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Tyco International Reports Third Quarter Earnings from Continuing Operations of $0.55 Per Share Before Special Items; Impact of Special Items Results in Loss from Continuing Operations of $6.13 Per Share
PEMBROKE, Bermuda, Aug. 7 /PRNewswire-FirstCall/ --
($ millions, except per-share amounts)
June 29, June 30, % Change
2007 2006
Revenue $5,085 $4,715 8%
Income from Continuing Operations ($3,035) $170 N/A
Diluted EPS from Continuing Operations ($6.13) $0.33 N/A
Special Items ($3,312) ($82)
Income from Continuing Ops Before
Special Items $277 $252 10%
Diluted EPS from Continuing Ops Before
Special Items $0.55 $0.49 12%
- Results Impacted by Charges of $3.3 Billion for Special Items,
Primarily from the Previously Disclosed Settlement of Legacy Securities
Class Action Litigation
- Spin-off of Healthcare and Electronics Businesses Completed on June 29,
2007
Tyco International Ltd. ( TYC; BSX: TYC) today reported a loss of
$6.13 in diluted GAAP EPS from continuing operations and diluted earnings
per share (EPS) from continuing operations of $0.55 before special items
for the fiscal third quarter of 2007. Revenue in the quarter increased 8%
versus the prior year to $5.1 billion, with organic revenue growth of 5%.
Third quarter income from continuing operations was negatively impacted
by previously disclosed special items which totaled $3.3 billion after tax
or $6.68 per share as follows:
$ in Millions $ Per Share
Settlement of Securities Class Action $2,884 $5.83
Separation Costs $343 $0.69
Goodwill Impairment $46 $0.09
Restructuring $37 $0.07
Divestitures $2 $0.00
TOTAL $3,312 $6.68
On June 29, 2007, Tyco International completed the spin-off of its
healthcare and electronics businesses and the operating results of these
businesses have been reclassified as a single line item, net of tax, in
discontinued operations for the third quarter of 2007 and all prior
periods.
In conjunction with the spin-off, Tyco International executed a
four-for- one reverse share split under which each Tyco share was converted
into one- fourth of a share. As a result, share and per share data have
been adjusted to reflect the reverse share split for the third quarter and
all previous periods.
Tyco Chairman and Chief Executive Officer Ed Breen said, "We achieved a
significant milestone during the third quarter by completing the spin-off
of our healthcare and electronics businesses. We also reached an important
agreement to resolve the majority of our legacy securities class action
litigation. Operationally, Tyco International's performance came in at the
high end of our estimates as we had solid growth in revenue and operating
income before special items driven by improvements across most of our
businesses."
Organic revenue growth, free cash flow, operating income before special
items, operating margin before special items, net income from continuing
operations before special items and EPS from continuing operations before
special items are all non-GAAP financial measures and are described below.
For a reconciliation of these non-GAAP measures, see the attached tables.
Additional schedules can be found at www.tyco.com on the Investor Relations
portion of Tyco's website.
SEGMENT RESULTS
In connection with the spin-off of the healthcare and electronics
businesses, Tyco International has realigned its businesses into the
following segments: ADT Worldwide; Fire Protection Services; Flow Control;
Safety Products and Electrical and Metal Products. The financial results
presented in the tables below are in accordance with GAAP unless otherwise
indicated. All dollar amounts are pre-tax and stated in millions. All
comparisons are to the quarter ended June 30, 2006 unless otherwise
indicated.
ADT Worldwide
June 29, June 30, $ Change % Change
2007 2006
Revenue $1,909 $1,806 $103 6%
Operating Income $205 $242 ($37) (15%)
Operating Margin 10.7% 13.4%
Special Items ($57) -
Operating Income Before
Special Items $262 $242 $20 8%
Operating Margin Before
Special Items 13.7% 13.4%
ADT Worldwide designs, sells, installs, services and monitors
electronic security systems to residential, commercial, industrial and
governmental customers. Revenue in this segment increased 6% in the third
quarter with organic revenue growth of 4%. Geographically, North America
and the Europe, Middle East, and Africa (EMEA) region both had organic
growth of 3% while Asia had growth of 16%.
Operating income was $205 million and the operating margin was 10.7%.
Before special items, operating income increased 8% to $262 million. The
operating margin before special items improved to 13.7%. This reflected the
benefit of improved attrition rates partially offset by lower recurring
revenue in Continental Europe and modest increases in sales and marketing
expenses. Special items in the quarter included $11 million of
restructuring costs, primarily in Europe and a $46 million goodwill
impairment.
Fire Protection Services
June 29, June 30, $ Change % Change
2007 2006
Revenue $882 $826 $56 7%
Operating Income $57 $61 ($4) (7%)
Operating Margin 6.5% 7.4%
Special Items ($13) ($1)
Operating Income Before
Special Items $70 $62 $8 13%
Operating Margin Before
Special Items 7.9% 7.5%
Fire Protection Services designs, sells, installs and services fire
detection and fire suppression systems to commercial, industrial and
governmental customers. Revenue in this segment increased 7% in the quarter
to $882 million with organic revenue growth of 4%.
Operating income was $57 million and the operating margin was 6.5%.
Before special items, operating income increased 13% to $70 million. The
operating margin before special items of 7.9% improved due to the benefit
of higher revenue in North America, Asia and Australia partially offset by
weaker performance in Europe. Special items of $13 million in the quarter
consisted primarily of restructuring charges in Europe.
Flow Control
June 29, June 30, $ Change % Change
2007 2006
Revenue $982 $806 $176 22%
Operating Income $124 $87 $37 43%
Operating Margin 12.6% 10.8%
Special Items ($2) -
Operating Income Before
Special Items $126 $87 $39 45%
Operating Margin Before
Special Items 12.8% 10.8%
Flow Control designs, manufactures, sells and services valves, pipes,
fittings, valve automation and heat tracing products for the water and
wastewater markets, the energy markets and other process industries.
Revenue in this segment increased 22% in the quarter with organic revenue
growth of 16% driven by strong double digit growth across all regions.
Operating income was $124 million and the operating margin was 12.6%.
Before special items, operating income increased 45% versus the prior year
to $126 million and the operating margin before special items improved 200
basis points due to higher revenue and improved operating efficiency.
Safety Products
June 29, June 30, $ Change % Change
2007 2006
Revenue $452 $432 $20 5%
Operating Income $73 ($20) $93 N/A
Operating Margin 16.2% (4.6%)
Special Items ($8) ($100)
Operating Income Before
Special Items $81 $80 $1 1%
Operating Margin Before
Special Items 17.9% 18.5%
Safety Products designs, manufactures and sells fire protection,
security and life safety products including fire suppression products,
breathing apparatus, intrusion security, access control and video
management systems. Revenue in this segment increased 5% in the quarter
with organic revenue growth of 2%. Strong revenue growth in fire
suppression and electronic security was partially offset by lower revenue
in the life safety business.
Operating income was $73 million and the operating margin was 16.2%.
Before special items, operating income of $81 million was essentially flat
versus prior year. The benefit from volume increases in fire suppression
and electronic security was offset by a decrease in sales in the life
safety business. Special items in the quarter included restructuring and
impairment charges of $8 million. Special items in the prior year quarter
included a $100 million charge for the estimated cost of a voluntary
replacement program for certain fire sprinkler heads.
Electrical and Metal Products
June 29, June 30, $Change % Change
2007 2006
Revenue $519 $526 ($7) (1%)
Operating Income $47 $84 ($37) (44%)
Operating Margin 9.1% 16.0%
Special Items - -
Operating Income Before
Special Items $47 $84 ($37) (44%)
Operating Margin Before
Special Items 9.1% 16.0%
Electrical and Metal Products designs, manufactures and sells steel
tubing and pipe products, pre-wired armored cable and flexible conduit
products for commercial construction. Revenue in this segment decreased 1%
in the quarter primarily due to lower volumes and prices in core steel
products.
Operating income decreased 44% to $47 million primarily due to lower
steel and copper spreads. On a quarter sequential basis, operating income
improved by $21 million, as expected.
OTHER ITEMS
- Revenue in Corporate and Other, consisting primarily of
Infrastructure
Services, was $341 million in the quarter compared to $319 million in
2006. Operating income for these businesses was $24 million compared to
$19 million in the third quarter of 2006. Beginning in the fourth
quarter, Infrastructure Services will be reported as a discontinued
operation as Tyco explores exiting this business.
- Corporate expense was $3.1 billion in the quarter. Special items in
the
quarter consisted primarily of the settlement of the securities class
action litigation. Before special items, corporate expense totaled $161
million compared to $183 million in the third quarter of 2006.
- Cash from operating activities was $125 million in the quarter. The
company had negative free cash flow of $137 million and this included
$340 million in payments for legacy tax items, separation and
restructuring.
- Charges related to Tyco's previously announced restructuring program
totaled $45 million in the third quarter and $158 million year to date.
OUTLOOK
For the fourth quarter of 2007, Tyco expects to achieve revenue growth
of 6 to 7% (organic revenue growth of approximately 4%) and an operating
margin before special items of 9.0 to 9.5%. The revenue and operating
margin outlook excludes Infrastructure Services that will be reported as a
discontinued operation in the fourth quarter. Please see the disclosures at
the end of this press release for additional information.
ABOUT TYCO INTERNATIONAL
Tyco International Ltd. ( TYC) is a diversified, global company
that provides vital products and services to customers in more than 60
countries. Tyco is a leading provider of security products and services,
fire protection and detection products and services, valves and controls,
and other industrial products. Tyco completed the spin-off of its
healthcare and electronics businesses on June 29, 2007 and today has annual
revenues of more than $18 billion and 115,000 employees. More information
on Tyco can be found at www.tyco.com.
CONFERENCE CALL AND WEBCAST
The company will hold a conference call for investors today beginning
at 8:30 a.m. ET. The call can be accessed in three ways:
- At Tyco's website: http://investors.tyco.com.
- By telephone: For both "listen-only" participants and those
participants who wish to take part in the question-and-answer portion
of the call, the telephone dial-in number in the United States is
(800) 288-8960. The telephone dial-in number for participants outside
the United States is (612) 288-0337.
- An audio replay of the conference call will be available beginning at
12:00 p.m. on August 7, 2007 and ending at 11:59 p.m. on August 15,
2007. The dial-in number for participants in the United States is
(800) 475-6701. For participants outside the United States, the replay
dial-in number is (320) 365-3844. The replay access code for all
callers is 880300.
NON-GAAP MEASURES
"Organic revenue growth," "free cash flow" (FCF), "operating income
before special items," "net income before special items," "earnings per
share (EPS) from continuing operations" and "operating margin before
special items" are non-GAAP measures and should not be considered
replacements for GAAP results.
Organic revenue growth is a useful measure used by the company to
measure the underlying results and trends in the business. The difference
between reported net revenue growth (the most comparable GAAP measure) and
organic revenue growth (the non-GAAP measure) consists of the impact from
foreign currency, acquisitions and divestitures, and other changes that do
not reflect the underlying results and trends (for example, revenue
reclassifications and changes to the fiscal year). Organic revenue growth
is a useful measure of the company's performance because it excludes items
that: i) are not completely under management's control, such as the impact
of foreign currency exchange; or ii) do not reflect the underlying growth
of the company, such as acquisition and divestiture activity. It is also a
component of the company's compensation programs. The limitation of this
measure is that it excludes items that have an impact on the company's
revenue. This limitation is best addressed by using organic revenue growth
in combination with the GAAP numbers. See the accompanying tables to this
press release for the reconciliation presenting the components of organic
revenue growth.
FCF is a useful measure of the company's cash which is free from any
significant existing obligation. The difference between cash flows from
operating activities (the most comparable GAAP measure) and FCF (the
non-GAAP measure) consists mainly of significant cash outflows that the
company believes are useful to identify. FCF permits management and
investors to gain insight into the number that management employs to
measure cash that is free from any significant existing obligation. It is
also a significant component in the company's incentive compensation plans.
The difference reflects the impact from:
- the sale of accounts receivable programs,
- net capital expenditures,
- acquisition of customer accounts (ADT dealer program),
- cash paid for purchase accounting and holdback liabilities, and
- voluntary pension contributions.
The impact from the sale of accounts receivable programs and voluntary
pension contributions is added or subtracted from the GAAP measure because
this activity is driven by economic financing decisions rather than
operating activity. Capital expenditures and the ADT dealer program are
subtracted because they represent long-term commitments. Cash paid for
purchase accounting and holdback liabilities is subtracted from Cash Flow
from Operating Activities because these cash outflows are not available for
general corporate uses.
The limitation associated with using FCF is that it subtracts cash
items that are ultimately within management's and the Board of Directors'
discretion to direct and that therefore may imply that there is less or
more cash that is available for the company's programs than the most
comparable GAAP measure. This limitation is best addressed by using FCF in
combination with the GAAP cash flow numbers.
FCF as presented herein may not be comparable to similarly titled
measures reported by other companies. The measure should be used in
conjunction with other GAAP financial measures. Investors are urged to read
the company's financial statements as filed with the Securities and
Exchange Commission, as well as the accompanying tables to this press
release that show all the elements of the GAAP measures of Cash Flows from
Operating Activities, Cash Flows from Investing Activities, Cash Flows from
Financing Activities and a reconciliation of the company's total cash and
cash equivalents for the period. See the accompanying tables to this press
release for a cash flow statement presented in accordance with GAAP and a
reconciliation presenting the components of FCF.
The company has presented and forecast its operating income, net
income, EPS and operating margin before special items. Special Items
include charges and gains related to divestitures, acquisitions,
restructurings (including transaction costs related to the separations of
Tyco Electronics and Tyco Healthcare into separate public companies), and
other income or charges that may mask the underlying operating results
and/or business trends of the company or business segment, as applicable.
The company utilizes operating income, net income, EPS and operating margin
before special items to assess overall operating performance, segment level
core operating performance and to provide insight to management in
evaluating overall and segment operating plan execution and underlying
market conditions. They are also significant components in the company's
incentive compensation plans. Operating income, net income, EPS and
operating margin before special items are useful measures for investors
because they permit more meaningful comparisons of the company's underlying
operating results and business trends between periods. Net income and EPS
before special items do not reflect any additional adjustments that are not
reflected in operating income before special items. The difference between
operating income and operating margin before special items and operating
income and operating margin (the most comparable GAAP measures) consists of
the impact of charges and gains related to divestitures, acquisitions,
restructurings (including transaction costs related to the separations of
Tyco Electronics and Tyco Healthcare into separate public companies), and
other income or charges that may mask the underlying operating results
and/or business trends. The limitation of these measures is that they
exclude the impact (which may be material) of items that increase or
decrease the company's reported operating income, net income, EPS and
operating margin. This limitation is best addressed by using operating
income and operating margin before special items in combination with the
most comparable GAAP measures in order to better understand the amounts,
character and impact of any increase or decrease on reported results.
The company presents its operating income, net income, EPS and
operating margin forecast before special items to give investors a
perspective on the underlying business results. Because the company often
cannot predict the amount and timing of unusual or special items and
associated charges or gains that may be recorded in the company's financial
statements, it does not present forecasts that include the impact of those
items. See the accompanying tables to this press release for the
reconciliation presenting the components of operating income before special
items.
FORWARD-LOOKING STATEMENTS
This release may contain certain "forward-looking statements" within
the meaning of the United States Private Securities Litigation Reform Act
of 1995. These statements are based on management's current expectations
and are subject to risks, uncertainty and changes in circumstances, which
may cause actual results, performance or achievements to differ materially
from anticipated results, performance or achievements. All statements
contained herein that are not clearly historical in nature are
forward-looking and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended to
identify forward-looking statements. The forward-looking statements in this
release include statements addressing the following subjects: future
financial condition and operating results. Economic, business, competitive
and/or regulatory factors affecting Tyco's businesses are examples of
factors, among others, that could cause actual results to differ materially
from those described in the forward-looking statements. Tyco is under no
obligation to (and expressly disclaims any such obligation to) update or
alter its forward-looking statements whether as a result of new
information, future events or otherwise. More detailed information about
these and other factors is set forth in Tyco's Annual Report on Form 10-K/A
for the fiscal year ended Sept. 29, 2006 and Quarterly Report on Form 10-Q
for the quarterly period ended June 29, 2007.
TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
(Restated)
Net revenue $5,085 $4,715 $14,650 $13,661
Cost of sales 3,410 3,229 9,856 9,205
Selling, general and administrative
expenses 1,236 1,188 3,695 3,525
Class action settlement, net 2,875 - 2,875 -
Separation costs 28 19 85 32
Goodwill impairment 46 - 46 -
Restructuring and asset impairment
charges, net 47 7 159 14
Losses on divestitures 3 1 12 2
Operating (loss) income (2,560) 271 (2,078) 883
Interest income 32 9 64 37
Interest expense (80) (65) (211) (214)
Other expense, net (259) - (257) -
(Loss) income from continuing
operations before income taxes
and minority interest (2,867) 215 (2,482) 706
Income taxes (166) (45) (212) (167)
Minority interest (2) - (3) -
(Loss) income from continuing
operations (3,035) 170 (2,697) 539
(Loss) income from discontinued
operations, net of income taxes (516) 698 774 1,817
(Loss) income before cumulative
effect of accounting change (3,551) 868 (1,923) 2,356
Cumulative effect of accounting change,
net of income taxes - - - (14)
Net (loss) income $(3,551) $868 $(1,923) $2,342
Basic earnings per common share:
(Loss) income from continuing
operations $(6.13) $0.34 $(5.45) $1.07
(Loss) income from discontinued
operations (1.05) 1.38 1.56 3.61
Cumulative effect of accounting
change - - - (0.03)
Net (loss) income $(7.18) $1.72 $(3.89) $4.65
Diluted earnings per common share:
(Loss) income from continuing
operations $(6.13) $0.33 $(5.45) $1.05
(Loss) income from discontinued
operations (1.05) 1.35 1.56 3.50
Cumulative effect of accounting
change - - - (0.03)
Net (loss) income $(7.18) $1.68 $(3.89) $4.52
Weighted-average number of shares
outstanding:
Basic 495 506 495 504
Diluted 495 518 495 524
Income Reconciliation for Diluted
EPS:
(Loss) income from continuing
operations $(3,035) $170 $(2,697) $539
Add back of interest expense for
convertible debt - 2 - 11
(Loss) income from continuing
operations, giving effect to
dilutive adjustments (3,035) 172 (2,697) 550
(Loss) income from discontinued
operations (516) 698 774 1,817
Add back of interest expense for
convertible debt - 2 - 15
Cumulative effect of accounting
change - - - (14)
Net (loss) income, giving effect
to dilutive adjustments $(3,551) $872 $(1,923) $2,368
NOTE: These financial statements should be read in conjunction with the
Consolidated Financial Statements and accompanying notes contained
in the Company's Annual Report on Form 10-K/A for the fiscal year
ended September 29, 2006, Quarterly Report on Form 10-Q/A for the
quarterly period ended December 29, 2006 and Quarterly Report on
Form 10-Q for the quarterly period ended March 30, 2007.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions)
(Unaudited)
Quarter Ended
June 29, June 30,
2007 2006
NET REVENUE
ADT Worldwide $1,909 $1,806
Fire Protection Services 882 826
Flow Control 982 806
Safety Products 452 432
Electrical and Metal Products 519 526
Corporate and Other(1) 341 319
Total Net Revenue $5,085 $4,715
OPERATING (LOSS) INCOME AND MARGIN
ADT Worldwide $205 10.7% $242 13.4%
Fire Protection Services 57 6.5% 61 7.4%
Flow Control 124 12.6% 87 10.8%
Safety Products 73 16.2% (20) -4.6%
Electrical and Metal Products 47 9.1% 84 16.0%
Corporate and Other(2) (3,066) N/M (183) N/M
Operating (Loss) Income and
Margin $(2,560) -50.3% $271 5.7%
Nine Months Ended
June 29, June 30,
2007 2006
NET REVENUE
ADT Worldwide $5,659 $5,333
Fire Protection Services 2,562 2,386
Flow Control 2,695 2,264
Safety Products 1,308 1,242
Electrical and Metal Products 1,441 1,428
Corporate and Other(1) 985 1,008
Total Net Revenue $14,650 $13,661
OPERATING (LOSS) INCOME AND MARGIN
ADT Worldwide $601 10.6% $658 12.3%
Fire Protection Services 171 6.7% 145 6.1%
Flow Control 334 12.4% 245 10.8%
Safety Products 217 16.6% 122 9.8%
Electrical and Metal Products 114 7.9% 237 16.6%
Corporate and Other(2) (3,515) N/M (524) N/M
Operating (Loss) Income and
Margin $(2,078) -14.2% $883 6.5%
(1) Revenue related primarily to Infrastructure Services.
(2) Includes operating income of $24 million and $19 million for the
quarter ended June 29, 2007 and June 30, 2006, respectively, primarily
related to Infrastructure Services. Includes operating income of
$68 million and $63 million for the nine months ended June 29, 2007
and June 30, 2006, respectively, primarily related to Infrastructure
Services.
TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
June 29, March 30, September 29,
2007 2007 2006
Current Assets:
Cash and cash equivalents $1,310 $3,196 $2,193
Accounts receivable, net 3,320 3,159 2,983
Inventories 1,927 1,928 1,627
Class action settlement escrow 2,972 - -
Other current assets 1,836 1,727 1,836
Assets of discontinued operations - 33,825 33,493
Total current assets 11,365 43,835 42,132
Property, plant and equipment, net 3,531 3,491 3,549
Goodwill 11,502 11,452 11,293
Intangible assets, net 2,668 2,659 2,730
Other assets 3,095 3,034 3,307
Total Assets $32,161 $64,471 $63,011
Current Liabilities:
Short-term debt and current
maturities of long-term debt $384 $1,708 $773
Accounts payable 1,635 1,652 1,666
Class action settlement liability 2,972 - -
Accrued and other current liabilities 3,588 3,691 3,664
Liabilities of discontinued
operations - 7,402 7,643
Total current liabilities 8,579 14,453 13,746
Long-term debt 4,101 8,260 8,877
Other liabilities 4,107 4,862 4,947
Total Liabilities 16,787 27,575 27,570
Minority interest 37 35 54
Shareholders' equity 15,337 36,861 35,387
Total Liabilities and Shareholders'
Equity $32,161 $64,471 $63,011
NOTE: These financial statements should be read in conjunction with the
Consolidated Financial Statements and accompanying notes contained in the
Company's Annual Report on Form 10-K/A for the fiscal year ended
September 29, 2006, Quarterly Report on Form 10-Q/A for the quarterly
period ended December 29, 2006 and Quarterly Report on Form 10-Q for the
quarterly period ended March 30, 2007.
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Quarter Ended Nine Months Ended
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
(Restated)
Cash Flows from Operating Activities:
Net (loss) income $(3,551) $868 $(1,923) $2,342
Loss (income) from discontinued
operations 516 (698) (774) (1,817)
Cumulative effect of accounting
change - - - 14
(Loss) income from continuing
operations (3,035) 170 (2,697) 539
Adjustments to reconcile net cash
provided by operating activities:
Depreciation and amortization 280 298 879 897
Non-cash compensation expense 40 35 124 116
Deferred income taxes 56 (16) (33) (92)
Provision for losses on accounts
receivable and inventory 21 12 63 34
Loss on the retirement of debt 259 - 259 1
Goodwill impairment 46 - 46 -
Non-cash restructuring, asset
impairment and divestiture
charges, net 10 1 29 5
Other non-cash items 28 4 18 11
Changes in assets and liabilities,
net of the effects of acquisitions
and divestitures:
Accounts receivable, net (138) (37) (264) (118)
Inventories 13 (74) (271) (168)
Accounts payable (41) 42 (88) (16)
Accrued and other liabilities (130) 166 (178) (205)
Income taxes, net (251) 24 (278) 9
Class action settlement
liability 2,972 - 2,972 -
Other (5) 42 278 (13)
Net cash provided by operating
activities 125 667 859 1,000
Net cash provided by discontinued
operating activities 769 843 2,442 2,162
Cash Flows from Investing Activities:
Capital expenditures (174) (141) (480) (403)
Proceeds from disposal of assets 2 8 15 16
Acquisition of businesses, net
of cash acquired (10) (2) (26) (2)
Acquisition of customer accounts
(ADT dealer program) (97) (97) (273) (266)
Purchase accounting and holdback
liabilities (1) (2) (5) (6)
Divestiture of businesses, net
of cash retained 9 (22) 85 871
Liquidation of rabbi trust
investments - - 271 -
(Increase) decrease in
investments (3) (13) 13 56
Decrease in restricted cash - 15 6 20
Class action settlement escrow (2,960) - (2,960) -
Other - 2 23 5
Net cash (used in) provided by
investing activities (3,234) (252) (3,331) 291
Net cash used in discontinued
investing activities (294) (288) (868) (890)
Cash Flows from Financing Activities:
Net repayments of debt (6,118) (10) (5,925) (1,079)
Proceeds from exercise of share
options 176 75 388 204
Dividends paid (396) (203) (791) (605)
Repurchase of common shares by
subsidiary - (1,107) (668) (1,918)
Transfers from discontinued
operations 7,535 480 8,525 887
Other 8 1 21 (7)
Net cash provided by (used in)
financing activities 1,205 (764) 1,550 (2,518)
Net cash provided by (used in)
discontinued financing activities 92 (490) (892) (1,142)
Effect of currency translation on
cash 18 8 39 10
Effect of currency translation on
cash of discontinued operations 14 3 33 7
Net decrease in cash and cash
equivalents (1,305) (273) (168) (1,080)
Less: net increase in cash related
to discontinued operations (581) (68) (715) (137)
Cash and cash equivalents at
beginning of period 3,196 1,903 2,193 2,779
Cash and cash equivalents at end of
period $1,310 $1,562 $1,310 $1,562
Reconciliation to "Free Cash Flow":
Net cash provided by operating
activities $125 $667 $859 $1,000
Decrease in sale of accounts
receivable 3 1 6 7
Capital expenditures, net (172) (133) (465) (387)
Acquisition of customer accounts (ADT
dealer program) (97) (97) (273) (266)
Purchase accounting and holdback
liabilities (1) (2) (5) (6)
Voluntary pension contributions 5 - 23 -
Free Cash Flow $(137) $436 $145 $348
NOTE: Free cash flow is a non-GAAP measure. See description of non-
GAAP measures contained in this release.
TYCO INTERNATIONAL LTD.
ORGANIC REVENUE GROWTH RECONCILIATION
(in millions)
(Unaudited)
Quarter Ended June 29, 2007
Foreign Acquisition /
Net Revenue Currency Divestiture
ADT Worldwide $1,909 5.7% $50 2.8% $(10) -0.6%
Fire Protection Services 882 6.8% 25 3.0% (2) -0.3%
Flow Control 982 21.8% 54 6.7% (4) -0.5%
Safety Products 452 4.6% 11 2.5% 1 0.4%
Electrical and Metal Products 519 -1.3% 6 1.1% - 0.1%
Corporate and Other 341 6.9% 10 3.1% (3) -0.9%
Total Net Revenue $5,085 7.8% $156 3.3% $(18) -0.5%
Quarter Ended June 29, 2007
Net
Revenue
for the
Quarter
Organic Ended
Revenue June 30,
Other Growth 2006
ADT Worldwide $(10) -0.6% $73 4.1% $1,806
Fire Protection Services - 0.0% 33 4.1% 826
Flow Control - 0.0% 126 15.6% 806
Safety Products - 0.0% 8 1.7% 432
Electrical and Metal Products - 0.0% (13) -2.5% 526
Corporate and Other - 0.0% 15 4.7% 319
Total Net Revenue $(10) -0.2% $242 5.2% $4,715
Nine Months Ended June 29, 2007
Foreign Acquisition /
Net Revenue Currency Divestiture
ADT Worldwide $5,659 6.1% $150 2.8% $(6) -0.1%
Fire Protection Services 2,562 7.4% 67 2.8% (25) -1.1%
Flow Control 2,695 19.0% 133 5.9% (4) -0.3%
Safety Products 1,308 5.3% 33 2.7% 2 0.1%
Electrical and Metal Products 1,441 0.9% 12 0.8% 2 0.2%
Corporate and Other 985 -2.3% 26 2.6% (3) -0.3%
Total Net Revenue $14,650 7.2% $421 3.1% $(34) -0.3%
Nine Months Ended June 29, 2007
Net
Revenue
for the
Nine
Months
Organic Ended
Revenue June 30,
Other Growth 2006
ADT Worldwide $(10) -0.2% $192 3.6% $5,333
Fire Protection Services - 0.0% 134 5.7% 2,386
Flow Control - 0.0% 302 13.4% 2,264
Safety Products - 0.0% 31 2.5% 1,242
Electrical and Metal Products - 0.0% (1) -0.1% 1,428
Corporate and Other - 0.0% (46) -4.6% 1,008
Total Net Revenue $(10) -0.1% $612 4.5% $13,661
NOTE: Organic revenue growth is a non-GAAP measure. See description of
non-GAAP measures contained in this release.
TYCO INTERNATIONAL LTD.
DEBT RECONCILIATION
(in millions)
(Unaudited)
Quarter Ended Nine Months Ended
June 29, 2007 June 29, 2007
Total debt at beginning of period $9,968 $9,650
Net debt repayments (6,119) (5,926)
Currency translation 17 119
Other 619 642
Total debt at end of period $4,485 $4,485
TYCO INTERNATIONAL LTD.
EARNINGS PER SHARE SUMMARY
(Unaudited)
Nine Months
Quarter Ended Ended
Jun. 30, 2006 Jun. 29, 2007 Jun. 29, 2007
Diluted EPS from
Continuing Operations $0.33 ($6.13) ($5.45)
Class action settlement,
net 5.83 5.83
Separation costs 0.04 0.69 0.85
Losses on divestitures 0.00 0.00 0.02
Restructuring and asset
impairment charges, net 0.07 0.23
Voluntary Replacement
Program 0.12
Goodwill impairment 0.09 0.09
Tax items (0.12)
Diluted EPS from
Continuing Operations
Before Special Items $0.49 $0.55 $1.45
TYCO INTERNATIONAL LTD.
For the Quarter Ended June 29, 2007
(in millions, except per share data)
Fire
ADT Protection Flow
Worldwide Services Control
Operating Income $205 $57 $124
Restructuring charges in cost of
sales 1 1
Class action settlement, net
Separation costs
Losses on divestitures 1
Restructuring and asset impairment
charges, net 11 11 1
Goodwill impairment 46
Operating Income Before Special Items $262 $70 $126
TYCO INTERNATIONAL LTD.
For the Quarter Ended June 29, 2007
(in millions, except per share data)
Electrical
Safety & Metal Corporate
Products Products and Other
Operating Income $73 $47 ($3,066)
Restructuring charges in cost of
sales
Class action settlement, net 2,884
Separation costs 28
Losses on divestitures 2
Restructuring and asset impairment
charges, net 8 16
Goodwill impairment
Operating Income Before Special Items $81 $47 ($136)
TYCO INTERNATIONAL LTD.
For the Quarter Ended June 29, 2007
(in millions, except per share data)
Interest
Operating Expense, Other
Income net Expense,
net
Operating Income ($2,560) ($48) ($259)
Restructuring charges in cost of
sales 2
Class action settlement, net 2,884
Separation costs 28 259
Losses on divestitures 3
Restructuring and asset impairment
charges, net 47
Goodwill impairment 46
Operating Income Before Special Items $450 ($48) $0
TYCO INTERNATIONAL LTD.
For the Quarter Ended June 29, 2007
(in millions, except per share data)
Income Minority
Taxes Interest
Operating Income ($166) ($2)
Restructuring charges in cost of
sales
Class action settlement, net
Separation costs 56
Losses on divestitures (1)
Restructuring and asset impairment
charges, net (12)
Goodwill impairment
Operating Income Before Special
Items ($123) ($2)
TYCO INTERNATIONAL LTD.
For the Quarter Ended June 29, 2007
(in millions, except per share data)
Income
from Diluted EPS from
Continuing Continuing
Operations Operations
Operating Income ($3,035) ($6.13)
Restructuring charges in cost of
sales 2 0.00
Class action settlement, net 2,884 5.83
Separation costs 343 0.69
Losses on divestitures 2 0.00
Restructuring and asset impairment
charges, net 35 0.07
Goodwill impairment 46 0.09
Operating Income Before Special Items $277 $0.55
Diluted Shares
Outstanding 495
Diluted Shares Outstanding - Before Charges 499
SOURCE Tyco International Ltd.