UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 20, 1999
0-16979
(Commission File Number)
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TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
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)
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*The executive offices of 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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ITEM 5. Other Events
Reference is made to the press release issued to the public by the
Registrant on July 20, 1999, the text of which is attached hereto as Exhibit 99,
for a description of the events reported pursuant to this Form 8-K.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c)Exhibits.
Exhibit Number Title
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99.1 Press Release dated July 20, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TYCO INTERNATIONAL LTD.
By: /s/ Mark H. Swartz
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Mark H. Swartz
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: July 21, 1999
<PAGE>
Exhibit Index
Exhibit Number Title Page
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99.1 Press Release dated July 20, 1999. 6
Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACT:
J. Brad McGee
Senior Vice President
Tyco International (US) Inc.
(603) 778-9700
Tyco International Reports Record Third Quarter Earnings
Earnings Per Share Increase 71 Percent
Tyco Announces Sale of Certain Flow Control Businesses
Tyco Declares Two-For-One Stock Split
Hamilton, Bermuda, July 20, 1999 -- Tyco International Ltd. (NYSE-TYC, LSE-TYI,
BSX-TYC), a diversified manufacturing and service company, reported today that
diluted earnings per share, before acquisition and other non-recurring charges
and before an extraordinary item, for its third quarter ended June 30, 1999 were
84 cents per share, a 71 percent increase over last year's 49 cents per share.
Income before acquisition and other non-recurring charges and an extraordinary
item rose to a record $699.4 million, an increase of 75 percent over last year's
$400.1 million. Sales for the quarter were up 18 percent at $5.82 billion
compared with last year's $4.95 billion. Income before acquisition and other
non-recurring charges and an extraordinary item for the first nine months of
fiscal 1999 reached $1.78 billion, or $2.14 per diluted share, a 44 percent
increase over last year's diluted per share earnings of $1.49. Revenues for the
first nine months increased to $16.27 billion, 17 percent higher than last
year's $13.95 billion.
Last year's results have been restated to reflect the mergers with AMP
Incorporated and U.S. Surgical, both of which were accounted for as poolings of
interests, and are before acquisition and other non-recurring charges and an
extraordinary item. Tyco's merger with AMP was completed on April 2, 1999. The
results for the fiscal 1999 periods prior to the merger have been restated to
include AMP's results.
"With strong contributions to higher earnings from each of our four
business segments, Tyco produced another record quarter and anticipates a record
year," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer.
"We continue to benefit from strong organic revenue growth and margin expansion
enhanced by the integration of synergistic acquisitions. Additionally, the
Company's free cash flow (operating cash less capital expenditures and
dividends) for the quarter was in excess of $800 million, a record high. The
strong cash flow, along with the anticipated proceeds from the sale of certain
of our flow control businesses, well position our Company for future earnings
growth. We are moving forward with integration planning and due diligence
related to our acquisition of Raychem, which we expect to close on
<PAGE>
schedule in mid-August. We remain excited about the sales growth and earnings
contribution to be provided by the combination of Raychem and AMP," he stated.
Mr. Kozlowski also stated, "Based upon the Company's strong performance and
outlook for the future, the Board of Directors has declared a two-for-one stock
split on its Common Shares. The split will be in the form of a 100 percent stock
distribution payable on October 21, 1999 to shareholders of record on October 1,
1999."
HEALTHCARE AND SPECIALTY PRODUCTS
Earnings for the third quarter at Tyco's Healthcare and Specialty Products
group grew 55 percent to $357.8 million, compared to the $231.3 million reached
a year earlier. Sales grew to $1.45 billion versus last year's $1.34 billion.
Steadily improving margins throughout our worldwide healthcare operations
contributed to the earnings increase at Tyco Healthcare. This margin expansion
was driven by a disciplined approach to ongoing plant consolidation and a
continuous effort to bundle more products.
FIRE AND SECURITY SERVICES
At Tyco's Fire and Security Services group, earnings for the quarter
increased 45 percent to $240.6 million versus $165.5 million last year. Sales
reached $1.55 billion compared to $1.17 billion last year. Organic revenue and
income growth for the quarter were positively impacted by a strong increase in
Tyco's security business outside of the United States. The security and fire
inspection businesses in the United States continue to demonstrate significant
and sustainable growth.
FLOW CONTROL
Third quarter earnings at the Tyco Flow Control group increased 28 percent
to $112.6 million from $88.3 million last year. Sales were $792.5 million
compared to the prior year's $604.2 million. Demand for Tyco's valves and
related products continues to be strong worldwide. In addition, Tyco announced
that it has agreed to sell certain of its flow control operations which,
together with other related transactions, will provide cash proceeds of
approximately $1 billion. These divestitures, which are expected to close prior
to the end of the fiscal year, will focus the Company's flow control group on
the more profitable service and sustainable growth sectors of the Company, and
provide cash which can be redeployed into higher return businesses.
ELECTRICAL AND ELECTRONIC COMPONENTS
At Tyco's Electrical and Electronic Components group, quarterly earnings
reached $369.0 million, just over double the $181.0 million reported in the same
quarter last year. Sales rose to $2.02 billion compared with $1.83 billion a
year earlier. The merger with AMP was completed on April 2, and actions were
taken immediately to attain the projected cost savings. The savings were
achieved earlier and were greater than initially estimated, with revenues also
stronger than originally forecasted. We expect this trend to continue for the
remainder of fiscal
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1999 as manufacturing consolidations are implemented and revenue growth is
accelerated. Additionally, Tyco Submarine Systems continued its strong
performance this quarter with revenues, earnings and backlog all at record
levels. Demand for cable capacity remains robust and the Company sees many
additional opportunities for equity interests in cable projects.
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Tyco International Ltd., a diversified manufacturing and service company,
is the world's largest manufacturer, installer, and provider of fire protection
systems and electronic security services, the largest manufacturer and servicer
of electrical and electronic components and underwater telecommunications
systems, the largest manufacturer of flow control valves, and has strong
leadership positions in disposable medical products and plastics and adhesives.
The Company operates in more than 80 countries around the world and has expected
fiscal 1999 revenues in excess of $22 billion.
FORWARD LOOKING INFORMATION
Comments in this earnings release concerning expected fiscal 1999 revenues,
revenue growth, cost savings and business cyclicality are forward-looking
statements, which are based on management's good faith expectations and belief
concerning future developments. Actual results may materially differ from these
expectations as a result of many factors, relevant examples of which are set
forth in the "Management Discussion and Analysis" section of the Company's 1998
Annual Report to Shareholders and the Company's 1998 Annual Report on Form 10-K.
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TYCO INTERNATIONAL LTD.
RESULTS OF OPERATIONS (1) (2)
(in millions except per share data)
Three Months Ended Nine Months Ended
6/30/99 6/30/98 6/30/99 6/30/98
SALES $5,819.8 $4,947.9 $16,272.0 $13,949.3
======== ======== ========= =========
Income before
income taxes $ 945.1 $ 585.4 $ 2,455.1 $ 1,759.2
Income taxes (245.7) (185.3) (678.6) (561.1)
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INCOME BEFORE
EXTRAORDINARY ITEM $ 699.4 $ 400.1 $ 1,776.5 $ 1,198.1
======== ======== ========= =========
EARNINGS PER
SHARE: (3)
BASIC $ 0.85 $ 0.50 $ 2.18 $ 1.52
======== ======== ========= =========
DILUTED $ 0.84 $ 0.49 $ 2.14 $ 1.49
======== ======== ========= =========
COMMON EQUIVALENT
SHARES:
BASIC 820.0 806.9 815.5 786.1
======== ======== ========= =========
DILUTED 836.9 824.7 832.8 807.1
======== ======== ========= =========
(1) Three months and nine months ended June 30, 1999 are before
extraordinary items of $0.5 million and $45.4 million, respectively,after-tax,
relating to the early extinguishment of debt. Three months and nine months ended
June 30, 1999 are before acquisition and other non-recurring charges of $505.4
million and $1.5 billion, after-tax, respectively, related to the AMP merger and
profit improvement plan and the U.S. Surgical merger. Including these charges,
per diluted share income before extraordinary item is $0.23 and $0.30 for the
three and nine months ended June 30, 1999, respectively.
(2) Three months and nine months ended June 30, 1998 are restated for
pooling of interests with AMP and U.S. Surgical. The nine months ended June 30,
1998 are before non-recurring items of $9.4 million, after-tax. These charges
relate to restructuring actions taken by AMP and U.S. Surgical prior to their
mergers with Tyco. The three and nine months ended June 30, 1998 are before
extraordinary items of $1.0 million and $2.2 million, respectively, after-tax,
relating to the early extinguishment of debt.
(3) Earnings per share based on diluted shares assumes conversion of LYONs
notes. Accordingly, net interest expense of $1.0 million and $3.4 million in the
three months and nine months ended June 30, 1999, and $1.5 million and $5.8
million in the three months and nine months ended June 30, 1998, must be added
back to income before extraordinary item for computing diluted earnings per
share.
