Tyco Reports 17% Increase In First Quarter Earnings

same quarter last year. As required, results for the first quarter of fiscal 2001 have been restated to reflect the adoption of Staff Accounting Bulletin No. 101 (SAB 101) and are presented on a pro forma basis to exclude goodwill amortization as a result of the Company's adoption of Statement of Financial Accounting Standards No. (SFAS) 142, "Goodwill and Other Intangible Assets." Revenues for the quarter rose 25 percent to $10.1 billion compared with last year's $8.0 billion. Results presented

above are before non-recurring charges and credits, extraordinary items, and, for fiscal 2001, the cumulative effect of accounting changes. As discussed further below and in the accompanying tables, non-recurring charges and credits for the first quarter totaled a charge of approximately $26 million, before tax, in fiscal 2002 and a credit of approximately $176 million, before tax, in fiscal 2001. After giving

effect to such non-recurring items, diluted earnings per share before cumulative effect of accounting changes and extraordinary items were 73 cents for the first quarter of fiscal 2002, compared to 57 cents in the first quarter of fiscal 2001. The guidelines of SFAS 142 do not allow for restatement of prior year results.

"Tyco once again produced strong results despite a very difficult economic environment. Strong demand worldwide for our fire and security products and services offerings, coupled with the stability of our healthcare and Tyco Capital businesses, contributed greatly to the results for the quarter," said L. Dennis Kozlowski,

Chairman and Chief Executive Officer of Tyco. "These results reflect the success of a

strategy Tyco has pursued since 1992 to have leadership positions within each of our

businesses, a strong base of recurring and service revenues, a low-cost structure and

high quality products and services. With this quarter's results, Tyco has proven that

it can outperform in a recessionary environment and has set the stage for additional

growth when the economy recovers."

FISCAL 2002 GUIDANCE

Tyco is reiterating its earnings per share guidance for fiscal 2002 of $3.70.

Earnings guidance for the second quarter of fiscal 2002 is $0.80 to $0.82 per share.

The earnings estimate reflects continued uncertainty about the near-term outlook for

the Electronics end markets. Free cash flow, including spending on the TyCom Global

Network, is expected to approximate $800 million to $1 billion in the second quarter

of fiscal 2002 and $4 billion for the full fiscal year.

QUARTERLY RESULTS

Quarterly segment profits and margins for the Company's Electronics, Healthcare and

Specialty Products and Fire and Security Services segments that are presented in the

discussions below are operating profits before non-recurring charges and credits and

goodwill amortization. Results for the Company's Tyco Capital segment are pre-tax

profits. Results before non-recurring items are commonly used as a basis for

operating performance, but should not be considered an alternative to operating

income determined in accordance with generally accepted accounting principles. All

dollar amounts are stated in millions.

ELECTRONICS

December 31, 2001 December 31, 2000

Segment revenues $ 3,131.6 $ 3,865.8

Segment profit $ 621.3 $ 941.7

Segment margins 19.8% 24.4%

The decrease in revenues resulted from the continued softness in demand,

primarily in the communications, telecommunications, printed circuit, and computer

and consumer electronics end markets, as well as from a 23 percent decline at the

Company's Telecommunications unit (TyCom). Revenues at Tyco Electrical and Metal

Products declined 13 percent as a result of lower raw material prices and lower

volume in certain end markets. It is expected that these weaknesses will continue

through at least the second fiscal quarter of 2002. The Company continues to take

actions to ensure the business has the most appropriate cost structure to reflect

current conditions. The lower revenues in these areas have been partially offset by

acquisitions and comparative strength in the automotive and energy markets. The lower

profits and reduced margins in Electronics resulted from the lower sales level and

mix of business, partially offset by cost reduction programs undertaken during the

quarter. At TyCom, operating profits decreased in line with the decline in revenues.

HEALTHCARE AND SPECIALTY PRODUCTS

December 31, 2001 December 31, 2000

Segment revenues $ 2,209.4 $ 1,995.7

Segment profit $ 557.5 $ 420.7

Segment margins 25.2% 21.1%

Tyco Healthcare's increase in revenues continues to be driven by strong growth

in the international healthcare businesses, most notably in Europe, with the

endomechanical and ValleyLab product lines, and Japan, where the Company saw strong

sales in respiratory, imaging and Auto Suture products. New product introductions in

the electrosurgical instrument and adult incontinence markets also contributed to the

growth in the United States. Margins improved as the benefits from the integration of

Mallinckrodt, the consolidation of facilities, and the implementation of

manufacturing and cost efficiency programs continue to have positive impacts. These

were combined with increased volumes and a higher-margin product mix.

FIRE AND SECURITY SERVICES

December 31, 2001 December 31, 2000

Segment revenues $ 3,288.6 $ 2,167.4

Segment profit $ 566.1 $ 355.6

Segment margins 17.2% 16.4%

Tyco Fire and Security achieved strong performances in each of its businesses - fire,

security and valves and controls - and across all geographic areas. Demand for the

Company's electronic security products and services continues at record levels. The

acquisitions of Simplex Time Recorder, SecurityLink and Sensormatic expanded Tyco

Fire & Security Services' offerings. The results for the quarter reflect the

Company's ability to service existing customers and expand its customer base by

providing complete protection through fully integrated fire systems and security

systems; offering innovative solutions to meet a variety of needs; and providing the

most up-to-date technology through high quality new products. The recurring and

service revenue component of the segment continues to increase as well. At Tyco

Valves and Controls, revenues increased 31 percent over the prior year as a result of

acquisitions and demand for its broad line of product offerings, most notably in

thermal controls and certain valve products.

TYCO CAPITAL

December 31, 2001

Segment revenues $ 1,443.1

Segment pre-tax earnings $ 380.1

Earnings and profitability were solid, improving sequentially over the previous

quarter. This reflects higher lending margins, strong fee generation and lower

operating expenses. Lending and leasing volumes were higher sequentially although the

market remains soft. Non-spread revenue increased 13 percent over the year ago

quarter, despite a 50 percent reduction in securitization, leasing equipment sale,

and venture capital gains. With the economy remaining weak, credit costs trended

upward on an overall basis, driven mainly by higher losses in the liquidating

portfolios: trucking, manufactured housing, and franchise. However, these were more

than offset by margin improvement reflecting lower short-term interest rates and

exiting lower yielding non-strategic assets. Also, operating efficiencies improved

significantly as a result of the restructuring of the business subsequent to its

acquisition by Tyco.

FREE CASH FLOW

Free cash flow, after including $591 million in spending on the TyCom Global Network

(TGN), was approximately a negative $215 million in the quarter. This compares to

prior year results of a positive $227 million, after including $269 million spent on

TGN. In prior periods, TGN spending was not included in the definition of free cash

flow. If TGN spending from both periods were excluded, cash flow would have totaled

approximately $375 million in the first quarter of fiscal 2002, compared to cash flow

of approximately $496 million in the first quarter of fiscal 2001. The first quarter

is traditionally the lowest cash flow quarter for the Company due primarily to the

disbursement of fiscal year end cash bonuses, and the first quarter typically being

the lowest net income quarter of the year. The free cash flow reported for the first

quarter of fiscal 2002 does not include the collection of approximately $390 million

in operating cash which was received subsequent to December 31, 2001 related to

outstanding accounts receivable on TyCom's C2C cable project.

Tyco refers to the net amount of cash generated from operating activities, excluding

those of Tyco Capital, less capital expenditures and dividends as "free cash flow."

Included as a reduction of operating cash flows in the first quarter of fiscal 2002

is $91 million related to cash spending on restructuring and other non-recurring

items, as compared with $11 million in the first quarter of fiscal 2001.

In addition, the Company paid out $177 million in cash during the quarter related to

purchase accounting spending in fiscal 2002, compared to $165 million in fiscal 2001.

Free cash flow is calculated before these expenditures.

NON-RECURRING CHARGES

The first quarter results discussed above are before non-recurring charges. During

the quarter, the Company recorded approximately $26 million ($18 million after-tax)

in charges related primarily to acquisitions in the Fire and Security businesses. Of

these charges, approximately $20 million are cash charges and $6 million are non-cash

charges. These cash outlays are expected to occur during fiscal 2002.

ACCOUNTING CHANGES

The Company adopted the provisions of SAB 101, related to revenue recognition, in the

fourth quarter of fiscal 2001. Accounting rules required that the Company adopt the

provisions effective as of October 1, 2000, and results for the first three quarters

of fiscal 2001 be restated. The results for the first quarter reflect the impact of

SAB 101 in both periods presented. In addition, we recorded an adjustment of

approximately $683 million for the cumulative effect of accounting changes as of the

beginning of the 2001 fiscal year ($654 million related to the adoption of SAB 101

and $30 million related to the adoption of SFAS 133, "Accounting for Derivative

Instruments and Hedging Activities").

In June 2001, the U.S. Financial Accounting Standards Board issued SFAS 142. As of

October 1, 2001, goodwill amortization was no longer permitted under this standard.

Prior year results are not to be restated, but pro forma presentation excluding

goodwill is required.

CONFERENCE CALL

The company will discuss first quarter results on a conference call for investors

today at 8:30 am EST. Interested parties may access the conference call live today,

or by replay through January 22, 2002, at the following website:

investors.tycoint.com/medialist.cfm.

____________________________________

Tyco International Ltd. is a diversified manufacturing and service company. Tyco is

the world's largest manufacturer and servicer of electrical and electronic

components; the world's largest designer, manufacturer, installer and servicer of

undersea telecommunications systems; the world's largest manufacturer, installer and

provider of fire protection systems and electronic security services and the world's

largest manufacturer of specialty valves. Tyco also holds strong leadership

positions in medical device products, financing and leasing capital, and plastics and

adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues of

approximately $36 billion.

FORWARD-LOOKING INFORMATION

This release contains certain "forward-looking statements" within the meaning of the

United States Private Securities Litigation Reform Act of 1995. All forward-looking

statements involve risks, uncertainties and contingencies, many of which are beyond

Tyco's control, 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. The

forward-looking statements in this release include statements addressing the

following subjects: future financial and operating results and timing and benefits of

acquisitions.

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.

More detailed information about these factors is set forth in Tyco's filings with the

Securities and Exchange Commission, including Tyco's Annual Report on Form 10-K for

the fiscal year ended September 30, 2001, Tyco's Annual Report to Shareholders, and

Tyco Capital's Transition Report on Form 10-K for the period from January 1, 2001 to

September 30, 2001. 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.