RNS Number:6067K
Tyco International Ld
30 April 2003
FOR IMMEDIATE RELEASE:
TYCO INTERNATIONAL REPORTS SECOND QUARTER LOSS OF 23 CENTS PER SHARE
CHARGES TOTALED 55 CENTS PER SHARE IN THE QUARTER
SECOND QUARTER CASH FLOW WELL ABOVE EXPECTATIONS
Pembroke, Bermuda, April 30, 2003 -- Tyco International Ltd. (NYSE-TYC, BSX-TYC,
LSE-TYI) reported today a loss from continuing operations of 23 cents per share
for its second quarter, compared to a loss from continuing operations of $1.03
for the same period last year.
* Second quarter 2003 results included 55 cents per share in after-tax
charges related to primarily non-cash adjustments arising out of the Company's
ongoing program of intensified internal audits and detailed controls and
operating reviews, a change to an accelerated amortization method for its ADT
dealer program account assets, and a change in the accounting for the connect
fee associated with ADT's dealer program.
* Second quarter 2002 results from continuing operations included $1.53
per share in after-tax net charges related primarily to the impairment of the
Tyco Global Network, the write-down of investments, and restructuring charges
associated with the downturn in the electronics and telecommunications sectors.
Earnings per share from continuing operations for the six months ended March 31,
2003 were 8 cents per share, including 55 cents related to the charges noted
above. For the six months ended March 31, 2002 the loss from continuing
operations was 56 cents per share, including $1.65 related to the charges noted
above. See the discussion below and the accompanying tables to this release for
a more detailed description of these items by category and by segment.
Revenues for the second quarter 2003 were $9.0 billion, up 4% from $8.6 billion
in the second quarter of last year, reflecting favorable changes in foreign
currency rates. For the six months ended March 31, 2003 revenues were $17.9
billion, a 4% increase over the same period last year due to favorable changes
in foreign currency rates.
Cash flow from continuing operating activities was $1.4 billion in the quarter
and $2.2 billion for the six months ended March 31, 2003, compared to $1.7
billion and $2.7 billion during the same periods in 2002, respectively.
* The Company changed its definition of "free cash flow" in March 2003.
Under the Company's current definition, second quarter 2003 free cash flow was
$833 million, or 47% above the $568 million in the same period in 2002. For the
six months ended March 31, 2003, free cash flow was $967 million compared to
negative $205 million for the same period in 2002.
* Under the Company's prior definition, free cash flow was $1.1 billion
in the second quarter 2003, compared to $1.0 billion in the same period in 2002.
Free cash flow for the six months ended March 31, 2003 was $1.5 billion compared
to $850 million in the same period in 2002.
("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. 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.)
"Our cash flow this quarter was well ahead of what we projected, demonstrating
the underlying strength of our businesses, as well as improvements in the
collection of receivables and the management of inventory." said Chairman and
CEO Ed Breen. "And even though we're operating in an economically challenging
environment, operationally our businesses delivered revenues and segment results
in line with the ranges discussed at our March 13, 2003 Investor meeting."
ACCOUNTING ITEMS
The charges arising out of the Company's ongoing program of intensified internal
audits and detailed controls and operating reviews were $997.4 million pre-tax.
This includes the $265 million to $325 million range of anticipated charges
announced on March 13th. Approximately 52% of the charges are the result of
applying management's judgment to estimates of reserves, accruals and valuations
of investments. The remaining 48% is attributable to account reconciliation
discrepancies, inappropriate capitalization of expenses and other accounting
adjustments, of which 44% relate to prior periods from 1997 through the first
quarter of fiscal 2003. Approximately 60% of the total charges related to the
Fire and Security segment and 20% to Engineered Products and Services.
The Company also recorded a charge of $364.5 million pre-tax to reflect a change
in the method of amortization used for ADT dealer program account assets. The
Company has adopted an accelerated approach, based on a 200% declining balance,
as opposed to the 10 year straight line method previously in place.
The Company has also adopted the newly issued EITF 02-16, which requires that
the connect fee associated with ADT's dealer program be recognized as a
reduction of the dealer asset account as opposed to a reduction in costs
associated with the program. The impact associated with this change in
accounting is recorded as a cumulative charge of $206.7 million after-tax as of
October 1, 2002, $12 million pre-tax for the first quarter of fiscal 2003 and $7
million pre-tax in the second quarter of fiscal 2003.
The Company's continuing reexamination of the dealer program assets and connect
fee was part of management's evaluation of this business as well as the ongoing
process of responding to the SEC's Division of Corporation Finance inquiries
regarding the dealer program. The Company has not completed its discussions
with the SEC on these matters or the other accounting items announced today.
The Company, with the concurrence of its external auditors, believes that all of
the charges announced today, coupled with those set forth in the Company's
Annual Report on Form 10-K for fiscal 2002, are not material individually or in
the aggregate to any prior year, and therefore, do not require a restatement of
previously disclosed operating results. The Company cannot predict the outcome
of its discussions with the SEC or that such outcome will not necessitate
further amendments or restatements of the Company's results of operations. The
Company hopes to resolve all issues raised by the ongoing SEC Division of
Corporation Finance review during its fiscal third quarter.
"I am disappointed that our intensified internal audit and review efforts have
identified additional charges, but I believe at this point we have identified
all, or nearly all, legacy accounting issues," Mr. Breen said. "We have
completed balance sheet reviews for all of our 2,154 accounting entities, and
completed on-site verification of these reviews covering the vast majority of
our assets. Additionally, the issues we have identified are almost entirely
non-cash."
QUARTERLY OPERATING RESULTS
The segment profits and margins presented in the tables below are in accordance
with generally accepted accounting principles (GAAP). These profits and margins
include the charges discussed above. See the tables accompanying this release
for a classification of the charges by segment. Tyco 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
March 31, 2003 March 31, 2002
Segment revenues $2,502.0 $2,493.9
Segment profit (loss) $348.6 ($2,588.4)
Segment margins 13.9% NM
Revenues were flat year over year as the positive impact of changes in foreign
currency and acquisitions was offset by lower revenues at Tyco
Telecommunications. Revenues in the electronic components sector increased $160
million, or 7%, from foreign currency and $21 million, or 1%, from acquisitions,
offset by a 2% decline due to weakened customer demand as decreases in
telecommunications and industrial markets only partially offset by growth in
product sales into the automotive industry. Telecommunications revenues
declined $134 million, or 82%, to $29 million as no third party systems were
built in 2003.
Segment profit includes a net credit of $17.3 million in 2003 and charges of
$2.957 billion in 2002. Favorable foreign currency fluctuations contributed $27
million in 2003. These improvements were partially offset by a decline in base
profits and margins due primarily to reduced sales and mix changes in the
electronic components sector.
Fire and Security Services
March 31, 2003 March 31, 2002
Segment revenues $2,778.9 $2,569.5
Segment (loss) profit ($702.6) $ 337.6
Segment margins NM 13.1%
Revenues increased 8% due primarily to a $150 million, or 6%, positive impact of
changes in foreign currency. Security revenues increased approximately $62
million, or 5%, as a result of foreign exchange. Fire revenues increased
approximately $143 million, or 12%, including 7% from foreign exchange and 1%
from acquisitions.
The segment loss in 2003 includes $936.8 million in charges, compared to $28.1
million in 2002. Excluding these charges, operating income declined by $131.5
million year over year. In our security business, increased depreciation and
amortization accounted for $48 million of the operating profit decline,
reflecting the impact of rapid growth in the subscriber asset and dealer asset
base in recent years, as well as the impact of acquisitions. In the European
security business, the year over year decline in operating income was $ 42
million, primarily reflecting allowance for doubtful accounts and other expenses
related to higher than expected attrition rates. The remainder of the decline
in operating income for the segment was attributable to a weaker worldwide fire
and contracting environment.
Fire and Security has recently announced restructuring programs at its ADT U.S.
and SimplexGrinnell operations, involving reductions of 1,400 and 1,000
employees, respectively. These restructuring programs will result in more
streamlined and effective operations going forward.
Healthcare
March 31, 2003 March 31, 2002
Segment revenues $2,137.3 $1,968.3
Segment profit $520.7 $ 448.7
Segment margins 24.4% 22.8%
Revenues increased 9%, including an $87 million, or 4%, increase from favorable
changes in foreign currency partially offset by a $9 million decline from the
net impact of acquisitions and divestitures. The increase in net revenues was
largely attributed to increases in the Surgical sector resulting from the award
of the Consorta contract and the introduction of the new TA Stapler product
line; increases in the International division in Europe, Japan and Asia Pacific
partially offset by a decline in Latin America; increases in the Pharmaceutical
division due to higher volumes in Dosage Narcotics, APAP and microelectronic
chemicals; increases in the Medical sector resulting from the April 2002 award
of the Premier Wound Care Contract, successful launches of new safety needle and
prefill syringe products, and increased demand in the Ultrasound market;
increases in the Imaging division resulting from higher sales across the full
product line; and increases in the Respiratory Division resulting mainly from
increased volumes in Helios. These sales increases were partially offset by a
decrease in Retail's base business.
Segment profit includes $7.7 million in net charges in 2003 and $7.8 million in
charges in 2002. Profits in 2003 were favorably impacted by $24.5 million from
foreign currency exchange fluctuations. The remaining increase in profits and
margins was largely attributed to the favorable sales performance noted above,
favorable absorption as a result of increased production volumes, and continued
focus on optimizing operating expenses.
Engineered Products and Services
March 31, 2003 March 31, 2002
Segment revenues $1,073.6 $1,101.2
Segment (loss) profit ($73.0) $ 152.7
Segment margins NM 13.9%
Revenues declined 3% compared to the second quarter of 2002,
comprised of a 9% decline primarily due to weaker non-residential construction
markets and lower levels of capital and project spending by customers partially
offset by a 6% benefit from favorable movements in foreign currency. Declines
were most notable in Flow Control due to weaker valve and thermal control
markets; Electrical and Metal Products, as lower levels of activity in
non-residential construction markets was only partially offset by higher selling
prices; and Earth Tech, primarily as a result of declines in government
spending for environmental and other projects and declines in construction
projects.
Segment results include charges of $178.3 million in 2003 and $12.5 million in
2002. The decrease in profits and margins was due primarily to lower volume and
competitive conditions in our major markets for valves and controls, thermal
controls and electrical and metal products, as well as higher raw material
costs.
Plastics and Adhesives
March 31, 2003 March 31, 2002
Segment revenues $488.5 $ 478.5
Segment profit $20.4 $ 47.9
Segment margins 4.2% 10.0%
Revenues increased $10 million including a $9 million benefit from
foreign currency. Higher selling prices in Plastics as a result of price
increases related to the rising cost of raw materials, as well as increases in
both Plastics and Adhesives resulting from higher volume of plastic sheeting and
duct tape products, were offset by general economic weakness in the retail, food
service, automotive, industrial and HVAC markets.
Segment profit and margins declined year over year due to $26.7 million in
charges recorded in 2003. Additionally, the impact of rising raw material costs
and a less favorable sales mix were offset by lower selling, general and
administrative expenses.
Other Items
Net interest expense was $278 million, up 23% from $226 million in
the same period a year ago, primarily due to increased borrowing costs.
Corporate expenses for the second quarter of 2003 include approximately $61
million of charges arising out of the Company's ongoing program of intensified
internal audits and detailed controls and operating reviews. Additionally,
Corporate expenses include incremental costs of $92 million to maintain and
extend liability coverage under the Company's Directors and Officers (D&O) and
Fiduciary insurance policies for the years 2001 to 2002.
LIQUIDITY
The Company had cash on hand of approximately $4.0 billion at March
31, 2003 compared to approximately $5.7 billion at December 31, 2002 and
approximately $6.2 billion at September 30, 2002.
During the second quarter, the Company issued convertible bonds with net
proceeds of $4.4 billion, redeemed $3.9 billion in bank credit facilities and
purchased $1.8 billion of its zero coupon convertible bonds due to the exercise
of a put option by the holders of the security. The Company also repurchased
$1.4 billion par value of its outstanding zero coupon bonds that have a put
exercisable at the option of the holders in November 2003, at a purchase price
of approximately $1.1 billion. Approximately $2.5 billion of this security
remains outstanding. Other debt repurchases amounted to approximately $38
million. In January, the Company entered into a $1.5 billion 364-day unsecured
revolving credit facility, none of which has been drawn down.
Tyco's debt-to-capitalization ratio was 46.2% at March 31, 2003, compared with
48.3% at December 31, 2002 and 49.4% at September 30, 2002. The net
debt-to-capitalization ratios were 37.8%, 36.9% and 36.8%, respectively, for the
same periods.
The Company has put in place a guarantee from Tyco International Group S.A.
(Luxembourg) (TIGSA) to bond holders of the Tyco International Ltd. (Bermuda)
zero coupon bonds due 2020 with a put option in November 2003. The Company has
also put in place inter-company guarantees, primarily from its U.S. operating
subsidiaries representing about two-thirds of consolidated tangible assets, in
favor of TIGSA which should address the structural subordination concerns of
Standard & Poor's Ratings Services (S&P). The inter-company guarantees become
effective only if S&P's senior unsecured credit rating for TIGSA falls below
BBB-.
OUTLOOK
Mr. Breen concluded: "Even in an uncertain global economy, our business units
exceeded our expectations on cash flow generation and met our revenue
expectations. These businesses traditionally have their strongest performance
in the third and fourth quarters of the fiscal year. We believe that this will
again be the case this year. The Fire and Security changes in amortization will
result in a few cents higher expense for the second half of the year. Even with
this we will strive continue to strive to achieve the low end of the range we
set out for the second half of the year on March 13th. Additionally, we expect
that our free cash flow will be at the top end of the range discussed on March
13th."
CONFERENCE CALL AND WEBCAST
The company will discuss second quarter results on a conference call for
investors today at 5:00 pm EDT. Interested parties may access the conference
call live today, or by replay through May 8, 2003, at the following website:
investors.tyco.com/medialist.cfm.
The telephone dial-in number to participate in the question and answer session
of the call for participants in the United States is: (800) 553-0326. The
telephone dial-in number for participants in International locations is: (612)
332-7515.
The telephone dial-in number to participate in a "listen-only" mode for
participants in the United States is: (800) 260-0712. The telephone dial-in
number for participants in International locations is: (612) 326-1008. The
participants' code for all callers is: 681919. Investors who do not intend to
ask questions should dial this number directly.
The telephone replay is scheduled to be available at 12:00 am on May 1, 2003
until 11:59 PM on May 8, 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: 681923.
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 $36 billion.
FORWARD-LOOKING INFORMATION
This release contains certain "forward-looking statements" within the meaning of
the United States Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are subject to
risks, uncertainty and changes in circumstances, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. All statements contained herein that are not
clearly historical in nature are forward looking and the words "anticipate," "
believe," "expect," "estimate," "project," and similar expressions are generally
intended to identify forward-looking statements. The forward-looking statements
in this release include statements addressing future financial condition and
operating results.
Economic, business, competitive and/or regulatory factors affecting Tyco's
businesses are examples of factors, among others, that could cause actual
results to differ materially from those described in the forward-looking
statements.
More detailed information about these and other factors is set forth in Tyco's
Annual Report on Form 10-K for the fiscal year ended September 30, 2002 and its
Quarterly Report on Form 10-Q for the quarter ended December 31, 2002. Tyco is
under no obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements whether as a result of new information,
future events or otherwise.
See 8 tables attached
050103
CONTACTS: Media: Gary Holmes, 212-424-1314
Investor Relations: Kathy Manning, 603-334-3900
TYCO INTERNATIONAL LTD.
NOTABLE ITEMS
($ in millions)
Engineered
Fire & Electronics Healthcare Products Plastics Corporate Total
Security
SIX MONTHS ENDED
3/31/03
By Category:
Asset reserves $ 82.4 $ - $ 8.2 $ 27.2 $ 1.3 $ 3.1 $ 122.2
Reconciliation 24.9 12.7 3.5 112.6 22.6 (6.1) 170.2
items
Capitalized costs 178.0 - - 2.6 - 10.6 191.2
Other accounting 115.3 - - 2.0 - - 117.3
adjustments
True-up of 164.7 (39.9) (4.0) 33.9 2.8 23.9 181.4
liabilities
D&O insurance and - 9.9 - - - 120.7 130.6
other unusual
expense
Dealer connect fee 18.5 - - - - - 18.5
ADT amortization 364.5 - - - - - 364.5
Total Operating 948.3 (17.3) 7.7 178.3 26.7 152.2 1,295.9
Investment - - - - - 84.1 84.1
write-downs
Reconciliation - - - - - 0.4 0.4
item
Total $ 948.3 $ (17.3) $ 7.7 $ 178.3 $ 26.7 $ 236.7 $1,380.4
SIX MONTHS ENDED
3/31/02
By Category:
Adjustments for $ - $ - $ - $ - $ - $ 211.3 $ 211.3
prior year errors
Restructuring and 22.1 374.0 7.8 18.9 0.9 - 423.7
other unusual
Inventory charges 13.8 237.5 - 5.8 - 10.7 267.8
Impairment of - 2,346.0 - 5.7 - - 2,351.7
long-lived assets
Total Operating $ 35.9 $ 2,957.5 $ 7.8 $ 30.4 $ 0.9 $ 222.0 $3,254.5
Notable items are presented to aid in the analysis of comparing results from period to period. However, these
analyses should be
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(Unaudited)
For the Six Months Ended 3/31/03 For the Six Months Ended 3/31/02
Notable Notable
GAAP Items GAAP Items
Net revenues $ 17,919.7 $ - $ 17,190.1 $ -
Cost of sales 11,617.4 (16.1) 10,864.4 (267.8)
Selling, general 5,334.2 (1,316.1) 3,852.4 (211.3)
and administrative
expenses
Restructuring and (63.1) 59.6 423.7 (423.7)
other unusual
(credits) charges,
net
Charges for the 23.3 (23.3) 2,351.7 (2,351.7)
impairment of
long-lived assets
Operating income 1,007.9 (1,295.9) (302.1) (3,254.5)
(loss)
Other expense, net (40.0) (84.1) (187.3) (187.3)
Interest expense, (541.2) (0.4) (414.8) -
net
Income (loss) from
continuing
operations before
income taxes,
minority interest
and
cumulative effect 426.7 (1,380.4) (904.2) (3,441.8)
of accounting
change
Income taxes (267.4) 236.0 (216.0) 172.2
Minority interest (1.7) - (0.1) -
Income (loss) from 157.6 (1,144.4) (1,120.3) (3,269.6)
continuing
operations
Loss from - - (4,058.3) (4,512.7)
discontinued
operations of Tyco
Capital, net of tax
Income (loss) 157.6 (1,144.4) (5,178.6) (7,782.3)
before cumulative
effect of
accounting change,
net of tax
Cumulative effect (206.7) (206.7) - -
of accounting
change
Net loss $ (49.1) $ (1,351.1) $ (5,178.6) $ (7,782.3)
Basic earnings
(loss) per common
share:
Income (loss) from $ 0.08 $ (0.56)
continuing
operations
Loss from - (2.05)
discontinued
operations of Tyco
Capital, net of tax
Income (loss) 0.08 (2.61)
before cumulative
effect of
accounting change,
net of tax
Cumulative effect (0.10) -
of accounting
change
Net loss per common (0.02) (2.61)
share
Diluted earnings
(loss) per common
share:
Income (loss) from $ 0.08 $ (0.56)
continuing
operations
Loss from - (2.05)
discontinued
operations of Tyco
Capital, net of tax
Income (loss) 0.08 (2.61)
before cumulative
effect of
accounting change,
net of tax
Cumulative effect (0.10) -
of accounting
change
Net loss per common (0.02) (2.61)
share
Weighted-average
number of common
shares outstanding:
Basic 1,994.6 1,983.1
Diluted 1,998.9 1,983.1
Notable items are presented to aid in the analysis of comparing results from period to
period. However, these analyses should be used only in conjunction with the data presented in accordance with GAAP.
See "Notable Items" table for a description of these items.
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except
per share data)
(Unaudited)
For the Quarter Ended 3/31/03 For the Quarter Ended 3/31/02
Notable Notable
GAAP Items GAAP Items
Net revenues $ 8,980.3 $ - $ 8,611.4 $ -
Cost of sales 5,887.2 (16.1) 5,630.0 (251.3)
Selling, general and 3,234.1 (1,304.6) 1,887.1 -
administrative
expenses
Restructuring and (59.6) 59.6 403.8 (403.8)
other unusual
(credits) charges,
net
Charges for the 23.3 (23.3) 2,351.7 (2,351.7)
impairment of
long-lived assets
Operating loss (104.7) (1,284.4) (1,661.2) (3,006.8)
Other expense, net (61.4) (84.1) (143.4) (143.4)
Interest expense, net (278.0) (0.4) (225.6) -
Loss from continuing (444.1) (1,368.9) (2,030.2) (3,150.2)
operations before
income taxes and
minority interest
Income taxes (22.8) 233.5 (23.2) 100.8
Minority interest (1.0) - (1.6) -
Loss from continuing (467.9) (1,135.4) (2,055.0) (3,049.4)
operations
Loss from - - (4,323.0) (4,512.7)
discontinued
operations of Tyco
Capital, net of tax
Net loss $ (467.9) $ (1,135.4) $ (6,378.0) $ (7,562.1)
Basic loss per common
share:
Loss from continuing $ (0.23) $ (1.03)
operations
Loss from - (2.17)
discontinued
operations of Tyco
Capital, net of tax
Net loss per common (0.23) (3.20)
share
Diluted loss per
common share:
Loss from continuing $ (0.23) $ (1.03)
operations
Loss from - (2.17)
discontinued
operations of Tyco
Capital, net of tax
Net loss per common (0.23) (3.20)
share
Weighted-average
number of common
shares outstanding:
Basic 1,994.5 1,991.5
Diluted 1,994.5 1,991.5
Notable items are presented to aid in the analysis of comparing results from period to
period. However, these analyses should be used only in conjunction with the data
presented in accordance with GAAP. See "Notable Items" table for a description of these items.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions, except
per share data)
(Unaudited)
For the Quarter Ended March 3/31/03 For the Quarter Ended 3/31/02
Notable Notable
GAAP Items GAAP Items
NET REVENUES
Fire and Security $ 2,778.9 $ - $ 2,569.5 $ -
Services
Electronics 2,502.0 - 2,493.9 -
Healthcare 2,137.3 - 1,968.3 -
Engineered Products 1,073.6 - 1,101.2 -
and Services
Plastics and 488.5 - 478.5 -
Adhesives
Total Net Revenues 8,980.3 - 8,611.4 -
SEGMENT PROFIT (LOSS)
Fire and Security (702.6) (936.8) 337.6 (28.1)
Services
Electronics 348.6 17.3 (2,588.4) (2,957.5)
Healthcare 520.7 (7.7) 448.7 (7.8)
Engineered Products (73.0) (178.3) 152.7 (12.5)
and Services
Plastics and 20.4 (26.7) 47.9 (0.9)
Adhesives
Total Segment Profit 114.1 (1,132.2) (1,601.5) (3,006.8)
(Loss)
Corporate Expenses (218.8) (152.2) (59.7) -
Operating (Loss) (104.7) (1,284.4) (1,661.2) (3,006.8)
Income
Interest Expense, Net (278.0) (0.4) (225.6) -
Other Income (Loss) 14.2 (8.5) (2.4) (2.4)
Loss on Investments (75.6) (75.6) (141.0) (141.0)
(Loss) Income from (444.1) (1,368.9) (2,030.2) (3,150.2)
Continuing Operations
Before Taxes and
Minority Interest
Income Taxes (22.8) 233.5 (23.2) 100.8
Minority Interest (1.0) - (1.6) -
(LOSS) INCOME FROM $ (467.9) $ (1,135.4) $ (2,055.0) $ (3,049.4)
CONTINUING OPERATIONS
BASIC COMMON SHARES 1,994.5 1,991.5
OUTSTANDING
EPS from Continuing ($0.23) ($1.03)
Operations
DILUTED COMMON SHARES 1,994.5 1,991.5
OUTSTANDING
EPS from Continuing ($0.23) ($1.03)
Operations
Notable items are presented to aid in the analysis of comparing results from period to period. However, these
analyses should be used only in conjunction with the data presented in accordance with GAAP. See "Notable Items" table
for a description of these items.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions, except per share data)
(Unaudited)
For the Six Months Ended 3/31/03 For the Six Months Ended 3/31/02
Notable Notable
GAAP Items GAAP Items
NET REVENUES
Fire and Security $ 5,538.3 $ - $ 5,049.8 $ -
Services
Electronics 5,030.3 - 5,311.2 -
Healthcare 4,142.7 - 3,738.7 -
Engineered 2,269.3 - 2,172.9 -
Products and
Services
Plastics and 939.1 - 917.5 -
Adhesives
Total Net 17,919.7 - 17,190.1 -
Revenues
SEGMENT PROFIT
(LOSS)
Fire and Security (443.3) (948.3) 739.7 (35.9)
Services
Electronics 641.2 17.3 (2,062.7) (2,957.5)
Healthcare 968.1 (7.7) 917.9 (7.8)
Engineered 64.3 (178.3) 296.5 (30.4)
Products and
Services
Plastics and 64.6 (26.7) 141.5 (0.9)
Adhesives
Total Segment 1,294.9 (1,143.7) 32.9 (3,032.5)
Profit
Corporate (287.0) (152.2) (335.0) (222.0)
Expenses
Operating Income 1,007.9 (1,295.9) (302.1) (3,254.5)
(Loss)
Interest Expense, (541.2) (0.4) (414.8) -
Net
Other Income 35.6 (8.5) (6.7) (6.7)
(Loss)
Loss on (75.6) (75.6) (141.0) (141.0)
Investments
Net Gain on Sale - - (39.6) (39.6)
of Shares of a
Subsidiary
Income (Loss) 426.7 (1,380.4) (904.2) (3,441.8)
Before Taxes and
Minority Interest
Income Taxes (267.4) 236.0 (216.0) 172.2
Minority Interest (1.7) - (0.1) -
INCOME (LOSS) $ 157.6 $ (1,144.4) $ (1,120.3) $ (3,269.6)
FROM CONTINUING
OPERATIONS
BASIC COMMON 1,994.6 1,983.1
SHARES
OUTSTANDING
EPS from $0.08 ($0.56)
Continuing
Operations
DILUTED COMMON 1,998.9 1,983.1
SHARES
OUTSTANDING
EPS from $0.08 ($0.56)
Continuing
Operations
Notable items are presented to aid in the analysis of comparing results from period to period or forecasting future
periods. However, these analyses should be used only in conjunction with the data presented in accordance with GAAP.
See "Notable Items" table for a description of these items.
TYCO INTERNATIONAL LTD.
NOTABLE ITEMS
($ in millions)
Engineered
Fire & Electronics Healthcare Products Plastics Corporate Total
Security
QUARTER ENDED
3/31/03
By Category:
Asset reserves $ 82.4 $ - $ 8.2 $ 27.2 $ 1.3 $ 3.1 $ 122.2
Reconciliation 24.9 12.7 3.5 112.6 22.6 (6.1) 170.2
items
Capitalized costs 178.0 - - 2.6 - 10.6 191.2
Other accounting 115.3 - - 2.0 - - 117.3
adjustments
True-up of 164.7 (39.9) (4.0) 33.9 2.8 23.9 181.4
liabilities
D&O insurance and - 9.9 - - - 120.7 130.6
other unusual
expense
Dealer connect fee 7.0 - - - - - 7.0
ADT amortization 364.5 - - - - - 364.5
Total Operating 936.8 (17.3) 7.7 178.3 26.7 152.2 1,284.4
Investment - - - - - 84.1 84.1
write-downs
Reconciliation - - - - - 0.4 0.4
item
Total $ 936.8 $ (17.3) $ 7.7 $ 178.3 $ 26.7 $ 236.7 $1,368.9
QUARTER ENDED
3/31/02
By Category:
Restructuring and $ 14.3 $ 374.0 $ 7.8 $ 6.8 $ 0.9 $ - $ 403.8
other unusual
Inventory charges 13.8 237.5 - - - - 251.3
Impairment of - 2,346.0 - 5.7 - - 2,351.7
long-lived assets
Total Operating $ 28.1 $ 2,957.5 $ 7.8 $ 12.5 $ 0.9 $ - $3,006.8
Notable items are presented to aid in the analysis of comparing results from period to period. However, these
analyses should be used only in conjunction with the data presented in accordance with GAAP.
TYCO INTERNATIONAL LTD.
NOTABLE ITEMS
($ in millions)
Engineered
Fire & Electronics Healthcare Products Plastics Corporate Total
Security
SIX MONTHS ENDED
3/31/03
By Category:
Asset reserves $ 82.4 $ - $ 8.2 $ 27.2 $ 1.3 $ 3.1 $ 122.2
Reconciliation 24.9 12.7 3.5 112.6 22.6 (6.1) 170.2
items
Capitalized costs 178.0 - - 2.6 - 10.6 191.2
Other accounting 115.3 - - 2.0 - - 117.3
adjustments
True-up of 164.7 (39.9) (4.0) 33.9 2.8 23.9 181.4
liabilities
D&O insurance and - 9.9 - - - 120.7 130.6
other unusual
expense
Dealer connect fee 18.5 - - - - - 18.5
ADT amortization 364.5 - - - - - 364.5
Total Operating 948.3 (17.3) 7.7 178.3 26.7 152.2 1,295.9
Investment - - - - - 84.1 84.1
write-downs
Reconciliation - - - - - 0.4 0.4
item
Total $ 948.3 $ (17.3) $ 7.7 $ 178.3 $ 26.7 $ 236.7 $1,380.4
SIX MONTHS ENDED
3/31/02
By Category:
Adjustments for $ - $ - $ - $ - $ - $ 211.3 $ 211.3
prior year errors
Restructuring and 22.1 374.0 7.8 18.9 0.9 - 423.7
other unusual
Inventory charges 13.8 237.5 - 5.8 - 10.7 267.8
Impairment of - 2,346.0 - 5.7 - - 2,351.7
long-lived assets
Total Operating $ 35.9 $ 2,957.5 $ 7.8 $ 30.4 $ 0.9 $ 222.0 $3,254.5
Notable items are presented to aid in the analysis of comparing results from period to period. However, these
analyses should be used only in conjunction with the data presented in accordance with GAAP.
Tyco International Ltd.
Condensed Consolidated Balance Sheet
(in millions)
Preliminary - Subject to Adjustments
(Unaudited) (Unaudited)
March 31, December 31, September 30,
2003 2002 2002
Current Assets:
Cash and cash equivalents $ 3,965.2 $ 5,732.0 $ 6,186.8
Restricted cash 460.3 468.9 196.2
Accounts receivables, net 5,828.2 5,983.8 5,848.6
Inventories 4,660.7 4,880.2 4,716.0
Deferred income taxes 1,253.6 1,112.8 1,338.1
Other current assets 1,797.8 1,655.8 1,464.1
Total current assets 17,965.8 19,833.5 19,749.8
Tyco Global Network, Net 644.5 684.8 581.6
Property, Plant and Equipment, Net 9,835.7 10,072.6 9,969.5
Goodwill 26,031.2 26,191.0 26,093.2
Intangible Assets, Net 5,844.5 6,701.6 6,562.6
Other Assets 3,132.7 3,351.9 3,457.7
Total Assets $ 63,454.4 $ 66,835.4 $ 66,414.4
Current Liabilities:
Loans payable and current maturities of long-term $ 4,386.8 $ 11,215.4 $ 7,719.0
debt
Accounts payable 2,824.2 2,798.6 3,170.0
Accrued expenses and other current liabilities 4,654.7 4,946.1 5,270.8
Contracts in process - billings in excess of cost 477.7 540.2 522.1
Deferred revenue 723.3 697.2 731.3
Income taxes payable 2,308.2 2,293.8 2,218.9
Total current liabilities 15,374.9 22,491.3 19,632.1
Long-Term Debt 17,442.7 13,000.8 16,486.8
Other Long-Term Liabilities 5,220.8 5,409.8 5,462.1
Total Liabilities 38,038.4 40,901.9 41,581.0
Minority Interest 30.1 42.1 42.8
Shareholders' Equity 25,385.9 25,891.4 24,790.6
Total Liabilities and Shareholders' Equity $ 63,454.4 $ 66,835.4 $ 66,414.4
TYCO INTERNATIONAL LTD.
Condensed Consolidated Statements of Cash Flows
(in millions)
Preliminary - Subject to Adjustments
(Unaudited)
For the Quarters Ended For the Six Months Ended
3/31/03 03/31/02 3/31/03 03/31/02
Cash flows from operating
activities:
(Loss) income from $ (467.9) $ (2,055.0) $ 157.6 $ (1,120.3)
continuing operations
Adjustments to reconcile
net (loss) income from
continuing operations
to net cash provided by
operating activities:
Non-cash restructuring and (33.7) 316.2 (33.7) 322.0
other unusual (credits)
charges, net
Charges for the impairment 23.3 2,351.7 23.3 2,351.7
of long-lived assets
Sale of common shares of - - - 39.6
subsidiary
Loss on investments 75.6 141.0 75.6 141.0
Depreciation 367.0 371.9 728.1 731.5
Amortization of intangible 520.3 134.8 659.1 255.9
assets
Income taxes - deferred (66.0) (12.3) 291.9 (116.8)
and payables
Charges related to prior - - - 222.0
years
Cash spent on (131.1) (91.1) (290.1) (182.0)
restructuring
Decrease in the sale of (12.6) (28.0) (93.0) (28.0)
accounts receivable
programs
Changes in working capital 1,095.5 583.3 637.4 60.8
and other
Net cash provided by 1,370.4 1,712.5 2,156.2 2,677.4
operating activities,
continuing operations
Net cash provided by - 690.3 - 924.6
operating activities,
discontinued operations
Net cash provided by 1,370.4 2,402.8 2,156.2 3,602.0
operating activities
Cash flows from investing
activities:
Capital expenditures, net (280.9) (418.9) (595.0) (988.3)
Tyco Global Network (2.5) (255.7) (89.0) (817.4)
spending
Acquisition of businesses, (32.4) (975.4) (35.3) (1,664.5)
net of cash acquired
Acquisition of dealer (163.7) (315.0) (358.3) (678.2)
accounts
Cash paid for purchase (77.7) (157.7) (189.5) (376.4)
accounting and
holdback/earn-out
liabilities
All other (97.2) 68.7 (448.6) (190.6)
Net cash used in investing (654.4) (2,054.0) (1,715.7) (4,715.4)
activities, continuing
operations
Net cash provided by - 727.1 - 2,251.2
investing activities,
discontinued operations
Net cash used in investing (654.4) (1,326.9) (1,715.7) (2,464.2)
activities
Cash flows from financing
activities:
Net (repayments of) (2,506.6) 2,453.4 (2,660.5) 5,181.7
proceeds from debt
Dividends paid (25.2) (25.3) (50.4) (49.7)
Proceeds from options 0.7 46.6 2.6 181.3
exercises
Repurchase of shares (0.4) (166.8) (0.4) (765.8)
All other (2.9) 15.1 (5.0) (185.0)
Net cash (used in) (2,534.4) 2,323.0 (2,713.7) 4,362.5
provided by financing
activities, continuing
operations
Net cash used in financing - (267.2) - (1,762.8)
activities, discontinued
operations
Net cash (used in) (2,534.4) 2,055.8 (2,713.7) 2,599.7
provided by financing
activities
Effect of currency 51.6 (5.2) 51.6 (31.0)
translation on cash
Net (decrease) increase in (1,766.8) 3,126.5 (2,221.6) 3,706.5
cash and cash equivalents
Tyco Capital's cash and - (957.7) - (1,451.3)
cash equivalents
transferred to
discontinued operations
Cash and cash equivalents 5,732.0 1,865.6 6,186.8 1,779.2
at beginning of period
Cash and cash equivalents $ 3,965.2 $ 4,034.4 $ 3,965.2 $ 4,034.4
at end of period
RECONCILIATION TO "FREE
CASH FLOW":
Net cash provided by $ 1,370.4 $ 1,712.5 $ 2,156.2 $ 2,677.4
operating activities,
continuing operations
Decrease in the sale of 12.6 28.0 93.0 28.0
accounts receivable
programs
Capital expenditures, net (280.9) (418.9) (595.0) (988.3)
Tyco Global Network (2.5) (255.7) (89.0) (817.4)
spending
Dividends paid (25.2) (25.3) (50.4) (49.7)
"FREE CASH FLOW" - OLD 1,074.4 1,040.6 1,514.8 850.0
DEFINITION
Acquisition of dealer (163.7) (315.0) (358.3) (678.2)
accounts
Cash paid for purchase (77.7) (157.7) (189.5) (376.4)
accounting and
holdback/earn-out
liabilities
"FREE CASH FLOW" - NEW $ 833.0 $ 567.9 $ 967.0 $ (204.6)
DEFINITION
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UROUROURSOUR