Summary
TE Connectivity Ltd. (formerly Tyco Electronics Ltd.) is reporting on a significant settlement reached with the State of New Jersey concerning a lawsuit filed in 2002. The company, along with Tyco International and Covidien, has agreed to pay $73.25 million to settle claims related to alleged securities and other law violations stemming from the actions of former Tyco International management. This settlement is separate from a previously finalized consolidated securities class action. For TE Connectivity, the financial impact is a net charge of approximately $23 million in the second quarter of fiscal year 2008, as the company has recorded the full settlement liability and a corresponding receivable from its related entities. The settlement payment is expected by June 2, 2008, with TE Connectivity anticipating that Tyco International will handle the primary payment, and TE Connectivity and Covidien will subsequently reimburse Tyco International for their respective shares. This event provides clarity on a legacy legal matter and its financial implications for the company.
Key Highlights
- 1Tyco International, on behalf of related entities including TE Connectivity, has reached a definitive settlement agreement with the State of New Jersey.
- 2The settlement resolves a lawsuit filed in 2002 by the State of New Jersey against Tyco International, its auditors, and former officers/directors.
- 3The total settlement amount is $73.25 million, payable to the plaintiffs in exchange for dismissal of the case and release of claims.
- 4TE Connectivity, Tyco International, and Covidien are jointly and severally liable for the full settlement amount.
- 5TE Connectivity recorded a net charge of approximately $23 million in Q2 fiscal 2008 for its portion of the settlement.
- 6No tax benefit was available for this charge.
- 7The settlement payment is due on or before June 2, 2008, with the expectation that Tyco International will manage the payment process.