Income before acquisition related charges and extraordinary items for the first half of fiscal 1999 rose to $860.9 million, or $1.30 per diluted share, a 44 percent increase over last year's diluted per share earnings of 90 cents. Revenues for the first half increased to $7.78 billion, 26 percent higher than last year's $6.16 billion.
Last year's results have been restated to reflect the merger with U.S. Surgical, which was accounted for as a pooling of interests, and are before non-recurring charges and extraordinary item. Tyco's merger with AMP Incorporated (AMP) was completed on April 2, 1999. The results for the quarter and six months ended March 31, 1999 exclude the results of AMP.
"Each of Tyco's four segments provided solid organic revenue growth, continued margin expansion and strong cash flow in the second quarter," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "Free cash flow (operating cash less capital expenditures and dividends) in the quarter was in excess of $700 million. We continue to experience positive revenue and earnings trends across all of our businesses. In addition to organic growth, there are many opportunities for synergistic acquisitions in each of our platforms."
HEALTHCARE AND SPECIALTY PRODUCTS
Earnings for the second quarter at Tyco's Healthcare and Specialty Products group grew 69 percent to $322.5 million, compared to the $190.7 million reached a year earlier. Sales grew to $1.40 billion versus last year's $1.10 billion. The integration of U.S. Surgical and Graphic Controls into the Tyco Healthcare Group continues to be ahead of schedule leading to increased margins this quarter. Tyco Plastics reported an increase in volume again this quarter, and margin improvement was further enhanced by the effect of lower resin pricing as compared to last year.
FIRE AND SECURITY SERVICES
At Tyco's Fire and Security Services group, earnings for the quarter increased 57 percent to $235.8 million versus $149.8 million last year. Sales reached $1.45 billion compared to $1.10 billion last year. Sales and margins were up in all businesses and geographic areas, as ADT's security businesses continued its rapid rate of adding new residential and commercial accounts, and the fire and safety business continued to grow the service and inspection parts of its business.
FLOW CONTROL
Second quarter earnings at the Tyco Flow Control group increased 24 percent to $91.3 million from $73.4 million last year. Sales were $613.1 million compared to the prior year's $548.8 million. Backlog continues to increase in this segment as demand for water/wastewater treatment and infrastructure related projects remains strong.
ELECTRICAL AND ELECTRONIC COMPONENTS
At Tyco's Electrical and Electronic Components group, quarterly earnings reached $109.2 million, an 18 percent increase over the $92.5 million reported in the same quarter last year. Sales rose to $501.6 million compared with $421.9 million a year earlier. Tyco Submarine Systems Limited and the Tyco Printed Circuit Group both have strong organic growth fundamentals for the foreseeable future. The addition of AMP is expected to provide a multitude of opportunities for sales growth, as well as, earnings improvement within this segment.
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Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer, installer, and provider of fire protection systems and electronic security services, the largest manufacturer and servicer of electrical and electronic components and underwater telecommunications systems, the largest manufacturer of flow control valves, and has strong leadership positions in disposable medical products and plastics and adhesives. The Company operates in more than 80 countries around the world and has expected fiscal 1999 revenues in excess of $22 billion.