Tyco To Raise Quarterly Dividend To $0.10 Per Share

PEMBROKE, Bermuda: Dec. 9, 2004 - The board of directors of Tyco International Ltd. (NYSE: TYC; BSX: TYC) has approved an increase in the quarterly dividend to $0.10 per share compared with the previous dividend of $0.0125.  The dividend is payable on Feb. 1, 2005 to shareholders of record as of Jan. 3, 2005.

 "On behalf of our board of directors, we are delighted to raise our dividend at this time," said Chairman and Chief Executive Officer Ed Breen. "Tyco had a significant year of progress in 2004, with solid earnings and revenue growth, excellent cash flow and continued strengthening of our balance sheet, and we expect to continue this progress in 2005.  The strength and quality of our cash flow have given us the confidence to make this move."

The company is also confirming earnings guidance for its fiscal first quarter and full year.  The company expects to achieve earnings per share (EPS) from continuing operations of $0.40 to $0.42 for the first quarter and $1.88 to $1.98 for the full year.  This EPS outlook excludes any charges related to divestitures or early retirement of debt.  The company expects full year cash from operating activities of approximately $7 billion.  As a result of increased dividend payments expected to total $525 million for the remainder of fiscal 2005, the company now expects free cash flow to be in excess of $4.5 billion.  Both cash flow measures are before any voluntary pension contributions.

Tyco International Ltd. is a global, diversified company that provides vital products and services to customers in five business segments: Fire & Security, Electronics, Healthcare, Engineered Products & Services, and Plastics & Adhesives. With 2004 revenue of $40.1 billion, Tyco employs 260,000 people worldwide. More information on Tyco can be found at http://www.tyco.com.

NON-GAAP MEASURES

"EPS from continuing operations excluding charges," "Cash flow excluding voluntary pension contribution" and "free cash flow" (FCF) are non-GAAP measures and should not be considered replacements for GAAP results. 

The company has forecast its EPS from continuing operations results excluding divestiture charges and charges relating to early retirement of debt to give investors additional perspective on the underlying business results.  Because the company cannot predict the amount and timing of divestitures or debt retirement and the associated charges or gains that will be taken, it is difficult to accurately include the impact of those items in the forecast. The company has forecast its cash flow results excluding any voluntary pension contribution because it has not yet made a determination about the amount and timing of any such contribution.

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/earn-out liabilities and
•  dividends paid.

The impact from the sale of accounts receivable programs is added or subtracted from the GAAP measure because this activity is driven by economic financing decisions rather than operating activity.  Capital expenditures, the ADT dealer program and dividends are subtracted because they represent long-term commitments. Cash paid for purchase accounting and holdback/earn-out 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 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, which 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.

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 for the period ended Sept. 30, 2003, Tyco's Current Report on Form 8-K filed on March 10, 2004, and Tyco's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004.