Exhibit 99.1
FOR IMMEDIATE RELEASE
Contacts: | News Media | Investor Relations | | | |
| Sheri Woodruff | Ed Arditte | | | |
| 609-720-4399 | 609-720-4621 | | | |
| swoodruff@tyco.com | John Roselli | | | |
| | 609-720-4624 | | | |
TYCO REPORTS SECOND QUARTER EARNINGS
FROM CONTINUING OPERATIONS OF $0.52 PER SHARE AND ANNOUNCES NEW SHARE REPURCHASE PROGRAM
• Results Include Net Favorable Impact of $0.07 Per Share From Tax Matters, Divestitures and Separation Costs
• Company Used $1 Billion of Cash to Repurchase Shares
• New $2 Billion Share Repurchase Program Authorized
PEMBROKE, Bermuda — May 4, 2006 — Tyco International Ltd. (NYSE: TYC; BSX: TYC) today reported diluted GAAP earnings per share (EPS) from continuing operations of $0.52 for the second fiscal quarter of 2006, compared with $0.19 in the second fiscal quarter of 2005. Included in EPS from continuing operations was a net favorable impact of $0.07 per share — consisting of a $0.06 benefit from certain tax matters, a $0.02 gain from divestitures, and a $0.01 charge for costs related to the previously-announced plan to separate Tyco into three separate, publicly-traded companies. Results also include a $0.02 per share charge related to the expensing of stock options, which is not reflected in the prior period. Last year’s results included net charges of $0.29 per share, primarily related to the early retirement of debt.
Revenue in the quarter totaled $10.2 billion, with organic revenue growth of 5 percent. The company generated cash flow from operating activities of $959 million and free cash flow of $444 million in the quarter, which included over $400 million in cash payments related to previously-disclosed legal items and separation activities.
Tyco Chairman and Chief Executive Officer Ed Breen said, “We are encouraged by the progress we made this quarter in a number of areas, and remain focused on continuing to improve our revenue growth and operating performance. We are confident that this progress will continue in the second half of 2006.”
During the second quarter and through April 11, Tyco used $1 billion in cash to buy back 36.6 million shares. Having completed the share purchase program that was originally announced in August of 2005, Tyco’s Board of Directors has approved a new $2 billion share repurchase program.
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Breen added, “In addition to our share repurchase activity, debt declined by $2.5 billion during the second quarter and we have reached our targeted $10 billion total debt level. We will continue to use excess cash to retire shares.”
At the beginning of the fiscal year, Tyco adopted Statement of Financial Accounting Standards (SFAS) No. 123R, which requires the expensing of stock options; prior year results were not restated. Organic revenue growth, free cash flow, and operating income before stock option expense are non-GAAP financial measures and are described below. For a reconciliation of these non-GAAP measures, see the attached tables.
SEGMENT RESULTS
The financial results presented in the tables below are in accordance with GAAP unless otherwise indicated. All dollar amounts are pretax and stated in millions. All comparisons are to the quarter ended April 1, 2005 unless otherwise indicated.
Electronics
| | Mar. 31, 2006 | | Apr. 1, 2005 | | $ | Change | | % Change | |
Revenue | | $ | 3,236 | | $ | 3,133 | | $ | 103 | | 3 | % |
Operating Income Before Stock Option Expense | | $ | 474 | | $ | 496 | | $ | (22 | ) | (4% | ) |
Stock Option Expense | | $ | (13 | ) | $ | 0 | | $ | (13 | ) | | |
Operating Income | | $ | 461 | | $ | 496 | | $ | (35 | ) | (7% | ) |
Operating Margin | | 14.2 | % | 15.8 | % | | | | |
Organic revenue growth was 7 percent, with 9 percent growth in connector and cable assembly products. The company experienced strong growth across most end markets, including double-digit growth in the consumer electronics, energy, industrial machinery, and communications end markets. Bookings were also strong during the quarter, resulting in a book-to-bill ratio of 1.06.
Operating income before stock option expense decreased by $22 million. Income from higher revenue was more than offset by approximately $56 million in higher materials cost. Results also included $13 million of charges for divestiture activity and the restructuring activity announced last November.
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Fire & Security
| | Mar. 31, 2006 | | Apr. 1, 2005 | | $ | Change | | % Change | |
Revenue | | $ | 2,873 | | $ | 2,874 | | $ | (1 | ) | 0 | % |
Operating Income Before Stock Option Expense | | $ | 299 | | $ | 311 | | $ | (12 | ) | (4% | ) |
Stock Option Expense | | $ | (10 | ) | $ | 0 | | $ | (10 | ) | | |
Operating Income | | $ | 289 | | $ | 311 | | $ | (22 | ) | (7% | ) |
Operating Margin | | 10.1 | % | 10.8 | % | | | | |
Organic revenue growth was 3 percent, with strength in the Worldwide Fire Services business and Tyco Safety Products, as well as modest revenue growth in Worldwide Security due to improvement in both the residential and commercial businesses.
Operating income before stock option expense decreased by $12 million. Income resulting from growth in the Worldwide Fire Services business and Tyco Safety Products was offset by lower margins in Worldwide Security. Compared to the first quarter of this year, the operating margin in Worldwide Security improved 140 basis points.
Healthcare
| | Mar. 31, 2006 | | Apr. 1, 2005 | | $ | Change | | % Change | |
Revenue | | $ | 2,409 | | $ | 2,369 | | $ | 40 | | 2 | % |
Operating Income Before Stock Option Expense | | $ | 589 | | $ | 689 | | $ | (100 | ) | (15% | ) |
Stock Option Expense | | $ | (10 | ) | $ | 0 | | $ | (10 | ) | | |
Operating Income | | $ | 579 | | $ | 689 | | $ | (110 | ) | (16% | ) |
Operating Margin | | 24.0 | % | 29.1 | % | | | | |
Organic revenue growth was 4 percent, with strong growth in the International and Surgical businesses, as well as improved growth in Pharmaceuticals. This growth was partially offset by a decline in the Imaging business, related to previously-announced voluntary product recalls.
Operating income before stock option expense decreased by $100 million, which included a $46 million divestiture gain. Operating income in the prior year benefited by $20 million due to the refinement of litigation liabilities and related insurance recoveries. The remaining decrease in operating income is primarily due to the impact of addressing previously-disclosed quality and regulatory issues, as well as continued investment in research and development and sales and marketing.
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Engineered Products & Services
| | Mar. 31, 2006 | | Apr. 1, 2005 | | $ | Change | | % Change | |
Revenue | | $ | 1,688 | | $ | 1,607 | | $ | 81 | | 5 | % |
Operating Income Before Stock Option Expense | | $ | 197 | | $ | 165 | | $ | 32 | | 19 | % |
Stock Option Expense | | $ | (5 | ) | $ | 0 | | $ | (5 | ) | | |
Operating Income | | $ | 192 | | $ | 165 | | $ | 27 | | 16 | % |
Operating Margin | | 11.4 | % | 10.3 | % | | | | |
Organic revenue growth was 7 percent, with continued strong performance in Flow Control and Fire & Building Products — which had a combined organic revenue growth of over 13 percent. Revenue in the Electrical & Metal Products business was essentially flat, with higher volumes offset by lower selling prices. Infrastructure Services improved, with 3 percent growth in the quarter.
Operating income before stock option expense increased by $32 million, with improved profit performance in Flow Control, Infrastructure Services, and Fire & Building Products. Higher income from increased sales was partially offset by approximately $14 million due to tighter steel spreads in Electrical & Metal Products.
OTHER ITEMS
• During the quarter, debt declined by $2.5 billion — including $1.2 billion of convertible debt and $1.3 billion of other debt — reducing total debt to $10 billion.
• The GAAP tax rate was 13.4 percent and was favorably impacted by 11.2 percentage points ($135 million) primarily relating to an adjustment to correct prior-year tax reserves on legacy tax matters.
• The company completed the sale of its Plastics, Adhesives, and Ludlow Coated Products businesses in the quarter. The $58 million loss in discontinued operations in the quarter is almost entirely a result of this transaction.
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OUTLOOK
For the third quarter of 2006, the company expects to achieve EPS from continuing operations, excluding special items, of $0.46 to $0.48 per share, driven by sequential improvement in Healthcare and Fire & Security.
The company expects full-year EPS from continuing operations, excluding special items, of $1.80 to $1.85 per share. The company further expects that 2006 free cash flow, excluding the cash impact of previously-disclosed legal items and separation costs, will exceed net income excluding special items.
EPS from continuing operations, excluding special items, is a non-GAAP financial measure and is described below.
ABOUT TYCO INTERNATIONAL
Tyco International Ltd. is a global, diversified company that provides vital products and services to customers in four business segments: Electronics, Fire & Security, Healthcare, and Engineered Products & Services. With 2005 revenue of $40 billion, Tyco employs approximately 250,000 people worldwide. More information on Tyco can be found at www.tyco.com.
CONFERENCE CALL AND WEBCAST
The company will hold a conference call for investors today beginning at 8:30 a.m. ET. The call can be accessed in two ways:
• At Tyco’s website: http://investors.tyco.com. A replay of the call will be available through May 19, 2006 at the same website.
• By telephone: For both “listen-only” participants and those participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is (888) 276-0009. The telephone dial-in number for participants outside the United States is (612) 332-0819.
An audio replay of the conference call will be available beginning at 12:00 p.m. on May 4, 2006 and ending at 11:59 p.m. on May 11, 2006. The dial-in number for participants in the United States is (800) 475-6701. For participants outside the United States, the replay dial-in number is (320) 365-3844. The replay access code for all callers is 823839.
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NON-GAAP MEASURES
“EPS from continuing operations excluding special items,” “free cash flow” (FCF), “organic revenue growth,” and “operating income before stock option expense” are non-GAAP measures and should not be considered replacements for GAAP results.
The company has forecast its EPS from continuing operations results excluding special items related to divestitures, early retirement of debt, transaction costs related to the separations, and other income or charges that may mask the underlying results and trends and make it difficult to give investors perspective on underlying business results. Because the company cannot predict the amount and timing of such items and the associated charges or gains that will be taken, it is difficult to include the impact of those items in the forecast.
The company has forecast its cash flow results excluding any voluntary pension contributions because it has not yet made a determination about the amount and timing of any future such contributions. In addition, the company’s forecast excludes the impact of special items because the company cannot predict the amount and timing of such items.
The difference between cash flows from operating activities (the most comparable GAAP measure) and FCF (the non-GAAP measure) consists mainly of significant cash outflows that the company believes are useful to identify. FCF permits management and investors to gain insight into the number that management employs to measure cash that is free from any significant existing obligation. It is also a significant component in the company’s incentive compensation plans. The difference reflects the impact from:
• the sale of accounts receivable programs,
• net capital expenditures,
• acquisition of customer accounts (ADT dealer program),
• cash paid for purchase accounting and holdback/earn-out liabilities and,
• voluntary pension contributions.
See the accompanying tables to this press release for a cash flow statement presented in accordance with GAAP and a reconciliation presenting the components of FCF.
The impact from the sale of accounts receivable programs and voluntary pension contributions is added or subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity. Capital expenditures and the ADT dealer program are subtracted because they represent long-term commitments. Cash paid for purchase accounting and holdback/earn-out liabilities is subtracted from Cash Flow from Operating Activities because these cash outflows are not available for general corporate uses.
The limitation associated with using FCF is that it subtracts cash items that are ultimately within management’s and the Board of Directors’ discretion to direct and that therefore may imply that there is less or more cash that is available for the company’s programs than the most comparable GAAP measure. This limitation is best addressed by using FCF in combination with the GAAP cash flow numbers.
FCF as presented herein may not be comparable to similarly titled measures reported by other companies. The measure should be used in conjunction with other GAAP financial measures. Investors are urged to read the company’s financial statements as filed with the Securities and Exchange Commission, as well as the accompanying tables to this press release that show all
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the elements of the GAAP measures of Cash Flows from Operating Activities, Cash Flows from Investing Activities, Cash Flows from Financing Activities and a reconciliation of the company’s total cash and cash equivalents for the period.
“Organic revenue growth” is a useful measure used by the company to measure the underlying results and trends in the business. The difference between reported net revenue growth (the most comparable GAAP measure) and organic revenue growth (the non-GAAP measure) consists of the impact from foreign currency, acquisitions and divestitures, and other changes that do not reflect the underlying results and trends (for example, revenue reclassifications and changes to the fiscal year).
Organic revenue growth is a useful measure of the company’s performance because it excludes items that: i) are not completely under management’s control, such as the impact of foreign currency exchange; or ii) do not reflect the underlying growth of the company, such as acquisition and divestiture activity, or revenue reclassification. It is also a component of the company’s compensation programs. The limitation of this measure is that it excludes items that have an impact on the company’s revenue. This limitation is best addressed by using organic revenue growth in combination with the GAAP numbers. See the accompanying tables to this press release for the reconciliation presenting the components of organic revenue growth.
“Operating income before stock option expense” is a financial measure used by the company to evaluate the underlying results and operating performance of the businesses. The difference between operating income (the most comparable GAAP measure) and operating income before stock option expense (the non-GAAP measure) reflects the impact of adopting SFAS 123R on the current period results. The limitation of this measure is that it excludes an item that impacts the company’s current period operating income. This limitation is best addressed by using this measure in combination with operating income (the most comparable GAAP measure) because operating income before stock option expense does not reflect the impact of adopting SFAS 123R and may be higher than operating income (the most comparable GAAP measure). Management believes operating income before stock option expense is a useful measure that allows investors to draw comparisons between operating results reported prior to adoption of SFAS 123R and the current period, which may mask underlying trends and make it difficult to give investors perspective on underlying business results.
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 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. 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. 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 Sept. 30, 2005 and Quarterly Report on Form 10-Q for the quarterly period ended Dec. 30, 2005.
# # #
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TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(Unaudited)
| | Quarter Ended | | Six Months Ended | |
| | March 31,
2006 | | April 1,
2005 | | March 31,
2006 | | April 1,
2005 | |
Net revenue | | $ | 10,206 | | $ | 9,993 | | $ | 19,912 | | $ | 19,594 | |
Cost of sales | | 6,785 | | 6,502 | | 13,256 | | 12,746 | |
Selling, general and administrative expenses | | 2,021 | | 1,960 | | 4,008 | | 3,925 | |
Restructuring and asset impairment charges, net | | 8 | | 4 | | 20 | | 11 | |
Separation costs | | 25 | | — | | 33 | | — | |
(Gains) losses on divestitures | | (41 | ) | 2 | | (38 | ) | 17 | |
Operating income | | 1,408 | | 1,525 | | 2,633 | | 2,895 | |
Interest income | | 33 | | 31 | | 70 | | 68 | |
Interest expense | | (189 | ) | (208 | ) | (378 | ) | (424 | ) |
Other expense, net | | (2 | ) | (575 | ) | (3 | ) | (736 | ) |
Income from continuing operations before income taxes and minority interest | | 1,250 | | 773 | | 2,322 | | 1,803 | |
Income taxes | | (168 | ) | (373 | ) | (430 | ) | (679 | ) |
Minority interest | | (2 | ) | (1 | ) | (5 | ) | (4 | ) |
Income from continuing operations | | 1,080 | | 399 | | 1,887 | | 1,120 | |
Loss from discontinued operations, net of income taxes | | (58 | ) | (207 | ) | (295 | ) | (219 | ) |
Income before cumulative effect of accounting change | | 1,022 | | 192 | | 1,592 | | 901 | |
Cumulative effect of accounting change, net of income taxes | | — | | — | | — | | 21 | |
Net income | | $ | 1,022 | | $ | 192 | | $ | 1,592 | | $ | 922 | |
| | | | | | | | | |
Basic earnings per common share: | | | | | | | | | |
Income from continuing operations | | $ | 0.54 | | $ | 0.20 | | $ | 0.94 | | $ | 0.56 | |
Loss from discontinued operations | | (0.03 | ) | (0.10 | ) | (0.15 | ) | (0.11 | ) |
Cumulative effect of accounting change | | — | | — | | — | | 0.01 | |
Net income | | $ | 0.51 | | $ | 0.10 | | $ | 0.79 | | $ | 0.46 | |
Diluted earnings per common share: | | | | | | | | | |
Income from continuing operations | | $ | 0.52 | | $ | 0.19 | | $ | 0.91 | | $ | 0.53 | |
Loss from discontinued operations | | (0.03 | ) | (0.09 | ) | (0.14 | ) | (0.10 | ) |
Cumulative effect of accounting change | | — | | — | | — | | 0.01 | |
Net income | | $ | 0.49 | | $ | 0.10 | | $ | 0.77 | | $ | 0.44 | |
| | | | | | | | | |
Weighted-average number of shares outstanding: | | | | | | | | | |
Basic | | 2,019 | | 2,010 | | 2,011 | | 2,009 | |
Diluted | | 2,107 | | 2,182 | | 2,109 | | 2,194 | |
| | | | | | | | | |
Income Reconciliation for Diluted EPS: | | | | | | | | | |
Income from continuing operations | | $ | 1,080 | | $ | 399 | | $ | 1,887 | | $ | 1,120 | |
Add back of interest expense for convertible debt | | 10 | | 21 | | 22 | | 45 | |
Income from continuing operations, giving effect to dilutive adjustments | | 1,090 | | 420 | | 1,909 | | 1,165 | |
Loss from discontinued operations | | (58 | ) | (207 | ) | (295 | ) | (219 | ) |
Cumulative effect of accounting change | | — | | — | | — | | 21 | |
Net income, giving effect to dilutive adjustments | | $ | 1,032 | | $ | 213 | | $ | 1,614 | | $ | 967 | |
NOTE: These financial statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 and Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2005.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions)
(Unaudited)
| | Quarter Ended | | | | Six Months Ended | | | |
| | March 31,
2006 | | | | April 1,
2005 | | | | March 31,
2006 | | | | April 1,
2005 | | | |
NET REVENUE | | | | | | | | | | | | | | | | | |
Electronics | | $ | 3,236 | | | | $ | 3,133 | | | | $ | 6,258 | | | | $ | 6,012 | | | |
Fire and Security | | 2,873 | | | | 2,874 | | | | 5,666 | | | | 5,756 | | | |
Healthcare | | 2,409 | | | | 2,369 | | | | 4,696 | | | | 4,688 | | | |
Engineered Products and Services | | 1,688 | | | | 1,607 | | | | 3,292 | | | | 3,120 | | | |
Corporate | | — | | | | 10 | | | | — | | | | 18 | | | |
Total Net Revenue | | $ | 10,206 | | | | $ | 9,993 | | | | $ | 19,912 | | | | $ | 19,594 | | | |
| | | | | | | | | | | | | | | | | |
OPERATING INCOME AND MARGIN | | | | | | | | | | | | | | | | | |
Electronics | | $ | 461 | | 14.2 | % | $ | 496 | | 15.8 | % | $ | 845 | | 13.5 | % | $ | 910 | | 15.1 | % |
Fire and Security | | 289 | | 10.1 | % | 311 | | 10.8 | % | 517 | | 9.1 | % | 594 | | 10.3 | % |
Healthcare | | 579 | | 24.0 | % | 689 | | 29.1 | % | 1,118 | | 23.8 | % | 1,270 | | 27.1 | % |
Engineered Products and Services | | 192 | | 11.4 | % | 165 | | 10.3 | % | 361 | | 11.0 | % | 337 | | 10.8 | % |
Corporate | | (113 | ) | | | (136 | ) | | | (208 | ) | | | (216 | ) | | |
Operating Income and Margin | | $ | 1,408 | | 13.8 | % | $ | 1,525 | | 15.3 | % | $ | 2,633 | | 13.2 | % | $ | 2,895 | | 14.8 | % |
TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
| | March 31,
2006 | | December 30,
2005 | | September 30,
2005 | |
| | | | | | | |
Current Assets: | | | | | | | |
Cash and cash equivalents | | $ | 2,389 | | $ | 3,071 | | $ | 3,206 | |
Accounts receivable, net | | 6,822 | | 6,601 | | 6,732 | |
Inventories | | 4,640 | | 4,401 | | 4,197 | |
Other current assets | | 3,273 | | 3,164 | | 3,090 | |
Assets held for sale | | 73 | | 1,129 | | 1,290 | |
Total current assets | | 17,197 | | 18,366 | | 18,515 | |
| | | | | | | |
Property, plant and equipment, net | | 9,162 | | 9,125 | | 9,238 | |
Goodwill | | 24,538 | | 24,486 | | 24,557 | |
Intangible assets, net | | 5,018 | | 5,067 | | 5,085 | |
Other assets | | 5,141 | | 5,217 | | 5,226 | |
Total Assets | | $ | 61,056 | | $ | 62,261 | | $ | 62,621 | |
| | | | | | | |
Current Liabilities: | | | | | | | |
Current maturities of long-term debt | | $ | 746 | | $ | 1,956 | | $ | 1,954 | |
Accounts payable | | 3,148 | | 3,006 | | 3,065 | |
Accrued and other current liabilities | | 5,913 | | 6,115 | | 6,552 | |
Liabilities held for sale | | 55 | | 289 | | 219 | |
Total current liabilities | | 9,862 | | 11,366 | | 11,790 | |
| | | | | | | |
Long-term debt | | 9,242 | | 10,529 | | 10,600 | |
Other liabilities | | 7,718 | | 7,799 | | 7,720 | |
Total Liabilities | | 26,822 | | 29,694 | | 30,110 | |
| | | | | | | |
Minority interest | | 48 | | 66 | | 61 | |
| | | | | | | |
Shareholders’ equity | | 34,186 | | 32,501 | | 32,450 | |
| | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 61,056 | | $ | 62,261 | | $ | 62,621 | |
NOTE: These financial statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 and Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2005.
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
| | Quarter Ended | | Six Months Ended | |
| | March 31,
2006 | | April 1,
2005 | | March 31,
2006 | | April 1,
2005 | |
Cash Flows from Operating Activities: | | | | | | | | | |
Net income | | $ | 1,022 | | $ | 192 | | $ | 1,592 | | $ | 922 | |
Loss from discontinued operations | | 58 | | 207 | | 295 | | 219 | �� |
Cumulative effect of accounting change | | — | | — | | — | | (21 | ) |
| | | | | | | | | |
Income from continuing operations | | 1,080 | | 399 | | 1,887 | | 1,120 | |
Adjustments to reconcile net cash provided by operating activities: | | | | | | | | | |
Non-cash restructuring and asset impairment charges, net | | (3 | ) | 2 | | 3 | | (2 | ) |
(Gains) losses and impairments on divestitures | | (49 | ) | (5 | ) | (38 | ) | 13 | |
Depreciation and amortization | | 519 | | 525 | | 1,035 | | 1,054 | |
Non-cash compensation expense | | 77 | | 14 | | 152 | | 34 | |
Deferred income taxes | | 77 | | (22 | ) | 51 | | 72 | |
Provision for losses on accounts receivable and inventory | | 38 | | 60 | | 92 | | 126 | |
Loss on the retirement of debt | | 2 | | 573 | | 2 | | 729 | |
Other non-cash items | | 6 | | (11 | ) | 24 | | 23 | |
Changes in assets and liabilities, net of the effects of acquisitions and divestitures: | | | | | | | | | |
Accounts receivable, net | | (205 | ) | (316 | ) | (119 | ) | (585 | ) |
Inventories | | (244 | ) | 2 | | (517 | ) | (319 | ) |
Accounts payable | | 143 | | 48 | | 114 | | 140 | |
Accrued and other liabilities | | (443 | ) | 274 | | (888 | ) | (31 | ) |
Other | | (39 | ) | 71 | | (164 | ) | 116 | |
Net cash provided by operations | | 959 | | 1,614 | | 1,634 | | 2,490 | |
Net cash provided by (used in) discontinued operating activities | | 8 | | 20 | | 5 | | (60 | ) |
| | | | | | | | | |
Cash Flows from Investing Activities: | | | | | | | | | |
Capital expenditures | | (428 | ) | (340 | ) | (729 | ) | (647 | ) |
Proceeds from disposal of assets | | 8 | | 24 | | 17 | | 52 | |
Acquisition of businesses, net of cash acquired | | (46 | ) | 1 | | (134 | ) | (10 | ) |
Acquisition of customer accounts (ADT dealer program) | | (92 | ) | (68 | ) | (169 | ) | (135 | ) |
Purchase accounting and holdback/earn-out liabilities | | (6 | ) | (6 | ) | (86 | ) | (23 | ) |
Divestiture of businesses, net of cash retained | | 964 | | 16 | | 960 | | 182 | |
(Increase) decrease in investments | | (32 | ) | (70 | ) | 62 | | (116 | ) |
Decrease in restricted cash | | 7 | | — | | 31 | | 3 | |
Other | | 11 | | (15 | ) | 2 | | (4 | ) |
Net cash provided by (used in) investing activities | | 386 | | (458 | ) | (46 | ) | (698 | ) |
Net cash used in discontinued investing activities | | (1 | ) | (9 | ) | (6 | ) | (19 | ) |
| | | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | | |
Net repayments of debt | | (1,223 | ) | (1,503 | ) | (1,227 | ) | (3,078 | ) |
Proceeds from exercise of share options | | 68 | | 75 | | 129 | | 118 | |
Dividends paid | | (202 | ) | (201 | ) | (402 | ) | (225 | ) |
Repurchase of common shares | | (595 | ) | — | | (811 | ) | — | |
Transfers to discontinued operations | | (73 | ) | (4 | ) | (85 | ) | (179 | ) |
Other | | (12 | ) | (2 | ) | (15 | ) | (17 | ) |
Net cash used in financing activities | | (2,037 | ) | (1,635 | ) | (2,411 | ) | (3,381 | ) |
Net cash (used in) provided by discontinued financing activities | | (2 | ) | 2 | | 10 | | 98 | |
| | | | | | | | | |
Effect of currency translation on cash | | 10 | | (32 | ) | 6 | | 48 | |
Net decrease in cash and cash equivalents | | (677 | ) | (498 | ) | (808 | ) | (1,522 | ) |
Less: net increase in cash related to discontinued operations | | (5 | ) | (13 | ) | (9 | ) | (19 | ) |
Cash and cash equivalents at beginning of period | | 3,071 | | 3,457 | | 3,206 | | 4,487 | |
| | | | | | | | | |
Cash and cash equivalents at end of period | | $ | 2,389 | | $ | 2,946 | | $ | 2,389 | | $ | 2,946 | |
| | | | | | | | | |
Reconciliation to “Free Cash Flow”: | | | | | | | | | |
Net cash provided by operating activities | | $ | 959 | | $ | 1,614 | | $ | 1,634 | | $ | 2,490 | |
Decrease in sale of accounts receivable | | 3 | | 6 | | 7 | | 15 | |
Capital expenditures, net | | (420 | ) | (316 | ) | (712 | ) | (595 | ) |
Acquisition of customer accounts (ADT dealer program) | | (92 | ) | (68 | ) | (169 | ) | (135 | ) |
Purchase accounting and holdback/earn-out liabilities | | (6 | ) | (6 | ) | (86 | ) | (23 | ) |
Voluntary pension contributions | | — | | — | | — | | — | |
Free Cash Flow | | $ | 444 | | $ | 1,230 | | $ | 674 | | $ | 1,752 | |
NOTE: Free cash flow is a non-GAAP measure. See description of non-GAAP measures contained in this release.
TYCO INTERNATIONAL LTD.
ORGANIC REVENUE GROWTH RECONCILIATION
(in millions)
(Unaudited)
| | Quarter Ended March 31, 2006 | | Net Revenue for the
Quarter Ended April 1,
2005 | |
Net Revenue | | Foreign Currency | | Acquisition /
Divestiture | | Organic Revenue
Growth |
Electronics | | $ | 3,236 | | 3.3 | % | $ | (108 | ) | -3.4 | % | $ | (3 | ) | -0.2 | % | $ | 214 | | 6.9 | % | $ | 3,133 | |
Fire and Security | | 2,873 | | 0.0 | % | (53 | ) | -1.8 | % | (35 | ) | -1.3 | % | 87 | | 3.1 | % | 2,874 | |
Healthcare | | 2,409 | | 1.7 | % | (59 | ) | -2.5 | % | 15 | | 0.6 | % | 84 | | 3.6 | % | 2,369 | |
Engineered Products and Services | | 1,688 | | 5.0 | % | (34 | ) | -2.1 | % | — | | -0.1 | % | 115 | | 7.2 | % | 1,607 | |
Corporate | | — | | NM | | — | | NM | | (10 | ) | NM | | — | | NM | | 10 | |
Total Net Revenue | | $ | 10,206 | | 2.1 | % | $ | (254 | ) | -2.5 | % | $ | (33 | ) | -0.4 | % | $ | 500 | | 5.0 | % | $ | 9,993 | |
| | | | | |
| | Six Months Ended March 31, 2006 | | Net Revenue for the
Six Months Ended
April 1, 2005 | |
Net Revenue | | Foreign Currency | | Acquisition /
Divestiture | | Organic Revenue
Growth |
Electronics | | $ | 6,258 | | 4.1 | % | $ | (200 | ) | -3.3 | % | $ | (10 | ) | -0.2 | % | $ | 456 | | 7.6 | % | $ | 6,012 | |
Fire and Security | | 5,666 | | -1.6 | % | (113 | ) | -2.0 | % | (94 | ) | -1.7 | % | 117 | | 2.1 | % | | 5,756 | |
Healthcare | | 4,696 | | 0.2 | % | (110 | ) | -2.3 | % | 18 | | 0.4 | % | 100 | | 2.1 | % | | 4,688 | |
Engineered Products and Services | | 3,292 | | 5.5 | % | (58 | ) | -1.9 | % | (2 | ) | 0.0 | % | 232 | | 7.4 | % | | 3,120 | |
Corporate | | — | | NM | | — | | NM | | (18 | ) | NM | | — | | NM | | | 18 | |
Total Net Revenue | | $ | 19,912 | | 1.6 | % | $ | (481 | ) | -2.5 | % | $ | (106 | ) | -0.6 | % | $ | 905 | | 4.7 | % | $ | 19,594 | |
NOTE: Organic revenue growth is a non-GAAP measure. See description of non-GAAP measures contained in this release.
TYCO INTERNATIONAL LTD.
DEBT RECONCILIATION
(in millions)
(Unaudited)
| | Quarter Ended
March 31, 2006 | | Six Months Ended
March 31, 2006 | |
| | | | | |
Total debt at beginning of period | | $ | 12,485 | | $ | 12,554 | |
Debt repayments | | (1,222 | ) | (1,226 | ) |
Debt conversions | | (1,241 | ) | (1,241 | ) |
Currency translation | | 31 | | (15 | ) |
Other | | (65 | ) | (84 | ) |
Total debt at end of period | | $ | 9,988 | | $ | 9,988 | |
