Q1 2011 Earnings Call January 20, 2011 Forward-Looking Statements - PowerPoint PPT Presentation

Q1 2011 Earnings Call January 20, 2011

Forward-Looking Statements and Non-GAAP Measures Forward-Looking Statements -- This presentation may contain certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. Tyco Electronics has no intention and is under no obligation to update or alter (and expressly disclaims any such intention or obligation to do so) its forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this presentation include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as developments in the credit markets; conditions affecting demand for products, particularly the automotive industry and the telecommunications, computer and consumer electronics industries; future goodwill impairment; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; political, economic and military instability in countries in which we operate; compliance with current and future environmental and other laws and regulations; the possible effects on us of changes in tax laws, tax treaties and other legislation; the risk that ADC will not be integrated successfully into Tyco Electronics; and the risk that revenue opportunities, cost savings and other anticipated synergies from the transaction may not be fully realized or may take longer to realize than expected. More detailed information about these and other factors is set forth in Tyco Electronics’ Annual Report on Form 10-K for the fiscal year ended Sept. 24, 2010, as well as in Tyco Electronics’ Current Reports on Form 8-K and other reports filed by Tyco Electronics with the Securities and Exchange Commission. Non-GAAP Measures -- Where we have used non-GAAP financial measures, reconciliations to the most comparable GAAP measure are provided, along with a disclosure on the usefulness of the non-GAAP measure, in this presentation. page 2 / January 20, 2011

Summary • Good start to FY 2011  Sales of $3.2 billion – up 11% versus prior year and at high end of guidance  Adjusted operating margin of 14.5% - up 300 bps versus prior year  Adjusted EPS of $0.73 – up 55% from $0.47 in prior year  ADC acquisition closed in December – minimal impact on overall adjusted results • Orders strengthened throughout the quarter  Book to Bill of 1.03 excluding SubCom  Global automotive market trends remain positive  Production for FY 2011 estimated at 76 million units  Network infrastructure markets continue to improve  Distribution channel inventory adjustments occurring as expected  Consumer and DataComm markets continue to be soft • Full year outlook (including ADC)  Revenue of $13.9 to $14.3 billion versus $12.1 billion in FY 2010  Adjusted EPS of $3.05 to $3.20 versus $2.54 in FY 2010 page 3 / January 20, 2011

ADC Update Cost Synergies • Strategic Rationale ~$100 million total  Creates the leading connectivity product ~80% range for the broadband network  Strong fiber portfolio ~40%  Wireless connectivity via Distributed Antenna System (DAS) technology  Strong position in every major geography FY11 FY12  Capitalize on upcoming wave of global (Cumulative P&L Impact) broadband infrastructure investment ADC adjusted operating margin at ~15% in FY13 • Integration proceeding as planned  Expect ~$100 million of cost synergies Cash Acquisition-Related Spending*  ~40% realized in FY 2011 $110-130 million cash costs • FY 2011 Financial Impact ~95% ~80%  ~$1 billion of revenues  ADC adjusted operating margin expected to be ~10% exiting 2011 FY11 FY12  ~$0.12 of adjusted EPS (Cumulative Cash Outflow) Adjusted Operating Margin and Adjusted EPS are non-GAAP measures; see * Includes cash restructuring, acquisition and integration costs and cash Appendix for description. payment related to terminated interest rate swaps. page 4 / January 20, 2011

Q1 Revenue Summary ($ in M illions) Y/Y Q/Q Segment Q1 FY11 Q1 FY10 Q4 FY10 Change Change Transportation Connectivity $ 1,311 $ 1,179 $ 1,208 11% 9% Communications & Industrial Solutions 1,223 1,090 1,315 12% (7%) Network Solutions 666 623 614 7% 8% Total $ 3,200 $ 2,892 $ 3,137 11% 2% Consumer vs. Industrial/ Infrastructure Markets Consumer $ 1,558 $ 1,424 $ 1,456 9% 7% Percent of Total 49% 49% 46% Industrial/ Infrastructure 1,642 1,468 1,681 12% (2%) Percent of Total 51% 51% 54% Total $ 3,200 $ 2,892 $ 3,137 11% 2% Strong Year-On-Year Growth Across All Segments page 5 / January 20, 2011

Transportation Connectivity Q1 Q1 Actual Organic ($ in Millions) 2011 2010 Growth Growth Automotive $1,154 $1,036 11.4% 16.1% Aerospace, Defense & Marine 157 143 9.8% 11.7% Transportation Connectivity $1,311 $1,179 11.2% 15.5% Automotive Aerospace, Defense & Marine  Auto Production up 5%  Commercial aerospace and oil exploration markets improving  Strong organic sales growth in all regions  Europe up 22%  Military stable  Asia up 12%  Americas up 12%  Higher content  Share gains Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. page 6 / January 20, 2011

Communications & Industrial Solutions Q1 Q1 Actual Organic 2011 2010 Growth Growth ($ in Millions) Industrial $370 $304 21.7% 23.7% Data Communications 255 212 20.3% 19.4% Consumer Devices 213 208 2.4% 2.7% Appliance 193 164 17.7% 19.3% Computer 107 115 (7.0)% (7.5)% Touch Systems 85 87 (2.3)% (0.4)% Communications & Industrial Solutions $1,223 $1,090 12.2% 12.8% Industrial Appliance  Continued recovery due to economic  Increased demand in emerging markets improvement and increasing factory automation and “energy star” incentives in North America DataComm Computer  Continued spending on broadband infrastructure  Lower volumes in PC market and wireless Touch Systems Consumer Devices  Decrease in retail project revenues  Increased demand for mobile devices Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. page 7 / January 20, 2011

Network Solutions Q1 Q1 Actual Organic ($ in Millions) 2011 2010 Growth Growth Energy $205 $200 2.5% 12.8% Service Providers 192 113 69.9% 33.8% Enterprise Networks 126 110 14.5% 9.7% Subsea Communications 143 200 (28.5)% (28.6)% Network Solutions $666 $623 6.9% 1.6% Q1 FY11 ADC Impact: Service Providers $45 million, Enterprise Networks $6 million Service Providers Energy  Increasing FTTX activity especially in Europe  Early stages of recovery in energy infrastructure  Addition of ADC Subsea Communications Enterprise Networks  FY 2011 revenue in line with expectations  Increased data center investment and government investment outside of U.S.  Expect revenues of $600 to $700 million  Strong RFP activity Organic sales growth is a non-GAAP measure; see Appendix for description and reconciliation. page 8 / January 20, 2011

Q1 Financial Summary Q1 FY11 Q1 FY10 ($ in Millions, except per share amounts) Net Sales $ 3,200 $ 2,892 Operating Income $ 400 $ 269 ADC Charges Restructuring & Other Charges 4 63 Cash $48 Acquisition Related Charges 59 - Noncash 11 Adj. Operating Income $ 463 $ 332 Total $59 Operating Margin 12.5% 9.3% Adjusted Operating Margin 14.5% 11.5% GAAP Earnings Per Share $ 0.60 $ 0.37 Restructuring & Other Charges 0.01 0.10 Acquisition Related Charges 0.13 - Adjusted EPS $ 0.73 $ 0.47 ADC impact was $51 million in Sales, No impact on Adjusted EPS Adjusted Operating Income, Adjusted Operating Margin and Adjusted EPS are non-GAAP measures; see Appendix for description and reconciliation. page 9 / January 20, 2011

Q1 Operating Results Gross Margin Percentage Gross Margin Performance 35% • Strong flow-through on incremental sales 32% • Expect gross margin of ~31% for Q2 29%  Includes ~30 basis point impact of metal 26% headwinds vs. Q1 23% FY 2008 FY 2009 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 29.0% 24.7% 29.1% 32.4% 31.9% 31.7% 31.9% GM % ($ in Millions) Operating Expense Performance Operating Expenses • Operating expenses at expected Q1 FY11 Q1 FY10 levels RD&E $ 163 $ 138 SG&A 402 368 • Expect RD&E of ~5% and SG&A of Total $ 565 $ 506 ~13% in Q2 % of Sales  ADC adds ~50 basis points to Q2 RD&E 5.1% 4.8% SG&A SG&A 12.6% 12.7% page 10 / January 20, 2011