10-KPeriod: FY2010

TE Connectivity plc Annual Report, Year Ended Sep 24, 2010

Filed November 10, 2010For Securities:TEL

Summary

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.

Financial Highlights

57 data points
Beta

Revenue

$11.68B

31.2% Gross Margin

Net Income

$1.10B

9.4% Net Margin

EPS (Diluted)

$2.41

Total Assets

$16.99B

Cash & Equivalents

$1.99B

Free Cash Flow

$1.30B

Financial Statements
Beta
Revenue$11.68B
Cost of Revenue$8.04B
Gross Profit$3.64B
R&D Expenses$461.00M
SG&A Expenses$1.49B
Operating Income$1.45B
Interest Expense$155.00M
Net Income$1.10B
EPS (Basic)$2.43
EPS (Diluted)$2.41
Shares Outstanding (Basic)453.00M
Shares Outstanding (Diluted)457.00M

Key Highlights

  • 1Net sales increased by 17.7% to $12.07 billion in fiscal year 2010, a recovery from the 28.6% decline seen in fiscal year 2009.
  • 2The Electronic Components segment was the primary driver of growth, with net sales up 35.4% to $8.07 billion, reflecting strong demand in the automotive market.
  • 3Operating income improved significantly to $1.52 billion in fiscal year 2010, compared to an operating loss of $3.47 billion in fiscal year 2009, driven by higher sales and improved gross margins.
  • 4The company is actively pursuing growth through strategic priorities, including strengthening innovation leadership (26% of sales from new products) and expanding in emerging markets.
  • 5TE Connectivity announced its intention to acquire ADC Telecommunications, Inc. for approximately $1.25 billion, expected to close in fiscal year 2011, signaling a strategic move towards consolidation and expanded offerings.
  • 6The company continues to actively manage its capital structure, repurchasing approximately $488 million of common shares in fiscal year 2010 and maintaining compliance with debt covenants.

Frequently Asked Questions

In fiscal year 2010, TE Connectivity showed a strong recovery with net sales increasing by 17.7% to $12.07 billion, up from $10.26 billion in fiscal year 2009. The company returned to profitability, reporting an operating income of $1.52 billion compared to an operating loss of $3.47 billion in the prior year. This improvement was primarily driven by a rebound in the Electronic Components segment, particularly in the automotive market.

TE Connectivity's growth is driven by its strong market positions in Electronic Components, Network Solutions, Specialty Products, and Subsea Communications. Strategic priorities include delivering extraordinary customer service, strengthening innovation leadership (with 26% of fiscal year 2010 sales from new products), achieving market leadership in attractive industries, extending leadership in emerging markets, and supplementing organic growth with strategic acquisitions. The company is also focused on expanding its global manufacturing footprint to lower-cost countries.

In fiscal year 2010, TE Connectivity announced its intention to acquire ADC Telecommunications, Inc. for approximately $1.25 billion, a move expected to close in the first quarter of fiscal year 2011. This acquisition signals a commitment to inorganic growth and expanding the company's portfolio. Additionally, the company continued its share repurchase program, buying back approximately $488 million of its common stock.

The Electronic Components segment was the standout performer, with net sales growing by 35.4% to $8.07 billion, driven by strong demand in the automotive sector. The Specialty Products segment also saw growth, with net sales up 9.5% to $1.55 billion. The Network Solutions segment experienced modest growth, with net sales increasing by 0.5% to $1.73 billion. The Subsea Communications segment saw a decline in net sales by 37.6% to $724 million, primarily due to the completion of large projects in the prior year.