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TEL · TE Connectivity plc

20 filings

10-K

TEL 10-K Annual Reports

TE Connectivity plc - 20 annual reports

Filing record · 2016–202610-K1010-Q338-K129

2025
TE Connectivity plc Annual Report, Year Ended Sep 26, 2025
TE Connectivity's fiscal 2025 (ended September 26, 2025) was a year of strong top-line and margin expansion, driven almost entirely by the Industrial Solutions segment. Net sales rose 8.9% to $17.26 billion (6.4% organic), with Industrial Solutions up 23.7% on AI/cloud-driven digital data networks demand (+72.6% organic) and the April 2025 acquisition of Richards Manufacturing (~$2.3 billion, contributing $179 million of sales). Transportation Solutions declined 1.0%, with sensors and commercial transportation weaker and automotive flat. Gross margin improved to 35.2% from 34.4%, and operating margin reached 18.6% versus 17.6%. Operating income rose 15% to $3.21 billion. Below the operating line, reported results were distorted by a $574 million non-cash tax charge tied to an OECD global minimum tax guidance change affecting a Swiss subsidiary's ten-year tax credit, which pushed the effective tax rate to 42.5% and cut net income to $1.84 billion ($6.16 diluted EPS) from $3.19 billion in fiscal 2024. That prior year had benefited from a large one-time tax credit recognition, so the year-over-year comparison is not a clean read of underlying earnings. Operating cash flow improved to $4.14 billion, and the company returned capital through $803 million in dividends and $1.36 billion in buybacks, with $1.4 billion remaining on the repurchase authorization. Balance sheet leverage increased meaningfully: total debt rose to $5.69 billion from $4.20 billion after several euro and dollar senior note issuances that funded the acquisitions. Management guides fiscal 2026 first-quarter net sales of about $4.5 billion (versus $3.8 billion a year earlier) and diluted EPS from continuing operations of about $2.33. Key risks include automotive concentration (about 41% of sales), roughly 25% of sales to China, ongoing tariff and trade exposure, unhedged currency translation (about 60% of sales invoiced in non-dollar currencies), a $8.8 billion deferred tax asset valuation allowance, and Irish-domicile governance considerations following the 2024 redomiciliation from Switzerland.
Nov 10, 2025
2024
TE Connectivity plc Annual Report, Year Ended Sep 27, 2024
TE Connectivity's fiscal 2024 10-K (filed November 12, 2024) shows a company with steady top-line results but a sharply higher reported profit, driven largely by a one-time tax benefit. Net sales were $15,845 million, down 1.2% from $16,034 million, with organic sales flat (-0.2%) as currency translation (-0.7%) and divestitures/acquisitions (-0.3%) weighed on reported figures. Transportation Solutions (60% of sales) fell 2.0%, Industrial Solutions (28%) fell 1.5%, and Communications Solutions (12%) grew 3.7%. Gross margin expanded to 34.4% from 31.5%, and operating margin rose to 17.6% from 14.4%, supported by manufacturing productivity, pricing actions, and lower restructuring charges ($166 million versus $340 million). Net income more than doubled to $3,193 million ($10.33 diluted EPS) from $1,910 million, but this was inflated by an income tax benefit of $397 million (effective tax rate of -14.2%). The benefit included a $636 million net gain tied to a $972 million ten-year Swiss tax credit (net of a $336 million valuation allowance), plus a $262 million revaluation benefit from a Swiss tax rate increase and a $118 million legal entity restructuring benefit. Investors should therefore treat fiscal 2024 earnings as non-recurring on the tax line; pre-tax income was $2,797 million, up about 23%. Operating cash flow rose to $3,477 million, and free cash flow after $680 million of capex was roughly $2.8 billion, which funded $760 million of dividends and $2,062 million of share repurchases. The company completed its change in place of incorporation from Switzerland to Ireland on September 30, 2024, and will report a new three-segment structure in fiscal 2025. Management guides Q1 fiscal 2025 net sales to about $3.9 billion and diluted EPS from continuing operations to about $1.64. Risks flagged include a global minimum tax that could materially affect cash taxes starting fiscal 2025, a $8.3 billion valuation allowance against deferred tax assets, a pending DDTC trade-controls investigation with penalties not yet estimable, and exposure to China (about 20% of sales) and automotive (about 44% of sales).
Nov 12, 2024
2023
TE Connectivity plc Annual Report, Year Ended Sep 29, 2023
TE Connectivity's fiscal 2023 (ended September 29, 2023) was a year of mixed performance: net sales fell 1.5% to $16.034 billion, but organic sales grew 1.0% as pricing actions added $607 million. The decline was driven by a 26.3% drop in Communications Solutions, which fell on inventory corrections in data and devices and appliances, while Transportation Solutions grew 4.0% on automotive strength and Industrial Solutions grew 1.4%. Profitability weakened: gross margin slipped to 31.5% from 32.2%, and operating income fell 16% to $2.304 billion, largely because restructuring charges rose to $340 million. Diluted EPS from continuing operations was $6.01, down from $7.47, and net income was $1.910 billion. Cash generation and capital returns remained strong. Operating cash flow rose to $3.132 billion, up $664 million, mainly from working capital improvements. The company returned about $1.67 billion to shareholders through $725 million in dividends and $946 million in buybacks, and it ended the year with $735 million left under its repurchase authorization. Total debt was roughly flat at $4.2 billion, and the company cited covenant compliance with no restrictive covenants. Investors should weigh several risks and forward items. The company disclosed ongoing voluntary disclosures of possible U.S. trade-control violations to BIS and DDTC, with a possible DOJ inquiry and fines that are not yet estimable. Its tax position includes a $7.4 billion valuation allowance against $10.2 billion of gross deferred tax assets. Management guided fiscal 2024 Q1 sales to about $3.85 billion and EPS to about $1.59, and it is completing the Schaffner acquisition for roughly $350 million.
Nov 13, 2023
2022
TE Connectivity plc Annual Report, Year Ended Sep 30, 2022
TE Connectivity's fiscal 2022 (53 weeks ended September 30, 2022) was a strong year on the top line and operating line. Net sales rose 9.1% to $16.3 billion, with 12.1% organic growth, pricing actions adding $509 million, and an extra week contributing $306 million. Operating income increased 13.2% to $2.76 billion, with operating margin expanding to 16.9% from 16.3%. Net income attributable to the company was $2.43 billion, or $7.47 per diluted share, versus $6.79 a year earlier. Results were driven by Industrial Solutions (+17.6% sales) and Communications Solutions (+20.8% sales, 23.7% segment margin), while Transportation Solutions grew a more modest 2.7% and faced a 5.4-point currency headwind. Gross margin was 32.2%, slightly down from 32.7%, as inflation and currency offset pricing and volume. Cash generation and capital returns remained substantial but cash from operations declined to $2.47 billion from $2.68 billion on working capital build. Capital expenditures were $768 million. The company returned about $2.1 billion to shareholders through $685 million in dividends and $1.41 billion in buybacks, and ended the year with $1.7 billion of remaining repurchase authorization. Total debt rose modestly to $4.2 billion. Management guided fiscal 2023 Q1 sales to about $3.75 billion and expects currency translation to reduce fiscal 2023 sales by roughly $1 billion. Investors should weigh several risks. The company disclosed voluntary disclosures of apparent U.S. trade-controls violations to the Commerce and State Departments, with the Justice Department also in contact, and fines or penalties remain unestimated. The valuation allowance on deferred tax assets jumped to $7.1 billion from $2.7 billion, largely due to $4.5 billion of write-downs of investments in subsidiaries, which is a non-cash item but signals structural tax complexity. Roughly 40% of sales depend on the automotive industry, about 21% of sales are to China, and approximately 60% of sales are invoiced in non-dollar currencies without hedging of that revenue exposure.
Nov 15, 2022
2021
TE Connectivity plc Annual Report, Year Ended Sep 24, 2021
TE Connectivity's fiscal 2021 (ended September 24, 2021) was a strong rebound year. Net sales rose 22.6% to $14.9 billion (18.2% organic), with Transportation Solutions up 31.1%, Communications Solutions up 30.4%, and Industrial Solutions up 3.5%. Operating income recovered to $2.43 billion (16.3% margin) from $537 million in fiscal 2020, which had included a $900 million goodwill impairment. Gross margin expanded to 32.7% from 30.7%, and diluted EPS from continuing operations was $6.77 versus a loss of $0.78 a year earlier. Net cash from continuing operations increased to $2.68 billion. The effective tax rate fell to 5.2%, helped by a $353 million valuation allowance release. The balance sheet and capital return picture is solid. Total debt was $4.09 billion, and the company held $1.2 billion of cash. The board authorized a $1.5 billion increase to the buyback program, with $1.6 billion remaining, and the company repurchased about $904 million of stock. Shareholders approved a $2.00 annual dividend for fiscal 2021–22, and total dividend payments were $647 million. Management expects fiscal 2022 Q1 net sales of about $3.7 billion and diluted EPS from continuing operations of roughly $1.50, while backlog rose to $5.8 billion from $3.5 billion. Investors should weigh several items. Automotive exposure is about 43% of total sales, and the filing discloses ongoing U.S. trade-controls investigations (BIS and DDTC) with penalties not yet estimable. Approximately 22% of sales go to China, and roughly 60% of sales are invoiced in non-U.S. dollar currencies, with no hedging of that revenue exposure. Raw material costs for copper, gold, and silver are rising, and the company is also restructuring its manufacturing footprint with about $211 million in fiscal 2021 program charges.
Nov 9, 2021
2020
TE Connectivity plc Annual Report, Year Ended Sep 25, 2020
TE Connectivity's fiscal 2020 (ended September 25, 2020) was a difficult year. Net sales fell 9.5% to $12.17 billion, with organic sales down 9.9%, driven by COVID-19 disruption and weakness in automotive, which is roughly 40% of company sales. Transportation Solutions, the largest segment at 56% of sales, fell 12.5%. Gross margin contracted to 30.7% from 32.7%, and operating margin fell to 4.4% from 14.7%, mainly because of a $900 million goodwill impairment on the Sensors reporting unit and $257 million of restructuring charges. The company swung to a net loss of $241 million, or $(0.73) per diluted share, compared with net income of $1.84 billion in fiscal 2019. Results were also hurt by a $355 million Swiss tax reform charge and a $226 million increase in the valuation allowance on deferred tax assets, largely tied to COVID-19. Operating cash flow nonetheless remained solid at $1.99 billion from continuing operations, and the company paid $625 million in dividends. Debt rose modestly to $4.15 billion, and management reports compliance with all debt covenants. Looking ahead, management guides fiscal Q1 2021 net sales to about $3.2 billion, a slight increase year over year, and diluted EPS from continuing operations of about $0.83. It expects automotive and commercial aerospace markets to remain weak, with commercial aerospace expected to fall more than 20% in fiscal 2021. Investors should weigh the near-term recovery signals against continued cyclical and pandemic-related risks, a large tax valuation allowance that could reverse or grow, and a balance sheet that still supports the dividend.
Nov 10, 2020
2019
TE Connectivity plc Annual Report, Year Ended Sep 27, 2019
TE Connectivity's fiscal 2019 (ended September 27, 2019) was a year of top-line contraction and margin pressure, with net sales falling 3.9% to $13.4 billion (organic decline of 1.7%, with 3.0 points of FX translation drag). Gross margin contracted to 32.7% from 33.9%, and operating income fell 15% to $1.98 billion (operating margin 14.7% vs. 16.7%), driven by lower volume, unfavorable mix, price erosion, and $255 million of restructuring charges. Net income declined to $1.84 billion ($5.42 diluted EPS) from $2.57 billion, though the GAAP tax line was a $15 million benefit that flattered results, including a $216 million Swiss Tax Reform benefit and a $90 million audit settlement benefit. Excluding these items, underlying earnings pressure was more pronounced. Cash generation remained solid, with operating cash flow from continuing operations of $2.45 billion and capital expenditures of $749 million, leaving healthy free cash flow that supported $608 million in dividends and $1.09 billion in share repurchases. Total debt was stable at $3.97 billion, the Credit Facility remained undrawn, and the company reported approximately $9.1 billion of cash and intercompany deposits held by subsidiaries that it considers permanently reinvested. Shareholders' equity was $10.6 billion, and the deferred tax asset valuation allowance grew to $4.97 billion, a significant item to monitor. Management's fiscal 2020 outlook calls for net sales of $12.7 billion to $13.3 billion and diluted EPS from continuing operations of $4.21 to $4.61, reflecting expected declines in automotive and communications end markets. The company also flagged an expected approximately $350 million income tax charge in Q1 fiscal 2020 from Swiss Tax Reform implementation, which is excluded from guidance, and a pending First Sensor acquisition valued at about €307 million. Investors should weigh the near-term earnings reset and tax-driven volatility against a durable cash-generative franchise with a diversified customer base.
Nov 12, 2019
2018
TE Connectivity plc Annual Report, Year Ended Sep 28, 2018
TE Connectivity Ltd. (TEL) reported strong performance in its fiscal year 2018, concluding on September 27, 2018. The company experienced a significant increase in net sales, up 14.8% year-over-year to $13.99 billion, driven by broad-based growth across all three segments: Transportation Solutions, Industrial Solutions, and Communications Solutions. Organic net sales, excluding currency fluctuations and acquisitions/divestitures, grew by a healthy 9.2%, indicating robust underlying business performance. The Transportation Solutions segment remains the largest contributor, with a 17.8% increase in net sales, largely fueled by the automotive market and content gains from acquisitions. The Industrial Solutions segment saw a 10.0% increase, supported by strong performance in industrial equipment and contributions from aerospace, defense, and energy markets. The Communications Solutions segment also posted solid growth of 12.4%, driven by demand in data and devices and appliances. The company also highlighted its commitment to shareholder returns, with increased dividend payments and an active share repurchase program. Looking ahead, TE Connectivity provided an outlook for fiscal year 2019 anticipating moderate growth, though acknowledging potential headwinds from foreign currency exchange rates and moderating automotive production. Overall, the 2018 report demonstrates a company with diversified revenue streams, a strong market position, and a focus on profitable growth.
Nov 13, 2018
2017
TE Connectivity plc Annual Report, Year Ended Sep 29, 2017
TE Connectivity Ltd. (TEL) reported strong performance in its fiscal year 2017, with net sales increasing by 7.1% to $13.11 billion. This growth was driven by robust demand in the Transportation Solutions segment, which saw an 8.2% increase in net sales, and a significant 9.1% rise in the Industrial Solutions segment, bolstered by strategic acquisitions. The Communications Solutions segment also experienced growth, albeit at a slower pace of 1.9%. The company demonstrated solid operational execution, with gross margin improving to 33.9% and operating income rising to $2.05 billion. TE Connectivity returned substantial value to shareholders through dividends and share repurchases, underscoring a focus on financial discipline and shareholder returns. The company's outlook for fiscal 2018 remained positive, with expectations for continued sales growth across its key segments, driven by ongoing trends in automotive content per vehicle, industrial automation, and smart devices.
Nov 14, 2017
2016
TE Connectivity plc Annual Report, Year Ended Sep 30, 2016
TE Connectivity Ltd. (TEL) demonstrated resilience in its fiscal year 2016, reporting flat net sales of $12.238 billion compared to the prior year, with organic sales growth of 1.5% signaling underlying business strength. The company's performance was driven by a balanced contribution across its segments, with Transportation Solutions and Industrial Solutions showing sales increases, partially offset by a decline in Communications Solutions. The fiscal year benefited from an extra week, adding $238 million to net sales. Notable events during the year included the acquisition of Creganna Medical and the divestiture of the Circuit Protection Devices (CPD) business, reflecting strategic portfolio management. The company also continued its commitment to shareholder returns through dividend payments and share repurchases, underscoring a focus on balancing growth initiatives with capital discipline.
Nov 15, 2016
2015
TE Connectivity plc Annual Report, Year Ended Sep 25, 2015
TE Connectivity Ltd. (TEL) for the fiscal year ended September 25, 2015, reported net sales of $12.23 billion, a 2.2% increase year-over-year, driven by growth in its Transportation Solutions and Communications Solutions segments. The company's strategic focus remains on designing and manufacturing connectivity and sensor solutions, operating across three core segments: Transportation, Industrial, and Communications. Significant events during the fiscal year included the acquisition of Measurement Specialties, Inc. for approximately $1.7 billion, and the divestiture of its Broadband Network Solutions (BNS) business for $3.0 billion, resulting in a substantial gain. The company demonstrated strong free cash flow generation and continued its share repurchase program, reflecting a commitment to returning value to shareholders. Despite overall sales growth, the company experienced negative impacts from foreign currency translation. The Transportation Solutions segment, representing 52% of net sales, saw organic growth of 4.1%, largely driven by the automotive sector. The Industrial Solutions segment experienced a slight organic sales decline, while the Communications Solutions segment showed robust organic growth of 8.4%, primarily due to its subsea communications business. Looking ahead, management provided guidance for fiscal 2016, anticipating continued market weakness in certain areas, particularly China, and ongoing inventory adjustments in the supply chain.
Nov 10, 2015
2014
TE Connectivity plc Annual Report, Year Ended Sep 26, 2014
TE Connectivity Ltd. reported strong performance for the fiscal year ended September 26, 2014, with net sales increasing by 4.8% to $13.9 billion, driven primarily by growth in its Transportation Solutions segment. The company highlighted its competitive strengths, including a diverse product portfolio, strong customer relationships, and a global presence. Management expressed optimism for fiscal year 2015, forecasting net sales between $14.7 billion and $15.3 billion, supported by anticipated growth in automotive production and contributions from acquisitions. The company's financial health remains robust, with significant cash flow generation and a manageable debt level, although it continues to navigate economic uncertainties and foreign currency fluctuations. Key investments in research and development and strategic acquisitions underscore its commitment to innovation and market expansion.
Nov 12, 2014
2013
TE Connectivity plc Annual Report, Year Ended Sep 27, 2013
TE Connectivity Ltd. (TEL) reported fiscal year 2013 results marked by stable net sales of $13.28 billion, consistent with the prior year. The company experienced organic sales growth in its Transportation Solutions segment, driven by the automotive market, but this was offset by declines in its Network Solutions, Industrial Solutions, and Consumer Solutions segments. TE Connectivity continues to focus on operational efficiency, including restructuring initiatives aimed at simplifying its manufacturing footprint and migrating operations to lower-cost countries, incurring $311 million in net restructuring and other charges in fiscal 2013. The company's financial position remained solid, with net income attributable to TE Connectivity Ltd. of $1.28 billion. Despite pressures from price erosion and fluctuations in raw material costs, TE Connectivity emphasized its competitive strengths, including a diverse product portfolio, strong customer relationships, and a global presence. The company also highlighted its commitment to returning capital to shareholders through dividends and share repurchases, with $384 million distributed in dividends and $829 million spent on share repurchases in fiscal 2013.
Nov 15, 2013
2012
TE Connectivity plc Annual Report, Year Ended Sep 28, 2012
TE Connectivity Ltd. (TEL) reported its fiscal year 2012 results on November 13, 2012. The company, a global leader in connectivity and sensor solutions, experienced a slight decrease in net sales, down 3.6% to $13.3 billion, primarily due to softness in the Communications and Industrial Solutions segment and unfavorable currency movements. However, the acquisition of Deutsch Group SAS in April 2012 provided a significant boost to the Transportation Solutions segment, particularly in the automotive and aerospace markets. Despite the top-line dip, TE Connectivity maintained a robust gross margin and focused on operational efficiency and cost management. The company continued to invest in research and development, aiming to strengthen its innovation leadership and extend its reach in emerging markets. Management expressed confidence in the company's strategic priorities and its ability to navigate the challenging economic environment, anticipating modest sales growth in fiscal year 2013.
Nov 13, 2012
2011
TE Connectivity plc Annual Report, Year Ended Sep 30, 2011
TE Connectivity Ltd. (TEL) demonstrated robust growth in fiscal year 2011, with net sales increasing by 18.6% to $14.3 billion. This growth was driven by strong performance across its segments, particularly in Transportation Solutions, and bolstered by the acquisition of ADC Telecommunications, Inc. The company also benefited from an additional week in its fiscal calendar and favorable foreign currency movements. Despite increased raw material costs and a slight decline in gross margin percentage, operating income saw a healthy increase. The company continues to focus on strategic priorities including customer service, innovation, and expansion in emerging markets, while also managing costs through ongoing restructuring and simplification initiatives. The acquisition of ADC is expected to accelerate growth in the broadband connectivity market and contribute to future cost savings. TE Connectivity maintained a strong liquidity position, with significant cash generated from operations. The company also actively managed its capital structure through share repurchases and debt management. Looking ahead, TEL provided guidance for fiscal year 2012 anticipating continued net sales growth and improved earnings per share, assuming stable foreign exchange and commodity rates. Key risks highlighted include global economic conditions, industry cyclicality, competition, and raw material price volatility.
Nov 18, 2011
2010
TE Connectivity plc Annual Report, Year Ended Sep 24, 2010
TE Connectivity plc (TEL) reported strong revenue growth in fiscal year 2010, a significant rebound from the economic downturn of fiscal year 2009. The company's net sales increased by 17.7% to $12.07 billion, driven by a robust recovery in its Electronic Components segment, which saw a 35.4% increase in net sales. This growth reflects improved demand across key end markets, particularly automotive, which accounted for 51% of the Electronic Components segment's sales. Operationally, the company demonstrated improved profitability with a return to operating income in fiscal year 2010 ($1.52 billion) after a substantial operating loss in fiscal year 2009, largely due to a significant goodwill impairment. The company is also strategically expanding its global reach, focusing on emerging markets, and investing in innovation, with 26% of fiscal year 2010 sales coming from new products introduced in the prior three years. Furthermore, TE Connectivity announced a significant acquisition of ADC Telecommunications, Inc. for approximately $1.25 billion, indicating a commitment to inorganic growth and market consolidation.
Nov 10, 2010
2009
TE Connectivity plc Annual Report, Year Ended Sep 25, 2009
TE Connectivity plc (formerly Tyco Electronics Ltd.) filed its 2009 10-K report, detailing a challenging fiscal year marked by a significant revenue decline and substantial goodwill impairment charges, primarily driven by the global economic downturn. The company experienced a 28.6% decrease in net sales to $10.3 billion, largely due to weakness across its key segments, particularly Electronic Components, which saw a 35.7% decline. This economic pressure led to a substantial goodwill impairment charge of $3.5 billion recognized in the second quarter of fiscal 2009, primarily impacting the Automotive and Communications and Industrial Solutions reporting units. The company also undertook significant restructuring and cost-reduction initiatives, including workforce reductions and manufacturing footprint simplification. Despite the headwinds, TE Connectivity maintained its focus on strategic priorities, including new product development and market share expansion in attractive industries. The company also completed the divestiture of its Wireless Systems business, a move intended to further streamline its portfolio. The report highlights the company's reliance on the automotive and telecommunications sectors, both of which were significantly impacted by the economic climate.
Nov 18, 2009
2008-A
TE Connectivity plc Annual Report (Amendment), Year Ended Sep 20, 2008
TE Connectivity Ltd. (TEL) reported robust financial performance for the fiscal year ended September 26, 2008, despite a challenging global economic environment. The company demonstrated strong revenue growth, driven by its Electronic Components and Network Solutions segments, with significant contributions from international markets, particularly Asia-Pacific and Europe. While gross income increased, operating margins saw some pressure due to increased raw material costs and a less favorable segment mix, with the high-growth Undersea Telecommunications segment having a lower margin than the company average. The company also incurred substantial charges related to restructuring and legacy litigation, impacting reported net income. However, the business remains well-positioned due to its broad product portfolio, strong customer relationships, and commitment to innovation, with substantial investments in research and development to drive future growth.
Jan 16, 2009
2008
TE Connectivity plc Annual Report, Year Ended Sep 26, 2008
TE Connectivity plc (formerly Tyco Electronics Ltd.) reported its fiscal year 2008 results, highlighting strong organic sales growth across most segments despite a challenging global economic environment. The company demonstrated resilience with a 7.9% organic net sales increase, driven by robust performance in its Undersea Telecommunications and Wireless Systems segments, and a solid 2.4% organic growth in Electronic Components. The company's diversified product portfolio and customer base across various end markets, including automotive, telecommunications, and industrial sectors, helped mitigate some of the economic headwinds. Despite the overall positive operational trends, the company faced significant headwinds from increased restructuring charges related to manufacturing footprint simplification, impairment charges in its Electronic Components segment, and ongoing legacy litigation settlements inherited from its separation from Tyco International. The company ended the fiscal year with a solid balance sheet and a strong cash flow from operations, underscoring its financial stability. Looking ahead, management expressed anticipation of a near-term slowdown, particularly in consumer-related end markets and automotive, but remained optimistic about long-term growth driven by innovation and strategic market penetration.
Nov 20, 2008
2007
TE Connectivity plc Annual Report, Year Ended Sep 28, 2007
Tyco Electronics Ltd. (TEL) filed its first Form 10-K as a standalone public company for fiscal 2007 (year ended September 28, 2007), following its June 29, 2007 spin-off from Tyco International. Fiscal 2007 net sales grew 9.4% to $13.46 billion (5.8% organic), but the company posted a net loss of $554 million, driven by an $887 million allocated net charge for the Tyco International securities class action settlement, $410 million of losses from discontinued operations (mainly a $585 million pre-tax impairment on the Power Systems business), $232 million of allocated debt-retirement losses, and $99 million of restructuring charges. Operating income fell to $753 million (5.6% margin) from $1,448 million, and diluted EPS was $(1.11). The balance sheet expanded materially, with total assets of $23.7 billion and total equity of $11.4 billion, but leverage increased. Total debt was $3.38 billion after the September 2007 issuance of $2.05 billion in senior notes and borrowings under a bridge and revolving facility. Cash rose to $936 million, and operating cash flow was $1.54 billion, against capital expenditures of $892 million that included a $280 million purchase of cable-laying vessels. The company initiated a $0.14 quarterly dividend and a $750 million share repurchase authorization, with no repurchases yet made. Investors should weigh several open risks: a material weakness in internal control over income tax accounting that had not been remediated, a 31% share of unresolved legacy Tyco International tax liabilities and securities litigation (including a possible $3 billion maximum exposure on the tax-sharing guarantee and a pending IRS dispute with roughly $1 billion of adjustments still being appealed), a pending FCPA baseline review, and continued raw material inflation in copper and gold. The planned divestiture of Power Systems, for $100 million, is expected to reduce consolidated sales by about 15% overall once other exits are included.
Dec 14, 2007