RNS Number:4909G
Tyco International Ld
22 January 2003
FOR IMMEDIATE RELEASE:
TYCO INTERNATIONAL REPORTS FIRST QUARTER INCOME OF 32 CENTS PER SHARE
Pembroke, Bermuda, January 22, 2003 -- Tyco International Ltd. (NYSE-TYC, BSX-TYC, LSE-TYI) reported today that
earnings per share for its first quarter were 32 cents, as compared to 47 cents from continuing operations for the
same period last year. Revenues were $8.9 billion, up 4% from $8.6 billion in the first quarter last year. Income
from continuing operations was $635 million for the quarter as compared with $935 million for the same period last
year. Free cash flow was $482 million in the quarter.
"Results for the first quarter reflect a base of operations on which we can build during fiscal 2003," said Ed
Breen, Tyco's Chairman and Chief Executive Officer. "Given the challenging economic environment in which we are
operating and the issues we worked to resolve during the quarter, these results demonstrate the strength of our
market positions and the appeal of our products and services."
QUARTERLY OPERATING RESULTS
The segment profits and margins below are presented in accordance with generally accepted accounting principles
(GAAP). During the quarter, David Robinson was appointed President of Tyco Plastics and Adhesives, reporting directly
to the CEO. Accordingly, Plastics and Adhesives is presented as a separate reportable segment for all periods. In
fiscal 2002, its results were included in the Healthcare and Specialty Products segment. Restated segment results by
quarter for fiscal 2002 are available at www.tyco.com. All dollar amounts are stated in millions.
Electronics
December 31, 2002 December 31, 2001
Segment revenues $2,528.3 $2,817.3
Segment profit $ 292.6 $ 525.7
Segment margins 11.6% 18.7%
Revenues decreased 10% due to a significant decline within the telecommunications sector, primarily associated with a
decline of $379 million at TyCom, where there were no new third party construction or capacity sales in FY03. These
declines were partially offset by acquisitions made in FY02 and favorable fluctuations in foreign currency rates.
Additionally, year over year declines in the telecommunication end market of our electronic components business were
partially offset by growth in product sales to the automotive industry. Segment profits were negatively impacted by
lower operating profits in the telecommunications sector, including operating losses of $65 million at TyCom,
compared to profit of $67 million in the year ago period, as well as lower manufacturing volumes in the electronic
components business and higher pension expense.
Fire and Security Services
December 31, 2002 December 31, 2001
Segment revenues $2,759.4 $2,480.3
Segment profit $ 270.8 $ 402.1
Segment margins 9.8% 16.2%
Fire and Security Services revenues increased 11% year over year as a result of acquisitions and the benefit of
favorable fluctuations in foreign currency rates. Segment profits were down 33% due to weaker commercial construction
impacting both fire and security in the U.S., lower gross margins in the fire service and contracting businesses, and
higher bad debt expense in security.
Healthcare
December 31, 2002 December 31, 2001
Segment revenues $2,005.4 $1,770.4
Segment profit $ 447.4 $ 469.2
Segment margins 22.3% 26.5%
Healthcare revenues increased 13% due to acquisitions made in FY02, favorable fluctuations in foreign currency
rates and organic growth of about 6%. Surgical and Medical revenues increased as a result of sales under new
contracts, as well as new product introductions. Imaging, Respiratory, and Pharmaceutical all benefited from higher
volumes. These increases were partially offset by declines in the International and Retail base businesses. Segment
profits were down roughly 5% as a result of increased selling costs associated with new contracts and product lines,
higher costs associated with International operations, higher R&D spending and increased pension expense.
Engineered Products and Services
December 31, 2002 December 31, 2001
Segment revenues $ 1,195.7 $1,071.7
Segment profit $ 137.3 $ 143.8
Segment margins 11.5% 13.4%
Revenues increased 12% and profits decreased 5% in Engineered Products and Services. Revenues grew through a
combination of acquisitions, favorable fluctuations in foreign currency rates, and almost 6% organically. Fire and
Building Products and Electrical and Metal Products revenues increased slightly. Flow Control saw revenue increases
due to demand for water and irrigation products, especially in the Pacific region, and higher revenues in Thermal
Controls as major contracts neared completion. This more than offset lower volumes and prices in North American and
European valves and controls markets, customer delays in infrastructure projects and reduced U.S. state and municipal
governmental spending levels. Segment profit and margin declines were primarily the result of selling price pressure
in North American and European non-residential construction markets, partially offset by profit contributions from
acquisitions.
Plastics and Adhesives
December 31, 2002 December 31, 2001
Segment revenues $450.6 $ 439.0
Segment profit $ 44.2 $ 93.6
Segment margins 9.8% 21.3%
The impact of revenue from acquisitions made in FY02 more than offset a 3% decrease in organic sales. Economic
conditions depressed volumes and prices in Custom and Retail, while Corrosion Protection declined as oil and gas
pipeline construction slowed. Segment profits declined in part as a result of reduced volumes, increased raw material
costs and adverse pricing trends.
Other Items
The Company's income tax rate was 28.0% for the quarter, up from 17.1% in the year ago period. Interest expense,
net was $263 million, up 39% from $189 million a year ago. The Company incurred approximately $40 million of expenses
associated with the Phase 2 accounting review and related matters. This was partially offset by the return to the
Company of an unauthorized payment of $20 million to a former director related to the acquisition of CIT.
CASH AND LIQUIDITY
Free cash flow was $482 million for the first quarter. Cash flow from operating activities was $828 million in the
quarter. Free cash flow was favorably impacted by approximately $200 million of employee bonuses which are typically
paid during the first quarter of our fiscal year, but which were not paid until January of 2003.. Operating cash flow
in the first quarter of FY03 included $159 million in cash spending on restructuring items. See the accompanying
table to this press release for the definition and components of free cash flow.
Additionally, the Company used $247 million in cash for acquisitions in the quarter, including $237 million for the
acquisition of dealer accounts. The Company also used $69 million related to purchase accounting liabilities and $43
million related to contingent deferred purchase price arising from prior acquisitions. Free cash flow is calculated
before these uses.
Tyco's debt-to-capitalization ratio was 48.3% at December 31, 2002 compared with 49.4% at September 30, 2002. The net
debt-to-capitalization ratios were 36.9% and 36.8%, respectively, for the same periods.
FISCAL 2003 GUIDANCE
Earnings per share are expected to be near the lower end of the Company's previously announced range of $1.50 to
$1.75, reflecting the incremental dilution associated with its refinancing of debt and higher pension expense. Free
cash flow is expected to remain in a range of $2.5 billion to $3.0 billion for the full fiscal year.
CONFERENCE CALL AND WEBCAST
The company will discuss first quarter results on a conference call for investors today at 8:30 am EST. Interested
parties may access the conference call live today, or by replay through January 28, 2003, at the following website:
investors.tycoint.com/medialist.cfm.
ABOUT TYCO INTERNATIONAL
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 designer, manufacturer, installer and
servicer of undersea telecommunications systems; 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 2002 revenues from continuing operations of approximately $36 billion.
FORWARD-LOOKING INFORMATION
This release contains 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,"
"project," and similar expressions are generally intended to identify forward-looking statements. The forward-looking
statements in this release include statements addressing 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. 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.
see 4 tables attached
012203
CONTACTS: Media: Gary Holmes, 212-424-1314
Investor Relations: Kathy Manning, 603-778-9700
TYCO INTERNATIONAL LTD.
FREE CASH FLOW (1)
(in millions)
(Unaudited)
For the Quarters Ended
12/31/02 12/31/01
Income from continuing operations $ 634.5 $ 934.7
Non-cash restructuring and other unusual (credits) charges (0.2) 5.8
Net loss on sale of common shares of subsidiary - 39.6
Depreciation 361.1 359.6
Amortization of intangible assets 155.4 121.1
Income taxes - deferred and payables 360.4 (104.5)
Charges related to prior years - 222.0
Cash spent on restructuring (159.0) (90.9)
Decrease in the sale of accounts receivable program (80.4) -
Working capital and all other (2) (444.0) (548.3)
Cash flows from operations 827.8 939.1
Capital expenditures, net (314.1) (569.4)
Tyco Global Network spending (86.5) (561.7)
Eliminating impact of sale of accounts receivable program 80.4 -
Dividends paid (25.2) (24.4)
FREE CASH FLOW 482.4 (216.4)
Plus: Tyco Global Network spending 86.5 561.7
FREE CASH FLOW - EXCLUDING SPENDING ON TGN $ 568.9 $ 345.3
(1) Free cash flow is not a substitute for cash flow from operating activities as determined in accordance with
GAAP.
(2) Includes decreases in accounts payables of $473.6 million and $181.6 million, and accrued expenses of $180.8
million
and $458.0 million, in Q1 2003 and Q1 2002, respectively.
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP)
(in millions, except per share data)
(Unaudited)
For the Quarters
Ended December 31,
2002 2001
Net revenues $ 8,939.4 $ 8,578.7
Cost of sales (1) 5,730.2 5,234.4
Selling, general and administrative expenses 2,088.6 1,965.3
Restructuring and other unusual (credits) charges, net (3.5) 19.9
Operating income 1,124.1 1,359.1
Other income (expense) 21.4 (4.3)
Interest expense, net (263.2) (189.2)
Net loss on sale of common shares of a subsidiary - (39.6)
Income from continuing operations before income taxes and 882.3 1,126.0
minority interest
Income taxes (247.1) (192.8)
Minority interest (0.7) 1.5
Income from continuing operations 634.5 934.7
Income from discontinued operations of Tyco Capital, net of tax - 264.7
Net income $ 634.5 $ 1,199.4
Basic earnings per common share:
Income from continuing operations $ 0.32 $ 0.47
Income from discontinued operations of Tyco Capital, net of tax - 0.13
Net income per common share 0.32 0.61
Diluted earnings per common share (2):
Income from continuing operations $ 0.32 $ 0.47
Income from discontinued operations of Tyco Capital, net of tax - 0.13
Net income per common share 0.32 0.60
Weighted-average number of common shares outstanding:
Basic 1,994.6 1,974.6
Diluted 2,000.4 1,999.7
(1) Includes inventory-related unusual credits of $0.2 million in the quarter ended December 31, 2002 and
charges of $5.8 million in the quarter ended December 31, 2001.
(2) Diluted earnings per common share assumes conversion of ADT LYONS. Accordingly, net interest expense of
$0.2 million for the quarter ended December 31, 2002 and $0.3 million for the quarter ended December 31, 2001
must be added back to income from continuing operations for computing diluted earnings per share.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS (GAAP)
(in millions, except per share data)
(Unaudited)
For the Quarters
Ended December 31,
2002 (1) 2001 (2)
NET REVENUES
Electronics $ 2,528.3 $ 2,817.3
Fire and Security Services 2,759.4 2,480.3
Healthcare 2,005.4 1,770.4
Engineered Products and Services 1,195.7 1,071.7
Plastics and Adhesives 450.6 439.0
Total Net Revenues 8,939.4 8,578.7
SEGMENT PROFIT
Electronics 292.6 525.7
Fire and Security Services 270.8 402.1
Healthcare 447.4 469.2
Engineered Products and Services 137.3 143.8
Plastics and Adhesives 44.2 93.6
Total Segment Profit 1,192.3 1,634.4
Corporate expenses (68.2) (275.3)
Operating income 1,124.1 1,359.1
Other income (expense) 21.4 (4.3)
Interest expense, net (263.2) (189.2)
Net loss on sale of common shares of a subsidiary - (39.6)
Income from continuing operations before income taxes and minority 882.3 1,126.0
interest
Income taxes (247.1) (192.8)
Minority interest (0.7) 1.5
INCOME FROM CONTINUING OPERATIONS $ 634.5 $ 934.7
Tyco International Ltd.
Condensed Consolidated Balance Sheet
(in millions)
Preliminary - Subject to Adjustments
(Unaudited)
December 31, September 30,
2002 2002
Current Assets:
Cash and cash equivalents $ 5,732.0 $ 6,186.8
Restricted cash 468.9 196.2
Accounts receivables, net 5,983.8 5,848.6
Inventories 4,880.2 4,716.0
Deferred income taxes 884.2 1,338.1
Other current assets 1,671.2 1,478.9
Total current assets 19,620.3 19,764.6
Tyco Global Network 684.8 581.6
Property, Plant and Equipment, Net 10,072.6 9,969.5
Goodwill, Net 26,191.0 26,093.2
Intangible Assets, Net 6,701.6 6,562.6
Other Assets 3,565.1 3,442.9
Total Assets $ 66,835.4 $ 66,414.4
Current Liabilities:
Loans payable and current maturities of long-term debt $ 11,215.4 $ 7,719.0
Accounts payable 2,798.6 3,170.0
Accrued expenses and other current liabilities 4,946.1 5,270.8
Contracts in process - billings in excess of cost 540.2 522.1
Deferred revenue 697.2 731.3
Income taxes payable 2,293.8 2,218.9
Total current liabilities 22,491.3 19,632.1
Long-Term Debt 13,000.8 16,486.8
Other Long-Term Liabilities 5,409.8 5,462.1
Total Liabilities 40,901.9 41,581.0
Minority Interest 42.1 42.8
Shareholders' Equity 25,891.4 24,790.6
Total Liabilities and Shareholders' Equity $ 66,835.4 $ 66,414.4
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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