Exhibit 99.1
FOR IMMEDIATE RELEASE
TYCO REPORTS FOURTH QUARTER AND FULL-YEAR RESULTS
Company Reports Fourth Quarter Loss of $0.15 Per Share, Including $0.49 per
Share of Charges
Fourth Quarter Cash from Operating Activities of $1.8 billion;
Free Cash Flow of $1.4 Billion
Company Initiates Divestiture and Restructuring Program As Part of Previously
Discussed Strategy to Sharpen Focus on Core Businesses
PEMBROKE, Bermuda, November 4, 2003—Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) today reported a loss of $0.15 per share for its fourth quarter, compared to a loss of $0.72 per share in the fourth quarter of 2002. For the full fiscal year 2003, Tyco reported earnings of $0.49 per diluted share, compared to a loss of $4.62 in fiscal 2002.
Tyco also initiated a divestiture and restructuring program as part of its previously discussed strategy to sharpen the focus on its core businesses, simplify operations, and improve its cost structure. This program has, along with other actions, resulted in pre-tax charges of $1.2 billion in the fourth quarter and reduced the Company's fourth quarter earnings per share by $0.49 (see summary of charges below).
Chairman and Chief Executive Officer Ed Breen said: "Our operating results are in line with expectations. In addition, our focus and execution on cash generation in the quarter were outstanding, providing us with increased financial flexibility as we move into 2004. Tyco's core businesses are strong, we continue to make progress in improving our operating efficiency, and I believe the restructuring and divestiture actions we are announcing today will enhance our future performance."
Other results for the quarter and full year include:
Divestiture and Restructuring Program
As part of its divestiture program, Tyco intends to sell the Tyco Global Network (TGN), its undersea fiber optic telecommunications network, as well as to exit more than 50 other businesses.
The businesses to be exited, the largest of which had annual sales of less than $400 million, had combined annualized revenues of $2.1 billion in fiscal year 2003, or about six percent of the Company's total revenue base. The TGN had a pre-tax operating loss of $117 million, while the remaining businesses to be exited had a combined operating profit of approximately $55 million in 2003.
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Excluding the TGN, Tyco expects to generate at least $400 million in proceeds from the divestiture program and further expects the program to generate a pre-tax loss of $250 million to $750 million.
The businesses to be exited are in every Tyco business segment except Plastics & Adhesives. Measured on the basis of revenue, more than half of the planned divestitures are in the Fire & Security segment. Aside from the TGN, the Company is not identifying at this time which businesses will be exited.
Tyco's restructuring program includes the consolidation of 219 manufacturing, sales, distribution, and other facilities. These actions are expected to reduce employment levels by about 7,200 employees. Of the facilities to be consolidated, 184 are in Fire & Security, 30 are in Plastics & Adhesives, and the remainder are in Engineered Products & Services. The charges associated with the restructuring program, most of which will be expensed in fiscal year 2004, are expected to be about $400 million, of which approximately $280 million is cash. Total annualized savings from the restructuring program are estimated at $230 million by 2005. Additional details are provided in the attached schedule.
Mr. Breen said: "Our divestiture and restructuring moves will accelerate our ability to improve our profitability as we continue to make the transition from an acquisition-focused enterprise to a high-performing operating company. Although the TGN is the world's largest undersea fiber optic network, we believe consolidation is needed in this market. Since we are not prepared to invest further in this industry, we intend to exit the business. The other planned divestitures are small, non-strategic businesses that require a disproportionate amount of resources and management attention."
Summary of Charges
In the fourth quarter, the Company recorded pre-tax charges of $1.2 billion ($0.49 per share of earnings), which consist of the following:
QUARTERLY OPERATING RESULTS
The financial results presented in the tables below are in accordance with generally accepted accounting principles (GAAP). All dollar amounts are pre-tax and stated in millions. All comparisons are to the quarter ended September 30, 2002 unless otherwise indicated.
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Fire and Security
| | September 30, 2003 | September 30, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Net revenues | $ | 2,906.7 | $ | 2,876.7 | |||
| Operating profit | $ | 133.1 | $ | 223.3 | |||
| Margins | 4.6 | % | 7.8 | % | |||
Revenues increased $30 million, driven by a $132 million increase from foreign currency. Excluding the impact of currency changes, revenue declined modestly, due to continued weakness in the Continental Europe Security business.
Operating profit in the fourth quarter of 2003 includes $101 million in net charges, primarily related to restructuring and impairment of long-lived assets. Operating performance benefited from improvement in Worldwide Security, which was partially offset by weakness in the Fire Protection business.
Electronics
| | September 30, 2003 | September 30, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Net revenues | $ | 2,656.4 | $ | 2,566.1 | |||
| Operating loss | $ | (559.9 | ) | $ | (1,888.6 | ) | |
| Margins | (21.1 | %) | (73.6 | %) | |||
Revenues increased $90 million, driven by a $113 million increase from foreign currency. Overall, the connector business was up modestly in the quarter with strength in automotive and communications markets offset by weakness in general industrial markets. The non-connector portion of Electronics declined slightly due to continued weakness in telecommunications infrastructure-related markets.
The operating loss in the fourth quarter of 2003 was driven by net charges of $922 million. These charges include a $664 million write-down of the carrying value of the TGN and a $278 million goodwill impairment charge. The operating loss in the fourth quarter of 2002 included $2.1 billion in charges relating to goodwill impairment, impairment of certain long-lived assets, and other restructuring and one-time charges. Operating profit improved in 2003 due to better performance in automotive, communications, and telecommunications (TyCom).
Healthcare
| | September 30, 2003 | September 30, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Net revenues | $ | 2,216.6 | $ | 2,118.3 | |||
| Operating profit | $ | 595.3 | $ | 500.3 | |||
| Margins | 26.9 | % | 23.6 | % | |||
Revenues increased $98 million, driven by a $56 million increase from foreign currency and seven percent revenue growth in the U.S. healthcare businesses. This increase was partially offset by decreased sales at the International Healthcare division.
Operating profit increased 19%, driven by increased sales, higher production volumes and a continued focus on optimizing operating expenses. Foreign exchange also contributed to the improvement.
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Engineered Products and Services
| | �� | September 30, 2003 | September 30, 2002 | ||||
|---|---|---|---|---|---|---|---|
| Net revenues | $ | 1,224.5 | $ | 1,334.8 | |||
| Operating profit | $ | 70.0 | $ | 54.8 | |||
| Margins | 5.7 | % | 4.1 | % | |||
Revenues declined $110 million, despite a $67 million benefit from foreign currency. This reflected lower sales volumes at the Flow Control and Electrical & Metal Products businesses, as both divisions continue to suffer from weak economic conditions and softness in non-residential construction activity.
Operating profit increased 28%, reflecting the impact of prior year charges of $97 million. Excluding impairment charges from the year over year comparison, operating profit decreased significantly in 2003, as a result of lower sales volumes at Flow Control as well as increased steel costs and lower sales volumes at Electrical & Metal Products.
Plastics & Adhesives
| | September 30, 2003 | September 30, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Net revenues | $ | 468.6 | $ | 476.9 | |||
| Operating profit (loss) | $ | 28.0 | $ | (2.7 | ) | ||
| Margins | 6.0 | % | (0.6) | % | |||
Revenues declined slightly, driven primarily by declines in the A&E Molded Plastics and Adhesives businesses, which were partially offset by a $5 million increase from foreign currency.
Operating profit increased $31 million, reflecting the impact of charges in fiscal year 2002. Operationally, segment profit declined due to the impact of higher resin and other material costs, unfavorable sales mix, and lower volumes.
Other Items
Progress in 2003
Mr. Breen noted that in the first full fiscal year under Tyco's new management, the Company made significant and steady progress at both the corporate and operating levels. Among other accomplishments, Tyco:
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Mr. Breen said: "Over the past year, our employees have made major progress in addressing the financial, operating and governance challenges that have faced Tyco. As a result of their hard work, the Company is in a strong competitive position and can look ahead to a bright future with many opportunities for growth in our markets around the world."
Outlook
In fiscal 2004, Tyco expects to achieve earnings per share of $1.42 to $1.52, excluding the impact of the divestiture and restructuring programs. This outlook anticipates a modest improvement in economic activity over the next year. Stronger economic performance in the industrial and non-residential construction markets will be an important factor in the Company's achieving the high end of this range. For the first quarter of fiscal 2004, the Company expects to achieve earnings per share of $0.30-$0.32 before any divestiture or restructuring charges. This represents 13-20% net income growth and 7-14% EPS growth from the first quarter of 2003.
The Company expects cash from operating activities and free cash flow in 2004 to exceed the levels achieved in 2003, which were $5.4 billion and $3.2 billion, respectively.
EPS excluding charges is a non-GAAP measure and it should not be considered a replacement for GAAP results. The Company has forecast its results excluding restructuring and divestiture charges to give investors additional perspective on the underlying business results. Because the Company cannot predict when the divestitures will occur and the associated charges or gains will be taken, it is difficult to accurately include the impact of those items in the forecast.
About Free Cash Flow
"Free cash flow" (FCF) is a non-GAAP metric and should not be considered a replacement for GAAP results. Investors are urged to read the Company's financial statements as filed with the Securities and Exchange Commission (SEC). The measure should be used in conjunction with other GAAP financial measures and is not presented as alternative measure of cash flow as calculated and presented in accordance with GAAP. Investors should not rely on FCF as a substitute for any GAAP financial measure. FCF as presented herein may not be comparable to similarly titled measures reported by other companies. FCF has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. See the accompanying table to this press release for a cash flow statement presented in accordance with GAAP and a reconciliation presenting the components of free cash flow.
FCF is used by the Company to measure its ability to meet its future debt obligations and is a significant measurement tool in the Company's incentive compensation plans. The Company believes that FCF is an important measure of the Company's management of cash flow and operating performance. The difference between Cash from Operating Activities (the most comparable GAAP
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measure) and FCF (the non- GAAP measure) consists of significant cash outflows that the Company believes are useful to measure its operations. The difference reflects net capital expenditures, acquisition of dealer accounts, Tyco Global Network spending, cash paid for holdbacks from prior acquisitions and purchase accounting, dividends paid, and the impact from the sale of accounts receivable programs. These items, particularly capital expenditures and acquisition of dealer accounts, are integral to the Company's operations and deducting these items provides a better picture in management's view of cash available for other uses including debt retirement.
Foreign Exchange Rates
From time to time, this press release discusses the impact of foreign exchange rates on revenues and operating profit. The Company believes this provides investors with a more complete understanding of underlying results and trends of its base businesses.
Conference Call and Webcast
The Company will hold a conference call for investors today at 8:30 am EDT. The call can be accessed in three ways:
The replay is scheduled to be available at 3:30 pm on November 4, 2003 until 11:59 PM on November 10, 2003. The dial-in numbers for the replay are as follows: Domestic (U.S.) (800) 475-6701. International: (320) 365-3844. The replay access code for all callers is: 698013.
ABOUT TYCO INTERNATIONAL LTD.
Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services; and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2003 revenues from continuing operations of approximately $37 billion.
FORWARD-LOOKING STATEMENTS
This release 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 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
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expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements.
More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2002, as amended, and in Tyco's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003. Tyco 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.
Contacts:
| Media: | Gary Holmes, 609-720-4387 | |
Investor Relations: | Ed Arditte, 609-720-4621 John Roselli, 609-720-4624 |
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TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(Unaudited)
| | For the Quarters Ended | For the Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 09/30/03 | 09/30/02 | 09/30/03 | 09/30/02 | ||||||||||
| | | (restated) | | (restated) | ||||||||||
| Net revenues | $ | 9,472.8 | $ | 9,372.8 | $ | 36,801.3 | $ | 35,589.8 | ||||||
| Cost of sales | 6,290.7 | 6,414.8 | 23,891.9 | 23,065.3 | ||||||||||
| Selling, general and administrative expenses | 1,994.4 | 2,325.2 | 8,813.4 | 8,181.6 | ||||||||||
| Restructuring and other (credits) charges, net | (1.7 | ) | 575.2 | (74.3 | ) | 1,124.3 | ||||||||
| Charges for the impairment of long-lived assets | 737.6 | 794.6 | 824.9 | 3,309.5 | ||||||||||
| Goodwill impairment | 278.4 | 499.3 | 278.4 | 1,343.7 | ||||||||||
| Write-off of purchased in-process research and development | — | 4.4 | — | 17.8 | ||||||||||
| Operating income (loss) | 173.4 | (1,240.7 | ) | 3,067.0 | (1,452.4 | ) | ||||||||
| Other expense, net | (11.6 | ) | (62.4 | ) | (223.4 | ) | (216.6 | ) | ||||||
| Interest expense, net | (251.7 | ) | (294.6 | ) | (1,040.8 | ) | (959.7 | ) | ||||||
| (Loss) income from continuing operations before income taxes and minority interest | (89.9 | ) | (1,597.7 | ) | 1,802.8 | (2,628.7 | ) | |||||||
| Income taxes | (131.1 | ) | 203.2 | (764.5 | ) | (208.1 | ) | |||||||
| Minority interest | (1.0 | ) | (0.6 | ) | (3.6 | ) | (1.4 | ) | ||||||
| (Loss) income from continuing operations | (222.0 | ) | (1,395.1 | ) | 1,034.7 | (2,838.2 | ) | |||||||
| Income (loss) from discontinued operations of Tyco Capital, net of tax | — | 11.1 | 20.0 | (6,282.5 | ) | |||||||||
| Loss on sale of Tyco Capital, net of tax | — | (58.8 | ) | — | (58.8 | ) | ||||||||
| (Loss) income before cumulative effect of accounting change | (222.0 | ) | (1,442.8 | ) | 1,054.7 | (9,179.5 | ) | |||||||
| Cumulative effect of accounting change, net of tax | (75.1 | ) | — | (75.1 | ) | — | ||||||||
| Net (loss) income | $ | (297.1 | ) | $ | (1,442.8 | ) | $ | 979.6 | $ | (9,179.5 | ) | |||
Basic (loss) income per common share: | ||||||||||||||
| (Loss) income from continuing operations | $ | (0.11 | ) | $ | (0.70 | ) | $ | 0.52 | $ | (1.43 | ) | |||
| Income (loss) from discontinued operations of Tyco Capital, net of tax | — | 0.01 | 0.01 | (3.16 | ) | |||||||||
| Loss on sale of Tyco Capital, net of tax | — | (0.03 | ) | — | (0.03 | ) | ||||||||
| (Loss) income before cumulative effect of accounting change | (0.11 | ) | (0.72 | ) | 0.53 | (4.62 | ) | |||||||
| Cumulative effect of a change in accounting, net of tax | (0.04 | ) | — | (0.04 | ) | — | ||||||||
| Net (loss) income | (0.15 | ) | (0.72 | ) | 0.49 | (4.62 | ) | |||||||
| Diluted (loss) income per common share: | ||||||||||||||
| (Loss) income from continuing operations | $ | (0.11 | ) | $ | (0.70 | ) | $ | 0.52 | $ | (1.43 | ) | |||
| Income (loss) from discontinued operations of Tyco Capital, net of tax | — | 0.01 | 0.01 | (3.16 | ) | |||||||||
| Loss on sale of Tyco Capital, net of tax | — | (0.03 | ) | — | (0.03 | ) | ||||||||
| (Loss) income before cumulative effect of accounting change | (0.11 | ) | (0.72 | ) | 0.53 | (4.62 | ) | |||||||
| Cumulative effect of a change in accounting, net of tax | (0.04 | ) | — | (0.04 | ) | — | ||||||||
| Net (loss) income | (0.15 | ) | (0.72 | ) | 0.49 | (4.62 | ) | |||||||
Weighted-average number of common shares outstanding: | ||||||||||||||
| Basic | 1,995.9 | 1,993.8 | 1,995.0 | 1,988.5 | ||||||||||
| Diluted | 1,995.9 | 1,993.8 | 2,002.7 | 1,988.5 | ||||||||||
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Tyco International Ltd.
Condensed Consolidated Balance Sheet
(in millions)
Preliminary — Subject to Adjustments
| | (Unaudited) September 30, 2003 | (Unaudited) June 30, 2003 | September 30, 2002 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | | | (restated) | |||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 4,186.7 | $ | 3,926.7 | $ | 6,185.7 | ||||
| Restricted cash | 141.8 | 210.9 | 196.2 | |||||||
| Accounts receivables, net | 5,714.8 | 5,898.3 | 5,831.9 | |||||||
| Inventories | 4,292.2 | 4,555.5 | 4,607.9 | |||||||
| Deferred income taxes | 855.2 | 870.2 | 1,356.0 | |||||||
| Other current assets | 2,048.8 | 2,140.6 | 1,461.7 | |||||||
| Total current assets | 17,239.5 | 17,602.2 | 19,639.4 | |||||||
Tyco Global Network, Net | — | 667.6 | 581.6 | |||||||
| Property, Plant and Equipment, Net | 10,299.8 | 10,009.8 | 9,861.0 | |||||||
| Goodwill | 25,938.7 | 26,301.8 | 26,020.5 | |||||||
| Intangible Assets, Net | 5,790.0 | 5,889.9 | 5,805.8 | |||||||
| Other Assets | 4,277.0 | 3,921.5 | 3,549.2 | |||||||
| Total Assets | $ | 63,545.0 | $ | 64,392.8 | $ | 65,457.5 | ||||
| Current Liabilities: | ||||||||||
| Loans payable and current maturities of long-term debt | $ | 2,718.4 | $ | 3,639.9 | $ | 7,719.0 | ||||
| Accounts payable | 2,716.7 | 2,763.1 | 3,173.8 | |||||||
| Accrued expenses and other current liabilities | 3,999.1 | 4,550.6 | 5,348.7 | |||||||
| Contracts in process — billings in excess of cost | 327.6 | 464.3 | 523.6 | |||||||
| Deferred revenue | 810.5 | 810.9 | 758.5 | |||||||
| Total current liabilities | 10,572.3 | 12,228.8 | 17,523.6 | |||||||
Long-Term Debt | 18,250.7 | 17,567.7 | 16,486.8 | |||||||
| Other Long-Term Liabilities | 8,239.7 | 7,888.9 | 7,288.9 | |||||||
| Total Liabilities | 37,062.7 | 37,685.4 | 41,299.3 | |||||||
Minority Interest | 113.3 | 74.8 | 76.9 | |||||||
Shareholders' Equity | 26,369.0 | 26,632.6 | 24,081.3 | |||||||
| Total Liabilities and Shareholders' Equity | $ | 63,545.0 | $ | 64,392.8 | $ | 65,457.5 | ||||
Note: Certain prior year amounts have been reclassified to conform with current year presentation.
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TYCO INTERNATIONAL LTD.
Condensed Consolidated Statements of Cash Flows
(in millions)
Preliminary—Subject to Adjustments
(Unaudited)
| | For the Quarters Ended | For the Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 09/30/03 | 09/30/02 | 09/30/03 | 09/30/02 | ||||||||||
| | | (restated) | | (restated) | ||||||||||
| Cash flows from operating activities: | ||||||||||||||
| (Loss) income from continuing operations | $ | (222.0 | ) | $ | (1,395.1 | ) | $ | 1,034.7 | $ | (2,838.2 | ) | |||
| Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities: | ||||||||||||||
| Non-cash restructuring and other charges (credits), net | 1.9 | 527.0 | (45.9 | ) | 796.5 | |||||||||
| Charges for the impairment of long-lived assets | 737.6 | 794.6 | 824.9 | 3,309.5 | ||||||||||
| Goodwill Impairment | 278.4 | 499.3 | 278.4 | 1,343.7 | ||||||||||
| Write-off of purchased in-process R&D | — | 4.4 | — | 17.8 | ||||||||||
| Loss on investments | 11.6 | 123.3 | 87.2 | 270.8 | ||||||||||
| Depreciation | 387.4 | 366.7 | 1,471.9 | 1,464.1 | ||||||||||
| Amortization of intangible assets | 176.8 | 167.1 | 725.0 | 620.9 | ||||||||||
| Income taxes—deferred and payables | 50.4 | (186.2 | ) | 549.5 | (250.1 | ) | ||||||||
| Cash spent on restructuring | (132.6 | ) | (157.6 | ) | (503.3 | ) | (517.5 | ) | ||||||
| (Decrease in) proceeds under sale of accounts receivable programs | (63.1 | ) | 57.2 | (119.0 | ) | (56.4 | ) | |||||||
| Changes in working capital and other | 549.9 | 1,017.9 | 1,042.7 | 1,250.3 | ||||||||||
| Net cash provided by operating activities, continuing operations | 1,776.3 | 1,818.6 | 5,346.1 | 5,411.4 | ||||||||||
| Net cash provided by operating activities, discontinued operations | — | — | 20.0 | 1,462.9 | ||||||||||
| Net cash provided by operating activities | 1,776.3 | 1,818.6 | 5,366.1 | 6,874.3 | ||||||||||
Cash flows from investing activities: | ||||||||||||||
| Capital expenditures, net | (265.5 | ) | (291.2 | ) | (1,115.8 | ) | (1,678.8 | ) | ||||||
| Purchase of previously leased TyCom ship | — | — | (53.8 | ) | — | |||||||||
| Tyco Global Network spending | 5.7 | (163.4 | ) | (112.7 | ) | (1,146.0 | ) | |||||||
| Acquisition of businesses, net of cash acquired | (9.4 | ) | (1.6 | ) | (44.0 | ) | (1,683.8 | ) | ||||||
| Acquisition of dealer accounts | (90.6 | ) | (267.6 | ) | (596.8 | ) | (1,139.3 | ) | ||||||
| Cash paid for purchase accounting and holdback/earn-out liabilities | (44.5 | ) | (103.3 | ) | (271.8 | ) | (624.1 | ) | ||||||
| Net proceeds from the sale of CIT | — | 4,395.4 | — | 4,395.4 | ||||||||||
| Disposal of businesses | 0.5 | 138.7 | 8.5 | 138.7 | ||||||||||
| Cash invested in short-term investments | (40.7 | ) | (93.5 | ) | (392.1 | ) | (93.5 | ) | ||||||
| Increase in restricted cash | (25.8 | ) | (196.2 | ) | (228.4 | ) | (196.2 | ) | ||||||
| All other | 6.8 | 76.3 | 66.9 | (18.1 | ) | |||||||||
| Net cash (used in) provided by investing activities, continuing operations | (463.5 | ) | 3,493.6 | (2,740.0 | ) | (2,045.7 | ) | |||||||
| Net cash provided by investing activities, discontinued operations | — | — | — | 2,684.3 | ||||||||||
| Net cash (used in) provided by investing activities | (463.5 | ) | 3,493.6 | (2,740.0 | ) | 638.6 | ||||||||
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Cash flows from financing activities: | ||||||||||||||
| Net repayments of debt | (1,010.5 | ) | (1,862.8 | ) | (4,618.6 | ) | 1,951.3 | |||||||
| Dividends paid | (25.3 | ) | (25.3 | ) | (100.9 | ) | (100.3 | ) | ||||||
| Proceeds from options exercises | 7.0 | — | 14.8 | 185.7 | ||||||||||
| Repurchase of shares | — | (0.1 | ) | (1.2 | ) | (789.2 | ) | |||||||
| All other | (1.5 | ) | (2.9 | ) | (8.0 | ) | (209.7 | ) | ||||||
| Net cash (used in) provided by financing activities, continuing operations | (1,030.3 | ) | (1,891.1 | ) | (4,713.9 | ) | 1,037.8 | |||||||
| Net cash used in financing activities, discontinued operations | — | — | — | (2,874.6 | ) | |||||||||
| Net cash used in financing activities | (1,030.3 | ) | (1,891.1 | ) | (4,713.9 | ) | (1,836.8 | ) | ||||||
| Effect of currency translation on cash | (22.5 | ) | (30.2 | ) | 88.8 | 2.1 | ||||||||
| Net increase (decrease) in cash and cash equivalents | 260.0 | 3,390.9 | (1,999.0 | ) | 5,678.2 | |||||||||
| Tyco Capital's cash and cash equivalents transferred to discontinued operations | — | — | — | (1,272.6 | ) | |||||||||
| Cash and cash equivalents at beginning of period | 3,926.7 | 2,794.8 | 6,185.7 | 1,780.1 | ||||||||||
| Cash and cash equivalents at end of period | $ | 4,186.7 | $ | 6,185.7 | $ | 4,186.7 | $ | 6,185.7 | ||||||
RECONCILIATION TO "FREE CASH FLOW": | ||||||||||||||
| Net cash provided by operating activities, continuing operations | $ | 1,776.3 | $ | 1,818.6 | $ | 5,346.1 | $ | 5,411.4 | ||||||
| Sale of accounts receivable programs | 63.1 | (57.2 | ) | 119.0 | 56.4 | |||||||||
| Capital expenditures, net | (265.5 | ) | (291.2 | ) | (1,115.8 | ) | (1,678.8 | ) | ||||||
| Purchase of previously leased TyCom ship | — | — | (53.8 | ) | — | |||||||||
| Tyco Global Network spending | 5.7 | (163.4 | ) | (112.7 | ) | (1,146.0 | ) | |||||||
| Dividends paid | (25.3 | ) | (25.3 | ) | (100.9 | ) | (100.3 | ) | ||||||
| "FREE CASH FLOW"—OLD DEFINITION | 1,554.3 | 1,281.5 | 4,081.9 | 2,542.7 | ||||||||||
| Acquisition of dealer accounts | (90.6 | ) | (267.6 | ) | (596.8 | ) | (1,139.3 | ) | ||||||
| Cash paid for purchase accounting and holdback/earn-out liabilities | (44.5 | ) | (103.3 | ) | (271.8 | ) | (624.1 | ) | ||||||
| "FREE CASH FLOW"—NEW DEFINITION | $ | 1,419.2 | $ | 910.6 | $ | 3,213.3 | $ | 779.3 | ||||||
Free cash flow is a non-GAAP metric used by the Company to measure its ability to meet its future debt obligations and is also one component of measurement used in the Company's compensation plans.
11
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions, except per share data)
(Unaudited)
| | For the Quarters Ended | For the Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 09/30/03 | 09/30/02 | 09/30/03 | 09/30/02 | ||||||||||
| | | (restated) | | (restated) | ||||||||||
| NET REVENUES | ||||||||||||||
| Fire and Security | $ | 2,906.7 | $ | 2,876.7 | $ | 11,292.8 | $ | 10,639.0 | ||||||
| Electronics | 2,656.4 | 2,566.1 | 10,355.0 | 10,464.1 | ||||||||||
| Healthcare | 2,216.6 | 2,118.3 | 8,571.9 | 7,899.1 | ||||||||||
| Engineered Products and Services | 1,224.5 | 1,334.8 | 4,684.4 | 4,709.3 | ||||||||||
| Plastics and Adhesives | 468.6 | 476.9 | 1,897.2 | 1,878.3 | ||||||||||
| Total Net Revenues | 9,472.8 | 9,372.8 | 36,801.3 | 35,589.8 | ||||||||||
OPERATING PROFIT (LOSS) | ||||||||||||||
| Fire and Security | 133.1 | 223.3 | 360.2 | 904.7 | ||||||||||
| Electronics | (559.9 | ) | (1,888.6 | ) | 457.7 | (4,245.9 | ) | |||||||
| Healthcare | 595.3 | 500.3 | 2,127.1 | 1,846.8 | ||||||||||
| Engineered Products and Services | 70.0 | 54.8 | 355.2 | 252.5 | ||||||||||
| Plastics and Adhesives | 28.0 | (2.7 | ) | 167.4 | 209.2 | |||||||||
| Total Profit (Loss) | 266.5 | (1,112.9 | ) | 3,467.6 | (1,032.7 | ) | ||||||||
Corporate Expenses | (93.1 | ) | (127.8 | ) | (400.6 | ) | (419.7 | ) | ||||||
| Operating Income (Loss) | 173.4 | (1,240.7 | ) | 3,067.0 | (1,452.4 | ) | ||||||||
Other Expense, Net | (11.6 | ) | (62.4 | ) | (223.4 | ) | (216.6 | ) | ||||||
| Interest Expense, Net | (251.7 | ) | (294.6 | ) | (1,040.8 | ) | (959.7 | ) | ||||||
| (Loss) Income from Continuing Operations Before Taxes and Minority Interest | (89.9 | ) | (1,597.7 | ) | 1,802.8 | (2,628.7 | ) | |||||||
Income Taxes | (131.1 | ) | 203.2 | (764.5 | ) | (208.1 | ) | |||||||
| Minority Interest | (1.0 | ) | (0.6 | ) | (3.6 | ) | (1.4 | ) | ||||||
| (LOSS) INCOME FROM CONTINUING OPERATIONS | (222.0 | ) | (1,395.1 | ) | 1,034.7 | (2,838.2 | ) | |||||||
Income (loss) from Discontinued Operations of Tyco Capital, Net of Tax | — | 11.1 | 20.0 | (6,282.5 | ) | |||||||||
| Loss on Sale of Tyco Capital, Net of Tax | — | (58.8 | ) | — | (58.8 | ) | ||||||||
| (LOSS) INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (222.0 | ) | (1,442.8 | ) | 1,054.7 | (9,179.5 | ) | |||||||
Cumulative Effect of Accounting Change, Net of Tax | (75.1 | ) | — | (75.1 | ) | — | ||||||||
| NET (LOSS) INCOME | $ | (297.1 | ) | $ | (1,442.8 | ) | $ | 979.6 | $ | (9,179.5 | ) | |||
BASIC COMMON SHARES OUTSTANDING: | 1,995.9 | 1,993.8 | 1,995.0 | 1,988.5 | ||||||||||
EPS from Continuing Operations | $ | (0.11 | ) | $ | (0.70 | ) | $ | 0.52 | $ | (1.43 | ) | |||
| EPS before Cumulative Effect | (0.11 | ) | (0.72 | ) | 0.53 | (4.62 | ) | |||||||
| EPS Net (Loss) Income | (0.15 | ) | (0.72 | ) | 0.49 | (4.62 | ) | |||||||
DILUTED COMMON SHARES OUTSTANDING: | 1,995.9 | 1,993.8 | 2,002.7 | 1,988.5 | ||||||||||
EPS from Continuing Operations | $ | (0.11 | ) | $ | (0.70 | ) | $ | 0.52 | $ | (1.43 | ) | |||
| EPS before Cumulative Effect | (0.11 | ) | (0.72 | ) | 0.53 | (4.62 | ) | |||||||
| EPS Net (Loss) Income | (0.15 | ) | (0.72 | ) | 0.49 | (4.62 | ) | |||||||
12
Tyco International Ltd.
Earnings Per Share from Continuing Operations
| | Quarter Ended | Year Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | December 31, 2002 | March 31, 2003 | June 30, 2003 | September 30, 2003 | September 30, 2003 | |||||||||||
| Diluted EPS as Previously Reported | $ | 0.32 | ($ | 0.23 | ) | N/A | N/A | N/A | ||||||||
| Customer Contract Amortization Method | (0.01 | ) | 0.08 | |||||||||||||
| ADT Dealer Reimbursements | (0.01 | ) | ||||||||||||||
| Restitution Payment | (0.01 | ) | ||||||||||||||
| Q2 Charges Restated to Prior Periods | (0.01 | ) | 0.21 | |||||||||||||
| Diluted EPS as Restated (GAAP)* | $ | 0.28 | $ | 0.06 | $ | 0.27 | ($ | 0.11 | ) | $ | 0.52 | |||||
| Intensified Internal Audit Process | 0.15 | |||||||||||||||
| D&O Insurance | 0.04 | |||||||||||||||
| Impairment of ADT Dealer Accounts | 0.04 | |||||||||||||||
| Debt Retirement (Drs) | 0.07 | |||||||||||||||
| Tax Settlement | (0.02 | ) | ||||||||||||||
| Impairment & Restructuring | $ | 0.43 | ||||||||||||||
| Fire and Security Reserve Adjustment | 0.02 | $ | 0.01 | |||||||||||||
| Other Corporate Charges | $ | 0.01 | ||||||||||||||
13
Tyco International Ltd.
Restructuring Program Summary
$ millions, except for Employees and Facilities
| | Quarter Ended September 30, 2003 | Quarter Ended December 31, 2003 | Total Year Ended September 30, 2004 | Total Program | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Cash | Non-Cash | Cash | Non-Cash | Cash | Non-Cash | Cash | Non-Cash | ||||||||||
| Estimated Costs | ||||||||||||||||||
| Fire and Security | 20 | 6 | 45 | 150 | 10 | 200 | 40 | |||||||||||
| Plastics and Adhesives | 20 | 40 | 60 | 40 | 60 | |||||||||||||
| Engineered Products and Services | 12 | 6 | 20 | 30 | 10 | |||||||||||||
| Corporate | 9 | 9 | ||||||||||||||||
| Total | 41 | 12 | 45 | 20 | 210 | 70 | 279 | 110 | ||||||||||
| | | | | | | | Annualized Benefits | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | Cash | Non-Cash | ||||||||||
| Estimated Benefits | ||||||||||||||||||
| Fire and Security | 12 | 3 | 80 | 15 | 135 | 25 | ||||||||||||
| Plastics and Adhesives | 20 | 5 | 35 | 10 | ||||||||||||||
| Engineered Products and Services | 3 | 0 | 15 | 25 | 0 | |||||||||||||
| Total | 15 | 3 | 115 | 20 | 195 | 35 | ||||||||||||
Estimated Employees Impacted | ||||||||||||||||||
| Fire and Security | 5,000 | |||||||||||||||||
| Plastics and Adhesives | 1,900 | |||||||||||||||||
| Engineered Products and Services | 275 | |||||||||||||||||
| Total | 7,175 | |||||||||||||||||
Estimated Facilities Reduced | ||||||||||||||||||
| Fire and Security | 184 | |||||||||||||||||
| Plastics and Adhesives | 30 | |||||||||||||||||
| Engineered Products and Services | 5 | |||||||||||||||||
| Total | 219 | |||||||||||||||||
14
