01—Abstract
Summary
Summary of the 10-K/A filed January 16, 2009. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Net sales increased by 14.5% to $14.8 billion, with organic growth of 7.9%, indicating strong underlying business performance.
- The Electronic Components segment remained the largest contributor to net sales (74%), followed by Network Solutions (15%), Undersea Telecommunications (8%), and Wireless Systems (3%).
- Significant investments were made in Research and Development, totaling $530 million, to support new product development and technological advancements.
- The company experienced increased raw material costs, particularly for copper and gold, and faced price erosion, which partially offset strong sales volume increases.
- Restructuring and other charges amounted to $185 million, reflecting efforts to simplify the global manufacturing footprint and migrate facilities to lower-cost countries.
- A material weakness in internal control over financial reporting related to accounting for income taxes was disclosed, indicating ongoing remediation efforts.
- The company repurchased approximately $1.24 billion of its common shares in fiscal 2008 as part of an authorized $2.0 billion share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, TE Connectivity plc kept $0.12.
- Revenue$14.37B100.0%
- Cost of revenue−$10.20B71.0%
- Gross profit$4.17B29.0%
- Operating costs−$2.51B17.5%
- Operating income$1.66B11.6%
- Interest, other & tax$24.0M0.2%
- Net income$1.69B11.7%
Where FY2008 revenue went
$14.37B- Cost of revenue: $10.20B, 71% of revenue
- Operating income: $1.66B, 12% of revenue
- R&D: $482.0M, 3.4% of revenue
- SG&A: $1.57B, 11% of revenue
- Other operating costs: $455.0M, 3.2% of revenue
Kept 12% as operating incomeOperating income $1.66B · 12%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2008filed January 16, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $14.37B$12.57B | +14.3% |
| Cost of Revenue | $10.20B$8.86B | +15.2% |
| Gross Profit | $4.17B$3.72B | +12.2% |
| R&D Expenses | $482.00M— | — |
| SG&A Expenses | $1.57B$1.51B | +4.2% |
| Operating Income | $1.66B$655.00M | +153.9% |
| Interest Expense | $190.00M$232.00M | −18.1% |
| Net Income | $1.69B-$554.00M | +404.5% |
| EPS (Basic) | $3.49$-1.11 | +414.4% |
| EPS (Diluted) | $3.47$-1.11 | +412.6% |
| Shares Outstanding (Basic) | 483.00M497.00M | −2.8% |
| Shares Outstanding (Diluted) | 486.00M497.00M | −2.2% |
05—Questions
Frequently Asked Questions
What was TE Connectivity's overall financial performance in fiscal year 2008?
TE Connectivity demonstrated strong revenue growth, with net sales reaching $14.8 billion, a 14.5% increase from the prior year. Organic growth was 7.9%, indicating healthy underlying business expansion across most segments. However, the company faced pressures from rising raw material costs and price erosion, alongside significant restructuring and legacy litigation charges, which impacted profitability.
Which segments contributed most significantly to TE Connectivity's revenue?
The Electronic Components segment was the largest contributor, accounting for 74% of net sales. Network Solutions followed with 15%, Undersea Telecommunications with 8%, and Wireless Systems with 3% of net sales.
What were the main challenges or risks highlighted in the filing?
The company highlighted several risks, including the adverse impact of current and future global economic conditions and cyclical industry conditions, particularly the significant downturn in the automotive industry. Dependence on the telecommunications, computer, and consumer electronics industries, and disruption in credit markets were also noted. Furthermore, a material weakness in internal control over financial reporting related to accounting for income taxes was disclosed.
Did TE Connectivity engage in any significant strategic actions, such as acquisitions or divestitures?
In fiscal 2008, TE Connectivity completed the divestiture of its Radio Frequency Components and Subsystem business for $427 million and the Automotive Radar Sensors business for $42 million. The company also continued to focus on simplifying its manufacturing footprint and regularly reviews its portfolio for potential divestitures of underperforming or non-strategic businesses.
06—Continue