PEMBROKE, Bermuda, Feb. 5 /PRNewswire-FirstCall/ --
($ millions, except per-share amounts)
Q1 2008 Q1 2007 %Change
Revenue $4,870 $4,365 12%
Income from Continuing Operations $369 $163 126%
Diluted EPS from Continuing Operations $0.74 $0.32 131%
Special Items Per Share After Tax $0.01 ($0.17) --
Income from Continuing Operations Before
Special Items $361 $249 45%
Diluted EPS from Continuing Operations Before
Special Items $0.73 $0.49 49%
-- Revenue increases 12% with organic revenue growth of 6%
-- Company achieves operating margin of 10.2% and operating margin before
special items of 10.7%
-- Guidance for Diluted EPS from continuing operations before special
items for full year 2008 increased to a range of $2.60 to $2.70
-- Company has repurchased 13.3 million shares for $531 million under
existing $1 billion share repurchase program
Tyco International Ltd. (NYSE: TYC; BSX: TYC) today reported $0.74 in
diluted GAAP earnings per share (EPS) from continuing operations and
diluted EPS from continuing operations of $0.73 before special items for
the fiscal first quarter of 2008. Diluted GAAP EPS from continuing
operations was positively impacted by special items which totaled $0.01 per
share. Diluted EPS from continuing operations before special items
increased 49% in the quarter. Revenue in the quarter increased 12% versus
the prior year to $4.9 billion, with organic revenue growth of 6%.
The company's operating margin in the quarter was 10.2% and the
operating margin before special items was 10.7% driven by higher revenue
and better productivity. The GAAP tax rate for the quarter was 24.8% and
was adversely impacted by 1.3 percentage points due to special items.
Special items increased EPS by $0.01 per share in the quarter and
consisted of the following: $0.08 per share of income for
separation-related items, partially offset by charges of $0.03 per share
for restructuring activities and $0.04 per share for certain tax items.
On January 23, the company raised its full year guidance for fiscal
2008 diluted EPS from continuing operations before special items from $2.50
- $2.65 to $2.60 - $2.70. Management will discuss the company's outlook for
the fiscal second quarter during a conference call and webcast today
beginning at 8:30 a.m. EST.
"Our first quarter results exceeded our previous guidance with improved
operating performance in each of our businesses," said Tyco Chairman and
Chief Executive Officer Ed Breen. "This performance, combined with the
progress we are making on our key initiatives, puts us on track for a solid
year in 2008."
Organic revenue growth, free cash flow, operating income before special
items, operating margin before special items, 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 http://www.tyco.com on the Investor Relations
portion of Tyco's Website.
SEGMENT RESULTS
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 fiscal first quarter of 2007 unless
otherwise indicated.
ADT Worldwide
Q1 2008 Q1 2007 %Change
Revenue $1,999 $1,863 7%
Operating Income $249 $201 24%
Operating Margin 12.5% 10.8% --
Special Items ($7) ($31) --
Operating Income Before Special Items $256 $232 10%
Operating Margin Before Special Items 12.8% 12.5% --
Revenue increased 7% in the quarter with organic revenue growth of 3.4%
led by double digit growth in Asia and Latin America. North America grew 2%
organically and the Europe, Middle East and Africa region grew 1%
organically.
Operating income was $249 million in the quarter and the operating
margin was 12.5%. Special items in the quarter consisted of $7 million of
restructuring charges incurred primarily in Europe. Operating income before
special items increased 10% to $256 million and included expenses of $24
million to convert certain North American customers to digital services in
advance of the analog-to-digital transition for wireless phone services.
The operating margin before special items improved to 12.8%.
Flow Control
Q1 2008 Q1 2007 %Change
Revenue $1,074 $835 29%
Operating Income $171 $108 58%
Operating Margin 15.9% 12.9% --
Special Items ($2) ($5) --
Operating Income Before Special Items $173 $113 53%
Operating Margin Before Special Items 16.1% 13.5% --
Revenue in Flow Control increased 29% in the quarter with organic
revenue growth of 17.7% driven by strong double digit growth across
industrial valves, water and thermal controls. Revenue growth continues to
benefit from strong demand in key end markets - particularly energy and
water.
Operating income was $171 million and the operating margin was 15.9%.
Special items in the quarter consisted of $2 million of restructuring
charges. Operating income before special items increased 53% to $173
million. The increase in operating income and the operating margin was due
to higher revenue and improved productivity.
Fire Protection Services
Q1 2008 Q1 2007 %Change
Revenue $832 $791 5%
Operating Income $72 $59 22%
Operating Margin 8.7% 7.5% --
Special Items -- -- --
Operating Income Before Special Items $72 $59 22%
Operating Margin Before Special Items 8.7% 7.5% --
Revenue in the Fire Protection Services segment increased 5% driven by
foreign exchange. Organic revenue growth in the North American
SimplexGrinnell business was 3.6% while the international fire businesses
declined 5% organically primarily due to the planned exit of certain
non-core international businesses.
Operating income increased 22% to $72 million and the operating margin
increased 120 basis points to 8.7% led primarily by North America with a
modest improvement in the international fire businesses.
Electrical and Metal Products
Q1 2008 Q1 2007 %Change
Revenue $487 $443 10%
Operating Income $41 $41 0%
Operating Margin 8.4% 9.3% --
Special Items ($4) -- --
Operating Income Before Special Items $45 $41 10%
Operating Margin Before Special Items 9.2% 9.3% --
Revenue in Electrical and Metal Products increased 10% in the quarter
with better volume and pricing for steel tubular products partially offset
by lower copper spreads. Organic revenue growth was 7.4%.
Operating income was $41 million and included $4 million of
restructuring charges. Operating income before special items of $45 million
improved primarily due to higher volume.
Safety Products
Q1 2008 Q1 2007 %Change
Revenue $447 $406 10%
Operating Income $86 $71 21%
Operating Margin 19.2% 17.5% --
Special Items ($1) ($7) --
Operating Income Before Special Items $87 $78 12%
Operating Margin Before Special Items 19.5% 19.2% --
Revenue in the Safety Products segment increased 10% in the quarter
with organic revenue growth of 4.7% driven by the fire suppression and
electronic security businesses.
Operating income was $86 million and the operating margin was 19.2%.
Operating income before special items was $87 million and the operating
margin before special items was 19.5%. All three lines of business - fire
suppression, electronic security and life safety - contributed to the
increase in operating income before special items, primarily led by higher
volume in fire suppression.
OTHER ITEMS
-- Net cash used in operating activities was $152 million in the quarter.
The company had a free cash outflow of $407 million, which included $53
million of payments for separation and restructuring activities.
-- Corporate expenses were $126 million and included $10 million of
separation expense. Revenue in Corporate and Other was $31 million and
operating income from business operations was $6 million.
-- Other income includes $50 million of income related to the Tax Sharing
Agreement entered into as part of the separation and recorded in
connection with the adoption of FASB Interpretation No. 48.
ABOUT TYCO INTERNATIONAL
Tyco International (NYSE: 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 had 2007 revenue of more than $18
billion and has 118,000 employees worldwide. More information on Tyco can
be found at http://www.tyco.com.
CONFERENCE CALL AND WEBCAST
Today's conference call for investors can be accessed in the following
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) 230-1085. The telephone dial-in number for participants outside
the United States is (612) 332-0107.
-- An audio replay of the conference call will be available beginning at
10:30 a.m. on February 5, 2008 and ending on February 12, 2008. 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 904017.
NON-GAAP MEASURES
"Organic revenue growth," "free cash flow (outflow)" (FCF), "income
from continuing operations before special items", "operating income before
special items", "operating margin before special items", and "earnings per
share (EPS) from continuing operations 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 may be
used as 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 may
also be 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 income from continuing operations before
special items, operating income and margin before special items and EPS
from continuing operations before special items, and forecast its EPS from
continuing operations 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
Covidien 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 income
from continuing operations, EPS and operating income and 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. There may also be significant components in the company's
incentive compensation plans. Operating income, operating margin, income
from continuing operations before special items and EPS 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. EPS before special items does not reflect any
additional adjustments that are not reflected in income from continuing
operations before special items. The difference between income from
continuing operations before special items and operating income and margin
before special items versus income from continuing operations, 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 Covidien 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 income from continuing operations, EPS and operating
income and margin. This limitation is best addressed by using income from
continuing operations before special items and operating income and 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 EPS 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 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 for the fiscal
year ended September 28, 2007.
TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(Unaudited)
Quarter Ended
December 28, December 29,
2007 2006
Net revenue $4,870 $4,365
Cost of sales 3,177 2,871
Selling, general and administrative expenses 1,174 1,157
Separation costs 9 25
Restructuring and asset impairment charges, net 11 56
Operating income 499 256
Interest income 58 14
Interest expense (117) (66)
Other income, net 52 1
Income from continuing operations before
income taxes and minority interest 492 205
Income taxes (122) (41)
Minority interest (1) (1)
Income from continuing operations 369 163
(Loss) income from discontinued operations,
net of income taxes (6) 630
Net income $363 $793
Basic earnings per common share:
Income from continuing operations $0.75 $0.33
(Loss) income from discontinued operations (0.01) 1.27
Net income $0.74 $1.60
Diluted earnings per common share:
Income from continuing operations $0.74 $0.32
(Loss) income from discontinued operations (0.01) 1.25
Net income $0.73 $1.57
Weighted-average number of shares outstanding:
Basic 493 496
Diluted 497 509
Income Reconciliation for Diluted EPS:
Income from continuing operations $369 $163
Add back of interest expense for
convertible debt - 2
Income from continuing operations,
giving effect to dilutive adjustments 369 165
(Loss) income from discontinued operations (6) 630
Add back of interest expense for
convertible debt - 3
Net income, giving effect to dilutive
adjustments $363 $798
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 for the fiscal year
ended September 28, 2007.
TYCO INTERNATIONAL LTD.
RESULTS OF SEGMENTS
(in millions)
(Unaudited)
Quarter Ended
December 28, December 29,
2007 2006
NET REVENUE
ADT Worldwide $1,999 $1,863
Flow Control 1,074 835
Fire Protection Services 832 791
Electrical and Metal Products 487 443
Safety Products 447 406
Corporate and Other (1) 31 27
Total Net Revenue $4,870 $4,365
OPERATING INCOME AND MARGIN
ADT Worldwide $249 12.5% $201 10.8%
Flow Control 171 15.9% 108 12.9%
Fire Protection Services 72 8.7% 59 7.5%
Electrical and Metal Products 41 8.4% 41 9.3%
Safety Products 86 19.2% 71 17.5%
Corporate and Other (2) (120) N/M (224) N/M
Operating Income and Margin $499 10.2% $256 5.9%
(1) Revenue related to certain international building products
businesses.
(2) Includes operating income of $6 million and $7 million for the three
months ended December 28, 2007 and December 29, 2006, respectively,
primarily related to certain international building products
businesses.
TYCO INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
December 28, September 28,
2007 2007
Current Assets:
Cash and cash equivalents $1,069 $1,894
Accounts receivable, net 3,040 2,961
Inventories 1,953 1,826
Class action settlement escrow 3,011 2,992
Other current assets 1,711 1,634
Assets of discontinued operations 1,007 1,044
Total current assets 11,791 12,351
Property, plant and equipment, net 3,573 3,551
Goodwill 11,736 11,691
Intangible assets, net 2,695 2,697
Other assets 2,675 2,525
Total Assets $32,470 $32,815
Current Liabilities
Short-term debt and current maturities
of long-term debt $693 $380
Accounts payable 1,553 1,682
Class action settlement liability 3,011 2,992
Accrued and other current liabilities 3,071 3,493
Liabilities of discontinued operations 554 560
Total current liabilities 8,882 9,107
Long-term debt 3,777 4,076
Other liabilities 4,013 3,941
Total Liabilities 16,672 17,124
Minority interest 70 67
Shareholders' equity 15,728 15,624
Total Liabilities and Shareholders' Equity $32,470 $32,815
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 for the fiscal year
ended September 28, 2007.
TYCO INTERNATIONAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Quarter Ended
December 28, December 29,
2007 2006
Cash Flows from Operating Activities:
Net income $363 $793
Loss (income) from discontinued operations 6 (630)
Income from continuing operations 369 163
Adjustments to reconcile net cash provided by
operating activities:
Depreciation and amortization 276 296
Non-cash compensation expense 35 45
Deferred income taxes (61) (7)
Provision for losses on accounts receivable
and inventory 30 24
Other non-cash items 13 4
Changes in assets and liabilities, net of
the effects of acquisitions and divestitures:
Accounts receivable, net (73) 22
Inventories (117) (207)
Other Current Assets (53) 115
Accounts payable (143) (56)
Accrued and other liabilities (382) (210)
Other (46) (59)
Net cash (used in) provided by operating
activities (152) 130
Net cash (used in) provided by discontinued
operating activities (25) 697
Cash Flows from Investing Activities:
Capital expenditures (176) (143)
Proceeds from disposal of assets 7 6
Acquisition of businesses, net of cash acquired (22) (16)
Acquisition of customer accounts
(ADT dealer program) (90) (97)
Other (4) 82
Net cash used in investing activities (285) (168)
Net cash used in discontinued investing activities (19) (267)
Cash Flows from Financing Activities:
Net repayments of debt 8 (2)
Proceeds from exercise of share options 13 120
Dividends paid (74) (199)
Repurchase of common shares by subsidiary (229) (660)
Transfers (to) from discontinued operations (43) 390
Other (70) 7
Net cash used in financing activities (395) (344)
Net cash provided by (used in) discontinued
financing activities 44 (396)
Effect of currency translation on cash 7 16
Effect of currency translation on cash of
discontinued operations - 10
Net decrease in cash and cash equivalents (825) (322)
Less: net increase in cash related to
discontinued operations - (44)
Cash and cash equivalents at beginning of period 1,894 2,187
Cash and cash equivalents at end of period $1,069 $1,821
Reconciliation to "Free Cash Flow":
Net cash (used in) provided by operating
activities $(152) $130
Decrease in sale of accounts receivable 5 2
Capital expenditures, net (169) (137)
Acquisition of customer accounts
(ADT dealer program) (90) (97)
Purchase accounting and holdback liabilities (1) (2)
Voluntary pension contributions - 18
Free Cash Flow $(407) $(86)
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 December 28, 2007
Organic
Revenue
Net Revenue Foreign Currency Other Growth
ADT Worldwide $1,999 7.3% $84 4.5% $(11) -0.6% $63 3.4%
Flow Control 1,074 28.6% 92 11.0% (1) 0.0% 148 17.7%
Fire Protection
Services 832 5.2% 41 5.2% - 0.0% - 0.0%
Electrical and
Metal Products 487 9.9% 11 2.5% - 0.0% 33 7.4%
Safety Products 447 10.1% 22 5.4% - 0.0% 19 4.7%
Corporate and
Other 31 14.8% 3 11.1% - 0.0% 1 3.7%
Total Net
Revenue $4,870 11.6% $253 5.8% $(12) -0.2% $264 6.0%
Net Revenue for the
Quarter Ended
December 29, 2006
ADT Worldwide $1,863
Flow Control 835
Fire Protection Services 791
Electrical and Metal Products 443
Safety Products 406
Corporate and Other 27
Total Net Revenue $4,365
NOTE: Organic revenue growth is a non-GAAP measure. See description of
non-GAAP measures contained in this release.
TYCO INTERNATIONAL LTD.
EARNINGS PER SHARE SUMMARY
(Unaudited)
Quarter Year Quarter
Ended Ended Ended
Dec. March June Sept. Sept. Dec.
29, 30, 29, 28, 28, 28,
2006 2007 2007 2007 2007 2007
Diluted EPS from
Continuing Operations $0.32 $0.31 ($6.16) $0.42 ($5.10) $0.74
Restructuring charges
in cost of sales - 0.00 0.00 0.01 0.01 0.01
Class action
settlement, net - - 5.83 (0.02) 5.81 -
Separation costs 0.07 0.10 0.69 0.08 0.93 (0.08)
Losses on divestitures - 0.00 0.00 - 0.01 -
Restructuring and
asset impairment
charges, net 0.10 0.05 0.07 0.07 0.28 0.02
Goodwill impairment - - 0.09 - 0.09 -
Tax items - (0.12) - - (0.12) 0.04
Voluntary Replacement
Program - - - 0.01 0.01 -
Diluted EPS from
Continuing Operations
Before Special Items $0.49 $0.34 $0.52 $0.57 $1.92 $0.73
TYCO INTERNATIONAL LTD.
For the Quarter Ended December 28, 2007
(in millions, except per share data)
(Unaudited)
Fire
ADT Protect- Electrical Corporate
World- Flow ion & Metal Safety and Operating
wide Control Services Products Products Other Income
Operating
Income $249 $171 $72 $41 $86 ($120) $499
Restructur-
ing charges
in cost of
sales 1 2 3
Class action
settlement,
net
Separation
costs 10 10
Losses on
divestitures
Restructuring
and asset
impairment
charges, net 7 1 2 1 11
Goodwill
impairment
Tax items
Voluntary
Replacement
Program
Operating
Income
Before
Special
Items $256 $173 $72 $45 $87 ($110) $523
Income Diluted EPS
Interest Other from from
Expense, Expense, Income Minority Continuing Continuing
net net Taxes Interest Operations Operations
Operating
Income ($59) $52 ($122) ($1) $369 $0.74
Restructuring
charges in
cost of sales (1) 2 0.01
Class action
settlement,
net
Separation
costs 7 (50) (5) (38) (0.08)
Losses on
divestitures
Restructuring
and asset
impairment
charges, net (3) 8 0.02
Goodwill
impairment
Tax items 20 20 0.04
Voluntary
Replacement
Program
Operating
Income
Before
Special
Items ($52) $2 ($111) ($1) $361 $0.73
Diluted Shares Outstanding 497
Diluted Shares Outstanding - Before Special Items 497
SOURCE Tyco International Ltd.
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Related links:
http://www.tyco.com
CONTACT:
Media, Paul Fitzhenry, +1-609-720-4621, or
Investor Relations, Ed Arditte, +1-609-720-4621, or Karen Chin,
+1-609-720-4398, all of Tyco International Ltd.
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