01—Abstract
Summary
Summary of the 10-K filed November 18, 2011. Cited figures are marked; the original filing is the authoritative source.
TE Connectivity Ltd. (TEL) demonstrated robust growth in fiscal year 2011, with net sales increasing by 18.6% to $14.3 billiona.
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.
02—Key points
Key Highlights
- Net sales grew 18.6% year-over-year to $14.3 billion in fiscal 2011, driven by strong demand and strategic acquisitions.
- The acquisition of ADC Telecommunications was completed, strengthening TE Connectivity's position in the broadband connectivity market.
- Transportation Solutions segment showed significant growth, particularly in the automotive sector, with organic net sales up 13.0%.
- Gross margin as a percentage of net sales slightly decreased to 30.9% from 31.3% in the prior year, impacted by higher material costs and price erosion.
- Operating income increased significantly to $1.74 billion, reflecting higher sales volumes and improved operational efficiencies.
- The company generated strong free cash flow of $1.4 billion, demonstrating efficient cash generation from operations.
- TE Connectivity continued its share repurchase program, repurchasing approximately 25 million shares for $867 million in fiscal 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, TE Connectivity plc kept $0.09.
- Revenue$13.78B100.0%
- Cost of revenue−$9.51B69.0%
- Gross profit$4.27B31.0%
- Operating costs−$2.58B18.8%
- Operating income$1.69B12.2%
- Interest, other & tax−$442.0M3.2%
- Net income$1.25B9.0%
Where FY2011 revenue went
$13.78B- Cost of revenue: $9.51B, 69% of revenue
- SG&A: $1.73B, 13% of revenue
- Net income: $1.25B, 9.0% of revenue
- R&D: $593.0M, 4.3% of revenue
- Other operating costs: $263.0M, 1.9% of revenue
- Interest, other & tax: $442.0M, 3.2% of revenue
Kept 9.0% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed November 18, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $13.78B$11.68B | +18.0% |
| Cost of Revenue | $9.51B$8.04B | +18.3% |
| Gross Profit | $4.27B$3.64B | +17.2% |
| R&D Expenses | $593.00M$461.00M | +28.6% |
| SG&A Expenses | $1.73B$1.49B | +16.0% |
| Operating Income | $1.69B$1.45B | +16.2% |
| Interest Expense | $161.00M$155.00M | +3.9% |
| Net Income | $1.25B$1.10B | +12.9% |
| EPS (Basic) | $2.84$2.43 | +16.9% |
| EPS (Diluted) | $2.81$2.41 | +16.6% |
| Shares Outstanding (Basic) | 438.00M453.00M | −3.3% |
| Shares Outstanding (Diluted) | 443.00M457.00M | −3.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of TE Connectivity's net sales growth in fiscal 2011?
TE Connectivity's net sales grew significantly in fiscal 2011 primarily due to strong performance in its Transportation Solutions segment, a rebound in industrial and infrastructure markets, the acquisition of ADC Telecommunications, Inc., an extra week in the fiscal year, and favorable foreign currency exchange rates.
How did the acquisition of ADC Telecommunications impact the company's financial results?
The acquisition of ADC, completed in December 2010, contributed $964 million in net sales during fiscal 2011. While it incurred an operating loss of $59 million in the period, including significant restructuring charges, it is expected to accelerate growth in the broadband connectivity market and contribute to future cost savings and synergies.
What are TE Connectivity's key strategic priorities for growth?
TE Connectivity's strategy focuses on delivering extraordinary customer service, strengthening innovation leadership, extending leadership in emerging markets, leading in smart connectivity, and supplementing organic growth with strategic partnerships and acquisitions.
What is TE Connectivity's outlook for fiscal year 2012?
For fiscal year 2012, TE Connectivity expects net sales to be between $14.3 billion and $14.9 billion, and diluted earnings per share to be in the range of $3.00 to $3.30 per share. This outlook assumes current foreign exchange and commodity rates.
06—Continue