10-QPeriod: Q3 FY2010

TE Connectivity plc Quarterly Report for Q3 Ended Jun 25, 2010

Filed July 23, 2010For Securities:TEL

Summary

TE Connectivity plc (TEL) reported strong financial performance for the quarter ending June 25, 2010, with net sales increasing by 23% year-over-year to $3.08 billion. This growth was driven by a significant rebound in the Electronic Components segment, which saw a 45.6% increase in net sales, benefiting from recovery in key end markets like automotive and consumer electronics. The company also demonstrated improved profitability, with operating income more than doubling compared to the prior year's quarter, reflecting benefits from ongoing restructuring efforts and higher sales volumes. Financially, the company maintained a solid liquidity position, with cash and cash equivalents increasing to $1.815 billion. TE Connectivity also announced a significant strategic move, entering into an agreement to acquire ADC Telecommunications for approximately $1.25 billion, signaling a proactive approach to growth and market expansion. The report also detailed the correction of certain immaterial tax accounting errors from prior periods, which were adjusted in the current quarter without materially impacting prior financial statements.

Financial Highlights

54 data points
Beta

Revenue

$3.08B

31.9% Gross Margin

Net Income

$330.00M

10.7% Net Margin

EPS (Diluted)

$0.72

Total Assets

$16.47B

Cash & Equivalents

$1.81B

Free Cash Flow

$283.00M

Financial Statements
Beta
Revenue$3.08B
Cost of Revenue$2.10B
Gross Profit$985.00M
SG&A Expenses$375.00M
Operating Income$467.00M
Interest Expense$38.00M
Net Income$330.00M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)451.00M
Shares Outstanding (Diluted)456.00M

Key Highlights

  • 1Net sales increased by 23.0% to $3.08 billion in Q3 FY2010 compared to Q3 FY2009.
  • 2Operating income surged to $467 million from $64 million in the prior year's quarter, indicating improved profitability and operational efficiency.
  • 3The Electronic Components segment showed robust growth with a 45.6% increase in organic net sales, driven by recovery in automotive and consumer markets.
  • 4The company announced a $1.25 billion acquisition of ADC Telecommunications, signaling a strategic move for future growth.
  • 5Cash and cash equivalents increased to $1.815 billion, demonstrating a strong liquidity position.
  • 6Restructuring and other charges decreased significantly to $3 million from $63 million year-over-year, reflecting progress in cost-saving initiatives.

Frequently Asked Questions

The primary driver was the strong performance in the Electronic Components segment, which saw a 45.6% increase in organic net sales. This growth was fueled by a broad-based recovery in key end markets, particularly automotive, data communications, industrial, appliance, computer, and consumer devices, indicating a positive trend in global demand.

Profitability improved substantially. Operating income more than doubled to $467 million in the third quarter of fiscal 2010, compared to $64 million in the same period of fiscal 2009. This improvement was attributed to higher sales volumes, increased gross margins due to cost reduction benefits from restructuring actions, and a significant reduction in restructuring and other charges.

The acquisition of ADC Telecommunications for approximately $1.25 billion is a major strategic initiative aimed at expanding TE Connectivity's market presence and product offerings. This move signals the company's commitment to growth through strategic consolidation and is expected to be completed in the first quarter of fiscal 2011.

Yes, the company identified and corrected certain immaterial errors in its income tax accounting from prior periods. While these corrections did not materially misstate prior financial statements, their cumulative effect was deemed material for the fiscal 2010 financial statements, leading to adjustments recorded in the third quarter of fiscal 2010.