UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
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)
January 17, 2000
001-13836
(Commission File Number)
---------------------
TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
Bermuda Not applicable
(State or other jurisdiction (IRS Employer
of Incorporation) Identification Number)
The Zurich Centre, Second Floor, 90 Pitts Bay Road,
Pembroke, HM 08, Bermuda
(Address of registrant's principal executive office)
441-292-8674*
(Registrant's telephone number)
---------------------
*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.
<PAGE>
ITEM 5. Other Events
Reference is made to the press release issued by the
Registrant on January 17, 2000, the text of which is attached hereto as
Exhibit 99.1, and to the press release issued by the Registrant
on January 18, 2000, the text of which is attached hereto as Exhibit 99.2, for
descriptions 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
99.1 Press Release dated January 17, 2000
99.2 Press Release dated January 18, 2000
<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
-------------------
Mark H. Swartz
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
Date: January 20, 2000
<PAGE>
Exhibit Index
Exhibit Number Title
99.1 Press Release dated January 17, 2000
99.2 Press Release dated January 18, 2000
[TYCO INTERNATIONAL LTD. LOGO]
Tyco International Ltd.
The Gibbons Building
10 Queen Street, Suite 301
Hamilton, HM11, Bermuda
Tele: 441-292-8674
FOR IMMEDIATE RELEASE CONTACT:
J. Brad McGee
Senior Vice President
Tyco International (US) Inc.
(603) 778-9700
TYCO INTERNATIONAL TO BUILD LARGEST, MOST TECHNOLOGICALLY
ADVANCED GLOBAL UNDERSEA FIBER OPTIC NETWORK
Hamilton, Bermuda, January 17, 2000 -- Tyco International Ltd.
(NYSE-TYC, LSE-TYI, BSX-TYC), a diversified manufacturing and service company,
announced today that its undersea fiber optics business will design, build,
operate and maintain its own global undersea fiber optic communications
network. Upon its completion, the system, to be known as the TyCom Global
NetworkTM (TGN), will be the largest and most advanced global undersea
telecommunications fiber optic network.
Phase 1 of TGN will offer a minimum capacity of 2.56 terabits over a
fully integrated system that will span more than 85,000 undersea kilometers
and connect 25 major telecommunications cities around the globe, including:
New York, London, Tel Aviv, St. Petersburg, Hong Kong, Tokyo, Guam, Hawaii,
Seattle, Los Angeles and 15 other major European cities. Tyco will utilize its
own state-of-the-art technology to design and manufacture all the cable,
optical amplifiers and terminal equipment needed for Phase 1. Tyco will also
design, build and equip the requisite network operating centers, telehouses
and cable stations which route the bandwidth traffic flowing over TGN.
Finally, Tyco's own fleet of 13 ships will install and maintain TGN. Tyco
Submarine Systems Ltd. (TSSL), a wholly-owned subsidiary of Tyco, has begun
the implementation of the first phase of TGN construction.
The Transatlantic portion of the first phase will be completed and
operational by the end of 2001. The remainder of the first phase, consisting
of the Transpacific and European systems, will be completed and operational by
the end of 2002. The timing and sequence of implementing additional phases of
the network will be based on future requirements of global and regional
demand.
"Undersea cable has been a contributor of strong earnings and cash
flow to Tyco for nearly 30 years," said L. Dennis Kozlowski, Chairman and
Chief Executive Officer of Tyco. "In recent years, due to both growing demand
and Tyco's market leadership, the undersea fiber optics business has
significantly increased its backlog of undersea contracts; developed and
implemented several breakthrough technologies in undersea telecommunications,
primarily related to increasing undersea cable capacity; partnered with key
customers through equity participations; and created innovative long-term
maintenance contracts such as the previously announced SEAHORSE(TM) global
operation and maintenance program. The TyCom Global Network will enable Tyco
to realize additional value for our shareholders by putting our expertise to
work not just as a designer, builder and maintainer of systems, but also as an
owner and seller of undersea cable bandwidth to the telecommunications
carriers of the world."
"The concept of building our own global network has intrigued us
since the creation of Tyco Submarine Systems two years ago. Our undersea fiber
optics business is ideally positioned for this undertaking based on its
knowledge of the market, expertise in designing, building, installing and
maintaining successively advanced undersea fiber optic networks, and its
relationships with the world's telecommunications carriers. Recent and planned
capacity additions now enable us to devote resources to the construction of
TGN, as well as to continue serving our customers' current and projected
needs," he continued.
The decision to commit Tyco's undersea fiber optics business to
implement TGN was based on the demand for undersea fiber optic networks to
serve the growing worldwide communication needs. The integration of the
Internet into the daily lives of the world's population, combined with the
burgeoning needs
<PAGE>
of global commerce and industry for data and other broadband applications,
continue to drive growth and demand. As broadband terrestrial fiber optic
networks are completed, they require the availability of undersea systems to
connect with the rest of the world. Tyco's current position as the premier
independent, fully integrated supplier and maintainer of the newest
technologies for undersea fiber optic networks provides it with a unique set
of abilities to meet the current and ongoing needs of a true global
telecommunications network.
TGN will be constructed in a number of phases. Construction
scheduling has been designed to offer global telecommunication connectivity to
those hubs around the world where voice, data and Internet demand for
bandwidth are growing the fastest. The TSSL Labs in Eatontown, New Jersey will
direct the deployment of emerging fiber optic technology on TGN. Installation,
operation and maintenance of TGN will be provided within the expanded SEAHORSE
global operation and maintenance programs developed and offered by TSSL. When
complete, TGN will be the largest independent, open-access undersea fiber
optic network, linking more than 80% of the world's population.
In addition to TGN, Tyco will continue to provide its technology and
services for the design, development, construction and maintenance of
telecommunication systems for customers around the world.
Tyco intends to offer up to 20% percent of its undersea fiber optic
cable business for sale in an initial public offering. Tyco expects that a
registration statement will be filed with the Securities and Exchange
Commission in the first calendar quarter of 2000 and to complete the offering
by mid-year, subject to market conditions. The new company will continue to be
managed by the Tyco and TSSL management team that has been responsible for the
market achievements of its undersea fiber optics business, including Mr.
Kozlowski, who will serve as Executive Chairman.
Tyco acquired Simplex in 1974 and combined it with the Submarine
Systems division of AT&T in 1997 to create TSSL, the premier fully integrated
supplier of undersea fiber optic telecommunications and services. TSSL
manufactures cable, repeater and transmission equipment at facilities located
in New Hampshire, New Jersey and Virginia. Its internationally distinguished
TSSL Labs, located in Eatontown, New Jersey, provide leading edge fiber optic
technology. Additionally, TSSL owns and operates 13 world class cable ships
for the installation and maintenance of undersea communication network
systems. TSSL has successfully completed 85 undersea fiber optic networks,
consisting of more than 350,000 kilometers of fiber optic cable and connecting
over 100 countries.
Tyco International Ltd., a diversified manufacturing and service
company, is the world's largest manufacturer and servicer of electrical and
electronic components and undersea telecommunications systems, the world's
largest manufacturer, installer, and provider of fire protection systems and
electronic security services, has strong leadership positions in disposable
medical products, plastics, and adhesives, and is the largest manufacturer of
flow control valves. The Company operates in more than 80 countries around the
world and has expected fiscal 2000 revenues in excess of $26 billion.
This release is not an offering of securities, which will be made
only by a prospectus.
FORWARD LOOKING INFORMATION
Certain comments in this release including, but not limited to, the
growth in worldwide demand for undersea telecommunications bandwidth; the
timing, size, and capacity of Phase 1; the timing and potential for additional
phases; the ability to secure funding for Phase 1 and any additional phases;
the timing, size and implementation of an initial public offering; and
expected fiscal 2000 revenue are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, 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 1999 Annual
Report on Form 10-K and the Company's 1999 Annual Report to Shareholders.
[TYCO INTERNATIONAL LTD. LOGO]
Tyco International Ltd.
The Gibbons Building
10 Queen Street, Suite 301
Hamilton, HM11, Bermuda
Tele: 441-292-8674
FOR IMMEDIATE RELEASE CONTACT:
J. Brad McGee
Senior Vice President
Tyco International (US) Inc.
(603) 778-9700
TYCO INTERNATIONAL REPORTS 48 PERCENT FIRST QUARTER
EARNINGS PER SHARE INCREASE
---------------------------------------------
EARNINGS PER SHARE RISE TO 46 CENTS FROM 31 CENTS
----------------------------------------------
Hamilton, Bermuda, January 18, 2000 -- Tyco International Ltd.
(NYSE-TYC, LSE-TYI, BSX-TYC), a diversified manufacturing and service company,
reported today that diluted earnings per share, before non-recurring charges
and credits and extraordinary item, for its first quarter of fiscal 2000 ended
December 31, 1999 were 46 cents per share, a 48 percent increase over last
year's 31 cents per share. Net income rose to $784.3 million, an increase of
54 percent over last year's $509.3 million. Sales for the quarter rose 27
percent to $6.64 billion compared with last year's $5.21 billion. Last year's
results have been restated to reflect the merger with AMP, which occurred on
April 2, 1999 and was accounted for as a pooling of interests, and are before
non-recurring charges and extraordinary item. After giving effect to
acquisition related and other non-recurring charges and credits, diluted
earnings per share were 46 cents in 2000 compared to a loss of 7 cents in
1999.
"Organic growth across each of our four business segments and all
geographies drove Tyco's performance in the first quarter," said L. Dennis
Kozlowski, Tyco's Chairman and Chief Executive Officer. "Free cash flow was
improved as well. The strength of our core businesses combined with strong
cash flows are indicative of another strong year for Tyco," he added.
The quarterly operating profits and margins for the Company's four
business segments that are presented in the discussions below are stated
before charges and credits for merger, restructuring and other non-recurring
charges, charges for impairment of long-lived assets, and goodwill
amortization. All dollar amounts are in millions.
TELECOMMUNICATIONS AND ELECTRONICS
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 2,739.2 $ 1,804.0
Operating profits $ 571.7 $ 257.9
Operating margins 20.9% 14.3%
<PAGE>
2
The 52% increase in sales resulted from both acquisitions and strong
organic growth. Acquisitions included Temasa and Raychem in Fiscal 1999 and
Siemens Electromechanical Components and Praegitzer in Fiscal 2000. In
addition, Tyco Electronics, which includes AMP, Tyco Submarine Systems Ltd.
(TSSL) and Tyco Printed Circuit Group (TPCG), achieved significant organic
growth quarter over quarter. Demand remains especially strong for TSSL.
Operating profits more than doubled due to improved margins at AMP
and Raychem, increased service and maintenance revenues at TSSL, increased
sales at TPCG, and the acquisitions noted above. Margin improvements at AMP
and Raychem were driven by increased volume, improved pricing and continuing
cost reduction programs.
HEALTHCARE AND SPECIALTY PRODUCTS
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 1,563.8 $ 1,342.8
Operating profits $ 362.1 $ 293.2
Operating margins 23.2% 21.8%
Healthcare and Specialty Products sales increased almost 17% over
the prior year, principally as a result of organic growth in both Tyco
Healthcare and Tyco Plastics. Of particular note was Tyco Healthcare's
especially strong growth outside the U.S. Additionally, Tyco Healthcare
experienced strong organic growth in the U.S. Surgical product lines resulting
from the combined sales efforts and bundling of products with the Kendall and
Sherwood lines. Tyco Plastics sales benefited from both increased volume and
an increase in resin prices as compared to the same quarter last year.
The 24% increase in operating profits at Tyco Healthcare was driven
by volume and cost savings from the consolidation of facilities. Tyco Plastics
and ADT Automotive also had significant increases in operating profit as
compared to the same period a year ago.
FIRE AND SECURITY SERVICES
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 1,449.7 $ 1,259.7
Operating profits $ 244.1 $ 196.9
Operating margins 16.8% 15.6%
Tyco Fire and Security Services achieved a 15% increase in sales as
compared with the same quarter last year, resulting primarily from organic
growth in both the fire and security divisions within the segment. Service
revenues and contract backlog continues to increase in the fire protection
division around the world.
Operating profits rose 24% as the security business continues to
enjoy healthy incremental margins on new monitoring accounts and fire
protection benefitted from its efforts at increasing its service and
maintenance business. Cost reduction programs in both fire and security
contributed as well.
FLOW CONTROL PRODUCTS AND SERVICES
December 31, 1999 December 31, 1998
----------------- -----------------
Sales $ 886.1 $ 807.0
Operating profits $ 170.7 $ 129.2
Operating margins 19.3% 16.0%
<PAGE>
3
Sales figures for the first quarter of fiscal 2000 include the
acquisitions of Glynwed, the heat tracing business of Raychem, Central
Sprinkler and AFC Cable, which were acquired after the first quarter of fiscal
1999. Sales figures for the first quarter of 2000 exclude the revenues of
Mueller and Grinnell Supply Sales, which were divested in August 1999.
Excluding the impact of these items, sales for Flow Control experienced low
double digit growth. Allied, EarthTech and Tyco Valves and Controls continue
to enjoy increased demand.
Operating profits increased 32% as a result of organic growth from
cost reduction programs, efficiency improvements and an increase in the
component of service work, as well as, the acquisitions noted above. These
increases are net of a reduction in operating profits as a result of the sale
of Grinnell Supply Sales and Mueller, which was partially offset by royalty
and licensing fee income from certain intellectual property associated with
these divested businesses.
FREE CASH FLOW
Tyco management refers to the net amount of cash generated from
operating activities less capital expenditures and dividends as "free cash
flow." Free cash flow was in excess of $400 million in the first quarter of
fiscal 2000, compared with negative cash flow of $617 million in the first
quarter of fiscal 1999, resulting in an improvement of over $1 billion.
Included as a reduction of operating cash flows is $58 million in the first
quarter of fiscal 2000 as compared to $207 million in the first quarter of
fiscal 1999 related to cash spending on restructurings. Historically, the
first fiscal quarter is the lowest generator of free cash flow, primarily due
to the payment of year end cash bonuses to employees based on the results of
the fiscal year just ended.
In addition, the Company paid out $113 million in the first quarter
of fiscal 2000, compared to $51 million in first quarter of fiscal 1999, in
cash related to purchase accounting spending. This amount is not included in
the calculation of free cash flow.
SHARE BUYBACK
The Company also announced that the Board of Directors of the
Company has approved the expenditure of up to an additional $2.0 billion to
repurchase shares of the Company. The exact timing and amount of the
repurchases will be subject to market conditions and other factors.
-----------------------------------
Tyco International Ltd., a diversified manufacturing and service
company, is the world's largest manufacturer and servicer of electrical and
electronic components and undersea telecommunications systems, the world's
largest manufacturer, installer, and provider of fire protection systems and
electronic security services, has strong leadership positions in disposable
medical products, plastics, and adhesives, and is the largest
<PAGE>
4
manufacturer of flow control valves. The Company operates in more than 80
countries around the world and has expected fiscal 2000 revenues in excess of
$26 billion.
The company will discuss first quarter results on a conference call
for investors today at 11:00 am (EST). The conference call can be accessed at
the following website: investors.tycoint.com/medialist.cfm
FORWARD LOOKING INFORMATION
Certain comments in this release including, but not limited to, the
current year outlook for Tyco and expected fiscal 2000 revenues are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, 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 1999 Annual Report on Form 10-K and the
Company's 1999 Annual Report to Shareholders.
011800 522
table following
<PAGE>
5
TYCO INTERNATIONAL LTD.
RESULTS OF OPERATIONS (1)(2)
(in millions, except per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
12/31/1999 12/31/1998
SALES
<S> <C> <C>
Telecommunications and Electronics $ 2,739.2 $ 1,804.0
Healthcare and Specialty Products 1,563.8 1,342.8
Fire and Security Services 1,449.7 1,259.7
Flow Control Products and Services 886.1 807.0
------------- ----------
Total Sales $ 6,638.8 $ 5,213.5
============= ==========
OPERATING PROFITS
Telecommunications and Electronics $ 571.7 $ 257.9
Healthcare and Specialty Products 362.1 293.2
Fire and Security Services 244.1 196.9
Flow Control Products and Services 170.7 129.2
------------- ----------
Total operating profits 1,348.6 877.2
Corporate (54.3) (19.0)
Expenses
Goodwill amortization (83.9) (44.4)
expense
Interest expense, net (164.7) (101.3)
------------- ----------
Income before income taxes 1,045.7 712.5
Income taxes (261.4) (203.2)
------------- ----------
INCOME BEFORE EXTRAORDINARY ITEM $ 784.3 $ 509.3
============= ===========
EARNINGS PER SHARE:
BASIC $ 0.46 $ 0.31
============= ==========
DILUTED (3) $ 0.46 $ 0.31
============= ==========
WEIGHTED AVERAGE COMMON
SHARES:
BASIC 1,693.2 1,622.0
============= ==========
DILUTED 1,716.8 1,655.5
============= ==========
</TABLE>
<PAGE>
6
(1) Three months ended December 31, 1999 are before credits associated with
the revision of estimates of restructuring costs of $137.6 million ($92.6
million, after tax) and restructuring and impairment charges of $113.4
million ($85.5 million, after tax) associated primarily with the exiting
of the interventional cardiology business. Including these credits and
charges, income before extraordinary item is $0.46 per diluted share.
Three months ended December 31, 1999 are before extraordinary losses of
$0.2 million after tax relating to the early extinguishment of debt.
(2) Three months ended December 31, 1998 are before charges of $786.9 million
($617.0 million, after tax) related to the U.S. Surgical merger and AMP's
profit improvement plan. Including these charges, loss before
extraordinary item is $0.07 per diluted share. Three months ended
December 31, 1998 are before extraordinary losses of $2.4 million 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 $0.4 million and $1.2 million
in the three months ended December 31, 1999 and 1998, respectively, must
be added back to income before extraordinary item for computing diluted
earnings per share.
