Electronic Components: Automotive. Joe Donahue Sr. Vice President

Transcription

1 Electronic Components: Automotive Joe Donahue Sr. Vice President December 21, 2007

2 Forward Looking Statement/ Non-GAAP Measures This presentation contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 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 or achievements to differ materially from anticipated results, performance 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. Forward-looking statements involve risks, uncertainties, and assumptions. The forward-looking statements in this presentation may include statements addressing the following subjects: future financial condition and operating results, economic, business, competitive and/or regulatory factors affecting Tyco Electronics business. In addition, Tyco Electronics historical and pro forma combined financial information is not necessarily representative of the results it would have achieved as an independent, publicly-traded company and may not be a reliable indicator of its future results. Tyco Electronics is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. More detailed information about these and other factors is set forth in the information statement included in the Tyco Electronics Ltd. Form 8-K filing of June 8, 2007 and Form 10K filing of December 14, Where we have used non-gaap financial measures, reconciliations to the most comparable GAAP measure is provided, along with a disclosure on the usefulness of the non-gaap measure, in the Appendix section of this presentation. page 2 / December 21, 2007

3 Tyco Electronics Business Segments 2007 Sales $13.5 Billion 2007 Adj. Operating Income* $1.8 Billion (13.4% Margin) Electronic Components 75% Electronic Components 79% (14.1%) Undersea Telecomm 4% Wireless Systems 7% Network Solutions 14% Undersea Telecomm 2% (7.8%) Wireless Systems 4% (7.2%) Network Solutions 15% (14.3%) * See Appendix for reconciliation to GAAP operating income page 3 / December 21, 2007

4 Electronic Components Overview Global leader in passive components with significant market position in all segments 70% of sales from connectors Sales of $10.1 billion and adjusted operating income of $1.4 billion* in 2007 Sales by Industry** Sales by Product Automotive Connectors/ Cable Assemblies 12% 9% Computer Telecommunications 8% Relays Circuit Protection 40% 14% 2% 3% 2% 7% 6% 5% Aerospace & Defense Household Appliance Industrial Machinery Instrumentation Consumer Electronics Commercial Bldg & Equip Other 70% 5% 4% 3% 2% 2% 1% 5% Touch Screens Wire & Cable Heat Shrink Tubing Application Tooling Fiber Optics Other ** Includes allocation of distributor sales * See Appendix for reconciliation to GAAP operating income page 4 / December 21, 2007

5 Key Market - Automotive 2007 Sales $4.0 billion Sales by Geography EMEA 54% Asia Pacific (excl China) 18% South America 4% North America 19% China 5% Automotive Business Profile $4.0 Billion Revenues 26 Manufacturing Locations 13 Engineering & Design Centers 22,900 Employees, 40% Low Cost Locations Primary Products - Connectors, Relays, Mechatronics Central Electrical Boxes 75,000 Saleable Products QS 16949, ISO14001, ISO9000 Certified Market Trends / Growth Drivers Electronic content growth in vehicles Advanced driver assistance and safety systems Communications and infotainment systems Replacement of mechanical systems (braking, shifting, steering) Production migration to Eastern Europe and China Share gains by European and Japanese manufacturers; local manufacturers gaining share in China page 5 / December 21, 2007

6 Sales by Product Segment Wire & Cable 3% Mechatronics 7% Relays 5% Application Tooling 4% Cable Assemblies 6% Boxes 6% Other 6% 2006 Rank Company Market Share % 2 Yazaki 12.2% 3 Delphi 11.2% 4 FCI 7.2% 5 Sumitomo 7.0% Market Total Connectors $9.7 billion Source: Bishop & Associates Connector Systems 63% Market Leader in Connector Systems, Top 3 Market Position in other Key Segments page 6 / December 21, 2007

7 TE Automotive Manufacturing Locations North America 3 Locations $700 M Revenue $600 M Production Europe 18 Locations $2.2 B Revenue $2.5 B Production South America 1 Location $150 M Revenue $100 M Production Asia 4 Locations $1.0 B Revenue $850 M Production page 7 / December 21, 2007

8 Automotive Market Dynamics Attractive Market for Tyco Electronics Stable market growth of 2 4% per annum Long product life cycles of 5 8 years Increased electronic content in vehicles Growth by Region Asia : High Growth EMEA : Moderate Growth N. America: Low Growth Market Trends Safety remains a key technology driver Comfort and infotainment features continue to increase Energy efficiencies driven by hybrid vehicles, weight reduction and new technology Low cost vehicles for developing markets Growth from emerging markets China India Eastern Europe South America Tyco Electronics scale in stable market drives attractive returns page 8 / December 21, 2007

9 FY : Market Growth Vehicle Production Vehicle Production : Unit in Million CAGR 4.0% Vehicle Production FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 Vehicle Production CAGR EMEA 22,350 22,969 24,155 24,479 25,440 26, % Asia Pacific 25,232 27,430 29,853 31,079 33,419 34, % North America 14,939 14,683 13,881 13,580 13,894 13, % South America 2,803 2,966 3,400 3,788 3,912 4, % WW Vehicle Production 65,324 68,048 71,289 72,926 76,665 79, % Source JD Power Production Database Nov 07 (Commercial Vehicles with Transplant Adustment) EMEA Moderate Growth / High Share Asia High Growth/Low Share N. America Low Growth/Moderate Share page 9 / December 21, 2007

10 Key Strategies and Organizational Priorities Simplify footprint and prune product portfolio Accelerate growth in emerging markets Expand share in Asia and American markets Increase new product stream with innovative designs across all product segments with particular focus on mechatronics and sensors Maintain strong relationships and print positions with OEM s Drive operational excellence through: Continued cost reduction applying 6 Sigma techniques Optimization of supply chain page 10 / December 21, 2007

11 Key Technology Trends 1. Environment 2. Safety 3. Comfort and Infotainment Future Energy Emissions Fuel Consumption Driver assistance systems Active Safety Pedestrian Protection Navigation Wireless Communication HMI (Human-Machine-Interface) 4. Process 5. Weight and Package Thermal Analysis Design-to-X Engineering 3D design tools Upfront design - FME Miniaturization Integration Process Improvements page 11 / December 21, 2007

12 Automotive Division - Overview Power Distribution Systems Inductive Systems Wireless Terminals & Connectors page 12 / December 21, 2007

13 Hybrid Automotive Products & Technologies Application Areas page 13 / December 21, 2007 Powertrain Chassis Safety Security Body Infotainment Comfort Connector Systems High-Current Connector Systems Relays / Power Relays Distribution Boxes / Fuse & Relay Boxes Hybrid Housings Mechatronics Inductive Systems Tyco Electronics Automotive Products & Technologies Inductive Sensors

14 Hybrid Automotive Products & Technologies Application Areas page 14 / December 21, 2007 Powertrain Chassis Safety Security Body Infotainment Comfort Wire & Cable incl. Special Solutions Heat Shrink Tubing Flexible Film Solutions Optical Systems Circuit Protection Application Tooling Tyco Electronics Automotive Products & Technologies Identification Products

15 Product Innovations for Automotive Markets Terminals & Connectors Product: Sealed MQS Housings with CPA Application: Engine compartment Product: Sealed heavy duty connector Application: Commercial Vehicles Product: New 183 way modular connector Application: Engine ECU page 15 / December 21, 2007

16 Product Innovations for Automotive Markets Mechatronics Explosion Chart page 16 / December 21, 2007

17 Product Innovations for Automotive Markets High Speed Communication Interconnecting USB Consumer with USB Automotive Headunit USB Automotive MP3 Player USB Automotive USB Frontend page 17 / December 21, 2007

18 Product Innovations for Automotive Markets Sensors PLCD Platform Design Measurement Range Application Examples PLCD 15 xx 6-15 mm 50 AT: DMS (angle) AMT: shiftlever AMT: Plunger PLCD 25 xx PLCD 50 xx mm mm AMT: gear-/shift lever AMT: clutch position AMT: clutch position EPB: clutch position AT: DMS (straight-lined) PLCD 35 xx mm AMT: gear-/ shift-/ clutch position EGR Valve page 18 / December 21, 2007

19 Product Trends - PCB Relays Progressive Miniaturization Single PCB Relays Mini K Power K From app. 3 A/cm 3 to app. 26 A/cm 3 µk New Power Relay PK2 Single Nano Relay TPR TCR DMR Double µk Double PCB Relays Nano Relay page 19 / December 21, 2007

20 Product Innovations for Automotive Markets Inductive Systems Antennas Brake& suspension control systems Injector coils page 20 / December 21, 2007

21 Product Innovations for Automotive Markets Hybrid Systems Not Shown: Module Cover Service Disconnect Pin Housing (Qnty = 1) Service Disconnect Fuse Assembly Access Cover HVIL Connector Assembly High Voltage Wire Harness Assembly Module Housing (Qnty = 1) Pre-charge Resister (Qnty = 1) Terminated Contactor Assembly (Qnty = 2) Contactors LEV100 HCR (Qnty = 2) Relay Isolator Assembly (Qnty = 2) 4p HV Connector (Qnty = 1) 12p LV Connector (Qnty = 1) Pre-Charge Relay (Qnty = 1) 12p Header (Qnty = 1) Stamped Busbars (Qnty = 8) Current Sensor (Qnty = 1) page 21 / December 21, 2007

22 Summary and Key Takeaways $4B business with a strong presence in all regions Stable global vehicle production levels. North American market not indicative of the global market. Broad range of products across all major automotive application areas Revenues driven by global growth in: vehicle production increasing electronic content per vehicle emerging market participation Margin improvement through: Footprint simplification Portfolio simplification Productivity efforts page 22 / December 21, 2007

23 Drive comfortably and safely with Tyco Electronics components on board! page 23 / December 21, 2007

24 Appendix December 21, 2007

25 NON-GAAP Measures Appendix Adjusted Operating Income is a non-gaap measure and should not be considered a replacement for GAAP results. The company has presented its operating income before unusual items including costs related to the separation, legal settlements, restructuring costs 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, separation-related costs and restructuring costs 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. page 25 / December 21, 2007

26 2007 Segment Operating Income Reconciliation Appendix Adjustments Restructuring Allocated and Other Separation Class Action Charges, Net Adjusted Related Settlement and Related Other Items, Results US GAAP Costs (1) Costs, Net Costs (2) Net (3) (Non-GAAP) (4) (in millions) Income from Operations: Electronic Components $ 1,339 $ 33 $ - $ 57 $ - $ 1,429 Network Solutions Wireless Systems (24) 65 Undersea Telecommunications Allocated class action settlement costs, net and separation costs (932) Total $ 753 $ 86 $ 887 $ 107 $ (24) $ 1,809 (1) Includes (1) Includes $45 million $45 million of separation of separation costs, costs, primarily primarily related related to employee to employee costs, costs, and and $41 $41 million million of of costs costs related related to to building building separate separate company company functions functions that did that not did not exist in exist the prior in the year. prior year. (2) Includes (2) Includes $104 million $104 million of net of restructuring net restructuring and and other other charges, charges, of of which which $5 $5 million million is is recorded recorded in in cost cost of of sales, sales, and and $3 million $3 million of restructuring of restructuring related related moving moving costs costs (recorded (recorded in cost in of cost goods of goods sold). sold). (3) Consists (3) Consists of a $24 of million a $24 million gain on gain the on sale the sale of real of real estate. estate and $232 million loss on retirement of debt. (4) (4) Adjusted Adjusted results results is a non-gaap is a non-gaap measure. measure. See See description description of of non-gaap non-gaap measures measures contained contained in in this this release. release. page 26 / December 21, 2007

27 Electronic Components: Automotive North America Steve Merkt Vice President

28 Automotive North America $700 Million Revenues 3 Manufacturing Locations 4 Engineering & Design Centers 4,192 Employees (include 2,853 in Empalme) Primary Products: Connectors, Relays, Mechatronics & Cable Assemblies. page 2 / 12/21/2007

29 North America Strategy Market Dynamics Significant loss of market share by the Detroit 3, significant gains by the Japanese. Consolidation of supply base accelerated due to the financial distress of many suppliers. OEM s desire global component standardization. Increased fuel costs are driving the market towards more fuel efficient vehicles. Safety systems, comfort/entertainment, styling (ambient lighting), environmental impact, and performance are driving opportunities. OEM s are aligning production with end unit sales by limiting fleet sales and controlling inventories. Key to Success Market share expansion beyond the Detroit 3 Disciplined approach to selection and execution of opportunities Manufacturing consolidation Key Risks and Mitigation Expansion of Japanese market share Focused global effort to expand TE content in Japanese vehicles Raw material price inflation Raw material provisions in quotes, selective hedging OEM production volumes significantly lower than forecast Further manufacturing and organizational consolidation page 3 / 12/21/2007

30 North American Market Dynamics Market Share Market Share Chg 99 to 10 Detroit % Japan % Japan 3: +2.0 million Vehicle Production Percent Detroit 3: -4.0 million Detroit Japan est 2009 est 2010 est Automotive News Market Data 2007 Thousands est 2009 est 2010 est Detroit Japan Other OEM Total N.A Automotive News Market Data 2007 & Estimates from JD Power Nov. 07 Million Total Sales N.A. 771, , ,021 Light Vehicle Prodn ,811 15,376 15, ,8 15,6 15,4 15, ,8 14,6 page 4 / 12/21/2007

31 Manufacturing Consolidation / Footprint Update Burgess Rd, North Carolina Stamping Competency Center Assembly Competency Center Empalme, Mexico Wiring Assembly Competency Center Electronic Assembly Competency Center Low Cost Molding Center Low Cost Connector Assembly Center Pegg Rd, North Carolina Molding Competency Center Mechatronics Competency Center Plating Competency Center Spartanburg, SC Facility Closing announced March, 2007 Completed Consolidation December 2007 Employee Summary March Headcount 291 Employees transferred 48 (NC/Mexico) Process Consolidation to Leverage Cost Improvement Assembly Four Plants to Two Burgess and Empalme Molding Four Plants to Two Pegg and Empalme Stamping Two Plants to One Burgess Empalme Capabilities Expanded Molding Connector Assembly Mechatronics (future) page 5 / 12/21/2007

32 Long Term Opportunities Enhanced fuel efficiency and emission reduction requirements 6,7, and 8 speed transmissions Alternative power vehicles Conversion of parasitic loads from mechanical drive to electrical solutions Weight reduction Increased active and passive safety functionality ABS, stability control Expanded use of airbags (side curtain, leg bolster, third row) Broad range of sensor applications Vehicle to vehicle, and vehicle to intelligent highway communication Brand differentiation through styling, comfort, and entertainment Internal Ambient Lighting Multimedia applications (high speed data transfer) Vehicle architecture Drive to decentralized architecture Intelligent sensors Intelligent actuators (Modules) page 6 / 12/21/2007

33 Ambient Lighting Projects Pin spot Ambient Lighting Ford Lighting Projects Value ($Millions) August 2007 $25 $20 $15 $10 $5 Potential Pending Won Light Guide technology $ Fiscal Year Exterior Ambient Lighting page 7 / 12/21/2007

34 Global Automotive Division North America Pegg Road Plant Overview December 21, 2007

35 Plant Profile - Size Total Square Footage - 198,500 Manufacturing Integrated - 120,000 Plating - 16,000 Warehouse - 12,000 Mfg Labs & Shop - 20,500 Offices, Conf. Rooms - 30,000 Total Headcount Weekly 370 Agency Salaried 106 Avg Service Credit 16 years Equipment / Manufacturing Profile Molding 129 Presses LSR Molding 10 Presses Insert Molding 17 Workcells Plus 10 assembly machines Plating 3 Lines 5 Shifts, 24/7 page 2 / December 21, 2007

36 Quality / Environmental Certifications TS Certified ISO Certified page 3 / December 21, 2007

37 Key Initiatives Pegg Rd Automotive Connector Segment Leading edge component manufacturing for Molding & Plating Excellent alignment with Burgess Rd. Establish the worldwide best molding operation. Continue to be North America s Plater of Choice Automotive Mechatronics Segment Continue to expand capabilities to drive accelerated revenue growth page 4 / December 21, 2007

38 Process Profile - Plating Three dry floor plating lines Very selective deposition of gold Zero discharge of liquids to sewer system 3 rd line added FY07 for silver capability page 5 / December 21, 2007

39 Process Profile - Molding 129 Injection Molding Machines Tonnage Range: 65T 440T Shot Size 0.74 oz 17 oz 21% of presses include robotic packing stations Flexible equipment strategy allows for changeovers per day. Centralized material drying and feed system allows for handling of 75 different resins, includes integrated silo storage system. 500 molding tools 1 cavity to 32 cavity tools 16,000+ individual part numbers 1 billion parts molded annually 2 fully automated overmolding cells T silicone molding machines. page 6 / December 21, 2007

40 Mechatronics Mechatronics Process Flow Connector Assembly Cable Assembly Leadframe Stamping Welding Overmolding Sealing & Testing page 7 / December 21, 2007

41 Global Automotive Division North America Burgess Road Plant Overview December 21, 2007

42 Plant Profile - Size Total Square Footage 126,000 Manufacturing Automated Assy 60,000 Stamping 35,500 Mfg Labs & Shop 20,000 Offices, Conf. Rooms - 20,000 Total Headcount Weekly 295 Agency - 52 Salaried 101 Avg. Service Credit 12 years Equipment / Manufacturing Profile Auto Stamping Presses 40 Auto Assembly Cells 52 5 Shifts, 24/7 page 2 / December 21, 2007

43 Quality / Environmental Certifications TS Certified ISO Certified page 3 / December 21, 2007

44 Key Initiatives Burgess Road Growth through innovation of core products Lead the industry in quality and delivery Continuous labor and process productivity improvement Leadership through ownership of employee development page 4 / December 21, 2007

45 Process Profile High Speed Stamping 40 High Speed Stamping presses 30 to 60 ton Presses 2 USFM (Universal Stamp and Form Machine) 200 Stamping dies in house stamped part numbers Billion terminals stamped per year Bandolier capability Inline welding Female receptacles with vision inspection Action pins, header pins Fully functional die maintenance shop 5 shifts that cover 24 / 7 operations Die engineering support on site page 5 / December 21, 2007

46 Process Profile Automated Assembly 52 Total Automated Assembly Machines 24 Automatic Header Machines 15 Automatic Large Plug Machines 12 Automatic Small Plug Machines 1Semi-Automatic Casting Machine Automated packaging Inline Dimensional Verification Inline Electrical Testing Inline Vision Systems to Verify Components 24 / 7 Coverage With 5 Shifts Full Shop and Technician Support Electrical maintenance support on site page 6 / December 21, 2007