CONSOLIDATED AND COMBINED STATE
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Sep. 25, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Net sales | $10,256 | $14,373 | $12,574 |
Cost of sales | 7,720 | 10,200 | 8,855 |
Gross income | 2,536 | 4,173 | 3,719 |
Selling, general, and administrative expenses | 1,408 | 1,573 | 1,509 |
Research, development, and engineering expenses | 536 | 593 | 532 |
Pre-Separation litigation charges, net | 144 | 22 | 887 |
Separation costs | 44 | ||
Restructuring and other charges, net | 375 | 219 | 92 |
Impairment of goodwill | 3,547 | 103 | |
Operating income (loss) | (3,474) | 1,663 | 655 |
Interest income | 17 | 32 | 53 |
Interest expense | (165) | (190) | (232) |
Other income (expense), net | (48) | 567 | (219) |
Income (loss) from continuing operations before income taxes and minority interest | (3,670) | 2,072 | 257 |
Income tax (expense) benefit | 576 | (540) | (465) |
Minority interest | (6) | (5) | (6) |
Income (loss) from continuing operations | (3,100) | 1,527 | (214) |
Income (loss) from discontinued operations, net of income taxes | (156) | 255 | (340) |
Net income (loss) | ($3,256) | $1,782 | ($554) |
Basic earnings (loss) per share: | |||
Income (loss) from continuing operations (in dollars per share) | -6.75 | 3.16 | -0.43 |
Income (loss) from discontinued operations (in dollars per share) | -0.34 | 0.53 | -0.68 |
Net income (loss) (in dollars per share) | -7.09 | 3.69 | -1.11 |
Diluted earnings (loss) per share: | |||
Income (loss) from continuing operations (in dollars per share) | -6.75 | 3.14 | -0.43 |
Income (loss) from discontinued operations (in dollars per share) | -0.34 | 0.53 | -0.68 |
Net income (loss) (in dollars per share) | -7.09 | 3.67 | -1.11 |
Weighted-average number of shares outstanding: | |||
Basic (in shares) | 459 | 483 | 497 |
Diluted (in shares) | 459 | 486 | 497 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Millions | Sep. 25, 2009
| Sep. 26, 2008
|
Current Assets: | ||
Cash and cash equivalents | $1,521 | $1,090 |
Accounts receivable, net of allowance for doubtful accounts of $48 and $40, respectively | 1,975 | 2,656 |
Inventories | 1,435 | 2,159 |
Prepaid expenses and other current assets | 487 | 756 |
Deferred income taxes | 161 | 204 |
Assets held for sale | 770 | |
Total current assets | 5,579 | 7,635 |
Property, plant, and equipment, net | 3,111 | 3,342 |
Goodwill | 3,160 | 6,749 |
Intangible assets, net | 407 | 454 |
Deferred income taxes | 2,518 | 1,915 |
Receivable from Tyco International Ltd. and Covidien plc | 1,211 | 1,218 |
Other assets | 234 | 287 |
Total Assets | 16,220 | 21,600 |
Current Liabilities: | ||
Current maturities of long-term debt | 101 | 20 |
Accounts payable | 1,068 | 1,433 |
Accrued and other current liabilities | 1,243 | 1,558 |
Deferred revenue | 203 | 207 |
Liabilities held for sale | 169 | |
Total current liabilities | 2,615 | 3,387 |
Long-term debt | 2,316 | 3,161 |
Long-term pension and postretirement liabilities | 1,129 | 721 |
Deferred income taxes | 188 | 289 |
Income taxes | 2,312 | 2,291 |
Other liabilities | 634 | 668 |
Total Liabilities | 9,194 | 10,517 |
Commitments and contingencies (Note 15) | ||
Minority interest | 10 | 10 |
Shareholders' Equity: | ||
Preferred shares, none at September 25, 2009; 125,000,000 shares authorized and none outstanding, $0.20 par value, at September 26, 2008 | 0 | 0 |
Common shares, 468,215,574 shares authorized and issued, CHF 2.43 par value, at September 25, 2009; 1,000,000,000 shares authorized and 500,241,706 shares issued, $0.20 par value, at September 26, 2008 | 1,049 | 100 |
Capital in excess: | ||
Share premium | 61 | |
Contributed surplus | 8,135 | 10,106 |
Accumulated earnings (deficit) | (2,274) | 1,141 |
Treasury shares, at cost, 9,425,172 shares at September 25, 2009; 36,904,702 shares at September 26, 2008 | (349) | (1,264) |
Accumulated other comprehensive income | 455 | 929 |
Total Shareholders' Equity | 7,016 | 11,073 |
Total Liabilities and Shareholders' Equity | $16,220 | $21,600 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
In Millions, except Share data | Sep. 25, 2009
| Sep. 26, 2008
|
BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $48 | $40 |
Preferred shares, shares authorized (in shares) | 0 | 125,000,000 |
Preferred shares, shares outstanding (in shares) | 0 | 0 |
Preferred shares, par value (in dollars per share) | 0.2 | |
Common shares, shares authorized (in shares) | 468,215,574 | 1,000,000,000 |
Common shares, shares issued (in shares) | 468,215,574 | 500,241,706 |
Common shares, par value, CHF per share (in Swiss Francs per share) | 2.43 | |
Common shares, par value, USD per share (in dollars per share) | 0.2 | |
Treasury shares (in shares) | 9,425,172 | 36,904,702 |
1_CONSOLIDATED AND COMBINED STA
CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | ||||||||
In Millions | Common Stock
| Treasury Stock
| Share Premium
| Contributed Surplus
| Parent Company Investment
| Accumulated Earnings (Deficit)
| Accumulated Other Comprehensive Income
| Total
|
Balance at Sep. 29, 2006 | $10,490 | $670 | $11,160 | |||||
Comprehensive income (loss): | ||||||||
Net income (loss) | (810) | 256 | (554) | |||||
Currency translation | 453 | 453 | ||||||
Minimum pension liability, net of income taxes | 207 | 207 | ||||||
Gain (loss) on cash flow hedge | (53) | (53) | ||||||
Total comprehensive income (loss) | 53 | |||||||
Adoption of funded status recognition provisions of ASC 715 (Compensation - Retirement Benefits), net of tax | (225) | (225) | ||||||
Net transfers from former parent | 848 | 848 | ||||||
Transfer of parent company investment to contributed surplus | 10,528 | (10,528) | ||||||
Guarantees and shared tax liabilities to Tyco International and Covidien in accordance with the Tax Sharing Agreement | (296) | (296) | ||||||
Due from Tyco International and Covidien in accordance with the Tax Sharing Agreement | 844 | 844 | ||||||
Income tax liabilities assumed upon Separation | (1,091) | (1,091) | ||||||
Issuance of common shares | 99 | 99 | ||||||
Issuance of common shares (in shares) | 497 | |||||||
Compensation expense, including charge related to Tyco International equity award conversion | 44 | 44 | ||||||
Dividends declared and distributions approved | (70) | (70) | ||||||
Exercise of share options | 13 | 13 | ||||||
Repurchase of common shares | (2) | (2) | ||||||
Balance at Sep. 28, 2007 | 99 | (2) | 13 | 10,029 | 186 | 1,052 | 11,377 | |
Balance (in shares) at Sep. 28, 2007 | 497 | |||||||
Adoption of uncertain tax position provisions of ASC 740 (Income Taxes) | (549) | (549) | ||||||
Comprehensive income (loss): | ||||||||
Net income (loss) | 1,782 | 1,782 | ||||||
Currency translation | (22) | (22) | ||||||
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes | (107) | (107) | ||||||
Gain (loss) on cash flow hedge | 7 | 7 | ||||||
Unrealized loss on securities, net of income taxes | (1) | (1) | ||||||
Total comprehensive income (loss) | 1,659 | |||||||
Compensation expense | 61 | 61 | ||||||
Dividends declared and distributions approved | (276) | (276) | ||||||
Exercise of share options | 1 | 7 | 48 | (2) | 54 | |||
Exercise of share options (in shares) | 3 | |||||||
Adjustment for pre-Separation tax matters | 16 | 16 | ||||||
Repurchase of common shares | (1,269) | (1,269) | ||||||
Repurchase of common shares (in shares) | (37) | |||||||
Balance at Sep. 26, 2008 | 100 | (1,264) | 61 | 10,106 | 1,141 | 929 | 11,073 | |
Balance (in shares) at Sep. 26, 2008 | 500 | (37) | ||||||
Adoption of provisions of ASC 715-60 (Compensation - Retirement Benefits: Defined Benefit Plans - Other Postretirement) related to the accounting for collateral assignment split-dollar life insurance arrangements | (5) | (5) | ||||||
Comprehensive income (loss): | ||||||||
Net income (loss) | (3,256) | (3,256) | ||||||
Currency translation | (206) | (206) | ||||||
Adjustments to unrecognized pension and postretirement benefit costs, net of income taxes | (279) | (279) | ||||||
Gain (loss) on cash flow hedge | 11 | 11 | ||||||
Total comprehensive income (loss) | (3,730) | |||||||
Reverse share split and issuance of fully paid up shares | 1,101 | (1,101) | ||||||
Cancellations of common shares held in treasury | (77) | 1,018 | (941) | |||||
Cancellations of common shares held in treasury, shares (in shares) | (32) | 32 | ||||||
Reallocation of share premium to contributed surplus | (61) | 61 | ||||||
Adoption of measurement date provisions of ASC 715 (Compensation - Retirement Benefits), net of tax | (7) | (7) | ||||||
Compensation expense | 52 | 52 | ||||||
Dividends declared and distributions approved | (75) | 2 | (147) | (220) | ||||
Exercise of share options | 1 | 1 | ||||||
Restricted share award vestings and other activity | 19 | (20) | (1) | |||||
Restricted share award vestings and other activity (in shares) | 2 | |||||||
Adjustment for pre-Separation tax matters | (22) | (22) | ||||||
Repurchase of common shares | (125) | (125) | ||||||
Repurchase of common shares (in shares) | (6) | |||||||
Balance at Sep. 25, 2009 | $1,049 | ($349) | $8,135 | ($2,274) | $455 | $7,016 | ||
Balance (in shares) at Sep. 25, 2009 | 468 | (9) |
2_CONSOLIDATED AND COMBINED STA
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (USD $) | |||
In Millions | 12 Months Ended
Sep. 25, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Cash Flows From Operating Activities: | |||
Net income (loss) | ($3,256) | $1,782 | ($554) |
(Income) loss from discontinued operations, net of income taxes | 156 | (255) | 340 |
Income (loss) from continuing operations | (3,100) | 1,527 | (214) |
Adjustments to reconcile net cash provided by operating activities: | |||
Impairment of goodwill | 3,547 | 103 | |
Class action settlement | (936) | 887 | |
Non-cash restructuring and other charges, net | 49 | 81 | 23 |
Depreciation and amortization | 515 | 539 | 496 |
Deferred income taxes | (583) | 164 | 144 |
Provision for losses on accounts receivable and inventory | 74 | 42 | 74 |
Tax sharing income | 68 | (567) | (13) |
Allocated loss on retirement of debt | 232 | ||
Other | 53 | 42 | (12) |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | |||
Accounts receivable, net | 651 | (107) | (97) |
Inventories | 638 | (221) | (76) |
Inventoried costs on long-term contracts | (4) | (46) | 16 |
Prepaid expenses and other current assets | 184 | 56 | (138) |
Accounts payable | (420) | 41 | 79 |
Accrued and other liabilities | (124) | 120 | 108 |
Income taxes | (115) | 18 | (112) |
Deferred revenue | (7) | 120 | 34 |
Other | (48) | (54) | 16 |
Net cash provided by (used in) continuing operating activities | 1,378 | 922 | 1,447 |
Net cash provided by (used in) discontinued operating activities | (49) | 67 | 78 |
Net cash provided by (used in) operating activities | 1,329 | 989 | 1,525 |
Cash Flows From Investing Activities: | |||
Capital expenditures | (328) | (610) | (863) |
Proceeds from sale of property, plant, and equipment | 13 | 42 | 41 |
Class action settlement escrow | 936 | (928) | |
Proceeds from divestiture of discontinued operations, net of cash retained by operations sold | 693 | 571 | 227 |
Proceeds from divestiture of businesses, net of cash retained by businesses sold | 17 | ||
Other | (1) | (29) | (3) |
Net cash provided by (used in) continuing investing activities | 394 | 910 | (1,526) |
Net cash provided by (used in) discontinued investing activities | (3) | (15) | (2) |
Net cash provided by (used in) investing activities | 391 | 895 | (1,528) |
Cash Flows From Financing Activities: | |||
Net (decrease) increase in commercial paper | (649) | 630 | |
Proceeds from long-term debt | 448 | 900 | 5,676 |
Repayment of long-term debt | (602) | (1,751) | (2,455) |
Allocated debt activity | (3,743) | ||
Net transactions with former parent | 1,112 | ||
Repurchase of common shares | (152) | (1,242) | |
Payment of common share dividends and cash distributions to shareholders | (294) | (271) | |
Proceeds from exercise of share options | 1 | 54 | 13 |
Transfers (to) from discontinued operations | (56) | 5 | (84) |
Minority interest distributions paid | (5) | (11) | (7) |
Other | (1) | (1) | (8) |
Net cash provided by (used in) continuing financing activities | (1,310) | (1,687) | 504 |
Net cash provided by (used in) discontinued financing activities | 56 | (52) | (73) |
Net cash provided by (used in) financing activities | (1,254) | (1,739) | 431 |
Effect of currency translation on cash | (31) | 1 | 46 |
Net increase (decrease) in cash and cash equivalents | 435 | 146 | 474 |
Less: net (increase) decrease in cash and cash equivalents related to discontinued operations | (4) | (3) | |
Cash and cash equivalents at beginning of fiscal year | 1,090 | 944 | 473 |
Cash and cash equivalents at end of fiscal year | 1,521 | 1,090 | 944 |
Supplementary Cash Flow Information: | |||
Interest paid | 163 | 100 | 231 |
Income taxes paid, net of refunds | $121 | $359 | $446 |
Basis of Presentation
Basis of Presentation | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Basis of Presentation | 1. Basis of Presentation Tyco ElectronicsLtd. ("Tyco Electronics" or the "Company") is a leading global provider of engineered electronic components, network solutions, specialty products, and undersea telecommunication systems. Change of Domicile Effective June25, 2009, the Company discontinued its existence as a Bermuda company as provided in Section132G of The Companies Act of 1981 of Bermuda, as amended (the "Bermuda Companies Act"), and, in accordance with article161 of the Swiss Federal Code on International Private Law, continued its existence as a Swiss corporation under articles620 et seq. of the Swiss Code of Obligations (the "Change of Domicile"). The rights of holders of the Company's shares are now governed by Swiss law, the Company's Swiss articles of association, and the Company's Swiss organizational regulations. The Separation Effective June29, 2007, the Company became the parent company of the former electronics businesses of Tyco InternationalLtd. ("Tyco International"). On June29, 2007, Tyco International distributed all of its shares of Tyco Electronics, as well as its shares of its former healthcare businesses ("Covidien"), to its common shareholders (the "Separation"). Basis of Presentation The accompanying Consolidated and Combined Financial Statements reflect the consolidated operations of Tyco ElectronicsLtd. and its subsidiaries as an independent, publicly-traded company subsequent to the Separation and a combined reporting entity comprising the assets and liabilities used in managing and operating the electronics businesses of Tyco International, including Tyco ElectronicsLtd., for the period prior to the Separation. The Consolidated and Combined Financial Statements have been prepared in United States Dollars, in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the Consolidated and Combined Financial Statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Significant estimates in these Consolidated and Combined Financial Statements include restructuring and other charges, acquisition liabilities, allowances for doubtful accounts receivable, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, loss contingencies, net realizable value of inventories, estimated contract revenue and related costs, legal contingencies, tax reserves and deferred tax asset valuation allowances, and the determination of discount and other rate assumptions for pension and postretirement employee benefit expenses. Actual results could differ materially from these estimates. The Consolidated and Combined Financial Statements for the period prior to the Separation may not be indicative of the Company's future performance and do not necessarily reflect what its consolidated and combined results of operations, financial position, and cash flows would have been had it operated as an in |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Revenue Recognition The Company's revenues are generated principally from the sale of its products. Revenue from the sale of products is recognized at the time title and the risks and rewards of ownership pass to the customer. This generally occurs when the products reach the free-on-board shipping point, the sales price is fixed and determinable, and collection is reasonably assured. For those items where title has not yet transferred, the Company has deferred the recognition of revenue. The Company provides certain distributors with an inventory allowance for returns or scrap equal to a percentage of qualified purchases. A reserve for estimated scrap and returns allowances is established at the time of the sale based on a fixed percentage of sales to distributors authorized and agreed to by the Company and is recorded as a reduction of sales. Other allowances include customer quantity and price discrepancies. A reserve for other allowances is established at the time of sale based on historical experience and is recorded as a reduction of sales. The Company believes it can reasonably and reliably estimate the amounts of future allowances. Contract sales for construction related projects are recorded primarily on the percentage-of-completion method. Profits recognized on contracts in process are based upon estimated contract revenue and related cost to complete. Percentage-of-completion is measured based on the ratio of actual costs incurred to total estimated costs. Revisions in cost estimates as contracts progress have the effect of increasing or decreasing profits in the current period. Provisions for anticipated losses are made in the period in which they first become determinable. Contract sales for construction related projects are generated primarily within the Company's Undersea Telecommunications segment. The Company generally warrants that its products will conform to the Company's or mutually agreed to specifications and that its products will be free from material defects in materials and workmanship for a limited time. The Company limits its warranty to the replacement or repair of defective parts or a refund or credit of the price of the defective product. The Company accepts returned goods only when the customer makes a verified claim and the Company has authorized the return. Returns result primarily from defective products or shipping discrepancies. A reserve for estimated returns is established at the time of sale based on historical return experience and is recorded as a reduction of sales. Additionally, certain of the Company's long-term contracts in its Undersea Telecommunications segment have warranty obligations. Estimated warranty costs for each contract are determined based on the contract terms and technology-specific considerations. These costs are included in total estimated contract costs and are accrued over the construction period of the respective contracts under percentage-of-completion accounting. Research and Development Research and development expenditures are expensed when incurred and are included in research, development, and |
Separation Costs
Separation Costs | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Separation Costs | 3. Separation Costs In connection with the Separation, the Company incurred costs of $44million in fiscal 2007, primarily related to employee costs, including non-cash compensation expense of $11million related to the modification of share option awards at Separation and $12million related to the acceleration of restricted share award vesting as a result of Separation. See Note23 for further information on the conversion of Tyco International share option awards into Tyco Electronics share option awards. |
Restructuring and Other Charges
Restructuring and Other Charges, Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Restructuring and Other Charges, Net | 4. Restructuring and Other Charges, Net Restructuring and other charges, net consisted of the following during fiscal 2009, 2008, and 2007: Fiscal 2009 2008 2007 (in millions) Restructuring and related charges, net $ 354 $ 185 $ 92 Loss on divestiture 7 Impairment of long-lived assets 14 34 $ 375 $ 219 $ 92 Restructuring and Related Charges, Net Charges to operations by segment during fiscal 2009, 2008, and 2007 were as follows: Fiscal 2009 2008 2007 (in millions) Electronic Components $ 269 $ 164 $ 52 Network Solutions 44 22 36 Specialty Products 31 3 4 Undersea Telecommunications 8 5 5 352 194 97 Less: (charges) credits in cost of sales 2 (9 ) (5 ) Restructuring and related charges, net $ 354 $ 185 $ 92 Amounts recognized on the Consolidated and Combined Statements of Operations during fiscal 2009, 2008, and 2007 were as follows: Fiscal 2009 2008 2007 (in millions) Cash charges $ 317 $ 147 $ 74 Non-cash charges 35 47 23 352 194 97 Less: (charges) credits in cost of sales 2 (9 ) (5 ) Restructuring and related charges, net $ 354 $ 185 $ 92 Restructuring and Related Cash Charges Activity in the Company's restructuring reserves during fiscal 2009, 2008, and 2007 is summarized as follows: Balance at Beginning of Year Charges Utilization Changes in Estimate Currency Translation and Other Balance at End of Year (in millions) Fiscal 2009 Activity: Fiscal 2009 Actions Employee severance $ $ 247 $ (138 ) $ (3 ) $ 10 $ 116 Facilities exit costs 6 (3 ) 3 Other 5 (4 ) 1 Total 258 (145 ) (3 ) 10 120 Fiscal 2008 Actions Employee severance 118 (58 ) 31 (2 ) 89 Facilities exit costs 8 (5 ) (1 ) 2 Other 2 12 (6 ) (1 ) 7 Total 120 20 (69 ) 31 (4 ) 98 Fiscal 2007 Actions Employee severance 31 (22 ) (4 ) (3 ) 2 Facilities exit costs 2 5 (5 ) 2 Other 2 3 (4 ) 1 Total 35 |
Discontinued Operations
Discontinued Operations | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Discontinued Operations | 5. Discontinued Operations During fiscal 2009, the Company entered into a definitive agreement to sell its Wireless Systems business. In May 2009, the Company completed the sale for $664million in net cash proceeds and recognized a pre-tax gain of $59million on this transaction. In September 2008, the Company completed the sale of the Radio Frequency Components and Subsystem business for net cash proceeds of $427million and recorded a $184million pre-tax gain on the sale. In September 2008, the Company also completed the sale of the Automotive Radar Sensors business for net cash proceeds of $42million and recorded a $31million pre-tax gain on the sale. In fiscal 2009, the Company recorded an additional pre-tax gain on sale of $4million in connection with the finalization of working capital adjustments relating to the sale of the Radio Frequency Components and Subsystem and Automotive Radar Sensors businesses. The total pre-tax gain on the sale of the Radio Frequency Components and Subsystem and Automotive Radar Sensors businesses was $187million and $32million, respectively. Also during fiscal 2009, the Company received additional cash proceeds related to working capital of $29million in connection with the fiscal 2008 sale of the Radio Frequency Components and Subsystem and Automotive Radar Sensors businesses. The Consolidated Balance Sheet reflected the $29million in prepaid expenses and other current assets at September26, 2008. The divestiture of the Company's Power Systems business was authorized during fiscal 2007. As a result, the Company assessed Power Systems' assets for impairment and determined that the book value of the Power Systems business exceeded its estimated fair value. The Company recorded a $585million pre-tax impairment charge in fiscal 2007 in income (loss) from discontinued operations, net of income taxes on the Consolidated and Combined Statement of Operations. In fiscal 2008, the Company completed the sale of its Power Systems business for $102million in net cash proceeds and recorded a $51million pre-tax gain on the sale. In fiscal 2007, the Company completed the sale of the Printed Circuit Group business for $227million in net cash proceeds and recorded a $45million pre-tax gain on the sale. The Wireless Systems, Radio Frequency Components and Subsystem, Automotive Radar Sensors, Power Systems, and Printed Circuit Group businesses met the held for sale and discontinued operations criteria and have been included in discontinued operations in all periods presented. Prior to reclassification to held for sale and discontinued operations, the Wireless Systems, Radio Frequency Components and Subsystem, and Automotive Radar Sensors businesses were components of the former Wireless Systems segment. Both the Power Systems and Printed Circuit Group businesses were components of the Other segment, which was subsequently renamed the Undersea Telecommunications segment. The following table reflects net sales, pre-tax income (loss) from discontinued operations, pre-tax gain on sale of discontinued operations including impairments and costs to sell, and income taxes for fiscal 2009, 2008, and 2007: |
Inventories
Inventories | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Inventories | 6. Inventories At fiscal year end 2009 and 2008, inventories consisted of the following: Fiscal 2009 2008 (in millions) Raw materials $ 253 $ 410 Work in progress 439 670 Finished goods 624 964 Inventoried costs on long-term contracts 119 115 Inventories $ 1,435 $ 2,159 |
Property, Plant, and Equipment,
Property, Plant, and Equipment, Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Property, Plant, and Equipment, Net | 7. Property, Plant, and Equipment, Net At fiscal year end 2009 and 2008, net property, plant, and equipment consisted of the following: Fiscal 2009 2008 (in millions) Land and improvements $ 259 $ 252 Buildings and leasehold improvements 1,342 1,338 Machinery and equipment 6,600 6,477 Construction in process 373 481 Gross property, plant, and equipment 8,574 8,548 Accumulated depreciation (5,463 ) (5,206 ) Property, plant, and equipment, net $ 3,111 $ 3,342 Depreciation expense was $484million, $506million, and $464million in fiscal 2009, 2008, and 2007, respectively. |
Goodwill
Goodwill | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Goodwill | 8. Goodwill The changes in the carrying amount of goodwill by segment for fiscal 2009 and 2008 were as follows: Electronic Components Network Solutions Specialty Products Total (in millions) Balance at September28, 2007 $ 4,998 $ 850 $ 1,010 $ 6,858 Purchase accounting adjustments 2 1 3 Impairment (103 ) (103 ) Currency translation (7 ) (1 ) (1 ) (9 ) Balance at September26, 2008 4,890 849 1,010 6,749 Divestiture of businesses and other (14 ) (6 ) (20 ) Impairment (3,435 ) (112 ) (3,547 ) Currency translation (28 ) 4 2 (22 ) Balance at September25, 2009 $ 1,413 $ 847 $ 900 $ 3,160 The Company tests goodwill allocated to reporting units for impairment annually during the fiscal fourth quarter, or more frequently if events occur or circumstances exist that indicate that a reporting unit's carrying value may exceed its fair value. The Company completed its annual goodwill impairment test in the fourth quarter of fiscal 2009 and determined that no impairment existed. As a result of declines in sales and profitability of the Automotive and Communications and Industrial Solutions reporting units of the Electronic Components segment and the Circuit Protection reporting unit of the Specialty Products segment during the second quarter of fiscal 2009, the Company determined that an indicator of impairment had occurred and goodwill impairment testing of these reporting units was required. Significant judgment is involved in determining if an indicator of impairment has occurred. In making this assessment, management relies on a number of factors including, among others, operating results, business plans, economic projections, and anticipated future cash flows. There are inherent uncertainties related to these factors and management's judgment in applying each to the analysis of the recoverability of goodwill. The testing for goodwill impairment is a two step process. In performing step I of impairment testing, the Company determined the fair value of the Automotive, Communications and Industrial Solutions, and Circuit Protection reporting units based on a discounted cash flows analysis incorporating the Company's estimate of future operating performance. The results of the step I goodwill impairment tests indicated that the book value of each of the reporting units exceeded its fair value. The failure of the step I goodwill impairment tests triggered step II goodwill impairment tests in which the Company determined the implied fair value of the reporting units' goodwill by comparing the reporting units' fair value determined in step I to the fair value of the reporting units' net assets, including unrecognized intangible assets. The step II goodwill impairment tests resulted in a full impairment charge of $2,088million for the Automotive reporting unit and partial impairment charges of $1,347million and $1 |
Intangible Assets, Net
Intangible Assets, Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Intangible Assets, Net | 9. Intangible Assets, Net The Company's intangible assets at fiscal year end 2009 and 2008 were as follows: Fiscal 2009 2008 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Amortization Period ($ in millions) Intellectual property $ 724 $ (330 ) $ 394 24years $ 764 $ (323 ) $ 441 24years Other 17 (4 ) 13 50years 16 (3 ) 13 49years Total $ 741 $ (334 ) $ 407 25years $ 780 $ (326 ) $ 454 25years Intangible asset amortization expense, which is recorded in cost of sales, was $31million, $33million, and $32million for fiscal 2009, 2008, and 2007, respectively. The estimated aggregate amortization expense on intangible assets currently owned by the Company is expected to be as follows: (in millions) Fiscal 2010 $ 30 Fiscal 2011 29 Fiscal 2012 28 Fiscal 2013 28 Fiscal 2014 28 Thereafter 264 $ 407 |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Accrued and Other Current Liabilities | 10. Accrued and Other Current Liabilities At fiscal year end 2009 and 2008, accrued and other current liabilities consisted of the following: Fiscal 2009 2008 (in millions) Accrued payroll and employee benefits $ 303 $ 404 Restructuring reserves 231 131 Interest payable 65 79 Income taxes payable 48 215 Deferred income taxes 22 28 Dividends payable 74 Other 574 627 Accrued and other current liabilities $ 1,243 $ 1,558 |
Debt
Debt | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Debt | 11. Debt Debt at fiscal year end 2009 and 2008 was as follows: Fiscal 2009 2008 (in millions) 6.00% senior notes due 2012(1) $ 720 $ 800 5.95% senior notes due 2014(1) 300 300 6.55% senior notes due 2017(1) 744 753 7.125% senior notes due 2037(1) 475 498 Commercial paper, at an average interest rate of 4.01% at September26, 2008 647 Other 178 183 Total debt 2,417 3,181 Less current portion(2) 101 20 Long-term debt $ 2,316 $ 3,161 (1) Senior notes are recorded at face amount, net of unamortized discount and the fair value of interest rate swaps. (2) The current portion of long-term debt at fiscal year end 2009 and 2008 was comprised of amounts shown as other. During June 2009, Tyco Electronics GroupS.A. ("TEGSA"), a wholly-owned subsidiary of the Company, commenced a tender offer to purchase up to $150million principal amount of its 6.00% senior notes due 2012, up to $100million principal amount of its 6.55% senior notes due 2017, and up to $100million principal amount of its 7.125% senior notes due 2037. On July7, 2009, the tender offer expired and on July9, 2009, TEGSA purchased and cancelled $86million principal amount of its 6.00% senior notes due 2012, $42million principal amount of its 6.55% senior notes due 2017, and $23million principal amount of its 7.125% senior notes due 2037 for an aggregate payment of $141million, plus paid accrued interest through July7, 2009 of $3million to the sellers of the notes. As a result of the transaction, in fiscal 2009, the Company recorded a pre-tax gain of $22million, which is included in other income, including the write-off of unamortized discounts and fees of $1million and the recognition of a gain of $12million associated with terminated interest rate swaps previously designated as fair value hedges. Additionally, as a result of the re-purchase and cancellation, unamortized losses in accumulated other comprehensive income of $3million related to terminated starting forward interest rate swaps designated as cash flow hedges were recognized as interest expense. In April 2007, TEGSA entered into a five-year unsecured senior revolving credit facility ("Credit Facility"). In fiscal 2009, $75million of the commitment was assigned by Lehman Brothers Bank, FSB to TEGSA, reducing the total effective commitment to $1,425million. Borrowings under the Credit Facility bear interest, at TEGSA's option, at a base rate or the London interbank offered rate plus a margin dependent on TEGSA's credit ratings and the amount drawn under the facility. TEGSA is required to pay an annual facility fee ranging from 4.5 to 12.5 basis points depending on its credit ratings. As of fiscal year end 2009 and 2008, TEGSA had no borrowings under the Credit Facility. Borrowings under the commercial paper program are backed by the Credit Facility. The Credit Facility contains a financial ratio covenant providing that if the Company's ratio of Consolidated Total Debt (as defined in the Credit Facility) to Consol |
Guarantees
Guarantees | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Guarantees | 12. Guarantees Separation and Distribution Agreement Upon Separation, the Company entered into a Separation and Distribution Agreement and other agreements with Tyco International and Covidien to effect the Separation and provide a framework for the Company's relationships with Tyco International and Covidien after the distribution of the Company's and Covidien's shares to Tyco International's shareholders. These agreements govern the relationships among Tyco International, Covidien, and the Company subsequent to the Separation and provide for the allocation to the Company and Covidien of certain of Tyco International's assets, liabilities, and obligations attributable to periods prior to the Separation. Under the Separation and Distribution Agreement and other agreements, subject to certain exceptions contained in the Tax Sharing Agreement, the Company, Covidien, and Tyco International assumed 31%, 42%, and 27%, respectively, of certain of Tyco International's contingent and other corporate liabilities. All costs and expenses associated with the management of these contingent and other corporate liabilities are shared equally among the parties. These contingent and other corporate liabilities primarily relate to consolidated securities litigation and any actions with respect to the Separation or the Distribution brought by any third party. If any party responsible for such liabilities were to default in its payment, when due, of any of these assumed obligations, each non-defaulting party would be required to pay equally with any other non-defaulting party the amounts in default. Accordingly, under certain circumstances, Tyco Electronics may be obligated to pay amounts in excess of its agreed-upon share of the assumed obligations related to such contingent and other corporate liabilities, including associated costs and expenses. Tax Sharing Agreement Upon Separation, the Company entered into a Tax Sharing Agreement, under which the Company shares responsibility for certain of its, Tyco International's, and Covidien's income tax liabilities based on a sharing formula for periods prior to and including June29, 2007. The Company, Covidien, and Tyco International share 31%, 42%, and 27%, respectively, of U.S. income tax liabilities that arise from adjustments made by tax authorities to its, Tyco International's, and Covidien's U.S. income tax returns. The effect of the Tax Sharing Agreement is to indemnify the Company for 69% of certain liabilities settled in cash by the Company with respect to unresolved pre-Separation tax matters. Pursuant to that indemnification, the Company has made similar indemnifications to Tyco International and Covidien with respect to 31% of certain liabilities settled in cash by the companies relating to unresolved pre-Separation tax matters. All costs and expenses associated with the management of these shared tax liabilities are shared equally among the parties. The Company is responsible for all of its own taxes that are not shared pursuant to the Tax Sharing Agreement's sharing formula. In addition, Tyco International and Covidien are responsible for their tax liabilities that are not subject t |
Financial Instruments
Financial Instruments | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Financial Instruments | 13. Financial Instruments The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, debt, and derivative financial instruments. The fair value of cash and cash equivalents, accounts receivable, and accounts payable approximated book value as of September25, 2009 and September26, 2008. See Note11 for additional information on the fair value of debt and Note16 for additional information on fair value measurements. The Company uses derivative and non-derivative financial instruments to manage certain exposures to foreign currency, interest rate, and commodity risks. The Company accounts for derivative financial instrument contracts on its Consolidated Balance Sheets at fair value. For instruments not designated as hedges under ASC 815 (Derivatives and Hedging), the changes in the instruments' fair value are recognized as selling, general, and administrative expenses on the Consolidated and Combined Statements of Operations. For instruments designated as cash flow hedges, the effective portion of changes in the fair value of a derivative is recorded in other comprehensive income and reclassified into earnings in the same period or periods during which the underlying hedged item affects earnings. Ineffective portions of a cash flow hedge are recognized currently, based on the nature of the ineffectiveness, in cost of sales or selling, general, and administrative expenses on the Consolidated and Combined Statements of Operations. Changes in the fair value of derivative instruments designated as fair value hedges affect the carrying value of the asset or liability hedged, with changes in both the derivative instrument and the hedged asset or liability being recognized in earnings. To the extent that Tyco International entered into hedges on behalf of the Company prior to Separation, the statement of operations effects of those hedges have been allocated to the Company as part of the Tyco International general corporate overhead expense allocation or interest expense allocation as appropriate. See Note17 for additional information regarding allocated expenses. The cash flows related to derivative financial instruments are reported in the operating activities section of the Consolidated and Combined Statements of Cash Flows. The Company's derivative financial instruments present certain market and counterparty risks; however, concentration of counterparty risk is mitigated as the Company deals with a variety of financial institutions worldwide with long-term Standard Poor's, Moody's, and/or Fitch credit ratings of A/A2 or higher. In addition, only conventional derivative financial instruments are utilized. The Company is exposed to potential losses if a counterparty fails to perform according to the terms of its agreement. With respect to counterparty net asset positions recognized at September25, 2009, the Company has assessed the likelihood of counterparty default as remote. At this time, the Company is not required, nor does it require, collateral or other security to be furnished by the counterparties to its derivative financial instruments. Foreign Exchange |
Retirement Plans
Retirement Plans | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Retirement Plans | 14. Retirement Plans Adoption of Measurement Date Provisions and Funded Status Recognition Provisions of ASC 715 In the fourth quarter of fiscal 2009, the Company adopted the measurement date provisions of ASC 715 (CompensationRetirement Benefits), which require that plan assets and benefits obligations be measured as of fiscal year end. Prior to adoption of this provision, the Company's measurement date was August31. The Company elected not to re-measure plan assets and benefit obligations as of the first day of fiscal 2009. As a result, the impact of adoption in fiscal 2009 was an after-tax charge of $7million, equal to approximately one-twelfth of annual net periodic benefit costs on a pre-tax basis, to accumulated deficit, and an after-tax increase of $2million in accumulated other comprehensive income on the Consolidated Balance Sheet. The Company adopted the funded status recognition provisions of ASC 715 effective September28, 2007. The impact of the adoption resulted in an after-tax decrease of $225million in accumulated other comprehensive income at September28, 2007. Defined Benefit Pension Plans The Company has a number of contributory and noncontributory defined benefit retirement plans covering certain of its U.S. and non-U.S. employees, designed in accordance with local customs and practice. Net periodic pension benefit cost is based on the utilization of the projected unit credit method of calculation and is charged to the Consolidated and Combined Statements of Operations on a systematic basis over the expected average remaining service lives of current participants. Contribution amounts are actuarially determined. The benefits under the defined benefit plans are based on various factors, such as years of service and compensation. Prior to Separation, the Company participated through Tyco International in one co-mingled plan that included plan participants of other Tyco International subsidiaries. The Company recorded its portion of the co-mingled plan's expense and the related obligation, which has been actuarially determined based on the Company's specific benefit formulas by participants and allocated plan assets. The contribution amounts were determined in total for the co-mingled plan and allocated to the Company based on headcount. Management believes such allocations were reasonable. In fiscal 2007, this plan was legally separated, resulting in a reallocation of assets based on the Employee Retirement Income Security Act ("ERISA") prescribed calculation. The net periodic benefit cost (credit) for all U.S. and non-U.S. defined benefit pension plans in fiscal 2009, 2008, and 2007 was as follows: U.S.Plans Non-U.S. Plans Fiscal Fiscal 2009 2008 2007 2009 2008 2007 ($ in millions) Service cost $ 7 $ 5 $ 5 $ 55 $ 73 $ 60 Interest cost 58 56 55 81 83 70 Expected return on plan assets (61 ) (75 ) (74 ) (57 ) (73 ) (60 ) Amortization of prior service credit (2 ) (2 ) Amortization of net actuari |
Commitments and Contingencies
Commitments and Contingencies | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Commitments and Contingencies | 15. Commitments and Contingencies General Matters The Company has facility, land, vehicle, and equipment leases that expire at various dates through the year 2056. Rental expense under these leases was $153million, $168million, and $152million for fiscal 2009, 2008, and 2007, respectively. At fiscal year end 2009, the minimum lease payment obligations under non-cancelable lease obligations were as follows: (in millions) Fiscal 2010 $ 108 Fiscal 2011 76 Fiscal 2012 56 Fiscal 2013 37 Fiscal 2014 32 Thereafter 97 Total $ 406 The Company also has purchase obligations related to commitments to purchase certain goods and services. At fiscal year end 2009, the Company had commitments to purchase $71million in fiscal 2010, $4million in fiscal 2011, and $1million in fiscal 2012. Tyco Electronics Legal Proceedings Intellectual Property and Antitrust Litigation The Company is a party to a number of patent infringement and antitrust actions that may require the Company to pay damage awards. The Company has assessed the status of these matters and has recorded liabilities related to certain of these matters where appropriate. Other Matters The Company is a defendant in a number of other pending legal proceedings incidental to present and former operations, acquisitions, and dispositions. The Company does not expect the outcome of these proceedings, either individually or in the aggregate, to have a material adverse effect on its results of operations, financial position, or cash flows. Legal Matters under Separation and Distribution Agreement The Separation and Distribution Agreement among the Company, Tyco International, and Covidien provided for the allocation among the parties of Tyco International's assets, liabilities, and obligations attributable to periods prior to the Company's and Covidien's separations from Tyco International on June29, 2007. Under the Separation and Distribution Agreement, the Company assumed the liability for, and control of, all pending and threatened legal matters at Separation related to the Company's business or assumed or retained liabilities, and will indemnify the other parties for any liability arising out of or resulting from such assumed legal matters. Tyco Electronics remains responsible for 31% of certain potential liabilities that may arise from litigation pending or threatened at Separation that was not allocated to one of the three parties, and Tyco International and Covidien are responsible for 27% and 42%, respectively, of such liabilities. If any party defaults in payment of its allocated share of any such liability, each non-defaulting party will be responsible for an equal portion of the amount in default together with any other non-defaulting party, although any such payments will not release the obligation of the defaulting party. Subject to the terms and conditions of the Separation and Distribution Agreement, Tyco International manages and controls all the legal matters related to the shared contingent liabilities, including the defense or settlement thereof, subject |
Fair Value Measurements
Fair Value Measurements | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Fair Value Measurements | 16. Fair Value Measurements The Company adopted ASC 820 (Fair Value Measurements and Disclosures) on September27, 2008. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company will adopt the provisions of ASC 820 for nonfinancial assets and liabilities in fiscal 2010; adoption will not have a material impact on the Company's results of operations, financial position, or cash flows. ASC 820 specifies a fair value hierarchy based upon the observability of the inputs utilized in the valuation. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with ASC 820, fair value measurements are classified under the following hierarchy: Level1Quoted prices in active markets for identical assets and liabilities. Level2Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flows methodologies and similar techniques that use significant unobservable inputs. The adoption of the fair value provisions of ASC 820 had no effect on the Company's results of operations, financial position, or cash flows. Assets and liabilities recorded at fair value were as follows: Fair Value Measurements Using Inputs Considered as Fair Value at September25, 2009 Description Level1 Level2 Level3 (in millions) Assets: Commodity swap contracts $ 1 $ $ $ 1 Foreign currency contracts 3 3 Rabbi trust assets 76 76 Total assets at fair value $ 77 $ 3 $ $ 80 Liabilities: Foreign currency contracts $ $ 4 $ $ 4 The Company does not have significant financial assets or liabilities that are measured at fair value on a non-recurring basis. The following is a description of the valuation methodologies used for the respective assets and liabilities measured at fair value: Commodity swap contractsFair value of these assets and liabilities is determined using quoted futures exchanges (level1). Foreign currency contractsFair value of these assets and liabilities is determined based on observable market transactions of spot currency rates and forward rates (level2). Rabbi trust assetsRabbi trust assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets (level1). Th |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Related Party Transactions | 17. Related Party Transactions Trade Activity Prior to Separation, the Company sold certain of its manufactured products consisting primarily of connectors and cable assemblies to Tyco International and its affiliates, at prices which approximated fair value. Sales to Tyco International and its affiliates, which are included in net sales on the Consolidated and Combined Statements of Operations, were $60million during the first nine months of fiscal 2007. Debt Related Allocations The Company was allocated a portion of Tyco International's net interest expense and loss on retirement of debt in fiscal 2007. See Note11 for further information regarding these allocations. Allocated Expenses In fiscal 2007, the Company was allocated a net charge from Tyco International of $887million related to the class action settlement. See Note15 for further information regarding the class action settlement. Prior to Separation, the Company was allocated general corporate overhead expenses from Tyco International for corporate-related functions based on a pro-rata percentage of Tyco International's consolidated net revenue. General corporate overhead expenses primarily related to centralized corporate functions, including treasury, tax, legal, internal audit, human resources, and risk management functions. During fiscal 2007, the Company was allocated $152million of general corporate overhead expenses incurred by Tyco International, which are included within selling, general, and administrative expenses on the Consolidated and Combined Statement of Operations. As discussed in Note1, the Company believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses and net class action settlement costs from Tyco International were reasonable. However, such expenses may not be indicative of the actual level of expenses that would have been incurred by the Company had it been operating as an independent, publicly-traded company during the period prior to Separation. Transactions with Tyco Electronics' and Tyco International's Directors During fiscal 2009, 2008, and 2007, the Company engaged in commercial transactions in the normal course of business with companies where Tyco Electronics' directors were employed and served as officers. Purchases from and sales to such companies were not material during each of these periods. In addition, during the period prior to the Separation in fiscal 2007, the Company engaged in commercial transactions in the normal course of business with companies where Tyco International's directors were employed and served as officers. Tyco Electronics' purchases from and sales to such companies were not material in pre-Separation fiscal 2007. |
Income Taxes
Income Taxes | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Income Taxes | 18. Income Taxes The Company's operations are conducted through its various subsidiaries in a number of countries throughout the world. The Company has provided for income taxes based upon the tax laws and rates in the countries in which its operations are conducted and income and loss from operations is subject to taxation. In fiscal 2009, the Company changed its place of incorporation from Bermuda to Switzerland. The Company does not expect the change to materially impact its tax provision or cash tax burden. Significant components of the income tax provision (benefit) for fiscal 2009, 2008, and 2007 were as follows: Fiscal 2009 2008 2007 (in millions) Current: United States: Federal $ (92 ) $ 132 $ 45 State (16 ) (20 ) Non-U.S. 115 264 276 Current income tax provision (benefit) 7 376 321 Deferred: United States: Federal (490 ) 116 151 State (12 ) 34 (9 ) Non-U.S. (81 ) 14 2 Deferred income tax provision (benefit) (583 ) 164 144 $ (576 ) $ 540 $ 465 The U.S. and non-U.S. components of income (loss) from continuing operations before income taxes and minority interest for 2009, 2008, and 2007 were as follows: Fiscal 2009 2008 2007 (in millions) U.S. $ (3,813 ) $ 271 $ 282 Non-U.S. 143 1,801 (25 ) Income (loss) from continuing operations before income taxes and minority interest $ (3,670 ) $ 2,072 $ 257 The reconciliation between U.S. federal income taxes at the statutory rate and the Company's provision (benefit) for income taxes on continuing operations for fiscal 2009, 2008, and 2007 was as follows: Fiscal 2009 2008 2007 (in millions) Notional U.S. federal income tax expense (benefit) at the statutory rate $ (1,285 ) $ 725 $ 90 Adjustments to reconcile to the income tax provision (benefit): U.S. state income tax provision (benefit), net (18 ) 2 (5 ) Other (income) expenseTax Sharing Agreement 24 (198 ) (5 ) Class action settlement 26 8 312 Divestitures and impairments 734 21 Proposed adjustments to prior year tax returns (4 ) 9 Tax law changes (21 ) 5 (11 ) Tax credits (19 ) (8 ) (6 ) Non-U.S. net earnings(1) (127 ) (121 ) (99 ) Nondeductible charges 6 10 5 Change in accrued income tax liabilities 48 100 53 Allocated loss (gain) on retirement of debt (7 ) 81 Valuation allowance 48 23 26 Adjustment to tax account balances (33 ) Other 15 10 15 |
Other Income
Other Income (Expense), Net | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Other Income (Expense), Net | 19. Other Income (Expense), Net In fiscal 2009, the Company recorded net other expense of $48million, consisting of $68million of expense pursuant to the Tax Sharing Agreement with Tyco International and Covidien, a $22million gain on the retirement of debt, and $2million of unrealized losses on rabbi trust assets. The $68million of expense is attributable to a net reduction of an indemnification asset primarily as a result of the settlement of various matters with the IRS. See Note15 for further information regarding the Tax Sharing Agreement. See Note11 for additional information regarding the gain on retirement of debt. In fiscal 2008, the Company recorded other income of $567million pursuant to the Tax Sharing Agreement with Tyco International and Covidien, of which $545million ($1.13 for basic earnings per share and $1.12 for diluted earnings per share in fiscal 2008) related to certain incremental tax liabilities recorded by the Company in connection with the adoption of the uncertain tax position provisions of ASC 740. See Note18 for additional information regarding the adoption of the uncertain tax position provisions of ASC 740. Net other expense of $219million in fiscal 2007 includes an allocation from Tyco International of $232million for loss on retirement of debt. See Note11 for additional information. Additionally, in fiscal 2007, the Company recorded other income of $13million pursuant to the Tax Sharing Agreement with Tyco International and Covidien. |
Earnings
Earnings (Loss) Per Share | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Earnings (Loss) Per Share | 20. Earnings (Loss) Per Share The computation of basic earnings (loss) per share is based on the Company's net income (loss) divided by the basic weighted-average number of common shares outstanding. The computation of diluted earnings (loss) per share is based on the Company's net income (loss) divided by the weighted-average number of common shares outstanding adjusted for potentially dilutive unexercised share options and non-vested restricted share awards. The following table sets forth the denominators of the basic and diluted earnings (loss) per share computations: Fiscal 2009 2008 2007 (in millions) Weighted-average shares outstanding: Basic 459 483 497 Share options and restricted share awards 3 Diluted 459 486 497 For fiscal 2009, 2008, and 2007, certain share options were not included in the computation of diluted earnings (loss) per share because the underlying exercise prices were greater than the average market prices of Tyco Electronics' common shares and inclusion would be antidilutive. Such shares not included in the computation of diluted earnings (loss) per share totaled 20million, 21million, and 20million as of September25, 2009, September26, 2008, and September28, 2007, respectively. For fiscal 2009 and 2007, non-vested restricted share awards and options to purchase Tyco Electronics' common shares with the underlying exercise prices less than the average market prices were outstanding, but were excluded from the calculations of diluted loss per share as inclusion of these securities would have been antidilutive. Such shares not included in the computation of diluted loss per share totaled 1million and 3million as of September25, 2009 and September28, 2007, respectively. |
Equity
Equity | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Equity | 21. Equity Change of Domicile Effective June25, 2009, the Company changed its jurisdiction of incorporation from Bermuda to Switzerland. In connection with the Change of Domicile and in accordance with the laws of Switzerland, the par value of the Company's common shares increased from $0.20 per share to 2.60 Swiss Francs ("CHF") per share (or $2.40 based on an exchange rate in effect on June22, 2009). The Change of Domicile was approved at a special meeting of shareholders held on June22, 2009. The following steps occurred in connection with the Change of Domicile, which did not result in a change to total Shareholders' Equity: 1) the par value of common shares was increased from $0.20 to CHF2.60 through a 1-for-12 reverse share split, followed by the issuance of 11 fully paid bonus shares so that the same number of shares were outstanding before and after the Change of Domicile but with an increased par value per share, which reduced contributed surplus by $1.1billion with a corresponding increase to common shares; 2) the cancellation of approximately 32million shares held in treasury; 3) the elimination of share premium with a corresponding increase to contributed surplus, all of which was designated as freely distributable reserves for Swiss corporate law purposes; and 4) the elimination of 125million authorized preferred shares, none of which were issued and outstanding. Preferred Shares In connection with the Change of Domicile, as discussed above, all authorized preferred shares were eliminated. At September26, 2008, the Company had authorized 125,000,000 preferred shares, par value of $0.20, none of which were issued and outstanding. Common Shares As a result of the adoption of the Company's new articles of association in connection with the Change of Domicile but prior to the distribution to shareholders discussed under "Distributions to Shareholders" below, the Company's ordinary share capital was $1,124million with 468million registered common shares and a par value of CHF2.60 (or $2.40 based on an exchange rate in effect on June22, 2009). Subject to certain conditions specified in the articles of association, the shareholders have authorized the Company's board of directors to increase the Company's share capital (the value, in CHF, of authorized shares multiplied by the par value), by issuing up to 234million conditional shares and up to 234million authorized shares (until June22, 2011). Although the Company states its par value in Swiss Francs, it continues to use the U.S. Dollar as its reporting currency for preparing its Consolidated and Combined Financial Statements. Common Shares Held in Treasury During the fourth quarter of fiscal 2009, the Company transferred 10million common shares held in treasury to a subsidiary. Shares held by the subsidiary continue to be presented as treasury shares on the Consolidated Balance Sheet. Prior to the Change of Domicile, approximately 32million shares held by the Company in treasury were cancelled, leaving 10million shares held in treasury as of June26, 2009. At September26, 2008, there were 37million shares held in treasury. Share Premium |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Accumulated Other Comprehensive Income | 22. Accumulated Other Comprehensive Income The components of accumulated other comprehensive income were as follows: Currency Translation(1) Unrealized Gain (Loss) on Securities Unrecognized Pension and Postretirement Benefit Costs (Loss) Gain on Cash Flow Hedge Accumulated Other Comprehensive Income (in millions) Balance at September29, 2006 $ 899 $ 1 $ (230 ) $ $ 670 Pre-tax current period change 453 319 (53 ) 719 Income tax expense (112 ) (112 ) 1,352 1 (23 ) (53 ) 1,277 Adoption of funded status recognition provisions of ASC 715: Pre-tax current period change (347 ) (347 ) Income tax benefit 122 122 Total (225 ) (225 ) Balance at September28, 2007 1,352 1 (248 ) (53 ) 1,052 Pre-tax current period change (22 ) (159 ) 8 (173 ) Income tax (expense) benefit (1 ) 52 (1 ) 50 Balance at September26, 2008 1,330 (355 ) (46 ) 929 Pre-tax current period change (206 ) (416 ) 11 (611 ) Income tax benefit 137 137 Balance at September25, 2009 $ 1,124 $ $ (634 ) $ (35 ) $ 455 (1) Includes hedge of net investment foreign exchange gains or losses, offsetting foreign exchange gains or losses attributable to the translation of the net investments. |
Share Plans
Share Plans | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Share Plans | 23. Share Plans All equity awards (restricted share awards and share options) granted by the Company subsequent to Separation were granted under the Tyco ElectronicsLtd. 2007 Stock and Incentive Plan, as amended and restated (the "2007 Plan"). The 2007 Plan is administered by the Management Development and Compensation Committee of the board of directors of Tyco Electronics, which consists exclusively of independent directors of Tyco Electronics and provides for the award of share options, stock appreciation rights, annual performance bonuses, long-term performance awards, restricted units, deferred stock units, restricted shares, promissory shares, and other share-based awards (collectively, "Awards"). The 2007 Plan provides for a maximum of 25million common shares to be issued as Awards, subject to adjustment as provided under the terms of the 2007 Plan. The 2007 Plan allows for the use of authorized but unissued shares or treasury shares to be used to satisfy such awards. As of September25, 2009, the Company had 10million shares available under the 2007 Plan. Prior to the Separation on June29, 2007, all equity awards held by Company employees were granted by Tyco International under the Tyco InternationalLtd. 2004 Stock and Incentive Plan or other Tyco International equity incentive plans. Based on the grant date, type of award, and employing company, awards converted from Tyco International to Tyco Electronics awards in different manners. As a result of the conversion, all Tyco Electronics restricted share awards granted to employees of Tyco International and Covidien are fully vested. Approximately 4million vested options to purchase common shares of the Company are held by current or former employees of Tyco International and Covidien. All share option award conversions were done in accordance with Sections409A and 424 of the Code. Restricted Share Awards Restricted share awards are granted subject to certain restrictions. Conditions of vesting are determined at the time of grant under the 2007 Plan. All restrictions on the award will lapse upon death or disability of the employee. If the employee satisfies retirement or normal retirement requirements, all or a portion of the award may lapse, depending on the terms and conditions of the particular grant. Recipients of restricted shares have the right to vote such shares and receive dividends, whereas recipients of restricted units have no voting rights and receive dividend equivalents. For grants that vest based on certain specified performance criteria, the fair market value of the shares or units is expensed over the period of performance, once achievement of criteria is deemed probable. For grants that vest through passage of time, the fair market value of the award at the time of the grant is amortized to expense over the period of vesting. The fair value of restricted share awards is determined based on the market value of the Company's shares on the grant date. Restricted share awards generally vest in increments over a period of four years as determined by the Management Development and Compensation Committee, or upon attainment of various levels of performance t |
Segment and Geographic Data
Segment and Geographic Data | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Segment and Geographic Data | 24. Segment and Geographic Data The Company operates through four reporting segments: Electronic Components, Network Solutions, Specialty Products, and Undersea Telecommunications. See Note1 for a description of the segments in which the Company operates. The Company aggregates its operating segments into reportable segments based upon the Company's internal business structure. Segment information has been revised to reflect the Company's current segment reporting structure. Prior period segment results have been reclassified to conform to the current presentation. The Company sold its Wireless Systems business in May 2009. This business has been reclassified as discontinued operations on the Consolidated and Combined Financial Statements. See Note5 for additional information regarding discontinued operations and the divestiture of the Wireless Systems business. Prior to reclassification to held for sale and discontinued operations, this business was reported as the Company's former Wireless Systems segment. Effective January1, 2009, the Company established the Specialty Products Group from its existing businesses. The results of this new organization are reported as a separate reporting segment on the Consolidated and Combined Financial Statements. This new segment is comprised of the Aerospace, Defense, and Marine; Touch Systems; Medical; and Circuit Protection businesses which were formerly reported in the Electronic Components segment. Segment performance is evaluated based on net sales and operating income. Generally, the Company considers all expenses to be of an operating nature, and, accordingly, allocates them to each reportable segment. Costs specific to a segment are charged to the segment. Corporate expenses, such as headquarters administrative costs, are allocated to the segments based on segment operating income. Pre-Separation litigation charges and separation costs were not allocated to the segments. Intersegment sales are not material and are recorded at selling prices that approximate market prices. Corporate assets are allocated to the segments based on segment assets. Net sales and operating income (loss) by business segment are presented in the following table for fiscal 2009, 2008, and 2007: Net Sales Operating Income (Loss) Fiscal Fiscal 2009 2008 2007 2009 2008 2007 (in millions) Electronic Components $ 5,961 $ 9,277 $ 8,531 $ (3,716 )(1) $ 978 (2) $ 1,063 Network Solutions 1,719 2,162 1,897 133 251 229 Specialty Products 1,415 1,769 1,581 34 (1) 296 258 Undersea Telecommunications 1,161 1,165 565 219 160 36 Pre-Separation litigation charges, net and separation costs (144 ) (22 ) (931 ) Total $ 10,256 $ 14,373 $ 12,574 $ (3,474 ) $ 1,663 $ 655 (1) The Electronic Components and Specialty Products segments recorded charges of $3,435million and $112million, respectively, related |
Quarterly Financial Data
Quarterly Financial Data | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Quarterly Financial Data (Unaudited) | 25. Quarterly Financial Data (Unaudited) Summarized quarterly financial data for the fiscal years ended September25, 2009 and September26, 2008 were as follows: Fiscal 2009 Fiscal 2008 First Quarter(1) Second Quarter(2) Third Quarter(3) Fourth Quarter(4) First Quarter(5) Second Quarter(6) Third Quarter(7) Fourth Quarter(8) (in millions, except per share data) Net sales $ 2,713 $ 2,337 $ 2,508 $ 2,698 $ 3,466 $ 3,549 $ 3,782 $ 3,576 Gross income(9) 724 534 587 691 998 1,068 1,099 1,008 Income (loss) from continuing operations 30 (3,239 ) 26 83 862 292 285 88 Income (loss) from discontinued operations, net of income taxes (67 ) 1 (100 ) 10 87 9 45 114 Net income (loss) (37 ) (3,238 ) (74 ) 93 949 301 330 202 Basic earnings (loss) per share: Income (loss) from continuing operations $ 0.07 $ (7.07 ) $ 0.06 $ 0.18 $ 1.74 $ 0.60 $ 0.60 $ 0.19 Income (loss) from discontinued operations, net of income taxes (0.15 ) (0.22 ) 0.02 0.17 0.02 0.09 0.24 Net income (loss) (0.08 ) (7.07 ) (0.16 ) 0.20 1.91 0.62 0.69 0.43 Diluted earnings (loss) per share: Income (loss) from continuing operations $ 0.07 $ (7.07 ) $ 0.06 $ 0.18 $ 1.73 $ 0.60 $ 0.59 $ 0.19 Income (loss) from discontinued operations, net of income taxes (0.15 ) (0.22 ) 0.02 0.17 0.02 0.09 0.24 Net income (loss) (0.08 ) (7.07 ) (0.16 ) 0.20 1.90 0.62 0.68 0.43 Weighted-average number of shares outstanding: Basic 459 458 458 459 496 486 478 470 Diluted 461 458 459 461 499 489 482 473 (1) Income from continuing operations for the first quarter of fiscal 2009 includes $77million of net restructuring and other charges. Net loss for the first quarter of fiscal 2009 includes $67million of loss, net of income taxes, from discontinued operations. (2) Loss from continuing operations for the second quarter of fiscal 2009 includes $135million of pre-Separation litigation charges, $189million of net restructuring and other charges, and $3,547million of goodwill impairment charges. (3) Income from continuing operations for the third quarter of fiscal 2009 includes $63million of net restructuring and other charges. Net loss for the third quarter of fiscal 2009 includes $100million of loss, net of income taxes, from discontinued operations. (4) Income from continuing operations for the fourth quarter of fiscal 2009 includes $46million of net restructuring and other charges, a $22million gain on retirement of debt, other expense of $77mi |
Subsequent Events
Subsequent Events | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Subsequent Events | 26. Subsequent Events In October 2009, the Company's shareholders approved a cash distribution to shareholders in the form of a capital reduction to the par value of the Company's common shares of CHF0.17 per share for each of the first and second quarters of fiscal 2010. This capital reduction will reduce the par value of the Company's common shares from CHF2.43 (equivalent to $2.24) to CHF2.09 (equivalent to $1.92). The distribution will be paid in U.S. Dollars at a rate of $0.16 per share for each of the first and second quarters of fiscal 2010. The Company has evaluated subsequent events through November18, 2009, the date on which the financial statements were issued. |
Tyco Electronics Group S.A.
Tyco Electronics Group S.A. | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Tyco Electronics Group S.A. | 27. Tyco Electronics GroupS.A. In December 2006, prior to the Separation, TEGSA, a 100%-owned subsidiary of Tyco ElectronicsLtd., was formed. TEGSA, a Luxembourg company, is a holding company that owns, directly or indirectly, all of the operating subsidiaries of Tyco ElectronicsLtd. TEGSA is the obligor under the Company's senior notes, Credit Facility, and commercial paper, all of which, including profit sharing notes issued by a subsidiary, are fully and unconditionally guaranteed by its parent, Tyco ElectronicsLtd. The following tables present condensed consolidating financial information for Tyco ElectronicsLtd., TEGSA, and all other subsidiaries that are not providing a guarantee of debt but which represent assets of TEGSA, using the equity method of accounting. Consolidating Statement of Operations For the Fiscal Year Ended September25, 2009 Tyco ElectronicsLtd. Tyco Electronics GroupS.A. Other Subsidiaries Consolidating Adjustments Total (in millions) Net sales $ $ $ 10,256 $ $ 10,256 Cost of sales 7,720 7,720 Gross income 2,536 2,536 Selling, general, and administrative expenses 108 10 1,290 1,408 Research, development, and engineering expenses 536 536 Pre-Separation litigation charges, net 74 70 144 Restructuring and other charges, net 375 375 Impairment of goodwill 3,547 3,547 Operating loss (182 ) (10 ) (3,282 ) (3,474 ) Interest income 17 17 Interest expense (155 ) (10 ) (165 ) Other income (expense), net 22 (70 ) (48 ) Equity in net loss of subsidiaries (2,891 ) (2,824 ) 5,715 Equity in net loss of subsidiaries of discontinued operations (156 ) (156 ) 312 Intercompany interest and fees (27 ) 76 (49 ) Loss from continuing operations before income taxes and minority interest (3,256 ) (3,047 ) (3,394 ) 6,027 (3,670 ) Income tax benefit 576 576 Minority interest (6 ) (6 ) Loss from continuing operations (3,256 ) (3,047 ) (2,824 ) 6,027 (3,100 ) Loss from discontinued operations, net of income taxes (156 ) (156 ) Net loss $ (3,256 ) $ (3,047 ) $ (2,980 ) $ 6,027 $ (3,256 ) Consolidating Statement of Operations For the Fiscal Year Ended September26, 2008 Tyco ElectronicsLtd. Tyco Electronics GroupS.A. Other Subsidiaries Consolidating Adjustments Total (in millions) Net sales $ $ $ 14,373 $ $ 14,373 Cost of sales 10,200 10,200 Gross income |
Disclosures Required by Swiss L
Disclosures Required by Swiss Law | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Notes To Consolidated and Combined Financial Statements | |
Disclosures Required by Swiss Law | 28. Disclosures Required by Swiss Law Following the Change of Domicile, the Company became subject to statutory reporting requirements in Switzerland. The following disclosures are presented in accordance with, and are based on definitions contained in, the Swiss Code of Obligations. Personnel Expenses Total personnel expenses were $2,931million and $3,686million in fiscal 2009 and 2008, respectively. Fire Insurance Value The fire insurance value of property, plant, and equipment was $10,258million and $9,778million at year end fiscal 2009 and 2008, respectively. Risk Assessment The Company's Board of Directors is responsible for appraising the Company's major risks and overseeing that appropriate risk management and control procedures are in place. The Audit Committee of the Board meets to review and discuss, as determined to be appropriate, with management, the internal auditor, and the independent registered public accountants, the Company's major financial and accounting risk exposures and related policies and practices to assess and control such exposures, and assist the Board in fulfilling its oversight responsibilities regarding the Company's policies and guidelines with respect to risk assessment and risk management. The Company's risk assessment process was in place upon Separation from Tyco International and followed by the Board of Directors. |
SCHEDULE II
SCHEDULE II | |
12 Months Ended
Sep. 25, 2009 USD / shares | |
Schedule of Valuation and Qualifying Accounts Disclosure [Text Block] | TYCO ELECTRONICSLTD. SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS Fiscal Years Ended September25, 2009, September26, 2008, and September28, 2007 Description Balance at Beginning of Year Additions Charged to Costs and Expenses Acquisitions, Divestitures and Other Deductions Balance at End of Year (in millions) Fiscal 2009 Allowance for Doubtful Accounts Receivable $ 40 $ 22 $ $ (14 ) $ 48 Fiscal 2008 Allowance for Doubtful Accounts Receivable 55 6 (1 ) (20 ) 40 Fiscal 2007 Allowance for Doubtful Accounts Receivable 53 9 4 (11 ) 55 |
Document and Entity Information
Document and Entity Information (USD $) | |||
12 Months Ended
Sep. 25, 2009 | Nov. 13, 2009
| Mar. 27, 2009
| |
Document And Entity Information | |||
Entity Registrant Name | Tyco Electronics Ltd. | ||
Entity Central Index Key | 0001385157 | ||
Document Type | 10-K | ||
Document Period End Date | 2009-09-25 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-25 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $5,480,996,000 | ||
Entity Common Stock, Shares Outstanding | 458,868,901 |