Tyco Electronics Group S.A. (Tables)

6 Months Ended

Mar. 27, 2020

Tyco Electronics Group S.A.

Condensed Consolidating Statements of Operations

Condensed Consolidating Statement of Operations (unaudited)

For the Quarter Ended March 27, 2020

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,195	$	—	$	3,195
Cost of sales		—		—		2,166		—		2,166
Gross margin		—		—		1,029		—		1,029
Selling, general, and administrative expenses, net(1)		23		(122)		451		—		352
Research, development, and engineering expenses		—		—		158		—		158
Acquisition and integration costs		—		—		12		—		12
Restructuring and other charges, net		—		—		22		—		22
Impairment of goodwill		—		—		900		—		900
Operating income (loss)		(23)		122		(514)		—		(415)
Interest income		—		—		5		—		5
Interest expense		—		(10)		(1)		—		(11)
Other income, net		—		—		11		—		11
Equity in net loss of subsidiaries		(403)		(493)		—		896		—
Equity in net loss of subsidiaries of discontinued operations		(4)		(4)		—		8		—
Intercompany interest income (expense), net		(26)		(22)		48		—		—
Loss from continuing operations before income taxes		(456)		(407)		(451)		904		(410)
Income tax expense		—		—		(42)		—		(42)
Loss from continuing operations		(456)		(407)		(493)		904		(452)
Loss from discontinued operations, net of income taxes		—		—		(4)		—		(4)
Net loss		(456)		(407)		(497)		904		(456)
Other comprehensive loss		(159)		(159)		(198)		357		(159)
Less: other comprehensive loss attributable to noncontrolling interests		2		2		2		(4)		2
Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries	$	(613)	$	(564)	$	(693)	$	1,257	$	(613)

(1) TEGSA selling, general, and administrative expenses include gains of $115 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 March 29, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	3,412	$	—	$	3,412
Cost of sales		—		—		2,294		—		2,294
Gross margin		—		—		1,118		—		1,118
Selling, general, and administrative expenses, net		28		9		336		—		373
Research, development, and engineering expenses		—		—		166		—		166
Acquisition and integration costs		—		—		7		—		7
Restructuring and other charges, net		—		—		42		—		42
Operating income (loss)		(28)		(9)		567		—		530
Interest income		—		1		3		—		4
Interest expense		—		(14)		(1)		—		(15)
Other income, net		—		1		—		—		1
Equity in net income of subsidiaries		489		560		—		(1,049)		—
Equity in net income of subsidiaries of discontinued operations		10		3		—		(13)		—
Intercompany interest income (expense), net		(32)		(50)		82		—		—
Income from continuing operations before income taxes		439		492		651		(1,062)		520
Income tax expense		—		—		(91)		—		(91)
Income from continuing operations		439		492		560		(1,062)		429
Income from discontinued operations, net of income taxes		—		7		3		—		10
Net income		439		499		563		(1,062)		439
Other comprehensive income		97		97		47		(144)		97
Comprehensive income	$	536	$	596	$	610	$	(1,206)	$	536

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 27, 2020

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	6,363	$	—	$	6,363
Cost of sales		—		—		4,304		—		4,304
Gross margin		—		—		2,059		—		2,059
Selling, general, and administrative expenses, net(1)		49		(106)		776		—		719
Research, development, and engineering expenses		—		—		319		—		319
Acquisition and integration costs		1		—		18		—		19
Restructuring and other charges, net		—		—		46		—		46
Impairment of goodwill		—		—		900		—		900
Operating income (loss)		(50)		106		—		—		56
Interest income		—		—		11		—		11
Interest expense		—		(20)		(3)		—		(23)
Other income, net		—		—		16		—		16
Equity in net loss of subsidiaries		(329)		(392)		—		721		—
Equity in net loss of subsidiaries of discontinued operations		(1)		(4)		—		5		—
Intercompany interest income (expense), net		(50)		(23)		73		—		—
Income (loss) from continuing operations before income taxes		(430)		(333)		97		726		60
Income tax expense		—		—		(489)		—		(489)
Loss from continuing operations		(430)		(333)		(392)		726		(429)
Income (loss) from discontinued operations, net of income taxes		—		3		(4)		—		(1)
Net loss		(430)		(330)		(396)		726		(430)
Other comprehensive loss		(70)		(70)		(90)		160		(70)
Less: other comprehensive loss attributable to noncontrolling interests		2		2		2		(4)		2
Comprehensive loss attributable to TE Connectivity Ltd., TEGSA, or Other Subsidiaries	$	(498)	$	(398)	$	(484)	$	882	$	(498)

(1) TE Connectivity Ltd. and TEGSA selling, general, and administrative expenses include gains of $14 million and $101 million, respectively, related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Statement of Operations (unaudited)

For the Six Months Ended March 29, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Net sales	$	—	$	—	$	6,759	$	—	$	6,759
Cost of sales		—		—		4,527		—		4,527
Gross margin		—		—		2,232		—		2,232
Selling, general, and administrative expenses, net(1)		63		(98)		797		—		762
Research, development, and engineering expenses		—		—		327		—		327
Acquisition and integration costs		—		—		12		—		12
Restructuring and other charges, net		—		—		117		—		117
Operating income (loss)		(63)		98		979		—		1,014
Interest income		—		1		8		—		9
Interest expense		—		(41)		(1)		—		(42)
Other income (expense), net		—		1		(1)		—		—
Equity in net income of subsidiaries		930		949		—		(1,879)		—
Equity in net loss of subsidiaries of discontinued operations		(97)		(46)		—		143		—
Intercompany interest income (expense), net		(55)		(78)		133		—		—
Income from continuing operations before income taxes		715		884		1,118		(1,736)		981
Income tax expense		—		—		(169)		—		(169)
Income from continuing operations		715		884		949		(1,736)		812
Loss from discontinued operations, net of income taxes		—		(51)		(46)		—		(97)
Net income		715		833		903		(1,736)		715
Other comprehensive income		146		146		82		(228)		146
Comprehensive income	$	861	$	979	$	985	$	(1,964)	$	861

(1) TEGSA selling, general, and administrative expenses include gains of $110 million related to intercompany transactions. These gains are offset by corresponding losses recorded by other subsidiaries.

Condensed Consolidating Balance Sheets

Condensed Consolidating Balance Sheet (unaudited)

As of March 27, 2020

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	796	$	—	$	796
Accounts receivable, net		—		—		2,461		—		2,461
Inventories		—		—		2,001		—		2,001
Intercompany receivables		46		3,590		59		(3,695)		—
Prepaid expenses and other current assets		6		32		419		—		457
Total current assets		52		3,622		5,736		(3,695)		5,715
Property, plant, and equipment, net		—		—		3,558		—		3,558
Goodwill		—		—		5,235		—		5,235
Intangible assets, net		—		—		1,547		—		1,547
Deferred income taxes		—		—		2,382		—		2,382
Investment in subsidiaries		13,418		27,701		—		(41,119)		—
Intercompany loans receivable		—		2,568		16,040		(18,608)		—
Other assets		—		100		830		—		930
Total assets	$	13,470	$	33,991	$	35,328	$	(63,422)	$	19,367
Liabilities and equity
Current liabilities:
Short-term debt	$	—	$	602	$	1	$	—	$	603
Accounts payable		1		—		1,389		—		1,390
Accrued and other current liabilities		655		102		1,209		—		1,966
Intercompany payables		3,643		—		52		(3,695)		—
Total current liabilities		4,299		704		2,651		(3,695)		3,959
Long-term debt		—		3,752		—		—		3,752
Intercompany loans payable		—		16,040		2,568		(18,608)		—
Long-term pension and postretirement liabilities		—		—		1,359		—		1,359
Deferred income taxes		—		—		126		—		126
Income taxes		—		—		228		—		228
Other liabilities		—		77		695		—		772
Total liabilities		4,299		20,573		7,627		(22,303)		10,196
Total equity		9,171		13,418		27,701		(41,119)		9,171
Total liabilities and equity	$	13,470	$	33,991	$	35,328	$	(63,422)	$	19,367

Condensed Consolidating Balance Sheet (unaudited)

As of September 27, 2019

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	927	$	—	$	927
Accounts receivable, net		—		—		2,320		—		2,320
Inventories		—		—		1,836		—		1,836
Intercompany receivables		49		2,959		60		(3,068)		—
Prepaid expenses and other current assets		4		36		431		—		471
Total current assets		53		2,995		5,574		(3,068)		5,554
Property, plant, and equipment, net		—		—		3,574		—		3,574
Goodwill		—		—		5,740		—		5,740
Intangible assets, net		—		—		1,596		—		1,596
Deferred income taxes		—		—		2,776		—		2,776
Investment in subsidiaries		13,865		28,336		—		(42,201)		—
Intercompany loans receivable		—		2,562		16,033		(18,595)		—
Other assets		—		72		382		—		454
Total assets	$	13,918	$	33,965	$	35,675	$	(63,864)	$	19,694
Liabilities and equity
Current liabilities:
Short-term debt	$	—	$	568	$	2	$	—	$	570
Accounts payable		1		—		1,356		—		1,357
Accrued and other current liabilities		328		57		1,228		—		1,613
Intercompany payables		3,019		—		49		(3,068)		—
Total current liabilities		3,348		625		2,635		(3,068)		3,540
Long-term debt		—		3,395		—		—		3,395
Intercompany loans payable		—		16,033		2,562		(18,595)		—
Long-term pension and postretirement liabilities		—		—		1,367		—		1,367
Deferred income taxes		—		—		156		—		156
Income taxes		—		—		239		—		239
Other liabilities		—		47		380		—		427
Total liabilities		3,348		20,100		7,339		(21,663)		9,124
Total equity		10,570		13,865		28,336		(42,201)		10,570
Total liabilities and equity	$	13,918	$	33,965	$	35,675	$	(63,864)	$	19,694

Condensed Consolidating Statements of Cash Flows

Condensed Consolidating Statement of Cash Flows (unaudited)

For the Six Months Ended March 27, 2020

	TE
	Connectivity				Other		Consolidating
	Ltd.		TEGSA		Subsidiaries		Adjustments		Total
	(in millions)
Cash flows from operating activities:
Net cash provided by (used in) operating activities(1)	$	(114)	$	493	$	971	$	(458)	$	892
Cash flows from investing activities:
Capital expenditures		—		—		(309)		—		(309)
Proceeds from sale of property, plant, and equipment		—		—		3		—		3
Acquisition of businesses, net of cash acquired		—		—		(359)		—		(359)
Change in intercompany loans		—		(625)		—		625		—
Other		—		—		(2)		—		(2)
Net cash used in investing activities		—		(625)		(667)		625		(667)
Cash flows from financing activities:
Changes in parent company equity(2)		59		(105)		46		—		—
Net decrease in commercial paper		—		(219)		—		—		(219)
Proceeds from issuance of debt		—		593		—		—		593
Proceeds from exercise of share options		—		13		14		—		27
Repurchase of common shares		(262)		(146)		—		—		(408)
Payment of common share dividends to shareholders		(307)		—		—		—		(307)
Intercompany distributions(1)		—		—		(458)		458		—
Loan activity with parent		624		—		1		(625)		—
Other		—		(4)		(27)		—		(31)
Net cash provided by (used in) financing activities		114		132		(424)		(167)		(345)
Effect of currency translation on cash		—		—		(11)		—		(11)
Net decrease in cash, cash equivalents, and restricted cash		—		—		(131)		—		(131)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		927		—		927
Cash, cash equivalents, and restricted cash at end of period	$	—	$	—	$	796	$	—	$	796

(1) Other subsidiaries made distributions to TEGSA in the amount of $458 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 Six Months Ended March 29, 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	$	(121)	$	(79)	$	1,083	$	—	$	883
Net cash used in discontinued operating activities		—		—		(30)		—		(30)
Net cash provided by (used in) operating activities		(121)		(79)		1,053		—		853
Cash flows from investing activities:
Capital expenditures		—		—		(401)		—		(401)
Proceeds from sale of property, plant, and equipment		—		—		13		—		13
Acquisition of businesses, net of cash acquired		—		—		8		—		8
Proceeds from divestiture of discontinued operation, net of cash retained by sold operation		—		312		(15)		—		297
Change in intercompany loans		—		5,475		—		(5,475)		—
Net cash provided by (used in) continuing investing activities		—		5,787		(395)		(5,475)		(83)
Net cash used in discontinued investing activities		—		—		(2)		—		(2)
Net cash provided by (used in) investing activities		—		5,787		(397)		(5,475)		(85)
Cash flows from financing activities:
Changes in parent company equity(1)		38		(5,704)		5,666		—		—
Net increase in commercial paper		—		90		—		—		90
Proceeds from issuance of debt		—		350		—		—		350
Repayment of debt		—		(441)		—		—		(441)
Proceeds from exercise of share options		—		—		17		—		17
Repurchase of common shares		(739)		—		—		—		(739)
Payment of common share dividends to shareholders		(299)		—		—		—		(299)
Loan activity with parent		1,121		—		(6,596)		5,475		—
Transfers to discontinued operations		—		—		(32)		—		(32)
Other		—		(3)		(27)		—		(30)
Net cash provided by (used in) continuing financing activities		121		(5,708)		(972)		5,475		(1,084)
Net cash provided by discontinued financing activities		—		—		32		—		32
Net cash provided by (used in) financing activities		121		(5,708)		(940)		5,475		(1,052)
Effect of currency translation on cash		—		—		1		—		1
Net decrease in cash, cash equivalents, and restricted cash		—		—		(283)		—		(283)
Cash, cash equivalents, and restricted cash at beginning of period		—		—		848		—		848
Cash, cash equivalents, and restricted cash at end of period	$	—	$	—	$	565	$	—	$	565

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