Tyco Electronics Group S.A. (Tables)

9 Months Ended

Jun. 28, 2019

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended June 28, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,389	$	—	$	3,389
Cost of sales		—		—		2,279		—		2,279
Gross margin		—		—		1,110		—		1,110
Selling, general, and administrative expenses, net(1)		40		(77)		393		—		356
Research, development, and engineering expenses		—		—		158		—		158
Acquisition and integration costs		—		—		9		—		9
Restructuring and other charges, net		—		—		67		—		67
Operating income (loss)		(40)		77		483		—		520
Interest income		—		—		4		—		4
Interest expense		—		(13)		—		—		(13)
Other income, net		—		—		2		—		2
Equity in net income of subsidiaries		830		831		—		(1,661)		—
Equity in net loss of subsidiaries of discontinued operations		(1)		(1)		—		2		—
Intercompany interest income (expense), net		(32)		(65)		97		—		—
Income from continuing operations before income taxes		757		829		586		(1,659)		513
Income tax benefit		—		—		245		—		245
Income from continuing operations		757		829		831		(1,659)		758
Loss from discontinued operations, net of income taxes		—		—		(1)		—		(1)
Net income		757		829		830		(1,659)		757
Other comprehensive loss		(41)		(41)		(20)		61		(41)
Comprehensive income	$	716	$	788	$	810	$	(1,598)	$	716

(1) TEGSA selling, general, and administrative expenses include gains of $84 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended June 29, 2018

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,581	$	—	$	3,581
Cost of sales		—		—		2,394		—		2,394
Gross margin		—		—		1,187		—		1,187
Selling, general, and administrative expenses, net		19		—		375		—		394
Research, development, and engineering expenses		—		—		171		—		171
Acquisition and integration costs		—		—		4		—		4
Restructuring and other charges, net		—		—		64		—		64
Operating income (loss)		(19)		—		573		—		554
Interest income		—		—		3		—		3
Interest expense		—		(24)		(2)		—		(26)
Other expense, net		—		—		(1)		—		(1)
Equity in net income of subsidiaries		490		498		—		(988)		—
Equity in net income of subsidiaries of discontinued operations		1		1		—		(2)		—
Intercompany interest income (expense), net		(18)		16		2		—		—
Income from continuing operations before income taxes		454		491		575		(990)		530
Income tax expense		—		—		(77)		—		(77)
Income from continuing operations		454		491		498		(990)		453
Income from discontinued operations, net of income taxes		—		—		1		—		1
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 Nine Months Ended June 28, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	10,148	$	—	$	10,148
Cost of sales		—		—		6,806		—		6,806
Gross margin		—		—		3,342		—		3,342
Selling, general, and administrative expenses, net(1)		103		(175)		1,190		—		1,118
Research, development, and engineering expenses		—		—		485		—		485
Acquisition and integration costs		—		—		21		—		21
Restructuring and other charges, net		—		—		184		—		184
Operating income (loss)		(103)		175		1,462		—		1,534
Interest income		—		1		12		—		13
Interest expense		—		(54)		(1)		—		(55)
Other income, net		—		1		1		—		2
Equity in net income of subsidiaries		1,760		1,780		—		(3,540)		—
Equity in net loss of subsidiaries of discontinued operations		(98)		(47)		—		145		—
Intercompany interest income (expense), net		(87)		(143)		230		—		—
Income from continuing operations before income taxes		1,472		1,713		1,704		(3,395)		1,494
Income tax benefit		—		—		76		—		76
Income from continuing operations		1,472		1,713		1,780		(3,395)		1,570
Loss from discontinued operations, net of income taxes		—		(51)		(47)		—		(98)
Net income		1,472		1,662		1,733		(3,395)		1,472
Other comprehensive income		105		105		62		(167)		105
Comprehensive income	$	1,577	$	1,767	$	1,795	$	(3,562)	$	1,577

(1) TEGSA selling, general, and administrative expenses include gains of $194 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Nine Months Ended June 29, 2018

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	10,479	$	—	$	10,479
Cost of sales		—		—		6,916		—		6,916
Gross margin		—		—		3,563		—		3,563
Selling, general, and administrative expenses, net		107		6		1,067		—		1,180
Research, development, and engineering expenses		—		—		509		—		509
Acquisition and integration costs		—		—		9		—		9
Restructuring and other charges, net		—		—		104		—		104
Operating income (loss)		(107)		(6)		1,874		—		1,761
Interest income		—		1		10		—		11
Interest expense		—		(79)		(1)		—		(80)
Other income, net		—		—		2		—		2
Equity in net income of subsidiaries		1,065		1,075		—		(2,140)		—
Equity in net loss of subsidiaries of discontinued operations		(6)		(6)		—		12		—
Intercompany interest income (expense), net		(48)		74		(26)		—		—
Income from continuing operations before income taxes		904		1,059		1,859		(2,128)		1,694
Income tax expense		—		—		(784)		—		(784)
Income from continuing operations		904		1,059		1,075		(2,128)		910
Loss from discontinued operations, net of income taxes		—		—		(6)		—		(6)
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 Balance Sheet

Condensed Consolidating Balance Sheet (unaudited)

As of June 28, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	546	$	—	$	546
Accounts receivable, net		—		—		2,463		—		2,463
Inventories		—		—		1,961		—		1,961
Intercompany receivables		50		3,870		54		(3,974)		—
Prepaid expenses and other current assets		7		37		408		—		452
Total current assets		57		3,907		5,432		(3,974)		5,422
Property, plant, and equipment, net		—		—		3,636		—		3,636
Goodwill		—		—		5,800		—		5,800
Intangible assets, net		—		—		1,664		—		1,664
Deferred income taxes		—		—		2,845		—		2,845
Investment in subsidiaries		14,980		29,097		—		(44,077)		—
Intercompany loans receivable		1		2,784		16,683		(19,468)		—
Other assets		—		21		360		—		381
Total assets	$	15,038	$	35,809	$	36,420	$	(67,519)	$	19,748
Liabilities and shareholders' equity
Current liabilities:
Short-term debt	$	—	$	600	$	2	$	—	$	602
Accounts payable		2		—		1,436		—		1,438
Accrued and other current liabilities		491		46		1,117		—		1,654
Intercompany payables		3,923		—		51		(3,974)		—
Total current liabilities		4,416		646		2,606		(3,974)		3,694
Long-term debt		—		3,433		1		—		3,434
Intercompany loans payable		—		16,683		2,785		(19,468)		—
Long-term pension and postretirement liabilities		—		—		1,094		—		1,094
Deferred income taxes		—		—		203		—		203
Income taxes		—		—		240		—		240
Other liabilities		—		67		394		—		461
Total liabilities		4,416		20,829		7,323		(23,442)		9,126
Total shareholders' equity		10,622		14,980		29,097		(44,077)		10,622
Total liabilities and shareholders' equity	$	15,038	$	35,809	$	36,420	$	(67,519)	$	19,748

Condensed Consolidating Balance Sheet (unaudited)

As of September 28, 2018

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	848	$	—	$	848
Accounts receivable, net		—		—		2,361		—		2,361
Inventories		—		—		1,857		—		1,857
Intercompany receivables		37		2,391		48		(2,476)		—
Prepaid expenses and other current assets		5		112		544		—		661
Assets held for sale		—		—		472		—		472
Total current assets		42		2,503		6,130		(2,476)		6,199
Property, plant, and equipment, net		—		—		3,497		—		3,497
Goodwill		—		—		5,684		—		5,684
Intangible assets, net		—		—		1,704		—		1,704
Deferred income taxes		—		—		2,144		—		2,144
Investment in subsidiaries		13,626		26,613		—		(40,239)		—
Intercompany loans receivable		2		6,535		17,887		(24,424)		—
Other assets		—		—		1,158		—		1,158
Total assets	$	13,670	$	35,651	$	38,204	$	(67,139)	$	20,386
Liabilities and shareholders' equity
Current liabilities:
Short-term debt	$	—	$	961	$	2	$	—	$	963
Accounts payable		2		—		1,546		—		1,548
Accrued and other current liabilities		400		36		1,275		—		1,711
Intercompany payables		2,437		—		39		(2,476)		—
Liabilities held for sale		—		—		188		—		188
Total current liabilities		2,839		997		3,050		(2,476)		4,410
Long-term debt		—		3,033		4		—		3,037
Intercompany loans payable		—		17,888		6,536		(24,424)		—
Long-term pension and postretirement liabilities		—		—		1,102		—		1,102
Deferred income taxes		—		—		207		—		207
Income taxes		—		—		312		—		312
Other liabilities		—		107		380		—		487
Total liabilities		2,839		22,025		11,591		(26,900)		9,555
Total shareholders' equity		10,831		13,626		26,613		(40,239)		10,831
Total liabilities and shareholders' equity	$	13,670	$	35,651	$	38,204	$	(67,139)	$	20,386

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Nine Months Ended June 28, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Cash flows from operating activities:
Net cash provided by (used in) continuing operating activities(1)	$	(198)	$	4,172	$	1,902	$	(4,301)	$	1,575
Net cash used in discontinued operating activities		—		—		(31)		—		(31)
Net cash provided by (used in) operating activities		(198)		4,172		1,871		(4,301)		1,544
Cash flows from investing activities:
Capital expenditures		—		—		(570)		—		(570)
Proceeds from sale of property, plant, and equipment		—		—		16		—		16
Acquisition of businesses, net of cash acquired		—		—		(283)		—		(283)
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation		—		312		(15)		—		297
Change in intercompany loans		—		1,045		—		(1,045)		—
Other		—		—		3		—		3
Net cash provided by (used in) continuing investing activities		—		1,357		(849)		(1,045)		(537)
Net cash used in discontinued investing activities		—		—		(2)		—		(2)
Net cash provided by (used in) investing activities		—		1,357		(851)		(1,045)		(539)
Cash flows from financing activities:
Changes in parent company equity(2)		57		(5,560)		5,503		—		—
Net decrease in commercial paper		—		(270)		—		—		(270)
Proceeds from issuance of debt		—		746		—		—		746
Repayment of debt		—		(441)		—		—		(441)
Proceeds from exercise of share options		—		—		55		—		55
Repurchase of common shares		(892)		—		(21)		—		(913)
Payment of common share dividends to shareholders		(454)		—		—		—		(454)
Intercompany distributions(1)		—		—		(4,301)		4,301		—
Loan activity with parent		1,487		—		(2,532)		1,045		—
Transfers to discontinued operations		—		—		(33)		—		(33)
Other		—		(4)		(28)		—		(32)
Net cash provided by (used in) continuing financing activities		198		(5,529)		(1,357)		5,346		(1,342)
Net cash provided by discontinued financing activities		—		—		33		—		33
Net cash provided by (used in) financing activities		198		(5,529)		(1,324)		5,346		(1,309)
Effect of currency translation on cash		—		—		2		—		2
Net decrease in cash, cash equivalents, and restricted cash		—		—		(302)		—		(302)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		848		—		848
Cash, cash equivalents, and restricted cash at end of period	$	—	$	—	$	546	$	—	$	546

(1) During fiscal 2019, other subsidiaries made distributions to TEGSA in the amount of $4,301 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 29, 2018

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Cash flows from operating activities:
Net cash provided by (used in) continuing operating activities(1)	$	(152)	$	(34)	$	1,580	$	(15)	$	1,379
Net cash provided by discontinued operating activities		—		—		148		—		148
Net cash provided by (used in) operating activities		(152)		(34)		1,728		(15)		1,527
Cash flows from investing activities:
Capital expenditures		—		—		(673)		—		(673)
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) continuing investing activities		—		322		(662)		(322)		(662)
Net cash used in discontinued investing activities		—		—		(13)		—		(13)
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		—
Transfers from discontinued operations		—		—		135		—		135
Other		—		—		(34)		—		(34)
Net cash provided by (used in) continuing financing activities		152		(288)		(1,368)		337		(1,167)
Net cash used in discontinued financing activities		—		—		(135)		—		(135)
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, cash equivalents, and restricted cash		—		—		(448)		—		(448)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		1,218		—		1,218
Cash, cash equivalents, and restricted cash 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.