<PAGE> 1
================================================================================
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 MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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)
</TABLE>
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)
------------------------------
- - 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 April 23, 1998 was
583,096,885.
------------------------------
* 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.
================================================================================
<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 -- March 31, 1998 and
September 30, 1997.................................... 1-2
Consolidated Statements of Operations for the Quarters
and Six Months ended March 31, 1998 and 1997.......... 3
Consolidated Statements of Cash Flows for the Six
Months ended March 31, 1998 and 1997.................. 4
Notes to Consolidated Financial Statements............. 5-10
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Operating Results.............. 11-15
PART II -- OTHER INFORMATION:
Item 4 -- Submission of Matters to a Vote of Security
Holders................................................ 16
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)
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ------------------
(IN MILLIONS)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................... $ 562.0 $ 369.8
Receivables, less allowance for doubtful accounts of $138.1
in fiscal 1998 and $107.7 in fiscal 1997.................. 2,091.0 1,912.3
Contracts in process........................................ 147.7 138.3
Inventories................................................. 1,411.7 1,124.8
Deferred income taxes....................................... 493.7 389.4
Prepaid expenses and other current assets................... 198.7 174.2
--------- ---------
4,904.8 4,108.8
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land........................................................ 169.9 160.3
Buildings................................................... 779.5 679.7
Subscriber systems.......................................... 1,865.9 1,737.6
Machinery and equipment..................................... 2,047.4 1,860.3
Leasehold improvements...................................... 81.0 74.8
Construction in progress.................................... 221.2 211.6
Accumulated depreciation.................................... (1,895.9) (1,800.3)
--------- ---------
3,269.0 2,924.0
--------- ---------
GOODWILL AND OTHER INTANGIBLE ASSETS........................ 4,622.4 2,933.2
DEFERRED INCOME TAXES....................................... 123.3 144.0
OTHER ASSETS................................................ 419.0 337.0
--------- ---------
TOTAL ASSETS................................................ $13,338.5 $10,447.0
========= =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ------------------
(IN MILLIONS, EXCEPT SHARE DATA)
<S> <C> <C>
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt...... $ 255.0 $ 250.0
Accounts payable............................................ 972.7 1,012.0
Accrued expenses and other current liabilities.............. 2,142.5 1,853.4
Contracts in process -- billings in excess of costs......... 297.7 293.7
Deferred revenue............................................ 174.1 152.3
Income taxes................................................ 375.5 403.5
Deferred income taxes....................................... 27.7 26.9
--------- ---------
4,245.2 3,991.8
--------- ---------
LONG-TERM DEBT.............................................. 3,144.4 2,480.6
OTHER LONG-TERM LIABILITIES................................. 485.0 497.5
DEFERRED INCOME TAXES....................................... 61.1 47.7
COMMITMENTS AND CONTINGENCIES
CONVERTIBLE REDEEMABLE PREFERENCE SHARES
SHAREHOLDERS' EQUITY:
Common shares, $.20 par value, 1,503,750,000 shares
authorized; outstanding 580,613,217 shares in fiscal 1998
and 536,357,498 shares in fiscal 1997, net of 4,638,401
shares owned by subsidiaries in fiscal 1998............... 116.1 107.3
Capital in excess:
Share premium.......................................... 3,475.0 2,041.3
Contributed surplus, net of deferred compensation of
$2.3 in fiscal 1998 and $2.2 in fiscal 1997.......... 2,414.0 2,305.7
Currency translation adjustment............................. (226.5) (161.6)
Accumulated deficit......................................... (375.8) (863.3)
--------- ---------
5,402.8 3,429.4
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $13,338.5 $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 SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
-------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES.......................................... $2,852.0 $2,332.8 $5,539.5 $4,564.9
Cost of sales...................................... 1,872.6 1,567.6 3,664.3 3,096.4
Selling, general and administrative expenses....... 529.9 482.4 1,027.6 927.2
Restructuring and other non-recurring charges...... -- 9.6 -- 246.9
-------- -------- -------- --------
OPERATING INCOME................................... 449.5 273.2 847.6 294.4
Interest income.................................... 6.9 4.7 13.7 15.0
Interest expense................................... (49.9) (43.5) (95.4) (94.8)
Other income less expenses......................... -- -- -- 118.4
-------- -------- -------- --------
Income before income taxes and extraordinary
items............................................ 406.5 234.4 765.9 333.0
Income taxes....................................... (130.3) (87.1) (248.9) (117.6)
-------- -------- -------- --------
Income before extraordinary items.................. 276.2 147.3 517.0 215.4
Extraordinary items, net of taxes.................. (0.3) -- (1.2) (2.6)
-------- -------- -------- --------
NET INCOME......................................... 275.9 147.3 515.8 212.8
Dividends on preference shares..................... -- -- -- (0.1)
-------- -------- -------- --------
Net Income available to common shareholders........ $ 275.9 $ 147.3 $ 515.8 $ 212.7
======== ======== ======== ========
BASIC EARNINGS PER SHARE:
Income before extraordinary item................... $ .49 $ .29 $ .94 $ .44
Extraordinary item, net of taxes................... -- -- -- (.01)
Net Income......................................... .49 .29 .93 .43
DILUTED EARNINGS PER SHARE:
Income before extraordinary item................... $ .48 $ .29 $ .91 $ .43
Extraordinary item, net of taxes................... -- -- -- (.01)
Net Income......................................... .48 .29 .91 .42
CASH DIVIDENDS PER COMMON SHARE (SEE NOTE 5)....... $ 0 .025 $ 0.05
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
Basic.............................................. 560.1 499.5 552.6 489.6
Diluted............................................ 579.9 529.1 574.1 518.7
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED MARCH 31,
--------------------
1998 1997
---- ----
(IN MILLIONS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 515.8 $ 212.8
Adjustments to reconcile net income to net cash provided by
operating activities:
Restructuring and other non-recurring charges.......... -- 217.4
Depreciation........................................... 206.9 179.2
Goodwill and other intangible amortization............. 65.6 49.6
Deferred income taxes.................................. 85.4 (15.9)
Gain from investments and litigation settlement........ -- (122.9)
Other non-cash items................................... 2.9 25.0
Changes in assets and liabilities net of the effects of
acquisitions:
Accounts receivable and contracts in process...... 32.8 (102.0)
Inventory......................................... (24.9) (73.7)
Accounts payable and accrued expenses............. (268.2) (52.4)
Income taxes payable.............................. (33.9) (4.5)
Deferred revenue.................................. 14.8 7.8
Other............................................. (45.7) (16.0)
--------- -------
Net cash provided by operating activities.............. 551.5 304.4
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................... (329.5) (324.5)
Acquisition of businesses, net of cash acquired............. (2,118.2) (402.2)
Disposal of other investments............................... -- 63.5
Proceeds from litigation settlement......................... -- 77.5
Other....................................................... (15.0) (1.9)
--------- -------
Net cash used in investing activities.................. (2,462.7) (587.6)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (repayments) from long-term debt and lines of
credit.................................................... 693.4 (216.9)
Dividends paid.............................................. (27.0) (28.6)
Net proceeds from sale of common shares..................... 1,245.0 566.7
Proceeds from exercise of options and warrants.............. 196.5 306.4
Other....................................................... (4.5) (8.9)
--------- -------
Net cash provided by financing activities.............. 2,103.4 618.7
--------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 192.2 335.5
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.................. $ 562.0 $ 573.6
========= =======
</TABLE>
See notes to consolidated financial statements.
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. 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, 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"). In addition, subsidiaries of Tyco merged
with INBRAND Corporation ("INBRAND") and Keystone International, Inc.
("Keystone") on August 27, 1997 and August 29, 1997, 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 statement
of cash flow for the six months ended March 31, 1997.
Certain prior period amounts have been reclassified to conform with the
current period presentation.
2. ACQUISITIONS
During the first six months of fiscal 1998, the Company purchased
businesses for an aggregate of $2.17 billion, including $2.12 billion in cash
and the assumption of approximately $45.1 million in debt. The cash portion of
the acquisitions were made utilizing cash on hand and borrowings under the
Company's uncommitted lines of credit. These acquisitions were accounted for as
purchases 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 $1.73 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 $15.9 million for transaction and other direct costs,
$103.5 million for severance and related costs and $190.9 million for costs
associated with the shut down and consolidation of certain acquired facilities.
Certain acquisition liabilities are based on current estimates.
These acquisitions include the purchase of the Sherwood-Davis & Geck
division ("Sherwood") of American Home Products Corporation ("AHP") on February
27, 1998 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 February 3,
1998, the Company also completed its acquisition of Holmes Protection Group,
Inc.
5
<PAGE> 8
("Holmes") for $104.0 million in cash. Holmes provides electronic security
systems to commercial and residential customers throughout the United States and
will be integrated within Tyco's Fire and Security Services segment.
In connection with purchase acquisitions consummated during and prior to
the six months ended March 31, 1998, liabilities for approximately $14.5 million
in transaction and other costs, $120.8 million for severance and related costs
and $209.9 million for the shutdown and consolidation of acquired facilities
remained on the balance sheet at March 31, 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. 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 March 31, 1998.
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C>
Sales.......................................... $5,992.3 $5,118.5
Income (loss) before extraordinary item........ 427.1 203.6
Net income (loss).............................. 420.5 200.0
Earnings (loss) per share:
Basic..................................... .76 .41
Diluted................................... .74 .40
</TABLE>
3. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1998 1997
--------- -------------
(IN MILLIONS)
<S> <C> <C>
Bank and acceptance facilities.............................. $ 1.6 $ 56.4
Bank credit agreement....................................... 1,500.0 1,400.0
Private placement notes..................................... 625.0 --
Uncommitted lines of credit................................. 235.0 38.5
Variable rate term loan due 1998............................ -- 97.1
8.125% public notes due 1999................................ 10.5 10.5
8.25% senior notes due 2000................................. 9.5 9.5
6.34% senior notes due 2000 - Keystone...................... -- 45.0
6.5% public note due 2001................................... 298.9 298.7
Sterling denominated bank facility due 2002................. 142.1 137.5
9.25% senior subordinated notes due 2003.................... 14.1 14.1
6.375% public notes due 2004................................ 104.5 104.5
Zero coupon Liquid Yield Option Notes due 2010.............. 190.0 259.6
9.5% public debentures due 2022............................. 49.0 49.0
8.0% public debentures due 2023............................. 50.0 50.0
Other....................................................... 169.2 160.2
-------- --------
Total debt.................................................. 3,399.4 2,730.6
Less current portion........................................ 255.0 250.0
-------- --------
Long-term debt.............................................. $3,144.4 $2,480.6
======== ========
</TABLE>
6
<PAGE> 9
In December 1997, Tyco US terminated a $500 million portion of its existing
credit agreement and thereafter had the right to borrow (a) up to $750 million
until June 1998 and (b) up to $500 million until June 2002. Balances outstanding
at the time of termination were repaid through the issuance of private placement
notes, $225 million due in March 1998 and $250 million due in June 1998. At
maturity of the private placement notes due in March 1998, Tyco US issued $375
million of additional private placement notes due in June 1998, increasing the
aggregate amount outstanding to $625 million. All of the private placement notes
bear interest at LIBOR plus 0.25% and have been classified as long term
liabilities, based on the Company's ability and intent to refinance these
obligations on a long term basis.
On February 13, 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, such term converting from a 364-day term to a five year term
upon notice by Tyco US to the banks. 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.
Simultaneous with the closing of the new credit agreement, Tyco US reduced
aggregate commitments available under the previously existing credit agreement
to $950 million by reducing the $750 million portion to $450 million due in June
1998 and amended the terms and conditions, including interest rates, of the
existing credit agreement to conform to the new credit agreement. 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 Tyco US 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.
During the six months ended March 31, 1998 and 1997, respectively, 171,024
and 104 of the Liquid Yield Option Notes ("LYONs") with a carrying value of
$76.3 million and $0.1 million were exchanged for 4,647,732 and 2,826 common
shares of the Company. The extraordinary item in the six months ended March 31,
1998 was the write-off of net unamortized deferred refinance costs and other
related fees of $1.2 million, net of tax, which were recorded upon the early
extinguishment of the related LYONs. The extraordinary item in the six months
ended March 31, 1997 was $2.6 million for the write-off of deferred financing
costs upon the early extinguishment of debt agreements by ADT.
In April 1998 Tyco International Group S.A. ("TIG"), a wholly-owned
subsidiary of the Company, filed a shelf registration statement to enable it to
offer from time to time unsecured debt securities at an aggregate initial
offering price not to exceed $3.75 billion. Repayment of amounts outstanding
under these debt securities are fully and unconditionally guaranteed by Tyco
(See Note 11). The Securities and Exchange Commission has declared the shelf
registration effective.
4. EARNINGS PER 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 share data have been restated in accordance with the provisions of
this statement.
7
<PAGE> 10
The reconciliations between basic and diluted earnings per share are as
follows:
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
MARCH 31, 1998 MARCH 31, 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 Share --
Net income available to common shareholders...... $275.9 560.1 $.49 $147.3 499.5 $.29
Restricted stock, options and warrants........... -- 7.6 -- 8.5
Exchange of LYONs debt........................... 2.1 12.2 3.5 21.1
------ ------ ------ ------
Diluted Income Per Share --
Net income available to common shareholders plus
assumed conversions............................ $278.0 579.9 $.48 $150.8 529.1 $.29
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1998 MARCH 31, 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 Share --
Net income available to common shareholders...... $515.8 552.6 $.93 $212.7 489.6 $.43
Restricted stock, options and warrants........... -- 8.9 8.0
Exchange of LYONS debt........................... 4.3 12.6 6.9 21.1
------ ------ ------ ------
Diluted Income Per Share --
Net income available to common shareholders plus
assumed conversions............................ $520.1 574.1 $.91 $219.6 518.7 $.42
====== ====== ====== ======
</TABLE>
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 six months ended March
31, 1997. Income before extraordinary items in the six months ended March 31,
1997 was adjusted for the dividends on preference shares in the calculation of
earnings per share.
5. CASH DIVIDENDS PER COMMON SHARE
Tyco declared a dividend of $0.025 per share in each of the two 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 and March 31, 1997.
6. SHAREHOLDERS' EQUITY
In December 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 $2.0 billion. The Securities and Exchange Commission has declared the
shelf registration effective. In March 1998, the Company sold 25.3 million
common shares at $50.75 per share. The net proceeds from the sale of
approximately $1.25 billion were used to repay indebtedness incurred for
previous acquisitions.
7. MERGER, RESTRUCTURING AND OTHER NON-RECURRING CHARGES
During the six months ended March 31, 1997, ADT recorded a charge of $246.9
million related to restructuring and other non-recurring charges in its
electronic security services and corporate operations. During the last quarter
of fiscal 1997 the Company recorded merger, restructuring and other
non-recurring charges related to the mergers between ADT, Former Tyco, Keystone
and INBRAND.
Approximately $293.1 million of accrued merger and restructuring costs
remain in other current liabilities and $112.9 million in other non-current
liabilities as of March 31, 1998. The Company currently anticipates
8
<PAGE> 11
that the restructurings will be substantially completed by September 30, 1998,
except for certain long-term obligations.
8. CONSOLIDATED SEGMENT DATA
Selected information for the Company's four industry segments is as follows
(in millions):
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES:
Disposable and Specialty Products........... $ 785.6 $ 646.7 $1,462.1 $1,227.7
Fire and Security Services.................. 1,095.7 1,003.7 2,222.3 2,022.8
Flow Control Products....................... 548.8 537.3 1,098.9 1,048.8
Electrical and Electronic Components........ 421.9 145.1 756.2 265.6
-------- -------- -------- --------
$2,852.0 $2,332.8 $5,539.5 $4,564.9
======== ======== ======== ========
OPERATING INCOME (LOSS):
Disposable and Specialty Products........... $ 149.4 $ 109.5 $ 273.0 $ 205.8
Fire and Security Services.................. 149.8 88.9(1) 296.2 (47.7)(1)(2)
Flow Control Products....................... 73.4 58.5 145.3 110.4
Electrical and Electronic Components........ 92.5 28.8 164.2 51.2
Corporate and other expenses................ (15.6) (12.5) (31.1) (25.3)
-------- -------- -------- --------
$ 449.5 $ 273.2 $ 847.6 $ 294.4
======== ======== ======== ========
</TABLE>
- ---------------
(1) Includes charges of $9.6 million related to merger, restructuring and other
non-recurring charges incurred by ADT.
(2) Includes a charge of $237.3 million for related restructuring and other
non-recurring items in ADT's electronic security services operations.
9. INVENTORIES
Inventories are classified as follows (in millions):
<TABLE>
<CAPTION>
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ------------------
<S> <C> <C>
Purchased materials and manufactured
parts.................................... $ 436.9 $ 262.7
Work in process............................ 273.9 294.4
Finished goods............................. 700.9 567.7
-------- --------
$1,411.7 $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.
9
<PAGE> 12
11. TYCO INTERNATIONAL GROUP S.A.
As discussed in Note 3, the company filed a registration statement in April
1998 for debt securities through TIG, a wholly-owned subsidiary. Repayment of
amounts outstanding under these debt securities are fully and unconditionally
guaranteed by Tyco. TIG was incorporated as a Luxembourg holding company in
March 1998. 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.
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1998 1997
--------- -------------
<S> <C> <C>
Total current assets................................. $4,979.1 $4,018.3
Total noncurrent assets.............................. 8,323.1 6,236.2
Total current liabilities............................ 4,216.8 3,905.2
Total noncurrent liabilities......................... 4,068.6 3,998.1
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales............... $2,852.0 $2,332.8 $5,539.5 $4,564.9
Gross profit............ 979.4 765.2 1,875.2 1,468.5
Income before
extraordinary
items(1).............. 265.4 141.9 491.9 130.2
Net income(2)........... 265.1 141.9 490.7 127.6
</TABLE>
- ---------------
(1) Income before extraordinary items in the six months ended March 31, 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.
(2) Extraordinary items were losses on repayment and the write off of net
unamortized deferred refinancing costs relating to the early extinguishment
of debt.
10
<PAGE> 13
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 and 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 second quarter and six months ended March 31, 1998 with the
corresponding quarter and six months ended March 31, 1997.
Overview
Income before extraordinary item was $517.0 million, or $.91 per share on a
diluted basis for the six months ended March 31, 1998 as compared to $215.4
million, or $.43 per share, for the six months ended March 31, 1997. Excluding
the $89.9 million ($.17 per share) after-tax net charge for restructuring and
other non-recurring items recorded in the six months ended March 31, 1997,
income before extraordinary item rose 69.3% from $305.3 million, or $.60 per
share. The increase was attributable to strong earnings in the Electrical and
Electronic Components group principally resulting from the earnings from the
acquisition of 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 March 31, 1998 Compared to Quarter ended March 31, 1997
Sales increased 22% during the quarter ended March 31, 1998 to $2.85
billion from $2.33 billion in the quarter ended March 31, 1997.
Sales of the Disposable and Specialty Products group increased $138.9
million to $785.6 million, or 21.5%, principally due to increased sales at
Kendall. This increase was primarily due to the inclusion for one month in the
current fiscal quarter of the results of Sherwood-Davis & Geck, acquired in
February 1998. Additionally, sales increased at ADT Automotive, Tyco Plastics
and Tyco Specialty Products.
Sales of the Fire and Security Services group increased $92.0 million to
$1.10 billion, or 9.2%, principally due to increased sales in the United States
in the Company's electronic security services business. Sales increased in the
North American fire protection operations and the Australian fire protection and
security operations. The primary reason for the increase in sales in the fire
protection and security businesses is the increase in service and recurring
revenues. Excluding the effect of foreign currency changes, sales for the
quarter ended March 31, 1998 increased 14.5%, compared to the corresponding
quarter ended March 31, 1997.
Sales of the Flow Control Products group increased $11.5 million to $548.8
million, or 2.1%, primarily reflecting increased demand for valve products in
North America and Europe. Excluding the effect of foreign currency changes,
sales for the quarter increased 7.4%, compared to the corresponding quarter
ended March 31, 1997.
11
<PAGE> 14
Sales of the Electrical and Electronic Components group increased $276.8
million to $421.9 million, or 191%, principally due to increased sales at Tyco
Submarine Systems Ltd ("TSSL") as well as increased sales, to a lesser extent,
at Tyco Printed Circuit Group ("TPCG") and Allied Electrical Conduit. 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 before extraordinary item was $406.5 million for the quarter
ended March 31, 1998, as compared to $234.4 million for the quarter ended March
31, 1997. Pre-tax income for the quarter ended March 31, 1997 included charges
of $9.6 million for merger, restructuring and other non-recurring items incurred
by ADT. Excluding these non-recurring charges, pre-tax income increased $162.5
million, or 66.6%, from $244.0 million. Amortization expense for goodwill and
other intangible assets was $38.7 million for the quarter ended March 31, 1998
and $26.1 million for the quarter ended March 31, 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
$39.9 million to $149.4 million, or 36.4%. Operating profits were 19.0% of sales
in the quarter ended March 31, 1998 as compared to 16.9% and 18.3% in the
quarters ended March 31, 1997 and December 31, 1997, respectively. The increase
was principally due to higher sales and increased margins in Kendall's North
American healthcare business, including the effect of the acquisition of
Sherwood-Davis & Geck for one month in the quarter ended March 31, 1998 and
higher sales and increased margins at Tyco Plastics.
Fire and Security Services profits increased $51.3 million to $149.8
million, or 52.1%. Operating profits were 13.7% of sales in the quarter ended
March 31, 1998 as compared to 9.8% and 13.0% in the quarters ended March 31,
1997 and December 31, 1997, respectively. The overall increase was principally
due to increases in the service volume of the fire protection and security
businesses mentioned above. 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 and in the Company's fire protection
contracting businesses in North America and Australia.
Operating profits for the Flow Control group increased $14.9 million to
$73.4 million, or 25.5%. Operating profits were 13.4% of sales in the quarter
ended March 31, 1998 as compared to 10.9% and 13.1% in the quarters ended March
31, 1997 and December 31, 1997, respectively. The increase was due to higher
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.
For the quarter ended March 31, 1998 as compared to the quarter ended March
31, 1997, operating profits of the Electrical and Electronic Components group
increased $63.7 million to $92.5 million, or 221%. 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 both the TPCG and Allied
Electrical Conduit. Operating profits were 21.9% of sales in the quarter ended
March 31, 1998 and 19.8% in the quarter ended March 31, 1997.
The effect of average foreign exchange rates during the quarter ended March
31, 1998 as compared to the quarter ended March 31, 1997 was not material to the
Company's operating profits.
The effective income tax rate was 32.1% during the quarter ended March 31,
1998 and 37.2% during the quarter ended March 31, 1997, due to higher earnings
in domiciles with lower income tax rates.
Six months ended March 31, 1998 Compared to Six months ended March 31, 1997:
Sales increased 21% during the six months ended March 31, 1998 to $5.54
billion from $4.57 billion in the six months ended March 31, 1997.
Sales of the Disposable and Specialty Products group increased $234.4
million to $1.46 billion, or 19.1%, principally due to increased sales at
Kendall, Tyco Plastics and ADT Automotive. At Kendall, the increase in sales
resulted from the inclusion of INBRAND beginning in January 1997, the inclusion
for one month in the six months ended March 31, 1998 of Sherwood-Davis & Geck
and internal growth at the Ludlow Technical Products division.
12
<PAGE> 15
Sales of the Fire and Security Services group increased $199.5 million to
$2.22 billion, or 10%, principally due to increased sales in the United States
in the Company's electronic security services business. The North American,
European and Australian fire protection contracting and service operations, and
the European security businesses had increased sales in the six month period
ended March 31, 1998 as compared to the six month period ended March 31, 1997.
The primary reason for the increase in sales in the fire protection and security
businesses is the increase in service and recurring revenues. Excluding the
effect of foreign currency changes, sales for the six months ended March 31,
1998 increased 13.9%, compared to the corresponding six months ended March 31,
1997.
Sales of the Flow Control Products group increased $50.1 million to $1.1
billion, or 4.8%, 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. Excluding
the effect of foreign currency changes, sales for the six months increased 9.8%,
compared to the corresponding six months ended March 31, 1997.
Sales of the Electrical and Electronic Components group increased $490.6
million to $756.2 million, or 185%, 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 before extraordinary item was $765.9 million for the six
months ended March 31, 1998, as compared to $333.0 million for the six months
ended March 31, 1997. Pretax income for the six months ended March 31, 1997
includes net charges of $124.8 million primarily related to non-recurring items
in ADT's electronic security services operations. Excluding these non-recurring
charges, pre-tax income increased $308.2 million, or 67.3% from $457.7 million.
Amortization expense for goodwill and other intangible assets was $65.6 million
for the six months ended March 31, 1998 and $49.6 million for the six months
ended March 31, 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
$67.2 million to $273.0 million, or 32.7%. Operating profits were 18.7% of sales
in the six months ended March 31, 1998 and 16.8% in the six months ended March
31, 1997. The increase was principally due to higher sales and increased margins
in Kendall's North American healthcare business, including the effect of the
acquisition of Sherwood -- Davis & Geck for one month in the six months ended
March 31, 1998. 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.
Fire and Security Services profits increased $97.0 million to $296.2
million, or 48.7%. Operating profits were 13.3% of sales in the six months ended
March 31, 1998 and 9.8% in the six months ended March 31, 1997. The overall
increase was principally due to increases in the service volume and margins of
the fire protection and security businesses.
Operating profits for the Flow Control Products group increased $34.9
million to $145.3 million, or 31.6%. Operating profits were 13.2% of sales in
the six months ended March 31, 1998 and 10.5% in the six months ended March 31,
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.
For the six months ended March 31, 1998 as compared to the six months ended
March 31, 1997, operating profits of the Electrical and Electronic Components
group increased $113.0 million to $164.2 million, or 221%. Operating profits
were 21.7% of sales in the six months ended March 31, 1998 and 19.3% in the six
months ended March 31, 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 better margins at TPCG.
The effect of average foreign exchange rates during the six months ended
March 31, 1998 as compared to the six months ended March 31, 1997 was not
material to the Company's operating profits.
13
<PAGE> 16
The effective income tax rate was 32.5% during the six months ended March
31, 1998 and 35.3% during the six months ended March 31, 1997, due to the higher
earnings in domiciles with lower income tax rates.
Selling, general and administrative expenses were 18.6% of sales during the
quarter and six months ended March 31, 1998, as compared to 20.7% and 20.3% in
the quarter and six months ended March 31, 1997, respectively. The reduction in
selling, general and administrative costs as related to sales is principally due
to the effect of 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 $551.5 million during the first six months of fiscal
1998. Accounts payable and accrued expenses decreased $268.2 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 six months of fiscal 1998, the Company used cash to (i)
acquire companies for an aggregate of $2.17 billion, including $2.12 billion in
cash and the assumption of $45.1 million in debt, (ii) purchase $329.5 million
of property, plant and equipment; and (iii) pay dividends of $27.0 million. The
Company received net proceeds of approximately $1.25 billion from the sale of
25.3 million common shares and $196.5 million upon the exercise of common share
options.
At March 31, 1998, the Company's total debt was $3.40 billion, as compared
to $2.73 billion at September 30, 1997. The increase resulted principally from
the acquisitions discussed above, partially offset by the net proceeds from the
sale of common shares, the exchange of LYON's debt with a $76.3 million
principal balance for common shares and net operating cash flows. Shareholders'
equity was $5.40 billion, or $9.31 per share, at March 31, 1998, compared to
$3.43 billion, or $6.39 per share, at September 30, 1997. Goodwill and other
intangible assets were $4.62 billion at March 31, 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 $517.0 million and proceeds from the
exercise of options. Total debt as a percent of total capitalization (total debt
and shareholders' equity) was 39% at March 31, 1998 and 44% at September 30,
1997.
In December 1997, Tyco US terminated a $500 million portion of its existing
credit agreement and thereafter had the right to borrow (a) up to $750 million
until June 1998 and (b) up to $500 million until June 2002. Balances outstanding
at the time of termination were repaid through the issuance of private placement
notes. All of the private placement notes bear interest at LIBOR plus 0.25%. The
$625 million of private placement notes outstanding as of March 31, 1998 are due
in June 1998 and have been classified as long term liabilities, based on the
Company's ability and intent to refinance these obligations on a long term
basis.
On February 13, 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, such term converting from a 364-day term to a five year term
upon notice by Tyco US to the banks. Interest payable on borrowings is variable
based upon the borrower's option of selecting a Eurodollar rate plus margins
ranging form 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.
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.
14
<PAGE> 17
In December 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 $2.0 billion. The Securities and Exchange Commission has declared the
shelf registration effective. In March 1998, the Company sold 25.3 million
common shares at $50.75 per share. The net proceeds from the sale of
approximately $1.25 billion were used to repay indebtedness incurred for
previous acquisitions.
In April 1998 Tyco International Group S.A., a wholly-owned subsidiary of
the Company, filed a shelf registration to enable it to offer from time to time
unsecured debt securities at an aggregate initial issuance price not to exceed
$3.75 billion. Repayment of amounts outstanding under these debt securities are
fully and unconditionally guaranteed by Tyco (see Note 11). The securities and
exchange commission has declared the shelf registration effective.
Working capital requirements for the remainder of fiscal 1998 are not
expected to significantly increase from the working capital levels as they exist
at March 31, 1998. The level of capital expenditures is not expected to increase
materially in fiscal 1998 as compared to the spending levels during the first
six months of fiscal 1998. The Company believes that its funding sources are
adequate for its anticipated requirements through expected cash flow from
operations, established financial arrangements and accessing equity and debt
capital markets.
BACKLOG
The backlog of unfilled orders was approximately $2.7 billion at March 31,
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.
15
<PAGE> 18
PART II -- OTHER INFORMATION
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The adjourned 1997 Annual General Meeting ("Adjourned 1997 Meeting") of the
Company was held on March 27, 1998. The 1998 Annual General Meeting ("1998
Meeting") of the Company was also held on March 27, 1998, immediately following
the Adjourned 1997 Meeting. All proposals submitted at the two meetings were
passed, except for Proposal 4, as described below. The following is a brief
description of each matter voted upon at the two meetings.
For both the Adjourned 1997 Meeting and the 1998 Meeting.
PROPOSAL 1. To re-elect the eleven Board of Directors at the Adjourned
1997 Meeting and the 1998 Meeting, and to approve their remuneration:
The following is a tabulation of the votes submitted in respect of
Proposal 1; proxy votes giving discretion to the chairman of the meeting
have been included in the votes for each meeting.
<TABLE>
<CAPTION>
ADJOURNED 1997 MEETING 1998 MEETING
--------------------------- ---------------------------
NUMBER OF NUMBER OF
NUMBER OF VOTES AGAINST NUMBER OF VOTES AGAINST
VOTES FOR OR WITHHELD VOTES FOR OR WITHHELD
--------- ------------- --------- -------------
<S> <C> <C> <C> <C>
L. Dennis Kozlowski............ 447,726,708 384,044 447,830,214 280,538
Michael A. Ashcroft............ 446,653,956 1,456,796 446,743,501 1,367,251
Joshua M. Berman............... 447,911,554 199,198 447,920,400 190,343
Richard S. Bodman.............. 447,918,340 192,412 447,916,900 193,852
John F. Fort................... 447,912,529 198,223 447,913,344 197,408
Stephen W. Foss................ 447,914,712 196,040 447,919,667 190,885
Richard A. Gilleland........... 447,813,645 297,107 447,816,980 293,772
Philip M. Hampton.............. 447,908,759 201,993 447,751,863 358,889
James S. Pasman, Jr............ 447,466,562 644,190 447,473,711 637,041
W. Peter Slusser............... 447,474,414 636,338 447,474,065 636,687
Frank E. Walsh................. 447,925,444 185,308 447,921,853 189,099
</TABLE>
There were 3,369,378 abstentions and no broker non-votes at each meeting.
PROPOSAL 2. To re-appoint Coopers & Lybrand as the independent auditors of
the Company and to authorize the directors to fix the auditors remuneration at
both the Adjourned 1997 Meeting and the 1998 Meeting:
A total of 449,397,837 shares were voted for and 397,775 shares were
voted against the re-appointment and authorization at the Adjourned 1997
Meeting. A total of 446,125,439 shares were voted for and 2,289,878 shares
were voted against the re-appointment and authorization at the 1998
Meeting. There were 1,684,519 and 3,064,813 abstentions at the Adjourned
1997 Meeting and 1998 Meeting, respectively. There were no broker
non-votes.
For the 1998 Meeting only.
PROPOSAL 3. To approve the conversion of the Third, Fourth and Fifth
Preference Shares into Common Shares; to approve the increase in the authorized
Common Share Capital of the Company; and to approve consequential changes to the
Company's Bye-Laws, at the 1998 Meeting:
A total of 395,522,635 shares were voted for and 18,975,493 shares
were voted against the proposal. There were 1,476,981 abstentions and
35,505,022 broker non-votes.
PROPOSAL 4. To request that the Board of Directors take steps to amend the
bye-laws, effective after the 1998 Meeting, to provide that the Board of
Directors shall consist of a majority of independent directors:
A total of 105,102,295 shares were voted for and 308,591,872 shares
were voted against the proposal. There were 4,280,942 abstentions and
35,505,022 broker non-votes.
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 March 6, 1998
to put on file the Underwriting Agreements dated March 2, 1998 in connection
with its sale of 25,300,000 common shares.
A Current Report on Form 8-K was filed by the registrant on March 11, 1998
regarding the acquisition of Sherwood, which was consummated on February 27,
1998.
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 and pro forma
financial information as of December 31, 1997.
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: May 15, 1998
18
<PAGE> 21
TYCO INTERNATIONAL LTD.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
27 Financial Data Schedule
</TABLE>
<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 SIX
MONTHS ENDED MARCH 31, 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 562,000
<SECURITIES> 0
<RECEIVABLES> 2,021,200
<ALLOWANCES> 138,100
<INVENTORY> 1,411,700
<CURRENT-ASSETS> 4,919,800
<PP&E> 5,164,900
<DEPRECIATION> 1,895,900
<TOTAL-ASSETS> 13,338,500
<CURRENT-LIABILITIES> 4,245,200
<BONDS> 3,144,400
0
0
<COMMON> 116,100
<OTHER-SE> 5,286,700
<TOTAL-LIABILITY-AND-EQUITY> 13,338,500
<SALES> 5,539,500
<TOTAL-REVENUES> 5,539,500
<CGS> 3,664,300
<TOTAL-COSTS> 3,664,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 36,700
<INTEREST-EXPENSE> 95,400
<INCOME-PRETAX> 765,900
<INCOME-TAX> 248,900
<INCOME-CONTINUING> 517,000
<DISCONTINUED> 0
<EXTRAORDINARY> (1,200)
<CHANGES> 0
<NET-INCOME> 515,800
<EPS-PRIMARY> .93
<EPS-DILUTED> .91
</TABLE>
