8-KFinancial EventsRegulation FDExhibits & Filings

TE Connectivity plc 8-K Report, Exit or Disposal Costs (Sep 4, 2008)

Filed September 4, 2008For Securities:TEL

Summary

TE Connectivity plc (formerly Tyco Electronics Ltd.) announced a significant restructuring of its European automotive operations on September 4, 2008. This initiative involves consolidating production, exiting certain manufacturing facilities, and relocating product lines to lower-cost regions. The primary drivers for this restructuring appear to be efficiency improvements and cost optimization within its global manufacturing footprint. Investors should note the estimated financial impact, which includes approximately $155 million in charges over 15 months. A substantial portion of these charges, about $135 million, is expected to be recognized in the fourth quarter of fiscal year 2008, leading to an increase in the company's previously forecasted restructuring charges for the year. This restructuring is projected to affect approximately 850 employees and involves plant closures in Spain and France.

Key Highlights

  • 1TE Connectivity is initiating a restructuring of its European automotive production to consolidate manufacturing and improve efficiency.
  • 2The plan involves exiting certain manufacturing operations and migrating product lines to lower-cost countries.
  • 3Three automotive plant closures in Spain and France are planned, impacting approximately 850 employees.
  • 4Total estimated charges for this restructuring are approximately $155 million, expected to be incurred over 15 months.
  • 5A significant portion of these charges, around $135 million, is expected to be recognized in Q4 FY2008.
  • 6The company's total estimated restructuring charges for fiscal year 2008 are now projected to be approximately $200 million, an increase of $70 million.
  • 7The restructuring is subject to consultation with works councils in relevant European countries.

Frequently Asked Questions

The primary purpose is to consolidate production of automotive products in key European manufacturing sites, simplify the company's global manufacturing footprint, exit certain operations, and migrate product lines to lower-cost countries for improved efficiency and cost optimization.

The company estimates total charges associated with the European automotive restructuring plan to be approximately $155 million. This includes an estimated $125 million in employee termination benefits and other cash expenditures, plus approximately $20 million in non-cash charges for inventory and fixed assets.

The company expects to incur a substantial portion of these charges, approximately $135 million, in the fourth quarter of fiscal year 2008, which ends on September 26, 2008.

The initiation of this European automotive restructuring plan increases the company's previously announced fiscal 2008 restructuring charges by approximately $70 million, raising the total estimated FY2008 charges from about $130 million to approximately $200 million.