01—Abstract
Summary
Summary of the 10-K filed November 13, 2012. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Net sales for fiscal year 2012 were $13.3 billion, a 3.6% decrease from $13.8 billion in fiscal year 2011, primarily driven by organic sales declines in Communications and Industrial Solutions and unfavorable foreign currency impacts.
- The acquisition of Deutsch Group SAS in April 2012 significantly strengthened the Transportation Solutions segment, contributing $327 million in net sales.
- Gross margin decreased slightly to 30.5% from 31.0% year-over-year, impacted by acquisition-related fair value adjustments and lower sales volumes, partially offset by productivity improvements.
- Operating income declined to $1.5 billion from $1.7 billion, reflecting lower sales and acquisition-related charges.
- The company generated $1.9 billion in cash from continuing operations and $1.4 billion in free cash flow, demonstrating strong operational cash generation.
- TE Connectivity's strategy remains focused on customer service, innovation leadership, expansion in emerging markets, smart connectivity, and strategic acquisitions.
- The company maintained a strong global presence with manufacturing and sales operations in over 150 countries, emphasizing customer relationships and technological leadership.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, TE Connectivity plc kept $0.08.
- Revenue$13.28B100.0%
- Cost of revenue−$9.24B69.5%
- Gross profit$4.05B30.5%
- Operating costs−$2.53B19.0%
- Operating income$1.52B11.4%
- Interest, other & tax−$406.0M3.1%
- Net income$1.11B8.4%
Where FY2012 revenue went
$13.28B- Cost of revenue: $9.24B, 70% of revenue
- SG&A: $1.69B, 13% of revenue
- Net income: $1.11B, 8.4% of revenue
- R&D: $595.0M, 4.5% of revenue
- Other operating costs: $248.0M, 1.9% of revenue
- Interest, other & tax: $406.0M, 3.1% of revenue
Kept 8.4% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed November 13, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $13.28B$13.78B | −3.6% |
| Cost of Revenue | $9.24B$9.51B | −2.9% |
| Gross Profit | $4.05B$4.27B | −5.3% |
| R&D Expenses | $595.00M$593.00M | +0.3% |
| SG&A Expenses | $1.69B$1.73B | −2.5% |
| Operating Income | $1.52B$1.69B | −10.0% |
| Interest Expense | $176.00M$161.00M | +9.3% |
| Net Income | $1.11B$1.25B | −10.7% |
| EPS (Basic) | $2.61$2.84 | −8.1% |
| EPS (Diluted) | $2.59$2.81 | −7.8% |
| Shares Outstanding (Basic) | 426.00M438.00M | −2.7% |
| Shares Outstanding (Diluted) | 430.00M443.00M | −2.9% |
05—Questions
Frequently Asked Questions
What were TE Connectivity's key financial results for fiscal year 2012?
In fiscal year 2012, TE Connectivity reported net sales of $13.3 billion, a 3.6% decrease from the previous year. Operating income was $1.5 billion, down from $1.7 billion in fiscal year 2011. The company generated $1.9 billion in cash from operations and $1.4 billion in free cash flow.
How did the Deutsch acquisition impact the company's performance?
The acquisition of Deutsch Group SAS in April 2012 was a significant event for TE Connectivity. It strengthened the Transportation Solutions segment, particularly in the automotive and aerospace markets, contributing $327 million in net sales during fiscal year 2012. However, the acquisition also resulted in acquisition and integration costs, including amortization of fair value adjustments.
What are TE Connectivity's primary growth strategies?
TE Connectivity's core strategies include delivering exceptional customer service, strengthening innovation leadership by increasing sales from new products, expanding its presence in emerging markets, leading in smart connectivity, and supplementing organic growth with strategic partnerships and acquisitions.
How did currency fluctuations affect TE Connectivity's results?
Currency exchange rates had a negative impact on TE Connectivity's net sales in fiscal year 2012, decreasing them by $338 million (2.4%) compared to the prior year. This was primarily due to the strengthening of the U.S. Dollar against other major currencies.
What is the outlook for TE Connectivity in fiscal year 2013?
For fiscal year 2013, TE Connectivity projected net sales between $13.4 billion and $14.0 billion, expecting growth in the automotive and aerospace markets driven by incremental Deutsch sales, but anticipating continued weakness in industrial, appliance, and energy markets. Diluted earnings per share were forecasted to be in the range of $2.61 to $2.91.
06—Continue