[TYCO INTERNATIONAL LTD. LOGO]
Tyco International Ltd.
The Gibbons Building
10 Queen Street, Suite 301
Hamilton, HM11, Bermuda
Tele: 441-292-8674
FOR IMMEDIATE RELEASE CONTACT:
J. Brad McGee
Senior Vice President
Tyco International (US) Inc.
(603) 778-9700
TYCO INTERNATIONAL REPORTS 48 PERCENT FIRST QUARTER
EARNINGS PER SHARE INCREASE
---------------------------------------------
EARNINGS PER SHARE RISE TO 46 CENTS FROM 31 CENTS
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Hamilton, Bermuda, January 18, 2000 -- Tyco International Ltd.
(NYSE-TYC, LSE-TYI, BSX-TYC), a diversified manufacturing and service company,
reported today that diluted earnings per share, before non-recurring charges
and credits and extraordinary item, for its first quarter of fiscal 2000 ended
December 31, 1999 were 46 cents per share, a 48 percent increase over last
year's 31 cents per share. Net income rose to $784.3 million, an increase of
54 percent over last year's $509.3 million. Sales for the quarter rose 27
percent to $6.64 billion compared with last year's $5.21 billion. Last year's
results have been restated to reflect the merger with AMP, which occurred on
April 2, 1999 and was accounted for as a pooling of interests, and are before
non-recurring charges and extraordinary item. After giving effect to
acquisition related and other non-recurring charges and credits, diluted
earnings per share were 46 cents in 2000 compared to a loss of 7 cents in
1999.
"Organic growth across each of our four business segments and all
geographies drove Tyco's performance in the first quarter," said L. Dennis
Kozlowski, Tyco's Chairman and Chief Executive Officer. "Free cash flow was
improved as well. The strength of our core businesses combined with strong
cash flows are indicative of another strong year for Tyco," he added.
The quarterly operating profits and margins for the Company's four
business segments that are presented in the discussions below are stated
before charges and credits for merger, restructuring and other non-recurring
charges, charges for impairment of long-lived assets, and goodwill
amortization. All dollar amounts are in millions.
TELECOMMUNICATIONS AND ELECTRONICS
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 2,739.2 $ 1,804.0
Operating profits $ 571.7 $ 257.9
Operating margins 20.9% 14.3%
2
The 52% increase in sales resulted from both acquisitions and strong
organic growth. Acquisitions included Temasa and Raychem in Fiscal 1999 and
Siemens Electromechanical Components and Praegitzer in Fiscal 2000. In
addition, Tyco Electronics, which includes AMP, Tyco Submarine Systems Ltd.
(TSSL) and Tyco Printed Circuit Group (TPCG), achieved significant organic
growth quarter over quarter. Demand remains especially strong for TSSL.
Operating profits more than doubled due to improved margins at AMP
and Raychem, increased service and maintenance revenues at TSSL, increased
sales at TPCG, and the acquisitions noted above. Margin improvements at AMP
and Raychem were driven by increased volume, improved pricing and continuing
cost reduction programs.
HEALTHCARE AND SPECIALTY PRODUCTS
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 1,563.8 $ 1,342.8
Operating profits $ 362.1 $ 293.2
Operating margins 23.2% 21.8%
Healthcare and Specialty Products sales increased almost 17% over
the prior year, principally as a result of organic growth in both Tyco
Healthcare and Tyco Plastics. Of particular note was Tyco Healthcare's
especially strong growth outside the U.S. Additionally, Tyco Healthcare
experienced strong organic growth in the U.S. Surgical product lines resulting
from the combined sales efforts and bundling of products with the Kendall and
Sherwood lines. Tyco Plastics sales benefited from both increased volume and
an increase in resin prices as compared to the same quarter last year.
The 24% increase in operating profits at Tyco Healthcare was driven
by volume and cost savings from the consolidation of facilities. Tyco Plastics
and ADT Automotive also had significant increases in operating profit as
compared to the same period a year ago.
FIRE AND SECURITY SERVICES
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 1,449.7 $ 1,259.7
Operating profits $ 244.1 $ 196.9
Operating margins 16.8% 15.6%
Tyco Fire and Security Services achieved a 15% increase in sales as
compared with the same quarter last year, resulting primarily from organic
growth in both the fire and security divisions within the segment. Service
revenues and contract backlog continues to increase in the fire protection
division around the world.
Operating profits rose 24% as the security business continues to
enjoy healthy incremental margins on new monitoring accounts and fire
protection benefitted from its efforts at increasing its service and
maintenance business. Cost reduction programs in both fire and security
contributed as well.
FLOW CONTROL PRODUCTS AND SERVICES
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 886.1 $ 807.0
Operating profits $ 170.7 $ 129.2
Operating margins 19.3% 16.0%
3
Sales figures for the first quarter of fiscal 2000 include the
acquisitions of Glynwed, the heat tracing business of Raychem, Central
Sprinkler and AFC Cable, which were acquired after the first quarter of fiscal
1999. Sales figures for the first quarter of 2000 exclude the revenues of
Mueller and Grinnell Supply Sales, which were divested in August 1999.
Excluding the impact of these items, sales for Flow Control experienced low
double digit growth. Allied, EarthTech and Tyco Valves and Controls continue
to enjoy increased demand.
Operating profits increased 32% as a result of organic growth from
cost reduction programs, efficiency improvements and an increase in the
component of service work, as well as, the acquisitions noted above. These
increases are net of a reduction in operating profits as a result of the sale
of Grinnell Supply Sales and Mueller, which was partially offset by royalty
and licensing fee income from certain intellectual property associated with
these divested businesses.
FREE CASH FLOW
Tyco management refers to the net amount of cash generated from
operating activities less capital expenditures and dividends as "free cash
flow." Free cash flow was in excess of $400 million in the first quarter of
fiscal 2000, compared with negative cash flow of $617 million in the first
quarter of fiscal 1999, resulting in an improvement of over $1 billion.
Included as a reduction of operating cash flows is $58 million in the first
quarter of fiscal 2000 as compared to $207 million in the first quarter of
fiscal 1999 related to cash spending on restructurings. Historically, the
first fiscal quarter is the lowest generator of free cash flow, primarily due
to the payment of year end cash bonuses to employees based on the results of
the fiscal year just ended.
In addition, the Company paid out $113 million in the first quarter
of fiscal 2000, compared to $51 million in first quarter of fiscal 1999, in
cash related to purchase accounting spending. This amount is not included in
the calculation of free cash flow.
SHARE BUYBACK
The Company also announced that the Board of Directors of the
Company has approved the expenditure of up to an additional $2.0 billion to
repurchase shares of the Company. The exact timing and amount of the
repurchases will be subject to market conditions and other factors.
-----------------------------------
Tyco International Ltd., a diversified manufacturing and service
company, is the world's largest manufacturer and servicer of electrical and
electronic components and undersea telecommunications systems, the world's
largest manufacturer, installer, and provider of fire protection systems and
electronic security services, has strong leadership positions in disposable
medical products, plastics, and adhesives, and is the largest
4
manufacturer of flow control valves. The Company operates in more than 80
countries around the world and has expected fiscal 2000 revenues in excess of
$26 billion.
The company will discuss first quarter results on a conference call
for investors today at 11:00 am (EST). The conference call can be accessed at
the following website: investors.tycoint.com/medialist.cfm
FORWARD LOOKING INFORMATION
Certain comments in this release including, but not limited to, the
current year outlook for Tyco and expected fiscal 2000 revenues are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which are based on management's good faith
expectations and belief concerning future developments. Actual results may
materially differ from these expectations as a result of many factors,
relevant examples of which are set forth in the "Management Discussion and
Analysis" section of the Company's 1999 Annual Report on Form 10-K and the
Company's 1999 Annual Report to Shareholders.
011800 522
table following
5
TYCO INTERNATIONAL LTD.
RESULTS OF OPERATIONS (1)(2)
(in millions, except per share data)
Three Months Three Months
Ended Ended
12/31/1999 12/31/1998
SALES
Telecommunications and Electronics $ 2,739.2 $ 1,804.0
Healthcare and Specialty Products 1,563.8 1,342.8
Fire and Security Services 1,449.7 1,259.7
Flow Control Products and Services 886.1 807.0
------------- ----------
Total Sales $ 6,638.8 $ 5,213.5
============= ==========
OPERATING PROFITS
Telecommunications and Electronics $ 571.7 $ 257.9
Healthcare and Specialty Products 362.1 293.2
Fire and Security Services 244.1 196.9
Flow Control Products and Services 170.7 129.2
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Total operating profits 1,348.6 877.2
Corporate (54.3) (19.0)
Expenses
Goodwill amortization (83.9) (44.4)
expense
Interest expense, net (164.7) (101.3)
------------- ----------
Income before income taxes 1,045.7 712.5
Income taxes (261.4) (203.2)
------------- ----------
INCOME BEFORE EXTRAORDINARY ITEM $ 784.3 $ 509.3
============= ===========
EARNINGS PER SHARE:
BASIC $ 0.46 $ 0.31
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DILUTED (3) $ 0.46 $ 0.31
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WEIGHTED AVERAGE COMMON
SHARES:
BASIC 1,693.2 1,622.0
============= ==========
DILUTED 1,716.8 1,655.5
============= ==========
6
(1) Three months ended December 31, 1999 are before credits associated with
the revision of estimates of restructuring costs of $137.6 million ($92.6
million, after tax) and restructuring and impairment charges of $113.4
million ($85.5 million, after tax) associated primarily with the exiting
of the interventional cardiology business. Including these credits and
charges, income before extraordinary item is $0.46 per diluted share.
Three months ended December 31, 1999 are before extraordinary losses of
$0.2 million after tax relating to the early extinguishment of debt.
(2) Three months ended December 31, 1998 are before charges of $786.9 million
($617.0 million, after tax) related to the U.S. Surgical merger and AMP's
profit improvement plan. Including these charges, loss before
extraordinary item is $0.07 per diluted share. Three months ended
December 31, 1998 are before extraordinary losses of $2.4 million after
tax relating to the early extinguishment of debt.
(3) Earnings per share based on diluted shares assumes conversion of LYONs
notes. Accordingly, net interest expense of $0.4 million and $1.2 million
in the three months ended December 31, 1999 and 1998, respectively, must
be added back to income before extraordinary item for computing diluted
earnings per share.