<PAGE> 1
- --------------------------------------------------------------------------------
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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 JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
0-16979
(COMMISSION FILE NUMBER)
------------------------
TYCO INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
BERMUDA NOT APPLICABLE
(Jurisdiction of Incorporation) (IRS Employer Identification Number)
THE GIBBONS BUILDING, 10 QUEEN STREET, SUITE 301, HAMILTON, HM11, BERMUDA
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
441-292-8674*
(REGISTRANT'S TELEPHONE NUMBER)
</TABLE>
------------------------
* 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 July 15, 1998 was
585,642,104.
------------------------
* The Executive Offices of the Registrant's principal United States subsidiary,
Tyco International (US) Inc., are located at One Tyco Park, Exeter, New
Hampshire 03833. The telephone number there is (603) 778-9700.
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<PAGE> 2
TYCO INTERNATIONAL LTD.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PART I -- FINANCIAL INFORMATION:
Item 1 -- Financial Statements --
Consolidated Balance Sheets -- June 30, 1998 and
September 30, 1997.................................... 1-2
Consolidated Statements of Operations for the Quarters
and Nine Months ended June 30, 1998 and 1997.......... 3
Consolidated Statements of Cash Flows for the Nine
Months ended June 30, 1998
and 1997............................................. 4
Notes to Consolidated Financial Statements............. 5-11
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Operating Results........................... 12-16
PART II -- OTHER INFORMATION:
Item 6 -- Exhibits and Reports on Form 8-K.................. 17
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
(IN MILLIONS)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................... $ 677.6 $ 369.8
Receivables, less allowance for doubtful accounts of $151.0
in fiscal 1998 and $107.7 in fiscal 1997.................. 2,166.3 1,912.3
Contracts in process........................................ 163.2 138.3
Inventories................................................. 1,450.2 1,124.8
Deferred income taxes....................................... 681.7 389.4
Prepaid expenses and other current assets................... 221.2 174.2
--------- ---------
5,360.2 4,108.8
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land........................................................ 169.3 160.3
Buildings................................................... 789.7 679.7
Subscriber systems.......................................... 2,004.3 1,737.6
Machinery and equipment..................................... 2,280.9 1,860.3
Leasehold improvements...................................... 100.7 74.8
Construction in progress.................................... 251.9 211.6
Accumulated depreciation.................................... (1,965.5) (1,800.3)
--------- ---------
3,631.3 2,924.0
--------- ---------
GOODWILL AND OTHER INTANGIBLE ASSETS........................ 5,886.6 2,933.2
DEFERRED INCOME TAXES....................................... 101.0 144.0
OTHER ASSETS................................................ 531.4 337.0
--------- ---------
TOTAL ASSETS...................................... $15,510.5 $10,447.0
========= =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
(IN MILLIONS, EXCEPT SHARE DATA)
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt...... $ 310.0 $ 250.0
Accounts payable............................................ 1,038.4 1,012.0
Accrued expenses and other current liabilities.............. 2,377.0 1,853.4
Contracts in process -- billings in excess of costs......... 301.7 293.7
Deferred revenue............................................ 472.5 152.3
Income taxes................................................ 498.7 403.5
Deferred income taxes....................................... 27.0 26.9
--------- ---------
5,025.3 3,991.8
--------- ---------
LONG-TERM DEBT.............................................. 4,193.2 2,480.6
OTHER LONG-TERM LIABILITIES................................. 508.7 497.5
DEFERRED INCOME TAXES....................................... 44.2 47.7
COMMITMENTS AND CONTINGENCIES
CONVERTIBLE REDEEMABLE PREFERENCE SHARES....................
SHAREHOLDERS' EQUITY:
Common shares, $.20 par value, 1,503,750,000 shares
authorized; outstanding 585,479,856 shares in fiscal 1998
and 536,357,498 shares in fiscal 1997, net of 5,003,294
shares owned by subsidiaries in fiscal 1998............... 117.1 107.3
Capital in excess:
Share premium.......................................... 3,490.3 2,041.3
Contributed surplus, net of deferred compensation of
$2.1 in fiscal 1998 and $2.2 in fiscal 1997.......... 2,461.9 2,305.7
Currency translation adjustment............................. (258.9) (161.6)
Accumulated deficit......................................... (71.3) (863.3)
--------- ---------
5,739.1 3,429.4
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........... $15,510.5 $10,447.0
========= =========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTERS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES......................................... $3,235.0 $2,546.6 $8,774.5 $7,111.5
Cost of sales..................................... 2,118.3 1,681.8 5,782.6 4,778.2
Selling, general and administrative expenses...... 598.2 557.5 1,625.8 1,484.7
Restructuring and other non-recurring charges..... -- 47.0 -- 293.9
-------- -------- -------- --------
OPERATING INCOME.................................. 518.5 260.3 1,366.1 554.7
Interest expense, net............................. (53.6) (32.9) (135.3) (112.7)
Other income less expenses........................ -- -- -- 118.4
-------- -------- -------- --------
Income before income taxes and extraordinary
items........................................... 464.9 227.4 1,230.8 560.4
Income taxes...................................... (144.7) (88.9) (393.6) (206.5)
-------- -------- -------- --------
Income before extraordinary items................. 320.2 138.5 837.2 353.9
Extraordinary items, net of taxes................. (1.0) -- (2.2) (2.6)
-------- -------- -------- --------
NET INCOME........................................ 319.2 138.5 835.0 351.3
Dividends on preference shares.................... -- -- -- (0.1)
-------- -------- -------- --------
Net income available to common shareholders....... $ 319.2 $ 138.5 $ 835.0 $ 351.2
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary items................. $ .55 $ .26 $ 1.49 $ .70
Extraordinary items, net of taxes................. -- -- -- (.01)
Net income........................................ .55 .26 1.48 .70
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary items................. $ .54 $ .25 $ 1.45 $ .68
Extraordinary items, net of taxes................. -- -- -- --
Net income........................................ .54 .25 1.44 .68
CASH DIVIDENDS PER COMMON SHARE (SEE NOTE 5)...... $ .025 $ .075
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic............................................. 583.8 528.7 563.0 502.6
Diluted........................................... 599.3 561.0 582.5 532.8
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED JUNE 30,
-------------------
1998 1997
--------- ------
(IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 835.0 $351.3
Adjustments to reconcile net income to net cash provided by
operating activities:
Restructuring and other non-recurring charges.......... -- 217.4
Depreciation........................................... 306.3 270.4
Goodwill and other intangible amortization............. 112.7 88.6
Deferred income taxes.................................. 56.7 2.6
Gain from investments and litigation settlement........ -- (122.9)
Other non-cash items................................... (7.0) 37.2
Changes in assets and liabilities net of the effects of
acquisitions:
Accounts receivable and contracts in process...... 65.7 (175.1)
Inventory......................................... (8.8) (92.8)
Accounts payable and accrued expenses............. (360.6) 15.9
Income taxes payable.............................. 87.1 3.7
Deferred revenue.................................. (16.1) 3.4
Other............................................. (51.9) (27.2)
--------- ------
Net cash provided by operating activities.............. 1,019.1 572.5
--------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................... (520.1) (480.4)
Acquisition of businesses, net of cash acquired............. (3,221.1) (467.3)
Disposal of other investments............................... -- 65.5
Proceeds from litigation settlement......................... -- 77.5
Other....................................................... (24.7) (21.6)
--------- ------
Net cash used in investing activities.................. (3,765.9) (826.3)
--------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on short-term debt and lines of credit........... (1,047.8) (221.6)
Net proceeds from issuance of public debt................... 2,744.5 --
Dividends paid.............................................. (41.7) (43.6)
Net proceeds from sale of common shares..................... 1,245.0 650.7
Proceeds from exercise of options and warrants.............. 212.1 317.1
Other....................................................... (57.5) (7.1)
--------- ------
Net cash provided by financing activities.............. 3,054.6 695.5
--------- ------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 307.8 441.7
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 369.8 237.0
Adjustment for INBRAND's cash and cash equivalents at
January 1, 1997 (as described in Note 1).................. -- 1.9
Effect of the excluded results of ASH (as described in Note
1)........................................................ -- (0.8)
--------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 677.6 $679.8
========= ======
</TABLE>
See notes to consolidated financial statments.
4
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
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 in the United States. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Transition Report on Form 10-K for the nine months ended September 30, 1997
("Form 10-K"). The accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing standards
in the United States, 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.
On July 2, 1997 a wholly-owned subsidiary of what was formerly called ADT
Limited ("ADT") merged with Tyco International Ltd. ("Former Tyco"). Upon
consummation of the merger, ADT (the surviving corporation) changed its name to
Tyco International Ltd. (the "Company" or "Tyco"). Former Tyco became a
wholly-owned subsidiary of the Company and changed its name to Tyco
International (US) Inc. ("Tyco US"). On August 27, 1997 and August 29, 1997 Tyco
merged with INBRAND Corporation ("INBRAND") and Keystone International, Inc.
("Keystone"), respectively. These consolidated financial statements include the
consolidated accounts of Tyco, a company incorporated in Bermuda, and its
subsidiaries. They have been prepared using the pooling of interests method of
accounting for the mergers and therefore reflect the combined financial
position, operating results and cash flows of ADT, Former Tyco and Keystone as
if they had been combined for all periods presented. The restated combined
financial statements do not include the financial position, operating results
and cash flows of INBRAND prior to January 1, 1997, due to immateriality.
As described more fully in the Company's Form 10-K, in September 1996 ADT
merged with Automated Security (Holdings) PLC ("ASH"). The merger with ASH has
been accounted for as a pooling of interests and its results have been combined
with the Company's using ASH's November 30 year end. The results of operations
and cash flows for ASH for the month of December 1996, which have been excluded
from these financial statements, are reflected as an adjustment in the
consolidated statement of cash flow for the nine months ended June 30, 1997.
Certain prior period amounts have been reclassified to conform with the
current period presentation.
2. ACQUISITIONS
During the first nine months of fiscal 1998, the Company purchased
businesses in each of its four segments for an aggregate of $3.42 billion. The
acquisitions were made utilizing cash on hand and borrowings under the Company's
uncommitted lines of credit and proceeds from the Company's revolving bank
credit and term loan agreements. Approximately $200 million in debt was assumed
in these acquisitions. All acquisitions were accounted for as purchases and the
results of operations of the acquired companies have been included in the
consolidated results of the Company from their respective acquisition dates. As
a result of the acquisitions, approximately $3.08 billion in goodwill and other
intangibles was recorded by the Company, which reflects the adjustments
necessary to allocate the individual purchase prices to the fair value of assets
acquired, liabilities assumed and additional purchase liabilities recorded.
Additional purchase liabilities recorded during fiscal 1998 include
approximately $52.6 million for transaction and other direct costs, $130.7
million for severance and related costs and $240.1 million for costs associated
with the shut down and consolidation of certain acquired facilities.
On February 27, 1998, the Sherwood-Davis & Geck division ("Sherwood") of
American Home Products Corporation ("AHP") was purchased for cash of $1.77
billion. Sherwood is a manufacturer of medical and surgical devices, such as
catheters, needles and syringes, sutures, thermometers and other specialized
disposable medical products, with annual revenues of approximately $1.0 billion.
Sherwood is being integrated with The Kendall Company within Tyco's Disposable
and Specialty Products segment. On May 29, 1998, the
5
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Company acquired the Wells Fargo Alarm business of Borg-Warner Security
Corporation for $425 million in cash. Wells Fargo Alarm, with annual revenues of
approximately $250 million, is a full service provider of electronic security
services, including intrusion, fire detection and monitoring, as well as closed
circuit television and access control.
In connection with purchase acquisitions consummated during and prior to
the nine months ended June 30, 1998, liabilities for approximately $49.3 million
in transaction and other costs, $134.6 million for severance and related costs
and $255.2 million for the shutdown and consolidation of acquired facilities
remained on the balance sheet at June 30, 1998. The Company expects that the
termination of employees and consolidation of facilities related to these
acquisitions will be substantially complete within one year of the related date
of acquisition.
The following unaudited pro forma data summarize the results of operations
for the periods indicated as if these acquisitions had been completed as of the
beginning of the periods presented. The pro forma data give effect to actual
operating results prior to the acquisitions and adjustments to interest expense,
goodwill amortization and income taxes. No effect has been given to cost
reduction or operating synergies in this presentation. These pro forma amounts
do not purport to be indicative of the results that would have actually been
obtained if the acquisitions had occurred as of the beginning of the periods
presented or that may be obtained in the future. The pro forma data do not give
effect to acquisitions completed subsequent to June 30, 1998.
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C>
Net sales....................................... $9,703.5 $8,530.5
Income (loss) before extraordinary item......... 715.7 283.0
Net income (loss)............................... 708.1 278.9
Net income (loss) per common share:
Basic...................................... 1.26 .55
Diluted.................................... 1.23 .54
</TABLE>
On May 25, 1998, the Company entered into a definitive merger agreement
pursuant to which Tyco will acquire United States Surgical Corporation ("USS")
in a stock for stock transaction valued at approximately $3.3 billion. USS, with
annual revenues of approximately $1.4 billion, develops, manufactures and
markets a line of surgical wound closure products and advanced surgical products
to hospitals throughout the world. The acquisition, which will be accounted for
as a pooling of interests, will be structured with USS shareholders receiving
0.7606 shares of Tyco stock for each share of USS stock outstanding. The
transaction is contingent upon customary regulatory review and approval by the
USS shareholders. The transaction is expected to close in October 1998.
6
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
3. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1998 1997
-------- -------------
(IN MILLIONS)
<S> <C> <C>
Bank and acceptance facilities..................... $ 1.8 $ 56.4
Bank credit agreement.............................. 500.0 1,400.0
Uncommitted lines of credit........................ 310.0 38.5
8.125% public notes due 1999....................... 10.5 10.5
8.25% senior notes due 2000........................ 9.5 9.5
6.5% public notes due 2001......................... 299.0 298.7
6.125% public notes due 2001....................... 746.8 --
9.25% senior subordinated notes due 2003........... 14.1 14.1
6.375% public notes due 2004....................... 104.5 104.5
6.375% public notes due 2005....................... 742.3 --
Zero coupon Liquid Yield Option Notes due 2010..... 122.9 259.6
6.25% public Dealer Remarketable Securities
("Drs.") due 2013................................ 763.4 --
9.5% public debentures due 2022.................... 49.0 49.0
8.0% public debentures due 2023.................... 50.0 50.0
7.0% public notes due 2028......................... 492.0 --
Other.............................................. 287.4 439.8
-------- --------
Total debt ................................... 4,503.2 2,730.6
Less current portion............................... 310.0 250.0
-------- --------
Long-term debt..................................... $4,193.2 $2,480.6
======== ========
</TABLE>
In February 1998, Tyco US entered into a new $2.25 billion credit agreement
with a group of commercial banks, giving it the right to borrow (a) up to $1.75
billion until February 12, 1999, with the ability to extend, at the option of
Tyco US, to February 12, 2000, and (b) up to $0.5 billion until February 12,
2003. Interest payable on borrowings is variable based upon the borrower's
option of selecting a Eurodollar rate plus margins ranging from 0.17% to 0.19%,
a certificate of deposit rate plus margins ranging from 0.295% to 0.315%, or a
base rate, as defined. If the outstanding principal amount of loans equals or
exceeds one-third of the commitments, the Eurodollar and certificate of deposit
margins are increased by 0.10%. Repayments of amounts outstanding under this
agreement are guaranteed by the Company. In accordance with the terms of this
agreement, in June 1998 Tyco US and Tyco International Group S.A. ("TIG"), a
wholly-owned subsidiary of the Company, elected that TIG become the borrower and
that Tyco US cease to be the borrower under this agreement. All other terms and
conditions in effect remained unchanged.
Simultaneous with the closing of the new credit agreement, Tyco US reduced
aggregate commitments available under the previously existing credit agreement
to $950 million. In March 1998, Tyco US terminated the $950 million credit
agreement. Balances outstanding at the time of termination were repaid with net
proceeds from the sale of common shares, discussed below (see Note 6).
Uncommitted lines of credit are borrowings by Tyco US from commercial banks
on an "as offered" basis. 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 TIG credit agreement.
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.
In June 1998, TIG issued $750 million 6 1/8% notes due 2001, $750 million
6 3/8% notes due 2005, $750 million 6 1/4% Dealer Remarketable Securities(SM)
("Drs.")(SM) due 2013 and $500 million 7.0% notes due 2028 under a $3.75 billion
shelf registration statement. Interest is payable semi-annually in June and
7
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
December. Under the terms of the Drs., a Remarketing Dealer has an option to
remarket the Drs. in June 2003, which would subject the Drs. to mandatory tender
and reset the interest rate to an adjusted fixed rate until June 2013. If the
Remarketing Dealer does not fully exercise its option then all Drs. are required
to be tendered in June 2003. Repayment of amounts outstanding under these debt
securities are fully and unconditionally guaranteed by Tyco (See Note 11). The
net proceeds of approximately $2.74 billion were ultimately used to repay
borrowings under the $2.25 billion bank credit facility and uncommitted lines of
credit of Tyco US. In connection with the offering of these debt securities, TIG
has entered into two interest rate swap agreements to hedge a portion of the
fixed interest rate terms. These two swap agreements are each based on a
notional amount of $650 million and are for a five and seven year term,
respectively. Under the terms of the agreements, TIG receives fixed interest
rates and owes variable rates, based on LIBOR, not to exceed a specified
maximum. Interest is received or paid semi-annually in June and December.
During the nine months ended June 30, 1998 and 1997, respectively, 322,318
and 1,102 of the Liquid Yield Option Notes ("LYONs") with a carrying value of
$145.7 million and $0.4 million were exchanged for 8,759,288 and 29,928 common
shares of the Company. The extraordinary item in the quarter and nine months
ended June 30, 1998 was the write-off of net unamortized deferred financing
costs related to the LYONs. The extraordinary item in the nine months ended June
30, 1997 was $2.6 million for the write-off of unamortized deferred financing
costs upon the early extinguishment of debt agreements by ADT.
4. EARNINGS PER COMMON SHARE
During the first quarter of fiscal 1998, the Company was required to adopt
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." SFAS No. 128 specifies the computation, presentation and disclosure
requirements for earnings per share and is substantially similar to the
standards recently issued by the International Accounting Standards Committee
entitled "International Accounting Standards Earnings Per Share". Prior period
earnings per common share data have been restated in accordance with the
provisions of this statement.
The reconciliations between basic and diluted earnings per common share are
as follows:
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
JUNE 30, 1998 JUNE 30, 1997
--------------------------- ---------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ --------- ------ ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BASIC INCOME PER COMMON SHARE
Net income available to common
shareholders $319.2 583.8 $ .55 $138.5 528.7 $.26
Restricted stock, options and warrants.... -- 7.0 -- 11.2
Exchange of LYONs debt.................... 1.5 8.5 3.5 21.1
------ ------ ------ ------
DILUTED INCOME PER COMMON SHARE
Net income available to common
shareholders plus assumed conversions $320.7 599.3 $ .54 $142.0 561.0 $.25
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997
--------------------------- ---------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ --------- ------ ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BASIC INCOME PER COMMON SHARE
Net income available to common
shareholders........................... $835.0 563.0 $1.48 $351.2 502.6 $.70
Restricted stock, options and warrants.... -- 8.3 -- 9.1
Exchange of LYONs debt.................... 5.8 11.2 10.4 21.1
------ ------ ------ ------
DILUTED INCOME PER COMMON SHARE
Net income available to common
shareholders plus assumed
conversions............................ $840.8 582.5 $1.44 $361.6 532.8 $.68
====== ====== ====== ======
</TABLE>
8
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
The effects on diluted earnings per common share resulting from the assumed
conversion of convertible redeemable preference shares, which were redeemed
during fiscal 1997, are anti-dilutive in the quarter and nine months ended June
30, 1997. Net income for the nine months ended June 30, 1997 was adjusted for
the dividends on preference shares in the calculation of earnings per common
share.
5. CASH DIVIDENDS PER COMMON SHARE
Tyco declared a dividend of $0.025 per share in each of the three quarters
in fiscal 1998. Prior to the merger with Former Tyco, ADT had not declared any
dividends on its common shares since 1991. Former Tyco and Keystone declared
dividends of $0.025 and $0.19 per share, respectively, in each of the quarters
ended December 31, 1996, March 31, 1997 and June 30, 1997.
6. SHAREHOLDERS' EQUITY
In March 1998, the Company sold 25.3 million common shares for
approximately $1.25 billion under a $2.0 billion shelf registration statement.
The net proceeds from the sale were used to repay indebtedness incurred for
previous acquisitions.
7. MERGER, RESTRUCTURING AND OTHER NON-RECURRING CHARGES
During the nine months ended June 30, 1997, ADT recorded a charge of $268.7
million related to restructuring and other non-recurring charges in its
electronic security services and corporate operations. During the quarter ended
June 30, 1997, INBRAND recorded a charge of $25.2 million related to
restructuring and other non-recurring charges in its disposable medical products
business.
Approximately $221.2 million and $112.5 million of accrued merger and
restructuring costs remain in other current liabilities and other non-current
liabilities, respectively, as of June 30, 1998.
9
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
8. CONSOLIDATED SEGMENT DATA
Selected information for the Company's four industry segments is as follows
(in millions):
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES:
Disposable and Specialty Products................. $ 980.0 $ 694.3 $2,442.1 $1,921.8
Fire and Security Services........................ 1,166.7 1,075.0 3,389.1 3,097.8
Flow Control Products............................. 604.2 592.2 1,703.1 1,641.1
Electrical and Electronic Components.............. 484.1 185.1 1,240.2 450.8
-------- -------- -------- --------
$3,235.0 $2,546.6 $8,774.5 $7,111.5
======== ======== ======== ========
OPERATING INCOME (LOSS):
Disposable and Specialty Products................. $ 182.8 $ 77.8(1) $ 455.8 $ 283.7(1)
Fire and Security Services........................ 165.5 86.6(2) 461.7 38.9(3)
Flow Control Products............................. 88.3 74.6 233.6 184.9
Electrical and Electronic Components.............. 98.3 37.3 262.5 88.5
Corporate and other expenses...................... (16.4) (16.0) (47.5) (41.3)
-------- -------- -------- --------
$ 518.5 $ 260.3 $1,366.1 $ 554.7
======== ======== ======== ========
</TABLE>
- ---------------
(1) Includes charges of $25.2 million related to merger, restructuring and other
non-recurring charges incurred by INBRAND.
(2) Includes charges of $21.8 million related to merger, restructuring and other
non-recurring charges incurred by ADT.
(3) Includes charges of $268.7 million related to merger, restructuring and
other non-recurring charges incurred by ADT.
9. INVENTORIES
Inventories are classified as follows (in millions):
<TABLE>
<CAPTION>
JUNE 30, 1998 SEPTEMBER 30, 1997
------------- ------------------
<S> <C> <C>
Purchased materials and manufactured parts..... $ 467.1 $ 262.7
Work in process................................ 251.7 294.4
Finished goods................................. 731.4 567.7
-------- --------
$1,450.2 $1,124.8
======== ========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
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.
11. TYCO INTERNATIONAL GROUP S.A.
As discussed in Note 3, TIG issued $2.75 billion of debt securities, which
are fully and unconditionally guaranteed by Tyco. TIG, a Luxembourg holding
company, is the parent company of substantially all the operating subsidiaries
of the Company. The following presents consolidated summary financial
information for TIG and its subsidiaries, as if TIG and its current
organizational structure was in place for all periods presented.
10
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1998 1997
--------- -------------
<S> <C> <C>
Total current assets................................ $ 5,445.6 $ 4,018.3
Total noncurrent assets............................. 10,026.8 6,236.2
Total current liabilities........................... 4,979.8 3,905.2
Total noncurrent liabilities........................ 5,154.0 3,998.1
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales........................... $3,235.0 $2,546.6 $8,774.5 $7,111.5
Gross profit........................ 1,108.5 864.8 2,983.7 2,333.3
Income before extraordinary
items(1)(2)....................... 134.7 141.3 626.6 271.5
Net income(3)....................... 133.7 141.3 624.4 268.9
</TABLE>
- ---------------
(1) Income before extraordinary items in the three and nine months ended June
30, 1997 includes non-recurring charges of $25.2 million related to the
restructuring of INBRAND's disposable medical products business and $0.4
million of transaction costs incurred in connection with the merger with
Former Tyco.
(2) Income before extraordinary items in the nine months ended June 30, 1997
includes non-recurring charges of $237.3 million related principally to the
restructuring of ADT's electronic security services businesses in the United
States and United Kingdom.
(3) Extraordinary items were losses on repayment and the write-off of net
unamortized deferred refinancing costs relating to the early extinguishment
of debt.
11
<PAGE> 14
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS
On July 2, 1997, a wholly-owned subsidiary of what was formerly called ADT
Limited ("ADT") merged with Tyco International Ltd. ("Former Tyco"). Upon
consummation of the merger, ADT (the surviving corporation) changed its name to
Tyco International Ltd. (the "Company" or "Tyco"). In August 1997, the Company
acquired Keystone International, Inc. ("Keystone") and INBRAND Corporation
("INBRAND"). All three of these transactions were accounted for as a pooling of
interests and, accordingly, the consolidated financial statements reflect the
combined financial position, results of operations and cash flows of ADT, Former
Tyco, Keystone and INBRAND for all periods presented except that the
consolidated financial statements for periods prior to January 1, 1997 do not
include INBRAND due to immateriality. See Note 1 to the consolidated financial
statements presented herein. These transactions are more fully discussed in the
Company's consolidated financial statements and notes thereto as of September
30, 1997 previously filed on Form 10-K.
RESULTS OF OPERATIONS
Information for all periods presented below reflects the grouping of the
Company's businesses into four business segments consisting of Disposable and
Specialty Products, Fire and Security Services, Flow Control Products, and
Electrical and Electronic Components.
In September 1997, the Company changed its fiscal year end from December 31
to September 30. In the discussions below, the results of operations for fiscal
1998 compare the third quarter and nine months ended June 30, 1998 with the
corresponding quarter and nine months ended June 30, 1997.
Overview
Income before extraordinary item was $837.2 million, or $1.45 per share on
a diluted basis for the nine months ended June 30, 1998 as compared to $353.9
million, or $.68 per share, for the nine months ended June 30, 1997. Excluding
the $130.2 million ($.25 per share) after-tax net charge for restructuring and
other non-recurring items recorded in the nine months ended June 30, 1997,
income before extraordinary item rose 72.9% from $484.1 million, or $.93 per
share. The increase was attributable to strong earnings in the Electrical and
Electronic Components group principally resulting from earnings at TSSL, which
includes the business acquired from AT&T's Submarine Systems unit, as well as
significant increases in income from operations in the Fire and Security
Services and Disposable and Specialty Products segments and, to a lesser extent,
in the Flow Control Products group.
Quarter ended June 30, 1998 Compared to Quarter ended June 30, 1997
Sales increased 27% during the quarter ended June 30, 1998 to $3.24 billion
from $2.55 billion in the quarter ended June 30, 1997.
Sales of the Disposable and Specialty Products group increased $285.7
million to $980.0 million, or 41%, principally due to increased sales at
Kendall. This increase was primarily due to the inclusion of the results of
Sherwood and CONFAB, which were acquired in February 1998 and April 1998,
respectively.
Sales of the Fire and Security Services group increased $91.7 million to
$1.17 billion, or 8.5%, principally due to increased sales in the United States
in the Company's electronic security services business and in the North American
fire protection operations and the European fire protection and security
operations. The primary reason for the increase in sales in the security and
fire protection businesses is the increase in service and recurring revenues
and, to a lesser extent, the inclusion of the results of companies acquired
during fiscal 1998.
Sales of the Flow Control Products group increased $12.0 million to $604.2
million, or 2.0%, primarily reflecting increased demand for valve products in
North America and Europe.
Sales of the Electrical and Electronic Components group increased $299.0
million to $484.1 million, or 162%, principally due to increased sales at Tyco
Submarine Systems Ltd ("TSSL") as well as increased sales,
12
<PAGE> 15
to a lesser extent, at Tyco Printed Circuit Group ("TPCG"). The increased sales
at TSSL resulted from the acquisition of AT&T's submarine systems business in
July 1997 and increased volume at Simplex.
Pre-tax income was $464.9 million for the quarter ended June 30, 1998, as
compared to $227.4 million for the quarter ended June 30, 1997. Pre-tax income
for the quarter ended June 30, 1997 included charges of $47.0 million for
merger, restructuring and other non-recurring items incurred by ADT and INBRAND.
Excluding these non-recurring charges, pre-tax income increased $190.5 million,
or 69%, from $274.4 million. Amortization expense for goodwill and other
intangible assets was $47.1 million for the quarter ended June 30, 1998 and
$39.0 million for the quarter ended June 30, 1997. The following analysis is
exclusive of the non-recurring amounts to present the comparability of recurring
operating profits.
Operating profits for the Disposable and Specialty Products group increased
$79.8 million to $182.8 million, or 77.5%. Operating profits were 18.7% of sales
in the quarter ended June 30, 1998 as compared to 14.8% in the quarter ended
June 30, 1997. The increase in operating profits from the comparable quarter
last year was principally due to increased volume in Kendall's North American
healthcare business, including the effect of the acquisition of Sherwood, and
increased margins at Tyco Plastics.
Operating profits for the Fire and Security Services increased $57.1
million to $165.5 million, or 52.7%. The overall increase was principally due to
increases in the service volume of the fire protection and security businesses
mentioned above. Operating profits were 14.2% of sales in the quarter ended June
30, 1998 as compared to 10.1% in the quarter ended June 30, 1997. The increase
in operating profits as a percentage of sales was due to higher volume and
improved margins in the Company's security service businesses around the world.
Operating profits for the Flow Control group increased $13.7 million to
$88.3 million, or 18.4%. Operating profits were 14.6% of sales in the quarter
ended June 30, 1998 as compared to 12.6% in the quarter ended June 30, 1997. The
increase was due to higher volume and margins in the Company's European flow
control products operations, including Keystone's valve products, which have
been integrated into the Company's operations, and improved margins at Allied
Tube & Conduit.
Operating profits for the Electrical and Electronic Components group
increased $61.0 million to $98.3 million, or 164%. The increase was principally
due to the acquisition of AT&T's submarine systems business in July 1997.
Operating profits were 20.3% of sales in the quarter ended June 30, 1998 and
20.2% in the quarter ended June 30, 1997.
The effect of average foreign exchange rates during the quarter ended June
30, 1998 as compared to the quarter ended June 30, 1997 was not material to the
Company's sales and operating profits.
The effective income tax rate was 31.1% during the quarter ended June 30,
1998 and 39.1% during the quarter ended June 30, 1997, due to higher earnings in
domiciles with lower income tax rates.
Nine months ended June 30, 1998 Compared to Nine months ended June 30, 1997
Sales increased 23% during the nine months ended June 30, 1998 to $8.77
billion from $7.11 billion in the nine months ended June 30, 1997.
Sales of the Disposable and Specialty Products group increased $520.3
million to $2.44 billion, or 27.1%, principally due to increased sales at
Kendall and ADT Automotive. At Kendall, the increase in sales resulted from the
inclusion of Sherwood and CONFAB, which were acquired in February 1998 and April
1998, respectively, and internal growth at the Ludlow Technical Products
division.
Sales of the Fire and Security Services group increased $291.3 million to
$3.39 billion, or 9.4%, principally due to increased sales in the United States
in the Company's electronic security services business. The North American and
Australian fire protection contracting and service operations, and the European
security and fire protection businesses had increased sales in the nine month
period ended June 30, 1998 as compared to the nine month period ended June 30,
1997. The primary reason for the increase in sales in the security and fire
protection businesses is the increase in service and recurring revenues and, to
a lesser extent, the inclusion of the results of companies acquired during
fiscal 1998.
13
<PAGE> 16
Sales of the Flow Control Products group increased $62.0 million to $1.70
billion, or 3.8%, reflecting increased volume at existing businesses at Allied
Tube & Conduit, including businesses acquired during fiscal 1997, and increased
demand for the Company's valve products in North America and Europe.
Sales of the Electrical and Electronic Components group increased $789.4
million to $1.24 billion, or 175%, principally due to increased sales at TSSL,
as well as increased sales at TPCG, offset slightly by decreased sales at Allied
Electrical Conduit. The increased sales at TSSL resulted principally from the
acquisition of AT&T's submarine systems business in July 1997.
Pre-tax income was $1.23 billion for the nine months ended June 30, 1998,
as compared to $560.4 million for the nine months ended June 30, 1997. Pretax
income for the nine months ended June 30, 1997 includes net charges of $171.8
million primarily related to non-recurring items in ADT's electronic security
services operations. Excluding these non-recurring charges, pre-tax income
increased $498.6 million, or 68.1% from $732.2 million. Amortization expense for
goodwill and other intangible assets was $112.7 million for the nine months
ended June 30, 1998 and $88.6 million for the nine months ended June 30, 1997.
The following analysis is exclusive of the non-recurring amounts to present the
comparability of recurring operations.
Operating profits for the Disposable and Specialty Products group increased
$146.9 million to $455.8 million, or 47.6%. Operating profits were 18.7% of
sales in the nine months ended June 30, 1998 and 16.1% in the nine months ended
June 30, 1997. The increase was principally due to higher sales in Kendall's
North American and international healthcare businesses, including the effect of
the acquisition of Sherwood, and increased volume at Ludlow Technical Products.
In addition, there were higher sales and margins at Tyco Plastics and higher
sales and margins at ADT Automotive, where the volume of automobiles placed in
auctions increased.
Operating profits for the Fire and Security Services increased $154.1
million to $461.7 million, or 50.1%. Operating profits were 13.6% of sales in
the nine months ended June 30, 1998 and 9.9% in the nine months ended June 30,
1997. The overall increase was principally due to increases in the service
volume, including recurring monitoring revenue, and margins of the security and
fire protection businesses.
Operating profits for the Flow Control Products group increased $48.7
million to $233.6 million, or 26.3%. Operating profits were 13.7% of sales in
the nine months ended June 30, 1998 and 11.3% in the nine months ended June 30,
1997. The increase was due to increased volume and margins in the Company's
North American and European Flow Control Products operations, including
Keystone's valve products, which have been integrated into the Company's
operations. In addition, there were higher sales and margins at Allied Tube &
Conduit.
Operating profits for the Electrical and Electronic Components group
increased $174.0 million to $262.5 million, or 197%. Operating profits were
21.2% of sales in the nine months ended June 30, 1998 and 19.6% in the nine
months ended June 30, 1997. The increase was principally due to the acquisition
of AT&T's submarine systems business in July 1997, as well as increased sales
and higher margins at TPCG.
The effect of average foreign exchange rates during the nine months ended
June 30, 1998 as compared to the nine months ended June 30, 1997 was not
material to the Company's sales and operating profits.
The effective income tax rate was 32.0% during the nine months ended June
30, 1998 and 36.8% during the nine months ended June 30, 1997, due to the higher
earnings in domiciles with lower income tax rates.
Selling, general and administrative expenses were 18.5% of sales during the
quarter and nine months ended June 30, 1998, as compared to 21.9% and 20.9% in
the quarter and nine months ended June 30, 1997, respectively. The reduction in
selling, general and administrative costs as related to sales is principally due
to the effects of higher sales and the termination of employees and
consolidation of facilities associated with the recent mergers.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Consolidated Statement of Cash Flows, net cash provided
by operating activities was $1.02 billion during the first nine months of fiscal
1998. Accounts payable and accrued expenses decreased
14
<PAGE> 17
$360.6 million, which resulted principally from spending for merger,
restructuring and other non-recurring costs during the period. Net changes in
other working capital accounts were not significant during the period. The
impact of changes in foreign exchange rates did not materially affect net
working capital during the quarter.
During the first nine months of fiscal 1998, the Company used cash to (i)
acquire companies for an aggregate of $3.22 billion, plus the assumption of
$195.8 million in debt, (ii) purchase $520.1 million of property, plant and
equipment and (iii) pay dividends of $41.7 million. The Company received net
proceeds of approximately $1.25 billion from the sale of 25.3 million common
shares and $212.1 million upon the exercise of common share options.
The source of the cash used for acquisitions was an increase in total debt,
proceeds from the sale of common shares and cash flows from operations. At June
30, 1998, the Company's total debt was $4.50 billion, as compared to $2.73
billion at September 30, 1997. The increase resulted principally from net
proceeds received of approximately $2.74 billion from the issuance of public
debt discussed below, partially offset by the repayment of amounts outstanding
under the bank credit agreement and the exchange of LYON's debt with a $145.7
million principal balance for common shares. Shareholders' equity was $5.74
billion, or $9.80 per share, at June 30, 1998, compared to $3.43 billion, or
$6.39 per share, at September 30, 1997. Goodwill and other intangible assets
were $5.89 billion at June 30, 1998, compared to $2.93 billion at September 30,
1997. The increase in shareholders' equity was due primarily to net proceeds of
approximately $1.25 billion from the sale of 25.3 million common shares, net
income of $835.0 million and proceeds from the exercise of options. Total debt
as a percent of total capitalization (total debt and shareholders' equity) was
44% at June 30, 1998 and September 30, 1997.
In February 1998, Tyco US entered into a new $2.25 billion credit agreement
with a group of commercial banks, giving it the right to borrow (a) up to $1.75
billion until February 12, 1999, with the ability to extend, at the option of
Tyco US, to February 12, 2000, and (b) up to $0.5 billion until February 12,
2003. Interest payable on borrowings is variable based upon the borrower's
option of selecting a Eurodollar rate plus margins ranging from 0.17% to 0.19%,
a certificate of deposit rate plus margins ranging from 0.295% to 0.315%, or a
base rate, as defined. If the outstanding principal amount of loans equals or
exceeds one-third of the commitments, the Eurodollar and certificate of deposit
margins are increased by 0.10%. Repayments of amounts outstanding under this
agreement are guaranteed by the Company. In accordance with the terms of this
agreement, in June 1998 Tyco US and Tyco International Group S.A. ("TIG"), a
wholly-owned subsidiary of the Company, elected that TIG become the borrower and
that Tyco US cease to be the borrower under this agreement. All other terms and
conditions in effect remained unchanged.
Simultaneous with the closing of the new credit agreement Tyco US reduced
aggregate commitments available under the previously existing credit agreement
to $950 million. In March 1998, Tyco US terminated the $950 million credit
agreement. Balances outstanding at the time of termination were repaid with net
proceeds from the sale of common shares, discussed below.
In March 1998, the Company sold 25.3 million common shares for
approximately $1.25 billion under a $2.0 billion shelf registration statement.
The net proceeds from the sale were used to repay indebtedness incurred for
previous acquisitions.
In June 1998, TIG issued $750 million 6 1/8% notes due 2001, $750 million
6 3/8% notes due 2005, $750 million 6 1/4% Dealer Remarketable
Securities(SM)("Drs.")(SM) due 2013 and $500 million 7.0% notes due 2028 under a
$3.75 billion shelf registration statement. Interest is payable semi-annually in
June and December. Under the terms of the Drs., a Remarketing Dealer has an
option to remarket the Drs. in June 2003, which would subject the Drs. to
mandatory tender and reset the interest rate to an adjusted fixed rate until
June 2013. If the Remarketing Dealer does not fully exercise its option then all
Drs. are required to be tendered in June 2003. Repayment of amounts outstanding
under these debt securities are fully and unconditionally guaranteed by Tyco.
The net proceeds of approximately $2.74 billion were ultimately used to repay
borrowings under the $2.25 billion bank credit facility and uncommitted lines of
credit of Tyco US. In connection with the offering of these debt securities, TIG
has entered into two interest rate swap agreements to hedge a portion of the
fixed interest rate terms. These two swap agreements are each based on a
notional
15
<PAGE> 18
amount of $650 million and are for a five and seven year term, respectively.
Under the terms of the agreements, TIG receives fixed interest rates and owes
variable rates, based on LIBOR, not to exceed a specified maximum. Interest is
received or paid semi-annually in June and December.
Working capital requirements for the remainder of fiscal 1998 are not
expected to significantly increase from the working capital levels as they exist
at June 30, 1998. The level of capital expenditures is not expected to increase
materially for the remainder of fiscal 1998 as compared to the spending levels
during the first nine months of fiscal 1998. The Company believes that its
funding sources are adequate for its anticipated requirements through expected
cash flow from operations.
BACKLOG
The backlog of unfilled orders was approximately $3.5 billion at June 30,
1998 as compared to $2.4 billion at September 30, 1997. Backlog increased in the
Company's Electrical and Electronic Components, Fire and Security Services and
Flow Control Products group segments. Within the Electrical and Electronic
Components group, backlog increased principally due to contracts awarded to the
Company's submarine systems business. Within the Fire and Security Services
group, backlog increased due principally to an increase in backlog at the
Company's United States fire protection and security businesses. Within the Flow
Control Products group, backlog increased principally due to an increase in
backlog in the Company's European flow control operations.
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which is effective for fiscal years
beginning after June 15, 1999. The statement establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 also requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Adoption of this standard is not expected to have a material impact on the
financial position or results of operations of the Company.
16
<PAGE> 19
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 -- Financial Data Schedule
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed by the registrant on April 23, 1998
to put on file summary financial information of Tyco International Group S.A.
("TIG"), a wholly-owned subsidiary of the Company, in connection with TIG's
shelf registration statement for debt securities.
An amended Current Report on Form 8-K/A was filed by the registrant on May
13, 1998 to submit the audited financial statements of Sherwood, which was
acquired on February 27, 1998, and pro forma financial information as of
December 31, 1997.
A Current Report on Form 8-K was filed by the registrant on June 24, 1998
to put on file the press release and Agreement and Plan of Merger by and among
Tyco International Ltd., T11 Acquisition Corp. and United States Surgical
Corporation.
17
<PAGE> 20
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
Executive Vice President -- Chief
Financial Officer
(Principal Accounting and Financial
Officer)
Date: August 13, 1998
18
<PAGE> 21
TYCO INTERNATIONAL LTD.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
27 Financial Data Schedule
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT OF TYCO INTERNATIONAL LTD. AS OF AND FOR THE NINE
MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 677,600
<SECURITIES> 0
<RECEIVABLES> 2,066,700
<ALLOWANCES> 151,000
<INVENTORY> 1,450,200
<CURRENT-ASSETS> 5,360,200
<PP&E> 5,596,800
<DEPRECIATION> 1,965,500
<TOTAL-ASSETS> 15,510,500
<CURRENT-LIABILITIES> 5,025,300
<BONDS> 4,193,200
0
0
<COMMON> 117,100
<OTHER-SE> 5,622,000
<TOTAL-LIABILITY-AND-EQUITY> 15,510,500
<SALES> 8,774,500
<TOTAL-REVENUES> 8,774,500
<CGS> 5,782,600
<TOTAL-COSTS> 5,782,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 44,500
<INTEREST-EXPENSE> 156,400
<INCOME-PRETAX> 1,230,800
<INCOME-TAX> 393,600
<INCOME-CONTINUING> 837,200
<DISCONTINUED> 0
<EXTRAORDINARY> (2,200)
<CHANGES> 0
<NET-INCOME> 835,000
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.44
</TABLE>
