Tyco Electronics Group S.A. (Tables)

9 Months Ended

Jun. 29, 2018

Tyco Electronics Group S.A.

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Operations (UNAUDITED)
For the Quarter Ended June 29, 2018

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Net sales	$	—		$	—		$	3,764		$	—		$	3,764
Cost of sales		—			—			2,547			—			2,547
Gross margin		—			—			1,217			—			1,217
Selling, general, and administrative expenses, net		19			—			390			—			409
Research, development, and engineering expenses		—			—			181			—			181
Acquisition and integration costs		—			—			4			—			4
Restructuring and other charges, net		—			—			65			—			65
Operating income (loss)		(19	)		—			577			—			558
Interest income		—			—			3			—			3
Interest expense		—			(24	)		(1	)		—			(25	)
Other expense, net		—			—			(1	)		—			(1	)
Equity in net income of subsidiaries		491			499			—			(990	)		—
Intercompany interest income (expense), net		(18	)		16			2			—			—
Income from continuing operations before income taxes		454			491			580			(990	)		535
Income tax expense		—			—			(81	)		—			(81	)
Net income		454			491			499			(990	)		454
Other comprehensive loss		(250	)		(250	)		(255	)		505			(250	)
Comprehensive income	$	204		$	241		$	244		$	(485	)	$	204

Condensed Consolidating Statement of Operations (UNAUDITED)
For the Quarter Ended June 30, 2017

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Net sales	$	—		$	—		$	3,367		$	—		$	3,367
Cost of sales		—			—			2,227			—			2,227
Gross margin		—			—			1,140			—			1,140
Selling, general, and administrative expenses, net		68			18			322			—			408
Research, development, and engineering expenses		—			—			168			—			168
Acquisition and integration costs		—			—			1			—			1
Restructuring and other charges, net		—			—			19			—			19
Operating income (loss)		(68	)		(18	)		630			—			544
Interest income		—			—			3			—			3
Interest expense		—			(32	)		—			—			(32	)
Other expense, net		—			—			(12	)		—			(12	)
Equity in net income of subsidiaries		507			530			—			(1,037	)		—
Equity in net income of subsidiaries of discontinued operations		3			4			—			(7	)		—
Intercompany interest income (expense), net		(7	)		27			(20	)		—			—
Income from continuing operations before income taxes		435			511			601			(1,044	)		503
Income tax expense		—			—			(71	)		—			(71	)
Income from continuing operations		435			511			530			(1,044	)		432
Income (loss) from discontinued operations, net of income taxes		—			(1	)		4			—			3
Net income		435			510			534			(1,044	)		435
Other comprehensive income		78			78			83			(161	)		78
Comprehensive income	$	513		$	588		$	617		$	(1,205	)	$	513

Condensed Consolidating Statement of Operations (UNAUDITED)
For the Nine Months Ended June 29, 2018

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Net sales	$	—		$	—		$	10,989		$	—		$	10,989
Cost of sales		—			—			7,352			—			7,352
Gross margin		—			—			3,637			—			3,637
Selling, general, and administrative expenses, net		107			6			1,107			—			1,220
Research, development, and engineering expenses		—			—			539			—			539
Acquisition and integration costs		—			—			9			—			9
Restructuring and other charges, net		—			—			106			—			106
Operating income (loss)		(107	)		(6	)		1,876			—			1,763
Interest income		—			1			10			—			11
Interest expense		—			(79	)		(1	)		—			(80	)
Other income, net		—			—			2			—			2
Equity in net income of subsidiaries		1,062			1,072			—			(2,134	)		—
Equity in net loss of subsidiaries of discontinued operations		(3	)		(3	)		—			6			—
Intercompany interest income (expense), net		(48	)		74			(26	)		—			—
Income from continuing operations before income taxes		904			1,059			1,861			(2,128	)		1,696
Income tax expense		—			—			(789	)		—			(789	)
Income from continuing operations		904			1,059			1,072			(2,128	)		907
Loss from discontinued operations, net of income taxes		—			—			(3	)		—			(3	)
Net income		904			1,059			1,069			(2,128	)		904
Other comprehensive loss		(101	)		(101	)		(74	)		175			(101	)
Comprehensive income	$	803		$	958		$	995		$	(1,953	)	$	803

Condensed Consolidating Statement of Operations (UNAUDITED)
For the Nine Months Ended June 30, 2017

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Net sales	$	—		$	—		$	9,657		$	—		$	9,657
Cost of sales		—			—			6,340			—			6,340
Gross margin		—			—			3,317			—			3,317
Selling, general, and administrative expenses, net		144			(52	)		1,090			—			1,182
Research, development, and engineering expenses		—			—			485			—			485
Acquisition and integration costs		—			—			5			—			5
Restructuring and other charges, net		—			—			125			—			125
Operating income (loss)		(144	)		52			1,612			—			1,520
Interest income		—			—			14			—			14
Interest expense		—			(95	)		—			—			(95	)
Other expense, net		—			—			(31	)		—			(31	)
Equity in net income of subsidiaries		1,409			1,369			—			(2,778	)		—
Equity in net income of subsidiaries of discontinued operations		5			18			—			(23	)		—
Intercompany interest income (expense), net		(21	)		83			(62	)		—			—
Income from continuing operations before income taxes		1,249			1,427			1,533			(2,801	)		1,408
Income tax expense		—			—			(164	)		—			(164	)
Income from continuing operations		1,249			1,427			1,369			(2,801	)		1,244
Income (loss) from discontinued operations, net of income taxes(1)		—			(13	)		18			—			5
Net income		1,249			1,414			1,387			(2,801	)		1,249
Other comprehensive income		36			36			14			(50	)		36
Comprehensive income	$	1,285		$	1,450		$	1,401		$	(2,851	)	$	1,285

(1)           Includes the internal allocation of gains and losses associated with the divestiture of our Broadband Network Solutions business.

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet (UNAUDITED)
As of June 29, 2018

	TE Connectivity Ltd.		TEGSA		Other Subsidiaries		Consolidating Adjustments			Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	770	$	—		$	770
Accounts receivable, net		—		—		2,591		—			2,591
Inventories		—		—		1,961		—			1,961
Intercompany receivables		39		2,644		49		(2,732	)		—
Prepaid expenses and other current assets		6		108		505		—			619
Total current assets		45		2,752		5,876		(2,732	)		5,941
Property, plant, and equipment, net		—		—		3,633		—			3,633
Goodwill		—		—		5,616		—			5,616
Intangible assets, net		—		—		1,698		—			1,698
Deferred income taxes		—		—		1,672		—			1,672
Investment in subsidiaries		12,615		25,097		—		(37,712	)		—
Intercompany loans receivable		2		6,562		17,639		(24,203	)		—
Other assets		—		—		453		—			453
Total Assets	$	12,662	$	34,411	$	36,587	$	(64,647	)	$	19,013
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt	$	—	$	712	$	2	$	—		$	714
Accounts payable		2		—		1,581		—			1,583
Accrued and other current liabilities		475		43		1,107		—			1,625
Deferred revenue		—		—		124		—			124
Intercompany payables		2,693		—		39		(2,732	)		—
Total current liabilities		3,170		755		2,853		(2,732	)		4,046
Long-term debt		—		3,289		5		—			3,294
Intercompany loans payable		—		17,640		6,563		(24,203	)		—
Long-term pension and postretirement liabilities		—		—		1,119		—			1,119
Deferred income taxes		—		—		227		—			227
Income taxes		—		—		311		—			311
Other liabilities		—		112		412		—			524
Total Liabilities		3,170		21,796		11,490		(26,935	)		9,521
Total Shareholders' Equity		9,492		12,615		25,097		(37,712	)		9,492
Total Liabilities and Shareholders' Equity	$	12,662	$	34,411	$	36,587	$	(64,647	)	$	19,013

Condensed Consolidating Balance Sheet (UNAUDITED)
As of September 29, 2017

	TE Connectivity Ltd.		TEGSA		Other Subsidiaries		Consolidating Adjustments			Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	1,218	$	—		$	1,218
Accounts receivable, net		—		—		2,290		—			2,290
Inventories		—		—		1,813		—			1,813
Intercompany receivables		49		1,914		60		(2,023	)		—
Prepaid expenses and other current assets		4		96		505		—			605
Total current assets		53		2,010		5,886		(2,023	)		5,926
Property, plant, and equipment, net		—		—		3,400		—			3,400
Goodwill		—		—		5,651		—			5,651
Intangible assets, net		—		—		1,841		—			1,841
Deferred income taxes		—		—		2,141		—			2,141
Investment in subsidiaries		11,960		20,109		—		(32,069	)		—
Intercompany loans receivable		—		4,027		9,700		(13,727	)		—
Other assets		—		6		438		—			444
Total Assets	$	12,013	$	26,152	$	29,057	$	(47,819	)	$	19,403
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt	$	—	$	708	$	2	$	—		$	710
Accounts payable		2		—		1,434		—			1,436
Accrued and other current liabilities		286		59		1,281		—			1,626
Deferred revenue		—		—		75		—			75
Intercompany payables		1,974		—		49		(2,023	)		—
Total current liabilities		2,262		767		2,841		(2,023	)		3,847
Long-term debt		—		3,629		5		—			3,634
Intercompany loans payable		—		9,700		4,027		(13,727	)		—
Long-term pension and postretirement liabilities		—		—		1,160		—			1,160
Deferred income taxes		—		—		236		—			236
Income taxes		—		—		293		—			293
Other liabilities		—		96		386		—			482
Total Liabilities		2,262		14,192		8,948		(15,750	)		9,652
Total Shareholders' Equity		9,751		11,960		20,109		(32,069	)		9,751
Total Liabilities and Shareholders' Equity	$	12,013	$	26,152	$	29,057	$	(47,819	)	$	19,403

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows (UNAUDITED)
For the Nine Months Ended June 29, 2018

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Cash Flows From Operating Activities:
Net cash provided by (used in) operating activities(1)	$	(152	)	$	(34	)	$	1,728		$	(15	)	$	1,527
Cash Flows From Investing Activities:
Capital expenditures		—			—			(686	)		—			(686	)
Proceeds from sale of property, plant, and equipment		—			—			19			—			19
Intercompany distribution receipts(1)		—			61			—			(61	)		—
Change in intercompany loans		—			261			—			(261	)		—
Other		—			—			(8	)		—			(8	)
Net cash provided by (used in) investing activities		—			322			(675	)		(322	)		(675	)
Cash Flows From Financing Activities:
Changes in parent company equity(2)		83			30			(113	)		—			—
Net increase in commercial paper		—			271			—			—			271
Proceeds from issuance of debt		—			119			—			—			119
Repayment of debt		—			(708	)		—			—			(708	)
Proceeds from exercise of share options		—			—			96			—			96
Repurchase of common shares		(218	)		—			(393	)		—			(611	)
Payment of common share dividends to shareholders		(441	)		—			6			—			(435	)
Intercompany distributions(1)		—			—			(76	)		76			—
Loan activity with parent		728			—			(989	)		261			—
Other		—			—			(34	)		—			(34	)
Net cash provided by (used in) financing activities		152			(288	)		(1,503	)		337			(1,302	)
Effect of currency translation on cash		—			—			2			—			2
Net decrease in cash and cash equivalents		—			—			(448	)		—			(448	)
Cash and cash equivalents at beginning of period		—			—			1,218			—			1,218
Cash and cash equivalents at end of period	$	—		$	—		$	770		$	—		$	770

(1)	During fiscal 2018, other subsidiaries made distributions to TEGSA in the amount of $76 million. Cash flows are presented based upon the nature of the distributions.
(2)	Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.

Condensed Consolidating Statement of Cash Flows (UNAUDITED)
For the Nine Months Ended June 30, 2017

	TE Connectivity Ltd.			TEGSA			Other Subsidiaries			Consolidating Adjustments			Total
	(in millions)
Cash Flows From Operating Activities:
Net cash provided by (used in) continuing operating activities	$	(159	)	$	(58	)	$	1,666		$	—		$	1,449
Net cash used in discontinued operating activities		—			—			(1	)		—			(1	)
Net cash provided by (used in) operating activities		(159	)		(58	)		1,665			—			1,448
Cash Flows From Investing Activities:
Capital expenditures		—			—			(452	)		—			(452	)
Proceeds from sale of property, plant, and equipment		—			—			12			—			12
Acquisition of business, net of cash acquired		—			—			(77	)		—			(77	)
Change in intercompany loans		—			16			—			(16	)		—
Other		—			(8	)		(9	)		(4	)		(21	)
Net cash provided by (used in) investing activities		—			8			(526	)		(20	)		(538	)
Cash Flows From Financing Activities:
Changes in parent company equity(1)		67			123			(190	)		—			—
Net decrease in commercial paper		—			(162	)		—			—			(162	)
Proceeds from issuance of debt		—			89			—			—			89
Proceeds from exercise of share options		—			—			86			—			86
Repurchase of common shares		—			—			(376	)		—			(376	)
Payment of common share dividends to shareholders		(407	)		—			2			—			(405	)
Loan activity with parent		499			—			(515	)		16			—
Other		—			—			(28	)		4			(24	)
Net cash provided by (used in) continuing financing activities		159			50			(1,021	)		20			(792	)
Net cash provided by discontinued financing activities		—			—			1			—			1
Net cash provided by (used in) financing activities		159			50			(1,020	)		20			(791	)
Effect of currency translation on cash		—			—			(11	)		—			(11	)
Net increase in cash and cash equivalents		—			—			108			—			108
Cash and cash equivalents at beginning of period		—			—			647			—			647
Cash and cash equivalents at end of period	$	—		$	—		$	755		$	—		$	755

(1)           Changes in parent company equity includes cash flows related to certain intercompany equity and funding transactions, and other intercompany activity.