter, compared to diluted EPS of
$0.62 in the prior-year period. Included in the loss per share from
continuing operations were $7.22 per share of charges -- comprised
of $6.60 per share of goodwill impairment charges, $0.33 per share
of restructuring charges and $0.29 per share of charges related to
the company's remaining portion of Tyco International
pre-separation securities litigation charges. This compares to
$0.05 per share of charges in the prior-year quarter. Adjusted EPS
from continuing operations were $0.14 in the quarter, including the
benefits of a more favorable tax rate versus the company's prior
guidance. Adjusted EPS declined 79 percent from last year's
adjusted EPS of $0.67. "As expected, business conditions were weak
across most of our end markets," said Tyco Electronics Chief
Executive Officer Tom Lynch. "Despite these challenging conditions,
we continued to execute on our strategy to focus on our core
connectivity business, improve our cost structure, and position the
company for accelerated growth when markets recover. We had strong
cash flow during the quarter, generating more than $380 million of
free cash flow, driven primarily by working capital reductions and
lower capital spending. In addition, we announced last week that we
entered into an agreement with Harris Corporation to sell our
Wireless Systems business for $675 million and this substantially
completes the divestiture program we initiated at separation."
Organic Sales Growth, Adjusted Operating Income, Adjusted EPS,
Adjusted Operating Margin and Free Cash Flow are all non-GAAP
financial measures and are described at the end of this press
release. For a reconciliation of these non-GAAP measures, see the
attached tables. All dollar amounts are pre-tax and stated in
millions. All comparisons are to the fiscal quarter ended Mar. 28,
2008 unless otherwise indicated. ($ in millions) Mar 27, 2009 Mar
28, 2008 $ Change % Change ------------ ------------ --------
-------- Net Sales $2,456 $3,662 $(1,206) (33)% Operating
Income/(Loss) $(3,802) $501 $(4,303) NM Goodwill Impairment
$(3,547) $0 Restructuring-Related Charges $(196) $(26)
Pre-Separation Litigation Charges $(135) $(23) Other Items $0 $36
--- --- Adjusted Operating Income $76 $514 $(438) (85)% Operating
Margin NM 13.7% Adjusted Operating Margin 3.1% 14.0% The GAAP
operating loss was $3.8 billion, compared to $501 million of income
in the prior-year period. Included in the current quarter operating
loss were goodwill impairment charges of $3.5 billion,
restructuring charges of $196 million and pre-separation litigation
charges of $135 million. Included in prior-year operating income
were $26 million of restructuring costs, pre-separation litigation
charges of $23 million, and a $36 million pre-tax gain on the sale
of real estate. Excluding these items in both periods, adjusted
operating income was $76 million compared to $514 million a year
ago, a decrease of 85 percent. The adjusted operating margin was
3.1 percent, compared to 14.0 percent a year ago -- reflecting a 33
percent decline in sales, primarily in the company's Electronic
Components, Networks Solutions and Specialty Products segments.
CASH FLOW Cash from continuing operations was $424 million during
the quarter, which included a $283 million reduction of primary
working capital. Free cash flow was $382 million, compared to $349
million in the prior year period. The increase in free cash flow
was driven by primary working capital reductions, as well as a 39
percent decline in capital expenditures versus the prior year.
ADDITIONAL ITEMS -- The company reported a non-cash goodwill
impairment charge of $3.5 billion. This charge is the result of
significant sales and earnings declines in the company's Electronic
Components and Specialty Products segments. -- The company reported
$135 million of charges related to its remaining portion (31
percent) of pre-separation Tyco International securities
litigation. The charges include the settlement of two cases in the
quarter, as well as establishment of a reserve for the remaining
securities litigation under the parties' separation and
distribution agreement. -- On April 16, 2009, the company announced
that it had entered into a definitive agreement to sell its
Wireless Systems business to Harris Corporation for $675 million in
cash. The company will report the results of the Wireless Systems
business as a discontinued operation beginning with its fiscal
third quarter, ending June 26, 2009. The transaction, subject to
customary regulatory approvals, is expected to close during the
summer. -- In January, the company's Board of Directors approved a
proposed change of the company's place of incorporation from
Bermuda to Switzerland. Shareholders will be asked to approve the
proposal at a Special General Meeting of Shareholders on June 22,
2009. If approved, the company would implement the change as soon
as practicable. -- Beginning with the current quarter, the company
is reporting its Specialty Products group as an additional segment.
This new segment consists of four businesses previously reported in
the Electronic Components segment: Aerospace, Defense and Marine;
Medical Products; Touch Systems; and Circuit Protection. A
reclassification of prior period results was included in an 8-K
filed on April 27, 2009. ORDERS Total company orders declined 42
percent compared to the prior year. On an organic basis, excluding
the effects of currency translation, orders declined 38 percent and
the book-to-bill ratio was 0.90. Excluding the company's Undersea
Telecommunications and Wireless Systems segments, which are
project-oriented businesses with uneven order patterns, orders
declined 44 percent overall and 39 percent organically in the
quarter, and the book-to-bill ratio was 0.95. THIRD QUARTER FISCAL
2009 OUTLOOK For the third quarter of fiscal 2009, and excluding
the results of the company's Wireless Systems segment which will be
reported as a discontinued operation, the company expects sales of
$2.35 billion to $2.45 billion, a decline of 35 to 38 percent below
prior-year sales of $3.8 billion, with an organic sales decline of
30 to 33 percent. The company expects income from operations of $0
to $30 million, which includes restructuring charges of
approximately $40 million. Adjusted operating income is expected to
be $40 million to $70 million. GAAP loss per share from continuing
operations is expected to be $0.00 to $0.05, including
restructuring charges of approximately $0.06 per share. Adjusted
EPS from continuing operations are expected to be $0.01 to $0.06,
compared to adjusted EPS of $0.63 in the prior-year period. This
outlook assumes current foreign exchange rates. Amounts for the
prior year period are estimated assuming the Wireless Systems
segment is reported as a discontinued operation. Lynch said, "Our
outlook assumes a slight sequential improvement in sales. We expect
our sales to consumer-related end markets, including automotive, to
increase about 10 percent sequentially. This will be mostly offset
by declines in the industrial markets we serve. The sequential
decline in adjusted operating income is due to our continued
inventory reduction efforts, which will more than offset the
savings from our cost reduction programs. We expect that the impact
of inventory reductions on our profitability will be substantially
reduced by the end of the third quarter." SEGMENT RESULTS Tyco
Electronics is comprised of five reporting segments: Electronic
Components, Network Solutions, Specialty Products, Undersea
Telecommunications and Wireless Systems. Electronic Components The
Electronic Components segment is one of the world's largest
suppliers of passive electronic components, including connectors
and interconnect systems, relays, switches, sensors, and wire and
cable. ($ in millions) Mar 27, 2009 Mar 28, 2008 $ Change % Change
Organic Growth ------------ ------------ -------- --------
-------------- Net Sales $1,280 $2,320 $(1,040) (45)% (41)%
Operating Income/(Loss) $(3,653) $342 $(3,995) NM Goodwill
Impairment $(3,435) $0 Restructuring- Related Charges $(166) $(15)
Other Items $0 $36 --- --- Adjusted Operating Income/(Loss) $(52)
$321 $(373) NM Operating Margin NM 14.7% Adjusted Operating Margin
(4.1)% 13.8% Sales in the segment declined 45 percent compared to
the prior-year quarter and declined 41 percent organically. On an
organic basis, the company experienced declines across all
end-markets, including automotive (-49 percent), computer (-37
percent), communications (-29 percent) and industrial (-37 percent)
markets. On a regional basis, Europe declined 43 percent, North
America declined 36 percent, and Asia declined 42 percent.
Operating income decreased by $4.0 billion and adjusted operating
income decreased by $373 million. 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 charges of $3.4 billion for goodwill impairments and $166
million of restructuring charges, compared to $15 million of
restructuring charges and $36 million of income related to other
items in the prior-year quarter. Network Solutions The Network
Solutions segment is one of the world's largest suppliers of
infrastructure components and systems for the communication service
provider, building networks and energy markets. ($ in millions) Mar
27, 2009 Mar 28, 2008 $ Change % Change Organic Growth ------------
------------ -------- -------- -------------- Net Sales $402 $517
$(115) (22)% (11)% Operating Income $22 $53 $(31) (58)%
Restructuring- Related Charges $(7) $(9) ---- ---- Adjusted
Operating Income $29 $62 $(33) (53)% Operating Margin 5.5% 10.3%
Adjusted Operating Margin 7.2% 12.0% Segment sales declined 22
percent compared to the prior-year quarter and declined 11 percent
organically. On an organic basis, sales to the communication
service provider market declined 8 percent, sales to the energy
market declined 8 percent and sales to the building networks market
declined 22 percent. The revenue decline was due to reduced capital
spending by customers in these markets. Operating income decreased
by $31 million and adjusted operating income decreased by $33
million. The decrease in the adjusted operating margin was
primarily due to the overall sales decline. Restructuring charges
in the quarter were $7 million, compared to $9 million in the
prior-year quarter. Specialty Products The Specialty Products
segment is a leader in providing highly-engineered custom
solutions, components and connectors for electronic systems,
subsystems and devices in the aerospace, defense and marine;
medical; touch systems; and circuit protection markets. ($ in
millions) Mar 27, 2009 Mar 28, 2008 $ Change % Change Organic
Growth ------------ ------------ -------- -------- --------------
Net Sales $346 $440 $(94) (21)% (19)% Operating Income/(Loss) $(82)
$77 $(159) NM Goodwill Impairment $(112) $0 Restructuring- Related
Charges $(11) $0 ----- --- Adjusted Operating Income $41 $77 $(36)
(47)% Operating Margin NM 17.5% Adjusted Operating Margin 11.8%
17.5% Segment sales declined 21 percent compared to the prior-year
quarter and declined 19 percent organically. On an organic basis,
sales to the medical market increased 4 percent, sales to the
aerospace, defense and marine market declined 12 percent, sales of
touch systems declined 24 percent and sales of circuit protection
products declined 49 percent. Operating income decreased by $159
million and adjusted operating income decreased by $36 million. The
decrease in the adjusted operating margin was primarily due to the
overall sales declines. The current quarter included charges for
goodwill impairment of $112 million and restructuring charges of
$11 million, compared to no such charges in the prior-year quarter.
Undersea Telecommunications The company's Undersea
Telecommunications segment is a world leader in developing,
manufacturing, installing and maintaining the world's most advanced
fiber optic undersea networks. ($ in millions) Mar 27, 2009 Mar 28,
2008 $ Change % Change Organic Growth ------------ ------------
-------- -------- -------------- Net Sales $309 $272 $37 14% 14%
Operating Income $55 $39 $16 41% Restructuring- Related Charges
$(1) $(2) ---- ---- Adjusted Operating Income $56 $41 $15 37%
Operating Margin 17.8% 14.3% Adjusted Operating Margin 18.1% 15.1%
Sales in the segment increased 14 percent organically versus the
prior year. Adjusted operating income increased $15 million. The
adjusted operating margin increased to 18.1 percent, driven by a
favorable project mix. Restructuring charges in the quarter were $1
million, compared to $2 million in the prior-year quarter. Wireless
Systems The Wireless Systems segment is a leading innovator of
wireless technology for critical communications. ($ in millions)
Mar 27, 2009 Mar 28, 2008 $ Change % Change Organic Growth
------------ ------------ -------- -------- -------------- Net
Sales $119 $113 $6 5% 10% Operating Income/(Loss) $(9) $13 $(22) NM
Restructuring- Related Charges $(11) $0 ----- --- Adjusted
Operating Income $2 $13 $(11) (85)% Operating Margin NM 11.5%
Adjusted Operating Margin 1.7% 11.5% Segment sales increased 5
percent compared to the prior-year quarter and grew 10 percent
organically, due to increased program deployments. Operating income
decreased $22 million and adjusted operating income decreased $11
million. The decrease in the adjusted operating margin to 1.7
percent was primarily related to increased project costs and a
lower-margin sales mix. Restructuring charges in the quarter were
$11 million, compared to no such charges in the prior-year quarter.
ABOUT TYCO ELECTRONICS Tyco Electronics Ltd. is a leading global
provider of engineered electronic components, network solutions,
undersea telecommunication systems, wireless systems and specialty
products, with fiscal 2008 sales of $14.8 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;
alternative energy and lighting; and public safety communications.
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) 230-1074.
The telephone dial-in number for participants outside the United
States is (612) 332-0228. -- An audio replay of the conference call
will be available beginning at 10:30 a.m. on April 29, 2009 and
ending at 11:59 p.m. on May 6, 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
992567. NON-GAAP MEASURES "Organic Sales Growth," "Adjusted
Operating Income," "Adjusted Operating Margin," "Adjusted Income
Tax Benefit (Expense)," "Adjusted (Loss) 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 litigation 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 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 benefit (expense) after adjusting
for the tax effect of unusual items including charges related to
restructuring, impairment and other income or charges ("Adjusted
Income Tax Benefit (Expense)"). The company presents Adjusted
Income Tax Benefit (Expense) to provide investors further
information regarding the tax effects of adjustments used in
determining the non-GAAP financial measure Adjusted (Loss) Income
from Continuing Operations (as defined below). The difference
between Adjusted Income Tax Benefit (Expense) and income tax
benefit (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 benefit (expense). This
limitation is best addressed by using Adjusted Income Tax Benefit
(Expense) in combination with income tax benefit (expense) in order
to better understand the amounts, character and impact of any
increase or decrease in reported amounts. The company has presented
(loss) 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 (Loss) Income from
Continuing Operations"). The company presents Adjusted (Loss)
Income from Continuing Operations as we believe that it is
appropriate for investors to consider results excluding these items
in addition to our results in accordance with GAAP. Adjusted (Loss)
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 (Loss) Income from Continuing Operations and
(loss) income from continuing operations (the most comparable GAAP
measure) consists of the impact of charges related to litigation
settlements and reserves, restructuring charges, impairment
charges, other income or charges and 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 (Loss) Income from Continuing Operations in
combination with (loss) 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 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 we believe
that it is appropriate for investors to consider results excluding
these items in addition to our results in accordance with GAAP. We
believe such a measure provides a picture of our results that is
more comparable among periods since it excludes the impact of
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 earnings per share (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. 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 the
following subjects: our future financial condition and operating
results, our ability to change the place of the company's
incorporation and our ability to consummate the sale of our
Wireless Systems business. 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; 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 Sept. 26, 2008 and Quarterly
Report on Form 10-Q for the quarterly period ended Dec. 26, 2008,
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 Quarters For the Six
Months Ended Ended --------- ----------- March 27, March 28, March
27, March 28, 2009 2008 2009 2008 ---- ---- ---- ---- (in millions,
except per share data) Net sales $2,456 $3,662 $5,265 $7,220 Cost
of sales 2,016 2,692 4,271 5,358 ----- ----- ----- ----- Gross
income 440 970 994 1,862 Selling, general, and administrative
expenses 362 421 851 820 Pre-Separation litigation charges, net 135
23 144 23 Restructuring and other charges, net 198 25 275 46
Impairment of goodwill 3,547 - 3,547 - ----- ----- ----- -----
(Loss) income from operations (3,802) 501 (3,823) 973 Interest
income 3 9 9 19 Interest expense (40) (49) (82) (99) Other income 3
13 2 605 --- --- --- --- (Loss) income from continuing operations
before income taxes and minority interest (3,836) 474 (3,894) 1,498
Income tax benefit (expense) 594 (171) 617 (326) Minority interest
(1) (1) (3) (2) --- --- --- --- (Loss) income from continuing
operations (3,243) 302 (3,280) 1,170 Income (loss) from
discontinued operations, net of income taxes 5 (1) 5 80 --- --- ---
--- Net (loss) income $(3,238) $301 $(3,275) $1,250 ======= ====
======= ====== Basic (loss) earnings per share: (Loss) income from
continuing operations $(7.08) $0.62 $(7.15) $2.38 Income from
discontinued operations 0.01 - 0.01 0.17 ---- ---- ---- ---- Net
(loss) income $(7.07) $0.62 $(7.14) $2.55 ====== ===== ====== =====
Diluted (loss) earnings per share: (Loss) income from continuing
operations $(7.08) $0.62 $(7.15) $2.37 Income from discontinued
operations 0.01 - 0.01 0.16 ---- ---- ---- ---- Net (loss) income
$(7.07) $0.62 $(7.14) $2.53 ====== ===== ====== =====
Weighted-average number of shares outstanding: Basic 458 486 459
491 Diluted 458 489 459 494 TYCO ELECTRONICS LTD. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 27, September 26,
2009 2008 ---- ---- (in millions, except share data) Assets Current
Assets: Cash and cash equivalents $722 $1,086 Accounts receivable,
net of allowance for doubtful accounts of $43 and $42, respectively
1,792 2,726 Inventories 1,989 2,312 Prepaid expenses and other
current assets 781 767 Deferred income taxes 203 204 --- --- Total
current assets 5,487 7,095 Property, plant, and equipment, net
3,284 3,517 Goodwill 3,444 7,068 Intangible assets, net 454 486
Deferred income taxes 2,670 1,915 Receivable from Tyco
International Ltd. and Covidien Ltd. 1,223 1,218 Other assets 258
301 --- --- Total Assets $16,820 $21,600 ======= =======
Liabilities and Shareholders' Equity Current Liabilities: Current
maturities of long-term debt $1 $20 Accounts payable 901 1,469
Accrued and other current liabilities 1,709 1,596 Deferred revenue
196 247 --- --- Total current liabilities 2,807 3,332 Long-term
debt 2,914 3,161 Long-term pension and postretirement liabilities
707 721 Deferred income taxes 285 289 Income taxes 2,311 2,291
Other liabilities 716 723 --- --- Total Liabilities 9,740 10,517
----- ------ Commitments and contingencies Minority interest 9 10
Shareholders' equity: Preferred shares, $0.20 par value,
125,000,000 shares authorized; none outstanding - - Common shares,
$0.20 par value, 1,000,000,000 shares authorized; 500,264,413 and
500,241,706 issued, respectively 100 100 Capital in excess: Share
premium 61 61 Contributed surplus 10,133 10,106 Accumulated
(deficit) earnings (2,286) 1,141 Treasury stock, at cost,
42,247,476 and 36,904,702 shares, respectively (1,391) (1,264)
Accumulated other comprehensive income 454 929 --- --- Total
Shareholders' Equity 7,071 11,073 ----- ------ Total Liabilities
and Shareholders' Equity $16,820 $21,600 ======= ======= TYCO
ELECTRONICS LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) For the Quarters For the Six Months Ended Ended
--------- ----------- March 27, March 28, March 27, March 28, 2009
2008 2009 2008 ---- ---- ---- ---- (in millions) Cash Flows From
Operating Activities: Net (loss) income $(3,238) $301 $(3,275)
$1,250 (Income) loss from discontinued operations, net of income
taxes (5) 1 (5) (80) --- --- --- --- (Loss) income from continuing
operations (3,243) 302 (3,280) 1,170 Adjustments to reconcile net
cash provided by (used in) operating activities: Impairment of
goodwill 3,547 - 3,547 - Tax sharing income (3) (13) (5) (605)
Class action settlement - (936) - (936) Non-cash restructuring and
other charges, net 14 13 24 20 Depreciation and amortization 130
137 262 271 Deferred income taxes (609) 85 (719) 127 Provision for
losses on accounts receivable and inventory 12 7 103 15 Other 18
(44) 38 5 Changes in assets and liabilities, net of the effects of
acquisitions and divestitures: Accounts receivable, net 338 (39)
827 (71) Inventories 326 (101) 211 (226) Inventoried costs on
long-term contracts (40) 10 (63) (61) Other current assets 61 (40)
214 26 Accounts payable (341) 29 (547) 34 Accrued and other
liabilities 162 123 (152) (34) Income taxes 5 (29) 27 17 Deferred
revenue (3) 34 (52) 147 Other 50 5 22 31 --- --- --- --- Net cash
provided by (used in) continuing operating activities 424 (457) 457
(70) Net cash provided by discontinued operating activities - 11 -
17 --- --- --- --- Net cash provided by (used in) operating
activities 424 (446) 457 (53) --- ---- --- --- Cash Flows From
Investing Activities: Capital expenditures (95) (157) (211) (283)
Proceeds from sale of property, plant, and equipment 3 27 7 31
Class action settlement escrow - 936 - 936 Proceeds from
divestiture of discontinued operations, net of cash retained by
businesses sold 6 - 29 102 Other 7 (8) 3 (17) --- --- --- --- Net
cash (used in) provided by continuing investing activities (79) 798
(172) 769 Net cash used in discontinued investing activities - (1)
- (4) --- --- --- --- Net cash (used in) provided by investing
activities (79) 797 (172) 765 --- --- ---- --- Cash Flows From
Financing Activities: Net (decrease) increase in commercial paper
(249) 145 (649) 650 Repayment of long-term debt (100) (251) (119)
(951) Proceeds from long-term debt 252 - 442 100 Repurchase of
common shares - (360) (152) (592) Payment of common dividends (73)
(66) (147) (136) Proceeds from exercise of share options - 9 - 28
Other 4 (3) 2 (9) --- --- --- --- Net cash used in continuing
financing activities (166) (526) (623) (910) Net cash used in
discontinued financing activities - (9) - (15) --- --- --- --- Net
cash used in financing activities (166) (535) (623) (925) ---- ----
---- ---- Effect of currency translation on cash (2) 11 (26) 17 Net
increase (decrease) in cash and cash equivalents 177 (173) (364)
(196) Less: net (increase) decrease in cash and cash equivalents
related to discontinued operations - (1) - 2 Cash and cash
equivalents at beginning of period 545 922 1,086 942 --- --- -----
--- Cash and cash equivalents at end of period $722 $748 $722 $748
==== ==== ==== ==== Supplemental Cash Flow Information: Income
taxes paid, net of refunds $10 $118 $74 $199 Reconciliation to Free
Cash Flow: Net cash provided by (used in) continuing operating
activities $424 $(457) $457 $(70) Capital expenditures, net (92)
(130) (204) (252) Draw down on standby letter of credit related to
the State of New York contract 50 - 50 - Class action settlement -
936 - 936 --- --- --- --- Free cash flow (1) $382 $349 $303 $614
==== ==== ==== ==== (1) Free cash flow is a non-GAAP measure. See
description of non-GAAP measures contained in this release. TYCO
ELECTRONICS LTD. CONSOLIDATED SEGMENT DATA (UNAUDITED) For the
Quarters Ended ---------------------- March 27, March 28, 2009 2008
---- ---- ($ in millions) Net Sales: Electronic Components $1,280
$2,320 Network Solutions 402 517 Specialty Products 346 440
Undersea Telecommunications 309 272 Wireless Systems 119 113 ---
--- Total $2,456 $3,662 ====== ====== Income from Operations:
Electronic Components $(3,653) -285.4% $342 14.7% Network Solutions
22 5.5% 53 10.3% Specialty Products (82) -23.7% 77 17.5% Undersea
Telecommunications 55 17.8% 39 14.3% Wireless Systems (9) -7.6% 13
11.5% Pre-Separation litigation charges, net (135) (23) ---- ---
Total $(3,802) -154.8% $501 13.7% ======= ==== For the Six Months
Ended ------------------------ March 27, March 28, 2009 2008 ----
---- ($ in millions) Net Sales: Electronic Components $2,905 $4,554
Network Solutions 858 1,029 Specialty Products 713 846 Undersea
Telecommunications 574 586 Wireless Systems 215 205 --- --- Total
$5,265 $7,220 ====== ====== Income from Operations: Electronic
Components $(3,669) -126.3% $621 13.6% Network Solutions 67 7.8%
122 11.9% Specialty Products (54) -7.6% 150 17.7% Undersea
Telecommunications 93 16.2% 82 14.0% Wireless Systems (116) -54.0%
21 10.2% Pre-Separation litigation charges, net (144) (23) ---- ---
Total $(3,823) -72.6% $973 13.5% ======= ==== TYCO ELECTRONICS LTD.
NET SALES GROWTH RECONCILIATION (UNAUDITED) Percentage Change in
Net Sales for the of Segment's Quarter Ended March 27, 2009 Total
Net versus Net Sales for the Sales for the Quarter Ended March 28,
2008 Quarter Ended Transl- March 27, Organic (1) ation (2) Total
2009 ------------ --------- ----- ---------- ($ in millions)
Electronic Components (3): Automotive $(556) (48.5)% $(62) $(618)
(53.9)% 41% Communications (67) (28.9) (5) (72) (31.2) 13 Computer
(86) (36.7) (2) (88) (37.8) 11 Industrial (46) (36.9) (7) (53)
(42.1) 6 Appliance (49) (37.2) (4) (53) (40.5) 6 Consumer
Electronics (17) (39.8) 1 (16) (37.2) 2 Other (129) (31.3) (11)
(140) (34.1) 21 ---- ----- --- ---- ----- --- Total (950) (40.9)
(90) (1,040) (44.8) 100% ---- ----- --- ------ ----- --- Network
Solutions (3): Energy (19) (8.1) (27) (46) (19.7) 47 Service
Providers (11) (7.7) (18) (29) (19.9) 29 Enterprise Networks (29)
(22.4) (11) (40) (30.1) 23 Other - 15.8 - - - 1 --- ---- --- ---
--- --- Total (59) (11.4) (56) (115) (22.2) 100% --- ----- --- ----
----- --- Specialty Products (3): Aerospace, Defense, and Marine
(23) (12.3) (6) (29) (15.3) 48 Touch Systems (26) (24.1) (4) (30)
(26.8) 23 Medical 3 4.2 (1) 2 3.2 18 Circuit Protection (37) (48.7)
- (37) (48.7) 11 --- ----- --- --- ----- --- Total (83) (18.9) (11)
(94) (21.4) 100% --- ----- --- --- ----- --- Undersea
Telecommunications 38 14.0 (1) 37 13.6 --- ---- --- --- ----
Wireless Systems 10 9.6 (4) 6 5.3 --- --- --- --- --- Total
$(1,044) (28.4)% $(162) $(1,206) (32.9)% ======= ===== =====
======= ===== Change in Net Sales for the Percentage Six Months
Ended March 27, 2009 of Segment's versus Net Sales for the Total
Net Six Months Ended March 28, 2008 Sales for the Transl- Six
Months Ended Organic (1) ation (2) Total March 27, 2009
------------ --------- ----- -------------- ($ in millions)
Electronic Components (3): Automotive $(883) (39.7)% $(114) $(997)
(44.8)% 42% Communications (111) (23.5) (9) (120) (25.4) 12
Computer (160) (33.0) (2) (162) (33.3) 11 Industrial (53) (22.7)
(12) (65) (27.4) 6 Appliance (76) (30.0) (7) (83) (32.7) 6 Consumer
Electronics (25) (27.9) 1 (24) (25.8) 3 Other (173) (22.1) (25)
(198) (25.2) 20 ---- ----- --- ---- ----- --- Total (1,481) (32.5)
(168) (1,649) (36.2) 100 ------ ----- ---- ------ ----- --- Network
Solutions (3): Energy (12) (2.5) (50) (62) (13.4) 47 Service
Providers (22) (7.4) (31) (53) (17.7) 29 Enterprise Networks (36)
(14.2) (19) (55) (21.6) 23 Other - 0.3 (1) (1) (8.3) 1 --- --- ---
--- ---- --- Total (70) (6.8) (101) (171) (16.6) 100% --- ---- ----
---- ----- --- Specialty Products (3): Aerospace, Defense, and
Marine (21) (6.1) (11) (32) (9.0) 45 Touch Systems (37) (17.9) (6)
(43) (20.8) 23 Medical (3) (2.9) (1) (4) (3.1) 18 Circuit
Protection (58) (38.1) 4 (54) (35.5) 14 --- ----- --- --- ----- ---
Total (119) (14.0) (14) (133) (15.7) 100% ---- ----- --- ---- -----
--- Undersea Telecommunications (13) (2.2) 1 (12) (2.0) --- ----
--- --- ---- Wireless Systems 18 8.7 (8) 10 4.9 --- --- --- --- ---
Total $(1,665) (23.1)% $(290) $(1,955) (27.1)% ======= ===== =====
======= ===== (1) Represents the change in net sales resulting from
volume and price changes, before consideration of acquisitions,
divestitures, and the impact of changes in foreign currency
exchange rates. Organic net sales growth is a non-GAAP measure. See
description of non-GAAP measures contained in this release. (2)
Represents the change in net sales resulting from changes in
foreign currency exchange rates. (3) Industry end market
information about net sales is presented consistently with our
internal management reporting and may be periodically revised as
management deems necessary. TYCO ELECTRONICS LTD. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES For the
Quarter Ended March 27, 2009 (UNAUDITED) Adjustments -----------
Restructuring Pre-Separation and Other Impair- Litigation Adjusted
US Charges, ment of Charges, (Non-GAAP) GAAP Net (1) Goodwill (2)
Net (3) (4) ---- ------------- ----------- ---------- ---------- ($
in millions, except per share data) (Loss) Income from Operations:
Electronic Components $(3,653) $166 $3,435 $- $(52) Network
Solutions 22 7 - - 29 Specialty Products (82) 11 112 - 41 Undersea
Telecommunications 55 1 - - 56 Wireless Systems (9) 11 - - 2
Pre-Separation litigation charges, net (135) - - 135 - ---- ----
---- ---- --- Total $(3,802) $196 $3,547 $135 $76 ======= ====
====== ==== === Operating Margin -154.8% 3.1% ====== === Income Tax
Benefit (Expense) $594 $(46) $(523) $- $25 ==== ==== ===== == ===
(Loss) Income from Continuing Operations $(3,243) $150 $3,024 $135
$66 ======= ==== ====== ==== === Diluted (Loss) Earnings per Share
from Continuing Operations $(7.08) $0.33 $6.60 $0.29 $0.14 ======
===== ===== ===== ===== (1) Includes $198 million recorded in
restructuring and other charges, net and a $2 million credit
recorded in cost of sales. (2) Includes $3,547 million recorded in
impairment of goodwill. (3) Consists of $135 million of costs
related to pre-Separation securities litigation recorded in
pre-Separation litigation charges, net. (4) See description of
non-GAAP measures contained in this release. TYCO ELECTRONICS LTD.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES For the Quarter Ended March 28, 2008 (UNAUDITED)
Adjustments ----------- Restructuring Other Adjusted US and Other
Items, (Non-GAAP) GAAP Charges, Net (1) Net (2) (3) -----
--------------- ------- ---------- ($ in millions, except per share
data) Income from Operations: Electronic Components $342 $15 $(36)
$321 Network Solutions 53 9 - 62 Specialty Products 77 - - 77
Undersea Telecommunications 39 2 - 41 Wireless Systems 13 - - 13
Pre-Separation litigation charges, net (23) - 23 - --- --- --- ---
Total $501 $26 $(13) $514 ==== === ==== ==== Operating Margin 13.7%
14.0% ==== ==== Income Tax (Expense) Benefit $(171) $(8) $20 $(159)
===== === === ===== Income from Continuing Operations $302 $18 $7
$327 ==== === == ==== Diluted Earnings per Share from Continuing
Operations $0.62 $0.04 $0.01 $0.67 ===== ===== ===== ===== (1)
Includes $25 million recorded in restructuring and other charges,
net and $1 million recorded in cost of sales. (2) Consists of a $36
million gain on the sale of real estate recorded in selling,
general, and administrative expenses and $23 million of costs
related to the settlement of pre-Separation securities litigation
recorded in pre-Separation litigation charges, net. (3) See
description of non-GAAP measures contained in this release. TYCO
ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
GAAP FINANCIAL MEASURES For the Six Months Ended March 27, 2009
(UNAUDITED) Adjustments ----------- Restructuring and Impair- State
of Other ment of New York Other Adjusted US Charges, Goodwill
Contract Items, (Non-GAAP) GAAP Net (1) (2) (3) Net (4) (5) ----
--------- -------- -------- ------- -------- ($ in millions, except
per share data) (Loss) Income from Operations: Electronic
Components $(3,669) $208 $3,435 $- $- $(26) Network Solutions 67 26
- - - 93 Specialty Products (54) 25 112 - 8 91 Undersea
Telecommunications 93 4 - - - 97 Wireless Systems (116) 11 - 111 -
6 Pre-Separation litigation charges, net (144) - - - 144 - ----
---- ---- ---- ---- ---- Total $(3,823) $274 $3,547 $111 $152 $261
======= ==== ====== ==== ==== ==== Operating Margin -72.6% 5.0%
===== === Income Tax Benefit (Expense) $617 $(69) $(523) $(42) $(3)
$(20) ==== ==== ===== ==== === ==== (Loss) Income from Continuing
Operations $(3,280) $205 $3,024 $69 $149 $167 ======= ==== ======
=== ==== ==== Diluted (Loss) Earnings per Share from Continuing
Operations $(7.15) $0.45 $6.57 $0.15 $0.32 $0.36 ====== ===== =====
===== ===== ===== (1) Includes $275 million recorded in
restructuring and other charges, net and a $1 million credit
recorded in cost of sales. (2) Includes $3,547 million recorded in
impairment of goodwill. (3) Includes $61 million recorded in cost
of sales and $50 million recorded in selling, general, and
administrative expenses. (4) Consists of $8 million of costs
related to a product liability matter from several years ago
recorded in selling, general, and administrative expenses and $144
million of costs related to pre-Separation securities litigation
recorded in pre-Separation litigation charges, net. (5) See
description of non-GAAP measures contained in this release. TYCO
ELECTRONICS LTD. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
GAAP FINANCIAL MEASURES For the Six Months Ended March 28, 2008
(UNAUDITED) Adjustments ----------- Restructuring Tax and Other
Sharing Other Adjusted US Charges, Income Items, (Non-GAAP) GAAP
Net (1) (2) Net (3) (4) ---- ------------- ------- -------
--------- ($ in millions, except per share data) Income from
Operations: Electronic Components $621 $30 $- $(36) $615 Network
Solutions 122 14 - - 136 Specialty Products 150 - - - 150 Undersea
Telecommunications 82 3 - - 85 Wireless Systems 21 - - - 21
Pre-Separation litigation charges, net (23) - - 23 - --- --- ---
--- --- Total $973 $47 $- $(13) $1,007 ==== === === ==== ======
Operating Margin 13.5% 13.9% ==== ==== Income Tax (Expense) Benefit
$(326) $(14) $- $20 $(320) ===== ==== === === ===== Income from
Continuing Operations $1,170 $33 $(572) $7 $638 ====== === =====
=== ==== Diluted Earnings per Share from Continuing Operations
$2.37 $0.07 $(1.16) $0.01 $1.29 ===== ===== ====== ===== ===== (1)
Includes $46 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 $572 million in
other income 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 $23 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,
+1-610-893-9555, Office, or +1-609-933-9243, Mobile, , or Investor
Relations, John Roselli, +1-610-893-9559, Office, , or Keith
Kolstrom, +1-610-893-9551, Office, , all of Tyco Electronics Ltd.
Web Site: http://www.tycoelectronics.com/
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