<PAGE>
--------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------- ----------
1-5482
(Commission File Number)
---------------------------------------
TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2297459
(State of Incorporation) (IRS Employer
Identification Number)
ONE TYCO PARK, EXETER, NEW HAMPSHIRE 03833
(Address of registrant's principal executive office)
603-778-9700
(Registrant's telephone number)
----------------------------------------
- Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X . No .
----- ----
The number of shares of common stock outstanding as of January 27,
1997 was 156,679,751.
--------------------------------------------------------------------------
<PAGE>
TYCO INTERNATIONAL LTD.
INDEX TO FORM 10-Q
PAGE
PART I - FINANCIAL INFORMATION:
Item 1 - Financial Statements -
Consolidated Balance Sheets - December 31, 1996 and
June 30, 1996 1-2
Consolidated Statements of Income for the Second Quarter
and Six Months ended December 31, 1996 and 1995 3
Consolidated Statements of Changes in Shareholders'
Equity for the Six Months ended December 31,
1996 and 1995 4
Consolidated Statements of Cash Flows for the Six
Months ended December 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Operating Results 9
PART II - OTHER INFORMATION:
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
- -------------------------------------------------------------------------------
(unaudited)
(IN THOUSANDS) DECEMBER 31, 1996 JUNE 30, 1996
- -------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 83,477 $ 69,404
Receivables, less allowance for doubtful
accounts of $59,571 in fiscal 1997 and
$36,672 in fiscal 1996 914,768 688,741
Contracts in process 131,633 130,473
Inventories 765,158 608,526
Deferred income taxes 144,944 126,282
Prepaid expenses and other current assets 94,138 72,098
----------- -----------
2,134,118 1,695,524
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land 43,775 37,560
Buildings 375,980 320,034
Machinery and equipment 1,094,427 934,918
Leasehold improvements 28,825 22,658
Construction in progress 99,157 52,289
Accumulated depreciation (717,994) (641,717)
----------- -----------
924,170 725,742
----------- -----------
GOODWILL AND OTHER INTANGIBLE ASSETS 1,837,282 1,232,617
REORGANIZATION VALUE IN EXCESS OF IDENTIFIABLE
ASSETS 99,385 102,591
DEFERRED INCOME TAXES 67,191 69,823
OTHER ASSETS 135,944 127,639
----------- -----------
TOTAL ASSETS $ 5,198,090 $ 3,953,936
----------- -----------
----------- -----------
See notes to consolidated financial statements.
1
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
(unaudited)
(IN THOUSANDS EXCEPT SHARE DATA) DECEMBER 31, 1996 JUNE 30, 1996
- -------------------------------------------------------------------------------
CURRENT LIABILITIES:
Loans payable and current maturities of
long-term debt $ 362,754 $ 127,822
Accounts payable 562,056 470,819
Accrued expenses 636,851 506,270
Contracts in process - billings
in excess of costs 153,275 89,640
Income taxes 101,087 84,196
Deferred income taxes 12,981 13,063
---------- ----------
1,829,004 1,291,810
---------- ----------
LONG-TERM DEBT 893,665 511,622
OTHER LIABILITIES 218,382 192,839
DEFERRED INCOME TAXES 28,989 19,226
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, authorized
2,000,000 shares; none outstanding - -
Common stock, $.50 par value, authorized
500,000,000 shares; outstanding 156,657,322
shares in fiscal 1997 and 152,977,282
shares in fiscal 1996, net of reacquired
shares of 13,054,679 in fiscal 1997 and
16,024,221 in fiscal 1996 (at cost) 78,328 76,488
Capital in excess of par value, net of
deferred compensation of $27,867 in
fiscal 1997 and $11,500 in fiscal 1996 747,173 627,985
Currency translation adjustment (24,693) (34,571)
Retained earnings 1,427,242 1,268,537
---------- ----------
2,228,050 1,938,439
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,198,090 $3,953,936
---------- ----------
See notes to consolidated financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
For the Periods ended December 31,
1996 and 1995 FISCAL SECOND QUARTER FISCAL SIX MONTHS
--------------------- -----------------
(IN THOUSANDS EXCEPT PER SHARE DATA) 1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $1,612,904 $1,243,885 $3,092,056 $2,460,087
--------- --------- ---------- ---------
COSTS AND EXPENSES:
Cost of sales 1,172,257 909,718 2,245,109 1,805,646
Selling, general and administrative 262,528 198,278 503,616 390,882
Interest 26,425 14,914 52,757 30,337
--------- --------- ---------- ---------
1,461,210 1,122,910 2,801,482 2,226,865
--------- --------- ---------- ---------
Income before income taxes 151,694 120,975 290,574 233,222
Income taxes (60,374) (50,204) (116,204) (96,787)
--------- --------- ---------- ---------
NET INCOME $ 91,320 $ 70,771 $ 174,370 $ 136,435
--------- --------- ---------- ---------
--------- --------- ---------- ---------
NET INCOME PER SHARE $ .58 $ .46 $1.12 $.89
---- ----- ---- ----
---- ----- ---- ----
CASH DIVIDENDS PER COMMON SHARE $ .05 $ .05 $ .10 $ .10
---- ----- ---- -----
---- ----- ---- -----
COMMON EQUIVALENT SHARES 157,445 152,898 156,029 152,819
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
For the Six Months ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
CAPITAL IN CURRENCY
COMMON STOCK EXCESS OF TRANSLATION RETAINED
(IN THOUSANDS) $.50 PAR VALUE PAR VALUE ADJUSTMENT EARNINGS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1995 $38,183 $620,633 $ (9,451) $ 985,316
Net income 136,435
Dividends (15,274)
Restricted stock grants,
cancellations, tax
benefits and other 12 879
Warrants, options exercised 5 110
Currency translation adjustment (19,602)
Amortization of deferred
compensation 4,416
Common stock reacquired (36) (2,467)
Two-for-one stock split effected in
form of a 100% stock dividend 38,195 (38,195)
------ --------- -------- ---------
BALANCE AT DECEMBER 31, 1995 $76,359 $585,376 $(29,053) $1,106,477
------- -------- -------- ----------
BALANCE AT JUNE 30, 1996 $76,488 $627,985 $(34,571) $1,268,537
Net income 174,370
Dividends (15,665)
Restricted stock grants,
cancellations, tax
benefits and other 278 1,195
Warrants, options exercised 83 3,546
Currency translation adjustment 9,878
Amortization of deferred
compensation 5,695
Issuance of treasury stock for acquisition 1,537 114,515
Other treasury stock transactions, net (58 (5,763)
------ -------- -------- ---------
BALANCE AT DECEMBER 31, 1996 $78,328 $747,173 $(24,693) $1,427,242
------- -------- -------- ----------
------- -------- -------- ----------
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
For the Six Months ended December 31,
(IN THOUSANDS) 1996 1995
- -----------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $174,370 $136,435
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 61,171 47,074
Amortization 33,788 23,729
Deferred income taxes 27,461 15,664
Provision for losses on accounts receivable
and inventory writedowns 18,035 13,114
Changes in assets and liabilities net of the
effects of acquisitions:
Decrease (increase) in accounts receivable
and contracts in process 67 (39,585)
Increase in inventory (62,735) (26,842)
Decrease in accounts payable and
accrued expenses (106,104) (21,248)
Increase in income taxes payable 8,136 33,306
Other 11,651 (38,174)
--------- ---------
Net cash provided by operating activities 165,840 143,473
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 100,396) (62,954)
Purchase of businesses, net of cash acquired (501,908) (40,785)
Proceeds from sale of acquired assets - 49,768
--------- ---------
Net cash used in investing activities (602,304) (53,971)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 298,490 -
Proceeds from lines of credit 166,247 7,495
Dividends paid (15,399) (15,221)
Issuance of stock and warrants 6,508 115
Common stock reacquired (5,309) (2,503)
--------- ---------
Net cash provided by (used in) financing activities 450,537 (10,114)
--------- ---------
Increase in cash and cash equivalents 14,073 79,388
Cash and cash equivalents at beginning of year 69,404 66,021
--------- ---------
Cash and cash equivalents at end of period $ 83,477 $145,409
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The unaudited financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include
all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in
conjunction with the financial statements and notes thereto included
in the Company's Form 10-K for the year ended June 30, 1996. The
accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Company's financial
position and results of operations.
2. During the first six months of fiscal 1997 the Company acquired two
disposable and specialty products companies, five fire and safety services
companies, four flow control products companies and one electrical and
electronic components company for an aggregate of $773.0 million, including
$501.9 million in cash, approximately 3.1 million shares of the Company's
common stock, valued at $116.1 million, and the assumption of approximately
$155.0 million in debt. The cash portion of the consideration for the
acquisitions was provided by cash on hand and borrowings under the
Company's credit agreement and uncommitted lines of credit. Each of the
acquisitions was accounted for as a purchase and the results of operations
of the acquired companies were included in the consolidated results of the
Company from their respective acquisition dates. As a result of the
acquisitions, approximately $620.5 million in goodwill was recorded by the
Company, which reflects, for each acquisition, the excess of the purchase
price, liabilities assumed and additional purchase liabilities recorded
over the fair value of assets acquired. Additional purchase liabilities
included approximately $26.8 million for transaction and other direct
costs, $22.7 million for severance costs and $17.3 million for costs
associated with the shut down and consolidation of certain acquired
facilities. At December 31, 1996 liabilities for approximately $18.9
million in transaction and other costs, $15.7 million in severance costs
and $13.2 million for facility related costs associated with fiscal 1997
acquisitions remained on the balance sheet, and liabilities for
approximately $9.1 million in severance costs and $2.3 million for facility
related costs associated with fiscal 1996 acquisitions remained on the
balance sheet.
3. On January 24, 1997, the Company acquired ElectroStar, Inc., a manufacturer
of complex printed circuit boards, and Sempell Valve Group, a manufacturer
and servicer of specialty valves. On February 5, 1997, the Company
acquired American Tube and Pipe Co., Inc., a manufacturer of steel pipe and
tubing. These purchases were made utilizing cash on hand as well as
borrowings under the Company's uncommitted lines of credit. The
acquisitions, which had an aggregate purchase price of approximately $266
million, will be accounted for as purchases, and their results of
operations will be consolidated with the Company's from their respective
acquisition dates.
6
<PAGE>
4. Long-term debt is as follows:
--------------------------------------------------------------------------
December 31, June 30,
(IN THOUSANDS) 1996 1996
--------------------------------------------------------------------------
Credit agreement $ 100,000 $ -
Uncommitted lines of credit 254,700 91,000
8.125% public notes due 1999 144,934 144,924
6.5% public notes due 2001 298,490 -
6.375% public notes due 2004 104,425 104,386
9.5% public debentures due 2022 199,599 199,592
8.0% public debentures due 2023 49,962 49,960
Other 104,309 49,582
--------- --------
1,256,419 639,444
Less current portion and loans payable 362,754 127,822
--------- --------
$ 893,665 $511,622
--------- --------
--------- --------
Under the Company's credit agreement with a group of commercial banks,
the Company has the right to borrow $300 million or a portion thereof
until October 1999 for its general corporate purposes. The principal
amount then outstanding will be due and payable at that time.
Interest payable on borrowings is variable based upon the Company's
option of selecting either a Eurodollar rate plus 0.325%, a
certificate of deposit rate plus 0.45%, or a base rate, as defined.
The Company's uncommitted lines of credit are borrowings from
commercial banks on an "as offered" basis. The borrowings and
repayments occur daily and contain no significant terms other than due
dates and interest rates. The due dates generally range from
overnight to 90 days and interest rates approximate those available
under the credit agreement.
In October 1996, the Company issued $300 million principal amount of
6.5% notes due 2001. The net proceeds were used to redeem debt
assumed with the acquisition of Carlisle Plastics as well as to reduce
certain amounts outstanding under the Company's credit agreement and
uncommitted lines of credit.
Under its various loan agreements, the Company is required to meet
certain covenants, none of which is considered restrictive to the
operations of the Company.
5. The Company has an agreement under which it sells participating
interests in a defined pool of trade accounts receivable. The
proceeds of sale are less than the face amount of accounts receivable
sold by an amount which approximates the purchaser's financing cost of
issuing its own commercial paper backed by these accounts receivable.
The discount from the face amount was $3.1 million and $3.4 million
during the second quarter of fiscal 1997 and fiscal 1996,
respectively, and $6.2 million and $6.7 million for the first six
months of fiscal 1997 and 1996, respectively, and has been included in
selling, general and administrative expense in the Company's
Consolidated Statements of Income.
7
<PAGE>
6. Selected information for the Company's four industry segments is as
follows (in thousands):
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------- ----------------------
1996 1995 1996 1995
-------- ---------- --------- --------
<S> <C> <C> <C> <C>
SALES:
Disposable and Specialty Products $ 506,010 $ 348,713 $ 946,746 $ 702,866
Fire and Safety Services 651,567 495,965 1,252,698 954,892
Flow Control Products 334,731 276,213 656,108 564,171
Electrical and Electronic Components 120,596 122,994 236,504 238,158
---------- ---------- -------- ----------
$1,612,904 $1,243,885 $3,092,056 $2,460,087
--------- --------- --------- ---------
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES:
Disposable and Specialty Products $ 88,818 $ 66,627 $ 170,247 $ 130,218
Fire and Safety Services 46,615 32,290 89,032 57,328
Flow Control Products 32,188 25,156 62,899 51,711
Electrical and Electronic Components 22,459 22,369 43,275 42,799
---------- ---------- --------- ---------
Total operations 190,080 146,442 365,453 282,056
Interest expense (26,425) (14,914) (52,757) (30,337)
Corporate and other amounts (11,961) (10,553) (22,122) (18,497)
---------- ---------- --------- ---------
$ 151,694 $ 120,975 $ 290,574 $ 233,222
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
7. Inventories are classified as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30,1996
----------------- ------------
<S> <C> <C>
Purchased materials and
manufactured parts $221,291 $162,600
Work in process 119,676 108,733
Finished goods 424,191 337,193
--------- ---------
$765,158 $608,526
-------- --------
</TABLE>
8. In the normal course of business, the Company is liable for contract
completion and product performance. In addition, the Company is in
receipt of notifications from various environmental agencies that
conditions at a number of sites where hazardous wastes were disposed
of by the Company and other persons may require cleanup and other
possible remedial action. In the opinion of management, these
obligations will not materially affect the Company's financial
position or results of operations.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
OVERVIEW
For the first six months of fiscal 1997, net income was $174.4 million, or
$1.12 per share, compared with $136.4 million, or $.89 per share, for the fist
six months of fiscal 1996. The increase was attributable to strong earnings
in the Disposable and Specialty Products and Fire and Safety Services groups as
well as increased income in the Flow Control Products group.
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL 1997 COMPARED TO SECOND QUARTER OF FISCAL 1996:
Sales increased 30% during the second quarter of fiscal 1997 to $1.61 billion
from $1.24 billion in the second quarter of fiscal 1996. Sales of the
Disposable and Specialty Products group increased $157.3 million to $506.0
million, or 45%, due to increased sales at Kendall, Ludlow, and Armin, as
well as the inclusion of Carlisle Plastics ("Carlisle") acquired in September
1996. Sales of the Fire and Safety Services group increased $155.6 million to
$651.6 million, or 31%, reflecting increased sales in each geographic region
of the contracting businesses, as well as the inclusion of Thorn Security
Group ("Thorn"), acquired in July 1996, and Earth Technology Corporation
("Earth Tech"), acquired in January 1996. Sales of the Flow Control Products
group increased $58.5 million to $334.7 million, or 21%, principally
reflecting increased volume at Europe's Flow Control operations, which include
businesses acquired in the second quarter of fiscal 1997, and at Mueller, which
includes businesses acquired in the first quarter of fiscal 1997. Sales of
the Electrical and Electronic Components group were down slightly with
increased sales at the Printed Circuit Group operations offset by decreased
sales at Simplex.
For the second quarter of fiscal 1997, as compared to the second quarter of
fiscal 1996, operating profits of the Disposable and Specialty Products group
increased $22.2 million to $88.8 million, or 33%, due primarily to higher
earnings at Kendall and Ludlow, as well as the inclusion of Carlisle.
Operating profits of the Fire and Safety Services group increased $14.3
million to $46.6 million, or 44%, due to higher margins in contracting
primarily in North America and Asia, and the inclusion of Thorn and Earth
Tech. Operating profits of the Flow Control Products group increased $7.0
million to $32.2 million, or 28%, due to increased earnings at each of the
group's operations, which include businesses acquired in the first and second
quarters. Operating profits of the Electrical and Electronic Components
group increased slightly to $22.5 million, due principally to higher earnings
at the Printed Circuit Group and at Allied's electrical conduit operations,
partially offset by a decrease at Simplex.
The impact on the consolidated sales and results of operations from changes
in foreign exchange rates relative to the value of the U.S. dollar for the
second quarter of fiscal 1997 as compared to the same period of fiscal 1996
was not material.
Interest expense increased during the second quarter of fiscal 1997 from the
second quarter of fiscal 1996 due to higher average debt balances resulting
principally from the effect of acquisitions.
9
<PAGE>
FIRST SIX MONTHS OF FISCAL 1997 COMPARED WITH FIRST SIX MONTHS OF FISCAL 1996:
Sales during the first six months of fiscal 1997 were $3.09 billion, a 26%
increase over fiscal 1996 sales of $2.46 billion. Sales of the Disposable
and Specialty Products group increased $243.9 million to $946.7 million, or
35%, due to increased sales principally at Kendall, Ludlow and Armin, as well
as the inclusion of Carlisle from September 1996. Sales of the Fire and
Safety Services group increased $297.8 million to $1.25 billion, or 31%, due
to increased sales in the contracting business in each geographic region as
well as the inclusion of Thorn and Earth Tech. Sales of the Flow Control
Products group increased $91.9 million to $656.1 million, or 16%, reflecting
higher volume at Europe Flow Control, including businesses acquired in the
second quarter of fiscal 1997, as well as from Mueller, including businesses
acquired in the first quarter of fiscal 1997, and Grinnell's distribution
operations. Sales of the Electrical and Electronic Components group decreased
slightly to $236.5 million resulting principally from lower sales of
underwater communications cable systems at Simplex partially offset by
increased sales at the Printed Circuit Group operations.
For the first six months of fiscal 1997 as compared to the first six months
of fiscal 1996, operating profits of the Disposable and Specialty Products
group increased $40.0 million to $170.2 million, or 31%, reflecting higher
earnings at Kendall, Ludlow and Armin, as well as the inclusion of Carlisle
from September 1996. Operating profits of the Fire and Safety Services group
rose $31.7 million to $89.0 million, or 55%, due principally to higher
margins at fire protection operations in each geographic region, as well as
the inclusion of Thorn and Earth Tech. The operating profits of the Flow
Control Products group increased $11.2 million to $62.9 million, or 22%,
resulting principally from increased earnings at Allied, Mueller and European
distribution operations, including businesses acquired during fiscal 1997.
Operating profits of the Electrical and Electronic Components group increased
$.5 million to $43.3 million, or 1%, due to increased earnings at the Printed
Circuit Group operations and Allied's electrical conduit operations,
partially offset by decreased earnings at Simplex.
The impact on the consolidated sales and results of operations from changes
in foreign exchange rates relative to the value of the U.S. dollar for the
first six months of fiscal 1997 as compared to the same period of fiscal 1996
was not material.
Interest expense increased $22.5 million to $52.8 million during the first
six months of fiscal 1997 as compared to the first six months of fiscal 1996
due principally to higher average debt balances, resulting from the effect of
acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Consolidated Statement of Cash Flows, net cash provided
by operating activities was $165.8 million during the first six months of
fiscal 1997. The significant changes in working capital accounts were an
increase of $62.7 million in inventory and a $106.1 million decrease in
accounts payable and accrued expenses. Net changes in other working capital
accounts were not significant during the period.
10
<PAGE>
During the first six months of fiscal 1997, the Company used cash to (i)
acquire a U.S. and a German Disposable and Specialty Products company, a U.K.
based and a German based Fire and Safety Services company, three Australian
Fire and Safety Services companies, three European Flow Control companies,
two U.S. Flow Control companies, and a U.S. Electrical and Electronic
Components company, for an aggregate of $773.0 million, including $501.9
million in cash, 3.1 million shares of the Company's common stock, valued at
$116.1 million, and the assumption of $155.0 million in debt; (ii) purchase
$100.4 million of property and equipment; (iii) pay dividends of $15.4
million, and (iv) reacquire shares for $5.3 million.
At December 31, 1996 the Company's total debt was $1.26 billion as compared
to $639.4 million at June 30, 1996. The increase resulted from the
acquisitions discussed above, partially offset by net operating cash flows.
Shareholders' equity was $2.23 billion, or $14.22 per share, at December 31,
1996, compared to $1.94 billion, or $12.67 per share, at June 30, 1996. The
increase is due primarily to net income of $174.4 million and the issuance of
the Company's shares for the Carlisle acquisition. Total debt as a percent
of total capitalization (total debt and shareholders' equity) was 36% at
December 31, 1996 and 25% at June 30, 1996.
In October 1996 the Company issued $300 million principal amount of 6.5%
notes due 2001. The net proceeds were used to redeem debt assumed in the
Carlisle acquisition, as well as to reduce certain amounts outstanding under
the Company's credit agreement and uncommitted lines of credit. The Company
believes that its funding sources are adequate for its anticipated capital
and operating requirements through expected cash flows from operations and
established financing arrangements.
In January 1997 the Company filed a shelf registration to enable it to offer
from time to time unsecured debt securities or shares of common stock, or any
combination of the foregoing, at an aggregate initial offering price not to
exceed $900 million. The Securities and Exchange Commission has declared the
shelf registration effective. The Company intends to file a Prospectus
Supplement in February 1997 to offer 8,500,000 shares of Common Stock.
The net proceeds from the sale are to be used to repay indebtedness incurred
for previous acquisitions.
Working capital requirements for the remainder of fiscal 1997 are not
expected to significantly exceed fiscal 1996 levels. The level of capital
expenditures is expected to increase in fiscal 1997 as compared to fiscal
1996 due to recent acquisitions as well as certain capital projects in
process, and the source of funds for such expenditures is expected to be cash
from operations.
Subsequent to December 31, 1996, the Company utilized cash on hand as well as
its existing financing arrangements to complete the acquisitions of
ElectroStar, Inc., Sempell Valve Group and American Tube and Pipe Co., Inc.
for cash totaling approximately $266 million.
BACKLOG
The backlog of unfilled orders was approximately $1.40 billion at December
31, 1996 and $1.15 billion at June 30, 1996. Backlog increased in the
Company's Disposable and Specialty Products, Fire and Safety Services, and
Flow Control Products segments, partially offset by a decrease in the
Electrical and Electronic Components segment. Within Fire and Safety
Services, backlog increased in each geographic region as well as from the
acquisition of Thorn. Within Electrical and Electronic Components, a decrease
at Simplex was partially offset by increases at the Printed Circuit Group.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting on October 22, 1996, shareholders voted on the
following items:
i) To elect eight directors to hold office until the 1997 Annual Meeting
of Shareholders.:
A total of 128,163,631 shares were voted for, and 764,545 shares were
voted against, each of the eight directors as a group. Votes
withheld against individual directors were as follows: L. Dennis
Kozlowski - 295,392 votes, Joshua M. Berman - 267,785 votes, Richard
S. Bodman - 11,035 votes, John F. Fort - 284,274 votes, Stephen W.
Foss - 3,283 votes, Richard A. Gilleland - 14,235 votes, Philip M.
Hampton - 3,215 votes, and Frank E. Walsh, Jr. - 3,340 votes. There
were no absentions or broker non-votes.
ii) To increase the number of authorized shares of the Company's common
stock from 180,000,000 shares to 500,000,000 shares:
A total of 93,103,750 shares were voted for, and 35,607,220 shares
were voted against the proposal. There were 217,206
abstentions and no broker non-votes.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Earnings Per Share Computation
27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K dated October 29, 1996 to put
on file an Underwriting Agreement, Form of Note and consent of
Coopers & Lybrand L.L.P. in connection with its sale of $300 million
6.5% Notes due 2001 through J.P. Morgan Securities, Inc.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TYCO INTERNATIONAL LTD.
/s/ Mark H. Swartz
--------------------------------------
Mark H. Swartz
Vice President - Chief Financial Officer
(Principal Accounting and Financial Officer)
Date: February 13, 1997
13
<PAGE>
TYCO INTERNATIONAL LTD.
INDEX TO EXHIBITS
EXHIBIT NO.
11 Earnings Per Share Computation
27 Financial Data Schedule
<PAGE>
TYCO INTERNATIONAL LTD.
EXHIBIT 11
EARNINGS PER SHARE COMPUTATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------- --------------------
1996 1995 1996 1995
---------- --------- -------- --------
<S> <C> <C> <C> <C>
CALCULATION OF EARNINGS PER SHARE:
PRIMARY:
Weighted average common shares outstanding
during the period 156,710 152,775 155,358 152,786
Effect of the restricted stock plan, stock
options and warrants using the treasury stock
method 735 123 671 33
-------- -------- ------- -------
Total common equivalent shares 157,445 152,898 156,029 152,819
-------- -------- ------- -------
-------- -------- ------- -------
Net income $ 91,320 $ 70,771 $174,370 $136,435
-------- -------- ------- -------
-------- -------- ------- -------
Earnings per share $ 0.58 $ 0.46 $ 1.12 $ 0.89
-------- -------- -------- --------
-------- -------- -------- --------
FULLY DILUTED(1):
Weighted average common shares outstanding
during the period 156,710 152,775 155,358 152,786
Effect of the restricted stock plan, stock
options and warrants using the treasury stock
method 790 279 718 175
-------- -------- -------- --------
Total common equivalent shares 157,500 153,054 156,076 152,961
-------- -------- -------- --------
-------- -------- -------- --------
Net income $ 91,320 $ 70,771 $174,370 $136,435
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per share $ 0.58 $ 0.46 $ 1.12 $ 0.89
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601 (b)(11) although not required by Footnote 2 to Paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF TYCO INTERNATIONAL LTD. AS OF AND FOR THE SIX
MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 83,477
<SECURITIES> 0
<RECEIVABLES> 922,219
<ALLOWANCES> 59,571
<INVENTORY> 765,158
<CURRENT-ASSETS> 2,134,118
<PP&E> 1,642,164
<DEPRECIATION> 717,994
<TOTAL-ASSETS> 5,198,090
<CURRENT-LIABILITIES> 1,829,004
<BONDS> 893,665
0
0
<COMMON> 78,328
<OTHER-SE> 2,149,722
<TOTAL-LIABILITY-AND-EQUITY> 5,198,090
<SALES> 3,092,056
<TOTAL-REVENUES> 3,092,056
<CGS> 2,245,109
<TOTAL-COSTS> 2,245,109
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,757
<INCOME-PRETAX> 290,574
<INCOME-TAX> 116,204
<INCOME-CONTINUING> 174,370
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174,370
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
</TABLE>
