The net impact of the changes is to increase diluted earnings per common share, after non-recurring charges and credits, by $0.02 in fiscal 1999, compared to the amount previously reported in Tyco's Annual Report on Form 10-K, and to decrease diluted earnings per common share, after non-recurring charges and credits, by $0.02 in the first quarter of fiscal 2000, compared to the amount previously reported in Tyco's Quarterly Report on Form 10-Q. The changes to the statements primarily relate to the presentation and timing of recording and reversing certain merger, restructuring and other non-recurring charges. Diluted earnings per common share for the second quarter of fiscal 2000 were not affected by the changes. There is no impact on diluted earnings per common share before non-recurring charges and credits and extraordinary item of $0.96 for the first half of fiscal 2000.
The U.S. Securities and Exchange Commission Corporation Finance accounting staff requested these changes following a limited review of a Tyco registration statement for a debt exchange offer filed in December 1999. The review included those portions of Tyco's financial statements principally relating to charges and reserves recorded in connection with Tyco's acquisition activity. As a result of correspondence and discussions with the U.S. Securities and Exchange Commission Corporation Finance accounting staff, Tyco filed amendments to its Annual Report on Form 10-K for the fiscal year ended September 30, 1999 and its Quarterly Reports on Form 10-Q for the quarters ended December 31, 1999 and March 31, 2000 reflecting these changes.
"These amendments impact our financial statements only in the presentation and timing of non-recurring and restructuring related charges. They do not impact earnings before non-recurring charges and credits reported for the last fiscal year and for the first six months of this fiscal year. For fiscal 2000, we see strength in our organic sales growth, earnings, and cash flow, and have the financial resources and flexibility to continue to pursue acquisitions that will have an immediate positive impact on our earnings per share," said L. Dennis Kozlowski, Chairman and Chief Executive Officer of Tyco.
The attached tables provide information concerning the impact of the changes. The changes to the financial statements were made to:
· reclassify charges, incurred by AMP prior to its merger with Tyco, related to the write-off of goodwill and fixed assets of exited businesses in the Consolidated Statements of Operations out of the "merger, restructuring and other non-recurring charges (credits)" line and into the "charge for impairment of long-lived assets" line;
· reclassify inventory related restructuring costs in the Consolidated Statements of Operations out of the "merger, restructuring and other non-recurring charges (credits)" line and into the "cost of sales" line;
· eliminate merger, restructuring and other non-recurring charges which were originally recorded in fiscal 1999 related primarily to severance and facility closings and the subsequent reversal of such charges recorded as a credit to merger, restructuring and other non-recurring charges (credits) in the first quarter of fiscal 2000;
· record a credit in fiscal 1999 for the reversal of certain merger, restructuring and other non-recurring charges which were originally recorded in fiscal 1997 related primarily to facility closings and lease termination costs (this credit was previously recorded in the first quarter of fiscal 2000);
· report certain non-recurring costs related to the integration of United States Surgical Corporation's business, originally recorded in the first quarter of fiscal 1999 as costs in later periods when such activity was completed; and
· update various disclosures primarily related to purchase accounting liabilities and merger, restructuring and other non-recurring charges.
As Tyco has previously reported, the Division of Enforcement of the U.S. Securities and Exchange Commission is conducting an informal inquiry of Tyco. Tyco is hopeful to be notified that the inquiry will be complete in the near future; however, we cannot predict the timing.
Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer and servicer of electrical and electronic components and undersea telecommunications systems, the world's largest manufacturer, installer, and provider of fire protection systems and electronic security services, has strong leadership positions in disposable medical products, plastics, and adhesives, and is the largest manufacturer of flow control valves. The Company operates in more than 80 countries around the world and has expected fiscal 2000 revenues in excess of $28 billion.
FORWARD LOOKING INFORMATION
Certain comments in this release including, but not limited to, the current year outlook for Tyco and expected fiscal 2000 revenues are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's good faith expectations and belief concerning future developments. All forward-looking statements included in this release are based upon information available as of the date of the release, and Tyco assumes no obligation to update any such forward-looking statements. Actual results may materially differ from these expectations as a result of many factors, relevant examples of which are set forth in the "Management's Discussion and Analysis" section of the Company's 1999 Annual Report on Form 10-K, as amended, and the Company's 1999 Annual Report to Shareholders.