Tyco Electronics Ltd. reported revenue of $3.4 billion for the fiscal third quarter ended June 29, 2007 – an increase of 6.4% over the prior-year period. Organic revenue growth was 3.3%, primarily due to continued strength in the Undersea Telecommunications segment. Sales in the other three business segments were essentially flat in the quarter.
The company reported an operating loss of $508 million, compared to operating income of $459 million in the prior-year period. The operating loss included $891 million of costs related to the company’s share of Tyco International’s previously-disclosed securities class action litigation settlement and $50 million of separation-related costs.
Restructuring costs were $28 million in the quarter, compared to $2 million in the prior-year period. Excluding these items, adjusted operating income was $461 million, compared to $461 million a year ago. The adjusted operating margin was 13.5%, compared to 14.4% a year ago. This decline was a result of lower production levels and an unfavorable sales mix compared to last year. The operating margin including restructuring costs was 12.7%.
The company reported a loss from continuing operations of $933 million, or $1.88 per share for the quarter – compared to income of $305 million, or earnings per share (EPS) of $0.61 in the prior-year period. The loss from continuing operations included a $1.79 per share charge for the company’s share of the Tyco International class action litigation settlement, as well as $0.47 per share in allocated debt retirement costs related to separation, and $0.07 per share in other separation costs. Restructuring costs were $0.04 per share.
"On an operational basis, our performance was in line with our guidance," said Tyco Electronics’ Chief Executive Officer Tom Lynch. "Our overall growth was due to strength in our Undersea Telecommunications business. In other markets, our results were mixed. We experienced good growth in Asian and European automotive, industrial machinery, aerospace and defense and mobile phone markets. However, this growth was mostly offset by revenue declines in the computer, communications equipment and service provider markets, as well as continued declines in the North American automotive and housing-related markets."
Lynch continued, "During the quarter, we also made progress on key strategic initiatives to simplify our portfolio and manufacturing footprint. With respect to portfolio focus, we began the process of divesting the Power Systems business and accelerating our exit of other low-margin business. We also began to accelerate manufacturing simplification, which is geared to reduce the number of manufacturing sites and increase our low-cost production. These initiatives will strengthen the company and are key to achieving our operating margin goal of at least 15% in the next three years."
