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  • Tyco Electronics Announces Definitive Agreement to Sell Its Wireless Systems Business to Harris Corporation for $675 Million; Announces Preliminary Fiscal Second Quarter Results

Tyco Electronics Announces Definitive Agreement to Sell Its Wireless Systems Business to Harris Corporation for $675 Million; Announces Preliminary Fiscal Second Quarter Results

Apr 17, 2009

PEMBROKE, Bermuda, April 16 /PRNewswire-FirstCall/ Tyco Electronics Ltd. today announced that the company has entered into a definitive agreement to sell its Wireless Systems business to Harris Corporation for $675 million in cash, subject to final working capital adjustments. Wireless Systems is a leader in the development of large-scale critical communications systems based on Internet Protocol (IP) technology for customers in the public safety, utility, transit and public service industries. The business generated sales of $461 million in fiscal 2008.

According to Tyco Electronics Chief Executive Officer Tom Lynch, "The sale of the Wireless Systems business will increase our focus on our core connectivity business and substantially completes the streamlining of our portfolio that we began two years ago. Wireless Systems is an ideal fit for Harris, whose size, resources and experience in the communications industry should help position the business for accelerated growth."

The transaction is subject to customary regulatory approvals and is expected to close in the summer of 2009. Tyco Electronics will report the results of the Wireless Systems business as a discontinued operation beginning with its fiscal third quarter, ending June 26, 2009.

FISCAL SECOND QUARTER PRELIMINARY RESULTS

The company also provided the following preliminary results and information for its fiscal second quarter ended March 27, 2009:

  • Sales for the fiscal second quarter were $2.46 billion, in-line with the company's previous guidance.

  • The company expects to report a non-cash goodwill impairment charge in the range of $3.3 billion to $3.8 billion. This estimated charge is due to significant sales and earnings declines, primarily in the company's Electronic Components segment. The company is currently in the process of completing its goodwill assessment.

  • The company also expects to report $135 million of charges related to its portion (31 percent) of previously-disclosed Tyco International securities litigation. The charges include the settlement of two cases in the quarter and the establishment of a reserve for the remaining securities litigation under the parties' separation and distribution agreement.

  • As a result of these charges, as well as restructuring charges of approximately $200 million, the company expects to report a GAAP operating loss for the quarter in the range of $3.6 billion to $4.1 billion. Excluding these charges, adjusted operating income for the quarter is expected to be approximately $75 million.

The company will report complete results for its fiscal second quarter before trading begins on April 29, 2009.

ABOUT TYCO ELECTRONICS

Tyco Electronics Ltd. is a leading global provider of engineered electronic components, network solutions, undersea telecommunication systems and wireless systems, with fiscal 2008 sales of US$14.8 billion to customers in more than 150 countries. We design, manufacture and market products for customers in industries from automotive, appliance and aerospace and defense to telecommunications, computers and consumer electronics. With nearly 8,000 engineers and worldwide manufacturing, sales and customer service capabilities, Tyco Electronics' commitment is our customers' advantage. More information on Tyco Electronics can be found at http://www.tycoelectronics.com/.

NON-GAAP MEASURE

The company has discussed above its expected operating income before unusual items including costs related to legal settlements, restructuring costs, impairment charges and other income or charges ("Adjusted Operating Income"). The company utilizes Adjusted Operating Income to assess segment level core operating performance and to provide insight to management in evaluating segment operating plan execution and underlying market conditions. It is also a significant component in the company's incentive compensation plans. Adjusted Operating Income is a useful measure for investors because it better reflects the company's underlying operating results, trends and the comparability of these results between periods. The difference between Adjusted Operating Income and operating income (the most comparable GAAP measure) consists of the impact of charges related to litigation settlement costs, restructuring costs, impairment charges and other income or charges that may mask the underlying operating results and/or business trends. The limitation of this measure is that it excludes the financial impact of items that would otherwise either increase or decrease the company's reported operating income. This limitation is best addressed by using Adjusted Operating Income in combination with operating income (the most comparable GAAP measure) in order to better understand the amounts, character and impact of any increase or decrease on reported results.

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