<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q/A
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
001-13836
(COMMISSION FILE NUMBER)
------------------------------
TYCO INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
BERMUDA NOT APPLICABLE
(JURISDICTION OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NUMBER)
THE 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)
</TABLE>
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
The number of common shares outstanding as of June 2, 2000 was
1,689,211,127.
------------------------
* 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>
TYCO INTERNATIONAL LTD.
This Amendment on Form 10-Q/A is being filed to adjust the Company's
Consolidated Financial Statements for the quarters ended December 31, 1999 and
1998, following a limited review by the accounting staff of the Division of
Corporation Finance of the U.S. Securities and Exchange Commission. This filing
should be read in conjunction with the Company's Amendment No. 3 on Form 10-K/A
for the fiscal year ended September 30, 1999. Adjustments to the Consolidated
Financial Statements for the quarter ended December 31, 1998 reflect the changes
made in the amendment to the Company's fiscal 1999 Form 10-K. These changes have
no impact on previously reported net sales or net cash provided by operating
activities for any periods. The amendment to the financial statements herein is
being filed to reclassify certain charges and to adjust merger, restructuring
and other non-recurring charges between periods due to the timing of the
underlying events as follows:
- To reclassify $65.6 million of charges, incurred by AMP during the quarter
ended December 31, 1998 prior to its merger with Tyco, related to the
write-off of goodwill and fixed assets of exited businesses in the
Consolidated Statements of Operations out of the "merger, restructuring
and other non-recurring (credits) charges, net" line and into the "charge
for the impairment of long-lived assets" line;
- To eliminate $26.0 million of merger, restructuring and other
non-recurring credits recorded to merger, restructuring and other
non-recurring (credits) charges in the first quarter of fiscal 2000
related to charges which were originally recorded in fiscal 1999 related
primarily to severance and facility closings;
- To reverse a $16.9 million credit previously recorded in the quarter ended
December 31, 1999, related to merger, restructuring and other
non-recurring charges which were originally recorded in fiscal 1997
related primarily to facility closings and lease termination costs, and to
record $3.0 million of that credit in the quarter ended December 31, 1998;
- To reclassify $15.0 million of inventory related restructuring costs,
incurred during the quarter ended December 31, 1998, in the Consolidated
Statements of Operations out of the "merger, restructuring and other
non-recurring (credits) charges, net" line and into the "cost of sales"
line;
- To report certain non-recurring costs related to the integration of the
USSC suture business originally recorded in the first quarter of fiscal
1999 as costs in later periods when such activity was completed (reversing
a $22.3 million charge in the quarter ended December 31, 1998 and
recording $7.7 million of that charge in the quarter ended December 31,
1999); and
- To update various disclosures primarily related to the above adjustments.
The impact on the Consolidated Statements of Operations and Consolidated
Balance Sheet, as a result of the above adjustments, is as follows (in millions,
except per share data):
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
--------------------- ---------------------
AMOUNT AMOUNT
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Statements of Operations:
Net sales........................................... $6,638.8 $6,638.8 $5,213.5 $5,213.5
Cost of sales....................................... 4,191.9 4,191.9 3,401.6 3,416.6
Merger, restructuring and other non-recurring
(credits) charges, net............................ (129.6) (79.0) 603.7 497.8
Charge for the impairment of long-lived assets...... 99.0 99.0 76.0 141.6
Operating income.................................... 1,234.6 1,184.0 49.1 74.4
Net income (loss)................................... 791.2 757.0 (110.1) (92.0)
Diluted earnings (loss) per common share............ 0.46 0.44 (0.07) (0.06)
Balance Sheet:
Current deferred income tax asset................... $ 622.1 $ 621.2
Accrued expenses and other current liabilities...... 3,303.5 3,300.1
Accumulated earnings................................ 4,725.5 4,728.0
</TABLE>
<PAGE>
INDEX TO FORM 10-Q/A
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PART I--FINANCIAL INFORMATION:
Item 1--Financial Statements
Consolidated Balance Sheets--December 31, 1999 (unaudited)
and September 30, 1999.................................. 1
Consolidated Statements of Operations for the Quarters
ended December 31, 1999 and 1998 (unaudited)............ 2
Consolidated Statements of Cash Flows for the Quarters
ended December 31, 1999 and 1998 (unaudited)............ 3
Notes to Consolidated Financial Statements (unaudited).... 4-13
Item 2--Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 14-22
PART II--OTHER INFORMATION:
Item 6--Exhibits and Reports on Form 8-K.................... 23
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(RESTATED) (RESTATED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,230.1 $ 1,762.0
Receivables, less allowance for doubtful accounts of
$361.0 at December 31, 1999 and $329.8 at September 30,
1999.................................................... 5,022.0 4,582.3
Contracts in process...................................... 416.2 536.6
Inventories............................................... 3,069.8 2,849.1
Deferred income taxes..................................... 621.2 694.3
Prepaid expenses and other current assets................. 778.0 721.2
--------- ---------
11,137.3 11,145.5
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land...................................................... 520.2 386.8
Buildings................................................. 2,410.2 2,414.0
Subscriber systems........................................ 2,822.5 2,703.3
Machinery and equipment................................... 7,552.2 7,005.3
Leasehold improvements.................................... 263.5 224.4
Construction in progress.................................. 468.6 573.0
Accumulated depreciation.................................. (6,152.7) (5,984.4)
--------- ---------
7,884.5 7,322.4
--------- ---------
GOODWILL AND OTHER INTANGIBLE ASSETS, NET................... 13,985.2 12,158.9
LONG-TERM INVESTMENTS....................................... 406.8 269.7
DEFERRED INCOME TAXES....................................... 629.3 668.8
OTHER ASSETS................................................ 762.8 779.0
--------- ---------
TOTAL ASSETS............................................ $34,805.9 $32,344.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt.... $ 973.3 $ 1,012.8
Accounts payable.......................................... 2,878.3 2,530.8
Accrued expenses and other current liabilities............ 3,300.1 3,545.7
Contracts in process--billings in excess of costs......... 1,090.5 977.9
Deferred revenue.......................................... 267.0 258.8
Income taxes.............................................. 862.5 798.0
Deferred income taxes..................................... 0.8 1.0
--------- ---------
9,372.5 9,125.0
--------- ---------
LONG-TERM DEBT, LESS CURRENT MATURITIES..................... 10,514.6 9,109.4
OTHER LONG-TERM LIABILITIES................................. 1,264.2 1,236.4
DEFERRED INCOME TAXES....................................... 494.7 504.2
SHAREHOLDERS' EQUITY:
Preference shares, $1 par value, 125,000,000 authorized,
none issued............................................... -- --
Common shares, $0.20 par value, 2,500,000,000 shares
authorized; 1,693,171,973 shares outstanding at December
31, 1999 and 1,690,175,338 shares outstanding at September
30, 1999, net of 19,944,274 and 11,432,678 shares owned by
subsidiaries at December 31, 1999 and September 30, 1999,
respectively.............................................. 338.6 338.0
Capital in excess:
Share premium............................................. 4,917.0 4,881.5
Contributed surplus, net of deferred compensation of $30.5
at December 31, 1999 and $30.7 at September 30, 1999.... 3,700.5 3,607.6
Accumulated earnings........................................ 4,728.0 3,992.3
Accumulated other comprehensive loss........................ (524.2) (450.1)
--------- ---------
13,159.9 12,369.3
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. $34,805.9 $32,344.3
========= =========
</TABLE>
See notes to consolidated financial statements (unaudited).
1
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
-----------------------
1999 1998
---------- ----------
(RESTATED) (RESTATED)
<S> <C> <C>
NET SALES................................................... $6,638.8 $5,213.5
Cost of sales............................................... 4,191.9 3,416.6
Selling, general and administrative expenses................ 1,242.9 1,083.1
Merger, restructuring and other non-recurring (credits)
charges, net.............................................. (79.0) 497.8
Charges for the impairment of long-lived assets............. 99.0 141.6
-------- --------
OPERATING INCOME............................................ 1,184.0 74.4
Interest expense, net....................................... (164.7) (123.5)
-------- --------
Income (loss) before income taxes and extraordinary items... 1,019.3 (49.1)
Income taxes................................................ (262.1) (40.5)
-------- --------
Income (loss) before extraordinary items.................... 757.2 (89.6)
Extraordinary items, net of taxes........................... (0.2) (2.4)
-------- --------
NET INCOME (LOSS)........................................... $ 757.0 $ (92.0)
======== ========
BASIC EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items.................. $ 0.45 $ (0.06)
Extraordinary items, net of taxes......................... -- --
Net income (loss)......................................... 0.45 (0.06)
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items.................. $ 0.44 $ (0.06)
Extraordinary items, net of taxes......................... -- --
Net income (loss)......................................... 0.44 (0.06)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic..................................................... 1,693.2 1,622.0
Diluted................................................... 1,716.8 1,622.0
</TABLE>
See notes to consolidated financial statements (unaudited).
2
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
-----------------------
1999 1998
---------- ----------
(RESTATED) (RESTATED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ 757.0 $ (92.0)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Merger, restructuring and other non-recurring (credits)
charges, net............................................ (80.3) 231.1
Charges for the impairment of long-lived assets........... 99.0 141.6
Depreciation.............................................. 250.7 247.5
Goodwill and other intangible amortization................ 123.9 66.3
Deferred income taxes..................................... 107.9 (91.3)
Other non-cash items...................................... 17.8 67.3
Changes in assets and liabilities, net of the effects of
acquisitions:
Accounts receivable and contracts in process............ 31.6 (223.1)
Inventories............................................. (18.2) (138.2)
Prepaid expenses and other current assets............... (4.9) (81.1)
Accounts payable, accrued expenses and other current
liabilities........................................... (490.4) (367.7)
Income taxes............................................ 64.7 88.9
Deferred revenue........................................ 11.1 10.7
Other................................................... 3.2 (93.9)
--------- ---------
Net cash provided by (used in) operating activities... 873.1 (233.9)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment................... (420.5) (308.1)
Purchase of leased property................................. -- (234.0)
Acquisition of businesses, net of cash acquired............. (1,734.2) (831.8)
(Increase) decrease in investments.......................... (134.1) 11.0
Other....................................................... 34.8 (3.5)
--------- ---------
Net cash used in investing activities................. (2,254.0) (1,366.4)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on long-term debt and lines of credit.............. 1,247.6 1,621.2
Proceeds from exercise of options........................... 35.8 96.4
Dividends paid.............................................. (21.4) (75.0)
Purchase of treasury shares................................. (413.0) (20.1)
--------- ---------
Net cash provided by financing activities............. 849.0 1,622.5
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS........ (531.9) 22.2
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 1,762.0 1,072.9
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 1,230.1 $ 1,095.1
========= =========
</TABLE>
See notes to consolidated financial statements (unaudited).
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements presented herein include the
consolidated accounts of Tyco International Ltd. (the "Company" or "Tyco"), a
company incorporated in Bermuda, and its subsidiaries. The financial statements
have been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles in the United States. These statements should be
read in conjunction with the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1999.
The consolidated 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. Certain prior period
amounts have been reclassified to conform with the current period presentation.
REVISION--The Company has revised its Consolidated Financial Statements for
the quarters ended December 31, 1999 and 1998, following a limited review by the
accounting staff of the Division of Corporation Finance of the U.S. Securities
and Exchange Commission. This filing should be read in conjunction with the
Company's Amendment No. 3 on Form 10-K/A for the fiscal year ended
September 30, 1999. Adjustments to the Consolidated Financial Statements for the
quarter ended December 31, 1998 reflect the changes made in the amendment to the
Company's fiscal 1999 Form 10-K. These changes have no impact on previously
reported net sales or net cash provided by operating activities for any periods.
The amendment to the financial statements herein is being filed to reclassify
certain charges and to adjust merger, restructuring and other non-recurring
charges between periods due to the timing of the underlying events as follows:
- To reclassify $65.6 million of charges, incurred by AMP during the quarter
ended December 31, 1998 prior to its merger with Tyco, related to the
write-off of goodwill and fixed assets of exited businesses in the
Consolidated Statements of Operations out of the "merger, restructuring
and other non-recurring (credits) charges, net" line and into the "charge
for the impairment of long-lived assets" line;
- To eliminate $26.0 million of merger, restructuring and other
non-recurring credits recorded to merger, restructuring and other
non-recurring (credits) charges in the first quarter of fiscal 2000
related to charges which were originally recorded in fiscal 1999 related
primarily to severance and facility closings;
- To reverse a $16.9 million credit previously recorded in the quarter ended
December 31, 1999, related to merger, restructuring and other
non-recurring charges which were originally recorded in fiscal 1997
related primarily to facility closings and lease termination costs, and to
record $3.0 million of that credit in the quarter ended December 31, 1998;
- To reclassify $15.0 million of inventory related restructuring costs,
incurred during the quarter ended December 31, 1998, in the Consolidated
Statements of Operations out of the "merger, restructuring and other
non-recurring (credits) charges, net" line and into the "cost of sales"
line;
- To report certain non-recurring costs related to integration of the USSC
suture business originally recorded in the first quarter of fiscal 1999 as
costs in later periods when such activity was completed (reversing a
$22.3 million charge in the quarter ended December 31, 1998 and recording
$7.7 million of that charge in the quarter ended December 31, 1999); and
- To update various disclosures primarily related to the above adjustments.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
1. BASIS OF PRESENTATION --(CONTINUED)
The impact on the Consolidated Statements of Operations and Consolidated
Balance Sheet, as a result of the above adjustments, is as follows (in millions,
except per share data):
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
--------------------- ---------------------
AMOUNT AMOUNT
PREVIOUSLY AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Statements of Operations:
Net sales........................................... $6,638.8 $6,638.8 $5,213.5 $5,213.5
Cost of sales....................................... 4,191.9 4,191.9 3,401.6 3,416.6
Merger, restructuring and other non-recurring
(credits) charges, net............................ (129.6) (79.0) 603.7 497.8
Charge for the impairment of long-lived assets...... 99.0 99.0 76.0 141.6
Operating income.................................... 1,234.6 1,184.0 49.1 74.4
Net income (loss)................................... 791.2 757.0 (110.1) (92.0)
Diluted earnings (loss) per common share............ 0.46 0.44 (0.07) (0.06)
Balance Sheet:
Current deferred income tax asset................... $ 622.1 $ 621.2
Accrued expenses and other current liabilities...... 3,303.5 3,300.1
Accumulated earnings................................ 4,725.5 4,728.0
</TABLE>
2. ACQUISITIONS
During the first quarter of fiscal 2000, the Company purchased businesses in
each of its four business segments for an aggregate cost of $2,415.9 million,
consisting of $1,620.9 million in cash, net of cash acquired, the issuance of
approximately 15.5 million common shares valued at $670.4 million and the
assumption of $124.6 million in debt. In addition, $113.3 million of cash was
paid during the quarter for purchase accounting liabilities related to current
and prior years' acquisitions. The cash portions of the acquisition costs were
funded utilizing cash on hand and borrowings under the Company's commercial
paper program. Each acquisition was accounted for as a purchase, and the results
of operations of the acquired companies have been included in the consolidated
results of the Company from their respective acquisition dates.
In connection with the fiscal 2000 acquisitions, the Company recorded
purchase accounting liabilities of $57.4 million for transaction costs and the
costs of integrating the acquired companies within the various Tyco business
segments. Details regarding these purchase accounting liabilities are set forth
below.
At the time each purchase acquisition is made, the Company records each
asset acquired and each liability assumed at its estimated fair value, which
amount is subject to future adjustment when appraisals or other further
information is obtained. The excess of (a) the total consideration paid for the
acquired company over (b) the fair value of assets acquired less liabilities
assumed and purchase accounting liabilities recorded is recorded as goodwill. As
a result of acquisitions completed in fiscal 2000, and adjustments to the fair
values of assets and liabilities and purchase accounting liabilities recorded
for acquisitions completed prior to fiscal 2000, approximately $2,117.1 million
in goodwill and other intangibles was recorded by the Company.
Fiscal 2000 purchase acquisitions include, among others, the acquisitions of
General Surgical Innovations, Inc. ("GSI"), AFC Cable Systems, Inc. ("AFC
Cable") and Siemens Electromechanical Components GmbH & Co. KG ("Siemens EC") in
November 1999 and Praegitzer Industries, Inc. ("Praegitzer") in December 1999.
GSI, a manufacturer and distributor of balloon dissectors and related devices
for
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
2. ACQUISITIONS --(CONTINUED)
minimally invasive surgery, was purchased through the issuance of approximately
2.7 million Tyco common shares valued at $107.6 million and is being integrated
within the Healthcare and Specialty Products segment. AFC Cable, a manufacturer
of prewired armor cable, was purchased through the issuance of approximately
12.8 million Tyco common shares valued at $562.8 million and is being integrated
within the Flow Control Products and Services segment. Siemens EC, a world
market leader for relays and one of the world's leading providers of components
to the communications, automotive, consumer and general industry sectors, was
purchased for $1,165.8 million in cash and is being integrated within the
Telecommunications and Electronics segment. Praegitzer, a provider of printed
circuit board and interconnect solutions to OEMs and contract manufacturers in
the communications, computer, industrial and consumer electronics industries,
was purchased for $72.2 million in cash and is being integrated within the
Telecommunications and Electronics segment.
The following table summarizes activity with respect to purchase accounting
liabilities in fiscal 2000 ($ in millions):
<TABLE>
<CAPTION>
SEVERANCE FACILITIES OTHER
-------------------- --------------------- --------
NUMBER OF NUMBER OF
EMPLOYEES RESERVE FACILITIES RESERVE RESERVE TOTAL
--------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total reserve balance at September 30, 1999.... 3,390 $217.3 101 $282.7 $ 70.3 $ 570.3
Fiscal 2000 acquisition reserves............... 431 13.3 13 21.9 22.2 57.4
Changes in estimates........................... 87 24.9 57 47.0 21.4 93.3
Reversal to goodwill........................... -- (4.1) -- (12.6) -- (16.7)
Fiscal 2000 utilization........................ (1,418) (59.0) (61) (36.6) (25.1) (120.7)
------ ------ --- ------ ------ -------
Ending balance at December 31, 1999............ 2,490 $192.4 110 $302.4 $ 88.8 $ 583.6
====== ====== === ====== ====== =======
</TABLE>
In connection with the fiscal 2000 acquisitions, primarily AFC Cable and
Praegitzer, the Company formulated certain plans at the date of each acquisition
for workforce reductions and the closure and consolidation of an aggregate of 13
facilities. The Company has communicated with the employees of the acquired
companies to announce the terminations and benefit arrangements, even though all
individuals have not been specifically told of their terminations. The costs of
employee termination benefits relate to the elimination of 316 positions in the
United States and 115 positions in Europe, consisting primarily of manufacturing
and distribution, administrative, sales and marketing, and technical personnel.
Facilities designated for closure include 10 facilities in the United States and
3 facilities in Europe, consisting primarily of manufacturing plants and sales
offices. At December 31, 1999, 124 employees had been terminated and 2
facilities had been closed or consolidated related to fiscal 2000 acquisitions.
Changes in estimates recorded during the quarter ended December 31, 1999
relate primarily to revisions associated with finalizing the exit plan for
Raychem Corporation, which was acquired in August 1999. These changes in
estimates resulted in additional purchase accounting liabilities of
$93.3 million and a corresponding increase in goodwill and deferred tax assets.
These revisions include the elimination of an additional 87 employees, related
primarily to manufacturing plants and administrative offices in the United
States and Europe. Additional facilities designated for closure include 20
facilities in Europe, 18 facilities in the Asia-Pacific region, 16 facilities in
the United States and 3 facilities in Latin America, consisting primarily of
sales and administrative offices and manufacturing plants.
In addition, during fiscal 2000 the Company reduced its estimate of purchase
accounting liabilities by $16.7 million, primarily because costs on facility
shutdowns for acquisitions consummated prior to fiscal
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
2. ACQUISITIONS --(CONTINUED)
2000 were less than anticipated. Goodwill and related deferred tax assets were
reduced by an equivalent amount.
The Company has not yet finalized its business integration plans for recent
acquisitions and accordingly, purchase accounting liabilities are subject to
revision in future quarters. In addition, the Company is still in the process of
obtaining information to finalize estimates for the fair values of assets
acquired and liabilities assumed.
At December 31, 1999, a total of $583.6 million purchase accounting reserves
remained on the Consolidated Balance Sheet, of which $452.1 million are included
in accrued expenses and other current liabilities and $131.5 million are
included in other long-term liabilities. The Company expects that the
termination of employees and consolidation of facilities related to all such
acquisitions will be substantially complete within two years of the related
dates of acquisition, except for certain long-term contractual obligations.
The following unaudited pro forma data summarize the results of operations
for the periods indicated as if the fiscal 2000 acquisitions had been completed
as of the beginning of the periods presented. The pro forma data give effect to
actual operating results prior to the acquisitions and adjustments to interest
expense, goodwill amortization and income taxes. No effect has been given to
cost reductions or operating synergies in this presentation. These pro forma
amounts do not purport to be indicative of the results that would have actually
been obtained if the acquisitions had occurred as of the beginning of the
periods presented or that may be obtained in the future.
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
---------------------
1999 1998
--------- ---------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net sales................................................ $6,851.6 $5,547.2
Income (loss) before extraordinary items................. 722.8 (113.1)
Net income (loss)........................................ 722.6 (115.5)
Net income (loss) per common share:
Basic.................................................. 0.43 (0.07)
Diluted................................................ 0.42 (0.07)
</TABLE>
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
3. LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(IN MILLIONS)
<S> <C> <C>
Commercial paper program.................................... $ 2,974.4 $ 1,392.0
International overdrafts and demand loans................... 133.7 184.9
Floating rate private placement notes due 2000.............. 499.6 499.4
0.57% Yen denominated private placement notes due 2000...... 89.6 89.7
8.25% senior notes due 2000................................. 9.5 9.5
Floating rate private placement notes due 2001.............. 499.2 499.1
6.5% public notes due 2001.................................. 299.4 299.3
6.125% public notes due 2001................................ 748.4 748.1
6.875% private placement notes due 2002..................... 992.9 992.2
5.875% public notes due 2004................................ 397.9 397.7
6.375% public notes due 2004................................ 104.7 104.6
6.375% public notes due 2005................................ 744.0 743.7
6.125% public notes due 2008................................ 395.1 394.9
7.2% notes due 2008......................................... 398.8 398.8
7.25% senior notes due 2008................................. 8.2 8.2
6.125% public notes due 2009................................ 394.2 394.1
Zero coupon Liquid Yield Option Notes ("LYONs") due 2010.... 34.7 49.1
International bank loans, repayable through 2013............ 206.5 208.2
6.25% public Dealer Remarketable Securities due 2013........ 759.4 760.1
9.5% public debentures due 2022............................. 49.0 49.0
8.0% public debentures due 2023............................. 50.0 50.0
7.0% public notes due 2028.................................. 492.4 492.4
6.875% public notes due 2029................................ 780.7 780.5
Financing lease obligation.................................. 65.5 69.5
Other....................................................... 360.1 507.2
--------- ---------
Total debt.................................................. 11,487.9 10,122.2
Less current portion........................................ 973.3 1,012.8
--------- ---------
Long-term debt.............................................. $10,514.6 $ 9,109.4
========= =========
</TABLE>
The extraordinary items of $0.2 million and $2.4 million in the quarters
ended December 31, 1999 and 1998, respectively, were related to the write-off of
net unamortized deferred financing costs related to the early extinguishment of
debt.
Under a bank credit agreement entered into by Tyco International Group S.A.
("TIG"), a wholly-owned subsidiary of the Company, and guaranteed by the
Company, the Company is required to meet certain covenants. None of these
covenants is considered restrictive to the operations of the Company.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
4. EARNINGS (LOSS) PER COMMON SHARE
The reconciliations between basic and diluted earnings (loss) per common
share are as follows:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE QUARTER ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------------- -------------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT LOSS SHARES AMOUNT
-------- -------- --------- -------- -------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BASIC INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items..... $757.2 1,693.2 $0.45 $ (89.6) 1,622.0 $(0.06)
Stock options................................ -- 18.8 -- --
Exchange of LYONs debt....................... 0.4 4.8 -- --
------ ------- ------- -------
DILUTED INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary items plus
assumed conversions........................ $757.6 1,716.8 $0.44 $ (89.6) 1,622.0 $(0.06)
====== ======= ======= =======
</TABLE>
The computation of diluted income per common share in the quarter ended
December 31, 1999 excludes the effect of the assumed exercise of approximately
27.8 million stock options that were outstanding as of December 31, 1999 because
the effect would be anti-dilutive. The computation of diluted loss per common
share in the quarter ended December 31, 1998 excludes the effect of the assumed
exercise of all outstanding stock options and warrants for approximately
96.6 million shares and the assumed exchange of outstanding LYONs for
approximately 13.0 million shares because the effect would be anti-dilutive.
5. SHAREHOLDERS' EQUITY
Tyco paid a quarterly cash dividend of $0.0125 per common share in the first
quarter of fiscal 2000 and fiscal 1999. Prior to its merger with Tyco, AMP paid
a dividend of $0.27 per share in the quarter ended December 31, 1998.
In November 1999, the Board of Directors authorized the Company to reacquire
up to 20 million of its common shares in the open market.
6. MERGER, RESTRUCTURING AND OTHER NON-RECURRING (CREDITS) CHARGES
The following table summarizes activity with respect to merger,
restructuring and other non-recurring (credits) charges in fiscal 2000 ($ in
millions):
<TABLE>
<CAPTION>
SEVERANCE FACILITIES OTHER
-------------------- --------------------- --------
NUMBER OF NUMBER OF
EMPLOYEES RESERVE FACILITIES RESERVE RESERVE TOTAL
--------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total reserve balance at September 30, 1999... 7,914 $100.4 67 $117.7 $181.2 $ 399.3
Fiscal 2000 restructuring charges............. 33 0.6 2 0.8 20.7 22.1
Revisions in estimates........................ (3,044) (39.7) (12) (13.3) (41.7) (94.7)
Fiscal 2000 utilization....................... (1,233) (13.9) (13) (11.6) (52.7) (78.2)
------ ------ --- ------ ------ -------
Ending balance at December 31, 1999........... 3,670 $ 47.4 44 $ 93.6 $107.5 $ 248.5
====== ====== === ====== ====== =======
</TABLE>
During the quarter ended December 31, 1999, the Company recorded a net
merger, restructuring and other non-recurring credit of $72.6 million. The net
credit of $72.6 million is comprised of a credit of $94.7 million representing a
revision of estimates for accrued merger, restructuring and other
9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
6. MERGER, RESTRUCTURING AND OTHER NON-RECURRING (CREDITS) CHARGES --(CONTINUED)
non-recurring charges recorded in prior periods, offset by restructuring and
other non-recurring charges of $22.1 million. The $94.7 million credit is
comprised of revisions of $57.8 million related primarily to the merger with AMP
Incorporated (``AMP") and costs associated with AMP's profit improvement plan;
$21.4 million related to the Company's 1997 restructuring plans; and
$15.5 million related primarily to the merger with United States Surgical
Corporation ("USSC"). The changes in estimates of the restructuring plan at AMP
were attributable primarily to increased demand for certain of AMP's products
which was not anticipated at the time of the merger and to recent acquisitions
such as Siemens EC. Therefore, the Company has determined not to close several
facilities and not to terminate approximately 3,000 employees, whose costs were
provided for in previous AMP restructuring plans. In addition, certain
restructuring activities at AMP were completed for amounts lower than originally
anticipated. The changes in estimates of the Company's 1997 restructuring plans
and the USSC restructuring plans were due primarily to the completion of
activities for amounts lower than originally recorded. The charges of
$22.1 million consist of $7.9 million related to the Company's exiting the USSC
interventional cardiology business, of which $6.4 million is included in cost of
sales, $7.7 million related to USSC's suture business and $6.5 million related
to the restructuring of AMP's Brazilian operations.
During the quarter ended December 31, 1998, the Company recorded net merger,
restructuring and other non-recurring charges of $526.1 million, of which
$28.3 million is included in cost of sales. The $526.1 million net charge
consists of charges of $412.6 million primarily related to the merger with USSC
and charges of $116.5 million related to AMP's profit improvement plan, offset
by a credit of $3.0 million representing a revision of estimates related to the
Company's 1997 restructuring and other non-recurring accruals.
At December 31, 1999, a total of $248.5 million merger, restructuring and
other non-recurring reserves remained on the Consolidated Balance Sheet, of
which $204.3 million are included in accrued expenses and other current
liabilities and $44.2 million are included in other long-term liabilities. The
Company currently anticipates that the restructuring activities to which all of
the above charges relate will be substantially completed within fiscal 2000,
except for certain long-term contractual obligations.
7. CHARGES FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
During the quarter ended December 31, 1999, the Healthcare and Specialty
Products segment recorded charges of $99.0 million primarily related to an
impairment in goodwill and other intangible assets associated with the Company
exiting the interventional cardiology business of USSC.
During the quarter ended December 31, 1998, the Healthcare and Specialty
Products segment recorded charges of $76.0 million primarily related to the
write-down of property, plant and equipment, principally administrative
facilities, associated with the consolidation of facilities in USSC's operations
in the United States and Europe as a result of its merger with the Company. The
Telecommunications and Electronics segment recorded charges of $65.6 million
related to the write-down of goodwill and property, plant and equipment,
primarily manufacturing and administrative facilities, associated with AMP's
profit improvement plan.
10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
8. COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) and its components are as follows:
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
----------------------
1999 1998
-------- --------
(IN MILLIONS)
<S> <C> <C>
Net income (loss)......................................... $757.0 $ (92.0)
Unrealized (loss) gain on securities, net of taxes...... (0.8) 1.9
Minimum pension liability, net of taxes................. -- (12.8)
Foreign currency translation adjustment, net of taxes... (73.3) 28.1
------ -------
Total comprehensive income (loss)......................... $682.9 $ (74.8)
====== =======
</TABLE>
9. CONSOLIDATED SEGMENT DATA
Selected information for the Company's four industry segments is as follows:
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
-----------------------
1999 1998
-------- --------
(IN MILLIONS)
<S> <C> <C>
NET SALES:
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
-------- --------
$6,638.8 $5,213.5
======== ========
OPERATING INCOME:
Telecommunications and Electronics.................. $ 623.0(1) $ 4.1 (4)
Healthcare and Specialty Products................... 273.2(2) (195.4)(5)
Fire and Security Services.......................... 255.3(3) 199.9 (6)
Flow Control Products and Services.................. 170.7 129.2
-------- --------
1,322.2 137.8
Less: Corporate expenses.............................. (54.3) (19.0)
Goodwill amortization expense.................... (83.9) (44.4)
-------- --------
$1,184.0 $ 74.4
======== ========
</TABLE>
------------------------
(1) Includes a restructuring charge of $6.5 million related to AMP's Brazilian
operations and a credit of $57.8 million primarily representing a revision
of estimates of merger, restructuring and other non-recurring accruals
related to the merger with AMP and AMP's profit improvement plan.
(2) Includes restructuring and other non-recurring charges of $7.9 million, of
which $6.4 million is included in cost of sales; charges for the impairment
of long-lived assets of $99.0 million related to exiting USSC's
interventional cardiology business; and restructuring and other
non-recurring charges of $7.7 million related to USSC's suture business.
Also includes a credit of $25.7 million representing a revision in estimates
of merger, restructuring and other non-recurring accruals, consisting of
$15.5 million related primarily to the merger with USSC and $10.2 million
related to the Company's 1997 restructuring accruals.
(3) Includes a credit of $11.2 million representing a revision in estimates
related to the Company's 1997 merger, restructuring and other non-recurring
accruals.
11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
9. CONSOLIDATED SEGMENT DATA --(CONTINUED)
(4) Includes merger, restructuring and other non-recurring charges of
$116.5 million, of which $28.3 million is included in cost of sales, and
charges for the impairment of long-lived assets of $65.6 million primarily
related to the merger with AMP and AMP's profit improvement plan.
(5) Includes merger, restructuring and other non-recurring charges of
$412.6 million and charges for the impairment of long-lived assets of
$76.0 million, primarily related to the merger with USSC.
(6) Includes a credit of $3.0 million representing a revision of estimates
related to the Company's 1997 restructuring and other non-recurring
accruals.
10. INVENTORIES
Inventories are classified as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(IN MILLIONS)
<S> <C> <C>
Purchased materials and manufactured parts.......... $ 918.5 $ 719.1
Work in process..................................... 892.9 774.2
Finished goods...................................... 1,258.4 1,355.8
-------- --------
$3,069.8 $2,849.1
======== ========
</TABLE>
11. TYCO INTERNATIONAL GROUP S.A.
TIG indirectly owns a substantial portion of the operating subsidiaries of
Tyco. During fiscal 1999, TIG issued public debt securities, which are fully and
unconditionally guaranteed by the Company. The Company has not included separate
financial statements and footnotes for TIG because of the full and unconditional
guarantee by Tyco and the Company's belief that such information is not material
to holders of the debt securities. The following presents consolidated summary
financial information for TIG and its subsidiaries, as if TIG and its current
organizational structure were in place for all periods presented.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(IN MILLIONS)
<S> <C> <C>
Total current assets................................ $ 7,389.3 $ 7,610.2
Total non-current assets............................ 26,873.3 24,008.4
Total current liabilities........................... 6,710.1 6,817.1
Total non-current liabilities....................... 12,793.4 10,553.9
</TABLE>
<TABLE>
<CAPTION>
FOR THE QUARTERS
ENDED DECEMBER 31,
-------------------
1999 1998
-------- --------
(IN MILLIONS)
<S> <C> <C>
Net sales................................................ $4,508.7 $3,819.2
Gross profit............................................. 1,670.2 1,466.2
Income (loss) before extraordinary items(1).............. 437.0 (166.3)
Net income (loss)(2)..................................... 436.8 (168.7)
</TABLE>
------------------------
(1) Income before extraordinary items in the quarter ended December 31, 1999
includes restructuring and other non-recurring charges of $7.9 million, of
which $6.4 million is included in cost of sales; charges for the impairment
of long-lived assets of $99.0 million related to exiting USSC's
interventional cardiology business; and restructuring and other
non-recurring charges of $7.7 million related to USSC's suture business.
Also included are credits of $15.5 million representing a revision of
estimates
12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) --(CONTINUED)
11. TYCO INTERNATIONAL GROUP S.A. --(CONTINUED)
of merger, restructuring and other non-recurring accruals related primarily
to the merger with USSC and $21.4 million related to the Company's 1997
restructuring plans. Loss before extraordinary items in the quarter ended
December 31, 1998 includes merger, restructuring and other non-recurring
charges of $412.6 million and charges for the impairment of long-lived
assets of $76.0 million, primarily related to the merger with USSC. Also
includes a credit of $3.0 million representing a revision of estimates
related to the Company's 1997 merger, restructuring and other non-recurring
accruals.
(2) Extraordinary items were primarily comprised of losses on the write-off of
net unamortized deferred financing costs relating to the early
extinguishment of debt.
12. SUBSEQUENT EVENTS
On January 14, 2000, the Company announced that it had entered into an
agreement to sell its ADT Automotive business to Manheim Auctions, Inc., a
wholly-owned subsidiary of Cox Enterprises, Inc., for approximately $1 billion
in cash. The sale is subject to customary regulatory review and, when complete,
is expected to generate a one-time pre-tax gain to the Company of approximately
$300 million.
On January 17, 2000, the Company announced that its undersea fiber optics
business will design, build, install, operate and maintain its own global
undersea fiber optic communications network, to be known as the TyCom Global
Network-TM-. The Company intends to offer up to 10 percent of its undersea fiber
optic cable business for sale in an initial public offering. TyCom Ltd. has
filed a registration statement with the SEC, which has not yet been declared
effective.
On January 18, 2000, the Company announced that the Board of Directors of
the Company had authorized the expenditure of up to an additional $2.0 billion
to repurchase shares of the Company. The timing and actual amount of the
repurchases will be subject to market conditions and other factors.
On February 11, 2000, TIG renewed the $3.4 billion portion of its credit
facility with a group of commercial banks, giving it the right to borrow up to
$4.5 billion until February 9, 2001, with the option to extend the facility for
one additional year and to increase the $4.5 billion up to $5.0 billion. The
additional $0.5 billion portion of TIG's credit facility continues to be
available until February 12, 2003. On February 23, 2000, TIG increased its
commercial paper program from $3.9 billion to $4.5 billion. The Company plans to
principally use the $4.5 billion portion of the credit facility to fully support
borrowings under its commercial paper program.
In April 2000, TIG issued [EURO]600 million ($571.4 million) 6.125% notes
due April 2007 in a private placement offering. The notes are fully and
unconditionally guaranteed by Tyco. The net proceeds of approximately
$565.9 million were used to repay borrowings under TIG's commerical paper
program.
In May 2000, the Company announced that it has agreed to acquire the
Electronic OEM Business of Thomas & Betts for $750 million in cash. This
agreement is subject to regulatory approval. The Electronic OEM Business of
Thomas & Betts manufactures electronic connectors for the telecommunications,
computer and automotive industries and will be integrated within the Tyco
Electronics group. The Company intends to account for the acquisition as a
purchase.
13
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Information for all periods presented below reflects the grouping of the
Company's businesses into four business segments consisting of
Telecommunications and Electronics, Healthcare and Specialty Products, Fire and
Security Services, and Flow Control Products and Services.
OVERVIEW
Sales increased 27.3% during the quarter ended December 31, 1999 to
$6,638.8 million from $5,213.5 million in the quarter ended December 31, 1998.
Income (loss) before extraordinary items was $757.2 million in the quarter ended
December 31, 1999, as compared to $(89.6) million in the quarter ended
December 31, 1998. Income before extraordinary items for the quarter ended
December 31, 1999 included an after-tax net charge of $27.1 million
($26.4 million pre-tax) consisting of a credit of $70.4 million ($94.7 million
pre-tax) representing a revision of estimates of merger, restructuring and other
non-recurring accruals, offset by restructuring and impairment charges of
$97.5 million ($121.1 million pre-tax) primarily related to the exiting of
USSC's interventional cardiology business. Loss before extraordinary items for
the quarter ended December 31, 1998 included an after-tax net charge of
$532.4 million ($667.7 million pre-tax) primarily related to the merger with
USSC and costs associated with AMP's profit improvement plan.
The following table details the Company's sales and earnings in the quarters
ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE QUARTERS
ENDED DECEMBER 31,
-------------------
1999 1998
-------- --------
(IN MILLIONS)
<S> <C> <C>
Net sales................................................... $6,638.8 $5,213.5
======== ========
Operating income, before certain credits (charges)(i)(ii)... $1,294.3 $ 786.5
Merger, restructuring and other non-recurring credits
(charges), net............................................ 72.6 (526.1)
Impairment of long-lived assets............................. (99.0) (141.6)
Amortization of goodwill.................................... (83.9) (44.4)
-------- --------
Operating income............................................ 1,184.0 74.4
Interest expense, net....................................... (164.7) (123.5)
-------- --------
Pre-tax income (loss) before extraordinary items............ 1,019.3 (49.1)
Income taxes................................................ (262.1) (40.5)
-------- --------
Income (loss) before extraordinary items.................... 757.2 (89.6)
Extraordinary items, net of taxes........................... (0.2) (2.4)
-------- --------
Net income (loss)........................................... $ 757.0 $ (92.0)
======== ========
</TABLE>
------------------------
(i) This amount is the sum of the operating income of the Company's four
business segments set forth in the segment discussion below, less certain
corporate expenses, and is before merger, restructuring and other
non-recurring credits (charges), charges for the impairment of long-lived
assets, and amortization of goodwill.
(ii) Restructuring charges in the amount of $6.4 million and $28.3 million
related to the write-down of inventory have been deducted as part of cost of
sales in the Consolidated Statements of Operations for the quarters ended
December 31, 1999 and 1998, respectively. However, they have not been
deducted as part of cost of sales for the purpose of calculating operating
income before certain credits
14
<PAGE>
(charges) in this table. These charges are instead included in the total
merger, restructuring and other non-recurring credits (charges).
The Company has taken recent merger, restructuring and other non-recurring
charges and charges for the impairment of long-lived assets with respect to AMP
and USSC. Under the Company's restructuring and integration programs, the
Company terminates employees and closes facilities made redundant. The reduction
in manpower and facilities comes from the manufacturing, distribution and
administrative functions. In addition, the Company discontinues or disposes of
product lines which do not fit the long-term strategy of the respective
businesses. The Company does not separately track the impact on financial
results of the restructuring and integration programs. However, the Company
estimates that its overall cost structure will be reduced by approximately $1
billion on an annualized basis due to the impact associated with these charges.
As of December 31, 1999, the Company believes that approximately $800 million of
benefits on an annualized basis have been realized. The significant decreases
have been to selling, general and administrative expenses and to cost of sales.
The restructuring plans will continue to improve the cost structure over the
remainder of fiscal 2000. The effect of the merger, restructuring and other
non-recurring charges and charges for the impairment of long-lived assets taken
in fiscal 2000 on the ongoing operations will not be material.
Operating income improved in all segments in the quarter ended December 31,
1999 as compared to the quarter ended December 31, 1998. The operating
improvements are the result of both increased revenues and enhanced margins.
Increased revenues resulted from organic growth and from acquisitions. The
Company enhances its margins through improved productivity and cost reductions
in the ordinary course of business, unrelated to acquisition or divestiture
activities. The Company regards charges that it incurs to reduce costs in the
ordinary course of business as recurring charges, which are reflected in cost of
sales and in selling, general and administrative expenses in the Consolidated
Statements of Operations.
When the Company makes acquisitions, the sales and operating results of the
acquired companies are included in the financial results of Tyco from the dates
of their acquisition. The acquired companies are immediately integrated within
the Company's existing operations. Consequently, the Company does not separately
track the operating results of acquired companies. The discussion following the
tables below includes an estimated quarter to quarter sales comparison that
excludes the effects of indicated acquisitions.
SALES AND OPERATING INCOME
TELECOMMUNICATIONS AND ELECTRONICS
The following table sets forth sales and operating income and margins on the
basis described above for the Telecommunications and Electronics segment:
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE QUARTERS ENDED
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
($ IN MILLIONS)
<S> <C> <C>
Sales................................................ $ 2,739.2 $ 1,804.0
Operating income, before certain credits (charges)... $ 571.7 $ 186.2
Operating margins, before certain credits
(charges).......................................... 20.9% 10.3%
Operating income, after certain credits (charges).... $ 623.0 $ 4.1
Operating margins, after certain credits (charges)... 22.7% 0.2%
</TABLE>
The 51.8% increase in sales in the quarter ended December 31, 1999 over the
quarter ended December 31, 1998 for the Telecommunications and Electronics
segment resulted in part from acquisitions. These included: the acquisition in
May 1999 of Telecomunicaciones Marinas, S.A. ("Temasa"),
15
<PAGE>
included in Tyco Submarine Systems Ltd. ("TSSL"); the acquisition in
August 1999 of Raychem Corporation ("Raychem"), included in Tyco Electronics;
the acquisition in November 1999 of Siemens Electromechanical Components GmbH &
Co. KG ("Siemens EC"), included in Tyco Electronics; and the acquisition in
December 1999 of Praegitzer Industries, Inc. ("Praegitzer"), included in the
Tyco Printed Circuit Group. Excluding the impact of Temasa, Raychem, Siemens EC
and Praegitzer, sales increased an estimated 17.7%, reflecting strong organic
growth in sales in the quarter ended December 31, 1999 at each of AMP, TSSL and
the Tyco Printed Circuit Group.
The substantial increase in operating income and margins, before certain
credits (charges), in the quarter ended December 31, 1999 compared with the
quarter ended December 31, 1998 was due to improved margins at AMP, the
acquisition of Raychem, and higher sales volume at TSSL and the Tyco Printed
Circuit Group. The improved operating margins at AMP in the quarter ended
December 31, 1999 resulted from increased volume, improved pricing and
continuing cost reduction programs following the merger.
In addition to the items discussed above, the substantial increase in
operating income and margins was due to a merger, restructuring and other
non-recurring net credit of $51.3 million in the quarter ended December 31, 1999
compared with a merger, restructuring and other non-recurring charge of
$116.5 million and a charge for the impairment of long-lived assets of
$65.6 million in the quarter ended December 31, 1998.
On January 17, 2000, the Company announced that its undersea fiber optics
business will design, build, install, operate and maintain its own global
undersea fiber optic communications network. Upon its completion, the system, to
be known as the TyCom Global Network-TM- ("TGN"), is expected to be the largest
and most advanced global undersea telecommunications fiber optic network. During
the construction phase of TGN, sales and operating profits of TSSL may decrease
from current levels.
HEALTHCARE AND SPECIALTY PRODUCTS
The following table sets forth sales and operating income (loss) and margins
on the basis described above for the Healthcare and Specialty Products segment:
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE QUARTERS
ENDED DECEMBER 31,
---------------------
1999 1998
--------- ---------
($ IN MILLIONS)
<S> <C> <C>
Sales................................................ $ 1,563.8 $ 1,342.8
Operating income, before certain credits (charges)... $ 362.1 $ 293.2
Operating margins, before certain credits
(charges).......................................... 23.2% 21.8%
Operating income (loss), after certain credits
(charges).......................................... $ 273.2 $ (195.4)
Operating margins, after certain credits (charges)... 17.5% (14.6)%
</TABLE>
The 16.5% increase in sales in the quarter ended December 31, 1999 over the
quarter ended December 31, 1998 was primarily the result of organic growth in
both Tyco Healthcare and Tyco Plastics. Tyco Healthcare's organic growth was
especially strong outside the United States.
In addition, sales increased in the quarter ended December 31, 1999 due to
the effects of acquisitions, which included: Graphic Controls Corporation and
Sunbelt Plastics, both acquired in November 1998 and included in results for all
of the quarter ended December 31, 1999 but only part of the quarter ended
December 31, 1998; Batts Inc., acquired in April 1999; and General Surgical
Innovations, Inc. ("GSI"), acquired in November 1999. Excluding the impact of
these acquisitions, sales increased an estimated 9.4%.
16
<PAGE>
The 23.5% increase in operating income, before certain credits (charges),
and higher operating margins, before certain credits (charges), in the quarter
ended December 31, 1999 compared to the quarter ended December 31, 1998 was
principally due to increased sales volume and improved margins at Tyco
Healthcare, especially outside the United States. Increased profits in the
quarter ended December 31, 1999 also reflected higher sales volume at Tyco
Plastics and ADT Automotive.
In addition to the items discussed above, the substantial increase in
operating income and margins was due to net charges of $88.9 million in the
quarter ended December 31, 1999 compared with charges of $488.6 million in the
quarter ended December 31, 1998. The net charges in the quarter ended
December 31, 1999 consist of merger, restructuring and other non-recurring
charges of $15.6 million and charges for the impairment of long-lived assets of
$99.0 million, partially offset by a merger, restructuring and other
non-recurring credit of $25.7 million.
On January 14, 2000, the Company announced that it had entered into an
agreement to sell its ADT Automotive business to Manheim Auctions, Inc., a
wholly-owned subsidiary of Cox Enterprises, Inc., for approximately $1 billion
in cash. The sale is subject to customary regulatory review and, when complete,
is expected to generate a one-time pre-tax gain to the Company of approximately
$300 million.
FIRE AND SECURITY SERVICES
The following table sets forth sales and operating income and margins on the
basis described above for the Fire and Security Services segment:
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE QUARTERS ENDED
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
($ IN MILLIONS)
<S> <C> <C>
Sales................................................ $ 1,449.7 $ 1,259.7
Operating income, before certain credits............. $ 244.1 $ 196.9
Operating margins, before certain credits............ 16.8% 15.6%
Operating income, after certain credits.............. $ 255.3 $ 199.9
Operating margins, after certain credits............. 17.6% 15.9%
</TABLE>
The 15.1% increase in sales in the quarter ended December 31, 1999 over the
quarter ended December 31, 1998 reflects increased worldwide sales in the
electronic security services business and higher sales volume in fire protection
operations in North America and the Asia-Pacific region. The increases were due
primarily to a higher volume of recurring service revenues and, to a lesser
extent, the effects of acquisitions in the security services business. These
acquisitions included: Entergy Security Corporation ("Entergy"), acquired in
January 1999, and Alarmguard Holdings ("Alarmguard"), acquired in
February 1999. Excluding the impact of Entergy and Alarmguard, the sales
increase for the segment in the quarter ended December 31, 1999 was an estimated
12.1%.
The 24.0% increase in operating income, before certain credits, in the
quarter ended December 31, 1999 over the quarter ended December 31, 1998
reflects increased service volume in fire protection operations worldwide and
security operations in the United States. The increase in operating margins in
the quarter ended December 31, 1999 was principally due to higher margins
associated with recurring monitoring revenue in the United States security
business and, to a lesser extent, improved margins worldwide in the fire
protection business.
In addition to the items discussed above, operating income and margins
increased due to a merger, restructuring and other non-recurring credit of
$11.2 million in the quarter ended December 31, 1999 compared with a
restructuring and other non-recurring credit of $3.0 million in the quarter
ended December 31, 1998.
17
<PAGE>
FLOW CONTROL PRODUCTS AND SERVICES
The following table sets forth sales and operating income and margins on the
basis described above for the Flow Control Products and Services segment:
<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE QUARTERS ENDED
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
($ IN MILLIONS)
<S> <C> <C>
Sales.................................................. $ 886.1 $ 807.0
Operating income....................................... $ 170.7 $ 129.2
Operating margins...................................... 19.3% 16.0%
</TABLE>
The 9.8% sales increase in the quarter ended December 31, 1999 over the
quarter ended December 31, 1998 reflects increased demand for valve products in
Europe, increased sales at Allied Tube and Conduit and Earth Tech and the impact
of acquisitions. These acquisitions included: certain subsidiaries in the metals
processing division of Glynwed International plc, acquired in March 1999;
Central Sprinkler Corporation, acquired in August 1999; and AFC Cable
Systems, Inc. ("AFC Cable"), acquired in November 1999. During August 1999, the
Company completed the sale of certain businesses within this segment, including
The Mueller Company and portions of Grinnell Supply Sales and Manufacturing.
Excluding the impact of these acquisitions and divestitures, sales increased an
estimated 11.0%.
The 32.1% increase in operating income in the quarter ended December 31,
1999 over the quarter ended December 31, 1998 was primarily due to increased
volume in worldwide valve operations, Allied Tube and Conduit and Earth Tech.
Also, royalty and licensing fee income from certain intellectual property
associated with the divested businesses offset a portion of the operating income
lost from the divestitures.
FOREIGN CURRENCY
The effect of changes in foreign exchange rates during the quarter ended
December 31, 1999 as compared to the quarter ended December 31, 1998 was not
material to the Company's sales and operating income.
CORPORATE EXPENSES
Corporate expenses were $54.3 million in the quarter ended December 31, 1999
compared to $19.0 million in the quarter ended December 31, 1998. This increase
was due principally to higher compensation expense under the Company's
equity-based incentive compensation plans and an increase in corporate staffing
to support and monitor the Company's expanding businesses and operations.
AMORTIZATION OF GOODWILL
Amortization of goodwill, a non-cash charge, increased to $83.9 million in
the quarter ended December 31, 1999 from $44.4 million in the quarter ended
December 31, 1998, due to an increase in goodwill resulting from acquisitions.
INTEREST EXPENSE, NET
Interest expense, net, increased to $164.7 million in the quarter ended
December 31, 1999, compared to $123.5 million in the quarter ended December 31,
1998. The increase was due to higher average debt balances resulting from
borrowings to finance acquisitions, slightly offset by lower average interest
rates. The increase in borrowings was mitigated in part by the use of free cash
flow to pay for certain acquisitions and to make payments on a portion of
long-term debt, including debt tender offers.
18
<PAGE>
EXTRAORDINARY ITEMS
Extraordinary items in the quarters ended December 31, 1999 and 1998
included after-tax losses amounting to $0.2 million and $2.4 million,
respectively, related to the write-off of net unamortized deferred financing
costs in connection with the early extinguishment of debt.
INCOME TAX EXPENSE
The effective income tax rate, excluding the impact of merger, restructuring
and other non-recurring credits (charges) and charges for the impairment of
long-lived assets, was 25.0% during the quarter ended December 31, 1999, as
compared to 28.4% in the quarter ended December 31, 1998. The decrease in the
effective income tax rate was primarily due to higher earnings in tax
jurisdictions with lower income tax rates.
LIQUIDITY AND CAPITAL RESOURCES
The following table shows the sources of the Company's cash flow from
operating activities and the use of a portion of that cash in the Company's
operations in the quarter ended December 31, 1999. Management refers to the net
amount of cash generated from operating activities less capital expenditures and
dividends as "free cash flow."
<TABLE>
<CAPTION>
(UNAUDITED)
QUARTER ENDED
DECEMBER 31,
1999
-------------
(IN MILLIONS)
<S> <C>
Operating income, before certain credits (charges).......... $1,294.3 (1)
Depreciation and amortization............................... 290.7 (2)
Net increase in deferred income taxes....................... 107.9
Less:
Net increase in working capital........................... (347.8)
Interest expense (net).................................... (164.7)
Income tax expense........................................ (262.1)
Restructuring expenditures................................ (58.3)(3)
Other (net)............................................... 13.1
--------
Cash flow from operating activities......................... 873.1
Less:
Capital expenditures...................................... (420.5)
Dividends paid............................................ (21.4)
--------
Free cash flow.............................................. $ 431.2
========
</TABLE>
------------------------
(1) This amount is the sum of the operating income of the four business segments
as set forth above, less certain corporate expenses, and is before merger,
restructuring and other non-recurring credits (charges), charges for the
impairment of long-lived assets and goodwill amortization.
(2) This amount is the sum of depreciation of tangible property
($250.7 million) and amortization of intangible assets other than goodwill
($40.0 million).
(3) This amount is cash paid out for merger, restructuring and other
non-recurring charges.
In addition, during the quarter ended December 31, 1999, the Company paid
out $113.3 million in cash that was charged against reserves established in
connection with acquisitions accounted for under the purchase accounting method.
This amount is included in "Acquisition of businesses, net of cash acquired" in
the Consolidated Statement of Cash Flows.
19
<PAGE>
In the quarter ended December 31, 1999, the Company established
restructuring and other non-recurring reserves of $22.1 million primarily
related to the exiting of USSC's interventional cardiology business, charges
associated with USSC's suture business and the restructuring of AMP's Brazilian
operations. At September 30, 1999, there existed merger, restructuring and other
non-recurring reserves of $399.3 million. During the quarter ended December 31,
1999, the Company paid out $58.3 million in cash and incurred $19.9 million in
non-cash charges that were charged against these reserves. Also in the quarter
ended December 31, 1999, the Company determined that $94.7 million of merger,
restructuring and other non-recurring reserves established in prior years was
not needed and recorded a credit to the merger, restructuring and other
non-recurring charges line item in the Consolidated Statement of Operations. The
changes in estimates of the restructuring plan at AMP were attributable
primarily to increased demand for certain of AMP's products which was not
anticipated at the time of the merger and to recent acquisitions such as Siemens
EC. Therefore, the Company has determined not to close several facilities and
not to terminate approximately 3,000 employees, whose costs were provided for in
previous AMP restructuring plans. In addition, certain restructuring activities
at AMP were completed for amounts lower than originally anticipated. The changes
in estimates of the Company's 1997 restructuring plans and the USSC
restructuring plans were due primarily to the completion of activities for
amounts lower than originally recorded. At December 31, 1999, there remained
$248.5 million of merger, restructuring and other non-recurring reserves on the
Company's Consolidated Balance Sheet, of which $204.3 million is included in
current liabilities and $44.2 million is included in long-term liabilities.
During the quarter ended December 31, 1999, the Company made acquisitions at
an aggregate cost of $2,415.9 million. Of this amount, $1,620.9 million was paid
in cash (net of cash acquired), $670.4 million was paid in the form of Tyco
common shares, and the Company assumed $124.6 million in debt. In connection
with these acquisitions, the Company established purchase accounting reserves of
$57.4 million for transaction and integration costs. In addition, purchase
accounting liabilities of $93.3 million and a corresponding increase to goodwill
and deferred tax assets were recorded during the quarter ended December 31, 1999
representing changes in estimates related to acquisitions consummated prior to
fiscal 2000, primarily the acquisition of Raychem in August 1999. At the
beginning of fiscal 2000, purchase accounting reserves were $570.3 million as a
result of purchase accounting transactions made in prior years. During the
quarter ended December 31, 1999, the Company paid out $113.3 million in cash and
incurred $7.4 million in non-cash charges against the reserves established
during and prior to this quarter. Also, in the quarter ended December 31, 1999,
the Company determined that $16.7 million of purchase accounting reserves
related to acquisitions prior to fiscal 2000 were not needed and reversed that
amount against goodwill. At December 31, 1999, there remained $583.6 million in
purchase accounting reserves on the Company's Consolidated Balance Sheet, of
which $452.1 million is included in current liabilities and $131.5 million is
included in long-term liabilities.
The net change in working capital, net of the effects of acquisitions and
divestitures, was an increase of $347.8 million in the quarter ended
December 31, 1999. These changes are set forth in detail in the Consolidated
Statement of Cash Flows. The increase in working capital accounts is
attributable to the higher level of business activity as reflected in the
increased sales over the prior quarter and the payment of fiscal 1999 year-end
bonuses. Management focuses on maximizing the cash flow from its operating
businesses and attempts to keep the working capital employed in the businesses
to the minimum level required for efficient operations.
In addition, during the quarter ended December 31, 1999, the Company
received proceeds of $35.8 million from the exercise of common share options and
used $413.0 million of cash to purchase its own common shares. In
November 1999, the Board of Directors authorized the Company to reacquire up to
20 million of its common shares in the open market. Such share reacquisition is
substantially complete. In January 2000, the Company announced that the Board of
Directors of the Company has authorized the expenditure of up to an additional
$2.0 billion to repurchase shares of the Company. The timing and actual amount
of the repurchases will be subject to market conditions and other factors.
20
<PAGE>
The source of the cash used for acquisitions in fiscal 2000 was primarily an
increase in total debt and cash flows from operations. Goodwill and other
intangible assets were $13,985.2 million at December 31, 1999, compared to
$12,158.9 million at September 30, 1999. At December 31, 1999, the Company's
total debt was $11,487.9 million, as compared to $10,122.2 million at
September 30, 1999. This increase resulted principally from borrowings under the
Company's commercial paper program. For further detail on debt activity, see
Note 3 to the Consolidated Financial Statements.
On February 11, 2000, TIG renewed the $3.4 billion portion of its credit
facility with a group of commercial banks, giving it the right to borrow up to
$4.5 billion until February 9, 2001, with the option to extend the facility for
one additional year and to increase the $4.5 billion up to $5.0 billion. The
additional $0.5 billion portion of TIG's credit facility continues to be
available until February 12, 2003. The Company plans to principally use the $4.5
billion portion of the credit facility to fully support borrowings under its
commercial paper program, which it intends to increase to $4.5 billion.
Shareholders' equity was $13,159.9 million, or $7.77 per share, at
December 31, 1999, compared to $12,369.3 million, or $7.32 per share, at
September 30, 1999. The increase in shareholders' equity was due primarily to
net income of $757.0 million and the issuance of a total of approximately
15.5 million common shares valued at $670.4 million for the acquisitions of GSI
and AFC Cable in November 1999. This increase was partially offset by the
Company's repurchase of its common shares discussed above. Total debt as a
percent of total capitalization (total debt and shareholders' equity) was 47% at
December 31, 1999 and 45% at September 30, 1999. Net debt (total debt less cash
and cash equivalents) as a percent of total capitalization was 42% at
December 31, 1999 and 37% at September 30, 1999.
The Company believes that its cash flow from operations, together with its
existing credit facilities and other credit arrangements, is adequate to fund
its operations. The Company intends to offer up to 10 percent of its undersea
fiber optics business for sale in an initial public offering, a portion of the
proceeds of which will be used to finance part of the build out of the TGN. See
Part II, Item 1 ``Legal Proceedings--IDT Litigation" for a discussion of a
complaint filed containing allegations with respect to the TGN.
In January 2000, the Company announced that it had entered into an agreement
to sell its ADT Automotive business for cash proceeds of approximately $1
billion.
BACKLOG
At December 31, 1999, the Company had a backlog of unfilled orders of
approximately $7,491.4 million, compared to a backlog of approximately
$7,581.1 million at September 30, 1999. Backlog by industry segment is as
follows (unaudited):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
(IN MILLIONS)
<S> <C> <C>
Telecommunications and Electronics.................. $5,009.3 $4,974.5
Flow Control Products and Services.................. 1,306.2 1,516.5
Fire and Security Services.......................... 1,027.7 986.6
Healthcare and Specialty Products................... 148.2 103.5
-------- --------
$7,491.4 $7,581.1
======== ========
</TABLE>
Within the Telecommunications and Electronics segment, backlog increased
principally due to an increase in backlog at Tyco Electronics, primarily
resulting from the acquisition of Siemens EC, offset slightly by a decrease in
backlog at TSSL due to the timing of contracts. The backlog may decrease in
future periods as the TSSL business begins working on the TGN. Within the Flow
Control Products and Services segment, backlog decreased primarily due to a
decrease at Earth Tech resulting from the timing of contracts. Within the Fire
and Security Services segment, backlog increased principally due to an increase
21
<PAGE>
in backlog at the Company's fire protection operations in Asia and, to a lesser
extent, the worldwide security and European fire protection businesses. Within
the Healthcare and Specialty Products segment, the increase resulted principally
from an increase in demand for the products sold by Ludlow Technical Products.
YEAR 2000 COMPLIANCE
The Company's Year 2000 compliance programs and systems modifications were
completed on time, and the conversion process was successful. The Company's
business has not been adversely affected due to the failure of key third parties
to successfully complete the Year 2000 conversion. Although there can be no
assurance that all of the Company's material third-party relationships had
successful conversion programs, management does not expect that any such failure
would have a material adverse effect on the financial position, results of
operations or liquidity of the Company. The costs of the Company's Year 2000
program to date have not been material, and the Company knows of no further
required modifications to its information technology or embedded technology
systems that would have a material impact on its financial position, results of
operations or liquidity.
FORWARD LOOKING INFORMATION
Certain statements in this report are "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All forward
looking statements involve risks and uncertainties. In particular, any statement
contained herein, in press releases, written statements or other documents filed
with the Securities and Exchange Commission, or in the Company's communications
and discussions with investors and analysts in the normal course of business
through meetings, phone calls and conference calls, regarding the consummation
and benefits of future acquisitions, as well as expectations with respect to
future sales, earnings, cash flows, operating efficiencies, product expansion,
backlog, financings and share repurchases, are subject to known and unknown
risks, uncertainties and contingencies, many of which are beyond the control of
the Company, which may cause actual results, performance or achievements to
differ materially from anticipated results, performances or achievements.
Factors that might affect such forward looking statements include, among other
things, overall economic and business conditions; the demand for the Company's
goods and services; competitive factors in the industries in which the Company
competes; changes in government regulation; changes in tax requirements
(including tax rate changes, new tax laws and revised tax law interpretations);
results of litigation; interest rate fluctuations and other capital market
conditions, including foreign currency rate fluctuations; economic and political
conditions in international markets, including governmental changes and
restrictions on the ability to transfer capital across borders; the timing of
construction and the successful operation of the TyCom Global Network; the
ability to achieve anticipated synergies and other cost savings in connection
with acquisitions; the timing, impact and other uncertainties of future
acquisitions; and the successful completion of Year 2000 conversion programs by
the Company's material customers and suppliers.
22
<PAGE>
PART II--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K filed on October 22, 1999 announcing fourth
quarter earnings for fiscal 1999 and the distribution of a two-for-one
stock split.
Current Report on Form 8-K filed on November 9, 1999 containing Amendment
No. 1 to the Agreement and Plan of Merger, dated as of August 23, 1999 by
and among General Acquisition, Tyco Acquisition Corp. XXIII (successor by
assignment to General Sub Acquisition Corp.), a Delaware corporation and
a wholly-owned subsidiary of General Acquisition, and General Surgical
Innovations, Inc.
Current Report on Form 8-K filed on November 22, 1999 containing
Amendment No. 1 to the Agreement and Plan of Merger, dated as of
August 31, 1999 by and among Tyco (NV), Tyco Acquisition Corp. XXII, a
Delaware corporation and a wholly-owned subsidiary of Tyco (NV), and AFC
Cable Systems, Inc., a Delaware corporation.
Current Report on Form 8-K filed on December 9, 1999 containing Tyco's
press release announcing the SEC's inquiry relating to charges and
reserves taken in connection with the Company's acquisitions.
Current Report on Form 8-K filed on December 10, 1999 disclosing wire
reports of shareholder class actions seeking damages against the Company
and certain of its officers.
Current Report on Form 8-K filed on January 20, 2000 containing press
releases announcing first quarter earnings for fiscal 2000, approval by
the Board of Directors to repurchase up to an additional $2.0 billion of
common shares and Tyco's plans to build its own advanced global undersea
fiber optic network.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C>
TYCO INTERNATIONAL LTD.
/s/ MARK H. SWARTZ
----------------------------------------------
Mark H. Swartz
Executive Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
Date: June 23, 2000
</TABLE>
24
