Income before non-recurring charges and credits and extraordinary items for the first half of fiscal 2000 rose to $1.64 billion, or 96 cents per diluted share, a 48 percent increase over last year's diluted per share earnings of 65 cents. After giving effect to acquisition related and other non-recurring charges and credits, and extraordinary item, diluted earnings per share were 96 cents, or $1.65 billion for the first half of fiscal 2000 compared to 1 cent, or $9.4 million, in fiscal 1999. Revenues for the first half increased to $13.7 billion, 31 percent higher than last year's $10.5 billion.
"Each of our four businesses had strong organic growth and generated positive free cash flow in the second quarter," said L. Dennis Kozlowski, Tyco's Chairman and Chief Executive Officer. "Our core businesses are well positioned to continue that trend for the remainder of the year," he added.
The quarterly operating profits and margins for the Company's four business segments that are presented in the discussions below are stated before charges and credits for merger, restructuring and other non-recurring charges, charges for impairment of long-lived assets, and goodwill amortization. All dollar amounts are in millions.
TELECOMMUNICATIONS AND ELECTRONICS
March 31, 2000 March 31, 1999
Sales $ 3,027.1 $ 1,725.6
Operating profits $ 692.1 $ 274.9
Operating margins 22.9% 15.9%
The 75 percent increase in sales resulted from both acquisitions and strong organic growth. Acquisitions included Temasa and Raychem in fiscal 1999 and Siemens Electromechanical Components and Praegitzer in fiscal 2000. Tyco Electronics organic revenues were up as a result of significant volume and minor price increases.
Operating profits increased by almost 152 percent due to improved margins at Tyco Electronics as both volume and pricing continued to improve and the benefits from rationalizing acquired facilities were realized. Increased sales at TyCom and the Tyco Printed Circuit Group and the acquisitions noted above also contributed to the increase.
HEALTHCARE AND SPECIALTY PRODUCTS
March 31, 2000 March 31, 1999
Sales $ 1,584.5 $ 1,395.1
Operating profits $ 377.1 $ 344.7
Operating margins 23.8% 24.7%
Healthcare and Specialty Products sales increased by 14 percent over the prior year, principally as a result of organic growth in each business within the segment. The impact of revenues from acquired businesses in the Healthcare and Plastics businesses was offset by a decrease in revenues associated with divested healthcare businesses.
The 9 percent increase in operating profits was driven by increased margins in international Healthcare and service work at ADT Automotive.
FIRE AND SECURITY SERVICES
March 31, 2000 March 31, 1999
Sales $1,466.9 $1,306.2
Operating profits $222.1 $228.1
Operating margins 15.1% 17.5%
Tyco Fire and Security Services achieved a 12 percent increase in sales as compared with the same quarter last year, resulting primarily from the U.S. security and international fire protection businesses.
Operating profits declined by 3 percent due to the lower margins in the worldwide security business, a result of the reorganization of our dealer program and internal sales force. This reorganization was completed during the quarter. Security customer growth and installation cost recovery, and the penetration of fire protection services remain strong.
FLOW CONTROL PRODUCTS AND SERVICES
March 31, 2000 March 31, 1999
Sales $991.5 $811.8
Operating profits $179.2 $132.8
Operating margins 18.1% 16.4%
Sales figures for the second quarter of fiscal 2000 include the acquisitions of Glynwed, which was acquired in February 1999, and the heat tracing business of Raychem, Central Sprinkler and AFC Cable, which were acquired after the second quarter of fiscal 1999. Sales figures for the second quarter of 2000 exclude the revenues of Mueller and Grinnell Supply Sales, which were divested in August 1999.
Operating profits increased 35 percent as a result of margin increases in Tyco Valves and Controls, as well as the acquisitions noted above. These increases are net of a reduction in operating profits as a result of the sale of Grinnell Supply Sales and Mueller, which was partially offset by royalty and licensing fee income from certain intellectual property associated with these divested businesses.
FREE CASH FLOW
Tyco management refers to the net amount of cash generated from operating activities less capital expenditures and dividends as "free cash flow." Free cash flow was in excess of $500 million in the second quarter of fiscal 2000. For the first six months of fiscal 2000, free cash flow was $954.5 million compared to a negative $12.5 million in the first six months of fiscal 1999. Included as a reduction of operating cash flows in the quarter is $34.1 million related to cash spending on restructurings.
In addition, the Company paid out $128.9 million during the quarter in cash related to purchase accounting spending. This amount is not included in the calculation of free cash flow.
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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.
The company will discuss second quarter results on a conference call for investors today at 11:00 am (EST). The conference call can be accessed at the following website: investors.tycoint.com/medialist.cfm